SHARE PURCHASE AGREEMENT
(the "AGREEMENT")
dated as of June 30, 2000
between
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇
(hereinafter the "SELLER 1")
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇
(hereinafter the "SELLER 2", and together with the Seller 1 the "SELLERS")
and
SYLVAN LEARNING SYSTEMS, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇.
(hereinafter the "PURCHASER")
regarding
GESTHOTEL SA
(hereinafter the "COMPANY")
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TABLE OF CONTENTS
ARTICLE I - PURCHASE AND SALE OF SHARES.......................................8
I.1 PURCHASE AND SALE.................................................8
I.2 PURCHASE PRICE PAYMENT............................................8
(a) Dividend..........................................................8
(b) Cash Payment at Closing...........................................9
(c) Earn-out Payments.................................................9
I.3 EARN-OUT PAYMENT 2000.............................................9
I.4 EARN-OUT PAYMENT 2001............................................10
I.5 EARN-OUT PAYMENT 2002............................................11
ARTICLE II - CLOSING.........................................................12
II.1 PLACE AND DATE...................................................12
II.2 EFFECTIVE DATE...................................................12
II.3 CLOSING DOCUMENTS................................................12
(a) Documents to be Delivered by the Sellers.........................12
(b) Documents to be Delivered by the Purchaser.......................13
ARTICLE III - REPRESENTATIONS AND WARRANTIES.................................13
III.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER......................13
(a) Organization of the Purchaser....................................13
(b) Authority........................................................13
(c) Authorization....................................................13
(d) Financial Statements.............................................14
(e) SEC Filings......................................................14
(f) Litigation.......................................................14
(g) No Intent to Resell..............................................14
(h) Brokers..........................................................14
III.2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS....................14
(a) Ownership of Sale Shares.........................................14
(b) Organization of Company..........................................15
(c) Authority; No Conflict...........................................15
(d) Capitalization...................................................15
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(e) Share Capital Paid-up............................................15
(f) No Rights of Third Party Over Equity Interests...................16
(g) Financial Statements.............................................16
(h) No Undisclosed Liabilities.......................................16
(i) Accounts Receivable..............................................16
(j) Capital Improvements.............................................16
(k) Absence of Change................................................17
(l) Insolvency.......................................................18
(m) Taxes............................................................18
(n) Environment......................................................19
(o) Leases; Real Property............................................20
(p) Condition of Assets; Sufficiency.................................20
(q) Intellectual Property Rights.....................................21
(r) Contracts........................................................21
(s) Litigation.......................................................22
(t) Compliance with Laws.............................................22
(u) Insurance........................................................22
(v) Employees........................................................23
(w) Professional and Social Welfare..................................23
(x) No Collective Bargaining.........................................23
ARTICLE IV - COVENANTS.......................................................24
IV.1 COVENANT NOT TO COMPETE AND NOT TO SOLICIT.......................24
IV.2 CONDUCT OF THE BUSINESS..........................................25
IV.3 ELECTION OF BOARD MEMBERS........................................25
IV.4 BEST EFFORTS.....................................................25
ARTICLE V - CONDITIONS TO CLOSING............................................25
V.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER AND THE SELLERS.......25
V.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER.......................26
V.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS.........................26
ARTICLE VI - INDEMNIFICATION.................................................27
VI.1 INDEMNIFICATION BY THE SELLERS...................................27
VI.2 SECURITY.........................................................27
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VI.3 INDEMNIFICATION BY THE PURCHASER.................................27
VI.4 DEDUCTIONS FROM PAYMENTS.........................................27
VI.5 LIMITATION IN TIME...............................................28
VI.6 LIMITATIONS ON AMOUNT............................................28
(a) Deductible.......................................................28
(b) Ceiling..........................................................28
(c) Effect of Provisions.............................................28
VI.7 THIRD PARTY CLAIMS...............................................29
VI.8 ADJUSTMENT OF INDEMNITY PAYMENT..................................29
VI.9 EFFECT OF KNOWLEDGE ON REPRESENTATIONS AND WARRANTIES............30
VI.10 REMEDIES.........................................................30
ARTICLE VII - MISCELLANEOUS..................................................30
VII.1 NOTICES..........................................................30
VII.2 ENTIRE AGREEMENT.................................................31
VII.3 SEVERABILITY OF PROVISIONS.......................................31
VII.4 BINDING EFFECT; BENEFIT..........................................32
VII.5 ASSIGNABILITY....................................................32
VII.6 CHANGE OF CONTROL................................................32
VII.7 AMENDMENT AND MODIFICATION; WAIVER...............................32
VII.8 ANNOUNCEMENTS....................................................33
(a) Employees........................................................33
(b) Press Releases and Public Announcements..........................33
VII.9 CONFIDENTIALITY..................................................33
VII.10 ADVISER'S FEES; EXPENSES.........................................33
VII.11 APPLICABLE LAW...................................................33
VII.12 ARBITRATION......................................................34
LIST OF ANNEXES..............................................................36
LIST OF SCHEDULES............................................................37
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WHEREAS the Company is a company incorporated in Switzerland, having its
registered office at Pre Fleuri, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇▇▇▇▇▇▇;
WHEREAS the Company has a fully paid-up share capital of CHF 1'500'000.-,
divided into 1500 registered shares with a par value of CHF 1'000.- (Swiss
francs one thousand) each;
WHEREAS the Sellers are the owners of the entire outstanding share capital of
the Company;
WHEREAS the Sellers desire to sell and the Purchaser desires to purchase 100% of
the outstanding share capital on the terms and conditions set out in this
Agreement;
NOW THEREFORE, the parties hereto agree as follows:
DEFINITIONS
"ACCOUNTS" shall mean the audited financial statements (consisting of the income
statement, the balance sheet and notes to the financial statements) and the
annual report of the Company for the business years 1997, 1998, and 1999.
"ACCOUNTS RECEIVABLE" shall mean any and all accounts receivable, trade
receivables, notes receivable and other receivables arising in connection with
the Business.
"AFFILIATE" shall mean, with respect to any person, any other person directly or
indirectly controlling, controlled by, or under common control with such other
person.
"BEST KNOWLEDGE" shall mean that level and extent of knowledge which, reasonably
is, or should be, held after having made reasonable inquiries.
"BUSINESS" shall mean the business carried on by the Company as of the date
hereof, in particular the management of the Swiss Hotel Association Hotel
Management School ▇▇▇ ▇▇▇▇▇▇.
"BUSINESS DAY" shall mean any day other than Saturday or Sunday on which banks
are open for business in Baltimore, Maryland; New York, and Geneva, Switzerland.
"CASH PAYMENT AT CLOSING" shall be the sum of CHF 35,000,000.- less (i) the
amount of any negative Working Capital pursuant to the June 30 2000 Balance
Sheet, and (ii) the amount of the Long Term Debt outstanding pursuant to the
June 30, Balance Sheet, payable in cash by the Purchaser at Closing.
"CLOSING" shall have the meaning set forth in Article II.1.
"CLOSING DATE" shall have the meaning set forth in Article II.1.
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"CORPORATE DOCUMENTS" shall mean the share certificates representing the Sale
Shares and the share register of the Company, and up-to-date, complete and
legally compliant copies of the Articles of association of the Company.
"EARN-OUT PAYMENT 2000" shall have the meaning described in Article I.3(a).
"EARN-OUT PAYMENT 2001" shall have the meaning described in Article I.4(a).
"EARN-OUT PAYMENT 2002" shall have the meaning described in Article I.5(a).
"ENVIRONMENTAL LAW" shall mean any and all applicable laws or regulations
regarding the protection of the environment (land, air, water or any combination
thereof) and of nature or human health and safety.
"EXECUTIVE EMPLOYMENT AGREEMENT" shall mean the employment agreement between the
Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ attached hereto as ANNEX 1.
"FINANCIAL REPORTS" shall mean the unaudited management accounts as of June 30,
2000 including the income statement and balance sheet prepared by the management
of the Company for internal purposes only.
"GUARANTEE PROPERTIES" shall mean the following plots and buildings (i)
Pre-Fleuri A (no 576), (ii) Praz ▇'▇▇▇▇▇▇▇▇▇ (▇▇▇ ▇(▇▇▇▇▇▇) ▇▇▇▇▇ to 51482 of
no(degree) 477), and (iii) Rocailles B and C (nos 2853, 2873, 2875 and 5803),
all located in Randogne.
