FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from Not Applicable to
Commission File Number 0-17840
NEW HORIZONS WORLDWIDE, INC.
----------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2941704
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
500 CAMPUS DRIVE, MORGANVILLE, NEW JERSEY 07751
-----------------------------------------------
(Address of principal executive offices)
(Zip Code)
(732) 536-8501
(Registrant's telephone number, including area code)
-------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of shares of common stock outstanding at June 30, 1997: 7,071,081
<PAGE>
PART 1: FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
New Horizons Worldwide, Inc. and Subsidiaries
June 30, 1997 and December 28, 1996
June 30, 1997 December 28,1996
------------- ----------------
ASSETS (unaudited)
Current assets;
Cash and cash equivalents $ 1,957,779 $11,410,868
Marketable securities 18,055,000 300,000
Accounts receivable, net 15,687,436 17,703,228
Inventories 776,383 606,453
Deferred income tax assets 410,312 825,329
Prepaid expenses and other current
assets 832,116 5,571,578
-------------- -------------
Total current assets 37,719,026 36,417,456
Property, plant and equipment, net 8,019,887 6,804,774
Other non-current assets 3,503,948 3,330,111
Intangible assets 13,731,391 13,920,041
-------------- -------------
$ 62,974,252 $ 60,472,382
============== =============
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
New Horizons Worldwide, Inc. and Subsidiaries
June 30, 1997 and December 28, 1996
June 30,1997 December 28, 1996
------------ -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited)
Current Liabilities:
Current Installments of long-term
obligations and notes payable $ 1,762,199 $ 1,449,052
Accounts Payable 2,738,865 4,614,466
Accrued expenses 9,011,105 7,427,813
Income taxes payable 509,192 96,145
------------ -------------
Total current liabilities 14,021,361 13,587,476
Long-term obligations, excluding current
installments 2,425,247 2,329,672
Deferred income tax liability 115,602 798,215
Stockholders' equity:
Preferred stock, without par value
2,000,000 shares authorized, no
shares issued
Common stock, $.0l par value,
15,000,000 shares authorized;
issued 7,256,081 shares in 1997
and 7,163,660 shares in 1996 72,561 71,637
Additional paid-in capital 25,780,546 25,312,279
Retained earnings 21,857,060 19,671,228
Treasury stock at cost - 185,000
shares in 1997 and 1996 (1,298,125) (1,298,125)
------------- --------------
Total stockholders' equity 46,412,042 43,757,019
------------- --------------
$ 62,974,252 $ 60,472,382
------------- --------------
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
New Horizons Worldwide, Inc. and Subsidiaries
Six and Three Months ended June 30, 1997 and June 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
--------------------------- ---------------------------
JUNE 30, JUNE 29, JUNE 30, JUNE 29,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $25,090,413 $19,094,015 $13,098,640 $10,000,844
Cost of revenues 13,017,035 9,383,752 6,620,015 4,978,184
Selling, general and
administrative expenses 11,479,188 8,968,674 5,979,372 4,898,474
----------- ----------- ----------- -----------
Operating income 594,190 741,589 499,253 124,186
Interest income (expense),
net 280,301 (50,339) 153,259 (35,115)
Gain from release of certain
franchise obligations 2,600,000 -- -- --
----------- ----------- ----------- -----------
Income from continuing
operations before income
taxes 3,474,491 691,250 652,512 89,071
Provision for income taxes 1,288,655 328,952 199,057 36,407
----------- ----------- ----------- -----------
Income from continuing
operations 2,185,836 362,298 453,455 52,664
Discontinued operations
(Note 2)Income (loss)
from operations of the
discontinued environmental
segment (less applicable
income tax benefit/(expense)
of $126,101 and ($314,915)) -- (316,882) -- 437,169
----------- ------------ ----------- -----------
Net income $ 2,185,836 $ 45,416 $ 453,455 $ 489,833
=========== ============ =========== ===========
Earnings per share from
continuing operations $ 0.31 $ 0.05 $ 0.06 $ 0.01
Earnings (loss) per share
from discontinued operations -- (0.04) -- 0.06
----------- ------------- ------------ ------------
Earnings per share $ 0.31 $ 0.01 $ 0.06 $ 0.07
=========== ============= ============ ============
Weighted average number
of shares outstanding 7,047,313 6,866,181 7,071,081 6,867,150
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
New Horizons Worldwide, Inc. and Subsidiaries
Six Months ended June 30, 1997 and June 29, 1996
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 JUNE 29, 1996
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 2,185,836 $ 45,417
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,888,742 1,237,752
Loss on disposal of equipment 1,076 (20,803)
Deferred income taxes (267,596) (175,176)
Gain from release of certain franchise
obligations (2,600,000) --
Cash provided (used) from the change in:
Accounts receivable 2,015,792 (3,987,900)
Inventories (169,930) (98,793)
