Exhibit 2.2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of June 4, 2003 (this
"AGREEMENT"), is entered into by and among Wyo-Tech Acquisition Corp., a
Delaware corporation ("BUYER"), East Coast Aero Tech, LLC. a Massachusetts
limited liability company ("SELLER"), Xxxxxx X. Xxxxxx III, of Holden,
Massachusetts and Xxxxxxx X. XxXxxxxxxx of Vero Beach, Florida ("OWNERS").
BACKGROUND
A. Owners are the sole Class A members of Seller, possessing all of
the voting rights of Seller.
B. Seller owns, operates and administers that certain proprietary,
post-secondary, aircraft technical training school known as East Coast Aero
Tech, located at 000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "SCHOOL").
C. Buyer desires to buy, through the payment of cash and the
assumption of certain liabilities of Seller, and Seller desires to sell,
substantially all assets and property owned by Seller and used in the business
of the School, upon the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I. SALE AND PURCHASE OF ASSETS
SECTION 1.01 PURCHASED ASSETS TO BE TRANSFERRED. Subject to the terms and
conditions of this Agreement, Seller hereby agrees to sell, assign, convey,
transfer and deliver to Buyer at the Closing (as defined herein), and Buyer
hereby agrees to purchase from Seller, all of the Seller's right, title and
interest in, to and under all of the business, properties, assets, goodwill,
rights and claims and property owned by Seller and used in the business of the
School of the types set forth below (the "PURCHASED ASSETS"), free and clear of
all mortgages, pledges, liens, claims, restrictions, encumbrances and security
interests of any kind or nature except as described on Schedule 5.08(b) (such
mortgages, pledges, liens, etc., as described on Schedule 5.08(b), the
"PERMITTED EXCEPTIONS"), and except for the Excluded Assets (as defined in 1.02
hereof):
(A) ACCOUNTS RECEIVABLE. All of Seller's accounts receivable, notes
receivable and other receivables (and causes of action related to
any of the foregoing) ("ACCOUNTS RECEIVABLE");
(B) INVENTORY. All of Seller's inventory, including without limitation,
textbooks, course materials and supplies;
(C) EQUIPMENT. All of Seller's computer hardware, printers, other data
processing equipment, other machinery and equipment, furniture,
fixtures, leasehold improvements, furnishings, classroom equipment,
tools and other tangible personal property used at the School;
(D) RECORDS. All of Seller's records related to or used in connection
with the operation of the School or pertaining to the Purchased
Assets, including, without limitation, all student records, ledgers,
financial statements and records, operating data, correspondence,
employment records,
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placement records, marketing materials, information and data,
mailing lists and copies of all documents and other information and
data filed by Seller with any state, federal or local government
authority or any guaranty or accrediting agency, whether on computer
disk, in paper form or otherwise, excluding personal records of
Owners and Seller's tax returns, subject to reasonable inspection
rights of Buyer described and set forth in Section 7.6 of this
Agreement;
(E) CONTRACTS AND LEASES. All of the rights of Seller under contracts,
purchase orders and leases applicable to the School to which Seller
is a party entered into in the course of Seller's business,
("Seller's Contracts and Leases"), including, without limitation,
those identified as Material Contracts in Schedule 5.09;
(F) INTELLECTUAL PROPERTY. All rights of Seller with respect to patents,
trademarks, service marks, logos, licenses and copyrights (whether
or not registered) and all applications and registrations therefor,
owned or licensed by Seller, and all rights of Seller with respect
to computer programs and software, including those described in
Schedule 5.10;
(G) WARRANTY RIGHTS. All rights of Seller 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;
(H) PREPAID EXPENSES. All of Seller's prepaid security, vendor, utility
and other deposits and expenses;
(I) PERMITS. To the extent transferable, Seller's licenses, permits,
certifications, approvals and other governmental and regulatory
authorizations required under all laws, rules and regulations
applicable to or affecting the School, including those described in
Schedule 5.05(a);
(J) GOODWILL AND OTHER INTANGIBLES. All of the goodwill and going
concern value of the School and all other intangibles used in
connection with the School;
(K) CURRICULUM MATERIALS. All rights of Seller with respect to
Curriculum (as defined in Section 5.08(e)) used in connection with
the educational programs of the School, whether proprietary or
licensed from third parties (including all periodic updates to the
curriculum as developed or used by Seller or any such third
parties);
(L) REAL PROPERTY OWNED BY ECAT. Any real property owned by Seller and
used in connection with the School, including, without limitation,
that certain building described as the "Mayo Building" on the
attached Schedule 5.08(a), located at 000 Xxxxxxx Xxxxx, Xxxxxxx, XX
00000 (subject to the ground lease described on Schedule 5.08(a));
and
(M) OTHER ASSETS. All other assets and property of any kind, wherever
located, which are owned, leased or licensed by Seller and used in
the business of the School (other than the Excluded Assets),
including, without limitation, promotional and marketing materials.
SECTION 1.02 EXCLUDED ASSETS. The Excluded Assets shall not be conveyed
hereunder. The "EXCLUDED ASSETS" means:
(A) CASH. All of Seller's cash or cash equivalents on hand at the
Closing and Seller's bank accounts relating thereto; and
(B) OTHER ASSETS. Such other assets as are identified on Schedule
1.02.(b) attached hereto.
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ARTICLE II. CONSIDERATION
SECTION 2.01 PURCHASE PRICE. The purchase price payable to Seller in connection
with the transfer to Buyer of the Purchased Assets shall be (i) the cash
consideration referred to in Section 2.02, plus (ii) the assumption of
liabilities of Seller referred to in Section 2.03 (collectively, the "PURCHASE
PRICE").
SECTION 2.02 CASH CONSIDERATION. The cash consideration portion of the Purchase
Price shall be Two Million, Eight Hundred Fifty Thousand Dollars
($2,850,000.00), payable as follows:
(a) At the Closing, Buyer shall pay to Seller, by wire transfer of
immediately available funds to accounts designated in writing by
Seller, One Million Nine Hundred Ninety-five Thousand Dollars
($1,995,000.00) (the "CLOSING PAYMENT");
(b) At the Closing, Buyer shall deposit to Xxxxx Fargo Bank (or such
other bank of national repute as Buyer shall designate) ("ESCROW
AGENT"), by wire transfer to an account designated by Escrow Agent,
Eight Hundred Fifty-five Thousand Dollars ($855,000.00) (the
"DEFERRED PURCHASE FUNDS") which shall be held and distributed to
Seller in accordance with the terms of an escrow agreement to be
entered into among Owners, Buyer, Escrow Agent and Seller,
substantially in the form attached hereto as Exhibit A (the "Escrow
Agreement"). The Deferred Purchase Funds shall be held by Escrow
Agent, and, subject to the provisions of the Escrow Agreement, shall
be distributed by Escrow Agent as follows:
i. Upon the later to occur of (x) receipt from the Department of
Education (the "DOE") of written approval of the change of
control of the School and notice that the School has received
final re-certification of eligibility (collectively, the "DOE
APPROVAL NOTICE") to receive funds administered under Title IV
of the Higher Education Act of 1965, as amended ("TITLE IV"),
and (y) the final determination of the Post-Closing Purchase
Price Adjustment pursuant to Section 2.06 (the date of such
payment will hereinafter be referred to as the "SECOND PAYMENT
DATE"), Five Hundred Seventy Thousand Dollars
($570,000.00.00), PLUS or MINUS, as the case may be, the
amount of the Post-Closing Purchase Price Adjustment, if any
(the "SECOND PAYMENT"), by wire transfer of immediately
available funds to account(s) designated by Seller; and
ii. On or prior to the date which is eighteen (18) calendar months
after the Closing Date (as defined below) (or on such later
date as the amount of Seller's and Owners' indemnification
obligations to Buyer with respect to any outstanding claims
existing on such eighteen (18) month anniversary have been
definitively determined pursuant to the requirements of
Sections 9.12 and 9.14, hereinafter the "THIRD PAYMENT DATE"),
Two Hundred Eighty-five Thousand Dollars ($285,000.00), MINUS
the amount of any of Buyer's Losses determined in accordance
with Sections 9.12 and 9.14 that remain unpaid as of such time
(the "THIRD PAYMENT"), by wire transfer of immediately
available funds to account(s) designated in writing by Seller.
SECTION 2.03 OBLIGATIONS AND LIABILITIES TO BE ASSUMED. Upon the terms and
subject to the conditions contained herein, at the Closing, Buyer shall, by an
instrument of assumption to be executed and delivered at the Closing
substantially in the form of Exhibit B hereto (the "ASSIGNMENT AND ASSUMPTION
AGREEMENT"), assume only the following liabilities (the "ASSUMED LIABILITIES")
of Seller and the School: (i) current trade accounts payable and accrued
expenses, except to the extent such accounts payable and accrued expenses relate
to liabilities of the types described in clauses (i) through (viii) in Section
2.04 below, (ii) all capital lease obligations (including current portion),
(iii) the School's teach-out obligation with respect to students enrolled as of
the Closing, (iv) a long term obligation of
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Seller for leasehold improvements in the approximate amount of $17,800,
including current portion, as more particularly described on Schedule 2.03, (v)
a deferred tuition revenue, (vi) Seller's duties, liabilities and obligations
(whether of payment, performance or otherwise) arising on or after the Closing
Date with respect to the Facilities leases and Seller's Contracts and Leases,
(vii) a deferred scholarship with an outstanding balance of $20,640, as more
particularly described on Schedule 2.03, and (viii) a term loan with an
approximate outstanding principal balance of $25,700, as more particularly
described on Schedule 2.03.
SECTION 2.04 EXCLUDED LIABILITIES. Buyer shall not assume, or otherwise be
responsible for, any liabilities or obligations (whether actual or contingent,
matured or unmatured, liquidated or unliquidated, or known or unknown)
(collectively, the "EXCLUDED LIABILITIES") of Seller, any other owner or
operator of the School prior to the Closing Date, or any Affiliate of any of the
foregoing, other than those liabilities and obligations which have been
specifically assumed by Buyer pursuant to Section 2.03. The "Excluded
Liabilities" shall include, without limitation, any liabilities or obligations
to the extent that they relate to, are connected with, are based upon or arise
out of the following: (i) regulatory liabilities imposed by the DOE and/or the
applicable state regulatory agencies with respect to Seller and/or the School
for periods prior to the Closing Date, (ii) liabilities relating to employees of
Seller and the School for periods prior to the Closing Date (including, without
limitation, salary, bonuses, payroll taxes payable, accrued vacation liability
or other compensation or benefits), (iii) liabilities with respect to accounts
payable incurred on or before the Closing Date that are set forth on Schedule
2.04, (iv) liabilities and costs (including those incurred post-Closing)
associated with or caused by a determination by the DOE that Seller and/or the
School have not demonstrated compliance with 34 CFR 668.15 (Factors of Financial
Responsibility) and 34 CFR 668.16 (Standards of Administrative Capability) for
dates and periods prior to Closing Date, (v) Tax liabilities of Seller or the
Owners (including, without limitation, any sales tax liabilities in connection
with this Agreement), (vi) liabilities with respect to the claims referenced on
Schedule 5.14 hereto, (vii) liabilities associated with Seller's line of credit
or other long-term debt of Seller (including current portion), except as
specifically set forth in subsections (iv), (vii) and (viii) of Section 2.03
above, (viii) any intercompany payables or debt (whether to any of the Owners or
any Affiliate of Seller or the Owners) and (ix) any other liability or
obligation which has not been specifically assumed by Buyer pursuant to Section
2.03. For purposes of this Agreement, the term "AFFILIATE" of any Person means
any other Person who directly or indirectly controls, is controlled by, or is
under common control with such Person.
