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EXECUTION COPY
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PREFERRED STOCK PURCHASE AGREEMENT
by and among
XXXXXXX EDUCATION, INC.,
NEW MOUNTAIN PARTNERS, L.P.
and
DB CAPITAL INVESTORS, L.P.
Dated: November 28, 2000
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS................................................................1
1.1 Definitions................................................................1
ARTICLE 2 PURCHASE AND SALE OF SERIES A PREFERRED STOCK..............................9
2.1 Purchase and Sale of Series A Preferred Stock..............................9
2.2 Articles Supplementary.....................................................9
2.3 Escrow Arrangements; Closing...............................................9
2.4 Use of Proceeds...........................................................11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................11
3.1 Corporate Existence and Power.............................................11
3.2 Subsidiaries..............................................................12
3.3 Corporate Authorization; No Contravention.................................12
3.4 Governmental Authorization; Third Party Consents..........................13
3.5 Binding Effect............................................................13
3.6 Capitalization of the Company and its Subsidiaries........................13
3.7 SEC Filings; Financial Statements.........................................14
3.8 Absence of Certain Developments...........................................14
3.9 No Undisclosed Liabilities................................................15
3.10 Compliance with Laws......................................................15
3.11 Litigation................................................................18
3.12 Material Contracts........................................................18
3.13 Environmental.............................................................19
3.14 Taxes.....................................................................19
3.15 Title to Property and Assets; Leases......................................19
3.16 Compliance with ERISA.....................................................20
3.17 Certain Payments..........................................................21
3.18 Insurance.................................................................21
3.19 Accounting................................................................21
3.20 Intellectual Property.....................................................21
3.21 Affiliate Transactions....................................................22
3.22 Investment Company Act....................................................22
3.23 Private Offering..........................................................22
3.24 Board Approval; Stockholder Approval......................................22
3.25 Series A Preferred Stock..................................................23
3.26 No Brokers or Finders.....................................................23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..........................23
4.1 Existence and Power.......................................................23
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4.2 Authorization; No Contravention...........................................24
4.3 Governmental Authorization; Third Party Consents..........................24
4.4 Binding Effect............................................................24
4.5 Purchase for Own Account, Etc.............................................24
4.6 No Brokers or Finders.....................................................25
4.7 Sufficient Funds..........................................................25
4.8 Litigation................................................................25
ARTICLE 5 COVENANTS OF THE COMPANY..................................................25
5.1 Conduct of Business.......................................................25
5.2 No Solicitation...........................................................28
5.3 Regulatory Approval.......................................................29
5.4 Board of Directors and Management.........................................30
5.5 Access....................................................................30
5.6 Employee Benefits Matters.................................................31
5.7 Leases....................................................................31
5.8 Legends...................................................................32
5.9 Valuation.................................................................32
ARTICLE 6 STOCKHOLDERS MEETING; TENDER OFFER........................................32
6.1 Preparation of Information Statement; Stockholders Meeting................32
6.2 Tender Offer..............................................................33
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO FUND
AND CLOSE...............................................................34
7.1 Conditions to Funding.....................................................34
7.1.1 Representations and Covenants.............................................34
7.1.2 Opinion of Counsel to the Company.........................................34
7.1.3 No Actions................................................................34
7.1.4 Stockholder Approval......................................................34
7.1.5 No Material Adverse Effect................................................34
7.1.6 Consents..................................................................35
7.1.7 NASDAQ Listing............................................................35
7.1.8 DOE Action................................................................35
7.2 Conditions to Closing.....................................................35
7.2.1 Opinion of Counsel to the Company.........................................35
7.2.2 No Actions................................................................35
7.2.3 DOE Action................................................................35
7.2.4 NASDAQ Listing............................................................36
7.2.5 Completion of the Offer...................................................36
7.2.6 Company Agreements........................................................36
7.2.7 Consents..................................................................36
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO FUND
AND TO CLOSE............................................................36
8.1 Conditions to Funding.....................................................36
8.1.1 Representations and Covenants.............................................36
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8.1.2 No Actions................................................................36
8.1.3 Stockholder Approval......................................................37
8.1.4 Consents..................................................................37
8.1.5 DOE Action................................................................37
8.2 Conditions to Closing.....................................................37
8.2.1 No Actions................................................................37
8.2.2 DOE Action................................................................37
8.2.3 Completion of the Offer...................................................37
8.2.4 Consents..................................................................37
8.2.5 Participation by all Purchasers...........................................38
ARTICLE 9 REGISTRATION RIGHTS; PREEMPTIVE RIGHTS; OTHER AGREEMENTS OF THE COMPANY...38
9.1 Registration Rights.......................................................38
9.2 Other Registration Rights.................................................38
9.3 Preemptive Rights.........................................................38
9.4 Rule 144..................................................................39
9.5 Availability of Common Stock..............................................39
9.6 No Rights Plan............................................................39
9.7 Regular Quarterly Dividends...............................................39
ARTICLE 10 TERMINATION OF AGREEMENT..................................................40
10.1 Termination...............................................................40
10.2 Survival after Termination................................................41
10.3 Termination Fee...........................................................42
ARTICLE 11 INDEMNIFICATION...........................................................42
11.1 Indemnification...........................................................42
11.2 Terms of Indemnification..................................................43
ARTICLE 12 MISCELLANEOUS.............................................................43
12.1 Survival..................................................................43
12.2 Fees and Expenses.........................................................44
12.3 Notices...................................................................44
12.4 Successors and Assigns....................................................45
12.5 Amendment and Waiver......................................................46
12.6 Counterparts..............................................................46
12.7 Headings..................................................................46
12.8 Governing Law; Exclusive Jurisdiction.....................................46
12.9 Severability..............................................................46
12.10 Entire Agreement..........................................................47
12.11 Further Assurances........................................................47
12.12 Public Announcements......................................................47
12.13 Specific Performance......................................................47
12.14 Subsidiaries..............................................................47
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EXHIBIT A Allocation Notice
EXHIBIT B Form of Articles of Amendment
EXHIBIT C Form of Articles Supplementary
EXHIBIT D Form of Escrow Agreement
EXHIBIT E Form of Resolution
EXHIBIT F Composition of the Board of Directors and Management of the
Company
EXHIBIT G Conditions to the Offer
EXHIBIT H Form of Xxxxx & Xxxxxxx Opinion
EXHIBIT I Form of Registration Rights Agreement
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PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT, dated as of November 28, 2000 (as
the same may be amended, supplemented or modified in accordance with the terms
hereof, this "Agreement"), by and among Xxxxxxx Education, Inc., a Maryland
corporation (the "Company"), and New Mountain Partners, L.P. and DB Capital
Investors, L.P. (the "Purchasers").
WHEREAS, the Company proposes to issue and sell to the Purchasers, and
the Purchasers propose to buy, for an aggregate purchase price of $150.0
million, 5,769,231 shares of Series A Convertible Preferred Stock, par value
$.01 per share (the "Series A Preferred Stock");
WHEREAS, it is a condition to the willingness of the Purchasers to
execute and deliver this Agreement that the Company, the Purchasers and certain
stockholders of the Company execute and deliver the Support and Option Agreement
(as defined below);
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms shall have the meanings set
forth below:
"Accrediting Body" means any entity or organization, whether
governmental, government-chartered, private or quasi-private, which engages in
the granting or withholding of accreditation of private post-secondary schools
or of educational programs provided by such schools in accordance with standards
and requirements relating to the performance, operations, financial condition or
academic standards of such schools including, without limitation, Middle States.
"Acquisition Proposal" has the meaning assigned to such term in Section
5.2.
"Actions" means actions, causes of action, suits, claims, complaints,
demands, litigations or legal, administrative or arbitral proceedings.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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"Agreement" has the meaning assigned to such term in the Preamble.
"Allocation Notice" means a notice in writing of the names in which to
register the Series A Preferred Stock to be purchased at the Closing (which
shall be the names of one or more of the Purchasers or their nominees) and the
number of shares of Series A Preferred Stock to be purchased by each Purchaser
or such nominee. The Allocation Notice as of the date hereof is attached hereto
as Exhibit A, provided that such Allocation Notice may be revised pursuant to
Section 2.3(c).
"Alternative Transaction Notice" has the meaning assigned to such term
in Section 10.1(a)(iv).
"Antitakeover Laws" has the meaning assigned to such term in Section
3.24(b).
"Application" has the meaning assigned to such term in Section 5.3(b).
"Articles of Amendment" means the Articles of Amendment to the Charter
of the Company, in the form attached hereto as Exhibit B, which shall, among
other things, increase the number of authorized shares of Preferred Stock to
8,000,000 shares, shall permit the board to increase the authorized number of
shares of Common Stock to ensure that there are a sufficient number of shares of
Common Stock outstanding to allow for the conversion of the Series A Preferred
Stock, and shall implement the preemptive rights described in Section 9.3.
"Articles Supplementary" means the Articles Supplementary classifying
and designating the Series A Preferred Stock, substantially in the form attached
hereto as Exhibit C.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee thereof.
"Board Recommendation" has the meaning assigned to such term in Section
6.1(b).
"Business Day" means any day other than (i) a Saturday or Sunday or (ii)
a day on which banking institutions in New York City are authorized or obligated
by law or executive order to remain closed.
"Bylaws" means the bylaws of the Company, as the same may have been
amended and in effect as of the Closing Date.
"Change in the Board Recommendation" has the meaning assigned to such
term in Section 6.1(b).
"Charter" means the charter of the Company, as the same may have been
amended and in effect as of the Closing Date.
"Claims" means losses, claims, damages or liabilities, joint or several,
Actions or proceedings (whether commenced or threatened).
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"Closing" has the meaning assigned to such term in Section 2.3(b).
"Closing Amount" has the meaning assigned to such term in Section
2.3(c).
"Closing Date" has the meaning assigned to such term in Section 2.3(b).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the Common Stock, par value $0.01 per share, of the
Company.
"Company" has the meaning assigned to such term in the Preamble.
"Company Agreements" has the meaning assigned to such term in Section
3.1.
"Company Benefit Plans" means all material employee benefit plans
providing benefits to any current or former employee or director of the Company
or any of its Subsidiaries or any beneficiary or dependent thereof that are
sponsored or maintained by the Company or any of its Subsidiaries or to which
the Company or any of its Subsidiaries contributes or is obligated to
contribute, including without limitation all material employee welfare benefit
plans within the meaning of Section 3(1) of ERISA, all material employee pension
benefit plans within the meaning of Section 3(2) of ERISA, and all material
bonus, incentive, deferred compensation, vacation, stock purchase, stock option,
severance and fringe benefit plans.
"Company Funds" has the meaning assigned to such term in Section 2.3(a).
"Company Options" has the meaning assigned to such term in Section 3.6.
"Confidentiality Agreement" means the confidentiality agreement dated
February 15, 2000, between New Mountain Capital and Xxxx Xxxxx Xxxx Xxxxxx, Inc.
on behalf of Xxxxxxx Education, Inc.
"Contemplated Transactions" means the transactions contemplated by this
Agreement and the Exhibits hereto, including without limitation the issuance,
purchase and sale of the Series A Preferred Stock, the adoption of the Articles
of Amendment, and the Offer.
"Contractual Obligation" means, as to any Person, any agreement,
undertaking, contract, indenture, mortgage, deed of trust, credit agreement,
note, evidence of indebtedness or other instrument, written or otherwise, to
which such Person is a party or by which it or any of its property is bound.
"Conversion Shares" has the meaning assigned to such term in Section
4.5(c).
"Decrees" has the meaning assigned to such term in Section 3.10(a).
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"DOE" means the United States Department of Education and any successor
agency administering Financial Assistance programs under Title IV.
"DOE Approval Notice" means a program participation agreement, both
issued and executed by the DOE, in conjunction with an Eligibility and
Certification Approval Report (but not including a temporary provisional program
participation agreement), that does not contain any condition that constitutes
or could result in a Material Adverse Effect.
"Education Law" means any Federal, state, municipal, foreign or other
law, regulation, order, or Accrediting Body standard or other requirement
applicable thereto, including without limitation the provisions of Title IV and
any regulations implementing or relating to Title IV, and any law, regulation,
order, Accrediting Body standard or requirement related to or administered by
any Educational Agency.
"Educational Agency" means any Person, entity or organization, whether
governmental, government chartered, private, or quasi-private, that engages in
granting or withholding Educational Approvals for or otherwise regulates private
post-secondary schools, their agents, or employees in accordance with standards
relating to the performance, operation, financial condition, or academic
standards of such schools, and the provision of Financial Assistance by and to
such schools or their students, including, without limitation, the DOE, the D.C.
Education Licensure Commission, the Virginia State Council of Higher Education,
the Maryland Higher Education Commission, any other state authorizing or
licensing agencies, Middle States, any other Accrediting Body, the U.S.
Department of Veterans Affairs, the U.S. Immigration and Naturalization Service,
American Student Assistance Corporation, USA Group, Educational Credit
Management Corporation, Great Lakes Higher Education Corporation, and any other
student loan guaranty agency that has guaranteed loans for students at the
University.
"Educational Approval" means any license, permit, authorization,
certification, agreement, accreditation, or similar approval material to the
operations of the Company or the University issued by any Educational Agency to
the Company, any of its Subsidiaries, or the University.
"ELP" has the meaning assigned to such term in Section 3.14.
"Environmental Claim" means any claim, action, cause of action,
investigation of which the Company or any of its Subsidiaries are aware, or
notice by any Person to the Company or any of its Subsidiaries alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the Company or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all Federal, state, local, and foreign
statute, law, regulation, ordinance, rule, judgment, order, decree or other
governmental requirement or restriction relating to pollution or protection of
human health or the environment (including,
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without limitation, ambient air, surface water, ground water, land surface or
subsurface strata and natural resources), including, without limitation, Laws
relating to emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder from time
to time.
"Escrow Agent" has the meaning assigned to such term in the definition
of Escrow Agreement.
"Escrow Agreement" means an escrow agreement substantially in the form
of Exhibit D hereto to be entered into among the parties and a financial
institution reasonably acceptable to the parties (in such capacity, the "Escrow
Agent") on or prior to the Escrow Date with such additional changes as the
Escrow Agent may reasonably request.
"Escrow Date" has the meaning assigned to such term in Section 2.3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Existing Plans" has the meaning assigned to such term in Section 3.6.
