EXHIBIT 4.6
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), effective as
of April 30, 1999 but dated this 12th day of May, 1999, by and among SYLVAN
LEARNING SYSTEMS, INC., a Maryland corporation (the "Purchaser"), The Emerald
Coast Corporation, an Alabama corporation (the "Company"), and Southeast
Learning Systems, Inc., the sole stockholder of the Company, and Xxxxxx X.
Xxxxxxx and Xxxxx X. XxXxxx, the sole and only stockholders of Southeast
Learning Systems, Inc. (the said Southeast Learning Systems, Inc., Xxxxxx X.
Xxxxxxx and Xxxxx X. XxXxxx, collectively being called herein the "Stockholder,"
whether one or more).
W I T N E S S E T H:
The Stockholder owns all the issued and outstanding capital stock of
the Company. The Purchaser and the Stockholder wish to enter into an agreement
for the acquisition of the Company by the Purchaser through a merger of the
Company into the Purchaser in a transaction qualifying as a tax-free
reorganization under Section 368(a)(1)(A) of the Code (the "Merger"). The
parties agree and acknowledge that for accounting purposes, the Merger is to be
treated as a pooling-of-interests. The Purchaser, the Company and the
Stockholder wish to enter into a definitive agreement setting forth the terms
and conditions of the Merger.
Accordingly, in consideration of the foregoing and of the covenants,
agreements, representations and warranties hereinafter contained, the Purchaser,
the Company and the Stockholder hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby represents and warrants to the Company and the Stockholder as
follows:
1.1 Organization and Standing. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has the corporate power to carry on its business as it is
now being conducted and to own or hold under lease the properties and assets it
now owns or holds under lease. Copies of the Charter and By-Laws of the
Purchaser have been delivered to the Company, and such copies are complete and
correct and in full force and effect on the date of this Agreement. The
Purchaser has at all times in the past operated and used its assets in material
compliance with, and currently is not in violation of, and has obtained all
material licenses and permits required by, any law, rule or regulation.
1.2 Financial Statements. The Purchaser has delivered to the
Company copies of the Purchaser's audited consolidated financial statement for
the fiscal year ended December 31, 1998. These financial statements are true and
complete in all material respects,
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have been prepared in accordance with generally accepted accounting principles
("GAAP") consistently followed throughout the periods covered by such statements
(except as may be stated in the explanatory notes to such statements), and
present fairly the consolidated financial position and results of operations of
the Purchaser at the dates of such statements and for the periods covered
thereby. The Purchaser also has delivered to the Company copies of its Annual
Report on Form 10-K for the year ended December 31, 1998, and all other reports
or documents required to be filed with the Securities and Exchange Commission
pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after the filing of such Annual Report on Form
10-K and prior to the date of this Agreement.
1.3 No Conflict With Other Documents. Neither the execution
and delivery of this Agreement nor the carrying out of the transactions
contemplated hereby will result in any violation, termination or modification
of, or be in conflict with, the Purchaser's Charter or By-Laws, or, any terms of
any contract, instrument or other agreement to which the Purchaser is a party or
by which it or any of its properties is bound or affected, or any law, rule,
regulation, license, permit, judgment, decree or order applicable to the
Purchaser or by which any of its properties or assets are bound or affected, or
result in any breach of or constitute a default (or with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation, or result in the creation
of any lien, charge or encumbrance upon any of its properties or assets, except
where such event or occurrence would not, singly or in the aggregate, have a
material adverse on the Purchaser.
1.4 Brokers and Advisors. The Purchaser has taken no action
which would give rise to a valid claim against any party hereto for a brokerage
commission, finder's fee, counseling or advisory fee, or like payment.
1.5 Authority. The execution, delivery and performance of this
Agreement by the Purchaser have been duly authorized by its Board of Directors,
and this Agreement is a valid, legally binding and enforceable obligation of the
Purchaser. Upon the satisfaction of all conditions contained herein and the
filing of Articles of Merger with the Maryland State Department of Assessments
and Taxation and the Alabama Secretary of State, this Agreement will result in
the valid, legally binding and enforceable statutory merger of the Company and
the Purchaser. The Purchaser warrants and represents that the approval of this
Agreement by its shareholders is not required.
1.6 Validity of Common Stock. The shares of Purchaser's Common
Stock to be issued and delivered by the Purchaser in connection with the Merger
have been duly authorized for issuance and will, when issued and delivered as
provided in this Agreement, be duly and validly issued, fully paid and
non-assessable.
1.7 Tax-Free Reorganization. The Purchaser is not aware of any
events or conditions relating to the Purchaser which would preclude the Company
or the Stockholder from treating the Merger as a tax-free reorganization under
Section 368(a)(1)(A) of the Code.
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1.8 Registration Statement on Form S-3. As of the date hereof,
the Purchaser is aware of no events, actions or conditions which would prevent
the Purchaser from being able to comply with the provisions of Section 11.1 of
this Agreement, and will use its best efforts to comply, and to continue to be
eligible to comply, with the provisions of Section 11.1.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SOLE
STOCKHOLDER. The Company and the Stockholder hereby jointly and severally
represent and warrant to the Purchaser as follows:
2.1 Authorized and Issued Shares. The Company's entire
authorized capital stock consists of 10,000 shares of Common Stock, $0.10 par
value per share (the "Company Common Stock"), of which 1500 shares are issued
and outstanding. 3,500 shares of Company Common Stock are held in the Company's
treasury; no shares are reserved for issuance. All outstanding shares of Company
Common Stock have been duly authorized and are validly issued and are fully paid
and non-assessable and are owned by the Stockholder. The Company is not a party
to or bound by any options, calls, contracts, preemptive rights or commitments
of any character relating to any issued or unissued capital stock, or any other
equity security issued or to be issued by the Company.
2.2 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Alabama and
has the corporate power and authority to carry on its business as it is now
being conducted and to own or hold under lease the properties or assets it now
owns or holds under lease and to perform the actions contemplated hereby.
Complete and accurate copies of the current Charter, By-Laws, minute books and
stock transfer books of the Company have been provided to the Purchaser, and
such copies are complete and correct and in full force and effect. The Company
does not own or have any direct or indirect interest in any other corporation,
firm, partnership, joint venture enterprise or other business entity.
2.3 Transactions with Affiliates. Except as set forth in
Section 2.3 of the disclosure schedule delivered to the Purchaser pursuant to
this Agreement (the "Disclosure Schedule") or in the Company Financial
Statements (as hereinafter defined), the Company is not a party to any contract,
agreement or other arrangement with any current or former officer, director or
stockholder or any affiliate of any such persons. Each transaction required to
be listed on the Disclosure Schedule is on terms no less favorable than terms
available from unrelated parties.
