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EXHIBIT 10.37
ASSET PURCHASE AGREEMENT
Agreement dated as of September 6, 1996 among EDUCATIONAL MEDICAL,
INC., a Delaware corporation ("EMI"), SACMD Acquisition Corp., a Delaware
corporation wholly owned by EMI ("Buyer"), San Antonio College of Medical and
Dental Assistants, Inc., a Texas corporation ("San Antonio"), Career Centers of
Texas - El Paso, Inc., a Texas corporation ("El Paso") ("San Antonio and El
Paso collectively are called the "Sellers"), and Mr. ▇▇▇▇▇ ▇▇▇▇▇
("Shareholder").
PRELIMINARY STATEMENT
San Antonio is the owner of a postsecondary educational institution
with a main campus located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (the "San Antonio Main
Location") in San Antonio, Bexar County, Texas, with an additional location
(the "San Antonio Additional Location") located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ with a
campus located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇ "McAllen location) in McAllen,
▇▇▇▇▇▇▇ County, Texas (collectively, called the "San Antonio School") and El
Paso is the owner of a postsecondary education institution located at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ (the "El Paso Main Campus") in El Paso, El Paso County, Texas
with an additional location (the "El Paso Additional Location") located at
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ (collectively called the "El Paso School") (the San Antonio
School and the El Paso School are collectively called the "Schools"). The
Shareholder owns all of the capital stock of the Sellers. The Buyer wants to
buy the Schools. Subject to the terms and conditions contained in this
Agreement, the Sellers want to sell the Schools to the Buyer.
This Agreement provides for the sale and purchase of the Schools. It
contains the terms pursuant to which Sellers have agreed to sell to Buyer
substantially all of the School Related Assets (as defined in Section 1(f)(1)
below), and Buyer has agreed to assume certain related Stated Liabilities (as
defined in Section 1(f)(2) below) of Sellers. In addition, the Shareholder has
agreed not to compete with EMI and its schools. EMI has entered into this
Agreement to reflect that it is jointly and severally liable with the Buyer
with regard to the obligations of the Buyer provided for in it.
IN CONSIDERATION OF THE COVENANTS CONTAINED IN THIS AGREEMENT, AND THE
OTHER CONSIDERATION PROVIDED FOR IN IT, THE PARTIES, EACH INTENDING TO BE
LEGALLY BOUND, AGREE AS FOLLOWS:
1. THE PURCHASE PRICE; CONVEYANCE OF THE ASSETS; ASSUMPTION OF
STATED LIABILITIES; CERTAIN DEFINITIONS; EFFECTIVE DATE OF TRANSACTION.
(a) The Purchase Price and Sellers' Cash Distribution. The
purchase price for the School Related Assets is $2,500,000 (the "Purchase
Price"). The Purchase Price will be allocated as follows: (i) $2,400,000 to
tangible and intangible assets, and (ii) $100,000 to the Non-Competition
Agreement (the "Non-Competition Agreement") contained in Section 7 of this
Asset Purchase Agreement. On or before the Closing Date, Buyer and Sellers
shall agree on the proportion of the consideration to be allocated to each of
the Assets purchased pursuant to this Agreement as shall have been proposed by
Buyer and reasonably approved by Sellers, and Buyer and Sellers agree that they
shall not thereafter take any position or action inconsistent with such
allocation in the filing of any Federal income tax returns. Upon execution of
this Agreement the Sellers shall distribute an aggregate amount to the
Shareholder equal to (x) the Shareholder's Cash Distribution (as defined in
Section 1(f)(1) below), minus (y) an aggregate of $300,000 (the "Undistributed
Portion of the Shareholder's Cash Distribution") of which $150,000 shall be
retained by each Seller for working capital. The Shareholder shall deposit
$250,000.00 of such amount (the "Escrow Agreement") into the escrow account
(the "Contingent Liability Escrow Account") established by the escrow agreement
(the "Contingent Liability Escrow Agreement") the form of which is attached to
this Agreement as EXHIBIT 1.(1) UPON EXECUTION
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OF THIS AGREEMENT THE BUYER SHALL PAY TO THE SELLERS AND SHAREHOLDER, JOINTLY,
$50,000, WHICH AMOUNT SHALL BE A FULLY REFUNDABLE DEPOSIT (THE "REFUNDABLE
DEPOSIT") ON ACCOUNT OF THE INITIAL PAYMENT (AS DEFINED IN SUBSECTION (D) OF
THIS SECTION 1).
(b) Conveyance of Assets. Upon the earlier to occur of (i)
receipt by the Buyer of all approvals from all applicable regulatory
authorities, including without limitation the Texas Education Agency (or its
successor, the Texas Workforce Commission -- Proprietary Schools Section)
which, in the opinion of Buyer's counsel must be received prior to the
acquisition of the Schools' assets, or (ii) such date as the parties may
specify (the "Closing Date"), but no later than January 31, 1997, the Seller
shall convey to Buyer all of its School Related Assets (the "Closing").
(c) Assumption of Stated Liabilities and the Texas Mandated
Assumed Liabilities. On the Closing Date, the Buyer shall assume and agree to
discharge when due all of the Stated Liabilities. To the extent not included
in Stated Liabilities the Buyer shall assume for the benefit of the relevant
third party(ies), but not the Sellers: (1) all of the Sellers' refund
liabilities which may have arisen during the operation of the Schools by the
Sellers or any former owner, and (2) the Sellers' liabilities, duties, and
obligations under the enrollment contracts between the students and each
respective Seller which such Seller is obligated to provide on or after the
Effective Date, as defined in Section 1(g) of this Agreement (the "Texas
Mandated Assumed Liabilities").
(d) Cash Payments by the Buyer and Shareholder's Cash
Distribution. On the Closing Date (1) the Buyer shall pay to Sellers, jointly,
$50,000 (which amount, together with the Refundable Deposit, is called the
"Initial Payment"), by wire transfer or otherwise in immediately available
funds, and (2) simultaneously with the Closing, the Sellers shall distribute
the Remaining Portion of the Shareholder's Cash Distribution Payment (as
defined in Section (f)(1) of this Agreement) to the Shareholder.
(e) Delivery of Second Payment Note, the Purchase Money
Promissory Note, and the Pledge Agreement by the Buyer. On the Closing Date the
Buyer shall deliver to Sellers, jointly:
(1) its Promissory Note for $1,150,000 (the "Second
Payment Note") in the form attached to this Agreement as EXHIBIT 2(2), payable
to the Sellers jointly, without interest, on the earlier of the last business
day within the first 30 calendar days following the date on which the
Prerequisite Student Aid Approvals are obtained, but no later than twelve
months from the date of Closing. "Prerequisite Student Aid Approvals" mean
approvals by the United States Department of Education and all other applicable
private and governmental agencies and organizations of the change in control
resulting from the change in ownership of the Schools resulting from the sale
of the Schools pursuant to this Asset Purchase Agreement which are a
prerequisite to receipt of federal and state aid by the Schools' students;
(2) its Promissory Note for $1,250,000, amortizing
in equal annual principal payments over 5 years with interest at 8% per annum
accruing and payable annually along with the applicable principal payment, such
Note to be in the form attached to this Agreement as EXHIBIT 3(3) (the "Purchase
Money Promissory Note").
(3) A pledge agreement in the form attached to this
Agreement as EXHIBIT 4(4) (the "Pledge Agreement") pursuant to which EMI secures
the payment of the Second Payment Note, and the related interest by a pledge of
all of the outstanding capital stock (the "Buyer's Stock") of the Buyer.
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(f) Definitions of School Related Assets and Stated
Liabilities.
(1) "School Related Assets" shall mean: (i) the
assets reflected in the Sellers' Most Recent Balance Sheets (as defined in
Section 2(c)(1) below) and included in the Sellers' Financial Statements,
together with the related goodwill and rights of each of the Sellers as a going
concern, tangible and intangible, used in connection with the operation of the
Schools, together with any other assets acquired by each of the Sellers
subsequent to the date of such balance sheet in connection with the operation
of the Schools, other than cash and cash equivalents on hand in an amount equal
to that presented on the Sellers' Most Recent Balance Sheets, less an amount
equal to current liabilities (other than deferred tuition income) as of such
date (the "Shareholder's Cash Distribution"), and (ii) Sellers' respective
rights to use the names "San Antonio College of Medical and Dental Assistants"
or and "Career Centers of Texas" and SUCH OTHER TRADE NAMES USED BY EITHER
SCHOOL IN THE CONDUCT OF ITS BUSINESS, in each case either alone or in
conjunction with other words or names in the context of the operation of a
school or other learning institution, but shall not include "Excluded Assets."
Excluded Assets are (i) assets, including without limitation, all properties,
interests and interests in properties, which have been or will be sold,
consumed or otherwise disposed of in the ordinary course of business subsequent
to the date of the Most Recent Balance Sheets and prior to the Closing Date,
(ii) those assets listed on EXHIBIT 5(5) attached to this Agreement and (iii)
judgment awards.
(2) "Stated Liabilities" shall mean the liabilities,
duties and obligations of the Sellers related to the operations of the Schools
(i) which are disclosed as non-contingent liabilities on the Sellers' Most
Recent Balance Sheets including the liability for deferred tuition, but
excluding profit sharing expenses and the guarantee of bank debt incurred by
the Shareholder in connection with the purchase of the Central Facility at the
San Antonio Main Location and the guarantee of bank debt incurred by the
Shareholder in connection with the purchase of the El Paso Main Campus as
described in Notes 6 and 7, respectively to the San Antonio and El Paso
December 31, 1995 Balance Sheets included in the Audited Financial Statements
(as defined in Section 2(c)(1), below), (ii) provided for in agreements made or
entered into in the ordinary course of business after the date of the Sellers'
Most Recent Balance Sheets to the Closing Date, including accounts payable
arising in the ordinary course of business, from transactions with trade
creditors and suppliers, regardless of whether any such agreement is in
writing, and accrued but unpaid payroll and other payroll related liabilities
such as payroll taxes (the "Closing Date Liabilities"), and (iii) provided for
in the agreements disclosed on Exhibits 12, 17, and 18 attached to this
Agreement, provided, in the case of liabilities, duties and obligations
described in clauses (ii) and (iii) of this sentence. Stated Liabilities shall
only include the liability, duty or obligation to (x) pay money if, and to the
extent, such obligation is provided for in such agreement and/or (y) perform
any service or take any action to the extent provided for in such agreement.
Stated Liabilities shall exclude, without limitation, any contingent
liabilities not specifically assumed, whether arising prior to or after the
Effective Date and regardless of whether disclosed to Sellers, including
without limitation, (x) any employee benefits other than for accrued wages as
provided for in clause (ii) of this Subsection (1)(f)(2), (y) liabilities
arising from failure to comply with any law or regulation relating to the
administration of any kind of student aid or grant, or record keeping or
reporting required in connection with such administration, including without
limitation the Potential Title IV Notification Liability (as defined in
Subsection 2(c)(2) of this Agreement), and (z) any liabilities arising out of
the action instituted by (i) ▇▇▇▇ ▇▇▇▇▇▇, et al, Plaintiff, vs. San Antonio
College of Medical and Dental Assistants, Inc., Defendant, No. 96-CI-02433,
225th Judicial District Court, Bexar County, Texas, and (2) ▇▇▇▇▇ ▇▇▇▇▇▇, et
al, Plaintiff, vs. San Antonio College of Medical and Dental Assistants, Inc.
and Becho, Defendants, No. C-929-94-E, 275th Judicial District Court, ▇▇▇▇▇▇▇
County, Texas.
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(g) Effective Date. In the event the Closing occurs, the
effective date of this transaction for all accounting purposes shall be August
31, 1996, and the operations of the Schools be deemed to have been on behalf of
the Buyer at all times following the Effective Date, provided that the
selection of such effective date shall not impose on the Buyer any liability of
the Sellers other than with respect to the assumption of Stated Liabilities.
2. REPRESENTATIONS OF THE SELLER AND THE SHAREHOLDER.
Each of the Sellers and the Shareholder, severally and not jointly,
make the following representations and warranties to Buyer.
(a) No Misstatements. The representations of each of the
Sellers and the Shareholder and the information supplied by Sellers, or the
Shareholder in each case contained in this Agreement, the Exhibits attached to
it and the documents incorporated into it by reference do not contain any
untrue statement of a material fact or omit to state any fact necessary to make
such representations or information not materially misleading.
(b) Validity of Actions. Each Seller (i) is duly
organized, validly existing and in good standing under the laws of its
organization, (ii) has all requisite corporate and other appropriate
authorization to conduct its business as currently conducted, (iii) is
qualified to do business in all jurisdictions in which such qualification is
necessary, other than those jurisdictions where the failure to so qualify would
not have a material adverse effect upon the business assets or operations of
such Seller, and (iv) has full power and authority to enter into this Agreement
and to carry out all acts contemplated by it. This Agreement has been duly
executed and delivered on behalf of each of the Sellers and the Shareholder,
has received all necessary corporate authorization and is a legal, valid and
binding obligation of each of the Sellers and the Shareholder, enforceable
against each of them in accordance with its terms. Entering into this Asset
Purchase Agreement and the consummation of the transactions contemplated by it
will not (i) violate any provision of the Articles of Incorporation or Bylaws
of Sellers or, (ii) conflict with or result in any breach of any of the
provisions of any material agreement to which each of the Sellers or the
Shareholder is a party or by which any of them or any of their respective
assets are bound, or (iii) cause a breach of any applicable law, governmental
regulation, order, or other decree of any court or governmental agency. The
Articles of Incorporation and Bylaws of Sellers, as presently in effect, are
attached to this Agreement as EXHIBIT 6(6).
(c) Sellers' Financial Statements
(1) Attached as EXHIBIT 7(7) to this Agreement
are each of the Sellers' audited balance sheets at December 31, 1993, 1994 and
1995, and statements of income and expense and cash flows for the years then
ending (the "Sellers' Audited Financial Statements"). Attached as EXHIBIT 8(8)
to this Agreement are each of the Sellers' unaudited balance sheets at June 30,
1996 (the Sellers' Most Recent Balance Sheets") and statements of income and
expense and cash flow for the period then ending (collectively the "Sellers'
Unaudited Financial Statements"). The Sellers' Unaudited Financial Statements
have been reviewed by a certified public accountant and accompanied by a
certificate of such accountant describing the scope of such review. The
Sellers' Audited and Unaudited Financial Statements are collectively called the
"Sellers' Financial Statements."
(2) The Sellers' Financial Statements: (i)
accurately represent the transactions appearing on the books and records of
each of the Sellers, and (ii) fairly present in all material respects Sellers'
financial condition and its results of operations at the times and for the
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periods presented, including normal adjustments consistent with year end
adjustments to properly reflect accruals through the end of the period;
provided, however that Sellers' Unaudited Financial Statements do not contain
footnotes and the related disclosures. The Sellers' Audited Financial
Statements have been prepared on the accrual basis in accordance with generally
accepted accounting principles consistently applied ("GAAP"), except as
otherwise disclosed in the reports accompanying them or in the notes attached
to them and except with respect to potential liability to refund Title IV funds
received by students attending the El Paso Additional Location prior to August
2, 1996 arising on account of El Paso's possible failure to comply with
applicable DOE regulations concerning notification of the commencement of
operations at such campus (the "Potential Title IV Notification Liability").
(3) There have been no material adverse changes
in the financial condition or in the operations, properties or assets of each
of the Sellers since each of the Sellers' Most Recent Balance Sheets.
(d) Liabilities of Sellers. Neither Seller has any
liabilities, contingent or otherwise, including, without limitation,
liabilities for state or Federal income, withholding, sales, or other taxes,
except to the extent reflected, reserved against, or provided for, in each of
the Sellers' Most Recent Balance Sheets, except for taxes, trade payables and
other obligations incurred after the date of each of the Sellers' Most Recent
Balance Sheets in amounts consistent in all material respects, with those
incurred in prior periods in the ordinary course of business, including without
limitation liabilities for unearned tuition, and the Potential Title IV
Notification Liability.
