EXHIBIT 2.6
SCHOOLS ACQUISITION AGREEMENT
AMONG
XXXXXX COLLEGES, INC.,
XXXXXX BUSINESS GROUP, INC.
AND
FLORIDA METROPOLITAN UNIVERSITY, INC.
AS BUYER,
AND
XXXXXXXX COLLEGES, INC.
AND CERTAIN OF ITS SUBSIDIARIES
AS SELLING PARTIES
DATED AS OF OCTOBER 17, 1996
TABLE OF CONTENTS
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ARTICLE I SALE AND PURCHASE OF ASSETS............................................................. 1
1.1 Purchased Assets to be Transferred...................................................... 1
1.1.1 Accounts Receivable............................................................. 1
1.1.2 Inventory....................................................................... 2
1.1.3 Equipment....................................................................... 2
1.1.4 Records......................................................................... 2
1.1.5 Contracts and Leases............................................................ 2
1.1.6 Warranty Rights................................................................. 2
1.1.7 Prepaid Expenses................................................................ 2
1.1.8 Permits......................................................................... 2
1.1.9 Promotional Material............................................................ 3
1.1.10 Other Assets.................................................................... 3
1.2 Excluded Assets......................................................................... 3
1.2.1 Cash............................................................................ 3
1.2.2 Earned Accounts Receivable...................................................... 3
1.2.3 Nontransferable Rights.......................................................... 3
1.2.4 Other Excluded Assets .......................................................... 3
1.3 Timing of Transfer of Purchased Assets.................................................. 3
1.4 Allocation of Purchased Assets.......................................................... 4
ARTICLE II CONSIDERATION........................................................................... 4
2.1 Purchase Price.......................................................................... 4
2.2 Cash Consideration...................................................................... 4
2.2.1 Tier I.......................................................................... 4
2.2.2 Tier II......................................................................... 4
2.2.3 No Option or Right to Offset.................................................... 4
2.3 Obligations and Liabilities to be Assumed............................................... 4
2.4 Excluded Liabilities.................................................................... 5
2.5 Allocation of Purchase Price............................................................ 6
2.6 Excise and Property Taxes............................................................... 6
2.7 Employees............................................................................... 6
2.8 Additional Payments..................................................................... 7
ARTICLE III CLOSING................................................................................. 8
3.1 Tier I Closing.......................................................................... 8
3.2 Tier II Closing......................................................................... 8
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3.3 Deliveries by Selling Parties at each Tier Closing..................................... 8
3.4 Deliveries by Buyer at each Tier Closing............................................... 9
3.5 Deliveries by Buyer at the Tier I Closing Only......................................... 9
3.6 Delivery by Buyer at the Tier II Closing Only.......................................... 9
ARTICLE IV TERMINATION............................................................................ 9
4.1 Termination............................................................................ 9
4.2 Effect of Termination.................................................................. 10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES.................................. 10
5.1 Organization and Corporate Power....................................................... 10
5.2 Capacity; Authorization; Binding Effect................................................ 10
5.3 Ownership of Schools................................................................... 11
5.4 No Conflicts........................................................................... 11
5.5 Compliance with Laws; Licenses and Permits............................................. 11
5.6 Recruitment; Admissions Procedures; Attendance; Reports................................ 12
5.7 Cohort Default Rate.................................................................... 13
5.8 Title to and Condition of the Purchased Assets......................................... 13
5.8.1 Leased Facilities............................................................... 13
5.8.2 Laws and Regulations; Records................................................... 13
5.8.3 Title........................................................................... 13
5.8.4 Purchased Assets................................................................ 13
5.9 Assumed Contracts...................................................................... 14
5.10 Intentionally Omitted.................................................................. 14
5.11 Financial Statements; Indebtedness..................................................... 14
5.12 Receivables............................................................................ 15
5.13 Inventories............................................................................ 16
5.14 Litigation............................................................................. 16
5.15 Insurance.............................................................................. 16
5.16 Environmental Matters.................................................................. 17
5.17 Employee Benefit Plans................................................................. 17
5.18 Employment Matters..................................................................... 18
5.19 Tax Matters............................................................................ 18
5.20 Absence of Certain Changes............................................................. 18
5.21 Delivery of Documents.................................................................. 19
5.22 Disclosure............................................................................. 19
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5.23 Survival of Representations and Warranties...................................... 19
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER............................................... 20
6.1 Incorporation; Authority......................................................... 20
6.2 Due Authorization; Binding Agreement............................................. 20
6.3 No Violation or Conflict......................................................... 20
6.4 No Undisclosed Liabilities....................................................... 20
6.5 Consents and Approvals........................................................... 21
6.6 Disclosure....................................................................... 21
6.7 Survival of Representations and Warranties....................................... 21
ARTICLE VII COVENANTS.............................................................................. 21
7.1 Covenants of the Selling Parties Pending Tier II Closing.......................... 21
7.2 Covenants of Buyer Pending Tier II Closing........................................ 22
7.3 Closing and Post-Closing Covenants................................................ 22
7.3.1 Further Assurances......................................................... 22
7.3.2 Mutual Cooperation......................................................... 22
7.3.3 Access to Employees........................................................ 23
7.3.4 Best Efforts to Satisfy Conditions......................................... 23
7.3.5 Eligibility to Participate in Federal Student Financial Assistance
Programs................................................................... 23
7.3.6 Refunds/Enrollment Contracts............................................... 23
7.3.7 Income Statement........................................................... 23
7.4 Administration of the Schools..................................................... 24
7.5 Access and Maintenance of Records................................................. 24
ARTICLE VIII CONDITIONS............................................................................. 25
8.1 Conditions Precedent to Obligations of Buyer...................................... 25
8.2 Intentionally Omitted............................................................. 25
8.3 Conditions Precedent to Obligations of Buyer at the Tier II Closing............... 26
8.4 Conditions Precedent to Obligations of Selling Parties............................ 26
ARTICLE IX MISCELLANEOUS.......................................................................... 27
9.1 Binding Effect.................................................................... 27
9.2 Notices........................................................................... 27
9.3 Entire Agreement.................................................................. 28
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9.4 Risk of Loss or Damage; Insurance............................................... 28
9.5 Waiver.......................................................................... 28
9.6 Governing Law................................................................... 29
9.7 Headings........................................................................ 29
9.8 Counterparts.................................................................... 29
9.9 Severability.................................................................... 29
9.10 Time is of the Essence.......................................................... 29
9.11 Brokers or Finders.............................................................. 29
9.12 Indemnification by.............................................................. 29
9.13 Indemnification by Buyer........................................................ 30
9.14 Procedure for Indemnification................................................... 30
9.14.1.......................................................................... 30
9.14.2.......................................................................... 30
9.14.3.......................................................................... 31
9.14.4 Indemnification Floor................................................... 31
9.14.5 Intentionally Omitted................................................... 31
9.14.6 Maximum Liabilities..................................................... 31
9.14.7 Definition.............................................................. 32
9.14.8 Indemnification Time Limit.............................................. 32
9.15 Exclusive Remedy................................................................ 32
9.16 Limitation...................................................................... 32
9.17 Dispute Resolution and Arbitration.............................................. 33
9.17.1 Negotiation Between Executives.......................................... 33
9.17.2 Arbitration............................................................. 33
9.18 Third Party Beneficiaries....................................................... 33
9.19 Bulk Transfers.................................................................. 33
9.20 Expenses........................................................................ 34
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SCHEDULES
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SCHEDULE 1.1.3 Equipment
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SCHEDULE 1.1.7(a) Prepaid Deposits and Prepaid Expenses
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SCHEDULE 1.1.7(b) Excepted Prepaid Deposits and Prepaid Expenses
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SCHEDULE 1.2.2 Calculation of Earned Accounts Receivable
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SCHEDULE 1.2.4 Excluded Assets
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SCHEDULE 2.5 Allocation of Purchase Price Among the Purchased Assets
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SCHEDULE 2.7 Employees
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SCHEDULE 5.4 Conflicts
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SCHEDULE 5.5(a) Compliance With Applicable Laws
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SCHEDULE 5.5(b) Exceptions to Licenses and Permits
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SCHEDULE 5.5(c) Applications
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SCHEDULE 5.5(d) Licenses and Permits
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SCHEDULE 5.5(e) Notices of Non-Renewal
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SCHEDULE 5.5(f) Accreditation
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SCHEDULE 5.5(g) Notice of Violation
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SCHEDULE 5.5(h) Regulatory Review
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SCHEDULE 5.6(a) Recruitment; Admissions Procedures; Attendance; Reports
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SCHEDULE 5.6(b) Noncompliance with Policy Guidelines
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SCHEDULE 5.7 Cohort Default Rates
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SCHEDULE 5.8.1 Leased Facilities
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SCHEDULE 5.8.2 Laws and Regulations; Records
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SCHEDULE 5.8.3 Title
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SCHEDULE 5.8.4 Purchased Assets
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SCHEDULE 5.9 Assumed Contracts
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SCHEDULE 5.11(a) Financial Statements
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SCHEDULE 5.11(b) Indebtedness
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SCHEDULE 5.11(c) Unaudited Interim Balance Sheet as of August 31, 1996
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SCHEDULE 5.14 Litigation
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SCHEDULE 5.15 Insurance
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SCHEDULE 5.16 Environmental Matters
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SCHEDULE 5.18 Employment Matters
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SCHEDULE 5.20 Absence of Certain Changes
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SCHEDULE 6.5 Consents and Approvals
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EXHIBITS
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EXHIBIT A List of Certain Subsidiaries of Xxxxxxxx
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EXHIBIT B List of Schools and Tier I Bid Prices
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EXHIBIT C Assignment and Assumption Agreement
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EXHIBIT D Xxxx of Sale
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EXHIBIT E-1 Buyer's Officer's Certificate
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EXHIBIT E-2 Phillip's Officer's Certificate
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SCHOOLS ACQUISITION AGREEMENT
This Schools Acquisition Agreement, dated as of October 17, 1996 (the
"Agreement"), is entered into by and between Xxxxxx Colleges, Inc., a Delaware
corporation ("Xxxxxx"), Xxxxxx Business Group, Inc., a Delaware corporation
("Xxxxxx Group"), and Florida Metropolitan University, Inc., a Florida
corporation ("FMU" and collectively with Xxxxxx and Xxxxxx Group, "Buyer"), on
the one hand, and Xxxxxxxx Colleges, Inc., a Mississippi corporation
("Xxxxxxxx"), and certain subsidiaries of Xxxxxxxx as identified on EXHIBIT A
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(the "Sellers" and, together with Xxxxxxxx, the "Selling Parties"), on the other
hand.
P R E A M B L E :
WHEREAS, Sellers own, operate and administer, among other things,
those certain post-secondary, vocational training schools listed on EXHIBIT B
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attached hereto and made a part hereof by this reference (the "Schools");
WHEREAS, for purposes of this Agreement, the parties have separated
the Schools into two groups, designated as the "Tier I Schools" and the "Tier II
Schools" as specified on EXHIBIT B; and
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WHEREAS, Buyer desires to buy, through the payment of cash, the
assumption of liabilities of Sellers and other valuable consideration, and the
Selling Parties desire to sell, substantially all assets and property owned by
Sellers and used directly in the business of the Schools and certain related
assets as specified herein, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants contained in this Agreement and intending to be legally bound hereby,
agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Purchased Assets to be Transferred. Subject to the terms and
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conditions of this Agreement, the Selling Parties hereby agree to sell, assign,
convey, transfer and deliver to Buyer, and Buyer hereby agrees to assume the
Assumed Liabilities (as defined in Section 2.3 below) from the Selling Parties
and to purchase from the Selling Parties, all of the Selling Parties' right,
title and interest in and to the following assets (the "Purchased Assets"),
subject to all existing mortgages, pledges, liens, claims, restrictions,
encumbrances, options, rights and security interests of any kind or nature,
including the Permitted Exceptions (as defined in Section 5.8.3 below), and
except for the Excluded Assets (as defined in Section 1.2 below):
1.1.1 Accounts Receivable. All accounts receivable, notes
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receivable and other receivables (and causes of action related thereto) of
Sellers arising from operations of
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the Schools, other than Earned Accounts Receivable (as defined in Section 1.2.2)
("Accounts Receivable");
1.1.2 Inventory. All of the Selling Parties' inventory of
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textbooks, materials and supplies on hand at the Tier I Schools at the Tier I
Closing (as defined in Section 3.1 below), and on hand at the Tier II Schools at
the Tier II Closing (as defined in Section 3.2 below);
1.1.3 Equipment. All computer hardware, printers, other data
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processing equipment, other machinery and equipment, furniture, fixtures,
leasehold improvements, furnishings and other tangible personal property owned
by the Selling Parties and used directly at the Schools, as described in
SCHEDULE 1.1.3 ("Equipment");
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1.1.4 Records. All of Sellers' records existing on the Tier I
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Closing Date or the Tier II Closing Date, as applicable, pertaining to the
Purchased Assets, including without limitation, all student records, ledgers,
copies of financial statements, copies of correspondence, copies of employment
records, copies of placement records, copies of marketing materials and copies
of all documents filed by any Seller with any state, federal or local government
authority or any guaranty or accrediting agency (the "Records"), but excluding
any records that relate in whole or in part to the Excluded Assets or the
Excluded Liabilities (as such terms are hereinafter defined), any corporate
minute books or corporate records, tax returns and similar reports or the
original form of general ledgers and supporting documentation including, without
limitation, original invoices and personnel records and subject to the
provisions of Section 7.5 below;
1.1.5 Contracts and Leases. To the extent transferable, all
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student enrollment contracts and all contracts and leases applicable to one or
more of the Schools to which a Seller is a party entered into in the course of
such Seller's business, including without limitation those identified in
SCHEDULE 5.9 (collectively, the "Assumed Contracts");
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1.1.6 Warranty Rights. To the extent transferable, all rights of
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Sellers relating to or arising out of express or implied warranties,
representations or guarantees from suppliers with respect to any of the
Purchased Assets, and all causes of action arising therefrom;
1.1.7 Prepaid Expenses. Sellers' prepaid deposits and prepaid
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expenses related to the Purchased Assets, as described in SCHEDULE 1.1.7(a),
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except for the prepaid deposits and prepaid expenses described on SCHEDULE
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1.1.7(b) which shall be reimbursed to the Selling Parties by Buyer, with such
reimbursable deposits and expenses to include any prepayment with respect to
real property leases to be prorated between Buyer and Sellers as of the
applicable Tier Closing.
