INTEREST PURCHASE AGREEMENT
This Interest Purchase Agreement (this
“Agreement”), is made and entered into as of the
16th day of December 2009 by and among
Educational
Investors, Inc., a
Delaware corporation (“EII”); TD Management,
Inc., a Delaware
corporation (“TD”); Xxxxxx X.
Xxxxxx, an individual
(“Monaco”); and Florham Consulting
Corp., a Delaware
corporation (“Florham”). EII, TD, Monaco
and Florham are hereinafter sometimes individually referred to as a “Party” and collectively
referred to as the “Parties.”
RECITALS:
A. EII
desires to purchase from TD and Monaco all of the outstanding membership
interests of Training Direct
LLC, a Connecticut limited liability company (the “Company”).
B. 100%
of the issued and outstanding membership interests of the Company (the “Subject Interests”) are owned
by TD and Monaco, and each of TD and Monaco own of record and beneficially 50%
of the outstanding Subject Interests.
C. TD
and Monaco are willing to sell the Subject Interests to EII upon the terms and
subject to the conditions hereinafter set forth.
D. Upon
consummation of the purchase of the Subject Interests, the Company will become a
wholly-owned direct subsidiary of EII.
E. Upon
consummation or shortly following the consummation of the Subject Interests, EII
will become a direct wholly-owned subsidiary of Florham upon consummation of the
Reverse Merger (as defined below).
NOW, THEREFORE, in
consideration of the mutual covenants, agreements, representations and
warranties contained in this Agreement, the parties hereto agree as
follows:
DEFINITIONS
As used
in this Agreement, the following terms shall have the meanings set forth
below:
“Affiliate” shall mean any
Person who is an “affiliate” as defined in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
“Articles of Organization”
means the Articles of Organization of the Company, as filed with the Secretary
of State of the State of Connecticut, including all amendments
thereto.
“Business Day” shall mean any
day, excluding Saturday, Sunday and any other day on which national banks
located in New York, New York shall be closed for business.
“By-laws” means the By-laws of
EII or its successor in interest after the consummation of the Reverse Merger,
including all amendments thereto.
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“Certificate of Incorporation”
means the Certificate of Incorporation of Florham (to be renamed Educational
Investors Corp., or such other name as shall be acceptable to EII), after
the consummation of the Reverse Merger, as filed with the Secretary of State of
the State of Delaware, including all amendments thereto.
“Closing Date” shall mean the
date upon which the purchase and sale of the Subject Interests shall be
consummated.
“Common Stock” means the shares
of common stock of Florham after the consummation of the Reverse Merger
authorized for issuance pursuant to the Certificate of
Incorporation.
“Consulting Agreement” means
the Consulting Agreement, dated as of the Closing Date, between EII and Xxxxxx
Xxxxxx, in the form attached hereto as Exhibit
A, as may be amended, restated, supplemented or modified from time to
time in accordance with the terms therein.
“Discounted VWAP” means seventy
percent (70%) of the VWAP of the Common Stock of Florham, but in any event not
less than $0.40 per share.
“Dollar” and “$” means lawful money of the
United States of America.
“EII” means Educational
Investors, Inc., a Delaware corporation.
“EII Option Holders” means the
collective reference to Xxxxxx X. Xxxxxx and Xxxx Xxxxxx.
“EII Stockholders” means the
collective reference to Sanjo Squared LLC and Kinder Investments
LP.
“Employment Agreement” means
the Employment Agreement, dated as of the Closing Date, between the Company and
Xxxxx Xxxxxx, in the form attached hereto as Exhibit
B, as may be amended, restated, supplemented or modified from time to
time in accordance with the terms therein.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
“Florham” means Florham
Consulting Corp., a Delaware corporation whose shares of Common Stock trade on
the FINRA Over-the-Counter Bulletin Board.
“Florham Warrants” means
warrants entitling the holder(s) to purchase an aggregate of 930,000 shares of
Florham Common Stock at an exercise price of $0.05 per share that are currently
issued and outstanding.
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“GAAP” means generally accepted
accounting principles in the United States of America as promulgated by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board or any successor institutes concerning the treatment of any
accounting matter.
“Governmental Authority” means
the government of any nation, state, city, locality or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
“Knowledge” means the knowledge
after reasonable inquiry.
“Liabilities” means direct or
indirect indebtedness, liability, claim (including, without limitation, any
claim by a third party), loss, damage, deficiency, obligation or responsibility,
known or unknown, fixed or unfixed, liquidated or unliquidated, secured or
unsecured, accrued or absolute, contingent or otherwise, including, without
limitation, any liability on account of Taxes or any governmental charge or
lawsuit.
“Lien” means any mortgage, deed
of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or
other) or preference, priority, right or other security interest or preferential
arrangement of any kind or nature whatsoever (excluding preferred stock and
equity related preferences).
“Losses” means all Liabilities,
Taxes, Liens, expenses (including reasonable fees, disbursements and other
charges of counsel).
“Material Adverse Effect” with
respect to any Person, entity or group of entities means any event, change or
effect that has or would have a materially adverse effect on the financial
condition, business, results of operations or prospects of such entity or group
of entities, taken as a consolidated whole.
“National Securities Exchange”
means the collective reference to the New York Stock Exchange, the NYSE
Alternext Exchange, the Nasdaq Stock Exchange, the FINRA OTC Bulletin Board or
any other recognized national securities exchange in the United
States.
“Operating Agreement” means the
Operating Agreement of the Company that is or will be in effect as at the
Closing Date, and in the form of Exhibit
C annexed hereto and made a part hereof, including all amendments
thereto.
“Person” means any individual,
firm, corporation, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, limited liability company,
Governmental Authority or other entity of any kind, and shall include any
successor (by merger or otherwise) of such entity.
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“Purchase Price” means One
Million One Hundred Thousand Dollars ($1,100,000), which shall be payable in
accordance with the provisions of Section 1.3 of this
Agreement.
“Requirements of Law” means, as
to any Person, any law, ordinance, regulation, statute, treaty, rule, right,
privilege, qualification, license or franchise or inspection, order, judgment,
injunction, award, decree or determination of an arbitrator or a court or other
Governmental Authority or stock exchange, in each case applicable or binding
upon such Person or any of its or his property or to which such Person or any of
its or his property is subject or pertaining to any or all of the transactions
contemplated or referred to herein.
“Reverse Merger” shall have the
meaning described in Section 1.5 of this
Agreement.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.
“Sellers” means, collectively,
TD and Monaco, and pursuant to Section 1.1(a) Xxxxx Xxxxxx.
“Stock Option Agreements” means
the Stock Option Agreements, dated August 20, 2009, between EII and each of
Xxxxxx X. Xxxxxx and Xxxx Xxxxxx.
