EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
BETWEEN
CORINTHIAN SCHOOLS, INC.
AS BUYER,
AND
CONCORDE CAREER COLLEGES, INC.,
AS SELLER
DATED AS OF JULY 11, 1996
TABLE OF CONTENTS
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Page
ARTICLE I SALE AND PURCHASE OF ASSETS.............................. 1
1.1 Purchased Assets to be Transferred....................... 1
1.2 Excluded Assets.......................................... 3
ARTICLE II CONSIDERATION............................................ 3
2.1 Purchase Price........................................... 3
2.2 Cash Consideration....................................... 3
2.3 Obligations and Liabilities to be Assumed................ 4
2.4 Excluded Liabilities..................................... 4
2.5 Allocation of Purchase Price............................. 4
2.6 Employees................................................ 5
ARTICLE III. CLOSING.................................................. 5
3.1 Closing.................................................. 5
3.2 Deliveries by Seller at Closing.......................... 5
3.3 Deliveries by Buyer at Closing........................... 6
ARTICLE IV.. TERMINATION.............................................. 6
4.1 Termination.............................................. 6
4.2 Effect of Termination.................................... 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER................. 7
5.1 Organization and Corporate Power......................... 7
5.2 Capacity; Authorization; Binding Effect.................. 8
5.3 Ownership of School...................................... 8
5.4 No Conflicts 8
5.5 Compliance with Laws; Licenses and Permits............... 9
5.6 Recruitment; Admissions Procedures; Attendance; Reports.. 9
5.7 Cohort Default Rate...................................... 10
5.8 Title to and Condition of the Purchased Assets........... 10
5.9 Assumed Contracts........................................ 11
5.10 Tradenames; Confidential Information..................... 11
5.11 Financial Statements; Indebtedness....................... 12
5.12 Receivables 13
5.13 Inventories 14
5.14 Litigation............................................... 14
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5.15 Insurance................................................ 14
5.16 Environmental Matters.................................... 14
5.17 Employee Benefit Plans................................... 15
5.18 Employment Matters....................................... 15
5.19 Tax Matters 16
5.20 Brokers or Finders....................................... 16
5.21 Absence of Certain Changes............................... 16
5.22 Delivery of Documents.................................... 17
5.23 Disclosure............................................... 17
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER.................. 17
6.1 Organization and Corporate Power......................... 18
6.2 Capacity; Authorization; Binding Effect.................. 18
6.3 No Conflicts 18
6.4 Brokers or Finders....................................... 18
6.5 Disclosure............................................... 18
ARTICLE VII. COVENANTS................................................ 19
7.1 Covenants of Seller Pending Closing...................... 19
7.2 Covenants of Buyer Pending Closing....................... 19
7.3 Closing and Post-Closing Covenants....................... 19
7.4 Excise and Property Taxes................................ 21
7.5 Administration in Accordance with Accreditations......... 21
7.6 Access and Maintenance of Records........................ 21
ARTICLE VIII CONDITIONS TO CLOSING.................................... 22
8.1 Conditions Precedent to Obligations of Buyer............. 22
8.2 Conditions Precedent to Obligations of Seller............ 23
ARTICLE IX MISCELLANEOUS............................................ 24
9.1 Binding Effect........................................... 24
9.2 Notices.................................................. 24
9.3 Entire Agreement......................................... 25
9.4 Nature and Survival of Representations................... 25
9.5 Risk of Loss or Damage; Insurance........................ 25
9.6 Waiver................................................... 25
9.7 Governing Law............................................ 26
9.8 Headings................................................. 26
9.9 Counterparts............................................. 26
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9.10 Severability............................................. 26
9.11 Time is of the Essence................................... 26
9.12 Indemnification by Seller................................ 26
9.13 Indemnification by Buyer................................. 27
9.14 Procedure for Indemnification............................ 27
9.15 Dispute Resolution and Arbitration....................... 28
9.16 Third Party Beneficiaries................................ 29
9.17 Expenses................................................. 29
SCHEDULES
Schedule 2.4 Excluded Accounts Payable
Schedule 2.5 Allocation of Purchase Price
Schedule 2.6 Accrued Vacation and Sick Pay
Schedule 5.4 Certain Regulatory Approvals
Schedule 5.5(a) Licenses and Permits
Schedule 5.5(b) Accreditations
Schedule 5.5(c) Investigations/Reviews
Schedule 5.6(a) Policy Manuals & Procedures
Schedule 5.6(b) Disclosed Guidelines
Schedule 5.7 Cohort Default Rate
Schedule 5.8(a) Leased Facilities
Schedule 5.8(b) Permitted Exceptions
Schedule 5.9 Assumed Contracts
Schedule 5.10 Intellectual Property
Schedule 5.11(a) Financial Statements
Schedule 5.11(b) Basis of Presentation
Schedule 5.11(c) Financial Security Arrangements
Schedule 5.11(d) Interim Financial Statements
Schedule 5.11(e) Long-term Liabilities
Schedule 5.14 Litigation
Schedule 5.15 Insurance
Schedule 5.17 Employee Benefit Plans
Schedule 5.21 Absence of Certain Changes
EXHIBITS
Exhibit A License Agreement
Exhibit B Assignment and Assumption Agreement
Exhibit C Xxxx of Sale
Exhibit D Form of Opinion of Seller's Counsel
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of July 11, 1996 (this
"AGREEMENT"), is entered into between Corinthian Schools, Inc., a Delaware
corporation ("BUYER"), and Concorde Career Colleges, Inc., a Delaware
corporation ("SELLER").
BACKGROUND
A. Seller owns, operates and administers that certain post-
secondary, vocational training school known as Concorde Career Institute,
located at 0000 Xxxxx 0xx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 (the "SCHOOL").
B. Buyer desires to buy, through the payment of cash and the
assumption of certain liabilities of Seller, and Seller desires to sell,
substantially all assets and property owned by Seller and used in the business
of the School, upon the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 PURCHASED ASSETS TO BE TRANSFERRED. Subject to the terms and
conditions of this Agreement, Seller hereby agrees to sell, assign, convey,
transfer and deliver to Buyer at the Closing (as defined in Section 2.2.1
hereof), and Buyer hereby agrees to purchase from Seller at the Closing, all of
the Seller's right, title and interest in and to all assets and property owned
by Seller and used in the business of the School, as set forth below (the
"PURCHASED ASSETS"), subject to all existing mortgages, pledges, liens, claims,
restrictions, encumbrances and security interests of any kind or nature,
consisting of the Assumed Liabilities and as otherwise described in Schedule
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5.8(b) (collectively the "PERMITTED EXCEPTIONS"), and except for the Excluded
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Assets (as defined in Section 1.2 hereof):
1.1.1 ACCOUNTS RECEIVABLE. All of Seller's accounts receivable,
notes receivable and other receivables (and causes of action related to any of
the foregoing), including any such receivables that have been written off, but
excluding those receivables that have been previously assigned ("ACCOUNTS
RECEIVABLE");
1.1.2 INVENTORY. All of Seller's inventory of textbooks,
materials and supplies as of the date hereof, plus or minus any such items which
have been added or deleted in the ordinary course of business consistent with
past practice ("INVENTORY");
1.1.3 EQUIPMENT. All of Seller's computer hardware, printers,
other data processing equipment, other machinery and equipment, furniture,
fixtures, leasehold improvements, furnishings, classroom equipment and other
tangible personal property used at the School as of the date hereof, plus or
minus any such items which have been added or deleted in the ordinary course of
business consistent with past practice ("EQUIPMENT");
1.1.4 RECORDS. All of Seller's records related to or used in
connection with the operation of the School or pertaining to the Purchased
Assets, including, without limitation, all student records, ledgers, copies of
financial statements, copies of correspondence, copies of employment records,
copies of placement records, copies of marketing materials and copies of all
documents and other information and data filed by Seller with any state, federal
or local government authority or any guaranty or accrediting agency, whether on
computer disk, in paper form or otherwise (the "RECORDS");
1.1.5 CONTRACTS AND LEASES. All of the contracts and leases
applicable to the School to which Seller is a party entered into in the course
of Seller's business, including, without limitation, those identified in
Schedule 5.9 (collectively, the "ASSUMED CONTRACTS";
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1.1.6 INTELLECTUAL PROPERTY. All patents, trademarks, service
marks licenses and copyrights (whether or not registered) and all applications
and registrations therefor, owned or licensed by Seller and used solely and
directly for the School (other than the name Concorde Career Institute), and all
computer programs and software used in the classrooms of the School, including
those described in Schedule 5.10 and excluding Seller's EdDGE administrative
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software (but including the database used in connection therewith), (the
"INTELLECTUAL PROPERTY");
1.1.7 WARRANTY RIGHTS. All rights of Seller relating to or
arising out of express or implied warranties, representations or guarantees from
suppliers with respect to any of the Purchased Assets, and all causes of action
arising therefrom;
1.1.8 PREPAID EXPENSES. All of Seller's prepaid security,
vendor, utility and other deposits and expenses;
1.1.9 PERMITS. To the extent transferable, Seller's licenses,
permits, certifications, approvals and other governmental and regulatory
authorizations required under all laws, rules and regulations applicable to or
affecting the School, including those described in Schedule 5.5(a);
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1.1.10 GOODWILL AND OTHER INTANGIBLES. All of the goodwill and
going concern value of the School and all other intangibles used in connection
with the School;
1.1.11 CURRICULUM. The right to use for a period of five years
after the Closing all proprietary curriculum used in connection with the
educational programs of the School (including all periodic updates to the
curriculum as developed or used by Seller during such period), in the form of
texts, lesson plans, handouts, films, videos, exams and other related materials,
such right, and the limitations thereon, shall be evidenced by a License
Agreement substantially in the form of Exhibit A hereto (the "LICENSE
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AGREEMENT");
1.1.12 LEAD BANK. Copies of all information in existence as of
the Closing in Seller's lead bank (the "LEAD BANK DATA"); and
1.1.13 OTHER ASSETS. All other assets and property owned by
Seller and used in the business of the School (other than the Excluded Assets),
including, without limitation, promotional and marketing materials.
