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EXHIBIT 10.69
AMENDED AND RESTATED
ESCROW AND SECURITY AGREEMENT
Amended and Restated Escrow and Security Agreement (the "Agreement") dated
as of March 13, 1998 and amended and restated as of May 1, 1998 among
EDUCATIONAL MEDICAL, INC., a Delaware corporation ("EMI"), NEW HAMPSHIRE
ACQUISITION CORP., a Delaware corporation wholly owned by EMI ("Acquisition")
(collectively, EMI and Acquisition shall be referred to hereinafter as the
"Buyer"), ▇▇▇▇▇▇, INC., a New Hampshire corporation (the "Corporation"), THE
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUST OF 1997, a revocable trust organized under the laws of
the State of New Hampshire, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual residing within
the State of New Hampshire (collectively, the Galeucias shall be referred to
hereinafter as the "Shareholders"), HARDWOOD PROPERTIES LIMITED PARTNERSHIP, a
New Hampshire limited partnership (the "Partnership") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an
individual licensed to practice law within the State of New Hampshire (the
"Escrow Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Stock Purchase Agreement dated of even date herewith
(the "Stock Purchase Agreement"), between Buyer, the Corporation, the
Shareholders and the Partnership, Buyer acquired all of the Stock of the
Corporation from the Shareholders and the Property from the Partnership in
consideration for, among other things, an $11,000,000 promissory note (the
"Second Payment Note"); and
WHEREAS, pursuant to Section 1(d)(1) of the Stock Purchase Agreement, Buyer
has agreed to establish a letter of credit (the "Letter of Credit") to be held
in escrow to secure its payment obligations arising out of the Second Payment
Note in accordance with the terms of this Escrow Agreement;
WHEREAS, subsequent to the Closing the parties agreed that EMI, at its
election, may substitute from time to time cash or cash equivalents as
collateral on a dollar for dollar basis for all or any portion of the Letter of
Credit.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Stock Purchase Agreement, the parties
hereto hereby agree as follows:
1. Definitions. All capitalized terms used in this Escrow Agreement and not
defined herein shall have the meaning assigned to them in the Stock Purchase
Agreement, a copy of which has been delivered to all parties hereto.
2. Appointment. The parties to this Agreement hereby appoint Escrow Agent
as the escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment. The Escrow Agent agrees to hold and dispose of
the letter of credit described herein and any funds resulting from draws thereon
in accordance with the terms hereof.
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3. Purpose of Escrow. The purpose of this Agreement is to secure the
payment obligations of Buyer arising out of the Second Payment Note pursuant to
the terms thereof and the terms of the Stock Purchase Agreement.
4. Letter of Credit.
(A) ESTABLISHMENT OF LETTER OF CREDIT. Concurrently with the execution of
the original escrow agreement, Buyer delivered to the Escrow Agent an
irrevocable and unconditional letter of credit, in substantially the form of
Attachment A hereto, in the amount of $11,000,000.00 (the "Letter of Credit"),
which expires no earlier than the first anniversary of the date of this
Agreement. The Letter of Credit was issued by Bank of America, NT&SA. Any Letter
of Credit and related sight drafts may be substituted from time to time by a
Letter of Credit and sight draft drawn upon any other bank of similar asset
size.
(B) SUBSTITUTION, RENEWAL, AND REDUCTION OF LETTER OF CREDIT AND GRANT OF
SECURITY INTEREST. At its option, from time to time, EMI may substitute cash or
cash equivalents, such as commercial paper for all or part of the Letter of
Credit (the "Substituted Collateral") on a dollar for dollar basis. The
Substituted Collateral shall be held in an account established at Bank of
America in the name of the Escrow Agent. EMI hereby grants the Shareholders and
the Partnership a security interest with respect to such Substituted Collateral.
If the principal amount of the Substituted Collateral is less than $11,000,000,
EMI shall deliver to the Escrow Agent a new letter of credit for the difference
between the amount of the Substituted Collateral and $11,000,000 (the "Shortfall
Letter of Credit"), or, if no such Shortfall Letter of Credit is delivered, the
Escrow Agent shall retain the original Letter of Credit until the Shortfall
Letter of Credit is delivered. Similarly, the Buyer may, at its election,
replace all or any portion of the Substituted Collateral with a new letter of
credit on a dollar for dollar basis. All Shortfall Letters of Credit shall be
subject to the provisions of this Agreement applicable to the Letter of Credit.
