Exhibit 11.06
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is entered into as of this 22 day
of November, 2000, among Sylvan Learning Systems Mexico, S. de X.X. de C.V.,
hereinafter referred to as "Sylvan", a company organized under the laws of
Mexico, and Xxxx Xxxxxx Xxxxxxxx, Xxxxx X. Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx Xxxxxx Xxxxxxxx, Xxxxx de los Angeles Xxxxxx Xxxxxxxx and
Xxxxx Xxxxxx Xxxxxxxx Xxxxx, hereinafter each individual denominated as a
"Family Member" and collectively denominated as the "Family Members" or the
"Xxxxxx Family".
BACKGROUND:
Sylvan is a Mexican subsidiary of Sylvan International, B.V., which in turn is a
wholly owned subsidiary of Sylvan Learning Systems, Inc., and part of a
corporate group engaged in the educational business in several countries around
the world. Sylvan is a corporation validly existing and in good standing under
the laws of Mexico, and desires to subscribe and pay 80% of the common shares
representative of the corporate capital of Plansi. (as defined hereinbelow).
The Family Members are Mexicans, with full capacity to enter into this
Agreement, and 100% owners, either directly or indirectly, of the associate
rights of Universidad del Xxxxx de Mexico, A.C. ("UVM") and Grupo Educativo
Potosino, A.C. ("GEP"). These two associations are duly incorporated and validly
existing under the laws of Mexico and are engaged in the rendering of
educational services in Mexico. The Family Members are also 100% owners, either
directly or indirectly, of the corporate parts of Estrategia Educativa y
Cultural de Tabasco, S.C. ("EET"), a Mexican civil company engaged in the
rendering of educational services in Mexico. The associate rights of UVM and GEP
as well as the corporate parts of EET, shall hereinafter be collectively and
indistinctly referred as the "Interests". Each of UVM, GEP and EET shall
hereinafter be referred indistinctly as an "Entity," and collectively as the
"Entities".
Sylvan and the Xxxxxx Family shall incorporate a Mexican corporation, Sociedad
Anonima de Capital Variable, with the corporate name of Planeacion de Sistemas,
S.A. de C.V. ("Plansi"). Sylvan and the Xxxxxx Family want to enter into this
Agreement in order to set forth the terms and conditions for incorporating
Plansi, carry out their respective contribution and subscribe and pay the common
shares representative of the corporate capital of Plansi, as well as to set
forth their mutual rights and obligations as future partners.
Each Family Member in the aggregate, desires to subscribe and pay up to 20% of
the common shares representative of the corporate capital of Plansi and, under
the terms and conditions set forth in the corporate Bylaws of Plansi and in that
certain Administration Trust Agreement executed on the date hereof, 100% of the
preferred shares with limited voting rights representative of the corporate
capital of Plansi.
In addition to the foregoing, Sylvan and each Family Member have agreed on the
execution of the following documents: (i) Trust Agreement; (ii) Plansi's Bylaws;
(iii) Transitory Clauses for the Bylaws of Plansi; (iv) Lease Agreements; (v)
Employment Agreement for Mr. Xxxx Xxxxxx Xxxxxxxx and (vi) other documents
related with the foregoing.
NOW, THERFORE, the parties hereto agree as follows:
ARTICLE I
Incorporation of Plansi
1.1 Bylaws (Estatutos Sociales). Sylvan and the Xxxxxx Family have
agreed on the Bylaws that shall govern Plansi. A complete copy of those Bylaws,
including the transitory clauses is attached hereto as Exhibit 1.1. Both parties
agree that the shareholders' rights and obligations, voting rights, management,
surveillance, as well as any other provision related to the operation and
governance of Plansi, is reflected in the attached Bylaws. Any situation not
foreseen in the Bylaws shall be resolved in accordance with the Mexican General
Law of Business Organizations.
1.2 Permits and Authorizations. Sylvan and the Xxxxxx Family have
obtained the respective permit from the Ministry of Foreign Affairs in order to
use the name Planeacion de Sistemas, S.A. de C.V., and such permit is in full
force and effect. Pursuant to the educational activities in which the Entities
are engaged, the parties have obtained the respective authorization from the
National Commission of Foreign Investments by means of which the corporate
capital of Plansi, as direct holding company of the Entities, may be subscribed
and paid in more than 49% by Sylvan. The Notary Public that will formalize the
incorporation of Plansi has received the original of both documents and set
forth the required references in the charter of incorporation.
1.3 Incorporation Date. Sylvan and the Xxxxxx Family hereby acknowledge
and agree that Plansi shall be incorporated at 9:00 a.m. on November 24, 2000,
at the Mexico City offices of White & Case, S.C. (hereinafter referred to as the
"Incorporation Date").
ARTICLE II
Contribution
2.1 The Xxxxxx Family. The Xxxxxx Family hereby agrees to contribute to
Plansi, on the Incorporation Date, in exchange for 1,375,000 shares, equivalent
to 20% of the common shares representative of the corporate capital of Plansi,
100% of the Interests in the Entities, free of all liens and encumbrances.
Additionally, in exchange for such contribution and subject to the terms and
conditions of the Bylaws of Plansi, as well as to that certain Administration
Trust Agreement executed as of the date hereof, the Xxxxxx Family shall receive
20,625,000 preferred shares, equivalent to 100% of the preferred
shares with limited voting rights, representative of the corporate capital of
Plansi.