(e) Assets of Sellers. Each Seller has good title to all
of its School Related Assets. Except as otherwise disclosed in the Sellers'
Financial Statements or the related notes accompanying them or in the Exhibits
to this Agreement, all of the School Related Assets are owned free and clear of
any adverse claims, security interests, or other encumbrances or restrictions,
except liens for current taxes not yet due and payable, landlords' liens as
provided for in the relevant leases or by applicable law, or liens or similar
security interests granted as part of personal property financing agreements
made in the ordinary course of business and which in the aggregate are not
material.
(f) Facility and Facility Operations.
(1) Attached to this Agreement as EXHIBIT 9(9) are
the leases (the "School Facility Leases") relating to each of the Sellers'
locations (the "School Facilities"). The Schools' operations are conducted
solely at the School Facilities and all of the tangible School Related Assets
used in connection with such operations are located at the School Facilities.
All of the improvements to the best of Sellers' and Shareholder's knowledge and
belief located at the School Facilities are in good operating condition and
repair, subject only to ordinary wear and tear. There is no pending or, to the
knowledge of each of the Sellers, threatened condemnation proceeding with
respect to the School Facilities.
(2) Attached as EXHIBIT 10(10) to this Agreement
is a schedule of all of the furnishings, fixtures and equipment with values in
excess of the baseline used in determining such inventory, located on, or used
in connection with, the operation of the School Facilities as of the date
indicated on such inventory, subject to immaterial omissions occurring in
course of compiling such inventory.
(3) Except for (i) environmental law compliance
(which is addressed in
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Section 2(f)(4) below) and (ii) accreditation, recruitment, admissions, student
loan and funding matters compliance (which are addressed in Sections 2(h) and
2(i) below) as to which no representation or warranty is made in this Section
2(f), all activities at, and the physical condition of, the School Facilities
are in compliance with all legal and regulatory requirements applicable to the
Sellers, the conduct of their business, and the use of each School Facility,
and neither of the Sellers has received any actual notice to the contrary.
Each of the Sellers has paid for and obtained all licenses, permits, and other
authorizations material to the conduct its business and the use of the School
Facilities (the "Permits"). All Permits currently in effect and pertaining to
the each of the Sellers, the School Facilities or either of the Sellers'
activities are listed on EXHIBIT 11(11) to this Agreement. The representations
contained in this Subsection 3 shall not apply to incidental instances of
non-compliance occurring in the ordinary course of business without the actual
knowledge of the each of the Sellers or the Shareholder, which are immaterial
to the operation of the Schools and capable of being cured without
significantly disrupting such School's operations.
(4) To the best of the knowledge of each of the
Sellers and the Shareholder, there are no Hazardous Substances1 in, on or under
the School Facilities except for those which are used by Sellers in compliance,
in all material respects, with applicable law, and each of the Sellers is not
now engaged in any litigation, proceedings or investigations, nor knows of any
pending or threatened litigation, proceedings or investigations regarding the
presence of Hazardous Substances in, on or under either of the School
Facilities.
(g) Equipment Leases and Financing Agreements. Except
for the School Facility Leases, all of the leases and financing agreements to
which each of the Sellers is a party are described
__________________________
(1) The term "Hazardous Substance" shall include without limitation:
(i) Those substances included within the definitions of
"hazardous substances," "hazardous materials," "toxic substances," or
"solid waste" in CERCLA, RCRA, and the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq., and in the
regulations promulgated pursuant to said laws;
(ii) Those substances defined as "hazardous wastes" in any
Texas Statute and in the regulations promulgated pursuant to any Texas
Statute;
(iii) Those substances listed in the United States Department
of Transportation Table (49 CFR 172.101 andamendments thereto) or by
the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 CFR Part 302 and amendments thereto);
(iv) Such other substances, materials and wastes which are or
become regulated under applicable local, state or federal law, or
which are classified as hazardous or toxic under federal, state, or
local laws or regulations; and
(v) Any material, waste or substance which is (A) petroleum,
(B) asbestos, (C) polychlorinated biphenyl, (D) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act,
33 U.S.C. Section Section 1251 et seq. or listed pursuant to Section
307 of the Clean Water Act, (E) flammable explosive, or (F)
radioactive materials.
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in EXHIBIT 12(12) to this Agreement (the "Financing and Related Agreements").
Copies of the Financing and Related Agreements are attached to such Exhibit or
have been provided to the Buyer. Except as reflected in such Exhibit, there
have been no modifications to any of the Financing and Related Agreements;
neither Seller is in default in any material respect with respect to them; and
none of the interests of either Seller in any of them is subject to any
restriction except as stated in the applicable document or as provided by
applicable law.
(h) Accreditation and Compliance with Title IV
Requirements. Attached as EXHIBIT 13(13) to this Agreement is a list of all
Federal, state or other licenses and approvals, including without limitation
all accreditations and certifications, granted to each Seller with respect to
the conduct of its educational or training business (the "Accreditations and
Certifications"), and the governmental body or agency or other entity granting
such Accreditation or Certification. Included in such Exhibit are copies of
all such Accreditations and Certifications.
(1) Except for the Permits and the Accreditations
and Certifications, no license or approval is material to the conduct of each
of the Sellers' business as it is now being conducted, and neither Sellers nor
the Shareholder has received notice that any other license or approval is
necessary for the continued conduct of such business or that any such license
or approval will not be renewed.
(2) Each of the Sellers is accredited by the
Accreditation Commission of Career Schools and Colleges of Technology and have
programmatic accreditation with respect to their Medical Assistant Program by
the Accreditation Bureau of Health Education Schools. In addition, the El Paso
School is accredited by the Council on Occupational Educational Institutions.
Each of the Sellers' operations is and has been conducted in all material
respects in accordance with all relevant standards imposed by applicable
accrediting agencies, or agencies administering state government student aid
programs in which the Sellers or any students attending the Schools
participate, or other applicable laws or regulations.
(3) Each of the Sellers is an institution
certified by the United States Department of Education (the "Department of
Education"). Each of the Sellers is a party to, and is and at all times has
been in compliance with, a valid program participation agreement with the
Department of Education with respect to the operations being conducted by the
Schools. Neither Seller has received any notice, not previously complied
with, with respect to any alleged violation of the rules or regulations of such
agency or any applicable accrediting agency in respect of the Schools or the
terms of any program participation agreement to which it is or was a party. If
any such notices have been received and complied with, Sellers have disclosed
their receipt and disposition to Buyer prior to the execution of this Agreement
in writing by a letter making specific reference to this Section of this
Agreement. Except with respect to the Potential Title IV Notification
Liability, each of the Sellers is and at all times has been, in compliance with
all of the provisions of the Higher Education Act of 1965 ("HEA") and the
regulations promulgated by the Department of Education thereunder (the "DOE
Regulations") necessary to establish and maintain its eligibility to
participate in the Title IV funding programs provided for therein, including
without limitation, the demonstration of financial and administrative
responsibility as provided for in the DOE Regulations. Sellers have submitted
audited financial statements to the Department of Education for the fiscal year
ended December 31, 1995 (the "DOE Financial Statements").
(4) Neither Sellers nor the Shareholder is aware
of any investigation or review of student financial aid programs (including
without limitation Title IV Programs) in which it or
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its students participate, or any review of any of its Accreditations or
Certifications whether by a party to any relevant agreement, the issuer of such
Accreditation or Certification or otherwise.
(i) Recruitment; Admissions Procedures; Attendance;
Reports. Attached as EXHIBIT 14(14) to this Agreement are copies of all of the
Sellers' policy manuals and other statements of procedures or instruction
relating to recruitment of students, including procedures for assisting in the
application by prospective students for direct or indirect state or Federal
financial assistance; admissions procedures, including any descriptions of
procedures for insuring compliance with state or Federal or other appropriate
standards or tests of eligibility; procedures for encouraging and verifying
attendance, minimum required attendance policies, and other relevant criteria
relating to course completion and certification (collectively referred to as
the "Policy Guidelines"). Sellers' operations have been conducted in all
material respects in accordance with the Policy Guidelines.
Each of the Sellers has submitted all reports, audits, and other
information, whether periodic in nature or pursuant to specific requests
("Compliance Reports"), to all agencies or other entities with which such
filings are required relating to its compliance with (i) applicable
accreditation standards governing its activities or (ii) laws or regulations
governing programs pursuant to which the Sellers or students attending the
Schools receive funding, including, without limitation, the ▇▇▇▇▇▇▇ Loan
Program, the ▇▇▇▇▇▇▇▇ Student Loan Program, the Pell Grant Program and the
Supplemental Educational Opportunity Grant Programs, or the Federal Direct
Student Lending Program, all of which are provided for pursuant to Title IV of
the HEA.
Complete and accurate records in all material respects for all present
and past students attending each of the Schools have been maintained consistent
with the operations of a school business. All forms and records have been
prepared, completed, maintained and filed in all material respects in
accordance with all applicable federal and state laws and regulations, and are
true and correct in all material respects. All financial aid grants and loans,
disbursements and record keeping relating to them have been completed in
compliance in all material respects with all federal and state requirements,
and there are no material deficiencies in respect thereto. No student has been
funded prior to the date for which such student was eligible for funding and
such student's records have been processed in all material respects in
accordance with all applicable federal, state and relevant third party funding
source requirements. All appropriate reports and surveys have been accurately
prepared, taken and filed prior to delinquency.
(j) Default. Attached as EXHIBIT 15(15) is a schedule
indicating the cohort default rate, as calculated by the United States
Department of Education, of all students attending the each of the Schools
receiving assistance pursuant to the ▇▇▇▇▇▇▇▇ Loan and Supplemental Loans for
Students Programs (or their applicable predecessor programs) for the federal
fiscal years ended September 30, 1992, 1993 and 1994. To the best of the
knowledge of the Sellers and the Shareholder, such Schedule is materially
accurate in all respects.
(k) Trademarks, etc. Attached to this Agreement as EXHIBIT
16(16) is a list of all trade names, trademarks, service marks, copyrights and
the registrations for them owned or used by Sellers. Neither Seller has
infringed and is not now infringing, any trademark, trade name, service ▇▇▇▇,
or copyright belonging to any other person. Except as set forth on such
exhibit, neither Seller is a party to any license, agreement or arrangement,
whether as licenser, licensee or otherwise, with respect to any trademark,
trade name, service ▇▇▇▇, or copyright used by such Seller. Each of the
Sellers may conduct its business without license by others for the use of any
trade name, trademark, service ▇▇▇▇, or copyright.
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(l) Material Contracts. Attached as composite EXHIBIT
17(17) to this Agreement is (i) a schedule identifying all material contracts
relating to the Schools' operations not otherwise specifically identified in
the other Exhibits to this Agreement, including, without limitation, all
agreements relating to state or Federal funding of educational services
provided by the Sellers through grants, loans or direct payments either to the
Sellers, individual students or otherwise, and any agreements relating to the
placement of students following their completion of relevant educational
programs provided by the Sellers other than agreements with students involving
the teaching of standard courses, for standard prices as set forth in the
Sellers' catalogs or in the enrollment agreement for such students (the
"Contracts"); (ii) a summary of all material provisions of the Contracts that
are oral and not reduced to written documents; and (iii) a copy of all written
Contracts. Except as disclosed in Exhibit 17: (i) all of the Contracts remain
unmodified and in full force and effect, and (ii) neither Seller is in default
of any material nature (nor, to the best knowledge of Sellers and the
Shareholder, does any state of facts exist which, with the giving of notice,
the passing of time, or otherwise, would constitute a default of any material
nature by either Seller) with respect to any of the Contracts.
(m) Maintenance and Employment Agreements. Attached to
this Agreement as composite EXHIBIT 18(18) is (i) a schedule of all written
agreements between the Sellers and independent contractors, employees and
agents who are employed or engaged in the management or operation of the
Schools or the School Facilities; (ii) the names of all parties entitled to
payments from each of the Sellers under any such agreements or arrangements;
(iii) the amounts payable by either Seller under the terms of all such
agreements and arrangements, including without limitation, the terms of
employment and compensation, including vacation and other employee benefit
provisions and the cost of all employee benefits and payroll taxes; and (iv) a
copy of all written contracts for such services. There are no material oral
agreements in effect for any such services. Except as disclosed on such
Exhibit: (x) there are no written agreements between any of such contractors,
employees or agents and either Seller; (y) there is no party entitled to
compensation or remuneration for any such services arising from Sellers'
operations after the Closing; and (z) Sellers' agreements and arrangements
providing for the services described on Exhibit 18 may be terminated by the
relevant Seller at any time, with or without cause, and without any obligation
to pay any of said parties any amounts whatsoever except as may be required by
law (including, without limitation, severance pay or accrued vacation pay or
other benefits).
(n) Employee Benefit Plans. Sellers maintain employee
benefit plans as listed on EXHIBIT 19(19) to this Agreement (the "Employee
Benefit Plans"). Copies of such plans are attached to such Exhibit. Except as
listed on such Exhibit, neither Seller maintains any profit sharing, pension or
other employee benefit plan. Neither Seller has an unfunded obligation
pursuant to any insurance, retirement, pension, profit sharing or deferred
compensation plan or program.
(o) Labor. There is no existing labor dispute affecting
Sellers' businesses. None of Sellers' employees are covered by any union or
collective bargaining agreement.
(p) Insurance. A schedule of all of the policies of
insurance maintained by either Seller in connection with the operation of its
business is attached as EXHIBIT 20(20) to this Agreement. The insurance
coverage provided by such policies complies in all material respects, with all
agreements to which each respective Seller is a party, and applicable legal
requirements to which it is subject. All such policies are currently in
effect. As of Closing, Sellers and Shareholder shall cease to be covered with
respect to any occurrence after the Closing under the insurance policies
obtained and maintained by Sellers and Shareholder covering the business,
property and employees of Sellers and Shareholder.
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Following the Closing, Buyers and EMI shall give to Sellers and
Shareholder prompt notice of the assertion by any person of any claim against
Sellers and Shareholder which might be subject to the insurance coverage.
Buyers and EMI shall cooperate with Sellers and Shareholder and any applicable
insurance carrier in any investigation by Sellers and Shareholder or any
applicable insurance carrier of any such claim and shall give to Sellers and
Shareholder and any applicable insurance carrier reasonable access to the
books, records and personnel formerly of Sellers and Shareholder to the extent
reasonably necessary to enable Sellers and Shareholder and any applicable
insurance carrier to investigate such claim.
(q) Taxes. Complete and accurate copies of all of the
Sellers' Federal, state and other income tax returns for the years ended
December 31, 1993, 1994 and 1995 are attached as composite EXHIBIT 21(21) to
this Agreement. Each of the Sellers has filed timely all Federal, state and
local tax returns which it is required to file and has no outstanding liability
for any Federal, state or local taxes or interest or penalties thereon, whether
disputed or not, except taxes not yet payable which have been provided for in
accordance with GAAP and are disclosed in the Most Recent Balance Sheets or
have subsequently accrued in the normal course of business. None of the above
Sellers' Federal income tax returns have been audited by the Internal Revenue
Service; there is not now in force any extension of time with respect to the
date on which any tax return was or is due to be filed by or with respect to
either Seller, or any waiver or agreement by it for the extension of time for
the assessment of any tax.
(r) Actions Pending. Except as disclosed in EXHIBIT
22(22) to this Agreement: (i) there are no actions, suits, proceedings or
claims pending or (to Sellers' or Shareholder's knowledge) threatened against
Sellers or the Shareholder which, if determined adversely to Sellers or the
Shareholder, would (A) have a material adverse effect on the Sellers, the
School Related Assets, or the business of either Seller when taken as a whole,
or (B) prevent or delay the consummation of any of the transactions
contemplated by this Agreement; (ii) neither Seller is (to its knowledge or the
knowledge of the Shareholder) the subject of any pending or threatened
investigation relating to any aspect of Sellers' operations, including the
operations of the School Facilities, by any Federal, state or local
governmental agency or authority; (iii) neither Seller is and has not been (to
its knowledge or the knowledge of the Shareholder) the subject of any formal or
informal complaint, investigation or inspection under the Equal Employment
Opportunity Act or the Occupational Safety and Health Act (or their state or
local counterparts) or the HEA or by any other Federal, state or local
authority.