To the extent amounts the Escrow Agent is holding to support Second Payment Note
payments do not equal $11,000,000.00, for so long as Second Payment Note
payments are payable to the Shareholders and/or the Partnership, and prior to
the end of business on the 330th day following such anniversary date of this
Agreement (the "Letter of Credit Renewal Date"), Buyer shall deliver to the
Escrow Agent a renewed Letter of Credit expiring no earlier than 365 days
following the Letter of Credit Renewal Date (the "Renewed Letter of Credit"). If
the Renewed Letter of Credit is not received by the Escrow Agent prior to the
Letter of Credit Renewal Date, the Escrow Agent shall notify Buyer, the
Shareholders and the Partnership of such failure in the manner provided for in
this Agreement on the next business day following the Letter of Credit Renewal
Date. If the Renewed Letter of Credit is not received prior to the close of
business ten (10) business days after the date notice of such failure is
received by Buyer (the "Renewal Deadline Date"), on the next business day
following, the Escrow Agent shall cash the sight draft and hold the proceeds of
it as if it were the Letter of Credit, and Buyer shall have no obligation with
respect to a new or replacement Letter of Credit. Buyer shall not be obligated
to deliver a Renewed Letter of Credit if, on the Letter of Credit Renewal Date,
the expiration date of the Letter of Credit is later than 365 days following the
Letter of Credit Renewal Date.
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(C) RETURN OF LETTER OF CREDIT. To the extent the face amount of the Letter
of Credit or any funds (but not funds drawn with respect to a Second Payment
Note payment) held in lieu of such Letter of Credit exceed the sum of the Second
Payment Note payment obligation, the Letter of Credit will be returned to the
Buyer when an acceptable substitute Letter of Credit is received by Escrow Agent
for the then applicable face amount.
5. Permissible Draws on Letter of Credit.
(A) DRAWS BY THE ESCROW AGENT. At any time and from time to time, prior to
the expiration of five (5) business days following the day of receipt by the
Escrow Agent of a Claim Certificate described below from either Buyer, the
Shareholders or the Partnership, as the case may be, the Escrow Agent shall
present the related sight draft for full or partial payment, as the case may be
(a "Permitted Draw"), and hold the relevant Unpaid Amount (as defined in
subsection (B) of this Section 5) in accordance with the provisions of
subsection (C) of this Section 5. If the expiration date of the Letter of Credit
is less than five (5) days from the date notice is so received, then the time
for presentation shall be reduced accordingly.
(B) CONDITIONS TO PERMITTED DRAWS. The Escrow Agent shall make a Permitted
Draw in accordance with the provisions of subsection (A) of this Section in the
case of the Letter of Credit, upon receipt of a certificate from either of the
Shareholders or the Partnership, a copy of which shall be delivered to the
Buyer, stating that all or part of Second Payment Note payment has not been paid
in accordance with the terms of such Second Payment Note (the "Unpaid Second
Payment Note Payment"), and the amount of the Unpaid Second Payment Note Payment
(the "Unpaid Second Payment Note Payment Amount"). The Permitted Draw shall be
limited to an amount equal to the difference between the principal amount of the
Substituted Collateral and the amount of the Unpaid Second Payment Note Payment
amount. The certificate provided for in this Subsection (B) is called the "Claim
Certificate."
(C) DISTRIBUTION OF ESCROWED AMOUNTS. The amounts held by the Escrow Agent
in accordance with Subsections (A) and (B) of this Section 5 and 6 of this
Agreement along with the principal amount of the Substituted Collateral are
called the "Escrowed Amounts". The Escrow Agent shall distribute the Escrowed
Amounts to the Shareholders and/or the Partnership, as the case may be upon
joint, written instructions from Buyer and Shareholders and the Partnership or
as otherwise provided herein. All such distributions shall be made first from
the Substituted Collateral and then from Permitted Draws. All interest payments
on the Substituted Collateral shall be paid directly to EMI, free from all
claims by the Sellers or the Partnership, prior to the receipt of a Claim
Certificate by the Escrow Agent with respect thereto, and thereafter all
interest accruing with respect to the relevant Substituted Collateral shall be
considered additional Substituted Collateral.
(D) NOTICE OF JUDGMENT OR AWARD. The Unpaid Second Payment Note Payment
specified in the Claim Certificate shall be made prior to the close of business
on the 10th business day following its receipt by the Escrow Agent unless the
Escrow Agent receives notice from EMI or Acquisition objecting to such payment
prior to the close of business on the 9th business day following the receipt by
the Buyer of the Claim Certificate, in which event the Escrow Agent shall
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hold such amounts pending further instructions from the parties, the order of a
court of competent jurisdiction or interplead such amounts pursuant to the
provisions of this Agreement.
