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Exhibit 2.1
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement ("Agreement") is entered into as
of the 6th day of May, 1999, but effective for certain purposes as of the
Effective Date (as defined below), by and among SA Horizons Education, Inc., a
Texas corporation, successor in interest to Horizons Education, L.L.C., a Texas
limited liability company, dba "New Horizons Computer Learning Center of San
Antonio" ("Seller"), Xxxxxxx X. Xxxxxx, the sole Shareholder of Seller (the
"Shareholder"), NHCLC of San Antonio, Inc., a Delaware corporation ("Buyer") and
New Horizons Worldwide, Inc., a Delaware corporation ("New Horizons").
Recitals:
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A. Seller is engaged in the business of providing computer
training services ("Services") to organizations and individuals primarily
located in and around San Antonio, Texas (the "Business") as a franchisee of New
Horizons Computer Learning Centers, Inc. ("NHCLC").
B. The parties desire that (i) Seller sell to Buyer and that
Buyer purchase from Seller substantially all of Seller's assets related to the
Business and (ii) Seller's Franchise Agreement dated May 1, 1997, with NHCLC for
the San Antonio area (the "San Antonio Franchise Agreement") be terminated upon
the terms therein and hereinafter set forth.
In consideration of and in reliance upon the mutual
representations, warranties, covenants, obligations and agreements contained
herein, the parties agree as follows:
1. Purchase and Sale of Assets.
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1.1 PURCHASED ASSETS. Seller hereby sells to Buyer, free of
all liens, encumbrances, claims and other restrictions of any kind, and Buyer
hereby purchases, all of Seller's right, title, and interest in and to all of
the properties, assets, and rights owned, used, acquired for use, or arising or
existing in connection with the Business, whether tangible or intangible, and
whether or not recorded on Seller's books and records, as the same exist at the
Effective Date and arising thereafter (as defined below), including, without
limitation, books and records, software and software licenses, permits and other
governmental authorizations pertaining to the Business (to the extent such
authorizations may legally be assigned), know-how, trade secrets, patents,
trademarks, trade names, copyrights (including applications for the foregoing),
and all goodwill relating to the Seller; PROVIDED, HOWEVER, that (i) Seller
shall not sell and Buyer shall not purchase the Retained Assets of Seller
described in Section 1.2 hereof, and (ii) as to contracts only, Seller shall
assign and Buyer shall assume only those contracts of Seller that are set forth
or described on SCHEDULE 2.1. The assets to be purchased and sold pursuant to
this Agreement are referred to herein as the "Purchased Assets."
1.2 RETAINED ASSETS. Seller shall retain, and Buyer shall
not purchase (i) any rights of Seller arising under this Agreement, (ii)
Seller's corporate minute books, stock records, and tax returns or other similar
corporate books and records relating to the Business, and those records,
originals of which Seller is required to maintain under applicable laws
(PROVIDED, copies of the same are included among the Purchased Assets), (iii)
contracts of Seller that are NOT
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set forth on SCHEDULE 2.1 and (iv) the items listed on SCHEDULE 1.2
(collectively, the "Retained Assets").
2. Liabilities of Seller.
2.1 ASSUMED LIABILITIES. On the Closing Date, Buyer agrees
to assume, and hereby assumes, the following liabilities and obligations of
Seller existing as of the Effective Date (the "Assumed Liabilities"): (a)
Seller's current liabilities reflected on the Adjusted Balance Sheet appearing
in the Adjusted Financial Statements (as such terms are defined in Section 3.2
below) and those current liabilities incurred in the ordinary course of business
consistent with past practices since the date of such Adjusted Balance Sheet to
the extent reflected or reserved on the Effective Date Balance Sheet (as defined
in Section 3.2 below) and thereafter arising in the ordinary course of business
and consistent with prior practice, as reflected on the books and records of
Seller, (b) Seller's long-term liabilities under the lease or financing
arrangements of a type required by GAAP to be included on a balance sheet set
forth on SCHEDULE 2.1 (such liabilities together with the current liabilities
reflected in paragraph (a) immediately preceding being sometimes referred to
herein as the "Assumed Balance Sheet Liabilities"), (c) the liabilities of
Seller under the contracts set forth on SCHEDULE 2.1 to the extent (i) such
contract liabilities accrue and relate solely to the period after the Effective
Date, and (ii) the corresponding benefits therefrom are validly assigned to and
received by Buyer, and (d) Seller's future obligation to provide training for
which Seller has received payment.
2.2 RETAINED LIABILITIES. Except for the Assumed
Liabilities, Buyer shall not assume nor become responsible for any liability or
obligation of Seller of any nature whatsoever, whether known or unknown,
accrued, absolute, contingent or otherwise (the "Retained Liabilities").
3. CONSIDERATION. The consideration payable by Buyer for the
Purchased Assets shall consist of the following: (i) Buyer's assumption of the
Assumed Balance Sheet Liabilities, (ii) payment of the consideration payable at
Closing as set forth in Section 3.1 below (the "Closing Payment"), as such may
be subsequently adjusted pursuant to Section 3.2 below, and (iii) the
consideration payable, if any, following the Closing as set forth in Section 3.3
below (the "Earn-Out").
3.1 CLOSING PAYMENT. The Closing Payment shall be payable
as follows:
(a) Three Million Eight Hundred Thousand Dollars
($3,800,000), payable by wire transfer of immediately available funds to an
account designated by Seller in writing; and
(b) Shares of Common Stock, $.01 par value, of New Horizons
having an aggregate Fair Market Value (as defined below) equal to One Million
Dollars ($1,000,000) (the "New Horizons Stock") issued at the Closing; PROVIDED,
that no fractional shares of New Horizons Stock will be issued or delivered to
Seller hereunder. Solely for purposes of determining the number of shares of New
Horizons Stock to be issued to Seller pursuant to this Section 3.1(b), the "Fair
Market Value" of a share of New Horizons Stock shall mean the
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average per share closing price of New Horizons Stock on the NASDAQ Stock Market
(or successor exchange) for the thirty (30) full trading days ending on the
second trading day prior to the Closing.
(c) Two Hundred Thousand Dollars ($200,000.00) (the
"Holdback Amount"), to be held by Buyer in an interest-bearing account pending
final determination of the Net Worth Adjustment (as defined and determined
below).
3.2 Net Worth Adjustment.
(a) Promptly after the Closing, Seller will prepare a
balance sheet as of the Effective Date ("Effective Date Balance Sheet")
reflecting:
(i) cash and cash equivalents included in the
Purchased Assets;
(ii) trade accounts receivable, net of allowance for
doubtful accounts and reserve for subsequent credit memos, included in the
Purchased Assets;
(iii) inventory, net of applicable reserves, included
in the Purchased Assets;
(iv) prepaid expenses included in the Purchased
Assets the benefit of which is fully available to Buyer;
(v) property, plant and equipment, net of
depreciation and amortization, included in the Purchased Assets;
(vi) any other assets included in the Purchased
Assets of a type required by GAAP to be included on a balance sheet; and
(vii) the Assumed Balance Sheet Liabilities.
