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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of July 25, 1996, is made and
entered into by and among EDUTREK INTERNATIONAL, LTD., a Georgia corporation
("Purchaser"), and XXXXXX X. XXXXXXXX, an individual residing in the State of
Georgia ("Xxxxxxxx") and XXXXXXX X. XXXXXXX, an individual residing in the State
of Georgia ("Xxxxxxx")(Xxxxxxxx and Xxxxxxx being sometimes hereinafter
individually referred to as a "Seller" and collectively as the "Sellers").
Capitalized terms not other-wise defined herein have the meanings set forth in
Section 13.1.
WHEREAS, each of Sellers owns the respective number of shares of common
stock, par value $1.00 per share, of American-European Corporation, a Georgia
corporation ("AEC"), hereinafter set forth, constituting all issued and
outstanding shares of capital stock of AEC (such shares being referred to herein
as the "AEC Shares"): Xxxxxxxx - 786.60 and Xxxxxxx - 87.40; and
WHEREAS, AEC and Xxxx Xxxxxxxx ("MB") own the respective limited
liability company interests of American European Middle East Co., a Georgia
limited liability company ("AEMEC"), hereinafter set forth, constituting all of
the limited liability company equity interests of AEMEC (such limited liability
company equity interests being referred to herein as the "AEMEC Shares"): AEC -
85%, and MB - 15%; and
WHEREAS, AEC and each of Sellers owns the respective number of shares
of common stock, par value $1.00 per share, of American College in London, Ltd.,
U. S., a District of Columbia corporation ("ACIL"), hereinafter set forth,
constituting all issued and outstanding shares .of capital stock of ACIL (such
shares being referred to herein as the "ACIL Shares"): AEC - 799 Xxxxxxxx -
180.9 and Xxxxxxx - 20.1; and
WHEREAS, Purchaser desires to purchase all of the AEC Shares and all of
the ACIL Shares that are owned by either or both of the Sellers, thereby
acquiring directly or indirectly all of the issued and outstanding stock of AEC
and ACIL and eighty five percent (85%) of the limited liability company
interests in AEMEC, and each of the Sellers desires to effect the same, on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF SHARES, DISTRIBUTION OF INCOME,
AND OTHER AGREEMENTS
1.1 Purchase and Sale. At the Closing on the terms and subject to the
conditions set forth in this Agreement, each of Sellers agrees to sell to
Purchaser, and Purchaser agrees to purchase from Sellers, (i) all of the AEC
Shares, and (ii) all of the ACIL Shares that are not owned by AEC (the shares
referenced in clauses (i) and (ii) hereinafter collectively referred to as the
"Sellers' Shares").
1.2 Purchase Price. The aggregate purchase price for the Sellers'
Shares is $35,829,182 (the "Purchase Price") which will be dispersed to Xxxxxxxx
and Xxxxxxx in accordance with the "Total Cash To Be
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Received" column set forth in Schedule 1.2 of this Agreement. Any Purchase Price
funds to be dispersed to Sellers shall be payable in immediately available
United States funds in Atlanta, Georgia, at the Closing in the manner provided
in Section 1.4. The Purchase Price will increase an additional $146,500 per week
(prorated on a per diem basis for any partial week) if the Closing does not
occur on or prior to August 30, 1996, as a result of the Purchaser's election to
extend the Closing Date for any reason other than an extension (i) elected
pursuant to Section 4.16, or (ii) required solely as a result of the Sellers'
failure to fulfill, for any reason (other than as set forth in the following
sentence), all of the conditions precedent to Purchaser's obligation to close,
as expressly set forth in Article VI of this Agreement. The parties hereto
acknowledge and agree that clause (ii) of the preceding sentence shall not apply
under circumstances where, despite the Sellers' compliance with Section 4.1, a
condition precedent to Closing has not been fulfilled due to a third party's
refusal or failure to provide its required consent or to otherwise take any
action required to fulfill such condition precedent.
1.3 Tax Related Purchase Price Adjustments. If between the date hereof
and the Closing, the Code shall be amended to effect a reduction in the Tax
payable on capital gains, then the Purchase Price referenced in Section 1.2
above shall be reduced by the amount of all Tax savings resulting to the Sellers
from such capital gains tax reduction. Similarly, if after the Closing (but
effective no later than January 1, 1997) the Code is amended to reduce the
capital gains Tax applicable to the transactions effected pursuant to this
Agreement, the Purchase Price set forth in subparagraph (b) above shall be
reduced by one half of the amount of Tax savings resulting to the Sellers from
such capital gains Tax reduction, and the Sellers shall refund such amount to
Purchaser, without notice or demand, within ten (10) Business Days after the
effective date of such amendment. Any dispute regarding the implementation of
this Section 1.3(b) shall be settled by mutual agreement of the Purchaser's
accountants and the Sellers' accountants, and in the absence of such agreement,
in accordance with the procedures set forth in Section 13.14 hereof.
1.4 Closing. The Closing will take place at the offices of Xxxxx,
Xxxxxxxx & Xxxxxxx, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000, or at such other place as Purchaser and Sellers mutually agree, at 10:00
A.M. local time, on or before August 30, 1996, or such later date as may be
designated by Purchaser at its election (but no later than September 30, 1996);
subject, however, to such further extensions as may arise pursuant to Section
4.16 (the "Closing Date"). At the Closing, Purchaser will pay the Purchase Price
by wire transfer of immediately available funds to such account as Sellers may
reasonably direct by written notice delivered to Purchaser by Sellers at least
two (2) Business Days before the Closing Date. Simultaneously, Sellers will
assign and transfer to Purchaser good and valid title in and to the Sellers'
Shares, free and clear of all Liens, by delivering to Purchaser certificates
representing the AEC Shares and ACIL Shares, in genuine and unaltered form, duly
endorsed in blank. At the Closing, there shall also be delivered to Seller and
Purchaser the opinions, certificates and other Contracts, documents and
instruments to be delivered under Articles VI and VII. The parties will endeavor
in good faith to cause the Closing to occur by August 30, 1996.
1.5 Distributions.
(a) At the Closing, the parties shall cause the Companies to
sell to Xxxxxxxx, and Xxxxxxxx to purchase from the Companies, for $731,120 (as
reflected on Schedule 1.2 of the Agreement) those certain assets identified as
items 22-28 on Schedule 1.2 of this Agreement (and as more particularly
described on Schedule 1.5(a) of this Agreement). The parties acknowledge and
agree that the payment of $731,120 is inclusive of the sales tax, if any, that
is due with respect to such transaction. In addition, at the Closing, the
parties shall cause the Companies to distribute to Xxxxxxxx the balance of any
other assets set forth on Schedule 1.5(a), together with an amount equal to one
half of that certain deposit maintained by AEC with the Internal Revenue Service
as required by Internal Revenue Code ss. 7519, and AEC shall retain all of such
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deposit upon its return by the Internal Revenue Service. All of the assets sold
or distributed to Xxxxxxxx pursuant to this Section 1.5(a) shall be so sold or
distributed free and clear of any and all liens and encumbrances, except as set
forth on Schedule 1.2 or Schedule 1.5(a). Any distribution of a lease or other
contractual obligation referenced in Schedule 1.5(a) shall be effected pursuant
to an assignment of the same with (i) appropriate third party consent, if
required pursuant to such lease or other contractual arrangement, and (ii) to
the extent possible, upon the parties' use of their best efforts to obtain such
result, a release of the Companies from any continuing obligations under the
lease or other contract so assigned.
(b) For purposes of this Agreement, the Companies' net
operating profit for the period of October 1, 1995, through May 31, 1996 shall
be deemed to be $5,813,092 (the "Net Operating Profit") which amount shall be
binding on the parties hereto for purposes of this Agreement. On or prior to
Closing AEC shall distribute to Sellers all of the Net Operating Profit not
previously distributed to Sellers prior to the date hereof. The parties agree
that all distributions taken or received by either of the Sellers from any of
the Companies on or after October 1, 1995 shall be deemed distributions of the
Net Operating Profit. Set forth in Schedule 1.5(b) is a list of all of the Net
Operating Profit which has been distributed to either or both of the Sellers on
or prior to the date hereof. Each Seller represents and warrants that as to
himself, the distributions listed in Schedule 1.5(b) are accurate and complete
as of the date hereof, and that such distributions represent all of the
distributions that have been taken with respect to the Net Operating Profit.
Both of the Sellers agree that from the date hereof until the Closing, Sellers
shall make no further distributions of Net Operating Profit without promptly
providing Purchaser with all relevant information relating to such distribution,
including the account from which such distribution was taken, the amount of such
distribution and a copy of the relevant check. In no event shall Sellers take
any distributions in excess of the Net Operating Profit or any distribution of
Net Operating Profit within five (5) days of the Closing Date. At the Closing,
Sellers shall deliver to Purchaser an affidavit in form and substance reasonably
acceptable to Purchaser and its legal counsel in which each Seller sets forth,
and confirms the accuracy and completeness of, a list of all distributions of
Net Operating Profit taken by Sellers prior to the Closing. If despite the
prohibitions set forth herein it should be determined that the Sellers received
distributions in excess of the Net Operating Profit, then an amount equal to
such excess shall be deducted from the Purchase Price or, if such determination
occurs within thirty (30) days after the Closing (and the Sellers are so
notified within such thirty (30) day period), an amount equal to such excess
shall be refunded to AEC without application of the Basket Amount limitations
referenced in Section 10.4. The parties further acknowledge and agree that, as
described in Section 5.4 hereof, Xxxxxxxx has initiated certain other business
ventures. The parties agree that the use of Company assets in connection with
these ventures (including, but not limited to, the use of AEC's airplanes), and
the value of any services provided by Company personnel in connection with such
ventures, shall not be considered as a "distribution" of Net Operating Profit or
otherwise for purposes of this Agreement. It is the intention of the parties
hereto that "distributions," for purposes hereof, shall only include cash
distributions from any of the Companies to either of the Sellers, distributions
of evidence of Indebtedness from any of the Companies to either of the Sellers,
and actual transfers of title or other ownership interest from any of the
Companies to either of the Sellers, in the case of assets other than cash.
(c) At the Closing, the Sellers shall pay to the Companies or
the appropriate third parties, as the case maybe, the amounts necessary to
discharge the Indebtedness or expenses reflected as items 12, 13, 14, 15 and 17
of Schedule 1.2 of this Agreement. The Sellers acknowledge that they are solely
responsible for paying to the appropriate governmental authority an amount
necessary to pay the taxes which are the subject of item 16 of Schedule 1.2 of
this Agreement. The parties acknowledge and agree that the amounts reflected in
Schedule 1.2 for such Indebtedness, expenses and taxes are only estimates and
are not a limitation on the Sellers' obligations with respect to the payment of
the same.
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1.6 NationsBank Loan. The parties hereto acknowledge and agree that
pursuant to that certain letter agreement, dated June 27, 1996, as amended by
that certain letter agreement, dated July 11, 1996, a copy of which is attached
hereto as Exhibit A, Xxxxx Xxxxxx, principal officer, director, and shareholder
of Purchaser, has arranged for NationsBank to loan AEC the sum of $500,000 (as
so amended, the "Letter Agreement"). The terms of the Letter Agreement are
hereby incorporated by this reference into this Agreement, and the parties
hereby confirm and ratify the Letter Agreement and hereby agree to comply fully
with the same.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, severally and not jointly, represents and warrants to
Purchaser, as of the date hereof and as of the Closing Date, the matters set
forth below. Neither Seller makes any representation or warranty with regard to
the other Seller or the ownership interest in the Companies of the other Seller.
2.1 Authority of Sellers. Each Seller warrants and represents that he
has the full right, power, legal capacity, and authority to execute and deliver
this Agreement, to perform his obligations hereunder and to consummate the
transactions contemplated hereby, including without limitation to own, hold,
sell and transfer (pursuant to this Agreement) his Sellers' Shares; that he has
duly and validly executed and delivered this Agreement and constitutes, and upon
his execution and delivery of the Operative Agreements to which such Seller is a
party, such Operative Agreements will constitute legal, valid, and binding
obligations of such Seller enforceable against such Seller in accordance with
their terms.
2.2 Organization of AEC. AEC is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Georgia, and has
full corporate power and authority to conduct its business as and to the extent
now conducted and to own, use and lease its Assets and Properties. Schedule 2.2
of the Disclosure Schedule lists all lines of business in which AEC is
participating or is engaged. AEC is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in Schedule
2.2 of the Disclosure Schedule, which to the Knowledge of each Seller are the
only jurisdictions in which the ownership, use or leasing of its Assets and
Properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for those jurisdictions in which the
adverse effects of all such failures by AEC to be qualified, licensed or
admitted and in good standing can, in the aggregate, be eliminated without
material cost or expense by AEC becoming qualified or admitted and in good
standing. The name of each director and officer of AEC on the date hereof, and
the position with AEC held by each, are listed in Schedule 2.2 of the Disclosure
Schedule. Sellers have prior to the execution of this Agreement delivered to
Purchaser true and complete copies of the articles of incorporation and by-laws
or other comparable corporate charter documents of AEC as in effect on the date
hereof.
2.3 Organization of AEMEC. AEMEC is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Georgia, and has full power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its Assets and Properties.
Schedule 2.3 of the Disclosure Schedule lists all lines of business in which
AEMEC is participating or is engaged. AEMEC is duly qualified, licensed or
admitted to do business and is in good standing only in the State of Georgia,
which to the Knowledge of each Seller is the only jurisdiction in the United
States in which the ownership, use or leasing of its Assets and Properties, or
the conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for those in which the adverse effects of all such
failures by AEMEC to be qualified, licensed or admitted and in good standing
can, in the aggregate, be
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eliminated without material cost or expense by AEMEC becoming qualified or
admitted and in good standing. The name of each member, manager and officer of
AEMEC on the date hereof, and the position with AEMEC held by each, are listed
in Schedule 2.3 of the Disclosure Schedule. Sellers have prior to the execution
of this Agreement delivered to Purchaser true and complete copies of the
Articles of Organization and Operating Agreement of AEMEC as in effect on the
date hereof.
2.4 Organization of ACIL. ACIL is a corporation duly organized, validly
existing and in good standing under the Laws of the District of Columbia, and
has full corporate power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its Assets and Properties.
Schedule 2.4 of the Disclosure Schedule lists all lines of business in which
ACIL is participating or is engaged. ACIL is duly qualified, licensed or
admitted to do business and is in good standing in those jurisdictions specified
in Schedule 2.4 of the Disclosure Schedule, which to the Knowledge of each
Seller are the only jurisdictions in which the ownership, use or leasing of its
Assets and Properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for those jurisdictions
in which the adverse effects of all such failures by ACIL to be qualified,
licensed or admitted and in good standing can, in the aggregate, be eliminated
without material cost or expense by ACIL becoming qualified or admitted and in
good standing: The name of each director and officer of ACIL on the date hereof,
and the position with ACIL held by each, are listed in Schedule 2.4 of the
Disclosure Schedule. Sellers have prior to the execution of this Agreement
delivered to Purchaser true and complete copies of the articles of incorporation
and by-laws or other comparable corporate charter documents of ACIL as in effect
on the date hereof.
2.5 Capital Stock. The authorized capital stock of AEC consists solely
of five hundred thousand (500,000) shares of common stock, of which only the AEC
Shares have been issued. The authorized capital stock of ACIL consists solely of
One Million (1,000,000) shares of common stock, of which only the ACIL Shares
have been issued The AEC Shares and ACIL Shares are duly authorized, validly
issued, outstanding, fully paid and nonassessable. Except as set forth in
Schedule 2.5 of the Disclosure Schedule, each Seller owns the AEC Shares set
opposite his name, beneficially and of record, free and clear of all Liens. AEC
and each Seller owns the ACIL Shares, beneficially and of record, free and clear
of all Liens, as set forth in Schedule 2.5 of the Disclosure Schedule. Except
for the equity interests of MB in AEMEC and MB's rights as a member of AEMEC,
AEC owns all the AEMEC Shares, beneficially and of record, free and clear of all
Liens, as set forth in Schedule 2.5 of the Disclosure Schedule. Except for this
Agreement, there are no outstanding Options with respect to the Companies or
AEMEC.
2.6 Subsidiaries. Schedule 2.6 of the Disclosure Schedule lists the
name of each Subsidiary and all lines of business in which each Subsidiary is
participating or engaged. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation identified in Schedule 2.6 of the Disclosure Schedule, and to the
Knowledge of each Seller has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its Assets
and Properties. To the Knowledge of each Seller each Subsidiary is duly
qualified, licensed or admitted to do business and is in good standing in those
jurisdictions specified in Schedule 2.6 of the Disclosure Schedule, which are
the only jurisdictions in which the ownership, use or leasing of such
Subsidiary's Assets and Properties, or the conduct or nature of its business,
makes such qualification, licensing or admission necessary, except for those
jurisdictions in which the adverse effects of all such failures by a Subsidiary
to be qualified, licensed or admitted and in good standing can, in the
aggregate, be eliminated without material cost or expense by such Subsidiary
becoming qualified, licensed or admitted and in good standing. Schedule 2.6
Disclosure Schedule lists for each Subsidiary the amount of its authorized
capital stock, the amount of its outstanding capital stock and the record owners
of such outstanding capital stock. Except as disclosed in Schedule 2.6 of the
Disclosure Schedule, all of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and
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are owned, beneficially and of record, by AEC, ACIL or Subsidiaries wholly owned
by AEC, ACIL free and clear of all Liens. Except as disclosed in Schedule 2.6 of
the Disclosure Schedule, there are no outstanding Options with respect to any
Subsidiary. The name of each director and officer of each Subsidiary on the date
hereof, and the position with such Subsidiary held by each, are listed in
Schedule 2.6 of the Disclosure Schedule. Seller has prior to the execution of
this Agreement delivered to Purchaser true and complete copies of the
certificate or articles of incorporation and by-laws (or other comparable
corporate charter documents) of each of the Subsidiaries as in effect on the
date hereof.