SECTION 2.05 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that the
Purchase Price shall be allocated among the Purchased Assets in accordance with
the allocation set forth in Schedule 2.05 attached hereto. Buyer and Seller
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. For the purposes of this Agreement, the term
"TAX" or "TAXES" means any foreign, federal, state, county or local income,
sales and use, excise, franchise, real and personal property, transfer, gross
receipt, capital stock, production, business and occupation, disability,
employment, payroll, severance or withholding tax or charge imposed by any
governmental entity, and any interest and penalties (civil or criminal) related
thereto or to the nonpayment thereof.
SECTION 2.06 POST-CLOSING PURCHASE PRICE ADJUSTMENT. Seller agrees that at 12:01
a.m. on the Closing Date the Seller's financial condition shall meet all
generally applicable financial requirements and ratios of the DOE, applicable
state educational regulators and any other applicable accrediting bodies with
respect to the Schools as of the Closing Date, and Seller shall have "Tangible
Net Equity" (as defined below) of no less than Five Hundred Sixty-Two Thousand
Nine Hundred Fifty-Four Dollars ($562,954) (the "NET EQUITY FLOOR"), and "Net
Working Capital" (as defined below) of no less than Two Hundred Ninety-Eight
Thousand Two Hundred Nine Dollars
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($298,209) ("WORKING CAPITAL FLOOR"), each calculated in accordance with GAAP,
applied on a basis consistent with the Seller's historical accounting practices.
Such amounts shall be determined and such requirements and ratios calculated
based upon the Closing Balance Sheet described in Section 2.07. If Tangible Net
Equity at 12:01 a.m. on the Closing Date is less than the Net Equity Floor,
and/or (ii) the Net Working Capital at 12:01 a.m. on the Closing Date is less
than the Working Capital Floor, then the Purchase Price shall be reduced,
dollar-for-dollar, by a dollar amount equal to the amount of cash which would be
required to bring both such requirements into compliance (hereinafter, the
"POST-CLOSING PURCHASE PRICE REDUCTION"). If the Tangible Net Equity at 12:01
a.m. on the Closing Date exceeds the Net Equity Floor, and (ii) the Net Working
Capital at 12:01 a.m. on the Closing Date exceeds the Working Capital Floor,
then the Purchase Price shall be increased, dollar-for-dollar, by a dollar
amount equal to the lesser of (A) the amount by which the Tangible Net Equity
exceeds the Net Equity Floor, or (B) the amount by which the Net Working Capital
exceeds the Working Capital Floor (hereinafter, the "POST-CLOSING PURCHASE PRICE
INCREASE," and referred to herein alternatively with the Post-Closing Purchase
Price Reduction as a "POST-CLOSING PURCHASE PRICE ADJUSTMENT"). If the
Post-Closing Purchase Price Reduction results in a decrease in the Purchase
Price which is less than the amount of the Second Payment, then the amount of
the Second Payment to be paid by Buyer to Seller in accordance with Section
2.02(b) shall be reduced by the amount of the Post-Closing Purchase Price
Reduction. If there is a Post-Closing Purchase Price Increase, then the amount
of the Second Payment to be paid by Buyer to Seller in accordance with Section
2.02(b) shall be increased by the amount of the Post-Closing Purchase Price
Increase and shall be paid as set forth therein. If the Post-Closing Purchase
Price Reduction is greater than the amount of the Second Payment, then Buyer
shall not be required to make the Second Payment to Seller in accordance with
Section 2.02(b), and Seller shall pay to Buyer, within three (3) business days
following the final determination of the Post-Closing Purchase Price Adjustment,
by wire transfer of immediately available funds to the account number designated
by Buyer, the amount by which the Post-Closing Purchase Price Adjustment exceeds
the Second Payment. For purposes hereof, "TANGIBLE NET EQUITY" shall mean the
excess of the consolidated tangible Purchased Assets (including accounts
receivable, net of allowance for doubtful accounts) of the Seller over the
consolidated Assumed Liabilities of the Seller as of the Closing Date, as
adjusted and calculated in accordance with the procedures established for
determining the Closing Balance Sheet in Section 2.07. For purposes hereof, "NET
WORKING CAPITAL" shall mean the sum of (A) all current Purchased Assets of the
Seller as reflected on the Closing Balance Sheet, minus the sum of (B) all
current Assumed Liabilities of the Seller as reflected on the Closing Balance
Sheet. Attached to this Agreement as Schedule 2.06 is an audited Balance Sheet
of the Seller dated as of December 31, 2002 (the "12/31/02 Balance Sheet"),
together with an attached spreadsheet showing the calculation of Seller's
Tangible Net Equity and Net Working Capital based thereon. The Seller's Tangible
Net Equity and Net Working Capital shall be calculated and adjusted in
accordance with the procedures established for determining the Closing Balance
Sheet in Section 2.07 and shall reflect accounts and entries consistent with the
accounting methodology and procedures used for establishing the 12/31/02 Balance
Sheet.
SECTION 2.07 POST-CLOSING AUDIT. (A) Within five (5) business days of the
Closing Date, Seller shall deliver to Buyer true and correct copies of all
financial books and records of Seller necessary for Buyer to prepare a balance
sheet of Seller dated as of the Closing Date. Within twenty (20) business days
after receipt of such books and records from Seller, Buyer shall prepare, and
have audited, a balance sheet dated as of the Closing Date (the "CLOSING BALANCE
SHEET") on which shall be shown the purchased current assets and the assumed
current liabilities of Seller as of the Closing Date, and from which the
Tangible Net Equity and Net Working Capital of Seller can be calculated.
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(B) The Closing Balance Sheet shall be prepared in accordance with
Generally Accepted Accounting Principles ("GAAP"), applied on a basis consistent
with Seller's past practices, and audited by Xxxxxx & Associates ("ALMICH") in
accordance with Generally Accepted Government Auditing Standards ("GAGAS"). Upon
receipt of the Closing Balance Sheet prepared by Buyer, Seller shall have
fifteen (15) business days in which to review it and either accept it or
identify objections by written notice to Buyer. If, within fifteen (15) business
days following delivery of the Closing Balance Sheet to Seller, Seller has not
given notice to Buyer of objections to the Closing Balance Sheet (such notice
must contain a statement of the basis of Seller's objections in reasonable
detail), then the calculations of Tangible Net Equity and Net Working Capital as
shown on the Closing Balance Sheet shall be used in computing the Post-Closing
Purchase Price Adjustment, if any. If exceptions or objections are noted by
Seller, Buyer, Seller and their respective accountants shall meet to resolve the
dispute. If such dispute has not been resolved within fifteen (15) business days
after Seller gives notice of an objection, then the issues in dispute shall be
submitted to a "Big 4" accounting firm with which neither Seller nor Buyer has a
prior relationship (the "ACCOUNTANTS") for resolution. If the issues are
submitted to the Accountants for resolution: (i) each party will furnish to the
Accountants such work papers and other documents and information relating to the
disputed issues as the Accountants may request and are available to such party
(or its accountants), and will be afforded the opportunity to present to the
Accountants any material relating to the determination and to discuss the
determination with the Accountants; (ii) the determination by the Accountants,
as set forth in a notice delivered to the parties, will be binding and
conclusive on the parties; and (iii) Buyer, on the one hand, and Seller, on the
other hand, will each bear 50% of the fees of the Accountants for such
determination. The amount of Seller's Tangible Net Equity and Net Working
Capital for all purposes of this Agreement shall be as determined in accordance
with this Section 2.07.
ARTICLE III. CLOSING
SECTION 3.01 CLOSING. Consummation of the purchase and sale of the Purchased
Assets contemplated hereby is referred to herein as the "CLOSING," and the date
on which the Closing takes place is referred to herein as the "CLOSING DATE."
The Closing shall take place, as soon as practicable following satisfaction or
waiver of all conditions precedent to the parties' obligations to close, at the
offices of Buyer at 0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx.
Delivery of documents at the Closing may be accomplished by facsimile, to be
followed by delivery of originals by overnight courier of national reputation on
the day after the Closing. The Closing shall be effective at 12:01 a.m. on the
Closing Date.
SECTION 3.02 DELIVERIES BY SELLER AT CLOSING. At the Closing, Seller shall
deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of Seller's managers and, if required by
applicable law, Seller's members, authorizing the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated herein;
(b) a duly executed Xxxx of Sale substantially in the form of Exhibit C
hereto (the "XXXX OF SALE") and such other instruments of conveyance
as shall, in the opinion of Buyer and its counsel, be necessary to
vest in Buyer title to the Purchased Assets;
(c) a duly executed counterpart of the Assignment and Assumption
Agreement;
(d) An officers' certificate signed by the President and the chief
executive officer of Seller, or such other officer reasonably
acceptable to Buyer, certifying (i) as to the representations,
warranties
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and covenants of Seller made herein as provided in Sections 8.01(a),
and 8.01(c), and (ii) as to the absence of a material adverse change
as provided in Section 8.01(b);
(e) Duly executed estoppel certificates and consents to assignment of
lease (executed by the landlords of the Facilities (as defined
below));
(f) A duly executed counterpart of an Assignment and Assumption of Lease
for each of the Facilities in form and substance satisfactory to
Buyer and its counsel (the "LEASE ASSIGNMENT");
(g) A Non-Competition Agreement in form and substance reasonably
satisfactory to Buyer and its counsel (the "NON-COMPETITION
AGREEMENT"), executed by Seller and each of the Owners, in which
Seller and the Owners shall have agreed to not participate, for a
period of five (5) years after the Closing Date, in the business of
proprietary, post-secondary technical education in any state from
which the School drew students during the three (3) calendar years
prior to the Closing Date;
(h) The Escrow Agreement, duly executed on counterparts by Seller, the
Owners and the Escrow Agent in substantially the form attached
hereto as Exhibit A;
(i) Documentary evidence, reasonably satisfactory to Buyer and its
counsel, that all security interests of third parties in the
Purchased Assets, including, without limitation, any security
interests held by Citizens Bank of Massachusetts, have been or will
be terminated as of the Closing Date,
(j) A consent to assignment, duly executed by Massachusetts Port
Authority, agreeing to the assignment under this Agreement by Seller
to Buyer of all rights and obligations under that certain Aviation
Services Operating Agreement X.X. Xxxxxxx Field, Dated July 1, 1996,
by and between Massachusetts Port Authority and Seller;
(k) Documentary evidence that the Commonwealth of Massachusetts
Department of Education has agreed that the existing letter of
credit in the face amount of $100,000 issued by Citizens Bank to the
Commonwealth of Massachusetts Department of Education for the
account of Seller may be returned to Seller for cancellation with
Buyer substituting therefore a substitute letter of credit or other
collateral acceptable to the Massachusetts Department of Education;
(l) Customary pay-off letters dated as of the Closing Date from Citizens
Bank of Massachusetts, in form and substance reasonably satisfactory
to Buyer and its counsel, with respect to the liabilities assumed by
Buyer under Section 2.03 (iv) (for leasehold improvements in the
approximate amount of $17,800), and Section 2.03 (viii) (for a term
loan with an approximate outstanding principal balance of $25,700),
and, to the effect that, upon receipt of sums substantially as set
forth above, all obligations due to Citizens Bank of Massachusetts
by the Seller shall have been fulfilled; and
(m) Any other documents reasonably requested by Buyer and its counsel to
effectuate the transactions contemplated hereby, including, without
limitation, all documents reasonably requested by Buyer or its
counsel to evidence satisfaction of the Conditions to Closing set
forth in Sections 8.01 and 8.02.
