STOCK PURCHASE AGREEMENT
AGREEMENT made as of this 14th day of January, 2000, by and among Xxxxx
X. Xxxxxxx, residing at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Seller"),
Interboro Holding, Inc., a Delaware corporation with offices at c/o Educational
Video Conferencing, Inc., 00 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxx
Xxxx 00000 ("BUYER") and Interboro Institute, Inc., with Offices at 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (collectively, with the Institute, the
"Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is a post-secondary two-year college that is
authorized by the New York State Board of Regents to grant the Associate of
Occupational Studies degree in business administration (with majors in
accounting and management), opthalmic dispensing, paralegal studies,
administrative secretarial arts (with majors in executive, medical and legal)
and security services and management (the "Institute");
WHEREAS, Seller owns 100 shares (the "Shares"), constituting 100% of
the Company's issued and outstanding common stock, no par value (the "Common
Stock"); and
WHEREAS, Buyer desires to purchase and Seller desires to sell the
Shares;
NOW, THEREFORE, in consideration of the premises and the respective
representations and warranties, agreements and covenants hereinafter set forth,
the parties agree as follows:
ARTICLE I.
DEFINITIONS
1.1. CERTAIN DEFINITIONS. Except as otherwise expressly provided in
this Agreement, or unless the text of this Agreement otherwise requires, in
addition to the other terms defined herein, the following shall apply:
(a) "AGREEMENT" means this Stock Purchase Agreement, including
the Disclosure Schedules and Exhibits and any amendments thereto, unless the
context otherwise requires.
(b) "BUYER'S RECOUPMENT AMOUNT" means the total amount Buyer
reasonably determines is required to be invested by Buyer in the Company to
satisfy (i) the net worth requirement of subparagraph 51E of the Lease in order
for Buyer to acquire the Shares under this Agreement without the consent of the
Landlord being required or the Landlord having any right to terminate or change
the Lease or recapture any portion of the premises covered by the Lease and (ii)
any further financial requirements, if any, of federal or New York State
agencies providing student financial aid to students of Interboro.
(c) "CLOSING" AND "CLOSING DATE" mean the closing and date of
closing referred to in Section 2.3(a) of this Agreement.
(d) "CONSENTS" mean all licenses, permits, franchises, approvals,
acknowledgments, registrations, authorizations, consents or order of, or filing
with, any governmental authority, (whether foreign, federal, state or local), or
accreditation or membership organization or any other party, necessary or
desirable for the present and continued conduct of, or relating to the
consummation of the transactions contemplated by this Agreement or the operation
of, the Company's business.
(e) "CONTRACT" means any agreement, contract, lease, note, loan,
evidence of indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license agreement,
instrument, obligation or commitment to which the Company is a party or by which
it is bound, whether oral or written.
(f) "CUMULATIVE EBITDA" means total EBITDA since December 31,
1999.
(g) "DISCLOSURE SCHEDULES" mean all of the schedules referred to
in this Agreement and delivered by Seller and the Company to Buyer
simultaneously with the execution and delivery of this Agreement and containing
the information required to be included therein pursuant to this Agreement.
(h) "EBITDA" means earnings before interest, taxes, depreciation
and amortization determined in accordance with GAAP by the independent auditors
of the Company.
(i) "EVCI" means Educational Video Conferencing, Inc., a Delaware
Corporation and the parent of Buyer.
(j) "GAAP" means generally accepted accounting principles in
general use by significant segments of the U.S. accounting profession.
(k) "LANDLORD" means 444 Realty Company, L.L.C.
(l) "LEASE" means the lease between the Landlord and the Company
dated July 27, 1983, as subsequently amended, including the Second Amendment and
Lease Extension Agreement dated February 1, 1983, which contains in paragraph 8
thereof the provisions of subparagraph 51E.
(m) "SELLERS RECOUPMENT AMOUNT" means that portion of the Price
equal to the amount of the Shareholder Debt minus $22,500.
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1.2. OTHER DEFINITIONS. The following terms have the meanings provided
for in the Sections set forth below.
TERM SECTION
---- -------
Accounts Payable Schedule 3.7
Accreditations 3.5
Audited Financial Statements 3.7
Breaching Party 8.2(d)
Buyer Preamble
Common Stock Second WHEREAS clause
Company Preamble
EBITDA Period 2.2(b)
Employee Plan 3.15
Equipment 3.12(b)
ERISA 3.15
Escrow Agreement 6.5
50% EBITDA Period 2.2(a)
50% EBITDA Portion 2.2(a)
Harmed Party 8.2(d)
Indemnifying Party 8.2(c)
Indemnitee 8.2(c)
Institute First WHEREAS clause
Inventory 3.12(a)
Losses 8.2(a)
Memberships 3.5
Price 2.2(a)
Prior Period Disallowance 8.2(e)
Receivables Schedule 3.7
Seller Preamble
Seller's Non-compete 2.2(a)
Seller's Non-compete Area 9.1(a)
SFA Programs 3.24
Shareholder Debt 3.16
Shares Second WHEREAS clause
Unaudited Balance Sheet 3.7
Unaudited Financial Statements 3.7
ARTICLE II.
PURCHASE AND SALE OF SHARES
2.1. PURCHASE AND SALE. Seller agrees that, at the Closing, it will
sell, assign, transfer and deliver the Shares to Buyer, free and clear of any
lien charge, claim, pledge or encumbrance of any kind, and Buyer agrees it will
purchase the Shares.
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2.2. PRICE AND PAYMENT.
(a) The total purchase price (the "Price") for the Shares and
Seller's non-compete agreement pursuant to Article IX ("Seller's Non-compete")
shall equal, and be limited to, the sum of (i) Seller's Recoupment Amount and
(ii) 50% of EBITDA, if any, for the three fiscal years of the Company ending
June 30, 2001, 2002 and 2003; provided, however, if, for any reason, in the
Company's sole discretion, it changes its fiscal year to a calendar year, the
foregoing dates shall be December 31, 2001, 2002 and 2003, respectively. The
portion of the Price exceeding Seller's Recoupment Amount is defined as the "50%
EBITDA Portion" and the three fiscal years of the Company referred to in the
immediately preceding sentence is defined as the "50% EBITDA Period."
(b) The Price shall be allocated 95% to the purchase of the
Shares and 5% to Seller's Non-compete. In addition, the execution and delivery
by EVCI of the Warrant Agreement referred to in Section 6.5 shall be deemed
additional consideration for Seller's Non-compete.
(c) Each portion of the Price shall be calculated and such
calculation shall be given to Seller within 100 days after the close of the
period to which it relates. The calculation of EBITDA shall be based on the
Company's audited financial statements. Each calculation of the Price shall be
accompanied by the financial statements to which such payment relates. The
financial statements shall be accompanied by a certificate of the Company's
Chief Financial Officer showing the calculation in reasonable detail of EBITDA
for the applicable fiscal year of the Company.
(d) Buyer's Recoupment Amount shall be deemed paid to Buyer out
of 80% of EBITDA for each fiscal year of the Company beginning after December
31, 1999. Buyer's Recoupment Amount shall be paid in full before any of the 50%
EBITDA Portion is paid to Seller.