“Subsidiary” of any Person
means another Person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its board of directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first Person.
“Subject Interests” means 100%
of the issued and outstanding membership interests of the Company.
“Tax” means: (i) any income,
alternative or add-on minimum tax, gross receipts tax, sales tax, use tax, ad
valorem tax, transfer tax, franchise tax, profits tax, license tax, withholding
tax, payroll tax, employment tax, excise tax, severance tax, stamp tax,
occupation tax, property tax, environmental or windfall profit tax, custom, duty
or other tax, impost, levy, governmental fee or other like assessment or charge
of any kind whatsoever together with any interest or any penalty, addition to
tax or additional amount imposed with respect thereto by any Governmental
Authority responsible for the imposition of any such tax (domestic or foreign);
(ii) any liability for the payment of any amounts of the type described in
clause (i) above as a result of being a member of an affiliated, consolidated,
combined or unitary group for any taxable period, and (iii) any liability for
the payment of any amounts of the type described in clauses (i) or (ii) above as
a result of any express or implied obligation to indemnify any other
person.
“Tax Return” means any return,
declaration, form, claim for refund or information return or statement relating
to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
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“Trading Day” means any day on
which the New York Stock Exchange or other National Securities Exchange on which
the Common Stock trades is open for trading.
“Transaction Documents” means,
collectively, this Agreement, the Consulting Agreement and the Employment
Agreement.
“VWAP” means a fraction, the
numerator of which is the sum of the product of (i) the closing trading price
for the Common Stock on the applicable National Securities Exchange for each
Trading Day during such twenty day period and (ii) the volume of the Common
Stock on the applicable National Securities Exchange for each such day, and the
denominator of which is the total volume of the Common Stock on the applicable
National Securities Exchange during such twenty day period, each as reported by
Bloomberg Reporting Service or other recognized stock market price reporting
service.
SECTION
1. PURCHASE AND SALE OF THE SUBJECT SHARES
1.1 Sale of the Subject
Interests.
(a) Immediately
prior to the Closing Date, each of Monaco and TD shall amend the Operating
Agreement to admit Xxxxx Xxxxxx (“Xxxxxx”) as a member and each
of Monaco and TD shall assign five (5%) percent of their individual Subject
Interests to Xxxxxx. Accordingly, as at the Closing Date, (i) Monaco
shall own forty-five percent (45%) of the Subject Interests, TD shall own
forty-five percent (45%) of the Subject Interests and Xxxxxx shall own ten
percent (10%) of the Subject Interests, and (ii) Xxxxxx shall be deemed to be
one of “Sellers” pursuant to this Agreement.
(b) On
the Closing Date and subject to and upon the terms and conditions of this
Agreement, the Sellers shall sell, assign,
transfer and exchange to EII all, and not less than all, of the Subject
Interests, consisting of 100% of the outstanding membership interests of the
Company at the Closing Date.
(c) On
the Closing Date, the Sellers shall cause the Operating Agreement to be amended
in order to reflect the admission of EII as the new sole member of the Company
and the withdrawal of the Sellers as members thereof.
1.2 Payment of Purchase
Price. EII shall equally pay to the Sellers (on a pro rata
ownership basis) the Purchase Price, against delivery of the Subject Interests,
as follows.
(a) $200,000
cash (the “Cash
Portion”), which shall be paid by wire transfer of immediately available
funds to bank accounts designated by the Sellers prior to the Closing
Date;
(b) A
number of shares of Common Stock of Florham having a deemed value of $600,000
(the “Acquisition
Shares”), with such number of Acquisition Shares to be determined by
dividing $600,000 by the Discounted VWAP for the twenty (20) Trading Days
immediately following the date of consummation of the Reverse Merger (as defined
below), which Acquisition Shares shall be issued to the Sellers not later than
three Business Days after determination of the Discounted VWAP;
and
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(c) A
number of shares of Common Stock of Florham having a deemed value of $300,000
(the “Escrow Shares”),
with such number of Escrow Shares to be determined by dividing $300,000 by the
Discounted VWAP for the twenty (20) Trading Days immediately following the date
of consummation of the Reverse Merger (as defined below), which Escrow Shares
shall be held in escrow and released therefrom according to the terms of Section 1.3
below.
1.3 Escrow
Shares. 50% of the Escrow Shares shall be released to the
Sellers in the event that the Tier I Options (as such term is defined in the
Stock Option Agreements) become exercisable. The remaining 50% of the
Escrow Shares shall be released to the Sellers in the event that the Tier II
Options (as such term is defined in the Stock Option Agreements) become
exercisable. The release of the Escrow Shares shall occur not later than three
Business Days after the conditions specified in this Section 1.3 have been
met. If the Escrow Shares are not released from escrow by March 31,
2015, then they shall be cancelled and contributed to the Company’s
treasury.
1.4 Closing. The
closing of the sale and purchase of the Subject Interests (the “Closing”) will
take place at the offices of Xxxxxxx Xxxx LLP, at its office at 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, within five (5) Business Days following the delivery
of satisfaction or waiver of the conditions precedent set forth in Section 4 or
at such other date as EII and the Sellers shall agree (the “Closing Date”), but in no
event shall the Closing Date occur later than December 31, 2009, unless such
date shall be extended by mutual agreement of EII and the Sellers. It
is anticipated that the Closing shall take place simultaneous with or promptly
following the closing of the Reverse Merger transaction described in Section 1.5
below.
1.5 Reverse
Merger.
(a) Simultaneous
with the date of execution of this Agreement, Florham and the EII Stockholders
and EII Optionholders entered into an agreement and plan of merger in the form
of Exhibit
D annexed hereto (the “Reverse Merger
Agreement”). Such Reverse Merger Agreement contemplates the
merger of a newly formed Delaware subsidiary of Florham (“Mergerco”) with and into EII,
with EII as the surviving corporation of such merger (the “Reverse Merger”).
(b) Upon
consummation of the Reverse Merger (i) EII shall become a wholly-owned
subsidiary of Florham, and (ii) the EII Stockholders and EII Optionholders shall
own, in the aggregate, ninety-five (95%) percent of the fully-diluted Florham
Common Stock as at the effective time of the Reverse Merger (A) after giving
effect to the full exercise of the Florham Warrants and the exercise or
conversion into Florham Common Stock of any other securities of Florham that are
then exercisable for or convertible into Florham Common Stock), but (B) before
giving effect to the issuance of the Acquisition Shares and the Escrow
Shares issued to the Sellers pursuant to this Agreement.
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(c) Consummation
of the transactions contemplated by the Reverse Merger Agreement and the Reverse
Merger shall occur immediately prior to the Closing under this Agreement and the
consummation of the transactions contemplated hereby.