"Financial Assistance" shall mean any form of student financial
assistance, grants or loans, including without limitation Title IV Program
funding.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision of any thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government or any international regulatory body
having or asserting jurisdiction over a Person, its business or its properties.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations of the Federal Trade Commission
thereunder.
"Information Statement" has the meaning assigned to such term in Section
6.1(a).
"Intellectual Property" has the meaning assigned to such term in Section
3.20.
"Leases" has the meaning assigned to such term in Section 3.15.
"Licenses" has the meaning assigned to such term in Section 3.10(b).
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"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), voting or other restriction,
registration or other requirement, preemptive right or other security interest
of any kind or nature whatsoever.
"Material Adverse Effect" means any material adverse change in or
affecting (i) the business, properties, assets, Educational Approvals,
liabilities, operations, results of operations, management, condition, financial
or otherwise, or prospects of the Company, its Subsidiaries, or the University,
or (ii) the ability of the Company or any of the Company's Subsidiaries or the
University to consummate the Contemplated Transactions other than any effect
resulting from changes in general economic conditions or the public announcement
of this Agreement and the transactions contemplated hereby.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and petroleum products (or any by-product or constituent thereof),
asbestos or asbestos-containing materials, lead or lead-based paints or
materials, PCBs, or radon.
"Maximum Number" has the meaning assigned to such term in Section 6.2.
"MGCL" means the Maryland General Corporation Law, as amended.
"Middle States" means the Middle States Commission on Higher Education.
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ" means The Nasdaq Stock Market Inc.'s National Market System.
"NYSE" means the New York Stock Exchange, Inc.
"Offer" has the meaning assigned to such term in Section 6.2.
"Offer Conditions" has the meaning assigned to such term in Section 6.2.
"Offer Consideration" has the meaning assigned to such term in Section
6.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, company,
limited liability company, trust, unincorporated association, Governmental
Authority, or any other entity of whatever nature.
"Preferred Stock" has the meaning assigned to such term in Section 3.6.
"Proposed Securities" has the meaning assigned to such term in Section
9.3(a)(i).
"Prospectus" means the prospectus included in any Registration Statement
(including without limitation a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus
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supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Purchase Price" has the meaning assigned to such term in Section 2.1.
"Purchasers" has the meaning assigned to such term in the Preamble.
"Purchasers' Agent" shall be New Mountain Partners, L.P.
"Registrable Securities" means the Series A Preferred Stock, the Common
Stock and other securities, if any, issuable upon conversion of the Series A
Preferred Stock, the Common Stock purchased by the Purchasers, if any, pursuant
to the Support and Option Agreement upon exercise of the option described
therein, and any securities issued pursuant to Purchasers' rights under Section
9.3, in each case, until any such security is effectively registered under the
Securities Act and disposed of in accordance with the Registration Statement
covering it, or is distributed to the public by the holder thereof pursuant to
Rule 144, or with respect to any Covered Holder (as defined in the Registration
Rights Agreement) owning less than $10 million in fair market value of
Registrable Securities, all the Registrable Securities held by that Covered
Holder are eligible for sale pursuant to Rule 144 without holding period or
volume limitations.
"Registration Rights Agreement" shall have the meaning assigned to such
term in Section 9.1.
"Registration Statement" means any registration statement of the Company
under the Securities Act that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Required Vote" has the meaning assigned to such term in Section
3.24(c).
"Requirement of Law" means, as to any Person, the charter and bylaws or
other organizational or governing documents of such Person, and any law
(including, without limitation, laws related to Taxes, Environmental Laws and
Educational Laws), treaty, rule, regulation, ordinance, qualification, standard,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority or Educational Agency or of the NYSE or NASD or any
national securities exchange or automated quotation system on which the Common
Stock is listed or admitted to trading, in each case applicable to, or binding
upon, such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions contemplated
hereby.
"Return" has the meaning assigned to such term in Section 5.1(ix).
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"Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission.
"S University" means Xxxxxxx University, Inc., a Maryland corporation.
"SEC Reports" means all proxy statements, registration statements,
reports and other documents filed or required to be filed by the Company or any
of its Subsidiaries with the Commission pursuant to the Securities Act or the
Exchange Act since July 1, 1996.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Series A Preferred Stock" has the meaning assigned to such term in the
Recitals hereto.
"Shares" mean the shares of Common Stock.
"Significant Employment Agreement" means a contract, offer letter or
agreement of the Company or any of its Subsidiaries with or addressed to any
individual who is rendering or has rendered services thereto as an employee or
consultant, pursuant to which the Company or any of its Subsidiaries has any
actual or contingent liability or obligation to provide compensation and/or
benefits in consideration for past, present or future services, but only if such
liabilities or obligations could exceed $75,000 per year or $150,000 in the
aggregate.
"Stockholders Meeting" has the meaning assigned to such term in Section
6.1(b).
"Subsidiary" of any specified Person means any other Person more than
50% of the outstanding voting securities of which is owned or controlled,
directly or indirectly, by such specified Person or by one or more other
Subsidiaries of such specified Person, or by such specified Person and one or
more other Subsidiaries of such specified Person; provided, however, that, when
used with respect to the Company, Subsidiary shall mean (without limitation)
either of S University and ELP. For the purposes of this definition, "voting
securities" means securities which ordinarily have voting power for the election
of directors (or other Persons having similar functions), whether at all times
or only so long as no senior class of securities has such voting power by reason
of any contingency, or other ownership interests ordinarily constituting a
majority voting interest.
"Superior Proposal" has the meaning assigned to such term in Section
6.1(b).
"Support and Option Agreement" means the Support and Option Agreement,
dated as of the date hereof, by and among the Company, the stockholders listed
therein and the Purchasers.
"Tax Claim" has the meaning assigned to such term in Section 5.1(ix).
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"Taxes" means all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
"Title IV" means Chapter 28, Subchapter IV of the Higher Education Act
of 1965, as amended, 20 U.S.C. Section 1070, et seq., and any amendments or
successor statutes thereto.
"Title IV Programs" means Federal student financial aid programs
authorized or administered under Title IV.
"University" means Xxxxxxx University, the institution of higher
education owned and operated by the Company through its Subsidiary S University,
and certified as eligible to participate in the Title IV Programs by the DOE,
including its main campus and all its campuses and locations at which it offers
all or any part of an educational program, including without limitation those
that are designated by the DOE as additional locations of the main campus.
ARTICLE 2
PURCHASE AND SALE OF SERIES A PREFERRED STOCK
2.1 Purchase and Sale of Series A Preferred Stock. Subject to the
terms set forth herein and in reliance upon the representations set forth below,
the Company shall issue and sell to the Purchasers severally in accordance with
the Allocation Notice, and the Purchasers shall purchase severally and not
jointly from the Company the Series A Preferred Stock, for an aggregate purchase
price of $150.0 million (the "Purchase Price").
2.2 Articles Supplementary. The Series A Preferred Stock shall have
the powers, rights and other terms set forth in the form of Articles
Supplementary attached hereto as Exhibit C.
2.3 Escrow Arrangements; Closing. (a) On the later of (i) the first
Business Day after receipt of the vote of the Company's stockholders pursuant to
Section 6.1(b) hereof, (ii) the first Business Day after the conditions set
forth in Sections 7.1 and 8.1 (other than those to be satisfied on the Escrow
Date, which shall be satisfied or waived on such date) have been satisfied or
waived by the party entitled to waive such conditions and (iii) such other date
as the parties may agree in writing, (the "Escrow Date"), (A) the parties and
the Escrow Agent shall enter into the Escrow Agreement, (B) the Purchasers shall
(x) deliver to the Escrow Agent by wire transfer in immediately available funds
to an escrow account or accounts designated in writing by the Escrow Agent to
the Purchasers at least two Business Days prior to the Escrow Date, funds in an
amount equal to the Purchase Price, such funds to be held in escrow as set forth
in the Escrow Agreement and (y) make or cause to be made the deliveries set
forth in Section 8.1, and (C) the Company shall (v) deliver and cause its
Subsidiaries to deliver to the Escrow Agent (by wire transfer as set forth
above), subject to Section 2.4, funds in the aggregate amount of $62.5 million
in respect of the repurchase of Common Stock pursuant to the Offer (the "Company
Funds"), such funds to be held in escrow as set forth in the Escrow Agreement,
(w) commence the Offer pursuant to Section 6.2, (x) notify the DOE of the
occurrence of the events described in this Section 2.3(a) and Section 5.4, (y)
file with the Commission a Current Report
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on Form 8-K pursuant to Item 1 of such Form, and (z) make or cause to be made
the deliveries set forth in Section 7.1.
(b) The issuance, sale and purchase of the Series A Preferred Stock
shall take place at a closing (the "Closing") to be held at the offices of
Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at
10:00 A.M., local time, on the Closing Date. The "Closing Date" shall be the
later of (i) the first Business Day after the conditions set forth in Sections
7.2 and 8.2 (other than those to be satisfied on the Closing Date, which shall
be satisfied or waived on such date) have been satisfied or waived by the party
entitled to waive such conditions and (ii) such other date and time as the
parties may agree in writing.
(c) Not less than two Business Days prior to the Closing Date, the
Purchasers shall provide the Escrow Agent and the Company with the Allocation
Notice setting forth the names of any additional Purchasers and the number of
shares of Series A Preferred Stock to be purchased by such additional Purchasers
(which would be a portion of the amount committed to by New Mountain Partners,
L.P. as of the date hereof); provided that in no event shall New Mountain
Partners L.P. and its Affiliates purchase less than 3,076,923 shares of Series A
Preferred Stock at the Closing. Any such additional Purchaser(s) shall enter
into a joinder agreement with the Company and the Purchasers by which it shall
agree to be bound by all of the terms and provisions of this Agreement,
whereupon such additional Purchaser shall be a "Purchaser" for all purposes of
this Agreement; provided, however, that the Company shall have the right to
consent to the identity of any such additional Purchasers, which consent shall
not unreasonably be withheld. At the Closing:
(A) the Escrow Agent will (i) release from escrow and
deliver to the Company by wire transfer of immediately available funds
to an account or accounts designated in writing by the Company to the
Escrow Agent at least two Business Days before the Closing, funds (which
funds shall be used by the Company in accordance with Section 2.4) in an
aggregate amount equal to the sum of the Purchase Price and the Company
Funds (that is, $212.5 million in the aggregate), plus any interest
accrued on the Company Funds from the Escrow Date and (ii) release from
escrow and deliver to the Purchasers by wire transfer of immediately
available funds to an account or accounts designated in writing by the
Purchasers to the Escrow Agent at least two Business Days before the
Closing, any interest accrued on the Purchase Price from the Escrow
Date, in each case (i) and (ii), in accordance with the terms of the
Escrow Agreement;
(B) the Company will (i) issue and deliver to the Persons
specified in the Allocation Notice the number of shares of Series A
Preferred Stock to be purchased by each Purchaser pursuant to the
Allocation Notice, registered in the names specified in the Allocation
Notice, (ii) pay to the designees of the Purchasers to be designated in
writing at least two Business Days before the Closing by wire transfer
of immediately available funds to an account or accounts designated in
writing by the Purchasers to the Company at least two Business Days
before the Closing an amount equal to 1.00% of the aggregate price paid
by the Company to purchase the Shares pursuant to the Offer (the
"Closing Amount") (in the proportion set forth in the Allocation
Notice), (iii) make or cause to be made the deliveries set forth in
Section 7.2, and (iv) accept for payment and pay for Shares validly
tendered in the Offer and not withdrawn; and
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(C) the Company will issue to the Purchasers, in accordance
with the Allocation Notice, and the Purchasers will severally and not
jointly (in accordance with the Allocation Notice) purchase from the
Company, by release of the Purchase Price from escrow as set forth in
clause (A) above, all of the shares of the Series A Preferred Stock.
(d) Subject to Section 10.1(a)(i), if the Closing does not occur by
October 31, 2001 (unless otherwise mutually agreed by the Company and the
Purchasers' Agent), (A) the Escrow Agent shall, on the first Business Day
following such date, release from escrow and deliver (i) to the Company, by wire
transfer in immediately available funds to an account or accounts designated in
writing by the Company to the Escrow Agent at least one Business Days prior to
such delivery the Company Funds, plus any interest accrued thereon from the
Escrow Date and (ii) to the Purchasers, by wire transfer in immediately
available funds to an account or accounts designated in writing by the
Purchasers to the Escrow Agent at least one Business Days prior to such
delivery, funds in an amount equal to the Purchase Price in accordance with the
amounts set forth in the Allocation Notice, plus any interest accrued thereon
from the Escrow Date, in each such case (i) and (ii), in accordance with the
terms of the Escrow Agreement, and (B) the Purchasers shall cause the directors
appointed to the Board of Directors of the Company pursuant to Section 5.4 to
resign their positions as directors and (if applicable) officers of the Company
effective as of such date.
2.4 Use of Proceeds. Any amounts received by the Company in respect
of the Purchase Price and the Company Funds shall be used by the Company solely
to purchase the Shares pursuant to and in accordance with the Offer, and the
Company shall not, without the prior written consent of the Purchasers' Agent,
borrow any moneys or use any funds, from whatever source, to finance the Offer,
provided that of the Company Funds delivered by the Company to the Escrow Agent
pursuant to Section 2.3(a), (i) up to $20.0 million may be funds (other than
borrowed funds) of (or derived from the sale of marketable securities of) the
Company, (ii) up to $41.5 million may be funds (other than borrowed funds) of
(or derived from the sale of marketable securities of) S University, and (iii)
up to $1.0 million may be funds (other than borrowed funds) of (or derived from
the sale of marketable securities of) ELP.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Maryland; (b) has all requisite corporate power and authority to own
and operate its properties, to lease the properties it operates as lessee and to
conduct the business in which it is engaged; and (c) has (or will have, as
applicable) the corporate power and authority to execute, deliver and perform
its obligations under this Agreement, the Support and Option Agreement, the
Registration Rights Agreement, the Articles of Amendment, the Escrow Agreement
and the Articles Supplementary (collectively, the "Company Agreements"). The
Company is duly qualified to do business as a
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foreign corporation in, and is in good standing under the laws of, each
jurisdiction in which the conduct of its business or the nature of the property
owned requires such qualification except where the failure to be so qualified or
in good standing would not reasonably be expected to have a Material Adverse
Effect.
3.2 Subsidiaries. Except as set forth on Schedule 3.2, the Company
has no Subsidiaries and no material interest or investments in any corporation,
partnership, limited liability company, trust or other entity or organization.