"GUARANTEE PROPERTIES MORTGAGE CERTIFICATE" shall mean the duly executed
certificate evidencing the first priority mortgage in the amount of CHF
6,900,000.- on the Guarantee Properties in favor of the Sellers to secure the
Earn-out Payment 2002.
"INDEPENDENT AUDITOR" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ or another
mutually acceptable internationally recognized auditing firm.
"INTELLECTUAL PROPERTY RIGHTS" shall mean all patents and patent applications,
all trademarks and trademark applications, all copyrights; all registrations and
applications and renewals for any of the foregoing; all trade names, trade
secrets, confidential information, ideas, formulae, compositions, know-how,
technical and computer data, documentation and software, financial, business and
marketing plans, customer and supplier lists and related information, marketing
and promotional materials and all other information and intellectual property
rights and all tangible embodiments thereof.
"JUNE 30, 2000 BALANCE SHEET" shall mean the pro forma balance sheet of the
Company prepared on a basis consistent with the last audited balance sheets of
the Company but including the Real Estate and the assets and liabilities
resulting from the transactions contemplated herein as if they were made and
effective as of June 30, 2000 and including a summary computation of the Working
Capital (showing the points at issue between the parties) and Long Term Debt
under the same assumptions, all as set forth in ANNEX 2.
"KEY PERSONS" shall mean the Sellers and Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"LONG TERM DEBT" shall mean the amount of long term debt owed by the Company as
set forth in the June 30, 2000 Balance Sheet.
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"MARKETING AGREEMENT" shall mean the agreement between the Company and Clivaz
Marketing and Public Relation Services SA attached hereto as ANNEX 3.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any person or entity, a
material adverse effect on the financial condition, business or results of
operations of such person or entity, taken as a whole.
"OBJECTION NOTICE" shall have the meaning set forth in Article I.3.(c) of this
Agreement.
"PRE FLEURI B AND C LEASE" shall mean the lease between the Seller 1,
▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Company attached hereto as ANNEX 4.
"PRE FLEURI B AND C MORTGAGE CERTIFICATE" shall mean the duly executed
certificate evidencing the first priority mortgage in the amount of CHF
1,000,000.- on Pre Fleuri B and C in favor of the Purchaser.
"PRE FLEURI B AND C PURCHASE AGREEMENT" shall mean the real estate purchase
agreement between the Seller 1 and the Company to be entered into substantially
pursuant to the terms of the Pre-Fleuri B and C Option Agreement promptly after
the Earn-out Payment 2002 has been determined, in accordance with Article I.5
hereof, to be in excess of CHF 4,500,000.
"PRE FLEURI B AND C OPTION AGREEMENT" shall mean the agreement between the
Seller 1 and the Company attached hereto as ANNEX 5.
"PURCHASE PRICE" shall mean the aggregate of the following: (i) Cash Payment at
Closing; PLUS PLUS (ii) the Earn-out Payments 2000, 2001 and 2002, if any such
earn-out payments are due.
"REAL ESTATE" shall mean the following plots and buildings (i) Batiments ▇▇▇
▇▇▇▇▇▇ (Land Reg. no. 2880), (ii) ▇▇. ▇▇▇▇▇▇▇▇ (▇▇ ▇▇▇▇), (▇▇▇) ▇▇▇-▇▇▇▇▇▇ ▇ (▇▇
▇▇▇), (▇▇) ▇▇▇▇ ▇'▇▇▇▇▇▇▇▇▇ (▇▇▇ ▇(▇▇▇▇▇▇) ▇▇▇▇▇ to 51482 of no(degree) 477),
and (v) Rocailles B and C (nos 2853, 2873, 2875 and 5803), all located in
Randogne.
"REAL ESTATE PURCHASE AGREEMENTS" shall mean the agreements between the Company
and the owners of the Real Estate attached hereto as ANNEXES 6 TO 9.
"RECURRING EBIT" shall mean the Company's operating income before interest,
taxes and all other non operating costs as determined in accordance with US
generally accepted accounting principles, applied in a manner consistent with
the past practice of the Company, to the extent such practice is consistent with
US generally accepted accounting principles which shall in any case prevail. It
shall include all divisions and subsidiaries which represent a succession to and
a continuation of the Business, as the Business may be expanded at ▇▇▇ ▇▇▇▇▇▇ an
in Spain, except that any loss, charge, payment or expense shall be excluded
from such computation to the extent it is (i) extraordinary or non-recurring,
(ii) not related to the Business or is incurred in relation with the expansion
of the business operations by way of acquisitions or opening and staffing new
schools or offices, (iii) a payment, charge or expense for allocation of home
office, executive, general and administrative expense or similar payment to the
Purchaser and its affiliates, (iv) an interest expense or charge relating to
funds furnished to the Company in replacement of funds withdrawn from the
company (by way of dividends, loans or otherwise) by the Purchaser or any of its
affiliates, and (v) depreciation or amortization of the real estate in excess of
2% of the value of the real estate of the Company as of the date of its
acquisition by the Company.
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"SALE SHARES" shall mean the entire outstanding share capital of the Company,
currently consisting of 1'500 registered shares with a par value of CHF 1'000.-
(Swiss francs one thousand) each.
"SOCIAL SECURITY CONTRIBUTIONS" shall mean the mandatory contributions to the
old-age pension insurance scheme (AHV), pension fund scheme (BVG), invalidity
insurance (IV), loss of salary insurance (EO) and unemployment insurance (ALV),
or any equivalent or similar contributions and any other social security
contributions (including accident and health insurance contributions as the case
may be) applicable in the jurisdictions in which the Company does business,
together with any interest or any penalty imposed by any social security
authority with respect thereto.
"TAXES" shall mean any and all Swiss taxes, together with any penalties,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto.
"WORKING CAPITAL" shall mean an amount equal to the sum of all current assets
after deduction of all current liabilities, determined in accordance with US
generally accepted accounting principles and, to the extent compatible with
these principles, in a manner consistent with the past practice of the Company.
ARTICLE I - PURCHASE AND SALE OF SHARES
I.1 PURCHASE AND SALE
In accordance with the terms of this Agreement, the Sellers shall sell to the
Purchaser and the Purchaser shall purchase from the Sellers good and valid title
to the Sale Shares free and clear from encumbrances, mortgages, charges, liens,
security interests and other rights of any third party, for the consideration
set out in Article I.2 below:
I.2 PURCHASE PRICE PAYMENT
(a) DIVIDEND
Promptly after execution of this Agreement, the parties shall appoint
PriceWaterhouseCoopers (PwC), ▇▇▇▇▇▇ ▇▇▇▇▇▇, or another mutually
acceptable internationally recognized accounting firm, to determine the
Working Capital of the Company as of June 30, 2000. PwC shall determine
the Working Capital based on the actual computations of the parties
(which are reflected in the June 30, 2000 Balance Sheet) and the
submissions of the parties' accountants, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ in Geneva and
Fiduciaire Actis in Sion. The determination of PwC shall be final and
binding upon the parties hereto. Upon detemination of the Working
Capital, the Sellers shall be entitled to cause the Company and the
Purchaser shall vote to approve (if such vote or approval is necessary)
and pay out to the Sellers a dividend for the business year 1999 equal
to the amount of the positive Working Capital as such Working Capital
is determined by PWC, provided, however, that the dividend shall be no
less than CHF
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874,000 (the Purchaser's computation) nor more than CHF 1,138,000 (the
Sellers' computation). The dividend shall be granted in accordance with
the legal requirements of Swiss law. The party whose computation of the
Working Capital is the further away from PwC's computation shall bear
the fees of PwC in relation herewith.
(b) CASH PAYMENT AT CLOSING
At Closing, the Purchaser and the Sellers shall jointly instruct the
escrow agent to pay by wire transfer of immediately available funds to
a bank account as previously specified by the Sellers to the Purchaser,
the Cash Payment plus interests accrued thereon in the hands of the
escrow agent less the escrow agents' fees in relation therewith, if
any.
(c) EARN-OUT PAYMENTS
Subsequent to Closing, the Purchaser shall pay to the Sellers or in
accordance with their instructions the Earn-out Payments 2000, 2001,
and 2002, all in accordance with the terms of this Article I.
I.3 EARN-OUT PAYMENT 2000
(a) No later than February 28, 2001, the Purchaser shall cause to be
prepared and delivered to the Sellers the audited financial statements
for fiscal year 2000 and its calculation of the Recurring EBIT and the
Earn-out Payment 2000. The Earn-out Payment 2000 shall be the positive
amount by which the Recurring EBIT of the Company for fiscal year 2000
exceeds CHF 5,100,000.-, such amount not to exceed in any circumstances
CHF 700,000.-. The Purchaser shall grant the Sellers access to the
auditors and to the relevant information to the extent such right of
access is exercised in a orderly manner until the final resolution of
any dispute pursuant to this Article I.3.