2.2 Sylvan. Sylvan hereby agrees to contribute to Plansi, on the
Incorporation Date, in exchange for 5,500,000 shares, equivalent to 80% of the
common shares representative of the corporate capital of Plansi, $42,400,000 U.S
dollars (Forty two million, four hundred thousand dollars of the United States
of America), in immediately available funds, by check to be deposited with the
Board of Directors of Plansi at the time of incorporation.
2.3 Financial Information. The Xxxxxx Family and Sylvan hereby
acknowledge that the amount of the contribution agreed by each party was
calculated based on the financial information prepared as of October 31, 2000,
attached hereto as Exhibit 2.3 (the "Financial Information").
2.4 Corporate Documents. The parties have agreed on the amount of their
contribution, on the subscription of their respective shares as well on all
other documents required to implement the steps described in the Transitory
Clauses of the Bylaws of Plansi. Therefore, on the Incorporation Date the
parties will receive their stock certificates and the Secretary of Plansi shall
proceed to prepare and register the entries required by law in the corporate
books of Plansi.
ARTICLE III
Representations and Warranties
3.1 Representations of the Xxxxxx Family Each of the Family Members
jointly and severally hereby represents and warrants to Sylvan, that:
a) Individual Authority. Each Family Member is an individual residing
in, and a citizen of, Mexico with full power and capacity under the laws of
Mexico to enter into this Agreement and all of the documents to be entered into
by him/her in connection herewith and to consummate the transactions
contemplated hereby and thereby.
b) No Breach of Agreements. The execution, delivery and performance of
this Agreement and each of the other documents to be entered into by each Family
Member in connection herewith, and the consummation of the transactions
contemplated hereby and thereby (i) do not, in the case of each Family Member
materially conflict ("materially" or "material" means, with respect to any
person, any adverse effect in the business, operations, assets, condition
(financial or otherwise), prospects, operating results or liabilities of such
person or any casualty loss or damage to the assets of such person, whether or
not covered by insurance that would impede the continuation of the business
and/or cause significant casualty loss or damage to any assets) with any
agreement, contract or judgment entered by him/her/it and does not materially
conflict with the Articles of Incorporation or other constitutive documents of
the corporation or civil corporations; and (ii) do not,
materially violate any law, rule, regulations, writ, judgment, injunction,
decree, determination or award applicable to him/her/it.
c) Government Consents. Except for those authorizations, approvals,
permits, actions, notices and filings mentioned in Section 1.2 above, no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority, regulatory body or agency is required for its due
execution, delivery, recordation, filing or performance of this Agreement or any
of the other documents to be entered into by each Family Member in connection
herewith, or for the consummation of the transactions contemplated hereby and
thereby.
d) No Breach of Contract. The execution, delivery and performance of
this Agreement and each of the other documents to be entered into by each Family
Member in connection herewith, and the consummation of the transactions
contemplated hereby and thereby (i) do not materially conflict with or result in
a default under, or permit the acceleration of, any agreement, instrument or
obligation to which each Family Member is a party and (ii) do not require any
consent or notice under any agreement, instrument or obligation to which each
Family Member is a party.
e) Enforceability. This Agreement has been duly executed and delivered
by each Family Member and this Agreement constitutes his/her legal, valid and
binding obligation enforceable against him/her in accordance with the terms of
this Agreement. Upon the execution and delivery of each of the other documents
to be entered into by each Family Member in connection herewith, such documents
shall constitute his/her legal, valid and binding obligations enforceable
against each Family Member in accordance with the terms of such documents.
f) Organization. Each of the Entities is a Mexican civil association/
corporation, duly incorporated, validly existing and in good standing under the
laws of Mexico and has all necessary corporate power and authority to operate
its business as now being conducted. Neither of the Entities is a party or
subject to any agreement or commitment materially restricting the conduct of its
business in any location. As of October 31, 2000 none of the Entities has
entered into any agreement or assumed any liability or obligation other than in
the ordinary course of business as historically conducted.
g) Real Estate. None of the Entities owns real estate, however, they
have entered into all the necessary lease agreements that allow the Entities to
continue using the installations in order to operate their business as now being
conducted during the next ten years. Exhibit 3.1 (g) attached hereto lists all
the lease agreements entered into by each of the Entities required to continue
with the operation of the business as historically conducted.
h) Patents and Patent Rights. To each Family Member's best knowledge
(following internal due diligence by those Family Members competent to perform
such due diligence), the Entities do not own or use any patent and have not
filed any patent applications. The present use of any invention, process, model,
design or formula by the Entities do not conflict with, infringe on or violate
any patent or other rights of any other
person.
i) Trademarks, Patents, Tradenames, Service Marks and Copyrights.
Exhibit 3.1 (i) attached hereto lists: (i) all trademarks, tradenames and
service marks owned or used by each of the Entities; (ii) all registrations
owned and registration applications filed by each of the Entities for trademarks
and service marks, and the jurisdiction that has issued each such registration
or in which each such application has been filed (including registration and
application numbers); and (iii) all registrations owned and registration
applications filed by each of the Entities for copyrights owned or used by each
of the Entities and each jurisdiction that has issued each such registration or
in which each such application has been filed (including registration and
application numbers). Exhibit 3.1 (i) also includes a list of each license or
other agreement to which each of the Entities is a party whether as licensor,
licensee or otherwise, with respect to any tradenames, trademarks, service marks
and copyrights. To each Family Member's best knowledge all of the registered
trademarks, service marks and copyrights listed on Exhibit 3.1 (i) attached
hereto are valid and subsisting, and no such registered trademarks, service
marks or copyrights have been, in whole or in part, abandoned, dedicated,
disclaimed or allowed to lapse for nonpayment of fees or taxes or for any other
reason. To each Family Member's best knowledge, each of the Entities has the
right and authority to use all tradenames, trademarks, service marks and
copyrights reasonably necessary to conduct its business as historically
conducted. To each Family Member's best knowledge, each of the Entities has not
infringed and is not now infringing on any tradename, trademark, service xxxx or
copyright belonging to any other person.