Attached hereto as SCHEDULE 3.2(a)(i) is a balance sheet of the Business as of
February 28, 1999 and an income statement for the two (2) month period then
ended, which have been prepared jointly by Seller and Buyer in accordance with
GAAP and which reflect the New Horizons Methodology (the "Adjusted Balance
Sheet" and "Adjusted Income Statement", respectively, and collectively, the
"Adjusted Financial Statements"). Such Methodology is set forth on SCHEDULE
3.2(a)(ii) hereof. The Adjusted Balance Sheet was derived from the Seller's
Balance Sheet (as defined in Section 4.3 hereof) by making those modifications
set forth on SCHEDULE 3.2(a)(i) hereof. The Effective Date Balance Sheet shall
be prepared in a manner consistent with the preparation of the Adjusted Balance
Sheet. Based on the Effective Date Balance Sheet, Seller will also prepare a
written calculation of the amount by which the Net Worth (as defined below) as
at the Effective Date is greater or less than Five Hundred Seventy-Seven
Thousand Dollars ($577,000.00) ("Net Worth Adjustment").
(b) NET WORTH ADJUSTMENT REVIEW. Seller will prepare the
Effective Date Balance Sheet and the Net Worth Adjustment and deliver the same
to Buyer not later than thirty (30) days after the Closing, together with a
written certification that such have been prepared and calculated in accordance
herewith. Thereafter, Buyer's Chief Financial Officer and
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Buyer's independent accountants will conduct a review of these items, and Buyer
will notify Seller not later than thirty (30) days after receipt thereof, as to
whether they are acceptable to Buyer. If Buyer objects to the Effective Date
Balance Sheet or the Net Worth Adjustment and Buyer and Seller are able to
resolve their dispute within fifteen (15) days after Buyer's objection, the Net
Worth Adjustment (reflecting the resolution) will become final and binding on
the parties. If Buyer and Seller are unable to resolve their dispute within
fifteen (15) days after Buyer's objection, the dispute will be resolved by a
"Big Five" national accounting firm mutually agreeable to the parties (the
"Independent Accountants"). The Independent Accountants will be instructed to
perform their services as expeditiously as possible and the resolution of the
Independent Accountants shall be final and binding on the parties. The fees and
expenses of the Independent Accountants for the resolution of the dispute shall
be shared by Buyer and Seller in inverse proportion to the respective amounts of
the disputed matters which are resolved in its favor.
(c) Final Payment or Refund.
(i) POST-CLOSING PAYMENT. If the Net Worth
Adjustment is a positive amount, the Holdback Amount shall be paid to Seller
(along with any interest accrued thereon) and Buyer shall pay the Net Worth
Adjustment to Seller.
(ii) POST-CLOSING REFUND. If the Net Worth Adjustment
is a negative amount, Seller will refund to Buyer the Net Worth Adjustment
(treated as a positive amount) from the Holdback Amount (which Buyer may retain,
to the extent necessary to pay the Net Worth Adjustment) and, if necessary, also
by the wire transfer of immediately available funds to an account designated in
writing by Buyer (or a combination of both). The balance of the Holdback Amount,
if any, shall be paid to Seller (along with any interest accrued thereon).
(iii) Time of Post-Closing Payment or Refund. Any
post-closing payment or refund (as the case may be) provided for under this
Section 3.2(c) will be made not more than three business (3) days after the Net
Worth Adjustment becomes final, as contemplated by Section 3.2(b) hereof.
3.3 EARN-OUT. As additional consideration for the Purchased
Assets, Seller shall be entitled to receive (i) with respect to the 12 month
period commencing on the first day of the month on or after the Effective Date
and ending on the last day of the twelfth month thereafter, an amount equal to
three (3) times the amount by which Buyer's EBIT for such period exceeds the
Base EBIT, if any, and (ii) with respect to the next 12 month period, an amount
equal to three (3) times the amount by which Buyer's EBIT for such period
exceeds Base EBIT ("Earn Out Payments"). Buyer will prepare the foregoing EBIT
calculations and deliver the same to Seller within forty-five (45) days after
the end of the twelve month period for which they are required, together with a
written certification that such calculations have been prepared and calculated
in accordance herewith. Thereafter, Seller will conduct a review of these items
and notify Buyer not later than thirty (30) days after receipt of such
calculations as to whether they are acceptable to Seller. If Seller objects to
such calculations and Buyer and Seller are able to resolve their dispute within
fifteen (15) days after Seller's objection, such calculations (reflecting the
resolution) will become final and binding on the parties. If Buyer and Seller
are unable to resolve their dispute within fifteen (15) days after Seller's
objection, the dispute will be resolved
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by the Independent Accountants. The Independent Accountants will be instructed
to perform their services as expeditiously as possible and the resolution of the
Independent Accountants shall be final and binding on the parties. The fees and
expenses of the Independent Accountants for the resolution of the dispute shall
be shared by Buyer and Seller in inverse proportion to the respective amounts of
the disputed matters which are resolved in its favor.
Within ten (10) days after the amount of any Earn Out Payment is
finally determined in accordance with the foregoing it shall be paid (i) by wire
transfer of 75% of such amount in immediately available funds to an account
designated in writing by Seller, and (ii) by issuance to Seller of shares of New
Horizons Stock having an aggregate Fair Market Value equal to 25% of such
amount. For purposes of this Section 3.3, "Fair Market Value" of a share of New
Horizons Stock shall mean the average per share closing price of New Horizons
Stock on the NASDAQ Stock Market (or successor exchange) for the thirty (30)
full trading days ending on the last day of the twelve month period with respect
to which such Earn Out Payment was earned.
For purposes of this Section 3:
"Base EBIT" shall be Eight Hundred Thirty-Three Thousand
Dollars ($833,000.00).
"Buyer's EBIT" shall be the amount determined from Buyer's
financial statements for the Business prepared in accordance with GAAP using the
New Horizons Methodology in a manner consistent with the Adjusted Income
Statement, by (a) adding to the net income or loss of the Business: (i) the
total of all federal, state, local and foreign tax expense with respect to
income; (ii) the total of all interest expense with respect to indebtedness for
borrowed money (including capitalized leases and purchase money financing), net
of interest income; and (iii) the amortization of all intangibles resulting from
the transactions contemplated by this Agreement, and (b) deducting royalties
which would have been payable by Seller to NHCLC under the San Antonio Franchise
Agreement in the absence of this Agreement. No intercompany administrative,
accounting or overhead charges will be made against the Business; PROVIDED, that
Buyer, New Horizons, or an affiliate of either entity may charge to the Business
the reasonable cost of providing (i) services which replace those historically
provided by any person or entity directly employed in the Business, or (ii)
services which are directly necessary to the continued growth and success of the
Business
"Net Worth" means the assets of the Business (excluding
unamortized organization costs or franchise fees) less total liabilities of the
Business, determined in accordance with GAAP, but excluding the Retained Assets
and Retained Liabilities.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
SHAREHOLDER. Seller and the Shareholder hereby jointly and severally represent
and warrant to Buyer and New Horizons as follows:
4.1 ORGANIZATION, AUTHORITY AND CAPACITY. Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas, is in good standing qualified to do business in such
other states where the nature of the business conducted requires such
qualification, and has full power and authority to own, lease and operate its
assets and properties and, carry on the Business as and where such assets and
properties are now owned or leased and as such business is presently being
conducted. Seller and the
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Shareholder have full power, authority, and legal capacity to execute, deliver,
and perform this Agreement in accordance with its terms, and such execution,
delivery and performance has been approved by all requisite corporate action of
Seller. This Agreement has been duly executed and delivered by Seller and the
Shareholder and constitutes the legal, valid and binding obligation of Seller
and the Shareholder, enforceable against Seller and the Shareholder in
accordance with its terms.