1.1.8 Permits. To the extent transferable, Sellers' licenses,
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permits, certifications, approvals and other governmental and regulatory
authorizations required under all laws, rules and regulations applicable to or
affecting the Schools or the Purchased Assets,
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including, without limitation, to the extent transferable, those described in
SCHEDULE 5.5(d) ("Sellers' Permits");
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1.1.9 Promotional Material. All of Sellers' right, title and
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interest in and to the promotional and marketing materials related exclusively
to the Schools;
1.1.10 Other Assets. All other tangible assets and property of
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Sellers (excluding intangible assets and real property) used in connection with
the operation of the Schools.
1.2 Excluded Assets. The Excluded Assets shall not be conveyed
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hereunder. The "Excluded Assets" are all assets of the Selling Parties not sold
in accordance with Section 1.1, above, including, but not limited to, the
following:
1.2.1 Cash. All of the Selling Parties' cash, cash equivalents,
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bank account balances, escrow account balances and bank account credit balances
(including cash arising from prepaid tuition and all collected accounts
receivable) on hand at the Tier I Closing or the Tier II Closing, as applicable;
1.2.2 Earned Accounts Receivable. Any accounts receivable of the
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Selling Parties relating to (i) the business conducted at the Tier I Schools
prior to the Tier I Closing and (ii) the business conducted at the Tier II
Schools prior to the Tier II Closing ("Earned Accounts Receivable"). Earned
Accounts Receivable include, without limitation, (a) the amount calculated in
accordance with SCHEDULE 1.2.2, which includes any unpaid amounts of student
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financial assistance funds from any governmental or nongovernmental sources,
including funds administered under Title IV of the Higher Education Act of 1965,
as amended ("Title IV"), due to Sellers, Xxxxxxxx or the Schools for periods of
instruction occurring prior to the Tier I Closing or Tier II Closing, as
applicable, (b) all Federal Work-Study reimbursement receivables, (c) out-of-
school receivables (i.e., amounts due from students who have withdrawn from a
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School as of the Tier I Closing or Tier II Closing, as applicable), and (d) any
intercompany accounts receivable.
1.2.3 Nontransferable Rights. Any license, permit,
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certification, approval and governmental or regulatory authorization or
accreditation of any of the Selling Parties that is not transferable; and
1.2.4 Other Excluded Assets. All assets and rights listed on
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SCHEDULE 1.2.4 and any assets of the Selling Parties not located at the Schools
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and not included in the Purchased Assets.
1.3 Timing of Transfer of Purchased Assets. The Purchased Assets
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related to the Tier I Schools shall be purchased, and the Assumed Liabilities
related to the Tier I Schools shall be assumed at the Tier I Closing; and the
Purchased Assets related to the Tier II Schools shall be purchased, and the
Assumed Liabilities related to the Tier II Schools shall be assumed at the Tier
II Closing.
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1.4 Allocation of Purchased Assets and Assumed Liabilities. Xxxxxx
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shall assume title to all Purchased Assets relating to the Xxxxxx Schools (as
listed on EXHIBIT B hereto) and shall assume all Assumed Liabilities relating to
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the Xxxxxx Schools on the Tier I Closing or the Tier II Closing, as applicable.
The Xxxxxx Group shall assume title to all Purchased Assets relating to the
Xxxxxx Group Schools (as listed on EXHIBIT B hereto) and shall assume all
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Assumed Liabilities relating to the Xxxxxx Group Schools on the Tier I Closing
or Tier II Closing, as applicable. FMU shall assume title to all Purchased
Assets relating to the Florida Schools (as listed on EXHIBIT B hereto) and shall
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assume all Assumed Liabilities relating to the Florida Schools on the Tier I
Closing.
ARTICLE II
CONSIDERATION
2.1 Purchase Price. In consideration of the sale of the Purchased
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Assets by the Selling Parties to the Buyer, the Buyer shall pay the Purchase
Price (as hereinafter defined) to Xxxxxxxx for itself and/or as agent for the
Sellers or any other parties as designated by Xxxxxxxx (collectively, the
"Xxxxxxxx Payee") in the manner and at the times set forth below, subject to
adjustment as hereinafter set forth, and assume the Assumed Liabilities pursuant
to the Assignment and Assumption Agreement (as hereinafter defined).
2.2 Cash Consideration. The Purchase Price shall be equal to the sum
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of the Tier I Payment and the Tier II Payment, subject to adjustment as set
forth herein, payable as follows:
2.2.1 Tier I. At the Tier I Closing, Buyer shall pay to the
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Xxxxxxxx Payee in cash by wire transfer of immediately available funds
$6,000,000 (the "Tier I Payment").
2.2.2 Tier II. At the Tier II Closing, Buyer shall pay to the
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Xxxxxxxx Payee in cash by wire transfer of immediately available funds an amount
calculated in accordance with Section 8.3 hereof (the "Tier II Payment").
2.2.3 No Option or Right to Offset. Buyer shall have no right of
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or option to offset against any amounts which Buyer claims are owed to it under
this Agreement or any other agreement, certificate, instrument or document
related hereto or thereto or otherwise by the Selling Parties.
2.3 Obligations and Liabilities to be Assumed. Upon each of the Tier
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I Closing and the Tier II Closing (each, a "Tier Closing"), with respect to the
applicable Schools, each Buyer shall, by an appropriate instrument of assumption
to be executed and delivered on the Tier Closing substantially in the form of
EXHIBIT C hereto (the "Assignment and Assumption Agreement"), assume and agree
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to perform, pay or discharge, when due, to the extent not theretofore performed,
paid or discharged, all of the following obligations, commitments and
liabilities of Sellers relating to or arising from the Tier I Schools or Tier II
Schools, as
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applicable (collectively, the "Assumed Liabilities"), subject to the allocation
of such Assumed Liabilities among Xxxxxx, the Xxxxxx Group and FMU as described
in Section 1.4 hereof:
2.3.1 All accounts payable of the Selling Parties relating to
the business or operations of such Schools existing at the applicable Tier
Closing and which shall have been entered into in the ordinary course of the
business of those Schools, except for those accounts payable relating to (i)
invoices dated prior to the Tier I Closing with respect to the Tier I Schools
and (ii) invoices dated prior to the Tier II Closing with respect to the Tier II
Schools; and all accounts payable for textbooks for the Schools for the October
or later starts with invoices dated after August 17, 1996 and for any media or
print advertising to be paid prior to the Tier I Closing Date or Tier II Closing
Date, as applicable, but published or disseminated subsequent to the Tier I
Closing Date or Tier II Closing Date, as applicable; and all accounts payable
for accrediting agency fees related to the sale of the Purchased Assets to Buyer
and all accounts payable for annual accrediting agency fees or dues, prorated
based on the time remaining in the period for which the fees or dues were paid
or are owed; provided, however, in the event that Selling Parties have paid any
invoices to be included in the Assumed Liabilities, Selling Parties shall be
reimbursed for such amounts in accordance with the provisions of Section 2.8(a)
below;
2.3.2 All obligations of and restrictions on the Selling Parties
with respect to the applicable Schools: (i) under the Assumed Contracts
(including assumption of the liabilities, duties and obligations under
enrollment contracts between students and Sellers which Sellers are obligated to
perform (a) on or after the Tier I Closing with respect to the Tier I Schools,
and (b) on or after the Tier II Closing with respect to the Tier II Schools),
but not including liabilities for breaches by Sellers under Assumed Contracts as
of the Tier I Closing or Tier II Closing, as applicable; (ii) with respect to
the Records; and (iii) otherwise directly arising from the Purchased Assets;
2.3.3 All liabilities imposed by ED, any applicable accrediting
body, any applicable state regulatory agency, any applicable guaranty agency or
any other governmental or non-governmental entity (each a "Regulatory Agency"
and collectively, the "Regulatory Agencies") for periods from and after the Tier
I Closing;
2.3.4 All other obligations, commitments and liabilities of the
Sellers and the Schools, except for the Excluded Liabilities (as defined in
Section 2.4 below).
2.4 Excluded Liabilities. The following obligations and liabilities
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of the Selling Parties (collectively, the "Excluded Liabilities") will not be
assumed by Buyer: (i) liabilities imposed by the Regulatory Agencies,
including, without limitation, liabilities for Title IV funds related to periods
prior to the Tier I Closing, (ii) liabilities relating to employees of the
Schools incurred prior to the Tier I Closing or the Tier II Closing, as
applicable (other than vacation and sick pay benefits of employees to be hired
by Buyer as contemplated by Section 2.7 hereof which accrued prior to the date
of employment of such employees by the Buyer and which remained unpaid in the
ordinary course of business on the date of the Tier I Closing or the Tier II
Closing, as applicable), (iii) liabilities with respect to accounts payable
other than
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those assumed by Buyer under Section 2.3.1 above, (iv) liabilities with respect
to the matters set forth on SCHEDULE 5.14 attached hereto, and (v) any
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environmental liabilities incurred prior to the Tier I Closing or Tier II
Closing, as applicable, with respect to any real property owned or leased by any
of the Selling Parties.
2.5 Allocation of Purchase Price. Buyer and the Selling Parties
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agree that the Purchase Price shall be allocated among the Purchased Assets in
accordance with the allocation set forth in SCHEDULE 2.5 attached hereto. Buyer
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and the Selling Parties agree that each will report the federal, state and local
income tax and other tax consequences of the purchase and sale contemplated
hereby in a manner consistent with such allocation and that neither will take
any position inconsistent therewith upon examination of any tax return, in any
refund claim, in any litigation, or otherwise; provided that in the reasonable
opinion of the Selling Parties, Buyer's allocation complies with Section 1060 of
the Internal Revenue Code of 1986, as amended (the "IRC"), and relevant Treasury
regulations thereunder and Buyer has provided information required pursuant to
Section 1060(b) of the IRC and other relevant authority in written form
reasonably satisfactory to the Selling Parties on or before November 30, 1996.
Buyer agrees to provide to the Selling Parties specific allocations of the
Purchase Price to tangible personal property within ten (10) business days of
the Tier I Closing or Tier II Closing, as applicable, together with a
certificate of the Selling Parties representing that the allocation to tangible
personal property constitutes Buyer's representation regarding the fair market
value of such tangible personal property and that Buyer will use such allocation
for all financial reporting and will not take any position inconsistent with
such allocation upon examination of any tax return, in any refund claim, in any
litigation or otherwise.
2.6 Excise and Property Taxes. Buyer shall pay seventy-five percent
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(75%) and the Selling Parties shall pay twenty-five percent (25%) of all sales
and use taxes arising out of the transfer of the Purchased Assets. Each of
Buyer and the Selling Parties shall pay its respective portion, prorated as of
the applicable Tier Closing, of state and local personal property taxes related
to the Schools.