(b) If the Sellers do not object to the calculation of the Earn-out Payment
2000 in the manner described in Article 1.6(c), then the Purchaser
shall pay to the Sellers the Earn-out Payment 2000 to an account
previously specified by the Sellers. If the Sellers have objected to
the calculation of the Earn-out Payment 2000 in the manner described in
Article 1.6(c), then the Earn-out Payment 2000 shall be made within
seven business days after the final resolution of such objection in
accordance with Section 1.6(c).
(c) If the Sellers object to the calculation of the Earn-out Payment 2000,
then, within 30 Business Days after delivery of the audited financial
statements for fiscal year 2000 and the calculation of Recurring EBIT
for the fiscal year 2000 and the Earn-out Payment 2000 to the Sellers,
the Sellers shall so advise the Purchaser by delivery to the Purchaser
of a written notice (the "OBJECTION NOTICE"). The Objection Notice
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shall specify the reasons for objection and set forth the Sellers'
calculation of the Earn-out Payment 2000.
(d) If the parties hereto agree on a resolution of the dispute set out in
the Objection Notice, they shall put such resolution in writing and
thereafter be bound by it.
(e) If the parties hereto are unable to settle any dispute notified in the
Objection Notice within 20 Business Days after delivery of the
Objection Notice, then, at the instigation of either party hereto, the
final determination of the dispute may be submitted to the Independent
Auditor.
(f) The determination of the Earn-out Payment 2000 by the Independent
Auditor shall be made within 30 Business Days (or such longer time as
the parties hereto shall agree in writing) after the date the dispute
was submitted to the Independent Auditor and the determination of the
Independent Auditor shall be final and binding on the parties hereto.
The Independent Auditor shall act as an expert arbitrator
(schiedsgutachter). The Independent Auditor shall give the parties
hereto the right to be heard and shall set forth the reasons for its
decisions in writing. The costs and expenses of the Independent Auditor
shall be borne equally by the Sellers and the Purchaser.
(g) Any Earn-out Payment 2000 payable under this Article 1.6 shall be paid
together with interest thereon calculated monthly from February 28,
2001 on to the date of payment, at the thirty day Swiss franc rate of
the London Interbank Offered Rate ("LIBOR") on February 28, 2001 for
deposits of the size of the Earn-out Payment 2000.
I.4 EARN-OUT PAYMENT 2001
(a) No later than February 28, 2002, the Purchaser shall cause to be
prepared and delivered to the Sellers the audited financial statements
for fiscal year 2001 and its calculation of the Recurring EBIT and the
Earn-out Payment 2001. The Earn-out Payment 2001 shall be the positive
amount by which the Recurring EBIT of the Company for fiscal year 2001
exceeds CHF 5,100,000.-, such amount not to exceed CHF 700,000.-, minus
the Earn-out Payment 2000.
(b) Article 1.3(b) to 1.3(g) and the right of access to the auditors in
Article I.3(a) shall apply MUTATIS MUTANDIS to the calculation and
payment of the Earn-out Payment 2001.
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I.5 EARN-OUT PAYMENT 2002
(a) Not later than February 28, 2003, the Purchaser shall cause to be
prepared and delivered to the Sellers the audited financial statements
for fiscal year 2002 and its calculation of the Recurring EBIT and the
Earn-out Payment 2002. Subject to paragraph (b) of this Article 1.5,
the Earn-out Payment 2002 shall be
(i) CHF 9,350,000.- if the Recurring EBIT for the fiscal year 2002
is higher than CHF 7,045,000.-;
(ii) CHF 6,510,000.- if the Recurring EBIT for the fiscal year 2002
is higher than CHF 6,205,000.- but lower than or equal to CHF
7,045,000.-;
(iii) CHF 4,500,000.- if the Recurring EBIT for the fiscal year 2002
is lower than or equal to 6,205,000.- but higher than or equal
to CHF 6,100,000.-. No Earn-out Payment 2002 is due if the
Recurring EBIT for the fiscal year 2002 is lower than CHF
6,100,000.-.
(b) If the Company terminates the Executive Employment Agreement with
respect to the Seller 1 before March 31, 2003 without reasons which
constitute grounds for immediate dismissal under Swiss law, then the
2002 Earn-out Payment shall be CHF 9,350,000.- and shall be payable to
the Sellers upon such dismissal. Any damages or severance payments due
under the Executive Employment Agreement (except salary and benefits
until the date of termination) shall, however, be deducted from this
amount. If the Executive Employment Agreement is terminated before
March 31, 2003 and an employment agreement is promptly executed between
the Company and the Seller 2 substantially on the same terms as the
Executive Employment Agreement, the first sentence of this paragraph
(b) shall not apply. If however the Company terminates this new
employment agreement with the Seller 2 before March 31, 2003 without
reasons which constitute grounds for immediate dismissal under Swiss
law, then the minimum 2002 Earn-out Payment shall be CHF 6,510,000.-
(this minimum 2002 Earn-out Payment being payable to the Seller 2
immediately upon such dismissal and the balance of the 2002 Earnt-out
Payment, if any, being due upon determination of the Recurring EBIT).
(c) As security for the payment of the Earn-out Payment 2002, the Purchaser
shall grant the Sellers a first priority mortgage in the amount of CHF
6,900,000.- on the Guarantee Properties.
(d) Any Earn-out Payment 2002 due shall be reduced by the purchase price as
defined in the Pre Fleuri B and C Purchase Agreement, i.e. CHF
4,500,000.-.
(e) In all other respects, article 1.3(b) to 1.3(g) and the right of access
to the auditors in Article I.3(a) shall apply MUTATIS MUTANDIS to the
calculation and payment of the Earn-out Payment 2002.
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ARTICLE II - CLOSING
II.1 PLACE AND DATE
The closing of the transactions contemplated herein ("CLOSING") shall take place
at the offices of ▇▇▇▇ & Staehelin in Geneva, as soon as possible, but in no
event later than 10 Business Days after satisfaction or waiver of the conditions
set forth in Article V hereof, or at such other place, date and time agreed on
by the parties hereto, the date on which Closing occurs being the "CLOSING
DATE".
II.2 EFFECTIVE DATE
Except at otherwise stated herein or in an agreement contemplated herein, the
transactions contemplated in this Agreement shall be effective as of July 1,
2000 or such other date and time as the parties may mutually agree on in
writing.
II.3 CLOSING DOCUMENTS
(a) DOCUMENTS TO BE DELIVERED BY THE SELLERS
Upon Closing, the Sellers shall deliver to the Purchaser:
(i) the certificates representing the Sale Shares duly endorsed in
blank;
(ii) a resolution of the Company's board of directors consenting to
the transfer of the Sale Shares to the Purchaser and
authorizing the Purchaser's registration, immediately after
Closing, in the Company's share register;
(iii) the Company's share register evidencing the registration of
the Purchaser as the owner of the Sale Shares;
(iv) to the extent required by the Purchaser, letters of
resignation as directors of the Company by Messrs ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, each containing a statement of the
resigning director that he has been fully compensated for his
services rendered to the Company and that he has no claim of
whatever nature against the Company as the case may be;
(v) the Pension Fund Certificate pursuant to Article III.2(x);
(vi) the duly executed Marketing Agreement;
(vii) the duly executed Executive Employment Agreement;
(viii) the duly executed Pre Fleuri B and C Lease;
(ix) the duly executed Real Estate Purchase Agreements;
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(x) the duly executed Pre Fleuri B and C Mortgage Certificate;
(xi) the duly executed Pre Fleuri B and C Option Agreement.
(b) DOCUMENTS TO BE DELIVERED BY THE PURCHASER
Upon Closing, the Purchaser shall deliver to the Sellers:
(i) evidence of payment of the Cash Payment at Closing to the
account previously specified by the Sellers and
(ii) the Guarantee Properties Mortgage Certificate.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
Each party hereto hereby makes the representations and warranties contained in
this Article III to the other party hereto, each of which is true and correct as
of the date hereof. The parties hereto do not make any representations nor give
any warranties other than the representations and warranties contained in this
Article III.
III.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
(a) ORGANIZATION OF THE PURCHASER
The Purchaser is duly organized and validly existing under the laws of
Maryland.