SECTION 3.03 DELIVERIES BY BUYER AT CLOSING. At the Closing, Buyer shall deliver
or cause to be delivered to Seller the following:
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(a) The Closing Payment;
(b) Certified resolutions of the Board of Directors of Buyer authorizing
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein;
(c) A duly executed counterpart of the Assignment and Assumption
Agreement;
(d) A duly executed counterpart of the Lease Assignments for each of the
Facilities;
(e) a duly executed counterpart of the Non-Competition Agreement;
(f) The Escrow Agreement, duly executed on counterparts by Buyer in
substantially the form attached hereto as Exhibit A; and
(g) Any other documents reasonably necessary to effectuate the
transactions contemplated hereby.
ARTICLE IV. TERMINATION
SECTION 4.01 TERMINATION. This Agreement may be terminated only as follows and
in each case only by written notice:
(a) At any time by mutual written consent of Seller and Buyer;
(b) Prior to the Closing, by Buyer if Seller or the Owners shall be in
breach of any covenant, undertaking, representation or warranty
contained herein, which breach either (a) materially misrepresents
the business, operations or financial condition of the Seller as of
the date hereof, (b) causes a material adverse change in the
business, operations or financial condition of the School or (c)
prohibits the satisfaction of a condition to the Closing;
(c) Prior to the Closing, by Seller if Buyer shall be in breach of any
covenant, undertaking, representation or warranty contained herein
which breach either (x) constitutes a material misrepresentation by
Buyer of its ability to perform its obligations under this
agreement, or (y) prohibits the satisfaction of the condition of the
Closing;
(d) Prior to the Closing, by Buyer if the DOE, the Federal Aviation
Administration (the "FAA"), the Commonwealth of Massachusetts or any
of its agencies, any applicable regulatory body, any guaranty agency
or any accreditation agency which provides accreditation for the
School (including, but not limited to, the Accrediting Commission of
Career Schools and Colleges of Technology (hereinafter, "ACCSCT"))
determines that, following the Closing, the School, or any of its
programs, will not be (i) certified as eligible to receive funds
administered under Title IV, or (ii) licensed to administer its
programs in the State of Massachusetts and under FAA regulations in
substantially the same manner as such operations are presently
conducted by the Seller;
(e) Prior to the Closing, by Buyer, at its sole and absolute discretion,
if, based on the DOE pre-review of the application for certification
and provisional extension of certification, Buyer determines that
the School will be unable to obtain certification by the DOE
subsequent to the Closing Date at any time, in a timely matter, or
without being subject to material adverse conditions and Buyer
notifies Seller in writing no later than fifteen (15) business days
following Buyer's determination thereof that Buyer is electing to
terminate this Agreement (and if Buyer
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fails to notify Seller in writing within such time period, Buyer
shall be deemed to have elected not to terminate this Agreement); or
(f) If the Closing has not occurred on or before September 2, 2003, by
Seller or Buyer, by notice to all other parties, at any time
thereafter and before the Closing.
SECTION 4.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Buyer or Seller in accordance with the applicable provisions
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 Seller (or their respective officers or
directors) to the other, except for liabilities arising from a breach of this
Agreement prior to such termination; provided, however, that Seller's and
Owners' obligations under the last sentence of Section 5.20 shall survive the
termination of this Agreement.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLER AND OWNERS
As a material inducement to Buyer to enter into this Agreement, to
purchase the Purchased Assets and to assume the Assumed Liabilities, Seller and
Owners, jointly and severally, hereby represent and warrant (a) as of the date
hereof and (b) as of the Closing Date, that:
SECTION 5.01 ORGANIZATION AND REQUISITE POWER. Seller is a limited liability
company, duly formed, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts, the jurisdiction in which it is formed.
Seller has all requisite power and authority to own and operate its properties,
to carry on its business as now conducted, to enter into this Agreement and to
consummate the transactions contemplated hereunder. Seller is duly qualified to
do business in each jurisdiction in which the failure to be so qualified would
have an adverse effect on the operation of the School. True and correct copies
of Seller's certificate of organization and operating agreement have been
furnished to Buyer and reflect all amendments made thereto at any time prior to
the date of this Agreement and the Closing Date.
SECTION 5.02 CAPACITY; AUTHORIZATION; BINDING EFFECT. Seller has the power,
legal capacity and authority to execute, deliver and perform this Agreement and
each other document being executed in connection herewith to which it is a
party. Seller has the 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 as otherwise disclosed in
Schedule 5.08(b). All corporate and other proceedings required to be taken by or
on the part of Seller, including all action required to be taken by the managers
or members of Seller, to authorize Seller 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 Closing, duly executed and delivered by Seller and constitute, or will
when delivered constitute, the valid and binding obligations of Seller,
enforceable against Seller, 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).
SECTION 5.03 OWNERSHIP OF SCHOOL. The School is owned and operated by Seller
directly, and no other Person has any ownership interest in the School. No other
Person has any right, option, subscription or other arrangement to purchase or
otherwise acquire any interest in the School. For purposes of this Agreement,
the term "PERSON" shall include any individual, corporation, partnership, joint
venture, trust, unincorporated association or government or any agency or
political subdivisions thereof.
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SECTION 5.04 NO CONFLICTS. Assuming the receipt of all consents, approvals,
authorizations, and other actions described in the schedules hereto, including
without limitation Schedule 5.04, have been obtained and all filings and
notifications in the schedules hereto have been made, the execution, delivery
and performance of this Agreement and each other document being executed by
Seller in connection herewith, and the consummation by Seller of the
transactions contemplated hereby and thereby will not: (a) violate any
provisions of law applicable to Seller; (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 formation or operating agreement of Seller, or any
instrument, license, agreement or commitment to which Seller is a party or by
which any of its assets or properties is bound, including the Assumed Contracts
(as defined in Section 5.09 hereof); (c) constitute a violation of any order,
judgment or decree to which Seller 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 set forth
or described on Schedule 5.04 or Schedule 6.03 attached hereto.
SECTION 5.05 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. Seller is not in
violation of any law, regulation or requirement of any governmental authority
and Seller has not received notice of any such violation. Seller currently
maintains all licenses, accreditations, certificates, permits, consents,
authorizations and other governmental or regulatory approvals (the "LICENSES AND
PERMITS") necessary for Seller to conduct the business and operations of the
School as presently being conducted, including, without limitation, all
requisite approvals for the educational and training programs currently offered
from the School's institutional accrediting agency and the state in which the
Schools operate. Each program offered by the School is an eligible program in
compliance with the requirements of 34 C.F.R. Section 668.8. Seller has duly
filed all reports and returns required to be filed by it with respect to the
School with governmental authorities and accrediting bodies and complied with
all stipulations, conditions or other requirements that they have imposed. The
Licenses and Permits for the School are in full force and effect, and no
proceedings for the suspension or cancellation of any of them is pending or, to
the knowledge of Seller, threatened. No application made by Seller for any
Licenses and Permits during the last five years has been denied. Schedule
5.05(a) attached hereto is a true, correct and complete list of all Licenses and
Permits held by Seller with respect to the School and the governmental authority
or accrediting body granting such Licenses and Permits. Seller has delivered to
Buyer true and correct copies of all such Licenses and Permits. Seller has
received no notice that any of the Licenses and Permits will not be renewed and,
to the knowledge of Seller, there is no basis for nonrenewal. The School is
accredited as set forth on Schedule 5.05(b) attached hereto, is certified by the
DOE as an eligible institution under Title IV and is party to, and in compliance
with, a valid program participation agreements with the DOE with respect to the
School's operations, and is authorized by the state in which it is located to
operate a for-profit postsecondary educational institution. Seller has not
received any notice, not previously complied with, in respect of any alleged
violation of the rules or regulations of the DOE, any state licensing body, or
any applicable accrediting body in respect of the School, including sales and
marketing activities, or the terms of any program participation agreement to
which it is or was a party. If any such notices have been received and complied
with, Seller has disclosed in writing their receipt and disposition to Buyer
prior to the execution of this Agreement. Seller is not aware of any
investigation or review of Seller's student financial aid programs or any review
of the School's state license accreditation by any Person.
SECTION 5.06 RECRUITMENT; ADMISSIONS PROCEDURES; ATTENDANCE; REPORTS. Schedule
5.06(a) attached hereto is a complete list of all policy manuals and other
statements of procedures or instruction relating to recruitment of students for
the School, including (a) procedures for assisting in the application by
prospective students for direct or indirect state or federal financial
assistance; (b) admissions procedures, including any descriptions of procedures
for insuring compliance with state or federal or other appropriate standards or
tests of eligibility; and (c) procedures for encouraging and
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verifying attendance, minimum required attendance policies, and other relevant
criteria relating to course completion and certification (collectively, the
"POLICY GUIDELINES"). Schedule 5.06(b) attached hereto sets forth a list of the
Policy Guidelines with respect to those students continuing in the School after
the Closing Date (the "DISCLOSED GUIDELINES"). Seller has delivered to Buyer
true, correct and complete copies of all Policy Guidelines, Disclosed Guidelines
and all documents and other information disseminated to students or prospective
students. Seller's operations with respect to the School have been conducted in
accordance with the Policy Guidelines and all relevant standards imposed by
applicable accrediting bodies, agencies administering state or federal
governmental programs in which Seller participates, and other applicable laws or
regulations. Seller has submitted all reports, audits, and other information,
whether periodic in nature or pursuant to specific requests, including, without
limitation, all annual compliance audits and audited financial statements, for
the School to all agencies or other entities 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 Seller or its students receive funding. Materially complete
and accurate records for all present and past students attending the School have
been maintained consistent with the operations of a school business. All forms
and records with respect to the School have been prepared, completed, maintained
and filed in accordance with all applicable federal and state laws and
regulations, and are true and correct, provided, however, the Seller has, where
reasonable and customary, accepted as true, facts and data provided by third
parties. All financial aid grants and loans, disbursements and record keeping
relating thereto have been completed in compliance with all federal and state
requirements, and there are no deficiencies in respect thereto. The School and
Seller have complied with the legal requirements that no student at the School
be funded prior to the date for which such student was eligible for funding.
Seller covenants and agrees that it shall reimburse Buyer for and indemnify
Buyer against any fines, penalties, expenses, costs and other losses Buyer may
incur as a result of any pre-eligibility funding prior to the Closing Date. The
records of each student at the School conform in form and substance to all
relevant regulatory requirements.
SECTION 5.07 COHORT DEFAULT RATE. Schedule 5.07 attached hereto sets forth the
cohort default rate for the School, calculated in the manner prescribed by the
DOE, of all students attending the School receiving assistance pursuant to Title
IV programs for the fiscal years 1996 through 2000. Such schedule is correct and
accurate in all respects.