(s) Accounts Receivable. Each of the accounts receivable
of Sellers constitutes a valid claim in its full amount against the debtor
charged on Sellers' books and has arisen in the ordinary course of Sellers'
business. Neither Seller has knowledge that each such account receivable is
not fully collectible to the extent of the face value thereof, except to the
extent of the normal allowance for doubtful accounts with respect to accounts
receivable computed on a basis consistent with Sellers' prior practices as
reflected on the Most Recent Balance Sheets. No account debtor has asserted
any right to any setoff, deduction or defense with respect thereto.
(t) No Guaranties. None of Sellers' obligations or
liabilities is guaranteed by any other person, firm or corporation except as
described in Sellers' Financial Statements, nor has either Seller guaranteed
the obligations or liabilities of any other person, firm or corporation.
(u) Bank Accounts and Deposit Boxes. Attached to this
Agreement as EXHIBIT 23(23) are the names and addresses of all banks or
financial institutions in which either Seller has an account, deposit or safety
deposit box with the names of all persons authorized to draw on these accounts
or
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deposits or to have access to the boxes, and an indication of which accounts or
deposits or boxes contain financial aid funds.
(v) Records. With respect to the years ended December
31, 1993, 1994 and 1995 and all subsequent periods, the books of account of
Sellers are complete and correct in all material respects, and there have been
no transactions involving the business of Sellers which properly should have
been set forth therein and which have not been accurately so set forth, to the
best of Sellers' and Shareholders knowledge and belief.
(w) Transactions With Certain Persons. Neither Seller
owes any amount to, nor has any contract with or commitment to, the
Shareholder, other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary course of
business and the agreement to make the Shareholder's Cash Distribution. Sellers
have made no distributions or other payments to the Shareholder subsequent to
the date of the Seller's Most Recent Balance Sheets except for compensation for
services paid in the ordinary course of business and the reimbursement of
expenses incurred in the ordinary course of business or with respect to the
Shareholder's Cash Distribution.
3. REPRESENTATIONS AND WARRANTIES OF EMI AND BUYER. Each of EMI
and Buyer represents to each of the Sellers and the Shareholder as follows:
(a) No Misstatements. The representations and the
information supplied by it contained in this Agreement and the documents
incorporated by reference into it do not contain any untrue statement of a
material fact or omit to state any fact necessary to make such representations
or information not materially misleading.
(b) Validity of Actions. It is duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the authority to carry on its business as currently conducted, and is qualified
to do business in all jurisdictions in which such qualification is necessary.
It has full power and authority to enter into this Agreement and to carry out
all acts contemplated by it. This Agreement and each of the documents provided
for in it to be delivered as part of this transaction, have been duly executed
and have or will be delivered pursuant to all appropriate corporate
authorization on its behalf and is, or will be, its legal, valid and binding
obligation and is enforceable against it in accordance with its terms. The
execution and delivery of this Agreement, and each of the documents to be
executed and delivered by EMI and the Buyer pursuant to its terms, and the
consummation of the transactions contemplated by them will not violate any
provision of their respective Certificates of Incorporation or Bylaws or,
violate, conflict with or result in any breach of any of the terms, provisions
of or conditions of, or constitute a default or cause acceleration of any
indebtedness under, any indenture, agreement or instrument to which it is a
party or by which it or its assets may be bound, or, cause a breach of any
applicable law or governmental regulation, or any applicable order, judgment,
writ, award, injunction or decree of any court or governmental instrumentality.
(c) Actions Pending. There are no actions, suits,
proceedings or claims pending or to the knowledge of EMI or the Buyer,
threatened against either of them which, if determined adversely to either of
them would (A) have a material adverse effect on their operations, or (B)
prevent or delay the consummation of any of the transactions contemplated by
this Agreement. Neither EMI nor Buyer is the subject of any pending or (to its
knowledge) threatened investigation relating to any aspect of its operations.
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(d) EMI's Financial Statements
(1) Attached as EXHIBIT 24(24) to this Agreement
are (A) EMI's audited balance sheets at March 31, 1994, 1995, and 1996, and the
most recent internally prepared financial statements and statements of income
and expense and cash flows for the years then ending ("EMI's Financial
Statements").
(2) EMI's Financial Statements: (i) have been
prepared on the accrual basis in accordance with generally accepted accounting
principles consistently applied ("GAAP"), except as otherwise disclosed in the
reports accompanying them or in the notes attached to them, and (ii) fairly
present EMI's financial condition and its results of operations at the times
and for the periods presented.
(3) There have been no material adverse changes
in the financial condition or in the operations, business, prospects,
properties of assets of EMI since the date of EMI's Financial Statements.
(e) Buyer's Financial Condition. The Buyer is a newly formed
corporation. It has no material liabilities except as provided for in this
Agreement, and no assets except the joint and several agreements of EMI to
perform in accordance with the terms of this Agreement.
4. COVENANTS OF THE PARTIES.
(a) Conduct of Business Prior to the Closing. Pending
consummation of the transactions contemplated in this Agreement or prior to
termination of this Agreement, Sellers and the Shareholder agree, without prior
written consent of Buyer, given in a letter which specifically refers to this
Section of the Agreement:
(1) not to (i) perform any act or omit to take
any act that would make any of their respective representations made in Section
2 above, inaccurate in any material respect or materially misleading as of the
Closing Date, or (ii) allow either Seller to make any payment or distribution
except for the payment of liabilities provided for in Sellers' Financial
Statements or incurred in the ordinary course of business;
(2) to cause each respective Seller to conduct
its businesses in the ordinary and regular course, maintain the School
Facilities and carry on its business practices, protect its Accreditation
Certifications and Permits, and keep its books of account, records and files in
substantially the same manner as at present; and
(3) to cause each Seller to make all tuition
refunds within the time frames provided for in the Regulations and any
applicable state or accrediting agency regulations, and to pay all accounts
payable as they become due.
(b) Notice. Pending the consummation of the transactions
contemplated in this Agreement or prior to termination of this Agreement, each
party agrees that it will promptly advise the others of the occurrence of any
condition or event which would make any of its representations contained in
this Agreement inaccurate, incorrect, or materially misleading.
(c) Access. Prior to the Closing, each Seller shall
afford to the Buyer (and its officers, attorneys, accountants and other
authorized representatives), upon reasonable notice, free
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and full access during usual business hours to its offices, personnel, the
School Facilities, books and records and other data, financial or otherwise,
so that Buyer may have full opportunity to make such investigation as it shall
desire of the School Related Assets, business and operations of each Seller,
provided that such investigation shall not unreasonably interfere with such
Sellers' operations. The scope of the investigation will include, but not be
limited to, a verification of Sellers' Financial Statements and a review of
Sellers' control procedures, regulatory compliance, the School Facilities,
material contracts, litigation and tax returns for prior years. Duly
authorized representatives of the Buyer shall also be entitled to discuss with
officers of each Seller, its counsel, employees and independent public
accountants, all of its books, records and other corporate documents,
contracts, pricing and service policies, commitments and future prospects.
Representatives of Sellers will furnish to Buyer and such other persons, copies
of all materials relating to the business affairs, operations, the School
Facilities, School Related Assets and liabilities of Sellers which may be
reasonably requested from time to time and will cause representatives and
employees of Sellers to assist Buyer in its investigation of the matters
relative to each Seller. All information obtained by Buyer, EMI or any of
their officers, directors, employees, lender, investors, agents and other
representatives (the "Buyer's Representatives") in connection with the
transactions contemplated by this Agreement or in the course of their
investigations of the Sellers, whether obtained before or after the date of
this Agreement (the "Evaluation Material") shall be used only in connection
with this Agreement and the subsequent operation of the Schools, and each of
Buyer and EMI shall assure that all Evaluation Material will be otherwise kept
strictly confidential by each of them and the Buyer's Representatives.
(d) Additional Documents. At the request of any party,
each party will execute and deliver any additional documents and perform in
good faith such acts as reasonably may be required in order to consummate the
transactions contemplated by this Agreement and to perfect the conveyance and
transfer of any property or rights to be conveyed or transferred or perfect the
assumption of any liabilities assumed under the terms of this Agreement.
(e) Employee Notification, Termination of Employee
Benefit Plans, Etc. With respect to any employees employed by the Sellers prior
to the Closing, Sellers will comply with the terms of all applicable Federal
and state laws and regulations, including without limitation the provisions of
the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section
Section 2101 et. seq. or the Consolidated Omnibus Budged Reconciliation Act
("COBRA"). Sellers will terminate all Employee Benefit Plans in accordance with
all applicable laws and regulations as of a date no later than the Closing
Date. The above section is subject to the contracts between Administaff and
Sellers. Copies are attached hereto as EXHIBIT 18.
(f) Filing of Returns; Additional Information. Each
Seller and the Shareholder will file on a timely basis all tax returns, notices
of sale and other documentation required by law in connection with the
transactions provided for in this Agreement or otherwise required by law,
regulation or pursuant to the terms of any agreement to which it is a party.
Each Seller and the Shareholder will supplement any previous filing made by it
in accordance with legitimate requests made by applicable agencies or parties
to the extent required by the relevant law, regulation or agreement.
(g) Delivery of Financial Statements. Prior to September 15,
1996, the Sellers shall deliver to the Buyer unaudited financial statements for
each Seller for the two month period ended August 31, 1996, which shall include
a statement of income and expense and a statement of cash flows for the period
then ending and a balance sheet as of such date, all of which shall be prepared
in accordance with, and subject to the same representations contained in,
Section 2(c)(2) and (3) of this Agreement (the "Effective Date Financial
Statements"). The Shareholder's Cash Distribution shall be
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increased or decreased based on a comparison of balance sheets included in the
Effective Date Financial Statements with the Seller's Most Recent Balance
Sheet. If as a result the amount of the Seller's Cash Distribution is
increased, Buyer shall make a payment to the Shareholder equal to such amount
within 10 business days. If the amount is decreased, the Shareholder shall
make a payment to the Buyer equal to such amount within 10 business days. With
respect to each succeeding month, within 15 days of such month's conclusion,
the Sellers shall deliver to the Buyer monthly unaudited financial statements
for each Seller which shall include statement of income and expense and a
statement of cash flows for the month then ended and a balance sheet for the
month then ended, all of which shall be prepared in accordance with, and
subject to the same representations contained in, Section 2(c)(2) and (3) of
this Agreement.
(h) Compliance with Conditions to Closing. Subsequent to the
execution and delivery of this Agreement and prior to the Closing Date, each of
the parties to this Agreement will execute such documents and take such other
actions as reasonably may be appropriate to fulfill the conditions to Closing
provided for in Section 5 of this Agreement.
5. CONDITIONS TO CLOSING BY THE RESPECTIVE PARTIES.
The obligation of EMI and Buyer, on the one hand, and Sellers and
the Shareholder on the other hand, to consummate the transactions contemplated
by this Agreement shall be subject to compliance with or satisfaction of the
following conditions by the other, to the extent applicable:
(a) Bring Down. The representations and warranties set
forth in this Agreement shall be true and correct in all material respects on
and at the Closing Date as if then made by the relevant party (except for those
representations and warranties made as of a given date, which shall continue to
be true and correct as of such given date).
(b) Compliance. Each party shall have complied with all
of the covenants and agreements in this Agreement on its or their part,
respectively, to be complied with as of or prior to the Closing Date.
(c) No Material Adverse Changes. Since the date of the
Sellers' Most Recent Balance Sheets, there shall not have occurred any material
adverse change in the condition (financial or otherwise) of the Schools, School
Facilities, or the School Related Assets of either of the Sellers. Since March
31, 1996, there shall not have occurred any material adverse change (financial
or otherwise) of EMI.
(d) Buyer Certificates. There shall be delivered to the
Sellers and the Shareholder:
(1) a certificate executed by the President and
Secretary of each of Buyer and EMI, dated the Closing Date, certifying that the
conditions to be fulfilled by each of them set forth in this Section 5 have
been fulfilled;
(2) a certificate of incumbency for each of them
executed by its President or any Vice President and by the Secretary or any
Assistant Secretary of such entity, listing the officers of such entity
authorized to execute (to the extent applicable) the Agreement and the other
documents, certificates, schedules and instruments to be delivered on behalf of
such entity, and their respective offices, and containing the genuine signature
of each such person set forth opposite his name; and
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(3) good standing certificates and certified
charter documents of each of them of recent date, from the Secretary of the
State of the jurisdiction of incorporation of such entity (the Certificates
described in 1, 2 and 3 above are hereafter referred to collectively as the
"Buyer's Certificates").
(e) Sellers' Certificates. There shall be delivered to
the Buyer and EMI:
(1) a certificate executed by the President and
Secretary of each Seller, dated the Closing Date, certifying that the
conditions to be fulfilled by it as set forth in this Section 5 have been
fulfilled;
(2) a certificate of incumbency for each Seller
executed by its President or any Vice President and by the Secretary or any
Assistant Secretary of such Seller, listing the officers of such entity
authorized to execute (to the extent applicable) the Agreement and the other
documents, certificates, schedules and instruments to be delivered on behalf of
such entity, and their respective offices, and containing the genuine signature
of each such person set forth opposite his or her name; and
(3) good standing certificates and certified
charter documents of each Seller of recent date, from the Secretary of the
State of the jurisdiction of incorporation of such entity (the Certificates
described in 1, 2 and 3 above are hereafter referred to collectively as the
"Sellers' Certificates").
(f) No Suits. No action or proceeding shall have been
instituted in any court or before any Federal, state or local governmental
agency against any party seeking to restrain or prohibit the consummation of
the transactions contemplated by this Agreement, or which could have a material
adverse effect on any of the parties, which shall not have been dismissed or
withdrawn prior to the Closing Date.
(g) Change of Sellers' Names. At least five (5) days
prior to the Closing, each Seller shall deliver to Buyer a duly executed and
acknowledged certificate of amendment to each Seller's articles of
incorporation or other appropriate document required to change each Seller's
corporate name to a new name bearing no resemblance to its present name so as
to make each Seller's present name available to Buyer. Buyer is hereby
authorized to file such certificate or other documents, at Sellers' expense, in
order to effectuate such change of name at or after the Closing.
(h) Documents. All documents required to be delivered to
Buyer or Sellers or the Shareholder pursuant to this Agreement at or prior to
Closing shall have been so delivered.
(i) Authority. There shall be in full force and effect
on the Closing Date resolutions of the Boards of Directors of the Buyer, EMI
and the Sellers approving this Agreement, the other documents executed and
delivered by each of them in connection with this Agreement and the
transactions contemplated in it. At or prior to the Closing, each party will
deliver to the other a copy of the resolutions of its Board of Directors and,
in the case of the Sellers, the resolutions or consent of the Shareholder,
together with any and all required resolutions or consent of the Shareholder
thereof, approving the execution and delivery of this Agreement and the other
documents to be delivered pursuant to this Agreement and the consummation of
all of the transactions contemplated hereby, duly certified by an appropriate
officer.
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(j) Opinions of Counsel. Each party shall receive the
opinion of counsel to the other party reasonably satisfactory in form and
content to the party receiving such opinion.
(k) Current Insurance Coverage. Payments will have been
made as of the Closing Date with respect to all of Sellers' insurance policies,
and all insurance coverage concerning Sellers' assets and operations shall be
continued in force through at least 10 days subsequent to the Closing Date,
unless canceled subsequent to the Closing Date by Buyer.
(l) Bankruptcy, Dissolution, etc. No petition or other
commencement of proceedings in bankruptcy or proceedings for dissolution,
termination, liquidation or an arrangement, reorganization or readjustment of
any party's debts under any state or Federal law enacted for the relief of
debtors or otherwise, whether instituted by or against a party, has been
effected or commenced by or against any party.