Prepaid expenses and other current assets 4,739,462 (3,691)
Other assets (173,837) (140,554)
Accounts payable (1,875,601) 498,892
Accrued expenses 1,583.292 1,150,648
Income tax payable 413,047 567,925
Discontinued operations-non cash charges
and working capitol changes -- 1,680,134
--------------- --------------
Net cash provided by (used in)
operating activities 7,740,283 753,851
--------------- --------------
Cash flows from Investing activities:
Purchase of marketable securities (17,755,000) --
Redemption of marketable securities -- 2,475,000
Gain from release of certain franchise
obligations 2,600,000 --
Additions to property, plant and equipment
Continuing operations (2,916,286) (2,638,404)
Discontinued operations -- (521,003)
Excess of cost over net assets of acquired
company -- (56,403)
--------------- ---------------
Net cash provided by investing activities (18,071,286) (740,810)
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of common stock 477,126 --
Proceeds from debt obligations 1,265,448 514,724
Principal payments on debt obligations (856,725) (160,370)
Other (7,935) (3,600)
--------------- --------------
Net cash provided by (used in)
financing activities 877,914 350,754
--------------- --------------
Net increase (decrease) in cash and cash
equivalents (9,453,089) 363,795
Cash and cash equivalents at beginning of period 11,410,868 3,652,408
--------------- --------------
Cash and cash equivalents at end of period $ 1,957,779 $ 4,016,203
=============== ==============
Supplemental disclosure of cash flow information
Cash was paid for:
Interest $ 142,047 $ 128,454
=============== ==============
Income taxes $ 731,950 $ 42,141
=============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Notes to Condensed Consolidated Financial Statements
New Horizons Worldwide, Inc. and Subsidiaries
For the Six and Three Months Ended June 30, 1997 and June 29, 1996
(Unaudited)
Note 1 In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (all of
which are normal and recurring) necessary to present fairly the
financial position of the Company at June 30, 1997 and the results of
operations for the six and three month periods ended June 30, 1997
and June 29, 1996. The statements and notes should be read in
conjunction with the financial statements and notes thereto included
in the Company's annual report for the year ended December 28, 1996.
Note 2 On December 27, 1996, the Company completed a transaction to sell
its environmental business and simultaneously changed its name from
Handex Corporation to New Horizons Worldwide, Inc., to concentrate on
and more closely identify with its continuing computer training
business.
The Company received aggregate consideration in the face amount of
approximately $21,954,000 in connection with the sale of Handex
Environmental, Inc. The consideration received consisted of (i)
$4,600,000 in cash; (ii) a promissory note in the original amount of
$3,700,000 (subject to adjustment in certain events) due on April 30,
2002, and bearing interest at the rate of 6% per annum; (iii) 2,000
shares of Series A Preferred Stock, stated value of $1,000 per share,
of the acquiring company; (iv) six-year warrants to acquire 300,000
and 85,000 common shares of the acquiring company at the price of
$1.32 and $1.60, respectively; and (v) one-third share of the
redemption value of a small joint venture when paid or made available
to the acquiring company. In addition, immediately prior to closing,
the Company received a dividend of cash, accounts receivable and
other assets, owned by the environmental subsidiaries having a book
value of $11,654,000 at December 27, 1996.
The net assets and results of operations of Handex Environmental,
Inc., the divested operation, have been reflected as discontinued
operations in the accompanying condensed consolidated financial
statements.
Note 3 The marketable securities are funds retained for future use in the
business and are invested in tax-exempt bonds and municipal funds.
The Company's investments are presented at their aggregate face
value. There were no unrealized gains or losses as of June 30, 1997.
Note 4 Certain items on the 1996 financial statements have been reclassified
to conform to the 1997 presentation.
6
<PAGE>
Note 5 The company has received permission from the Department of the
Treasury to change its accounting period for federal income tax
purposes to a taxable year ending on December 31 from a 52-53 week
taxable year ending on the Saturday nearest December 31.
7
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company operates computer training centers in the United States and
franchises computer training centers in the United States and abroad. Prior to
the sale of Handex Environmental, Inc. in December 1996, the Company also
operated an environmental remediation business. As a result of the completion of
the sale of Handex Environmental, Inc. the results of operations for the
Company's environmental business segment have been classified as discontinued
operations for all periods presented in the accompanying condensed consolidated
financial statements.
