EXHIBIT 2.7
PROVISIONS CONCERNING PURCHASE AND SALE OF REAL ESTATE
THESE PROVISIONS CONCERNING PURCHASE AND SALE OF REAL ESTATE (this
"AGREEMENT") is entered into as of October 17, 1996, by and among XXXXX BUSINESS
COLLEGE, INC., a Colorado corporation, XXXXXXXX COLLEGE OF DENVER, INC., a
Colorado corporation, and XXXXXXXX EDUCATIONAL GROUP OF CENTRAL FLORIDA, INC., a
Florida corporation, (each a "SELLER" and collectively "SELLERS"), XXXXXXXX
COLLEGES, INC., a Mississippi corporation ("XXXXXXXX" and, together with
Sellers, "SELLING PARTIES") and CORINTHIAN COLLEGES, INC., a Delaware
corporation ("BUYER"). (Sellers, Xxxxxxxx and Buyer are sometimes referred to
collectively herein as the "PARTIES.") All initially capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the Master
Asset Purchase Agreement dated October 17 1996, by and between Buyer, as buyer,
and Selling Parties, as seller, (the "MASTER PURCHASE AGREEMENT") and the
Schools Acquisition Agreement dated October 17 1996, by and between Buyer's
affiliates, namely Xxxxxx Colleges, Inc. ("XXXXXX") and Florida Metropolitan
University, Inc. ("FMU"), as buyer, and Selling Parties, as seller, (the
"SCHOOLS AGREEMENT"). (The Master Purchase Agreement and the Schools Agreement
are sometimes referred to collectively herein as the "ASSET PURCHASE
AGREEMENTS.")
R E C I T A L S
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A. Under the Asset Purchase Agreements, Buyer, Xxxxxx and FMU have agreed
to buy and Selling Parties have agreed to sell certain intangible assets and
personal property used by Selling Parties in operating post-secondary,
vocational training schools ("SCHOOLS").
X. Xxxxxxx, each of which is a subsidiary of Xxxxxxxx, are the fee simple
owners of those tracts of real property commonly known as the Xxxxx Xxxxxx
College Tract, the Parks College-Denver North Tract, the Parks College-Denver
South Tract, the Orlando College-Melbourne Tract, and the Tampa College-Main
Tract (each a "TRACT" and collectively the "TRACTS"). The legal description of
each Tract, and the identity of the respective owner of each Tract, are set
forth on Schedule 1 to this Agreement.
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C. The Tracts are improved with certain buildings and other improvements
(collectively the "IMPROVEMENTS") as to which Sellers hold fee simple title and
that comprise, generally
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speaking, buildings and facilities utilized in the operation of the particular
Schools located on and associated with the Tracts.
D. The term "PROPERTY" as used herein refers to a Tract, together with
all rights, privileges, easements, rights of way, mineral and water rights and
other appurtenances to such Tract; all Improvements thereon; all fixtures of a
permanent nature currently affixed to the Tract or its Improvements; and all of
the respective Seller's right, title and interest as lessor in all leases or
rental agreements affecting a Property under which the respective Seller of such
Property or Xxxxxxxx is lessor (collectively, the "LEASES"). (The term
"PROPERTIES" as used herein refers to each Property collectively.)
E. In connection with the transaction to be consummated under the Asset
Purchase Agreements, Buyer and Sellers desire, respectively, to buy and sell the
Properties on the terms and conditions set forth in this Agreement.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing Recitals, and in further
consideration of the mutual covenants, agreements and conditions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Selling Parties agree as
follows:
1. AGREEMENT TO PURCHASE AND SELL. Each Seller hereby agrees to sell,
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convey and assign its respective Property or Properties to Buyer, and Buyer
hereby agrees to buy and accept the Properties from Sellers, under the terms and
conditions and for the purchase price hereinafter set forth.
2. PURCHASE PRICE. The purchase price to be paid at the Close of Escrow
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by Buyer to each Seller for each Seller's respective Property (each an
"INDIVIDUAL REAL PROPERTY PURCHASE PRICE" and collectively the "AGGREGATE REAL
PROPERTY PURCHASE PRICE") is set forth below:
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INDIVIDUAL REAL
PROPERTY PURCHASE
SELLER TRACT PRICE
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Xxxxx Business Xxxxx Xxxxxx $ 633,600
College, Inc. College Tract
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Xxxxxxxx College of Parks College- $ 880,000
Denver, Inc. Denver North Tract
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Xxxxxxxx College of Parks College- $ 960,000
Denver, Inc. Denver South Tract
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Xxxxxxxx Xxxxxxx College- $ 640,000
Educational Group Melbourne Tract
of Central Florida,
Inc.
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Xxxxxxxx Tampa $1,080,000
Educational Group College-Main
of Central Florida, Tract
Inc.
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Aggregate Real Property Purchase Price
(before adjustment for Seller Cost Credit
and TFC Adjustment): $4,193,600
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Each Individual Real Property Purchase Price (as adjusted for the Seller Cost
Credit and a pro rata share of the $800,000 credit pursuant to the TFC
Adjustment (as defined in the Asset Purchase Agreements)) shall be paid by Buyer
to the applicable Seller at the Close of Escrow. The terms and conditions of
payment of the Individual Real Property Purchase Prices (as so adjusted) are
completely and particularly described in the Real Property Purchase Money Notes
and the Purchase Money Mortgages (both as hereafter defined).
3. INTENTIONALLY OMITTED.
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4. INTENTIONALLY OMITTED.
