<PAGE>
EXHIBIT 3
TENDER AND OPTION AGREEMENT
WITH OFFICERS & INSIDE DIRECTORS
This Tender and Option Agreement (the "Agreement") is entered into as of
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June 26, 2000 by and between Odyssey Acquisition Corp., a Delaware corporation
("Purchaser"), and each of the individuals a signatory to this Agreement (the
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"Stockholders").
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RECITALS
WHEREAS, concurrently herewith, Purchaser is entering into an Agreement and
Plan of Merger (the "Merger Agreement") with Kaplan, Inc., a Delaware
----------------
corporation ("Parent"), and Quest Education Corporation, a Delaware corporation
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(the "Company"), pursuant to which Purchaser will acquire the Company, on the
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terms and subject to the conditions set forth in the Merger Agreement, by means
of a tender offer by Purchaser (the "Offer") for all outstanding shares of
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common stock, no par value, of the Company (the "Company Common Stock") and
--------------------
associated Rights, at $18.35 per share, net to the seller in cash, without
interest, followed by a merger (the "Merger") of Purchaser into the Company
(capitalized terms used herein and not otherwise defined are used as defined in
the Merger Agreement); and
WHEREAS, as of the date hereof, the Stockholders together beneficially own
directly or indirectly 1,199,695 shares of Company Common Stock, together with
the associated Rights (which stock and associated Rights are referred to as the
"Existing Shares" and, together with any After-Acquired Shares (as defined
---------------
below), the "Shares"), which Existing Shares constitute approximately 12.8% of
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the issued and outstanding shares of Company Common Stock; and
WHEREAS, as an inducement to Purchaser to acquire the Company, and as a
condition to Purchaser's willingness to enter into the Merger Agreement and
consummate the transactions contemplated thereby, Purchaser has required that
the Stockholders agree, and the Stockholders have agreed (i) to grant Purchaser
an irrevocable option to buy the Shares at $18.35 per share (the "Option"); and
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(ii) to tender and, in the event such option is not theretofore exercised, sell
the Shares in the Offer and vote their Shares in favor of the Merger, in each
case upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, and such other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Agreement to Tender; Option.
1.1 Tender of Shares. Each Stockholder hereby agrees (a) to validly
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tender (or cause the record owner of any Shares to tender) all Shares
beneficially owned by such Stockholder pursuant to the Offer, not later than the
fifth business day after
<PAGE>
commencement of the Offer or, with respect to After-Acquired Shares, within one
business day following the acquisition thereof, (b) not to withdraw any Shares
so tendered without the prior written consent of Purchaser except as otherwise
provided in Section 1.1(c) and (c) to withdraw all Shares tendered in the Offer
immediately upon receipt of notice from Purchaser that it is exercising the
Option in order that it may acquire such Shares in accordance with Section
1.2(a) hereof. Each Stockholder hereby acknowledges and agrees that Purchaser's
obligation to accept for payment and pay for the Shares in the Offer is subject
to the terms and conditions of the Offer.
1.2 Option.
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(a) In order to induce Purchaser to enter into the Merger Agreement,
and subject to the terms and conditions of this Agreement, each of the
Stockholders hereby irrevocably grants to Purchaser the Option, exercisable
in whole but not in part from and after the date hereof, to purchase Shares
at a purchase price of $18.35 per Share. If (i) the Offer is terminated,
abandoned or withdrawn by Purchaser (whether due to the failure of any of
the conditions thereto or otherwise) or (ii) the Merger Agreement is
terminated pursuant to Sections 8.1(c), 8.1(d) or 8.1(e), the Option shall
continue to be exercisable, in whole but not in part for a period of 90
days after the date of the occurrence of such event, so long as (x) all
applicable waiting periods under the HSR Act required for the purchase of
the Shares pursuant to the Option upon such exercise shall have expired or
been terminated and (y) there shall not be in effect any preliminary or
final injunction or other order issued by any court or governmental,
administrative or regulatory agency or authority or legislative body or
commission prohibiting the exercise of the Option pursuant to this
Agreement. In the event the Merger Agreement is terminated other than
pursuant to Sections 8.1(c), 8.1(d) or 8.1(e), the Option shall terminate
upon such termination of the Merger Agreement.
