Exhibit 2.2
FORM OF FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
This FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT (the "Agreement"),
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dated as of December 5, 1996, is among JLC HOLDINGS, INC., a Delaware
corporation ("Holdings"), SOFTWARE SYSTEMS CORP., a Delaware corporation
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("SSC"), JLC LEARNING CORPORATION, an Illinois corporation (the "Company"), and
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SYLVAN LEARNING SYSTEMS, INC., a Maryland corporation (the "Investor").
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WHEREAS, Holdings, SSC, the Company and the Investor have entered into a
certain Securities Purchase Agreement dated as of November 1, 1996 (as in effect
on the date hereof prior to giving effect to this Agreement, the "Securities
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Purchase Agreement") pursuant to which, among other things, (a) Holdings sold
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and issued to the Investor, and the Investor purchased from Holdings, a warrant
(the "Warrant") to purchase shares of Holdings' Class A-1 Common Stock and Class
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L-1 Common Stock, in each case $.01 par value per share, and (b) the Company
sold and issued to the Investor, and the Investor purchased from the Company,
20,000 shares (the "Shares") of the Company's Class A Preferred Stock, $.01 par
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value per share;
WHEREAS, the Company and the Investor have entered into a certain Stock
Transfer Agreement dated as of November 1, 1996 (as amended and in effect from
time to time, the "Academic Systems Stock Transfer Agreement") pursuant to
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which, among other things, the transferred and assigned to the Investor, and the
Investor accepted the transfer and assignment from the Company of, the Academic
Systems Shares (as defined below);
WHEREAS, on November 8, 1996, in accordance with the terms of the
Securities Purchase Agreement, the Investor paid to Holdings and the Company an
aggregate purchase price of $20,600,000 for the Warrant, the Shares and the
Academic Systems Shares;
WHEREAS, pursuant to the Academic Systems Stock Transfer Agreement, the
Investor agreed to pay to the Company, as additional consideration for the
Academic Systems Shares, 50% of any amounts or other consideration which the
Investor receives at any time or from time to time as a result of holding,
transferring, selling or otherwise disposing of the Academic Systems Shares or
any rights with respect thereto;
WHEREAS, on or about November 20, 1996, the Company informed the Investor
that (a) the Company has a contractual obligation to offer to sell the Academic
Systems Shares to Academic Systems (as defined below) and certain of its
stockholders before the Company may make an effective transfer and assignment to
the Investor of the Academic Systems Shares and (b) the transfer and assignment
by the Company to the Investor of the Academic Systems Shares pursuant to the
Academic Systems Stock Transfer Agreement violated such contractual obligation;
WHEREAS, the transfer and assignment by the Company to the Investor of the
Academic Systems Shares was an integral part of the transactions contemplated by
the Securities Purchase Agreement; and
WHEREAS, in light of the Company's contractual obligation to offer to sell
the Academic Systems Shares to Academic Systems and certain of its stockholders,
each of Holdings, SSC, the Company and the Investor desires to amend the
Securities Purchase Agreement in a manner that is equitable to all of the
parties;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Definitions; Certain Rules of Construction. Certain capitalized terms are
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used in this Agreement with the specific meanings defined below in this Section
1. Capitalized terms defined in the Securities Purchase Agreement as amended
hereby (the "Amended Securities Purchase Agreement") and not otherwise defined
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herein are used herein with the meanings so defined. Except as otherwise
explicitly specified to the contrary or unless the context clearly requires
otherwise, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section include all subsections
thereof and (d) the word "including" shall be construed as "including without
limitation".