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2.4 Financial Statements. The Company has provided to the
Purchaser the unaudited financial statements of the Company for the twelve
months ended on June 30, 1998, which have been prepared on an accrual basis, but
excluding accrual related income tax adjustments (collectively, the "Company
Financial Statements"). The Company Financial Statements are complete and
correct, have been prepared on a consistent basis throughout the periods covered
thereby and present fairly and accurately the financial position and results of
operations of the Company as of and for the periods indicated. There are no
material liabilities or obligations of the Company, whether contingent or
absolute, as of the dates of such statements, including liability for taxes of
any type, which in accordance with GAAP consistently applied should have been
shown or provided for in the Company Financial Statements and are not so shown
or provided for. Since June 30, 1998, there has been no material adverse change
in the condition (financial or otherwise), assets, liabilities, earnings, net
worth, financial position, business, operations, properties or prospects of the
Company except as shown on Schedule 2.4 of Disclosure Schedule. The Company's
accounts receivable arose, and all accounts receivable that will be outstanding
as of the Closing Date shall have arisen, from bona fide transactions in the
ordinary course of business and will be collectible by the Company in full, less
applicable reserves shown in the Company Financial Statements, in the ordinary
course of business within ninety days of the Closing Date, and there are no
offsets or claims related to such accounts receivable.
2.5 Taxes. The Company and the Stockholder have properly
prepared and filed all federal, state and other tax returns required to be filed
in connection with the operations of the Company. True and complete copies of
all federal and state income tax returns for the Company and the Stockholder for
each of the years ended June 30, 1997 through June 30, 1998 have been delivered
or made available to the Purchaser on or prior to the date hereof and copies of
other returns will be made available upon request. Except as set forth on
Section 2.5 of the Disclosure Schedule or in the Company Financial Statements,
neither the Company nor the Stockholder, to the best knowledge of the
Stockholder, has any liability for any federal, state, county, local or other
taxes whatsoever that arose or otherwise was incurred on or before the date of
the balance sheet for 1998 included in the Company Financial Statements. To the
best knowledge of the Stockholder, no proposed taxes, additions to tax, interest
or penalties have been asserted or are pending against the Company or the
Stockholder with respect to periods ending on or before Closing, and no such
matters are under discussion with the applicable authorities. There are no
agreements, waivers, or other arrangements providing for extensions of time with
respect to the assessment or collection of any unpaid tax against the Company or
the Stockholder. The Company and the Stockholder have withheld or otherwise
collected all taxes or amounts it or she was required to withhold or collect
under any applicable federal, state or local law, including, without limitation,
any amounts required to be withheld or collected with respect to employee state
and federal income tax withholding, social security, unemployment compensation,
sales or use taxes or workmen's compensation, and all such amounts have been
timely remitted to the proper authorities.
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2.6 Agreements. Section 2.6 of the Disclosure Schedule
identifies each of the following agreements, contracts, documents and other
items (whether written or oral) as to which the Company is a party or otherwise
is bound (and all such contracts, or summaries thereof, have been made available
to the Purchaser): (i) all documents relating to indebtedness for money borrowed
or collateral therefor, including guarantees; (ii) all agreements or plans
relating to employment, compensation of or benefits for officers or employees of
the Company; (iii) all contracts for the purchase of materials, supplies,
services, merchandise or equipment involving consideration of more than $2,000
or involving purchases in excess of normal operating requirements; (iv) any
contract, agreement, or instrument not entered into in the ordinary course of
the business of the Company on a basis consistent with past practice; (v) any
contract containing restrictions on the Company's operations or its ability to
compete in any geographic region or in any line of business; (vi) any lease of
real property and all personal property leases calling for annual lease payments
in excess of $2,000; and (vii) each and every other contract which is material
to the financial condition, earnings, operation or business of the Company. Each
of the contracts and agreements so listed (collectively, the "Contracts") is a
valid and existing contract or agreement in full force and effect and there
exists no default by the Company thereunder. None of the Contracts will be
violated or breached and no default or right of termination or modification
shall arise thereunder as a result of the consummation of the transactions
contemplated by this Agreement.
2.7 Property. Section 2.7 of the Disclosure Schedule sets
forth a schedule (the "Property Schedule") of (i) all real property owned or
leased by the Company (the "Real Property"), (ii) all individual items of
tangible personal property and assets (other than inventory) of the Company
having a fair market value in excess of $2,000, and (iii) all patents,
trademarks, trade names, service marks, trade secrets, copyrights, franchise
rights or applications therefor which are held, used, prepared in connection
with or otherwise related to the conduct of the business of the Company. Except
as set forth in the Disclosure Schedule, the Company has good and marketable
title to all of such property and assets owned by it, free of any pledge,
mortgage, lien, lease, security agreement, encumbrance, charge or claim of any
nature whatsoever. The machinery and equipment of the Company are, in all
material respects, in good operating condition and repair, ordinary wear and
tear excepted. To the Company's knowledge, the Company is not infringing on any
patent, trademark, trade name, service xxxx, trade secret or copyright of
another entity and has received no notice or claim of any such infringement.
2.8 Legal Proceedings, Etc. Except as set forth in Section 2.8
of the Disclosure Schedule, there are no legal, administrative, arbitration, or
other proceedings or governmental investigations pending or, to the best of the
Company's and the Stockholder's knowledge, threatened against the Company, the
Stockholder or the respective properties or assets of the Company and the
Stockholder.
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2.9 Compliance; Licenses. The Company has at all times in the
past operated and used its assets in material compliance with, and currently is
not in violation of, and has obtained all material licenses and permits required
by, any law, rule or regulation. Section 2.9 of the Disclosure Schedule contains
a true and complete list of all material licenses, permits, approvals,
franchises and other authorizations as are necessary in order to enable the
Company to own and conduct its business.
2.10 Bank Accounts, etc. Section 2.10 of the Disclosure
Schedule sets forth a true and complete list of all bank accounts, safe deposit
boxes and lock boxes of the Company including, with respect to each such account
and lock box identification of all authorized signatories.
2.11 Insurance. Section 2.11 of the Disclosure Schedule sets
forth a summary of all general liability, product liability, fire, casualty,
motor vehicle and other insurance currently maintained by or on behalf of the
Company. All requirements and provisions thereof are being complied with. True
and correct copies of all insurance policies relating to such coverage have been
provided by the Company to the Purchaser. No notice of cancellation has been
given to or received by the Company with respect to any of its insurance
policies, and no such policies are subject to any retroactive rate or audit
adjustments or coinsurance arrangements.
2.12 Employee Plans. Except as set forth in Section 2.12 of
the Disclosure Schedule, the Company does not maintain, sponsor or contribute to
any plans in effect for pension, profit-sharing, deferred compensation,
severance pay, bonuses, stock options, stock purchases, or any other retirement
or deferred benefit, or for any health, accident or other welfare plan, or any
other employee or retired employee benefits or incentive plan, program,
contract, understanding or arrangement in which any employee, former employee,
retired employee, or beneficiary of any of these, of the Company is entitled to
participate. The plans, programs, contracts, understandings and arrangements
listed on the Disclosure Schedule pursuant to this Section 2.12 are hereinafter
referred to as the "Employee Plans." The Company has supplied the Purchaser with
complete and accurate copies of each such Employee Plan. Each Employee Plan has
been operated according to its terms in compliance with all applicable laws.