SECTION
2. REPRESENTATIONS AND
WARRANTIES CONCERNING THE
SELLERS AND THE
COMPANY.
Each of the Sellers hereby represents
and warrants to EII and Florham, jointly and severally, as follows:
2.1 Representations Concerning
the Sellers.
(a) Each
Seller has the power to enter into this Agreement and the Transaction Documents
and to perform his or its obligations hereunder and thereunder. The
execution and performance of this Agreement and the Transaction Documents will
not constitute a material breach of any agreement, indenture, mortgage, license
or other instrument or document to which such Seller is a party and will not
violate any Requirements or Law applicable to such Seller or his or its
properties. The execution and performance of this Agreement and the
Transaction Documents will not violate or conflict with any provision of the
articles of organization or operating agreement of TD.
(b) As
at the date of this Agreement and the Closing Date, the Sellers are the record
and beneficial owner of all, and not less than all, of the Subject Interests.
The Subject Interests are owned of record and beneficially by the Sellers free
and clear of all Liens, and have not been sold, pledged, assigned or otherwise
transferred except pursuant to this Agreement. There are no
outstanding subscriptions, rights, options, warrants or other agreements
obligating the Company to issue, sell or transfer any membership interests or
other equity securities or any securities exercisable, convertible or
exchangeable into such equity securities, or any options, warrants or rights
with respect to any of the foregoing, except for the option previously granted
by TD to Xxxxx Xxxxxx to purchase 20% of the Subject Interests currently held by
TD, which shall be cancelled as of the Closing.
(c) This
Agreement and the Transaction Documents have been duly executed and delivered by
each Seller, and constitutes the legal, valid and binding obligations of each
Seller, enforceable against such Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(d) Except
for the approval of the Department of Higher Education of the State of
Connecticut (the “Department of
Higher Education”), which approval shall be obtained by Sellers and the
Company on or before the Closing, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance by, or enforcement against, the Sellers of this
Agreement and the Transaction Documents.
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2.2 Organization and Good
Standing; Authorization. The Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Connecticut and has all requisite power and authority to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in each case as it is currently engaged.
The execution, delivery and performance by the Company of this Agreement and
each of the other Transaction Documents and the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action of the
Company.
2.3 Consents; Binding
Effect.
(a) Except
for the approval of the Department of Higher Education, which approval shall be
obtained by the Sellers and the Company on or before the Closing, no approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Company of this Agreement and the other Transaction Documents or
the transactions contemplated hereby and thereby.
(b) This
Agreement and each of the other Transaction Documents have been duly executed
and delivered by the Company, and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
2.4 Financial Statements, Books
and Records.
(a) Schedule 2.4 consists
of the audited financial statements (balance sheet, income statement, statements
of cash flows and owners equity and notes thereto) of the Company as of December
31, 2007 and December 31, 2008 and for the fiscal years then ended, and the
unaudited consolidated balance sheet and statement of income of the Company for
the comparative nine (9) month periods ended September 30, 2009 and September
30, 2008 (collectively, the “Financial
Statements”).
(b) To
the extent that the above Financial Statements are not audited by a firm
certified by the Public Company Accounting Oversight Board (“PCAOB”), if required by the
Securities and Exchange Commission or applicable rules or regulations under the
Securities Act of 1933, as amended or the Securities and Exchange Act of 1934,
as amended, the Company will have such Financial Statements reaudited by a PCAOB
certified firm prior to the Closing Date.
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(c) The
Financial Statements fairly represent the financial position of the Company as
at such dates and the results of their operations for the periods then
ended. The Financial Statements were prepared in accordance with GAAP
applied on a consistent basis with prior periods except as otherwise stated
therein.
(d) All
accounts, books and ledgers of the Company have been properly and accurately
kept and completed in all material respects on a basis consistent with those of
preceding accounting periods, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein. The books
and records fairly and correctly set out and disclose, in all material respects,
the current financial position and condition of the Company. All financial
transactions involving the Company have been accurately recorded in the books
and records and all such transactions represent actual, bona fide
transactions.
2.5 Subsidiaries, Partnerships,
Joint Ventures. The
Company does not have any Subsidiaries and does not own of record or
beneficially, directly or indirectly, (i) any shares of capital stock or
securities convertible into capital stock of any other corporation or (ii) any
participating interest in any partnership, joint venture, limited liability
company or other non-corporate business enterprise and does not control,
directly or indirectly, any other entity.
2.7 No Material Adverse
Changes. Except as otherwise described on Schedule 2.6 hereto,
since December 31, 2008 there has not been:
(a) any
material adverse change in the financial position of the Company, except changes
arising in the ordinary course of business, which changes will in no event
materially and adversely affect the financial position of the
Company;
(b) any
damage, destruction or loss materially affecting the assets, prospective
business, operations or condition (financial or otherwise) of the Company
whether or not covered by insurance;
(c) any
declaration, setting aside or payment of any dividend or distribution with
respect to any redemption or repurchase of the membership interests of the
Company;
(d) any
sale of an asset (other than in the ordinary course of business) or any mortgage
or pledge by the Company of any properties or assets; or
(e) any
adoption of a pension, profit sharing, retirement, stock bonus, stock option or
similar plan or arrangement.
2.8 Taxes. The
Company has timely filed, or has caused to be timely filed on its behalf, all
applicable Tax Returns required to be filed by it, and all such Tax Returns are
true, complete and accurate, except to the extent any failure to file or any
inaccuracies in any filed Tax Returns, individually or in the aggregate, have
not had and would not reasonably be expected to have a Material Adverse Effect
on the Company. All Taxes shown to be due on such Tax Returns, or
otherwise owed, has been timely paid, except to the extent that any failure to
pay, individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company
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2.9 Compliance with
Laws. The Company has complied with all Requirements of Law
applicable to it or its business which, if not complied with, would have a
Material Adverse Effect on the Company.
2.10 No
Breach. The execution, delivery and performance of this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby will not:
(a) violate
any provision of the Articles of Organization or Operating
Agreement;
(b) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time, or both
constitute) a default under any contract or other agreement to which the Company
is a party or by or to which it or any of its assets or properties may be bound
or subject or result in the creation of any Lien on the assets or properties of
the Company; or
(c) violate
any Requirements of Law against, or binding upon, the Company or upon the
properties or business of the Company or applicable to the transactions
contemplated herein.
2.11 Actions and
Proceedings. The Company is not a party to any material
pending litigation or, to its knowledge, any governmental investigation or
proceeding not reflected in the Financial Statements, and to the Knowledge of
the Sellers, no material litigation, claims, assessments or non-governmental
proceedings is threatened against the Company.
2.12 Agreements. Schedule 2.12 sets
forth each material contract or arrangement to which the Company is a party
or by or to which it or its assets, properties or business are bound or subject.