2.7 No Conflicts. Each Seller warrants and represents only as to
himself that the execution and delivery by such Seller of this Agreement does
not, and the execution and delivery by such Seller of the Operative Agreements
to which he is a party, the performance by such Seller of his respective
obligations under this Agreement and such Operative Agreements to which such
Seller is a party and the consummation of the transactions contemplated hereby
and thereby will not to the Knowledge of each Seller:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the certificate or articles of
incorporation or by-laws, Articles of Organization or Operating Agreement (or
other comparable corporate charter documents) of any of the Companies;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Schedule 2.8 of the
Disclosure Schedule, conflict with or result in a violation or breach of any
term or provision of any Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx, xxx Xxxxxx
Xxxxxx of America Law or Order applicable to any of the Companies or any of
their respective Assets and Properties; or
(c) except as disclosed in Schedule 2.7 of the Disclosure
Schedule, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require such Seller or any of the Companies to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, (iv) result in or give to any Person any right
of termination, cancellation, acceleration or modification in or with respect
to, (v) result in or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments under, or (vi) result
in the creation or imposition of any Lien upon such Seller or any of the
Companies or any of their respective Assets and Properties under, any Contract
or License to which such Seller or any of the Companies is a party or by which
any of their respective Assets and Properties is bound, which violation, breach,
failure to obtain consent, right of termination, right of acceleration, or lien
would, individually or in the aggregate, have a material adverse affect upon the
business or assets of any or all of the Companies.
2.8 Governmental Approvals and Filings. Except as disclosed in
Schedule 2.8 of the Disclosure Schedule, to the Knowledge of each Seller no
consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority on the part of a Seller or any of the Companies is required
in connection with the execution, delivery and performance of this Agreement or
any of the Operative Agreements to which he is a party or the consummation of
the transactions contemplated hereby or thereby.
2.9 Books and Records. The minute books and other similar records
of the Companies as made available to Purchaser prior to the execution of this
Agreement contain a true and complete record, in all material respects, of all
action taken at all meetings and by all written consents in lieu of meetings of
the stockholders, the boards of directors and committees of the boards of
directors of the Companies. The stock transfer ledgers and other similar records
of the Companies as made available to Purchaser prior to the execution of this
Agreement accurately reflect all record transfers since September 30, 1991, to
the date
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hereof in the capital stock of the Companies. Except as set forth in Schedule
2.9 of the Disclosure Schedule, neither AEC nor any of the Companies has any of
its Books and Records recorded, stored, maintained, operated or otherwise wholly
or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Companies.
2.10 Financial Statements. Prior to the execution of this
Agreement, Sellers have delivered to Purchaser true and complete copies of the
following financial statements:
(a) the audited combined balance sheet of AEC and its
Subsidiaries as of May 31, 1995, and for the five (5) preceding fiscal years,
and the related audited combined statement of income, stockholders' equity and
cash flows for each of the fiscal years then ended, together with a true and
correct copy of the report on such audited information by Xxxxx & Xxxxxx, P.C.
(with respect to the reports for the fiscal years ended May 31, 1995, and May
31, 1994) and Xxxxxxxx, Benator and Xxxxx (with respect to the prior reports)
with respect to the results of such audits (collectively, the "Audited Financial
Statements"); and
(b) the unaudited combined balance sheet of AEC and its
Subsidiaries as of May 31, 1996, and the related unaudited combined statements
of operations, stockholders' equity and cash flows for the period from October
1, 1995, through May 31, 1996 (the "Unaudited Financial Statements").
Except as set forth in the notes thereto and as disclosed in Schedule 2.10 of
the Disclosure Schedule:
(i) all such Audited Financial Statements
were prepared as stated in the applicable auditors' reports in accordance with
GAAP;
(ii) the Unaudited Financial Statements were
prepared consistent with prior unaudited fiscal year-end (i.e., May 31) reports;
(iii) all such financial statements fairly present
the combined financial condition and results of operations of such of the
Companies as are covered thereby as of the respective dates thereof and for the
respective periods covered thereby, except for customary year-end adjustments
that may be required to be made by AEC's independent public accountants to the
Unaudited Financial Statements; and
(iv) all such financial statements were compiled
from the Books and Records of the Companies regularly maintained by the
Companies and used to prepare the financial statements of the Companies in
accordance with the principles stated therein. To the Knowledge of each Seller,
except as set forth in Schedule 2.10 of the Disclosure Schedule, the Companies
have maintained their respective Books and Records in a manner sufficient to
permit the preparation of audited financial statements in accordance with GAAP,
such Books and Records fairly reflect, in all material respects, the income,
expenses, assets and liabilities of the Companies and the Books and Records
provided a fair and accurate basis for the preparation of the Audited Financial
Statements and the Unaudited Financial Statements.
2.11 Absence of Changes. Since the unaudited balance sheet of May
31, 1996, there has not been, to the Knowledge of each Seller, any material
adverse change, or any event or development which, individually or together with
other such events, could reasonably be expected to result in a material adverse
change, in the Business or Condition of the Companies. Without limiting the
foregoing, to the Knowledge of each Seller, except as disclosed in Schedule 2.11
of the Disclosure Schedule, there has not occurred between May 31, 1996, and the
date hereof:
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(a) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock or limited liability
company interests of any of the Companies, other than advances and distributions
to Sellers that are expressly provided for in this Agreement, or any direct or
indirect redemption, purchase or other acquisition by any of the Companies of
any such capital stock or limited liability company interests of or Option with
respect to any of the Companies;
(b) any authorization, issuance, sale or other disposition by
any of the Companies of any shares of capital stock or limited liability company
interests of or Option with respect to any of the Companies, or any modification
or amendment of any night of any holder of any outstanding shares of capital
stock or limited liability company interests of or Option with respect to any of
the Companies;
(c) any increase in the salary, wages or other compensation of
any officer, employee or consultant of any of the Companies whose annual salary
is, or after giving effect to such change would be, $40,000 or more, which
increases would, in the aggregate, exceed $50,000 and other than as set forth in
the Companies' operating budget heretofore provided Purchaser; any establishment
or modification of (A) targets, goals, pools or similar provisions in respect of
any fiscal year under any Benefit Plan, employment-related Contract or other
employee compensation arrangement or (B) salary ranges, increase guidelines or
similar provisions in respect of any Benefit Plan, employment-related Contract
or other employee compensation arrangement; or any adoption, entering into or
becoming bound by any Benefit Plan, employment-related Contract or collective
bargaining agreement, or amendment, modification or termination (partial or
complete) of any Benefit Plan, employment-related Contract or collective
bargaining agreement, except to the extent required by applicable Law and, in
the event compliance with legal requirements presented options, only to the
extent the option which any of the Companies reasonably believed to be the least
costly was chosen;
(d) any increase of Indebtedness of the Companies in excess of
the aggregate Indebtedness set forth on the unaudited balance sheet of May 31,
1996 (as reduced by the regularly scheduled amortized payments with respect to
the same) except as permitted pursuant to the further terms of this Agreement;
any voluntary purchase, cancellation, prepayment or complete or partial
discharge in advance of a scheduled payment date with respect to, or waiver of
any right of any of the Companies under, any Indebtedness of or owing to any of
the Companies; and such Indebtedness will not be increased through the Closing,
except for the $500,000 loan described in Section 1.6 of this Agreement and/or
to make the distributions to Sellers at or before the Closing as contemplated
herein;
(e) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the plant, real or
personal property or equipment of any of the Companies in an aggregate amount
exceeding $50,000;
(f) any material change in (x) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or Tax practice or
policy of any of the Companies, or (y) any method of calculating any bad debt,
contingency or other reserve of any of the Companies for accounting, financial
reporting or Tax purposes, or any change in the fiscal year of any of the
Companies;
(g) any write-off, write-down or write-up of or any
determination to write-off, write-down or write-up any of the Assets and
Properties of any of the Companies in an aggregate amount exceeding $50,000,
other than normal year-end adjustments that may be required to be made to the
Unaudited Financial Statements or that may be required to be made by AEC's
independent public accountants pursuant to their audit of the fiscal year ended
May 31, 1996, including, by way of example, the customary year-end adjustment to
the student contract receivables account to be made as of May 31, 1996;
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(h) any acquisition or disposition of, or incurrence of a Lien
(other than a Permitted Lien) on, any Assets and Properties of any of the
Companies, other than in the ordinary course of business consistent with past
practice;
(i) any amendment of the certificate or articles of
incorporation or by-laws (or other comparable corporate charter documents) of
any of the Companies, recapitalization, reorganization, liquidation or
dissolution of any of the Companies, or merger or other business combination
involving any of the Companies and any other Person;
(j) any entering into, amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent with
respect to (A) any Contract which is required (or had it been in effect on the
date hereof would have been required) to be disclosed in the Disclosure Schedule
pursuant to Section 2.19(a) or provided to Purchaser in accordance with Section
2.16(d) or (B) any material License held by any of the Companies;
(k) capital expenditures or commitments (including any
capitalized leases) for additions to property, plant or equipment of the
Companies constituting capital assets in an aggregate amount exceeding $100,000
per month;
(l) any commencement or termination by any of the Companies
of any line of business;
(m) any transaction by any of the Companies with a Seller, any
officer, director, Affiliate (other than any of the Companies) or Associate of a
Seller or any Associate of any such officer, director or Affiliate outside the
ordinary course of business except consistent with past practice or other than
on an arm's-length basis, other than pursuant to any Contract in effect on May
31, 1996, and disclosed pursuant to Schedule 2.20 of the Disclosure Schedule; or
(n) any entering into of a Contract to do or engage in any of
the foregoing after the date hereof.
2.12 No Undisclosed Liabilities. Except as reflected or reserved
against in the Unaudited Financial Statements, or as disclosed in Schedule 2.12
of the Disclosure Schedule, to the Knowledge of each Seller there are no
Liabilities against, relating to or affecting any of the Companies or any of
their respective Assets and Properties, other than Liabilities incurred in the
ordinary course of business consistent with past practice.
2.13 Taxes.
(a) Each of the Companies has filed all Tax Returns that it
was required to file. To the Knowledge of each Seller all such Tax Returns were
correct and complete in all respects, and all Taxes owed by any of the Companies
have been paid or provision for payment thereof has been made. None of the
Companies currently is the beneficiary of any extension of time within which to
file any Tax Return. To the Knowledge of each Seller, no claim has ever been
made by an authority in a jurisdiction where any of the Companies does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction. To
the Knowledge of each Seller, there are no Liens on any of the Assets and
Properties of any of the Companies that arose in connection with any failure (or
alleged failure) to pay any Tax.
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(b) To the Knowledge of each Seller each of the Companies has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, or provision for payment thereof has
been made and is reflected in the Unaudited Financial Statements.
(c) To the Knowledge of each Seller there is no dispute or
claim concerning any Tax Liability of any of the Companies. Schedule 2.13 of the
Disclosure Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to any of the Companies for taxable periods ended on
or after September 30, 1993, and indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. The Sellers have delivered to the Purchaser correct and complete copies
of all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the Companies since
September 30, 1993.
(d) None of the Companies has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(e) None of the Companies has filed a consent under Code ss.
341(f) concerning collapsible corporations. None of the Companies has made any
payments, is obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Code ss. 280G. None of the Companies has been a United
States real property holding corporation within the meaning of Code ss. 897(2)
during the applicable period specified in Code ss. 897(c)(1)(A)(ii). None of the
Companies is a party to any tax allocation or sharing agreement. None of the
Companies has been a member of an affiliated group filing, a consolidated
federal income Tax Return (other than a group the common parent of which was
AEC) or has any Liability for the Taxes of any Person (other than any of the
Companies) under Reg. ss. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(f) Except as set forth on Schedule 2.13 of the Disclosure
Schedule, the unpaid Taxes of the Companies did not, as of May 31, 1996, exceed
the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the May 31, 1996, Unaudited Financial Statements and do not
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Companies in filing their
Tax Returns.
(g) No tax is required to be withheld pursuant to Code ss.
1445 as a result of any of the transfer contemplated by this Agreement and
Sellers will provide certificates to Purchaser documenting the foregoing.
(h) Except as set forth on Schedule 2.13 of the Disclosure
Schedule, for all periods after September 30, 1991:
(i) for federal and state income tax purposes,
AEC has been and will be (through the Closing Date but not thereafter) taxable
as an S corporation as such term is defined in Code ss. 1361(a)(1), and
comparable provisions of applicable state law. AEC has provided to the Purchaser
complete and accurate copies of its election to be taxed as an S corporation for
federal income tax purposes (together with copies of any state election required
to be so taxed for state income tax purposes) and copies of the IRS's notice of
acceptance of the election of AEC to be taxed as an S corporation for federal
(or state, as applicable) income tax purposes;
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(ii) there is, to the Knowledge of each Seller,
no basis upon which the AEC's election to be so taxed could be denied or revoked
for federal or state purposes prior to Closing, and AEC has not been taxable or
has not taken the position that it was taxable as other than an S corporation in
any jurisdiction.
(i) To the Knowledge of each Seller, AEMEC qualifies as a
partnership for federal income tax purposes, and none of AEMEC, AEC or such
Seller have taken any position inconsistent with such treatment.
2.14 Legal Proceedings. Except as disclosed in Schedule 2.14 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings pending or, to the
Knowledge of each Seller, threatened against, relating to or affecting such
Seller, any of the Companies or any of their respective Assets and Properties
which could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements or otherwise result in a material diminution of the
benefits contemplated by this Agreement or any of the Operative Agreements to
Purchaser, or if determined-adversely to a Seller, or any of the Companies,
could reasonably be expected to result in (x) any injunction or other equitable
relief against any of the Companies that would interfere in any material respect
with its business or operations or (y) Losses by any of the Companies;
(b) there are no facts or circumstances Known to a Seller that
could reasonably be expected to give rise to any Action or Proceeding that would
be required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against any of the
Companies.
Prior to the execution of this Agreement, Sellers have delivered to Purchaser
all responses of counsel for the Companies to auditors' requests for information
delivered in connection with the Audited Financial Statements for May 31, 1995
(together with any updates provided by such counsel) regarding Actions or
Proceedings pending or threatened against, relating to or affecting any of the
Companies.
2.15 Compliance with Laws and Orders. To the Knowledge of each
Seller and except as disclosed in Schedule 2.15 of the Disclosure Schedule, none
of the Companies is or has at any time within the last five (5) years been, or
has received any notice that it is or has at any time within the last five (5)
years been, in violation of or in default under, in any material respect, any
Law or Order applicable to any of the Companies or any of their respective
Assets and Properties.
2.16 Benefit Plans; ERISA.
(a) The Sellers have heretofore delivered to Purchaser true
and complete copies of each of the Companies' Benefit Plans, which Plans are
listed on Schedule 2.16 of the Disclosure Schedule, and have made copies of all
related documentation (such as summary plan descriptions, annual reports, trust
agreements, determination letters, audit reports, and domestic relations orders)
available for review by Purchaser and its representatives. Except as set forth
in Schedule 2.16 of the Disclosure Schedule, none of the Companies has scheduled
or agreed upon future increases of benefit levels (or creations of new benefits)
with respect to any Benefit Plan, and no such increases or creation of benefits
have been proposed, made the
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subject of representations to employees or requested or demanded by employees
under circumstances which make it reasonable to expect that such increases will
be granted.
(b) Except as set forth on Schedule 2.16 of the Disclosure
Schedule, to the Knowledge of each Seller none of the Companies maintains or is
obligated by Law to provide benefits under any life, medical or health plan
(other than as an incidental benefit under a Qualified Plan) which provides
benefits to retirees or other terminated employees other than benefit
continuation rights under the Consolidated Omnibus Budget Reconciliation of
1985, as amended.
(c) Except as set forth in Schedule 2.16 of the Disclosure
Schedule, each Benefit Plan covers only employees who are employed by one or
more of the Companies (or former employees or beneficiaries with respect to
service with one or more of the Companies), so that the transactions
contemplated by this Agreement will require no spin-off of assets and
liabilities or other division or transfer of rights with respect to any such
plan.
(d) None of the Companies, nor any ERISA Affiliate or any
other corporation or organization controlled by or under common control with any
of the foregoing within the meaning of Section 4001 of ERISA has at any time
contributed to any "multiemployer plan", as that term is defined in Section 4001
of ERISA.
(e) To the Knowledge of each Seller, each of the Benefit Plans
is, and its administration is and has been since inception, and except as set
forth in Schedule 2.16 of the Disclosure Schedule, in all material respects in
compliance with, and none of the Companies has received any claim or notice that
any such Benefit Plan is not in compliance with, all applicable Laws and Orders
and prohibited transactions exemptions, including the requirements of ERISA, the
Code, the Age Discrimination in Employment Act, the Equal Pay Act and Title VII
of the Civil Rights Act of 1964. Each Qualified Plan is qualified under Section
401(a) of the Code, and, if applicable, complies with the requirements of
Section 401(k) of the Code. To the Knowledge of each Seller, each Benefit Plan
which is intended to provide for the deferral of income, the reduction of salary
or other compensation or to afford other Tax benefits complies with the
requirements of the applicable provisions of the Code or other Laws required in
order to provide such Tax benefits.
(f) To the Knowledge of each Seller, neither of the Sellers
nor any of the Companies is in default in performing any of his or its
contractual obligations under any of the Benefit Plans or any related trust
agreement or insurance contract. To the Knowledge of each Seller, all
contributions and other payments required to be made by a Seller, any of the
Companies to any Benefit Plan with respect to any period ending before or at or
including the Closing Date have been made or reserves adequate for such
contributions or other payments have been or will be set aside therefor and have
been or will be reflected in Financial Statements in accordance with GAAP. To
the Knowledge of each Seller, there are no material outstanding liabilities of
any Benefit Plan other than liabilities for benefits to be paid to participants
in such Benefit Plan and their beneficiaries in accordance with the terms of
such Benefit Plan.