4.2 NO CONSENTS OR CONFLICTS. Except as set forth on
SCHEDULE 4.2, no consent of, or filing with, any governmental authority or third
party is required in connection with the execution, delivery or performance of
this Agreement or any of the other agreements, instruments or documents to be
delivered by or on behalf of Seller or the Shareholder in connection herewith.
Neither the execution or delivery nor the performance of this Agreement or any
of the other agreements, instruments or documents to be delivered by or on
behalf of Seller or the Shareholder in connection herewith conflicts with,
violates or results in any breach of: (i) any judgment, decree, order, statute,
rule or regulation applicable to Seller or the Shareholder, (ii) any agreement
or instrument to which Seller or the Shareholder is a party or by which Seller
or any of its assets is bound, or (iii) any provision of the Articles of
Incorporation or the By-Laws of Seller.
4.3 FINANCIAL STATEMENTS. Seller has previously delivered
to Buyer Seller's audited financial statements for the years ended December 31,
1998, (the "Seller Prepared Financial Statements"; the balance sheet dated
December 31, 1998 is also referred to as "Seller's Balance Sheet"). The Seller
Prepared Financial Statements present fairly Seller's financial position as of
the dates indicated and results of operations for the periods indicated on a
consistent basis.
4.4 NO LIABILITIES. Seller has no liabilities or
obligations of any kind. (accrued, absolute, contingent, known, unknown or
otherwise) except (i) as reflected on the Adjusted Balance Sheet, (ii) as
incurred in the ordinary course of business, consistent with past practice,
since the date of the Adjusted Balance Sheet, or (iii) as set forth on SCHEDULE
4.4.
4.5 NO CHANGES. Since the date of the Adjusted Balance
Sheet which forms a part of Seller's Adjusted Financial Statements, Seller has
operated only in the ordinary course, consistent with past practice, and there
has not been any material adverse change, or any event, fact or circumstance
which might reasonably be expected to result in a material adverse change, in
the assets, liabilities, operating performance, business relationships, or
prospects of the Business. Without limiting the generality of the foregoing,
since the date of such balance sheet, except as set forth on SCHEDULE 4.5, there
has not been with respect to the Business any:
(a) waiver, release, cancellation or compromise of any
debts owed to it or claims or rights against others exceeding $10,000 in the
aggregate;
(b) sale, disposition or subjection to any lien of any
assets other than inventory in the ordinary course of business;
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(c) unusual or novel method of transacting business engaged
in by Seller or any change in Seller's accounting procedures or practices
(except as required by Buyer) or its financial structure;
(d) any increase in salaries, bonuses or benefits paid or
payable to employees;
(e) any material damage, destruction or loss to or of the
assets of Seller; or
(f) any distribution on or with respect to Seller's shares
of capital stock.
4.6 TITLE TO PURCHASED ASSETS. Seller owns all of the
Purchased Assets free and clear of all liens, claims, encumbrances and other
restrictions or limitations of any kind whatsoever affecting the ability to use
or transfer the Purchased Assets.
4.7 OWNERSHIP OF SELLER. The Shareholder owns beneficially
and of record, free and clear of all liens and encumbrances, all of the issued
and outstanding capital stock of Seller.
4.8 ASSETS OWNED. Except for the Retained Assets, the
Purchased Assets comprise all of those assets which are used or useful in the
operation of the Business in the ordinary course as presently conducted.
4.9 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE
4.9, Seller has conducted the Business in compliance with all laws, regulations
or orders of any jurisdiction or governmental authority, including, without
limitation, those pertaining to, environmental protection, occupational health
or safety, employee benefits, and employment practices. Except as set forth on
SCHEDULE 4.9, Seller has all permits, registrations and licenses necessary to
conduct the Business, and all of Seller's employees utilized in connection with
the Business have obtained all required permits, registrations, and licenses.
All such permits and licenses are in full force and effect, and no proceeding is
pending or, to the knowledge of Seller, threatened, to revoke or limit any of
them.
4.10 NO LITIGATION. Except as set forth on SCHEDULE 4.10,
there is no claim, litigation, investigation or proceeding pending or, to the
knowledge of Seller, threatened against Seller. There are no pending or, to the
knowledge of Seller, threatened controversies, grievances or claims by any
employee or former employee of Seller with respect to their employment,
compensation, benefits or working conditions.
4.11 CONDITION. Except as set forth on SCHEDULE 4.11, all of
the items of tangible property included among the Purchased Assets and used in
the ordinary conduct of Seller's Business are in good operating condition,
normal wear and tear excepted, and do not require nor are reasonably expected to
require any special or extraordinary expenditures to remain in such condition
beyond normal maintenance, and are capable of being used for their intended
purposes in the ordinary course of business consistent with past practice.
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4.12 TAXES. All tax returns, reports and declarations
(hereinafter collectively, "Tax Returns") required by any governmental authority
to be filed in connection with the properties, Business, income, expenses, net
worth and franchises of Seller have been timely filed by either Seller or the
Shareholder. All taxes due in connection with the properties, Business, income,
expenses, net worth and franchises of Seller ("Taxes") have been paid by either
Seller or the Shareholder, other than tax which is not yet due or which, if due,
is not yet delinquent or is being contested in good faith, and for which in all
cases reserves have been established on the Adjusted Balance Sheet. There are no
tax claims, audits or proceedings pending in connection with the properties,
Business, income, expenses, net worth and franchises of Seller, and, to the
knowledge of Seller, there are no such threatened claims, audits or proceedings.
4.13 EMPLOYEE BENEFITS. All employee benefit plans (as such
term is defined in Section 3(3) of Employee Retirement Income Security Act of
1974 ("ERISA")) and all other employee benefit programs or arrangements of any
type (collectively, the "Plans") maintained by Seller or to which Seller
contributes are listed on SCHEDULE 4.13, and, except as disclosed on said
SCHEDULE 4.13, such Plans comply, in all material respects, with all applicable
provisions of any laws, rules or regulations, including, without limitation, the
Internal Revenue Code of 1986, as amended ("Code") and ERISA, and have so
complied during all prior periods during which any such provisions are
applicable. Except as set forth on said SCHEDULE 4.13, Seller (i) has complied
in all material respects with the provisions of ERISA applicable to Seller as an
employer, plan sponsor, plan administrator or fiduciary of any such Plan, (ii)
has administered the Plans in accordance with their terms and (iii) with respect
to any Plan maintained by Seller or to which Seller contributes, has made all
contributions required of it by any law (including, without limitation, ERISA)
or contract and no unfunded liability exists with respect to any Plan.