2. Amendments to Securities Purchase Agreement. Subject to all the terms and
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conditions hereof, the Securities Purchase Agreement is amended as follows,
effective upon the date that the conditions in Section 4 are satisfied (the
"Amendment Date"):
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2.1. Amendment to Section 2.2. The last sentence of Section 2.2 of the
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Securities Purchase Agreement is amended to read in its entirety as follows:
"The aggregate purchase price for the Warrant and the Shares sold by
Holdings and the Company to the Investor under this Agreement and the
rights in respect of the Academic Systems Shares granted by the Company to
the Investor under the Academic Systems Stock Transfer Agreement shall be
$20,600,000. The parties agree (i) to allocate $100,000, $20,000,000 and
$500,000 of such aggregate purchase price to the Warrant, the Shares and
the rights in respect of the Academic Systems Shares granted by the Company
to the Investor under the Academic Systems Stock Transfer Agreement,
respectively, and (ii) to prepare and, if appropriate, file, all financial
statements, income tax returns and other reports on a basis consistent with
such allocation."
2.2. Amendment to Section 7.9. Section 7.9 of the Securities Purchase
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Agreement is amended to read in its entirety as follows:
"7.9. Excess Value of Sylvan Shares. Upon the sale by the Company of
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all Sylvan Shares (other than Additional Sylvan Shares) then held by the
Company, (a) the Company promptly shall furnish the Investor with a written
notice setting forth the
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price received by the Company in respect of each Sylvan Share (other than
the Additional Sylvan Shares) sold by the Company in each transaction after
the date of the Closing and (b) if the Aggregate Net Proceeds exceed
$15,600,000, the Company promptly shall pay to the Investor an amount equal
to the lesser of:
(i) the excess of (A) the Aggregate Net Proceeds over (B)
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$15,600,000; and
(ii) the aggregate amount of payments received by the Company
from the Investor pursuant to Section 8.5."
2.3. Addition of Section 7.11. A new Section 7.11 is added to the
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Securities Purchase Agreement immediately after Section 7.10 of the Securities
Purchase Agreement to read in its entirety as follows:
"7.11. Sale of Additional Sylvan Shares. The Company shall sell all
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of the Additional Sylvan Shares on or prior to December 11, 1997; provided,
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however, that prior to December 4, 1997, the Company shall not sell any
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Additional Sylvan Share without the prior written consent of the Investor."
2.4. Amendment to Section 8.7. Section 8.7 of the Securities Purchase
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Agreement is amended to read in its entirety as follows:
"8.7. Bridge Loans.
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8.7.1. Unsecured Bridge Loan. On December 9, 1996, the
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Investor shall make an unsecured loan (the "Unsecured Bridge Loan") to
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the Company in the amount of $5,000,000. The Unsecured Bridge Loan:
(a) shall have a principal amount equal to the lesser of (i)
the aggregate proceeds (net of any sale commissions, underwriting
discounts and applicable transfer taxes) received by the Company
upon the sale of all the Additional Sylvan Shares and (ii)
$5,000,000;
(b) shall be made by the Investor to the Company by
delivery to the Company of a certificate or certificates,
registered in the Company's name, representing a number of shares
of Sylvan Common Stock (the "Additional Sylvan Shares")
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determined by dividing $5,150,000 by the Subsequent Specified
Price against delivery by the Company to the Investor of a
promissory note in a form mutually satisfactory to each of the
Company and the Investor;
(c) shall not bear interest;
(d) shall, upon any sale by the Company of any Additional
Sylvan Share, be prepaid by the Company in an amount equal to the
Sale Price; and
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(e) shall be due and payable in full on December 13, 1997;
provided, however, that in the event that the Company sells all
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of the Additional Sylvan Shares in accordance with Section 7.11,
the Investor shall forgive an aggregate amount of the principal
of, and interest on, the Unsecured Bridge Loan equal to the
excess, if any, of (i) $5,000,000 over (ii) the aggregate Sale
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Price in respect of all of the Additional Sylvan Shares.