(g) To the Knowledge of each Seller, no event has occurred,
and there exists no condition or set of circumstances in connection with any
Benefit Plan, under which any of the Companies, directly or indirectly (through
any indemnification agreement or otherwise), could reasonably be expected to be
subject to any risk of material liability under Section 409 of ERISA, Section
502(i) of ERISA, Title IV of ERISA or Section 4975 of the Code.
(h) To the Knowledge of each Seller, no transaction
contemplated by this Agreement will result in liability to the PBGC under
Sections 302(c)(ii), 4062, 4063, 4064 or 4069 of ERISA, or
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otherwise, with respect to any of the Companies, or any corporation or
organization controlled by or under common control with the Companies within the
meaning of Section 4001 of ERISA, and no event or condition exists or has
existed which could: reasonably be expected to result in any such liability with
respect to any of the Companies or any such corporation or organization; no
"reportable event" within the meaning of Section 4043 of ERISA has occurred with
respect to any Defined Benefit Plan; no termination reestablishment or spin-off
re-establishment transaction has occurred with respect to any Subject Defined
Benefit Plan; no Subject Defined Benefit Plan has incurred any accumulated
funding deficiency whether or not waived. No filing has been made and no
proceeding has been commenced for the complete or partial termination of, or
withdrawal from, any Benefit Plan which is a Pension Benefit Plan.
(i) To the Knowledge of each Seller, no benefit under any
Benefit Plan, including, without limitation, any severance or parachute payment
plan or agreement, will be established or become accelerated, vested, funded or
payable by reason of any transaction contemplated under this Agreement.
(j) To the Knowledge of each Seller, there are no pending or
threatened claims by or on behalf of any Benefit Plan, by any Person covered
thereby, or otherwise, which allege violations of Law which could reasonable be
expected to result in liability on the part of any of the Companies or any
fiduciary of any such Benefit Plan, nor is there any basis for such a claim.
(k) No employer securities, employer real property or other
employer property is included in the assets of any Benefit Plan.
(l) To the Knowledge of each Seller, the fair market value of
the assets of each Subject Defined Benefit Plan, as determined as of the last
day of the plan year of such plan which coincides with or first precedes the
date of this Agreement, was not less than the present value of the projected
benefit obligations under such plan at such date as established on the basis of
the actuarial assumptions applicable under such Subject Defined Benefit Plan at
said date and, to the Knowledge of each Seller, there have been no material
changes in such values since said date.
2.17 Real Property.
(a) Sellers have previously delivered to Purchaser true and
correct copies of each lease of real property entered into by any of the
Companies (as lessor or lessee) and all amendments thereto, which Leases are
listed on Schedule 2.17 of the Disclosure Schedule. None of the Companies owns
fee title to any real property.
(b) The Companies have adequate rights of ingress and egress
with respect to such leased real property and all buildings, structures,
facilities, fixtures and other improvements thereon. To the Knowledge of each
Seller, none of such real property, buildings, structures, facilities, fixtures
or other improvements, or the use thereof, contravenes or violates any building,
zoning, administrative, occupational safety and health or other applicable Law
in any material respect (whether or not permitted on the basis of prior
nonconforming use, waiver or variance), except as set forth in Schedule 2.17 of
the Disclosure Schedule.
(c) To the Knowledge of each Seller, each of the Companies has
a valid and subsisting leasehold estate in and the right to quiet enjoyment of
the real properties leased by it for the full term of the lease thereof. To the
Knowledge of each Seller, each lease referred to in the first sentence of
paragraph (a) above is a legal, valid and binding agreement, enforceable in
accordance with its terms, of each of the Companies that is a party thereto, and
except as set forth in Schedule 2.17 of the Disclosure Schedule, there is no,
and none of the Companies has received notice of any, default (or any condition
or event which, after
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notice or lapse of time or both, would constitute a default) thereunder;
however, said leases are assigned to National Westminister Bank, PLC, as
collateral security for the indebtedness owed to said bank. None of the
Companies owes any brokerage commissions with respect to any such leased space.
(d) Sellers have delivered to Purchaser prior to the execution
of this Agreement true and complete copies of all leasehold title insurance
policies, title reports, surveys and similar documents, and all amendments
thereof, with respect to the real property leased by the Companies, if any.
(e) To the Knowledge of each Seller, except as disclosed in
Schedule 2.17 of the Disclosure Schedule, the improvements on the real property
are in good operating condition and in a state of good maintenance and repair,
ordinary wear and tear excepted, and, to the Knowledge of each Seller, there are
no condemnation or appropriation proceedings pending or threatened against any
of such real property or the improvements thereon.
2.18 Tangible Personal Property; Investment Assets.
(a) To the Knowledge of each Seller and except as disclosed on
Schedule 2.18 of the Disclosure Schedule, each of the Companies is in possession
of and has good title to, or has valid leasehold interests in or valid rights
under Contract to use, all tangible personal property used in or reasonably
necessary for the conduct of their business, including all tangible personal
property reflected on the balance sheet included in the May 31, 1996, Unaudited
Financial Statements and tangible personal property acquired since May 31, 1996,
other than property disposed of since such date in the ordinary course of
business consistent with past practice. All such tangible personal property is
free and clear of all Liens, other than Permitted Liens and Liens disclosed in
Schedule 2.18 of the Disclosure Schedule, and, other than tangible, personal
property not currently in use in the operation of the business, is in good
working order and condition, ordinary wear and tear excepted. In no event shall
the representations and warranties contained in this Section 2.18 be construed
as applying for the personal property that will be distributed to either of the
Sellers in connection with the transactions contemplated herein.
(b) Schedule 2.18 of the Disclosure Schedule describes each
Investment Asset owned by any of the Companies on the date hereof. Except as
disclosed in Schedule 2.18 of the Disclosure Schedule, all such Investment
Assets are owned by each of the Companies free and clear of all Liens other than
Permitted Liens.
2.19 Intellectual Property Rights.
(a) The Companies utilize and have utilized in the past
numerous computer software programs in the administration and the day-to-day
conduct of their businesses. Sellers believe that, from time to time, some staff
members, faculty members and students use computer software programs in their
classes which have not been licensed by, and thus not officially authorized by,
the Companies, and Sellers make no warranties and representations with respect
to such software programs. To the Knowledge of each Seller, the Companies have
in recent years obtained contracts or consents to use substantially all the
computer software which the Companies believe are currently in use by the
Companies. None of such software will be removed from the Companies by Sellers,
either prior to or after the Closing, without the prior written approval of
Purchaser.
(b) To the Knowledge of each Seller, all other Intellectual
Property used in the conduct of the business of any of the Companies is owned or
validly licensed by the Companies. Subject to the qualifications set forth in
Section 2.19(a), Schedule 2.19 of the Disclosure Schedule sets forth all
trademarks,
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trade names, patents and, to the Knowledge of each Seller, a summary description
of any other Intellectual Property used by the Companies.
(c) To the Knowledge of each Seller, except as disclosed in
Schedule 2.19 of the Disclosure Schedule and subject to the qualifications set
forth in Section 2.19(a), (i) each of the Companies has the exclusive right to
use the intellectual Property owned by the Companies, (ii) all registrations
with and applications to Governmental or Regulatory Authorities in respect of
such Intellectual Property are valid and in full force and effect and are not
subject to the payment of any Taxes or maintenance fees or the taking of any
other actions by any of the Companies to maintain their validity or
effectiveness, (iii) none of the Companies is, or has received any notice that
it is, in default (or with the giving of notice or lapse of time or both, would
be in default) under any Contract to use such Intellectual Property, (iv) to the
Knowledge of each Seller, no such Intellectual Property is being infringed by
any other Person, and (v) there are no restrictions on the direct or indirect
transfer of any Contract, or interest therein, held by any of the Companies in
respect of such Intellectual Property which gives rise to the rights of any of
the Companies to use such Intellectual Property which would be implicated by the
consummation of this Agreement. Neither Seller nor any of the Companies has
received notice that any of the Companies is infringing any Intellectual
Property of any other Person, no claim is pending or, to the Knowledge of each
Seller, has been made to such effect that has not been resolved and, to the
Knowledge of each Seller, none of the Companies is infringing any Intellectual
Property of any other Person.
2.20 Contracts.
(a) Schedule 2.20 of the Disclosure Schedule contains a true
and complete list of each of the following Contracts or other arrangements (true
and complete copies, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to Purchaser prior to the
execution of this Agreement), to which any of the Companies is a party or by
which any of their respective Assets and Properties is bound:
(i) (A) all written or unwritten Contracts
which involve the payment or potential payment, pursuant to the terms of any
such Contract, by or to any of the Companies of more than $50,000 annually
(excluding Benefit Plans) providing for a commitment of employment or
consultation services for a specified or unspecified term or otherwise relating
to employment or the termination of employment, the name, position and rate of
compensation of each Person party to such a Contract and the expiration date of
each such Contract, and (B) any written (or unwritten representations made by
Xxxxxx X. Xxxxxxxx) representations, commitments, promises, communications or
courses of conduct (excluding Benefit Plans and any such Contracts referred to
in clause (A)) involving an obligation of any of the Companies to make payments
in any year, other than with respect to salary or incentive compensation
payments in the ordinary course of business, to any employee;
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of any of the
Companies to engage in any business activity or compete with any Person or,
except as provided in Section 4.11, prohibiting or limiting the ability of any
Person to compete with any of the Companies;
(iii) all partnership, joint venture,
shareholders' or other similar Contracts with any Person whether written or
unwritten;
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(iv) all Contracts relating to Indebtedness of
any of the Companies, except loans secured by life insurance contracts to be
transferred to either Seller at Closing, which loans will be assumed by the
appropriate Seller;
(v) all written or unwritten Contracts with
distributors, dealers, representatives, sales agencies or franchisees which
involve the payment or potential payment, pursuant to the terms of any such
Contract, by or to any of the Companies of more than $50,000 annually;
(vi) all written or unwritten Contracts relating
to (A) the future disposition or acquisition of any Assets and Properties, other
than dispositions or acquisitions in the ordinary course of business consistent
with past practice, and (B) any merger or other business combination;
(vii) all written or unwritten Contracts between
or among any of the Companies, on the one hand, and a Seller, any officer,
director, Affiliate (other than any of the Companies) or Associate of a Seller
or any Associate of any such officer, director or Affiliate, on the other hand;
(viii) all collective bargaining or similar labor
Contracts;
(ix) all Contracts that (A) limit or contain
restrictions on the ability of any of the Companies to declare or pay dividends
on, to make any other distribution in respect of or to issue or purchase, redeem
or otherwise acquire its capital stock, to incur Indebtedness, to incur or
suffer to exist any Lien, to purchase or sell any Assets and Properties, to
change the lines of business in which it participates or engages or to engage in
any business combination or (B) require any of the Companies to maintain
specified financial ratios or levels of net worth or other indicia of financial
condition; and
(x) all other Contracts (other than Benefit
Plans, leases listed in Schedule 2.17 of the Disclosure Schedule and insurance
policies listed in Schedule 2.22 of the Disclosure Schedule) that (A) involve
the payment or potential payment, pursuant to the terms of any such Contract, by
or to any of the Companies of more than $50,000 annually and (B) cannot be
terminated within thirty (30) days after giving notice of termination without
resulting in any material cost or penalty to any of the Companies.
(b) To the Knowledge of each Seller, each Contract
required to be disclosed in Schedule 2.20 of the Disclosure Schedule is in full
force and effect and constitutes a legal, valid and binding agreement of the
Company which is a party to such contract and enforceable against such Company
in accordance with its terms; and except as disclosed in Schedule 2.20 of the
Disclosure Schedule to the Knowledge of each Seller none of the Companies nor
any other party to such Contract is, or has received, written notice that it is
in violation or breach of or default under any such Contract (or with notice or
lapse of time or both, would be in violation or breach of or default under any
such Contract) in any material respect.
2.21 Licenses. To the Knowledge of each Seller, Schedule 2.21 of
the Disclosure Schedule contains a true and complete list of all Licenses used
in and material, individually or in the aggregate, to the business or operations
of any of the Companies (and all pending applications for any such Licenses),
setting forth the licensor, the licensee, and the expiration and renewal date of
each. Prior to the execution of this Agreement, Sellers have delivered to
Purchaser true and complete copies of all such Licenses. To the Knowledge of
each Seller, except as disclosed in Schedule 2.21 of the Disclosure Schedule:
(a) each of the Companies owns or validly holds all
Licenses that are material, individually or in the aggregate, to its business or
operations;
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(b) each License listed in Schedule 2.21 of the
Disclosure Schedule is in full force and effect;
(c) none of the Companies is, or has received any notice
that it is, in default (or with the giving of notice or lapse of time or both,
would be in default) under any such License; and
(d) no Governmental or Regulatory Authority has initiated
any Actions or Proceedings or threatened to initiate any Actions or Proceedings
with respect to any such License, or restricted or limited or threatened to
restrict or limit the right of any of the Companies to participate in any
program administered or regulated by such Governmental or Regulatory Authority,
and no basis therefor is Known to a Seller.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, neither Seller makes any representations nor warranties with respect
to any license requirements applicable to the operation of the American
University in Dubai.
2.22 Insurance. To the Knowledge of each Seller, Schedule 2.22 of
the Disclosure Schedule contains a summary of insurance policies currently in
effect and maintained by the Companies as provided the Companies by a carrier or
insurance broker, which policies have been issued to any of the Companies or
have been issued to any Person (other than any of the Companies) for the benefit
of any of the Companies. The insurance coverage provided by any of the policies
issued to the Companies will not terminate or lapse by reason of the
transactions contemplated by this Agreement. To the Knowledge of each Seller,
each policy listed in Schedule 2.22 of the Disclosure Schedule is valid and
binding and in full force and effect, no premiums due thereunder have not been
paid and none of the Companies nor the Person to whom such policy has been
issued has received any notice of cancellation or termination in respect of any
such policy or is in default thereunder. To the Knowledge of each Seller, the
insurance policies listed in Schedule 2.22 of the Disclosure Schedule, are
believed to be in amounts and have coverages that are reasonable and customary
for Persons engaged in such businesses and operations and having such Assets and
Properties. None of the Companies nor the Person to whom such policy has been
issued has received notice that any insurer under any policy referred to in this
Schedule is denying liability with respect to a claim thereunder or defending
under a reservation of rights clause.
2.23 Affiliate Transactions. To the Knowledge of each Seller,
except as set forth in the May 31, 1996, Unaudited Financial Statements, or in
Schedule 2.23 of the Disclosure Schedule, (i) there are no Liabilities between
any of the Companies, on the one hand, and a Seller, any officer, director,
Affiliate (other than any of the Companies) or Associate of a Seller or any
Associate of any such officer, director or Affiliate, on the other, (ii) neither
of the Sellers nor any such officer, director, Affiliate or Associate provides
or causes to be provided any assets, services of facilities to any of the
Companies, and (iii) none of the Company provides or causes to be provided any
assets, services or facilities to a Seller or any such officer, director,
Affiliate or Associate.
2.24 Employees; Labor Relations.
(a) Section 2.24 of the Disclosure Schedule contains a
true and accurate list of the name of each officer and employee of the Companies
having an annual W-2 base salary or wages of at least $40,000 at the date
hereof, together with each such person's annual base salary or wages and any
incentive or bonus arrangement with respect to such person for such period. No
Seller has received any information that would lead him to believe that a
material number of such persons will or may cease to be employees because of the
consummation of the transactions contemplated by this Agreement.
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(b) To the Knowledge of each Seller, except as disclosed in
Schedule 2.24 of the Disclosure Schedule, no employee of any of the Companies
is presently a member of a collective bargaining unit, and there are no
threatened or contemplated attempts to organize for collective bargaining
purposes any of the employees of any of the Companies, no unfair labor practice
complaint or sex, age, race or other discrimination claim has been brought
during the last five (5) years against any of the Companies before the National
Labor Relations Board, the Equal Employment Opportunity Commission or any other
Governmental or Regulatory Authority, and there has been no work stoppage,
strike or other concerted action by employees of any of the Companies. Except as
disclosed in Schedule 2.14 of the Disclosure Schedule, there are no Actions or
Proceedings pending or, to the Knowledge of each Seller, threatened against,
relating to or affecting a Seller, any of the Companies or any of their
respective Assets and Properties which have been initiated by any of the current
or former employees of the Companies, and there are no facts or circumstances to
the Knowledge of each Seller which could reasonably be expected to give rise to
any such Action or Proceeding.
2.25 Environmental Matters. Except as set forth in Schedule 2.25
of the Disclosure Schedule.
(a) To the Knowledge of each Seller, the Companies have not
conducted their businesses in a manner that knowingly violates applicable
Environmental Laws.
(b) To the Knowledge of each Seller, no Hazardous Materials
exist on, under or about any site or facility now or previously owned, operated
or leased by any of the Companies.
(c) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or that are in the
possession of, any of the Companies in relation to any site or facility now or
previously owned, operated or leased by any of the Companies which have not been
delivered to Purchaser prior to the execution of this Agreement.
2.26 Bank and Brokerage Accounts; Investment Assets. Schedule 2.26
of the Disclosure Schedule sets forth a true and complete list of the names of
all banks, trust companies, securities brokers and other financial institutions
at which any of the Companies has an account or safe deposit box or maintains a
banking, custodial, trading or other similar relationship; account numbers of
each bank account, safe deposit account, or other banking account, and the names
of the respective officers, employees, agents or other similar representatives
of any of the Companies having signatory power with respect thereto; and a list
of each Investment Asset, the name of the record and beneficial owner thereof,
the location of the certificates, if any, therefor, the maturity date, if any,
and any stock or bond powers or other authority for transfer granted with
respect thereto. Each Seller acknowledges and agrees that the certificate of
deposit and all proceeds thereof pledged to secure Xxxxxxxx'x debt to Fidelity
National Bank are assets of AEC, and that AEC will retain the same upon their
release by the bank.
2.27 No Powers of Attorney. Except as set forth in Schedule 2.27
of the Disclosure Schedule, none of the Companies has any powers of attorney or
comparable delegations of authority outstanding.