(e) Each installment payment of Seller's Recoupment Amount shall
equal 20% of EBITDA for each fiscal year of the Company beginning after December
31, 1999, except to the extent the last installment is less than 20% of EBITDA
for the applicable fiscal year. Installment payments of Seller's Recoupment
Amount shall be made to Seller when the calculation of EBITDA to which such
payment relates is delivered to Seller pursuant to Section 2.2(c). If, however,
Seller's Recoupment Amount is not paid in full by the time Buyer's Recoupment
Amount is paid in full, the balance of Seller's Recoupment Amount shall continue
to be paid out of 20% of EBITDA and, in addition, commencing the Company's
fiscal year immediately following the Company's fiscal year in which 80% of
Cumulative EBITDA equals or exceeds Buyer's Recoupment Amount and continuing
through the fiscal year in which 20% of Cumulative EBITDA equals or exceeds
Seller's Recoupment Amount, 30% of EBITDA for the fiscal year shall be used to
pay any 50% EBITDA Portion that is earned in such fiscal year or, if such fiscal
year is not within the 50% EBITDA Period, such 30% of EBITDA shall be used to
pay the accrued 50% EBITDA Portion. Payment of such 30% of EBITDA shall be made
when the calculation of EBITDA for the period to which it relates is delivered
to Seller pursuant to Section 2.2(c).
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(f) In addition, if all or substantially all the assets of the
Company are sold, or if the stock of the Company is disposed of, in a
transaction where Buyer receives cash of other property (the "Transaction
Consideration"), Seller shall be entitled to receive, upon the Closing of such
transaction, the portion of the Transaction Consideration as equals the sum of:
(i) the lesser of 20% thereof and the unpaid balance of Seller's
Recoupment Amount,
(ii) to the extent, if any, Buyer's Recoupment Amount has been
paid in full by the application of 80% of the Transaction Consideration, or
otherwise, but there remains an unpaid balance of Seller's Recoupment Amount,
the lesser of 50% of the Transaction Consideration and the unpaid balance of
Seller's Recoupment Amount, and
(iii) if there is any Transaction Consideration remaining after
the payments pursuant to the immediately preceding clauses (i) and (ii), the
lesser of 50% of such remaining Transaction Consideration or the amount required
to pay the accrued 50% EBITDA Portion in full.
(g) Payment of installments of the 50% EBITDA Portion that have
been accrued and remain unpaid as of the end of the Company's fiscal year in
which 20% of Cumulative EBITDA equals or exceeds Seller's Recoupment Amount,
shall be paid to Seller in equal eight quarterly installments on each March 31,
June 30, September 30, and December 31, commencing the quarterly payment date
immediately following such fiscal year. All 50% EBITDA Portions earned during
the fiscal years, if any, of the 50% EBITDA Period commencing after the fiscal
year when 20% of Cumulative EBITDA equals or exceeds Seller's Recoupment Amount,
shall be paid to Seller together with the delivery of the calculation of EBITDA
to which each such 50% EBITDA Portion relates until all such 50% EBITDA Portions
are paid in full.
(h) Notwithstanding any other provision of this Agreement, in the
event that, as of September 30, 2000, the Company has not collected, or does not
have reasonable assurance of collecting by October 31, 2000, tuition totaling
$1,732, 500 (from sources other than loans by the Institute) that is
attributable solely to student enrollment at the Institute during the current
Spring 2000 semester, Seller's Recoupment Amount shall be reduced by the amount
that such tuition collections and anticipated collections are less than
$1,732,500.
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2.3. CLOSING.
(a) The Closing of the sale and purchase of the Shares shall take
place at the offices of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000, on January 14, 2000, commencing at 10:00 A.M., or at such other
time and place as the parties shall mutually agree.
(b) Subject to the satisfaction or waiver of the conditions of
the Closing specified in Articles VI and VII hereof, at the Closing, Seller
shall deliver to Buyer the certificate(s) representing the Shares, duly endorsed
to Buyer by Seller or accompanied by a stock power duly endorsed to Buyer by
Seller.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants the following to Buyer:
3.1. CORPORATE ORGANIZATION AND QUALIFICATION; BUSINESS.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, has full corporate
power and authority to carry on its business as it is now being conducted and to
own the properties and assets it now owns. The Company is not qualified as a
foreign corporation or licensed to do business as a foreign corporation in any
other jurisdiction because the character and location of its assets and nature
of its business do not require it to be so qualified or licensed. The copies of
the Company's Certificate of Incorporation and By-Laws provided to Buyer are
complete and correct copies of such instruments as presently in effect.
(b) The Company's sole business activity consists of operating
the Institute.
3.2. AUTHORIZED AND OUTSTANDING SHARES; NO SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of 200
shares of Common Stock, of which 100 shares of Common Stock are issued and
outstanding and owned of record and beneficially solely by Seller. All of the
issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and non-assessable.
(b) Except for the Shares, no other stock is issued and there are
no outstanding options, warrants, agreements, restrictions, contracts, calls,
demands, understandings, obligations (contingent or otherwise) or other
commitments of any kind relating to the issuance or ownership of any equity
interest in the Company, other than as provided in this Agreement.
(c) The Company has no subsidiaries.
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3.3. TITLE TO SHARES. Seller owns the Shares beneficially and of record
and free and clear of all liens, charges, claims, pledges and encumbrances of
any kind whatsoever. Seller has the complete and unrestricted power to sell and
deliver to Buyer all of the Shares in accordance with this Agreement. The Shares
acquired by Buyer under this Agreement will be acquired free and clear of any
and all liens, charges, claims, pledges and encumbrances of any kind whatsoever,
including any claim for payment of any transfer or other similar taxes, if any,
which shall be Seller's obligation to pay.
3.4. AUTHORIZATION; BINDING EFFECT; NO CONFLICT. The execution,
delivery and performance of this Agreement has been duly and validly authorized
by all necessary action on the part of the Company. The Company has the full
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller and the Company. This Agreement is the valid and binding
obligation of Seller and the Company enforceable in accordance with its terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution, delivery and performance of this Agreement by
Seller and the Company does not (i) violate or conflict with any statute, law,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
of any court or governmental authority; (ii) violate the Certificate of
Incorporation or By-Laws of the Company; and (iii) violate, conflict with, or
constitute a default under, or result in the acceleration of any debt of the
Company or the creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of the Company, under any Consent or
Contract to which Seller or the Company is a party or by which Seller or the
Company is bound.
3.5. CONSENTS.
(a) Schedule 3.5 lists and attaches evidence of all Consents,
including those required by all federal, state, county and local governmental
(including New York State Board of Regents), accreditation organizations
(collectively, "Accreditations") and membership organizations (collectively,
"Memberships") held or required by the Company in order to operate the
Institute's business described in the Interboro Institute College Catalogue
1999-2001. Except as disclosed in Schedule 3.5, to the best knowledge of Seller
and the Company, the Company has complied and is in compliance in all material
respects with the terms and conditions of all such Consents, Accreditations and
Memberships and no notice of noncompliance has been received by the Company nor
does Seller or the Company know of, or aware of any basis for, any event which,
with the lapse of time, would result in such a notice being given to the
Company.