(m) Leases. The Buyer and the landlords shall have
entered into lease agreements with respect to the School Facilities and the
Sellers' obligations pursuant to the School Facility Leases with respect to all
periods after the Closing Date shall be released in full.
(n) Texas Education Agency. All necessary approvals by
the Texas Education Agency (or its successor, the Texas Workforce Commission --
Proprietary Schools Section) have been obtained and delivered to Buyer.
6. CLOSING AND POST CLOSING AGREEMENTS.
(a) Closing Date and Place; Effective Date. The closing
of the transactions provided for in this Agreement shall take place at the time
provided for in Section 1(b) of this Agreement and shall be effective as
provided in Section 1(f).
(b) Deliveries by Buyer to Seller. At the Closing, Buyer
and EMI shall deliver to Seller:
(1) Initial Payment;
(2) The Second Payment Note;
(3) An assumption agreement (the "Assumption
Agreement" in substantially the form attached
to this Agreement as EXHIBIT 25(25);
(4) The Purchase Money Promissory Note;
(5) The Pledge Agreement; and
(6) The Buyer's Certificates.
(c) Deliveries by Sellers to Buyer and the Shareholder.
At the Closing, Sellers shall deliver to Buyer:
(1) The ▇▇▇▇ of Sale (the "▇▇▇▇ of Sale") in
substantially the form attached to this
Agreement as EXHIBIT 26(26); and
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(2) Assignments of all of Sellers' Bank
Accounts;
(3) The Sellers' Certificates;
(4) Escrow Agreement; and
(5) Such other instruments of conveyance in form
and substance reasonably satisfactory to
Buyer's counsel, as shall be effective to
vest in Buyer good title to the School
Related Assets.
Sellers shall deliver to the Shareholder:
(5) The Undistributed Portion of the
Shareholder's Cash Distribution.
(d) Delivery of Post Closing Financial Statements of the
Sellers to the Buyer. Prior to the expiSeptember 19, 1996ration of 15 Calendar
days following the Closing, the Sellers shall deliver to the Buyer unaudited
financial statements for each Seller which shall include a statement of income
and expense for the month ending immediately prior to the Closing (if not
previously delivered pursuant to Section 4(g) of this Agreement) and for the
partial monthly period ending immediately prior to the Closing Date and a
balance sheet as of the end of such periods, all of which shall be prepared in
accordance with, and subject to the same representations contained in, Section
2(c)(2) and (3) of this Agreement.
(e) Filing of Tax Returns and Other Reports. The Sellers
and Shareholder shall timely file all federal and state income tax and other
returns or reports relating to the transactions provided for in this Agreement
and relating to all periods during which each of the Sellers owned their
respective School Related Assets, and to the extent required by law or
regulation, all reports with the Department of Education or any other
applicable state of federal regulatory or accrediting agency relating to such
periods including without limitation the Financial Aid Audits for the federal
fiscal year ended June 30, 1996 to be filed by each of the Schools with the
Department of Education pursuant to applicable regulations.
(f) Further Documents or Acts. The parties will also
execute, deliver, record (where appropriate) and/or perform at Closing and from
time to time thereafter, at the request of Buyer, EMI, Sellers or the
Shareholder, all other documents or acts required to consummate any of the
transactions contemplated by this Agreement or otherwise carry out the purposes
of this Agreement, including without limitation, any and all instruments or
other documents of transfer, conveyance, assignment and assumption as may be
reasonably necessary to effect or evidence the transfer of the School Related
Assets and the assumption of the Stated Liabilities.
7. CONFIDENTIALITY AND JOINT NON-COMPETITION AGREEMENT.
(a) Shareholder acknowledges that, as a result of his
ownership of the Sellers and, if applicable, employment by Sellers, he has had
access to and knowledge of confidential or proprietary information developed by
Sellers and of a special and unique nature and value to Sellers, including, but
not limited to, Sellers' methods and systems, the names and addresses of its
students and sources of referral, tuition charged and paid by Sellers or its
customers, curricula, related memoranda, research reports, designs, records,
student files, services, and operating procedures, and other information, data,
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and documents now existing or later acquired by Shareholder or Sellers,
regardless of whether any such information, data, or documents, qualify as a
"trade secret" under applicable Federal or state law (collectively
"Confidential Information"). Confidential Information does not include
information that (i) becomes generally available to the public other than as a
result of disclosures by Sellers or the Shareholder in violation of the terms
of this Agreement, or (ii) becomes available to Sellers or the Shareholder on a
non-confidential basis from a source that is not bound by a confidentiality
agreement with Buyer or its directors, officers, employees, agents or
representatives. As a material inducement to Buyer to enter into this
Agreement, each of the Shareholder and the Sellers, jointly and severally,
covenants and agrees not at any time following the Closing Date directly or
indirectly, to divulge or disclose for any purpose whatsoever, any Confidential
Information which is in the possession of Sellers or which has been obtained by
or disclosed to such Shareholder as a result of employment by Sellers,
ownership of Sellers, or otherwise as a result of the relationship between such
Shareholder and Sellers. In accordance with the foregoing, the Shareholder and
the Sellers agree at no time to retain or remove from the School Facilities
records of any kind or description whatsoever (other than those which
constitute Excluded Assets) for any purpose whatsoever unless authorized by
Buyer. Notwithstanding the foregoing provisions of this Section 7(a), Sellers
and the Shareholder may disclose Confidential Information (i) to its employees,
counsel, accountants and agents on a need-to-know basis (provided that any such
person shall be informed of the confidential nature of such information and
directed not to disclose or make public such Confidential Information), (ii) to
the extent required by applicable law, rules and regulation, and (iii) in any
action, suit or proceeding between the parties, provided that in connection
with disclosures permitted by clauses (ii) and (iii) above, Sellers or
Shareholder shall provide Buyer with at least three (3) days notice of such
intent so that an appropriate protective order may be sought by Buyer if
desired.
(b) As a material inducement to Buyer to enter into this
Agreement, the Shareholder and the Sellers, jointly and severally, covenant and
agree for a period of ten years (10) years after the Closing of the
transactions provided for in this Agreement not to (i) directly or indirectly
engage in competition with any school owned or operated by EMI (the "Prohibited
Activities") anywhere within 50 miles of the location of any school listed on
EXHIBIT 27(27) or any post secondary education school which EMI subsequently
operates (the "Area") (the "Prohibited Activities"); (ii) become associated as
manager, supervisor, employee, consultant, advisor, stockholder owning more
that 5% of the outstanding stock of a company or participating in the
management or direction of a company or otherwise with any person, corporation
or entity engaging in Prohibited Activities anywhere within the Area; (iii)
call upon any of Buyer's students, teachers or referral sources for the purpose
of promoting any Prohibited Activities for any person, person, corporation or
entity within the Area; or (iv) divert, solicit or take away any of Buyer's
teachers or other personnel for the purpose of engaging in any Prohibited
Activities regardless of the location of such activities.
(c) In the event of a breach or threatened breach by the
Shareholder of any of the provisions of this Section 7, Buyer, in addition to
and not in limitation of any other rights, remedies, or damages available to
Buyer at law or in equity, shall be entitled to a permanent injunction in order
to prevent or to restrain any such breach by Sellers or any Shareholder, or by
such Shareholder's partners, agents, representatives, servants, employers,
employees and/or any and all persons directly or indirectly acting for or with
him.
(d) Each of the Shareholder and the Sellers covenants and
agrees that, if such Seller or Shareholder shall violate any of his covenants
or agreements provided for in this Section 7, Buyer shall be entitled to an
accounting and repayment of all profits, compensation, commissions,
remuneration, or benefits which Sellers or such Shareholder, directly, or
indirectly, has realized and/or
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may realize as a result of, growing out of, or in connection with any such
violation; such remedy shall be in addition to and not in limitation of any
injunctive relief or other rights or remedies to which Buyer may be entitled to
at law or in equity or under this Agreement.
(e) Each of the Shareholder and the Sellers has carefully
read and considered the provisions of this Section 7, and agrees that the
restrictions set forth above (including without limitation the time period and
geographical areas of restriction) are fair and reasonable and are reasonably
required for the protection of the interest of the Buyer. In the event that,
notwithstanding the foregoing, any of the provisions of this Section 7 are held
invalid or unenforceable, the remaining provisions shall continue to be valid
and enforceable. In the event that any provision of this Section 7 relating to
time period and/or areas of restriction are declared by a court of competent
jurisdiction to exceed the maximum time period or areas such court deems
reasonable and enforceable, said time period or areas of restriction shall be
deemed to become, and thereafter be, the maximum time period and/or area which
such court deems reasonable and enforceable.
(f) If the obligations of the parties are terminated and
the closing does not occur Buyer and EMI agree to return all information
furnished to them by Sellers and Shareholder or any of their officers,
directors, employees, lenders, investors, agents and other representatives.
Buyer and EMI acknowledge that they have had access and knowledge of
confidential and/or proprietary information developed by Sellers and of a
special and unique nature and value to Sellers, including, but not limited to ,
Sellers' methods and systems, the names and addresses of its students and
sources of referral, tuition charged and paid by Sellers or its customers,
curricula, related memoranda, research reports, designs, records, student
files, services, and operating procedures, and other information, data, and
documents now existing or later acquired by Shareholder or Sellers, regardless
of whether any such information, data, or documents, qualify as a "trade
secret" under applicable Federal or state law (collectively "Confidential
Information"). Confidential Information does not include information that (i)
becomes generally available to the public, (ii) becomes available to Buyer or
EMI on a non-confidential basis from a source that is not bound by a
confidentiality agreement with Sellers or its directors, officers, employees,
agents or representatives. Buyer and EMI further agree not to use or disclose
said information as stated above and will hold same in strict confidence unless
compelled to disclose by requirements of law.
In the event of a breach or threatened breach by the Buyer or EMI of
any of the provisions as stated above in this Section 7(f), Sellers and
Shareholder, in addition to and not in limitation of any other rights,
remedies, or damages available to Seller and Shareholder at law or in equity,
shall be entitled to a permanent injunction in or to prevent or to restrain any
such breach by Buyer or EMI or by such Buyer or EMI's partners, agents,
representatives, servants, employers, employees and/or any and all persons
directly or indirectly acting for or with him.
8. INDEMNIFICATION.
(a) Each of Sellers and the Shareholder, severally and
not jointly, agrees to defend, indemnify and hold harmless the Buyer and EMI
and their directors, officers, employees and agents from and against any loss,
liability, damage, settlement or expense (including without limitation,
attorneys' fees and disbursements) incurred by Buyer or EMI arising from or
related to (1) the inaccuracy or breach of any of the representations,
warranties, covenants or agreements of Sellers or the Shareholder, as the case
may be, contained in this Agreement or in any document incorporated by
reference into this Agreement, (2) the Potential Title IV Notification
Liability (the "Potential Title IV Notification Liability Claims"), or (3)
Texas Mandated Assumed Liabilities (the "Texas Mandated Assumed Liability
Claims").
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Without limiting the general right to indemnification provided for in the
previous sentence, Sellers and the Shareholder specifically agree that with
respect to Texas Mandated Assumed Liability Claims and Potential Title IV
Notification Liability Claims, the Buyer shall have the right FIRST to recover
the amount of such claims from the Contingent Liability Escrow Account, AND
THEN, to the extent such claims exceed the amount paid from such Escrow Account
to Buyer on account thereof, by offset against principal and interest, if any,
due with respect to Second Payment Note and Purchase Money Promissory Note,
such offset to be made against the most current payments due regardless of the
note to which such payment relates, AND THEREAFTER against the Sellers and the
Shareholder, jointly and severally.
(b) Buyer and EMI, jointly and severally, agree to
defend, indemnify and hold harmless each Seller and the Shareholder and their
directors, officers, employees and agents from and against any loss, liability,
damage, settlement or expense (including without limitation attorneys' fees and
disbursements) incurred by Sellers and/or the Shareholder and arising from or
related to: (i) the inaccuracy or breach of any of the representations,
warranties, covenants or agreements of Buyer or EMI contained in this Agreement
or in any document incorporated by reference into this Agreement.
(c) Buyer and EMI, jointly and severally, agree to
defend, indemnify and hold harmless each Seller and the Shareholder and their
directors, officers, employees and agents from and against any loss, liability,
damage, settlement or expense (including without limitation attorneys' fees and
disbursements) incurred by Sellers and/or the Shareholder and arising from acts
or omissions occurring subsequent to the closing relating to the Asset Purchase
Agreement and/or the operations of the Schools subsequent to the Closing.
(d) The party seeking indemnification pursuant to this
Section 8 (the "Indemnified Party") shall give (or cause to be given) to the
party or parties from whom indemnification is sought hereunder (the
"Indemnifying Party") notice of any claim or matter for which indemnity is (or
will be) sought under this Section 8. Such notice shall be given promptly
after the Indemnified Party receives actual notice or knowledge of the claim or
matter that is subject to indemnification. With respect to any claim asserted
by a third party against an Indemnified Party for which indemnity is sought
hereunder, the relevant Indemnifying Party shall have the right to employ
counsel reasonably acceptable to the relevant Indemnified Party to defend
against such assertion and such Indemnifying Party shall have the right to
compromise or otherwise settle any such action or claim only with the prior
written consent of such relevant Indemnified Party, which consent shall not be
unreasonably withheld, provided, however, that upon the determination of any
applicable agency or court of law that any claim for which indemnification is
sought, including a determination by the Department of Education that amounts
are due from the Buyer on account of Potential Title IV Notification Liability
Claims, is due and payable (a "Liability Determination") the Indemnified Party
may pay such amount (a "Jeopardy Payment") and, in the case of the Buyer,
immediately be entitled to recovery of such amounts as provided for in the last
sentence of clause (a) of this Section 8, further provided, however, that the
Indemnified Party shall not be entitled to make such Jeopardy Payment during
the pendency of any appeals from such Liability Determination, so long as the
amount of such determination is not due either because of the pendency of such
appeal or because of the posting of applicable bonds. Notwithstanding the
foregoing, nothing in the previous sentence shall require the party seeking
indemnification with respect to any such Liability Determination to post any
bond or otherwise take any action to vacate or challenge a Liability
Determination. If such determination amount is paid by Buyer and thereafter
such determination is reversed or set aside, and the Jeopardy Payment is
returned or otherwise credited to Buyer, the Indemnifying Party shall be
reimbursed by Buyer for any sums recovered from the Contingent Liability Escrow
Account or by any Note offset or money recovered from
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Sellers and/or Shareholder incident to the Jeopardy Payment.
9. EVENTS OF DEFAULT. If any one or more of the following events
occurs then, subject to the expiration of any specified grace period and the
giving of any prior notice required under this Section 9, such event shall
constitute an Event of Default by the party responsible for such event or
against whom it should be charged.
(a) Warranties or Representations. Any warranty or
representation by or on behalf of any party contained in this Agreement (or in
any document between the parties furnished in compliance with this Agreement at
Closing) is false or misleading in any material respect.
(b) Agreements. Any party fails to take any action
required of it to comply with its obligations contained in this Agreement, or
takes any action prohibited or inconsistent with its obligations under this
Agreement, and such failure to act or action is not cured prior to ten (10)
days after written notice thereof is given to the defaulting party.
(c) Refusal to Close. A party refuses to consummate the
transactions provided for (and subject to the terms and conditions specified)
in this Agreement by 5 p.m., Eastern Daylight Time on January 31, 1997 (the
"Termination Date"), except if the failure to close is based upon the failure
of the other party to meet a condition to Closing provided for in Section 5 of
this Agreement.
(d) Failure of Closing Condition. Any party is unable to
comply with the conditions of Closing provided for in Section 5 of this
Agreement, other than as a result of an Event of Default as described in
Sections 9(a), (b), or (c) above.