8.7.2. Secured Bridge Loan. At any time after December 9, 1996
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and prior to the date on which the registration statement covering the
Sylvan Shares under the Securities Act filed pursuant to Section 8.3
shall become effective, the Investor shall, upon not less than three
business days' prior written notice from the Company to the Investor,
make a secured loan (the "Secured Bridge Loan") to the Company in such
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amount as the Company may request in such notice; provided, however,
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that in no event shall the amount of the Secured Bridge Loan exceed
$7,800,000. The Secured Bridge Loan:
(a) shall be made by the Investor to the Company in lawful
money of the United States of America by wire transfer to one or
more accounts designated by the Company in such notice against
delivery by the Company to the Investor of a promissory note in a
form mutually satisfactory to each of the Company and the
Investor;
(b) shall bear interest at the applicable federal rate in
effect under the Internal Revenue Code on the date that the
Secured Bridge Loan is made pursuant to this Section 8.7.2;
(c) shall, upon any sale by the Company of any Sylvan Share
(other than an Additional Sylvan Share), be prepaid by the
Company in an amount equal to the Sale Price; and
(d) shall be due and payable in full on the date on which
the Company shall have sold all of the Sylvan Shares (other than
the Additional Sylvan Shares).
As security for the payment and performance of the Secured Bridge
Loan, the Company shall pledge to the Investor, and shall grant to the
Investor a security interest in, all of the Company's right, title and
interest in and to all of the Sylvan Shares (other than the Additional
Sylvan Shares). The Company shall take, or cause to be taken, all
such actions as may be reasonably requested by the Investor in order
to perfect the security interest granted by the Company to the
Investor pursuant to this Section 8.7.2."
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2.5. Addition of Section 9A. A new Section 9A is added to the
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Securities Purchase Agreement immediately after Section 9 of the Securities
Purchase Agrement to read in its entirety as follows:
9A. Payment and Refund of Certain Late Fees.
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9A.1 Payment of Late Fees.
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(a) If, on or prior to Xxxxx 00, 0000, (x) the Company has
not transferred and assigned to the Investor the Academic Systems
Shares in accordance with the terms of the Academic Systems Stock
Transfer Agreement (ii) the Company has transferred, assigned or
sold to any Person (other than the Investor) the Academic Systems
Shares and has not paid to the Investor 50% of any amount or
other consideration received by the Company upon such transfer,
assignment or sale, or (iii) Academic Systems has dissolved,
liquidated or otherwise terminated its existence and the Company
has not paid to the Investor 50% of any distribution in respect
of the Academic Systems Shares received by the Company upon such
dissolution, liquidation or termination, then the Company shall
pay to the Investor on March 31, 1997 a late fee in the amount
of $500,000.
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(b) If, on or prior to December 31, 1997, (i) the Company
has not transferred and assigned to the Investor the Academic
Systems Shares in accordance with the terms of the Academic
Systems Stock Transfer Agreement, (ii) the Company has
transferred, assigned or sold to any Person (other than the
Investor) the Academic Systems Shares and has not paid to the
Investor 50% of any amount or other consideration received by the
Company upon such transfer, assignment or sale or (iii) Academic
Systems has dissolved, liquidated or otherwise terminated its
existence and the Company has not paid to the Investor 50% of any
distribution in respect of the Academic Systems Shares received
by the Company upon such dissolution, liquidation or termination,
then the Company shall pay to the Investor on December 31, 1997 a
late fee in the amount of $500,000.
(c) If, on or prior to December 31, 1998, (i) the Company
has not transferred and assigned to the Investor the Academic
Systems Shares in accordance with the terms of the Academic
Systems Stock Transfer Agreement, (ii) the Company has
transferred, assigned or sold to any Person (other than the
Investor) the Academic Systems Shares and has not paid to the
Investor 50% of any amount or other consideration received by the
Company upon such transfer, assignment or sale or (iii) Academic
Systems has dissolved, liquidated or otherwise terminated its
existence and the Company has not paid to the Investor 50% of any
distribution in respect of the Academic Systems Shares received
by the Company upon such dissolution, liquidation or termination,
then the Company shall pay to the Investor on December 31, 1998 a
late fee in the amount of $250,000.