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(b) Except as disclosed in Schedule 3.5, no further Consent is
necessary for the execution, delivery and consummation of this Agreement as of
the Closing. Except as disclosed in Schedule 3.5, all Consents referred to in
this Agreement and the Disclosure Schedules are in full force and effect and are
valid, binding and enforceable in accordance with their terms; neither Seller
nor the Company is aware of, or knows of any basis for, any existing defaults,
or incurred violations that could result in a default, in the material terms
thereof, which defaults, individually or in the aggregate, could reasonably be
expected to materially adversely affect the business, assets, properties or
prospects of the Company.
3.6. COMPLIANCE WITH LAW. Except as disclosed in Schedule 3.6, Seller
and the Company do not know, nor are they aware of any basis, of a failure by
the Company to conduct its operations in accordance with all applicable laws,
regulations and other requirements of all governmental, regulatory and other
authorities, having jurisdiction over the Company, except for violations which
individually and in the aggregate could not reasonably be expected to have a
material adverse affect on the assets, business or prospects of the Company.
Except as disclosed in Schedule 3.6, during the last 36 months, the Company has
not received any notification of any alleged present or past failure by the
Company to comply with such laws, rules or regulations.
3.7. FINANCIAL RECORDS; STATEMENTS. The Company has delivered to Buyer:
(i) a schedule of notes and accounts receivable dated January 13, 2000 (the
"Receivables Schedule"); (ii) a schedule of accounts payable dated January 13,
2000 (the "Accounts Payable Schedule"); (iii) the Company's unaudited balance
sheet as of December 31, 1999 (the "Unaudited Balance Sheet") and the related,
statements of income, retained earnings and cash flows (collectively, with the
Unaudited Balance Sheet, the "Unaudited Financial Statements") and (iv) the
Company's audited financial statements for the fiscal year ended June 30, 1999
(the "Audited Financial Statements"). The Receivables Schedule and the Accounts
Payable Schedule are, in all material respects, complete and accurate, as of
their respective dates, and the Unaudited Financial Statements and the Audited
Financial Statements fairly present the Company's financial position, as of the
respective dates of the balance sheets included therein, and the Company's
results of its operations and cash flows for the respective periods ended on
such dates, in accordance with GAAP (except, in the case of unaudited
statements, for normally recurring year-end adjustments, which adjustments will
not be material either individually or in the aggregate).
3.8. NO UNDISCLOSED LIABILITIES. Except as disclosed in the Unaudited
Balance Sheet, the Accounts Payable Schedule and the Disclosure Schedules, the
Company does not have any liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise).
3.9. TAXES. Except as disclosed in Schedule 3.9, the Company has duly
filed all tax reports and returns required to be filed by it and has duly paid
all taxes and other charges due or claimed to be due from it by federal, state,
local or other taxing authorities. Except as disclosed in Schedule 3.9, there
are no tax liens upon any property or assets of the Company except liens for
current taxes not yet due. There are no audits of the Company's tax returns
pending and there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax returns for any period.
Except as disclosed in Schedule 3.9, a complete and correct copy of the income
tax returns for the Company (federal and state) with respect to the fiscal years
ended December 31, 1996, 1997 and 1998 have been delivered to Buyer.
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3.10. TITLE TO PROPERTIES; ENCUMBRANCES. The Company has good, valid
and marketable title to all the properties and assets which it purports to own,
except for personal property having an aggregate book value not in excess of
$1,000, free and clear of, all title defects or objections, liens, claims,
charges, security interests or other encumbrances of any nature whatsoever,
except for encumbrances in the nature of leases affecting the specific Equipment
which is the subject of such leases. The rights, properties and other assets
presently owned, leased or licensed by the Company and described elsewhere in
this Agreement include all rights, properties and other assets necessary to
permit the Company to conduct its business in all material respects in the same
manner as its business has been conducted prior to the date hereof.
3.11. RECEIVABLES. All notes and accounts receivable of the Company
reflected in the Receivables Schedule represent receivables actually due in the
ordinary course of business and are believed by Seller, based solely on Seller's
knowledge of the Company's collection experience, to be collectible in full,
without setoff or deduction, net of any reserves shown on the Receivables
Schedule.
3.12. INVENTORY; EQUIPMENT.
(a) Schedule 3.12(a) sets forth a complete and accurate list of
each category of items exceeding a total of $10,000 in value of the Company's
inventory ("Inventory") and the cost thereof. All Inventory is reflected on the
Unaudited Balance Sheet, and consists of a quality and quantity usable an
salable in the ordinary course of business, except for obsolete items and items
of below-standard quality, all of which have been written down in the Unaudited
Balance Sheet to realizable market value or for which adequate reserves have
been provided therein. Except as disclosed in Schedule 3.12(a), the quantities
of all Inventory are reasonable and warranted in the present circumstances of
the Company's business.
(b) Schedule 3.12(b) lists all of the equipment used by the
Company in connection with the business of the Company, including any office
furniture and leased equipment (collectively, the "Equipment"). All of the
Equipment is, as of the date of this Agreement, in generally good operating
condition and repair and is adequate for the uses to which it is being put; and,
except as disclosed in Schedule 3.12(b), none of the Equipment, as of the date
of this Agreement, is in need of maintenance or repairs except for ordinary,
routine maintenance and repairs which are not material in nature or cost. At the
Closing, Buyer is accepting the Equipment "as is."
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3.13. CONTRACTS.
(a) Schedule 3.13(a) is an accurate list of all material
Contracts to which the Company is a party, or by which it, or any of its
property is bound. Except as disclosed on Schedule 3.13(a), to Seller's or the
Company's knowledge, all such Contracts are in full force and effect and no
party is in material breach of, or default under, any such Contract. Each
Contract is a valid and binding obligation to the Company enforceable in
accordance with its terms. The Company has delivered to Buyer a complete and
correct copy of each Contract (including the Lease) that is identified on
Schedule 3.13 as having been delivered to Buyer.
(b) Except as disclosed in Schedule 3.13(b), (i) all fixed rent
and additional rent presently due and owing to the Landlord pursuant to the
Lease has been paid, (ii) neither Seller nor the Company knows of, or is aware
of any basis for, the occurrence of any event which is, or with the giving of
notice or passage of time or both will become, a condition of limitation under
the Lease, on the part of either the Institute or the Landlord, (iii) the
Company is currently the sole tenant under the Lease and the Lease is presently
in full force and effect, and (iv) the Company has not received any notices of
default citing any defaults under the Lease which remain uncured.
3.14. EMPLOYEES.
(a) Schedule 3.14 sets forth a complete and correct list of the
names, current annual rates of salary, bonus, employee benefits, accrued
vacation times and pay, sick pay, and other compensation of all the present
officers, employees, and agents of Seller.
(b) Except as set forth in Schedule 3.14, all of the Company's
employees may be terminated at will without any liability or obligation of the
Company except for compensation earned prior to such termination and owed
pursuant to the terms of their employment, as disclosed in Schedules 3.14 and
3.15, prior to such termination. Neither Seller nor the Company knows of, or is
aware of any basis for, any claim against the Company by any employee or agent
of the Company as a result of the Company's execution, delivery or performance
of this Agreement.