10. TERMINATION AND RIGHTS AND REMEDIES ON DEFAULT.
(a) Termination. This Agreement may be terminated and
the transactions contemplated hereby abandoned prior to the Closing: (i) by
the mutual consent of Buyer, EMI and Shareholder; (ii) by Buyer and EMI, if
any condition to their obligations to close set forth in Section 5 hereof
becomes impossible of performance or has not been satisfied in full (in each
case other than as a result of a breach of such party's obligations under this
Agreement) or previously waived by the other parties to this Agreement in
writing at or prior to the Termination Date; (iii) by Sellers and Shareholder
if any condition to their obligations to close set forth in Article 5 hereof
becomes impossible of performance or has not been satisfied in full (in each
case other than as a result of a breach of such party's obligations under this
Agreement) or previously waived by the other parties to this Agreement in
writing at or prior to the Termination Date; or (iv) by any party (other than a
party that is in breach of its obligations under this Agreement) if the Closing
shall not have occurred on or before the Termination Date. If this Agreement
is terminated pursuant to clause (i) of this Article 10, all obligations of the
parties hereunder shall terminate without any further liability or obligation
of either party to the other, except that the provisions of Section 11, Section
13(b) and the confidentiality provisions of Section 4(c) of this Agreement
shall survive and continue in full force and effect notwithstanding such
termination. Except as limited by the preceding sentence, the exercise by any
party of the right to terminate this Agreement shall not terminate or limit any
remedy that such party may have in this Section 10 as a result of an Event of
Default. If this Agreement is terminated pursuant to the provisions of this
Section 10 (except with respect to a termination by Sellers and Shareholder
pursuant to subclause (iii) of the first sentence of this Section) the
Refundable Deposit shall be returned to the Buyer immediately upon such
termination. If this Agreement is terminated pursuant to the provisions of
such subclause (iii), the Buyer shall lose all rights with respect to the
Refundable Deposit.
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(b) Rights and Remedies on Default. Upon and after an Event
of Default by any party, the other party shall have the following rights and
remedies:
(1) Default by Buyer and EMI. If, on the
termination Date, there exists an Event of Default as described in Section 9 of
this Agreement, chargeable against the Buyer or EMI, or which Sellers or
Shareholder is made specifically aware, Sellers or Shareholder may either (i)
specifically waive such default and close, in which Sellers or Shareholder
shall have the right to seek specific performance of the Agreement, including,
without limitation, or (ii) refuse to close, and, except in the case of an
Event of Default described in Section 9(d) above, seek money damages from
Buyer and/or EMI, including, without limitation, indemnification pursuant to
Section 8 of this Agreement. An election by Sellers or Shareholder to proceed
in accordance with subclause (i) of the preceding sentence shall constitute the
acknowledgment by Buyer, EMI, Sellers or Shareholder that Sellers or
Shareholder cannot be adequately compensated by money damages for the failure
to perform by Buyer and EMI, that such damages are indeterminate, and that a
court of competent jurisdiction may enter an order pursuant to which Buyer and
EMI are obligated to specifically perform their obligations to Sellers or
Shareholder pursuant to the terms of this Agreement.
(2) Default by Sellers or Shareholder. If, on
the Termination Date, there exists an Event of Default as described in Section
9 of this Agreement, chargeable against the Sellers or the Shareholder, or
which Buyer is made specifically aware, Buyer may either (i) specifically waive
such default and close, in which event Buyer shall have the right to seek
specific performance of this Agreement, including, without limitation, the
acquisition of the School Related Assets and the performance by the Sellers and
the Shareholder of the covenants provided for in this Agreement, or (ii) refuse
to close, and, except in the case of an Event of Default described in Section
9(d) above, seek money damages from Sellers and Shareholder, including, without
limitation, indemnification pursuant to Section 8 of this Agreement. An
election by Buyer to proceed in accordance with subclause (i) of the preceding
sentence shall constitute the acknowledgment by Buyer, Sellers and Shareholder
that Buyer cannot be adequately compensated by money damages for the failure to
perform by Sellers and Shareholder, that such damages are indeterminate, and
that a court of competent jurisdiction may enter an order pursuant to which
Sellers and Shareholder are obligated to specifically perform their obligations
to Buyer pursuant to the terms of this Agreement.
(3) Default Subsequent to Closing. If any party
breaches this Agreement subsequent to Closing, or if a default exists pursuant
to Sections 9(a) or 9(b) of this Agreement, the nondefaulting party(ies) shall
have the right to seek money damages from the defaulting party(ies), either
pursuant to Section 8 of this Agreement or otherwise. In addition, if, (i) as
a result of any action taken or not taken by the either Seller in violation of
any applicable law or regulation which (ii) has not been disclosed to the Buyer
in this Agreement, and which (iii) the occurrence or non occurrence of which
was known or reasonably should have been known to either Seller or the
Shareholder, the Prerequisite Student Aid Approvals are not received prior to 6
months from the date of the Closing, or, if received or offered, can only be
obtained on conditions imposing substantial financial burdens on the Buyer in
addition to those which would otherwise be imposed in connection which such
approval, the Buyer may elect to rescind the transactions provided for in this
Agreement and, upon such election, the parties will take such action as may be
reasonably required to restore the other party to its respective positions as
they existed prior to the Closing provided for in this Agreement.
(4) Nature of Remedies Cumulative. Except as
otherwise provided in this Agreement, all rights and remedies granted in this
Agreement or available under applicable law shall be deemed concurrent and
cumulative and not alternative or exclusive remedies, to the full extent
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permitted by law and this Agreement, and any party may proceed with any number
of remedies at the same time or in any order. The exercise of any one right or
remedy shall not be deemed a waiver or release of any other right or remedy,
and any party, upon the occurrence of an event of default by another party
under this Agreement, may proceed at any time, under any agreement, in any
order and with any available remedy.
(5) Limitation on Liability of Sellers and
Shareholder. Except in the case of a breach of the agreements contained in
Section 7 of this Agreement, or in connection with Texas Mandated Assumed
Liability Claims and Potential Title IV Notification Liability Claims, neither
Sellers nor Shareholder shall have any liability with respect to any claims of
Buyer or EMI for money damages, whether pursuant to this Section, Section 8 of
this Agreement or otherwise (a) until such time, if any, as the aggregate
amount of all such amounts otherwise subject to recovery by Buyer or EMI shall
exceed, in the aggregate, $10,000, and then only to the extent of such excess;
and (b) to the extent the total amount otherwise subject to recovery by Buyer
or EMI from the Sellers and/or the Shareholder exceeds the aggregate of all
amounts paid or payable to the Sellers pursuant to the terms of this Agreement
plus the Shareholder's Cash Distribution.
11. FINDERS FEES.
Each of the parties represents and warrants to the other that such
party has not employed any finder or broker in connection with transactions
contemplated by this Agreement. Each party agrees to indemnify and hold
harmless the others from and against any claim, damages, liabilities, and
expenses (including without limitation, attorneys' fees and disbursements)
arising from any claim or demand asserted by any person or entity on the basis
of its employment as a finder or broker by the respective party.
12. NOTICES. All notices or other communications required or
permitted under the terms of this Agreement shall be made in writing and shall
be deemed given upon (i) hand delivery or (ii) three days after deposit of same
in the Certified Mail, Return Receipt Requested, first class postage and
registration fees prepaid and correctly addressed to the parties at the
following addresses:
If to Buyer: SACMD Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: President
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to EMI: Educational Medical, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
-▇▇-
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: President
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to Seller: San Antonio College of Medical and Dental
Assistants, Inc.
▇▇▇ ▇-▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Seller: Career Centers of Texas - El Paso, Inc.
▇▇▇ ▇-▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Shareholder: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇-▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇
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With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as any of the parties hereto may designate by notice
to the others.
13. MISCELLANEOUS.
(a) Successors. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns. This Agreement may not be assigned prior to Closing
without the prior written consent of the other parties hereto.
(b) Expenses. Except as otherwise provided in this
Agreement, Buyer and Sellers and the Shareholder shall be responsible for any
and all of the respective fees, costs and expenses incurred by each, in
connection with the negotiation, preparation or performance of this Agreement.
(c) Entire Agreement. This Agreement incorporates by
this reference all Exhibits hereto and all documents executed and/or delivered
at Closing. This Agreement and the documents so incorporated into it contain
the parties' entire understanding and agreement with respect to the subject
matter hereof; and any and all conflicting or inconsistent discussions,
agreements, promises, representations and statements, if any, between the
parties or their representatives that are not incorporated in this Agreement
shall be null and void and are merged into this Agreement.
(d) Amendments Only in Writing. No amendment,
modification, waiver or discharge of this Agreement or any provision of this
Agreement shall be effective against any party, unless such party shall have
consented thereto in writing.
(e) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall constitute an original, but all of
which together shall constitute a single agreement.
(f) Cooperation. Each of the parties to this Agreement,
when requested by another party, shall give all reasonable and necessary
cooperation with respect to any reasonable matters relating to the transactions
contemplated by this Agreement.
(g) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas, and any suit,
action or proceeding arising out of or relating to this Agreement shall be
commenced and maintained in the District Court in Bexar County, Texas or the
appropriate United States District Court for the State of Texas and each party
waives objection to such jurisdiction and venue.
(h) Headings. The various section headings are inserted
for purposes of reference only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
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(i) Gender; Number. All references to gender or number
in this Agreement shall be deemed interchangeably to have a masculine,
feminine, neuter, singular or plural meaning, as the sense of the context
requires.
(j) Severability. The provisions of this Agreement shall
be severable, and any invalidity, unenforceability or illegality of any
provision or provisions of this Agreement shall not affect any other provision
or provisions of this Agreement, and each term and provision of this Agreement
shall be construed to be valid and enforceable to the full extent permitted by
law.
(k) Survival. Except as otherwise expressly provided in
this Agreement, the liabilities and obligations of each party with respect to
any and all of its representations, warranties, covenants and agreements set
forth in this Agreement and/or in any document incorporated into it shall not
be merged into, affected or impaired by the Closing under this Agreement. All
of the representations, warranties, covenants and agreements set forth in this
Agreement shall survive the Closing for the period of two years thereafter, so
that (except as otherwise provided below) any claim under this Agreement must
be asserted by notice given to the party claimed to be liable on or before the
second anniversary of the Closing Date. Notwithstanding the foregoing, the
time limitation shall not apply to: (i) the covenants related to
confidentiality and non-competition contained in Section 7 above; (ii) claims
arising out of a misrepresentation as to matters contained in Section 2(h) or
2(i) (which shall survive for a period ending on the seventh anniversary of the
Closing Date), (iii) fraud, Texas Mandated Assumed Liability Claims or (v)
Potential Title IV Notification Liability Claims. All obligations and
liabilities described in clauses (i) and (iii) of the previous sentence shall
survive the Closing for the period in which a claim can be asserted with
respect thereto under applicable law.
(l) No Third Party Beneficiaries. This Agreement has been
entered into solely for the benefit of the parties that have executed it, and
not to confer any benefit or enforceable right upon any other party or entity.
Accordingly, no party or entity that has not executed this Agreement shall have
any right to enforce any of the provisions of it.
(m) Intention to Cease Business. Buyer and EMI acknowledge
that the Sellers intend to cease operations at or shortly after the Closing
Date and, following the Closing, will cease to have any material assets.
(n) Access to Records. Following the effective Closing
Date, Buyer and EMI shall give to the Sellers and Shareholder free and
unrestricted access to (and the right to make copies at the expense of
Shareholder) the records and to the extent that such were purchased by Buyer
and EMI hereunder and relate to the business, operations, income, expenses and
assets of Seller corporation existing on, accruing or arising prior to or
occurring prior to effective time of closing, but any access shall be conducted
in such manner as not to interfere unreasonably with the operations of the
business following the effective Closing Date. Sellers and Shareholder's free
and unrestricted access to the records of Shareholder includes but is not
limited to all matters relating to litigation. Buyer and EMI shall also give
to the Sellers and Shareholder reasonable access to their former employees,
and/or their former employees contracted through Administaff in regard to
current and/or future litigation.
(o) Mediation. The parties hereto agree that it is a
precondition to filing of any action to enforce this Agreement, that the
parties will submit to non-binding mediation, except in the case where
immediate injunctive relief is sought. Unless the parties agree on some other
mediation forum, the parties will use the Bexar County Presuit Mediation
Service or the Bexar County Dispute Resolution Center. Upon any party giving
notice of a demand for mediation, both parties must make
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themselves available for mediation within thirty (30) days of that notice. All
mediation fees shall be split equally between the parties to the mediation.
(p) Judgment awards. Buyer and EMI acknowledge that
Sellers and Shareholder shall retain all interest in their judgment awards that
were obtained prior to the Closing Date of this Agreement
(q) Attorneys' Fees. In any suit, action or proceeding
arising out of or in connection with this Agreement, the prevailing party shall
be entitled to an award of the amount of attorneys' fees and disbursements
incurred by such party in connection herewith, including fees and disbursements
one or more appeals.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by an officer duly authorized to do so, all as of the day and year
first above written.
SACMD ACQUISITION CORP. ("BUYER") SAN ANTONIO COLLEGE OF MEDICAL AND
DENTAL ASSISTANTS, INC. ("SELLER")
BY: /S/ ▇▇▇▇ ▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------- -----------------------------------
Authorized Signatory Authorized Signatory
CAREER CENTERS OF TEXAS - EL PASO, INC.
("SELLER")
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Authorized Signatory
EDUCATIONAL MEDICAL, INC.
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Authorized Signatory
SHAREHOLDER:
/S/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
-27-
28
EXHIBIT 1
September 6, 1996
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Escrow Agreement
Gentlemen:
EDUCATIONAL MEDICAL, INC., a Delaware corporation ("EMI"), SACMD
Acquisition Corp., a Delaware corporation wholly owned by EMI ("Buyer"), SAN
ANTONIO COLLEGE OF MEDICAL AND DENTAL ASSISTANTS, INC., a Texas corporation,
and CAREER CENTERS OF TEXAS - EL PASO, INC., a Texas corporation (hereinafter
referred to jointly as the "Sellers") and Mr. ▇▇▇▇▇ ▇▇▇▇▇ ("Shareholder") have
entered into an Asset Purchase Agreement dated September 6, 1996 (the "Asset
Purchase Agreement") pursuant to which the Sellers are selling certain of their
school operations. Pursuant to Section 1(a) of the Asset Purchase Agreement,
you will be receiving $250,000.00. Unless otherwise defined in this Agreement,
all capitalized terms used in this Agreement shall have the same meaning as set
forth in the Asset Purchase Agreement.
Subject to the terms of this Escrow Agreement:
1. (a) Establishment of the Escrow Account:
Upon the execution of the Asset Purchase Agreement,
the Shareholder shall deposit with you the sum of Two
Hundred Fifty Thousand Dollars ($250,000.00), (the
"Escrow Funds") which you shall deposit into an
interest bearing account at a bank (the "Selected
Bank") to be mutually agreed upon by Shareholder and
Buyer (the "Escrow Account").
(b) Purpose of the Escrow Funds:
The Escrow Account has been established to hold the
Escrow Funds, to the extent necessary, to serve as
security for and satisfy claims made by the Buyer
against the Sellers and/or the Shareholder pursuant
to Section 8 of the Asset Purchase Agreement (the
"Section 8 Claims"). The parties acknowledge that
the Sellers and the Shareholder have selected the
Escrow Agent and that the Sellers and the Shareholder
shall bear all of the risk of loss in the event of
the loss of some or all of the Escrow Funds.
(c) Investment of the Escrow Funds:
The Escrow Funds shall, at the direction of the
Shareholder, only be invested and reinvested in (a)
obligations issued or guaranteed by the United States
government or agencies thereof, with maturities of
less than one year from the date of such investment,
and (b) certificates of deposit at the Selected Bank
with maturity dates of less then one year from the
date of such investment, and (iii) money market
accounts at the Selected Bank. Income from all
investments and reinvestment of Escrow Funds shall be
paid upon termination of this Agreement to the
parties receiving the distribution of the Escrow
Funds in proportion to the amount of such
distributions. For Federal Income Tax purposes,
income from all investments and reinvestment of all
Escrow Funds
29
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
September 6, 1996
Page 2
shall be recognized by the parties in
proportion to the amount of distribution of such
income.