Each such contract or arrangement: (a) is a valid and binding agreement, (b) is
in full force and effect, and (c) neither the Company nor, to the Knowledge of
the Sellers, any other party thereto is in breach or default (whether with or
without the passage of time or the giving of notice or both) under the terms of
any such contract or arrangement. The Company has not assigned, delegated, or
otherwise transferred any of its rights or obligations with respect to any such
contracts or arrangements, or granted any power of attorney with respect
thereto. The Sellers have given a true and correct fully executed copy of each
material contract or arrangement to EII.
2.13 Real
Estate. The Company owns no real property. With
respect to any leasehold agreement entered into by the Company: (a) such
agreement is valid and enforceable by the Company with respect to the other
party thereto, (b) such agreement has not been altered or amended and is in full
force and effect, and (c) all payments required to be made by the Company have
been paid. The Company is not in default in meeting any of its
obligations under such agreement, no event exists which but for the passage of
time or the giving of notice, or both, would constitute a default of the Company
under such agreement no party to such agreement has claimed any default by the
Company or is taking action purportedly based on such a
default.
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2.14 Intellectual
Property. The Company has or has rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar rights (the “Intellectual Property
Rights”) that are necessary or material for use in connection with its
businesses and which the failure to so have could, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect
on the Company. The Company has not received a written notice that
such Intellectual Property Rights used by it violates or infringes upon the
rights of any person. To the knowledge of the Sellers, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
person of any of such Intellectual Property Rights.
2.15 Tangible
Assets. The Company has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures, projects,
owned or leased by the Company, any related capitalized items or other
tangible property material to the business of the Company (the “Tangible
Assets”). The Company holds all right, title and
interest in all the Tangible Assets owned by it as set forth on the Financial
Statements or acquired by it after the date of the Financial Statements free and
clear of all Liens. All of the Tangible Assets are in good operating
condition and repair and are usable in the ordinary course of business of the
Company.
2.16 Liabilities. The
Company does not have any Liabilities which are not fully, fairly and adequately
reflected on the Financial Statements. As of the Closing, the
Company will not have any Liabilities, other than Liabilities fully and
adequately reflected on the Financial Statements, including (a) trade payables
incurred in the ordinary course of business, (b) up to $10,000 in a bank credit
line secured by Company receivables and other assets, and (c) a lien on recently
acquired Company equipment and furniture having a purchase price of
approximately $60,000.
2.17 Operations of the
Company. From December 31, 2008 through the Closing Date,
except as disclosed on Schedule 2.17 or the
Financial Statements, the Company has not and will not have:
(a) declared
or paid any dividend or declared or made any distribution of any kind to any
shareholder, or made any direct or indirect redemption, retirement, purchase or
other acquisition of any shares in its membership interests;
(b) except
in the ordinary course of business, incurred or assumed any indebtedness or
liability (whether or not currently due and payable);
(c) disposed
of any assets except in the ordinary course of business;
(d) materially
increased the annual level of compensation of any executive
employee;
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(e) adopted,
increased, terminated, amended or otherwise modified any plan for the benefit of
its employees; or
(f)
issued any equity securities or rights to acquire
such equity securities.
2.18 Permits. The
Company has all material permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit it to own or lease
its properties and to conduct its business as presently conducted (the
“Permits”); all such Permits are in full force and effect and, to the Knowledge
of the Company, no suspension or cancellation of any such Permit is threatened
or will result from the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents or the transactions contemplated
hereby and thereby.
2.19 Employment
Matters. The Company has complied in all material respects
with all applicable Requirements of Law relating to employment or
labor. No present or former employee, officer or director of the
Company has, or shall have at the Closing Date, any claim against the Company
for any matter including, without limitation, for wages, salary, vacation,
severance, or sick pay except for the same incurred in the ordinary course of
business for the last payroll period prior to the Closing Date. There is no: (a)
charge or complaint against the Company alleging a violation of any Requirements
of Law relating to employment or labor, including any charge or complaint filed
with the National Labor Relations Board or any comparable Governmental
Authority, (b) pending labor strike, slowdown, work stoppage or other material
labor trouble affecting the Company and there has not been any of the forgoing
during the past three years; material labor grievance pending against the
Company, (c) pending representation question respecting the employees of the
Company, or (d) pending arbitration proceeding arising out of or under any
collective bargaining agreement to which the Company is a party. In
addition, to the Knowledge of the Sellers: (i) none of the matters specified in
clauses (a) through (d) above is threatened against the Company; (ii) no union
organizing activities have taken place with respect to the Company; and (iii) no
basis exists for which a claim may be made under any collective bargaining
agreement to which the Company is a party. The Company maintains a
health insurance plan, but does not offer or participate in any other employment
benefit plans.
2.20 Insurance. The
Company has in effect insurance of the type and amount customary for the conduct
of its business and has paid all insurance policy premiums due and has otherwise
performed all of its obligations under each insurance policy to which it is a
party. Copies of all such insurance policies have been furnished to
EII.
2.21 Brokers or
Finders. No broker’s or finder’s fee will be payable by the
Company in connection with the transactions contemplated by this
Agreement.
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2.22 Securities Law
Matters. The shares of Common Stock to be acquired by the
Sellers are being issued pursuant to an exemption from the registration
requirements of the Securities Act and are being acquired for the account of the
Sellers and with no intention of distributing or reselling such securities or
any part thereof in any transaction that would be in violation of the
registration requirements of the Securities Act and applicable state securities
laws. Each Seller understands that if he or it should in the future
decide to dispose of any of such shares of Common Stock, he or it may do so only
in compliance with the registration requirements of the Securities Act and
applicable state securities laws, as then in effect. Each Seller
agrees to the imprinting, so long as required by law, of a legend on
certificates representing all of its shares of Common Stock to the following
effect:
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE. THE
SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.”
2.23 Full
Disclosure. No representation or warranty by the Sellers in
this Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished by the Sellers pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of the Company.
SECTION
3. REPRESENTATIONS AND WARRANTIES of EII and
FLORHAM
Each of
EII and Florham hereby severally (and not jointly and severally) represent and
warrant to the Sellers as follows; it being expressly understood and agreed
that: (i) all representations and warranties of EII shall, to the extent
relevant, apply only to the capitalization, business, assets, financial
conditions and prospects of EII (and not Florham), and (ii) all representations
and warranties of Florham shall, to the extent relevant, apply only to the
capitalization, business, assets, financial conditions and prospects of Florham
(and not EII) :
3.1 Organization and Good
Standing. Each of EII and Florham are a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in each
case as it is currently engaged. The execution, delivery and
performance by each of EII and Florham of this Agreement and each of the other
Transaction Documents and the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action of EII and
Florham.