(c) The Company is not a party to any labor agreement with
respect to its employees with any union or similar labor organization. Neither
Seller nor the Company knows of, or is aware of any basis for, any employee
unions (nor any similar labor or employee organizations) under any statute,
custom or practice governing the Company's employees in their capacity as the
Company's employees. There is no labor strike or disturbance pending, or to
Seller's or the Company's knowledge, threatened against the Company nor is any
labor grievance currently being asserted against the Company. Within the last
three years there has been no union organization campaign involving the Company.
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3.15. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 3.15, the
Company has no bonus, deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option, group insurance or any other fringe
benefit plan, arrangement or practice, whether formal or informal (each, an
"Employee Plan"). Schedule 3.15 contains an accurate description of, and sets
forth the annual amount payable pursuant to, each Employee Plan. Each Employee
Plan, if any, that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA") has been administered in compliance with ERISA and
all other applicable laws, rules, and regulations, and any necessary
governmental approvals of the Employee Plan have been obtained. True and
complete copies of the Employee Plans and reports filed with any governmental
agency with respect thereto and the amount of contributions made by Seller to
any such Employee Plans for the last three fiscal years of the Company have been
furnished to Purchaser by Seller. Except as set forth in Schedule 3.15, the
Company does not have any obligations, contingent or otherwise, past or present,
under applicable laws, rules, or regulations or the terms of any Employee Plan.
3.16. INSIDER/AFFILIATE ARRANGEMENTS; SHAREHOLDER DEBT. The Company is
not a party to any transaction or understanding with any officer or director or
Seller (or any relative thereof) of the Company that cannot be terminated
without liability to the Company. The total amount of indebtedness of the
Company to each of Seller, Xxxxx Advertising and any relative or other affiliate
of Seller (collectively, the "Shareholder Debt") is disclosed in Schedule 3.16.
3.17. LITIGATION. Except as disclosed in Schedule 3.17, neither Seller
nor the Company knows of any action, suit, inquiry, student complaint,
proceeding or investigation pending or threatened by or before any court or
governmental or other regulatory or administrative agency, or commission or
Membership organization, or any Accreditation or student financial assistance
agency or organization, involving the Company or which questions or challenges
the validity of this Agreement or any action taken or to be taken by Seller or
the Company pursuant to this Agreement or in connection with the transactions
contemplated hereby; and neither Seller nor the Company know of any basis for
any such action, lawsuit, inquiry, student complaint, proceeding or
investigation. The liability claims against the Company disclosed on Schedule
3.17 are fully covered by insurance.
3.18. INSURANCE. Schedule 3.18 contains an accurate summary of all
material policies of fire, liability, workmen's compensation and other forms of
insurance owned or held by the Company. All such policies are in full force and
effect, and, except as disclosed in Schedule 3.18, all premiums with respect
thereto have been paid when due or before the grace period thereunder has
elapsed, and no notice of cancellation or termination has been received with
respect to any such policy. Such policies are sufficient for compliance with all
requirements of law and of all agreements to which the Company is a party;
provide adequate insurance coverage for the assets and operations of the
Company; will remain in full force and effect through the respective dates set
forth in Schedule 3.18; and will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement. Schedule
3.18 identifies all types of material risks for which the Company is
self-insured.
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3.19. ABSENCE OF CHANGE. Except as disclosed in Schedule 3.19, since
the date of the Unaudited Balance Sheet, there has not been any:
(a) transaction by the Company except in the ordinary course of
the Company's business;
(b) material adverse change in the financial condition,
liabilities, assets, business or prospects of the Company;
(c) destruction, damage to, or loss or impairment of any material
asset of Consent of the Company (whether or not covered by insurance);
(d) labor dispute or other event or condition of any character
materially and adversely affecting the financial condition, business, assets, or
prospects of the Company;
(e) change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization policies or rate) by the
Company;
(f) except in accordance with past practice, increase in the
salary or other compensation payable or to become payable by the Company to any
of its officers, directors, or employees, or the declaration, payment, or
commitment or obligation of any kind for the payment, by the Company, of a bonus
or other additional salary or compensation to any such person;
(g) amendment or termination of any Contract to which the Company
is a party, or by which it or any of its assets or properties are subject,
except in the ordinary course of the Company's business;
(h) waiver or release of any right or claim of the Company,
except in the ordinary course of the Company's business;
(i) declaration of, or agreement to make, any distribution of any
assets of any kind whatsoever;
(j) citations, notices, or communications received by the Company
for any violations of any law, rule or regulation or Consent of any governmental
agency or other authority or Accreditation or Membership organization;
(k) claim incurred by the Company for damages or alleged damages
for actual or alleged negligence or other tort or breach of contract which is
not fully covered by insurance underwritten by responsible insurers;
(l) sales, transfers, disposals of or agreements to sell,
transfer or otherwise dispose of any of the assets, properties or rights of the
Company, except as incurred in the ordinary course of business consistent with
the past practices of the Company;
(m) agreements entered into by the Company granting any
preferential rights to purchase any of the assets, properties or rights of the
Company (including management and control thereof); or
(n) agreement by Seller to do any of the things described in the
preceding clauses (a) through (m).
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3.20. BOOKS AND RECORDS. All of the Company's books and records,
including, without limitation, its books of account, corporate records, minute
book and stock certificate book are up to date and complete and reflect
accurately and fairly the conduct of its business in all material respects since
its date of incorporation.
3.21. INTELLECTUAL PROPERTY RIGHTS. Schedule 3.21 lists and briefly
describes all patents, trademarks, servicemarks, tradenames, copyrights, and
applications therefor registered in the name of the Company or in which the
Company has any right, license, or other interest. Except as disclosed in
Schedule 3.21, the Company is not a party to any license agreements whether
written or oral, either as licensor or licensee, with respect to any patents,
trademarks, servicemarks, tradenames, or copyrights or applications therefor.
Neither Seller nor the Company has any reason to believe that (i) the Company
does not have good and marketable title to, or the right to use, such patents,
trademarks, service marks, tradenames, trade secrets and know-how necessary for
the operation of the Company's business, without the payment of any royalty or
similar payment or (ii) that the Company is infringing on any patent, trademark,
servicemark, tradename, or copyright of others, and neither Seller nor the
Company is aware of any infringement by others of any such rights owned by the
Company.
3.22. STUDENT ENROLLMENT.
(a) The information disclosed in Schedule 3.22(a) regarding
student enrollments at the Institute by semester, from Fall 1994 through Fall
1999, including information about TAP and PELL grants and student loans, is
accurate and complete in all material respects.
(b) The information disclosed in Schedule 3.22(b) regarding the
number of students majoring in each of the degree programs offered by the
Institute, by semester from Spring 1996 through Fall 1999, is accurate and
complete in all material respects.