SECTION 5.08 TITLE TO AND CONDITION OF THE PURCHASED ASSETS.
(A) LEASED FACILITIES. The leased facilities described on Schedule
5.08(a) (the "FACILITIES") constitute the only real property used in
connection with the operation of the School by Seller.
(B) LAWS AND REGULATIONS; RECORDS. All of Seller's operations with
respect to the School are conducted at the Facilities, and all of
the tangible Purchased Assets and records relating to intangible
Purchased Assets of the School are located at the Facilities. Other
than as set forth in the leases relating to the Facilities, Seller
is not under any contractual or other legal obligation, and has 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 the manner in which the
Facilities are currently used and the Facilities are not subject to
any condemnation proceedings. Each Facility and Seller's use thereof
is in compliance with all laws, including, without limitation, the
Americans with Disabilities Act.
(C) TITLE. Seller owns outright, and has good and marketable title to,
all of the Purchased Assets, free and clear of all liens, claims and
encumbrances, options, rights, and restrictions, other than
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as set forth on Schedule 5.08(b). Except as set forth on Schedule
5.08(c), all leases for tangible personal property used by Seller in
connection with the operation of the School are (i) valid and in
full force and effect, (ii) are enforceable in accordance with their
terms, and (iii) are capable of being assigned, and will in fact be
assigned to Buyer, upon the execution and delivery by Buyer and
Seller of the Assignment and Assumption Agreement. Neither Seller
nor, to the knowledge of Seller, any of the other parties to any
lease, is in default under any such lease, 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 a default thereunder.
(D) CONDITION OF PURCHASED ASSETS. Except as set forth in Schedule
5.08(d), the tangible Purchased Assets and properties of the Schools
which are owned or leased by Seller and used in connection with the
operation of the School are in good operating condition, order and
repair (reasonable wear and tear excepted), useable in the ordinary
course of business consistent with past practice and are sufficient
and adequate for all current operations. Except as set forth in
Schedule 5.08(d), Seller has not received notice of any violation of
or default under any law, ordinance, order, regulation or
requirement relating to any of the Purchased Assets which remains
uncured or has not been resolved.
(E) TITLE; CONDITION AND QUALITY OF THE CURRICULUM. Seller owns
outright, and has good and marketable title to, the Curriculum of
the School, free and clear of all encumbrances (except as set forth
on Schedule 5.08(b)), and the Closing of this Agreement and the
delivery by Seller to Buyer of the Xxxx of Sale will vest good and
marketable title to the Curriculum in Buyer, free and clear of all
encumbrances. No employee or Affiliate of Seller or any of the
Owners or any other Person owns or has any interest, directly or
indirectly, in any part of the Curriculum. Seller does not use any
part of the Curriculum by consent of any other Person and is not
required to and does not make any payments to others with respect
thereto. No component of the Curriculum infringes or violates any
copyright, patent, trade secret, trademark, service xxxx,
registration or other proprietary right of any other Person, and
Seller's and Owner's past and current use of any part of the
Curriculum does not infringe upon or violate any such right. The
term "CURRICULUM," as used in this Agreement, means the curriculum
used in the educational programs of the Schools in the form of
computer programs, slide shows, texts, films, videos or any other
form or media, including, without limitation, the following items:
(1) course objectives, (2) lesson plans, (3) exams, (4) class
materials (including interactive or computer-aided materials), (5)
faculty notes, (6) course handouts, (7) diagrams, (8) syllabi, (9)
sample externship and placement materials, (10) clinical checklists,
(11) course and faculty evaluation materials, (12) policy and
procedure manuals, and (13) other related materials. The Curriculum
shall also include, without limitation, (a) all copyrights,
copyright applications, copyright registrations and trade secrets
relating to the above-listed items and (b) Revisions. The term
"REVISIONS," as used in this Agreement, means all periodic updates
or revisions to the Curriculum as developed or used by Seller during
its period of operation of the School from the beginning of time
through the Closing Date.
SECTION 5.09 MATERIAL CONTRACTS. Schedule 5.09 attached hereto lists each of
Seller's Contracts and Leases relating to the School or to which any of the
Purchased Assets is subject or bound that individually, or together as a series
of related contracts involving the same party or parties, or the successors to
such party or parties: (a) obligates Seller or its Affiliates to pay an amount
of $5,000 or more, (b) has an unexpired term as of the date of this Agreement in
excess of six months, (c) was not made in the ordinary course of business, or
(d) is in any way otherwise material to the operation of the School (each, a
"Material Contract" and collectively, the "Material Contracts"). Each Material
Contract is valid and existing. Seller has duly performed all its obligations
under the Material Contracts to the
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extent that such obligations to perform have accrued. Seller has not received
written notice of any alleged breach or default, and no event which would (with
the passage of time, notice or both) constitute a material breach or default by
Seller or to the knowledge of Seller, any other party or obligor with respect
thereto, has occurred. True and correct copies of the Material Contracts,
including all amendments and supplements thereto, have been delivered to Buyer
or are attached to Schedule 5.09. Each of the Material Contracts is (i)
enforceable in accordance with their terms, and (ii) is capable of being
assigned to Buyer and will in fact be assigned to Buyer upon the execution and
delivery by Buyer and Seller of the Assignment and Assumption Agreement. For
purposes of this Agreement, the term "AFFILIATE" of any Person means any other
Person who directly or indirectly controls, is controlled by, or is under common
control with such Person. For purposes of this Agreement, the term "Person"
shall include any individual, corporation, partnership, joint venture, trust,
unincorporated association or government or any agency or political subdivisions
thereof.
SECTION 5.10 TRADENAMES; CONFIDENTIAL INFORMATION. All tradenames, trademarks or
service marks and all forms, derivatives and graphic presentations thereof of
Seller having any material value to the operation of the School are set forth or
described on Schedule 5.10 attached hereto (collectively, the "TRADENAMES").
Seller has the right to the use of each Tradename as an assumed business name in
connection with the business of Seller as presently conducted in the
Commonwealth of Massachusetts, and Schedule 5.10 lists all registrations of each
Tradename as a trademark, servicemark or assumed name. Seller has not licensed
any other Person to use any Tradename. Seller has not been sued or threatened
with suit for infringement, violation or breach with respect to any Tradename,
and, to the knowledge of Seller, no basis exists for any such suit. Except as
disclosed on Schedule 5.10, Seller is not on notice of any infringement,
violation or breach of the Tradename by any other Person. Seller has the right
to use and license, free and clear of any claims or rights of any third party,
all trade secrets, customer lists, know-how, curricula and any other
confidential information required for or used in the operation of the School.
Seller is not in any way making any unlawful or wrongful use of any trade
secrets, customer lists, know-how, curricula or any other confidential
information of any third party, including, without limitation, any former
employer of any present or past employee of Seller in connection with the
operation of the School.
SECTION 5.11 FINANCIAL STATEMENTS; INDEBTEDNESS. Attached hereto as Schedule
5.11(a) are the following financial statements of Seller: audited Balance Sheets
at December 31, 2002, 2001 and 2000 and audited Statements of Operations and
Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000
(including schedules containing corresponding Statements of Assets and
Liabilities and Statements of Revenue and Expenses of the School in the form
appropriate for filing with the DOE) and an unaudited Balance Sheet as of March
31, 2003 and unaudited Statements of Operations and Statements of Cash Flows for
the three months ended March 31, 2003 (collectively, the "FINANCIAL
STATEMENTS"). The basis of presentation of the Financial Statements of the
Seller and the School is disclosed on Schedule 5.11(a) attached hereto or in the
notes thereto. The balance sheets included in the Financial Statements present
fairly in accordance with GAAP the assets and liabilities of Seller and the
School as of the respective dates thereof, and the related Statements of Revenue
and Expenses present fairly in accordance with GAAP the results of operations of
Seller and the School for the respective periods covered thereby. The Financial
Statements (i) have been prepared based upon the books and records of Seller in
a manner consistent with Seller's standard internal accounting practices,
consistently applied, and (ii) fairly present the financial position of Seller
as of the dates of such Financial Statements and the results of operations for
the periods covered by such Financial Statements. Seller has maintained the
books and records of the Seller and the School in accordance with applicable
laws, rules and regulations and with GAAP and GAGAS, and such books and records
are, and during the periods covered by the Financial Statements were, materially
correct and complete, fairly reflecting the income,
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expenses, assets and liabilities of the Seller and the School. As of December
31, 2002, Seller did not have any liabilities required to be set forth in a
balance sheet prepared in accordance with GAAP and GAGAS that were not included
in the latest balance sheet included in the Financial Statements. Except as
provided in Schedule 5.11(b), Seller is not required to provide any letters of
credit, guarantees or other financial security arrangements in connection with
any transactions, approvals or licenses in the ordinary course of the School's
business. As of the date hereof, Seller has no indebtedness, liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
other than:
(a) those set forth or reserved against in the balance sheet of Seller
as of March 31, 2003, to the extent set forth, reserved against or
disclosed;
(b) those incurred since March 31, 2003 in the ordinary course of
business of the Schools and consistent in nature with past practice,
the aggregate amount of which, in relation to the current assets of
Seller, has not increased by more than $40,000; and
(c) those described in the Schedules attached hereto.
To the knowledge of Seller, there exists no condition relating to the School,
(excepting general economic conditions affecting businesses generally on the
date hereof), whether absolute, accrued, contingent or otherwise, which could
have an adverse effect on the properties, business, Purchased Assets, results of
operations or condition (financial or otherwise) of the School or which would
prevent the operations of the School from being carried on in the future in
substantially the same manner as they are presently being conducted other than
as disclosed herein or in the Schedules hereto. There are no long-term fixed or
contractual liabilities relating to the operation of the School which are
required to be assumed by Buyer in order to continue to operate the School as
presently operated by Seller, the annual expense of which are not reflected in
the Financial Statements.
SECTION 5.12 RECEIVABLES. The Accounts Receivable, except to the extent of the
allowance for 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 Seller and the School, are recorded correctly on the books and
records of Seller and the School, and Seller has no reason to believe that such
Accounts Receivables will not be collected in full in the ordinary course of
business within the ordinary time frame for such receivables consistent with
historical practices of Seller. Such receivables are not subject to any defense,
counterclaim or setoff or 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 as
reflected in reserves or allowance for doubtful accounts shown on the Financial
Statements), and (A) no facts or circumstances exist which would cause any of
such Accounts Receivable to have to be written down or written off in excess of
the allowance for doubtful accounts set forth in the Financial Statements, and
(B) since the date of Seller's most recent audited Balance Sheet, Seller has not
discounted or sold such Accounts Receivable or any portion thereof (either to
the debtor(s) or in connection with the sale of such receivables to a third
party), except in connection with the settlement with individual debtor(s) of
receivables in the ordinary course of business consistent in type and amount
with Seller's past practice.
SECTION 5.13 INVENTORIES. The only inventories maintained by Seller in
connection with the operation of the School consist of supplies used in the
ordinary course of business of the School and are reflected on the Financial
Statements as "inventories." Such supplies are reflected at cost (subject to the
following sentence), are usable in the ordinary and regular course of business,
are fit and sufficient for the purpose for which they were purchased, and, at
the date of this Agreement, are in customary
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amounts appropriate to Seller's operations of the School. All excess or obsolete
items have been written down to net realizable value or written off in
accordance with GAAP.