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5. CONTINGENT RIGHTS AND OBLIGATIONS. Buyer's right and obligation to
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purchase the Properties, Sellers' rights and
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obligations to sell the Properties and the remainder of Parties' rights and
obligations under this Agreement shall be subject to the contingency, which is
hereby agreed to be a condition precedent to the Close of Escrow, that the Tier
I Closing must take place pursuant to the Asset Purchase Agreements. If for any
reason, except for a breach of the Asset Purchase Agreements by a Selling Party,
the Tier I Closing does not occur, Buyer shall have no right to purchase and
Sellers shall have no obligation to sell the Properties under this Agreement.
If for any reason, except for a breach of the Asset Purchase Agreements by
Buyer, Xxxxxx or FMU, the Tier I Closing does not occur, Sellers shall have no
right to sell and Buyer shall have no obligation to buy the Properties under
this Agreement. The foregoing shall not limit the right of any of the Parties
to recover damages arising out of the breach of this Agreement or the Asset
Purchase Agreements by any other person or entity.
6. ESCROW.
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A. ESCROW HOLDER. An escrow for the purchase and sale of the
Properties (the "ESCROW") shall be established with First American Title
Insurance Company , 000 Xxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx, (the "ESCROW
HOLDER").
B. OPENING OF ESCROW. The Escrow shall be deemed open (the "OPENING
OF ESCROW") as of the date of this Agreement.
C. ESCROW INSTRUCTIONS. This Agreement, together with such further
instructions, if any, as the Parties shall provide to Escrow Holder by
mutually executed written agreement, shall constitute the escrow
instructions to the Escrow Holder. The General Provisions of Escrow Holder
attached hereto as Schedule 2 are incorporated herein by reference. In the
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event of any conflict between the General Provisions of Escrow Holder
attached as Schedule 2 and the provisions of this Agreement, the provisions
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of this Agreement shall control.
D. SELLER DEPOSITS INTO ESCROW. As a condition precedent to the
Close of Escrow in favor of Buyer, Sellers shall deliver or cause to be
delivered to Escrow Holder, in a timely manner (that is, to permit the
closing of the transaction contemplated hereunder by the Close of Escrow),
the following:
I. A duly executed and acknowledged special warranty deed for
each Property in the form attached hereto as Schedule 3 (for the
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Properties in Colorado) or Schedule 4 (for the Properties in Florida)
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(collectively the "DEEDS").
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II. A duly executed assignment of leases, in the form attached
hereto as Schedule 5, assigning to Buyer the entire right, title and
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interest of any of the Selling Parties, as lessor, under the Leases
(the "LEASE ASSIGNMENT").
III. A duly executed Non-Foreign Affidavit for each Seller in
the form attached hereto as Schedule 6 (collectively the "NON-FOREIGN
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AFFIDAVITS").
IV. Any executed, acknowledged or other documents reasonably
required by the Title Company or Escrow Holder to consummate this
transaction.
E. BUYER DEPOSITS INTO ESCROW. As a condition precedent to the Close
of Escrow in favor of Sellers, Buyer shall deliver or cause to be delivered
to Escrow Holder, in a timely manner (that is, to permit the closing of the
transaction contemplated hereby by the Close of Escrow), the following:
I. An amount, in cash or immediately available funds, equal to
all sums required for costs or prorations to be paid by Buyer pursuant
to the terms of this Agreement. At the Close of Escrow, Buyer shall
receive a credit in an amount equal to all costs and prorations to by
paid by Sellers hereunder (the "SELLER COST CREDIT"). The Seller Cost
Credit shall be allocated to the Individual Real Property Purchase
Price of the Properties giving rise to such cost or proration. Any
item comprising the Seller Cost Credit that is not specifically
allocable to a Property shall be allocated to the Individual Real
Property Purchase Prices of all Properties in proportion to their
respective Individual Real Property Purchase Prices.
II. A duly executed promissory note, in the form of Schedule 7
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(for Properties in Colorado) or Schedule 8 (for Properties in
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Florida), payable to the Seller of each Property in the original
principal amount of the Individual Real Property Purchase Price for
each Property (subject to reduction by a portion of the Seller Cost
Credit and by a pro rata share of the $800,000 credit pursuant to the
TFC Adjustment) (each a "REAL PROPERTY PURCHASE MONEY NOTE" and
collectively the "REAL PROPERTY PURCHASE MONEY NOTES").
III. A duly executed and recordable real property security
interest covering each Property, in the form attached hereto as
Schedule 9 (for Properties in Colorado) or Schedule 10 (for Properties
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in Florida) (each a "PURCHASE MONEY MORTGAGE" and collectively the
"PURCHASE MONEY MORTGAGES").
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IV. The duly executed Lease Assignment to evidence Buyer's
acceptance thereof and Buyer's assumption of all of Sellers'
obligations arising or accruing under the Leases from and after the
Close of Escrow.
V. A duly executed change of ownership statement for each
Property if required by applicable law in Colorado or Florida
(collectively, the "CHANGE OF OWNERSHIP STATEMENTS").
VI. Any executed, acknowledged or other documents reasonably
required by the Title Company or Escrow Holder to consummate this
transaction.
Notwithstanding Sections 6(e)(ii) and (iii) above, Buyer may in its
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sole and absolute discretion deposit (or cause its lender to deposit) into
Escrow an amount in cash or immediately available funds equal to the Aggregate
Real Property Purchase Price (as the same may be adjusted hereunder with respect
to the Seller Cost Credit) in lieu of the Real Property Purchase Money Notes and
Purchase Money Mortgages.
F. CLOSE OF ESCROW. Escrow shall close concurrently with the Tier I
Closing (as defined in Section 3.1 of the Asset Purchase Agreements), or as
soon thereafter as Selling Parties are prepared to convey title to all of
the Properties subject only to the Permitted Exceptions and the Title
Company is prepared to issue the Title Policies (the "CLOSE OF ESCROW");
provided, however, that if the Close of Escrow has not occurred on or
before the thirtieth day after the Tier I Closing, this Agreement shall
terminate without further action by any of the Parties. The consummation
of the transaction contemplated by this Agreement shall take place at the
offices of O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000. The Close of Escrow shall be deemed to
have occurred on the day upon which the Deeds are filed for record in the
official records of the counties in which the respective Properties are
situated.