j) Permits; Authorizations. Except as established on Exhibit 3.1(j)
attached hereto and to each family Member's best knowledge, the Entities have
all the licenses, permits, certifications or approvals required to conduct its
business as historically conducted by the Entities (the "Permits and
Authorizations"). To each Family Member's best knowledge the Permits and
Authorizations are in full force and effect, all fees and charges payable with
respect thereto have been paid, and neither of the Entities has received any
notice of any revocation, limitation or violation thereof.
k) Contracts. Exhibit 3.1 (k) attached hereto lists each contract
currently in full force and effect, entered into by each of the Entities
involving an aggregate value in excess of US $100,000. To each Family Member's
best knowledge all the contracts executed as of this date by each of the
Entities have been entered into in the ordinary course of business on terms
consistent with past practices.
l) Investments. To each Family Member's best knowledge neither of the
Entities owns any capital stock of, any equity Interests in, or any other
ownership or investment interest in, any corporation, partnership, joint venture
or other business entity, except for those mentioned in Exhibit 3.1 (l).
m) Capitalization. The Interests of each Family Member in the Entities
existing as of the date hereof, are as set forth in Exhibit 3.1 (m), attached
hereto. All of the issued and outstanding Interests of the Entities are duly
authorized, validly issued and fully paid and
are owned beneficially and of record as set forth on such Exhibit 3.1 (m)
attached hereto. All such Interests are free and clear of all liens and other
adverse claims. None of the Entities has issued any Interests in violation of
any applicable law. There are no existing options or other rights of any
character relating to authorized but unissued Interests of any of the Entities.
Other than the bylaws of each of the Entities, there are no other documents or
agreements governing the transfer or voting of the Interests.
n) Compliance with Laws. To Each Family Member's best knowledge each of
the Entities is materially in compliance with all applicable Mexican federal,
state and local laws, and all the services provided by the Entities, and all
marketing material and promotion arrangements used or employed by the Entities,
materially conform to all requirements of all applicable Mexican federal, state
and local laws.
o) Employee Relations. To each Family Member's best knowledge none of
the Entities is delinquent in the payment to any of their employees or
consultants or to any regulatory authorities of any wages, salaries,
commissions, bonuses, health benefits, housing benefits, social security,
retirement benefits or other direct compensation or benefits for any services
performed by them to the date hereof or amounts required to be reimbursed to
such employees. Exhibit 3.1 (o) attached hereto contains a list of all employees
and consultants employed in connection with the operations of the Entities who,
individually, have received or are scheduled to receive compensation from any of
the Entities for the current fiscal year in excess of US $50,000.
p) Environmental Compliance. To each Family Member's best knowledge,
the Entities' operations are and have been in compliance in all material
respects with all applicable Environmental Laws. To each Family Member's best
knowledge, none of the Entities has received any written notice, mandate, order
or request under any Environmental Law concerning the Entities' facilities that
relates to any hazardous substance. To each Family Member's best knowledge there
is no proceeding pending against any of the Entities by any Mexican federal,
state or local court, tribunal, administrative agency, department, commission,
board or other authority or instrumentality with respect to the presence or
release of any hazardous substance from or on the Entities' facilities. To each
Family Member's best knowledge there has not been released from or on the
Entities' facilities any hazardous substance in a quantity or concentration that
would require remedial action under any applicable Environmental Law. To each
Family Member's best knowledge all storage tanks (whether above or below ground)
on or at any of the Entities' facilities installed or used by any of the
Entities, are in sound condition free of corrosion or leaks that could permit
any release of any hazardous substance. Except in the companies ordinary course
of the business, none of their facilities has been used for processing, storing
or otherwise utilizing any hazardous substances and none of the Entities has
received notice that any hazardous substance is present on or at any of their
facilities. To each Family Member's best knowledge all hazardous substances
resulting from the Entities' operations have been disposed of in accordance with
applicable Environmental Laws and none of the Entities has received notice from
any person, including any Mexican federal or state environmental agency, of its
possible involvement with any disposal site under investigation by any such
person. To each Family Member's best
knowledge each of the Entities is in compliance in all material respects with
all applicable Mexican federal, state and local filing and notification
requirements respecting hazardous substances. To each Family Member's best
knowledge there are no xxxxx located on the Entities facilities that are
contaminated or are constructed or maintained in such a manner that their
continued use or existence endangers ground water quality or are a safety or
health hazard, or are inoperable or not in use, or must be sealed under the
provisions of applicable law.
q) Tax Matters. To each Family Member's best knowledge each of the
Entities has, with respect to all years for which the applicable statute of
limitations for assessment, reassessment or collection has not yet expired, paid
or caused to be paid, all taxes required to be paid by them. There is no
material tax deficiency or claim of additional taxes or interest thereon or
penalties in connection therewith, asserted or, to each Family Member's
knowledge, threatened to be asserted against any of the Entities or any of their
businesses by any taxing authority. To each Family Member's best knowledge each
of the Entities has, in accordance with applicable law, timely filed all tax
reports or returns required to be filed by it through the date hereof. Each such
tax report and return materially reflects the amount of tax liability of such
Entity for such period and other required information, and all amounts shown as
payable thereon have been paid. To each Family Member's best knowledge no audit
of any tax return of any of the Entities is in progress and, to each Family
Member's knowledge, no such audit is contemplated or pending. No extension of
time with respect to any date on which a tax return was or is to be filed by any
Entity is in force, and no waiver or agreement is in force for the extension of
time or for the assessment or payment of any tax. To each Family Member's best
knowledge there are no security interest in any of the assets owned by the
Entities that arose in connection with any failure to pay taxes.