3.23. STUDENT FINANCIAL ASSISTANCE. Except as disclosed in Schedule
3.23, (i) the Company is not subject to disallowance of funds advanced or to be
reimbursed to the Company with respect to any current or prior semester under
any federal or state financial aid programs ("SFA Programs") and (ii) there is
no basis for any disallowance. The amounts remaining to be repaid as a result of
all prior disallowances under SFA Programs and the due dates of such repayments
are disclosed in Schedule 3.23. Except as disclosed in Schedule 3.23, neither
Seller nor the Company knows of, or is aware of any basis for, pending or
threatened claims, assessments, notices, proposals to assess, or audits with
respect to any funds disbursed to the Company under SFA Programs or for which
the Company has applied for disbursement.
3.24. BANKING FACILITIES, CASH. Schedule 3.24 lists:
(a) each bank, savings and loan, brokerage or similar financial
institution in which the Company has an account or safety deposit box and
numbers of the accounts or safety deposit boxes maintained by the Company
thereat;
(b) the names of all signatories authorized to draw on each such
account or to have access to any such safety deposit box facility, together with
a description of the authority (and conditions thereof, if any) of each such
signatory with respect thereto.
(c) the cash, securities and other property on deposit or
maintained in a brokerage account at or invested through each such financial
institution as of January 12, 2000.
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3.25. POWERS OF ATTORNEY AND SURETYSHIPS. Except as set forth on
Schedule 3.25, the Company does not have any general or special powers of
attorney outstanding (whether as grantor or grantee thereof) or any obligation
or liability (whether actual, accrued, accruing, contingent or otherwise) as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise in
respect of the obligation of any person or entity except as endorser or maker of
checks endorsed or made in the ordinary course of business.
3.26. ILLEGAL PAYMENTS. The Company has not directly or indirectly,
paid or delivered any fee, commission or other sum of money or item or property,
however characterized, to any finder, agent, government official or other party,
in the United States or any other country, which is in any manner related to the
business or operations of the Company and which is, or may be with the passage
of time or discovery, illegal under any federal, state or local laws of the
United States (including, without limitation, the U.S. Foreign Corrupt Practices
Act) or any other country having jurisdiction; and the Company has not
participated, directly or indirectly, in any boycotts or other similar practices
affecting any of its actual or potential students.
3.27. NO BROKERS. Neither the Company, nor Seller or any officers,
directors, employees or affiliates of the Company has employed or made any
agreement with any third party which obligates the Company or Seller or any of
their Affiliates to pay any finder's fee, brokerage fees or commission or
similar payment in connection with the transactions contemplated hereby, other
than Xx. Xxxxxxxx Xxxxxxxx and for which Seller shall be solely responsible.
3.28. DISCLOSURE. No representations or warranties by Seller in this
Agreement and no statements contained in any document, certificate, or other
writing furnished or to be furnished by Seller or the Company to Buyer or any of
its representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and the Company as follows:
4.1. ORGANIZATION, ETC. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full power and authority to carry on its business as it is now contemplated and
to own the properties and assets it now owns and contemplates owning.
4.2. AUTHORIZATION; BINDING EFFECT. Buyer has full power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. This Agreement is a valid and binding agreement of Buyer enforceable in
accordance with its terms except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
4.3. NO VIOLATION. Neither Buyer's execution and delivery of this
Agreement nor its consummation of the transactions contemplated hereby will (i)
violate the Certificate of Incorporation or By-Laws of Buyer; or (ii) violate,
or be in conflict with, or constitute a default under, or cause the acceleration
of the maturity of any debt or obligation pursuant to, any Contract to which
Buyer is a party or by which Buyer is bound.
14
4.4. LEASE.
(a) By the Closing, Buyer will have the financial ability to
satisfy the net worth requirements of subparagraph 51E of the Lease, provided
the representations and warranties of Seller in Section 3.23 are not breached.
(b) Representatives of Buyer will cooperate with representatives
of the Company in negotiating the final disposition of all claims of the
Landlord under the Lease that are disclosed in Schedule 3.13(b).
4.5. DUE DILIGENCE. With Seller's and the Company's cooperation,
Buyer's representatives have conducted, but not completed, due diligence
(without waiving any claims hereunder) regarding, among other matters, the
Lease, the continuation of the Institute's state and federal Consents, the
Company's books and records and previous disallowances under SFA Programs.
ARTICLE V.
COVENANTS OF SELLER AND THE COMPANY
The Company and Seller hereby covenant and agree with Buyer that:
5.1. FULL ACCESS. The Company has afforded and shall continue to afford
to Buyer, its counsel, accountants and other representatives full access to
books and records of the Company on reasonable notice and during the Company's
normal business hours so that Buyer may have full opportunity to make such
investigations as it shall desire to make of the affairs of the Company and the
Company shall cause its officers and accountants to furnish such additional
reasonable financial and operating data and other information as is customarily
kept or prepared by the Company and as Buyer shall from time to time request.
5.2. SUPPLEMENTS TO DISCLOSURE SCHEDULES. At or prior to the Closing,
Seller and the Company will supplement or amend the Disclosure Schedules with
respect to any matters hereafter arising which, individually or in the aggregate
are material, and if existing or occurring at the date of this Agreement, would
have been required to be disclosed in the Disclosure Schedules. No supplement or
amendment of the Disclosure Schedules made pursuant to this section shall be
deemed to cure any breach of any representation of or warranty made in this
Agreement unless Buyer specifically agrees thereto in writing.
5.3. SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to
the Closing, the Seller and the Company shall use their best efforts to cause to
be satisfied all conditions precedent to the obligations of Buyer to close
hereunder.
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5.4. CONDUCT OF BUSINESS. Through the Closing Date, the Company shall
conduct its business substantially in the manner in which it is presently
conducted.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS OF SELLER AND THE COMPANY
Each and every obligation of Seller and the Company under this Agreement to
be performed on or before the Closing shall be subject to the satisfaction, on
or before the Closing of each of the following conditions, unless waived in
writing by Seller or the Company:
6.1. NO GOVERNMENT PROCEEDING OR LITIGATION. Except as disclosed in
Schedule 3.17, no suit, action, investigation, inquiry or other legal or
administrative proceeding by any governmental authority, Accreditation or
Membership organization, or other party shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated hereby
or could reasonably result in the foregoing.
6.2. REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer contained herein and in any certificate or document
delivered and to be delivered by Buyer shall be in all material respects true
and accurate as of the date when made and at and as of the Closing Date as
though such representations and warranties were made at and as of such dates,
except for changes expressly permitted or contemplated by this Agreement, and
Buyer shall have executed and delivered to Seller a certificate to such effect.
6.3. PERFORMANCE. Buyer shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by Buyer, on or prior to the Closing, and Buyer shall
have executed and delivered to Seller a certificate to such effect.
6.4. WARRANT AGREEMENT. Seller and EVCI shall have entered into the
Warrant Agreement in the form of Exhibit A to this Agreement.
6.5. ESCROW AGREEMENT. Seller, the Company, Buyer and
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx shall have entered into the Escrow Agreement
in the form of Exhibit B to this Agreement (the "Escrow Agreement").
6.6. INVESTMENT. Buyer shall have invested at least $500,000 in cash in
the Company by means of loans or contributions to equity.