Each Subsidiary listed on Schedule 3.2 has been duly organized, is validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite corporate power and authority to own and operate
its properties, to lease the properties it operates as lessee and to conduct the
business in which it is engaged, and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business or
the nature of its properties requires such qualification except where the
failure to be so qualified or in good standing would not reasonably be expected
to have a Material Adverse Effect. Except as disclosed on Schedule 3.2, all of
the issued and outstanding stock (or equivalent interests) of each Subsidiary
set forth on Schedule 3.2 has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company free and clear of any Liens
and there are no rights, options or warrants outstanding or other agreements to
acquire shares of stock (or equivalent interests) of such Subsidiary.
Professional Education, Inc. is an inactive wholly owned subsidiary of the
Company that has no liabilities.
3.3 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of each Company Agreement and the
consummation of the Contemplated Transactions, (a) subject to the satisfaction
of the matters described in Section 3.24(b) and (c), have been duly authorized
by all necessary corporate action of the Company; (b) do not contravene the
terms of the Charter or Bylaws or the organizational documents of its
Subsidiaries; and (c) subject to receipt or satisfaction of the approvals,
consents, exemptions, authorizations or other actions, notices or filings set
forth on Schedule 3.4, and except as may result from any facts or circumstances
relating solely to the Purchasers or their respective Affiliates, do not violate
or result in any breach or contravention of, a default under, or an acceleration
of any obligation under or the creation (with or without notice, lapse of time
or both) of any Lien under, result in the termination or loss of any right or
the imposition of any penalty under any Contractual Obligation of the Company or
its Subsidiaries or by which their respective assets or properties are bound or
any Requirement of Law applicable to the Company or its Subsidiaries or by which
their respective assets or properties are bound except for any of the foregoing
as would not be material to the Company or the Purchasers. No event has occurred
and no condition exists which (upon notice or the passage of time or both) would
constitute, or give rise to: (i) any breach, violation, default, change of
control or right to cause the Company to repurchase or redeem under, (ii) any
Lien on the assets of the Company or any of its Subsidiaries under, (iii) any
termination right of any party, or any loss of any right or imposition of any
penalty, under or (iv) any change or acceleration in the rights or obligations
of any party under, any Contractual Obligation of the Company or its
Subsidiaries (or by which their respective assets or properties are bound) or
the Charter or Bylaws or the organizational documents of the Company's
Subsidiaries except for any of the foregoing as would not be material to the
Company or the Purchasers.
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3.4 Governmental Authorization; Third Party Consents. Except as set
forth on Schedule 3.4, no approval, consent, exemption, authorization or other
action by, or notice to, or filing with, any Governmental Authority, Educational
Agency, or any other Person in respect of any Requirement of Law, Contractual
Obligation or otherwise, and no lapse of a waiting period under a Requirement of
Law, is necessary or required in connection with the execution, delivery or
performance (including, without limitation, the issuance, sale and delivery of
the Series A Preferred Stock) by the Company, or enforcement against the
Company, of the Company Agreements or the consummation of the Contemplated
Transactions except for any of the foregoing as would not be material to the
Company or the Purchasers.
3.5 Binding Effect. Each of the Company Agreements has been (or
will, as of the Closing, be, as applicable) duly authorized, executed and
delivered by the Company and constitutes (or will, as of the Closing,
constitute, as applicable) the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
3.6 Capitalization of the Company and its Subsidiaries. The
authorized stock of the Company consists of (i) 20,000,000 shares of Common
Stock and (ii) 5,000,000 shares of preferred stock, par value $0.01, of the
Company (the "Preferred Stock"). As of the date hereof, (a) no shares of
Preferred Stock are issued or outstanding, (b) 15,299,516 shares of Common Stock
were issued and outstanding, and (c) 219,101 shares of Common Stock were
reserved for or subject to issuance upon the exercise of outstanding Company
Options. Schedule 3.6 sets forth a true and correct list of all outstanding
options or warrants to purchase shares of any class or series of stock of the
Company (collectively, the "Company Options") and a true and correct list of
each of the Company's stock option, incentive or other plans pursuant to which
options or warrants to purchase stock of the Company may be issued
(collectively, the "Existing Plans"). Except (1) as set forth in the second
sentence of this Section 3.6, (2) for shares of Common Stock issued pursuant to
the exercise of outstanding Company Options, and (3) for shares of Common Stock
issuable upon conversion of the Series A Preferred Stock, on the Closing Date
there will be no shares of Common Stock or any other equity security of the
Company issued or outstanding and no shares of Common Stock or any other equity
security of the Company or any of its Subsidiaries issuable upon conversion or
exchange of any security of the Company or any of its Subsidiaries nor will
there be any rights, options or warrants outstanding or other agreements to
acquire shares of stock of the Company or any of its Subsidiaries nor will the
Company or any of its Subsidiaries be contractually obligated to issue any
shares of stock or to purchase, redeem or otherwise acquire any of its
outstanding shares of stock. Neither the Company nor any of its Subsidiaries has
created any "phantom stock," stock appreciation rights or other similar rights
the value of which is related to or based upon the price or value of the Common
Stock. Neither the Company nor any of its Subsidiaries has outstanding debt or
debt instruments providing for voting rights with respect to the Company or such
Subsidiary to the holders thereof. No stockholder of the Company or any of its
Subsidiaries or other Person is entitled to any preemptive or similar rights to
subscribe for shares of stock of the Company or any of its Subsidiaries. All of
the issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid, and nonassessable. Except as set forth on Schedule 3.6
hereto, neither the Company nor any of its Subsidiaries has granted to any
Person the right to demand or request that the Company or such Subsidiary effect
a registration under the Securities Act of any securities held by such Person or
to include any securities of such Person in any such registration by the Company
or such Subsidiary.
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3.7 SEC Filings; Financial Statements. (a) The Company has timely
filed all SEC Reports. Each SEC Report complied in all material respects with
the applicable requirements of the Securities Act or the Exchange Act, as
applicable, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements in the SEC Reports, in light of the circumstances under
which they were made, not misleading. Each of the Company's financial statements
(including, in each case, any related notes) contained in the SEC Reports
complied as to form in all material respects with applicable published rules and
regulations of the Commission with respect thereto, was prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements) and fairly
presented the financial position of the Company and its Subsidiaries as at the
respective dates and the results of operations and cash flows for the periods
indicated, except that unaudited financial statements were subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount or effect.
(b) Each loan, grant or other Financial Assistance in respect of
which any receivable is included in "student tuition receivable," "student loans
receivable," or other entries in the financial statements of the Company or any
Subsidiary (i) was originated, certified, or placed by the Company or such
Subsidiary in the ordinary course of business and is being administered by the
Company, one or more of its Subsidiaries, the servicer with whom the Company or
such Subsidiaries have contracted to perform such services, the private lender,
or guaranty agency, as the case may be, in accordance with applicable policies
and requirements of the Company, its Subsidiaries, and Educational Agencies,
(ii) was created in compliance with any applicable Requirement of Law, and (iii)
all material consents, approvals, authorization or other orders of or
registrations or filings with any Governmental Authority or Educational Agency
relating thereto have been duly obtained, effected or given and are in full
force and effect as of the date hereof.
3.8 Absence of Certain Developments. Except as set forth on Schedule
3.8, since September 30, 2000, except as described in the SEC Reports filed with
the Commission prior to the date hereof or as otherwise publicly disclosed by
press release prior to the date hereof, (a) each of the Company, its
Subsidiaries and the University has operated in the ordinary course, (b) there
has been no occurrence or event of the type set forth in Section 5.1, and (c)
there has occurred no fact, event, circumstance or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect.
3.9 No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any material liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, except (a) liabilities or obligations
disclosed or reserved against in the SEC Reports filed prior to the date of this
Agreement or (b) liabilities or obligations which arose after the last date of
any such SEC Report, in the ordinary course of business consistent with past
practice that, individually or in the aggregate, have not had, and could not
reasonably be expected to have, a Material Adverse Effect or (c) liabilities
incurred in connection with or as a result of the transactions contemplated by
this Agreement.
3.10 Compliance with Laws. (a) General. Except as set forth in the
SEC Reports filed with the Commission prior to the date hereof or as set forth
in Schedule 3.10(a),
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neither the Company or any of its Subsidiaries nor the University in the conduct
of its business, is, or since July 1, 1997, has been, in violation of any
Requirement of Law, or any judgments, orders, rulings, injunctions or decrees of
Governmental Authority or Educational Agency (collectively, "Decrees"),
applicable thereto or to the employees conducting such business except for
violations that, individually or in the aggregate, do not have, and would not
reasonably be expected to have, a Material Adverse Effect or prevent or impair
the ability of the Company to consummate the Contemplated Transactions.
(b) Licenses. The Company, its Subsidiaries and the University, as
applicable, have obtained or made, as the case may be, all material permits,
licenses, authorizations, orders and approvals, and all material filings,
applications and registrations with, all Governmental Authorities ("Licenses"),
other than the Educational Approvals, that are required to conduct the
businesses of the Company, its Subsidiaries, and the University in the manner
and to the full extent as presently conducted. None of such Licenses is subject
to any restriction or condition that limits or would reasonably be expected to
limit in any material way the full operation of the Company, its Subsidiaries,
or the University as presently operated. Each of the Licenses has been duly
obtained, is valid and in full force and effect, and is not subject to any
pending or threatened proceeding to limit, condition, suspend, cancel, suspend,
or declare such License invalid. Neither the Company or any of its Subsidiaries
nor the University is in default in any material respect with respect to any of
the Licenses, and to the knowledge of the Company no event has occurred which
constitutes, or with due notice or lapse of time or both may constitute, a
material default by the Company, any such Subsidiary, or the University under
any License.
(c) Educational Approvals. (i) The Company, its Subsidiaries and the
University each have obtained, as necessary, all of the Educational Approvals
required from any Governmental Authority or Educational Agency for the lawful
conduct of the businesses of the Company, its Subsidiaries, and the University
in the manner and to the full extent presently conducted at every location where
the University offers all or part of an educational program, including without
limitation the eligibility of the University's students for Financial Assistance
and the ability of the University's employees or agents to recruit students in
any state where it engages employees or agents to recruit students.
(ii) Except as set forth in Schedule 3.10(c)(ii), none of such
Educational Approvals is subject to any restriction or condition that limits or
would reasonably be expected to limit in any material way the full operation of
the Company, its Subsidiaries, or the University as presently operated. Each of
the Educational Approvals has been duly obtained, is valid and in full force and
effect, and is not subject to any pending or, to the knowledge of the Company,
threatened proceeding to limit, condition, cancel, suspend, or declare such
Educational Approval invalid. Neither the Company or any of its Subsidiaries nor
the University is in default in any material respect with respect to any of the
Educational Approvals, and to the knowledge of the Company no event has occurred
which constitutes, or with due notice or lapse of time or both may constitute, a
material default by the Company, any such Subsidiary, or the University under
any Educational Approval. Neither the Company or any of its Subsidiaries nor the
University has received notice that any Educational Approval will not be renewed
and to the knowledge of the Company there is no basis for non-renewal.
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(iii) Each of the Company, its Subsidiaries and the University has
received and maintained without interruption all Educational Approvals material
to the University's operations and receipt of all Financial Assistance since
July 1, 1997.
(iv) To the knowledge of the Company, there exists no fact,
circumstance, act or omission with respect to the present or prospective
business, operations or financial condition of the Company, any of its
Subsidiaries or the University that could serve as a basis to revoke, deny,
withdraw, terminate, suspend, condition or limit (A) any Educational Approval
for the Company, any such Subsidiary or the University or (B) any consents or
approvals of Educational Agencies that are necessary to permit the consummation
of the Contemplated Transactions without forfeiture or material impairment of
any Educational Approval, it being agreed that a DOE approval will not be deemed
materially impaired if it is temporary or provisional pending receipt of a DOE
Approval Notice.
(v) Since July 1, 1997, neither the Company or any of its
Subsidiaries nor the University has received any written, or to the knowledge of
the Company, other notice with respect to any alleged violation of (A) any
Education Law with respect to the University, including with respect to
recruitment, sales and marketing activities, or (B) the terms of any program
participation agreement to which the Company, any such Subsidiary, or the
University is or was a party, the failure to comply with which Education Law or
program participation agreement could cause, individually or in the aggregate, a
Material Adverse Effect.
(vi) No Person who exercises "substantial control" (as such term is
described in 34 C.F.R. Section 600.30) over the Company, any of its Subsidiaries
or the University or any member or members of that Person's family, alone or
together, (A) owes a liability for a violation of a Title IV Program requirement
and cannot demonstrate that the liability is being repaid in accordance with an
agreement with the DOE or (B) exercises or, since July 1, 1997 has exercised,
"substantial control" over another post-secondary institution, other than the
University, or over a third-party servicer (as such term is defined in 34 C.F.R.
668.2) that owes a liability for a violation of a Title IV Program requirement
and cannot demonstrate that the liability is being repaid in accordance with an
agreement with the DOE. Since July 1, 1997, none of the Company, its
Subsidiaries and the University and their respective chief executive officers
have been found guilty of a crime involving the acquisition, use, or expenditure
of funds under the Title IV Programs or has been judicially determined to have
committed fraud involving funds under the Title IV Programs. Neither the Company
or any of its Subsidiaries or the University, nor any of their respective
Affiliates that has the power, by contract or ownership interest, to direct or
cause the direction of the management or policies of the University, has ever
filed for relief in bankruptcy or had entered against it an order for relief in
bankruptcy. Since July 1, 1997, the University has not knowingly employed in a
capacity that involves the administration of funds under the Title IV Programs
or the receipt of funds under those programs, any individual who has been
convicted of, or has pled nolo contendere or guilty to, a crime involving the
acquisition, use or expenditure of federal, state, or local government funds, or
has been administratively or judicially determined to have committed fraud or
any other material violation of law involving federal, state, or local
government funds. Since July 1, 1997, the University has not knowingly
contracted with an institution or third party servicer (as such term is defined
in 34 C.F.R. 668.2) that has been terminated under the Title IV Programs for a
reason involving the acquisition, use, or expenditure of federal, state or local
government funds,
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or that has been administratively or judicially determined to have committed
fraud or any other material violation of law involving federal, state or local
government funds. Since July 1, 1997, the University has not knowingly
contracted with or employed any individual, agency, or organization that has
been, or whose officers or employees have been, convicted of, or pled nolo
contendere or guilty to, a crime involving the acquisition, use, or expenditure
of federal, state, or local government funds, or that has been administratively
or judicially determined to have committed fraud or any other material violation
of law involving federal, state, or local government funds.