4.14 CUSTOMERS. Except as set forth on SCHEDULE 4.14, no
customer of the Business accounting for more than One Hundred Thousand Dollars
($100,000) in revenues during the twelve (12) full calendar months preceding the
Closing has canceled or otherwise terminated, or made any threat to cancel or
otherwise terminate, its relationship with Seller or to materially decrease its
purchases from Seller.
4.15 CONTRACTS. Except as set forth on SCHEDULE 4.15,
neither Seller, nor, to the knowledge of Seller, any other party to any contract
set forth on SCHEDULE 2.1, has breached any obligation under any such contract.
4.16 CONFLICTS. Except as set forth on SCHEDULE 4.16,
neither the Shareholder, nor any other person or entity controlled by or under
common control with Seller or the Shareholder, has any direct or indirect
interest in any business enterprise which does business with Seller or competes
with Seller in any manner.
4.17 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set
forth on SCHEDULE 4.17, Seller and the Shareholder have not, and to the
knowledge of Seller no employee or agent of Seller, or any other person acting
on its behalf has, directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
which (i) might subject Seller to any damage or penalty in any civil, criminal
or
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governmental litigation or proceeding, (ii) if not given in the past, might have
had an adverse effect on the Purchased Assets or the Business, or (iii) if not
continued in the future, might adversely affect the Purchased Assets, the
Business or the prospects of the Business.
4.18 BROKERS AND FINDERS. Except as set forth on SCHEDULE
4.18, no broker, finder or other person or entity acting in a similar capacity
has participated on behalf of Seller or the Shareholder in bringing about the
transactions contemplated herein, rendered any services with respect hereto, or
been in any way involved herewith. Seller and the Shareholder are fully
responsible for any fees and/or expenses due any such party.
4.19 INVESTMENT MATTERS. Seller is acquiring the New
Horizons Stock for investment purposes, for its own account and not with a view
to distribution or resale thereof or to divide its participation with others;
provided, however, Seller may elect to transfer the New Horizons Stock to the
Shareholder, who hereby confirms that he will thereby acquire the New Horizons
Stock for investment purposes, for his own account and not with a view to
distribution or resale thereof or to divide his participation with others.
Seller and the Shareholder both meet the definition of "accredited investor" as
defined in Regulation D, 17 C.F.R. ss. 230.501(a), under the Securities Act of
1933, as amended (the "Act"). Seller and the Shareholder both have knowledge and
experience in financial and business matters such that they are capable of
evaluating the merits and risks of an investment in the New Horizons Stock.
Seller and the Shareholder acknowledge that they have received and have reviewed
(a) New Horizons' most recent Proxy Statement, (b) New Horizons' most recent
Annual Report on Form 10-K, (c) New Horizons' Form 10-Q Quarterly Report(s) for
the fiscal quarter(s) subsequent to such Annual Report, and (d) all other
material and relevant information concerning New Horizons, which New Horizons
has furnished in accordance with the rules of the Securities and Exchange
Commission ("SEC"), and have had the opportunity to ask questions of, receive
answers from and obtain additional information from New Horizons concerning the
business and financial condition of New Horizons.
Seller and the Shareholder understand, acknowledge and agree
that: (i) none of the New Horizons Stock will be registered under the Act and
that all of the New Horizons Stock will constitute "restricted securities" as
defined in Rule 144 (or its successor) under the Act; (ii) the New Horizons
Stock must be held indefinitely unless it is registered under the Act or an
exemption from registration is available; (iii) neither New Horizons nor Buyer
is under any obligation or has made any commitment to provide any such
registration or to take such steps as are necessary to permit sale without
registration pursuant to Rule 144 under the Act or otherwise; (iv) at such time
as the New Horizons Stock may be disposed of in routine sales without
registration in reliance on Rule 144 under the Act, such disposition can be made
only in limited amounts in accordance with all of the terms and conditions of
Rule 144; (v) if the Rule 144 exemption is not available, compliance with some
other exemption from registration will be required; (vi) all certificates
evidencing the New Horizons Stock will bear an appropriate legend concerning
restrictions on transfer; (vii) the transfer agent and registrar of Buyer will
be advised by appropriate "stop-transfer" instructions of the foregoing
restrictions and instructed to advise Buyer of any proposed transfer of
certificate(s) evidencing the New Horizons Stock; and (viii) in addition to the
forgoing restrictions, no shares of the New Horizons Stock may be sold or
transferred during the twelve (12) months following their issuance.
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4.20 SOFTWARE. Except as set forth on SCHEDULE 4.20, all
software used in connection with the Business ("Software") has been designed and
developed by Seller or is used pursuant to valid license agreements, which
agreements are fully paid and in full force and effect. Except as set forth on
SCHEDULE 4.20, Seller has not licensed the Software to any third party and no
third party (including, but not limited to, any of Seller's employees) have any
rights in such Software. To Seller's knowledge there are no pending or
threatened claims against or demands upon Seller or the Shareholder alleging
that the Software infringes upon the rights of any third party.
4.21 ACCOUNTS RECEIVABLE. Except for the reserve for
doubtful accounts reflected on the Adjusted Balance Sheet, all accounts
receivable of Seller reflected on the Adjusted Balance Sheet, and as incurred in
the normal course of business since the date thereof, represent arm's length
sales actually made in the ordinary course of business and are collectible in
the ordinary course of business.
4.22 MILLENNIUM COMPLIANCE. Seller has taken those steps
outlined on SCHEDULE 4.22 to determine whether its information systems used in
connection with the Business are Millennium Compliant. "Millennium Compliant"
means the ability when used individually or in conjunction with any other
systems, software or equipment to: (a) accurately process Date Data before,
after and across December 31, 1999 and throughout the year 2000 and beyond
(including by recognizing the year 2000 as a leap year); (b) provide correct
results when moving backwards and forwards between the 20th and 21st century;
and (c) function without error or without interruption related to or caused by
Date Data. For the purposes of this definition, "Date Data" means data which
represents or references dates in the same and/or different centuries.
4.23 RESIDENCY. The Shareholder is a resident of the State
of Texas.
4.24 NO MISREPRESENTATIONS. No representation or warranty
made by Seller or the Shareholder in this Agreement, the Schedules or Exhibits
hereto, or any certificate or document delivered to Buyer contains any untrue
statement of a material fact or omits to state a fact necessary to make the
statements and facts contained therein or herein, in light of the circumstances
under which they are made, not false or misleading. Copies of all documents
delivered or made available to Buyer by Seller were complete and accurate copies
of such documents.
4.25 KNOWLEDGE DEFINED. For purposes of this Section 4, "to
the knowledge of Seller" (or similar phrases) shall mean (i) the actual
knowledge of the Shareholder and (ii) the knowledge Shareholder would have had
after making reasonable inquiry of the Seller's personnel and reasonable
investigation and review of Seller's books and records and other relevant
documentation.
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5. REPRESENTATIONS AND WARRANTIES OF BUYER AND NEW HORIZONS.