1.2 EXCLUDED ASSETS. The Excluded Assets shall not be conveyed
hereunder. The "Excluded Assets" means:
1.2.1 CASH. All of Seller's cash or cash equivalents on hand at
the Closing and Seller's bank accounts relating thereto;
1.2.2 NONTRANSFERABLE RIGHTS. Any license, permit, contract and
governmental authorization or accreditation that is not transferable;
1.2.3 OTHER EXCLUDED ASSETS. Intellectual property of Seller
other than that owned by Seller and used solely and directly for the School.
1.2.4 OVERPAYMENT REFUND. Any refund relating to years ending
prior to the Closing Date which represents amounts overpaid into the Student
Tuition Recovery Fund.
ARTICLE II
CONSIDERATION
2.1 PURCHASE PRICE. The purchase price payable to Seller in
connection with the transfer to Buyer of the Purchased Assets shall be the cash
consideration portion referred to in Section 2.2, plus the assumption of
liabilities of Seller referred to in Section 2.3 (collectively, the "PURCHASE
PRICE").
2.2 CASH CONSIDERATION. The cash consideration portion of the
Purchase Price shall be $350,000, payable as follows:
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2.2.1 CLOSING. On July 31, 1996, or on such other date as the
parties hereto may agree in writing (the "CLOSING" or "CLOSING DATE"), Buyer
shall pay to Seller in cash by certified check, cashier's check or wire transfer
$150,000 (the "CLOSING PAYMENT").
2.2.2 CERTIFICATION. On December 31, 1996, Buyer shall pay to
Seller in cash by certified check, cashier's check or wire transfer $200,000
(the "CERTIFICATION PAYMENT"). Buyer shall provide Seller with an irrevocable
letter of credit (the "LETTER OF CREDIT") to secure Buyer's obligation to make
the Certification Payment.
2.3 OBLIGATIONS AND LIABILITIES TO BE ASSUMED. Upon the terms and
subject to the conditions contained herein, at the Closing, Buyer shall, by an
instrument of assumption to be executed and delivered at the Closing
substantially in the form of Exhibit B hereto (the "ASSIGNMENT AND ASSUMPTION
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AGREEMENT"), assume the liabilities (the "ASSUMED LIABILITIES") of the School
other than the Excluded Liabilities (as defined in Section 2.4 hereof),
including, without limitation, the obligation to operate or dispose of the
School (whether through xxxxxxxx, sale or other disposition) if after the
Closing Buyer is not able to obtain certification of eligibility for Title IV
funding for the School. Buyer's xxxxxxxx obligation after the Closing with
respect to the School shall include the obligation to perform all obligations in
order for the xxxxxxxx to comply with the requirements of all governmental
entities and regulatory authorities.
2.4 EXCLUDED LIABILITIES. Buyer shall not assume, or otherwise be
responsible for, any liabilities or obligations (whether actual or contingent,
matured or unmatured, liquidated or unliquidated, or known or unknown) of
Seller, any other owner or operator of the School prior to the Closing Date, or
any affiliate of any of the foregoing, which consist of, relate to, are
connected with, are based upon or arise out of the following: (i) regulatory
liabilities imposed by the U.S. Department of Education ("USED") and the
applicable state regulatory agencies for periods prior to the Closing Date and
identified by USED or any such state regulatory agency prior to or within 18
months after the Closing Date, (ii) liabilities relating to employees of the
School prior to the Closing Date (other than vacation and sick pay benefits of
employees to be hired by Buyer as contemplated by Section 2.6 hereof which
accrued prior to the Closing Date and which remained unpaid in the ordinary
course of business on the Closing Date), (iii) liabilities with respect to
accounts payable incurred on or before the Closing Date that are more than 45
days old as of the Closing Date and are set forth on Schedule 2.4, (iv)
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liabilities and costs (including those incurred post-Closing) associated with or
caused by a determination by the USED that the School has not demonstrated
compliance with 34 CFR 668.15 (Factors of Financial Responsibility) and 34 CFR
668.16 (Standards of Administrative Capability), provided that Seller shall be
permitted to assume all negotiations with USED arising out of any such
determination and Buyer shall be permitted to participate in all such
negotiations, and (v) liabilities with respect to the claims referenced on
Schedule 5.14 hereto (collectively, the "EXCLUDED LIABILITIES").
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2.5 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that the
Purchase Price shall be allocated among the Purchased Assets in accordance with
the allocation set forth in Schedule 2.5 attached hereto. Buyer and Seller
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agree that each will report the federal, state and local income tax and other
tax consequences of the purchase and sale contemplated hereby in a manner
consistent with such allocation and that neither will take any position
inconsistent therewith upon examination of any tax return, in any refund claim,
in any litigation or otherwise.
2.6 Employees. Buyer shall offer employment on an at will basis to
those employees of the School which Buyer deems necessary, in its sole and
absolute discretion, to the operation of the School. Such employment shall be
effective as of the Closing. Schedule 2.6 hereto sets forth the accrued but
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unpaid vacation and sick pay benefits of all employees of the School as of the
date of this Agreement.
ARTICLE III
CLOSING
3.1 CLOSING. The Closing shall take place at the offices of
O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000. The Closing shall be declared effective at 11:59 p.m. on the
Closing Date.
3.2 DELIVERIES BY SELLER AT CLOSING. At the Closing, Seller shall
deliver or cause to be delivered to Buyer the following:
(1) Certified resolutions of Seller's Board of Directors
authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein;
(2) Duly executed License Agreement;
(3) Duly executed Xxxx of Sale substantially in the form of
Exhibit C hereto (the "XXXX OF SALE") and such other instruments of
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conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary to vest in Buyer title to the Purchased Assets;
(4) Duly executed Assignment and Assumption Agreement;
(5) One or more opinions of counsel to Seller, in form and
substance reasonably acceptable to Buyer, containing the opinions set forth
on Exhibit D, along with usual and customary exceptions and qualifications;
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(6) An officers' certificate signed by the President and the
Chief Financial Officer of Seller, or such other officer reasonably
acceptable
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to Buyer, certifying as to the representations, warranties and covenants of
Seller made herein as provided in Sections 8.1.1 and 8.1.2; and
(7) Any other documents reasonably necessary to effectuate the
transactions contemplated hereby.
3.3 DELIVERIES BY BUYER AT CLOSING. At the Closing Buyer shall
deliver or cause to be delivered to Seller the following:
(1) The Closing Payment and Letter of Credit;
(2) Certified resolutions of the Board of Directors of Buyer
authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein;
(3) Duly executed License Agreement;
(4) Duly executed Assignment and Assumption Agreement;
(5) An officers' certificate signed by the President and the
Chief Financial Officer of Buyer, or such other officer reasonably
acceptable to Seller, certifying as to the representations, warranties and
covenants of Buyer made herein as provided in Sections 8.2.1 and 8.2.2; and
(6) Any other documents reasonably necessary to effectuate the
transactions contemplated hereby.
ARTICLE IV
TERMINATION
4.1 TERMINATION. This Agreement may be terminated only as follows
and in each case only by written notice:
(1) At any time by mutual written consent of Seller and Buyer;
(2) Prior to the Closing, by Seller on the one hand or Buyer on
the other, if the other party shall be in breach of any covenant,
undertaking or representation contained herein in any material respect and
such breach has not been cured within ten business days after the giving of
written notice to the breaching party of such breach;
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(3) Prior to the Closing, by Buyer if USED, the California
Student Aid Commission, the State of California or any of its agencies, any
guaranty agency or any accreditation agency determine that the School or
the program will not be certified as eligible for Title IV funds;
(4) Prior to the Closing, by Seller if (i) Seller's Board of
Directors receives a written opinion from its legal counsel that Seller's
Board of Directors has a fiduciary duty to consider a proposal by a
potential buyer of the School, (ii) the Seller's Board of Directors decides
to enter into a definitive agreement with respect to such proposal and
(iii) Seller pays to Buyer a termination fee of $25,000 (the "TERMINATION
FEE") and reimburses Buyer for all of its reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by
Buyer in connection with the transactions contemplated by this Agreement,
provided that Seller's reimbursement obligation hereunder shall not exceed
$35,000 (excluding the Termination Fee); and
(5) On August 31, 1996, by either party if the Closing has not
yet occurred.