SECTION 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 knowledge of Seller, threatened against or affecting the
School or its operations 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 Seller or the School, (ii) to the knowledge of
Seller, neither Seller, the Owners, nor the 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 with respect to
the School) and (iii) there is no basis for any of the foregoing.
SECTION 5.15 INSURANCE. Schedule 5.15 attached hereto sets forth the insurance
coverages maintained by Seller on the Facilities, the Purchased Assets and the
operations of the School, including all policies or binders of fire, extended
coverage, general and vehicular, fidelity and fiduciary liability, workers'
compensation, and other insurance held by Seller and all binders for insurance
to be purchased on or before Closing, in order to replace policies expiring
prior to the Closing or otherwise. Such policies and binders are in full force
and effect, and there is no 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. The
insurance coverage maintained by Seller for the School is sufficient and is
customary for adequately insured schools of similar size and engaged in similar
lines of business. There are no claims pending or threatened under any of said
policies pertaining to the School or disputes with underwriters regarding
coverage under such policies pertaining to the School. Except as set forth on
Schedule 5.15, neither the execution, delivery and performance of this
Agreement, nor the consummation of the transactions contemplated hereby, will
result in the loss to Seller of any of the insurance policies listed or impair
the rights of Seller with respect to liabilities arising in connection with the
operation of the Schools prior to the Closing. Within the five years prior to
the date hereof, Seller has not been denied insurance for the School, or been
offered insurance for the School only at a commercially prohibitive premium.
SECTION 5.16 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.16
attached hereto, in connection with the operations of the School, Seller has not
generated, transported, stored, treated or disposed, nor has Seller allowed or
arranged for any third persons to transport, store, treat or dispose, 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 Seller
performed or 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 Seller in connection with its operation of the School. Seller has
not received notification, nor is it aware of, any past or present failure by
Seller to comply with any environmental laws, regulations, permits, franchises,
licenses or orders applicable to the School or its operations. Seller has not
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 of the School which may result in
judicial, regulatory or other legal proceedings having a material adverse impact
on the operations of the School or result in the imposition of any lien, claim,
assessment or other encumbrance against the Purchased Assets. To the knowledge
of Seller, except as set forth in Schedule 5.16, the Facilities do not contain
asbestos or polychlorinated biphenyls or any underground storage
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tanks. Seller acknowledges that Buyer is not assuming any of Seller's
liabilities with respect to the matters addressed in this Section 5.16 and that
any liabilities of Seller related to the matters addressed herein are Excluded
Liabilities.
SECTION 5.17 EMPLOYEE BENEFIT PLANS. Schedule 5.17 attached hereto sets forth a
complete accurate and detailed description of all of Seller's employee welfare
and benefit plans ("PLANS"). Seller acknowledges that Buyer is assuming none of
the Plans. Seller has never sponsored, administered or contributed to any
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1976, as amended ("ERISA"), that is subject to
Title IV of ERISA. There are no accrued liabilities under any Plans, programs or
practices maintained on behalf of the employees of the Schools which are not
provided for on its books or in the Financial Statements or which have not been
fully provided for by contributions to such Plans, programs or practices. As of
the date hereof, Seller does not maintain any employee welfare benefit plans, as
defined in Section 3(1) of ERISA, which provide post-retirement benefits to
former employees of the Schools and to current employees of the School 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"). Seller shall provide any notices required under COBRA for
events occurring on or prior to the Closing Date and shall provide all benefits
required pursuant to COBRA in connection therewith.
SECTION 5.18 EMPLOYMENT MATTERS. Seller and the School are in compliance with
all applicable federal, state and local laws, rules and regulations affecting
employment and employment practices with respect to the School, including terms
and conditions of employment, employment discrimination and wages and hours, and
Seller is not engaged in any unfair labor practices with respect to employees of
the School; there are no complaints against Seller with respect to employees of
the School 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 knowledge of Seller, threatened with
respect to any employees of the School; except as set forth in Schedule 5.18,
attached hereto, no labor organization activities have occurred with respect to
employees of the School during the past three years; there are no collective
bargaining agreements binding on Seller relating to the operation of the School;
no grievances have been asserted against Seller with respect to employees of the
School; and Seller has not experienced any work stoppage by its employees at the
School during the last three years.
SECTION 5.19 TAX MATTERS. Seller and the Owners have completed and filed on or
before the due dates thereof or within applicable extension periods all returns
for Taxes required to be filed with respect to the operations of the School, and
such returns are true and correct. Seller and/or the Owners, as applicable, 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 Closing. Neither Seller
nor any of the Owners is a party to, nor 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 operations of the School.
SECTION 5.20 BROKERS OR FINDERS. No agent, broker, investment banker or other
firm or person retained by Seller is or will be entitled to any broker's or
finder's fee or any similar commission or fee in connection with any of the
transactions contemplated by this Agreement, except for Atlantic Management
Company, Inc. ("BROKER"), the responsibility for the payment of whose fee shall
be solely and exclusively that of Seller and the Owners. Seller and the Owners,
jointly and severally, agree to defend, indemnify and hold harmless Buyer and
its Affiliates from and against any and all claims arising in connection with
Seller or Owners discussions and/or use of the services of Broker or any other
finder or broker.
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SECTION 5.21 ABSENCE OF CERTAIN CHANGES. Except as contemplated by this
Agreement or as set forth on Schedule 5.21 attached hereto, since December 31,
2002, there has not been, occurred or arisen with respect to the School:
(a) any sale, lease, transfer, abandonment or other disposition of any right,
title or interest in or to any of the properties or assets of Seller used
in connection with the operations of the School (tangible or intangible);
(b) (i) any approval or action to put into effect any increase in any
compensation or benefits payable to any employee, agent or officer of
Seller employed or providing services in connection with the operation of
the School 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, agent or officer of Seller 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;
(c) any material adverse change in the financial condition, assets,
liabilities (absolute, accrued, contingent or otherwise), reserves or
operations of Seller;
(d) any damage, destruction or loss to the assets, business or operations of
the School, whether or not covered by insurance in excess of an aggregate
of $5,000;;
(e) any change in the business policies or practices of the School or a
failure to operate the business of the School in the ordinary course with
a view to (i) preserving such business intact, (ii) retaining the services
of the present officers, employees and agents of Seller employed or
providing services in connection with the operation of the School, and
(iii) preserving the business relationships of the School with, and the
goodwill of, students, sales representatives, suppliers, accrediting
bodies, governmental authorities and others;
(f) any agreement, whether in writing or otherwise, to take any action
described in this Section 5.21; or
(g) any withdrawal, revocation or denial of accreditation, or order to show
cause why accreditation should not be revoked, or any revocation,
termination or denial of license to operate, or any termination or
suspension of eligibility to participate in the federal student financial
aid programs authorized by Title IV, for the School, or any program
offered by the School.
SECTION 5.22 DELIVERY OF DOCUMENTS. True, correct and complete copies of all
documents, instruments, agreements and records of Seller relating to the
Purchased Assets, the Assumed Liabilities, the representations and warranties of
Seller contained in this Agreement and/or the operation of the School have been
delivered to Buyer.
SECTION 5.23 PROGRAM REVENUES. For Seller's fiscal year ending on December 31,
1998, the School did not receive greater than eighty-five percent (85%) of its
revenues from programs authorized by Title IV or other federal student financial
aid funds, and for Seller's fiscal years ending on December 31, 1999, 2000, 2001
and 2002, no greater than ninety percent (90%), of the School's revenues from
programs authorized by Title IV or other federal student financial aid funds,
and the School satisfies the requirements regarding Title IV program funds
established by the DOE as set forth at 34 C.F.R. Section 600.5.
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The attached Schedule 5.23 contains a correct statement of the School's
percentage of revenue from such federal funding sources during each of such
fiscal years.
SECTION 5.24 ACCREDITING BODY AND GOVERNMENTAL APPROVALS. There exist no facts
or circumstances attributable to Seller or the School that would cause the DOE,
or any other governmental authority or accrediting body (including, without
limitation, ACCSCT) whose authorization, consent or similar approval is required
for the consummation of the transactions contemplated by this Agreement or the
operation of the School after the Closing Date, to refuse to deliver such
authorization, consent or similar approval.
SECTION 5.25 VOTING/MANAGEMENT RIGHTS. The Owners and Wentworth Technical
Schools, Inc. ("WENTWORTH") own all of the membership interests of the Seller,
free and clear of any liens or encumbrances or other rights in favor of any
third party, as follows: (i) Xxxxxx X. Xxxxxx III owns 50% and Xxxxxxx X.
XxXxxxxxxx owns 50% of the Class A membership interests, and (ii) o the date
hereof, Wentworth owns all of the Class B membership interest. The Class B
membership interests shall be redeemed in full on or before the Closing Date.
There are no outstanding options, rights or agreements, commitments or letters
of intent for the purchase or acquisition from the Seller or the Owners of any
membership interests in Seller. Except for the Buy-Sell Agreement between the
Owners (a true and correct copy of which is attached as Schedule 5.25), neither
the Owners nor the Seller is a party or subject to any agreement or
understanding which affects or relates to the voting, management or giving of
written consents with respect to ownership interest of the Seller.
SECTION 5.26 DISCLOSURE. Neither this Agreement nor any of the schedules,
exhibits, attachments, documents, certificates or other items prepared or
supplied to Buyer by or on behalf of Seller with respect to the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary to make any such other statements not misleading
in light of the circumstances in which such statements were made. There is no
fact which Seller has not disclosed to Buyer in writing and of which Seller or
any of the Owners is aware which has had or is reasonably likely to have a
material adverse effect upon the existing or expected financial condition,
operating results, assets, employee relations, accreditation, reputation or
business of the School.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller and the Owners to enter into this
Agreement and to sell the Purchased Assets, Buyer hereby represents and warrants
that:
SECTION 6.01 ORGANIZATION AND CORPORATE POWER. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware, the jurisdiction in which it is incorporated. Buyer has the corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereunder.
SECTION 6.02 CAPACITY; AUTHORIZATION; BINDING EFFECT. Buyer has the power, legal
capacity and authority to execute, deliver and perform this Agreement and each
other document being executed in connection herewith to which it is a party. All
corporate and other proceedings required to be taken by or on the part of Buyer
to authorize Buyer to enter into and carry out this Agreement and the related
documents contemplated herein, have been duly and properly taken. This Agreement
has been duly executed and delivered by Buyer and constitutes valid and binding
obligations of Buyer, enforceable against Buyer in accordance with its 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).
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SECTION 6.03 NO CONFLICTS. The execution, delivery and performance of this
Agreement and each other document being executed by Buyer in connection
herewith, and the consummation by Buyer of the transactions contemplated hereby
and thereby will not: (a) violate any provisions of law applicable to Buyer; (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 Buyer (as heretofore amended), any instrument, license, agreement
or commitment to which Buyer is a party or by which any of its assets or
properties is bound; (c) constitute a violation of any order, judgment or decree
to which Buyer 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 set forth or described on
Schedule 5.04 attached hereto or Schedule 6.03 attached hereto.
SECTION 6.04 BROKERS OR FINDERS. Buyer represents that no agent, broker,
investment banker or other firm or person retained by Buyer is entitled to any
broker's or finder's fee or any similar commission or fee in connection with any
of the transactions contemplated by this Agreement. Buyer agrees to defend,
indemnify and hold harmless Seller, Owners and their respective Affiliates from
and against any and all claims arising in connection with Buyer's discussions
with and/or use of the services of any broker or finder.