Buyer and New Horizons, jointly and severally, represent and warrant to Seller
and the Shareholder as follows:
5.1 ORGANIZATION AND AUTHORITY OF BUYER. Buyer and New
Horizons are corporations duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and have full corporate power
and authority to execute, deliver and perform this Agreement in accordance with
its terms. This Agreement and the transactions contemplated by this Agreement,
have been authorized by all necessary corporate action of Buyer and New
Horizons. This Agreement has been duly executed and delivered by Buyer and New
Horizons and constitutes the legal, valid and binding obligation of Buyer and
New Horizons, enforceable against Buyer and New Horizons in accordance with its
terms.
5.2 NO CONSENTS OR CONFLICTS. No consent of, or filing
with, any governmental authority or third party is required in connection with
the execution, delivery or performance of this Agreement by Buyer or New
Horizons which has not been obtained or made or which will be obtained or made
before due. Neither the execution or delivery nor the performance of this
Agreement or any of the other agreements, instruments or documents to be
delivered by or on behalf of Buyer or New Horizons in connection herewith
conflicts with, violates or results in any breach of: (i) any judgment, decree,
order, statute, rule or regulation applicable to Buyer or New Horizons, (ii) any
agreement to which Buyer or New Horizons is a party or by which either of them
is bound, or (iii) any provision of the Certificate of Incorporation or the
By-Laws of Buyer or New Horizons.
5.3 ACCURACY OF PUBLIC DISCLOSURES. As of their respective
dates all reports filed by the Company with the Securities and Exchange
Commission did not contain any untrue statement of a material fact or omit 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.
5.4 NEW HORIZONS STOCK. The New Horizons Stock issued or to
be issued to Seller hereunder has been duly authorized and, when issued, will be
fully paid and nonassessable.
5.5 BROKERS AND FINDERS. No broker, finder or other person
or entity acting in a similar capacity has participated on behalf of Buyer in
bringing about the transactions contemplated herein, rendered any services with
respect thereto or been in any way involved therewith.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller and the Shareholder set forth in
Section 4 hereof will survive the Closing, regardless of any investigation made
by any party hereto, until the second anniversary of the Closing Date, except
that the representations and warranties contained in Sections 4.1, 4.2, 4.6,
4.7, 4.12 and 4.13 will survive for the applicable statute of limitations
(including extensions). The representations and warranties of Buyer set forth in
Section 5 hereof will survive the Closing, regardless of any investigation made
by any party hereto, until the second anniversary
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of the Closing Date, except that the representations and warranties contained in
Section 5.1 and 5.2 will survive for the applicable statute of limitations.
7. CLOSING. The consummation of the transactions contemplated
by this Agreement (the "Closing") will take place simultaneously with the
execution and delivery of this Agreement by all of the parties hereto as of the
date hereof (the "Closing Date"), at the offices of Seller or at such other
place as the parties may agree in writing, and shall be effective as of the
opening of business on May 1, 1999 (the "Effective Date").
7.1 SELLER'S CLOSING DELIVERIES. Seller shall deliver the
following items in connection with the Closing, each of which shall be in form
and substance acceptable to Buyer and its counsel:
(a) CONSENTS. The consent to the transactions
contemplated by this Agreement of any third party whose consent is required for
the consummation of such transactions by Seller or Shareholder;
(b) BOARD AND SHAREHOLDER APPROVAL. Certified copies of
the resolutions of Seller's Board of Directors and sole Shareholder approving
the consummation of the transactions contemplated by this Agreement;
(c) TRANSFER INSTRUMENTS; RELEASES OF LIENS. Bills of
sale, assignments and other transfer instruments and releases of liens,
encumbrances and restrictions sufficient to convey, transfer, and assign to
Buyer, and to effectively and legally vest in Buyer all of Seller's right, title
and interest in and to the Purchased Assets free and clear of all liens,
encumbrances and restrictions whatsoever;
(d) FRANCHISE AGREEMENTS. A written cancellation of and
waiver of all claims by Seller under the San Antonio Franchise Agreement;
(e) EMPLOYMENT. Employment agreements between Buyer and
each of the Shareholder and Xxxx Xxxxxxxxx in the form attached hereto as
EXHIBIT 7.1(e) to be effective from and after the Closing Date;
(f) NAME CHANGE. Evidence that Seller has ceased, or
within ten (10) days after the Closing will cease, all uses of the name "New
Horizons," "New Horizons Computer Learning Center" and all variations thereof;
(g) PAYMENT OF WICHITA ROYALTY. Evidence satisfactory
to Buyer of Seller's payment in full of any royalty or similar payment due PFT,
Inc. and/or Horizons Training Center, L.P., or any partner thereof; and
(h) OTHER DELIVERIES. Such other instruments and
documents as may be reasonably requested in order to give effect to the
transactions contemplated by this Agreement.
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7.2 BUYER'S CLOSING DELIVERIES. Buyer shall deliver the
following items in connection with the Closing, each of which shall be in form
and substance acceptable to Seller, Shareholder and their counsel.
(a) EMPLOYMENT AGREEMENTS. Employment agreements between
Buyer and each of Shareholder and Xxxx Xxxxxxxxx, to be effective from and after
the Closing Date;
(b) CONSENTS. The consent to the transactions contemplated
by this Agreement of any third party whose consent is required for the
consummation of such transactions by Buyer or New Horizons;
(c) BOARD APPROVAL. Certified copies of the resolutions of
Buyer's and New Horizons' respective Board of Directors approving the
consummation of the transactions contemplated by this Agreement;
(d) CLOSING PAYMENT. The Closing Payment provided for in
Section 3.1; and
(e) ASSUMPTION AGREEMENT. An agreement assuming Seller's
obligations for the Assumed Liabilities.
8. RESTRICTIVE COVENANTS.
8.1 CONFIDENTIALITY. Without the prior written consent of
Buyer, Seller and the Shareholder shall at all times hold in strictest
confidence the terms of this Agreement and any and all non-public information
concerning the Business, Buyer or any of Buyer's affiliated companies.
8.2 NON-COMPETITION. Seller and the Shareholder shall not,
for a period of five (5) years following the Closing, without the prior written
consent of Buyer, engage or invest, directly or indirectly, in any form of
business activity or organization that is substantially similar to the Business
in any area where Buyer, any affiliate of Buyer, including NHCLC, or any
franchisee of Buyer or any affiliate of Buyer conducts such business; provided,
that Seller or Shareholder (or any entity in which Shareholder, directly or
indirectly, owns an interest) may, without regard to location own, directly or
indirectly, securities of any publicly traded enterprise which do not represent
a beneficial ownership of more than two percent (2%) of any class of securities
of such enterprise.
8.3 NON-INTERFERENCE.
(a) Seller and the Shareholder shall not, for a period of
five (5) years following the Closing, without the prior written consent of
Buyer, directly or indirectly induce or attempt to induce any employee, agent,
consultant, representative, supplier, or customer of Buyer or any of its
affiliated companies to terminate its relationship with Buyer or such affiliate
or otherwise interfere with a relationship between Buyer or such an affiliate
and any of their employees, agents, consultants, representatives, suppliers, or
customers.