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3.2 Binding Effect;
Consents.
(a) This
Agreement and each of the other Transaction Documents have been duly executed
and delivered by EII and Florham, and constitute the legal, valid and binding
obligations of each of EII and Florham, enforceable against EII and Florham in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in
equity).
(b) Except
for the approval of the Department of Higher Education which approval shall be
obtained by the Sellers and the Company on or before the Closing, no approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, EII or Florham of this Agreement and the other Transaction Documents or
the transactions contemplated hereby and thereby.
3.3 Capitalization.
(a) As
of the date of this Agreement, EII is authorized to issue 20,000,000 shares of
common stock. An aggregate of 16,667,000 shares of EII common stock are issued
and outstanding. Except for the Stock Option Agreements and except as
contemplated by this Agreement, there are no outstanding subscriptions, rights,
options, warrants or other agreements obligating EII to issue, sell or transfer
any shares of EII common stock or other equity securities or any securities
exercisable, convertible or exchangeable into such equity securities, or any
options, warrants or rights for common stock. The record and
beneficial owners of the 16,667,000 issued and outstanding shares of EII common
stock as of the date hereof are set forth on Annex A to the Reverse Merger
Agreement.
(b) As
of the date of this Agreement, Floham is authorized to issue 12,000,000 shares
of capital stock, consisting of (i) 2,000,000 shares of preferred stock, $0.0001
par value per share, none of which are issued and outstanding, and (ii)
10,000,000 shares of Florham Common Stock, of which (A) 166,700 shares of
Florham Common Stock are currently issued and outstanding, and (B) the Florham
Warrants are currently issued and outstanding.
3.4 SEC
Reports. Florham has timely filed and is current in its
filing of all Form 10-K, Form 10-Q, Form 8-K and other periodic reports
(collectively, the “SEC
Reports”) it is required to file with the Securities and Exchange
Commission (“SEC”) under
the Exchange Act. To its Knowledge, none of the SEC Reports
filed by Florham are currently being reviewed by the SEC and Florham has not
received any letter of comments from the SEC that it has not, as yet, fully
responded to.
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3.5 Compliance with
Laws. Each of EII and Florham has complied with all
Requirements of Law applicable to it or its business which, if not complied
with, would have a Material Adverse Effect on EII or Florham.
3.6 Actions and
Proceedings. Neither EII nor Florham is a party to any
material pending litigation or, to its knowledge, any governmental investigation
or proceeding, and to its Knowledge, no material litigation, claims, assessments
or non-governmental proceedings is threatened against it.
3.7 No
Breach. The execution, delivery and performance of this
Agreement and the Transaction Documents by EII and Florham and the consummation
of the transactions contemplated hereby and thereby will not:
(a) violate
any provision of their respective Certificates of Incorporation or
By-laws;
(b) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time, or both
constitute) a default under any contract or other agreement to which EII or
Florham is a party or by or to which it or any of its assets or properties may
be bound or subject or subject or result in the creation of any Lien on the
assets or properties of EII or Florham; or
(c) violate
any Requirements of Law against, or binding upon, EII or Florham or
upon their respective properties or business or applicable to the transactions
contemplated herein.
3.8 Issuance of
Shares. The Acquisition Shares and Escrow Shares have been
duly authorized by all necessary corporate action on the part of Florham, and,
upon issuance in accordance with the terms hereof, shall be validly issued and
free from all Taxes, Liens and charges with respect to the issue thereof and the
such Acquisition Shares and Escrow Shares shall be fully paid and nonassessable
with the holder being entitled to all rights accorded to a holder of Common
Stock.
3.9 Brokers or
Finders. No broker’s or finder’s fee will be payable by EII or
Florham in connection with the transactions contemplated by this
Agreement.
3.10 Full
Disclosure. No representation or warranty by EII or Florham in
this Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished by EII or Florham pursuant hereto or in connection with the
negotiation, execution or performance of this Agreement contains or will contain
any untrue statement of a material fact or omits or will omit to state any fact
necessary to make any statement herein or therein not materially misleading or
necessary to complete and correct presentation of all material aspects of the
business of EII or Florham.
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3.11 Department of Higher
Education Approval. To the best Knowledge of EII and
Florham, there exist no facts or circumstances attributable to either of EII or
Florham, which could reasonably be expected to have a negative impact on the
Sellers’ and Company’s ability to obtain the requisite consent from the
Department of Higher Education required to enable the Company to continue its
current business and operations following the Closing.
SECTION
4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to the
Obligations of the Sellers. All obligations of the
Sellers under this Agreement are subject to the fulfillment, prior to or as of
the Closing Date, as indicated below, of each of the following conditions, any
of which may be waived by the Sellers:
(a) The
Secretary of EII shall have delivered to the Sellers a certificate, duly
executed by such Person and certifying, that to the best of such Person’s
knowledge and belief, (i) that the attached copies of the Certificate of
Incorporation, the By-laws, and resolutions of the board of directors of EII
approving this Agreement and each of the other Transaction Documents and the
transactions contemplated hereby and thereby, are all true, complete and correct
and remain unamended and in full force and effect and (ii) as to the incumbency
and specimen signature of each officer of EII executing this Agreement, each
other Transaction Document and any other document delivered in connection
herewith on behalf of EII.
(b) The
representations and warranties by or on behalf of EII contained in this
Agreement or in any certificate or document delivered pursuant to the provisions
hereof shall be true in all material respects at and as of Closing Date as
though such representations and warranties were made at and as of such
time.
(c) EII
shall have performed and complied in all material respects, with all covenants,
agreements, and conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or complied with or
executed and delivered by it prior to or at the Closing.
(d) An
executive officer of EII shall have delivered to the Sellers a certificate, duly
executed by such Person and certifying, that to the best of such Person’s
knowledge and belief, the representations and warranties of EII set forth in
this Agreement are true and correct in all material respects, and that EII has
performed and complied, in all material respects, with all covenants, agreements
and conditions contained herein required to be performed or complied with by it
prior to or at the Closing Date.
(e) Prior
to the Closing, the Sellers and the Company shall have obtained the written
consent of the Department of Higher Education.
(f) EII
shall have duly executed and delivered the Employment Agreement and the
Consulting Agreement.
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(g) There
shall be no pending or threatened litigation which could call into question the
validity of the transactions contemplated by this Agreement.
(h) EII
shall have paid in full the Cash Portion of the Purchase Price for the Subject
Interests.
(i) Florham,
EII and the EII Stockholders and EII Optionholders shall have duly executed the
Reverse Merger Agreement and shall have consummated the Reverse
Merger.