2.13 Recent Operations; Employee Matters. Since December 31,
1998, (i) the Company has operated its business substantially as it was operated
immediately prior to said date and only in the ordinary course, and the Company
and the Stockholder have used their best efforts to preserve intact the
Company's business relationships, (ii) there have been no bonuses paid to or
increases in the compensation of officers or employees, except as set forth in
Section 2.13(ii) of the Disclosure Schedule, and (iii) except as set forth in
Section 2.13(iii) of the Disclosure Schedule, the Company has not declared or
paid any dividend or made any other distribution with respect to its capital
stock.
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2.14 Stockholder Distributions. No dividends or distributions
were declared and/or paid to the Stockholder (whether in cash or other assets)
after June 30, 1998 through the date hereof (the "1999 Period").
2.15 Environmental Matters. To the best of Company's
knowledge, no storage tanks, underground or otherwise, are now located on any
properties occupied by the Company, the Company has complied in all material
respects with all environmental laws relating to its operations or properties
occupied by it and there are no asbestos containing materials located on
properties occupied by the Company. The Company has not received any notice,
demand, suit or information request pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") or any comparable state law,
nor does it have knowledge of any other party's receipt of same relating to any
properties occupied by the Company.
2.16 Disclosure. The Company and the Stockholder have to their
best knowledge disclosed to the Purchaser all facts material to the assets,
business, operations, financial condition and prospects of the Company. All
agreements, schedules, exhibits, documents, certificates, reports or statements
furnished or to be furnished to the Purchaser by or on behalf of the Company in
connection with this Agreement or the transactions contemplated hereby are true,
complete and accurate in all material respects, and to the best knowledge of the
Stockholder, no such items contain any untrue statement of a material fact or
omit a material fact necessary in order to make the statements contained herein
and therein not misleading.
2.17 No Conflict With Other Documents. Neither the execution
and delivery of this Agreement, nor the carrying out of any of the transactions
contemplated hereby, will result in any violation, termination or modification
of, or be in conflict with, the Company's Articles of Incorporation or By-Laws,
any terms of any contract, instrument or other agreement to which the Company is
a party or by which it or any of its properties is bound or affected, or any
law, rule, regulation, license, permit, judgment, decree or order applicable to
the Company or by which any of its properties or assets are bound or affected,
or result in any breach of or constitute a default (or with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation, or result in the creation
of any lien, charge or encumbrance upon any of its properties or assets, except
where such event or occurrence would not, singly or in the aggregate, have a
material adverse effect on the Company.
2.18 Brokers and Advisors. The Company has taken no action
which would give rise to a valid claim against any party hereto for a brokerage
commission, finder's fee, counseling or advisory fee, or like payment.
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2.19 Authority. The execution, delivery and performance of
this Agreement by the Company have been duly authorized by the sole Director and
the Stockholder, and this Agreement is a valid and legally binding and
enforceable obligation of the Company. Upon the satisfaction of all conditions
contained herein and the filing of the Articles of Merger with the Maryland
State Department of Assessments and Taxation and the Alabama Secretary of State,
this Agreement will result in the valid, legally binding and enforceable
statutory merger of the Company and the Purchaser.
2.23 Employees Holding Sylvan Certification. Section 2.20 of the Disclosure
Schedule sets forth the names of all those employees of the Company who have
ever been trained or certified by Purchaser, and the particular certification
held by each and when issued.
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to the Purchaser as follows:
3.1 Ownership of Company Common Stock. Such Stockholder has
good and marketable title to the number of issued and outstanding shares of
Company Common Stock set forth opposite his or her name on Section 3.1 of the
Disclosure Schedule, free and clear of any pledges, liens, restrictions, claims
or encumbrances of any kind. Such Stockholder is not a party to or bound by any
options, calls, contracts, or commitments of any character relating to any
issued or unissued stock or any other equity security issued or to be issued by
the Company.
3.2 No Conflicts. Neither the execution and delivery of this
Agreement nor the carrying out of the transactions contemplated hereby, will
result in any breach of or constitute a default (or with notice or lapse of time
or both would become a default), or give to others any rights, under the terms
of any contract, instrument or other agreement to which such Stockholder is a
party or is otherwise bound, or any judgment, decree or order applicable to such
Stockholder.
3.3 Binding Effect. This Agreement is a valid and legally
binding and enforceable obligation of the Stockholder.
3.4 Litigation. There is no litigation, proceeding or
governmental investigation pending as to which Stockholder has been served with
process or summons, or to the best of Stockholder's knowledge, threatened or in
prospect against or relating to such Stockholder or the shares of Company Common
Stock owned by him or her or the transactions contemplated by this Agreement.
3.5 Brokers and Advisors. Such Stockholder has taken no action
which would give rise to a valid claim against any party hereto for a brokerage
commission, finder's fee, counseling or advisory fee, or like payment.
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3.6 Investment Intent. It is understood that the shares of
Purchaser Common Stock to be delivered to the Stockholder pursuant to this
Agreement are not being registered, for purposes of the transactions hereunder,
under the Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws, and the shares are being delivered without registration in
reliance upon an exemption from the registration requirements of the Securities
Act or any state securities laws. The Stockholder is acquiring the Purchaser
Common Stock hereunder only for his own account and not with any intention of
making, or with a view to, or for sale in connection with, any distribution
thereof within the meaning of the Securities Act unless such shares first are
registered under the Securities Act.
In connection with the foregoing, each Stockholder hereby
represents and warrants that:
(a) such Stockholder has reviewed, discussed and
evaluated the information delivered under Section 1.2 and has had the
opportunity to ask questions of, and receive answers from, executive officers of
the Purchaser concerning the terms and conditions of this Agreement and to
obtain any additional information which such Stockholder considered necessary to
verify the accuracy of the information delivered under Section 1.2;
(b) such Stockholder understands that he or she
must bear the economic risks of the investment in Purchaser Common Stock to be
made hereunder for an indefinite period of time because such stock has not been
registered under the Securities Act and, therefore, may not be sold until such
stock subsequently is registered under the Securities Act or an exemption from
registration is available; and
(e) such Stockholder has sufficient knowledge and
experience in financial and business matters to enable such Stockholder to be
capable of evaluating the merits and the risks of the exchange of the Company
Common Stock for the Purchaser Common Stock contemplated by this Agreement and
such Stockholder's prospective investment in the Purchaser; and
(f) such Stockholder understands that
notwithstanding the registration for sale under the Securities Act of the
Purchaser Common Stock, such Stockholder cannot sell such stock until after the
date on which the Purchaser has reported financial statements in a quarterly
report on Form 10-Q that include at least 30 days of operating results
subsequent to the Effective Closing Date.