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(b) Buyer and New Horizons shall not, and shall not permit
any of their affiliates, for a period commencing on the Closing Date and ending
upon payment of the last Earn Out Payment contemplated by Section 3.3, without
the prior written consent of the Shareholder, to directly or indirectly induce
or attempt to induce any employee, agent, consultant, representative, supplier
or customer of the Business as existing as of the Closing Date or at any time
prior to payment of the last Earn Out Payment, to terminate its/his/her
relationship with the Business.
8.4 ADEQUATE CONSIDERATION. Seller and the Shareholder
acknowledge and agree that the obligations of Buyer hereunder constitute
adequate consideration for their obligations under this Section 8. Buyer
acknowledges and agrees that in addition to any other remedy which Seller or the
Shareholder may have at law, Seller and the Shareholder shall be free of any
restrictions imposed by this Section 8 if Buyer wrongfully fails to make any
payment due under this Agreement.
8.5 REMEDIES. Seller and the Shareholder acknowledge that a
breach of any of the provisions of this Section 8 will result in irreparable
damage to Buyer for which there will be no adequate remedy at law, and agree
that Buyer, in addition to its rights at law, will be entitled to injunctive and
other equitable relief to enforce such provisions, without having to post any
bond.
8.6 REFORMATION. In the event any provision of this Section
8 shall be determined to be unenforceable or invalid, such provision shall be
enforceable in part to the fullest extent permitted by law, such invalidity or
unenforceability shall not otherwise affect any other provision of this
Agreement or any similar agreement, and this Agreement shall otherwise remain in
full force and effect.
9. POST-CLOSING AGREEMENTS/FURTHER ASSURANCES.
9.1 As of the Closing, Buyer may not have all required
licenses, permits and other governmental or vendor authorizations necessary for
it to take title to all of the Purchased Assets and to hereafter operate all
aspects of the Business. Seller agrees to cooperate with Buyer in timely
obtaining such licenses, permits and other governmental and vendor
authorizations, and further agrees that Buyer may operate the Business under the
authority of any of Seller's licenses, permits or other governmental
authorizations of the type that Buyer has not yet obtained, PROVIDED, that such
operation does not violate applicable laws or regulations, and that Buyer and
New Horizons, jointly and severally, indemnify and hold Seller harmless against
any and all costs, liability, loss, damage or deficiency resulting from Seller's
good faith performance of these obligations.
9.2 The parties hereto agree to execute and deliver to any
other party any and all documents and instruments, and do and perform such acts,
in addition to those expressly provided for herein, as may be necessary or
appropriate to carry out or evidence the transactions contemplated by this
Agreement, whether before, at or after the Closing. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement will not constitute
an agreement to assign any contract or claim or any right or benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the consent of a third party
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thereto, would constitute a breach thereof or in any way affect the rights of
Buyer thereunder. Seller and the Shareholder shall use their best efforts to
obtain the consent of the other party to any of the foregoing contracts or
claims to the assignment thereof to Buyer in all cases that such consent is
required for assignment or transfer.
9.3 Buyer shall use all reasonable efforts to collect the
accounts receivable included in the Purchased Assets, but Buyer shall not be
required to take or threaten legal action to collect any of such receivables.
9.4 Seller shall, within fourteen (14) days after the
Closing Date, provide such notices of continuation health coverage as are
required to be provided to any of Seller's employees, former employees, or the
beneficiaries or dependents of such employees or former employees, under Part 6
of Subtitle B of Title I of ERISA or Section 4980B(f) of the Code.
9.5 During the period commencing on the Closing Date and
ending upon payment of the last Earn Out Payment contemplated by Section 3.3,
Buyer covenants and agrees as follows:
(a) Buyer and New Horizons shall cause separate and
distinct books and records for the Business to be maintained;
(b) Buyer and New Horizons shall deliver to the Shareholder
within thirty (30) days of the close of each fiscal quarter of Buyer (other than
that coinciding with the end of its fiscal year, in which event such statements
shall be provided after the completion of New Horizons' year-end audit) copies
of the balance sheet of the Business as of that date and of the statements of
income for the fiscal quarter and year-to-date then ended prepared in accordance
with the provisions of Section 3.2 hereof; and
(c) All transactions between or among Buyer and any of
Buyer's affiliates shall be on terms and conditions no less favorable to Buyer
than those available through comparable transactions with third parties.
9.6 Seller and the Shareholder agree that, except for a
transfer of the New Horizons Stock by Seller to the Shareholder, as contemplated
in Section 4.19 of this Agreement, they will not sell, transfer, pledge
otherwise dispose of any of the New Horizons Stock prior to the expiration of
the twelve (12) month period following the Closing.
9.7 Buyer acknowledges that a substantial inducement to
Seller and the Shareholder is the undertaking of Buyer to retain the services of
the Shareholder for and during the period of the Earn-Out as set forth in
Section 3.3 of this Agreement. The purpose hereof is to give Seller and the
Shareholder assurance that decisions affecting the Business, as conducted by
Buyer, will, to the extent practicable and otherwise compatible with Buyer's and
New Horizons' operations and strategic plans, be reflective of the business
philosophy and judgment possessed by the Shareholder. Accordingly, while Seller
and the Shareholder recognize and agree that Buyer possesses ultimate authority
to direct the Business, Buyer agrees that it will direct and operate the
Business with a view to developing a consensus with the Shareholder on matters
which materially affect the Business, its earnings and prospects. While the
Buyer retains authority to discharge and regulate compensation of employees who
are not covered by employment agreements, neither
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Buyer nor New Horizons shall, nor shall permit any of their affiliates to,
relocate to other operations conducted by such persons any of the persons
employed in connection with the Business, unless the Shareholder shall approve
thereof at any time during the period of the Earn-Out as set forth in Section
3.3 of this Agreement.
10. INDEMNIFICATION.
10.1 Seller and the Shareholder jointly and severally
agree to indemnify and hold Buyer and New Horizons harmless from and against (i)
any and all loss, damage, liability or deficiency resulting from or arising out
of any inaccuracy in or breach of any representation, warranty, covenant, or
obligation made or incurred by Seller or the Shareholder herein, (ii) any
imposition (including, without limitation, by operation of bulk transfer or
other law) or attempted imposition by a third party upon Buyer of any liability
or obligation of Seller which is not an Assumed Liability, and (iii) any and all
costs and expenses (including reasonable attorneys' and accountants' fees)
related to any of the foregoing.
10.2 Buyer and New Horizons jointly and severally agree to
indemnify and hold Seller and the Shareholder harmless from and against (i) any
and all loss, damage, liability or deficiency resulting from or arising out of
any inaccuracy in or breach of any representation, warranty, covenant, or
obligation made or incurred by Buyer or New Horizons herein, (ii) any imposition
or attempted imposition by a third party upon Seller or Shareholder of any
Assumed Liability, and (iii) any and all costs and expenses (including
reasonable attorneys' and accountants' fees) related to any of the foregoing.