2.7 Employees. Attached in SCHEDULE 2.7 are lists of employees at
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Sellers' Schools, including each employee's title, base salary and earned
vacation time and sick leave. Buyer may, in its sole discretion, extend an
offer of employment to any of such employees (except for those employees whose
employment is severed or terminated in the ordinary course of business prior to
the Tier I Closing or Tier II Closing, as applicable) from and after the Tier I
Closing or Tier II Closing, as applicable. Buyer shall pay, perform and assume
Sellers' obligations for vacation and sick pay benefits of employees hired by
Buyer which accrue prior to the Tier I Closing or Tier II Closing, as
applicable, and remain unpaid in the ordinary course of business at the Tier I
Closing or Tier II Closing, as applicable, and shall include such employees in a
medical plan which provides for a waiver of waiting time and pre-existing
conditions.
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2.8 Additional Payments.
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(a) As soon as possible following the Tier I Closing, and in any
event not later than twenty (20) days after the Tier I Closing, the Selling
Parties shall deliver a certificate to Buyer, setting forth the "Additional
Payment Amount" which shall include: (1) the amount of prepaid deposits and
prepaid expenses related to the Tier I Schools, pursuant to Section 1.1.7, which
shall be reimbursed to Sellers, and (2) the amounts of accounts payable related
to the Tier I Schools, pursuant to Section 2.3.1, which shall be reimbursed to
Sellers. Within ten (10) days of receipt of such certificate, the Buyer shall
pay to Selling Parties in immediately available funds the Additional Payment
Amount. Such certificate shall be deemed to have been accepted by, and be
binding upon, Buyer if Buyer fails to deliver written objections to the Selling
Parties concerning such certificates within ten (10) business days after Buyer's
receipt of such certificate. If Buyer objects to such certificate, and such
objections are not resolved to Buyer's satisfaction within five (5) business
days after delivery of such written objections to the Selling Parties, then
Buyer shall pay to Selling Parties that amount of the Additional Payment Amount
which is undisputed, and Price Waterhouse, L.L.P., or another nationally
recognized certified public accounting firm not otherwise engaged by either the
Selling Parties or Buyer or their affiliates mutually selected by the Selling
Parties and Buyer (the "Independent Auditor"), shall review such certificate and
all related work papers with respect to the amount of the Additional Payment
Amount that is disputed. Such review shall be completed by the Independent
Auditor within ten (10) business days following its engagement, and the
determinations of the Independent Auditor shall be final and binding upon all
parties. The costs of the engagement of the Independent Auditor shall be borne
equally by Buyer and Selling Parties.
(b) As soon as possible following the Tier I Closing and in any event
not later than thirty (30) days after the Tier I Closing, the Selling Parties
shall deliver a certificate to Buyer, setting forth the calculation of Earned
Accounts Receivable (the "EAR Calculation"). If the EAR Calculation results in
an amount due to Sellers (i.e., Deferred Tuition is less than Total Student-
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Related Receivables), Sellers shall be entitled to retain the U.S. Department of
Education ("ED") reimbursement receivable up to the amount of the Earned
Accounts Receivable owed to Sellers, and Buyer shall pay to Sellers in
immediately available funds the difference between the ED reimbursement
receivable and the amount due to Sellers based on the EAR Calculation, such
amount to be paid on the later of (i) forty-five (45) days following the Tier I
Closing or (ii) the last date on which (1) the ED has certified all of the Tier
I Schools as eligible for Title IV funding; and (2) some or all of the guaranty
agencies which guarantee Federal Family Education Loan ("FFEL") program loans
for the Schools resume such activities such that any combination of the Schools
with an aggregate value of $4,400,000 (based on the Tier I Bid Prices set forth
in EXHIBIT B hereto) are able to receive FFEL loan program funds (the "Payment
-------
Date"). In the event that the EAR Calculation results in an amount due to Buyer
(i.e., if Deferred Tuition is greater than Total Student-Related Receivables),
----
Sellers shall pay that amount to Buyer in immediately available funds on the
later of forty-five (45) days following the Tier I Closing or the Payment Date.
(c) In calculating Earned Accounts Receivable, there shall be
included a bad debt reserve equal to one-half ( 1/2) of the difference between
(i) the TFC Adjustment less
7
(ii) $800,000. The term "TFC Adjustment" shall mean (A) forty-three percent
(43%) of (x) the outstanding principal balance of the institutional loans which
the TFC Credit Corporation is processing and servicing for the Selling Parties
("TFC Notes") as of the Tier I Closing Date as identified on the TFC Credit
Corporation Accounts Receivable Report for the period ending on the Tier I
Closing Date less (y) the principal balance of such TFC Notes included thereon
which were issued subsequent to September 30, 1996 (the "October TFC Notes")
plus (B) 25% of the October TFC Notes.
ARTICLE III
CLOSING
3.1 Tier I Closing. The closing of the transactions related to the
--------------
Tier I Schools contemplated by this Agreement (the "Tier I Closing") will take
place at the offices of O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, simultaneously with the execution and
delivery of this Agreement (the "Tier I Closing Date"), but in no event later
than December 31, 1996, subject to the provisions of this Agreement. The Tier I
Closing shall be effective as of 12:01 a.m. Central Standard Time on the Tier I
Closing Date.
3.2 Tier II Closing. Subject to the satisfaction of the conditions
---------------
precedent listed in Article VIII, the closing of the transactions related to the
Tier II Schools contemplated by this Agreement (the "Tier II Closing" and,
together with the Tier I Closing, the "Tier Closings") will take place at the
offices of O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000, on the last business day of the calendar month
immediately following the date which is sixty (60) days following Buyer's
receipt of an official written determination from ED of each Tier II School's
official 1994 cohort default rate ("CDR"), or within five (5) business days
after such later date as all the conditions to the Tier II Closing set forth in
Article VIII have been satisfied (the "Tier II Closing Date"), but in no event
later than December 31, 1996, subject to the provisions of this Agreement. The
Tier II Closing shall be effective as of 12:01 a.m. Central Standard Time on the
Tier II Closing Date.
3.3 Deliveries by Selling Parties at each Tier Closing. At each Tier
--------------------------------------------------
Closing, the Selling Parties shall deliver or cause to be delivered to Buyer the
following:
3.3.1 The following documents of transfer and assignment duly
executed by Sellers relating to that portion of the Purchased Assets to be
conveyed to Buyer at such Tier Closing:
(i) Xxxx of Sale substantially in the form of EXHIBIT D
-------
hereto;
(ii) Assignment and Assumption Agreement substantially in
the form of EXHIBIT C hereto;
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8
(iii) Such other instruments of conveyance as shall, in
the reasonable opinion of Buyer and its counsel, be necessary to vest in Buyer
title to that portion of the Purchased Assets to be conveyed to Buyer at such
Tier Closing.
3.3.2 Certified resolutions of the Boards of Directors and
shareholders of the Selling Parties authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein;
3.3.3 An officers' certificate signed by the President and the
Chief Executive Officer of Xxxxxxxx, or such other officer reasonably acceptable
to Buyer, certifying with respect to the Selling Parties, dated as of the date
of such Tier Closing, which officers' certificate shall be in the form attached
hereto as EXHIBIT E-2.
-------
3.4 Deliveries by Buyer at each Tier Closing. At each Tier Closing,
----------------------------------------
Buyer shall deliver or cause to be delivered to the Selling Parties the
following duly executed documents:
3.4.1 The Assignment and Assumption Agreement substantially in
the form of EXHIBIT C hereto;
-------
3.4.2 Certified resolutions of the Board of Directors of each
Buyer authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein; and
3.4.3 An officers' certificate signed by the President of Buyer,
dated as of the date of such Tier Closing, in the form attached hereto as
EXHIBIT E-1.
-------
3.5 Deliveries by Buyer at the Tier I Closing Only. At the Tier I
----------------------------------------------
Closing only, the Buyer shall deliver or cause to be delivered the Tier I
Payment by wire transfer of immediately available funds payable to the Xxxxxxxx
Payee in the amount of $6,000,000.
3.6 Delivery by Buyer at the Tier II Closing Only. At the Tier II
---------------------------------------------
Closing only, Buyer shall deliver or cause to be delivered to the Xxxxxxxx Payee
prior to the Tier II Closing the Tier II Payment, by wire transfer of
immediately available funds.
ARTICLE IV
TERMINATION
4.1 Termination. This Agreement may be terminated only as follows
-----------
and in each case only by written notice:
4.1.1 At any time by mutual written consent of the Selling
Parties and Buyer;
9
4.1.2 With respect to the provisions of this Agreement relating
to the purchase of the Tier II Schools only, on December 31, 1996 by either
party if the Tier II Closing has not occurred.
4.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Buyer or the Selling Parties in accordance with Section 4.1
above, this Agreement shall forthwith terminate upon notice thereof duly given
in accordance with the provisions hereof, and there shall be no liability of any
nature on the part of either Buyer or the Selling Parties (or their respective
officers or directors) to the other; provided, however, that this Section 4.2 in
-------- -------
no way limits the obligations of the parties set forth in Sections 9.12, 9.13,
9.14, 9.15, 9.16, 9.17 and 9.18 hereof, which obligations shall survive the
termination. If this Agreement is terminated as provided in Section 4.1 above,
each of Buyer and the Selling Parties shall, and shall cause its respective
representatives to, either destroy or redeliver to such other party all
documents, work papers and other materials relating to the transactions
contemplated hereby or to the business or operations of the other party, whether
so obtained before or after the execution hereof, and all such information
received by Buyer or the Selling Parties, as the case may be, (other than
information which is in or becomes part of the public domain by publication or
otherwise through no fault of such party or which has heretofore been or is
hereafter filed or available as public information with any governmental
authority) shall be kept confidential, except as required by law. In addition,
each of Buyer and the Selling Parties shall cooperate in good faith following
termination of this Agreement to provide any information or documents reasonably
required by the other party in connection with preparation of such party's
financial statements and tax returns.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES
As a material inducement to Buyer to enter into this Agreement, to
purchase the Purchased Assets and assume the Assumed Liabilities, the Selling
Parties, hereby represent and warrant with respect to the Purchased Assets
related to the Tier I Schools, as of the date hereof, that:
5.1 Organization and Corporate Power. The Selling Parties are
--------------------------------
corporations, duly organized, validly existing and in good standing under the
laws of the jurisdiction in which they are incorporated. The Selling Parties
have all requisite corporate power and authority to own and operate their
properties, to carry on their business as now conducted, to enter into this
Agreement and to consummate the transactions contemplated hereunder. The
Selling Parties are duly qualified to do business in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
operation of any Tier I School. The copies of Xxxxxxxx' articles of
incorporation and bylaws which have been furnished to Buyer reflect all
amendments made thereto at any time prior to the date of this Agreement and are
correct and complete.
5.2 Capacity; Authorization; Binding Effect. Each of the Selling
---------------------------------------
Parties has the corporate power, legal capacity and authority to execute,
deliver and perform this Agreement
10
and each other document being executed in connection herewith to which it is a
party. Each of the Selling Parties has the corporate power, legal capacity and
authority to transfer, convey and deliver the Purchased Assets, free and clear
of all liens, claims, encumbrances, options, rights and restrictions, except for
the Permitted Exceptions (as defined in Section 5.8.3 below). All corporate and
other proceedings required to be taken by or on the part of the Selling Parties,
including all action required to be taken by the directors or stockholders of
the Selling Parties, to authorize the Selling Parties to enter into and carry
out this Agreement and the related documents contemplated herein, have been duly
and properly taken. This Agreement has been, and each of the related documents
will be at each Tier Closing, duly executed and delivered by the Selling Parties
and constitute, or will when delivered constitute, the valid and binding
obligations of the Selling Parties, enforceable against the Selling Parties 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 or otherwise).
5.3 Ownership of Schools. The Tier I Schools are owned and operated
--------------------
by Sellers directly, and each Seller is a wholly-owned subsidiary of Xxxxxxxx.
No other person or entity has any right, option, subscription or other
arrangement to purchase or otherwise acquire any interest in any Tier I School,
other than in connection with the Permitted Exceptions.
5.4 No Conflicts. Except as set forth on SCHEDULE 5.4, the
------------ --------
execution, delivery and performance of this Agreement and each other document
being executed by the Selling Parties in connection herewith, and the
consummation of the transactions contemplated hereby and thereby will not: (a)
violate any provisions of law applicable to the Selling Parties; (b) with or
without the giving of notice or the passage of time, or both, conflict with or
result in the breach of any provision of the articles of incorporation or bylaws
of the Selling Parties, any material instrument, license, agreement or
commitment to which a Selling Party is a party or by which any of its assets or
properties is bound, which breach might reasonably be expected to have a
material adverse effect on the Purchased Assets; (c) constitute a violation of
any order, judgment or decree to which a Selling Party is a party or by which
any of its assets or properties is bound; or (d) require any approval of, or
filing or registration with, any governmental entity or regulatory authority
other than those which will be effected by the Selling Parties prior to the Tier
I Closing.