9A.2. Refund of Late Fees. Upon the earliest of (a) the date
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upon which the Company shall transfer and assign to the
Investor the Academic Systems Shares in accordance with the terms of
the Academic Systems Stock Transfer Agreement, (b) the date upon
which the Company shall transfer, assign or sell to any other Person
the Academic Systems Shares and shall pay to the Investor 50% of any
amount or other consideration received by the Company upon such
transfer, assignment or sale the date upon which then (i) the Company
shall have no further obligation to pay any late fee owing by the
Company to the Investor pursuant to Section 9A.1 and (ii) the Investor
shall, within 30 days, refund to the Company in cash an amount equal
to the excess of (A) the aggregate amount of all late fees paid by the
Company to the Investor pursuant to Section 9A.1 over (B) the amount
of any termination fee owing by the Company to the Investor pursuant
to Section 6 of the Academic Systems Stock Transfer Agreement.''
2.6 Amendment to Section 14.3. Section 14.3 of the Securities Purchase
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Agreement is amended to read in its entirety as follows:
"14.3. "Academic Systems Shares" means the shares of Academic
Systems Preferred Stock with respect to which the Company has granted
the Investor certain rights pursuant to the Academic Systems Stock
Transfer Agreement."
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2.7. Addition of Section 14.5A. A new Section 14.5A is added to the
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Securities Purchase Agreement immediately after Section 14.5 of the Securities
Purchase Agreement to read in its entirety as follows:
"14.5A. "Additional Sylvan Shares" is defined in Section 8.7.1."
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2.8. Amendment to Section 14.8. Section 14.8 of the Securities Purchase
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Agreement is amended to read in its entirety as follows:
"14.8. "Aggregate Sale Price" means the sum of the respective Sale
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Prices in respect of all Sylvan Shares (other than the Additional Sylvan
Shares)."
2.9. Amendment to Section 14.32. Section 14.32 of the Securities Purchase
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Agreement is amended to read in its entirety as follows:
"14.32. "Guaranteed Sylvan Shares" means:
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(a) prior to May 7, 1997, any Sylvan Share (other than
Additional Sylvan Shares) (i) designated in writing by the Company to
the Investor as a "Guaranteed Sylvan Share" prior to the sale thereof
and (ii) sold by the Company with the written consent of the Investor;
and
(b) on or after May 7, 1997, any Sylvan Share (other than
Additional Sylvan Shares) (i) designated in writing by the Company to
the Investor as a "Guaranteed Sylvan Share" prior to the sale thereof
and (ii) sold by the Company."
2.10. Amendment to Section 14.48. Section 14.48 of the Securities
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Purchase Agreement is amended to read in its entirety as follows:
"14.32. "Multiplier" means 0.3333.
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2.11. Amendment to Section 14.51. Section 14.51 of the Securities
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Purchase Agreement is amended to read in its entirety as follows:
"14.51. "Number of Guaranteed Sylvan Shares" means a number equal to
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the lesser of (a) the product of (i) the number of Sylvan Shares (other
than the Additional Sylvan Shares) received by the Company from the
Investor pursuant to this Agreement multiplied by (ii) the Multiplier and
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(b) the Guaranteed Sylvan Shares."
2.12. Amendment to Section 14.62. Section 14.62 of the Securities
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Purchase Agreement is amended to read in its entirety as follows:
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"14.62. "Secured Bridge Loan" is defined in Section 8.7.2."
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2.13. Amendment to Section 14.74. Section 14.74 of the Securities
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Purchase Agreement is amended to read in its entirety as follows:
"14.74. "Sylvan Shares" means each of the Initial Sylvan Shares, the
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Subsequent Sylvan Shares and the Additional Sylvan Shares.
2.14. Addition of Section 14.77A. A new Section 14.77A is added to the
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Securities Purchase Agreement immediately after Section 14.77 of the Securities
Purchase Agreement to read in its entirety as follows:
"14.77A. "Unsecured Bridge Loan" is defined in Section 8.7.1."
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3. Waivers.
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3.1. Waiver of Certain Increases in the Multiplier. Effective upon the
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Amendment Date, each of Holdings, SSC and the Company waives the right to
receive any increase in the Multiplier resulting from the failure by the
Investor to have declared effective a registration statement covering the Sylvan
Shares under the Securities Act prior to November 21, 1996.