3.7 Legends. It is understood and agreed that, to implement
the requirements of the Securities Act and state securities laws and evidence
the restrictions upon transfer contained in this Agreement, the Purchaser will
cause a legend to be conspicuously noted on the certificates representing the
Purchaser Common Stock deliverable hereunder, and that the Purchaser will issue
stop transfer instructions to its transfer agent, to the effect that such stock
has not been registered under the Securities Act and that no transfer may take
place except as permitted by Section 11 of this Agreement and after delivery of
an opinion of Purchaser's counsel to the effect that registration thereof for
the purpose of transfer is not required under the Securities Act or that the
stock proposed to be transferred has been effectively registered for that
purpose under the Securities Act.
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3.14 No Agreements with Respect to Purchaser Common
Stock. Except for this Agreement, Stockholder has not entered into any agreement
or understanding with anyone for the sale, at Stockholder's option or otherwise,
of any of the Purchaser Common Stock to be delivered hereunder to Stockholder at
the Closing.
3.15 Preparation of Final Tax Returns. The
Stockholder will cause to be prepared, and timely filed with the appropriate
authorities, any and all tax returns for the Company for the tax period ending
April 30, 1999, and pay any tax liability due thereunder that is not covered by
any credits or tax deposits to which the Company may be entitled as of April 30,
1999.
4. COVENANTS OF THE PURCHASER. The Purchaser covenants to the Company
and the Stockholder that, except as otherwise consented to in writing by the
Company after the date of this Agreement:
4.4 Stock Reservation. Between the date hereof and the Closing Date, the
Purchaser will keep available and reserve a sufficient number of shares of
Purchaser Common Stock for issuance and delivery to the Stockholder as
contemplated in this Agreement.
4.2 Cause Conditions to be Satisfied. The Purchaser will use
its best efforts to cause all of the conditions described in Sections 8 of this
Agreement to be satisfied (to the extent such matters reasonably are within its
control).
4.3 Registration Statement on Form S-3. The Purchaser will use
its best efforts to meet the requirements for eligibility set forth in paragraph
A. of the General Instructions to Form S-3, as promulgated by the U.S.
Securities and Exchange Commission in fulfilling its obligations under Section
11 hereof.
4.4 Consents. The Purchaser agrees to take all necessary
corporate or other action and to use best efforts to obtain all consents and
approvals required for consummation of the transactions contemplated by this
Agreement.
4.5 Tax-Free Reorganization. The Purchaser recognizes that the
Company and the Stockholder desire to treat the Merger as a tax-free
reorganization under Section 368(a)(1)(A) of the Code and will use its best
efforts to cooperate with the Company and the Stockholder in this regard. The
Purchaser will take no actions which would disqualify the transaction from being
treated as a pooling of interests under applicable accounting rules and the
Code.
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5. COVENANTS OF THE COMPANY AND THE STOCKHOLDER. The Company and the
Stockholder jointly and severally covenant to the Purchaser that, except as
otherwise consented to in writing by the Purchaser after the date of this
Agreement:
5.1 Conduct of Business. After the date hereof and through the
date of the Closing, with respect to the Company (a) its business will be
conducted only in the ordinary course; (b) it will terminate each of its
Employee Plans and will not enter into, adopt or amend any employee benefit
plan, agreement or arrangement, enter into or amend any employment contracts, or
increase the salaries or compensation of its officers or employees, other than
ordinary increases in salaries in accordance with past practices; (c) it shall
pay in full all liabilities outstanding on the date hereof except for (i) those
balances owed to the holders of the Company's notes and other liabilities as
shown in Section 5.1(c) of the Disclosure Schedule, and (ii) accrued employee
compensation, leave and benefits and the taxes thereon as shown in Section 5.1
(c) of the Disclosure Schedule (all of which liabilities and balances shown in
Section 5.1(c) shall, by virtue of the merger, become liabilities of the
Purchaser); and (d) it shall not incur any additional liability for borrowed
money, or encumber any of its assets; (e) all outstanding loans payable by the
Company to the Stockholder or receivable by the Company from the Stockholder or
any employee shall be repaid in full by the appropriate party; (f) its current
assets at all times will exceed all of its liabilities; (g) except as shown in
Sec 5.1(g) of the Disclosure Schedule, all trade payables and liabilities and
obligations payable in installments shall be current; (h) it will use its best
efforts to preserve its business organization intact, to keep available the
service of its officers and employees and to preserve the goodwill of suppliers,
customers and others doing business with it; (i) it will not enter into any
agreement for the purchase, sale or other disposition, or purchase, sell or
dispose of, any equipment, supplies, inventory, investments or other assets
(other than sales of inventory and purchases of materials and supplies in the
ordinary course of business and in accordance with past practices); (j) it will
not compromise or write off any material account receivable other than by
collection of the full recorded amount thereof; (k) no change shall be made in
its Charter or By-Laws; (l) no change shall be made in the number of shares or
terms of its authorized, issued or outstanding capital stock, nor shall it enter
into or grant any options, calls, contracts or commitments of any character
relating to any issued or unissued capital stock; (m) no dividend or other
distribution or payment shall be declared or paid in respect of its capital
stock; and (n) no bonus or additional compensation in excess of normal salary
shall be paid to or declared for the benefit of any Stockholder.
5.2 Consents. The Company and the Stockholder agree to take
all necessary corporate or other action and to use their best efforts to obtain
all consents and approvals required for consummation of the transactions
contemplated by this Agreement.
5.3 Restated Financial Statements. The Stockholder will cause
the Company to deliver to Purchaser the Company's financial statements for the
fiscal year ended June 30, 1998 and for the ten month period ended April 30,
1999 as soon as practicable after the execution of this Agreement, but in no
event later than May 12, 1999. Said statements shall be prepared to reflect the
business operations of the Company on an accrual basis in accordance with GAAP.
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5.4 Cause Conditions to Be Satisfied. The Company and the
Stockholder will use their best efforts to cause all of the conditions described
in Sections 7 and 8 of this Agreement to be satisfied (to the extent such
matters reasonably are within their control).
5.5 Tax-Free Reorganization. The Company and the Stockholder
recognize that the Purchaser desires to treat the Merger as a tax-free
reorganization under Section 368(a)(1)(A) of the Code and will use best efforts
to cooperate with the Purchaser in this regard. The Company and the Stockholder
will take no actions which would disqualify the transaction from being treated
as a pooling of interests under applicable accounting rules and the Code.
9. MERGER OF PURCHASER AND THE COMPANY. Subject to the terms and conditions of
this Agreement, the Purchaser and the Company agree to effect the following
transactions at the Closing:
6.1 Conditions. The Purchaser and the Company will deliver to
the other appropriate evidence of the satisfaction of the conditions to their
respective obligations hereunder.