(b) AUTHORITY
This Agreement has been duly authorized and validly executed and
delivered by the Purchaser and is valid and enforceable against the
Purchaser in accordance with its terms; the Purchaser has full power
and authority to enter into this Agreement and to carry out the
transactions contemplated by this Agreement.
The execution and delivery of this Agreement by the Purchaser does not
violate the Purchaser's articles of association or internal
regulations, any agreement to which it is a signatory or any
governmental law, regulation, order or judgement to which it is
subject.
(c) AUTHORIZATION
The Purchaser is not required to give notice or obtain any governmental
or other authorization (except internal authorizations) to execute or
consummate this
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Agreement.
(d) FINANCIAL STATEMENTS
The Purchaser has delivered to the Sellers its audited balance sheet
for the last three business years.
(e) SEC FILINGS
The Purchaser's SEC filings are up to date.
(f) LITIGATION
There is no claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Swiss or foreign governmental
commission, court, tribunal or arbitral body by or against the
Purchaser or any of its assets or properties pending, or, to the Best
Knowledge of the Purchaser, threatened to be brought, which would
preclude or materially adversly affect the transactions contemplated in
this Agreement.
(g) NO INTENT TO RESELL
The Purchaser does not intend to resell the Sale Shares except to an
entity of the group of companies to which the Purchaser belongs.
(h) BROKERS
The Purchaser has not entered into any agreement with a broker which
materially affects or will materially affect the Sellers.
III.2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby make the following representations and warranties to the
Purchaser:
(a) OWNERSHIP OF SALE SHARES
The Sellers have, and at Closing the Purchaser shall receive, good and
valid title to the Sale Shares, including those shares held in a
fiduciary capacity by any director of the Company. The Sale Shares are
free and clear of all encumbrances, mortgages, charges, liens, security
interests or any other rights of any third party.
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(b) ORGANIZATION OF COMPANY
The Company is duly organized and validly existing under the laws of
Switzerland, has the corporate power to own and operate its assets and
to carry on the Business as now being conducted. The Articles of
association and the internal regulations of the Company, which are
attached hereto as SCHEDULE III.2.(b) are true, correct, in compliance
with applicable law and up-to-date.
(c) AUTHORITY; NO CONFLICT
Neither the execution and delivery of this Agreement or of any other
agreements contemplated herein nor the consummation or performance of
any of the other agreements contemplated by this Agreement will
directly or indirectly
(1) violate, conflict with, or give any governmental body or other
person a right to challenge, in full or in part, any of the
transactions contemplated under this Agreement under any
applicable law or regulation or any order or judicial or
administrative decision to which the Sellers or the Company is
subject;
(2) violate, conflict with the terms of, or give any governmental
body a right to revoke, suspend, or modify any governmental
authorization permit or recognition held by the Company,
except to the extent such violation, conflict or right has no
Material Adverse Effect on the Company ;
(3) violate, conflict with, or give any person the right to
terminate, declare a default or exercise any other remedy
under, any agreement to which the Company is a party, except
to the extent such violation, conflict, right or other remedy
has no Material Adverse Effect on the Company;
(4) result in the creation or imposition of any lien or other
charge on any asset of the Company except to the extent such
lien or charge is contemplated herein;
(5) require any governmental authorization, with the exception of
authorizations required under the Swiss federal statute on the
acquisition of real estate by foreign persons.
(d) CAPITALIZATION
The Company has the following capital structure: a fully paid-up share
capital of CHF 1'500'000.-, divided into 1'500 registered shares
numbered 1 to 1'500 with a par value of CHF 1'000.- each. There are no
other share certificates of the Company circulating.
(e) SHARE CAPITAL PAID-UP
All the issued and outstanding shares of the Company are duly and
validly authorized, issued and fully paid-up.
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(f) NO RIGHTS OF THIRD PARTY OVER EQUITY INTERESTS
Except as set forth on SCHEDULE III.2(f), there is no option, warrant,
conversion privilege, pledge, right of pre-emption, right to acquire,
right of first refusal or similar or analogous right over or affecting
any of the Sale Shares or shares of the Company, nor is there any
commitment to give or create any of the foregoing, and no person has
claimed to be entitled to any of the foregoing. The option agreement
("PROMESSE DE VENTE ET D'ACHAT") dated January 9, 1997 between the
Seller 1 and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ pursuant to which the Seller 1 has
granted to ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ the right to purchase the Sale Shares is
terminated as of the Closing according to ANNEX 10 and no rights will
be exercised thereunder.
(g) FINANCIAL STATEMENTS
The Sellers have delivered to the Purchaser the Accounts as well as the
Financial Reports and the budget for the fiscal year 2000, all as set
forth in SCHEDULE III.2.(g).
The Accounts have been prepared in accordance with the provisions of
Swiss law and generally accepted accounting principles in Switzerland,
applied consistently throughout the last 3 financial years. The
Accounts are correct and complete and give a true and fair view of the
financial condition and the results of operations of the Company.
The Financial Reports have been prepared with due care and in good
faith for the purposes of management support in accordance with the
accounting principles of the Company consistently applied.
(h) NO UNDISCLOSED LIABILITIES
The Accounts contain all material actual, conditional and contingent
liabilities and all material accruals and reserves that, according to
the provisions of Swiss law and generally accepted accounting
principles in Switzerland should be contained therein. As of the date
hereof, there exist no material liabilities of the Company other than
those set out in the Accounts, with the exception of liabilities which
have been incurred in the ordinary course of business since January 1,
2000.
(i) ACCOUNTS RECEIVABLE
SCHEDULE III.2(i) sets forth a true, accurate and complete aging
schedule of all Accounts Receivable exceeding CHF 10,000.- of the
Company outstanding at May 31, 2000. All outstanding Accounts
Receivable of the Company have arisen out of bona fide transactions in
the ordinary course of business.
(j) CAPITAL IMPROVEMENTS
SCHEDULE III.2(j) describes all capital improvements or purchases or
other capital expenditures (as determined in accordance with the
provisions of Swiss law and
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generally accepted accounting principles in Switzerland) as of May 31,
2000 exceeding CHF 10,000.- which the Company has committed to or
contracted for and which have not been completed prior to the date
hereof and the costs and expenses (including professional fees and
charges) reasonably estimated as being required to complete such
transactions.
(k) ABSENCE OF CHANGE
Except as set forth on SCHEDULE III.2.(k), since December 31, 1999,
there has not been any of the following events, with the exception of
events which would, by itself or taken together with other events
falling under the following list, not have a Material Adverse Effect on
the Company:
(i) change in the financial condition, assets, liabilities,
personnel or operations of the Company or in its relations
with suppliers, customers, lessors or others, other than
changes in the ordinary course of business, with the exception
of changes in relation with thetransactions contemplated by
this Agreement, including, without limitation, the Real Estate
Purchase Agreements;
(ii) changes which have had or could have a Material Adverse Effect
on the Business or the Company, with the exception of changes
in relation with thetransactions contemplated by this
Agreement, including, without limitation, the Real Estate
Purchase Agreements;
(iii) damage, destruction, loss, or other action which may give rise
to any liability or obligation of the Company (whether or not
covered by insurance) adversely affecting its assets, except
in relation with the transactions contemplated by this
Agreement, including, without limitation, the Real Estate
Purchase Agreements;
(iv) (x) indebtedness for borrowed money incurred by the Company
becoming, or becoming capable of being declared, repayable
earlier than the due date for payment or (y) forgiveness or
cancellation of indebtedness owed to the Company or waiver of
any claims or rights by the Company with regard to such
indebtedness, except in relation with the transactions
contemplated by this Agreement, including, without limitation,
the Real Estate Purchase Agreements;
(v) increase in the compensation or benefits paid or payable by
the Company to any of its officers or employees or agreement
to do the same, except for scheduled increases in the ordinary
course of business consistent with past practice ;
(vi) dividend, distribution or other disposition or any transfer,
lease, license of assets of the Company to the Sellers;
(vii) encumbrances placed on or created or extended over any of the
assets of the Company, except in relation with the
transactions contemplated by this Agreement, including,
without limitation, the Real Estate Purchase Agreements;
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(viii) amendment or termination of any lease, contract, license or
other agreement of the type described in Article III.2.(r) to
which the Company is a party, other than in the ordinary
course of business, except in relation with the transactions
contemplated in this Agreement, including, without limitation,
the Real Estate Purchase Agreements;
(ix) change in the collection, payment or credit practices of the
Company or in the accounting practices, procedures or methods
of the Company;
(x) agreement, arrangement or transaction, other than in the
ordinary course of business consistent with past practice and
of an entirely arm's length nature, between the Company and
(i) one or both of the Sellers, (ii) any officer or employee
of the Company or, (iii) any other person or entity affiliated
with or related to one or both of the Sellers or an officer or
employee of such entity, with the exception of the
transactions contemplated by this Agreement including, without
limitation, the Real Estate Purchase Agreements; or
(xi) notice given by any officer, supplier, customer or contractual
counterpart of the Company that they intend to terminate or by
which they terminate a current contractual relationship with
the Company.