2.28 Accounts Receivable. To the Knowledge of each Seller, the
accounts and notes receivable of the Companies reflected on the balance sheet
included in the May 31, 1996, Unaudited Financial Statements, and all accounts
and notes receivable arising subsequent to said Unaudited Financial Statements
arose from bona fide sales transactions in the ordinary course of business and
are payable in accordance with their terms, are legal, valid and binding
obligations of the respective debtors enforceable in accordance with their terms
(including such cancellation rights set forth therein or as provided by
applicable Laws or Orders), are not subject to any valid set-off or
counterclaim, do not represent obligations for goods sold on
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consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement, except as described above, and are not the
subject of any Actions or Proceedings brought by or on behalf of any of the
Companies. Sellers do not warrant the collectibility of said receivables, except
with respect to the receivables from Sellers which will be paid at Closing. The
Companies do not maintain a reserve for doubtful accounts or similar reserve.
The Companies evaluate their receivables as of May 31 and September 30 of each
year and on other occasions from time to time to determine which receivables are
not likely to be collected and expense or write-off such amount against income
as of the fiscal year end.
2.29 SACS. The American College (of Applied Arts) operated by AEC
and its branch campuses has been accredited by and is in good standing with
SACS, and to the Knowledge of each Seller there are no actions pending or
threatened which could result in the loss of such accreditation, and to the
Knowledge of each Seller there is no basis therefor. Within ten (10) days after
the date hereof, Sellers will provide Purchaser with all correspondence to and
from SACS since January 1, 1994, with respect to such accreditation.
2.30 Scholarships. Schedule 2.30 of the Disclosure Schedules sets
forth a true and complete list of (i) all scholarships and discounts that are
outstanding but are not presently being utilized by the recipients thereof, and
(ii) any commitments to provide scholarships or discounts that are not presently
being utilized by the recipients thereof. The expense of such scholarships and
discounts presently awarded and being utilized approximates $500,000 on an
annual basis. In addition, the expense of scholarships and discounts awarded but
not presently being utilized are not expected to exceed $500,000 annually.
2.31 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Sellers directly with
Purchaser without the intervention of any Person on behalf of either of the
Sellers in such manner as to give rise to any valid claim by any Person against
Purchaser, any of the Companies for a finder's fee, brokerage commission or
similar payment.
2.32 Disclosure. To the Knowledge of each Seller, all material
facts relating to the Business or Condition of the Companies have been disclosed
to Purchaser in or in connection with this Agreement, and no representation or
warranty contained in this Agreement, and no statement contained in the
Disclosure Schedule or in any certificate, list or other writing furnished to
Purchaser pursuant to any provision of this Agreement (including without
limitation the Financial Statements), knowingly contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers, as of the date
hereof and as of the Closing Date, as follows:
3.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Georgia.
Purchaser has full corporate power and authority to execute and deliver this
Agreement and the Operative Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.
3.2 Authority. The execution and delivery by Purchaser of this
Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of obligations hereunder and thereunder,
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have been duly and validly authorized by the Board of Directors of Purchaser, no
other corporate action on the part of Purchaser or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes, and upon the execution and delivery by Purchaser of
the Operative Agreements to which it is a party, such Operative Agreements will
constitute, legal, valid and binding obligations of Purchaser enforceable
against Purchaser in accordance with their terms.
3.3 No Conflicts. The execution and delivery by Purchaser of this
Agreement do not, and the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, the performance by Purchaser of its
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the articles of incorporation or by-laws
(or other comparable corporate charter document) of Purchaser;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Schedule 3.4 hereto,
conflict with or result in a violation or breach of any term or provision of any
Law or Order applicable to Purchaser or any of its Assets and Properties; or
(c) except as disclosed in Schedule 3.3 hereto, conflict with
or result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, require Purchaser to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, or result in the creation or imposition of any
Lien upon Purchaser or any of its Assets or Properties under, any Contract or
License to which Purchaser is a party or by which any of its Assets and
Properties is bound.
3.4 Governmental Approvals and Filings. Except as disclosed in
Schedule 3.4 hereto, no consent, approval or action of, filing with or notice to
any Governmental or Regulatory Authority on the part of Purchaser is required in
connection with the execution, delivery and performance of this Agreement or the
Operative Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
3.5 Legal Proceedings. There are no Actions or Proceedings pending
or, to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could reasonably be expected
to result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements.
3.6 Purchase for Investment. The Sellers' Shares will be acquired
by Purchaser (or, if applicable, its assignee pursuant to Section 14.10) for its
own account for the purpose of investment, it being understood that the right to
dispose of such Sellers' Shares shall be entirely within the discretion of
Purchaser (or such assignee, as the case may be). Purchaser (or such assignee,
as the case may be) will refrain from transferring or otherwise disposing of any
of the Sellers' Shares, or any interest therein, in such manner as to cause
either of the Sellers to be in violation of the registration requirements of the
Securities Act of 1933, as amended, or applicable state securities or blue sky
laws.
3.7 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser directly
with Sellers without the intervention of any Person on behalf of Purchaser in
such manner as to give rise to any valid claim by any Person against either of
the
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Sellers or any of the Companies for a finder's fee, brokerage commission or
similar payment. Notwithstanding the foregoing, Purchaser has engaged the
Xxxxxxxx-Xxxxxxxx Company to assist it in arranging the financing to consummate
the transactions contemplated herein.
3.8 Capitalization. As of the Closing Date, Purchaser's equity
capitalization, including preferred stock and/or subordinated debt, shall be
equal to not less than 25% of the Purchase Price.
ARTICLE IV
COVENANTS OF SELLERS
Each of the Sellers severally covenants and agrees with Purchaser that,
at all times from and after the date hereof until the Closing and, with respect
to any covenant or agreement by its terms to be performed in whole or in part
after the Closing, for the period specified herein or, if no period is specified
herein, indefinitely, each of the Sellers will comply with all covenants and
provisions of this Article IV (and the applicable provisions of Article V) to be
performed by him, except to the extent Purchaser may otherwise consent in
writing. The parties agree that neither Seller shall be responsible for the
covenants of the other Seller.
4.1 Regulatory and Other Approvals. Each of the Sellers will, and
will cause the Companies to, take all commercially reasonable steps necessary or
desirable, and proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable to obtain all consents, approvals
or actions of, to make all filings with and to give all notices to Governmental
or Regulatory Authorities or any other Person required of a Seller or any of the
Companies to consummate the transactions contemplated hereby, including without
limitation those described in Schedule 2.7 and 2.8 of the Disclosure Schedule
and Sections 6.5, 6.6, 6.7, 7.5, and 7.6, provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as Purchaser or such Governmental or Regulatory Authorities or other Persons may
reasonably request of Sellers in connection therewith, and cooperate with
Purchaser as promptly as practicable in obtaining all consents, approvals or
actions of, making all filings with and giving all notices to Governmental or
Regulatory Authorities or other Persons required of Purchaser to consummate the
transactions contemplated hereby and by the Operative Agreements. Sellers will
provide prompt notification to Purchaser when any such consent, approval,
action, filing or notice referred to in clause (a) above is obtained, taken,
made or given, as applicable, and will advise Purchaser of any communications
(and, unless precluded by Law, provide copies of any such communications that
are in writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement or any of the
Operative Agreements.
4.2 Investigation by Purchaser. Each Seller will, and will cause
the Companies to, (a) provide Purchaser and any Person providing (equity or
debt) financing to Purchaser to finance all or any portion of the Purchase Price
and their respective officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives (together
"Representatives") with full access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants of the
Companies, including without limitation Xx Xxxxxxx, and their Assets and
Properties and Books and Records; provided, such interviews are coordinated with
Sellers to cause the least disruption of the operations of the Companies and
avoid duplicative interviews, and (b) furnish Purchaser and such other Persons
with all such information and data (including without limitation copies of
Contracts, Benefit Plans and other Books and Records) concerning the business
and operations of the Companies as Purchaser or any of such other Persons
reasonably may request in connection with such investigation.
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4.3 No Solicitations. Neither of the Sellers will take, nor will
they permit any of the Companies or any Affiliate or Associate of a Seller (or
authorize or permit any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of any of the
Sellers, the Companies or any Affiliate or Associate of a Seller) to take,
directly or indirectly, any action to solicit, encourage, receive, negotiate,
assist or otherwise facilitate (including by furnishing confidential information
with respect to any of the Companies or permitting access to the Assets and
Properties and Books and Records of any of the Companies) any offer or inquiry
from any Person concerning an Acquisition Proposal. If any of the Sellers or the
Companies or any Affiliate or Associate of a Seller (or any such Person acting
for or on their behalf) receives from any Person any offer, inquiry or
informational request referred to above, the Sellers will cause the Purchaser to
be promptly advised by written notice, of such offer, inquiry or request.
4.4 Conduct of Business. Except as set forth in Section 4.7, each
Seller will use commercially reasonable efforts to cause the Companies to
conduct business only in the ordinary course consistent with past practice and
in such manner so that the representations and warranties contained in Article
II shall continue to be true and correct on and as of the Closing Date as if
made on and as of the Closing Date. Without limiting the generality of the
foregoing, each Seller will:
(a) cause the Companies to use commercially reasonable efforts
to preserve intact the present business organization and reputation of the
Companies, keep available (subject to dismissals and retirements in the ordinary
course of business consistent with past practice) the services of the present
officers, employees and consultants of the Companies, maintain the Assets and
Properties of the Companies in good working order and condition, ordinary wear
and tear excepted, maintain the good will of students, student outplacement
sources, referral sources, landlords, suppliers, lenders and other Persons to
whom any of the Companies provides services or with whom any of the Companies
otherwise has significant business relationships and continue all current sales,
marketing and promotional activities relating to the business and operations of
the Companies;
(b) except to the extent required by applicable Law, cause the
Books and Records to be maintained in the usual, regular and ordinary manner,
not permit any material change in (A) any pricing, investment, accounting,
financial reporting, inventory, credit, allowance or Tax practice or policy of
any of the Companies, or (B) any method of calculating any bad debt, contingency
or other reserve of any of the Companies for accounting, financial reporting or
Tax purposes and not permit any change in the fiscal year of any of the
Companies;
(c) use, and will cause the Companies to use, commercially
reasonable efforts to maintain in full force and effect until the Closing
substantially the same levels of coverage as the insurance afforded under the
Contracts listed in Schedule 2.22 of the Disclosure Schedule, and cause any and
all benefits under such Contracts paid or payable (whether before or after the
date of this Agreement) with re spect to the business, operations, employees or
Assets and Properties of the Companies to be paid to the Companies; and
(d) will not knowingly engage in any fraudulent or illegal
activity, and promptly following receipt of any notice received from any
Governmental or Regulatory Authority or other Person alleging any violation of
any Law or Order give Purchaser copies of any such notice.
(e) will not award any additional scholarships or discounts
without the prior approval of Purchaser, other than Founder's Scholorships,
Xxxxxx Xxxxx Scholarships, Xxxxxx Xxxxxx (Lord Tonypandy) Scholarships, Xxxxx
X'Xxxxx/Xxxxxxx Xxxxxxx Scholarships, Travilla Scholarships, Xxxx Xxxxxxxx Youth
Home Scholarships, Xxx Xxxxxx Scholarships, or scholarships awarded pursuant to
the
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American College High School/Secondary School Scholarship competition, in each
case awarded pursuant to the procedures set forth in the American College's
1994-1996 catalog.
4.5 Financial Statements and Reports; Filings.
(a) As promptly as practicable and in any event no later than
thirty (30) days after the end of each calendar month ending after the date
hereof and before the Closing Date, Sellers will deliver to Purchaser true and
complete copies of the unaudited balance sheet, and the related unaudited
statements of operations, stockholders' equity and cash flows, of each of the
Companies, in each case as of each such calendar month and the portion of the
fiscal year then ended, together with the notes, if any, relating thereto, which
financial statements shall be prepared on a basis consistent with the Unaudited
Financial Statements, except for customary year-end adjustments as may be
required, as disclosed in Schedule 2.10.
(b) As promptly as practicable, Sellers will deliver to
Purchaser true and complete copies of such other financial statements, reports
and analyses relating to the business or operations of any of the Companies, as
Purchaser may reasonably request and which are routinely prepared by the
Companies.
(c) As promptly as practicable, Sellers will deliver copies of
all License applications and other filings made by any of the Companies after
the date hereof and before the Closing Date with any Governmental or Regulatory
Authority (other than routine, recurring filings made in the ordinary course of
business consistent with past practice).
4.6 Employee Matters. Except as may be required by Law, each
Seller will refrain, and will cause the Companies to refrain, from directly or
indirectly:
(a) making any representation or promise, oral or written, to
any officer, employee or consultant of any of the Companies concerning any
Benefit Plan, except for statements as to the rights or accrued benefits of any
officer, employee or consultant under the terms of any Benefit Plan;
(b) making any increase in the salary, wages or other
compensation of any officer, employee or consultant of any of the Companies
whose annual salary is or, after giving effect to such change, would be $40,000
or more (except for minor isolated increases which do not exceed 10% of the
annual compensation of any such employee) without the prior written consent of
Purchaser;
(c) adopting, entering into or becoming bound by any Benefit
Plan, employment-related Contract or collective bargaining agreement, or
amending, modifying or terminating (partially or completely) any Benefit Plan,
employment-related Contract or collective bargaining agreement, except to the
extent required by applicable Law and, in the event compliance with legal
requirements presents options, only to the extent that the option which of the
Companies reasonably believes to be the least costly is chosen; or
(d) establishing or modifying any targets, goals, pools or
similar provisions in respect of any fiscal year under any Benefit Plan,
employment-related Contract or other employee compensation arrangement or salary
ranges, increase guidelines or similar provisions in respect of any Benefit
Plan, employment-related Contract or other employee compensation arrangement.
Each Seller will use commercially reasonable efforts to cause the
Companies to administer each Benefit Plan, or cause the same to be so
administered, in all material respects in accordance with the applicable
provisions of the Code, ERISA and all other applicable Laws. Each Seller will
promptly notify Purchaser in writing of each receipt by such Seller, any of the
Companies (and furnish Purchaser with copies)
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of any notice of investigation or administrative proceeding by the IRS,
Department of Labor, PBGC or other Person involving any Benefit Plan.
4.7 Certain Restrictions. Each Seller will cause the Companies to
refrain from:
(a) amending their certificates or articles of incorporation
or by-laws (or other comparable corporate charter documents) or taking any
action with respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution of any such corporation; except, in
the case of AEMEC, such amendment to its operating agreement and/or other
organizational documents, as may be necessary to reflect AEC's understanding
with Xxxx Xxxxxxxx, as described on Schedule 2.20 hereof;
(b) authorizing, issuing, selling or otherwise disposing of
any shares of capital stock of or any Option with respect to any of the
Companies, or modifying or amending any right of any holder of outstanding
shares of capital stock or limited liability company interests of or Option with
respect to any of the Companies;
(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock or limited liability company
interest of any of the Companies, or directly or indirectly redeeming,
purchasing or otherwise acquiring any capital stock or limited liability company
interests of or any Option with respect to any of the Companies; provided,
however, that the Sellers shall be permitted to cause the Companies to pay
dividends or distributions to the Sellers (including by way of salary or other
compensation) which do not exceed the net income of the Companies (prior to the
effects of this transaction) from October 1, 1995, through the close of business
on May 31, 1996 (and the Sellers shall be responsible for all Taxes thereon),
except as may otherwise be provided in Article I hereof.
(d) acquiring or disposing of, or incurring any Lien (other
than a Permitted Lien) on, any Assets and Properties, other than in the ordinary
course of business consistent with past practice or except as expressly provided
for in this Agreement;
(e) (i) entering into, amending, modifying, terminating
(partially or completely), granting any waiver under or giving any consent with
respect to (A) any Contract that would, if in existence on the date of this
Agreement, be required to be disclosed in the Disclosure Schedule pursuant to
Section 2.19(a), but only if such amendment, modification, or termination would
with respect to all such contracts increase the obligations of the Companies by
more than $100,000 annually, in the aggregate, without prior written consent of
Purchaser, or (B) any material License or (ii) granting any irrevocable powers
of attorney;
(f) knowingly violating, breaching or defaulting under in any
material respect, or taking or failing to take any action that (with or without
notice or lapse of time or both) would constitute a material violation or breach
of, or default under, any term or provision of any License held or used by any
of the Companies or any Contract to which any of the Companies is a party or by
which any of their respective Assets and Properties is bound;
(g) incurring Indebtedness in an aggregate principal amount
exceeding the amount reflected on the unaudited balance sheet dated May 31, 1996
(as reduced by the regularly scheduled amortized payments with respect to the
same), or voluntarily purchasing, canceling, prepaying or otherwise providing
for a complete or partial discharge in advance of a scheduled payment date with
respect to, or waiving any right of any of the Companies under, any Indebtedness
of or owing to any of the Companies without the prior written consent of
Purchaser, or fail or otherwise refrain from making any regularly scheduled
amortization
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payment with respect to any Indebtedness, unless in each case such action is
otherwise permitted pursuant to the terms of this Agreement;
(h) engaging with any Person in any merger or other business
combination;
(i) making capital expenditures or commitments for additions
to property, plant or equipment constituting capital assets in an aggregate
amount exceeding $100,000 per month after May 31, 1996, without the prior
written consent of Purchaser;
(j) making any change in the lines of business in which they
participate or are engaged;
(k) writing off or writing down any of their Assets and
Properties outside the ordinary course of business consistent with past
practice; or
(l) entering into any Contract to do or engage in any of the
foregoing.
