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National Education Corporation
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Sylvan Learning Systems, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
May 12, 1997
Gentlemen:
By this letter, you agree with us to amend the Agreement and Plan of
Reorganization (the "Sylvan Agreement") dated as of March 12, 1997, by and among
Sylvan Learning Systems, Inc. ("Sylvan") and National Education Corporation
("NEC") as follows. In the event that NEC and Harcourt General, Inc.
("Harcourt") come to an agreement on or before May 16, 1997 for a business
combination between NEC and Harcourt at a price of $21.00 per NEC share (the
"Harcourt Transaction"), NEC and Sylvan agree that the Sylvan Agreement shall
automatically and without any further action required by NEC or Sylvan be
terminated effective immediately prior to such time as Harcourt and NEC enter
into an agreement with respect to the Harcourt Transaction (the "Harcourt
Agreement"). No later than noon Pacific Daylight Time (the "Drop-Dead Time") on
the business day immediately following the execution of the Harcourt Agreement
(the "Drop-Dead Date"), NEC and Harcourt jointly and severally agree that a fee
of $30.0 million (the "Sylvan Fee") will be paid by NEC to Sylvan by wire
transfer in immediately available funds to the account of Sylvan at
NationsBank, N.A. (Account Number: 3933614751); provided, however, that if
the Sylvan Fee is not paid by the Drop-Dead Time, the Sylvan Agreement
shall be deemed not to have been terminated in accordance with the preceding
sentence and shall remain in full force and effect and no breach or right of
termination shall have occurred thereunder as a result of actions taken in
compliance with the preceding sentence. Notwithstanding the foregoing, in the
event the Sylvan Fee is paid to Sylvan following the Drop-Dead Time but on the
Drop-Dead Date and by noon Eastern Daylight Time on the business day immediately
following the Drop-Dead Date Sylvan has not (i) rejected the Sylvan fee in a
written notice to NEC and (ii) irrevocably instructed NationsBank, N.A. to
refund the Sylvan fee to NEC, the Sylvan Agreement shall be deemed to have been
terminated in accordance with the second sentence of this letter agreement.
Sylvan shall be entitled to no further payments from NEC or Harcourt pursuant to
the Sylvan Agreement or otherwise. Upon effectiveness of the termination of the
Sylvan Agreement pursuant to the second sentence hereof, the mutual release set
forth as Annex A hereto shall become effective.
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Please indicate your agreement to the foregoing by executing this
letter in the space below.
Very truly yours,
NATIONAL EDUCATION CORPORATION
By: /s/ Xxxxx X. Xxxxx
_________________________
Name: Xxxxx X. Xxxxx
Title: Vice President, Chief
Financial Officer and
Treasurer
Accepted and agreed: Accepted and agreed:
SYLVAN LEARNING SYSTEMS, INC. HARCOURT GENERAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
________________________ ________________________
Name: Xxxxxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: President and Co-Chief Title: Senior Vice President and
Executive Officer General Counsel
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Annex A
MUTUAL RELEASE
WHEREAS, Sylvan Learning Systems, Inc., a Maryland corporation
("Sylvan"), and National Education Corporation, a Delaware corporation ("NEC"),
are parties to an Agreement and Plan of Reorganization by and among Sylvan and
NEC dated as of March 12, 1997 (the "Reorganization Agreement"); and
WHEREAS, Harcourt General, Inc., a Delaware corporation
("Harcourt"), through a wholly-owned subsidiary has commenced a tender offer to
purchase all the outstanding capital stock of NEC (the "Tender Offer"); and
WHEREAS, Sylvan, NEC and Harcourt have entered into a letter
agreement (the "Letter Agreement") dated May 12, 1997; and
WHEREAS, Sylvan and NEC wish to resolve any actual or potential
controversies or disputes between them arising out of or relating to the
Reorganization Agreement if the Reorganization Agreement is terminated in
accordance with the terms of the Letter Agreement:
NOW, THEREFORE,
1. In consideration of the release of Sylvan by NEC and Harcourt
contained herein, (i) Sylvan for itself, its predecessors, successors and
assigns (ii) does hereby remise, release and forever discharge and covenant not
to xxx (iii) NEC and Harcourt and the corporate predecessors, successors,
assigns, subsidiaries, affiliates, parents and divisions, as well as the present
and former officers, partners, directors, advisory directors, employees, agents,
stockholders, advisers (including without limitation, financial advisors) and
attorneys of each of NEC and Harcourt and their heirs, executors,
administrators, and representatives (collectively, the "NEC/Harcourt
Releasees"), (iv) of and from all manner of actions, causes of action, suits,
debts, dues, sums of money, accounts, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, damages, judgments, executions,
rights, claims, and demands whatsoever, in law or in equity, whether known or
unknown, suspected or unsuspected, (v) which against the NEC/Harcourt Releasees,
or any of them, Sylvan or Sylvan's predecessors, successors, or assigns or any
of the present or former officers, directors, employees, agents, stockholders,
advisers (including without limitation, financial advisors) or attorneys of the
foregoing, or any of their heirs, executors, administrators, representatives,
successors or assigns, acting in any capacity, ever had or now has or hereafter
can, shall, or may have, (vi) arising out of or relating to the Reorganization
Agreement (including without limitation the negotiation, execution, amendment or
termination of the Reorganization Agreement) or the Tender Offer or the
transactions contemplated thereby (including, without limitation, any claim for
tortious interference with the Reorganization Agreement or the transactions
contemplated
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thereby), (vii) subject to the exception provided in Paragraph 3 of this Mutual
Release.