6.7. DEBT REPAYMENT. Seller shall have received repayment, by wire
transfer to an account designated by Seller, of $22,500 of the Shareholder Debt,
without interest.
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ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF BUYER
Each and every obligation of Buyer under this Agreement to be performed on
or before the Closing shall be subject to the satisfaction, on or before the
Closing of each of the following conditions, unless waived in writing by Buyer:
7.1. CONSENTS. All Consents required in order to consummate the
transactions contemplated by this Agreement shall have been obtained.
7.2. NO GOVERNMENT PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other legal or administrative proceeding by any
governmental body, Accreditation or Membership organization or other party shall
have been instituted or threatened which questions or affects the validity,
legality or value of the transactions contemplated hereby or which could
reasonably result in the foregoing or, except as disclosed in the Disclosure
Schedules, could have a material adverse affect on Seller or the Company.
7.3. REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Seller and the Company contained in this Agreement, the Disclosure
Schedules and in any certificates and other documents delivered and to be
delivered by Seller and/or the Company, pursuant hereto, or in connection with
the transactions contemplated hereby, shall be true, complete and accurate in
all material respects as of the date when made and at and as of the Closing Date
as though such representations and warranties were made at and as of such dates,
except for changes expressly permitted or contemplated by the terms of this
Agreement, and Seller shall have executed and delivered to Buyer a certificate
to such effect.
7.4. PERFORMANCE. Seller and the Company shall have performed and
complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by them on or prior to the Closing
Date, and Seller shall have executed and delivered to Buyer a certificate to
such effect.
7.5. FINANCIAL STATEMENTS. The Company shall have provided Buyer with
audited financial statements for its fiscal year ended June 30, 1999 and
unaudited financial statements for its six months ending December 31, 1999, in
such form as Buyer's auditors shall reasonably request to ensure their
compliance with applicable requirements of Regulations S-B and S-X of the
Securities and Exchange Commission.
7.6. ENROLLMENT. For the Spring 2000 semester, at least 550 full-time
students shall be enrolled at the Institute who have or, Buyer is satisfied will
have, their tuition fully paid from sources other than loans from the Institute.
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7.7. SHAREHOLDER DEBT. Except for the $22,500 repaid to Seller at the
Closing, all of the Shareholder Debt shall have been contributed to the equity
of the Company.
7.8. ESCROW AGREEMENT. Seller, the Company, Buyer and Xxxxxxxxx Xxxxxxx
Xxxxxx Xxxxxxx shall have entered into the Escrow Agreement.
7.9. OTHER CLOSING DELIVERIES. Buyer shall have received: (a) a long
form certificate of good standing of the Company or such other evidence
reasonably satisfactory to Buyer, regarding the Company's good standing and a
copy of the Company's charter documents on file with, and certified by, the New
York Department of State and (b) an opinion of Seller's and the Company's
counsel, in form reasonably satisfactory to Buyer's counsel, with respect to the
matters set forth in Exhibit C to this Agreement.
ARTICLE VIII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1. INVESTIGATIONS; SURVIVAL OF WARRANTIES.
(a) The respective representations and warranties of the parties
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party hereto. Furthermore, the disclosure to Buyer in
the Disclosure Schedules or otherwise of an investigation, audit, failure to
file, liability claim or other event, which is not disclosed on a Disclosure
Schedule as a liquidated dollar amount, shall not relieve Seller of any
liability for Losses resulting from such investigation, audit, failure to file,
liability claim or other event; provided, however, that (i) the full extent of
Seller's liability for any such Losses resulting from New York State Education
Department and U.S. Department of Education investigations or audits shall be
limited to reduction of the unpaid portion of the Price by offset pursuant to
Section 8.2; (ii) Seller shall have no responsibility, and have no liability,
for any Losses arising from any regulatory or administrative review, assessment
or determination of the Company's compliance with any laws, rules or regulations
of any kind relating to facts or circumstances existing at any point after the
Closing; and (iii) Seller shall have no liability whatsoever for Losses in
connection with the Company's non-compliance with any legal, regulatory or
administrative notice, filing or other requirement after the Closing.
(b) All representations and warranties (other than with respect
to taxes in Section 3.9, Employee Plans in the last sentence of Section 3.15 and
disallowances under SFA Programs in Section 3.23), shall survive the execution
and delivery hereof and the Closing hereunder for one year following the Closing
Date and shall thereupon expire together with any right to indemnification in
respect thereof (except to the extent a notice asserting a claim for breach of
any such representation or warranty shall have been given prior to such date)
Representations and warranties with respect to taxes in Section 3.9, Employee
Plans in the last sentence of Section 3.15 and disallowances under SFA Programs
in Section 3.23 shall survive the execution and delivery hereof and the Closing
until the expiration of any applicable statute of limitations, including any
extensions thereof, and shall thereupon expire together with any right to
indemnification in respect thereof (except to the extent a notice assenting a
claim for breach or any such representation or warranty shall have been given
prior to such date).
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8.2. INDEMNIFICATION.
(a) SELLER'S OBLIGATION. Seller agrees to indemnify and hold
harmless Buyer and its stockholders, officers, directors and affiliates against
and in respect to all damages, claims, losses and expenses (including, without
limitation to, attorneys' fees and disbursements) reasonably incurred (all such
amounts being hereinafter sometimes referred to as "Losses") arising out of (i)
any misrepresentation or breach of any representation or warranty made by the
Seller or the Company in this Agreement or pursuant hereto; and (ii) the
non-performance or breach of any covenant, agreement or obligation of Seller or
the Company contained in this Agreement. Notwithstanding any other provision of
this Agreement, the sole source for payment or reimbursement of Buyer for Losses
resulting from Seller's breach of Section 3.23 shall be by reduction of the
Price by offset pursuant to Section 8.2 or by payment to Buyer from funds
deposited in escrow, plus accrued interest, pursuant to the Escrow Agreement.
(b) BUYER'S OBLIGATION. Buyer shall indemnify, defend and hold
harmless the Company and its stockholder, officers, directors and affiliates
from and against any Losses arising out of or due to a breach of any
representation, warranty, covenant or agreement of Buyer contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement.