4.8 Affiliate Transactions.
(a) The parties agree that at or before the Closing, all
Indebtedness (including those identified as "advance accounts," "interest
accounts," and "note receivable accounts,") and other amounts owing under
Contracts between a Seller or his Affiliate (other than any of the Companies) or
Associate or any Associate of such Affiliate, on the one hand, and any of the
Companies, on the other, will be paid in full, and each Seller will terminate
and will cause any such Affiliate or Associate to terminate each Contract with
any of the Companies except for any Contract that is to be entered into or
continued pursuant to the express terms of this Agreement. Prior to the Closing,
none of the Companies will enter into any Contract or amend or modify any
existing Contract, and will not engage in any transaction outside the ordinary
course of business consistent with past practice or not on an arm's-length basis
(other than pursuant to Contracts disclosed pursuant to Schedule 2.23 of the
Disclosure Schedule), with a Seller or any such Affiliate or Associate except
for any Contract that is to be entered into or continued pursuant to the express
terms of this Agreement.
(b) At or before the Closing, Sellers shall cause the
Companies to sell or otherwise distribute to the Sellers (in accordance with
Section 1.5(a)) the assets described in Schedule 1.5(a), and all of the Net
Operating Profit not previously distributed to the Sellers, computed in the
manner set forth in Section 1.5(b).
(c) At or before the Closing, Sellers shall cause AEC to
transfer to Xxxxxxxx all of AEC's interests and forego any claims with respect
to prepaid memberships, deposits, tickets and interest in the Royal Automobile
Club, Harry's Bar, Mark's Club, Xxxx Xxxx'x, British Red Cross 125 Society, The
Georgian Club, The Buckhead Club, Braves Baseball Tickets for 1996 only,
Sailfish Point and the Farm Golf Clubs.
(d) At or before the Closing, AEC shall enter into an
agreement in form and substance reasonably satisfactory to Xxxxxxxx and
Purchaser, whereby Xxxxxxxx (or an entity to be designated by Xxxxxxxx) shall be
granted the right to use the video production facilities and personnel of AEC
located at its Atlanta, Georgia school location for a total of 500 hours within
three (3) years from the Closing, at no charge. Such use shall be at such
reasonable times, and may be subject to such reasonable conditions, as may be
agreed upon by Xxxxxxxx and Purchaser, which times may include, without
limitation but subject to the normal operations of the educational curriculum,
usage after 4:00 p.m. on weekdays, and reasonable usage on weekends.
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4.9 Books and Records. On the Closing Date, Sellers will deliver
or make available to Purchaser at the offices of the Companies all of the Books
and Records, and if at any time after the Closing either of the Sellers
discovers in its possession or under its control any other Books and Records, it
will forthwith deliver such Books and Records to Purchaser.
4.10 Noncompetition.
(a) Each Seller will, for a period of three (3) years from the
Closing Date, refrain from, either alone or in conjunction with any other
Person, or directly or indirectly through its present or future Affiliates or
Associates of a Seller or his Affiliates:
(i) employing, engaging or seeking to employ or
engage any Person who within the prior twelve (12) months had been an officer or
employee of one or more of the Companies, other than Xxxx Xxxxxxxx, Xxxxxxx
Xxxxxxxx, Xx Xxxxxxx, and Xxxxx Xxxxxxxxx, unless such officer or employee (A)
resigns voluntarily (without any solicitation from a Seller or any of his
Affiliates or any Associate of Seller or his Affiliates) or (B) is terminated by
any of the Companies after the Closing Date;
(ii) causing or attempting to cause (A) any
student, student outplacement source, referral source, client, customer or
supplier of any of the Companies to terminate or materially reduce its business
with the Companies or (B) any officer, employee or consultant of any of the
Companies to resign or sever a relationship with one or more of the Companies;
or
(iii) participating or engaging in (other than
through the ownership of five percent (5%) or less of any class of securities
registered under the Securities Exchange Act of 1934, as amended), or otherwise
perform consulting services or lending assistance (financial or otherwise) to
any Person participating or engaged in, any of the lines of business in which
any of the Companies is participating or engaged on the Closing Date in any
jurisdiction listed in Schedule 4.10, which are all of the jurisdictions in
which one or more of the Companies participates or engages in such line of
business on the Closing Date. Notwithstanding the foregoing, in the event that
Xxxxxxx'x employment with Purchaser is terminated without "cause" (as defined in
the Employment Agreement to be entered into between Xxxxxxx and Purchaser) the
covenants and agreement set forth in this Section 4.10(a) shall as to Xxxxxxx,
terminate and be of no further force and effect.
(b) Following the Closing, each Seller will refrain from,
either alone or in conjunction with any other Person, or directly or indirectly
through its present or future Affiliates or Associates of a Seller or his
Affiliates, disclosing (unless compelled by judicial or administrative process)
or using any confidential or secret information relating to any of the Companies
or any of their respective clients, customers or suppliers. The obligations
contained in this Section 4.10(b) shall survive for a period of five (5) years
following the Closing Date. The right to enforce a Seller's obligations under
this Section 4.10(b) are in addition to those rights the Purchaser and the
Companies have under the common law or applicable statutes for the protection of
trade secrets.
(c) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the Laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section shall not render unenforceable, or impair, the
remainder of the provisions of this Section.
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Accordingly, if any provision of this Section shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall be deemed to apply
only with respect to the operation of such provision in the particular
jurisdiction in which such determination is made and not with respect to any
other provision or jurisdiction.
(d) The parties hereto acknowledge and agree that any remedy
at Law for any breach of the provisions of this Section would be inadequate, and
each Seller hereby consents to the granting by any court of an injunction or
other equitable relief, without the necessity of actual monetary loss being
proved and without the necessity of posting a bond or other security, in order
that the breach or threatened breach of such provisions may be effectively
restrained.
(e) The Sellers acknowledge and agree that each of the
Companies shall be deemed a third party beneficiary of the obligations of
Sellers set forth in this Section, and that any one or more of the Companies
shall be entitled to enforce the obligations of Seller contained in this
Section.
4.11 Certain Obligations with respect to Life Insurance. Between
the date hereof and the Closing, Xxxxxxxx will (i) purchase for their cash
surrender value all life insurance policies owned by AEC on Xxxxxxxx'x life; and
(ii) use his best efforts to cause the Companies to be released from any and all
obligations which are the subject of that certain Deferred Compensation
Agreement with Xxxxxxx Xxxxxx that is referenced in the Disclosure Schedule. In
connection with obtaining the aforementioned release from Xxxxxxx Xxxxxx the
Purchaser agrees that Xxxxxxxx may cause the Companies to distribute to Xxxxxxx
Xxxxxx (or any other Person) any life insurance policies maintained by any of
the Companies on Xxxxxxx Xxxxxx'x life.
4.12 Non-Affiliate Asset Distributions. Between the date hereof
and the Closing, the Sellers will cause title to the Ford Explorer used by
Manson Xxxxxxxx to be transferred to him without charge.
4.13 Use of Home Office Building. Purchaser shall cause AEC to
vacate its corporate office at 000 Xxxxxxx Xxxxx, Xxxxxxxx #00, Xxxxxxxx,
Xxxxxxx, within ninety (90) days after the Closing and the parties hereto shall
cause the existing lease to be terminated without further obligation of tenant
and landlord to each other. The parties hereto acknowledge and agree that
Xxxxxxxx intends to continue to conduct various business and personal activities
in said building. The parties will cooperate (and the Purchaser shall cause AEC
to cooperate) with each other to accommodate the activities of AEC, Purchaser
and Xxxxxxxx. The receptionist employed by AEC will serve as the receptionist
for AEC and Xxxxxxxx'x activities during the continued occupancy of AEC, and
will be compensated by AEC without reimbursement from Xxxxxxxx. AEC may occupy
the premises during the term, rent free, except AEC will pay all utilities,
including telephone, actual condominium fees, property taxes and insurance
(prorated), janitorial services, non-capital maintenance and repairs, during its
occupancy; provided, however, that such charges shall in no event exceed, in the
aggregate, the sum of $8,500 per month (prorated on a per diem basis for partial
months). Other than Purchaser's CEO, no person employed by Purchaser and AEC,
other than those currently employed by AEC and located in said building, shall
be moved into said building. Such employees and Purchaser's CEO shall be located
in such offices in said building as may be designated by Xxxxxxxx.
4.14 Non-Affiliate Loan Repayments. At the Closing, the Sellers
shall direct the Purchaser to apply a sufficient portion of the Purchase Price
to retire Xxxxxxxx'x debt to Fidelity National Bank (not to exceed $500,000), to
retire Xxxxxxxx'x debt to Xxxxxxx Xxxxxx and his associates (not to exceed
$2,066,667) and to retire Xxxxxxx'x debt to Xxxxxxxx (not to exceed $96,000).
4.15 Appointment of Special Counsel. Prior to or immediately upon
the execution of this Agreement, the Sellers have caused or shall cause the
Companies to hire the law firm of Dow, Xxxxxx &
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Xxxxxxxxx, at the sole expense of the Companies, to assist all parties in
obtaining the required approvals of SACS, the Department of Education and other
Governmental and Regulatory Authorities. In connection with such appointment,
the Sellers will cause Dow, Xxxxxx & Xxxxxxxxx to approach the U.S. Department
of Education and present the transactions contemplated by this Agreement
(without revealing the names of any parties) in order to confirm the absence of
any barriers to the Department of Education continuing or reissuing the License
of the Companies to participate in the Title IV, HEA programs, after Closing, on
a basis consistent with the current License of the Companies. The expense with
respect to such counsel is not to be included in determining the legal and
accounting expense described in Section 13.03 hereof.
4.16 Truth of Warranties, Representations, and Statements. No
representation or warranty of the Sellers contained in this Agreement or in the
documents, certificates and written statements furnished to Purchaser for use in
connection with the transactions contemplated hereby contains or shall contain
any untrue statement of a material fact, or omits or shall omit to state a
material fact necessary to make the statements and facts contained therein not
misleading or that would otherwise materially and adversely affect the business
of the Companies. All the statements, representations, and warranties made by
the Sellers in this Agreement and the attached Disclosure Schedule are true and
accurate in every material respect, and the Sellers have no information with
respect to any facts, circumstances, or conditions which do or would in any way
materially and adversely affect the truth of the above warranties and
representations or which, if not disclosed, would make the statements,
representations, or warranties herein, or in the attached Disclosure Schedule,
materially misleading. The Sellers shall have the obligation throughout the
period from the date of this Agreement through and including the Closing Date to
give Purchaser prompt written notice of the inaccuracy or change in any
representation or warranty made by the Sellers in Article II of this Agreement
or on any Disclosure Schedule attached hereto. On or before the Closing Date,
the Sellers shall provide Purchaser with any and all information or documents
relating to any event, transaction or circumstance, as soon as practicable after
it becomes Known to Seller, occurring after the date of this Agreement that will
render untrue any representation or warranty or Disclosure Schedule of the
Sellers contained in this Agreement and such notification shall be deemed to be
an update to the applicable representation, warranty, or schedule hereof without
the necessity of further action by Purchaser or Sellers. In the event that any
such information or documents should have been but were not previously disclosed
on the Disclosure Schedule hereto, or set forth material changes which,
individually or in the aggregate, materially adversely affect or may materially
adversely affect, the Companies and/or their operations, the Purchaser may elect
to terminate this Agreement as provided in Article XI hereof. Sellers
acknowledge and agree that any information, documents, or notices (including any
amendments, additions or supplements to the Disclosure Schedule) delivered to
Purchaser pursuant to this Section 4.16 shall be so delivered to and received by
Purchaser at least five Business Days prior to the Closing Date or Purchaser may
unilaterally extend the Closing Date to allow five Business Days to review the
same prior to the Closing.
4.17 Fulfillment of Conditions. Each Seller will execute and
deliver at the Closing each Operative Agreement that such Seller is required
hereby to execute and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each other condition to the obligations of Purchaser
contained in this Agreement and will not, and will not permit any of the
Companies to, take or fail to take any action that could reasonably be expected
to result in the nonfulfillment of any such condition.
4.18 Acknowledgment. EACH SELLER ACKNOWLEDGES AND AGREES THAT
EXCEPT FOR ANY WRITTEN WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT ANY ASSET
BEING DISTRIBUTED, SOLD OR OTHERWISE CONVEYED TO A SELLER BY ANY ONE OR MORE OF
THE COMPANIES PURSUANT TO THE TERMS OF THIS AGREEMENT IS BEING SO DISTRIBUTED,
SOLD OR OTHERWISE CONVEYED WITHOUT ANY EXPRESS OR IMPLIED REPRESENTATION OR
WARRANTY OF
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ANY NATURE, KIND OR CHARACTER, AND ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE IS EXPRESSLY DISCLAIMED.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that, at all times from and
after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this Article V (and the applicable provisions of
Article IV), except to the extent Sellers may otherwise consent in writing.
5.1 Regulatory and Other Approvals. Purchaser will take all
commercially reasonable steps necessary or desirable, and proceed diligently and
in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all filings
with and to give all notices to Governmental or Regulatory Authorities or any
other Person required of Purchaser to consummate the transactions contemplated
hereby, including without limitation those described in Schedules 3.3 and 3.4
hereto and Sections 6.5, 6.6, 6.7, 7.5, and 7.6, provide such other information
and communications to such Governmental or Regulatory Authorities or other
Persons as Sellers or such Governmental or Regulatory Authorities or other
Persons may reasonably request of Purchaser in connection therewith and
cooperate with Sellers and the Companies as promptly as practicable in obtaining
all consents, approvals or actions of, making all filings with and giving all
notices to Governmental or Regulatory Authorities or other Persons required of
Sellers or any of the Companies to consummate the transactions contemplated
hereby and by the Operative Agreements. Purchaser will provide prompt
notification to Sellers when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Sellers of any communications (and, unless precluded
by Law, provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
5.2 Notice and Cure. Purchaser will notify Sellers in writing of,
and contemporaneously will provide Sellers with true and complete copies of any
and all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes known to Purchaser,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Purchaser under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Purchaser
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Purchaser also will notify Sellers in
writing of, and will use all commercially reasonable efforts to cure, before the
Closing, any violation or breach, as soon as practicable after it becomes known
to Purchaser, of any representation, warranty, covenant or agreement made by
Purchaser in this Agreement, whether occurring or arising before, on or after
the date of this Agreement. No notice given pursuant to this Section shall have
any effect on the representations, warranties, covenants or agreements contained
in this Agreement for purposes of determining satisfaction of any condition
contained herein or shall in any way limit Sellers' right to seek indemnity
under Article X.
5.3 Closing and Post Closing Obligations of Purchaser.
(a) From and after the Closing, Purchaser agrees that it will
cause the Companies to provide scholarships to those individuals listed on
Schedule 5.3 of the Disclosure Schedule, should such
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individuals so desire. Such scholarships shall include all tuition, books,
regular dormitory accommodations and travel expenses germane to the educational
program of the student.
(b) Purchaser shall cause the Companies to erect and maintain
plaques in the main reception area of each school to recognize Xxxxxx X. and
Xxxxx Xxxxxxxx as co-founders. Purchaser will also cause Paddington to be named
for Xxxxxx X. Xxxxxxxx and the auditorium in the building to be named Xxxxxxxxx
Xxxx.
(c) Purchaser shall cause the lenders and lessors listed on
Schedule 5.3(c) to release Sellers from any and all guarantees and direct
obligations either or both have given or made on behalf of any of the Companies.
(d) Purchaser shall cause the Companies to honor, and the
Companies shall honor, all scholarships granted in the ordinary course of
business by the Companies prior to Closing, including scholarships that may not
be utilized until some period subsequent to the Closing, but in each case only
if and to the extent specifically disclosed in Schedule 2.30 of the Disclosure
Schedule.
(e) Purchaser shall cause AEC (or another one of the
Companies) to provide, and AEC (or another of the Companies) shall continue to
provide retirement compensation to the following individuals: Xxxx Xxxx - $100
per week; Xxxxxx Xxxx - $100 per week; Xxxxxxx Xxxxxxxxx - $1,000 per month;
Xxxxx Xxxxxxxxx - $1,000 per month.
(f) The Purchaser shall not permit the Companies, and the
Companies shall not reduce Manson Xxxxxxxx'x current level of compensation under
any circumstances for at least twelve (12) months following the Closing.
(g) Purchaser shall cause ACIL to provide, and ACIL shall
provide, Xxxxxxxx with free access to and free use of his office in London at
000 Xxxxxxxxxx Xxxx Xxxxxx for a three (3) year period following the Closing.
All present furnishings and office furniture will remain in his office during
the three (3) year period. Purchaser will also appoint Xxxxxxxx to serve as
"Chairman Emeritus" of the colleges operated by the Companies with reimbursement
for reasonable expenses and other benefits commensurate with other nonexecutive
directors for so long as Xxxxxxxx shall be willing to serve in such capacity.
Xxxxxxxx agrees to make himself available to serve in such position.
(h) Promptly after the Closing, Purchaser will cause the
Companies to cancel any prepaid insurance pertaining to any of the assets sold
or transferred to Xxxxxxxx in accordance with this Agreement, and Purchaser will
Promptly remit to Xxxxxxxx any premium refunds received with respect to such
canceled policies.
(i) Purchaser shall pay, or cause AEC to pay and satisfy in
full, all obligations arising under those certain equipment leases on equipment
in the corporate offices and aviation office transferred to Xxxxxxxx, and to
further exercise any purchase options thereunder, so that such assets may be
transferred to Xxxxxxxx at or before Closing free and clear of any and all
liens, but only if and to the extent the cost of all of the foregoing
obligations and purchase options does not exceed the sum of $ 30,000 in the
aggregate.
5.4 Acknowledgment of Xxxxxxxx'x Related Activities. Purchaser
acknowledges Xxxxxxxx has initiated other business ventures to produce
television documentaries, seminars, lecture series, and related activities. Some
of the personnel of AEC, in addition to Xxxxxxxx, have assisted in initiating
these new ventures and will continue to provide some assistance through the
Closing. Purchaser agrees to execute at
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Closing, and to cause AEC to execute at Closing, a general release to Xxxxxxxx
and the other ventures to the effect that neither AEC nor the Purchaser shall
have any rights in said ventures or the products of said ventures, and are not
entitled to any reimbursement for the services of any of the employees of AEC
prior to Closing for any such activities nor for any other expenses related
thereto that may have been incurred by AEC; provided, that none of such expenses
are capital expenditures incurred after the date hereof.