5.5 Compliance with Laws; Licenses and Permits. Except as set forth
------------------------------------------
in SCHEDULE 5.5(a), Sellers are not in violation of any law or any regulation or
--------
requirement (including, without limitation, all relevant standards imposed by
applicable accrediting bodies or agencies administering state or federal
government programs) which violation might reasonably be expected to have a
material adverse effect upon the financial condition, operating results,
accreditation or business of the Tier I Schools, and Sellers have not received
notice of any such violation. Sellers currently maintain all licenses,
accreditations, certificates, permits, consents, authorizations and other
governmental or regulatory approvals (the "Licenses and Permits") necessary for
Sellers to conduct the business and operations of each Tier I School as
presently being conducted. Except as set forth in SCHEDULE 5.5(b), the Licenses
--------
and Permits for
11
each Tier I School are in full force and effect, and no proceedings for the
suspension or cancellation of any of them is pending or, to the best of the
Selling Parties' knowledge, threatened. Except as set forth in SCHEDULE 5.5(c),
--------
to the knowledge of the Selling Parties, no application made by Sellers for any
Licenses and Permits during the last five years has been denied. SCHEDULE
--------
5.5(d) attached hereto is a true, correct and complete list of all Licenses and
Permits held by the Sellers with respect to the operation of each Tier I School
and the governmental authority or accrediting body granting such Licenses and
Permits. Sellers have delivered or made available to Buyer copies of all such
Licenses and Permits. Except as set forth in SCHEDULE 5.5(e), Sellers have
--------
received no notice that any of the Licenses and Permits will not be renewed and
to the best of the Selling Parties' knowledge, there is no basis for nonrenewal.
Except as set forth in SCHEDULE 5.5(f), each Tier I School is accredited, is
--------
certified by ED as an eligible institution under Title IV and is a party to, and
in compliance with, valid program participation agreements with ED with respect
to such Tier I School's operations. Except as set forth in SCHEDULE 5.5(g),
--------
Sellers have not received any notice, not previously responded to, in respect of
any alleged violation of the rules or regulations of any Regulatory Agency in
respect of any Tier I School, including sales and marketing activities, or the
terms of any program participation agreement to which they are or were a party.
If any such notices have been received and responded to, but not resolved,
Sellers have disclosed to Buyer in writing their receipt and response prior to
the execution of this Agreement. Except as set forth in SCHEDULE 5.5(h), the
--------
Selling Parties are not aware of any investigation or review of Sellers' student
financial assistance programs by any Regulatory Agency or any review of the
accreditation of any Tier I School by any Regulatory Agency.
5.6 Recruitment; Admissions Procedures; Attendance; Reports.
-------------------------------------------------------
SCHEDULE 5.6(a) attached hereto is a complete list of all policy manuals and
--------
other statements of procedures or instruction relating to recruitment of
students for each Tier I School, including (a) procedures for assisting in the
application by prospective students for direct or indirect state or federal
student financial assistance; (b) admissions procedures, including any
descriptions of procedures for insuring compliance with federal, state or
accrediting agency requirements applicable to such procedures; and (c)
procedures for encouraging and verifying attendance, minimum required attendance
policies, and other relevant criteria relating to course completion
(collectively, the "Policy Guidelines"). Sellers have delivered or made
available to Buyer true, correct and complete copies of all Policy Guidelines
and all documents and other information disseminated to students or prospective
students concerning such Policy Guidelines. Except as set forth in SCHEDULE
--------
5.6(b), Sellers' operations with respect to each Tier I School have, in all
material respects, been conducted in accordance with the Policy Guidelines.
Sellers have submitted all reports, audits, and other information, whether
periodic in nature or pursuant to specific requests, for each Tier I School
("Compliance Reports") to all Regulatory Agencies with which such filings are
required relating to its compliance with (i) applicable accreditation standards
governing its activities, and (ii) laws or regulations governing programs
pursuant to which Sellers or their students receive student financial
assistance. Complete and accurate records in all material respects for all
present and former students attending each Tier I School have been maintained
consistent with the operations of each Tier I School's business. All forms,
records, reports and returns with respect to each Tier I School have been
prepared, completed, maintained and filed in all material respects in accordance
with all applicable federal and state
12
laws and regulations and requirements of any Regulatory Agency, and are true and
correct in all material respects.
5.7 Cohort Default Rate. SCHEDULE 5.7 attached hereto sets forth the
------------------- --------
cohort default rate for each Tier I School, calculated in the manner prescribed
by ED, for fiscal years 1992, 1993 and 1994. To the best knowledge of the
Selling Parties, such schedule is accurate in all material respects.
5.8 Title to and Condition of the Purchased Assets.
----------------------------------------------
5.8.1 Leased Facilities. The leased facilities set forth on
-----------------
SCHEDULE 5.8.1 (the "Facilities") constitute the only real property used in
--------
connection with the operation of any Tier I School which is leased by Sellers.
5.8.2 Laws and Regulations; Records. Except as set forth on
-----------------------------
SCHEDULE 5.8.2, all of Sellers' operations with respect to each Tier I School
--------
are conducted at the Facilities, and all of the Purchased Assets of each Tier I
School are, or as of the Tier Closings will be, located at the Facilities;
provided, however, that certain records are in the possession of Global
Financial Aid Services, Inc. ("Global") as agent for Sellers and will remain in
the possession of Global, which will retain the records as agent for Buyer.
Sellers are not under any contractual or other legal obligation and have not
entered into any commitment to make capital improvements or alterations to the
Facilities. The Facilities are not subject to any zoning ordinance or other
restrictions which would prohibit the use and enjoyment of the Facilities in any
material respects in the manner in which the Facilities are currently used. The
Selling Parties have no knowledge of any condemnation proceedings relating to
any Facility. To the best of Selling Parties' knowledge, each Facility and
Sellers' use thereof is in compliance in all material respects with all laws,
including, without limitation, the Americans with Disabilities Act.
5.8.3 Title. Sellers own outright, and have good and marketable
-----
title to, all of the Purchased Assets of the Tier I Schools, free and clear of
all liens, claims and encumbrances, options, rights, and restrictions, other
than the Assumed Liabilities, liens for current taxes not yet due and payable
and as otherwise disclosed in SCHEDULE 5.8.3 hereto (collectively, the
--------
"Permitted Exceptions"). All leases for tangible personal property used by
Sellers in connection with the operation of any Tier I School are valid and in
full force and effect and are enforceable in all material respects in accordance
with their terms. Except as set forth in SCHEDULE 5.8.3, neither Sellers nor,
--------
to the best of Selling Parties' knowledge, any of the other parties thereto, are
in material default under any lease for tangible personal property, and no
event, act or omission has occurred which (with or without notice, the passage
of time or the happening or occurrence of any other event) would result in such
a default thereunder.
5.8.4 Purchased Assets. The tangible Purchased Assets which are
----------------
owned or leased by Sellers and used in connection with the operation of the Tier
I Schools are in useable condition in the ordinary course of business consistent
with past practice, subject to ordinary wear and tear, and are adequate for all
current operations of the Tier I Schools in all
13
material respects. Except as set forth on SCHEDULE 5.8.4, the Selling Parties
--------
have not received notice of any violation of or default under any law, or
government ordinance or regulation relating to any of the Purchased Assets of
the Tier I Schools, which if uncured or unresolved would have a material adverse
effect on the Purchased Assets, taken as a whole or on any Material Asset (as
defined in Section 5.11 below).
5.9 Assumed Contracts. Except for student enrollment or maintenance
-----------------
contracts, SCHEDULE 5.9 attached hereto lists each of the Assumed Contracts
--------
relating to any Tier I School or to which any of the Purchased Assets is subject
or bound that individually, or together as a series of related Assumed Contracts
involving the same party or parties, or the successors to such party or parties:
(a) obligates Sellers or their Affiliates to pay an amount of $10,000 or more in
any fiscal year, (b) has an unexpired term as of the date of this Agreement in
excess of twenty-four (24) months, (c) was not made in the ordinary course of
business, or (d) is in any way otherwise material to the operation of any Tier I
School. To the best of the Selling Parties' knowledge, each Assumed Contract
listed on SCHEDULE 5.9 is valid and existing. Except as set forth on SCHEDULE
-------- --------
5.9, Sellers have duly performed all obligations under the Assumed Contracts
listed on SCHEDULE 5.9 in all material respects to the extent that such
--------
obligations to perform have accrued. Except as set forth on SCHEDULE 5.9,
--------
Sellers have not received written notice of any alleged breach or default, and
to the Selling Parties' knowledge, no event which would (with the passage of
time, notice or both) constitute a material breach or default by Sellers or any
other party or obligor with respect thereto, has occurred. True and correct
copies of the Assumed Contracts listed on SCHEDULE 5.9, including all amendments
--------
and supplements thereto, have been made available to Buyer or Buyer's counsel.
For purposes of this Agreement, the term "Affiliate" of any person or entity
means any corporation, partnership or other entity of which more than 50% of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect more than 50% of the board of directors or others
performing similar functions with respect to such corporation, partnership or
other entity, directly or indirectly, controls, is controlled by, or is under
common control with such person or entity.
5.10 Intentionally Omitted.
---------------------
5.11 Financial Statements; Indebtedness. Attached hereto as SCHEDULE
---------------------------------- --------
5.11(a) are the following financial statements of the Tier I Schools: Balance
Sheets at the end of fiscal years 1993, 1994 and 1995 and Income Statements for
the fiscal years ended 1993, 1994 and 1995, which have been prepared from the
detailed subsidiary schedules which support the audited consolidated financial
statements of Xxxxxxxx for the fiscal years ended 1993, 1994 and 1995
(collectively, the "Financial Statements"). The balance sheets included in the
Financial Statements present fairly in accordance with generally accepted
accounting principles ("GAAP") the assets and liabilities of the Tier I Schools
as of the respective dates thereof, and the related Income Statements present
fairly in accordance with GAAP the results of operations of the Tier I Schools
for the respective periods covered thereby. The Financial Statements (i) have
been prepared based upon the books and records maintained by Sellers in a manner
consistent with the Selling Parties' standard internal accounting practices,
consistently applied, except as noted on SCHEDULE 5.11(a), (ii) are
--------
substantially correct and complete, and (iii) fairly present the
14
financial position of the Tier I Schools as of the dates of such Financial
Statements, and the results of operations for the periods covered by such
Financial Statements. Sellers have maintained the books and records of the Tier
I Schools in accordance with applicable laws, rules and regulations and with
GAAP, and such books and records are, and during the periods covered by the
Financial Statements were, correct and complete in all material respects, fairly
reflecting the income, expenses, assets and liabilities of the Tier I Schools.
Upon each Tier Closing, Buyer and the Purchased Assets shall not be subject to
any liabilities with respect to any letters of credit, guaranty or other
financial security arrangements provided by the Selling Parties in connection
with any transactions, approvals or licenses in the ordinary course of the Tier
I Schools' business. As of the date hereof, none of the Tier I Schools has any
indebtedness, liability or obligation of any nature in excess of $25,000,
whether absolute, accrued, or contingent, except as previously disclosed to
Buyer and listed on SCHEDULE 5.11(b), and except for:
--------
(i) those set forth or reserved for in the unaudited interim
balance sheet of the Tier I Schools as of August 31, 1996, a copy of which
is attached hereto as a part of SCHEDULE 5.11(c), to the extent set forth,
--------
reserved against or disclosed; and
(ii) those incurred since August 31, 1996, in the ordinary
course of business and consistent in nature with past practice.
To the best of the Selling Parties' knowledge, there exists no condition
relating to any Tier I School, whether absolute, accrued or contingent, which is
reasonably likely to have a material adverse effect on the Purchased Assets
taken as a whole or on the transactions contemplated by this Agreement taken as
a whole or on the results of operations of any of the following (each a
"Material Asset"): (i) Orlando College - South; (ii) Tampa College - Main;
(iii) Tampa College - Pinellas; (iv) all Florida Schools listed on EXHIBIT B,
-------
taken as a whole, but not including the Schools listed in clauses (i)-(iii)
above; or (v) all Xxxxxx Schools and Xxxxxx Group Schools listed on EXHIBIT B,
-------
taken as a whole, or which is reasonably likely to prevent the operations of any
of the Material Assets from being carried on in the future in substantially the
same manner as they are presently being conducted. There are no long-term fixed
or contractual liabilities relating to the operation of any Tier I School which
are required to be assumed by Buyer in order to continue to operate any Tier I
School as presently operated by Seller, the annual expense of which are not
reflected in the Financial Statements where required by GAAP or which are not
otherwise disclosed or set forth in this Agreement or any schedule hereto or the
Assignment and Assumption Agreement.