4.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Buyer or Seller in accordance with the applicable provisions
above, this Agreement shall forthwith terminate upon notice thereof duly given
in accordance with the provisions hereof, and there shall be no liability of any
nature on the part of either Buyer or Seller (or their respective officers or
directors) to the other, except for liabilities arising from a breach of this
Agreement prior to such termination; provided, however, that this Section 4.2 in
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no way limits the obligations of the parties set forth in Sections 9.12
(Indemnification by Seller), 9.13 (Indemnification by Buyer) and 9.14 (Procedure
for Indemnification) hereof, which obligations shall survive the termination.
If this Agreement is terminated as provided herein, each of Buyer and Seller
shall, and shall cause its respective representatives to, either destroy or
redeliver all documents, work papers and other materials relating to the
transaction contemplated hereby or to the business or operations of the other
party, whether so obtained before or after the execution hereof, to such other
party, and all such information received by Buyer or Seller, as the case may be,
(other than information which is in or becomes part of the public domain by
publication or otherwise or which has heretofore been or is hereafter filed or
available as public information with any governmental authority) shall be kept
confidential, except as required by law. In addition, each of Buyer and Seller
shall cooperate in good faith following termination of this Agreement to provide
any information or documents reasonably required by the other party in
connection with preparation of such party's financial statements and tax
returns.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer to enter into this Agreement, to
purchase the Assets and assume the Assumed Liabilities, Seller hereby represents
and warrants (a) as of the date hereof and (b) as of the Closing Date, that:
5.1 ORGANIZATION AND CORPORATE POWER. Seller is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware, the jurisdiction in which it is incorporated. Seller has all
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted, to enter into this Agreement and to
consummate the transactions contemplated hereunder. Seller is duly qualified to
do business in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the operation of the School. The copies of
Seller's articles of incorporation and bylaws which have been furnished to Buyer
reflect all amendments made thereto at any time prior to the date of this
Agreement and are correct and complete.
5.2 CAPACITY; AUTHORIZATION; BINDING EFFECT. Seller has the power,
legal capacity and authority to execute, deliver and perform this Agreement and
each other document being executed in connection herewith to which it is a
party. Seller has the power, legal capacity and authority to transfer, convey
and deliver the Purchased Assets, free and clear of all liens, claims,
encumbrances, options, rights and restrictions, except as otherwise disclosed in
Schedule 5.8(b). All corporate and other proceedings required to be taken by or
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on the part of Seller, including all action required to be taken by the
directors or stockholders of Seller, to authorize Seller to enter into and carry
out this Agreement and the related documents contemplated herein, have been duly
and properly taken. This Agreement has been, and each of the related documents
will be at Closing, duly executed and delivered by Seller and constitute, or
will when delivered constitute, the valid and binding obligations of Seller,
enforceable against Seller, in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5.3 OWNERSHIP OF SCHOOL. The School is owned and operated by Seller
directly, and no other Person has any ownership interest in the School. No
other Person has any right, option, subscription or other arrangement to
purchase or otherwise acquire any interest in the School.
5.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement and each other document being executed by Seller in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby will not: (a) violate any provisions of law applicable to Seller; (b)
with or without the giving of notice or the passage of time, or both, conflict
with or result in the breach of any provision of the articles of incorporation
or bylaws of Seller, any material instrument, license, agreement or
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commitment to which Seller is a party or by which any of its assets or
properties is bound, including the Assumed Contracts (as defined in Section 5.9
hereof); (c) constitute a violation of any order, judgment or decree to which
Seller is a party or by which any of its assets or properties is bound; or (d)
require any approval of, or filing or registration with, any governmental entity
or regulatory authority other than those which will be effected by Buyer with
the cooperation of Seller prior to the Closing Date as set forth on Schedule 5.4
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attached hereto.
5.5 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. Seller is not in
violation of any law or any regulation or requirement which violation might
reasonably be expected to have a material adverse effect upon the financial
condition, operating results, accreditation or business prospects of the School,
and Seller has not received notice of any such violation. Seller currently
maintains all material licenses, accreditation, certificates, permits, consents,
authorizations and other governmental or regulatory approvals (the "LICENSES AND
PERMITS") necessary for Seller to conduct the business and operations of the
School as presently being conducted. Seller has duly filed all material reports
and returns required to be filed by it with respect to the School with
governmental authorities and accrediting bodies. The Licenses and Permits for
the School are in full force and effect, and no proceedings for the suspension
or cancellation of any of them is pending or, to the best of Seller's knowledge,
threatened. No application made by Seller for any Licenses and Permits during
the last five years has been denied. Schedule 5.5(a) attached hereto is a true,
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correct and complete list of all Licenses and Permits held by Seller with
respect to the School and the governmental authority or accrediting body
granting such Licenses and Permits. Seller has delivered to Buyer copies of all
such Licenses and Permits. Seller has received no notice that any of the
Licenses and Permits will not be renewed and to the best of Seller's knowledge,
there is no basis for nonrenewal. The School is accredited as set forth on
Schedule 5.5(b) attached hereto, is certified by USED as a qualified institution
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under Title IV and is a party to, and in compliance with, valid program
participation agreements with USED with respect to the School's operations.
Seller has not received any notice, not previously complied with, in respect of
any alleged violation of the rules or regulations of USED or any applicable
accrediting body in respect of the School, including sales and marketing
activities, or the terms of any program participation agreement to which it is
or was a party. If any such notices have been received and complied with,
Seller has disclosed in writing their receipt and disposition to Buyer prior to
the execution of this Agreement. Other than as set forth on Schedule 5.5(c)
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attached hereto, Seller is not aware of any investigation or review of Seller's
student financial aid programs or any review of the accreditation of the School
by any person.
5.6 RECRUITMENT; ADMISSIONS PROCEDURES; ATTENDANCE; REPORTS.
Schedule 5.6(a) attached hereto is a complete list of all policy manuals and
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other statements of procedures or instruction relating to recruitment of
students for the School, including (a) procedures for assisting in the
application by prospective students for direct or indirect state or federal
financial assistance; (b) admissions procedures, including any
descriptions of procedures for insuring compliance with state or federal or
other appropriate standards or tests of eligibility; and (c) procedures for
encouraging and verifying attendance, minimum
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required attendance policies, and other relevant criteria relating to course
completion and certification (collectively, the "POLICY GUIDELINES"). Schedule
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5.6(b) attached hereto sets forth a list of the Policy Guidelines in which Buyer
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has an interest with respect to those students continuing in the School after
the Closing (the "DISCLOSED GUIDELINES"). Seller has delivered to Buyer true,
correct and complete copies of all Disclosed Guidelines and all documents and
other information disseminated to students or prospective students. Seller's
operations with respect to the School have, in all material respects, been
conducted in accordance with the Policy Guidelines and all relevant standards
imposed by applicable accrediting bodies, agencies administering state or
federal governmental programs in which Seller participates, and other applicable
laws or regulations. Seller has submitted all reports, audits, and other
information, whether periodic in nature or pursuant to specific requests, for
the School ("COMPLIANCE REPORTS") to all agencies or other entities with which
such filings are required relating to its compliance with (i) applicable
accreditation standards governing its activities and (ii) laws or regulations
governing programs pursuant to which Seller or its students receive funding.
Seller does not have any articulation agreements with degree-granting colleges
and universities in effect as of the date of this Agreement. Complete and
accurate records in all material respects for all present and past students
attending the School have been maintained consistent with the operations of a
school business. All forms and records with respect to the School have been
prepared, completed, maintained and filed in all material respects in accordance
with all applicable federal and state laws and regulations, and are true and
correct in all material respects. All financial aid grants and loans,
disbursements and record keeping relating thereto have been completed in
compliance with all federal and state requirements, and there are no material
deficiencies in respect thereto. The School and Seller have complied in all
material respects with the legal requirements that no student at the School be
funded prior to the date for which such student was eligible for funding;
provided, however, that Seller shall reimburse Buyer for and indemnify Buyer
against any fines, penalties, expenses, costs and other losses Buyer may incur
as a result of any pre-eligibility funding prior to the Closing Date. The
records of each student at the School conform in form and substance to all
relevant regulatory requirements.
5.7 COHORT DEFAULT RATE. Schedule 5.7 attached hereto sets forth the
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cohort default rate for the School, calculated in the manner prescribed by USED,
of all students attending the School receiving assistance pursuant to Title IV
programs for the years ended December 31, 1990 through 1995. To the best
knowledge of Seller, such schedule is materially accurate in all respects.
5.8 TITLE TO AND CONDITION OF THE PURCHASED ASSETS.
5.8.1 LEASED FACILITIES. The leased facilities set forth on
Schedule 5.8(a) (the "FACILITIES") constitute the only real property used in
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connection with the operation of the School which is leased by Seller.