6. Information and Taxes. The parties to this Agreement shall provide the
Escrow Agent with all information, and shall execute all documents, deemed
necessary or desirable by the Escrow Agent to carry out its duties under this
Agreement. The Escrow Agent shall cause to be prepared all income and other tax
returns and reports the Escrow Agent, in its sole discretion, deems necessary or
desirable in order to comply with all tax and other laws, rules and regulations
applicable to the Escrow Fund and shall pay all taxes and charges it deems
lawfully due with respect to the income and operation of the Escrow Fund.
7. Liability. The duties of the Escrow Agent hereunder are only such as
herein specifically provided and are purely ministerial in nature; and the
Escrow Agent shall not be liable for any action taken by the Escrow Agent in
good faith and in accordance with the terms of this Agreement. The Escrow Agent
shall be fully protected in acting upon any written notice, request, waiver,
consent, proxy, certificate, receipt, authorization, power of attorney or other
agreement, document or instrument which the Escrow Agent receives from the
parties to this Agreement to carry out its duties under this Agreement or which
the Escrow Agent in good faith believes to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be liable
for any error in judgment, or for any act that it takes or fails to take in good
faith, or for any mistake of fact or law, or for anything which it may do or
refrain from doing in connection herewith, except for its own gross negligence
or willful misconduct, so long as it has acted in good faith. It is understood
and agreed that the Escrow Agent is acting as a depository only and is not
responsible for or liable in any manner whatsoever for the sufficiency,
correctness, genuineness or validity of the documents described herein or any
part of the Escrow Fund.
In the event any dispute, conflict or question arises as the construction
of any provision hereof or the Escrow Agent's duties hereunder, the Escrow Agent
may consult with, and obtain advice from, legal counsel. The Escrow Agent shall
be reimbursed from the Escrow Fund for all reasonable costs and reasonable fees
incurred in obtaining such advice. The Escrow Agent shall incur no liability and
shall be fully protected from any liability when acting in good faith in
accordance with the written opinion and instructions of such counsel. Copies of
all such opinions shall be made available to the other parties hereto upon
request. The Escrow Agent may, but shall not be required to, defend itself in
any legal proceeding in respect of the Escrow Fund, or any part thereof. The
Escrow Agent shall be paid from the Escrow Fund for all reasonable costs and
reasonable expenses incurred by the Escrow Agent in connection with any such
defense or action.
8. Resignation. The Escrow Agent may resign and be discharged from its
duties and obligations hereunder by giving notice of such resignation in
writing, specifying the date when such resignation shall take effect, which date
shall be not less than 10 days from the date on which such notice is given. Upon
the effective date of such resignation, the Escrow Fund shall be delivered by
the Escrow Agent to such person as may be designated in writing by the parties
to this Agreement, whereupon all of the Escrow Agent's obligations hereunder
shall cease and terminate. If no such person shall have been designated by such
date, all obligations of the Escrow Agent thereunder shall cease and terminate.
The Escrow Agent's sole responsibility thereafter
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shall be to keep safely the Escrow Fund then held by it and to deliver the same
to a person designated by the parties to this Agreement in accordance with the
directions of a final order or judgment of a court of competent jurisdiction.
9. Indemnification. The parties to this Agreement, jointly and severally,
hereby agree to indemnify the Escrow Agent for, and to defend and hold it
harmless from and against, any loss, damage, tax, liability or expense incurred
in good faith on the part of the Escrow Agent arising out of or in connection
with its entering into this Agreement and carrying out its duties hereunder,
including, without limitation, the reasonable legal costs and expenses of
defending itself against any claim or liability in connection with its
performance hereunder.
10. Interpleader. The Escrow Agent shall be required to make disbursements
from the Escrow Fund only if the Escrow Agent determines that such disbursement
is authorized under the terms of this Agreement and the Escrow Agent can do so
without incurring any liability. Should any controversy arise between the
parties to this Agreement with respect to this Agreement or with respect to the
right to receive any amount out of the Escrow Fund, the Escrow Agent shall have
the right to consult counsel and elect to do either or both of the following:
(i) refuse to comply with any adverse or conflicting claims or demands made upon
the Escrow Agent until such are resolved to the Escrow Agent's satisfaction, or
(ii) file a suit in interpleader or for instructions or for declaratory judgment
or for such other relief in any court of competent jurisdiction in Manchester,
New Hampshire, to determine the rights of the parties. Should a ▇▇▇▇ of
interpleader be instituted, or should the Escrow Agent become involved in
litigation in any manner whatsoever on account of this Agreement or the Escrow
Fund, each of the parties to this Agreement hereby bind and obligate themselves,
and their respective successors and assigns, to pay the Escrow Agent, in
addition to any charge made hereunder for acting as the Escrow Agent, reasonable
attorney's fees incurred by the Escrow Agent, and any other disbursements,
expenses, losses, costs and damages in connection with and resulting from such
litigation. The prevailing parties in any controversy or litigation shall be
entitled to the reasonable and necessary expenses incurred by such parties in
defending any such controversy, which expenses, including, without limitation,
the expenses of the Escrow Agent, shall first be paid from the Escrow Fund.