r) Litigation. Except as set forth on Exhibit 3.1 (r) attached hereto,
the Entities are not a party to, and there is no claim, action, suit,
proceeding, arbitration or any investigation or inquiry, before any Mexican
federal, state, municipal, foreign or other court or governmental or
administrative body or agency, or any private arbitration tribunal now pending
or, to the knowledge of the Xxxxxx Family, threatened against or relating to the
Entities or that relates to the transactions contemplated by this Agreement.
s) Undisclosed Liabilities. To each Family Member's knowledge
(following internal due diligence by those Family Members competent to perform
such due diligence), each of the Entities, on an individual basis, are not
subject to any material obligation, liability, debt or commitment, contingent or
otherwise, other than: (i) liabilities reflected on the Financial Information;
(ii) liabilities not required to be disclosed on the Financial Information but
otherwise disclosed herein; (ii) liabilities incurred since the date of the
Financial Information in the ordinary course of business; and (iv) liabilities
arising hereunder.
t) Transactions with Related Parties. Exhibit 3.1 (t) attached hereto,
lists all contracts, agreements or transactions currently in force and effect
carried out by each of the Entities with any Related Party. For purposes of this
Section, the term Related Party includes
(i) any corporation, limited liability company, partnership, joint venture,
trust, other entity and/or other person controlled, directly or indirectly, by
the Entities and/or by any of the Family Members whether through the ownership
of capital stock or other equity interests, by contract or otherwise; and (ii)
each director, officer, employee and consultant of the Entities.
u) Investment Banks; Brokers. The Xxxxxx Family has not employed any
investment bank in connection with the transactions contemplated by this
Agreement. It has not employed any broker or finder, other than Xx. Xxxxxx
Xxxxxxxx, or incurred any liability for any brokerage fees, commissions or
finders fees in connection with the transactions contemplated by this Agreement,
other than those payable to Xx. Xxxxxx Xxxxxxxx.
v) No Material Omission. No representation by the Xxxxxx Family on
their own right or on behalf of the Entities, contained herein or any writing to
be delivered hereunder to Sylvan or to Plansi contains any untrue statement of
material fact or omits material facts required to make the statements herein or
therein contained not misleading. Every representation and warranty is
materially true and correct, and valid as of the Incorporation Date.
w) Financial Statements. Attached hereto as Exhibit 3.1 (w) are audited
financial statements of each of the Entities, as of December 31, 1999, and
unaudited financial statements as of October 31, 2000 of each of the entities
(collectively "the Financial Statements"). The Financial Statements are true and
correct in all material respects, fairly present the financial position and
results of operations of each of the Entities, as of the dates and for the
periods indicated, and were prepared in conformity with Mexican GAAP applied on
a consistent basis.
x) Labor Matters. Exhibit 3.1 (x-a) contains a list of all employees of
the Entities as of October 31, 2000. This list contains details about salary,
(including benefits in kind), age, seniority, length of service, notice periods
for termination, right to severance pay and to bonus.
To each Family Member's best knowledge (following internal due
diligence by those Family Members competent to perform such due diligence) and
except for employment contracts listed in Exhibit 3.1(x-b), each contract of
employment to which the Entities are party and which is for an annual
consideration of $50,000 or more can be terminated by the Entities without
damages or compensation (other than that payable by laws) by giving at any time
not more than six months' notice.
To each Family Member's best knowledge (following internal due
diligence by those Family Members competent to perform such due diligence) and
except as set forth in Exhibit 3.1 (x-c), there are no collective bargaining or
other union agreements or arrangements (whether binding or not) to which the
Entities are party of by which there are bound or which are currently being
negotiated and no dispute between the Entities and any trade union or other
organization formed for a similar purpose are existing, pending or threatened.
y) Professional and Social Welfare. To each Family Member's best
knowledge (following internal due diligence by those Family Members competent to
perform such due diligence), any an all returns and reports related to Social
Security contributions that are required to be filed with respect to the
Entities prior to the date hereof have been filed timely and correctly in all
material respects. To each Family Member's best knowledge (following internal
due diligence by those Family Members competent to perform such due diligence),
the Entities have paid in full any and all Social Security contributions as and
when due. No social security authority is currently asserting any deficiency or
claim for additional Social Security contributions (or interest thereon or
penalties in connection therewith) and any and all Social Security contributions
which (although not due) have accrued on the basis of the salaries to be paid
until the date hereof, have been fully provisioned.
Except as set forth in Exhibit 3.1 (y-a) to the best knowledge of each
of the Family Member's, there are no facts or circumstances existing or having
arisen prior to the date hereof which have or may lead to a re-assessment by any
Social Security authority of Social Security contributions to be made by the
Entities relating to any period prior to the date hereof.
The details of the employee pension fund of each of the Entities are
described in Exhibit 3.1 (y-b)(hereinafter the "Pension Fund"). The Entities are
meeting all their obligations under the Pension Fund and specifically have paid
(or provisioned) all contributions required prior to the date hereof as
stipulated by the regulations of the Pension Fund.