5.5 Fulfillment of Conditions. Purchaser will execute and deliver
at the Closing each Operative Agreement that Purchaser is hereby required to
execute and deliver as a condition to the Closing, will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each other condition to the obligations of Sellers contained in this
Agreement and will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Sellers' Shares
are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
6.1 Representations and Warranties. Each of the representations
and warranties made by the Sellers in this Agreement (other than those made as
of a specified date earlier than the Closing Date) shall be true and correct in
all material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date, and any
representation or warranty made as of a specified date earlier than the Closing
Date shall have been true and correct in all material respects on and as of such
earlier date.
6.2 Performance. Each Seller shall have performed and complied
with, in all material respects, each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by such Seller at or
before the Closing.
6.3 Certificates. Each Seller shall have delivered to Purchaser a
certificate, dated the Closing Date and in form and substance reasonably
satisfactory to Purchaser and its legal counsel, confirming that the conditions
set forth in Sections 6.1 and 6.2 have been performed and including a statement
to the effect that such Seller is unaware (after reasonable inquiry) of any
breach of any warranty, representation, or covenant herein made by Purchaser,
except as specifically set forth therein.
6.4 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Operative Agreements
to Purchaser, and there shall not be pending or threatened on the Closing Date
any Action or Proceeding or any other action in, before or by any Governmental
or Regulatory Authority which could reasonably be expected to result in the
issuance of any such Order or the enactment, promulgation or deemed
applicability to Purchaser, any of the Companies or the transactions
contemplated by this Agreement or any of the Operative Agreements of any such
Law.
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6.5 Regulatory Consents and Approvals.
(a) Subject to Section 6.5(b) below, all consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit Purchaser and Sellers to perform their obligations
under this Agreement and the Operative Agreements and to consummate the
transactions contemplated hereby and thereby (without any loss of or adverse
affect on the Licenses described in Section 2.21) shall have been duly obtained,
made or given, shall be in form and substance reasonably satisfactory to
Purchaser, shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and shall be in full force and effect.
(b) The parties acknowledge and agree that after the Closing
the Companies' continued participation in the Title IV, HEA programs
administered by the Department of Education will require the Purchaser and/or
the Companies to make certain post-Closing filings with the Department of
Education in order to obtain a continuation or reissuance of the current License
of the Companies to participate in such programs. Notwithstanding the inability
to obtain a continuation or reissuance of such License prior to the Closing, the
parties acknowledge and agree that as a condition to Purchaser's obligation to
purchase the Sellers' Shares the Purchaser must receive written assurance (in
form and substance acceptable to Purchaser's legal counsel) from the legal
counsel referenced in Section 4.15 that there are no significant barriers to the
Department of Education continuing or reissuing the License of the Companies to
participate in the Title IV, HEA programs on a basis consistent with the current
License of the Companies.
6.6 SACS Consent and Approval. The approval of SACS to the
Purchaser's acquisition of the Seller's Shares, and the agreement of SACS to the
maintenance of the accreditation of the educational institution operated by AEC
(a) shall have been obtained, (b) shall be in form and substance reasonably
satisfactory to Purchaser, (c) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (d) shall be in full force
and effect. Such approval executed by the Executive Director of SACS (acting in
such capacity and on behalf of SACS) shall satisfy the condition set forth in
this Section 6.6.
6.7 Third Party Consents.
(a) The consents (or in lieu thereof waivers) listed in
Schedule 6.7 of the Disclosure Schedule, and all other consents (or in lieu
thereof waivers) to the performance by Purchaser and Sellers of their
obligations under this Agreement and the Operative Agreements or to the
consummation of the transactions contemplated hereby and thereby as are required
under any Contract to which Purchaser, a Seller or any of the Companies is a
party or by which any of their respective Assets and Properties are bound (a)
shall have been obtained, (b) shall be in form and substance reasonably
satisfactory to Purchaser, (c) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (d) shall be in full force
and effect, except where the failure to obtain any such consent (or in lieu
thereof waiver) could not reasonably be expected, individually or in the
aggregate with other such failures, to materially adversely affect Purchaser or
the Business or the Condition of the Companies or otherwise result in a material
diminution of the benefits of the transactions contemplated by this Agreement
and the Operative Agreements to Purchaser.
(b) Without limiting the obligations set forth in Section
6.7(a) Sellers shall obtain, in accordance with Section 6.7(a), the consent of
MB to the direct or indirect transfer to Purchaser of the limited liability
company interests in AEMEC as provided for in this Agreement.
6.8 Opinion of Counsel. Purchaser shall have received the
opinion of Xxxxxx, Golden & Xxxxxxx, counsel to Seller and the Companies, dated
the Closing Date, substantially in the form and to such
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effect as Purchaser and its legal counsel may reasonably request. Purchaser
shall also have received a reliance letter from Xxxxxx, Golden & Xxxxxxx
authorizing any financial institution extending acquisition financing to
Purchaser to rely on such opinion.
6.9 Good Standing Certificates. Seller shall have delivered to
Purchaser (a) copies of the certificates or articles of incorporation (or other
comparable corporate charter documents), including all amendments thereto, of
each of the Companies certified by the Secretary of State or other appropriate
official of the jurisdiction of incorporation, (b) certificates from the
Secretary of State or other appropriate official of the respective jurisdictions
of incorporation to the effect that each of the Companies is in good standing or
subsisting in such jurisdiction, listing all charter documents of such Companies
on file and attesting to its payment of all franchise or similar Taxes, and (c)
a certificate from the Secretary of State or other appropriate official in each
jurisdiction in which the Companies are qualified or admitted to do business to
the effect that the applicable of the Companies is duly qualified or admitted
and in good standing in such jurisdiction.
6.10 Resignations of Directors and Officers. Such members of the
boards of directors and such officers of the Companies as are designated in a
written notice delivered at least two (2) Business Days prior to the Closing
Date by Purchaser to Sellers shall have tendered, effective at the Closing,
their resignations as such directors and officers.
6.11 Financial Covenants. The annual lease liabilities of the
Companies for all property other than real estate shall not exceed in the
aggregate, as of the Closing, the limits set forth in Schedule 6.11, plus such
non-real estate capital lease obligations as were incurred subsequent to May 31,
1996, in the ordinary course of business (and within the limits set forth in
Section 4.7) to finance equipment acquisitions for the Companies, and the total
debt of the Companies will not exceed, in the aggregate, as of the Closing, the
amount set forth on in the Unaudited Financial Statements, plus such debt as was
incurred subsequent to May 31, 1996, in the ordinary course of business,
including the amount referred to in Section 1.6 (and within the limits set forth
in Section 4.7), to finance the day-to-day operations of the Companies and the
acquisition of equipment and other materials for the Companies, or as permitted
by the further provisions of this Agreement.
6.12 Employment Agreements.
(a) Xxxxxxx Xxxxxxxx shall have executed and delivered to AEC
an employment agreement, in form and substance reasonably satisfactory to
Purchaser and Xxxxxxx Xxxxxxxx, which shall provide for (i) a term of five (5)
years; (ii) a prohibition against termination without cause prior to the third
year; (iii) one (1) year's severance if the employment agreement is terminated
during the third through fifth year without cause; and (iv) an annual
compensation of One Hundred Thousand and 00/100 Dollars ($100,000).
(b) Xxxxxxx Xxxxxxx shall have executed and delivered to AEC,
an employment agreement, in form and substance reasonably satisfactory to
Purchaser and Xxxxxxx, which shall provide for (i) a term of five (5) years;
(ii) two (2) years' severance if such agreement is terminated without cause; and
(iii) annual compensation of Two Hundred Thousand and 00/100 Dollars ($200,000).
(c) Xxxxxx Xxxx shall have executed and delivered to AEC an
employment agreement, in form and substance reasonably satisfactory to
Purchaser, which shall provide for (i) a term of five (5) years; (ii) a minimum
notice of eighteen (18) months or the remaining duration of the five (5) year
employment agreement if such employment agreement is terminated without cause;
(iii) annual compensation of One Hundred Eighty Five Thousand and 00/100 Dollars
($185,000); and (iv) an additional Five Thousand 00/100 Dollars ($5,000) per
year in miscellaneous benefits of Xxxxxx Xxxx'x choosing.
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(x) Xxxxxxx XxXxxxx shall have executed and delivered to AEC
an employment agreement, in form and substance reasonably satisfactory to
Purchaser, which shall provide for (i) a term of five (5) years; (ii) minimum
notice of one (1) year or the remaining duration of the five (5) year employment
agreement if such employment agreement is terminated without cause; and (iii)
annual compensation equal to her compensation immediately prior to Closing.
(e) Each of the employment agreements referenced in this
Section 6.12 shall provide for standard company benefits with Xxxxxxx Xxxxxxxx,
Xxxxxxx Xxxxxxx and Xxxxxx Xxxx receiving such other or additional benefits as
are commensurate with each other and the other executive officers of AEC. Each
of the employment agreements referenced in this Section 6.12 shall also contain
noncompetition covenants in favor of the Companies which shall survive any
employment termination for any reason, but will expire upon the final payment of
any severance obligations payable for any termination without cause.
6.13 Proceedings. All proceedings to be taken on the part of Seller in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of all such
documents and other evidences as Purchaser may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
6.14 License of Logo. Xxxxxxxx shall have entered into an agreement
with the Companies whereby Xxxxxxxx shall agree to allow the Companies to use
the logo distributed to Xxxxxxxx (i.e. a shield with an eagle on it) for a
period of three (3) years after the Closing, at no charge.
6.15 Consulting Agreements.
(a) Xxxxxxxx shall have executed and delivered to AEC, a
consulting agreement, in form and substance reasonably satisfactory to
Purchaser, which shall provide for Xxxxxxxx to render consultation services from
the Closing Date until December 31, 1999, in consideration of a total payment of
Three Hundred Fifty Thousand and 00/100 Dollars ($350,000) to be paid in equal
monthly installments of Nine Thousand Seven Hundred Twenty Two and 22/100
Dollars ($9,722.22). Such installments shall begin on January 5, 1997, with each
subsequent installment to be paid by the fifth (5th) calendar day of each
succeeding month and with the last installment to be paid on December 5, 1999.
(b) AEC and a consulting company which is owned and controlled by
Xxxxxxx Xxxxxxxx shall have also entered into a Consulting Agreement, in form
and substance reasonably satisfactory to Purchaser, pursuant to which the
consulting company shall provide consultation services to AEC and the Companies
in consideration of Seventy Five Thousand and 00/100 Dollars ($75,000) per year.
Such consulting agreement shall have a term of five (5) years and cannot be
terminated without cause prior to the third (3rd) year. Such consulting
agreement shall also provide for one (1) year's severance if such consulting
agreement is terminated during the third (3rd) through fifth (5th) year without
cause.
(c) AEC and a consulting company which is owned and controlled by
Xxxxxxx shall have entered into a consulting agreement, in form and substance
reasonably satisfactory to Purchaser, pursuant to which the consulting company
shall provide consultation services to AEC and the Companies in consideration of
Twenty Eight Thousand and 00/100 Dollars ($28,000) per year payable quarterly.
Such consulting agreement shall provide for a term of five (5) years and two (2)
years' severance if such consulting agreement is terminated without cause.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder to sell the Sellers' Shares are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Seller in
its sole discretion):
7.1 Representations and Warranties. Each of the representations
and warranties made by Purchaser in this Agreement shall be true and correct in
all material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date.
7.2 Performance. Purchaser and the Companies shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by
Purchaser and the Companies at or before the Closing.
7.3 Officers' Certificates. Purchaser shall have delivered to
Sellers a certificate, in form and substance reasonably satisfactory to Sellers
and their legal counsel, dated the Closing Date and executed by the Chairman of
the Board, the President or any Executive or Senior Vice President of Purchaser,
confirming that the conditions set forth in Sections 7.1 and 7.2 have been
performed and including a statement to the effect that the Purchaser is unaware
(after reasonable inquiry) of any breach of any warranty, representation, or
covenant herein made by Sellers, except as specifically set forth in such
certificate, including, without limitation, any representation, warranty, or
covenant dealing with financial matters, and distributions from any of the
Companies to either of the Sellers. Purchaser shall have also delivered to
Sellers a certificate, in form and substance reasonably satisfactory to Sellers
and their legal counsel, dated as of the Closing Date and executed by the
Secretary or Assistant Secretary of Purchaser, confirming the authority and
incumbency of the officers of the Purchaser who are effecting the transactions
contemplated by this Agreement.
7.4 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law that became effective after the date of this Agreement
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
7.5 Regulatory Consents and Approvals. Subject to Section 6.5(b),
all consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority necessary to permit Sellers and Purchaser
to perform their obligations under this Agreement and the Operative Agreements
and to consummate the transactions contemplated hereby and thereby (a) shall
have been duly obtained, made or given, (b) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (c)
shall be in full force and effect.
7.6 Third Party Consents. All consents (or in lieu thereof
waivers) to the performance by the Sellers of their obligations hereunder and to
the consummation of the transactions contemplated hereby as are required under
the Contracts listed in Schedule 7.6 of the Disclosure Schedule (a) shall have
been obtained, (b) shall not be subject to the satisfaction of any condition
that has not been satisfied or waived and (c) shall be in full force and effect.
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7.7 Opinion of Counsel. Seller shall have received the opinion of
Xxxxx, Xxxxxxxx & Xxxxxxx, counsel to Purchaser, dated the Closing Date,
substantially in the form and to such effect as Sellers and their legal counsel
may reasonably request.
7.8 Employment Agreements. AEC shall have executed the Employment
Agreements and delivered the same to Xxxxxxx Xxxxxxxx, Xxxxxxx, Xxxxxxx XxXxxxx
and Xxxxxx Xxxx. AEC shall also enter into a letter agreement or some other
acceptable agreement with Xxxxxx Xxxxxx, whereby AEC shall agree to pay Xx.
Xxxxxx a xxxxxxxxx payment equal to six months of his salary in effect as of May
31, 1996, in the event that his employment with AEC is terminated without cause
(as defined in the Employment Agreements), within two (2) years after Closing.
7.9 Proceedings. All proceedings to be taken on the part of
Purchaser in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Sellers, and Sellers shall have received copies of all such
documents and other evidences as Seller may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
7.10 Release from Guarantees. The lenders and lessors listed on
Schedule 5.3(c) shall have released Sellers from any and all guarantees and
direct obligations either or both of them have given or made on behalf of any of
the Companies, or the Sellers shall be satisfied, in their reasonable
discretion, that such releases will be obtained by Purchaser promptly and
expeditiously after the Closing.
7.11 Consulting Agreements. AEC shall have executed and delivered
to Xxxxxxxx, and AEC and the two consulting companies referenced in Section 6.15
shall have executed and delivered to each other, the consulting agreements
described in Section 6.15.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.1 Tax Sharing Agreements. Any Tax sharing agreement to which any
of the Sellers or the Companies is a party shall be terminated as of the Closing
Date and will have no further effect for any taxable year or period following
the Closing Date.
8.2 Certain S. Corporation Tax Items. Sellers shall prepare and
file all unfiled federal and state income tax returns treating AEC as an S
Corporation pursuant to the Code for federal income tax purposes and for all
state income tax purposes (the "S Corporation Returns") for AEC for all periods
ending on or before the Closing Date (the "Pre-Closing Period"). Purchaser shall
make available to Sellers any and all information reasonably requested by them
to allow Sellers to prepare such returns. With respect to any such S Corporation
Return, the Seller shall provide the Purchaser and its authorized
representatives with a copy of such completed S Corporation Return and a
statement (including all necessary supporting schedules and information required
to support such statement) that certifies and sets forth the calculation of the
amount of Tax shown on such S Corporation Return at least 30 days prior to the
due date (including any extension thereof) for the filing of such S Corporation
Return, and the Purchaser and its authorized representatives shall have the
right to review such S Corporation Return and statement (including any
supporting schedules or other documents relevant thereto) prior to the filing of
such S Corporation Return. The Sellers and the Purchaser agree to consult and to
attempt in good faith to resolve any issues arising as a result of the review of
such S Corporation Return and statement by the Purchaser or its authorized
representatives. Subject to the
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foregoing right of review, consultation and resolution of disputed items,
Purchaser shall cause AEC to file such S Corporation with the Internal Revenue
Service and with the appropriate state agencies. The Sellers shall control and
have final decision making authority with respect to any audit relating to the
Pre-Closing Period S Corporation Returns for all matters which involve taxes
imposed on the Shareholders. Any Shareholder level taxes in respect of the
Pre-Closing Period S Corporation Returns including any audit adjustments thereto
shall be the sole obligation of Sellers, provided that any audit adjustment with
respect to a Pre-Closing Period S Corporation Return which increases the tax
liability of Sellers and which results in a future tax benefit of AEC or
Purchaser in a tax period ending after the Pre-Closing Period shall give rise to
a repayment obligation by Purchaser in the amount of such tax benefit. Payment
of the amount of such benefit or benefits to Sellers shall be made by Purchaser
on or before the due date of Purchaser's or AEC returns for the years in which
such benefits are available to be claimed by Purchaser or AEC.
8.3 Cooperation on Tax Matters.
(a) Purchaser, the Companies and Sellers shall cooperate
fully, as and to the extent reasonably requested by any other party, in
connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Companies and Sellers agree (i) to retain all
books and records with respect to Tax matters pertinent to the Companies
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or Seller, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (ii) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, the Companies or Sellers, as the case may be, shall
allow the other party to take possession of such books and records.