5.12 Receivables. The tuition receivable, and accounts receivable,
-----------
notes receivable and other receivables of each Tier I School, except to the
extent of the allowance for cancellations and doubtful accounts set forth in the
Financial Statements, are bona fide receivables, arose out of arms' length
transactions in the normal and usual practices of Sellers and such Tier I
School, and are recorded correctly on the books and records of Sellers and such
Tier I School, and to the best of the Selling Parties' knowledge, are in the
aggregate collectible at their full amount (net of allowances for doubtful
accounts established in accordance with consistently applied prior practice).
To the best knowledge of the Selling Parties, such
15
receivables are not subject to any defense, counterclaim or setoff or trade
discounts or credits not reflected in the Financial Statements (other than
tuition refund policies administered in accordance with all applicable legal
requirements and the applicable Policy Guidelines), and Sellers have no
knowledge of any facts or circumstances which would cause any material amount of
such receivables to have to be written down or written off. Notwithstanding
anything to the contrary in this Section 5.12, it is recognized that the
allowance for doubtful accounts with respect to the TFC Notes is being adjusted
subsequent to the information set forth in the Financial Statements.
5.13 Inventories. The only inventories maintained by Sellers in
-----------
connection with the operation of the Tier I Schools consist of supplies used in
the ordinary course of business of the Tier I Schools. Such supplies are in all
material respects usable in the ordinary and regular course of business, are in
all material respects fit for the purpose for which they were purchased, and, at
the date of this Agreement, are in customary amounts maintained by Sellers for
operations of the Tier I Schools.
5.14 Litigation. Except as set forth in SCHEDULE 5.14 attached
---------- --------
hereto, (i) there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the best of the Selling Parties' knowledge, threatened
against or affecting any Tier I School at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality or
accrediting body pertaining to or affecting any Tier I School, (ii) to the best
of the Selling Parties' knowledge, no Tier I School is the subject of any
governmental investigations or inquiries (including inquiries as to the
qualification to hold or receive any of the Licenses and Permits) and (iii) to
the best of Selling Parties' knowledge, there is no basis for any of the
foregoing.
5.15 Insurance. To the best of the Selling Parties' knowledge, the
---------
Facilities and the Purchased Assets are insurable, and SCHEDULE 5.15 attached
--------
hereto sets forth the insurance coverages maintained by Sellers on the
Facilities and the Purchased Assets, including all policies or binders of fire,
extended coverage, general and vehicular, fidelity and fiduciary liability,
workers' compensation, key-man life and other insurance held by Sellers and all
binders for insurance to be purchased on or before the date of the Tier I
Closing, in order to replace policies expiring prior to the date of the Tier I
Closing. Such policies and binders are in full force and effect, and, except as
set forth on SCHEDULE 5.15, there is no material breach or default with respect
--------
to any provision contained in any such policy or binder, and all premiums, to
the extent due and payable, have been paid or the liability therefor properly
accrued. Except for amounts deductible under such policies of insurance and
except as otherwise set forth on SCHEDULE 5.15, Sellers are not and have not
--------
been, prior to the date hereof, subject to liability as a self-insurer for the
Tier I Schools. Except as set forth on SCHEDULE 5.15, there are no claims
--------
pending or threatened under any of said policies pertaining to any Tier I School
or disputes with underwriters regarding coverage under such policies pertaining
to any Tier I School. Except as set forth on SCHEDULE 5.15, to the best of the
--------
Selling Parties' knowledge, the execution and delivery of this Agreement, will
not result in the loss to Sellers of any of the insurance policies listed or
impair the rights of Sellers with respect to liabilities arising in connection
with the operation of any Tier I School prior to the Tier I Closing. Within the
five years prior to the
16
date hereof, Sellers have not been denied insurance for any Tier I School, or
been offered insurance for any Tier I School only at a commercially prohibitive
premium.
5.16 Environmental Matters. Except as set forth in SCHEDULE 5.16, in
--------------------- --------
connection with the operations of the Tier I Schools, Sellers have not
generated, transported, stored, treated or disposed of, nor have they allowed or
arranged for any third persons to transport, store, treat or dispose of, any
hazardous substance to or at: (a) any location other than a site lawfully
permitted to receive such hazardous substance for such purposes or (b) any
location designated for remedial action pursuant to federal, state or local
statute and relating to the environment or waste disposal; nor has any Seller
performed, arranged for or allowed by any method or procedure such
transportation or disposal in contravention of any laws or regulations or in any
other manner which may result in liability for contamination or threat of
contamination of the environment. Except as set forth in SCHEDULE 5.16, no
--------
generation, use, handling, storage, treatment, release, threat of release,
discharge, spillage or disposal of any hazardous substance, has occurred or is
occurring at the Facilities or any other facilities or properties owned or
operated by such Seller in connection with its operation of the Tier I Schools.
Except as set forth in SCHEDULE 5.16, no Seller has received notification, nor
--------
is any Seller aware of, any past or present failure by it to comply with any
environmental laws, regulations, permits, franchises, licenses or orders
applicable to the Tier I Schools or their operations. Except as set forth in
SCHEDULE 5.16, no Seller has received any notification, nor is it aware of, any
--------
past or present failure to comply, with any environmental laws, regulations,
permits, franchises, licenses or orders applicable to its operations other than
the Tier I Schools which may result in judicial, regulatory or other legal
proceedings having a material adverse impact on the operations of the Tier I
Schools or result in the imposition of any lien, claim, assessment or other
encumbrance against the Purchased Assets. To the best of the Selling Parties'
knowledge, the Facilities do not contain asbestos or polychlorinated biphenyls
or any underground storage tanks.
5.17 Employee Benefit Plans. Each "employee benefit plan" as such
----------------------
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") ("Plans"), and related trust agreement (as
applicable) sponsored, contributed to or operated by any Selling Party has been
administered and operated in all material respects in accordance with its terms
and applicable law. Other than claims for benefit payments in the ordinary
course under the Plans, there are no actions, suits, claims or proceedings,
pending or, to the best of the Selling Parties' knowledge, threatened. No
Selling Party is now, nor has ever been a participant in, any Multiemployer Plan
within the meaning of Section 3(37) of ERISA. Accrued liabilities under the
Plans maintained for the employees of the Tier I Schools are provided for on the
books or in the Financial Statements or have been fully provided for by
contributions to such Plans. No liabilities exist under any Plan which shall
become liabilities of Buyer by operation of law or otherwise. As of the date
hereof, no Seller maintains any employee welfare benefit plan, as defined in
Section 3(1) of ERISA, which provides post-retirement benefits to former
employees of the Tier I Schools and to current employees of the Tier I Schools
after their termination of employment (including, without limitation, medical
and life insurance benefits), other than as may be required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended and interpreted by
regulations thereunder ("COBRA").
17
The Selling Parties shall provide any notices required under COBRA for events
occurring on or prior to the date of the Tier I Closing and shall provide all
benefits required pursuant to COBRA in connection therewith.
5.18 Employment Matters. Other than as disclosed in SCHEDULE 5.18:
------------------ --------
Sellers and the Tier I Schools are in compliance in all material respects with
all federal, state and local laws, rules and regulations affecting employment
and employment practices with respect to the Tier I Schools, including terms and
conditions of employment, employment discrimination and wages and hours, and
Sellers are not engaged in any unfair labor practices with respect to employees
of the Tier I Schools; there are no complaints against any Seller with respect
to employees of the Tier I Schools pending before the National Labor Relations
Board or any similar state or local labor agency; there are no labor strikes,
slow-downs or stoppages or other labor troubles pending or, to the best of the
Selling Parties' knowledge, threatened with respect to any employees of the Tier
I Schools; no labor organization activities have occurred with respect to
employees of the Tier I Schools during the past three years; there are no
collective bargaining agreements binding on Sellers relating to the operation of
the Tier I Schools; no grievances have been asserted against Sellers with
respect to employees of the Tier I Schools; and Sellers have not experienced any
work stoppage by their employees at the Tier I Schools during the last three
years.
5.19 Tax Matters. Sellers have completed and filed on or before the
-----------
due dates thereof or within applicable extension periods all returns for taxes
required to be filed, and such returns are true and correct in all material
respects. Sellers have paid all taxes shown to be due and payable on such
returns to the extent that the same have become due and payable on or before the
Tier I Closing. Sellers are not parties to, nor to the best of the Selling
Parties' knowledge, expected to become a party to, any pending or threatened
action or proceeding, assessment or collection of taxes by any governmental
authority relating to the business and operations of Sellers.
5.20 Absence of Certain Changes. Except as contemplated by this
--------------------------
Agreement or as set forth on SCHEDULE 5.20 attached hereto, since August 31,
--------
1996, there has not been, occurred or arisen:
5.20.1 any sale, lease, transfer, abandonment or other
disposition of any right, title or interest in or to any of the properties
or assets of Sellers used in connection with the operations of any Tier I
School (tangible or intangible), except in the ordinary course of business;
5.20.2 (i) any approval or action to put into effect any
increase in any compensation or benefits payable to any employee, agent or
officer of Sellers employed or providing services in connection with the
operation of any Tier I School or such Seller or any payment, grant or
accrual to or for the benefit of any such employee, agent or officer of any
bonus, service award, percentage compensation or other benefit, (ii) any
adoption or amendment of any Plans, or any severance agreement or
employment contract to which any such employee,
18
agent or officer of any Tier I School is a party or (iii) any entering into
of any employment, deferred compensation or other agreements with respect
to bonuses, service awards, percentage compensation or other benefits with
any such employee, agent or officer in every case except in the ordinary
course of business;
5.20.3 any material adverse change in the financial condition,
assets, liabilities (absolute, accrued or contingent), reserves or
operations of any of the Material Assets taken as a whole, or any one
thereof;
5.20.4 any damage, destruction or loss, whether or not covered
by insurance, materially adverse to the Purchased Assets;
5.20.5 any change in any material respect in the business
policies or practices of any Tier I School or a failure to operate the
business of any Tier I School in the ordinary course with a view to
preserving such business intact, to retaining the services of the present
officers, employees and agents of Sellers employed or providing services in
connection with the operation of such Tier I School and with a view to
preserving the business relationships of such Tier I School with, and the
goodwill of, students, sales representatives, suppliers, accrediting
bodies, governmental authorities and others; or
5.20.6 any agreement, whether in writing or otherwise, to take
any action described in this Section 5.20.
5.21 Delivery of Documents. All material documents, instruments,
---------------------
agreements and records of Sellers relating to the Purchased Assets, the Assumed
Liabilities, the representations and warranties of Sellers contained in this
Agreement and/or the operation of the Tier I Schools which have been delivered
or made available to Buyer are true, correct and complete in all material
respects.
5.22 Disclosure. Neither this Agreement nor any of the schedules,
----------
exhibits, attachments, documents, certificates or other items prepared or
supplied to Buyer in writing by or on behalf of Xxxxxxxx with respect to the
transactions contemplated hereby or thereby contain any untrue statement of a
material fact or omit a material fact necessary to make such statements not
misleading in light of the circumstances in which such statements were made.
There is no fact which Xxxxxxxx has not disclosed to Buyer in writing and of
which any of Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, C. Xxxxxx Xxxxxxxxxx, Xxxxxx
Xxxxxxxxxxx and any of the presidents of the Tier I Schools is aware which has
had or may reasonably be anticipated to have a material adverse effect upon the
existing or expected financial condition, operating results, assets, employee
relations, accreditation or reputation of any of the Tier I Schools.
5.23 Survival of Representations and Warranties. Subject to the
------------------------------------------
limitations in Sections 9.12 and 9.14 hereof, the representations and warranties
of the Selling Parties contained
19
in this Agreement shall survive the Tier Closings through the second (2nd)
anniversary of the Tier I Closing Date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Selling Parties to enter into this
Agreement, and to sell the Purchased Assets, Buyer hereby represents and
warrants as of the date hereof, that:
6.1 Incorporation; Authority. Each of Xxxxxx, the Xxxxxx Group and
------------------------
FMU is a corporation, duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated, and has all
requisite corporate power and authority to execute, deliver and perform this
Agreement and all other agreements and instruments to be executed by it in
connection with or pursuant hereto (the "Ancillary Documents") and to consummate
the transactions contemplated hereunder.