5.8.2 LAWS AND REGULATIONS; RECORDS. All of Seller's operations
with respect to the School are conducted at the Facilities, and all of the
tangible Purchased Assets and records relating to intangible Purchased Assets of
the School are, or as of the
10
Closing will be, located at the Facilities. Seller is not under any contractual
or other legal obligation and has not entered into any commitment to make
capital improvements or alterations to the Facilities. The Facilities are not
subject to any zoning ordinance or other restrictions which would prohibit the
use and enjoyment of the Facilities in the manner in which the Facilities are
currently used. Seller has no knowledge of any condemnation proceedings relating
to any Facility. To the best of Seller's knowledge, each Facility and Seller's
use thereof is in compliance in all material respects with all laws, including,
without limitation, the Americans with Disabilities Act.
5.8.3 TITLE. Seller owns outright, and has good and marketable
title to, all of the Purchased Assets of the School, free and clear of all
liens, claims and encumbrances, options, rights, and restrictions, other than as
set forth on Schedule 5.8(b) and liens for current taxes not yet due and
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payable. All leases for tangible personal property used by Seller in connection
with the operation of the School are valid and in full force and effect and are
enforceable in all material respects in accordance with their terms. Neither
Seller nor, to the best of Seller's knowledge, any of the other parties thereto,
is in default under any such lease, and no event, act or omission has occurred
which (with or without notice, the passage of time or the happening or
occurrence of any other event) would result in a default thereunder.
5.8.4 CONDITION OF PURCHASED ASSETS. The tangible Purchased
Assets and properties of the School which are owned or leased by Seller and used
in connection with the operation of the School are in good operating condition,
order and repair, useable in the ordinary course of business consistent with
past practice, subject to ordinary wear and tear, and are sufficient and
adequate for all current operations. Seller has not received notice of any
violation of or default under any law, ordinance, order, regulation or
requirement relating to any of the Purchased Assets of the School which remains
uncured or has not been resolved.
5.9 ASSUMED CONTRACTS. Schedule 5.9 attached hereto lists each
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assumed contract of Seller (the "ASSUMED CONTRACTS") relating to the School or
to which any of the Purchased Assets is subject or bound that individually, or
together as a series of related Assumed Contracts involving the same party or
parties, or the successors to such party or parties: (a) obligates Seller or its
Affiliates to pay an amount of $2,500 or more, (b) has an unexpired term as of
the date of this Agreement in excess of six months, (c) was not made in the
ordinary course of business, or (d) is in any way otherwise material to the
operation of the School. To the best of Seller's knowledge, each Assumed
Contract is valid and existing. Seller has duly performed all its obligations
under the Assumed Contracts in all material respects to the extent that such
obligations to perform have accrued. Seller has not received written notice of
any alleged breach or default, and to Seller's knowledge, no event which would
(with the passage of time, notice or both) constitute a material breach or
default by Seller or any other party or obligor with respect thereto, has
occurred. True and correct copies of the Assumed Contracts, including all
amendments and supplements thereto, have been delivered to Purchaser or
Purchaser's counsel or are attached to Schedule 5.9. For purposes of this
Agreement, the term "AFFILIATE" of any person or entity means any
11
corporation, partnership or other entity of which more than 50% of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect more than 50% of the board of directors or others
performing similar functions with respect to such corporation, partnership or
other entity, directly or indirectly, controls, is controlled by, or is under
common control with such person or entity.
5.10 TRADENAMES; CONFIDENTIAL INFORMATION. All tradenames, trademarks
or service marks and all forms, derivatives and graphic presentations thereof of
Seller (other than the name Concorde Career Institute) having any material value
to the operation of the School are set forth on Schedule 5.10 attached hereto
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(collectively, the "TRADENAMES"). Seller has exclusive right to the use of each
Tradename as an assumed business name in the states in which such Tradename is
used, and Schedule 5.10 sets forth all registrations of each Tradename as a
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trademark, servicemark or assumed name. Seller has not licensed any other
Person to use any Tradename. Seller has not been sued or threatened with suit
for infringement, violation or breach with respect to any Tradename, and to the
best of Seller's knowledge, no basis exists for any such suit. Except as
disclosed on Schedule 5.10, Seller is not on notice of any infringement,
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violation or breach of the Tradename by any other Person. Seller has the right
to use and license, free and clear of any claims or rights of any third party,
all trade secrets, customer lists, know-how, curricula and any other
confidential information required for or used in the operation of the School.
Seller is not in any way making any unlawful or wrongful use of any trade
secrets, customer lists, know-how, curricula or any other confidential
information of any third party, including, without limitation, any former
employer of any present or past employee of Seller in connection with the
operation of the School.
5.11 FINANCIAL STATEMENTS; INDEBTEDNESS. Attached hereto as Schedule
--------
5.11(a) are the following audited financial statements of Seller: Consolidated
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Balance Sheets at December 31, 1995, 1994 and 1993; Consolidated Statements of
Operation and Consolidated Statements of Cash Flows for the three years in the
period ended December 31, 1995 (including, for fiscal years ending December 31,
1994 and 1995, consolidating schedules containing corresponding Statements of
Assets and Liabilities and Statements of Revenue and Expenses of the School in
the form appropriate for filing with the USED, and for the fiscal year ending
December 31, 1993, unaudited internal management reports of the Statement of
Assets and Liabilities and Statement of Operations of the School) (collectively,
the "Financial Statements"). The basis of presentation of the financial
statements of the School is disclosed on Schedule 5.11(b) attached hereto.
Except as disclosed on Schedule 5.11(b), the balance sheets included in the
Financial Statements present fairly in accordance with generally accepted
accounting principles ("GAAP") the assets and liabilities of the School as of
the respective dates thereof, and the related statements of revenue and expenses
present fairly in accordance with GAAP the results of operations of the School
for the respective periods covered thereby. The Financial Statements for the
School (i) have been prepared based upon the books and records of Seller in a
manner consistent with Seller's standard internal accounting practices,
consistently applied and (ii) fairly present the financial position of the
School as of the dates of such Financial Statements, and the results of
operations for the periods covered by such Financial Statements. Except as
disclosed on
12
Schedule 5.11(b), Seller has maintained the books and records of the School in
----------------
accordance with applicable laws, rules and regulations and with GAAP, and such
books and records are, and during the periods covered by the Financial
Statements were, materially correct and complete, fairly reflecting the income,
expenses, assets and liabilities of the School. On the date hereof, the School
does not have any material liabilities required to be set forth in a balance
sheet prepared in accordance with GAAP, that were not included in the
consolidating balance sheets schedule of the School included in the Financial
Statements. Except as provided in Schedule 5.11(c), Seller is not required to
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provide any letters of credit, guaranty or other financial security arrangements
in connection with any transactions, approvals or licenses in the ordinary
course of the School's business. As of the date hereof, the School has no
indebtedness, liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise, other than:
(i) those set forth or reserved against in the consolidating
balance sheets schedule of the School included in the Financial Statements
for the fiscal years then ended to the extent set forth, reserved against
or disclosed;
(ii) those set forth or reserved against in the unaudited
interim balance sheet of the School as of May 31, 1996, a copy of which is
attached hereto as a part of Schedule 5.11(d), to the extent set forth,
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reserved against or disclosed;
(iii) those incurred since May 31, 1996, in the ordinary course
of business of the School and consistent in nature with past practice; and
(iv) those set forth in the Schedules attached hereto.
To the best of Seller's knowledge, there exists no condition relating to the
School, whether absolute, accrued, contingent or otherwise, which could have a
material adverse effect on the properties, business, Purchased Assets, results
of operations or condition (financial or otherwise) of the School or which would
prevent the operations of the School from being carried on in the future in
substantially the same manner as they are presently being conducted. Except as
set forth on Schedule 5.11(e) attached hereto, there are no long-term fixed or
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contractual liabilities relating to the operation of the School which are
required to be assumed by Buyer in order to continue to operate the School as
presently operated by Seller, the annual expense of which are not reflected in
the Financial Statements or which are not otherwise disclosed in this Agreement
or any schedule hereto.
5.12 RECEIVABLES. The tuition receivable, and accounts receivable,
notes receivable and other receivables of the School, except to the extent of
the allowance for cancellations and doubtful accounts set forth in the Financial
Statements, are bona fide receivables, arose out of arms' length transactions in
the normal and usual practices of Seller and the School, are recorded correctly
on the books and records of Seller and the School, and, to the best of Seller's
knowledge, will be collected in full in the ordinary course of
13
business, within the ordinary time frame for such receivables, subject in the
case of certain receivables to reserves established for such receivables in the
Financial Statements. Such receivables are not subject to any defense,
counterclaim or setoff or trade discounts or credits not reflected in the
Financial Statements (other than tuition refund policies administered in
accordance with all applicable legal requirements and the applicable Policy
Guidelines), and Seller has no knowledge of any facts or circumstances which
would cause any of such receivables to have to be written down or written off.