(vii) Other than the University, no post-secondary institution
(whether or not participating in the Title IV Programs) or any third-party
servicer (as such term is defined in 34 C.F.R. Section 668.2) is, or, since July
1, 1997 has been, administered commonly, jointly or in conjunction with the
Company, any Subsidiary of the Company or the University. No other institution
or organization of any sort provides, or, since July 1, 1997 has provided, any
educational instruction on behalf of the University. Neither the Company or any
of its Subsidiaries nor the University provides, or since July 1, 1997, has
provided, any educational instruction on behalf of any other institution or
organization of any sort.
(viii) Except as set forth in Schedule 3.10(c)(viii), the University
does not contract with a third-party servicer (as such term is defined in 34
C.F.R. Section 668.2) to provide any services in connection with the processing
or administration of the University's administration of any form of Financial
Assistance.
(d) Financial Assistance Programs. (i) The University has complied
in all material respects with the limitation on the receipt of Title IV Program
funding under the "85/15 Rule" codified at 34 C.F.R. Section 600.5(a)(8) and (d)
for the fiscal year ending on December 31, 1997, and under the "90/10 Rule"
codified at 34 C.F.R. Section 600.5(a)(8) and (d) (as amended by section 101(a)
of Public Law No. 105-244 (Higher Education Amendments of 1998)) for the two
fiscal years ending on December 31, 1998 and 1999.
(ii) The University satisfied in all material respects the standards
of financial responsibility in accordance with 34 C.F.R. Section 668.171-175, as
applicable, for the fiscal years ending December 31, 1997, 1998 and 1999.
(iii) Since July 1, 1997, neither the Company or any of its
Subsidiaries nor the University has received notice from the DOE or any other
Educational Agency that the Company, any such Subsidiary, or the University
lacked financial responsibility or administrative capability for any period
under the Education Laws or standards in effect in such period or, except as set
forth in Schedule 3.10(c)(ii), was required to post a letter of credit or other
form of surety for any reason, including any request for a letter of credit
based on late refunds pursuant to 34 C.F.R. Section 668.173, 34 C.F.R. Section
668.15 or any predecessor regulation.
(iv) Schedule 3.10(d)(iv) includes a correct and complete list of the
University's official, published cohort default rates for Federal Family
Education Loan Program loans or Federal Direct Loan Program loans for the
federal fiscal years ending September 30, 1996, 1997 and 1998.
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(v) Since July 1, 1997, (A) none of the Company, its Subsidiaries
and the University has paid any commission, bonus, or other incentive payment
based directly or indirectly on success in securing enrollments or financial aid
to any Person engaged in any student recruiting or admission activities or in
making decisions regarding the awarding of Financial Assistance and (B) each of
the Company, its Subsidiaries and the University has complied in all material
respects with all Education Laws concerning the provision of commissions,
bonuses, or other incentive payments to admissions representatives, agents, and
other Persons engaged in any student recruiting or admission activities or in
making decisions regarding the awarding of Title IV Program funds for or on
behalf of the Company or the University.
(e) Since July 1, 1997, the University has at all times complied
with the limitation in 34 C.F.R. Section 600.7 on the number of courses that an
institution may offer by correspondence or telecommunications and the number of
students who may enroll in such courses.
3.11 Litigation. There is no legal action, suit, arbitration or other
legal, administrative or other governmental investigation, inquiry or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or relating to any of the Company Agreements
or the Contemplated Transactions which, if determined adversely to the Company
or any of its Subsidiaries, would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect or would reasonably be expected to
prohibit or materially delay the Closing. The Company is not subject to any
Decree that, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect.
3.12 Material Contracts. All of the Company's Contractual Obligations
that are required to be described in the SEC Reports or to be filed as exhibits
thereto are described in the SEC Reports or filed as exhibits thereto, as so
required. Neither the Company nor any of its Subsidiaries nor (to the knowledge
of the Company) any other party is in breach in any material respect of, or in
default in any material respect under, any of its Contractual Obligations or
organizational documents.
3.13 Environmental. The Company and its Subsidiaries are in
compliance with all Environmental Laws, except where such non-compliance could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
notice that alleges that the Company or its Subsidiaries is not in compliance
with any Environmental Laws, and to the knowledge of the Company, there are no
circumstances that may prevent or interfere with such compliance in the future.
There is no Environmental Claim pending, or to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries with respect to the
operations or business of the Company or its Subsidiaries, or against any Person
whose liability for any Environmental Claim the Company or its Subsidiaries has
retained or assumed either contractually or by operation of law, and to the
Company's knowledge, there are no circumstances that could form the basis of any
such Environmental Claim in the future.
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3.14 Taxes. Except as set forth on Schedule 3.14 hereto, all Returns
required to be filed by the Company and each of its Subsidiaries have been filed
and all such Returns are true, complete, and correct in all material respects.
All Taxes that are due or claimed to be due from the Company and each of its
Subsidiaries have been paid, other than those (i) currently payable without
penalty or interest or (ii) being contested in good faith and by appropriate
proceedings and for which, in the case of both clauses (i) and (ii), adequate
reserves have been established on the books and records of the Company and its
subsidiaries in accordance with GAAP. There are no proposed Tax assessments
against the Company or any of its Subsidiaries. To the knowledge of the Company,
the accruals and reserves on the books and records of the Company and its
Subsidiaries in respect of any Tax liability for any taxable period not finally
determined are adequate to meet any assessments of Tax for any such period. The
Company is not currently a United States real property holding corporation as
defined in Section 897(c)(2) of the Code. The Company will use its best efforts
to not become a United States real property holding corporation in the future.
Each of S University and Education Loan Processing, Inc. ("ELP") duly and
properly filed an effective election to be an S corporation under Section 1362
of the Code and the rules and regulations thereunder, effective from the date of
its formation, and such election was in effect, and each of S University and ELP
was an S corporation, continuously during the period from such date up to and
including July 25, 1996, in the case of S University and July 31, 1996, in the
case of ELP.
3.15 Title to Property and Assets; Leases. Each of the Company and
its Subsidiaries has good and marketable title, free and clear of all Liens to
all of its assets, including all real property and interests in real property
owned in fee simple by the Company and its Subsidiaries and all real property
leased, subleased or otherwise occupied by the Company and its Subsidiaries,
except (i) Liens for taxes not yet due and payable and (ii) Liens that do not
interfere with the use (or contemplated use), utility or value of such assets in
any material respect. All leases to which the Company or any of its Subsidiaries
is a party (collectively, the "Leases") are valid and binding and in full force
and effect, and no material default (or event which, with the giving of notice
or passage of time, or both, would constitute a material default) by the Company
or any of its Subsidiaries, or to the knowledge of the Company by any other
party thereto, has occurred or is continuing thereunder. The Company and its
Subsidiaries enjoy a peaceful and undisturbed possession under all such Leases
to which any of them is a party as lessee with such exceptions as do not
materially interfere with the use made by the Company or such Subsidiary. The
Company or its applicable Subsidiary have exercised within the time prescribed
in each Lease any option provided therein to extend or renew the term thereof.
With respect to each Lease either (a) such Lease is not subject or subordinate
to any mortgage, deed of trust or other lien which has priority over such Lease,
or (b) the holder of any such lien has entered into a valid, binding and
enforceable nondisturbance agreement in favor of the lessee pursuant to which
the Lease cannot be extinguished or terminated by reason of any foreclosure or
other acquisition of title by such holder if the lessee thereunder is not in
default under the Lease as of the date of acquisition of title. As used herein,
the term "Lease" shall also include subleases or other occupancy agreements, the
term "lessee" shall also include any sublessee or other occupant.
3.16 Compliance with ERISA. The Company has made available to the
Purchasers true and complete copies of each Significant Employment Agreement and
each Company Benefit Plan, as well as certain related documents, including, but
not limited to, (x) the
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actuarial report for such Company Benefit Plan (if applicable) for each of the
last two years, and (y) the most recent determination letter from the IRS (if
applicable) for such Company Benefit Plan. Except as would not reasonably be
expected, either individually in the aggregate, to have a Material Adverse
Effect: (A) each of the Company Benefit Plans has been operated and administered
in all material respects in compliance with its terms and all applicable laws;
(B) each of the Company Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified; and (C) to the knowledge
of Company there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Company
Benefit Plans or any trusts related thereto or pursuant to any Significant
Employment Agreement. None of the Company Benefit Plans is subject to Title IV
of ERISA. No material liability under Title IV of ERISA has been incurred by
Company, its subsidiaries or any entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the Company or any of its subsidiaries, or
that is a member of the same "controlled group" as the Company or any of its
subsidiaries pursuant to Section 4001(a)(14) of ERISA that has not been
satisfied in full. Except as disclosed in the SEC Reports, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in conjunction with any other event
such as termination of employment) (i) result in, or cause any increase or
acceleration of, any material payment, benefit or award under any Company
Benefit Plan or Significant Employment Agreement to any director or employee of
Company or any of its Subsidiaries, (ii) give rise to any obligation to fund for
any such payments, awards or benefits to any material extent, or (iii) give rise
to any limitation on the ability of the Company or any of its Subsidiaries to
amend or terminate any Company Benefit Plan. Neither the Company nor any of its
Subsidiaries has any liability to provide any post-retirement or
post-termination life, health, medical or other welfare benefits to any current
or former employees or beneficiaries or dependents thereof, except for health
continuation coverage as required by Section 4980B of the Code or Part 6 of
Title I of ERISA and at no expense to the Company and its Subsidiaries. Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement. The committee of the Board of Directors authorized to administer the
Company's stock option and employee stock purchase plans has adopted the
resolution attached hereto as Exhibit E.
3.17 Certain Payments. Neither the Company nor any Subsidiary nor, to
the knowledge of the Company, any director, officer, agent, employee, or other
person associated with or acting on behalf of any of them, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Subsidiary or any Affiliate of
the Company or any Subsidiary, or (iv) in violation of any Federal, state,
local, or foreign statute, law, regulation, ordinance, rule, judgment, order,
decree or other governmental requirement, or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
3.18 Insurance. The Company and its Subsidiaries maintain, with
reputable insurers, insurance in such amounts, including deductible
arrangements, and of such a character as is usually maintained by reasonably
prudent managers of companies engaged in the same or
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similar business. All policies of title, fire, liability, casualty, business
interruption, workers' compensation and other forms of insurance including, but
not limited to, directors and officers insurance, held by the Company and its
Subsidiaries, are in full force and effect in accordance with their terms.
Neither the Company nor any of its Subsidiaries is in default in any material
respect under any provisions of any such policy of insurance and no such Person
has received notice of cancellation of any such insurance.
3.19 Accounting. The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.20 Intellectual Property. The Company and its Subsidiaries own in
all material respects the entire and unencumbered right, title and interest in
and to, or possess adequate licenses or other rights to use, all intellectual
property, including but not limited to, patents, trademarks, service marks,
trade names, copyrights, computer software and know-how used in, or necessary
to, the business conducted by the Company or any of its Subsidiaries (the
"Intellectual Property"). The Company and each of its Subsidiaries have
performed all acts and have paid all required fees and Taxes to maintain all
registrations and applications of such Intellectual Property in full force and
effect. None of the Company or any of its Subsidiaries has received any notice
of infringement of or conflict with (or knows or has known of such infringement
of or conflict with) asserted rights of others with respect to the use of
Intellectual Property. To the Company's knowledge, the Company and its
Subsidiaries do not in the conduct of their business infringe or conflict with
any right of any third party.
3.21 Affiliate Transactions. Except as set forth in the SEC Reports
filed with the Commission prior to the date hereof or for transactions described
on Schedule 3.21 and transactions contemplated by the Support and Option
Agreement, (a) neither the Company nor any of its Subsidiaries is or has been a
party to any transaction or series of transactions described in Item 404 of
Regulation S-K under the Securities Act; provided, however, that for purposes
hereof, references in such Item 404 to the "registrant" shall be deemed to be
references to the Company or such Subsidiary, as the case may be, and references
to the "beginning of the registrant's last fiscal year" shall be deemed to be
references to the beginning of the Company's fiscal year ended December 31,
1997, and (b) no current or former officer or director of the Company or any of
its Subsidiaries and no Affiliate or associate of any such current or former
officer or director has, directly or indirectly, any interest in any contract,
arrangement or property (real or personal, tangible or intangible) used by the
Company or any such Subsidiary or in their respective businesses, or in any
supplier, distributor or customer of the Company or any such Subsidiary.
3.22 Investment Company Act. Neither the Company nor any of its
Subsidiaries is, and, after giving effect to consummation of the transactions
contemplated hereby and by the other Company Agreements, will be, an "investment
company" or an entity
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"controlled by" an "investment company" (as such terms are defined in the
Investment Company Act of 1940, as amended).
3.23 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Series A Preferred Stock. No registration of the Series
A Preferred Stock pursuant to the provisions of the Securities Act will be
required by the offer, sale, or issuance of the Series A Preferred Stock
pursuant to this Agreement, assuming the accuracy of the Purchasers'
representations contained in Section 4.5.
3.24 Board Approval; Stockholder Approval. (a) The Board of Directors
at a meeting duly called and held has determined the Contemplated Transactions
to be advisable and in the best interests of the Company and its stockholders
and has approved the Contemplated Transactions. The Board of Directors of the
Company has received the opinion of its financial advisor, Xxxx Xxxxx Xxxx
Xxxxxx, Inc., to the effect that, as of the date of such opinion, the
Contemplated Transactions are fair from a financial point of view to the holders
of the Common Stock other than Affiliates of the Company.
(b) Prior to the Closing Date, the Company, its stockholders and its
Board of Directors shall have each taken all action required in order to (i)
exempt the Purchasers, in respect to their purchase and conversion of the Series
A Preferred Stock and any other securities of the Company acquired pursuant to
the Contemplated Transactions, from "interested stockholder" status as defined
by the Maryland Business Combination Act and (ii) exempt the execution,
delivery, and performance of the Company Agreements, and the issuance and
conversion of the Series A Preferred Stock, from the requirements of, and from
triggering any provisions under, any "moratorium," "control share," "fair
price," "affiliate transaction," "business combination" or other anti-takeover
laws and regulations of, the State of Maryland, including, without limitation,
the Maryland Business Combination Act and the Maryland Control Share Acquisition
Act (collectively, "Antitakeover Laws").