(l) INSOLVENCY
(i) No order has been notified and no resolution has been passed
for the winding up of the Company or for a provisional
liquidator to be appointed in respect of the Company and no
petition has been presented and no meeting has been convened
for the purpose of winding up the Company.
(ii) No receiver (which expression shall include an administrative
receiver) has been appointed in respect of the Company or all
or any of its assets.
(iii) The Company is not insolvent, unable to pay its debts and has
not stopped paying its debts as they fall due.
(iv) No unsatisfied judgement is outstanding against the Company.
(v) To the Best Knowledge of the Sellers and the Key Persons,
there are no reasons that any of the events described under
III.2.(l)(i) to (iv) above shall occur.
(m) TAXES
(i) Filing of Returns
The Company has filed when due, materially accurate returns
for Taxes (except in cases where inaccuracies are covered by
sufficient tax provisions) and has otherwise complied in all
respects with requirements relating to the filing of Tax
returns and the supply of all information required to be
supplied to any tax authority.
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(ii) Payment of Taxes
The Company has complied with all and any requirements
relating to the payment of Taxes, of whatever nature,
including interest and penalties, if any.
(iii) Tax Provisions
The Company has paid and, if not paid, established adequate
provisions in the Accounts for the year 1999 for all Taxes of
whatever nature that may be assessed or computed on the
results, operations or transactions of the Company for all
periods prior to the date hereof, regardless of the financial
period during which such Taxes may become due and payable.
For the Company, the amount of the provision for deferred
Taxes in the December 1999 balance sheet is adequate and fully
in accordance with Swiss law and generally accepted accounting
principles in Switzerland and practices commonly adopted by
companies carrying on businesses similar to those carried on
by the Company.
(iv) No Dispute
Except as set forth in SCHEDULE III.2(m)(iv), the Company is
to the Best Knowledge of the Key Persons, not subject to
formal proceedings or investigations related to Taxes (except
for requests for additional information) by the respective
authorities and no such proceedings are threatened against the
Company.
(v) No Withholding Tax on Dividends
The Company has not distributed or caused to be distributed,
any hidden or constructive dividend, nor distributed or
granted any other benefit to the Sellers or any other person
which could lead to the imposition of any withholding taxes on
such hidden or constructive dividend.
(vi) No Adverse Tax Consequences
Except as set forth in SCHEDULE III.2(m)(vi) the acquisition
of the Sale Shares by the Purchaser will not give rise to any
adverse tax consequences for the Company.
(n) ENVIRONMENT
To the Best Knowledge of the Key Persons,
(i) the Company conducts and has always conducted its activities
in conformity with Environmental Law;
(ii) until and including the date hereof, the Company has complied
with and not violated any Environmental Law at the time when
such law was applicable;
(iii) no action has been undertaken or, threatened to be undertaken
by Swiss or
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foreign authorities with respect to Environmental Law which
could have a Material Adverse Effect on the Company or its
activities; and
(iv) no facts, events or conditions in existence on or prior to the
date hereof and relating to the past or present facilities,
properties or operations of the Company will give rise to any
investigatory, remedial or corrective obligations pursuant to
Environmental Law, or give rise to any other liabilities for
onsite or offsite releases of hazardous materials, substances
or wastes, personal injury, contamination of soil, water, air
or groundwater, property damage or damage to natural
resources, pursuant to Environmental Law.
(o) LEASES; REAL PROPERTY
SCHEDULE III.2(o) sets forth a complete and correct list of all real
property or premises leased in whole or in part (including "droits
reels" like right of land use ("droits de superficie") and similar
rights) by the Company.
The leases to which the Company is a party allow unencumbered use of
the leased property in accordance with the terms and conditions of such
leases. None of the leases is terminable by any third party, or would
be breached, in both cases, as a result of the transactions
contemplated by this Agreement, except if such termination or breach
would have no Material Adverse Effect on the Company,
Each lease of premises utilized by the Company is legal, valid and
binding, as between the Company and the other party or parties thereto,
and the Company is tenant in good standing thereunder, free of any
default or breach and quietly enjoys the premises provided for therein.
Each rental and other payment due from the Company thereunder has been
duly paid; to the Best Knowledge of the Key Persons, each act required
to be performed by the Company which if not performed would constitute
a breach thereof has been duly performed; and to the Best Knowledge of
the Key Persons, no act forbidden to be performed by the Company has
been performed thereunder.
All buildings occupied by the Company have been constantly maintained
in accordance with past practice of the Company and in accordance with
any applicable lease. None of such premises or properties has been
condemned or otherwise taken by public authority and no such
condemnation or taking is threatened or contemplated. The Company has
all required material legal or governmental approvals for each of the
properties, leased, used or occupied by it.
All rights to real property, including "droits reels" and the like and
options and preemption rights to real estate and to any other "droits
reels" are legal, valid, registered in the land register (to the extent
possible under applicable law) and binding between the respective
parties.
(p) CONDITION OF ASSETS; SUFFICIENCY
The equipment and other tangible assets (other than inventory) owned by
the Company are owned free of third party rights and are in good repair
and operating condition, normal wear and tear excepted; have been
maintained regularly in
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accordance with past practice of the Company and in accordance with any
applicable manufacturer's guidelines; and may be used for their
intended purpose in the normal course of the Business. In the Financial
Reports, the assets and the inventory included among the assets of the
Company are valued in accordance with applicable accounting principles
consistently applied.
(q) INTELLECTUAL PROPERTY RIGHTS
(i) Except as set forth in SCHEDULE III.2(q), the Company owns and
possesses all right, title and interest in and to, or has a
written, enforceable license to use, all of the Intellectual
Property Rights currently used in the operation of the
Business free and clear of all liens, security interests,
restrictions and encumbrances with the exception of the
software jointly developed with College du Leman, as to which
the Company and College du Leman are jointly entitled.
(ii) No claim by any third party contesting the validity,
enforceability, use or ownership of any Intellectual Property
Rights owned or used by the Company has been made, is
currently outstanding or, to the Best Knowledge of the Key
Persons, is threatened, and there are, to the Best Knowledge
of the Key Persons, no grounds for such claim.
(iii) Except as set forth in SCHEDULE III.2(q), the Company has not
infringed, misappropriated or otherwise acted in conflict with
any Intellectual Property Rights of any third party, nor is
any Key Persons aware, to their Best Knowledge, of any
infringement, misappropriation or conflict which will occur as
a result of the continued operation of the Business as
conducted.
(r) CONTRACTS
SCHEDULE III.2.(r) hereto sets forth a complete and correct list, of
all (written or oral) contracts (except employment contracts),
agreements, commitments, instruments or other consensual obligations to
which the Company is a party or by which the Company, or any of the
assets of the Company are bound or liable excluding customary inventory
purchase orders in the ordinary course of business (these agreements
collectively referred to as the "SIGNIFICANT AGREEMENTS"):
(i) which each involve a yearly aggregate consideration of CHF
100'000.- or more;
(ii) which guarantee the performance, liabilities or obligations of
any other person (whether legal or natural);
(iii) which restrict the ability of the Company, taken as a whole,
to conduct any business activities;
(iv) which are not in the ordinary course of the business;
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(v) which are concluded with or for the benefit of any Affiliate
or relative of one or both of the Sellers.
Each Significant Agreement disclosed in Schedule III.2(r) is a valid
and binding agreement of the Company and is in full force and effect.
The Company is not in material breach of any of the Significant
Agreements, nor, to the Best Knowledge of the Key Persons, is any third
party in material breach of the Significant Agreements or has
repudiated any provision of the Significant Agreements and no event has
occurred which with notice, lapse of time or both would constitute a
material breach or default or permit termination, modification or
acceleration of any such Significant Agreement.