(b) In the event Purchaser wishes to exercise the Option, Purchaser
shall deliver written notice thereof to each of the Stockholders,
specifying the date, time and place for the closing of such purchase. A
closing of the purchase of Shares pursuant to the Option (a "Closing")
shall take place on the date, at the time and at the place specified in
such notice; provided, that if at such date any of the conditions specified
in Section 1.2(a)(x) or (y) hereof shall not have been satisfied or waived,
Purchaser may postpone such Closing until a date within two business days
after such conditions are satisfied or waived. At the Closing, each of the
Stockholders will deliver to Purchaser (in accordance with Purchaser's
instructions) the certificates representing the Shares being purchased
pursuant to Section 1.2, duly endorsed or accompanied by stock powers duly
executed in blank. At such Closing, Purchaser shall either (i) wire
transfer to the account designated by each Stockholder or (ii) deliver to
each Stockholder a certified or bank cashier's check payable to or upon the
order of such Stockholder, in each case in an amount equal to the number of
Shares being purchased from such Stockholder at such Closing multiplied by
$18.35, in immediately available funds.
1.3 Assignment of Dividends and Other Distributions. Each Stockholder
-----------------------------------------------
hereby assigns to Purchaser any and all dividends and other distributions that
may be
2
<PAGE>
declared, set aside or paid by the Company with respect to such Stockholder's
Shares during the term of this Agreement.
1.4 Title. Each Stockholder agrees that, in connection with the
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transfer of his Shares to Purchaser in the Offer or to Purchaser pursuant to the
Option, he shall transfer to and unconditionally vest in the Purchaser good and
valid title to such Shares, free and clear of all claims, liens, restrictions,
security interests, pledges, limitations and encumbrances whatsoever, except
those arising hereunder.
1.5 No Purchase. Purchaser may allow the Offer to expire without
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accepting for payment or paying for any Shares, as set forth in the Offer to
purchase, and Purchaser may allow the Option to terminate without purchasing all
or any Shares pursuant to the exercise thereof. If any Shares are not accepted
for payment in accordance with the terms of the Offer or purchased pursuant to
the Option, they shall be returned to the respective Stockholder, whereupon they
shall continue to be held by such Stockholder subject to the terms and
conditions of this Agreement.
2. Voting. Each Stockholder hereby agrees that (for so long as the Merger
Agreement is in effect), at any meeting of the holders of Company Common Stock,
however called, or in connection with any written consent of the holders of
Company Common Stock, he shall vote (or cause to be voted) his Shares (a) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement and any actions required
in furtherance thereof and hereof; (b) against any action or agreement that
would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or this Agreement; and (c) except as otherwise agreed to in writing in
advance by Purchaser, against any of the following actions or agreements (other
than the Merger Agreement or the transactions contemplated thereby): (i) any
action or agreement that is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or attempt to discourage or adversely
affect the Merger, the Offer and the transactions contemplated by this Agreement
and the Merger Agreement; (ii) any extraordinary corporate transaction, such as
a merger, consolidation or other business combination involving the Company and
its Subsidiaries; (iii) a sale, lease or transfer of a material amount of assets
of the Company or its Subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of the Company or its Subsidiaries; (iv) any change
in the management or Board of Directors of the Company, except as contemplated
by the Merger Agreement; (v) any change in the present capitalization or
dividend policy of the Company; (vi) any amendment of the Company's certificate
of incorporation or bylaws; or (vii) any other material change in the Company's
corporate structure or business. Notwithstanding anything to the contrary
contained in this Agreement, each Stockholder who is also a member of the Board
of Directors of the Company shall be free to act in his or her capacity as a
member of the Board of Directors of the Company and to discharge his or her
fiduciary duty as such. At the request of Purchaser, each Stockholder, in
furtherance of the voting agreement and the transactions contemplated hereby and
by the Merger Agreement, shall promptly execute and deliver to Purchaser an
irrevocable proxy (the "Irrevocable Proxy") and
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<PAGE>
irrevocably appoint Purchaser or its designees, its attorney and proxy to vote
all Shares of such Stockholder, for all purposes whatsoever, with full power of
substitution. Each such Stockholder acknowledges that this proxy (a) shall be
coupled with an interest, (b) constitutes, among other things, an inducement for
Purchaser to enter into the Merger Agreement, and (c) shall be irrevocable and
shall not be terminated by operation of law upon the occurrence of any event.