Performance of these obligations is acknowledged in the pension fund
certificate (hereinafter the "Pension Fund Certificate") attached hereto as
Exhibit 3.1 (y-c). The Entities are not required to contribute to any pension
fund other than the Pension Fund.
z) Bank Accounts. Exhibit 3.1 (z) attached hereto, lists each bank
account opened in favor of each one of the Entities, including the authorized
signatories. The amounts described in each bank account are true and correct and
the respective sums shall be kept until the Incorporation Date.
aa) Powers of Attorney. The Xxxxxx Family acknowledges and accepts that
at the Incorporation Date each one of the Entities will hold associates/partners
meetings in which diverse powers of attorney may be revoked, amended and/or
granted.
bb) Insurance. To each Family Member's best knowledge (following
internal due diligence by those Family Members competent to perform such due
diligence), all the equipment, vehicles, and any other assets owned by each one
of the Entities, are duly insured by a Mexican authorized insurance company, and
the respective insurance policies are in full force and effect, and will
continue valid until December 31, 2000. Exhibit 3.1 (bb) contains a list of the
insurance agreements obtained by each one of the Entities and currently in
force. The Xxxxxx Family acknowledges and agrees that there are no current
material claims against any of the Entities. To each Family Member's best
knowledge (following internal due diligence by those Family Members competent to
perform such due diligence), all premiums pertaining to the insurance policies
have been paid as they fell due, or are duly provided for in the Financial
Statements.
cc) Working Capital. The parties hereby acknowledge and accept that the
Xxxxxx Family will have the right to withdraw $40,000,000.00 Mex. Cy. (Forty
Million pesos Mexican Currency) of working capital over a period of time enough
in order to not affect in any way the cash flow of the Entities.
dd) Validity of the Representations. The Xxxxxx Family hereby
acknowledges and accepts that each of the representations and warranties, except
specifically determined otherwise, is in full force and effect as of the date
hereof.
3.2 Representations regarding Sylvan. Sylvan hereby represents and
warrants to the Xxxxxx Family, that:
a) Authority. It is a Sociedad de Responsabilidad Limitada, duly
incorporated and validly existing under the laws of Mexico and has all necessary
corporate power and authority to enter into this Agreement and each of the other
documents to be entered into by it in connection herewith and to consummate the
transactions contemplated hereby and thereby. Its execution, delivery and
performance hereof and each of the other documents to be entered into by it in
connection herewith and its consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action.
b) No Breach of Law. Its execution, delivery and performance of this
Agreement and each of the other documents to be entered into by it in connection
herewith, and its consummation of the transactions contemplated hereby and
thereby (i) do not conflict with its Articles of Incorporation or other
constitutive documents; (ii) do not, violate any law, rule, regulations, writ,
judgment, injunction, decree, determination or award applicable to it.
c) Government Consents. Except for those authorizations, approvals,
permits, actions, notices and filings mentioned in Section 1.2 above, which have
been satisfied, there are no other authorizations, approvals or other actions
by, and no notice to or filing with, any governmental authority, regulatory body
or agency required for the due execution, delivery, filing or performance of
this Agreement or any of the other documents to be entered into by it in
connection herewith, or for the consummation of the transactions contemplated
hereby and thereby.
d) No Breach of Contract. Its execution, delivery and performance of
this Agreement and each of the other documents to be entered into by it in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby (i) do not conflict with or result in a default under, or
permit the acceleration of, any agreement, instrument or obligation to which it
is a party or by which it or any of its properties may be affected or be bound;
and (ii) do not require any consent or notice under any agreement,
instrument or obligation to which it is a party of by which it or any of its
properties may be affected or be bound.
e) Enforceability. This Agreement has been duly executed and delivered
by it, and (assuming due authorization, execution and delivery by the Xxxxxx
Family) this Agreement constitutes its legal, valid and binding obligation
enforceable against it in accordance with the terms of this Agreement. Upon its
execution and delivery of each of the other documents to be entered into by it
in connection herewith (assuming due authorization, execution and delivery by
the other parties signatories thereto), such documents shall constitute its
legal, valid and binding obligations enforceable against it in accordance with
the terms of such documents.
ARTICLE IV
Conditions to the Xxxxxx Family Obligations
Each and every obligation of the Xxxxxx Family under this Agreement
shall be subject to the fulfillment, prior to or at the Incorporation Date, of
each of the following conditions. If any of the following conditions to the
Incorporation Date shall not have been satisfied, the Xxxxxx Family may elect to
terminate this Agreement, or to waive such condition and to consummate the
transactions contemplated hereby despite such failure.
4.1. Opinion of Counsel. Xxxxxxxx, Xxxxxxxxx y Asociados, S.C., counsel
to Sylvan, shall have delivered to the Xxxxxx Family an opinion dated the
Incorporation Date in the form of Exhibit 4.1, attached hereto.
4.2 Approvals and Consents. Sylvan shall have obtained and have
provided to the Xxxxxx Family such authorizations as are required by law in
order to consummate the transactions contemplated hereby.
ARTICLE V
Conditions to Sylvan Obligations
Each and every obligation of Sylvan under this Agreement shall be
subject to the fulfillment, prior to or at the Incorporation Date, of each of
the following conditions. If any of the following conditions to the
Incorporation Date shall not have been satisfied, Sylvan may elect to terminate
this Agreement or to waive such condition and to consummate the transactions
contemplated hereby despite such failure.
5.1. Opinion of Counsel. White & Case, S.C., special Mexican counsel to
the Xxxxxx Family, shall have delivered to Sylvan an opinion dated the
Incorporation Date in the form of Exhibit 5.1 attached hereto.