5.13 INVENTORIES. The only inventories maintained by Seller in
connection with the operation of the School consist of supplies used in the
ordinary course of business of the School and are reflected on the Financial
Statements as "inventories." Such supplies are reflected at cost, are usable in
the ordinary and regular course of business, are fit and sufficient for the
purpose for which they were purchased, and, at the date of this Agreement, are
in customary amounts appropriate to Seller's operations of the School. All
excess or obsolete items have been written down to net realizable value or
written off.
5.14 LITIGATION. Except as set forth in Schedule 5.14 attached
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hereto, (i) there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the best of Seller's knowledge, threatened against or
affecting the School or its operations at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality or
accrediting body pertaining to or affecting Seller or the School, (ii) to the
best of Seller's knowledge, Seller is not the subject of any governmental
investigations or inquiries (including inquiries as to the qualification to hold
or receive any of the Licenses and Permits with respect to the School) and (iii)
to the best of Seller's knowledge, there is no basis for any of the foregoing.
5.15 INSURANCE. Schedule 5.15 attached hereto sets forth the
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insurance coverages maintained by Seller on the Facilities, the Purchased Assets
and the operations of the School, including all policies or binders of fire,
extended coverage, general and vehicular, fidelity and fiduciary liability,
workers' compensation, key-man life and other insurance held by Seller and all
binders for insurance to be purchased on or before Closing, in order to replace
policies expiring prior to the Closing or otherwise. Such policies and binders
are in full force and effect, and there is no material breach or default with
respect to any provision contained in any such policy or binder, and all
premiums, to the extent due and payable, have been paid or the liability
therefor properly accrued. The insurance coverage maintained by Seller for the
School is sufficient and is customary for an adequately insured School of
similar size, engaged in similar lines of business. Except for amounts
deductible under such policies of insurance, Seller is not and has not been,
prior to the date hereof, subject to liability as a self-insurer for the School.
There are no claims pending or threatened under any of said policies pertaining
to the School or disputes with underwriters regarding coverage under such
policies pertaining to the School. Except as set forth on Schedule 5.15, neither
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the execution, delivery and performance of this Agreement, nor the consummation
of the transactions contemplated hereby, will result in the loss to Seller of
any of the insurance policies listed or impair the rights of Seller with respect
to liabilities arising in connection with the operation of the School prior to
the Closing. Within the five years
14
prior to the date hereof, Seller has not been denied insurance for the School,
or been offered insurance for the School only at a commercially prohibitive
premium.
5.16 ENVIRONMENTAL MATTERS. In connection with the operations of the
School, Seller has not generated, transported, stored, treated or disposed, nor
has Seller, to the best of its knowledge, allowed or arranged for any third
persons to transport, store, treat or dispose, any hazardous substance to or at:
(a) any location other than a site lawfully permitted to receive such hazardous
substance for such purposes or (b) any location designated for remedial action
pursuant to federal, state or local statute and relating to the environment or
waste disposal; nor has Seller performed or, to the best of Seller's knowledge,
arranged for or allowed by any method or procedure such transportation or
disposal in contravention of any laws or regulations or in any other manner
which may result in liability for contamination or threat of contamination of
the environment. No generation, use, handling, storage, treatment, release,
threat of release, discharge, spillage or disposal of any hazardous substance,
has occurred or is occurring at the Facilities or any other facilities or
properties owned or operated by Seller in connection with its operation of the
School. Seller has not received notification, nor is it aware of, any past or
present failure by Seller to comply with any environmental laws, regulations,
permits, franchises, licenses or orders applicable to the School or its
operations. Seller has not received any notification, nor is it aware of, any
past or present failure to comply with any environmental laws, regulations,
permits, franchises, licenses or orders applicable to its operations other than
the School which may result in judicial, regulatory or other legal proceedings
having a material adverse impact on the operations of the School or result in
the imposition of any lien, claim, assessment or other encumbrance against the
Purchased Assets. To the best of Seller's knowledge, the Facilities do not
contain asbestos or polychlorinated biphenyls or any underground storage tanks.
5.17 EMPLOYEE BENEFIT PLANS. Schedule 5.17 attached hereto sets forth
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a complete accurate and detailed description of all of Seller's employee welfare
and benefit plans ("PLANS"). Buyer is assuming none of the Plans. Seller has
never sponsored, administered or contributed to any employee benefit plan within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1976, as amended ("ERISA"), that is subject to Title IV of ERISA. There are no
accrued liabilities under any Plans, programs or practices maintained on behalf
of the employees of the School which are not provided for on its books or in the
Financial Statements or which have not been fully provided for by contributions
to such Plans, programs or practices. As of the date hereof, Seller does not
maintain any employee welfare benefit plans, as defined in Section 3(1) of
ERISA, which provide post-retirement benefits to former employees of the School
and to current employees of the School after their termination of employment
(including, without limitation, medical and life insurance benefits), other than
as may be required by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and interpreted by regulations thereunder ("COBRA"). Seller
shall provide any notices required under COBRA for events occurring on or prior
to the Closing Date and shall provide all benefits required pursuant to COBRA in
connection therewith.
15
5.18 EMPLOYMENT MATTERS. Seller and the School are in compliance in
all material respects with all federal, state and local laws, rules and
regulations affecting employment and employment practices with respect to the
School, including terms and conditions of employment, employment discrimination
and wages and hours, and Seller is not engaged in any unfair labor practices
with respect to employees of the School; there are no complaints against Seller
with respect to employees of the School pending before the National Labor
Relations Board or any similar state or local labor agency; there are no labor
strikes, slow-downs or stoppages or other labor troubles pending or, to the best
of Seller's knowledge, threatened with respect to any employees of the School;
no labor organization activities have occurred with respect to employees of the
School during the past three years; there are no collective bargaining
agreements binding on Seller relating to the operation of the School; no
grievances have been asserted against Seller with respect to employees of the
School; and Seller has not experienced any work stoppage by its employees at the
School during the last three years.
5.19 TAX MATTERS. Seller has completed and filed on or before the due
dates thereof or within applicable extension periods all returns for taxes
required to be filed with respect to the operations of the School, and such
returns are true and correct in all material respects. Seller has paid all
taxes shown to be due and payable on such returns to the extent that the same
have become due and payable on or before the Closing. Seller is not a party to,
nor to the best of Seller's knowledge, expected to become a party to, any
pending or threatened action or proceeding, assessment or collection of taxes by
any governmental authority relating to the operations of the School.
5.20 BROKERS OR FINDERS. Seller represents that no agent, broker,
investment banker or other firm or person retained by Seller is or will be
entitled to any broker's or finder's fee or any similar commission or fee in
connection with any of the transactions contemplated by this Agreement. Seller
agrees to defend and hold harmless Buyer and its affiliates from and against any
and all claims arising in connection with its discussions and/or use of the
services of any finder or broker.
5.21 ABSENCE OF CERTAIN CHANGES. Except as contemplated by this
Agreement or as set forth on Schedule 5.21 attached hereto, since May 31, 1996,
-------------
there has not been, occurred or arisen with respect to the School:
(1) any sale, lease, transfer, abandonment or other disposition
of any right, title or interest in or to any of the properties or assets of
Seller used in connection with the operations of the School (tangible or
intangible), except in the ordinary course of business;
(2) (i) any approval or action to put into effect any increase in
any compensation or benefits payable to any employee, agent or officer of
Seller employed or providing services in connection with the operation of
the School or any payment, grant or accrual to or for the benefit of any
such employee, agent or officer of any bonus, service award, percentage
16
compensation or other benefit, (ii) any adoption or amendment of any Plans,
or any severance agreement or employment contract to which any such
employee, agent or officer of the School is a party or (iii) any entering
into of any employment, deferred compensation or other agreements with
respect to bonuses, service awards, percentage compensation or other
benefits with any such employee, agent or officer;
(3) any material adverse change in the financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves
or operations of the School;
(4) any damage, destruction or loss, whether or not covered by
insurance, materially adverse to the assets, business or operations of the
School;
(5) any change in any material respect in the business policies
or practices of the School or a failure to operate the business of the
School in the ordinary course with a view to preserving such business
intact, to retaining the services of the present officers, employees and
agents of Seller employed or providing services in connection with the
operation of the School and with a view to preserving the business
relationships of the School with, and the goodwill of, students, sales
representatives, suppliers, accrediting bodies, governmental authorities
and others; or
(6) any agreement, whether in writing or otherwise, to take any
action described in this Section 5.21.
5.22 DELIVERY OF DOCUMENTS. True, correct and complete copies of all
material documents, instruments, agreements and records of Seller relating to
the Purchased Assets, the Assumed Liabilities, the representations and
warranties of Seller contained in this Agreement and/or the operation of the
School have been delivered or made available to Buyer.
5.23 DISCLOSURE. Neither this Agreement nor any of the schedules,
exhibits, attachments, documents, certificates or other items prepared or
supplied to Buyer in writing by or on behalf of Seller with respect to the
transactions contemplated hereby contain any untrue statement of a material fact
or omit a material fact necessary to make such statements not misleading in
light of the circumstances in which such statements were made. There is no fact
which Seller has not disclosed to Buyer in writing and of which any of Seller's
Executive Employees (as defined below) is aware which has had or is reasonably
likely to have a material adverse effect upon the existing or expected financial
condition, operating results, assets, employee relations, accreditation,
reputation or business of the School. "Executive Employee" shall mean only Xxxx
X. Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxx.