Notwithstanding anything to the contrary contained herein, the Irrevocable Proxy
and the voting agreement contained in this Section 2 shall terminate immediately
upon the termination of the Option. The provisions of this Section 2 shall
constitute a voting agreement under Section 212 of the Delaware General
Corporation Law.
3. Representation and Warranties. Each Stockholder hereby severally and not
jointly represents and warrants to Purchaser as follows:
3.1 Ownership of Shares; Purchase Rights. (a) On the date hereof, (i)
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such Stockholder is the record owner of the Existing Shares as set forth
opposite such Stockholder's name on the signature page hereto and (ii) such
Existing Shares constitute all of the shares of Company Common Stock owned of
record and beneficially by each such Stockholder. Such Stockholder has sole
voting power, sole power of disposition and sole power to agree to all of the
matters set forth in this Agreement with respect to all of such Existing Shares,
with no limitations, qualifications or restrictions on such rights, and such
Existing Shares are the only shares of Company Common Stock over which such
Stockholder has such powers or otherwise are owned of record or beneficially by
such Stockholder as of the date hereof.
(b) On the date hereof, (i) such Stockholder is the beneficial owner
of the options and warrants as set forth opposite such Stockholder's name
on the signature page hereto and (ii) such Stockholder does not have any
option or other right to acquire Shares ("Purchase Right") except as
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indicated thereon.
3.2 Power, Binding Agreement. Such Stockholder has the legal capacity,
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power and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which he is a party,
including, without limitation, any voting agreement, stockholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered by
such Stockholder and constitutes a valid and binding agreement of him,
enforceable against him in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights.
3.3 No Conflicts. Except for filings under the HSR Act and the Exchange
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Act, (a) no filing with, and no permit, authorization, consent or approval of,
any Federal, state or foreign public body or authority is necessary for the
execution of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby and (b) neither the
execution and delivery of this Agreement by such Stockholder nor the
consummation by such Stockholder of the transactions contemplated hereby nor
compliance by such Stockholder with any of the provisions
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hereof shall (i) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation to which
such Stockholder is a party or by which such Stockholder or any of his
properties or assets may be bound or (ii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to such Stockholder or any of his
properties or assets.
3.4 Encumbrances. The Shares owned by such Stockholder and the
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certificates representing such Shares are now, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
3.5 Finder's Fees. Except for the fee to be paid to Donaldson, Lufkin &
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Jenrette Securities Corporation, no investment banker, broker, financial
advisor, finder or other person is entitled to a commission or fee from
Purchaser or the Company in respect of this Agreement or the transactions
contemplated hereby based upon any arrangement or agreement made by or on behalf
of such Stockholder, except as otherwise specifically provided in the Merger
Agreement or arrangements or agreements made by or on behalf of Purchaser by its
authorized representatives.
3.6 Reliance by Purchaser. Such Stockholder understands and acknowledges
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that Purchaser is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement and the representations,
warranties and covenants of such Stockholder set forth herein.
4. Other Covenants of the Stockholders. Each Stockholder hereby severally and
not jointly covenants and agrees as follows:
4.1 No Solicitation. Each Stockholder agrees that he shall comply with
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the provisions of Section 5.3 of the Merger Agreement.
4.2 Restriction on Transfer, Proxies and Non-Interference; Stop Transfer
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Order.