6.2 Due Authorization; Binding Agreement. Each Buyer has the power,
------------------------------------
legal capacity and authority to execute, deliver and perform this Agreement.
The execution and delivery by each Buyer of this Agreement and all Ancillary
Documents and the performance by each Buyer of its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action on the
part of each Buyer. This Agreement and the Ancillary Documents have been duly
executed and delivered by each Buyer. This Agreement and all Ancillary
Documents constitute the legal, valid and binding obligation and act of each
Buyer enforceable in accordance with the respective terms hereof and thereof,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or equity).
6.3 No Violation or Conflict. The execution, delivery and
------------------------
performance of this Agreement and the Ancillary Documents, the consummation of
the transactions provided for herein and therein, and the fulfillment of the
terms hereof and thereof by each Buyer will not violate any material provision
of law applicable to Buyer, with or without the giving of notice or the passage
of time, or both, conflict with or result in the breach of any provision of the
Certificate of Incorporation or Bylaws of either Buyer, or result in the breach
of any of the terms and provisions of, or constitute a default under, or
conflict with, or cause an acceleration of, any obligation of either Buyer under
any material agreement, license, indenture, commitment or other instrument to
which it is a party or by which any of its assets or properties is bound, or
constitute a violation of any judgment, decree, or order, or award of any court,
governmental body, or arbitrator, or applicable law, rule or regulation
applicable to Buyer, its assets or properties, or require any approval of, or
filing or registration with any governmental entity or regulatory authority.
6.4 No Undisclosed Liabilities. Each Buyer has no liability or
--------------------------
obligation of any nature, whether due or to become due, absolute, contingent or
otherwise, including liabilities for or in respect of federal, state and local
taxes and any interest or penalties relating thereto,
20
except (i) liabilities incurred in the ordinary course of either Buyer's
business prior to the date of the Tier I Closing or Tier II Closing, as
applicable, and (ii) liabilities and obligations created by this Agreement and
the Ancillary Documents.
6.5 Consents and Approvals. No consent, approval or authorization
----------------------
of, or declaration, filing or registration with, any governmental or regulatory
authority, or any third person or entity, is required to be made or obtained by
either Buyer in connection with the execution, delivery or performance of this
Agreement and the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby other than those set forth in SCHEDULE 6.5, all
--------
of which shall have been obtained by Buyer prior to the applicable Tier Closing
to which such approval relates.
6.6 Disclosure. Neither this Agreement nor any representation or
----------
warranty by Buyer in this Agreement or the Ancillary Documents, nor any exhibit,
certificate, schedule attachment or document furnished or to be furnished by
either Buyer pursuant hereto or thereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained herein or therein, in light
of the circumstances under which they were made, not misleading.
6.7 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties of the Buyer contained in this Agreement shall survive the Tier
Closings through the second (2nd) anniversary of the Tier I Closing Date,
subject to the limitations in Sections 9.13 and 9.14 hereof.
ARTICLE VII
COVENANTS
7.1 Covenants of the Selling Parties Pending Tier II Closing. With
--------------------------------------------------------
respect to the Tier II Schools, the Selling Parties covenant and agree with
Buyer that from and after the date hereof and until the Tier II Closing or the
termination of this Agreement pursuant to Article IV hereof, Sellers (i) shall
use their best efforts to fulfill or satisfy, or cause to be fulfilled or
satisfied, all of the conditions precedent to Buyer's obligations to consummate
and complete the sale provided herein including, without limitation,
satisfaction of the conditions set forth in Article VIII, hereof and to take all
other steps and do all other things reasonably required to consummate this
Agreement in accordance with its terms, (ii) shall not interfere with the
performance by Buyer of its obligations under this Agreement, (iii) shall not
fail to pay prior to delinquency any taxes, assessments, governmental charges or
levies imposed upon it or its income, profits or assets, (iv) shall not make or
authorize the making of any capital expenditure except for the performance of
obligations previously incurred, or expenditures in the ordinary course or the
replacement of equipment or tangible property necessary to the operations of the
business of Sellers, (v) shall promptly notify Buyer of any notice from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement, or any fact or circumstance of
which the Selling Parties have knowledge which would make any representation or
warranty set forth herein materially untrue or inaccurate as
21
of the applicable date of the Tier II Closing, or any planned or threatened
labor dispute, organization efforts, strike or collective work stoppage
affecting the employees of Sellers, (vi) shall not take any action outside the
ordinary course of business that would adversely affect any Selling Party's
title to the Purchased Assets to be transferred to Buyer at the Tier II Closing
and (vii) until the earlier of the Tier II Closing or termination of this
Agreement, shall not directly or indirectly solicit, respond to or negotiate
with or release any information relative to the Tier II Schools to any potential
buyer other than Buyer. In addition, from and after the date hereof until the
earlier of the Tier II Closing or termination of this Agreement in accordance
with Article IV hereof, Sellers shall (a) operate the Tier II Schools in the
ordinary course of business consistent with past practices, including processing
of accounts receivable and accounts payable in accordance with past practices,
and processing and paying refunds to students at the Tier II Schools in the
ordinary course of business consistent with Sellers' past practices, and (b)
will use their commercially reasonable efforts to cause any employee of any
Seller to whom Buyer has proposed to extend an offer of employment to continue
to perform and exercise his or her duties (including the duty of loyalty) to
such Seller during such period.
7.2 Covenants of Buyer Pending Tier II Closing. Buyer covenants and
------------------------------------------
agrees with the Selling Parties that from and after the date hereof and until
the termination of this Agreement pursuant to Article IV hereof, each Buyer (i)
shall use its best efforts to fulfill or satisfy, or cause to be fulfilled or
satisfied, all of the conditions precedent to Selling Parties' obligations to
consummate and complete the sale provided herein and to take all other steps and
do all other things reasonably required to consummate this Agreement in
accordance with its terms; (ii) shall not interfere with the performance by
Selling Parties of their obligations under this Agreement; and (iii) shall
secure financing sufficient to allow Buyer to consummate the purchase of the
Purchased Assets in accordance with the terms of this Agreement.
7.3 Closing and Post-Closing Covenants.
----------------------------------
7.3.1 Further Assurances. From time to time after each Tier
------------------
Closing, (i) each of the Selling Parties will use its reasonable efforts for as
long as it continues its corporate existence to execute and deliver such
instruments of conveyance, sale or assignment as Buyer may reasonably request,
to more effectively vest, confirm or evidence Buyer's title to or rights in any
of the Purchased Assets and to otherwise carry out the purpose and intent of
this Agreement, and (ii) Buyer will execute and deliver such instruments as
Selling Parties may reasonably request to more effectively assure the assignment
to and assumption by Buyer of the obligations and liabilities of the Selling
Parties to be assumed by Buyer pursuant to this Agreement and the Assignment and
Assumption Agreement and to otherwise carry out the purpose and intent of this
Agreement.
7.3.2 Mutual Cooperation. The parties shall use reasonable
------------------
efforts to cooperate fully with each other and with their respective counsel and
accountants in connection with any steps required to be taken to consummate the
transactions contemplated hereby and transition management and ownership of the
Schools from Sellers to Buyer. Before and after each Tier Closing, Sellers
shall use their best efforts to assist Buyer in obtaining any required
accreditation reasonably necessary for Buyer's operation of the Schools,
including furnishing
22
Buyer such necessary information and reasonable assistance as Buyer may request
in connection with its preparation of necessary filings, submissions or
accreditation applications to any Regulatory Agency in connection with the
transactions contemplated hereby.
7.3.3 Access to Employees. From and after the Tier I Closing,
-------------------
each of Buyer and the Selling Parties shall afford to the other party, its
officers, counsel, accountants and other authorized representatives (the
"Requesting Party") access to the other party's employees who currently are
employed by the Selling Parties without cost to the Requesting Party (other than
payment of out-of-pocket costs not including personnel costs) and as reasonably
required by the Requesting Party in connection with any claim, action,
litigation, program review, audit or other proceeding involving the Selling
Parties, a School or any other school previously owned or operated by the
Selling Parties, except where such claim, action, litigation or other proceeding
is between the parties to this Agreement. Each party shall use its reasonable
efforts to cause such employees to cooperate with and assist the Requesting
Party in its prosecution or defense of such claims, actions, litigations,
program reviews, audits and other proceedings, which cooperation shall include,
without limitation, preparing and providing written and oral discovery and
attending and testifying at depositions, hearings, motions and trials, all as
necessary in the reasonable opinion of the Requesting Party or its counsel. Any
such access shall take place only during normal business hours in such a manner
as not to interfere unreasonably with the operation of the business of the other
party.
7.3.4 Best Efforts to Satisfy Conditions. After each Tier
----------------------------------
Closing, Buyer shall provide to any of the Regulatory Agencies all information
required or reasonably requested by any of them, and Buyer shall use its best
efforts to satisfy promptly all requirements and demands of ED or any other
Regulatory Agency requisite to obtaining certification. Without limiting the
foregoing, Buyer shall submit to ED promptly a completed Application for
Approval to Participate in Federal Student Aid Programs or other application for
certification for the Schools after the Tier I Closing or Tier II Closing, as
applicable.
7.3.5 Eligibility to Participate in Federal Student Financial
-------------------------------------------------------
Assistance Programs. Buyer expressly acknowledges that documentation
-------------------
establishing each School's eligibility and certification to participate in the
programs administered under Title IV under Buyer's ownership must be issued by
the U.S. Department of Education before any such School may participate in the
Federal student financial assistance programs under such Title.
7.3.6 Refunds/Enrollment Contracts. Buyer agrees to (a) abide
----------------------------
by the refund policy in effect at each School for students enrolled prior to the
Tier I Closing Date, except to the extent such policy must be modified in
conformance with requirements of any Regulatory Agency, and (b) honor student
enrollment contracts entered into prior to the Tier I Closing Date with respect
to students at the Tier I Schools and the Tier II Closing Date with respect to
students at the Tier II Schools and assumed by the Buyer in accordance with this
Agreement and the Assignment and Assumption Agreement.
7.3.7 Income Statement. Xxxxxxxx agrees to provide to Buyer,
----------------
within 90 days of the Tier I Closing, a compiled combining income statement of
the Tier I Schools
23
combined, detailing each Tier I School on a separate schedule, for the current
fiscal year through the Tier I Closing.
7.4 Administration of the Schools. From and after the Tier I
-----------------------------
Closing, or Tier II Closing, as applicable, Buyer, at Buyer's sole cost and
expense, shall administer and operate the Schools in accordance with all federal
and state laws, statutes, rules and regulations and in accordance with all
licenses, permits, accreditations, authorizations and agreements issued by or
entered into with any Regulatory Agency in any way regulating or otherwise
relating to the administration and operation of the Schools, or any of them.
Subject to the terms and provisions of this Agreement, Buyer and Sellers shall
work together cooperatively and in good faith to obtain any and all approvals
from any Regulatory Agency that may be necessary or appropriate to vest in Buyer
the right and authority to administer and operate the Schools and to release
Selling Parties from further liability or obligations in connection with the
administration or operation of the Schools.
7.5 Access and Maintenance of Records. From and after the Tier I
---------------------------------
Closing, each party shall afford the other party, its officers, counsel,
accountants and other authorized representatives and any Regulatory Agency (the
"Reviewing Party") access to the other party's properties, books, records, files
or documents, at any time and from time to time upon reasonable notice from the
Reviewing Party, as reasonably required by the Reviewing Party. Until seven
years after the Tier I Closing or until the expiration of the record retention
period under relevant Regulatory Agency requirements, if longer, no party to
this Agreement will destroy or otherwise dispose of or change the storage format
of any of the properties, books, records, files or documents relating to the
Purchased Assets without giving the parties on the other hand thirty (30) days'
prior written notice and an opportunity to take possession or make extracts or
copies thereof. "Properties, books, records, files or documents" shall include,
but not be limited to, copies of any insurance policies, testing logs,
application forms, all student records, including academic and financial aid
records and files, attendance records, all accounting records, including student
accounts, accreditation reports, personnel files, financial statements,
operational reports, school policies, correspondence, all reports prepared for
or provided to any Regulatory Agency, all records that the Schools retained
pursuant to relevant Regulatory Agency requirements and any other properties,
books, records, files or documents that are provided to Buyer pursuant to
Section 1.1.4 of this Agreement. The Buyer shall permit the Secretary of
Education or the Secretary's authorized representatives to have access to and
examine and make copies of any books, records, files or documents of Buyer in
accordance with applicable statutory or regulatory requirements. Any document
or other information obtained from a party hereunder that is designated by such
party as confidential shall be maintained in confidence by the Reviewing Party,
except to the extent that the Reviewing Party is required by law or regulation
to disclose all or part of such document or information or deems it appropriate
to do so in connection with any administrative, regulatory or judicial process.