(c) The affirmative vote of the holders of a majority of the
outstanding shares of the Company's Common Stock (the "Required Vote") is
required under the MGCL, NASDAQ Rules and the Charter to approve the
Contemplated Transactions and the Articles of Amendment. Except for the Required
Vote, no approval of the Company Agreements or of the Contemplated Transactions
by the holders of any shares of stock of the Company is required in connection
with the execution or delivery of the Company Agreements or the consummation of
the Contemplated Transactions, whether pursuant to the MGCL, the Charter or
Bylaws, the rules and regulations of the NYSE, NASD, NASDAQ or otherwise.
3.25 Series A Preferred Stock. (a) All shares of the Series A
Preferred Stock, when issued and delivered in accordance with the terms of this
Agreement, the Articles Supplementary and the other Company Agreements, will be
duly and validly issued and outstanding, entitled to the benefits contemplated
by the Articles Supplementary, fully paid and nonassessable and free and clear
of any Liens, not subject to preemptive or other similar rights, and constitute
valid and legally binding obligations of the Company, enforceable against the
Company in accordance with their terms.
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(b) All shares of the Common Stock issued and delivered upon
conversion of the Series A Preferred Stock, in accordance with the terms of the
Articles Supplementary, will, when so issued and delivered, be duly and validly
issued and outstanding, fully paid and nonassessable and free and clear of any
Liens and not subject to preemptive or other similar rights.
3.26 No Brokers or Finders. Except for Xxxx Xxxxx Xxxx Xxxxxx, Inc.
(and other than the Closing Amount), no agent, broker, finder, or investment or
commercial banker or other Person (if any) engaged by or acting on behalf of the
Company or any Subsidiary or Affiliate is or will be entitled to any brokerage
or finder's or similar fee or other commission as a result of the Company
Agreements or the Contemplated Transactions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally but not jointly represents and warrants
to the Company as follows as to itself:
4.1 Existence and Power. Such Purchaser (a) is duly organized and
validly existing under the laws of the jurisdiction of its formation and (b) has
the requisite power and authority to execute, deliver and perform its
obligations under this Agreement.
4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of each Company Agreement to which it is a party
and the Contemplated Transactions (a) have been duly authorized by all necessary
corporate or other action, (b) do not contravene the terms of such Purchaser's
organizational documents, and (c) do not violate, conflict with or result in any
breach or contravention of, or the creation of any Lien under, any Contractual
Obligation of such Purchaser or any Requirement of Law applicable to such
Purchaser, except for such violations, conflicts, breaches or Liens which will
not result in a material adverse effect on such Purchaser's ability to
consummate the Contemplated Transactions.
4.3 Governmental Authorization; Third Party Consents. Except as
listed in Schedule 3.4 or as could not have a material adverse effect or
materially affect the Purchasers' legal power or ability to own the Series A
Preferred Stock and exercise the rights incident thereto, no approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person in respect of any Requirement of Law,
and no lapse of a waiting period under a Requirement of Law, is necessary or
required in connection with the execution, delivery or performance by such
Purchaser, or enforcement against such Purchaser, of this Agreement or the
consummation of the Contemplated Transactions.
4.4 Binding Effect. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms.
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4.5 Purchase for Own Account, Etc. (a) Purchase for Own Account. The
shares of Series A Preferred Stock are being acquired by such Purchaser for its
own account (except that NMC may designate one or more additional Purchasers of
shares of Series A Preferred Stock in accordance with Section 2.3(c)) and with
no current intention of distributing or reselling such shares of Series A
Preferred Stock or any part thereof in any transaction that would be in
violation of the securities laws of the United States of America or any state,
without prejudice, however, to the rights of such Purchaser at all times to sell
or otherwise dispose of all or any part of such Series A Preferred Stock under
an effective Registration Statement under the Securities Act or under an
exemption from said registration available under the Securities Act. Such
Purchaser understands and agrees that if such Purchaser should in the future
decide to dispose of any Series A Preferred Stock, it may do so only in
compliance with the Securities Act and applicable state securities laws, as then
in effect. Such Purchaser agrees to the imprinting, so long as required by law,
of a legend on all certificates representing shares of Series A Preferred Stock.
(b) Purchaser Status. Such Purchaser is an "Accredited Investor" (as
defined in Rule 501(a)) under the Securities Act.
(c) Restricted Shares. Such Purchaser understands (i) that the
shares of the Series A Preferred Stock have not been, and the shares of Common
Stock issuable upon conversion of the Series A Preferred Stock (the "Conversion
Shares") will not (subject to Section 9.1) be registered under the Securities
Act or any state securities laws, by reason of their issuance by the Company in
a transaction exempt from the registration requirements thereof and (ii) the
shares of the Series A Preferred Stock and the Conversion Shares may not be sold
unless such disposition is registered under the Securities Act and applicable
state securities laws or is exempt from registration thereunder.
4.6 No Brokers or Finders. Except as contemplated by this Agreement
(including the Closing Amount), no agent, broker, finder, or investment or
commercial banker or other Person (if any) engaged by or acting on behalf of the
Purchasers or any of their respective Affiliates is or will be entitled to any
brokerage or finder's or similar fee or other commission as a result of this
Agreement or the Contemplated Transactions.
4.7 Sufficient Funds. Such Purchaser will have at the Closing funds
sufficient to perform its obligations under this Agreement and to consummate the
Contemplated Transactions.
4.8 Litigation. There is no legal action, suit, arbitration or other
legal, administrative or other governmental investigation, inquiry or proceeding
pending or, to the knowledge of such Purchaser, threatened against or affecting
such Purchaser or relating to any of the Company Agreements or the Contemplated
Transactions which, if determined adversely to such Purchaser, would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or would reasonably be expected to prohibit or materially delay
the Closing. Such Purchaser is not subject to any Decree that, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect.
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ARTICLE 5
COVENANTS OF THE COMPANY
5.1 Conduct of Business. Except as expressly contemplated by this
Agreement or consented to in writing by the Purchasers, from the date hereof
through the Closing Date, the Company and its Subsidiaries shall conduct their
businesses in the ordinary course, consistent with past practice and generally
in a manner such that the representations and warranties contained in Article 3,
to the extent such matters are within the Company's, any of its Subsidiary's or
the University's control, shall continue to be true and correct in all material
respects on and as of the Closing Date (except for representations and
warranties made as of a specific date) as if made on and as of the Closing Date.
The Company shall give the Purchasers prompt notice of any event, condition or
circumstance known or that becomes known to the Company occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
(i) any representation or warranty, whether made as of the date hereof or as of
the Closing Date, or (ii) any covenant of the Company contained in this
Agreement; provided, however, that no such notification shall relieve or cure
any such breach or violation of any such representation, warranty or covenant or
otherwise affect the accuracy of any such representation or warranty for the
purposes of Section 7.1; provided further, however, that the unintentional
failure to give notice shall not give rise to a claim for damages by any
Purchaser. Without limiting the generality of the foregoing, except as otherwise
expressly contemplated by the terms of this Agreement or agreed in writing by
the Purchasers, from and after the date hereof and through and including the
Closing Date, the Company shall not, and will cause its Subsidiaries not to:
(i) make capital expenditures which are more than $100,000
individually or $500,000 in the aggregate except pursuant to agreements or
commitments entered into by the Company or any of its Subsidiaries prior to
the date hereof or unless otherwise reserved against in the Company's most
recent financial statements filed with the Commission, or except as set
forth on Schedule 5.1;
(ii) enter into any or amend any lease, license, agreement,
contract or commitment, other than in the ordinary course of business, or,
in any event, involving more than $100,000 individually or $500,000 in the
aggregate except as set forth on Schedule 5.1;
(iii) enter into, modify, make, renew, extend or otherwise
alter any credit agreement, note or other similar agreement (including any
interest rate or currency swap, hedge, collar or straddle or similar
transaction) or instrument to which the Company or a Subsidiary is a party
or incur or otherwise become liable with respect to any indebtedness, other
than trade payables incurred in the ordinary course of business and
consistent with past practice;
(iv) enter into any contract or agreement with respect to the
acquisition of any business, assets or property (real, personal or mixed,
tangible or intangible, including stock or other equity interests in, or
evidences of the indebtedness of, any other
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corporation, partnership or entity), other than acquisitions of assets in
the ordinary course of business and consistent with past practice;
(v) form any joint venture or partnership;
(vi) sell, lease, license, surrender, relinquish, encumber,
pledge, transfer, amend, convey or otherwise dispose of any business,
property or assets (whether tangible or intangible) having an aggregate
market value of in excess of $100,000 individually or $500,000 in the
aggregate;
(vii) fail to maintain any property of the Company or any of
its Subsidiaries in customary repair, order and condition consistent with
the Company's or such Subsidiary's current maintenance policies, ordinary
wear and tear excepted;
(viii) discontinue, permit to lapse or otherwise fail to keep
in full force and effect any material policies of insurance or knowingly
take any action that would cause any such policy to terminate or be
terminable prior to the expiration of its stated term;
(ix) except as required by applicable law, make or change any
material Tax election of the Company or any of its Subsidiaries, change any
annual Tax accounting period of the Company or any of its Subsidiaries,
adopt or change any Tax accounting method of the Company or any of its
Subsidiaries, file 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, a "Return")
relating to the Company or any of its Subsidiaries in a manner that is
materially inconsistent with past practice, enter into any closing agreement
relating to material Taxes of the Company or any of its Subsidiaries, settle
any material claim made by any Governmental Authority including social
security administration, domestic or foreign, having jurisdiction over the
assessment, determination, collection or other imposition of Tax or
assessment relating to the Company or any of its Subsidiaries (a "Tax
Claim"), surrender any right to claim a refund of Taxes relating to the
Company or any of its Subsidiaries, consent to any extensions or waivers of
the limitations period applicable to any Tax Claim or assessment relating to
the Company or any of its Subsidiaries, or enter into a Tax sharing
agreement or similar arrangement with respect to the Company or any of its
Subsidiaries;
(x) except as expressly contemplated by this Agreement,
purchase, redeem or otherwise acquire, split, combine or reclassify,
directly or indirectly, any of the Company's stock or other equity
securities or give notice of any intention to exercise any right to
purchase, redeem or otherwise acquire, split, combine or reclassify, any of
the Company's stock or other equity securities (including any such purchase,
redemption, acquisition or notice in accordance with the terms of the
Charter or Bylaws or any stockholders agreement);
(xi) except as contemplated by this Agreement, issue or sell,
or issue any rights to purchase or subscribe for, or subdivide or otherwise
change, any shares of the Company's or any of its Subsidiaries' stock or
other securities or similar rights, except
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pursuant to the normal operation of the Xxxxxxx Education, Inc. Employee
Stock Purchase Plan as in effect as of the date hereof;
(xii) except for regular quarterly cash dividends of no more
than $.065 per share of Common Stock in any calendar quarter, paid at times
and with record dates consistent with past practices, declare or pay any
dividends on or make other distributions (whether in cash, stock or property
or any combination thereof), directly or indirectly, in respect of the
Company's stock;
(xiii) amend the Charter or Bylaws or the organizational
documents of any Subsidiary;
(xiv) settle any material Claim;
(xv) change any method of accounting or accounting practice
used by the Company or any of its Subsidiaries, except for any change
required by GAAP, by any Governmental Authority or by a change in law;
(xvi) cause or permit, by any act or failure to act, any
Educational Approval or other material License to expire or to be revoked,
suspended, or modified, or take any action that could reasonably be expected
to cause any Educational Agency or other Governmental Authority to institute
proceedings for the suspension, revocation, or adverse modification of any
of any Educational Approval or other material License;
(xvii) maintain any significant amount of investments in or
trade in equities or other speculative securities;
(xviii) take any corporate or other action in furtherance of any
of the foregoing; or
(xix) agree to do any of the foregoing.
5.2 No Solicitation. Without limiting the Company's other
obligations under this Agreement, the Company agrees that, from the date hereof
until the Closing, neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall use
its reasonable best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, (i)
initiate, solicit, encourage or knowingly facilitate (including by way of
furnishing information) any inquiries or the making of any proposal or offer
with respect to, or a transaction to effect, a merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving it or any of its Subsidiaries, or
any purchase or sale of 10% or more of the consolidated assets (including
without limitation stock of its Subsidiaries) of it and its Subsidiaries, taken
as a whole, or any purchase or sale of, or tender or exchange offer for, the
equity securities of the Company that, if consummated, would result in any
Person (or the stockholders of such Person) beneficially owning securities
representing 10% or more of the total voting power of the Company (or of the
surviving parent entity in such transaction) or any of its Subsidiaries (any
such proposal, offer or transaction, including any single or multi-step
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transaction or series of related transactions (other than a proposal or offer
made by the Purchasers or any of their respective Affiliates) being hereinafter
referred to as an "Acquisition Proposal"), (ii) have any discussion with or
provide any confidential information or data to any Person relating to an
Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal, (iii) approve or recommend, or propose publicly to approve
or recommend, any Acquisition Proposal or (iv) approve or recommend, or propose
to approve or recommend, or execute or enter into, any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement or propose publicly or agree to do any of
the foregoing related to any Acquisition Proposal; provided, however, that the
foregoing shall not prohibit the Company, prior to the receipt of the Required
Vote, (A) from complying with Rule 14e-2 and Rule 14d-9 under the Exchange Act
with regard to a bona fide tender offer or exchange offer or (B) from
participating in negotiations or discussions with or furnishing information to
any person in connection with an unsolicited bona fide Acquisition Proposal
which is submitted in writing by such person to the Board of Directors of the
Company after the date of this Agreement and prior to the Required Vote;
provided further, however, that prior to participating in any such discussions
or negotiations or furnishing any information, (i) the Company receives from
such person an executed confidentiality agreement on terms not less favorable to
the Company than the Confidentiality Agreement, a copy of which shall be
provided only for informational purposes to the Purchasers, and (ii) the Board
of Directors of the Company shall have concluded in good faith, after consulting
with its outside financial advisors and counsel, that such Acquisition Proposal
is reasonably likely to be or to result in a Superior Proposal (as defined in
Section 6.1(b) hereto). If the Board of Directors of the Company receives an
Acquisition Proposal, the Company shall promptly inform the Purchasers in
writing of the terms and conditions of such proposal and the identity of the
person making it, and will keep the Purchasers informed, on a current basis, of
the status and terms of any such proposals or offers by any Person (whether
written or oral). The Company will, and will cause its Affiliates to,
immediately cease and cause to be terminated any activities, discussions or
negotiations existing as of the date of this Agreement with any Persons (other
than the Purchasers and their respective Affiliates) conducted heretofore with
respect to any Acquisition Proposal, and request the return or destruction of
all non-public information furnished in connection therewith. The Company shall
not release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which such party or its Subsidiaries
is a party.