6.2 Merger. At the Closing, the Company will be merged with
and into the Purchaser pursuant to the provisions and with the effect provided
in the general corporation laws of the States of Maryland and Alabama. The
parties shall prepare and execute appropriate merger documents under the
corporate laws of Maryland and Alabama, containing the terms provided in this
Agreement, including a Certificate and Articles of Merger which shall be filed
with the Maryland State Department of Assessments and Taxation and with the
Alabama Secretary of State on the Effective Closing Date, or immediately
thereafter. The Purchaser shall be the surviving corporation in the Merger. Each
of Purchaser, the Company and the Stockholder do acknowledge that in executing
this Agreement, they do respectively adopt same as the plan of merger and
reorganization for Purchaser and the Company.
- 13 -
6.3 Conversion Amount; Conversion of the Company Shares. As a
result of the Merger and without any action by the holders thereof, all of the
shares of Company Common Stock issued and outstanding immediately prior to the
Merger and all rights in respect thereof, shall be converted into that number
shares of Purchaser Common Stock having a market value of $175,000.00, or such
other amount as the Purchaser and Stockholder shall mutually agree to in writing
at or prior to the Closing (the "Conversion Amount"). As a result of such
conversion, the Stockholder will receive the number of shares of Purchaser
Common Stock to be issued pursuant to the Merger, rounded to the nearest whole
share. In order to effect such conversion, (i) the Stockholder will deliver to
the Purchaser at the Closing certificates in due and proper form representing
the shares of Company Common Stock owned by such Stockholder, duly endorsed or
accompanied by duly executed stock powers, and (ii) the Purchaser shall deliver
to the Stockholder a certificate, in due and proper form, representing the
number of shares of Purchaser Common Stock to which such Stockholder is
entitled. Each share of Purchaser Common Stock issued pursuant to the Merger
shall be fully paid and non-assessable. For purposes of the foregoing, the
market value of the Purchaser Common Stock shall equal the average of the
closing prices reported by Commodity Systems, Inc. in Yahoo! Finance/Historical
Quotes for each of the fifteen (15) consecutive trading days ended and including
Tuesday, May 11, 1999.
6.4. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of the
stockholder's attorneys in Birmingham, Alabama, beginning at 9 a.m. on May 12,
1999, or at such other time and place as may be agreed upon in writing by the
Purchaser and the Stockholder (the "Closing Date"). The closing shall be
effective as of the close of business on April 30, 1999 (the "Effective Closing
Date").
7. CONDITIONS TO THE PURCHASER'S OBLIGATIONS. Unless waived by the
Purchaser in writing in its sole discretion, all obligations of the Purchaser
under this Agreement are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions:
7.1. Approvals of Governmental Authorities. All governmental
approvals necessary or advisable in the reasonable opinion of the Purchaser's
counsel to consummate the transactions contemplated by this Agreement shall have
been received and shall not contain any provision which, in the reasonable
judgment of the Purchaser, is unduly burdensome.
7.2 No Adverse Proceedings or Events. No suit, action or other
proceeding against the Company or the Purchaser, or their respective officers or
directors, or either of the Stockholder, shall be threatened or pending before
any court or governmental agency in which it will be, or it is, sought to
restrain or prohibit any of the transactions contemplated by this Agreement or
to obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby.
7.3. Consents and Actions; Contracts. All requisite consents
of any third parties and other actions which the Company has covenanted to use
its best efforts to obtain and take under Section 5.2 hereof shall have been
obtained and completed. All material contracts and agreements of the Company,
including, without limitation, all contracts and agreements listed on Section
2.6 of the Disclosure Schedule, shall be in full force and effect and shall not
be affected by the consummation of the transactions contemplated hereby.
- 14 -
7.4 Other Evidence. The Purchaser shall have received from the
Company and the Stockholder such further certificates and documents evidencing
due action in accordance with this Agreement, including certified copies of
proceedings of the Board of Directors and stockholders of the Company, as the
Purchaser reasonably shall request.
7.5 Current Financial Statements and Projections. The
Stockholder shall have provided, or caused the Company to have provided to
Purchaser the financial statements of the Company for the fiscal year ended June
30, 1998 showing a recurring EBIT of at least $40,000.00 for such year. Such
financial statements shall be prepared on an accrual basis, in accordance with
GAAP. "EBIT" means the Company's net recurring revenues minus all of its
recurring expense items (excluding any extraordinary and non-recurring items)
and depreciation and amortization, but excluding interest and taxes.
7.6 Resignation of Officers and Directors. Each and every
officer and director of the Company shall have resigned from any and all
positions with the Company as director, officer or employee effective as of
immediately prior to the Effective Closing Date.
7.7 Non-compete Agreement. The Purchaser and Stockholders
shall have entered into a Non-compete Agreement in substantially the form of
Exhibit A attached hereto.
7.8 Secretary's Certificate. The Company and the Stockholder
shall have delivered to Purchaser such proper and duly executed Consents,
Resolutions and Secretary's Certificates, as appropriate, evidencing the
approval of this Agreement and the Merger by the Company's directors and
stockholders, as required by law.
7.9 Termination of Sylvan License Agreements #2607 and 2609.
The Purchaser and the Company and the Stockholder shall have entered into a
Mutual Termination and Release, in substantially the same form shown in Exhibit
B attached hereto, covering Sylvan License Agreements #2607 and 2609.
7.13 Consulting Agreement. The Purchaser and each of Xxxxxx X.
Xxxxxxx and Xxxxx X. XxXxxx shall have entered into a Consulting Agreement in
substantially the same form of Exhibit C attached hereto.
7.14 Call Center Agreement. The Purchaser and Xxxxxx X.
Xxxxxxx shall have entered into a Call Center Agreement in substantially the
same form shown in Exhibit D attached hereto, covering Sylvan Learning Centers
#614, 615, 3012, and 3013.
- 15 -
8. CONDITIONS TO THE COMPANY'S AND THE STOCKHOLDER'S OBLIGATIONS.
Unless waived by the Company and the Stockholder, all obligations of the Company
and the Stockholder under this Agreement are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions:
8.1. No Adverse Proceedings or Events. No suit, action or
other proceeding against the Company or the Purchaser, or their respective
officers or directors, or the Stockholder, shall be threatened or pending before
any court or governmental agency in which it will be, or it is, sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the transactions contemplated hereby.
8.2. Consents and Actions. All requisite consents of any third
parties and other actions which the Purchaser has covenanted to use its best
efforts to obtain and take under Section 4.4 of this Agreement shall have been
obtained and completed.
8.6. Other Evidence. The Company and the Stockholder shall
have received from the Purchaser such further certificates and documents
evidencing due action in accordance with this Agreement, including certified
copies of proceedings of the Board of Directors of the Purchaser, as the Company
and the Stockholder reasonably shall request.