G. AUTHORIZATION TO CLOSE ESCROW. Provided that: (x) Escrow Holder
shall not have received written notice from Buyer or Sellers of the failure
of any conditions precedent or of the termination of the Escrow; (y) Buyer
and Sellers have deposited into the Escrow the items required by this
Agreement; and (z) Title Company can and will issue the Title Policies
concurrently with the Close of Escrow, Escrow Holder shall:
I. Deliver to Buyer each Deed by causing the same to be
recorded in the Official Records of the Office of the County Recorder
of the appropriate County
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and causing the Deeds to be mailed to Buyer after the same have been
recorded.
II. Deliver to Sellers the Purchase Money Mortgages by causing
the same to be recorded in the official records of the Office of the
County Recorder of each county in which each Property is located and
causing the Purchase Money Mortgages to be mailed to Sellers after the
same have been recorded.
III. Deliver to Buyer the Lease Assignment and the Non-Foreign
Affidavits.
IV. Deliver to Sellers the Real Property Purchase Money Notes.
V. Deliver to Buyer Sellers' share of liabilities and/or
expenses to be prorated by Escrow Holder to Sellers' account under
Section 8.
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VI. Deliver to Xxxxxxxx Buyer's share of liability and/or
expenses to be prorated by Escrow Holder to Buyer's account under
Section 8.
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VII. Cause the Owner's Title Policies to be issued to Buyer and
the Lender's Policies to be issued to Sellers by the Title Company.
VIII. Cause each Change of Ownership Statement to be filed with
the Tax Assessor for the appropriate County or with any other
governmental official or agency as required by applicable law.
Notwithstanding Sections 6(g)(ii) and (iv), if Buyer makes the
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election to deposit cash or immediately available funds pursuant to Section 6(e)
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above, Escrow Holder shall not deliver the Real Property Purchase Money Notes or
the Purchase Money Mortgages as provided above.
H. INTERPLEADER. The Parties expressly agree that if the Parties
give Escrow Holder contradictory instructions, Escrow Holder shall have the
right at its election to file an action in interpleader requiring the
Parties to answer and litigate their several claims and rights among
themselves and to deposit with the clerk of court all documents and funds
held in this Escrow. In the event such action is filed, the Parties agree
to pay Escrow Holder's cancellation charges and costs, expenses and
reasonable attorney's fees that Escrow Holder is required to expend or
incur in the interpleader action, the amount thereof to be fixed and
judgment therefor to be rendered by the court. Upon the filing of such an
action, Escrow Holder shall be fully released and discharged from all
obligations to
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further perform any duties or obligations otherwise imposed by the terms of
the Escrow.
I. U.S. TREASURY REGULATIONS. The purchase and sale of each Property
is the sale of "reportable real estate" within the meaning of U.S. Treasury
Regulations section 1.6045-4 (the "REGULATION"). Escrow Holder is the "real
estate reporting person" within the meaning of the Regulation and shall
make all reports to the federal government as required by the Regulation.
7. CLOSING COSTS.
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A. Sellers shall pay (i) twenty-five percent (25%) of (A) any
documentary transfer tax, revenue tax or excise tax (and any surtax
thereon) due in connection with the transfer of the Properties by Sellers
to Buyer and (B) any intangible tax, documentary tax or other mortgage tax
payable in connection with the recordation of the Purchase Money Mortgages;
and (ii) fifty percent (50%) of all escrow fees of the Escrow Holder.
B. Buyer shall pay (i) the fees for recording the Deeds and the
Purchase Money Mortgages; (ii) seventy-five percent (75%) of any (A)
documentary transfer tax, revenue tax or excise tax (and any surtax
thereon); and (B) any intangible tax, documentary tax or other mortgage tax
payable in connection with the recordation of the Purchase Money Mortgages;
and (iii) fifty percent (50%) of all escrow fees of the Escrow Holder.
C. The cost of the Title Policies shall be allocated between Buyer
and Sellers as described in Section 9(d).
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D. Any other costs of the Escrow or of closing pertaining to this
transaction not otherwise expressly allocated among Buyer and Seller under
this Agreement shall be attributed and allocated by Escrow Holder to the
Property or Properties giving rise to such other costs. These costs shall
then be apportioned in the manner customary in the County or Counties in
which such Property or Properties are situated.
E. Notwithstanding the provisions of this Section 7, if the Escrow
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fails to close for any reason (other than the breach of this Agreement by
one or more of the Parties), the costs incurred through the Escrow,
including the costs incurred by Buyer for any preliminary title reports
shall be borne fifty percent (50%) by Buyer and fifty percent (50%) by
Sellers. All other expenses incurred by any party in connection with the
transactions contemplated by this Agreement (including the costs of surveys
and environmental
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site assessments) shall be borne by the party who incurred such expense.