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(a) Each Stockholder hereby agrees, while this Agreement is in
effect, and except as specifically contemplated hereby, not to (i) offer
for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the offer for sale, sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any of his Shares
or any interest therein, (ii) grant any proxies or powers of attorney,
deposit any of his Shares into a voting trust or enter into a voting
agreement with respect to any of his Shares or (iii) take any action that
would make any representation or warranty of any
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<PAGE>
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling any Stockholder from performing his obligations
under this Agreement.
(b) In furtherance of the provisions of Section 4.2(a) hereof,
concurrently herewith the Stockholders shall and hereby do authorize the
Company to notify the Company's transfer agent that there is a stop
transfer order with respect to all of the Existing Shares and any
additional Shares of Common Stock acquired by any Stockholder after the
date hereof (and that this Agreement places limits on the voting and
transfer of such shares).
4.3 Confidentiality. Each Stockholder recognizes that successful
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consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Stockholder hereby agrees
not to disclose or discuss such matters with anyone not a party to this
Agreement (other than counsel and advisors, if any) without the prior written
consent of Purchaser, except for filings required pursuant to the Exchange Act
and the rules and regulations thereunder or disclosures such Stockholder's
counsel advises are necessary in order to fulfill his obligations imposed by
laws, in which event such Stockholder shall give notice of such disclosure to
Purchaser as promptly as practicable so as to enable Purchaser to seek a
protective order from a court of competent jurisdiction with respect thereto.
4.4 Additional Shares. (a) Each Stockholder agrees, subject to the
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following provisions of this Section 4.4, at the request of Purchaser, to
exercise, exchange or convert his Rights into Shares of Company Common Stock, so
as to constitute After-Acquired Shares under this Agreement. In order to
facilitate the exercise at the request of Purchaser of any such Right, Purchaser
shall loan to any requesting Stockholder funds sufficient to allow such
Stockholder to exercise the Right. Such loan shall not be interest bearing and,
at Purchaser's option, shall be secured by a pledge of the shares of Company
Common Stock acquired upon exercise of such Right.
(b) Each Stockholder hereby agrees to promptly notify Purchaser in
writing of the number of After-Acquired Shares that may be acquired by such
Stockholder, if any, after the date hereof.
(c) Public Disclosure. Each Stockholder hereby agrees that Purchaser
may publish and disclose in (i) the Offer Documents and (ii) if approval of
the Company's Stockholders is required under applicable law, the Proxy
Statement (including all documents and schedules filed with the SEC) his
identity and ownership of Company Common Stock and the nature of his
commitments, arrangements and understandings under this Agreement.
4.5 No Inconsistent Agreements. No Stockholder shall enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions of this Agreement.
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<PAGE>
4.6 Further Assurances. From time to time, at the other party's request
and without further consideration, each of the Purchaser, on the one hand, and a
Stockholder, on the other, shall execute and deliver such additional documents
and take all such further action as may be necessary or desirable to consummate
and make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
5. Miscellaneous.
5.1 Fees and Expenses. All costs and expenses incurred in connection
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with this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses.
5.2 Survival of Representations and Warranties. Except for the
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representations and warranties in Section 3.2 of this Agreement, the
representations and warranties contained in this Agreement shall not survive the
delivery of and payment for the Shares or termination of the Option in
accordance with this Agreement.
5.3 Effect of Representations, Warranties and Covenants of Stockholders.
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The representations, warranties and covenants of the Stockholders shall be
several and not joint. The liability of each individual Stockholder shall extend
only to the representations, warranties and covenants of such Stockholder and
not to any representation, warranty or covenant of any other Stockholder. No
Stockholder shall have any liability for incidental or consequential damages or
any amount in excess of the aggregate purchase price for his Shares.
5.4 Amendment and Modification. This Agreement may be amended, modified
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and supplemented in any and all respects by written agreement of all parties
hereto.
5.5 Assignment. Neither this Agreement nor any of the rights, interests
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or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that any or all of the Purchaser's respective rights, interests
and obligations hereunder may be assigned by the Purchaser to any other direct
or indirect wholly owned subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective heirs, executors, legal
representative or successors and assigns or other transferees and any other
successor in interest.