SECTION 6.05 COMPLIANCE WITH EDUCATION LAWS. Buyer is financially responsible
and administratively capable in all material respects, as defined by ACCSCT and
by DOE at 34 C.F.R. (xx.xx.) 668.14, 668.16 and 668, Subpart L. To the knowledge
of Buyer, neither Buyer nor any of its Affiliates or employees have been nor are
the subject of any actions, suits, proceedings, investigations, audits, program
reviews or claims that would reasonably be expected to prevent or delay the
approval of the change in ownership of the School by any Accrediting Body that
is required to approve the change or issue a License or Accreditation to Buyer
or the School as a result of the change. To the knowledge of Buyer, there are no
circumstances involving Buyer or any of its Affiliates or employees that would
cause any Accrediting Body that is required to approve the change in ownership
of the School to deny or delay approval of the change or to refuse or delay the
issuance of a License or Accreditation to Buyer or the School as a result of the
change.
Section 6.06 PRIOR DOE APPROVALS SECURED BY BUYER. Schedule 6.06 sets forth the
following information with respect to each of the three (3) most recent
acquisitions by Buyer of educational institutions participating in the Title IV
programs for which the DOE approval process is pending or complete: (a) name of
institution acquired; (b) number of weeks that transpired between the date of
the acquisition and the issuance of a non-temporary Provisional Program
Participation Agreement for that institution; and (c) a description of
conditions or denials, if any, imposed by DOE in connection with any of those
acquisitions or any DOE approvals.
ARTICLE VII. COVENANTS
SECTION 7.01 COVENANTS OF SELLER AND OWNERS PRIOR TO THE CLOSING. Seller
covenants and agrees with Buyer that, from and after the date hereof and until
the earlier of the Closing Date or the termination of this Agreement pursuant to
Article IV hereof, Seller (i) shall use its reasonable best efforts to fulfill
or satisfy, or cause to be fulfilled or satisfied, all of the conditions
precedent to Seller's and Buyer's obligations to consummate and complete the
sale provided herein and to take all other steps and do all other things
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
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pay any Taxes, assessments, governmental charges or levies imposed upon it or
its income, profits or assets or otherwise required to be paid by it, (iv) shall
not make any capital expenditure in excess of $5,000 without Buyer's prior
written consent, (v) shall not engage in any sale or discount of its Accounts
Receivable (whether by discount to the debtors or by sale to any third party)
except for the settlement with individual debtors of receivables in the ordinary
course of business consistent in type and amount with Seller's past practices,
(vi) shall promptly notify Buyer (A) of any notice from any governmental or
regulatory agency or authority, (B) of any fact or circumstance of which Seller
becomes aware which would make any representation or warranty set forth herein
untrue or inaccurate as of the Closing Date, or (C) any planned or threatened
labor dispute, organization efforts, strike or collective work stoppage
affecting the employees of Seller and (vii) shall not take any action that would
cause Buyer to be unable to obtain good and marketable title to the Purchased
Assets to be transferred to Buyer at the Closing (including pledging any of such
assets as security for obligations of Owners or Seller). Until the termination
of this Agreement, Seller and the Owners will not directly or indirectly
solicit, respond to or negotiate with or release any information relative to the
Seller or the School to any potential buyer other than Buyer.
SECTION 7.02 COVENANTS OF BUYER PRIOR TO THE CLOSING. Buyer covenants and agrees
with Seller that from and after the date hereof and until the earlier of the
Closing Date or the termination of this Agreement pursuant to Article IV hereof,
Buyer (i) shall use its reasonable best efforts to fulfill or satisfy, or to
cause to be fulfilled or satisfied, all of the conditions precedent to Seller's
and Buyer's 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 Seller of its obligations under this Agreement and (iii)
shall promptly notify Seller of (A) any notice from any governmental or
regulatory agreement or authority which reasonable affects or is likely to
affect the transactions contemplated by this Agreement or (B) any fact or
circumstance of which Buyer becomes aware which would make any representation or
warranty set forth in this Article VI untrue or inaccurate as of the Closing
Date.
SECTION 7.03 Closing and Post-Closing Covenants.
(a) FURTHER ASSURANCES. From time to time after the Closing, (i) Seller and
Owners will 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
Seller may reasonably request to more effectively assure the assignment to
and assumption by Buyer of the obligations and liabilities of Seller to be
assumed by Buyer pursuant to this Agreement and to otherwise carry out the
purpose and intent of this Agreement.
(b) 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 School from Seller to Buyer. Before and after the Closing, Seller
shall use its reasonable best efforts to assist Buyer in obtaining any
required accreditation reasonably necessary for Buyer's operation of the
School, including furnishing Buyer such information and assistance as
Buyer may request in connection with its preparation of filings,
submissions or accreditation applications to any governmental agency in
connection with the transactions contemplated hereby.
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(c) ACCESS TO EMPLOYEES. From and after the Closing, each of Buyer and Seller
(the "REQUESTED PARTY") shall afford to the other party (the "REQUESTING
PARTY"), its officers, counsel, accountants and other authorized
representatives reasonable access to the Requested Party's employees who
formerly were or currently are employed by the Requested Party, 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 (i) any claim, action, litigation or
other proceeding involving Seller, Buyer or the School, and (ii) the
preparation of the Closing Balance Sheet. Each party shall use its
reasonable best efforts to cause such employees to cooperate with and
assist the Requesting Party in its prosecution or defense of such claims,
actions, litigation 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.
(d) CERTIFICATION. The parties hereto hereby acknowledge and agree that the
transactions contemplated hereby are subject to the usual and customary
conditions relating to a change of ownership resulting in a change of
control of a postsecondary educational institution certified as eligible
to participate in the student financial assistance programs authorized
under Title IV, including the following: (1) approval by the applicable
state education regulatory authority of the Commonwealth of Massachusetts;
(2) approval by all accrediting agencies that accredit the School,
including, without limitation, ACCSCT; (3) the issuance by the DOE of a
temporary Provisional Program Participation Agreement extending the
School's certification to participate in Title IV funding programs
immediately following the Closing; and (4) the issuance of a new
Provisional Program Participation Agreement permitting the School to
resume participation in Title IV funding under the new ownership. Prior to
and after the Closing, Seller and Buyer shall provide to the DOE and to
all state regulatory agencies and accrediting bodies all information
required or reasonably requested by any of them, and shall use their
reasonable efforts to satisfy all requirements and demands of the DOE or
any such agency or body requisite to obtaining certification of the School
as eligible to participate in the Title IV programs after the Closing.
Seller and the Owners shall cooperate with Buyer to ensure that a
materially complete application for recertification and provisional
extension of certificate (the "APPLICATION") for the School is filed with
the DOE no later than ten (10) business days following the Closing. For
purposes of this Agreement, a materially complete Application consists of
a completed application for approval to participate in federal student
financial aid programs and the following: (i) a copy of the School's state
licenses or other equivalent document currently authorizing the School to
provide a program of postsecondary education in the Commonwealth of
Massachusetts; (ii) copies of documentation from the School's accrediting
agency demonstrating that the School currently is accredited and that the
accrediting agency has approved or accredited all programs offered by the
School; (iii) audited financial statements of the Seller's two most
recently completed fiscal years that are prepared in accordance with GAAP
published by the Financial Accounting Standards Board and audited in
accordance with GAGAS published by the Governmental Accounting Standards
Board; and (iv) audited financial statements of the Buyer's two most
recently completed fiscal years that are prepared in accordance with GAAP
and audited in accordance with GAGAS, or acceptable equivalent
information. Seller shall further cooperate with Buyer to ensure that the
following are filed with the DOE by the last day of the month following
the month in which the Closing occurred: (i) a balance sheet showing the
financial position of the Seller and School, as of the date of the
Closing, that is prepared in accordance with GAAP and audited in
accordance with GAGAS;
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(ii) approval of the change of ownership from the Commonwealth of
Massachusetts; (iii) approval of the change of ownership from the School's
accrediting agency; and (iv), if necessary, a default management plan. At
Buyer's option, as soon as practicable after the date of this Agreement,
Buyer and Seller shall provide the DOE with all information necessary to
obtain a pre-Closing review of the Application. If, on the basis of the
pre-Closing submission to the DOE, Buyer determines or is informed that it
will not be able to obtain certification of the Schools subsequent to the
Closing at any time, in a timely manner, or without being subject to
material adverse conditions, then notwithstanding any other provision
hereof, Buyer shall so notify Seller and Buyer may elect to terminate this
Agreement pursuant to Section 4.01(d) of this Agreement. Buyer may
withdraw its election if, subsequent to the giving of notice, Buyer is
satisfied that the basis cited in the notice has been satisfactorily
resolved. Buyer's determination, in its sole and absolute discretion,
shall be dispositive.
(e) SATISFACTION AND PAYMENT OF THE EXCLUDED LIABILITIES. Seller and Owners
shall immediately pay and satisfy, or cause to be paid and satisfied
within sixty days of the Closing, all debts of Seller incurred prior to
the Closing Date relating to the School that constitute the Excluded
Liabilities.
SECTION 7.04 EXCISE AND PROPERTY TAXES. Seller shall pay all Taxes arising out
of the transfer of the Purchased Assets. Each of Buyer and Seller shall pay its
respective portion, prorated as of the Closing, of state and local real and
personal property taxes of the business of the School.
SECTION 7.05 ADMINISTRATION IN ACCORDANCE WITH ACCREDITATIONS. From and after
the date of this Agreement through the Closing Date, Seller, at Seller's sole
cost and expense, shall administer and operate the School in accordance with all
federal and state laws, statutes, rules and regulations and in accordance with
all permits, accreditations, authorizations and agreements issued by or entered
into with any federal, state or local governmental or quasi-governmental entity
in any way regulating or otherwise relating to the administration and operation
of the School. Subject to the terms and provisions of this Agreement, Buyer and
Seller shall work together cooperatively and in good faith to obtain any and all
approvals from the DOE, any state education regulatory authority and any other
governmental or quasi-governmental entity that may be necessary or appropriate
to vest in Buyer at the Closing the right and authority in all material respects
to administer and operate the School and to release Seller from further
liability or obligations in connection with the administration or operation of
the School.
SECTION 7.06 ACCESS AND MAINTENANCE OF RECORDS. From and after the Closing, each
of Buyer and Seller (the "REQUESTED PARTY") shall afford to the other party (the
"REQUESTING PARTY"), its officers, counsel, accountants and other authorized
representatives and regulatory authorities access to its properties, books and
records, including those maintained by its accountants, at any time and from
time to time upon reasonable notice from the Requesting Party, as reasonably
required by the Requesting Party in connection with (i) performance by the
Requesting Party of any of its obligations under the terms and conditions of
this Agreement, including, without limitation, any liability or obligation of
Seller not assumed by Buyer pursuant to this Agreement, (ii) any claim, action,
litigation or other proceeding involving the Requesting Party or the School,
(iii) the Requesting Party's preparation of its financial statements and Tax
returns, (iv) any other essential business purpose of the Requesting Party. In
addition, the Requesting Party, at its expense, may make copies of any such
records as may be necessary or appropriate for the Requesting Party's use. Each
party shall maintain all such records in accordance with, and subject to all
restrictions imposed by, all laws, rules and regulations. 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.