5.2. Approvals and Consents. The Xxxxxx Family shall have obtained and
have provided to Sylvan such authorizations as are required by law or under
agreements with third parties in order to consummate the transactions
contemplated hereby and to continue the business of the Entities.
ARTICLE VI
Conduct Subsequent to the Incorporation Date
6.1. Further Assurances. From and after the Incorporation Date, upon
the reasonable request of Sylvan or the Xxxxxx Family, the Xxxxxx Family or
Sylvan shall execute, acknowledge and deliver to Sylvan or to the Xxxxxx Family,
such further instruments and take such other actions as Sylvan or the Xxxxxx
Family may reasonably request, in order to carry out the intent and purposes of
this Agreement and/or more effectively
reflect the consummation of the transactions contemplated hereby.
ARTICLE VII
Non Compete; Confidentiality
7.1 Non Compete. Each of the Family Members hereby acknowledge and
agree that none of the Family Members shall compete in Mexico, directly or
through another person or entity, for a four (4) year period in the university
education segment. This four (4) year period shall be counted as from the
Incorporation Date. For purposes of this clause, the following shall not be
deemed to mean competition: (i) Holding individually up to 2% or jointly amongst
the six Family Members up to 12% of the voting equity of a company involved in
the university education segment; (ii) Holding a teaching position at a company
involved in the university education segment, (iii) Participating in a
non-for-profit organization with the purpose of promoting (not providing)
university level education, or (iv) existing businesses in which the Xxxxxx
Family is currently participating (e.g. Nuevo Continente Schools, Profesionistas
y Docentes Asociados, S.A. de C.V., Red Tercer Milenio, S.C., Red Univercom,
S.C., Procesos Educativos y de Consultoria, S.C., Centro de Formacion Continua,
Formacion Completa, S.C. [Campus Lago de Guadalupe], Sociedad Mexicana de
Normalizacion y Certificacion, S.C., Centro Mexicano de Tecnologia para la
Competividad, S.C., and Centro Universitario ETAC, A.C.), but in no event to
directly or indirectly compete with the university education segment business of
the Entities.
7.2. Confidentiality. Each of the Family members and Sylvan, hereby
agrees and acknowledges that in connection with the negotiation, preparation and
execution of this Agreement and the agreements and/or documents related thereto,
it has had, and derived from their relation with Plansi they will continue to
have, access to Confidential Information.
Each of the Family Members (and/or the corporations or civil
corporations) and Sylvan, hereby accept not to divulge, disclose or communicate,
or permit to be divulged, disclosed or communicated, to any third party in any
manner, directly or indirectly, any Confidential Information, and it shall
disclose or permit to be disclosed the Confidential Information only to those of
its representatives who have a need to know such Confidential Information solely
in connection with the conduct of Plansi and/or the Entities business in the
ordinary course, and shall take measures to ensure that such representatives
agree to be bound by the provisions hereof, and it shall take all other
necessary or appropriate actions to preserve the confidentiality of the
Confidential Information.
For purposes hereof, "Confidential Information" shall mean all
financial and other technical data and information, business and commercial
information, and know-how of Plansi, the Entities, each of the Family Members
and Sylvan, relating in any manner to their business, written or unwritten that
has been, prior to the date hereof, or may be, following the date hereof
delivered or furnished to any party. In addition, "Confidential
Information" includes any analysis, market study or compilation in respect of
any of the foregoing.
The restrictions contained herein shall not apply to Confidential
Information that: (i) at the time of disclosure is generally available to the
public (than as a result of a disclosure directly or indirectly by the party
otherwise subject to the provisions of this Article, or any of its
representatives in violation of this Agreement); (ii) is obtained by a party
otherwise subject to the provisions of this Article, or any of its respective
representatives on a nonconfidential basis from a source that is not bound by a
confidentiality agreement with, or other obligation of confidentiality to,
Plansi, the Entities or Sylvan; (iii) has been independently acquired or
developed by a party otherwise subject to the provisions of this Article or any
of its representatives without use of or reference to the Confidential
Information (iv) is required to be disclosed by law; or (v) was within the
receiving party's possession prior to its being furnished to the receiving party
by or on behalf of the disclosing party pursuant hereto, provided that the
source of such information was not known by the receiving party to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the disclosing party or any other party with
respect to such information.
The Xxxxxx Family hereby acknowledges and agrees that all the
information received by Sylvan, including the Confidential Information, may
be used by Sylvan in order to comply with the applicable laws and regulations
of the different jurisdictions where Sylvan Learning Systems, Inc., has or
may have business. Sylvan may have the possibility at all times of sharing
the information, including the Confidential Information, with all its related
companies around the world, including the parent companies.
ARTICLE VIII
Indemnification
8.1. Indemnification by the Xxxxxx Family. The Xxxxxx Family, jointly
and severally, shall indemnify and hold Sylvan and/or their respective
shareholders, directors, officers, employees, agents, successors and/or assigns
harmless from and against any and all losses, liabilities, damages, claims,
costs, expenses and/or assessments (including reasonable and duly documented
attorneys and other professional fees and costs as well as fines, penalties
and/or interest) (collectively, "Losses") suffered or incurred by any of them
which result from or arise out of:
(a) An inaccurate or untrue statement or omission of a material fact
made by the Xxxxxx Family on their own right or on behalf of the Entities,
herein or in any agreement, instrument or certificate delivered pursuant hereto;
(b) The failure by the Xxxxxx Family to comply with or perform any
covenant or agreement of the Xxxxxx Family set forth herein or in any agreement,
instrument or certificate delivered pursuant hereto;
(c) The parties agree that the Xxxxxx Family will not have any
obligation to indemnify Sylvan or any of its shareholders, directors, officers,
employees, agents, successors and/or assigns until any individual loss exceeds
US$100,000, in which case the Xxxxxx Family will indemnify for the full amount
of said loss. Likewise, the parties agree that the obligation to indemnify for
losses is limited (individually and in the aggregate) to US$42,400,000.