8. PRORATIONS AND ADJUSTMENTS. The following shall be prorated and
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adjusted between Sellers and Buyer, as if the transaction contemplated hereby
involved one buyer and one seller, all as of the Close of Escrow (except as
otherwise specified):
A. Rents and other charges under the Leases ("RENTS"), other than
Delinquent Rents (as hereinafter defined), shall be prorated and Buyer's
share of such Rents shall be credited against the appropriate Individual
Real Property Purchase Price if such Rents are due and payable as of the
Close of Escrow, without regard to whether such Rents have actually been
collected by the appropriate Seller as of such time. Prepaid Rents
together with all interest earned thereon, if any, shall be credited
against the appropriate Individual Real Property Purchase Price. Rents
that, at the Close of Escrow, are thirty (30) or more days past due
("DELINQUENT RENTS") shall not be prorated. Buyer will cooperate with
Sellers in the collection of Delinquent Rents at Sellers' expense;
provided, however, that Buyer shall in no way be obligated to collect or be
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responsible for collecting such Delinquent Rents. Any Rents collected by
Buyer after the Close of Escrow will apply first to Rents that accrue after
the Close of Escrow and then to the Rents that have accrued prior to the
Close of Escrow. Notwithstanding the foregoing, if Buyer receives Rents
after the Close of Escrow that relate to the period prior to the Close of
Escrow to which Seller is entitled under this Section 8, Buyer shall
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promptly remit to Seller all of such amounts. Likewise, Seller shall
promptly remit to Buyer all Rents received by Seller after the Close of
Escrow to which Buyer is entitled under this Section 8.
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B. As used in the definition of Rents in this Section 8, the word
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"charges" shall include all charges paid by tenants under the Leases for
real estate taxes, insurance premiums, electricity, other utilities, sign
rents (if any) and other common area charges (collectively "CAM CHARGES").
As promptly as is reasonably possible after the Close of Escrow, Buyer, if
Sellers have not already done so, shall xxxx all tenants under the Leases
for any unpaid CAM Charges attributable to the period prior to the Close of
Escrow with respect to which Sellers claim that they are entitled to
reimbursement. Sellers shall present Buyer with copies of paid invoices
evidencing expenses for which Sellers claim reimbursement from such CAM
Charges. Buyer will cooperate with Sellers in the collection of such CAM
Charges attributable to the period prior to the Close of Escrow; provided,
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however, that Buyer is not obligated to pay
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Sellers for such CAM Charges if, for any reason, the tenants do not pay
such CAM Charges to Buyer. If any tenants are entitled to reimbursement
due to overpayment of CAM Charges previously paid to Sellers resulting from
estimated CAM Charges, Sellers shall pay such tenants, within ten (10) days
of notice thereof from Buyer and confirmation thereof by Sellers with the
tenant, the amount of any such overpayment for the period through the date
of the Close of Escrow. Buyer shall be responsible for any such
overpayment for the period after the Close of Escrow, provided said CAM
Charges were paid to Buyer. To the extent that Sellers have collected CAM
Charges from tenants prior to the Close of Escrow, but have not, prior to
such date, paid the expenses of the Property relating to such CAM Charges,
such CAM Charges shall be credited against the appropriate Individual Real
Property Purchase Price at the Close of Escrow.
C. An amount equal to the aggregate amount, as of the Close of
Escrow, of all security and other deposits to each Seller by tenants
(collectively the "TENANT DEPOSITS"), together with such interest thereon
as may be required by law or the terms of the applicable Lease, shall be
credited against the appropriate Individual Real Property Purchase Price at
the Close of Escrow. Sellers shall retain as Sellers' own funds any Tenant
Deposits held by Sellers, but such Tenant Deposits shall be deemed
transferred to Buyer as if a cash payment were made by Sellers to Buyer.
Sellers represent and warrant that: (i) all Tenant Deposits have or will be
accurately identified and disclosed to Buyer in writing and are held by
Seller in cash; and (ii) no tenant or any other party has any claim (other
than for customary refund at the expiration of a Lease) to all or any part
of any Tenant Deposit. Sellers hereby covenant that no tenant or any other
party shall have any claim (other than for refund at the expiration of a
Lease as required by law or the terms of the applicable lease) to all or
any part of any Tenant Deposit resulting from actions that occur prior to
the Close of Escrow. Sellers hereby agree to indemnify and hold harmless
Buyer from any and all losses, costs, expenses and damages (including
attorney's fees) incurred, suffered by or claimed against Buyer by reason
of any claim by any tenant or any other party to all or any part of any
Tenant Deposit resulting from actions which occur prior to the Close of
Escrow.
D. All real property taxes, personal property taxes and any premiums
for insurance policies on the Properties assumed by Buyer shall be prorated
as of the Close of Escrow. All assessments against the Properties,
including, without limitation, all installments of such assessments that
will become due and payable after the Close of Escrow shall be prepaid by
Seller or, at Buyer's option, such assessments may remain a lien against
the applicable
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Properties, with an amount equal to the aggregated amount of such
assessments to be credited against the appropriate Individual Real Property
Purchase Price at the Close of Escrow.
E. For purposes of calculating prorations, Buyer shall be deemed to
be vested with title to the Properties, and, therefore, entitled to the
income therefrom and responsible for the expenses thereof, for the entire
day upon which the Close of Escrow occurs. All such prorations shall be
made on the basis of the actual number of days of the month that shall have
elapsed as of the Close of Escrow and based upon a three hundred sixty-
five (365) day year. Sellers shall provide to Escrow Holder such operating
statements and other documents or information as may be reasonably required
by Escrow Holder and Buyer to calculate such prorations and to prepare a
closing statement for the transaction contemplated hereunder.
F. In the event that Buyer has occupied the Properties as a lessee
pursuant to Section 13 hereof, all adjustments, payments or charges to be
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made under the leases between Buyer, as lessee, and Sellers, as lessors,
shall be settled and paid at the Close of Escrow.
9. TITLE.
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A. POSSESSION. Each Seller shall deliver to Buyer actual possession
of such Seller's Property concurrently with the Close of Escrow, subject to
the rights of tenants in possession, as tenants only, under the Leases.
B. DEEDS. Title to the fee simple interest in each Property shall
be conveyed by Sellers to Buyer by the Deeds.