2. In consideration of the release of NEC and Harcourt by Sylvan
contained herein, (i) NEC and Harcourt each for itself, its predecessors,
successors and assigns (ii) does hereby remise, release and forever discharge
and covenant not to xxx (iii) Sylvan and its corporate predecessors, successors,
assigns, subsidiaries, affiliates, parents and divisions, as well as the present
and former officers, partners, directors, advisory directors, employees, agents,
stockholders, advisors (including, without limitation, financial advisors) and
attorneys of the foregoing and their heirs, executors, administrators, and
representatives (collectively, the "Sylvan Releasees"), (iv) of and from all
manner of actions, causes of action, suits, debts, dues, sums of money,
accounts, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, damages, judgements, executions, rights, claims, and
demands whatsoever, in law, or in equity, whether known or unknown, suspected or
unsuspected, (v) which against the Sylvan Releasees, or any of them, NEC or
Harcourt or each's predecessors, successors, or assigns or any of the present or
former officers, directors, employees, agents, stockholders, advisers
(including, without limitation, financial advisors) or attorneys of the
foregoing, or any of their heirs, executors, administrators, representatives,
successors or assigns, acting in any capacity, ever had or now has or hereafter
can, shall, or may have, (vi) arising out of or relating to the Reorganization
Agreement (including without limitation the negotiation, execution, amendment or
termination of the Reorganization Agreement) or the Tender Offer or the
transactions contemplated thereby (including, without limitation, any claim for
tortious interference with the Tender Offer or the Transactions contemplated
thereby).
3. Nothing in this Mutual Release shall affect Sylvan's rights or
claims to payments from NEC (or Harcourt on behalf of NEC) pursuant to the third
sentence of the Letter Agreement.
4. This Mutual Release shall inure to the benefit of and shall be
binding upon the heirs, executors, administrators and successors of Sylvan, the
Sylvan Releasees, NEC and Harcourt and the NEC/Harcourt Releasees.
5. This Mutual Release shall be governed and construed in accordance
with the substantive law of the State of New York without regard to principles
of choice or conflict of laws.
6. The person who enters into and executes this Mutual Release on
behalf of Sylvan warrants and represents that he or she has been duly authorized
by Sylvan to do so. The person who enters into and executes this Mutual Release
on behalf of NEC warrants and represents that he or she has been duly authorized
by NEC to do so. The person who enters into and executes this Mutual Release on
behalf of Harcourt warrants and represents that he or she has been duly
authorized by Harcourt to do so.
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7. This Mutual Release may be modified only by a writing signed by
the Releasees.
8. This Mutual Release shall only be effective after the Merger
Agreement has been terminated in accordance with the terms of the Letter
Agreement; provided, that this Mutual Release shall automatically and without
any further action required by Harcourt, NEC or Sylvan be terminated effective
immediately in the event the Sylvan Fee is not paid by the Drop-Dead Time or is
not paid to Sylvan following the Drop-Dead Time but on the Drop-Dead Date and is
not accepted by Sylvan in accordance with the terms of the Letter Agreement.
9. Capitalized terms which are used herein but not defined herein
are used herein as defined in the Letter Agreement.
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IN WITNESS WHEREOF, Sylvan, NEC and Harcourt have executed this
Mutual Release by their duly authorized officers as of the 12th day of May,
1997.
SYLVAN LEARNING SYSTEMS, INC. NATIONAL EDUCATION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
----------------------- ---------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxx
Title: President and Co-Chief Title: Vice President, Chief Financial
Executive Officer Officer and Treasurer
HARCOURT GENERAL, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President and
General Counsel