(s) LITIGATION
Except as disclosed in SCHEDULE III.2(s), there is no claim, action,
suit, arbitration, inquiry, proceeding or investigation by or before
any Swiss or foreign governmental commission, court, tribunal or
arbitral body by or against the Company or any of its assets or
properties pending, or, to the Best Knowledge of the Key Persons,
threatened to be brought against one or both of the Sellers or any of
the Company's officers or staff relating to the Business, by or before
any Swiss or foreign governmental commission, court, tribunal or
arbitral body nor, to the Best Knowledge of the Key Persons, do any
circumstances exist, which are likely to give rise to any such claim,
action suit, arbitration, inquiry, proceedings or investigation. There
are no claims of whatever nature against the Company by any former
directors, officers, or employees of the Company.
(t) COMPLIANCE WITH LAWS
To the Best Knowledge of the Key Persons, the Business has been
conducted in material compliance with all laws and regulations of Swiss
local and federal authorities applicable to the Company. To the actual
knowledge without investigation of the Key Persons, the Business has
been conducted in compliance with all laws and regulations of foreign
governmental authorities applicable to the Company and they have
received no notice to the effect that the Business has not been
conducted in such a manner. The Company possesses, and is in compliance
with, all licenses, permits, approvals and other governmental
authorizations necessary to the conduct of the Business, which
licenses, permits and approvals are set forth on SCHEDULE III.2.(t),
and there is no reason or circumstance which indicates that such
licenses, permits, approvals and authorizations are likely to be
revoked or confer a right of revocation.
(u) INSURANCE
SCHEDULE III.2.(u) contains a true and accurate list of all risk-based
insurance contracts that the Company has entered into and lists the
premiums payable under these contracts and any increases of these
premiums in the last three years. The Company has not received any
notice or other communication from any insurance company within 3 years
prior to the date hereof canceling or amending such policies and, tro
the Best Knowledge of the Key Persons, no such cancellation or
amendment is threatened.
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All premiums pertaining to the insurance policies have been paid as
they fell due, or are duly provided for in the Accounts.
(v) EMPLOYEES
SCHEDULE III.2.(v)(i) contains a list of all employees of the Company
as of May 31, 2000. This list contains details about salary, (including
benefits in kind), age, seniority, length of service, notice periods
for termination, right to severance pay and to bonus.
Except for employment contracts listed in SCHEDULE III.2.(v)(ii), each
contract of employment to which the Company is a party and which is for
an annual consideration of CHF 75,000.- or more can be terminated by
the Company without damages or compensation (other than that payable by
law) by giving at any time not more than six months' notice.
(w) PROFESSIONAL AND SOCIAL WELFARE
Any and all returns and reports related to Social Security
Contributions that are required to be filed with respect to the Company
prior to the date hereof have been filed timely and correctly in all
material respects. The Company has paid in full any and all Social
Security Contributions as and when due. No social security authority is
now asserting any deficiency or claim for additional Social Security
Contributions (or interest thereon or penalties in connection
therewith) and any and all Social Security Contributions which
(although not due) have accrued on the basis of the salaries to be paid
until the date hereof, have been fully provisioned.
Except as set forth in SCHEDULE III.2(w)(i), to the Best Knowledge of
the Key Persons, there are no facts or circumstances existing or having
arisen prior to the date hereof which have or may lead to a
re-assessment by any social security authority of Social Security
Contributions to be made by the Company relating to any period prior to
the date hereof.
The details of the employee pension fund of the Company are described
in SCHEDULE III.2.(w)(ii) (hereinafter the "PENSION FUND"). The Company
is meeting all its obligations under the Pension Fund and specifically
has paid (or provisioned) all contributions required prior to the date
hereof as stipulated by the regulations of the Pension Fund.
Performance of these obligations is acknowledged in the pension fund
certificate (hereinafter the "PENSION FUND CERTIFICATE") attached
hereto as SCHEDULE III.2.(w)(iii). The Company is not required to
contribute to any pension fund other than the Pension Fund.
(x) NO COLLECTIVE BARGAINING
There is no collective bargaining or other union agreement or
arrangement (whether binding or not) to which the Company is a party or
by which it is bound or which is
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currently being negotiated and no dispute between the Company and any
trade union or other organization formed for a similar purpose is
existing, pending or threatened.
ARTICLE IV - COVENANTS
IV.1 COVENANT NOT TO COMPETE AND NOT TO SOLICIT
For the purpose of assuring to the Purchaser the full benefit of the business
and goodwill of the Company, each of the Sellers undertakes by way of further
consideration for the obligations of the Purchaser under this Agreement as a
separate and independent agreement that:
(a) he will at no time after Closing disclose to any person, or himself use
for any purpose, except to the extent required for the proper performance
of this Agreement and the transactions contemplated herein, any
information concerning the business, accounts or finances of the Company
or any of its clients' or customers' transactions or affairs of which he
has knowledge and that he will use his best endeavors to prevent the
publication or disclosure of such information;
(b) for 3 years after the termination of the Executive Employment Agreement,
either on his own account or for any other person directly or indirectly
solicit, interfere with or endeavor to entice away from the Company or
any member of the Purchaser's group of companies as then constituted, any
person who to his knowledge is, or has during the immediately preceding 3
years been, a client, customer or employee of, or in the habit of dealing
with the Company or any member of the Purchaser's Group of Companies as
then constituted;
(c) for the periods set out in (b) above he will not, alone, or jointly with,
or as manager, agent for, or employee of any person, or as a shareholder
of more than a 5% interest directly or indirectly carry on or be engaged,
concerned or interested in (i) the Business; or (ii) any business
competitive with the Business as then carried on by the Company or by any
member of the Purchaser's group of companies as then constituted.
The Sellers' activities of conducting the business of the College du Leman
substantially as currently conducted shall not constitute a violation of this
Article ▇▇.▇.▇▇ case of a violation of the duties under this Article IV.1(b) and
(c), the Sellers shall, be entitled to demand by written notice that the
activities contrary to the duties under Article IV.1(b) and (c) be terminated
immediately and any damages occurred be cured. If such activities are not
terminated immediately upon receipt of such notice, the Sellers shall jointly
and severally, pay to the Purchaser liquidated damages in the amount of CHF
500,000.- for each violation. In addition to the payment of liquidated damages,
the Purchasers and the Company shall have the right to request further damages
incurred by the Purchaser, any member of the Purchaser's group of companies as
then constituted or the Company, and the right to request the immediate
termination of any activity which is contrary to the duties under this Article
IV.1. The Sellers shall notify the Purchaser of any intended activities that
could reasonably be viewed as a violation of the duties under Article IV.1(b)
and (c) hereof.
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IV.2 CONDUCT OF THE BUSINESS
From the date hereof until the Closing Date, the Sellers shall procure that the
Business is conducted in the ordinary course consistent with past practice and
they shall use their best efforts to preserve intact the Business, the
relationships of the Company with third persons, and to keep available the
services of the present employees. Without limiting the foregoing, except as
contemplated herein, the Sellers shall not, and shall cause the Company not to,
(i) take or agree to take any action that would make any representation or
warranty of the Sellers hereunder inaccurate in any respect at, or as of any
time prior to, the Closing Time or (ii) omit or agree to omit to take any action
necessary to prevent any such representation or warranty from bein inaccurate in
any respect at any such time.
IV.3 ELECTION OF BOARD MEMBERS
At signing of this Agreement, the Sellers shall vote the Sale Shares to elect
such new members of the Company's board of directors, as the Purchaser shall
have designated reasonably in advance. Until Closing, the Sellers shall vote the
Sale Shares with regard to the election of board members only as directed by the
Purchaser.
IV.4 BEST EFFORTS
The parties hereto covenant to use their best efforts to take all action and do
all things necessary to consummate the transactions contemplated herein, in
particular to cooperate to obtain any required authorization (or - if
appropriate - the ruling that no such authorization is required) for the real
estate and share transfers contemplated herein. In addition, the Purchaser
agrees to use its best efforts to cause the Company to purchase Pre Fleuri B and
C according to the terms and conditions of the Pre Fleuri B and C Purchase
Agreement, if an Earn-out Payment 2002 has been determined to be in excess of
CHF 4,500,000 pursuant to Article I.5 hereof.
ARTICLE V - CONDITIONS TO CLOSING
V.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER AND THE SELLERS
The obligations of the Purchaser and the Sellers to consummate the Closing are
subject to the satisfaction or waiver of the following conditions:
(a) All actions by or in respect of or filings with any governmental body,
agency, official or authority required to permit the consummation of
the Closing shall have been taken, made and obtained;
(b) a final decision by the competent authorities declaring the
non-applicability to, or the authorization of, the transactions
contemplated in the Real Estate Purchase Agreements under the federal
law on the acquisition of real estate by foreigners shall have been
obtained by September 30, 2000.