C. TITLE POLICIES. Title to each Property shall be insured by an
ALTA 1992 Standard Coverage Joint Protection Owner's/Lender's Policy of
Title Insurance, with standard regional exceptions ("STANDARD COVERAGE
POLICY"), and liability in the amount of the applicable Individual Real
Property Purchase Price, dated as of the Close of Escrow, issued by First
American Title Company (the "TITLE COMPANY"), insuring that title to the
fee estates and interests in the Property are vested in Buyer, subject only
to the title exceptions listed on Schedule 14 attached to this Agreement
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(collectively the "PERMITTED EXCEPTIONS"), together with the endorsements
as are listed on said Schedule 14 (collectively the "SCHEDULED
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ENDORSEMENTS"). Each lender's policy or portion of each joint policy shall
insure, without limitation, the validity and priority of the lien created
by applicable Purchase Money Mortgage, with liability in the full amount of
the applicable Real Property Purchase Money Note, subject only to the
Permitted
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Exceptions and including the Scheduled Endorsements. For one or more of
the Properties, Buyer in its sole and absolute discretion may require in
lieu of the Standard Coverage Policy an ALTA Extended Coverage Owner's
Policy of Title Insurance, Form 1970B without modification (or its
equivalent by endorsement) (an "EXTENDED COVERAGE POLICY"). The Standard
Coverage Policy or Extended Coverage Policies, as applicable, shall
sometimes be referred to collectively herein as the "TITLE POLICIES."
D. COST OF TITLE POLICIES. Sellers shall pay the cost of the Title
Policies up to the amount of the premium for a Standard Coverage Policy
with liability in the amounts of the Individual Real Property Purchase
Prices, and 50% of the cost of any of the Scheduled Endorsements which are
not included in the premium for the Standard Coverage Policy. Buyer shall
pay (i) the additional cost, if any, of the lender's coverage insuring
Sellers and (ii) the cost differential of the premium for any Extended
Coverage Policy requested by Buyer over the cost of the premium paid for a
Standard Coverage Policy for the applicable Property, and (iii) 50% of the
cost of any of the Scheduled Endorsements which are not included in the
premium for the Standard Coverage Policy.
10. Representations and Warranties of Buyer. Buyer hereby represents and
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warrants to Sellers that the following matters are true and correct as of the
execution of this Agreement and also will be true and correct as of the Close of
Escrow:
A. Buyer is a corporation, and is duly organized, validly existing
and in good standing under the laws of the state of Delaware; and
B. This Agreement and all the documents to be executed and delivered
by Buyer to Sellers pursuant to the terms of this Agreement: (i) have been
or will be duly authorized, executed and delivered by Buyer; (ii) are or
will be legal and binding obligations of Buyer as of the date of their
respective executions; (iii) are or will be enforceable in accordance with
their respective terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity)); and (iv) do not, and will not at the
Close of Escrow, violate any provisions of any material agreement to which
Buyer is a party.
C. Buyer is not a licensed real estate broker or salesperson.
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11. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers hereby represent
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and warrant to Buyer that the following matters are true and correct as of the
execution of this Agreement and also will be true and correct as of the Close of
Escrow:
A. Each of the Selling Parties is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated.
B. This Agreement and all the documents and items to be executed and
delivered by Sellers to Buyer pursuant to the terms of this Agreement: (i)
have been or will be duly authorized, executed and delivered by Sellers;
(ii) are or will be legal and binding obligations of Sellers as of the date
of their respective executions; (iii) are or will be enforceable in
accordance with their respective terms (except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium
and other principles relating to or limiting the rights of contracting
parties generally); (iv) do not and will not at the Close of Escrow,
violate any provisions of any agreement to which a Seller or Xxxxxxxx is a
party; and (v) will be sufficient to convey title (to the extent they
purport to do so).
C. To Selling Parties' actual knowledge, there are no material
physical, structural, or mechanical defects in the Properties, including,
without limitation, the plumbing, heating, air conditioning and electrical
systems.
D. To Selling Parties' actual knowledge, the Selling Parties' use,
operation and sale of the Properties are in all material respects in
compliance with applicable building codes, environmental, zoning,
subdivision and land-use laws and other applicable local, state and federal
laws and regulations.
E. Except as disclosed in writing by the Selling Parties to Buyer
prior to the execution of the Asset Purchase Agreements or any schedule or
exhibit thereto, none of the Properties are burdened by or subject to any
leases, occupancy agreements, license agreements or other agreements
pursuant to which any third party has the right to use or occupy the
premises, and no amount is owed by any of the Sellers to any third party
with respect to leasing commissions, deposits, common area charges or other
charges under any of such agreements which may have previously existed as
to any of the Properties.
F. Intentionally Omitted.
G. As used in this Agreement, "SELLING PARTIES' ACTUAL KNOWLEDGE"
shall mean those matters within the present knowledge, at the time of
execution of this
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Agreement, of Xxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxx X. Xxxxxxxxxx, Xxxxxx
Glaskewicz and the Presidents of each of the Schools associated with the
Properties, provided that matters that could have been discovered through
sources providing record or constructive notice or through reasonable
diligence or investigation shall not be considered to be within Selling
Parties' actual knowledge. Selling Parties represent and warrant that the
Presidents of each of the Schools associated with the Properties are the
employees, officers, directors or principals of Selling Parties who are
most familiar with the subject matter of the representations and warranties
in this Section 11 with respect to their respective Schools.
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H. HAZARDOUS MATERIALS.