Notwithstanding any of the foregoing, upon the reasonable request of any of the
Selling Parties, the Buyer agrees to provide access to any purchaser or proposed
purchaser of any school or schools currently owned, directly or indirectly, by
any of the Selling Parties to any properties, books, records, files or documents
provided to Buyer pursuant to Section 1.1.4 of this Agreement which relate to
the school or schools sold or to be sold to such purchaser.
24
ARTICLE VIII
CONDITIONS
8.1 Conditions Precedent to Obligations of Buyer at the Tier II
-----------------------------------------------------------
Closing. The obligation of Buyer to complete the purchase of Purchased Assets
-------
of the Tier II Schools as provided for herein is subject to the fulfillment or
satisfaction on or before the Tier II Closing of each of the conditions set
forth below, any of which may be waived by Buyer in writing.
8.1.1 All representations and warranties of each of the Selling
Parties contained in this Agreement shall be true and correct in all material
respects as of the date of the Tier II Closing (except to the extent such
representations and warranties speak of a particular date), and Buyer shall have
received a certificate signed by one executive officer of Xxxxxxxx,
substantially in the form as set forth in EXHIBIT E-2, to such effect;
-------
8.1.2 Each of the Selling Parties shall have performed in all
material respects all of the obligations, covenants and agreements contained in
this Agreement to be performed by it on or before the date of the Tier II
Closing, as applicable, and Buyer shall have received a certificate signed by
one executive officer of Xxxxxxxx, substantially in the form as set forth in
EXHIBIT E-2, to such effect;
-------
8.1.3 All instruments and documents required on the part of each
of the Selling Parties to effectuate and consummate the transactions
contemplated hereby as of the Tier II Closing, as applicable, including those
set forth in Section 3.3, shall be delivered by the appropriate Selling Party
and shall be in form and substance reasonably satisfactory to Buyer and its
counsel;
8.1.4 No law or order shall have been enacted, entered, issued,
or promulgated by any governmental entity which prohibits or restricts the
transactions contemplated hereby, and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any court or
governmental agency or other regulatory or administrative agency or commission,
challenging any of the transactions contemplated by this Agreement or seeking
monetary relief by reason of the consummation of such transactions;
8.1.5 Sellers shall have provided evidence satisfactory to Buyer
that all obligations due under the leases and refunds due more than thirty days
prior to the Tier II Closing have been satisfied, released and/or paid in full
with such evidence with respect to the refunds to consist of copies of checks
payable to ED or to the appropriate lender in the amount of the refunds; and
8.1.6 Buyer shall have received satisfactory evidence that all
liens (other than the Permitted Exceptions) on the Purchased Assets have been
terminated and completely released of record.
8.2 Intentionally Omitted.
---------------------
25
8.3 Conditions Precedent to Obligations of Buyer at the Tier II
-----------------------------------------------------------
Closing. Buyer shall have no obligation to purchase the Purchased Assets
-------
related to any Tier II School unless, prior to October 31, 1996, Buyer receives
official written determination from the ED that such Tier II School's official
1994 CDR is less than 25% (a "CDR Verification"). The Tier II Payment shall
equal the sum of the Tier II Bid Prices listed on EXHIBIT B for all Tier II
-------
Schools for which Buyer receives CDR Verifications. In the event any such
official written notification from the ED provides that the official 1994 CDR
for any Tier II School is less than 20%, then the Tier II Payment (and, as a
result, the Purchase Price) shall be increased by an amount equal to the excess
of such School's Alternate Tier II Bid Price over such School's Tier II Bid
Price, all as listed on EXHIBIT B.
-------
8.4 Conditions Precedent to Obligations of Selling Parties. The
------------------------------------------------------
obligations of the Selling Parties to complete the sale of Purchased Assets as
provided for herein are subject to the fulfillment or satisfaction on or before
the date of the Tier II Closing of each of the conditions set forth below, any
of which may be waived by the Selling Parties in writing.
8.4.1 All representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects as of the date
of the Tier II Closing with the same force and effect as if the same had been
made on and as of the date of the Tier II Closing (except to the extent such
representations and warranties speak of a particular date), and the Selling
Parties shall have received a certificate signed by two executive officers of
Buyer, substantially in the form as set forth in EXHIBIT E-1, to such effect;
-------
8.4.2 Buyer shall have performed in all material respects all of
the obligations, covenants and agreements contained in this Agreement to be
performed by Buyer on or before the date of the Tier II Closing and the Selling
Parties shall have received a certificate signed by two executive officers of
Buyer, substantially in the form as set forth in EXHIBIT E-1, to such effect;
-------
8.4.3 All instruments and documents required on Buyer's part to
effectuate and consummate the transactions contemplated hereby including those
set forth in Section 3.4 shall be delivered by Buyer and shall be in form and
substance reasonably satisfactory to the Selling Parties and their counsel;
8.4.4 No law or order shall have been enacted, entered, issued,
or promulgated by any governmental entity which prohibits or restricts the
transactions contemplated hereby and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any court or
governmental agency or other regulatory or administrative agency or commission,
challenging any of the transactions contemplated by this Agreement or seeking
monetary relief by reason of the consummation of such transactions.
26
ARTICLE IX
MISCELLANEOUS
9.1 Binding Effect. All terms and provisions of this Agreement shall
--------------
be binding upon and shall inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement, nor the obligations of any party hereunder, shall be assignable
or transferable by any party without the prior written consent of all parties
hereto. If Buyer desires to assign its right to acquire a portion of the
Purchased Assets to an affiliated entity, the Selling Parties will consider such
request in good faith and will not unreasonably withhold consent; provided,
however, that Buyer shall remain liable for the payment of the entire Purchase
Price notwithstanding such assignment or transfer. Without limiting the Selling
Parties' rights of approval, the parties acknowledge that approval may be
withheld if the Selling Parties believe such assignment may impair or otherwise
negatively affect Buyer's ability to obtain timely all accreditations, approvals
and consents (including, without limitation, ED certification of the Schools to
participate in the Title IV Programs under the ownership of Buyer) contemplated
in this Agreement.
9.2 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.
if to Buyer, at:
Corinthian Colleges, Inc.
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx, President
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
if to any of the Selling Parties, at:
Xxxxxxxx Colleges, Inc.
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Chief Executive Officer
27
with a copy to:
Xxxxxxx & Marsal, Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Dow, Xxxxxx & Xxxxxxxxx PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxx X. Bureau, Esq.
or 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 9.2. Notices shall be deemed effective and received (i) on the
actual receipt thereof in the case of hand delivery, or (ii) 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.
9.3 Entire Agreement. This Agreement and the documents referred to
----------------
herein and therein and to be delivered in connection herewith constitute the
entire agreement between the parties pertaining to the subject matter hereof,
and supersede all prior agreements, understandings, negotiations,
representations, warranties and discussions of the parties, whether oral or
written; and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein or therein. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby.
9.4 Risk of Loss or Damage; Insurance. It is understood and agreed
---------------------------------
that all right, title and interest in and to the Purchased Assets and all risk
of loss or damage thereto shall not pass from the Selling Parties to Buyer
unless and until the Tier I Closing whereupon all risk of loss or damage shall
pass to Buyer. In the event of a casualty or condemnation in respect of the
Purchased Assets prior to the Tier I Closing, Buyer shall have the right, at its
sole option, to elect to either terminate this Agreement or to accept the
insurance proceeds in respect of such casualty or condemnation and proceed to
close otherwise in accordance with the terms and conditions of this Agreement.
9.5 Waiver. No waiver shall be deemed to have been made by any party
------
of any of its rights hereunder unless the same shall be in writing and shall be
signed by the waiving party. Such a waiver, if any, shall be a waiver only in
respect to the specific instance involved and shall in no way impair the rights
of the waiving party or the obligations of any other party in any other respect
at any other time. No waiver of any of the provisions of this Agreement
28
shall be deemed or shall constitute a waiver of any other provision of this
Agreement, whether or not similar, nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
9.6 Governing Law. This Agreement shall be construed and interpreted
-------------
according to the substantive laws of the State of California without giving
effect to the principles of conflicts of law thereof.
9.7 Headings. The headings of the articles and sections of this
--------
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.
9.8 Counterparts. This Agreement may be executed by the parties in
------------
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.9 Severability. In the event that any one or more terms or
------------
provisions hereof shall be held void or unenforceable by any court or
arbitrator, all remaining terms and provisions hereof shall remain in full force
and effect.
9.10 Time is of the Essence. The Selling Parties and Buyer agree that
----------------------
time is of the essence in connection with the implementation and performance by
the parties of all terms, conditions and obligations of this Agreement.
9.11 Brokers or Finders. None of the Selling Parties has retained any
------------------
broker or finder and is not and will not be obligated to pay any brokers' or
finders' fee in connection with the negotiation or consummation of the
transactions contemplated by this Agreement, except for the retention of the
management consulting firm of Xxxxxxx & Marsal, Inc. ("A&M") by Xxxxxxxx.
Xxxxxxxx is responsible for fees payable to A&M in respect of the transactions
contemplated by this Agreement. The Buyer has not retained any broker or finder
and is not and will not be obligated to pay any brokers' or finders' fee in
connection with the negotiation or consummation of the transactions contemplated
by this Agreement, except for the retention of Banc-One Capital Group by Buyer.
Buyer is responsible for fees payable to Banc-One Capital Group in respect of
the transactions contemplated by this Agreement.
9.12 Indemnification by Selling Parties. The Selling Parties, jointly
----------------------------------
and severally, hereby indemnify, defend and hold harmless Buyer and its
Affiliates and their respective officers and directors from and against:
(a) any loss, liability, claim, obligation, damage or deficiency
arising out of or resulting from any material breach of any representation or
warranty or nonfulfillment of any covenant or agreement on the part of the
Selling Parties contained in this Agreement or any other agreement, statement or
certificate furnished or to be furnished by the Selling Parties in connection
with the transactions contemplated hereby which is not cured within twenty (20)
calendar days of written notice thereof from Buyer to the Selling Parties;
29
(b) any loss, liability, claim, obligation, damage or
deficiency arising out of or resulting from any claim related to or arising out
of the operation of the Schools prior to the Tier I Closing that are asserted
with respect to any liabilities that are not Assumed Liabilities; and
(c) any actions, judgments, costs and expenses (including
reasonable attorneys' fees, expert witness fees and all other expenses incurred
in investigating, preparing or defending any litigation or proceeding, commenced
or threatened) incident to any of the foregoing or the enforcement of this
Section 9.12.
9.13 Indemnification by Buyer. Xxxxxx, the Xxxxxx Group and FMU,
------------------------
jointly and severally, hereby indemnify, defend and hold harmless each of the
Selling Parties and their Affiliates and their respective officers and directors
from and against:
(a) any loss, liability, claim, obligation, damage or
deficiency arising out of or resulting from any material breach of any
representation or warranty or nonfulfillment of any covenant or agreement on the
part of Buyer contained in this Agreement or any other agreement, statement or
certificate furnished or to be furnished by Buyer in connection with the
transactions contemplated hereby which is not cured within twenty (20) calendar
days of written notice thereof from the Selling Parties to the Buyer;
(b) any loss, liability, claim, obligation, damage or
deficiency resulting from or arising out of the failure by Buyer to pay, perform
or discharge, or cause to be paid, performed or discharged, any of the Assumed
Liabilities; and
(c) any actions, judgments, costs and expenses (including
reasonable attorneys' fees, expert witness fees and all other expenses incurred
in investigating, preparing or defending any litigation or proceeding, commenced
or threatened) incident to any of the foregoing or the enforcement of this
Section 9.13.
9.14 Procedure for Indemnification.
-----------------------------
9.14.1 The provisions of this Section 9.14 shall govern any
claim for indemnification of Buyer and its Affiliates, pursuant to Section 9.12,
or of the Selling Parties and their Affiliates, pursuant to Section 9.13 (each
such party an "Indemnitee") against the party agreeing to provide
indemnification hereunder (the "Indemnitor").