(c) THIRD PARTY CLAIMS. If either Seller or Buyer (the
"Indemnitee") receives notice of any claim or the commencement of any action or
proceeding with respect to which the other is obligated to provide
indemnification (the "Indemnifying Party") pursuant to such Sections (a) or (b)
hereof, the Indemnitee shall promptly give the Indemnifying Party written notice
thereof. The failure to give such notice shall not relieve the Indemnifying
Party of its indemnification obligation hereunder (except as set forth in
Section 8.1). The Indemnifying Party may compromise, settle or defend, at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel,
any such matter involving the asserted liability of the Indemnitee if the
Indemnifying Party has agreed to pay 100% of any liability of Indemnitee
resulting from such defense, settlement or compromise. In the event the
Indemnifying Party has not agreed to assume 100% of any such liability for which
Indemnitee is seeking indemnification hereunder, the parties hereto agree in
good faith to jointly choose and control counsel to defend, settle or compromise
such claim and, the fees of such joint counsel shall jointly be shared until the
resolution of such claim and a determination of the extent of liability, if any,
of the Indemnifying Party hereunder. Thereupon, if the claim made hereunder is
found to have been one as to which the Indemnifying Party is responsible for
hereunder, it shall be liable for all of such counsel fees and if found not to
be so liable hereunder, the Indemnitee shall be responsible for all such counsel
fees; provided, however, that if more than one claim is involved in a lawsuit or
if both the Indemnitee and Indemnifying Party are found to be liable, then the
right to recover counsel fees shall be shared equitably and in proportion to the
claims which are finally determined to be subject to indemnification hereunder
and the parties liable therefor. The Indemnitee shall not be entitled to
reimbursement for its counsel fees in an indemnification claim except as
hereinabove provided in this Section 8.2 and in the event Indemnitee
successfully makes a claim for indemnification against the Indemnifying Party to
recover any sum pursuant to a claim for indemnification under this Agreement. In
any event, the Indemnitee, the Indemnifying Party and the Indemnifying Party's
counsel shall cooperate in the compromise of, or defense against, any such
asserted liability. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to the Indemnifying Party any books, records or
other documents within its control that are necessary or appropriate for such
defense and the Indemnitee shall not be entitled to reimbursement for its
counsel fees which are incurred after the Indemnifying Party has agreed to pay
100% of any liability resulting from a claim made hereunder.
19
(d) INTEREST. If any party to this Agreement ("Breaching Party")
breaches any of its obligations to any other party to this Agreement ("Harmed
Party") under this Article VIII and such breach causes the Harmed Party to pay
or expend money, such expended sum shall bear interest at the rate of 12% per
annum from the date the Harmed Party is required to pay or expend such sum to
the date the Breaching Party pays such sum to the Harmed Party.
(e) OFFSET RIGHT. Buyer shall have the right to cause the offset
of any amounts due from Seller under this Section 8.2 against amounts owed to
Seller by Buyer pursuant to the Agreement that remain unpaid. Such offset
amounts include any Losses resulting from any and all disallowances made under
any SFA Program with respect to any period prior to the Closing (each a "Prior
Period Disallowance"). In this connection, notwithstanding any other provision
of this Agreement or any disclosure in any Disclosure Schedule, the amount of
Losses resulting from any and all Prior Period Disallowances and Losses, if any,
specifically referred to in Section 8.1(a) shall reduce the Price except to the
extent of any portion of the Price that has been paid to Seller. However, if the
Company receives any notice of a proposed investigation or audit of the Company,
or such an investigation or audit is commenced without notice, under any SFA
Program, any 50% EBITDA Portion that is required to be paid to Seller shall
instead be paid to, and thereafter released by, the Escrow Agent pursuant to the
terms of the Escrow Agreement.
ARTICLE IX.
SELLER'S NON-COMPETE
9.1. NON-COMPETE. Seller agrees that he shall not, from and after the
Closing, until the fifth anniversary of the Closing Date:
(a) directly or indirectly own, engage in, manage, operate, join, control,
or participate in the ownership, management, operation, or control of, or be
connected as a stockholder, director, officer, employee, agent, partner, joint
venturer, member, beneficiary or otherwise with any corporation, limited
liability company, partnership, sole proprietorship, association, business,
trust, or other organization, entity or individual which in any way is then
competing with the Company (i) within a 100 mile radius of the Institute or any
of its branches or extensions wherever located, or (ii) by delivering courses by
video conferencing or other distance learning services to any geographic
location where the Company delivers competitive courses ((i) and (ii) being
"Sellers Non-compete Area"), provided, however, that Seller may own, directly or
indirectly, securities of any entity traded on any national securities exchange
or listed on Nasdaq if Seller does not, directly or indirectly, own 3% or more
of any class of equity securities, or securities convertible into or exercisable
or exchangeable for 3% or more of any class of equity securities, of such
entity;
(b) aid, abet or otherwise assist any business, or other
organization or entity in competing with the Company in Seller's Non-compete
Area;
(c) directly or indirectly request or advise any present or
future students or vendors of the Institute to cancel any contracts with the
Institute or curtail their dealings with the Institute;
(d) directly or indirectly request or advise any present or
future service provider or financial resource of the Institute or the Company to
withdraw, curtail, or cancel the furnishing of such service or resource;
(e) directly or indirectly disclose or communicate to any other
person, firm, or corporation, the names of any past, present or future students
of the Institute;
(f) directly or indirectly induce or attempt to influence any
employee of the Institute or the Company to terminate his or her employment.
20
9.2. INJUNCTIVE RELIEF. Seller agrees that a violation of Seller's
Non-compete, or any provision thereof, will cause irreparable injury to the
Company and Buyer and that the Company or Buyer shall be entitled, in addition
to any other rights and remedies it may have, at law or in equity, to seek an
injunction enjoining and restraining Seller from violating or attempting to
violate any provision of the Seller's Non-compete.
9.3. BLUE PENCILING. In the event any provision of Seller's Non-compete
as applied to any circumstances shall be adjudged by a Court to be invalid or
unenforceable, such invalidity shall in no way affect any other provision of
Seller's Non-compete or the application of any such provision in any other
circumstance, or the validity or enforceability of this Agreement. Seller and
Buyer intend Seller's Non-compete to be enforced as written. However, in the
event any provision, or any part of Seller's Non-compete, is adjudged by a Court
to be unenforceable because of the duration of such provision or the area
covered thereby, Seller and Buyer agree that the Court making such determination
shall have the power to reduce the duration and/or area of such provision,
and/or to delete specific words or phrases (generally referred to as blue
penciling), and, in its reduced or blue penciled form, such provision shall then
be enforceable and shall be enforced.
ARTICLE X.
MISCELLANEOUS PROVISIONS
10.1. TERMINATION.
(a) TERMINATION BY MUTUAL WRITTEN CONSENT. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned, for any
reason and at any time prior to the Closing Date, by the mutual written consent
of Seller, the Company and Buyer.
(b) TERMINATION BY THE COMPANY OR BUYER. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by action
of Seller or Buyer if (i) the Closing shall not have occurred at or prior to
5:00 P.M., New York City time, on January 31, 1999 (the "Latest Closing Date")
provided, however, that the right to terminate this Agreement pursuant to this
Section 9.1(b) shall not be available to any party whose failure to fulfill any
of its obligations under this Agreement has been the cause of or has resulted n
the failure of the Closing to occur at or before such time and date; provided,
further, However, that if the Closing shall not have occurred on or prior to the
Latest Closing Date, the Closing may only occur after the Latest Closing Date
with the written consent of Buyer.
(c) TERMINATION BY BUYER. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned by Buyer at any time prior
to the Closing Date, if (i) Seller or the Company shall have failed to comply,
in any material respect, with any of its covenants or agreements contained in
this Agreement, (ii) there shall have been a material breach of any
representation or warranty made by Seller in this Agreement, (iii) there shall
have occurred any event or development, or there shall be in existence any
condition, having or reasonably likely to have a material adverse effect on the
Company, or (iv) Seller or the Company shall have failed to satisfy the
conditions provided in Article VII hereof.