3.2. Waiver of Certain Breaches Regarding the Transfer of the Academic
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Systems Shares. Effective upon the Amendment Date, the Investor waives (a) any
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breach by the Company of any representation, warranty of covenant contained in
the Academic Systems Stock Transfer Agreement occurring prior to giving effect
to this Agreement and (b) any breach by Holdings, SSC or the Company or any
representation or warranty contained in Sections 3.1, 3.2, 3.9, 3.14 or 3.19 of
the Securities Purchase Agreement (i) resulting from the inability or failure by
the Company to comply with the terms of the Academic Systems Stock Transfer
Agreement and (ii) occurring prior to giving effect to this Agreement.
4. Conditions.
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4.1. Conditions to Obligations of the Investor. The obligations of the
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Investor to consummate the transactions contemplated hereby are subject to the
fulfillment of each of the following conditions on or prior to the Amendment
Date:
4.1.1. Amendment to Academic Systems Stock Transfer Agreement.
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Holdings, SSC and the Company shall have executed and delivered to the
Investor an amendment to the Academic Systems Stock Transfer Agreement in
substantially the form of Exhibit 4.1.1.
4.1.2. Indemnification Agreement. Holdings, SSC and the Company
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shall have executed and delivered to the Investor an indemnification
agreement in substantially the form of Exhibit 4.1.2.
4.1.3. Amendment to Bank Credit Agreement. Holdings, SSC, the
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Company and the lenders party to the Bank Credit Agreement shall have entered
into an amendment to the Bank Credit Agreement in substantially the form of
Exhibit 4.1.3.
4.1.4. Amendment to Note Purchase Agreement. Holdings, SSC, the
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Company and the lenders party to the Note Purchase Agreement shall have entered
into an amendment to the Note Purchase Agreement in substantially the form of
Exhibit 4.1.5.
4.1.5. Opinion of Counsel for Holding, SSC and the Company. Ropes &
Xxxx, counsel for Holdings, SSC and the Company, shall have delivered to the
Investor an opinion dated the Amendment Date in substantially the form of
Exhibit 4.1.5.
4.2. Conditions to Obligations of Holdings, SSC and the Company. The
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obligations of Holdings, SSC and the Company to consummate the transactions
contemplated hereby are subject to the fulfillment of each of the following
conditions on or prior to the Amendment Date:
4.2.1. Academic Systems Shares. The Investor shall have delivered to
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the Company certificates representing the Academic Systems Shares and, if
requested by the Company, stock transfer powers executed by the Investor in
favor of the Company.
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4.2.2. Amendment to Academic Systems Stock Transfer Agreement. The
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Investor shall have executed and delivered to Holdings, SSC and the Company
an amendment to the Academic Systems Stock Transfer Agreement in
substantially the form of Exhibit 4.1.1.
4.2.3. Indemnification Agreement. The Investor shall have executed
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and delivered to Holdings, SSC and the Company an indemnification agreement
in substantially the form of Exhibit 4.1.2.
5. General. The Amended Securities Purchase Agreement and all of the other
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Transaction Documents are each confirmed as being in full force and effect.
This Agreement, the Amended Securities Purchase Agreement and the other
Transaction Documents referred to herein or therein constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and current understandings and agreements,
whether written or oral, with respect to such subject matter. The invalidity or
unenforceability of any provision hereof shall not affect the validity or
enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not alter, limit or
otherwise affect the meaning hereof. Each of this Agreement and the Amended
Securities Purchase Agreement is a Transaction Document and may be executed in
any number of counterparts, which together shall constitute one instrument, and
shall bind and inure to the benefit of the parties and their respective
permitted successors and assigns. This Agreement shall be governed by and
construed in accordance with the laws (other than the conflict of laws rules) of
The Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
executed by its duly authorized officer as an agreement under seal as of the
date first above written.
JLC HOLDINGS, INC.
By
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Title:
SOFTWARE SYSTEMS CORP.
By
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Title:
JLC LEARNING CORPORATION
By
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Title:
SYLVAN LEARNING SYSTEMS, INC.
By
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Title:
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