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I. Except as set forth in Schedule 11 or in a Phase I
-----------
environmental assessment listed on Schedule 12, to the best of each
-----------
Seller's knowledge: (A) no Seller uses or has used its Property or
permits or has permitted the use of its Property in a manner that
violates any Environmental Enactment (as hereinafter defined); (B) no
Seller knows of any violation of any Environmental Enactment on its
Property by any other prior owner of such Property; (C) no Seller
knows of any discharge, seepage or release of Hazardous Materials (as
hereinafter defined) onto its Property from any adjoining or
neighboring property; and (D) no Seller or any prior owner of its
Property has used or has permitted the use of its Property in a manner
that would require notice, disclosure or reporting to a governmental
agency of such use under any Environmental Enactment;
II. Without limiting the foregoing, except as set forth in
Schedule 11 or in a Phase I environmental assessment listed on
-----------
Schedule 12 and except for such ordinary and customary materials used
-----------
by Sellers in the normal course of Sellers' business operated on the
Properties in conformance with all Environmental Enactments, to the
best of each Seller's knowledge: (A) no asbestos, polychlorinated
biphenyls, radon, urea or formaldehyde is contained in or stored on
any Property; (B) no Hazardous Materials are stored on any Property in
violation of any Environmental Enactments; and (C) no storage tanks
containing or previously con taining Hazardous Materials are located
in or under any Property;
III. As used herein, "ENVIRONMENTAL ENACTMENT" shall mean any
federal, state or local law, regulation or ordinance or any judicial
decision, rule, regulation or publication promulgated thereunder, or
any common
14
law, authorization, judgment, decree, concession, grant, franchise,
agreement, or other governmental restriction or requirement, regarding
or related to the environment, environmental matters, human health and
safety or Hazardous Materials;
IV. As used herein, "HAZARDOUS MATERIALS" shall mean any
flammable substances, explosives, radioactive materials, pollutants,
contaminants, medical waste materials, petroleum, petroleum products,
hazardous or toxic materials or any related materials or substances
at, on or beneath the surface of the applicable real property,
including substances defined as "EXTREMELY HAZARDOUS SUBSTANCES,"
"HAZARDOUS SUBSTANCES," "HAZARDOUS WASTE," "HAZARDOUS MATERIALS,"
"TOXIC SUBSTANCES" or "INFECTIOUS WASTE" in any Environmental
Enactment or in the regulations adopted and publications promulgated
pursuant to said Environmental Enactments; and
V. As used herein, "A VIOLATION OF AN ENVIRONMENTAL ENACTMENT"
or words of similar import shall mean the existence, use, storage,
discharge, treatment, release, transportation or disposition of,
whether temporary or permanent, any Hazardous Materials other than in
compliance with the requirements of all applicable Environmental
Enactments.
I. No Seller is either a "foreign person" within the meaning of
section 1445(f)(3) of the United States Internal Revenue Code of 1986, as
may be amended, or a non-resident seller of a "California real property
interest" within the meaning of sections 18805 or 26131 of the California
Revenue and Taxation Code.
J. No Seller is a licensed real estate broker or salesperson.
No representation or warranty made by any Seller in this Agreement
shall merge into any instrument of conveyance delivered at the Close of
Escrow, and all such representations and warranties shall survive the Close
of Escrow for a period of one (1) year. The representations, warranties
and limited survival periods set forth in this Section 11 shall not be
----------
deemed or construed as limiting, waiving or relinquishing any statutory or
common law right or remedy, and, except as provide herein, the effect of
the representations and warranties made in this Agreement shall not be
diminished or deemed to be waived by any inspections, tests or
investigations made by Buyer or its agents. Moreover, the provisions of
this Section 11 with respect to Hazardous Materials and Environmental
----------
Enactments are not intended as, nor shall they be construed to be, a waiver
or
15
release by Buyer of any rights that Buyer may have after the Close of
Escrow as to the Property or any Seller under any Environmental Enactments.
12. SELLERS' COVENANTS. Sellers hereby covenant with Buyer as follows:
------------------
A. Each of the matters with respect to which a Seller has made a
representation and warranty to Buyer in Section 11 shall be continuing,
----------
shall be true and correct in all material respects as of the Close of
Escrow and shall be deemed remade by such Seller as of the Close of Escrow
with the same force and effect as if in fact made at that time.
B. Except as permitted by the Asset Purchase Agreements, no Seller
shall execute any new lease, occupancy or license agreement or any other
agreement respecting the use or occupancy of any Property.
C. Except as permitted by the Asset Purchase Agreements, no Seller
shall, without the prior written consent of Buyer, enter into any contract
with respect to any Property that will survive the Close of Escrow or will
otherwise affect the use, operation or enjoyment of the Property after the
Close of Escrow.
D. All existing insurance policies affecting the Properties, or
equivalent coverage, shall remain continuous ly in force through the Close
of Escrow.
X. Xxxxxxx shall promptly (and in any event prior to the Close of
Escrow) notify Buyer of any change in any condition with respect to the
Property or of any event or circumstance that makes any representation or
warranty of a Seller to Buyer under this Agreement materially untrue or
misleading.
The liability of a Seller or Sellers for a breach of any covenant
herein shall not be merged into any instrument of conveyance delivered at the
Close of Escrow and shall survive the Close of Escrow for a period of two (2)
years. The covenants and survival periods set forth herein shall not be deemed
or construed as limiting, waiving or relinquishing any statutory or common law
right or remedy, and, except as provided herein, the effect of the covenants
made in this Agreement shall not be diminished or deemed to be satisfied by any
inspections, tests or investigations made by Buyer or its agents.
13. INTERIM OCCUPANCY. Buyer shall commence occupancy of the Properties
-----------------
as of the Tier I Closing (as defined in the Asset Purchase Agreements), which
the Parties anticipate may occur before the Close of Escrow hereunder. If the
Close of Escrow occurs after the Tier I Closing, Buyer shall occupy each
Property
16
under a separate lease, each lease being in the form attached hereto as Schedule
--------
13, which shall provide, without limitation: that Buyer's occupancy is on a
--
triple net basis; that no rent is payable during the first sixty (60) days of
the term; and that the lease shall terminate upon the Close of Escrow. The
execution of said Lease by Buyer as lessee and Seller as lessor shall be a
condition to the Tier I Closing.