11. Notices. All notices, requests, demands or other communications which
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been received on the day delivered by hand
prior to 5 p.m. on any business day or if delivered by Federal Express for next
day delivery, on the next business day after being given to Federal Express,
prepaid for delivery, as follows:
If to Buyer:
Educational Medical, Inc.
New Hampshire Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
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with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ et al.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Shareholders:
The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust of 1997 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ c/▇ ▇▇▇▇▇▇ Collge
▇▇▇▇▇▇ College ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to the Partnership:
Hardwood Properties Limited Partnership
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ College
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to the Escrow Agent:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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or to any other address which any party hereto may designate by notice given as
herein provided.
12. Acknowledgement of Representation. Buyer acknowledges that the Escrow
Agent is counsel for the Shareholders and the Partnership and agrees that no
action taken by the Escrow Agent under this Agreement shall affect or impair the
right of the Escrow Agent to represent such parties in any matter, including an
interpleader action pursuant to this Agreement.
13. Prohibition on Assignment. Notwithstanding anything to the contrary
herein contained, no portion of the interest or rights of any party hereto to or
in the Escrow Fund shall be sold, assigned, pledged, hypothecated or otherwise
used as security, and any attempted anticipation, assignment, pledge, sale or
transfer of any right or interest in contravention of this Agreement shall be
void. No portion of the Escrow Fund shall be subject to interference or control
by any creditor of any party hereto, or be subject to being taken or reached by
any legal or equitable process in satisfaction of any debt or other liability of
any such party hereto prior to the disbursement thereof to such party hereto in
accordance with the provisions of this Agreement.
14. Entire Agreement. This Agreement and Stock Purchase Agreement
constitute the entire agreement among the parties and there are no agreements,
understandings, representations or warranties among the parties on the subject
matter hereof other than those set forth herein and therein.
15. Governing Law. This Agreement shall be construed and controlled in all
respects in accordance with the laws of the State of New Hampshire.
16. Amendment. This Agreement may be amended only by a written instrument
executed by all parties hereto.
17. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their permitted successors, personal
representatives and assigns.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the date and year first written above.
ATTEST EDUCATIONAL MEDICAL, INC.
By:
---------------------------- ------------------------
Its Name:
------------------------- ----------------------
Title:
---------------------
ATTEST NEW HAMPSHIRE ACQUISITION
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CORP.
By:
---------------------------- -------------------------
Its Name:
------------------------- -----------------------
Title:
----------------------
ATTEST ▇▇▇▇▇▇, INC.
By:
---------------------------- -------------------------
Its Name:
------------------------- -----------------------
Title:
----------------------
WITNESS THE ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
REVOCABLE TRUST OF 1997
By:
---------------------------- -------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as
---------------------------- Trustee
WITNESS
---------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
ATTEST HARDWOOD PROPERTIES LIMITED
PARTNERSHIP
By:
---------------------------- -------------------------
Its Name:
------------------------- -----------------------
Title:
----------------------
WITNESS
---------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
----------------------------
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ATTACHMENT A
DATE:________________
Beneficiary
(Name and Address)
Gentlemen:
We hereby establish in your favor our irrevocable and unconditional standby
Letter of Credit Number _____________ dated _______________, in your favor for
account of _________________________________ (address) for Eleven Million and
no/100 U.S. Dollars ($11,000,000 U.S.) available with Bank of America NT&SA
against presentation of your draft(s) drawn at sight on us.
Any draft drawn under this credit must be presented to our Main Office at
___________ Attention: __________________, not later than _______________ (time)
on _______________________ (date).
Any draft(s) drawn hereunder must be marked: "Drawn under ____________________
_______________________________(bank), _______________________________
(address), Letter of Credit Number ________________________, dated __________.
Partial drawings are permitted.
We hereby engage with you that draft(s) drawn under and in compliance with the
terms of this Letter of Credit will be duly honored upon presentation to the
Drawee.
The Credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication Number
500.
----------------------------------
Authorized Signature
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