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V.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser to consummate the Closing are subject to the
satisfaction or waiver of the following further conditions:
(a) The Sellers shall have performed in all material respects all of their
obligations hereunder required to be performed by it on or prior to the
Closing.
(b) The representations and warranties of the Sellers contained in this
Agreement shall be true at and as of the Closing Date.
(c) The Purchaser shall have obtained a confirmation from the competent
authority in a form and content satisfactory to the Purchaser to the
effect that the transactions contemplated in this Agreement do not
constitute grounds for a withdrawal or modification of the recognition
dated November 6, 1985 nor to propose or initiate any other action of a
supervisory nature regarding the Swiss Hotel Association Hotel
Management School ▇▇▇ ▇▇▇▇▇▇.
(d) The Real Estate Purchase Agreements and the Pre Fleuri B and C Option
Agreement shall have been duly executed and filed with the Land
Register.
(e) A final decision by the competent authorities declaring the
non-applicability to, or the authorization of, the transactions
contemplated in the Pre Fleuri B and C Option Agreement under the
federal law on the acquisition of real estate by foreigners shall have
been obtained by September 30, 2000.
(f) After the execution of this Agreement, there shall have been no
development or developments that has (or have), in the aggregate, a
Material Adverse Effect on the Company or that would, in the aggregate
reasonably be expected to have a Material Adverse Effect on the
Company.
(g) The constitution of the Company's board of directors shall not have
changed since the signing of this Agreement other than with the written
consent of the Purchaser.
V.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligation of the Sellers to consummate the Closing is subject to the
following further conditions:
(a) The Purchaser shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Closing.
(b) The representations and warranties of the Purchaser contained in this
Agreement shall be true at and as of the Closing Date.
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ARTICLE VI - INDEMNIFICATION
VI.1 INDEMNIFICATION BY THE SELLERS
The Sellers shall indemnify and hold harmless the Purchaser from and against any
and all losses, damages, liabilities, obligations, claims, judgements, costs and
expenses including reasonable attorney's fees incurred by the Purchaser in
connection, directly or indirectly, with (x) a breach of or inaccuracy in the
representations and warranties contained in Article III.2 or (y) a breach of or
inaccuracy in any of the other agreements and covenants contained in this
Agreement. The Sellers' obligation to indemnify shall be joint and several in
the amount of 10% of any claim for indemnification; for the exceeding amount,
only the Seller 1 shall be liable.
Articles 201 and 210 of the Swiss Code of Obligations shall not be applicable to
any claim arising out of or in connection with this Agreement.
An obligation to indemnify hereunder shall be satisfied first by a reduction of
the Purchase Price, provided that such reduction (set-off) may not exceed CHF
1,000,000, and second by payment by the Sellers of the excess amount, if any.
For the avoidance of doubt, it is agreed that the Seller 1 shall not delay or
withhold the execution, delivery, and recording of the Pre Fleuri B and C
Purchase Agreement because of indemnification claimed by the Purchaser.
VI.2 SECURITY
As security for any claims made by the Purchaser under Article VI.1, the Sellers
shall grant the Purchaser a first priority mortgage on Pre Fleuri B and C.
VI.3 INDEMNIFICATION BY THE PURCHASER
The Purchaser shall indemnify and hold harmless the Sellers from and against any
losses, damages, liabilities, obligations, claims, judgements, costs and
expenses including reasonable attorneys' fees incurred by the Sellers by reason
of or resulting from a breach of or inaccuracy in the representations and
warranties contained in Article III.1.
VI.4 DEDUCTIONS FROM PAYMENTS
(a) All sums payable under this Article VI shall be paid free and clear of
all deductions or withholdings whatsoever, save only as may be required
by law.
(b) If any deductions or withholdings are required by law to be made from
any of the sums payable under this Article VI, the paying party shall
be obliged to pay the receiving party such sum as will, after the
deduction or withholding has been made,
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leave the receiving party with the same amount as it would have been
entitled to receive in the absence of any such requirement to make a
deduction or withholding.
(c) If any Taxes shall be payable by the receiving party on any sum payable
under this Article VI, the paying party shall be obliged to pay to the
receiving party such sum as will, after the payment of such Taxes has
been made by the receiving party, leave the receiving party with the
same amount as it would have been entitled to receive in the absence of
any such requirement to pay Taxes. All Tax benefits of the receiving
party related to the claim which is indemnified shall be deducted
according to the same principles.
(d) All sums payable under this Article VI shall be appropriately adjusted
for any sums received from insurances or other third parties for the
underlying claims. The parties hereto covenant to pursue such claims in
good faith. In addition, the amount of any indemnification payment
shall be reduced if the indemnitee failed to use reasonable efforts to
mitigate its damages in good faith.
VI.5 LIMITATION IN TIME
A party to this Agreement may request indemnification as provided in Article
VI.1 or claim for breach of a warranty contained in Article III: (i) during a
period ending on December 31, 2001 (ii) in case of a breach of the Sellers'
representations and warranties in Article III.2.(m) and (x) until the expiration
of the applicable statutory limitation period in the relevant statute of
limitations (or comparable statute) in each relevant jurisdiction, plus 60 days.
Both cases of (i) and (ii) shall hereinafter be referred to as the
"INDEMNIFICATION PERIOD"). Upon expiry of the relevant Indemnification Period,
the right to request indemnification shall lapse.
VI.6 LIMITATIONS ON AMOUNT
(a) DEDUCTIBLE
The Sellers and the Purchaser shall have no liability with respect to the
matters described in Article VI.1 and VI.3 hereof until the party to be
indemnified has suffered damages in excess of CHF 500,000.- in the aggregate, at
which point the liable party shall indemnify the other party only against such
damages in excess of such amount.
(b) CEILING
The maximum liability of the Sellers and the Purchaser with respect to the
matters described in Article VI.1 and VI.3 hereof shall be CHF 3,000,000.
(c) EFFECT OF PROVISIONS
The Sellers' liability shall be reduced by any provisions created in the Closing
Balance Sheet
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to cover the kind of risk, loss, or damage that would otherwise give rise to a
claim for indemnification.
VI.7 THIRD PARTY CLAIMS
Promptly after a party entitled to indemnification under this Article VI (an
"INDEMNIFIED PARTY") shall have received notice (an "INDEMNIFICATION NOTICE") of
the commencement of any action by a third party in respect of which the
Indemnified Party will or may seek indemnification under this Article VI or
shall have discovered other facts that the Indemnified Party believes give rise
to a right to indemnity under this Agreement, the Indemnified Party shall notify
the party providing the indemnification hereunder (the "INDEMNIFYING PARTY")
thereof in writing but no failure to so notify the Indemnifying Party shall
relieve the Indemnifying Party from any liability that it has to the Indemnified
Party except if and to the extent that the Indemnifying Party shall have been
materially prejudiced thereby. In making any claim under this Article VI.6, the
Indemnified Party will specify with reasonable particularity the item or items
giving rise to the claim and the basis of the claim.
The Indemnified Party shall be entitled to defend lawsuits or actions
(including, without limitation, all administrative appeals, proceedings, hearing
and conferences with any tax authority and all aspects of any litigation
relating to taxes) and to employ and engage attorneys of its own choice to
adequately handle and defend the same. The reasonable fees of such attorneys
shall be borne by the Indemnifying Party.
The Indemnifying Party shall have the right to employ its own, separate counsel
who may give non-binding advice to the Indemnified Party and shall have the
right to be consulted by the Indemnified Party in the defense of such lawsuit or
action, but the fees and expenses of such counsel shall be at the expense of the
Indemnifying Party.
The Indemnifying Party shall co-operate in all reasonable respects with the
Indemnified Party and its attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom.
The Indemnified Party shall, in conducting any relevant lawsuit or action, take
into account the reasonable interests of the Indemnifying Party.
The Indemnified Party shall not make any admission of liability, agreement or
compromise with any person, body or authority in relation thereto without the
prior written consent of the Indemnifying Party which shall not be unreasonably
withheld or delayed.