(j) EII
shall have reimbursed the Sellers in the amount of $2,200, which represents the
$2,000 non-refundable application fee and $200 non-refundable application fee
the Sellers previously paid to the Education Department in
connection.
(k) EII
shall have submitted a $40,000 Irrevocable Letter of Credit, issued by a bank
with its main office or branch located within the State of Connecticut, to the
Department of Higher Education.
(l)
All corporate and other proceedings to be taken by EII
and Florham in connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Sellers and their counsel, and the Sellers and their counsel
shall have received all such counterpart originals or certified or other copies
of such documents as they reasonably may request.
4.2 Conditions Precedent to the
Obligations of EII. All obligations of EII and Florham under
this Agreement are subject to the fulfillment, prior to or at Closing, of each
of the following conditions, any of which may be waived by both EII and
Florham:
(a) The
Secretary of the Company shall have delivered a certificate, duly executed by
such Person and certifying, that to the best of such Person’s knowledge and
belief, (i) that the attached copies of the Articles of Organization, the
Operating Agreement, and resolutions of the managing members of the Company
approving this Agreement and the transactions contemplated hereby, are all true,
complete and correct and remain unamended and in full force and effect and (ii)
as to the incumbency and specimen signature of each officer of the Company
executing this Agreement and any other document delivered in connection herewith
on behalf of the Company.
(b) The
representations and warranties by or on behalf of the Sellers and the Company
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of
Closing Date as though such representations and warranties were made at and as
of such time.
(c) The
Sellers and the Company shall have performed and complied in all material
respects, with all covenants, agreements, and conditions set forth in, and shall
have executed and delivered all documents required by this Agreement to be
performed or complied with or executed and delivered by them prior to or at the
Closing.
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(d) The
Sellers and an executive officer of the Company shall have delivered a
certificate, duly executed by such Person and certifying, that to the best of
such Person’s knowledge and belief, the representations and warranties of the
Sellers and the Company set forth in this Agreement are true and correct in all
material respects, and that the Sellers and the Company have performed and
complied, in all material respects, with all covenants, agreements and
conditions contained herein required to be performed or complied with by them
prior to or at the Closing Date.
(e) Prior
to the Closing, the Sellers and the Company shall have obtained the written
consent of the Department of Higher Education and all other consents and
approvals, if any, required to be obtained from any other Governmental
Authorities and third parties in order to consummate the transactions
contemplated hereby.
(f) Xxxxxx
X. Xxxxxx and Xxxxx Xxxxxx shall have duly executed and delivered the Employment
Agreement and the Consulting Agreement, respectively.
(g) The
Sellers shall have duly executed and delivered a counterpart signature page to
the Stockholders Agreement of EII.
(h) Xxxxx
Xxxxxx shall have executed and delivered an instrument terminating his right to
receive any of the Subject Interests.
(i) There
shall be no pending or threatened litigation which could call into question the
validity of the transactions contemplated by this Agreement.
(j) Each
of Florham and EII shall, in their sole and reasonable discretion, be satisfied
with the results of its business, accounting, tax and legal due diligence
investigation of the Company, including comfort that the Company’s (i) income
before taxes for the year ending December 31, 2009 will not be materially less
than $140,000 (after giving effect to the annualized compensation provided in
the Consulting Agreement) and (ii) tangible net worth will not be materially
less than $165,000 at Closing.
(k) As
of the Closing, the Company will not have any Liabilities, other than
Liabilities fully and adequately reflected on the Financial Statements,
including (a) trade payables incurred in the ordinary course of business, (b) up
to $10,000 in a bank credit line secured by Company receivables and other
assets, and (c) a lien on recently acquired Company equipment and furniture
having a purchase price of approximately $60,000.
(l) The
Sellers shall have tendered the Subject Interests to EII.
(m) All
conditions to the consummation of the Reverse Merger shall have been satisfied
or waived by the party for whose benefit such condition was
provided.
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(n) All
corporate and other proceedings to be taken by the Sellers and the Company in
connection with the transactions contemplated hereby and all documents incident
thereto shall be satisfactory in form and substance to EII and Florham and their
respective counsel, and EII, Florham and their counsel shall have received all
such counterpart originals or certified or other copies of such documents as
they reasonably may request.
SECTION
5. COVENANTS
5.1 Exclusivity. In
order to induce EII and Florham to incur the effort and expense of due diligence
examinations and analysis, the Company and the Sellers hereby, jointly and
severally, agree that none of them will elicit, discuss, explore, entertain or
consider any possible sale of all or any part of the Company’s securities or
assets or any other change in control of the Company or its assets with any
other person, or provide any information to any other person, other than such
ordinary course of such business operations in circumstances where none of them
has any reason to believe that such information may be used to evaluate a
possible purchase or sale of some or all of the Company’s assets or
securities.
5.2 Conduct of
Business. From the date of this Agreement to the Closing, the
Company shall operate its business in the ordinary course consistent with past
practices and shall use its best efforts to maintain the goodwill of its
employees, customers and other interested parties. Notwithstanding
the above, unless otherwise required by the terms of this Agreement
or agreed to in writing by EII and Florham, the Company shall not (i)
make any distributions to its members, (ii) enter into any agreements or
transactions not in the ordinary course of business, (iii) enter into any
agreements or transactions with any of its employees, officers, directors,
managers, members, affiliates or any related party to any of the foregoing, or
(iv) enter into any agreement or transaction described in Section 2.17 of this
Agreement.
5.3 Corporate Examinations and
Investigations. The Company and the Sellers will permit EII,
its representatives, accountants and counsel, to conduct an investigation and
evaluation of the Company and, in connection therewith, will provide such
assistance to such Persons as is reasonably requested. EII and its
representatives, subject
to the approval of the Company (which approval shall not be unreasonably
withheld), shall be
permitted to contact and communicate with the Company’s bankers, accountants,
attorneys, key personnel and other advisors on request. EII will similarly
permit the Company, its representatives, accountants and counsel, to conduct an
investigation and evaluation of EII and, in connection therewith, will provide
such assistance to such Persons as is reasonably requested. The
Company and its representatives, subject to the approval of EII (which approval
shall not be unreasonably withheld), shall be permitted to contact and
communicate with EII’s bankers, accountants, attorneys, key personnel and other
advisors on request.
5.4 Change of Ownership; Further
Assurances.
(a) The
Parties shall execute such documents and other papers and take such further
actions as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby. Each such Party
shall use its best efforts to fulfill or obtain the fulfillment of the
conditions to the Closing, including, without limitation, the execution and
delivery of any documents or other papers, the execution and delivery of which
are necessary or appropriate to the Closing.