14. LOSS BY FIRE, OTHER CASUALTY OR CONDEMNATION. Except as provided
--------------------------------------------
below, in the event that prior to the Close of Escrow, any Property, or any part
thereof, is destroyed or damaged by fire or other casualty, or is subject to a
taking by a public authority, then Buyer shall have the right, exercisable by
giving notice to the appropriate Seller within fifteen (15) days after receiving
written notice of such damage or destruction or taking either: (a) to terminate
this Agreement with respect to the affected Property, in which case neither
Party shall have any further rights or obligations hereunder with respect to
such Property and any money or documents in Escrow shall be returned to the
party depositing the same, except that Buyer and Sellers shall each be
responsible for one-half of any related title or Escrow cancellation fee; or (b)
to accept the affected Property in its then condition and proceed to close this
transaction with respect to such Property, provided that an abatement or
reduction shall be made in the appropriate Individual Real Property Purchase
Price in the amount of the deductible for any applicable insurance coverage and
further provided that Buyer shall be entitled to receive an assignment of all of
the respective Seller's and Xxxxxxxx'x rights to any insurance proceeds payable
by reason of such damage or destruction or any condemnation awards payable by
reason of such taking. If Buyer elects to proceed under the foregoing clause
(b), neither Seller nor Xxxxxxxx shall compromise, settle or adjust any claims
to such proceeds or awards without Buyer's prior written consent. Sellers agree
to give Buyer prompt notice of any taking, damage or destruction of the
Properties. Notwithstanding the foregoing, if the cost of repairing any fire or
casualty damage to any individual Property does not exceed $50,000 (as
reasonably estimated by an architect of good reputation selected by Sellers), or
if no more than ten percent (10%) of the floor area of the Improvements to any
individual Property is taken by a public authority and the remainder of such
Improvements and Property is reasonably suitable for the operation of the School
thereon, then Buyer shall be deemed to have elected to proceed under the
foregoing clause (b) and shall have no right to terminate this Agreement.
15. INDEMNIFICATION. Xxxxxxxx and Sellers, on the one hand, and Buyer, on
---------------
the other, hereby agree to indemnify and hold free and harmless the other from
and against any losses, damages, costs and expenses (including attorneys' fees)
resulting from any inaccuracy in or breach of any representation or warranty of
the indemnifying party or any breach or default by such indemnifying
17
party under any of such indemnifying party's covenants or agreements contained
in this Agreement. The foregoing indemnities shall survive the Close of Escrow.
Without limiting the rights of Buyer hereunder, in the event that Buyer has a
claim against Sellers or Xxxxxxxx under this Section 15, Buyer shall have the
----------
right to pursue such claim pursuant to Section 9.12 of the Master Purchase
Agreement.
16. NOTICES. All notices or other communications required or permitted
-------
hereunder shall be in writing and shall be given or made by personal delivery or
by a nationally recognized courier service for overnight delivery.
To Sellers Xxxxxxxx Colleges, Inc.
and Xxxxxxxx: Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
and Chief Executive Officer
Facsimile No.: 604/864-0519
With a Xxxxxxx & Marsal, Inc.
copy to: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: 212/230-3307
With a Dow, Xxxxxx & Xxxxxxxxx
copy to: 0000 Xxx Xxxxxxxxx Xxxxxx X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxx X. Bureau, Esq.
Facsimile No.: 202/776-2222
With a Xxxxxxxxx, Xxxxx & Xxx
copy to: 0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: E. Xxxxx Xxxxx, Esq.
Facsimile No.: 214/953-1189
To Buyer: Corinthian Schools, Inc.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxx, President
Facsimile No.: (000) 000-0000
With a O'Melveny & Xxxxx
copy to: 000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
18
Notices or other communications may be given or made at such other place as the
party to whom such notice or communication is to be addressed may have
designated to the other Parties by notice conforming to this Section 16.
----------
Notices shall be deemed effective and received (a) on that actual receipt
thereof in the case of hand delivery, or (b) on the next business day after
deposit in the case of notices by nationally recognized overnight courier
services. As used herein, "NOTICE TO A PARTY" shall include concurrent notice
to that party's counsel as set forth herein.
17. MISCELLANEOUS PROVISIONS.
------------------------
A. INCORPORATION OF PRIOR AGREEMENTS. This Agreement and the Asset
Purchase Agreements and the documents referred to herein and therein and to
be delivered pursuant hereto and thereto contain the entire understanding
of Buyer, Xxxxxxxx and Sellers with respect to the subject matter hereof,
and no prior or contemporaneous written or oral agreement or understanding
pertaining to any such matter shall be effective for any purpose. This
Agreement specifically supersedes any offers to purchase the Properties,
Tracts, or Improvements. No provision of this Agreement may be revised or
amended except by an agreement in writing, expressly stating that such
agreement is an amendment of this Agreement, signed by the Parties to this
Agreement or their respective successors in interest.
B. DISPUTE RESOLUTION AND ARBITRATION. Any dispute arising out of or
relating to this Agreement shall be resolved in accordance with the
procedure set forth in Section 9.18 of the Master Purchase Agreement.
C. TIME IS OF THE ESSENCE. Time is of the essence of this Agreement.
D. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
enure to the benefit of each of the Parties hereto and to their respective
transferees, successors, and assigns; provided, however, that Buyer may not
assign its rights under this Agreement except as permitted by, and subject
to complying with the requirements of, Section 9.1 of the Master Purchase
Agreement. Notwithstanding anything to the contrary herein, Buyer may
nominate any of its direct or indirect subsidiaries to take title to all of
the Properties or any Property at the Close of Escrow.