VI.8 ADJUSTMENT OF INDEMNITY PAYMENT
If any amount is paid by an Indemnifying Party pursuant to this Article VI in
respect of any item, then to the extent that the Indemnified Party later
recovers in respect of such item an amount which, when added to the
indemnification payment previously received in respect thereof pursuant to this
Article VI, exceeds the amount which the Indemnified Party was entitled to
receive in respect of such item in accordance with the terms hereof, the
Indemnified Party will pay to the Indemnifying Party promptly the amount of such
excess.
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VI.9 EFFECT OF KNOWLEDGE ON REPRESENTATIONS AND WARRANTIES
Unless, and then only to the extent, expressly contained in this Agreement and
the Annexes and Schedules hereto, no knowledge on the part of the Purchaser's
external lawyers and accountants shall limit the Sellers' obligations with
respect to, or liabilities for breach of, representations, warranties,
disclosures or other obligations hereunder.
VI.10 REMEDIES
After the Closing, the remedies provided for in this Agreement shall be the only
available remedies under this Agreement. Neither party hereto shall be entitled
to satisfy its claims under this Article VI by set-off in excess of CHF
1,000,000. The remedies available under applicable law with respect to the
various side agreements contemplated by this Agreement shall not be affected by
this Article VI.10.
ARTICLE VII - MISCELLANEOUS
VII.1 NOTICES
All notices, requests, demands, waivers and other communications (together
"NOTICES"), required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given if sent by registered mail
or by telefax with a confirmation by registered mail, as follows:
(a) if to the Sellers, to:
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Fax No: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
with a copy to:
▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Fax No: + ▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
(b) if to the Purchaser, to:
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Sylvan Learning Systems, Inc.
Att.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Fax No. ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. du ▇▇▇▇▇▇▇▇
▇▇▇▇ & Staehelin
25 Grand-Rue
1211 Geneva 11
Fax No: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
or to such other substitute person or address as any party hereto shall from
time to time specify by notice in writing to the other party hereto.
Notices and communications made by fax shall be deemed to be received on the
date of dispatch provided that an answer-back confirmation is available,
irrespective of the date of receipt of the confirmation by registered mail.
Notices given by registered mail only are deemed to be received upon delivery to
the addressee.
VII.2 ENTIRE AGREEMENT
This Agreement (including the Annexes and Schedules which are part of this
Agreement, and documents and agreements to be delivered in accordance with this
Agreement) constitutes the entire agreement between the Parties hereto and
supersedes all prior agreements and undertakings, oral or written, between the
Parties hereto with respect to the subject matter hereof.
VII.3 SEVERABILITY OF PROVISIONS
If any term or provision of this Agreement or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement and the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and be enforceable to the fullest extent permitted
by law.
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VII.4 BINDING EFFECT; BENEFIT
With the exception of Article IV.2, this Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any person other than the parties hereto or their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
VII.5 ASSIGNABILITY
This Agreement shall not be assigned by any party hereto without the prior
written consent of the other party hereto. The Purchaser may, however, assign
without the Sellers' prior consent all or part of its rights and duties under
this Agreement to any entity of the group to which it belongs or owns
controlling interests in, provided that the Purchaser will remain liable for the
duties and obligations under this Agreement until any Earn-out Payments 2000,
2001, and 2002 due are paid. In this case, the Purchaser's liability for the
duties and obligations arising under this Agreement shall be secondary to the
assignee's. However, the Purchaser shall not raise any defenses or objections
that were not available to the assignee and the Purchaser shall accept a final
and binding court or arbitral decision against the assignee or an unconditional
admission of liability by the assignee.
VII.6 CHANGE OF CONTROL
The maximum Earn-out Payments 2000, 2001, and 2002 shall be immediately payable
to the Sellers if there is a Change of Control with regard to the Company.
For purposes of this Agreement, a Change of Control shall be deemed to have
occured when a party other than a member of the Purchaser's group of companies
acquires direct or indirect control over the Company or if all of the Company's
assets or a substantial part thereof are transferred to an entity other than a
member of the Purchaser's group of companies. For the avoidance of doubt, it is
agreed that a possible going public or spin-off of the Purchaser's International
University Business business shall not be deemed a Change of Control.
VII.7 AMENDMENT AND MODIFICATION; WAIVER
This Agreement may be amended or modified by a written instrument duly executed
by the Purchaser and the Sellers at any time with respect to any of the terms
contained herein. No waiver by any party hereto of any provision hereof shall be
effective unless explicitly set forth in writing and executed by the party
hereto so waiving. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party hereto, shall be deemed to constitute a waiver by the
party hereto taking such action of compliance with any representations,
warranties, covenants, or agreements contained herein, and in any documents
delivered or to be delivered pursuant to this Agreement and in connection with
the Closing hereunder. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed
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as a waiver of any other or subsequent breach or a waiver of any other provision
of this Agreement.
VII.8 ANNOUNCEMENTS
(a) EMPLOYEES
The transactions contemplated by this Agreement shall be announced to
the employees of the Company prior to or simultaneous with any press
release or public announcement in a form to be agreed upon by the
parties hereto and in accordance with applicable laws.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS
No announcement concerning this sale and purchase or this Agreement
shall be made before, on or after Closing by any party to this
Agreement except as required by law or any competent stock exchange or
regulatory authority (provided that in any such case a party hereto
required to make such an announcement has, where reasonably
practicable, first consulted the other party hereto and taken into
account the reasonable comments, objections and requirements of the
other party hereto) or with the written approval of the other party
hereto (such approval not to be unreasonably withheld or delayed).
VII.9 CONFIDENTIALITY
The parties hereto agree to keep the terms of this Agreement and any information
acquired during the course of the negotiations having led to this Agreement
strictly confidential.
VII.10 ADVISER'S FEES; EXPENSES
Except as otherwise specifically provided in this Agreement, each of the parties
hereto shall bear its own fees and costs incident to this Agreement and the
transactions contemplated hereby, including those of its financial, technical,
legal and other advisers.
VII.11 APPLICABLE LAW
This Agreement and the legal relations between the parties hereto shall be
governed by and construed in accordance with the laws of Switzerland.
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VII.12 ARBITRATION
(a) All disputes arising out of or in connection with this Agreement which
cannot be settled by mutual agreement between the parties shall be
finally settled under the Rules of Arbitration of the Geneva Chamber of
Commerce, to the exclusion of the ordinary courts, by a three-person
arbitral tribunal (the "ARBITRAL TRIBUNAL").
(b) The Arbitral Tribunal shall have its seat in Geneva and the arbitration
proceedings, including arguments and briefs, shall be conducted in
English and French, both languages being equally valid. A translation
of documents in French into English and documents in English into
French shall not be required.
(c) The parties hereby waive the filing of the award with the competent
judicial authority. The award shall be delivered to the parties by the
Arbitral Tribunal.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
---------------------- -------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Sylvan Learning Systems, Inc.
----------------------- -------------------------
Name : Name :
Title : Title :
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LIST OF ANNEXES
ANNEX N(DEGREE) DESCRIPTION
1 Executive Employment Agreement
2 June 30 Balance Sheet
3 Marketing Agreement
4 Pre Fleuri B and C Lease
5 Pre Fleuri B and C Option Agreement
6 Real Estate Purchase Agreement (▇▇▇▇▇▇ ▇▇▇▇▇▇/▇▇▇ ▇▇▇▇▇▇ and
StFrancois)
7 Real Estate Purchase Agreement (▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇/Les Rocailles)
8 Real Estate Purchase Agreement (▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇/ Praz d'Anchettes)
9 Real Estate Purchase Agreement (▇▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇-▇▇▇▇▇▇▇▇ and
Pierre-▇▇▇▇▇ ▇▇▇▇▇▇/ Pre Fleuri A)
10 Termination of Marcel Option on Sale Shares
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LIST OF SCHEDULES
SCHEDULE N(Degree) DESCRIPTION
III.2.(b) Articles of Incorporation and internal regulations of
the Company
III.2.(f) Rights over Equity Interests
III.2.(g) Financial Statements
III.2.(i) Accounts Receivable
III.2.(j) Capital Improvements
III.2.(k) Absence of Change
III.2.(m)(iv) Tax Disputes
III.2.(m)(vi) Adverse Tax Consequences
III.2.(o) Lease; Real Property
III.2.(q) Intellectual Property
III.2.(r) Contracts
III.2.(s) Litigation
III.2.(t) Licenses, Permits, Approvals
III.2(u) Insurance
III.2.(v)(i) List of Employees
III.2.(v)(ii) Termination of Employment Agreements
III.2.(w)(i) Social Security
III.2.(w)(ii) Pension Fund
III.2.(w)(iii) Pension Fund Certificate