(d) Disbursement of Escrow Funds: The Escrow Funds shall
be distributed to the Shareholder or the Buyer, as the case may be, as follows:
(i) upon joint written instruction from Buyer
and Shareholder;
(ii) to Shareholder, in 5 equal annual
installments of $50,000 along with all related
interest, commencing on the first anniversary of this
Agreement, provided that no Section 8 Claim has been
made with respect to such Escrow Funds and related
interest and remains unresolved; or
(iii) to Buyer, with respect to any Section 8
Claim, provided that the Buyer has delivered to the
Escrow Agent notification (the "Distribution
Request") as to the basis for such Claim, which
request shall specify the amount of the Section 8
Claim and the basis upon which such Claim is made. A
copy of the Distribution Request shall be
simultaneously delivered to the Escrow Agent, the
Sellers and the Shareholder. Within thirty (30) days
after such notice is given by the Buyer, either of
the Sellers or the Shareholder shall have the right
to file with the Escrow Agent written notice that
they intend to contest the Buyer's claim. If,
within such thirty (30) day period, the Escrow Agent
does not receive such notice from the Sellers or
Shareholder or receives notice from the Sellers or
Shareholder that such claim is uncontested, the
Escrow Agent shall deliver to the Buyer the specified
Distribution request.
If, however, within such thirty (30) day period, the
Escrow Agent shall receive notice the Sellers or
Shareholder of their intention to contest Buyer's
claim with respect to part or all of the Escrow
funds, then the Escrow Agent shall promptly give
Buyer a copy of such notice and continue to hold the
Escrow funds that are claimed by Buyer in its notice,
until the earlier of (a) Receipt of written notice
from the Sellers and Shareholder consenting to the
release to Buyer of such Escrow funds originally
claimed by Buyer; or (b) Receipt of a written final
decision of the Mediator chosen in accordance with
the provisions as stated in this Escrow Agreement
subject to the parties agreement to abide by the
decision of the Mediator; or (c) Receipt of a
certified copy of a final judgment, unappealed or
unappealable, of a court of competent jurisdiction,
or of the agreement of Sellers and Shareholder and
Buyer, that Buyer or Sellers or Shareholder are
entitled to all or part of the Escrow Funds.
2. The undersigned represent to you that the execution, delivery and
performance of this Agreement has been duly authorized, and does not violate or
conflict with any statute, regulation, order, judgment or writ that is binding
upon the representing party or any of its assets.
3. Unless sooner terminated pursuant to the terms of this Agreement,
this Agreement shall terminate and your responsibilities under this Agreement
shall cease upon distribution of the Escrow Funds and all related income as
provided for in Section 1.
4. To induce you to act as Escrow Agent hereunder, the undersigned
agree as follows:
(a) Except as otherwise provided in this Agreement, you
shall not in any way be bound or affected by any
notice or modification or cancellation of this
Agreement unless in writing, signed by the parties
indicated herein, nor shall you be bound by any
modification hereof unless the same shall be
satisfactory to you. You shall be entitled to rely
upon any judgment, certification, demand or other
writing without being required to determine the
authenticity or the
30
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
September 6, 1996
Page 3
correctness of any fact stated therein, the propriety
or validity of the service thereof, or the
justification of the court issuing such judgment or
order in the premises.
(b) Any party to this Agreement may give the Escrow Agent
a notice requesting the Escrow Agent to make any
delivery or take any action with respect to the
Escrow Funds. If the notice describing any such
request is executed by all of the parties, the Escrow
Agent shall promptly comply with the request. If the
notice is given less than all of the parties, the
Escrow Agent shall promptly forward a copy of such
notice to the party(ies) that did not sign it.
Thereafter, the Escrow Agent shall refrain from
taking any action with respect to such request for
the lesser of 5 business days, or until the other
party(ies) authorizes the Escrow Agent in writing to
comply with such request. If the other party(ies)
fails to deliver written notice of objection to the
Escrow Agent within such 5-day period, the Escrow
Agent shall be fully protected in complying with such
request. This Section (b) is subject to the
provisions set forth in Section 1 (d) above.
(c) The Escrow Agent shall not in any way be bound or
affected by any notice or modification or
cancellation of this Agreement unless in writing,
signed by all parties hereto, nor shall the Escrow
Agent be bound by any modification hereof unless the
same shall be satisfactory to the Escrow Agent. The
Escrow Agent shall be entitled to rely upon any
judgment, certification, demand or other writing
(including but not limited to any instructions given
to it under (b), above) without being required to
determine the authenticity or the correctness of any
fact stated therein, the propriety of validity of the
service thereof, or the jurisdiction of the court
issuing such judgment or order.
(d) The Escrow Agent may act in reliance upon any
document, instrument or signature believed by it to
be genuine, and the Escrow Agent may assume that any
person purporting to give any notice or instructions
in accordance with the provisions hereof has been
duly authorized to do so.
(e) The Escrow Agent may act relative hereto in reliance
upon advice of counsel in reference to any matter(s)
connection herewith, and shall not be liable for any
mistake of fact or error of judgment, or for any acts
or omissions of any kind, unless caused by the Escrow
Agent's willful misconduct or gross negligence. The
Escrow Agent shall be entitled to consult with its
counsel, which shall include any attorney retained by
it, and the Escrow Agent shall not be liable for any
action taken, suffered or omitted by it in accordance
with the advice (whether written or oral) of such
counsel.
(f) This Agreement sets forth exclusively the Escrow
Agent's duties with respect to any and all matters
pertinent hereto. The Escrow Agent shall not be
bound by, the provisions of any other agreement.
(g) The Escrow Agent may at any time resign hereunder by
giving written notice of its resignation to all
parties hereto at least thirty (30) days prior to the
date specified for such resignation to take effect,
and upon the effective date of such resignation, all
cash, documents and all other property then held by
the Escrow Agent hereunder shall be delivered by it
to such persons as may be designated in writing by
all parties hereto, whereupon all its further
obligations of Escrow Agent hereunder shall cease and
terminate. The Escrow Agent's sole responsibility
thereafter shall be to keep safely all property then
held by it and to deliver same to a person designated
by all parties hereto or in accordance with the
directions of a final order or judgment of a court of
31
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
September 6, 1996
Page 4
competent jurisdiction. In addition, the Escrow
Agent shall be discharged from any further duties and
obligations hereunder upon its filing an impleader or
other appropriate proceeding in a court of competent
jurisdiction and depositing in such court all of the
funds and property then held by it hereunder. All
parties hereto hereby submit to the personal
jurisdiction of said court (but solely for the
purpose of implementing this Agreement) and waive all
rights to contest said jurisdiction.
(h) Each of the parties to this Agreement shall be
jointly and severally obligated to pay the Escrow
Agent its fees, and reimburse all of its costs and
expenses in connection herewith, including reasonable
counsel fees for counsel retained by the Escrow Agent
(even though the Escrow Agent is a practicing
attorney) and to indemnify it and hold it harmless
against any claim asserted against it or any
liability, loss or damage incurred by it in
connection herewith.
(i) Nothing herein contained shall be deemed to obligate
the Escrow Agent to deliver any securities, cash,
instruments, documents or any other property referred
to herein, unless the same shall have first been
received by the Escrow Agent pursuant to this
Agreement.
(j) Each of the parties acknowledge that the Escrow Agent
is counsel of the Sellers and Shareholder, and agrees
that no action taken by the Escrow Agent under this
Agreement shall affect or impair the right of the
Escrow Agent to represent the Sellers and Shareholder
in any matter, including an interpleader action
pursuant to this Agreement.
5. This Agreement shall be binding on and inure to the benefit of the
respective parties hereto and their successors and assigns. This Agreement may
be executed in counterparts, each of which shall be deemed an original, but
both of which together shall constitute one and the same instrument. This
Agreement represents the entire understanding of the parties hereto, and
supersedes any and all other prior agreements between the parties relating to
the subject matter of this agreement. The terms and provisions of this
Agreement cannot be terminated or modified or amended except in writing and
signed by the party against whom enforcement is sought. This Agreement shall
be governed by and construed in accordance with the laws of the State of Texas,
and any suit, action or proceeding arising out of or relating to this Agreement
shall be commenced and maintained in the District Court of Bexar County, Texas
or the appropriate United States District Court for the State of Texas and each
party waives objection to such jurisdiction and venue. The provisions of this
Agreement are severable, and any invalidity, unenforceability or illegality in
any provision or provisions hereof shall not affect the remaining provisions of
this Agreement. As between the parties other than the Escrow Agent, in any
suit, action or proceeding arising out of or in connection with this Agreement,
the prevailing party shall be entitled to an award of the amount of attorneys'
fees and disbursements actually billed to such party in connection herewith,
including fees and disbursements on one or more appeals.
6. Mediation. If any notice given by any party under Section
1.(d)(iii) in this Escrow Agreement shall contain any demand for Mediation, the
parties hereto agree that the parties will submit to non-binding mediation.
Unless the parties agree on some other mediation forum, the parties will use
the Bexar County Presuit Mediation Service or the Bexar County Dispute
Resolution Center. Upon any party giving notice of a demand for mediation,
both parties must make themselves available for mediation within thirty (30)
days of that notice. All mediation fees shall be split equally between the
parties to the mediation.
All notices required or allowed hereunder shall be in writing and
shall be deemed given upon (i) hand delivery or (ii) deposit of same in the
United States Certified Mail, Return Receipt Requested, first class postage and
registration fees prepaid and correctly addressed to the party for whom
intended at their address specified in the Asset Purchase Agreement.
32
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
September 6, 1996
Page 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
In the Presence of: EDUCATIONAL MEDICAL, INC.
----------------------------------
By:
---------------------------------- -----------------------------------
Authorized Signatory
SACMD ACQUISITION CORP.
----------------------------------
By:
---------------------------------- -----------------------------------
Authorized Signatory
SAN ANTONIO COLLEGE OF MEDICAL AND
DENTAL ASSISTANTS, INC.
----------------------------------
By:
---------------------------------- -----------------------------------
Authorized Signatory
CAREER CENTERS OF TEXAS - EL PASO, INC.
----------------------------------
By:
---------------------------------- -----------------------------------
Authorized Signatory
---------------------------------- --------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
33
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
September 6, 1996
Page 6
ACCEPTANCE OF ESCROW AGENT
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ acknowledges receipt of the foregoing
Agreement and agrees to act as Escrow Agent under its terms.
By:
------------------------------------
34
EXHIBIT 2
NON-NEGOTIABLE
SECOND PAYMENT PROMISSORY NOTE
U.S. $1,150,000.00 ____________________
_______________, 1996
FOR VALUE RECEIVED, each of the undersigned, jointly and severally,
(each individually called a "Maker" and collectively called the "Makers")
hereby unconditionally promises to pay jointly to the order of SAN ANTONIO
COLLEGE OF MEDICAL AND DENTAL ASSISTANTS, INC. and CAREER CENTERS OF TEXAS - EL
PASO, INC. (hereinafter referred to jointly as "Sellers"), or assigns
("Holder") at __________________________________________________, or at such
other place or to such other party as Holder may from time to time designate in
writing, the principal sum of One Million One Hundred Fifty Thousand and 00/100
Dollars (U.S. $1,150,000.00) in lawful currency of the United States.
This Note evidences a payment to be made to the Holder pursuant to the
Asset Purchase Agreement among Educational Medical, Inc., SACMD Acquisition
Corp., Sellers, and the Shareholder of Sellers dated the date of this
Promissory Note, and providing for the purchase by SACMD Acquisition Corp. of
substantially all of the Assets of Sellers (the "Agreement"). The terms of the
Agreement are incorporated into this Note, and this Note is the Second Payment
Promissory Note referred to in the Agreement representing a portion of the
purchase price of Assets as defined in the Agreement.
The principal amount of this Note will be due (1) as provided in
Section 1(e)(1) of the Agreement, (2) within 5 days following notice to the
Maker from the Holder that a payment of principal or interest has not been made
in accordance with the terms of this Note, which notice specifically declares
the entire amount owed to Holder and provided for in this Note immediately due
and payable, or (3) the first anniversary of this Note, (the earlier of the
dates referred to in the preceding three clauses is called the "Maturity
Date"). All amounts owing pursuant to this Note and not paid upon the Maturity
Date shall bear interest at the highest rate of interest permitted by law until
paid.
Maker for itself, its heirs, legal representatives, successors and
assigns, waives presentment for payment, demand, notice of dishonor or
non-payment, notice of default, notice of protest, and protest of this Note,
and waives any right to be released by reason of any extension of time or
change in terms of payment or any change, alteration or release of any security
given for the payment hereof. Maker hereby consents to any number of
extensions of time, and any and all renewals, waivers, and modifications of
this Note or any combination of the foregoing that may be made or granted by
Holder.
Maker agrees to pay immediately upon demand all reasonable costs and
expenses of Holder, including attorneys' fees, (i) if after default this Note
be placed in the hands of an attorney or attorneys for collection, or (ii) if
Holder finds it necessary or desirable upon default to secure the services or
advice of one or more attorneys with regard to collection of this Note against
Maker, or for the protection of its rights under this Note, or any instrument
relating to property securing the Note. The term "attorneys' fees" shall
include attorneys' fees incurred by Holder whether or not suit is brought and
if suit is brought, the term shall include attorneys' fees at trial and on
appeal, and shall include attorneys' fees incurred in connection with
consultations, arbitration, bankruptcy, conservatorship, receivership or any
other proceeding.
This Note shall be interpreted, construed, governed and enforced in
accordance with the laws of the State of Texas, and any suit, action or
proceeding arising out of or relating to this Note shall be
35
commenced and maintained in the District Court of Bexar County, Texas or the
appropriate United States District Court for the State of Texas and each party
waives objection to such jurisdiction and venue.
EACH OF HOLDER AND MAKER HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT EITHER IT OR ITS SUCCESSORS, PERSONAL
REPRESENTATIVES OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE
LOAN EVIDENCED BY THIS NOTE AND ANY AGREEMENTS CONTEMPLATED THEREBY TO BE
EXECUTED IN CONJUNCTION THEREWITH, OR IN CONJUNCTION WITH ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE PARTIES.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Note in _________________________, the date first above written.
EDUCATIONAL MEDICAL, INC.
By:________________________________________________
Authorized Signatory
SACMD ACQUISITION CORP.
By:________________________________________________
Authorized Signatory
-2-
36
EXHIBIT 3
NON-NEGOTIABLE
PURCHASE MONEY PROMISSORY NOTE
U.S. $1,250,000.00 _____________________
_______________, 1996
FOR VALUE RECEIVED, each of the undersigned, jointly and severally,
(each individually called a "Maker" and collectively called the "Makers")
hereby unconditionally promises to pay jointly to the order of SAN ANTONIO
COLLEGE OF MEDICAL AND DENTAL ASSISTANTS, INC. and CAREER CENTERS OF TEXAS - EL
PASO, INC. (hereinafter referred to jointly as "Sellers"), or assigns
("Holder") at ______________________________________________________, or at
such other place or to such other party as Holder may from time to time
designate in writing, the principal sum of One Million Two Hundred Fifty
Thousand and 00/100 Dollars (U.S. $1,250,000.00) in lawful currency of the
United States.
This Note evidences obligations of the Makers to the Holder provided
for in to the Asset Purchase Agreement among Educational Medical, Inc., SACMD
Acquisition Corp., Sellers, and the Shareholder of Sellers dated the date of
this Promissory Note, and providing for the purchase by SACMD Acquisition Corp.
of substantially all of the Assets of Sellers (the "Agreement"). The terms of
the Agreement are incorporated into this Note, and this Note is the Purchase
Money Promissory Note referred to in the Agreement representing a portion of
the purchase price of Assets as defined in the Agreement.