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SECTION 7.07 EMPLOYMENT MATTERS.
Buyer and Seller agree that Buyer has not assumed and shall not
assume any obligations to (or regarding the employment of) any Persons
previously or currently employed by Seller. As of the day prior to the Closing
Date, Seller shall terminate all of its employees employed at the School in
accordance with all applicable laws and, prior to the Closing, shall provide any
required notices in a timely manner in connection therewith. All of Seller's
obligations for compensation, wages, bonuses, severance pay, vacation time, pay
in lieu of vacation, sickness and accident benefits, leaves of absence, and
similar employee benefits accrued as of the Closing shall be paid by Seller as
of the day prior to the Closing Date.
(a) Buyer may, at its option and in its sole and absolute discretion,
offer employment to any current or former employee of Seller on such
terms and conditions as may be mutually agreed upon by Buyer and
such employees. Seller shall use its best efforts to assist Buyer in
hiring any such employees with respect to whom Buyer elects to offer
employment. Seller shall not take any action, directly or
indirectly, to prevent or discourage any such employee from being
employed by Buyer after the Closing Date and shall not solicit,
invite, induce or entice any such employee to remain in the employ
of Seller or otherwise attempt to retain the services of any such
employee, except with the prior written consent of Buyer.
(b) Notwithstanding any possible inferences to the contrary, neither
Seller nor Buyer intends for this Section 7.07 to create any rights
or obligations except as between Seller and Buyer, and no past,
present or future employees of Seller or Buyer shall be treated as
third-party beneficiaries of this Section 7.07.
SECTION 7.08 ADVICE OF CHANGES. From and after the date hereof, up to and
including the Closing Date, each of Buyer, Seller and the Owners shall promptly
notify the other parties in writing of any event occurring subsequent to the
date of this Agreement of which the notifying party becomes aware which would
render any of its representations and warranties herein, if made on or as of the
date of such event or as of the Closing Date, untrue or inaccurate. Such
notification may take the form of a supplement (the "SUPPLEMENTARY SCHEDULES")
to the Schedules that are being delivered by such party as of the date of this
Agreement; provided, however, that in no event shall any information disclosed
on the Supplementary Schedules be given effect for the purpose of satisfying the
Condition to Closing set forth in Section 8.01(a) that "all representations and
warranties of Seller and the Owners contained in this Agreement or in any
certificate to Buyer pursuant hereto shall be accurate, complete, true and
correct as of the Closing Date with the same effect as though made at and as of
the Closing Date"; provided, further, however, that any information disclosed in
Supplementary Schedules and referenced in a certificate shall be deemed to
modify the certificate or schedule as of the date such Supplementary Schedule is
delivered to Buyer in determining whether a representation or warranty has been
breached as of a particular date for purposes of indemnity under Section 9.12(a)
or 9.13(a). Seller and Owners shall promptly notify Buyer of the occurrence of
any event, condition, or state of facts of which the notifying party becomes
aware which is reasonably likely to have a material adverse impact on the
business, operations or assets of the Company.
ARTICLE VIII. CONDITIONS TO CLOSING
SECTION 8.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligation of
Buyer to complete the purchase of Purchased Assets as provided for herein is
subject to the fulfillment or satisfaction on or before the Closing Date of each
of the conditions set forth below, any of which may be waived by Buyer in
writing.
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(a) All representations and warranties of Seller contained in this Agreement
or in any certificate or other document delivered to Buyer pursuant hereto
shall be accurate, complete, true and correct as of the Closing Date with
the same effect as though made at and as of the Closing Date (except to
the extent such representations and warranties speak as of a particular
date), without giving effect to any disclosures made in the Supplementary
Schedules, and Buyer shall have received a certificate signed by an
officer of Seller to such effect;
(b) There shall have been no material adverse change in the condition
(financial or otherwise), assets, liabilities (absolute, accrued,
contingent or otherwise), prospects, earning power, commercial
relationships, reserves, business or operations of Seller or the School
from and after the date of this Agreement;
(c) Seller shall have performed all of the obligations, covenants and
agreements contained in this Agreement to be performed by Seller on or
before the Closing Date, and Buyer shall have received a certificate
signed by an officer of Seller to such effect;
(d) All instruments and documents required on Seller's part to effectuate and
consummate the transactions contemplated hereby as of the Closing,
including those described in Section 3.02, shall be delivered by Seller
and shall be in form and substance satisfactory to Buyer and its counsel;
(e) No law or order shall have been enacted, entered, issued, promulgated or
entered 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;
(f) Seller and Buyer shall have obtained all required regulatory approvals
that are capable of being obtained prior to Closing, including, but not
limited to, all registrations, licenses, permits and approvals required by
(i) the FAA, and (ii) any governmental entity or agency or other
regulatory body to operate the School in the Commonwealth of Massachusetts
and all local jurisdictions contained therein (including, without
limitation, the Commonwealth of Massachusetts's consent to the return to
Seller of the existing letter of credit in the face amount of $100,000
issued by Citizens Bank to the Commonwealth of Massachusetts Department of
Education for the account of Seller and the substitution by Buyer of a
similar letter of credit or other collateral acceptable to the
Massachusetts Department of Education, with no adverse impact on the
School as a result thereof);
(g) Buyer shall be reasonably satisfied that, with respect to all required
regulatory approvals that are not capable of being obtained prior to
Closing, Buyer will be able to obtain all such other required regulatory
approvals within a reasonable time period after the Closing Date without
material expense or undue burden;
(h) The School shall have received all required accreditation approvals and
shall not have received from any accrediting agency or body (including,
without limitation, ACCSCT) any "show cause" letter or other notice which
would tend to call into question the validity of such accreditation or the
ability of the School to maintain such accreditation in good standing at
any time after the Closing Date;
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(i) All third party consents required by the transactions contemplated hereby
shall have been obtained (including, without limitation, all necessary
consents of other parties to the Assumed Contracts);
(j) Buyer shall have received satisfactory evidence that all liens (other than
the obligations of Seller described in Section 2.03(iv) and 2.03(viii)) on
the Purchased Assets have been terminated and completely released of
record, or will be terminated and completely released of record
concurrently with the Closing;
(k) Buyer shall have received from the landlords of the Facilities executed
estoppel certificates and consents to the Lease Assignments;
(l) Buyer shall have completed its due diligence investigation of Seller and
the School and shall be satisfied, in its reasonable discretion, with the
results of such investigation; and
(m) The Class B membership interests in Seller shall have been redeemed by
Seller on or before the Closing Date.
SECTION 8.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligation of
Seller to complete the sale of Purchased Assets as provided for herein are
subject to the fulfillment or satisfaction on or before the Closing Date of each
of the conditions set forth below, any of which may be waived by Seller in
writing.
(a) All representations and warranties of Buyer contained in this
Agreement or in any certificate or other document delivered to
Seller pursuant hereto shall be complete, true and correct in all
material respects as of the Closing Date, and Seller shall have
received a certificate signed by an officer of Buyer to such effect;
(b) Buyer shall have performed all of the obligations, covenants and
agreements contained in this Agreement to be performed by Buyer on
or before the Closing Date, and Seller shall have received a
certificate signed by an officer of Buyer to such effect;
(c) All instruments and documents required on Buyer's part to effectuate
and consummate the transactions contemplated hereby, including those
described in Section 3.03, shall be delivered by Buyer;
(d) No law or order shall have been enacted, entered, issued,
promulgated or entered 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;
and
(e) The existing letter of credit in the face amount of $100,000 issued
by Citizens Bank to the Commonwealth of Massachusetts Department of
Education for the account of Seller shall have been returned to
Seller for cancellation with Buyer substituting therefore a
substitute letter of credit or other collateral acceptable to the
Massachusetts Department of Education.
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ARTICLE IX. MISCELLANEOUS
SECTION 9.01 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 such party without the prior written consent of all parties
hereto, except that Buyer may assign its rights and obligations hereunder to an
Affiliate. No assignment of any right or delegation of any duty shall relieve
the assignor or delegator of any liabilities hereunder, except to the extent, if
any, so provided in a writing signed by the obligee(s).
SECTION 9.02 NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be given or made (a) by personal
delivery, (b) by a nationally recognized courier service for overnight delivery,
charges prepaid, or (c) by registered or certified mail, postage prepaid, return
receipt requested, in each case addressed
if to Buyer, at:
Wyo-Tech Acquisition Corp.
0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx and Xxxx X. Xxxxxxxxx, Esq.
with each such notice to Buyer, a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to Seller, at:
East Coast Aero Tech, LLC
c/o Atlantic Management Company, Inc.
Xxxxxxx Xxxx, Xxxxx X00
000 Xxxxxxxxx Xxxxx Xxxx
Portsmouth, New Hampshire 03801
Attention: J. Xxxxxxx Xxxxxx
Facsmile: (000) 000-0000
if to Owners, at:
Xxxxxx X. Xxxxxx III
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
Xxxxxxx X. XxXxxxxxxx
0000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, XX 00000
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with each such notice to Seller and/or Owners, a copy to:
Rich May, a Professional Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
or at such other place as the party to whom such notice of communication is to
be addressed may have designated to the other parties by notice conforming to
this Section 9.02. Notices shall be deemed effective and received (i) on the
actual receipt in the case of hand delivery, (ii) on the next business day after
deposit in the case of notices by nationally recognized overnight courier
services, or (iii) on the third business day after the date of mailing in the
manner set forth herein. As used herein, notice to a party shall include
concurrent notice to that party's counsel as set forth herein.
SECTION 9.03 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein and to be delivered pursuant hereto constitute the entire agreement
between the parties pertaining to the subject matter hereof, and supersede all
prior and contemporaneous 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. No waiver of any of the
provisions of this Agreement 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.
SECTION 9.04 NATURE AND SURVIVAL OF REPRESENTATIONS. The representations,
warranties, covenants and agreements of Buyer, Seller and Owners contained in
this Agreement, and all statements contained in this Agreement or any Exhibit or
Schedule hereto or any certificate or financial statement delivered pursuant to
this Agreement, shall be deemed to constitute representations, warranties,
covenants and agreements of the respective party delivering the same. All such
representations, warranties, covenants and agreements shall survive the Closing
for a period of three (3) years (after which no claim for indemnity pursuant to
Section 9.12(a) or 9.13(a) may be made); provided, however, that the
representations and warranties contained in Sections 5.16, 5.17, 5.18 and 5.19
shall survive for three (3) months following the expiration of any applicable
statute of limitations covering causes of action for which liability could be
imposed on Seller if the facts set forth in the representations and warranties
in such Sections are not true. The representations and warranties set forth in
Articles V and VI are cumulative, and any limitation or qualification set forth
in any one representation and warranty therein shall not limit or qualify any
other representation and warranty therein.
SECTION 9.05 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 Seller to Buyer unless and until the
Closing occurs whereupon all risk of loss or damage shall pass to Buyer. In the
event of a casualty or condemnation in respect of any of the Purchased Assets
prior to the Closing, Buyer shall have the right, at its sole option, to elect
either (a) to terminate this Agreement or (b) to accept the insurance proceeds
in respect of such casualty or condemnation and proceed to close
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otherwise in accordance with the terms and conditions of this Agreement. Seller
agrees to maintain the insurance currently carried with respect to the Purchased
Assets until the Closing Date.