5.3 Regulatory Approval. (a) Promptly upon execution and delivery
hereof, the Purchasers and the Company will prepare and file, or cause to be
prepared and filed, with the appropriate Governmental Authorities, the requisite
notification with respect to the Contemplated Transactions pursuant to the HSR
Act. Thereafter, the Purchasers and the Company shall promptly supply all
information requested by Governmental Authorities in connection with the HSR Act
notification and cooperate with each other in responding to any such request,
and the Company shall use all reasonable efforts to cause the applicable HSR Act
waiting periods to be terminated early or to expire without further inquiry or
extension of time by any Governmental Authority and otherwise to cause the HSR
Requirements to be satisfied, including by supplying all information requested
by Governmental Authorities in connection therewith, and to cooperate with the
Purchasers in connection with the satisfaction of the HSR requirements and the
XXX Xxx xxxxxxxxx.
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(x) Promptly upon execution and delivery hereof, the Company, its
Subsidiaries and the University shall prepare and file, or cause to be prepared
and filed, with the appropriate Governmental Authorities and Educational
Agencies the requisite notifications and applications necessary for the
post-Escrow and post-Closing operation of the Company, its Subsidiaries and the
University to the full extent as presently operated without forfeiture or
material impairment of any Contract or any Educational Approval or other
License, including any such consent, permit, or approval required to be obtained
after the Escrow Date or the Closing Date including those listed on Schedule
3.4; provided that, without limitation of the foregoing, (i) an application to
Middle States for approval of a "substantive change" resulting from the
Contemplated Transactions shall be submitted by the University not later than
December 1, 2000, (ii) an Application for Approval to Participate in Federal
Student Financial Aid Programs (an "Application") shall be submitted by the
University to the DOE for pre-acquisition review at least 45 days prior to the
Commencement of the Offer pursuant to Section 6.2 hereof, (iii) notification of
the filing of the Form 8-K on the Escrow Date shall be made to the DOE on the
day the Form 8-K is filed, and (iv) all requisite documentation in support of
the Application, including without limitation notification of all necessary
post-Escrow Date Educational Approvals, audited financial statements of the
Company and S University for the fiscal years ended December 31, 1998 and 1999,
and the Prospectus submitted by the Company to the Commission in connection with
the Offer shall be submitted by the University as promptly as they become
available and in no event later than the last day of the month following the
month in which the Escrow Date occurred, and an audited balance sheet of the
Company as of the Closing Date shall be submitted if requested by DOE. The
Company, its Subsidiaries and the University shall prosecute and complete with
due diligence and with full consultation with Purchasers all such filings. The
Company, Subsidiaries and University shall promptly provide Purchasers with
complete copies of all letters, applications, or other documents submitted to or
received from any Governmental Authority or Educational Agency with respect to
any Educational Approval or other License, including, wherever possible, drafts
of letters, applications, and other documents to be submitted to any Educational
Agency or Governmental Authority, and shall consult with Purchasers in
connection with any communications to or from any Educational Agency or
Governmental Authority in connection with such filings.
(c) Each of the Company, its Subsidiaries and University will use
best efforts to maximize the University's opportunity after the Closing Date to
make disbursements of Title IV Program funds pursuant to 34 C.F.R. Section
668.26 by taking actions that include disbursing all Title IV Program funds to
students enrolled prior to and as of the Closing Date consistent with past
practices and to the extent authorized by the Title IV Program regulations, and
ensuring that all commitments under each applicable Title IV Program are made to
students enrolled in any School or Campus prior to and as of the Closing Date in
accordance with 34 C.F.R. Section 668.26 and other applicable Title IV Program
regulations.
(d) Promptly upon execution and delivery hereof, the Company
shall take such action as is necessary to obtain the consent of the NASDAQ for
the listing of the shares of Common Stock issuable upon conversion of the Series
A Preferred Stock, subject only to official notice of issuance.
5.4 Board of Directors and Management. At or prior to the Escrow
Date, the Company will take all action necessary (including without limitation
using its reasonable best
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efforts to cause the resignation of the current members of the Company's (and
Subsidiaries') Boards of Directors (and committees thereof) and management) (or,
if necessary, to increase the size of such Boards of Directors) so that, on such
date the composition of the Company's Board of Directors and management shall be
as set forth in Exhibit F hereto; and from and after the Escrow Date to the
Closing Date, the Purchasers shall be entitled to the rights set forth in the
Articles Supplementary (including without limitation the board representation
and related rights set forth therein) as if the Series A Preferred Stock were
issued and outstanding. Without limiting the foregoing, the Company shall not
take any action that, if the Series A Preferred Stock had been issued, would
require the approval of the holders of the Series A Preferred Stock without
obtaining the prior written approval of the Purchasers' Agent.
5.5 Access. (a) From the date hereof until the Closing, upon
reasonable notice, the Company shall (and shall cause its Subsidiaries to)
afford to the officers, employees, accountants, counsel, financial advisors and
other representatives of the Purchasers reasonable access during normal business
hours, during the period prior to the Closing, to all its books, records,
properties, plants and personnel and, during such period, the Company shall (and
shall cause its Subsidiaries to) furnish promptly to the Purchasers (i) a copy
of each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of Federal or state laws, as applicable, and (ii) all other
information concerning it and its business, properties and personnel as the
Purchasers may reasonably request. The Purchasers will hold any information
obtained pursuant to this Section 5.5 in confidence in accordance with, and will
otherwise be subject to, the provisions of the Confidentiality Agreement. Any
investigation by the Purchasers shall not affect the representations and
warranties of the Company or the conditions to its obligations to consummate the
transactions contemplated by this Agreement.
(b) From the date hereof until the Closing, the Company shall
promptly keep the Purchasers and their representatives informed of any material
development in the business of the Company or its Subsidiaries provided that the
unintentional failure to keep the Purchasers and their representatives informed
shall not give rise to a claim for damages by any Purchaser. Without limiting
the foregoing, from the date hereof until the Closing, the Company shall cause
its officers to consult and cooperate with representatives of the Purchasers,
including the proposed new members of management, in order to facilitate a
smooth transition as of the Closing. Nothing in this Section 5.5 shall give the
Purchasers or their Affiliates any approval rights over the day-to-day
activities of the Company.
5.6 Employee Benefits Matters. Without limiting the generality of
the foregoing, except as otherwise expressly agreed in writing by the
Purchasers, the Company shall not, and shall cause its Subsidiaries not to, take
any of the following actions:
(i) enter into any new Significant Employment
Agreement or amend any existing Significant Employment Agreement;
(ii) adopt any new Company Benefit Plan or, except as
may be required by applicable law, amend any existing Company Benefit
Plan;
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(iii) grant any stock options or other equity-based
compensation to any employee or director of the Company or any of its
Subsidiaries, except pursuant to the normal operation of the Xxxxxxx
Education, Inc. Employee Stock Purchase Plan as in effect on the date
of this Agreement;
(iv) increase the salaries, wages, or other compensation
or benefits of any employee or director of the Company or any of its
Subsidiaries, except for such increases with respect to employees who
are not officers of the Company or any of its Subsidiaries that are in
the ordinary course of business consistent with past practice and do
not result in an aggregate increase in the annual cost of compensation
and benefits for employees of the Company and its Subsidiaries of more
than five percent over such annual costs as in effect on the date of
this Agreement; or
(v) agree to do any of the foregoing.
5.7 Leases. The Company shall (and shall cause its
applicable Subsidiary to), on or prior to the Closing, obtain landlord's consent
to the Contemplated Transactions with respect to those Leases that require such
consent.
5.8 Legends. Any legends placed on the Series A Preferred
Stock or the Common Stock or other securities issuable, if any, pursuant to the
Contemplated Transactions shall be removed by the Company upon delivery of an
opinion of counsel reasonably acceptable to the Company stating that such legend
is no longer necessary.
5.9 Valuation. The Company shall engage a valuation firm
reasonably acceptable to the Purchasers to provide a fair valuation of the total
assets of the Company so as to ensure that the Contemplated Transactions may be
effected in a manner consistent with Section 2-311 of the MGCL. The report of
such valuation company shall be provided to the Board of Directors of the
Company and to the Purchasers prior to the Closing Date.
ARTICLE 6
STOCKHOLDERS MEETING; TENDER OFFER
6.1 Preparation of Information Statement; Stockholders
Meeting. (a) As promptly as reasonably practicable following the date hereof,
the Company shall prepare and file with the Commission an information statement
(such information statement and any amendments or supplements thereto, the
"Information Statement") with respect to the Contemplated Transactions. The
Information Statement shall seek approval of the matters to be submitted for
approval at the Stockholders Meeting. The Company shall use reasonable best
efforts to have the Information Statement cleared by the Commission as promptly
as reasonably practicable after filing with the Commission. The Company shall,
as promptly as practicable after receipt thereof, provide the Purchasers copies
of any written comments and advise the Purchasers of any oral comments, with
respect to the Information Statement received from the Commission. The Company
shall provide the Purchasers with a reasonable opportunity to review and comment
on the Information Statement and any amendment or supplement thereto prior to
filing such with the Commission, and with a copy of all such filings made with
the Commission. Notwithstanding
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any other provision herein to the contrary, neither the Information Statement
nor any amendment or supplement thereto shall be filed or made without the
approval of the Purchasers (which approval shall not be unreasonably withheld or
delayed). The Company will use reasonable best efforts to cause the Information
Statement to be mailed to its stockholders as promptly as practicable. If at any
time any information should be discovered by the Company which should be set
forth in an amendment or supplement to the Information Statement so that it
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company shall
promptly notify the Purchasers and, to the extent required by applicable law, an
appropriate amendment or supplement describing such information shall be
promptly filed with the Commission and disseminated to the stockholders of the
Company.
(b) The Company shall duly take all lawful action to call,
give notice of, convene and hold a meeting of its stockholders as promptly as
practicable after the date hereof (the "Stockholders Meeting") for the purpose
of obtaining the Required Vote and the vote of the Company's stockholders with
respect to the Contemplated Transactions (including, without limitation, the
issuance of the Series A Preferred Stock and the issuance of shares of Common
Stock upon conversion of the Series A Preferred Stock, the Articles of Amendment
and such other amendments to the Charter as may be necessary or appropriate to
give effect to any of the Contemplated Transactions (including without
limitation the grant of preemptive rights as contemplated by Article 9 hereof),
and any other action that may be required with respect to any of the
transactions contemplated by this Agreement) and shall take all lawful action to
solicit the approval of all such matters by the Company's stockholders. The
Company shall include in the Information Statement the recommendation of the
Board of Directors in favor of approval of all such matters (the "Board
Recommendation") and the written opinion of Xxxx Xxxxx Xxxx Xxxxxx, Inc., dated
the date of this Agreement, to the effect that, as of the date hereof, the
Contemplated Transactions are fair, from a financial point of view, to the
holders of the Common Stock other than Affiliates of the Company. The Board of
Directors of the Company shall not withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to the Purchasers such
recommendation (a "Change in the Board Recommendation"); provided, however, that
the Board of Directors of the Company may, prior to the receipt of the Required
Vote, make a Change in the Board Recommendation in connection with (i) an
unsolicited bona fide Acquisition Proposal which is submitted in writing to the
Board of Directors of the Company after the date of this Agreement if the
Company shall have complied in all respects with the requirements of Section 5.2
with respect to such Acquisition Proposal, or (ii) a material adverse event
occurring after the date hereof; provided that, in either case (i) or (ii), the
Board of Directors of the Company shall have concluded in good faith, after
consulting with its outside financial advisors and counsel that (A) in the case
described in clause (i) of this Section 6.1(b), such Acquisition Proposal is
financially superior to the Contemplated Transactions, taking into account all
relevant factors (including financing, required approvals and the timing and
likelihood of consummation) (a "Superior Proposal") and (B) in the case
described in either clause (i) or clause (ii) of this Section 6.1(b), that the
failure to take such action would violate the obligations of the directors under
Maryland law.
6.2 Tender Offer. Promptly after obtaining the vote of the
Company's stockholders as set forth in Section 6.1(b), but in any event not
later than one Business Day thereafter, the Company shall commence (within the
meaning of Rule 13e-4(a)(4) under the
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Exchange Act), an offer (the "Offer") to purchase up to 8.5 million outstanding
Shares (the "Maximum Number") at a price of $25.00 per Share, net to the seller
in cash (as paid pursuant to the Offer, the "Offer Consideration"), in
compliance with the applicable provisions of Rule 13e-4 and Regulation MA of the
Commission, and pursuant to documentation in form and substance reasonably
satisfactory to the Purchasers. The obligation of the Company to commence the
Offer, to consummate the Offer and to accept for payment and pay for Shares
validly tendered in the Offer and not withdrawn shall be subject only to the
conditions set forth in Exhibit G hereto (the "Offer Conditions"). The Company
expressly reserves the right, in its sole discretion, to waive any such
condition (other than the Minimum Condition as defined in the Offer Conditions)
and make any other changes in the terms and conditions of the Offer; provided
that no such change may be made unless previously approved by the Purchasers'
Agent in writing. The financing of the Offer shall be as contemplated by Section
2.3 and in form and substance acceptable to the Purchasers, including without
limitation the names in which funds from the Company's Subsidiaries are
transferred to the Company for use in such Offer.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE PURCHASERS TO FUND AND CLOSE
7.1 Conditions to Funding. The obligation of the Purchasers
to deliver the Purchase Price to the Escrow Agent pursuant to Section 2.3 is
subject to the fulfillment on or prior to the Escrow Date of the following
conditions, any one or more of which may be waived by the Purchasers' Agent:
7.1.1 Representations and Covenants. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects (other than those which are qualified as to
materiality, Material Adverse Effect or other similar term, which shall be true
and correct in all respects) on and as of the Escrow Date with the same force
and effect as though made on and as of the Escrow Date (except that
representations and warranties made as of a specific date shall be true and
correct in all material respects (except as aforesaid) on such date); the
Company shall have performed and complied with all covenants and agreements
required by this Agreement to be performed or complied in all material respects
with by the Company on or prior to the Escrow Date; and the Company shall have
delivered to the Purchasers a certificate, dated the date of the Escrow Date and
signed by an executive officer of the Company, to the foregoing effect.