17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller to enter into this Agreement, Buyer
hereby represents and warrants (a) as of the date hereof and (b) as of the
Closing Date, that:
6.1 ORGANIZATION AND CORPORATE POWER. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware, the jurisdiction in which it is incorporated. Buyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereunder.
6.2 CAPACITY; AUTHORIZATION; BINDING EFFECT. Buyer has the power,
legal capacity and authority to execute, deliver and perform this Agreement and
each other document being executed in connection herewith to which it is a
party. All corporate and other proceedings required to be taken by or on the
part of Buyer, including all actions required to be taken by the directors or
stockholders of Buyer, to authorize Buyer to enter into and carry out this
Agreement and the related documents contemplated herein, have been duly and
properly taken. This Agreement has been, and each of the related documents will
be at Closing, duly executed and delivered by Buyer and constitute, or will when
delivered constitute, the valid and binding obligations of Buyer, enforceable
against Buyer, in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement and each other document being executed by Buyer in connection
herewith, and the consummation by Buyer of the transactions contemplated hereby
and thereby will not: (a) violate any provisions of law applicable to Buyer;
(b) with or without the giving of notice or the passage of time, or both,
conflict with or result in the breach of any provision of the Restated
Certificate of Incorporation or bylaws of Buyer, any material instrument,
license, agreement or commitment to which Buyer is a party or by which any of
its assets or properties is bound; (c) constitute a violation of any order,
judgment or decree to which Buyer is a party or by which any of its assets or
properties is bound; or (d) require any approval of, or filing or registration
with, any governmental entity or regulating authority other than those set forth
on Schedule 5.4 attached hereto.
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6.4 BROKERS OR FINDERS. Buyer represents that, except for the
retention of Trenwith South Coast Capital Group ("TRENWITH") by Buyer, whom
Buyer shall pay at Buyer's sole cost and expense, no agent, broker, investment
banker or other firm or person retained by Buyer is or will be entitled to any
broker's or finder's fee or any similar commission or fee in connection with any
of the transactions contemplated by this Agreement. Buyer agrees to defend and
hold harmless Seller and its affiliates from and against any and all claims
arising in connection with its discussions and/or use of the services of any
finder or broker, including, without limitation, Trenwith.
18
6.5 DISCLOSURE. Neither this Agreement nor any of the schedules,
exhibits, attachments, documents, certificates or other items prepared or
supplied to Seller in writing by or on behalf of Buyer with respect to the
transactions contemplated hereby contain any untrue statement of a material fact
or omit a material fact necessary to make such statements not misleading in
light of the circumstances in which such statements were made.
ARTICLE VII
COVENANTS
7.1 COVENANTS OF SELLER PENDING CLOSING. Seller covenants and agrees
with Buyer that from and after the date hereof and until the earlier of the
Closing Date or the termination of this Agreement pursuant to Article IV hereof,
Seller (i) shall use its best efforts to fulfill or satisfy, or cause to be
fulfilled or satisfied, all of the conditions precedent to Seller's obligations
to consummate and complete the sale provided herein and to take all other steps
and do all other things reasonably required to consummate this Agreement in
accordance with its terms, (ii) shall not interfere with the performance by
Buyer of its obligations under this Agreement, (iii) shall not fail to pay prior
to delinquency any taxes, assessments, governmental charges or levies imposed
upon it or its income, profits or assets or otherwise required to be paid by it,
(iv) shall not make or authorize the making of any capital expenditure in excess
of $1,000 without Buyer's prior written consent except for the performance of
obligations previously incurred, or for the replacement of equipment or tangible
property necessary to the operations of the business of Seller, (v) shall not
engage in any sale of its Accounts Receivable, (vi) shall promptly notify Buyer
of any notice from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement, or any fact or
circumstance of which Seller has knowledge which would make any representation
or warranty set forth herein materially untrue or inaccurate as of the Closing
Date or as of the date of this Agreement, or any planned or threatened labor
dispute, organization efforts, strike or collective work stoppage affecting the
employees of Seller and (vii) shall not take any action outside the ordinary
course of business that would cause Buyer to be unable to obtain good and
marketable title to the Purchased Assets to be transferred to Buyer at the
Closing. Subject to Section 4.1(4), until the earlier of July 31, 1996 or the
termination of this Agreement, Seller will not directly or indirectly solicit,
respond to or negotiate with or release any information relative to the School
to any potential buyer other than Buyer.
7.2 COVENANTS OF BUYER PENDING CLOSING. Buyer covenants and agrees
with Seller that from and after the date hereof and until the earlier of the
Closing Date or the termination of this Agreement pursuant to Article IV hereof,
Buyer (i) shall use its best efforts to fulfill or satisfy, or cause to be
fulfilled or satisfied, all of the conditions precedent to Buyer's obligations
to consummate and complete the sale provided herein and to take all other steps
and do all other things reasonably required to consummate this Agreement in
accordance with its terms and (ii) shall not interfere with the performance by
Seller of its obligations under this Agreement.
19
7.3 CLOSING AND POST-CLOSING COVENANTS.
7.3.1 FURTHER ASSURANCES. From time to time after the Closing,
(i) Seller will use reasonable efforts for as long as it continues its corporate
existence to execute and deliver such instruments of conveyance, sale or
assignment as Buyer may reasonably request, to more effectively vest, confirm or
evidence Buyer's title to or rights in any of the Purchased Assets and to
otherwise carry out the purpose and intent of this Agreement, and (ii) Buyer
will execute and deliver such instruments as Seller may reasonably request to
more effectively assure the assignment to and assumption by Buyer of the
obligations and liabilities of Seller to be assumed by Buyer pursuant to this
Agreement and to otherwise carry out the purpose and intent of this Agreement.
7.3.2 MUTUAL COOPERATION. The parties shall use reasonable
efforts to cooperate fully with each other and with their respective counsel and
accountants in connection with any steps required to be taken to consummate the
transactions contemplated hereby and transition management and ownership of the
School from Seller to Buyer. Before and after the Closing, Seller shall use its
best efforts to assist Buyer in obtaining any required accreditation reasonably
necessary for Buyer's operation of the School, including furnishing Buyer such
necessary information and reasonable assistance as Buyer may request in
connection with its preparation of necessary filings, submissions or
accreditation applications to any governmental agency in connection with the
transactions contemplated hereby.
7.3.3 ACCESS TO EMPLOYEES. From and after the Closing, each of
Buyer and Seller shall afford to the other party (the "REQUESTING PARTY"), its
officers, counsel, accountants and other authorized representatives reasonable
access to its employees who formerly were or currently are employed by Seller,
as the case may be, without cost to the Requesting Party (other than payment of
out-of-pocket costs not including personnel costs) and as reasonably required by
the Requesting Party in connection with any claim, action, litigation or other
proceeding involving Seller or the School. Each party shall use its best efforts
to cause such employees to cooperate with and assist the Requesting Party in its
prosecution or defense of such claims, actions, litigations and other
proceedings, which cooperation shall include, without limitation, preparing and
providing written and oral discovery and attending and testifying at
depositions, hearings, motions and trials, all as necessary in the reasonable
opinion of the Requesting Party or its counsel. Any such access shall take place
only during normal business hours in such a manner as not to interfere
unreasonably with the operation of the business of the other party.
7.3.4 CERTIFICATION. Prior to and after the Closing, Seller and
Buyer shall provide to the USED and to all state regulatory agencies and
accrediting bodies all information required or reasonably requested by any of
them, and Buyer shall use its reasonable efforts to satisfy all requirements and
demands of the USED or any such agency or body requisite to obtaining
certification. Without limiting the foregoing, Buyer shall submit to USED a
completed application for certification of the School conveyed to Buyer at the
Closing within a reasonable time after Closing.
20
7.3.5 RETURN OF DISCLOSED GUIDELINES. As soon as reasonably
practicable after the completion of the educational program of the School by all
students of the School on the Closing Date, Buyer shall return all copies, notes
and derivative materials of the Disclosed Guidelines to Seller or, at Seller's
request, destroy such materials. Buyer shall not disclose any of the Disclosed
Guidelines to any person not employed by Buyer unless required by law or in
connection with regulatory proceedings.
7.4 EXCISE AND PROPERTY TAXES. Buyer and Seller shall each pay fifty
percent (50%) of all sales and use taxes arising out of the transfer of the
Purchased Assets. Each of Buyer and Seller and shall pay its respective
portion, prorated as of the Closing, of state and local real and personal
property taxes of the business.
7.5 ADMINISTRATION IN ACCORDANCE WITH ACCREDITATIONS. From and after
the date of this Agreement, Seller, at Seller's sole cost and expense, shall
administer and operate the School in accordance in all material respects with
all federal and state laws, statutes, rules and regulations and in accordance in
all material respects with all permits, accreditations, authorizations and
agreements issued by or entered into with any federal, state or local
governmental or quasi-governmental entity in any way regulating or otherwise
relating to the administration and operation of the School, or any of them.