10.3 If any legal proceedings shall be instituted or any
claim is asserted by any third party in respect of which any party hereto may be
entitled to indemnity hereunder, the party asserting such right to indemnity
shall give the party from whom indemnity is sought written notice thereof. A
delay in giving notice shall only relieve the recipient of liability to the
extent the recipient suffers actual prejudice because of the delay. The party
from whom indemnity is sought shall have the right, at its option and expense,
to participate in the defense of such a proceeding or claim, but not to control
the defense, negotiation or settlement thereof, which control shall at all times
rest with the party asserting such right to indemnity, unless the proceeding or
claim involves only money damages and the party from whom indemnity is sought:
(a) irrevocably acknowledges in writing complete
responsibility for and agrees to indemnify the party
asserting such right to indemnity, and
(b) furnishes satisfactory evidence of the financial ability
to indemnify the party asserting such right to
indemnity,
in which case the party from whom indemnity is sought may assume such control
through counsel of its choice and at its expense, but the party asserting such
right to indemnity shall continue to have the right to be represented, at its
own expense, by counsel of its choice in connection with the defense of such a
proceeding or claim. If the party from whom indemnity is sought does not assume
control of the defense of such a proceeding or claim, the entire defense of the
proceeding or claim by the party asserting such right to indemnity, any
settlement made by the party asserting such right to indemnity, and any judgment
entered in the proceeding or
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claim shall be deemed to have been consented to by, and shall be binding on, the
party from whom indemnity is sought as fully as though it alone had assumed the
defense thereof and a judgment had been entered in the proceeding or claim in
the amount of such settlement or judgment, except that the right of the party
from whom indemnity is sought to contest the right of the other to
indemnification under this Agreement with respect to the proceeding or claim
shall not be extinguished. If the party from whom indemnity is sought does
assume control of the defense of such a proceeding or claim, it will not,
without the prior written consent of the party asserting such right to
indemnity, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include as an unconditional term thereof the
giving by the claimant to the party asserting such right to indemnity a release
from all liability in respect of the proceeding or claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim.
10.4 The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable, or common law
remedy available to any party.
10.5 Notwithstanding the provisions of Section 10.1 hereof,
any claim or claims for indemnity against the Seller or the Shareholder
resulting from or arising out of any inaccuracy in or breach of any
representation or warranty given by Seller or the Shareholder hereunder (other
than those arising solely as a result of the inaccuracy in any representations
and warranties provided for in Sections 4.6 or 4.12) shall not be actionable
until the aggregate loss incurred by Buyer or New Horizons shall with respect to
all such claims exceeds Twenty-Five Thousand Dollars ($25,000.00) (the
"Basket"); PROVIDED, that the Basket shall not be applicable to any loss
incurred by Buyer or New Horizons resulting from or arising out of (i) Seller's
or Shareholder's failure to pay any royalty or similar payment due PFT, Inc., or
(ii) Seller's or Shareholder's failure, prior to the Effective Date, to have
acquired sufficient software licenses, or (iii) any claim or action whatsoever
brought by Horizons Training Center, L.P., or any partner or former partner
thereof.
11. REGISTRATION RIGHTS.
11.1 REGISTRATION RIGHTS. Subject to the limitations set
forth in Section 11.2 hereof, in the event that (i) New Horizons files or causes
to be filed a registration statement ("Registration Statement") under the
Securities Act in connection with the proposed offer and sale for cash by it, or
by Xxxxxx Xxx Xxxxx, Xx. and Xxxxxx X. Xxxxx, of shares of new Horizons Stock
(the "Registration"), other than a registration on Form S-4 or Form S-8
promulgated under the Securities Act or any successor or similar form, and (ii)
the sale of the New Horizons Stock issued to the Seller and/or the Shareholder
remains restricted pursuant to Rule 144 of the Securities Act or by the terms of
this Agreement, New Horizons will give written notice of its or their intention
to effect the Registration to Seller and/or the Shareholder. Upon written
request from any one or more of the Seller and/or the Shareholder to New
Horizons within 15 days after the mailing of any such notice from New Horizons
regarding the Registration, New Horizons shall use its best efforts to cause the
shares of New Horizons Stock as to which such registration has been requested to
be included in the Registration. For purposes of this Agreement, and subject to
New Horizon's rights under Subsection 11.2 hereof, New Horizons shall be deemed
to have used its best efforts to satisfy its obligations under this Section 11
if it: (i) prepares and
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files with the Securities and Exchange Commission a Registration Statement with
respect to the New Horizons Stock for which registration has been properly
requested and to use its best efforts to cause such Registration Statement to
become and remain effective for such period as may be necessary to permit the
Seller and/or the Shareholder to dispose of the shares of New Horizons Stock
covered thereby; provided however, that New Horizons not need file any such
Registration Statement (or cause same to become or remain effective) after the
date that such shares of New Horizons Stock are freely tradable without
restriction under the Act by the Seller and/or the Shareholder pursuant to Rule
144(k) promulgated thereunder and under the terms of this Agreement (the
"Registration Expiration Date") (ii) prepares and files with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by the Registration Statement, (iii)
furnishes to the Seller and/or the Shareholder such numbers of copies of a
prospectus in conformity with the requirements of the Act, and such other
documents as the Seller and/or the Shareholder may reasonably request in order
to facilitate the disposition of the New Horizons Stock owned by the Seller
and/or the Shareholder; and (iv) uses it best efforts to register and qualify
the securities covered by the Registration Statement under such other securities
or Blue Sky law of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the Registration Statement, provided
that New Horizons shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions. Nothing contained herein
shall be construed to confer any rights upon the Seller and/or the Shareholder
to make an underwritten offering of their New Horizons Stock or to include their
New Horizons Stock in any registration statement that includes securities to be
issued by New Horizons for its own account that does not include shares of New
Horizons Stock.
11.2 LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding,
the provisions of Subsection 11.1 of this Agreement: (i) the maximum number of
shares of New Horizons Stock that may be included in any Registration Statement
shall be determined by New Horizons, in its reasonable discretion; (ii) New
Horizons shall not be obligated to include the Seller and/or the Shareholder in
more than two Registrations pursuant to this Agreement; and (iii) New Horizons
may postpone for up to six months the filing or effectiveness of any
Registration Statement if (A) New Horizons determines, in its reasonable
discretion, that such registration would have an adverse effect upon any pending
or proposed transaction which is or may become material to New Horizons and its
subsidiaries and affiliates, taken as a whole, (B) in order to complete any
registration, distribution or lock-up period in connection with any underwritten
offering of any of New Horizons' securities, or (C) if consistent with New
Horizon's business purposes, to delay the disclosure to the public of any
material event.
11.3 LOCK-UP AGREEMENTS. The Seller and the Shareholder
agree that, if New Horizons or the managing underwriter(s) of any underwritten
offering of New Horizons' securities so requests, the Seller and/or the
Shareholder will not, without the prior written consent of New Horizons or such
underwriter(s), effect any sale, transfer or other disposition of any of the
shares of New Horizons Stock, including sales pursuant to a Registration
Statement or under Rule 144, during the 10-day period prior to, and during the
180-day period commencing on, the effective date of such underwritten
registration (or during such shorter period or periods as such underwriter(s)
may in writing permit).