7.1.2 Opinion of Counsel to the Company. The Purchasers shall
have received the legal opinion of Xxxxx & Xxxxxxx LLC, counsel to the Company,
dated the Escrow Date, addressed to the Purchasers, with respect to the matters
set forth in paragraphs (a)-(i) of Exhibit H hereto.
7.1.3 No Actions. (a) No Action shall be pending or
threatened to restrain or prohibit, or otherwise relating to, the consummation
of any of the transactions contemplated by Section 2.3(a) or any of the other
Contemplated Transactions.
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(b) No law, order, decree, rule or injunction shall have
been enacted, entered, promulgated or enforced by any Governmental Authority
that prohibits or makes illegal the consummation of any of the transactions
contemplated by Section 2.3(a) or any of the other Contemplated Transactions.
7.1.4 Stockholder Approval. The Required Vote and the
affirmative vote of the Company's stockholders with respect to the matters set
forth in Section 6.1(b) hereof shall have been obtained and shall be in full
force and effect.
7.1.5 No Material Adverse Effect. Since the date hereof, no
event or development shall have occurred (or failed to occur) and there shall be
no circumstance (and the Purchasers shall not have become aware of any
previously existing circumstance) that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect. Without
limiting the foregoing, a Material Adverse Effect under this Section 7.1.5 shall
be deemed to include (1) the Company's failure to report earnings per share of
at least $1.37 for the year ending December 31, 2000, or (2) enrollment for the
University for Winter 2001 failing to grow by more than 5% over enrollment for
Winter 2000.
7.1.6 Consents. Any and all consents and other action listed
or required to be listed in Schedule 3.4 hereto, except those consents indicated
with an asterisk on Schedule 3.4 which cannot be obtained prior to the Escrow
Date, shall have been obtained and delivered to Purchasers without any material
adverse change in the terms or conditions of any Educational Approval or other
License, and all such consents shall be in full force and effect.
7.1.7 NASDAQ Listing. The shares of Common Stock issuable
upon conversion of the Series A Preferred Stock shall have been approved for
listing on NASDAQ, subject only to official notice of issuance.
7.1.8 DOE Action. The DOE, based on its review of the
pre-Escrow Date Application or any other materials filed by the Company, any
Subsidiary, or the University to obtain the DOE's pre-Escrow Date review, has
not notified the University of any material impediment, which impediment has not
been cured by the Escrow Date, to obtaining (A) a temporary provisional program
participation agreement within fifteen days after the Escrow Date, or (B) a DOE
Approval Notice before the Closing Date.
7.2 Conditions to Closing. The obligations of the
Purchasers to enter into and complete the Closing are subject to the fulfillment
on or prior to the Closing Date of the following conditions, any one or more of
which may be waived by the Purchasers' Agent:
7.2.1 Opinion of Counsel to the Company. The Purchasers shall
have received the legal opinion of Xxxxx & Xxxxxxx LLC, counsel to the Company,
dated the Closing Date, addressed to the Purchasers, with respect to the matters
set forth in Exhibit H hereto (brought down to the Closing Date with respect to
the matters covered in the opinion delivered pursuant to Section 7.1.2).
7.2.2 No Actions. (a) No Action shall be pending or
threatened to restrain or prohibit, or otherwise relating to, any Company
Agreement or the consummation of any of the Contemplated Transactions.
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(b) No law, order, decree, rule or injunction shall have
been enacted, entered, promulgated or enforced by any Governmental Authority
that prohibits or makes illegal the consummation of any of the Contemplated
Transactions.
7.2.3 DOE Action. The DOE shall have issued a DOE Approval
Notice to the University, which shall be in full force and affect.
7.2.4 NASDAQ Listing. The approval of the shares of Common
Stock issuable upon conversion of Series A Preferred Stock for listing on NASDAQ
shall be in full force and effect.
7.2.5 Completion of the Offer. The Minimum Condition shall be
satisfied and the Company shall have accepted for payment and paid for all
Shares validly tendered in the Offer and not withdrawn, up to the Maximum
Number.
7.2.6 Company Agreements. The Company and the Purchasers
shall have entered into the Registration Rights Agreement. The Articles of
Amendment and the Articles Supplementary in the forms attached hereto as
Exhibits B and C shall, respectively, have been filed with and accepted for
record by the State Department of Assessments and Taxation of Maryland in
accordance with the MGCL.
7.2.7 Consents. Those consents indicated with an asterisk on
Schedule 3.4 which cannot be obtained prior to the Escrow Date shall have been
obtained and delivered to Purchasers without any material adverse change in the
terms or conditions of any Educational Approval or other License, and all such
consents shall be in full force and effect.
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE COMPANY TO FUND AND TO CLOSE
8.1 Conditions to Funding. The obligation of the Company to
deliver the Company Funds to the Escrow Agent pursuant to Section 2.3 is subject
to the fulfillment on or prior to the Escrow Date of the following conditions,
any one or more of which may be waived by the Company:
8.1.1 Representations and Covenants. The representations and
warranties of the Purchasers contained in this Agreement shall be true and
correct in all material respects on and as of the Escrow Date with the same
force and effect as though made on and as of the Escrow Date (except that
representations and warranties made as of a specific date shall be true and
correct in all material respects on such date); the Purchasers shall have in all
material respects performed and complied with all covenants and agreements
required by this Agreement to be performed or complied with by them on or prior
to the Escrow Date; and the Purchasers shall have delivered to the Company a
certificate, dated the date of the Escrow Date and signed by each Purchaser, to
the foregoing effect.
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8.1.2 No Actions. (a) No Action shall be pending or
threatened to restrain or prohibit any Company Agreement or the consummation of
any of the Contemplated Transactions.
(b) No law, order, decree, rule or injunction shall have
been enacted, entered, promulgated or enforced by any Governmental Authority
that prohibits or makes illegal the consummation of any of the Contemplated
Transactions.
8.1.3 Stockholder Approval. The Required Vote and the
affirmative vote of the Company's stockholders with respect to the matters set
forth in Section 6.1(b) hereof shall have been obtained and shall be in full
force and effect.
8.1.4 Consents. Any and all governmental consents and other
action listed or required to be listed in Schedule 3.4 hereto, except those
consents indicated with an asterisk on Schedule 3.4 which cannot be obtained
prior to the Escrow Date, shall have been obtained and delivered to Purchasers
without any material adverse change in the terms or conditions of any
Educational Approval or other License, and all such consents shall be in full
force and effect.
8.1.5 DOE Action. The DOE, based on its review of the
pre-Escrow Date Application or any other materials filed by the Company, any
Subsidiary, or the University to obtain the DOE's pre-Escrow Date review, has
not notified the University of any material impediment, which impediment has not
been cured by the Escrow Date to obtaining (A) a temporary provisional program
participation agreement within fifteen days after the Escrow Date, or (B) a DOE
Approval Notice before the Closing Date.
8.2 Conditions to Closing. The obligations of the Company
to enter into and complete the Closing are subject to the fulfillment on or
prior to the Closing Date of the following condition(s), any one or more of
which may be waived by the Company:
8.2.1 No Actions. (a) No action shall be pending or
threatened to restrain or prohibit any Company Agreement or the consummation of
any of the Contemplated Transactions.
(b) No law, order, decree, rule or injunction shall have
been enacted, entered, promulgated or enforced by any Governmental Authority
that prohibits or makes illegal or otherwise relates to the consummation of any
of the Contemplated Transactions.
8.2.2 DOE Action. The DOE shall have issued a DOE Approval
Notice to the University, which shall be in full force and effect.
8.2.3 Completion of the Offer. The Minimum Condition shall be
satisfied and the Company shall have accepted for payment and paid for all
Shares validly tendered in the Offer and not withdrawn, up to the Maximum
Number.
8.2.4 Consents. Those consents indicated with an asterisk on
Schedule 3.4 (with the exception of terms 1, 4, 8 and 9 thereon) which cannot be
obtained prior to the Escrow Date, shall have been obtained and delivered to
Purchasers without any material adverse change
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in the terms or conditions of any Educational Approval or other License, and all
such consents shall be in full force and effect.
8.2.5 Participation by all Purchasers. Each of the Purchasers
shall have delivered the full Purchase Price to the Escrow Agent for the shares
of Series A Preferred Stock to be purchased by them as indicated in the
Allocation Notice and shall have directed the release of the Purchase Price from
escrow.
ARTICLE 9
REGISTRATION RIGHTS; PREEMPTIVE RIGHTS;
OTHER AGREEMENTS OF THE COMPANY
9.1 Registration Rights. On or prior to the Closing Date,
the Company shall enter into a Registration Rights Agreement (the "Registration
Rights Agreement") with respect to the Registrable Securities having the terms
set forth in Exhibit I hereto.
9.2 Other Registration Rights. The Company shall not grant
any right of registration under the Securities Act relating to any of its
securities to any Person other than the Purchasers if such rights would or could
reasonably be expected to frustrate, impede or limit the Purchasers' rights
pursuant to the Registration Rights Agreement.
9.3 Preemptive Rights. (a) From the Closing Date, and for
as long as the Purchasers collectively beneficially own Series A Preferred Stock
and/or shares of Common Stock representing (on an as-converted basis) at least
one-half of the shares of Series A Preferred Stock and/or shares of Common Stock
purchased pursuant to this Agreement (adjusted for stock-splits, stock
dividends, reverse stock-splits and the like), in the event the Company proposes
to issue Common Stock of any kind (including any warrants, options or securities
or units comprising securities convertible into or exchangeable for Common Stock
or rights to acquire the same) of the Company, other than (1) pursuant to an
employee or non-management director stock option plan, stock bonus plan, stock
purchase plan or other management equity program or plan, in the ordinary course
of business consistent with past practice, not representing more than 10% of the
shares of Common Stock on a fully diluted basis in any one year, or (2)
securities issuable upon exercise of previously issued warrants, options or
other rights to acquire Common Stock or upon conversion of previously issued
securities convertible into Common Stock, then the Company shall:
(i) deliver to the Purchasers written notice setting forth
in reasonable detail (1) the terms and provisions of the securities
proposed to be issued (the "Proposed Securities"); (2) the price and other
terms of the proposed sale of such securities; (3) the amount of such
securities proposed to be issued; and (4) such other information as the
Purchasers may reasonably request in order to evaluate the proposed
issuance; and
(ii) offer to issue to the Purchasers in the aggregate a
portion of the Proposed Securities equal to a percentage determined by
dividing (x) the number of shares of Common Stock beneficially owned by the
Purchasers (assuming conversion of all shares of Series A Preferred Stock
into Common Stock, regardless of whether such
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shares of Series A Preferred Stock are actually then convertible), by (y)
the total number of shares of Common Stock then outstanding.
The Purchasers must exercise the purchase rights hereunder within
20 Business Days after receipt of such notice from the Company. The Company
shall take any and all actions necessary to adopt and implement the Articles of
Amendment so as to give full effect to the provisions of this Section 9.3.
(b) Upon the expiration of the offering period described
above, or if the Purchasers shall default in paying for or purchasing the
Proposed Securities on the terms offered by the Company, the Company shall
thereafter be free to sell such Proposed Securities that the Purchasers have not
elected to purchase during the 120 days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to the
Purchasers. Any Proposed Securities offered or sold by the Company after such
120-day period must be reoffered to the Purchasers pursuant to this Section 9.3.
(c) The election by the Purchasers not to exercise preemptive
rights under this Section 9.3 in any one instance shall not affect their rights
(other than in respect of a reduction in their percentage holdings) as to any
subsequent proposed issuance. Any sale of such securities by the Company without
first giving the Purchasers the rights described in this Section 9.3 shall be
void and of no force and effect, and the Company shall not register such sale or
issuance on the books and records of the Company.
9.4 Rule 144. The Company shall file all reports required to
be filed by it under the Securities Act and the Exchange Act and shall take such
further action as the Purchasers may reasonably request, all to the extent
required to enable the Purchasers to sell the Series A Preferred Stock or the
Common Stock into which the Series A Preferred Stock may be converted pursuant
to and in accordance with Rule 144. Such action shall include, but not be
limited to, making available adequate current public information meeting the
requirements of paragraph (c) of Rule 144.
9.5 Availability of Common Stock. The Company shall at all
times reserve and keep available out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of the Series A Preferred
Stock and the preemptive rights set forth in Section 9.3, at least the full
number of shares of Common Stock then issuable upon the conversion of such
securities. The Company will, from time to time, in accordance with the laws of
the State of Maryland, increase the authorized amount of Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall be insufficient to permit conversion of the Series A Preferred
Stock or the preemptive rights set forth in Section 9.3.
9.6 No Rights Plan. From the date hereof and for as long as
the Purchasers collectively beneficially own Common Stock representing at least
10% of the total voting power of the Company (assuming conversion of all then
outstanding shares of Series A Preferred Stock into Common Stock, regardless of
whether such securities are actually then convertible), without the prior
written consent of the Purchasers, the Company shall not adopt or enter into any
"poison pill" rights plan or any similar plan or agreement or declare or pay any
dividend of any rights to purchase stock of the Company in connection with such
a plan or agreement.