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(b) Prior
to Closing, the Sellers shall notify the Department of Higher Education and any
other relevant Governmental Agencies of the change in ownership contemplated by
this Agreement. The Sellers shall use their collective best efforts
(but without being required to make any personal expenditures or incur any
personal liability) to obtain the consent of the Department of Higher Education
to this Agreement and consummation of the transactions contemplated hereby and
pursuant to the Reverse Merger Agreement.
(c) The
Company shall, at its expense, prepare and deliver the Financial Statements set
forth in Section
2.4 of this Agreement. To the extent additional financial statements are
required in order to effect the transactions contemplated herein or in
connection with the Reverse Merger, the Company’s auditors shall prepare and
provide them to EII and Florham at the Company’s expense. In
addition, the Company and its counsel shall assist EII, Florham and their
counsel in the preparation of the Form 8-K and other filings required in
connection with the Reverse Merger.
5.5 Confidentiality. Each
of the Company, the Sellers, Florham and EII agree not to make or permit to be
made any public disclosure of the existence of the terms of this Agreement
without the prior written consent of the others, except as otherwise required by
Requirements of Law or as advised by legal counsel, except to their respective
advisors and attorneys; provided, however, such obligation shall not apply to
information which:
(a) at
the time of the disclosure was public knowledge;
(b) is
required to be disclosed publicly pursuant to any applicable federal or state
securities laws;
(c) after
the time of disclosure becomes public knowledge (except due to the action of the
receiving party); or
(d) the
receiving party had within its possession at the time of
disclosure.
5.6 Expenses. The
Company and the Sellers, on the one hand, and EII and Florham, on the other
hand, will bear all of respective costs and expenses (including, but not limited
to, fees and expenses of legal counsel, accountants, and other representatives
and consultants) in connection with the transactions contemplated
hereby
5.7 Post-Closing
Covenants. Each of the Parties hereto shall use their best
efforts to comply with the following post-closing covenants:
(a) Board of
Managers. On and after the Closing, the
Board of Managers of the Company shall consist of four (4) Persons, being (a)
Xxxxxx X. Xxxxxx, (b) Xxxxxx X. Xxxxxx, (c) Xxxx Xxxxxx, and (d) Xxxxx Xxxxxx
(the “Board of
Managers”).
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(b) Filings. The
Parties shall use all commercially reasonable efforts promptly to make all
filings with the Department of Higher Education and any and all other
educational Governmental Agencies necessary to carry out the Company’s current
business and operations and the Sellers and EII shall cooperate in good faith to
share information and documents required to complete such filings;
(c) Company Employees and
Consultants. For
a period of not less than one (1) year following the Closing, to continue to
employ all or substantially all of the Company’s employees providing full-time
service to the Company as of the Closing (subject to the Company’s continued
satisfaction with the performance of such employees) and permit the Company to
continue to honor the terms of such employees’ employment agreement, as well as
any other employee benefit related agreement currently in effect between such
employee and the Company. In addition, in each instance that the
issue of a Company employee’s term of service is called into question, the
period of service by such employee with the Company prior to the Closing shall
be credited, to the extent permitted by applicable law and applicable tax
qualification requirements, and subject to any generally applicable break in
service or similar rules. In addition to the foregoing, the Company
shall honor all of the terms and conditions of the Employment Agreement and
Consulting Agreement.
(d) Conduct of Company
Business. Subject
at all times the right of the Board of Managers of the Company to manage its
business, following the Closing, EII and Florham shall permit the Company to
carry on its business in the ordinary course consistent with past practice,
including the obligation to maintain:
(i) the
current business operations of the Company as an ongoing business and preserve
its goodwill, in accordance with past custom and practice;
(ii) the
Company in good standing with the Department of Higher Education and other
Government Agencies with which the Company currently maintains such
standing;
(iii) marketing
and student recruiting efforts in the ordinary course, consistent with past
practice; and
(iv) all
school records, continue and perform the obligation of the Company to teach all
students who have not completed their programs, and continue to issue tuition
refunds, all as required under Applicable Laws and consistent with the Company’s
past practices.
(e) Organizational
Documents. So long as the business and operations of the
Company remain profitable, the organizational documents of the Company will not
be amended or modified in a manner that would materially change the nature of
the business and operations of the Company as presently
conducted.
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SECTION
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding
any right of either Party to investigate the affairs of the other Party, each
Party has the right to rely fully upon representations, warranties, covenants
and agreements of the other Party contained in this Agreement or in any document
delivered to one by the other or any of their representatives, in connection
with the transactions contemplated by this Agreement. All such
representations, warranties, covenants and agreements shall survive the
execution and delivery hereof and the closing hereunder for twelve (12) months
following the Closing, except for the representations and warranties of the
Sellers set forth in Section 2.1(a), (b) and (c) of this Agreement, which shall
survive indefinitely.
SECTION
7. INDEMNIFICATION; DISPUTE RESOLUTION;
NON-COMPETITION.
7.1 Indemnification by the
Sellers.
(a) From
and after the Closing, the Sellers shall jointly and severally indemnify and
hold harmless EII, Florham and their directors, officers, employees, agents,
stockholders and Affiliates (collectively, the “Purchasing Parties”) from and
against any and all Losses finally awarded arising out of, resulting from or in
any way related to: (i) a breach by the Sellers or the Company of any of their
representations and warranties contained herein, or (ii) the failure to perform
or satisfy, when due, any of the covenants and agreements made by the Sellers or
the Company in this Agreement or in any other document or certificate delivered
by the Sellers or the Company at the Closing pursuant hereto.
(b) Notwithstanding
the foregoing, the indemnification obligations of the Sellers under Section
7.1(a)(i) above shall not be applicable to Losses incurred by EII Parties which
shall be in excess of the Purchase Price (the “Indemnity Cap”); provided,
that there shall be no Indemnity Cap with respect to the matters contemplated by
Section 7.1(a)(ii) above or for any breach of the provisions of Section 2.1 (a),
(b) or (c) of this Agreement, and such indemnity obligations shall survive
indefinitely. Any payment made to any Purchasing Party pursuant to
the indemnification obligations under this Section 7.1 shall constitute a
reduction in value of the Purchase Price paid pursuant to this
Agreement.
7.2 Indemnification by EII and
Florham.