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11.4 OBLIGATION TO FURNISH INFORMATION. It shall be a
condition precedent to the obligations of New Horizons to take any action
pursuant to Subsection 11.1 hereof that the Seller and/or the Shareholder shall
furnish to New Horizons such information regarding the Seller and/or the
Shareholder, the New Horizons Stock held by them, and the intended method of
disposition of such securities as New Horizons shall reasonably request and as
shall be required in connection with the actions to be taken by New Horizons.
11.5 EXPENSES OF REGISTRATION. All expenses incurred in
connection with the Registrations pursuant to Subsection 11.1 (excluding
underwriters' discounts and commission and brokerage or dealer commissions),
including without limitation all registration an qualification fees, costs of
complying with applicable blue sky and other securities laws, printers' and
accounting fees, and fees and disbursements of counsel for New Horizons shall be
borne by New Horizons; provided, however, that New Horizons shall not be
required to pay for any such expenses if the Seller and/or the Shareholder
subsequently withdraw the New Horizons Stock from said Registration.
11.6 DELAY OF REGISTRATION. The Seller and/or the
Shareholder shall not have any right to take any action to restrain, enjoin or
otherwise delay the Registration Statement as the result of any controversy that
might arise with respect to the interpretation or implementation of this Section
11.
11.7 INDEMNIFICATION. If any shares of New Horizons Stock
owned by the Seller and/or the Shareholder are included in a registration
statement under this Section 11:
11.7.1 INDEMNIFICATION OF SELLER OR THE SHAREHOLDER.
To the extent permitted by law, New Horizons will indemnify and hold harmless
the Seller and/or the Shareholder requesting or joining in the Registration
Statement against any losses, claims, damages or liabilities, joint or several,
to which they may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based on any untrue or alleged untrue statement of any material fact
contained in such Registration Statement, including any prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or arise out of any violation by New Horizons of any rule or
regulation promulgated under the Act applicable to New Horizons and relating to
action or inaction required by New Horizons in connection with any such
registration; and will reimburse the Seller and/or the Shareholder for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Subsection 11.7.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of New
Horizons (which consent shall not be unreasonably withheld) nor shall New
Horizons be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
connection with such
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registration statement, any prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by the Seller and/or the Shareholder.
It is expressly understood among the parties to this Agreement that in no event
shall New Horizons be obligated to agree to indemnify, in any respect, any
underwriter, broker, dealer or other entity or person effecting the sale,
purchasing or otherwise distributing any of the New Horizons Stock.
11.7.2 INDEMNIFICATION OF NEW HORIZONS. To the extent
permitted by law, the Seller and/or the Shareholder will indemnify and hold
harmless New Horizons, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls New
Horizons within the meaning of the Act, and each agent for New Horizons (within
the meaning of the Act) against any losses, claims, damages or liabilities to
which New Horizons or any such directors, officer, controlling person or agent
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, including any prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon the omissions or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, prospectus, or amendments or supplements thereof, in reliance upon
and in conformity with written information furnished by the Seller and/or the
Shareholder for use in connection with such registration; and the Seller and/or
the Shareholder will reimburse any legal or other expenses reasonably incurred
by New Horizons or any such director, officer, controlling person or agent in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Subsection 11.7.2 shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Seller and/or the Shareholder (which consent shall
not be unreasonably withheld).
11.8 TRANSFER OF REGISTRATION RIGHTS. The registration
rights of the Seller and/or the Shareholder under this Section 11 may not be
transferred to any third party, except that such rights may be transferred to an
estate, trust, or heir, upon the death of the Shareholder.
11.9 Reports Under Exchange Act. With a view to making
available to the Seller and/or the Shareholder the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the Securities and
Exchange Commission that may at any time permit the Seller and/or the
Shareholder to sell securities of New Horizons to the public without
registration, New Horizons agrees to use its best efforts to (i) make and keep
public information available, as those terms are understood and defined in Rule
144, (ii) file with the Securities and Exchange Commission in a timely manner
all reports and other documents required of New Horizons under the Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and (iii)
furnish to Seller and/or the Shareholder, so long as Seller and/or the
Shareholder owns any of the New Horizons Stock, a written statement by New
Horizons that it has complied with the reporting requirements of Rule 144 and of
the Act and the Exchange Act, a copy of the most recent annual or quarterly
report of New Horizons, and such other reports and documents so filed by New
Horizons as may be reasonably requested in availing the Seller and/or the
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Shareholder of any rule or regulation of the Securities and Exchange Commission
permitting the selling of any such securities without registration.
12. MISCELLANEOUS.
12.1 AMENDMENTS; BINDING EFFECT. The Agreement (including
each Schedule and Exhibit hereto) may not be amended or modified except by a
document in writing signed by all parties hereto. This Agreement and the rights
and obligations of each party hereunder shall be binding upon and shall inure to
the benefit of the respective successors and permitted assigns of each of the
parties hereto, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other parties; provided, however, that Buyer may assign
this Agreement and its rights, interests and obligations hereunder to its parent
companies or to any of its majority-owned subsidiaries or affiliates without the
prior written consent of the other parties hereto.
12.2 NOTICES. All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to be
effectively served and delivered (a) when delivered personally; (b) when given
by facsimile (with confirmation of receipt and a copy mailed by first-class U.S.
mail); (c) one (1) business day following deposit with a recognized national air
courier service; or (d) three (3) business days after being deposited in the
United States mail in a sealed envelope, postage prepaid, return receipt
requested to the appropriate party at the following address (or such other
address for a party as shall be specified by notice pursuant hereto):
If to Seller or the Shareholder, to: Xxxxxxx Xxxxxx
000 Xxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to: Xxxxx Xxxxx PC
2000 St. Xxxx Place
000 Xxxxx Xx. Xxxx
Xxxxxx, Xxxxx
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer or
New Horizons, to: New Horizons Computer Learning Centers, Inc.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxx, XX 00000-0000
Attention: Chief Financial Officer
Facsimile: 000-000-0000
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With a copy to: Xxxxxx, Halter & Xxxxxxxx LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
12.3 CONSTRUCTION. This Agreement (including the Schedules
and Exhibits hereto), sets forth the exclusive statement of the agreement among
the parties concerning the subject matter hereof, and there are no agreements or
understandings between or among any of the parties hereto concerning such
subject matter other than as set forth herein. The headings to the various
provisions of this Agreement are for reference purposes only and shall not be
construed as affecting the meaning or interpretation of this Agreement. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
document. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas without regard to any conflict of laws
provisions.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Asset
Purchase Agreement on the date first written above.
SA HORIZONS EDUCATION, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Title: President
-----------------------
"Seller"
/s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
"Shareholder"
NHCLC OF SAN ANTONIO, INC.
By: /s/ Xxxxxx X. XxXxxxxx
---------------------------
Title: CFO and Treasurer
------------------------
"Buyer"
NEW HORIZONS WORLDWIDE, INC.
By: /s/ Xxxxxx X. XxXxxxxx
---------------------------
Title: Vice President and CFO
------------------------
"New Horizons"
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