(b) Purchaser and Sellers further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANT AND AGREEMENTS
9.1 Survival of Representations, Warranties, Covenants and
Agreements. Notwithstanding any right of Purchaser (whether or not exercised) to
investigate the affairs of the Companies or any right of any party (whether or
not exercised) to investigate the accuracy of the representations and warranties
of the other party contained in this Agreement, Seller and Purchaser have the
right to rely fully upon the representations, warranties, covenants and
agreements of the other contained in this Agreement. The representations,
warranties, covenants and agreements of Seller and Purchaser contained in this
Agreement will survive the Closing as follows: (a) indefinitely with respect to
the representations and warranties contained in Sections 2.2, 2.3, 2.4, 2.5, 2.6
(but only insofar as it relates to the capital stock of the Companies), 2.30,
2.31, 3.2 and 3.7 and the covenants and agreements contained in Sections 13.3
and 13.6, (b) until sixty (60) days after the expiration of all applicable
statutes of limitation (including all periods of extension, whether automatic or
permissive) with respect to matters covered by (i) Section 2.13 and Article
VIII, and (ii) Section 2.16 and
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Article X (insofar as Section 2.16 and Article X relate to ERISA or the Code),
(c) until the second anniversary of the date that AEC files its federal income
tax returns for the taxable year in which the Closing occurs in the case of all
other representations and warranties and any covenant or agreement to be
performed in whole or in part on or prior to the Closing, or (d) with respect to
each other covenant or agreement contained in this Agreement, until sixty (60)
days following the last date on which such covenant or agreement is to be
performed or otherwise terminates in accordance with its terms or, if no such
date is specified, indefinitely, except that any representation, warranty,
covenant or agreement that would otherwise terminate in accordance with clause
(b), (c), or (d) above will continue to survive if a Notice of Claim shall have
been timely given under Article X on or prior to such termination date, until
the related claim for indemnification has been satisfied or otherwise resolved
as provided in Article X.
ARTICLE X
INDEMNIFICATION
10.1 Not Applicable to Termination. The provisions in this Article
X with respect to indemnification shall not provide any of the parties hereto,
their officers, directors, employees, or stockholders, with any rights for
damages, losses, or expenses of any kind relating to the failure, refusal, or
inability of the transactions herein contemplated to be closed on or before the
Closing Date (as extended pursuant to the further provisions hereof), as all
such rights, if any, shall be governed by the provisions of Section 11.2.
10.2 Indemnification by Sellers. For a period commencing on the
Closing Date and ending at the time specified in Section 9.1 hereof that is
applicable to the particular matter in question, each of the Sellers hereby
jointly and severally covenants and agrees to fully and completely defend,
indemnify and hold harmless Purchaser and the Companies and any of their
respective successors or assigns (and any of their respective shareholders,
directors, officers, employees, agents, Affiliates and principals) from and
against any and all claims, losses, liabilities, costs, expenses, payments,
damages, or deficiencies (including reasonable attorneys' fees) of every nature,
kind or character (collectively the "Damages") asserted, paid, or incurred by,
or levied or assessed against, Purchaser, any of the Companies, or any of their
respective successors or assigns, or any of their respective shareholders,
directors, officers, employees, agent, Affiliates, or principals, resulting from
or arising in connection with any of the following matters:
(a) Liabilities or obligations existing as of May 31, 1996,
and which, under GAAP (to be applied without any materiality limitations),
should have been accrued or reserved for on a balance sheet or the notes thereto
as a liability or obligation if and to the extent that the same were not accrued
or reserved for as liabilities on the May 31, 1996, balance sheet included as a
part of the Unaudited Financial Statements, or which were not disclosed in the
Disclosure Schedule (without regard to any materiality limitations), or which
were not subject to computation in a manner consistent with past practice as a
result of disclosures in the Disclosure Schedule hereto;
(b) Liabilities or obligations arising out of any breach by
any of the Companies prior to Closing of any provision of any agreement,
Contract (written or unwritten), commitment, or lease (except with respect to
any liabilities or obligations disclosed in the Disclosure Schedule or otherwise
expressly set forth in this Agreement) not accrued or reserved for in the May
31, 1996, balance sheet included as a part of the Unaudited Financial Statements
or that are to be satisfied at or immediately after Closing in accordance with
the terms of this Agreement;
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(c) Any breach of any representation or warranty on the part
of a Seller contained in or made pursuant to this Agreement or in any
certificate, schedule, exhibit furnished by a Seller in connection herewith or
therewith, and for purposes of this clause (c) any qualification of such
representations and warranties by reference to the materiality of matters stated
therein, shall be disregarded, in determining any inaccuracy, untruth,
incompleteness or breach thereof; provided, however, that if such breach or
failure is known by the Purchaser as of the Closing, and reflected on the
certificate discussed in Section 7.3 hereof, such breach or failure shall not
give rise to a right of indemnification hereunder;
(d) Any breach or failure to perform any covenant or agreement
on the part of a Seller contained in this Agreement or any instrument or
document furnished by a Seller in connection herewith; provided, however, that
if such breach or failure is known by the Purchaser as of the Closing, and
reflected on the certificate discussed in Section 7.3 hereof, such breach or
failure shall not give rise to a right of indemnification hereunder; or
(e) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and expenses (including reasonable attorneys'
fees) suffered or incurred by Purchaser as a result of or in connection with any
matter or item listed and described in the foregoing subparagraphs (a) through
(d) of this Section 10.2.
10.3 Indemnification by Purchaser. For a period commencing on the
Closing Date and ending at the time specified in Section 9.1 hereof that is
applicable to the particular matter in question, Purchaser hereby agrees to
indemnify and hold harmless Sellers from and against any Damages as a result of
the following matters:
(a) Any financial obligations of Purchaser and the Companies
incurred in the operation of the Companies arising or accruing after the Closing
Date, including obligations arising under contractual obligations of the
Companies, which obligations include, without limitation, contracts between the
Companies and Xxxxx XxXxx & Company, and contractual obligations guaranteed by
either Seller, which guarantees are not released at or before Closing;
(b) Any breach by Purchaser of any of the representations,
warranties, or covenants made by Purchaser in this Agreement, including, without
limiting the foregoing, the satisfaction of any and all obligations of the
Companies guaranteed by either of the Sellers; provided, however, that if such
breach or failure is known by either Seller as of the Closing, and reflected on
the certificate discussed in Section 6.3 hereof, such breach or failure shall
not give rise to a right of indemnification hereunder;
(c) Any misrepresentation contained in any Exhibit,
certificate, or other document or instrument delivered to the Seller by
Purchaser in accordance with any provision of this Agreement;
(d) Any claim asserted by any employee or former employee of
the Companies relating to or arising from any action by Purchaser, or failure to
act by Purchaser, on or after the Closing Date (except for claims directly
arising from any contract, dispute or other fact or circumstance that preceded
Closing but was not properly disclosed to Purchaser within the Disclosure
Schedule or otherwise pursuant to Section 4.16); and
(e) Any claims, liabilities, causes of action, or damages
resulting from the operation of the Companies subsequent to Closing which are in
no way caused or resulting from the operation of the Companies prior to Closing;
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(f) Any State of Georgia sales tax (together with any
interest, penalties, or other charges associated therewith, all of which shall
be grossed up for any income taxes imposed upon Sellers as a result of their
receipt of such amounts) that is properly imposed on either of the Sellers with
respect to the transfer of any of the assets of the Companies to such Seller in
accordance with the terms of this Agreement;
(g) Any claim for any investment banking or brokerage fee
(including, but not limited to, any fees payable to the Xxxxxxxx-Xxxxxxxx
Company) incurred by Purchaser in connection with the consummation of the
transactions contemplated herein; or
(h) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and expenses (including reasonable attorneys'
fees) suffered or incurred by sellers as a result of or in connection with any
matter or item listed and described in the foregoing Subparagraphs (a) through
(g) of this Section 10.3.
10.4 Limitations on Indemnification. The indemnification
obligations of the Sellers under this Article X shall only be applicable when
Damages are incurred which exceed, in the aggregate, the sum of Five Hundred
Thousand and 00/100 Dollars ($500,000) (the "Basket Amount") and shall only be
applicable to the extent that any such Damages exceed the Basket Amount.
Furthermore, notwithstanding anything else in this Agreement to the contrary,
the indemnifications provided by Sellers hereunder that are applicable to the
Companies generally shall be pro rata in that Xxxxxxxx shall be responsible for
90% and Xxxxxxx for 10%, and the indemnification of a breach by only one Seller
shall be the exclusive obligation of such Seller. Moreover, the benefits of the
Basket Amount shall be similarly allocated between Xxxxxxxx and Xxxxxxx on a
90/10 percent basis. Notwithstanding the foregoing, the maximum indemnification
obligation of Xxxxxxxx hereunder shall not exceed $1,800,000 and that of Xxxxxxx
shall not exceed $200,000, in each case in excess of the Basket Amount.
10.5 Indemnification Procedure.
(a) The party to be indemnified hereunder (the "Indemnitee")
shall give prompt written notice to the party from whom indemnification is
sought (the "Indemnitor") of the assertion of a claim for indemnification (such
written notice referred to as the "Notice of Claim"), but in no event later than
(i) fifteen (15) days after service of process in the event litigation is
commenced against the Indemnitee by a third party, or (ii) thirty (30) days
after the assertion of such claim. If the Indemnitee fails to give a Notice of
Claim within the time periods set forth in the immediately preceding sentence,
the Indemnitee shall nonetheless be entitled to be indemnified hereunder to the
extent (but only to the extent) that the Indemnitor has not been prejudiced by
such failure. Each Notice of Claim shall describe in reasonable detail and in
good faith the facts and circumstances upon which the asserted claim for
indemnification is based. The Indemnitee shall consult regularly with the
Indemnitor with respect to the payment, settlement or defense of any claim,
action, suit, proceeding or demand.
(b) If any action or proceeding shall be brought in connection
with any liability or claim to be indemnified hereunder, the Indemnitee shall
provide the Indemnitor a period of twenty (20) days to decide whether to defend
such liability or claim. During such period the Indemnitee shall take all
necessary steps to protect the interests of itself and the Indemnitor, including
the filing of necessary responsive pleadings, the seeking of emergency relief or
other action necessary to maintain the status quo, subject to reimbursement from
the Indemnitor of its expense in doing so. The Indemnitor shall defend such
action or proceeding at its expense, using counsel selected by any insurance
company insuring against any such claim and undertaking to defend such claim, or
by other counsel selected by it and approved by the Indemnitee, which approval
shall not be unreasonably withheld or delayed. The Indemnitor shall keep the
Indemnitee
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fully apprised at all times as to the status of the defense and shall consult
with the Indemnitee prior to the settlement of any indemnified matter and will
not settle or otherwise compromise the same without the Indemnitee's consent
(which shall in any event not be unreasonably withheld) unless there is no
finding or admission of any violation of law by the Indemnitee or any violation
of the rights of any person by the Indemnitee and no effect on any other claims
that may be made against the Indemnitee and the sole relief provided is monetary
damages that are paid in full by the Indemnitor. Indemnitee shall have the
option, at its expense, of participating in the defense of any such action or
proceeding. In the event the Indemnitor does not notify the Indemnitee whether
the Indemnitor will defend such liability or claim within twenty (20) days after
receipt of Indemnitee's Notice of Claim (or if Indemnitor abandons the defense
of such claim), the Indemnitee shall have the right to defend the claim at
Indemnitor's expense with counsel of its own choosing reasonably satisfactory to
Indemnitor, subject to the right of the Indemnitor to assume the defense of any
claim at any time prior to settlement or final determination thereof. In such
event the Indemnitee shall send a written notice to Indemnitor of any proposed
settlement of any claim, which settlement the Indemnitor may reject, in its
reasonable judgment, within thirty (30) days of receipt of such notice. Failure
to reject such notice within such thirty (30) day period shall be deemed an
acceptance of such settlement. The Indemnitee shall have the right to settle any
such claim over the objection of the Indemnitor, provided that the Indemnitee
waives any right to indemnify therefor, but such waiver shall occur only if (i)
the Indemnitor is contesting such claim in good faith, or (ii) the Indemnitor
has assumed the defense from the Indemnitee.
(c) Notwithstanding the subsection (b) above, if there is a
reasonable probability that a third party claim for which a Seller has granted
indemnification rights to Purchaser hereunder will materially and adversely
affect Purchaser or the Companies or its business to be carried after the
Closing Date other than as a result of money damages or other payments Purchaser
shall be entitled to conduct the defense of such claim at Seller's expense.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Xxxxxxxx and Purchaser;
(b) at any time before the Closing, by either Xxxxxxxx or
Purchaser, in the event (i) a representation of the nonterminating party, proves
to be untrue in some material, adverse respect; (ii) of a material breach of a
covenant or agreement set forth herein by the non-terminating party if such non-
terminating party fails to cure such breach within five (5) Business Days
following notification thereof by the terminating party (and prior to September
30, 1996, in any event), or (iii) upon notification of the non terminating party
by the terminating party that the satisfaction of any condition to the
terminating party's obligations under this Agreement becomes impossible or
impracticable with the use of commercially reasonable efforts if the failure of
such condition to be satisfied is not caused by the terminating party; or
(c) at any time after September 30, 1996, by either Xxxxxxxx
or Purchaser upon notification of the non-terminating party by the terminating
party if the Closing shall not have occurred on or before such date.
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11.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 11.1, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of Sellers or Purchaser
(or any of their respective officers, directors, employees, agents or other
representatives or Affiliates), except as provided in Section 11.2(a) and the
provisions with respect to confidentiality in Section 13.5 will continue to
apply following any such termination, except as follows:
(a) If Purchaser terminates this Agreement on or before the
Closing Date because a representation or warranty of a Seller proves to be
untrue in some material adverse respect, or because of a breach of a material
covenant of a Seller, which breach is not cured within the applicable cure
period set forth in Section 11.1(b) above, or the failure of one or both of the
Sellers to fulfill any obligation required to be fulfilled by them prior to the
Closing, then Purchaser shall be entitled to receive from the Sellers, an amount
equal to the lesser of (i) all of the out-of-pocket costs and expenses incurred
by Purchaser (or Xxxxx Xxxxxx) in connection with the transactions contemplated
by this Agreement, including without limitation, legal fees, loan commitment
fees and travel expenses, or (ii) Five Hundred Thousand Dollars ($500,000). Such
amount shall be paid to Purchaser in the form of a promissory note from Sellers
to Purchaser, to be paid in full on or before the first anniversary date of such
termination. Such promissory note shall bear interest at the same rate as is
provided for in the loan which is the subject of the Letter Agreement. Sellers
shall also be required to use their best efforts to cause Purchaser and Xxxxxx
Xxxxxx to be released from all liability as a guarantor or otherwise, pertaining
to that certain loan to AEC by NationsBank described more specifically in
Section 1.6 hereof.
(b) If Purchaser terminates this Agreement for any other
reason, Purchaser shall not be entitled to reimbursement from Sellers, for any
expenses or damages suffered as a result of such termination, whether liquidated
damages or otherwise.
(c) If either Seller terminates this Agreement for any reason,
including Purchaser's breach of any warranty, representation or covenant
contained in this Agreement, Sellers shall not be entitled to any legal or
equitable remedy, including any claim for reimbursement from Purchaser for any
expenses or damages suffered as a result of such termination. The Sellers have
agreed to this Section 11.2(c) in consideration of the obligations of Purchaser
and Xxxxx Xxxxxx set forth in the Letter Agreement referenced in Section 1.6.
(d) Other than as set forth in this Section 11.2, the parties
shall have no right to damages or any other claims arising out of the
termination of this Agreement.
ARTICLE XII
DEFINITIONS
12.1 Definitions.
(a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Acquisition Proposal" means any proposal for a merger or other
business combination to which any of the Companies is a party or the direct or
indirect acquisition of any equity interest in, or a substantial portion of the
assets of, any of the Companies, other than the transactions contemplated by
this Agreement.
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"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit, but
excluding in each case any of the foregoing matters that arise under the laws of
any of the United Arab Emirates, including Dubai, or any political subdivision
thereof.
"Affiliate" means any Person that directly, or indirectly through one
of more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning
fifty percent (50%) or more of the voting securities of another Person shall be
deemed to control that Person.
"Agreement" means this Stock Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto and the certificates delivered in
accordance with Sections 6.3 and 7.3, as the same shall be amended from time to
time.
"Assets and Properties" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation or other
business organization of which such Person is an officer or partner or is the
beneficial owner, directly or indirectly, of fifty percent (50%) or more of any
class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Audited Financial Statements" has the meaning ascribed to it in
Section 2.10(a).
"Basket Amount" has the meaning ascribed to it in Section 10.4.
"Benefit Plan" means any Plan established by any of the Companies, or
any predecessor or Affiliate of any of the foregoing, existing at the Closing
Date or prior thereto, to which any of the Companies contributes or has
contributed, or under which any employee, former employee or director of any of
the Companies or any beneficiary thereof is covered, is eligible for coverage or
has benefit rights.
"Books and Records" means all files, documents, instruments, papers,
books and records relating to the Business or Condition of the Companies,
including without limitation financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of Georgia are authorized or obligated to
close.
"Business or Condition of the Companies" means the business, condition
(financial or otherwise), results of operations, Assets and Properties and
prospects of the Companies taken as a whole.
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"Closing" means the closing of the transactions contemplated by Section
1.4.
"Closing Date" has the meaning ascribed to it in Section 1.4.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Companies" means AEC, AEMEC, ACIL, and each Subsidiary.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract (in each
case written unless oral contracts are expressly referenced in the Agreement).
"Damages" has the meaning ascribed to it in Section 10.2.
"Defined Benefit Plan" means each Benefit Plan which is subject to Part
3 of Title I of ERISA, Section 412 of the Code or Title IV of ERISA.
"Disclosure Schedule" means the record delivered to Purchaser by
Sellers herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Sellers pursuant to this Agreement, including any
amendment thereof or supplement thereto which is effected pursuant to Section
4.16.
"Employment Agreements" has the meaning ascribed to it in Section 6.14.
"Environmental Law" means any Law or Order relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is in the same controlled group
of corporations or who is under common control with a Seller or, before the
Closing, any of the Companies (within the meaning of Section 414 of the Code).
"Financial Statements" means the financial statements of the Companies
delivered to Purchaser pursuant to Section 2.10 or 4.5.