(d) TERMINATION BY SELLER AND THE COMPANY. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by Seller
and the Company at any time prior to the Closing Date, if Buyer shall have
failed to comply with any of its covenants or agreements or breached any
representation or warranty made by it in this Agreement.
(e) EFFECT ON TERMINATION. In the event of the termination of
this Agreement pursuant to this Section 10.1, this Agreement shall thereafter
become void and have no effect, and no party hereto shall have any liability or
obligation to any other party hereto in respect of this Agreement, except that
the provisions of Article XIII and Sections 10.1, 10.2, 10.5, 10.6, 10.8 and
10.10-10.14 shall survive any such termination; provided, however, that no party
shall be released from any liability hereunder if this Agreement is terminated
and the transactions contemplated hereby abandoned by reason of (i) willful
failure of such party to perform its obligations hereunder or (ii) any
misrepresentation made by such party of any matter set forth herein.
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10.2. CONFIDENTIALITY.
(a) PRE-CLOSING. Each party hereto will hold and will cause its
or their employees, consultants and advisors to hold in strict confidence the
negotiations regarding and the existence of this Agreement and all other
documents and information (collectively, "Confidential Information") concerning
the other parties furnished it by such other parties or its or their
representatives in connection with the transactions contemplated by this
Agreement (except to the extent that Confidential Information can be shown to
have been (i) previously known by the party to which it was furnished, (ii) in
the public domain through no fault of such party, or (iii) later lawfully
acquired from other sources by the party to which it was furnished); provided,
however, Buyer shall have the right to disclose or cause others to disclose
Confidential Information to the extent Buyer deems reasonably necessary to
respond to oral or written requests or inquiries from federal or state
regulators or in order to obtain any Consent. Each party will not disclose
Confidential Information, except to its auditors, attorneys, financial advisors,
bankers and other consultants and advisors on a "need to know" basis, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its or their counsel, by other requirements of law. This covenant shall
survive the consummation of the transactions contemplated by this Agreement or
the earlier termination of this Agreement for a period of one year. Written
Confidential Information shall be returned to the party or parties providing it
promptly after written request therefor.
(b) POST-CLOSING. Seller acknowledges that Confidential
Information concerning the business affairs of Interboro will be the property of
the Company and not Seller following the Closing. Therefore, Seller agrees that
he will not disclose to any person or use for his own account any of such
Confidential Information unless and to the extent that it is already or becomes
generally known to and available for use by the public otherwise than as a
result of Seller's act or omission to act or is required to be disclosed by
Seller to a court of law or pursuant to lawful subpoena or summons, provided
Seller has given the Company and Buyer reasonable notice of any attempt to
legally compel Seller to disclose any such information, observations or data.
Seller agrees to deliver to the Company, at any time the Company may request,
all memoranda, notes, plans, records, reports, and other documents (and copies
thereof) constituting Confidential Information relating to the Company's
business.
10.3. FURTHER ASSURANCES. The parties shall from time to time, at the
reasonable request of another party, and without further cost or expense to such
requesting party, execute and deliver such other documents and instruments and
take such other actions as may be reasonably requested, in order to fully
consummate the transactions contemplated hereby.
10.4. AMENDMENT AND MODIFICATION. This Agreement may only be amended,
modified and supplemented by written agreement of the parties.
10.5. EXPENSES. Except as otherwise provided herein, Seller and the
Company agree that all fees and expenses incurred by them in connection with
this Agreement shall be borne by them and Buyer agrees that all fees and
expenses incurred by it in connection with this Agreement shall be borne by it.
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10.6. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given and received if delivered by hand, receipt acknowledged, or fax,
receipt confirmed or, if mailed, four days after having been mailed, certified
or registered mail with postage prepaid:
(a) If to Seller or the Company, to each of them at their
respective addresses set forth in the first paragraph of this Agreement with a
copy to Xxxxx X. Xxxx, Esq., Levy, Boonshoft & Xxxxxxxxxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, or to such other person(s) or address(es) as Seller
and the Company shall furnish to Buyer in writing.
(b) If to Buyer, to it at its address set forth in the first
paragraph of this Agreement, with a copy to Xxxxxx X. Xxxxxxx, Esq.,
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, or to
such other person or address as Buyer shall furnish to Seller and the Company in
writing.
10.7. ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by Seller or
the Company or, following the Closing, by Buyer or the Company without the
written consent of Seller (which Seller shall not unreasonably withhold or
delay).
10.8. GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York.
10.9. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.10. HEADINGS. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
10.11. ENTIRE AGREEMENT. This Agreement, including the Disclosure
Schedules, Exhibits hereto, and the other documents and certificates delivered
pursuant to the terms hereof, set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein, and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
10.12. JOINTLY DRAFTED AGREEMENT. The parties acknowledge that each of
them, and their attorneys, have had the opportunity to draft and comment upon
this Agreement and have in fact done so, and that this Agreement is the joint
product of negotiation among them. The parties agree that, in construing this
Agreement, each term shall be given its ordinary meaning. The parties waive
application of the doctrine of construction against the drafter and acknowledge
that, for purposes of construction of this Agreement, they shall jointly be
considered to be the drafters of the Agreement and of each term contained
herein.
10.13. THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein, expressed or implied, is intended or shall be construed
to confer upon or give to any person or entity other than the parties hereto and
their successors or permitted assigns, any rights or remedies under or by reason
of this Agreement.
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10.14. SEVERABILITY. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, legality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
10.15. DISPUTE RESOLUTION. Any and all disputes, claims or
controversies arising out of or relating to this Agreement that are not resolved
within ten (10) business days shall be submitted to final and binding
arbitration in New York City before J-A-M-S/ENDISPUTE, or its successor,
pursuant to the United States Arbitration Act, 9 U.S.C. Sec. 1 et seq. Any party
hereto may commence the arbitration process called for in this Agreement by
filing a written demand for arbitration with J-A-M-S/ENDISPUTE, with a copy to
the other party. The arbitration will be conducted in accordance with the
provisions of J-A-M-S/ENDISPUTE's Streamlined Arbitration Rules and Procedures
in effect at the time of filing of the demand for arbitration. The parties will
cooperate with J-A-M-S/ENDISPUTE and with one another in selecting an arbitrator
from J-A-M-S/ENDISPUTE's panel of neutrals, and in scheduling the arbitration
proceedings so that a final determination can be made within thirty (30) days
after submission to arbitration. The parties covenant that they will participate
in the arbitration in good faith, and that they will share equally in its costs.
However, except as otherwise provided in Section 8.2(c), once an award is
rendered, the arbitrator shall determine the allocation of costs and expenses of
the arbitration, including attorneys fees, between the parties. The provisions
of this Section 10.15 may be enforced by any Court of competent jurisdiction,
and the party seeking enforcement shall be entitled to an award of all costs,
fees and expenses, including attorneys' fees, to be paid by the party against
whom enforcement is ordered.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
INTERBORO HOLDING, INC.
By: /s/ Xxxx X. Xxxxxxxx
_______________________________
Xx. Xxxx X. Xxxxxxxx, Chairman
INTERBORO INSTITUTE, INC.
By: /s/ Xxxxx X. Xxxxxxx
_______________________________
Xxxxx X. Xxxxxxx, President
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