(a) From
and after the Closing, EII and Florham shall severally (not jointly) indemnify
and hold harmless the Sellers and their respective managers, officers,
employees, agents, members and Affiliates (collectively, the “Sellers Parties”) from and
against any and all Losses finally awarded arising out of, resulting from or in
any way related to: (i) a breach by EII or Florham, as the case may be, of their
several representations and warranties contained herein, or (ii) the failure to
perform or satisfy, when due, any of the covenants and agreements made by EII or
Florham in this Agreement or in any other document or certificate delivered by
EII or Florham at the Closing pursuant hereto. Notwithstanding the
foregoing, in no event shall EII be liable to indemnify the Sellers Parties for
any representation or warranty of Florham contained in this Agreement, and in no
event shall Florham be liable to indemnify the Sellers Parties for any
representation or warranty of EII contained in this Agreement
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(b) Notwithstanding
the foregoing, the indemnification obligations of EII and Florham under Section
7.2(a)(i) above shall not be applicable to Losses incurred by the Seller Parties
which shall be in excess of the Purchase Price (the “Indemnity Cap”); provided,
that there shall be no Indemnity Cap with respect to the matters contemplated by
Section 7.2(a)(ii) above or for any breach of the provisions of Section 3.1 and
Section 3.2(a) of this Agreement, and such indemnity obligations shall survive
indefinitely. Any payment made to any Seller Party pursuant to the
indemnification obligations under this Section 7.2 shall constitute an increase
in value of the Purchase Price paid pursuant to this Agreement.
(c) In
the event that any claim for Losses shall be asserted against any of the Seller
Parties for which EII and/or Florham is liable to indemnify against pursuant to
this Section 7.2, EII and Florham shall have the sole right to conduct, at its
expense, the defense of any and all such claims with counsel of its choosing,
and shall have the sole right to effect any financial settlement of any such
claims for Losses; provided, however, that if any such settlement would result
in any injunction or restrictions on the Seller Parties, or otherwise require
any of the Seller Parties to pay any ongoing royalties or other payments to any
Person, no such settlement may be effected by EII or Florham without
the prior written consent of the Sellers.
SECTION
8. MISCELLANEOUS
8.1 Waivers. The
waiver of a breach of this Agreement or the failure of any Party hereto to
exercise any right under this Agreement shall in no way constitute waiver as to
future breach whether similar or dissimilar in nature or as to the exercise of
any further right under this Agreement.
8.2 Amendment. This
Agreement may be amended or modified only by an instrument of equal formality
signed by the Parties or the duly authorized representatives of the respective
Parties.
8.3 Assignment. This
Agreement is not assignable except by operation of law.
8.4 Notice. Until
otherwise specified in writing, the mailing addresses and fax numbers of the
parties of this Agreement shall be as follows:
To the Sellers or the
Company:
Training Direct LLC
0000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx
Attn: Xxxxxx X. Xxxxxx,
President
Fax: (203) ________
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with a
copy to (which shall not constitute notice):
Leser, Hunter, Taubman &
Taubman
00 Xxxxx Xxxxxx, Xxxxx
0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx, P.C.
Fax: (000)
000-0000
Email: xxx@xxxxxxx.xxx
To EII:
Educational Investors,
Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx,
President
Fax: (000) 000
0000
Email: xxxxxxxx@xxx.xxxx.xxx
with a
copy to (which shall not constitute notice):
Xxxxxxx Xxxx, LLP
0000 Xxxxxxxx, 00xx
Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx,
Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxx.xxx
To Florham:
00 Xxxxxx Xxxxxx, Xxxxx
000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx,
President
(000) 000-0000
with a
copy to (which shall not constitute notice):
Xxxxxxxx Xxxxxx, Esq.
00 Xxxx Xxxxxx
0xx
Xxxxx
Xxx Xxxx, XX 00000
Fax: 000 000 0000
Email: xxxxxxxxxxxxxx@xxxxxxx.xxx
Any notice or statement given under
this Agreement shall be deemed to have been given if sent by registered
mail addressed to the other party at the address indicated above or at such
other address which shall have been furnished in writing to the
addressor.
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8.5 Governing
Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law of any jurisdiction. All actions and
proceedings arising out of or relating to this agreement shall be brought by the
parties and heard and determined only in a federal or state court located in the
Borough of Manhattan in the City and State of New York and the parties hereto
consent to jurisdiction before and waive any objections to the venue of such
federal and New York courts. The parties hereto agree to accept service of
process in connection with any such action or proceeding in any manner permitted
for a notice hereunder.
8.6 Waiver of Jury
Trial. Each Party acknowledges and agrees that any controversy
which may arise under this Agreement is likely to involve complicated and
difficult issues, and therefore each such Party hereby irrevocably and
unconditionally waives any right such Party may have to a trial by jury in
respect of any litigation directly or indirectly arising out of or relating to
this Agreement, or the transactions contemplated by this Agreement. Each Party
certifies and acknowledges that (a) no representative, agent or attorney of any
other Party has represented, expressly or otherwise, that such other Party would
not, in the event of litigation, seek to enforce the foregoing waiver, (b) each
Party understands and has considered the implications of this waiver, (c) each
Party makes this waiver voluntarily, and (d) each Party has been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 8.6.
8.7 Publicity. No
publicity release or announcement concerning this Agreement or the transactions
contemplated hereby shall be issued by either party hereto at any time from the
signing hereof without advance approval in writing of the form and substance by
the other party.
8.8 Entire
Agreement. This Agreement (including the schedules to be
attached hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, written or oral, with respect
hereof.
8.9 Headings. The
headings in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
8.10 Severability of
Provisions. The invalidity or unenforceability of any term,
phrase, clause, paragraph, restriction, covenant, agreement or provision of this
Agreement shall in no way affect the validity or enforcement of any other
provision or any part thereof.
8.11 Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed, shall constitute an original copy hereof, but all of which together
shall consider but one and the same document.
8.12 PDF and Facsimile
Signatures. This
Agreement and the other Transaction Documents may be executed and delivered with
electronic pdf or facsimile signatures of the respective Parties; each of which
shall have the same validity as original signatures hereto.
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8.13 Binding
Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
8.14 Press Releases and
Filings. The Parties will mutually agree as to the wording and
timing of any informational releases concerning this transaction prior to and
through Closing.
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IN WITNESS WHEREOF, the
parties have executed this Agreement on the date first above
written.
|
SELLERS:
|
|
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/s/ Xxxxxx X. Xxxxxx
|
|
|
XXXXXX
X. XXXXXX
|
|
|
TD
MANAGEMENT, INC.
|
|
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By:
|
/s/ Xxxx Xxxxxx
|
|
Name:
Xxxx Xxxxxx
|
|
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Title:
|
|
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EII:
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|
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EDUCATIONAL
INVESTORS, INC.
|
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By:
|
/s/ Xxxxxx X. Xxxxxx
|
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Name:
Xxxxxx X. Xxxxxx
|
|
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Title:
Chief Executive Officer
|
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FLORHAM:
|
|
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By:
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/s/ Xxxxx Xxxxxxx
|
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Name:
Xxxxx Xxxxxxx,
|
|
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Title:
President
|
|
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ACCEPTED
AND AGREED TO:
|
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/s/ Xxxxx Xxxxxx
|
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XXXXX
XXXXXX
|
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