9.14.2 The Indemnitee shall promptly give notice hereunder to
the Indemnitor, but in no event more than the lesser of 30 days or, with respect
to third party claims, one-half (1/2) of the response time required with respect
to the third party's notice to the Indemnitee, after obtaining notice of any
claim as to which recovery may be sought against the Indemnitor because of the
indemnity in Sections 9.12 or 9.13, and, if such indemnity shall arise from the
claim of a third party, the Indemnitee shall consent to the Indemnitor assuming
the defense of any such claim; provided that the Indemnitee shall not be
--------
required to permit the Indemnitor to assume the defense of any third party claim
(x) which, if not first paid, discharged
30
or otherwise complied with, would result in a material interruption or cessation
of the conduct of the business of the Indemnitee, or (y) if the Indemnitee
reasonably concludes that there may be a conflict of interest between the
Indemnitor, on the one hand, and the Indemnitee, on the other hand, in the
conduct of the defense of such action. Failure by the Indemnitor to notify the
Indemnitee of its election to defend any such claim or action within 14 days of
the date of notice from the Indemnitee shall be deemed to constitute its consent
to the Indemnitee's assumption of such defense. If the Indemnitor assumes the
defense of such claim or litigation resulting therefrom, the obligations of the
Indemnitor hereunder as to such claim shall include taking all steps necessary
in the defense or settlement of such claim or litigation resulting therefrom
including the retention of counsel, which counsel must be to the Indemnitee's
reasonable satisfaction, and holding the Indemnitee harmless from and against
any and all damages resulting from, arising out of, or incurred with respect to
any settlement approved by the Indemnitor or any judgment in connection with
such claim or litigation resulting therefrom. The Indemnitor shall not, in the
defense of such claim or litigation, (i) consent to the entry of any judgment
(other than a judgment of dismissal on the merits without costs) except with the
written consent of the Indemnitee, which consent shall not be unreasonably
withheld or (ii) enter into any settlement (except with the written consent of
the Indemnitee, which consent shall not be unreasonably withheld), unless the
Indemnitee is released and held harmless from and against any and all damages
resulting from, arising out of or incurred with respect to such judgment or
settlement.
9.14.3 If the Indemnitor is offered the opportunity to, but
shall not assume the defense of any such claim by a third party or litigation
resulting therefrom, the Indemnitee may defend against such claim or litigation
in such manner as it deems appropriate, and the Indemnitee may settle such claim
or litigation on such terms as it may deem appropriate and the Indemnitor shall
promptly reimburse the Indemnitee for the amount of such settlement and for all
damages incurred by the Indemnitee in connection with the defense against or
settlement of such claim or litigation.
9.14.4 Indemnification Floor. Notwithstanding anything to the
---------------------
contrary herein, any claim by an Indemnitee against an Indemnitor under this
Agreement that has been Definitively Resolved (as hereinafter defined) against
the Indemnitor, shall be payable by the Indemnitor only in the event and to the
extent that the accumulated amount of all such Settled Claims (as hereinafter
defined) shall exceed the amount of One Hundred Thousand Dollars ($100,000) in
the aggregate, including any amounts claimed under any other agreement executed
in connection with this Agreement (the "Basket Amount"). At such time as the
aggregate amount of Settled Claims of an Indemnitor shall exceed the Basket
Amount, such Indemnitor shall thereafter be liable on a dollar-for-dollar basis
for all Settled Claims, including the Basket Amount.
9.14.5 Intentionally Omitted.
---------------------
9.14.6 Maximum Liabilities. In no event shall the maximum
-------------------
aggregate liability of the Selling Parties with respect to all claims under this
Article IX exceed the aggregate amount of the Purchase Price.
31
9.14.7 Definition. For purposes hereof, any claim for
----------
indemnification hereunder shall be deemed to have been "Definitively Resolved"
when any of the following has occurred:
(a) a claim is settled by mutual agreement of the
parties;
(b) forty-five (45) days have elapsed since the receipt
by the party against which indemnification has been claimed and the claiming
party has not received on or before such date, a written notice disputing such
claim; or
(c) a judgment, order or award of a court of competent
jurisdiction or arbitrator or administrative judge deciding such claim has been
rendered, as evidenced by a certified copy of such judgment, order or award
("Original Judgment"); provided, however, if the Original Judgment is reversed
or modified on appeal, the Indemnitee shall repay the Indemnitor any amounts
received by the Indemnitee from the Indemnitor as a result of the Original
Judgment (with the Indemnitor remaining responsible for any amounts awarded to
the Indemnitee in connection with modification of the Original Judgment);
provided, however, that the Indemnitee must continue to appeal or challenge the
Original Judgment in accordance with its rights if there is a reasonable basis
to conclude that such Original Judgment could be reversed or modified on appeal.
Any indemnity claim that has been Definitively Resolved against an
Indemnitor is referred to herein as a "Settled Claim."
9.14.8 Indemnification Time Limit. Notwithstanding any provision
--------------------------
of this Agreement to the contrary, no party shall be entitled to indemnification
hereunder for any claim which is not asserted against such party within two (2)
years of the Tier I Closing, if such claim relates to a Tier I School or the
Tier I Closing or within two (2) years of the Tier II Closing, if such claim
relates to a Tier II School or the Tier II Closing.
9.15 Exclusive Remedy. After the Tier I Closing, indemnification
----------------
pursuant to Sections 9.12 and 9.13 shall be the sole and exclusive remedies of
the parties to this Agreement for any claims of any nature whatsoever, arising
out of or relating to the transactions contemplated by this Agreement or the
Ancillary Documents, whether such claims may be asserted as a breach of
contract, tort or otherwise.
9.16 Limitation. Notwithstanding anything in this Agreement to the
----------
contrary, no shareholder, partner, director, officer, employee, agent, manager
or Affiliate of the Selling Parties (or any direct or indirect shareholder,
partner, director, officer, employee, agent, manager or affiliate of any of
them) shall have any liability of any nature whatsoever to Buyer as a result of
a breach of any representation, warranty, covenant or agreement contained in
this Agreement or the Ancillary Documents or otherwise arising out of the
transactions contemplated hereby or thereby.
32
9.17 Dispute Resolution and Arbitration.
----------------------------------
9.17.1 Negotiation Between Executives. The parties shall
------------------------------
attempt in good faith to resolve any dispute arising out of or relating to this
Agreement promptly by negotiation between executives who have authority to
settle the controversy and who are at a higher level of management (if any) than
the persons with direct responsibility for administration of this Agreement. Any
party may give the other party written notice of any dispute not resolved in the
normal course of business. Within 15 days after delivery of the notice the
receiving party shall submit to the other a written response. The notice and the
response shall include (i) a statement of each party's position and a summary of
arguments supporting that position, and (ii) the name and title of the executive
who represents that party and of any other person who will accompany the
executive. Within 10 days after delivery of the disputing party's notice, the
executives of both parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to attempt to resolve
the dispute. All reasonable requests for information made by one party to the
other will be honored. If the matter has not been resolved within 45 days of the
disputing party's notice, or if the parties fail to meet within 10 days of such
notice, either party may initiate arbitration of the controversy or claim as
provided hereinafter. All negotiations pursuant to this clause are confidential
and shall be treated as compromise and settlement negotiations for purposes of
the Federal Rules of Evidence of California and other states' Rules of Evidence.
9.17.2 Arbitration. Any dispute arising out of or relating to
-----------
this Agreement or the breach, termination or the validity thereof, which has not
been resolved by the nonbinding meet and confer provisions provided in Section
9.17.1 within 90 days of the initiation of such procedure, shall be settled by
arbitration in accordance with the then-current End Dispute-Judicial Arbitration
and Mediation Services (JAMS) rules for arbitration of business disputes by a
sole arbitrator who shall be a former superior court or appellate court judge or
justice with significant experience in resolving business disputes. If
available, the arbitrator should have familiarity or experience in Title IV
funding matters. The arbitration shall be governed by the California Code of
Civil Procedure Section 1280 et seq. and the parties intend this procedure to be
------
specifically enforceable in accordance with such provisions. Judgment upon the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The place of arbitration shall be Orange County, California. The
arbitrator may award equitable relief in those circumstances where monetary
damages would be inadequate. The arbitrator shall be required to follow the
applicable law as set forth in the governing law section of this Agreement.
9.18 Third Party Beneficiaries. This Agreement shall be binding upon,
-------------------------
be enforceable against, and inure to the benefit of the parties and their
respective successors and permitted assigns; otherwise, this Agreement shall
not, and shall not be deemed to, inure to the benefit of or be enforceable by
any third party.
9.19 Bulk Transfers. If Buyer requests, Sellers will comply with any
--------------
applicable bulk transfer laws. If Buyer does not so request, Buyer and Sellers
each hereby waives compliance with any applicable bulk transfer laws in
connection with the sale of the Purchased
33
Assets hereunder and Selling Parties hereby agree to indemnify Buyer against and
hold Buyer harmless from any and all damages and liabilities (including
reasonable attorneys' fees) relating to or resulting from such non-compliance.
9.20 Expenses. Except as otherwise provided in this Agreement, each
--------
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution and performance of this Agreement and the Ancillary
Documents, including all fees and expenses of counsel, accountants, agents and
representatives.
34
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of this ____ day of October, 1996.
XXXXXX COLLEGES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXX BUSINESS GROUP, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
FLORIDA METROPOLITAN UNIVERSITY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX COLLEGES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXX BUSINESS COLLEGE, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX COLLEGE OF DENVER, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
TO-BA CORPORATION
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX COLLEGE OF LOS ANGELES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX EDUCATIONAL SERVICES OF NEW
YORK CITY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX EDUCATIONAL GROUP OF
PENNSYLVANIA, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX EDUCATIONAL GROUP OF
PORTLAND, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
ROCHESTER BUSINESS INSTITUTE, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX EDUCATIONAL GROUP OF UTAH,
INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX EDUCATIONAL GROUP OF
MISSOURI, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX EDUCATIONAL GROUP OF CENTRAL
FLORIDA, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
EXHIBIT A
-------
LIST OF SUBSIDIARIES OF XXXXXXXX
1. Xxxxx Business College, Inc. (a Colorado corporation)
2. Xxxxxxxx College of Denver, Inc. (a Colorado corporation)
3. TO-BA Corporation (a Nevada corporation)
4. Xxxxxxxx College of Los Angeles, Inc. (a California corporation)
5. Xxxxxxxx Educational Services of New York City, Inc. (a New York
corporation)
6. Xxxxxxxx Educational Group of Pennsylvania, Inc. (a Pennsylvania
corporation)
7. Xxxxxxxx Educational Group of Portland, Inc. (an Oregon corporation)
8. Rochester Business Institute, Inc. (a New York corporation)
9. Xxxxxxxx Educational Group of Utah, Inc. (a Utah corporation)
10. Xxxxxxxx Educational Group of Missouri, Inc. (a Missouri corporation)
11. Xxxxxxxx Educational Group of Central Florida, Inc. (a Florida corporation)
A-1
EXHIBIT B
-------
SCHOOLS
TIER I SCHOOLS
NAME; LOCATION STATE TIER I BID PRICE
--------------- ----- ----------------
XXXXXX SCHOOLS:
Western Business College; OR $ 400,000
Portland
Xxxxx Xxxxxx College; Colorado CO $ 000,000
Xxxxxxx
Xxxxx Xxxxxxx (Xxxxx); Xxxxxx XX $ 25,000
Parks College (South); Aurora CO $ 75,000
Xxxxxxxx College; Las Vegas NV $ 50,000
Xxxxxxxx Xxxxxx College of Salt UT $ 100,000
Lake City; Salt Lake City
Xxxxxxxx Xxxxxx College; MO $ 125,000
Springfield
XXXXXX GROUP SCHOOLS:
Duff's Business Institute; PA $ 100,000
Pittsburgh
Rochester Business Institute; NY $ 75,000
Rochester
FLORIDA SCHOOLS:
FMUS - Ft. Lauderdale FL $ 56,250
College
FMUS - Orlando College FL $ 425,000
(North); Orlando
FMUS - Orlando College FL $ 700,000
(South); Orlando
FMUS - Orlando College FL $ 81,250
(Melbourne); Melbourne
FMUS - Tampa College FL $1,625,000
(Main); Tampa
FMUS - Tampa College FL $ 375,000
(Xxxxxxx); Tampa
Tampa College (Pinellas); FL $ 950,000
Clearwater
Tampa College; Lakeland FL $ 162,500
----------------------------------------------------------
Aggregate Tier I Bid Price $5,500,000
==========================================================
B-1
TIER II SCHOOLS
ALTERNATE
LOCATION STATE TIER II BID PRICE TIER II BID PRICE
--------------------------------------------------------------------------
XXXXXX SCHOOLS:
Xxxxxxxx Xxxxxx CA $300,000 $600,000
College (Van Nuys);
Northridge
XXXXXX GROUP
SCHOOL:
Xxxxxx Business NY $300,000 $300,000
Institute; New York
B-2