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9.7 Regular Quarterly Dividends. The Purchasers shall cause
the members of the Board of Directors of the Company elected by the holders of
the Series A Preferred Stock to approve the declaration and payment of Regular
Quarterly Dividends (as defined in the Articles Supplementary) upon the
recommendation of the Independent Directors (as defined in the Articles
Supplementary) provided the Company is current in its payments of cash dividends
on the Series A Preferred Stock.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 Termination. (a) This Agreement may be terminated prior to
the Closing as follows:
(i) by either the Purchasers or the Company if (A) the
Escrow Date shall not have occurred before June 30, 2001, or the Closing
shall not have occurred before October 31, 2001, or (B) the approval of the
Company's stockholders, as set forth in Section 6.1(b) hereof, shall not
have been obtained by reason of the failure to obtain the Required Vote at
a duly held meeting of stockholders or any adjournment thereof; provided,
however, that the right to terminate this Agreement under this Section
10.1(a)(i) shall not be available to any party whose failure to perform any
covenant or obligation under this Agreement or willful breach of a
representation or warranty has been the cause of or resulted in the failure
of the Escrow Date or the Closing, as the case may be, to occur on or
before such date;
(ii) at the election of the Purchasers, if (A) prior to the
Closing Date there shall have been a breach of any of the Company's
representations, warranties, covenants or agreements, which breach would
result in the failure to satisfy any of the conditions set forth in Section
7.1, and such breach shall be incapable of being cured or, if capable of
being cured, shall not have been cured within 30 days after written notice
thereof shall have been received by the Company, (B) the Board of Directors
shall have (x) failed to make the Board Recommendation, (y) withdrawn the
Board Recommendation or (z) modified or qualified, in any manner adverse to
the Purchasers, the Board Recommendation (or resolved or proposed to take
any such action referred to in clause (x), (y) or (z)), in each case
whether or not permitted by the terms hereof, (C) the Company shall have
breached its obligations under this Agreement by reason of either a breach
of Section 5.2 or a failure to call and hold the Stockholders Meeting in
accordance with Section 6.1(b) or a failure to prepare and mail to its
stockholders the Information Statement in accordance with Section 6.1(a),
unless such failure was caused by the actions or inactions of any Purchaser
(or their respective representatives) in violation in any material respect
of their obligations under this Agreement, or (D) either of the
stockholders party to the Support and Option Agreement shall have breached
any of their respective obligations thereunder in any material respects;
(iii) at the election of the Company, if prior to the Closing
Date there shall have been a breach of any of the Purchasers'
representations, warranties, covenants or
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agreements, which breach would result in the failure to satisfy any of the
conditions set forth in Section 8.1, and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured within
30 days after written notice thereof shall have been received by the
Purchasers;
(iv) at the election of the Company or the Purchasers, if any
Governmental Authority has taken any action, which action is final and not
subject to appeal, seeking to prevent the consummation of the Closing or
any other Contemplated Transaction and the Company or the Purchasers, as
the case may be, reasonably and in good xxxxx xxxx it impracticable or
inadvisable to proceed in view of such action;
(v) at the election of the Company, if (A) the Company is
not in breach in any material respect of any of the terms of this
Agreement, (B) the Required Vote shall not have been obtained, (C) the
Board of Directors of the Company shall have made a Change in the Board
Recommendation in accordance with Section 6.1 and authorizes the Company,
subject to complying with the terms of this Agreement, to enter into a
binding written agreement concerning a transaction that constitutes a
Superior Proposal and the Company notifies the Purchasers in writing that
it intends to enter into such an agreement, attaching the most current
version of such agreement to such notice (the "Alternative Transaction
Notice"), (D) the Purchasers do not make, prior to five Business Days after
receipt of the Alternative Transaction Notice, an offer that the Board of
Directors of the Company determines, in good faith after consultation with
its financial advisors, is at least as favorable as the Superior Proposal
taking into account all relevant factors (including financing, required
approvals, the timing and likelihood of consummation and the post-closing
prospects for the Company) and (E) the Company prior to such termination
pays to the Purchasers in immediately available funds the fees and expenses
required to be paid pursuant to Section 10.3 and Section 12.2(b); or
(vi) at any time on or prior to the Closing Date, by mutual
written consent of the Company and the Purchasers.
(b) If this Agreement so terminates, it shall become null and
void and have no further force or effect, except as provided in Sections 10.2
and 10.3.
10.2 Survival after Termination. If this Agreement terminates
pursuant to Section 10.1 and the Contemplated Transactions are not consummated,
this Agreement shall become null and void and have no further force or effect,
except that any such termination shall be without prejudice to the rights of any
party on account of the non-satisfaction of the conditions set forth in Articles
7 and 8 or on account of the termination of this Agreement, each resulting from
the intentional or willful breach or violation of the representations,
warranties, covenants or agreements of another party under this Agreement.
Notwithstanding anything in this Agreement to the contrary, the provisions of
Sections 3.26 and 4.6, this Section 10.2 and Sections 10.3, 11.1, 11.2, 12.2,
12.3, 12.8 and 12.10 shall survive any termination of this Agreement.
10.3 Termination Fee. If (a)(i) this Agreement shall be terminated
at a time at which the Purchasers are entitled to terminate this Agreement
pursuant to Xxxxxxx 00.0(x)(xx)(X),
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(X) xx (X), xx (xx) this Agreement shall be terminated at a time at which the
Purchasers are entitled to terminate this Agreement pursuant to Section
10.1(a)(i)(B) or Section 10.1(a)(ii)(A), and (b) in the case of clause (a)(ii)
of this sentence, within twelve months of such termination the Company or any of
its Subsidiaries enters into any agreement with respect to, or consummates, any
Acquisition Proposal, then, in each such case, the Company shall promptly, but
in no event later than the date of such termination (or in the case of clause
(b), if later, the date the Company or its Subsidiary enters into such agreement
with respect to or consummates (whichever is earlier) such Acquisition
Proposal), pay the Purchasers (to the account or accounts designated by the
Purchasers) a termination fee in an amount equal to $6,000,000, by wire transfer
of immediately available funds, in addition to any amount to which Purchasers
are then entitled pursuant to Section 12.2(b). Notwithstanding the foregoing,
the Company shall have no obligation to pay the $6,000,000 termination fee if
(i) the Agreement is terminated pursuant to Section 10.1(a)(ii)(B), (ii) prior
to such termination no Acquisition Proposal shall have been made, and (iii) the
principal reason for the Change in the Board Recommendation is a material
adverse change in the financial condition or business of any Purchaser or any
transaction, commitment, dispute or other event, in each case relating to the
Purchasers, or any other development or combination of developments relating to
the Purchasers that, in any such case individually or in the aggregate, has had
or is reasonably likely to result in a material adverse effect on such
Purchaser's ability to effect the Contemplated Transactions or upon the Company
following the Closing. Such funds shall be distributed pro-rata to the
Purchasers based upon the Allocation Notice.
If the Company elects to terminate this Agreement pursuant to
Section 10.1(a)(v), the Company, prior to such termination, shall pay to the
Purchasers (to the account or accounts designated by the Purchasers) an amount
equal to $6,000,000, by wire transfer of immediately available funds, in
addition to any amount to which Purchasers are then entitled pursuant to Section
12.2(b). Such funds shall be distributed pro-rata to the Purchasers based upon
the Allocation Notice.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification. The Company hereby agrees to
indemnify, defend and hold harmless each Purchaser, its Affiliates and their
respective directors, managers, officers, agents, advisors, representatives,
employees, successors and assigns (each, a "Purchaser Indemnitee") from and
against all Claims, including without limitation, interest, penalties and
attorneys' fees and expenses, asserted against, resulting to, or imposed upon or
incurred by such Purchaser Indemnitee by a third party and arising out of or
resulting from any allegation or Claim in respect of any wrongful action or
inaction by the Company in connection with the authorization, execution,
delivery and performance of this Agreement or the Company Agreements, except to
the extent that the Purchaser Indemnitee has committed a material breach of its
representations, warranties or obligations under this Agreement, which breach is
the cause of the Company's wrongful action or inaction.
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11.2 Terms of Indemnification. The obligations and
liabilities of the Company with respect to Claims by third parties will be
subject to the following terms and conditions: (a) a Purchaser Indemnitee will
give the Company prompt notice of any Claims asserted against, resulting to,
imposed upon or incurred by such Purchaser Indemnitee, directly or indirectly,
and the Company will undertake the defense thereof by representatives of their
own choosing which are reasonably satisfactory to such Purchaser Indemnitee;
provided that the failure of any Purchaser Indemnitee to give notice as provided
in this Section 11.2 shall not relieve the Company of its obligations under this
Article 11, except to the extent that such failure has materially and adversely
affected the rights of the Company; (b) if within a reasonable time after notice
of any Claim, the Company fails to defend, such Purchaser Indemnitee will have
the right to undertake the defense, compromise or settlement of such Claims on
behalf of and for the account and at the risk of the Company, subject to the
right of the Company to assume the defense of such Claim at any time prior to
settlement, compromise or final determination thereof; (c) if there is a
reasonable probability that a Claim may materially and adversely affect a
Purchaser Indemnitee other than as a result of money damages or other money
payments, such Purchaser Indemnitee will have the right at its own expense to
defend, or co-defend, such Claim; (d) neither the Company nor the Purchaser
Indemnitee will, without the prior written consent of the other, settle or
compromise any Claim or consent to entry of any judgment relating to any such
Claim; (e) with respect to any Claims asserted against a Purchaser Indemnitee,
such Purchaser Indemnitee will have the right to employ one counsel of its
choice in each applicable jurisdiction (if more than one jurisdiction is
involved) to represent such Purchaser Indemnitee if, in such Purchaser
Indemnitee's reasonable judgment, a conflict of interest between such Purchaser
Indemnitee and the Company exists in respect of such Claims, and in that event
the fees and expenses of such separate counsel shall be paid by the Company
party; and (f) the Company will provide each Purchaser Indemnitee reasonable
access to all records and documents of the Company relating to any Claim.
ARTICLE 12
MISCELLANEOUS
12.1 Survival. All representations and warranties, covenants
and agreements of the Company and any Purchaser contained in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Purchaser or any controlling person
thereof or by or on behalf of the Company, any of its officers and directors or
any controlling person thereof, and such representations and warranties shall
expire on the Closing Date. The covenants and agreements contained herein shall
survive in accordance with their terms.
12.2 Fees and Expenses. (a) The Company shall pay its own
expenses incurred in connection with the negotiation, execution, delivery,
performance and consummation of this Agreement and the Contemplated Transactions
(including without limitations expenses incurred in connection with the Offer
and the filing, printing and mailing of the Information Statement).
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(b) Unless this Agreement is terminated pursuant to Section
10.1(a)(iii), whether or not the Contemplated Transactions are consummated and
without limiting Section 10.3, the Company shall reimburse each of the
Purchasers for the reasonable, documented out-of-pocket expenses of the
Purchasers or any of their Affiliates (whether or not incurred prior to the date
hereof), including, without limitation, the fees, disbursements and other
reasonable expenses of attorneys, accountants and any other advisors thereto,
arising out of or relating to the negotiation, execution, delivery, performance
and consummation of this Agreement and the Contemplated Transactions. Such
reimbursement shall be made from time to time not later than the third Business
Day following the date on which the Purchasers provide a written statement of
their theretofore unreimbursed expenses to the Company.
(c) On the Closing Date, the Company shall pay to the
Purchasers the Closing Amount, as set forth in Section 2.3(c).
12.3 Notices. All notices or other communications required
or permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given if delivered personally or telecopied, on
the date of such delivery, or if sent by reputable overnight courier, on the
first Business Day following the date of such mailing, as follows:
(a) if to the Company:
Xxxxxxx Education, Inc.
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Xx.
Telecopy: (000) 000-0000
(b) if to the Purchasers:
New Mountain Partners, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
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and
DB Capital Investors, L.P.
c/o DB Capital Partners, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
and
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy: 000 000-0000
Any party may by notice given in accordance with this Section 12.3 designate
another address or person for receipt of notices hereunder.
12.4 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Other than the parties hereto and their successors and permitted
assigns, and except as set forth in Article 11, no Person is intended to be a
beneficiary of this Agreement. Except as contemplated by Section 2.3(c), no
party hereto may assign its rights under this Agreement without the prior
written consent of the other party hereto; provided, however, that any Purchaser
may assign all or any portion of its rights hereunder (along with the
corresponding obligations) to any Affiliate of such Purchaser or its security
holders or partners or (provided that the Purchasers on the date hereof continue
to own or be committed to purchase pursuant hereto at least $115 million in
aggregate liquidation amount of the Series A Preferred Stock) to any other
Purchaser; provided further that no such assignment shall relieve any Purchaser
of its obligations under this Agreement. Any assignee of any Purchaser pursuant
to the proviso of the foregoing sentence shall be deemed to be a "Purchaser" for
all purposes of this Agreement.
12.5 Amendment and Waiver. (a) No failure or delay on the
part of the Company or the Purchasers in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
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The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or the Purchasers at law, in
equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement and any waiver of any provision of this Agreement
shall be effective only if it is made or given in writing and signed by the
Company and each Purchaser.
12.6 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, all
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
12.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
12.8 GOVERNING LAW; EXCLUSIVE JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF WHICH WOULD
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. The parties hereby
irrevocably submit to the jurisdiction of the federal courts of the United
States of America located in the State of Maryland (or, if such federal courts
shall not have jurisdiction over such matters, to the jurisdiction of the state
courts of the State of Maryland located in the City of Baltimore) solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and in respect of the Contemplated Transactions and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties irrevocably
agree that all claims with respect to such action or proceeding shall be heard
and determined in such a federal or state court.
12.9 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
12.10 Entire Agreement. This Agreement, together with the
schedules and exhibits hereto, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement, together with the schedules and exhibits hereto,
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
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12.11 Further Assurances. Subject to the terms and conditions
of this Agreement, each of the parties shall execute such documents and take, or
cause to be taken, all appropriate action, and shall do or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Contemplated Transactions and obtain any
consents, exemptions, authorizations, or other actions by, or give any notices
to, or make any filings with, any Governmental Authority or any other Person, as
soon as practicable after the date hereof. In furtherance and not in limitation
of the foregoing, the Company agrees to all actions necessary to give effect to
the voting rights of the Series A Preferred Stock in accordance with the terms
thereof.
12.12 Public Announcements. Except to the extent required by
law or the regulations of any national securities exchange or the NASD, none of
the parties hereto will issue or make any reports, statements or releases to the
public with respect to this Agreement or the Contemplated Transactions without
consulting the other parties, and, during the period from the date hereof until
thirty (30) days after the Closing Date, without the approval of the other
parties (such approval not to be unreasonably withheld).
12.13 Specific Performance. The parties acknowledge that
money damages are not an adequate remedy for violations of this Agreement and
that any party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as such
court may deem just and proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable law, each party
waives any objection to the imposition of such relief or any requirement for a
bond.
12.14 Subsidiaries. Whenever this Agreement provides that a
Subsidiary of the Company (including the University) is obligated to take or
refrain from taking any action, the Company shall cause such Subsidiary to take
or refrain from taking such action.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their respective officers hereunto duly
authorized as of the date first above written.
XXXXXXX EDUCATION, INC.
By: /s/ XXX X. XXXXXX
--------------------------------
Name: Xxx X. Xxxxxx
Title: President and CEO
PURCHASERS:
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P., its
general partner
By: New Mountain GP, LLC, its
general partner
By: /s/ XXXXXX X. XXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Member
DB CAPITAL INVESTORS, L.P.
By: DB Capital Partners, L.P., its
general partner
By: DB Capital Partners, Inc., its
general partner
By: /s/ XXXXXX X. XXXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Director
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