"GAAP" means generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately prior comparable
period.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States and, other than the United Arab Emirates, any foreign country,
any domestic or foreign state, county, city or other political subdivision
(other than of
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the United Arab Emirates, including Dubai), or any private or public entity such
as SACS that regulates, inspects, monitors, or issues any reports or finding
with respect to educational institutions.
"Hazardous Material" means (i) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (ii) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; and
(iii) any other chemical or other material or substance, exposure to which is
now or hereafter prohibited, limited or regulated by any Governmental or
Regulatory Authority under any Environmental Law.
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Indemnitee" has the meaning ascribed to it in Section 10.3(a).
"Indemnitor" has the meaning ascribed to it in Section 10.3(a).
"Intellectual Property" means all patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks and
service xxxx rights, service names and service name rights, brand names,
inventions, processes, formulae, copyrights and copyright rights, trade dress,
business and product names, logos, slogans, trade secrets, industrial models,
processes, designs, methodologies, computer programs (including all source
codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"Investment Assets" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by any of the
Companies and issued by any Person other than any of the Companies (other than
trade receivables generated in the ordinary course of business of the
Companies).
"IRS" means the United States Internal Revenue Service.
"JAMS" has the meaning ascribed to it in Section 13.13.
"Knowledge of either Seller" or "Known to a Seller" means the actual
current awareness of either of the Sellers, Xxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xx
Xxxxxxx, or Xxxxxx Xxxxxx. The phrase "to the Knowledge of each Seller" or
similar phrases are to be construed to mean the separate and distinct Knowledge
of a Seller with respect to the representations and warranties in question.
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country (other than the United Arab Emirates) or any domestic
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or foreign state, county, city or other political subdivision (other than of the
United Arab Emirates, including Dubai) or of any Governmental or Regulatory
Authority.
"Letter Agreement" has the meaning ascribed it in Section 1.6.
"Liabilities" means all Indebtedness, obligations and other liabilities
of a Person (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing, but excluding in each case any of the foregoing
matters that arise under the laws of any of the United Arab Emirates, including
Dubai, or any political subdivision thereof.
"Loss" means any and all damages, fines, fees, penalties, deficiencies,
losses, liabilities and expenses (including without limitation interest, court
costs, fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment).
"Notice of Claim" has the meaning ascribed to it in Section 10.3(a).
"Operative Agreements" means any support or other agreements to be
entered into in connection with the transaction.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such Person or
(ii) receive or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock of such Person, including
any rights to participate in the equity or income of such Person or to
participate in or direct the election of any directors or officers of such
Person or the manner in which any shares of capital stock of such Person are
voted.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PBGC" means the Pension Benefit Guaranty Corporation established under
ERISA.
"Pension Benefit Plan" means each Benefit Plan which is a pension
benefit plan within the meaning of Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of Law with respect to a
Liability that is not yet due or delinquent and (iii) any minor imperfection of
title or similar Lien which individually or in the aggregate with other such
Liens does not materially impair the value of the property subject to such Lien
or the use of such property in the conduct of the business of any of the
Companies.
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"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
"Purchase Price" has the meaning ascribed to it in Section 1.2(b).
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
"Qualified Plan" means each Benefit Plan which is intended to qualify
under Section 401 of the Code.
"Representatives" has the meaning ascribed to it in Section 4.2.
"SACS" means the Southern Association of Colleges and Schools.
"Seller" has the meaning ascribed to it in the forepart, of this
Agreement.
"Sellers' Shares" has the meaning ascribed to it in the forepart of
this Agreement.
"Subject Defined Benefit Plan" means each Defined Benefit Plan listed
and described in Schedule 2.16(a) of the Disclosure Schedule.
"Subsidiary" means any Person (other than ACIL or AEMEC) in which any
of AEC, AEMEC or ACIL, directly or indirectly through subsidiaries or otherwise,
beneficially owns more than fifty percent (50%) of either the equity interests
in, or the voting control of, such Person.
"Tax Returns" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means any federal, state, local, or foreign income, gross
receipts, license payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not, but excluding in each case any of
the foregoing matters that arise under the laws of the United Arab Emirates,
including Dubai, or any political subdivision thereof.
"Unaudited Financial Statements" has the meaning ascribed to it in
Section 2.10(b).
(b) Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby"
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and derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of one or more of the Companies. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Business Days
are specified. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
ARTICLE XIII
MISCELLANEOUS
13.1 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Purchaser, to:
Edutrek International, Ltd.
x/x Xxxxxxx Xxxxxxxx, Xxx.
Xxx Xxxxxxxx Xxxxx
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile No.: 404/264-8949
Attn: Xxxxx Xxxxxx
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx
Atlanta Financial Center
Suite 1800
0000 Xxxxxxxxx Xxxx, X. X.
Xxxxxxx, XX 00000-0000
Facsimile No.: 404/264-2652
Attn: Xxxxxx Xxx Xxxxxxxx, Esq.
If to a Seller, to:
American European Corporation
000 Xxxxxxx Xxxxx
Xxxxxxxx 00
Xxxxxxxx, Xxxxxxx 00000
Facsimile No.:
Attn: Xxxxxx X. Xxxxxxxx; Xxxxxxx X. Xxxxxxx
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with a copy to:
Xxxxxx, Golden & Xxxxxxx
2800 One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx Xxxxxxx, XX 00000
Facsimile No.: 404/873-8501
Attn: S. Xxxxxx Xxxxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
13.2 Entire Agreement. This Agreement and the Operative Agreements
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof, and contain the sole and entire
agreement between the parties hereto with respect to the subject matter hereof
and thereof.
13.3 Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Section 11.2), whether or
not the transactions contemplated hereby are consummated, each party will pay
its own costs and expenses, and Sellers shall pay the costs and expenses of the
Companies, incurred in connection with the negotiation, execution and closing of
this Agreement and the Operative Agreements and the transactions contemplated
hereby and thereby; provided, however, that the Sellers may cause the Companies
to pay some or all of their costs and expenses up to, but not in excess of, the
aggregate amount of $150,000; and provided, further, that the expenses incurred
by the Companies pursuant to Section 4.15 hereof shall not be counted against
such $150,000 limitation.
13.4 Public Announcements. At all times at or before the Closing,
Sellers and Purchaser will not issue or make any reports, statements or releases
to the public or generally to the students, student outplacement sources,
referral sources, employees, customers, suppliers or other Persons to whom the
Companies sell goods or provide services or with whom the Companies otherwise
have significant business relationships with respect to this Agreement or the
transactions contemplated hereby without the consent of the other, which consent
shall not be unreasonably withheld. If either party is unable to obtain the
approval of its public report, statement or release from the other party and
such report, statement or release in the opinion of legal counsel to such party,
required by Law in order to discharge such party's disclosure obligations, then
such party may make or issue the legally required report, statement or release
and promptly furnish the other party with a copy thereof. Seller and Purchaser
will also obtain the other party's prior approval of any press release to be
issued immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
13.5 Confidentiality. Each party hereto will hold, and will use its
best efforts to cause its Affiliates, and in the case of Purchaser, any Person
listed on Schedule 13.5 who considering investing in Purchaser or who has
provided, or who is considering providing, financing to Purchaser to finance all
or any portion of the Purchase Price, and their respective Representatives to
hold, in strict confidence from any Person (other than any such Affiliate,
Person who has provided, or who is considering providing, financing
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or Representative), unless (a) compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (b) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information do
not qualify or cease to qualify as a trade secret under applicable law on or
after the 3rd anniversary of the later of (i) the date of disclosure or (ii) the
earlier of the termination of this Agreement or the Closing, and except to the
extent that such documents or information can be shown to have been (x)
previously known by the party receiving such documents or information, (y) in
the public domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party or (z) later
acquired by the receiving party from another source if the receiving party is
not aware that such source is under an obligation to another party hereto to
keep such documents and information confidential; provided that following the
Closing the foregoing restrictions will not apply to Purchaser's use of
documents and information concerning the Companies furnished by a Seller
hereunder. In the event the transactions contemplated hereby are not
consummated, upon the request of the other party, each party hereto will, and
will cause its Affiliates, any Person who has provided, or who is considering
providing, financing to such party and their respective Representatives to,
promptly (and in no event later than five (5) Business Days after such request)
redeliver or cause to be redelivered all copies of documents and information
furnished by the other party in connection with this Agreement or the
transactions contemplated hereby and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings related thereto
or based thereon prepared by the party furnished such documents and information
or its Representatives. The obligations contained in this Section 13.5 shall
survive the termination of this Agreement or the Closing, as the case may be.
Purchaser agrees that it will cause each Person listed on Schedule 13.5 who is
provided with any information which is the subject of this Section 13.5 to
execute a confidentiality agreement which contains restrictions substantially
similar to those contained herein and which expressly provides that the Sellers
and the Companies shall be third party beneficiaries thereof. Purchaser shall
promptly provide Xxxxxxxx with a copy of each such confidentiality agreement.
13.6 Further Assurances; Post-Closing Cooperation.
(a) At any time or from time to time after the Closing, each
Seller shall execute and deliver to Purchaser such other documents and
instruments, provide such materials and information and take such other actions
as Purchaser may reasonably request more effectively to vest title to the
Sellers' Shares in Purchaser and, to the full extent permitted by Law, to put
Purchaser in actual possession and operating control of the Companies and their
Assets and Properties and Books and Records, and otherwise to cause such Seller
to fulfill his obligations under this Agreement and the Operative Agreements to
which he is a party.
(b) Following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Business or
Condition of the Companies in its possession with respect to periods prior to
the Closing and the right to make copies and extracts therefrom, to the extent
that such access may be reasonably required by the requesting party in
connection with (i) the preparation of Tax Returns, (ii) the determination or
enforcement of rights and obligations under this Agreement, (iii) compliance
with the requirements of any Governmental or Regulatory Authority, (iv) the
determination or enforcement of the rights and obligations of any Indemnitee or
(v) in connection with any actual or threatened Action or Proceeding. Further,
each party agrees for a period extending six (6) years after the Closing Date
not to destroy or otherwise dispose of any such books, records and other data
unless such party shall first offer in writing to surrender such books,
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records and other data to the other party and such other party shall not agree
in writing to take possession thereof during the ten (10) day period after such
offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business or Condition of the Companies not referred
to in paragraph (b) above, and such information, documents or records are in the
possession or control of the other party, such other party shall use its best
efforts to furnish or make available such information, documents or records (or
copies thereof) at the recipient's request, cost and expense. Any information
obtained by a Seller in accordance with this paragraph shall be held
confidential by such Seller in accordance with Section 13.5.
(d) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this Section, relating to the subject matter in litigation
or arbitration, shall be subject to applicable rules relating to discovery.
13.7 Waiver. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
13.8 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
13.9 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than (a) any Person entitled to indemnity under Article X, and (b) the Companies
pursuant to and to the extent provided in Section 4.10.
13.10 No Assignment, Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation of Law
and (b) that Purchaser may assign any or all of its rights, interests and
obligations hereunder (including without limitation its rights under Article X)
to (i) an Affiliate of Purchaser, provided that any such Affiliate agrees in
writing to be bound by all of the terms, conditions and provisions contained
herein, (ii) any post-Closing purchaser of all of the issued and outstanding
stock of one or more of the Companies or substantial part of any one or more of
their assets, or (iii) any financial institution providing purchase money or
other financing to Purchaser (or its assignee) or any of the Companies from time
to time as collateral security for such financing (and, in this connection,
Sellers shall execute an acknowledgment in favor of such financial institution
acknowledging and agreeing to such assignment), but no such assignment referred
to in clause (i) or (ii) shall be effective, unless Xxxxx Xxxxxx owns not less
than fifty percent (50%) of the voting rights of all classes of stock of the
assignee, and such assignment shall not relieve Purchaser (or its assignee) of
its obligations hereunder. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
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13.11 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
13.12 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any parry hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
13.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia applicable to a
Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
13.14 Dispute Resolution, Consent to Jurisdiction and Venue. Any
dispute between the parties either with respect to the application of any
provision of this Agreement or with respect to the performance by Sellers or
Purchasers of its, or their, respective duties and responsibilities hereunder
shall be resolved in the following manner:
(a) Upon the written request of a party, each of the parties
(Sellers acting jointly as one party) will appoint a designated representative
who has not devoted substantial time to the subject in dispute whose task it
will be to meet for the purpose of endeavoring to resolve such dispute.
(b) The designated representatives shall meet as often as the
parties reasonably deem necessary in order to gather and furnish to the other
all information with respect to the matter in issue which the parties believe to
be appropriate and germane in connection with its resolution.
(c) Such representatives shall discuss the problem and
negotiate in good faith in an effort to resolve the dispute without the
necessity of any formal proceeding relating thereto.
(d) During the course of such negotiation, all reasonable
requests made by one party to the other for non-privileged information
reasonably related to the subject in dispute will be honored in order that each
of the parties may be fully advised of the other's position.
(e) The specific format for such discussions will be left to
the discretion of the designated representatives but may include the preparation
of agreed upon statements of fact or written statements of position furnished to
the other party.
(f) If the designated representatives cannot resolve the
dispute within thirty (30) days after the initial request to negotiate such
dispute, then either party may refer the dispute to the Judicial Arbitration &
Mediation Service, Inc. ("JAMS"), Atlanta, Georgia, for a voluntary settlement
conference and the other party will be deemed to have consented to such
conference. The parties may alternatively request nonbinding mediation or a
binding settlement conference. In the absence of agreement the procedure shall
be nonbinding mediation. If JAMS does not maintain an office in Xxxxxx County at
such time, then either party may request the American Arbitration Association to
be substituted for JAMS.
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(g) If the procedure set forth in subparagraph (f) above
utilized by the parties is a nonbinding procedure, then a party who is not
satisfied with the proposed resolution of the dispute may, after the expiration
of not less than thirty (30) days from the date of the conclusion of the
proceeding, initiate formal proceedings in the Superior Court of Xxxx County,
Georgia, or the United States District Court for the Northern District of
Georgia for a judicial resolution of such dispute.
(h) Notwithstanding the foregoing, a party may proceed to
initiate formal proceedings in the Superior Court of Xxxx County, Georgia, or
the United States District Court for the Northern District of Georgia if there
are less than thirty (30) days before the statute of limitations governing any
cause of action relating to such dispute would expire.
(i) Except where clearly prevented by the subject in dispute,
the parties agree to continue performing their respective obligations under this
Agreement while the dispute is being resolved.
(j) Sellers and Purchaser each represent and warrant to the
other that it or they is/are not entitled, to immunity from judicial proceedings
and agree that, should any party bring any judicial proceedings to enforce any
obligation or liability of the other under this Agreement, no immunity from such
proceedings will be claimed by or on behalf of such other party or with respect
to their assets or property. The parties agree that any suit, action or
proceeding arising out of or relating to this Agreement may be instituted only
in the Superior Court of Xxxx County, Georgia, or the Federal District Court for
the Northern District of Georgia, Atlanta, Georgia, they waive any objection
which a party may have now or hereafter to the laying of venue of any such suit,
action or proceeding, and irrevocably consent and submit to the jurisdiction of
such court in any such suit, action or proceeding.
(k) If any action or proceeding relating to this Agreement or
the enforcement of any provision of this Agreement is brought against any party
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing party may be entitled).
13.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered, under seal, by the duly authorized officer of each party hereto as of
the date first above written.
"Purchaser"
Attest: /s/ Xxxx Xxxxx EDUTREK INTERNATIONAL, LTD.
--------------------------------
Name: Xxxx Xxxxx
--------------------------
Title: Secretary
------------------------- By: /s/ X. Xxxxxx
--------------------------------
Xxxxx Xxxxxx, Chairman
[CORPORATE SEAL]
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
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"Sellers"
By: /s/ Xxxxxx X. Xxxxxxxx L.S.
--------------------------------------------------
XXXXXX X. XXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxx L.S.
--------------------------------------------------
XXXXXXX X. XXXXXXX
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LIST OF SCHEDULES
DESCRIPTION SCHEDULE
Purchase Price Calculations 1.2
Asserts to be distributed to Sellers 1.5(a)
Net Operating Profit; Distributions of Net Operating Profit 1.5(b)
AEC: lines of business, jurisdictions in which
qualified, officers and directors 2.2
AEMEC: lines of business, jurisdictions in which
qualified, members and officers 2.3
ACIL: lines of business, jurisdictions in which
qualified, officers and directors 2.4
Exceptions to title in Shares 2.5
Subsidiaries 2.6
Violations of Agreements 2.7
Governmental Consents and Approvals 2.8
Books and Records; where maintained other than at Headquarters of AEC 2.9
Exceptions to GAAP 2.10
Changes since May 31, 1996 2.11
Liabilities not shown on Balance Sheet 2.12
Tax returns filed since September 30, 1993; Tax Disclosures 2.13
Legal Proceedings 2.14
Compliance with Laws 2.15
Benefit Plans and benefit matters 2.16
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Real Property Leases; defaults; Condition of improvements 2.17
Exceptions to Title to tangible personal property; Investment Assets 2.18
Intellectual Property; Exceptions to right to use Intellectual Property 2.19
Material Contracts; Violations of Contracts 2.20
Licenses 2.21
Insurance Policies 2.22
Affiliate Transactions 2.23
Employee Labor Matters 2.24
Environmental Laws 2.25
Bank Accounts; Bank Account Information 2.26
Powers of Attorney 2.27
Scholarships 2.30
No Violations (Purchaser) 3.3
Consents and Approvals (Purchaser) 3.4
Noncompetition Jurisdictions 4.10
Specified Individuals Entitled to Full Scholarships 5.3
Lenders to release Sellers' guarantees 5.3(c)
Required Third Party Consents 6.7
Annual Lease liabilities for non-real estate leases 6.11
Required Third Party Consents 7.6
Persons to be subject to Confidentiality Agreements (Purchaser Schedule) 13.5
The Company hereby agrees to furnish supplementally a copy of any omitted
schedule to the Commission upon request.
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