E. CALIFORNIA LAW; CHOICE OF FORUM. This Agreement shall be
construed in accordance with and governed by the internal laws of the State
of California without giving effect to any conflict of law or choice of law
rules of such or any other state.
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F. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which,
when taken together, shall constitute one and the same instrument.
G. INTERPRETATION. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be valid under
applicable law, but, if any provision of this Agreement shall be invalid or
prohibited thereunder, such invalidity or prohibition shall be construed as
if such invalid or prohibited provision had not been inserted herein and
shall not affect the remainder of such provision or the remaining
provisions of this Agreement.
H. CONSTRUCTION. The language in all parts of this Agreement shall
be in all cases construed simply according to its fair meaning and not
strictly against the party who drafted such language. Additionally,
whenever the words "INCLUDING," "INCLUDE" or "INCLUDES" are used in this
Agreement, they are used and shall be interpreted in a non-exclusive
manner, as though either the phrase "but [is] not limited to" or the phrase
"without limitation" immediately followed the same.
I. JOINT AND SEVERAL OBLIGATIONS. This Agreement is between Buyer,
on the one hand, and Sellers and Xxxxxxxx, jointly and severally, on the
other. Therefore, to the extent allowed by applicable law, each Seller and
Xxxxxxxx are jointly and severally liable for performance of each and every
obligation under this Agreement.
J. HEADINGS. Section and paragraph headings of this Agreement are
solely for convenience of reference and shall not govern nor be relied upon
in the interpretation of any of the provisions of this Agreement.
K. EXHIBITS. All Exhibits, Schedules and Appendices attached hereto
are incorporated herein and made a part of this Agreement by this
reference.
L. WAIVER BY A PARTY. The waiver of any contingency, representation,
warranty, covenant, or other matter or provision hereof may only be made by
the Party benefitted by same, and the waiver must be in writing, must be
signed by the benefitted Party, must specifically state which matter is
being waived and shall not work as a waiver of any other contingency,
representation, warranty, covenant or other matter.
M. RECITALS VERIFIED. The Recitals to this Agreement are hereby
stated to be true and correct and are incorporated herein by this
reference.
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N. INJUNCTIVE AND EQUITABLE RELIEF. Seller, Xxxxxxxx and Buyer hereby
agree that the Properties are of a special and unique character that gives
the Properties a peculiar value, and that Buyer cannot reasonably or
adequately be compensated in damages in an action at law in the event that
any Seller breaches its obligation to sell its Property to Buyer.
Therefore, Xxxxxxxx and each Seller expressly agrees that Buyer shall be
entitled to injunctive and other equitable relief (including, without
limitation, the right to specifically enforce Sellers' obligation to sell
the Property to Buyer) in the event of such breach in addition to any other
rights or remedies that may be available to Buyer.
O. BUSINESS DAYS. As used in this Agreement, a "BUSINESS DAY" shall
mean a day other than Saturday, Sunday or any day on which banking
institutions in the city of Los Angeles are authorized by law or other
governmental action to close. All other references to "DAYS" or "CALENDAR
DAYS" in this Agreement shall refer to calendar days.
P. BROKERS OR FINDERS. Sellers, on the one hand, and Buyer, on the
other, shall each indemnify and hold the other harmless from and against
any and all claims of all brokers and finders claiming by, through or under
the indemnifying party and in any way related to the sale and purchase of
the Properties pursuant to this Agreement, including reasonable attorneys'
fees incurred by the party to be indemnified in connection with such
claims. Notwithstanding any provision herein to the contrary, such
indemnification shall survive the Close of Escrow or the termination of
this Agreement, as applicable. Without limiting the foregoing indemnities,
Sellers shall be responsible for fees payable to the management consulting
firm of Xxxxxxx and Marsal, Inc. in connection with the transactions
contemplated by this Agreement. Buyer represents that there are no
brokers, finders or other similar fees payable to Bank One Capital Group or
The Xxxxx Company in connection with the transactions contemplated by this
Agreement.
21
IN WITNESS WHEREOF, Buyer, Seller and Xxxxxxxx have executed this
Agreement as of the day and year first above written.
"XXXXXXXX"
XXXXXXXX COLLEGES, INC.,
a Mississippi corporation
By:___________________________________
Name:____________________________
Title:___________________________
"SELLERS"
XXXXX BUSINESS COLLEGE, INC.,
a Colorado corporation
By:___________________________________
Name:____________________________
Title:___________________________
XXXXXXXX COLLEGE OF DENVER, INC.,
a Colorado corporation
By:___________________________________
Name:____________________________
Title:___________________________
XXXXXXXX EDUCATIONAL GROUP OF CENTRAL
FLORIDA, INC., a Florida corporation
By:___________________________________
Name:____________________________
Title:___________________________
22
"BUYER"
CORINTHIAN COLLEGES, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: XXXXX X. XXXXX
----------------------------
Title: PRESIDENT/CEO
---------------------------
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LIST OF SCHEDULES
Schedule 1 - Legal Descriptions of Tracts
Schedule 2 - General Provisions of Escrow Holder
Schedule 3 - Form of Deeds (Colorado)
Schedule 4 - Form of Deeds (Florida)
Schedule 5 - Form of Lease Assignment
Schedule 6 - Form of Non-Foreign Affidavits
Schedule 7 - Real Property Purchase Money Note
(Colorado)
Schedule 8 - Real Property Purchase Money Note
(Florida)
Schedule 9 - Purchase Money Mortgage (Colorado)
Schedule 10 - Purchase Money Mortgage (Florida)
Schedule 11 - Hazardous Materials Disclosure
Schedule 12 - Phase I Environmental Assessments
Schedule 13 - Form of Lease for Interim Occupancy
Schedule 14 - Permitted Exceptions and Scheduled
Endorsements
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