SECTION 9.06 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.
SECTION 9.07 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.
SECTION 9.08 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.
SECTION 9.09 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.
SECTION 9.10 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.
SECTION 9.11 TIME IS OF THE ESSENCE. Seller 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.
SECTION 9.12 INDEMNIFICATION BY SELLER AND OWNERS. Seller and Owners, jointly
and severally, hereby agree to indemnify, defend and hold harmless Buyer and its
Affiliates and their respective officers, directors, stockholders, employees,
agents, successors and assigns from and against any and all Losses (as defined
in Section 9.16) as a result of, or based upon or arising out of:
(a) any breach of, or any inaccuracy or misrepresentation in, any of the
representations or warranties made by Seller or Owners in this
Agreement or any other agreement, statement or certificate delivered
pursuant hereto;
(b) any breach of or violation by Seller or Owners of any of the
covenants made by Seller and/or Owners in this Agreement or any
other agreement, statement or certificate delivered pursuant hereto;
(c) any actual or threatened claim, suit, action or proceeding resulting
from or arising out of Seller's operation of the School or conduct
of its business on or before the Closing Date that are asserted with
respect to any liabilities that are not Assumed Liabilities;
(d) any of the Excluded Liabilities (and/or Seller's or Owners' failure
or refusal to discharge any obligation related to the Excluded
Liabilities);
(e) any of the matters disclosed on Schedule 5.14 and/or Schedule 5.18;
(f) any Tax payable by or on behalf of Seller or any of Seller's
Affiliates for any taxable period ending on or prior to the Closing
Date;
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(g) any determination by the DOE or any accrediting agency that Seller
and/or School has not demonstrated compliance with 34 CFR 668.15
(Factors of Financial Responsibility) and 34 CFR 668.16 (Standards
of Administrative Capability) for dates and periods prior to Closing
Date; and
(h) 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.
Notwithstanding the foregoing, Seller and Owners shall have no liability
under Section 9.12(a) until the aggregate of all Losses arising out of all
matters set forth in Section 9.12(a) exceeds $50,000 (the "Threshold Amount") in
which case Seller and Owners shall be jointly and severally liable for all such
Losses without regard to the Threshold Amount. No matter or series of related
matters shall constitute a "Loss" eligible for indemnification under Section
9.12(a) unless and until the aggregate liability with respect to such matter or
series of related matters exceeds $10,000.
SECTION 9.13 INDEMNIFICATION BY BUYER. Buyer hereby agrees to indemnify and hold
harmless Seller and Owners from and against:
(a) any breach of, or any inaccuracy or misrepresentation in, any of the
representations or warranties made by Buyer in this Agreement or any
other agreement, statement or certificate delivered pursuant hereto;
(b) any breach of or violation by Buyer of any of the covenants made by
Buyer in this Agreement or any other agreement, statement or
certificate delivered pursuant hereto;
(c) all Losses arising out of or resulting from any claim or arising out
of operation of the School on or after the Closing Date;
(d) all Losses arising out of or resulting from the Assumed Liabilities;
and
(e) 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.
SECTION 9.14 INDEMNIFICATION OF THIRD PARTY CLAIMS; RIGHT TO SET-OFF.
(a) The provisions of this Section 9.14 shall govern any claim for
indemnification of Buyer, pursuant to Section 9.12, or Seller, pursuant to
Section 9.13 (each such party an "Indemnitee"), against the party agreeing to
provide indemnification hereunder (the "Indemnitor"). The Indemnitee shall
promptly give notice hereunder to the Indemnitor, after obtaining notice of any
claim as to which recovery may be sought against the Indemnitor because of the
indemnity in Section 9.12 or 9.13, and, if such indemnity shall arise from the
claim of a third party, the Indemnitee shall consent, if requested, to the
Indemnitor assuming the defense of any such claim; provided however, 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 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 after receiving the advice of counsel that there is reasonably likely
to 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
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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
at the request of Indemnitor , 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 Losses 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 Losses resulting from, arising out of or
incurred with respect to such judgment or settlement. If the Indemnitee does not
request the Indemnitor to assume the defense, or if Indemnitor does 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
Losses incurred by the Indemnitee in connection with the defense against or
settlement of such claim or litigation.
(b) Upon notice to Seller (which notice shall be as soon as
reasonably practicable after Buyer becomes aware the facts giving rise to a
claim), Buyer is hereby authorized at any time, and from time to time, to
set-off and apply any and all amounts owing by Buyer to Seller, whether under
this Agreement or otherwise, against any and all of the obligations of Seller
and/or Owners to Buyer hereunder, including without limitation Seller's and
Owners' obligations pursuant to Section 9.12 hereunder. The set-off right with
respect indemnification obligations of Seller and/or Owners set forth in this
Section 9.14 (b) shall not be exercisable unless Seller and/or Owners shall have
failed to satisfy such indemnification obligation to Buyer after Buyer has given
thirty (30) days' written notice to Seller and/or Owners specifying the nature
and amount of such indemnification obligation and indicating Buyer's intention
to exercise said set-off right under this Agreement. If Seller and/or Owners
shall reasonably and in good faith object to Buyer's notice, the issue of
whether or not Buyer shall be entitled to set-off and the amount of such set-off
shall be resolved in accordance with the dispute resolution provisions of
Section 9.15 of this Agreement; provided, however, that Buyer shall not be
obligated to pay any amounts it reasonably and in good faith believes are
subject to such set-off right pending the resolution of such dispute in
accordance with the provisions of Section 9.15.
SECTION 9.15 DISPUTE RESOLUTION AND ARBITRATION.
(A) NEGOTIATION BETWEEN PARTIES. 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. 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 shall be honored. If the
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matter has not been resolved within 45 days of the disputing party's
notice, or if the parties fail to meet within 10 days, 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 all applicable rules of evidence.
(B) ARBITRATION. Any dispute arising out of or relating to this
Agreement or the breach, termination or the validity hereof, which
has not been resolved by the nonbinding meet and confer provisions
provided in Section 9.15(a) within 90 days of the initiation of such
procedure, shall be settled by arbitration in accordance with the
then-current 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
rules of civil procedure in the jurisdiction in which such
arbitration proceeding is initiated, 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. For claims
initiated by Buyer, the place of arbitration shall be Boston,
Massachusetts and for claims initiated by Seller or Owners the place
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.
SECTION 9.16 DEFINITION OF LOSS. (a) The term "Loss" or "Losses" shall mean any
and all claims, liabilities, obligations, judgments, penalties, fines, losses,
damages (including consequential and incidental damages) and reasonable costs
and expenses, including but not limited to, reasonable attorneys' fees and
accounting fees and related disbursements. The amount of any Losses for which
Seller is obligated to provide indemnification under Section 9.12 shall be net
of any insurance proceeds (minus collection expenses incurred by Buyer in the
pursuit of such insurance proceeds) actually received by the Buyer on account of
such Loss. Nothing in this Section 9.16 shall be deemed to obligate any Person
to maintain any insurance or to pursue any claim against any insurer or third
party.
(b) To the extent that an indemnifying party has discharged any claim
for indemnification hereunder, the indemnifying party shall be
subrogated to all rights of the indemnified party against any
Person, including any insurance company, to the extent of the Losses
that relate to such claim. Any indemnified party shall, upon written
request by the indemnifying party following the discharge of such
claim, execute an instrument reasonable necessary to evidence such
subrogation rights.
(c) Any payments made as indemnification under Sections 9.12 or 9.14
shall be considered adjustments to the Purchase Price for purposes
of the parties' respective tax filings and tax obligations.
SECTION 9.17 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.
SECTION 9.18 EXPENSES. Each party hereto shall bear its own expenses relating to
the transactions contemplated by this Agreement; provided, however, that such
expenses incurred by the Seller prior to Closing that remain outstanding as of
the Closing Date shall be the sole responsibility of the Seller and
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the Buyer shall have no liability therefor. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses shall be subject
to any rights of such party arising from a breach of this Agreement by the other
party. Seller shall reimburse and indemnify the Buyer from and against any and
all fees and expenses of agents, representatives, counsel, and accountants
incurred by the Seller prior to the Closing Date that remain outstanding as of
the Closing Date.
SECTION 9.19 REPRESENTATION BY COUNSEL. EACH PARTY HERETO REPRESENTS AND AGREES
WITH EACH OTHER THAT IT HAS BEEN REPRESENTED BY, OR HAD THE OPPORTUNITY TO BE
REPRESENTED BY, INDEPENDENT COUNSEL OF ITS OWN CHOOSING, AND THAT IT HAS HAD THE
FULL RIGHT AND OPPORTUNITY TO CONSULT WITH ITS RESPECTIVE ATTORNEY(S), THAT TO
THE EXTENT, IF ANY, THAT IT DESIRED, IT AVAILED ITSELF OF THIS RIGHT AND
OPPORTUNITY, THAT IT OR ITS AUTHORIZED OFFICERS (AS THE CASE MAY BE) HAVE
CAREFULLY READ AND FULLY UNDERSTAND THIS AGREEMENT IN ITS ENTIRETY AND HAVE HAD
IT FULLY EXPLAINED TO THEM BY SUCH PARTY'S RESPECTIVE COUNSEL, THAT EACH IS
FULLY AWARE OF THE CONTENTS THEREOF AND ITS MEANING, INTENT AND LEGAL EFFECT,
AND THAT IT OR ITS AUTHORIZED OFFICER (AS THE CASE MAY BE) IS COMPETENT TO
EXECUTE THIS AGREEMENT AND HAS EXECUTED THIS AGREEMENT FREE FROM COERCION,
DURESS OR UNDUE INFLUENCE. THIS AGREEMENT IS THE PRODUCT OF NEGOTIATIONS BETWEEN
THE PARTIES HERETO REPRESENTED BY COUNSEL AND ANY RULES OF CONSTRUCTION RELATING
TO INTERPRETATION AGAINST THE DRAFTER OF AN AGREEMENT SHALL NOT APPLY TO THIS
AGREEMENT AND ARE EXPRESSLY WAIVED. THE PROVISIONS OF THIS AGREEMENT SHALL BE
INTERPRETED IN A REASONABLE MANNER TO EFFECT THE INTENTIONS OF THE PARTIES TO
THIS AGREEMENT.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the date first above written.
"BUYER"
WYO-TECH ACQUISITION CORP.
a Delaware corporation
By: /s/ XXXX X. ST. PIERRE
Name: Xxxx X. St. Pierre
Title: Executive Vice President,
Marketing & Admissions
"SELLER"
EAST COAST AERO TECH, LLC,
a Massachusetts limited liability company
By: /s/ XXXXXX X. XXXXXX III
Name: XXXXXX X. XXXXXX III
Title: PRESIDENT
"OWNERS"
/s/ XXXXXX X. XXXXXX III
_______________________________________
XXXXXX X. XXXXXX III
/s/ XXXXXXX X. XXXXXXXXXX
_______________________________________
XXXXXXX X. XXXXXXXXXX
X-0 (Asset Purchase Agreement)
ASSET PURCHASE AGREEMENT
CORINTHIAN/EAST COAST AERO TECH
LIST OF EXHIBITS
Exhibit Designation Exhibit Contents
Exhibit A Form of Escrow Agreement
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C Form of Xxxx of Sale
A-1 (Asset Purchase Agreement)