8.8 Secretary's Certificate. The Purchaser shall have
delivered to the Stockholder such proper and duly executed Secretary's
Certificates, as appropriate, evidencing the approval of this Agreement and the
Merger by the Purchaser's directors, as required by law.
8.5 Termination of Sylvan License Agreements #2607 and 2609.
The Purchaser and the Company and the Stockholder shall have entered into a
Mutual Termination and Release, in substantially the same form shown in Exhibit
B attached hereto, covering Sylvan License Agreements #2607 and 2609.
8.6 Consulting Agreement. The Purchaser and each of Xxxxxx X.
Xxxxxxx and Xxxxx X. XxXxxx shall have entered into a Consulting Agreement in
substantially the same form of Exhibit C attached hereto.
8.7 Call Center Agreement. The Purchaser and Xxxxxx X. Xxxxxxx
shall have entered into a Call Center Agreement in substantially the same form
shown in Exhibit D attached hereto, covering Sylvan Learning Centers #614, 615,
3012, and 3013.
- 16 -
9. INDEMNIFICATION.
9.1. Indemnification by the Stockholder. The Stockholder
hereby covenants and agrees to indemnify and hold harmless the Purchaser and its
respective successors and assigns, at all times from and after the date of
Effective Closing Date against and in respect of the following:
(i) any damage or loss resulting from any
misrepresentation, breach of representation or warranty or breach or
non-fulfillment of any agreement or covenant on the part of the Company or the
Stockholder under this Agreement, or from any inaccuracy or misrepresentation in
or omission from any certificate or other instrument or document furnished or to
be furnished by the Company or the Stockholder hereunder;
(ii) any liabilities or obligations of the Company or
the Stockholder for federal, state or local income tax or, to the extent not
accrued or reflected in the Financial Statements, any personal property, FICA,
withholding, excise, unemployment, sales or franchise taxes arising from
operations of the Company prior to the Effective Closing Date except as shown in
Schedule 5.1(c) and 5.1(g) of the Disclosure Schedule.
(iii) all claims, actions, suits, proceedings,
demands, assessments, judgments, costs, reasonable attorneys' fees and expenses
of any nature incident to any of the matters indemnified against pursuant to
this Section 9.1, including, without limitation, all such costs and expenses
incurred in the defense thereof or in the enforcement of any rights of the
Purchaser hereunder.
9.2. Notice and Defense. The Purchaser shall notify the
Stockholder of any asserted liability, damage, loss or expense claimed to give
rise to indemnification hereunder and the Stockholder shall have an initial
right to defend, compromise and settle such matter provided that the Purchaser
is fully protected from any liability, loss damage, cost or expense in
connection therewith. Within ten (10) days of receipt of such notice,
Stockholder shall respond in writing as to whether Stockholder will engage
counsel at Stockholder's expense to defend the claim. If Stockholder does not
respond, or affirmatively declines to defend the claim or disputes its
obligation to indemnify, the Purchaser shall then have, at its election, the
right to compromise or defend any such matter at the Stockholder's sole cost and
expense through counsel chosen by the Purchaser and reasonably acceptable to the
Stockholder; provided, however, that any such compromise or defense shall be
conducted in a manner which is reasonable and the Stockholder shall in all
events have a right to veto any such compromise or defense which might increase
the potential liability of, or create a new liability for, the Stockholder
(other than under Section 9.1). Each party agrees in all cases to cooperate with
the defending party and its or his counsel in the
- 17 -
compromise of or defending of any such liabilities or claims. In addition, the
non-defending party shall at all times be entitled to monitor such defense
through the appointment, at its or his own cost and expense, of advisory counsel
of its own choosing. As to any claim paid by the Purchaser for which the
Stockholder has indemnity liability under this Section 9, and which the
Stockholder does not reimburse Purchaser within five (5) days following demand
for reimbursement by Purchaser, Purchaser may, in addition to any other
remedies, (if such Stockholder is then an employee of Purchaser) offset the
amount of the Stockholder's liability on the claim paid against any compensation
payable to the Stockholder.
9.3. Indemnification by the Purchaser. From and after the
Closing Date, the Purchaser hereby covenants and agrees to indemnify and hold
harmless the Stockholder against and in respect of the following:
(i) any liability, loss, damage or expense resulting
from any misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of Purchaser under this Agreement, or from any
misrepresentation in or omission from any certificate or other instrument or
document furnished or to be furnished by the Purchaser hereunder; and
(ii) all claims, actions, suits, proceedings,
demands, assessments, judgments, costs, reasonable attorneys' fees and expenses
of any nature incident to any of the matters indemnified against pursuant to
this Section 9.3, including without limitation, all such costs and expenses
incurred in the defense thereof or in the enforcement of any rights of the
Stockholder hereunder.
The Stockholder shall notify the Purchaser of any asserted liability,
damage, loss or expense claimed to give rise to indemnification hereunder and
thereafter the Purchaser shall have the right to defend, compromise and settle
such matter provided that the Stockholder is fully protected from any cost or
expense in connection therewith. Within ten (10) days of receipt of such notice,
Purchaser shall respond in writing as to whether Purchaser will engage counsel
at Purchasher's expense to defend the claim. If Purchaser does not respond, or
affirmatively declines to defend the claim or disputes its obligation to
indemnify, the Shareholder shall then have, at its election, the right to
compromise or defend any such matter at the Purchaser's sole cost and expense
through counsel chosen by the Shareholder and reasonably acceptable to the
Purchaser; provided, however, that any such compromise or defense shall be
conducted in a manner which is reasonable and the Purchaser shall in all events
have a right to veto any such compromise or defense which might increase the
potential liability of, or create a new liability for, the Purchaser (other than
under Section 9.3). Each party agrees in all cases to cooperate with the
defending party and its or his counsel in the compromise of or defending of any
such liabilities or claims. In addition, the non-defending party shall at all
times be entitled to monitor such defense through the appointment, at its or his
own cost and expense, of advisory counsel of its own choosing.
- 18 -
10. SURVIVAL; LIMITATIONS.
10.4 Survival. The representations, warranties and agreements
made by the parties in this Agreement and in any other certificates and
documents delivered in connection herewith, including the indemnification
obligations of the Stockholder and Purchaser set forth in Section 9 hereof,
shall survive the Closing under this Agreement regardless of any investigation
made by the party making claim hereunder, except that, subject to the provisions
of the next sentence, neither the Purchaser, on the one hand, nor the
Stockholder, on the other, shall have any liability with respect to any matter
if notice of a claim has not been provided on or prior to April 30, 2001.