8.2. Indemnification by Sylvan. Sylvan shall indemnify and hold the
Family Members and/or their successors, agents and/or assigns, harmless from and
against any and all Losses suffered or incurred by any of them which result from
or arise out of:
(a) The inaccurate or breach of any representation or warranty made by
Sylvan herein or in any agreement, instrument or certificate delivered pursuant
hereto; or
(b) The failure by Sylvan to comply with or perform any covenant or
agreement of Sylvan set forth herein or in any agreement, instrument or
certificate delivered pursuant hereto.
8.3. Notice of Claims. Promptly after any person entitled to
indemnification hereunder (an "Indemnitee") (i) receives notice of any claim or
the commencement of any proceeding against it, or (ii) has knowledge of any
claim or proceeding against it or of any Loss for which it intends to seek
indemnification hereunder, such person shall, if a claim for reimbursement with
respect thereto is to be made against any party hereto obligated to provide
indemnification (the "Indemnifying Party") hereunder, promptly give the
Indemnifying Party written notice of such claim or Loss or the commencement of
such proceeding; provided, however, that failure to give such notification shall
not affect indemnification hereunder, except to the extent that the Indemnifying
Party is unable to defend any such claim or is required to pay a greater amount
or accrue additional expenses with respect to any claim or Loss as a result of
such failure to provide prompt notice.
8.4. Defense of Third Party Claims. The Indemnifying Party shall have
the right to compromise or defend, at its own expense and by its counsel, any
third party claim made against the Indemnitee; provided, however, that no
compromise of any claim shall be made without the consent of the Indemnitee
unless such compromise results in the full and unconditional release of all
claims against the Indemnitee by the person asserting such claim. The
Indemnifying Party shall notify the Indemnitee whether it elects to assume the
defense of any third party claim within ten (10) days after the Indemnifying
Party receives notice thereof from the Indemnitee as provided in Section 8.3.
The Indemnitee shall cooperate with the Indemnifying Party or its counsel in the
defense against any such third party claim and in any compromise thereof. Such
cooperation shall include, but not be limited to, furnishing the Indemnifying
Party with any books, records or information reasonably requested by the
Indemnifying Party. Except as provided below, after the Indemnifying Party has
notified the Indemnitee of its intention to undertake to compromise or defend
any such third party claim, the Indemnifying Party shall not be liable for any
additional legal expense incurred by the Indemnitee. However, the Indemnitee
shall have the right to retain its own counsel and participate in the defense of
such claim at the expense of the Indemnitee, in which case the Indemnifying
Party shall cooperate in providing information to and consulting with the
Indemnitee about the claim. If the Indemnifying Party does not assume the
defense of such claim, the Indemnitee may defend against or settle such claim in
such manner and on such terms as it deems appropriate, and shall be indemnified
by the Indemnifying Party for the amount of any judgment or settlement and for
all losses or expenses, including attorneys' and other professional fees and
costs, incurred by the Indemnitee in connection with the defense or settlement
of such claim.
Any issue can only be settled with the consent of the Indemnitee, in
the understanding that if no consent can be reached, the parties will have to
resolve the dispute by
arbitration according to point 9.2 of this agreement.
8.5. Payment. If any Indemnitee shall incur any Loss for which it is
entitled to indemnification hereunder, the Indemnifying Party shall make the
indemnification payment required under this Article VIII within ten (10) days
after receipt by the Indemnifying Party of written notice from the Indemnitee
stating the amount of the Loss and of the indemnification payment requested.
ARTICLE IX
Miscellaneous
9.1 Expenses. The Xxxxxx Family shall be responsible for any taxes
which become due as a result of the transfer of the Interests to Plansi. Each
party shall pay its own expenses and costs relating to the negotiation,
execution and performance of this Agreement and the agreements, documents and
instruments derived here from.
9.2. Governing Law; Arbitration. This Agreement shall be governed by,
and construed and interpreted in accordance with the laws of the United Mexican
States, and shall be subject to arbitration in Mexico or such other place as the
Xxxxxx Family and Sylvan shall mutually agree and shall be held in accordance
with the rules of the International Chamber of Commerce. Any controversy or
claim arising out of or relating to this Agreement, or the breach thereof or
relationship created thereby, that is not settled through negotiation shall be
resolved exclusively by arbitration under the auspices of and in accordance with
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce then in effect. The arbitration shall be conducted in English language.
The arbitration shall be heard before three arbitrators, one to be chosen by
Sylvan, one to be chosen by the Xxxxxx Family, and the third to be chosen by
those two arbitrators. The arbitration shall be final and binding on the
parties, and shall not be subject to any appeal. Judgment on the award of the
arbitrators may be entered by any court having jurisdiction to do so. The losing
party, so declared by the arbitrators, shall pay all out-of-pocket expenses
incurred by the prevailing party in connection with any such dispute.
Notwithstanding any other provision of this agreement, any party shall be
entitled to seek injunctive or other provisional relief from any court of
competent jurisdiction pending the final decision or award of the arbitrators.