5.6 Specific Performance. Each of the parties hereto recognizes and
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acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
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5.7 Notices. All notices and other communications hereunder shall be in
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writing and shall be deemed given upon personal delivery, facsimile transmission
(which is confirmed), telex or delivery by an overnight express courier service
(delivery, postage or freight charges prepaid), or on the fourth day following
deposit in the United States mail (if sent by registered or certified mail,
return receipt requested, delivery, postage or freight charges prepaid),
addressed to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to a Stockholder: c/o Quest Education Corporation
1400 Hembree Road, Suite 100
Roswell, GA 30076
Attention: Gary D. Kerber
Facsimile No.: (770) 510-2001
With a copy to: Greenberg, Traurig, P.A.
777 South Flagler Drive, Suite 300-E
West Palm Beach, FL 33401
Attention: Morris C. Brown, Esq.
Facsimile No.: (561) 655-6222
If to Purchaser, to: c/o Kaplan, Inc.
888 Seventh Avenue, 23rd Floor
New York, NY 10106
Attention: Veronica Dillon
Facsimile No.: (212) 489-2301
with a copy to: Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Attention: John F. Seegal, Esq.
Facsimile No.: (415) 773-5759
5.8 Definitions; Interpretation.
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(a) As used in this Agreement, (i) the term "After-Acquired Shares"
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shall mean any shares of Company Common Stock acquired directly or
indirectly, or otherwise beneficially owned, by any of the Stockholders in
any capacity after the date hereof and prior to the termination hereof,
whether upon the exercise of options, warrants or rights, the conversion or
exchange of convertible or exchangeable securities, or by means of a
purchase, dividend, distribution, gift, bequest, inheritance or as a
successor in interest in any capacity (including a fiduciary capacity) or
otherwise; (ii) the term "affiliate(s)" shall have the meaning set forth in
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Rule 12b-2 of the Exchange Act; and (iii) the phrases "beneficially own" or
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"beneficial ownership" with respect to any securities shall mean having
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"beneficial ownership" of such securities (as determined pursuant to Rule
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13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing (without
duplicative counting of the same securities by the same holder, securities
beneficially owned by a person shall include
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securities beneficially owned by all other persons with whom such Person
would constitute a "group" within the meaning of Rule 13d-5 of the
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Exchange Act).
(b) When a reference is made in this Agreement to a Section, such
reference shall be to a Section in this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without
limitation." The descriptive headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.9 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
5.10 Entire Agreement, No Third Party Beneficiaries, Rights of Ownership.
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This Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
5.11 Severability. If any term, provision, covenant or restriction of
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this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
5.12 Governing Law. This Agreement shall be governed and construed in
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accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
5.13 Remedies Cumulative. All rights, powers and remedies provided
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under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
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IN WITNESS WHEREOF, Purchaser and each of the Stockholders have caused this
Agreement to be duly executed as of the day and year first above written.
ODYSSEY ACQUISITION CORP.
By: /s/ Jonathan N. Grayer
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Name: Jonathan N. Grayer
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Title: President and Chief Executive Officer
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<TABLE>
<CAPTION>
Stockholders:
Purchase Rights
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Shares Options Warrants
-------- ---------- ----------
<S> <C> <C> <C>
320,276 230,927 0 /s/ Gary D. Kerber
-------- ---------- ---------- -------------------------------------
Gary D. Kerber
168,459 194,074 0 /s/ Vince Pisano
-------- ---------- ---------- -------------------------------------
Vince Pisano
0 164,000 0 /s/ Gerald T. Kosentos
-------- ---------- ---------- -------------------------------------
Gerald T. Kosentos
5,822 43,125 0 /s/ Elaine Neely-Eacona
-------- ---------- ---------- -------------------------------------
Elaine Neely-Eacona
1,333 25,000 0 /s/ K. Terry Guthrie
-------- ---------- ---------- -------------------------------------
K. Terry Guthrie
3,973 42,709 0 /s/ A. William Benham
-------- ---------- ---------- -------------------------------------
A. William Benham
</TABLE>
10