Subject to the terms and provisions of this Agreement, Buyer and Seller shall
work together cooperatively and in good faith to obtain any and all approvals
from the USED, any state education regulatory authority and any other
governmental or quasi-governmental entity that may be necessary or appropriate
to vest in Buyer at the Closing the right and authority in all material respects
to administer and operate the School and to release Seller from further
liability or obligations in connection with the administration or operation of
the School.
7.6 ACCESS AND MAINTENANCE OF RECORDS. From and after the Closing,
each of Buyer and Seller shall afford to the Requesting Party, its officers,
counsel, accountants and other authorized representatives and regulatory
authorities access to its properties, books and records, including those
maintained by its accountants, at any time and from time to time upon reasonable
notice from the Requesting Party, as reasonably required by the Requesting Party
in connection with (i) performance by the Requesting Party of any of its
obligations under the terms and conditions of this Agreement, including, without
limitation, any liability or obligation of Seller not assumed by Buyer pursuant
to this Agreement, (ii) any claim, action, litigation or other proceeding
involving the Requesting Party or the School and (iii) the Requesting Party's
preparation of its financial statements and tax returns. In addition, the
Requesting Party, at its expense, may make copies of any such records as may be
necessary or appropriate for the Requesting Party's use. Each party shall
maintain all such records in accordance with, and subject to all restrictions
imposed by, all laws, rules and regulations. Each party shall not destroy or
otherwise dispose of any of such records without prior notice to the other
party, which party shall have the option, at such party's expense, to take
possession of any such records which the other party elects to destroy or
otherwise dispose of. Any such access shall take place only during normal
business hours in such a manner as not to interfere unreasonably with the
operation of the business of the other party. Notwithstanding the foregoing,
Buyer shall preserve and protect
21
all books, documents, papers, computer programs and records pertaining in any
manner to the administration by Seller of the Federal student financial
assistance programs pursuant to Title IV of the Higher Education Act of 1965, as
amended, for the period of time specified under applicable law and regulation.
Any document or other information obtained from a party hereunder that is
designated by such party as confidential shall be maintained in confidence by
the other party, except to the extent Seller is required by law or regulation to
disclose part or all of such documents or information.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligation of
Buyer to complete the purchase of Purchased Assets as provided for herein is
subject to the fulfillment or satisfaction on or before the Closing Date of each
of the conditions set forth below, any of which may be waived by Buyer in
writing.
(1) All representations and warranties of Seller contained in
this Agreement or in any certificate or other document delivered to Buyer
pursuant hereto shall be complete, true and correct in all material
respects as of the Closing Date (except to the extent such representations
and warranties speak as of a particular date), and Buyer shall have
received a certificate signed by the chief executive officer of Seller to
such effect;
(2) Seller shall have performed all of the obligations, covenants
and agreements contained in this Agreement to be performed by Seller on or
before the Closing Date, and Buyer shall have received a certificate signed
by the chief executive officer of Seller to such effect;
(3) All instruments and documents required on Seller's part to
effectuate and consummate the transactions contemplated hereby as of the
Closing, including those set forth in Section 3.2, shall be delivered by
Seller and shall be in form and substance reasonably satisfactory to Buyer
and its counsel;
(4) No law or order shall have been enacted, entered, issued,
promulgated or entered by any governmental entity which prohibits or
restricts the transactions contemplated hereby, and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any court or governmental agency or other regulatory or
administrative agency or commission, challenging any of the transactions
contemplated by this Agreement or seeking monetary relief by reason of the
consummation of such transactions;
(5) Buyer shall have satisfactorily completed its due diligence
investigation of the School;
22
(6) Seller shall have obtained all registrations, licenses,
permits and approvals (other than those set forth on Schedule 5.4 attached
------------
hereto, which shall be obtained by Buyer with the cooperation of Seller)
required by any governmental entity or agency or other regulatory body to
operate the School in the State of California and all local jurisdictions
contained therein;
(7) The School shall have received all required accreditation
approvals;
(8) Seller shall have provided evidence satisfactory to Buyer
that all debts incurred through the Closing Date relating to the School,
including lender payables, regulatory fines, repayment, refunds, and all
known obligations or liens have been satisfied and paid in full; and
(9) Buyer shall have received satisfactory evidence that all
liens (other than the Permitted Exceptions) on the Purchased Assets have
been terminated and completely released of record.
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations
of Seller to complete the sale of Purchased Assets as provided for herein are
subject to the fulfillment or satisfaction on or before the Closing Date of each
of the conditions set forth below, any of which may be waived by Seller in
writing.
(1) All representations and warranties of Buyer contained in this
Agreement or in any certificate or other document delivered to Seller
pursuant hereto shall be complete, true and correct in all material
respects as of the Closing Date (except to the extent such representations
and warranties speak as of a particular date), and Seller shall have
received a certificate signed by the chief executive officer of Buyer to
such effect;
(2) Buyer shall have performed all of the obligations, covenants
and agreements contained in this Agreement to be performed by Buyer on or
before the Closing Date, and Seller shall have received a certificate
signed by the chief executive officer of Buyer to such effect;
(3) All instruments and documents required on Buyer's part to
effectuate and consummate the transactions contemplated hereby including
those set forth in Section 3.3 shall be delivered by Buyer and shall be in
form and substance reasonably satisfactory to Seller and its counsel; and
(4) No law or order shall have been enacted, entered, issued,
promulgated or entered by any governmental entity which prohibits or
restricts the transactions contemplated hereby, and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any court or governmental agency or other regulatory or
administrative agency or commission, challenging any
23
of the transactions contemplated by this Agreement or seeking monetary
relief by reason of the consummation of such transactions.
ARTICLE IX
MISCELLANEOUS
9.1 BINDING EFFECT. All terms and provisions of this Agreement shall
be binding upon and shall inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement, nor the obligations of either party hereunder, shall be
assignable or transferable by either such party without the prior written
consent of all parties hereto. If Buyer desires to assign its right to acquire
a portion of the School to an affiliated entity, Seller will consider such
request in good faith and will not unreasonably withhold its consent.
9.2 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be given or made by personal
delivery, by a nationally recognized courier service for overnight delivery or
by registered or certified mail, postage prepaid, return receipt requested,
addressed
if to Buyer, at:
Corinthian Schools, Inc.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx, President
with each such notice to Buyer, a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
if to Seller, at:
Concorde Career Colleges, Inc.
City Center Square
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, President
24
with each such notice to Seller, a copy to:
Xxxxx Xxxx LLP
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxx Xxxx, Esq.
or at such other place as the party to whom such notice of communication is to
be addressed may have designated to the other parties by notice conforming to
this Section 9.2. Notices shall be deemed effective and received (i) on the
actual receipt in the case of hand delivery, (ii) on the next business day after
deposit in the case of notices by nationally recognized overnight courier
services, or (iii) on the third business day after the date of mailing in the
manner set forth herein. As used herein, notice to a party shall include
concurrent notice to that party's counsel as set forth herein.
9.3 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein and to be delivered pursuant hereto constitute the entire agreement
between the parties pertaining to the subject matter hereof, and supersede all
prior and contemporaneous agreements, understandings, negotiations,
representations, warranties and discussions of the parties, whether oral or
written; and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein or therein. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
9.4 NATURE AND SURVIVAL OF REPRESENTATIONS. The representations,
warranties, covenants and agreements of Buyer and Seller contained in this
Agreement, and all statements contained in this Agreement or any Exhibit or
Schedule hereto or any certificate or financial statement delivered pursuant to
this Agreement shall be deemed to constitute representations, warranties,
covenants and agreements of the respective party delivering the same. All such
representations, warranties, covenants and agreements shall survive the Closing;
provided, however, the representations and warranties contained in Articles V
and VI shall terminate 24 months after the Closing Date.
9.5 RISK OF LOSS OR DAMAGE; INSURANCE. It is understood and agreed
that all right, title and interest in and to the Purchased Assets and all risk
of loss or damage thereto shall not pass from Seller to Buyer unless and until
the Closing occurs whereupon all risk of loss or damage shall pass to Buyer. In
the event of a casualty or condemnation in respect of the Purchased Assets prior
to the Closing, Buyer shall have the right, at its sole option, to elect to
either terminate this Agreement or to accept the insurance proceeds in respect
of such casualty or condemnation and proceed to close otherwise in accordance
with the terms and conditions of this Agreement. Seller agrees to maintain the
insurance currently carried with respect to the Purchased Assets until the
Closing.
25
9.6 WAIVER. No waiver shall be deemed to have been made by any party
of any of its rights hereunder unless the same shall be in writing and shall be
signed by the waiving party. Such a waiver, if any, shall be a waiver only in
respect to the specific instance involved and shall in no way impair the rights
of the waiving party or the obligations of any other party in any other respect
at any other time.
9.7 GOVERNING LAW. This Agreement shall be construed and interpreted
according to the substantive laws of the State of California without giving
effect to the principles of conflicts of law thereof.