Notwithstanding the foregoing, (i) any indemnification obligations of the
Stockholder relating to federal, state or local tax matters or environmental
matters of any sort shall continue in full force and effect without limitation
until expiration of the statute of limitations applicable to such tax or
environmental matters, (ii) the representation and warranty contained in
Sections 2.1, 2.2 or 3.1 and any indemnification obligations of the Stockholder
in connection therewith shall continue in full force and effect until expiration
of the statute of limitations applicable thereto, (iii) any claims, actions or
suits the Purchaser, on the one hand, or the Company or the Stockholder, on the
other hand, may have which arises from any fraud or willful misconduct on the
part of the Stockholder or the Company, or any representative of either, on the
one hand, and the Purchaser or any representative of it, on the other hand,
shall continue in full force and effect without limitation until expiration of
the statute of limitations applicable thereto.
10.2 Limitations. No indemnified party shall be entitled to
indemnification hereunder until such time as a single loss or an aggregate of
several losses equals Five Thousand Dollars ($5,000), at which time such
indemnified party shall be entitled to indemnification for all losses sustained,
incurred, paid or required to be paid by such indemnified party in excess of the
$5,000; and in no event shall any party to this Agreement be entitled to
indemnification for a single loss or an aggregate of several losses which
exceeds the Conversion Amount.
11. REGISTRATION RIGHTS.
- 19 -
11.1 Registration Procedures and Expenses. Purchaser shall:
(a) as soon as practicable after the closing date but
in no event later than ninety (90) days after the closing date, prepare and file
with the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 which meets the requirements of Rule 415 promulgated under
the Securities Act (a "Shelf Registration Statement") covering the sale by the
Stockholder from time to time of all of the shares of the Purchaser Common Stock
received by the Stockholder in the Merger. The foregoing notwithstanding,
Purchaser shall have no obligation to file a Shelf Registration Statement or to
maintain the effectiveness of any previously filed Shelf Registration Statement
if the sale of the Purchaser Common Stock pursuant to exemption from
registration under Rule 144 is available to the Stockholder. Further, the
Purchaser may extend its obligation to file a registration statement if the
Purchaser advises the Stockholder that there is a pending, but unannounced
transaction or development which Purchaser determines is not then appropriate
for disclosure, and that registration of the Purchaser Common Stock would
require such disclosure.
(b) use its best efforts, subject to receipt of
necessary information from the Stockholder, to cause each of the Shelf
Registration Statements to become effective;
(c) prepare and file with the Commission such
amendments and supplements to the Shelf Registration Statements and the
prospectus used in connection therewith as may be necessary to keep the Shelf
Registration Statements effective until the earlier of the date on which the
Purchaser Common Stock registered by such Shelf Registration Statement has been
sold, or one year from the date of the initial filing thereof;
(d) during the period referred to in (c) above,
prepare and promptly file with the Commission, and promptly notify the
Stockholder of the filing of, such amendment or supplement to each such Shelf
Registration Statement and the prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to the
Purchaser Common Stock is required to be delivered under the Securities Act, any
event has occurred the result of which is that any such prospectus then in
effect would include or incorporate an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
- 20 -
(e) advise the Stockholder, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of any of such Shelf Registration
Statements or the initiation or threatening of any proceeding for that purpose
and promptly use its diligent best efforts to prevent the issuance of any stop
order and to obtain its withdrawal if such stop order should be issued;
(f) furnish to the Stockholder with respect to the
Purchaser Common Stock registered under any of the Shelf Registration Statements
such number of copies of prospectuses and preliminary prospectuses in conformity
with the requirements of the Securities Act and such other documents as the
Stockholder may reasonably request (but in no event more than 100 copies), in
order to facilitate the public sale or other disposition of all or any of the
registered Purchaser Common Stock by the Stockholder; provided, however, that
the obligation of Purchaser to deliver copies of prospectuses or preliminary
prospectuses to the Stockholder shall be subject to the receipt by Purchaser of
reasonable assurances from the Stockholder that the Stockholder will comply with
the applicable provisions of the Securities Act and of such other securities or
blue sky laws as may be applicable in connection with any use of such
prospectuses or preliminary prospectuses;
(g) file documents required of Purchaser for normal
blue sky clearance in states reasonably specified in writing by the Stockholder,
provided, however, that Purchaser shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented; and
(h) bear all expenses in connection with the
procedures in paragraphs (a) through (g) of this Section 11.1 and the
registration of the Purchaser Common Stock pursuant to each of the Shelf
Registration Statements, other than fees and expenses, if any, of counsel or
other advisers to the Stockholder.
- 21 -
11.2 Engagement of Underwriters. The parties hereto agree that
the Purchaser shall have no obligation to (i) conduct, arrange or coordinate any
distribution or sales activities on behalf of the Stockholder with respect to
the Purchaser Common Stock other than as set forth in Section 11.1 above or (ii)
retain any underwriter(s) in connection with the registration and/or
distribution of the Purchaser Common Stock pursuant to this Section 11. The
Stockholder agrees that any underwriter(s) or counsel engaged in connection with
the registration or distribution of the Purchaser Common Stock required to be
registered pursuant to this Section 11 will be retained by and at the sole
expense of the Stockholder and agrees further that any discounts or commissions
payable to such underwriter(s) shall also be an expense solely of the
Stockholder. In the event the Stockholder engages one or more underwriters
pursuant to this Section 11.2, the Stockholder shall enter into an underwriting
agreement with the managing or lead managing underwriter in the form customarily
used by such underwriter with such changes thereto as the parties thereto shall
agree; and, further, shall provide to such underwriter any documents or other
information as is necessary, in the underwriter's reasonable opinion, to
facilitate the effectiveness of the Shelf Registration Statement and the
completion of the distribution of the Purchaser Common Stock so registered.
11.3 Indemnification with respect to Shelf Registration
Statements. Purchaser hereby agrees to indemnify the Stockholder against
liability arising out of or based upon any untrue statement or alleged untrue
statement of material fact in any of the Shelf Registration Statements filed by
Purchaser pursuant hereto, or the omission or alleged omission to state or
incorporate by reference in such Shelf Registration Statements any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, other than any such statement included or incorporated
by reference in, or omitted from, such Shelf Registration Statements by
Purchaser in reliance upon and in conformity with written information furnished
to Purchaser specifically for use therein by or on behalf of the Stockholder.
The Stockholder hereby agrees to indemnify Purchaser against liability arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact included or incorporated by reference in the Shelf Registration
Statements or the omission or alleged omission to state or incorporate by
reference therein any material fact required to be stated therein or necessary
in order to make the statements therein not misleading, if such statement or
omission was made by Purchaser in reliance upon and in conformity with written
information furnished to Purchaser for use or incorporation by reference in such
Shelf Registration Statements.
12. CONFIDENTIALITY. After the date hereof, the Stockholder will hold
in confidence and not reveal to any third parties any knowledge or information
of a confidential nature with respect to the business, products, know-how and
methods of operation of the Company, and will not disclose, publish or make use
of the same, provided, however, that the foregoing shall not be applicable to
any disclosure or use of confidential information or knowledge that can be
demonstrated to have (i) been publicly known prior to the date of this
Agreement, (ii) become well known by publication or otherwise not due to the
unauthorized act or omission on the part of the Stockholder, or (iii) been
supplied to the Stockholder by a third party without violation of the rights of
the Company or the Purchaser or any other party. The parties agree that the
remedy at law for any breach by the Stockholder of this Section 12 shall be
inadequate and that the aggrieved party shall be entitled to injunctive relief
in addition to any other remedy.