This Note shall bear interest at the rate of eight percent (8%) per
annum and amortize in five equal principal payments of Two Hundred Fifty
Thousand and 00/100 Dollars ($U.S. $250,000.00) payable on the ____ day of
__________ commencing _________, 1997, together with all accrued interest.
All amounts represented by this Note shall be due and payable (1)
within 15 days following notice to the Maker from the Holder that a payment of
principal or interest has not been made in accordance with the terms of this
Note1/, which notice specifically declares the entire amount owed to Holder and
provided for in this Note immediately due and payable, (2) _________________,
2001 (the earlier of the dates referred to in the preceding two clauses is
called the "Maturity Date"). All amounts owing pursuant to this Note and not
paid upon the Maturity Date shall bear interest at the highest rate of interest
permitted by law until paid.
Maker for itself, its heirs, legal representatives, successors and
assigns, waives presentment for payment, demand, notice of dishonor or
non-payment, notice of default, notice of protest, and protest of this Note,
and waives any right to be released by reason of any extension of time or
change in terms of payment or any change, alteration or release of any security
given for the payment hereof. Maker hereby consents to any number of
extensions of time, and any and all renewals, waivers, and modifications of
this Note or any combination of the foregoing that may be made or granted by
Holder.
____________________
1/ In the event of a dispute as to the payment of such amounts, the relevant
payment may be made into the registry of any court of competent jurisdiction
subject to the resolution of such dispute or, at the discretion of the Buyer
(as defined in the Agreement) into the escrow account of counsel for the
Holder.
37
Maker agrees to pay immediately upon demand all reasonable costs and
expenses of Holder, including attorneys' fees, (i) if after default this Note
be placed in the hands of an attorney or attorneys for collection, or (ii) if
Holder finds it necessary or desirable upon default to secure the services or
advice of one or more attorneys with regard to collection of this Note against
Maker, or for the protection of its rights under this Note, or any instrument
relating to property securing the Note. The term "attorneys' fees" shall
include attorneys' fees incurred by Holder whether or not suit is brought and
if suit is brought, the term shall include attorneys' fees at trial and on
appeal, and shall include attorneys' fees incurred in connection with
consultations, arbitration, bankruptcy, conservatorship, receivership or any
other proceeding.
This Note shall be interpreted, construed, governed and enforced in
accordance with the laws of the State of Texas, and any suit, action or
proceeding arising out of or relating to this Note shall be commenced and
maintained in the District Court of Bexar County, Texas or the appropriate
United States District Court for the State of Texas and each party waives
objection to such jurisdiction and venue.
EACH OF HOLDER AND MAKER HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT EITHER IT OR ITS SUCCESSORS, PERSONAL
REPRESENTATIVES OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE
LOAN EVIDENCED BY THIS NOTE AND ANY AGREEMENTS CONTEMPLATED THEREBY TO BE
EXECUTED IN CONJUNCTION THEREWITH, OR IN CONJUNCTION WITH ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE PARTIES.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Note in _____________, _______________, the date first above written.
EDUCATIONAL MEDICAL, INC.
By:
-------------------------------
Authorized Signatory
SACMD ACQUISITION CORP.
By:
-------------------------------
Authorized Signatory
-2-
38
EXHIBIT 4
PLEDGE AGREEMENT
AGREEMENT, dated as of ____________________, 1996 among EDUCATIONAL
MEDICAL, INC., a Delaware corporation (the "Pledgor"), SAN ANTONIO COLLEGE OF
MEDICAL AND DENTAL ASSISTANTS, INC., a __________________ corporation and CAREER
CENTERS OF TEXAS - EL PASO, INC., a ________________ corporation (hereinafter
referred to jointly as the "Pledgees") and SACMD ACQUISITION CORP., a Delaware
corporation (the "Issuer").
PRELIMINARY STATEMENT
The Pledgor is the owner of all of the issued and outstanding common
stock, par value $.10 per share (the "Pledged Securities"), of the Issuer.
The Issuer and the Pledgor have jointly and severally executed and
delivered to Pledgees (i) their Promissory Note in the principal amount of
$1,150,000.00 (the "Second Payment Note"), a copy of which is attached as
Exhibit 1 to this Pledge Agreement. The Second Payment Note was issued
pursuant to an asset purchase agreement (the "Asset Purchase Agreement")
entered into among the Pledgor, Pledgees, the Issuer and the Shareholder of the
Pledgees and dated _____________, 1996. The Pledgor's obligations with respect
to the payment of the Second Payment Note are called the "Secured Obligations"
and are to be secured by the Pledged Collateral, as defined in Section 1.
In consideration of the premises and of the mutual covenants herein
contained, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. Pledge. As security for the due and punctual payment and
performance of the payment of the Secured Obligations, and this Agreement, the
Pledgor hereby pledges, hypothecates, assigns, transfers, sets over and
delivers unto the Pledgees, and hereby grants to the Pledgees a security
interest in, the following:
(a) the Pledged Securities and the certificates
representing the Pledged Securities, and all cash, proceeds, securities,
dividends and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Securities; and
(b) all securities hereafter delivered or issued in
substitution for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such securities, together with the
interest coupons (if any) attached thereto, and all cash, proceeds, securities,
interest, dividends and other property at any time and from time to time
received or otherwise distributed in respect of or in exchange for any or all
thereof (all such Pledged Securities, certificates, interest coupons, cash,
proceeds, securities, interest, dividends and other property being herein
collectively called the "Pledged Collateral");
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights,
titles, interests, privileges and preferences appertaining or incidental
thereto, unto the Pledgees, their successors and assigns, forever, subject,
however to the terms, covenants and conditions hereinafter set forth.
39
2. Transfer to Escrow Agent. The original certificates representing
all Pledged Collateral shall be held on behalf of Pledgees by
___________________________________________________ (the "Escrow Agent"). The
Pledgor shall deliver to the Escrow Agent all original certificates
representing the Pledged Collateral issued in the name of the Pledgor, endorsed
or assigned in blank in favor of the Pledgees. The Pledgees may, upon request
to the Escrow Agent and delivery by the Escrow Agent of the appropriate Pledged
Collateral to the Issuer, exchange the certificates representing the Pledged
Collateral for certificates of smaller or larger denominations for any purpose
consistent with the terms of this Pledge Agreement.
3. Voting Rights; Dividends. So long as there is no failure to make
due and punctual payment to the Pledgees in accordance with the terms of the
Secured Obligations nor any other continuing event which would constitute an
event of default under this Agreement (an "Event of Default"):
(a) The Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers relating or pertaining to the
Pledged Collateral or any part thereof.
(b) The Pledgor shall be entitled to receive and retain
any and all ordinary cash dividends and interest payable on the Pledged
Collateral, but any and all stock and/or liquidating dividends, distributions
in property, returns of capital or other distributions made on or in respect of
the Pledged Collateral, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of an Issuer or received in
exchange for Pledged Collateral or any part thereof, or as a result of any
merger, consolidation, acquisition or other exchange of assets to which the
Issuer may be a party or otherwise, and any and all cash and other property
received in payment of the principal of or in redemption of or in exchange for
any Pledged Collateral (either at maturity, upon call for redemption or
otherwise), shall be and become part of the collateral pledged by the Pledgor
hereunder and, if received by the Pledgor, shall be received in trust for the
benefit of the Pledgees or their assigns or the holder of any subsequent
perfected lien and shall forthwith be delivered to the Escrow Agent
(accompanied by proper instruments of assignment and/or stock and/or bond
powers executed by the Pledgor in accordance with the Pledgees' instructions)
to be held as Pledged Collateral subject to the terms of this Pledge Agreement.
(c) The Pledgees shall execute and deliver (or cause to
be executed and delivered) to the Pledgor all such proxies, powers of attorney,
dividend orders, interest coupons and other instruments as the Pledgor may
request for the purpose of enabling the Pledgor to exercise the voting and/or
consensual rights and powers which it is entitled to exercise pursuant to
subparagraph (a) above and/or to receive the dividends and/or interest payments
which it is authorized to receive and retain pursuant to subparagraph (b)
above.
(d) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Pledgor to exercise the voting and/or
consensual rights and powers which it is entitled to exercise pursuant to
Section 3(a) hereof and/or to receive the dividends and interest payments which
it is authorized to receive and retain pursuant to Section 3(b) hereof shall
cease, and all such rights shall thereupon become vested in the Pledgees who
shall have the sole and exclusive right and authority to exercise such voting
and/or consensual rights and powers and/or to receive and retain the dividends
and/or interest payments which the Pledgor would otherwise be authorized to
retain pursuant to Section 3(b) hereof. Any and all money and other property
paid over to or received by the Pledgees pursuant to the provisions of this
Section 3 or pursuant to the exercise by Pledgees of the voting and/or
consensual rights and powers shall be retained by the Pledgees as additional
collateral hereunder and be applied in accordance with the provisions of this
Pledge Agreement.
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4. Events of Default. The occurrence of any one or more of the
following shall constitute an Event of Default:
(a) the Pledgor and the Issuer shall default in making any
payment with respect to the Secured Obligations; or
(b) if either the Pledgor or the Issuer become bankrupt or
insolvent, or file any petition for reorganization or relief from creditors
under any applicable law of any jurisdiction, or make any general assignment
for the benefit of creditors, and in any event; and
(c) except as provided for in subsection (c), if such default
or event shall continue for 10 days after the giving of written notice to the
Pledgees.
5. Remedies upon Default. If any Event of Default shall have occurred
and be continuing, then, in addition to exercising any rights and remedies as a
secured party under the Uniform Commercial Code in effect in __________, the
Pledgees may without being required to give any notice to the Pledgor:
(a) apply the cash (if any) then held by it as collateral
hereunder, first, to the payment of all costs of collection (including
attorneys' fees) incurred in enforcing Pledgees' rights under the Secured
Obligations and this Agreement; second to the payment of interest accrued and
unpaid on the Second Payment Note to and including the date of such
application, third to the payment or prepayment of principal of the Second
Payment Note; and fourth all other amounts then due with respect to other
Secured Obligations and then otherwise pursuant to this Pledge Agreement, and
(b) sell the Pledged Collateral, or any part thereof, at any
public or private sale or at any broker's board or in any securities exchange,
for cash, upon credit or for future delivery, as the Pledgees shall deem
appropriate. The Pledgees shall be authorized at any such sale (if they deem
it advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Pledged
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Pledgees shall have the right to assign, transfer and deliver to the purchaser
or purchasers thereof the Pledged Collateral so sold, free and clear from any
claims or rights of Pledgor. Further, it shall be deemed commercially
reasonable for the Pledgees to impose sufficient conditions on any such sale so
as to preclude the necessity of registration of the Pledged Collateral under
the Securities Act of 1933, as amended. Each such purchaser at any such sale
shall hold the property sold absolutely, free from any claim or right on the
part of the Pledgor, and the Pledgor hereby waives (to the extent permitted by
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Pledgees shall give the Pledgor and the holder of any
subsequent perfected lien at least 30 days' written notice in the manner
specified for notices under this Agreement of the Pledgees' intention to make
any such public or private sale or sales at any broker's board or on any such
securities exchange, and the Pledgor agrees that such notice of sale will be
commercially reasonable notice to it. Such notice, in case of public sale,
shall state the time and place fixed for such sale, and, in the case of sale at
a broker's board or exchange at which such sale is to be made, the day on which
the Pledged Collateral, or portion thereof, will first be offered for sale at
such board or exchange. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places, as the
Pledgees may fix in the notice of such sale. At any such sale, the Pledged
Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Pledgees may (in their sole and
absolute discretion) determine and the Pledgees or other holder of the Secured
Obligations may bid (which bid may be in whole or in part,
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in the form of cancellation of indebtedness) for and purchase for the account
of the Pledgees or other holder of any Secured Obligation the whole or any part
of the Pledged Collateral. If the proceeds of the Pledged Collateral are
insufficient to satisfy Pledgor's obligations under the Second Payment Note and
then otherwise pursuant to this Agreement, Pledgor shall remain liable for any
deficiency. The Pledgees shall not be obligated to make any sale of Pledged
Collateral if they shall determine not to do so, regardless of the fact that
notice of sale of Pledged Collateral may have been given. The Pledgees may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case sale of all or any part
of the Pledged Collateral is made on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Pledgees until the sale price is paid
by the purchaser or purchasers thereof, but neither the Pledgees nor any other
holder of the Secured Obligations or the assignee of any of the Pledgees'
rights, shall incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Pledged Collateral so sold and, in the
case of such failure, such Pledged Collateral may be sold again upon like
notice. As an alternative to exercising the power of sale herein conferred
upon it, the Pledgees may proceed by a suit or suits at law or in equity to
foreclose this Pledge Agreement and to sell the Pledged Collateral, or any
portion thereof, pursuant to a judgment or decree of a court or courts of
competent jurisdiction.
6. Application of Proceeds of Sale. The proceeds of sale of Pledged
Collateral sold pursuant to Section 5 (c) hereof shall be applied by the
Pledgees as follows:
First: in the manner provided in paragraph (a) of Section 5
hereof; and
Second: the balance (if any) of such proceeds shall be paid to the
holder of any subsequent perfected lien and then the Pledgor, its successors or
assigns in proportion to their ownership of the Pledged Collateral, or as a
court of competent jurisdiction may direct.
7. Extension or Modification of the Second Payment. The Pledged
Collateral pledged hereunder secures the payment and performance of all of the
indebtedness of the Pledgor with respect to the Secured Obligations and the
Pledgor agrees that the Second Payment Note may be extended or otherwise
modified in accordance with its terms without affecting this Pledge Agreement
or the obligations of Pledgor hereunder, which shall continue in full force and
effect until the Secured Obligations shall have been fully paid and performed.
8. Authority of Pledgees. The Pledgees shall have and be entitled to
exercise all such powers hereunder as are specifically delegated to the
Pledgees by the terms hereof, together with such powers as are reasonably
incidental thereto. The Pledgees may execute any of their duties hereunder by
or through agents or employees and shall be entitled to retain counsel and to
act in reliance upon the advice of such counsel (whether written or oral)
concerning all matters pertaining to their duties hereunder. Neither the
Pledgees, nor any director, officer or employee of the Pledgees, shall be
liable for any action taken or omitted to be taken by it or them hereunder in
connection herewith, except for its or their own gross negligence or willful
misconduct. The Pledgor hereby agrees to reimburse the Pledgees, on demand,
for all expenses incurred by the Pledgees in connection with the administration
and enforcement of this Pledge Agreement (including expenses incurred by the
Escrow Agent or any subagent employed by the Pledgees) and agrees to indemnify
and hold harmless the Pledgees and/or any such subagent against any and all
liability incurred by the Pledgees (or such subagent hereunder or in connection
herewith), unless such liability shall be due to willful misconduct or gross
negligence on the part of the Pledgees or such subagent.
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9. Pledgees Appointed Attorney in Fact. The Pledgor hereby appoints
the Pledgees the Pledgor's attorney-in- fact for the purpose of carrying out
the provisions of this Pledge Agreement and, upon the occurrence of any Event
of Default, taking any action and executing any instrument which the Pledgees
may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, upon an Event of Default, the Pledgees shall have
the right and power to receive, endorse and collect all checks and other orders
for the payment of money made payable to the Pledgor representing any dividend,
interest payment or other distribution payable or distributable in respect of
the Pledged Collateral or any part thereof and to settle or compromise any
claims relating thereto and to give full discharge for the same.
10. Representations and Warranties of Pledgor. To induce Pledgees to
enter into the transactions provided for in the Asset Purchase Agreement and to
accept the Second Payment Note, Pledgor represents and warrants to Pledgees,
and covenants with Pledgees that:
(a) it owns the Pledged Securities and by the execution and
delivery of this Agreement and delivery of the Pledged Collateral it has
created is a first priority lien granted in favor of the Pledgees with respect
to such Pledged Collateral; and
(b) this Agreement is the valid and binding obligation of
Pledgor, enforceable in accordance with its terms.