9.8 HEADINGS. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.
9.9 COUNTERPARTS. This Agreement may be executed by the parties in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.10 SEVERABILITY. In the event that any one or more terms or
provisions hereof shall be held void or unenforceable by any court or
arbitrator, all remaining terms and provisions hereof shall remain in full force
and effect.
9.11 TIME IS OF THE ESSENCE. Seller and Buyer agree that time is of
the essence in connection with the implementation and performance by the parties
of all terms, conditions and obligations of this Agreement.
9.12 INDEMNIFICATION BY SELLER. Seller hereby indemnifies, defends
and holds harmless Buyer and its affiliates and their respective officers,
directors, shareholders, employees, agents, successors and assigns from and
against any and all claims, liabilities, obligations, losses, costs, expenses
(including, without limitation, interest, penalties and reasonable attorneys'
fees), fines, or damages of any kind or nature (collectively "LOSSES"), as a
result of, or based upon or arising out of:
(1) any breach of, or any inaccuracy or misrepresentation in, any
of the representations or warranties made by Seller in this Agreement or
any other agreement, statement or certificate delivered pursuant hereto;
(2) any breach of or violation by Seller of any of the covenants
made by Seller in this Agreement or any other agreement, statement or
certificate delivered pursuant hereto;
(3) all Losses arising out of or resulting from any claim related
to or arising out of Seller's operation of the School prior to the Closing
Date that are asserted with respect to any liabilities that are not Assumed
Liabilities;
26
(4) all Losses arising out of or resulting from the Excluded
Liabilities; and
(5) any actions, judgments, costs and expenses (including
reasonable attorneys' fees, expert witness fees and all other expenses
incurred in investigating, preparing or defending any litigation or
proceeding, commenced or threatened) incident to any of the foregoing or
the enforcement of this Section 9.12.
9.13 INDEMNIFICATION BY BUYER. Buyer hereby indemnifies, defends and
holds harmless Seller and its affiliates and their respective officers,
directors, shareholders, employees, agents, successors and assigns from and
against:
(1) any breach of, or any inaccuracy or misrepresentation in, any
of the representations or warranties made by Buyer in this Agreement or any
other agreement, statement or certificate delivered pursuant hereto;
(2) any breach of or violation by Buyer of any of the covenants
made by Buyer in this Agreement or any other agreement, statement or
certificate delivered pursuant hereto;
(3) all Losses arising out of or resulting from any claim related
to or arising out of Buyer's operation of the School after the Closing Date
that are asserted with respect to any liabilities that are not Excluded
Liabilities;
(4) all Losses resulting from or arising out of the failure by
Buyer to pay, perform or discharge, or cause to be paid, performed or
discharged, any of the Assumed Liabilities; and
(5) all actions, judgments, costs and expenses (including
reasonable attorneys' fees, expert witness fees and all other expenses
incurred in investigating, preparing or defending any litigation or
proceeding, commenced or threatened) incident to any of the foregoing or
the enforcement of this Section 9.13.
9.14 PROCEDURE FOR INDEMNIFICATION. The provisions of this Section
9.14 shall govern any claim for indemnification of Buyer, pursuant to Section
9.12, or of Seller, pursuant to Section 9.13 (each such party an "INDEMNITEE")
against the party agreeing to provide indemnification hereunder (the
"INDEMNITOR"). The Indemnitee shall promptly give notice hereunder to the
Indemnitor, after obtaining notice of any claim as to which recovery may be
sought against the Indemnitor because of the indemnity in Sections 9.12 or 9.13,
and, if such indemnity shall arise from the claim of a third party, the
Indemnitee shall consent to the Indemnitor assuming the defense of any such
claim; provided that the Indemnitee shall not be required to permit the
--------
Indemnitor to assume the defense of any third party claim (x) which, if not
first paid, discharged or otherwise complied with, would result in a material
interruption or cessation of the conduct of the business of the Indemnitee, or
(y) if the Indemnitee reasonably concludes that there may be a conflict of
interest between
27
the Indemnitor, on the one hand, and the Indemnitee, on the other hand, in the
conduct of the defense of such action. Failure by the Indemnitor to notify the
Indemnitee of its election to defend any such claim or action within 14 days of
the date of notice from the Indemnitee shall be deemed to constitute its consent
to the Indemnitee's assumption of such defense. If the Indemnitor assumes the
defense of such claim or litigation resulting therefrom, the obligations of the
Indemnitor hereunder as to such claim shall include taking all steps necessary
in the defense or settlement of such claim or litigation resulting therefrom
including the retention of counsel, which counsel must be to the Indemnitee's
reasonable satisfaction, and holding the Indemnitee harmless from and against
any and all Losses resulting from, arising out of, or incurred with respect to
any settlement approved by the Indemnitor or any judgment in connection with
such claim or litigation resulting therefrom. The Indemnitor shall not, in the
defense of such claim or litigation, (i) consent to the entry of any judgment
(other than a judgment of dismissal on the merits without costs) except with the
written consent of the Indemnitee, which consent shall not be unreasonably
withheld or (ii) enter into any settlement (except with the written consent of
the Indemnitee, which consent shall not be unreasonably withheld), unless the
Indemnitee is released and held harmless from and against any and all Losses
resulting from, arising out of or incurred with respect to such judgment or
settlement. If the Indemnitor shall not assume the defense of any such claim by
a third party or litigation resulting therefrom, the Indemnitee may defend
against such claim or litigation in such manner as it deems appropriate, and the
Indemnitee may settle such claim or litigation on such terms as it may deem
appropriate and the Indemnitor shall promptly reimburse the Indemnitee for the
amount of such settlement and for all Losses incurred by the Indemnitee in
connection with the defense against or settlement of such claim or litigation.
9.15 DISPUTE RESOLUTION AND ARBITRATION.
9.15.1 NEGOTIATION BETWEEN EXECUTIVES. The parties shall attempt
in good faith to resolve any dispute arising out of or relating to this
Agreement promptly by negotiation between executives who have authority to
settle the controversy and who are at a higher level of management (if any) than
the persons with direct responsibility for administration of this Agreement.
Any party may give the other party written notice of any dispute not resolved in
the normal course of business. Within 15 days after delivery of the notice the
receiving party shall submit to the other a written response. The notice and
the response shall include (i) a statement of each party's position and a
summary of arguments supporting that position, and (ii) the name and title of
the executive who represents that party and of any other person who will
accompany the executive. Within 10 days after delivery of the disputing party's
notice, the executives of both parties shall meet at a mutually acceptable time
and place, and thereafter as often as they reasonably deem necessary, to attempt
to resolve the dispute. All reasonable requests for information made by one
party to the other will be honored. If the matter has not been resolved within
45 days of the disputing party's notice, or if the parties fail to meet within
10 days, either party may initiate arbitration of the controversy or claim as
provided hereinafter. All negotiations pursuant to this clause are confidential
and shall be treated as compromise and settlement negotiations for purposes of
the Federal Rules of Evidence of California and other states' Rules of Evidence.
28
9.15.2 ARBITRATION. Any dispute arising out of or relating to
this Agreement or the breach, termination or the validity hereof, which has not
been resolved by the nonbinding meet and confer provisions provided in Section
9.15.1 within 90 days of the initiation of such procedure, shall be settled by
arbitration in accordance with the then-current End Dispute-Judicial Arbitration
and Mediation Services (JAMS) rules for arbitration of business disputes by a
sole arbitrator who shall be a former superior court or appellate court judge or
justice with significant experience in resolving business disputes. If
available, the arbitrator should have familiarity or experience in Title IV
funding matters. The arbitration shall be governed by the California Code of
Civil Procedure Section 1280 et seq. and the parties intend this procedure to be
-- ---
specifically enforceable in accordance with such provisions. Judgment upon the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The place of arbitration shall be Orange County, California. The
arbitrator may award equitable relief in those circumstances where monetary
damages would be inadequate. The arbitrator shall be required to follow the
applicable law as set forth in the governing law section of this Agreement.
9.15.3 SATISFACTION OF DAMAGES. In the event that an arbitrator
awards damages to Buyer hereunder, or Seller admits in writing liability for
damages hereunder, and if there is then outstanding any amount owed by Buyer to
Seller hereunder, then the amount of such damages shall first be satisfied by
offset against such outstanding amounts.
9.16 THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon,
be enforceable against, and inure to the benefit of the parties and their
respective successors and permitted assigns; otherwise, this Agreement shall
not, and shall not be deemed to, inure to the benefit of or be enforceable by
any third party.
9.17 Expenses. Except as contemplated by Sections 4.1(4) and 7.4
hereof, each party hereto shall bear its own expenses relating to the
transactions contemplated by this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
29
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of this 11th day of July, 1996.
"BUYER"
CORINTHIAN SCHOOLS, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
---------------------------
Title: President - CEO
--------------------------
"SELLER"
CONCORDE CAREER COLLEGES, INC.,
a Delaware corporation
By: [SIGNATURE ILLEGIBLE]
-----------------------------
Name: [SIGNATURE ILLEGIBLE]
---------------------------
Title: President - CEO 7/11/96
--------------------------
30