- 22 -
13. EXPENSES. Each party to this Agreement shall pay all of its
expenses relating hereto, including legal and accounting fees and disbursements
of its counsel, accountants and financial advisors, whether or not the
transactions hereunder are consummated. If said transactions are consummated, it
is expressly understood that the Stockholder will bear, and will not cause the
Company to pay, any legal fees or other expenses incurred by Company in
connection with the transactions contemplated by this agreement, as well as the
cost of furnishing the audited and reviewed Company Financial Statements
referred to in Section 2.4; provided, however, that in the event of any
litigation between the parties hereto relating to or arising from this
Agreement, the prevailing party in such litigation shall be entitled to payment
by the non-prevailing party of all reasonable attorney's fees and costs.
14. NOTICES. Except as otherwise provided herein, all notices,
requests, demands and other communications under or in connection with this
Agreement shall be in writing, and, (a) if to the Purchaser, shall be addressed
to:
General Counsel
Sylvan Learning Systems, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Xx., Esquire
Piper & Marbury
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(b) if to the Company or the Stockholder, shall be addressed to:
Xxxxxx X. Xxxxxxx Xxxxx X. XxXxxx
0000 Xxx Xxxxxxxxxxxx Xxxx 000 Xxxxxxx Xxxxxx
- 00 -
Xxxxxxxxx, Xxxxxxx 00000 Xxxxxxxxxxxx, Xxxxxxx 00000
with a copy to:
H. Xxxxxx Xxxxx, Esq.
x/x Xxxx xxx Xxxxxx, XXX
Xxxxx 000 XxxxxXxxxx Xxxxx
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
All such notices, requests, demands or communications shall be mailed
postage prepaid, certified mail, return receipt requested, or by overnight
delivery or delivered personally, and shall be sufficient and effective when
delivered to or received at the address so specified. Any party may change the
address at which it is to receive notice by like written notice to the other.
15. ENTIRE AGREEMENT. This Agreement (including the exhibits hereto and
the lists, schedules and documents delivered pursuant hereto, which are a part
hereof) is intended by the parties to and does constitute the entire agreement
of the parties with respect to the transactions contemplated by this Agreement.
This Agreement supersedes any and all prior understandings, written or oral,
between the parties, and this Agreement may be amended, modified, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of the amendment, modification, waiver, discharge or
termination is sought.
16. GENERAL. The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns, but nothing herein, express or implied, is
intended to or shall confer any rights, remedies or benefits upon any person
other than the parties hereto. This Agreement may not be assigned by any party
hereto. This Agreement shall be construed in accordance with and governed by the
laws of the State of Maryland.
IN WITNESS WHEREOF, the Purchaser, the Company and the Stockholder have
caused this Agreement to be duly executed and their respective seals to be
hereunto affixed as of the date first above written.
WITNESS: SYLVAN LEARNING SYSTEMS, INC.
__________________________ By:_____________________________
- 24 -
Name: O. Xxxxxx Xxxxx
Title: Vice President
WITNESS: THE EMERALD COAST CORPORATION
__________________________ By:___________________________________
Name: __________________________
[Corporate Seal]
Title: ___________________________
WITNESS: STOCKHOLDER:
Southeast Learning Systems, Inc.
___________________________ By:___________________________(Seal)
Xxxxx X. XxXxxx, President
WITNESS: STOCKHOLDER:
___________________________ ___________________________(Seal)
Xxxxxx X. Xxxxxxx
WITNESS: STOCKHOLDER:
___________________________ ___________________________(Seal)
Xxxxx X. XxXxxx
- 25 -
Schedule to
Agreement and Plan of Reorganization between
Sylvan Learning Systems, Inc.
Schedule 2.3 - Transactions with Affiliates - None
Schedules 2.4 - Material Adverse Changes - None
Schedule 2.5 - Taxes - None
Schedule 2.6 - Agreements
(i indebtedness for money borrowed - None
(ii)officer/employee compensation, plans, benefits - None (iii)
contracts for purchase of materials, services, etc.
a. Cooperative advertising agreement with Advertising Accounts, Inc.
(iv) contracts not in ordinary course - None
(v) contracts containing restrictions on Company's operations - None
(vi) real property leases:
d. Premises leased: 0000 Xxxxxxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
Square Footage: 1,503
Landlord: Xxxxxxx Properties, LLC
Lease Date: March 1, 1996
Expiration Date: July 31, 2001
e. Premises leased: 0000 Xxxxxxx 00 Xxxx, Xxxxx X, Xxxxxxx, Xxxxxxx
Square Footage: 1,400
Landlord: Allstate Life Insurance Company
Lease Date: April 22, 1997
Expiration Date: November 14, 2002
(vii) other material contracts - None
Schedule 2.7 - Property
(i) real property owned or leased - see schedule 2.6(vi) (ii)
tangible personal property - None (iii) intellectual property -
None
Schedule 2.8 - Legal Proceedings - None
Schedule 2.9 - Licenses/Permits - None
Schedule 2.10 - Bank Accounts
(i) checking account #00000000 at SouthTrust Bank
Schedule 2.11 - Insurance:
(i) Monumental Life Insurance Company
Policy Number ALWC 8706-01 (Worker's Compensation)
Policy Number ALEL 008706-1 (Bodily Injury)
(ii) American States Insurance Company
Policy Number 01-CD-357013-8 (Commercial Property/Liability
/Automobile)
Schedule 2.12 - Employee matters/Plans/Benefits - None
Schedule 2.13
(ii) Bonuses paid/Compensation increases since 12/31/98 - None other
than regular monthly bonuses paid to staff.
(iii) - Dividends declared or paid since 12/31/98 - None
Schedule 2.20 - Employees holding Sylvan certification:
(i) Xxxx Xxxxxxxx Exec. Director 1998 2607
(ii) Xxxxxxx Xxxxxx CD 1996 2607
- 26 -
Schedule 3.1
Stockholders # Shares owned Percentage of shares
------------ ------ -----
Southeast Learning Systems, Inc. 1,500 100%
Schedule 5.1 (c) - (i) the Company's notes and other liabilities
not being paid at or prior to
Closing - None
(iii) accrued employee compensation, etc. - None
Schedule 5.1 (g) - Trade payables and liabilities not paid current through
Closing -
EXHIBITS
Exhibit A - Noncompete Agreement Form
Exhibit B - Mutual Termination and Release Form
Exhibit C - Consulting Agreement Form
Exhibit D - Call Center Agreement Form
- 27 -