11. No Waiver; Cumulative Remedies. No failure on the part of the
Pledgees to exercise, and no delay in exercising any right, power, privilege or
remedy hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power, privilege or remedy of the Pledgees
preclude any other or further exercise thereof or the exercise of any other
right, power, privilege or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided herein or by law.
12. Termination. This Pledge Agreement shall terminate when the
Secured Obligations have been fully paid and performed, at which time the
Pledgees shall reassign and redeliver (or cause to be reassigned and
redelivered) to the Pledgor, or to such person or persons as the Pledgor shall
designate, such of the Pledged Collateral (if any) as shall not have been sold
or otherwise applied by the Pledgees pursuant to the terms hereof and shall
still be held hereunder, together with appropriate instruments of reassignment
and release. Any such reassignment shall be without recourse against or
express or implied representation or warranty by the Pledgees and at the
expense of the Pledgor.
13. Assignability. The Pledgees may assign, in whole or in part, any
or all of their rights, title and interests provided for in this Pledge
Agreement, to any holder of the Secured Obligations or portion thereof.
14. Terms Relating to Escrow Agent.
(a) ______________________ shall initially act as Escrow
Agent under this Agreement. The Escrow Agent shall acknowledge its receipt of
the original certificate(s) representing the Pledged Securities by executing
this Agreement. Pledgor shall also deliver to the Escrow Agent any and all
original certificates, funds or documents as may hereafter become part of the
Pledged Collateral. The possession of the original certificates and other
documents relating to the Pledged Collateral shall be
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deemed to constitute the Pledgees' possession thereof in order to perfect
Pledgees' security interest in the Pledged Collateral.
(b) The Escrow Agent shall hold all certificates, funds
and documents representing the Pledged Collateral (collectively, the
"Instruments") subject to the following terms and conditions:
(i) If the Pledgees at any time instruct the Escrow Agent
to exchange any certificates representing any securities included in
the Pledged Collateral to change the denominations of such
certificates, the Escrow Agent shall comply with such request promptly
by so exchanging certificates directly with the Issuer. The Escrow
Agent shall give Pledgor and the holder of any subsequent perfected
lien notice of any such action within 10 days after it is completed.
(ii) Either Pledgor or Pledgees may give the Escrow Agent
a notice requesting the Escrow Agent to make any delivery or take any
action with respect to any Instruments that is proposed to be taken
pursuant to this Agreement. If the notice describing any such request
is executed by both the Pledgor and the Pledgees, the Escrow Agent
shall promptly comply with the request.
If the notice is given by Pledgor or Pledgees, and is not signed by
both, the Escrow Agent shall promptly forward a copy of such notice to the
party that did not sign it. Thereafter, the Escrow Agent shall refrain from
taking any action with respect to such request for at least 5 business days, or
until the other party authorizes the Escrow Agent in writing to comply with
such request. If the other party fails to deliver written notice of objection
to the Escrow Agent within such 5-day period, the Escrow Agent shall be fully
protected in complying with such request.
(c) In order to induce the Escrow Agent to act under this
Agreement, the Pledgor and the Pledgees jointly and severally agree as follows:
(i) The Escrow Agent shall not in any way be bound or
affected by any notice or modification or cancellation of this
Agreement unless in writing, signed by all parties hereto, nor shall
the Escrow Agent be bound by any modification hereof unless the same
shall be satisfactory to the Escrow Agent. The Escrow Agent shall be
entitled to rely upon any judgment, certification, demand or other
writing (including but not limited to any instructions given to it
under (b), above) without being required to determine the authenticity
or the correctness of any fact stated therein, the propriety of
validity of the service thereof, or the jurisdiction of the court
issuing such judgment or order.
(ii) The Escrow Agent may act in reliance upon any
document, instrument or signature believed by it to be genuine, and
the Escrow Agent may assume that any person purporting to give any
notice or instructions in accordance with the provisions hereof has
been duly authorized to do so.
(iii) The Escrow Agent may act in reliance upon advice of
counsel in reference to any matter(s) in connection herewith, and
shall not be liable for any mistake of fact or error of judgment, or
for any acts or omissions of any kind, unless caused by the Escrow
Agent's willful misconduct or gross negligence. The Escrow Agent
shall be entitled to consult with its counsel, which shall include any
attorney retained by it, and the Escrow Agent shall not be liable for
any
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action taken, suffered or omitted by it in accordance with the advice
(whether written or oral) of such counsel.
(iv) This Agreement sets forth exclusively the Escrow
Agent's duties with respect to any and all matters pertinent hereto.
The Escrow Agent shall not be bound by, the provisions of any other
agreement.
(v) The Escrow Agent may at any time resign hereunder by
giving written notice of its resignation to all parties hereto at
least thirty (30) days prior to the date specified for such
resignation to take effect, and upon the effective date of such
resignation, all cash, documents and all other property then held by
the Escrow Agent hereunder shall be delivered by it to such persons as
may be designated in writing by all parties hereto, whereupon all
further obligations of Escrow Agent hereunder shall cease and
terminate. The Escrow Agent's sole responsibility thereafter shall be
to keep safely all property then held by it and to deliver same to a
person designated by all parties hereto or in accordance with the
directions of a final order or judgment of a court of competent
jurisdiction. In addition, the Escrow Agent shall be discharged from
any further duties and obligations hereunder upon its filing an
impleader or other appropriate proceeding in a court of competent
jurisdiction and depositing in such court all of the funds and
property then held by it hereunder. All parties hereto hereby submit
to the personal jurisdiction of said court (but solely for the purpose
of implementing this Agreement) and waive all rights to contest said
jurisdiction.
(vi) Pledgor and Pledgees shall be jointly and severally
obligated to pay the Escrow Agent its fees, and reimburse all of its
costs and expenses in connection herewith, including reasonable
counsel fees for counsel retained by the Escrow Agent (even though the
Escrow Agent is a practicing attorney) and to indemnify it and hold it
harmless against any claim asserted against it or any liability, loss
or damage incurred by it in connection herewith. The Escrow Agent may
apply to a court of competent jurisdiction for payment of its fees and
expenses from the Pledged Collateral and such claim shall have
priority over the rights of the undersigned with respect to any
payment to be made pursuant to this Agreement. In that connection the
Escrow Agent may sell all or any part of the Pledged Collateral to
satisfy such obligations as if they were Secured Obligations as
defined in this agreement.
(vii) Nothing herein contained shall be deemed to obligate
the Escrow Agent to deliver any securities, cash, instruments,
documents or any other property referred to herein, unless the same
shall have first been received by the Escrow Agent pursuant to this
Agreement.
(vii) Pledgor acknowledges that the Escrow Agent is counsel
of the Pledgees, and agrees that no action taken by the Escrow Agent
under this Agreement shall affect or impair the right of the Escrow
Agent to represent the Pledgees in any matter, including an impleader
action pursuant to this Agreement.
15. Miscellaneous. This Agreement shall be binding on and inure to
the benefit of the respective parties hereto and their successors and assigns.
This Agreement may be executed in counterparts, each of which shall be deemed
an original, but both of which together shall constitute one and the same
instrument. This Agreement represents the entire understanding of the parties
hereto, and supersedes any and all other prior agreements between the parties
relating to the subject matter of this Agreement. The terms and provisions of
this Agreement cannot be terminated or modified or amended except in writing
and signed by the party against whom enforcement is sought.
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This Agreement shall be governed by and construed in accordance with the laws
of the State of Texas, and any suit, action or proceeding arising out of or
relating to this Agreement shall be commenced and maintained in the District
Court of Bexar County, Texas or the appropriate United States District Court
for the State of Texas and each party waives objection to such jurisdiction and
venue. The provisions of this Agreement are severable, and any invalidity,
unenforceability or illegality in any provision or provisions hereof shall not
affect the remaining provisions of this Agreement. As between Pledgor and
Pledgees, in any suit, action or proceeding arising out of or in connection
with this Agreement, the prevailing party shall be entitled to an award of the
amount of attorneys' fees and disbursements actually billed to such party in
connection herewith, including fees and disbursements on one or more appeals.
All notices required or allowed hereunder shall be in writing and
shall be deemed given upon (i) hand delivery or (ii) deposit of same in the
United States Certified Mail, Return Receipt Requested, first class postage and
certification fees prepaid and correctly addressed to the party for whom
intended at their address written in the first paragraph hereof, or such other
address as is most recently noticed for such party as aforesaid.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
In the Presence of: EDUCATIONAL MEDICAL, INC.
___________________________
___________________________ By:
________________________________
Authorized Signatory
SACMD ACQUISITION CORP.
___________________________
___________________________
By: ________________________________
Authorized Signatory
SAN ANTONIO COLLEGE OF MEDICAL AND
DENTAL ASSISTANTS, INC.
___________________________
___________________________ By:
__________________________________
Authorized Signatory
CAREER CENTERS OF TEXAS - EL PASO, INC.
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___________________________
___________________________
By:__________________________________
Authorized Signatory
ACCEPTANCE OF ESCROW AGENT
________________________ acknowledges receipt of the foregoing
Agreement and agrees to act as Escrow Agent under its terms.
By: _________________________________
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EXHIBIT 25
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT made as of ___________________, 1996 between SAN
ANTONIO COLLEGE OF MEDICAL AND DENTAL ASSISTANTS, INC., a _________________
corporation and CAREER CENTERS OF TEXAS - EL PASO, INC., a _________________
corporation (hereinafter referred to jointly as the "Sellers") with a
registered office at _________________________________________ and SACMD
ACQUISITION CORP., a Delaware corporation, the registered office of which is
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("Buyer").
Preliminary Statement
Buyer, Educational Medical, Inc., which is the parent corporation of
the Buyer, Sellers and Sellers' shareholder, have entered into an Agreement
dated as of ____________, 1996 (the "Asset Purchase Agreement") pursuant to
which, among other things, Buyer has agreed to assume certain stated
liabilities and obligations of Sellers relating to the operation of its
Schools. All of the capitalized terms in this Assumption Agreement shall have
the meaning given to them in the Asset Purchase Agreement unless the context
clearly demands otherwise.
NOW THEREFORE, in consideration of the agreements set forth herein and
in the Asset Purchase Agreement, and other good and valuable considerations,
the receipt and adequacy of which are hereby conclusively acknowledged by
Buyer, and to induce Sellers and the Shareholder to consummate the transactions
contemplated by the Asset Purchase Agreement, and intending to be legally bound
hereby Buyer agrees as follows:
1. Assumption Obligation. Buyer hereby assumes and undertakes to
perform, pay, satisfy, and discharge each of the Stated Liabilities.
The Buyer shall perform, pay, satisfy, and discharge, as the
case may be, each of the Stated Liabilities at or before such time as payment
or performance thereunder is due.
2. Right to Contest. Buyer may contest, in good faith, its
obligation to perform or pay Stated Liabilities in the event and to the extent
Buyer reasonably believes that such payment or performance is not due to the
creditor or other party claiming entitlement to payment or performance. In the
event that Buyer contests its obligation to pay or perform any of the Stated
Liabilities, (a) Buyer shall promptly notify Sellers of the Stated Liability
being contested, and the reasons therefor, and (b) regardless of whether such
notice is given, Buyer shall, at its cost and expense, protect, defend,
indemnify and hold harmless Sellers and the Shareholder from, against and in
respect of any cost, expense (including reasonable attorneys' fees and costs),
liability, obligation or claim asserted against, incurred by or imposed upon
Sellers or Shareholder arising from, or in connection with or related to
Buyer's contest of any Stated Liabilities.
3. Costs of Enforcement. In connection with any action arising
from or in connection with the enforcement of this Agreement, the prevailing
party shall be entitled to an award of its expenses, including reasonable
attorneys' fees and disbursements, incurred or paid in any proceeding which may
be instituted.
4. Jury Trial Waiver. BUYER KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF,
48
UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR THE TRANSACTIONS OR OBLIGATIONS
CONTEMPLATED IN THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING TO THIS
AGREEMENT. BUYER CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF SELLERS, NOR
SELLERS' COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT,
IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY
TRIAL PROVISION.
5. Modifications; Waivers Remedies Cumulative. No amendment,
modification, waiver or discharge of this Agreement, or any provision hereof,
shall be valid or effective unless in writing and signed by Sellers and Buyer.
No delay or omission of Sellers to exercise any right, power or remedy accruing
under or pursuant to this Agreement, at law, in equity, or otherwise, shall
exhaust or impair any right, power or remedy or shall be construed to waive any
such right, power or remedy. Every right, power and remedy of Sellers created
under this Agreement may be exercised from time to time and as often as may be
deemed expedient by Sellers in their sole discretion. No right, power or
remedy conferred upon or reserved to Sellers is exclusive of any other right,
power or remedy, but each and every such right, power and remedy shall be
cumulative and concurrent and shall be in addition to any other right, power
and remedy given under this Agreement or under any other instrument executed in
connection herewith (including, without limitation, the Asset Purchase
Agreement), or now or hereafter existing at law, in equity, or otherwise. No
obligation of Buyer under this Agreement shall be deemed waived by any course
or pattern of conduct by any party.
6. Choice of Law; Venue. This Agreement shall be interpreted,
construed, governed and enforced in accordance with the laws of the State of
Texas, and any suit, action or proceeding arising out of or relating to this
Agreement shall be commenced and maintained in the District Court of Bexar
County, Texas or the appropriate United States District Court for the State of
Texas and each party waives objection to such jurisdiction and venue.
7. Severability. The provisions of this Agreement shall be
severable. In the event that a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, and is not
reformed by such court, such invalid or unenforceable provision shall not
affect or impair the validity or enforceability of any other provision of this
Agreement and this Agreement shall be construed as if the invalid or
unenforceable provision had not been included in this Agreement.
8. Captions. The captions used in this Agreement are for
convenience of reference only and shall not be construed to extend, limit or
modify the scope of meaning of the respective paragraphs to which they relate.
9. Enforceability; Successors and Assigns. This Agreement shall
be binding upon Buyer and Buyer's successors and assigns and shall inure to the
benefit of Sellers and their successors and assigns.
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IN WITNESS WHEREOF, Buyer has executed and delivered this Agreement on
the date first above written.
SACMD ACQUISITION CORP.
By:__________________________________
Authorized Signatory
Educational Medical, Inc. joins in this Agreement for the purpose of confirming
that it is jointly and severally obligated with SACMD Acquisition Corp.
pursuant to the terms of this Assumption Agreement.
EDUCATIONAL MEDICAL, INC.
By:________________________________________________
Authorized Signatory
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EXHIBIT 26
▇▇▇▇ OF SALE
SAN ANTONIO COLLEGE OF MEDICAL AND DENTAL ASSISTANTS, INC., a
____________ corporation and CAREER CENTERS OF TEXAS - EL PASO, INC., a
_____________ corporation, (hereinafter referred to jointly as the "Sellers")
with a registered office at _____________________________ in consideration of
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, paid to it by SACMD ACQUISITION CORP., a Delaware corporation the
registered office of which is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Buyer") hereby sell and deliver to the Buyer all of
their School Related Assets, as defined in the Asset Purchase Agreement between
Sellers and Buyer dated ____________, 1996, (the "Asset Purchase Agreement") to
which a form of this ▇▇▇▇ of Sale is attached as an Exhibit, including without
limitation all of their right, title and interest to the personal property,
tangible or intangible, listed or described on Exhibit A, which is attached to
and made a part of this ▇▇▇▇ of Sale by reference.
The Sellers warrant that they are the lawful owners of all of the
personal property listed in Exhibit A; that all of such property is free and
clear of all encumbrances except those specified in the Asset Purchase
Agreement; and that the Sellers have the right to sell all of such property and
will defend the sale and title to such property in the Buyer against the claims
of all persons.
IN WITNESS WHEREOF, the Sellers have caused this document to be
executed this ____ day of ___________________, 1996.
WITNESSES: SAN ANTONIO COLLEGE OF MEDICAL
AND DENTAL ASSISTANTS, INC.
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By:
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Authorized Signatory
CAREER CENTERS OF TEXAS - EL PASO, INC.
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By:
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Authorized Signatory