9.3. Notices. Any notice or request with respect to this Agreement
shall be in writing in English language and shall be delivered personally, by
registered mail, by express courier or by any electronic media with acknowledge
receipt, at the following addresses:
To the Xxxxxx Family: Segunda Xxxxxxx xx Xxxxxxx Xx. 00
Xxxxxxx Xxx Xxxxx 00000
Xxxxxx, D.F.
Attention: Mr. Xxxx Xxxxxx
Fax: 00 00 00 00
With copy to: White & Case, S.C.
Xx. Xxxxx xx xxx Xxxxxx 000, 0xx Floor,
Col. Xxxxx xx Xxxxxxxxxxx
00000 Xxxxxx, D.F.
Attention: Xx. Xxxxxx Xxxxxx
Fax (00) 0000 00 00
To Sylvan 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000
X.X.X.
Attention: Xx. Xxxxxx X. Xxxxx
Fax: (000) 000 0000
With copy to: Xxxxxxxx, Xxxxxxxxx y Asociados, S.C.
Xxxxxxxxxxx Xxx Xx. 000, 00xx Xxxxx,
Xxx. Xxx Xxxxx
00000 Xxxxxx, D.F.
Attention: Xx. Xxxxxxx Xxxxxxxx
Fax (00) 0000 00 00
9.4. Certain Definitions. Unless the context clearly otherwise
requires, as used herein, the term "Agreement" means this Agreement and the
Exhibits hereto. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Paragraph or other subdivision. The use of the neuter pronoun
"it" shall also refer as appropriate to the masculine and/or feminine gender.
The use of the singular herein shall, where appropriate, be deemed to include
the plural and vice versa. As used herein, the word "person" refers to any
individual, corporation, partnership, trust, governmental body or authority or
other organization or entity. As used herein, the term "including" means
"including, without limitation." As used herein, "dollars" and "$" refer to
United States Dollars. For purposes of this agreement, "to the knowledge of any
person" shall mean any matter within the actual knowledge of such person and/or
any matter that should have been known by such person in connection with the
performance of his duties as an employee, officer and/or director, and/or any
matter that should have been known by such person as a result of a reasonable
inquiry.
9.5. Headings. The headings to Articles and Sections of this Agreement
are for reference only and shall not be used in construing the provisions hereof
or otherwise affect the meaning hereof.
9.6. Entire Agreement. This Agreement embodies the entire agreement and
understanding between Sylvan and the Xxxxxx Family and supersedes all prior
agreements and understandings related to the subject matter hereof. There are no
representations, warranties, covenants, promises or agreements on the part of
any party to any other party hereto which are not explicitly set forth herein.
9.7. Modifications, Waivers. Any modification or amendment of or with
respect to any provisions of this Agreement or any agreement, instrument or
document delivered pursuant hereto shall not be effective unless it shall be in
writing and signed by Sylvan and the Family Members and shall designate
specifically the terms and provisions so modified. Any waiver of or with respect
to any provisions of this Agreement or any agreement, instrument or document
delivered pursuant hereto shall not be effective unless it shall be in writing
and signed by Sylvan, in the case of a waiver by Sylvan, and by the Xxxxxx
Family, in the case of a waiver by the Xxxxxx Family.
9.8. Benefit; Assignment. This Agreement shall be binding upon and
inure to the benefit of Sylvan and the Xxxxxx Family and their respective
successors and permitted
assigns. Sylvan and the Xxxxxx Family may assign their rights or delegate their
obligations hereunder following the terms and conditions of the Bylaws of
Plansi.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
SYLVAN LEARNING SYSTEMS MEXICO, S. DE X.X. DE C.V.
/s/ XXXXXXX XXXXXXXX XXXXXXXXX
---------------------------------------
By: Xxxxxxx Xxxxxxxx Xxxxxxxxx
Its: Attorney in fact
XXXXXX FAMILY
/s/ XXXX XXXXXX XXXXXXXX /s/ XXXXX X. XXXXXX XXXXXXXX
--------------------------------- ---------------------------------------
XXXX XXXXXX XXXXXXXX XXXXX X. XXXXXX XXXXXXXX
/s/ XXXXXXX XXXXXX XXXXXXXX /s/ XXXXX XXXXXX XXXXXX XXXXXXXX
--------------------------- ---------------------------------------
XXXXXXX XXXXXX XXXXXXXX XXXXX XXXXXX XXXXXX XXXXXXXX
/s/ XXXXX DE LOS ANGELES XXXXXX XXXXXXXX
---------------------------------------------
XXXXX DE LOS ANGELES XXXXXX XXXXXXXX
/s/ XXXXX XXXXXX XXXXXXXX XXXXX
------------------------------------
XXXXX XXXXXX XXXXXXXX XXXXX
LIST OF EXHIBITS
1.1 Plansi Bylaws
2.3 Financial Information
3.1(g) Lease Agreements
3.1(i) Trademarks, Tradenames, Service Marks and Copyrights.
3.1(j) Permits, Authorizations
3.1(k) Contracts
3.1(l) Investments in other Entities.
3.1(m) Capitalization
3.1(o) Employee Relations
3.1(r) Litigation
3.1(t) Transactions with Related Parties
3.1(w) Financial Statements
3.1(x-a) List of Employees
3.1(x-b) Employment Contracts
3.1(x-c) Collective Bargaining Agreements
3.1(y-a) Re-assessments
3.1(y-b) Employee Pension Fund
3.1(y-c) Pension Fund Certificate
3.1(z) Bank Accounts
3.1(bb) Insurance Agreements
4.1 Xxxxxxxx, Xxxxxxxxx y Asociados, S.C., Opinion
5.1 White & Case, S.C., Opinion.