New Horizons conducts two distinct businesses, one which operates company-owned
computer training centers, and the other which supplies systems of instructions
and sales and management concepts concerning computer training to independent
franchisees.
Corporate revenues are defined as revenues from company-owned training centers,
initial franchise fees and royalties from franchised operations. System-wide
revenues are defined as total revenues from all centers, both company-owned and
franchised. System-wide revenues are used to gauge the growth rate of the entire
New Horizons training network.
Revenues from company-owned training centers operated by New Horizons consist
primarily of training fees and fees derived from the sale of courseware
material. Cost of revenues consists primarily of instructor costs, rent,
utilities, classroom equipment, and computer hardware, software and peripheral
expenses. Included in selling, general and administrative expenses are costs
associated with technical support personnel, facilities support personnel,
scheduling personnel, training personnel, accounting and finance personnel and
sales executives.
Revenues for the franchising operation consist primarily of initial franchise
fees paid by franchisees for the purchase of specific franchise territories and
franchise rights; royalty and advertising fees based on a percentage of gross
training revenues realized by the franchisees; and percentage royalty fees
received on the gross sales of courseware. Cost of revenues consists primarily
of costs associated with franchise support personnel who provide system
guidelines and advice on daily operating issues including sales, marketing,
instructor training, and general business problems. Included in selling, general
and administrative expenses are technical support, courseware development,
accounting and finance support, major account program support, advertising
expenses, and franchise sales expenses.
REVENUES
Revenues increased $3,098,000 or 31.0% to $13,099,000 for the second quarter of
1997 and increased $5,996,000 or 31.4% for the first half of 1997 compared to
the same periods in 1996. This was primarily due to improved revenues at
company-owned locations, same-center revenue increases and additional franchises
added to the system. System-wide revenues for the second quarter were
$64,789,000, up 40.0% from $46,285,000 for the same period in 1996. For the
first
8
<PAGE>
six months of 1997 system-wide revenues grew 41.3% to $123,287,000 from
$87,256,000 for the corresponding first six months of 1996. System-wide revenues
include revenues from both franchised locations and company-owned training
centers. Revenues from locations open more than 12 months, both franchised and
company-owned, grew 35.3% in the second quarter of 1997 and 39.0% for the first
six half of 1997 compared to the same periods in 1996.
COST OF REVENUES
Cost of revenues increased $1,642,000 or 33.0% for the second quarter of 1997
and increased $3,633,000 or 38.7% for the first half of 1997 compared to the
same periods in 1996. As a percentage of revenues, cost of revenues increased to
50.5% for the 1997 quarter and to 51.9% for the first half of 1997, from 49.8%
and 49.1% respectively, for the same periods in 1996. The increases in the cost
of revenues in absolute dollars and as a percent of revenues were due primarily
to higher training, facilities and depreciation expenses associated with the
opening of a training center in Los Angeles and the expansion of the centers in
Santa Ana and New York City.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased $1,081,000 or 22.1% for
the second quarter of 1997 and increased $2,511,000 or 28.0% for the first half
of 1997, compared to the same periods in 1996. As a percentage of revenues,
selling, general and administrative expenses decreased to 45.6% for the 1997
quarter and to 45.8% for the first half of 1997 from 49.0% and 47.0%
respectively, for the same periods for 1996. The increase in selling, general
and administrative expenses in absolute dollars was due principally to increased
spending in the areas of sales and marketing, national advertising, the
expansion of the Major Accounts Program, franchise support for domestic and
international operations, and expenses associated with the new center in Los
Angeles and expansion in New York City. The decrease in selling, general and
administrative expenses as a percent of revenues was primarily due to the
increase in revenue and control of the addition of non-revenue producing
employees.
OPERATING INCOME
Operating income increased $375,000 or 302% for the second quarter of 1997 and
decreased $147,000 or 19.9% for the first half of 1997 compared with the same
periods of 1996. As a percentage of revenues, operating income rose to 3.8% from
1.2% for the second quarter of 1997, while it declined to 2.4% for the first
half of 1997 from 3.9% for the same period in 1996. The increase in operating
income for the second quarter of 1997 resulted from the increase in revenues and
the reduction in selling general and administrative expenses as a percent of
revenue discussed above. The reduction in operating income for the first half of
1997 was primarily attributable to higher training, facilities and depreciation
expenses associated with the opening of a training center in Los Angeles and the
expansion of the centers in Santa Ana and New York City.
INTEREST INCOME/(EXPENSE)
Interest income increased $240,000 or 612% for the second quarter of 1997 and
increased $455,000 or 582% for the first half of 1997, compared with the same
periods for 1996. As a percentage of revenues, interest income increased to 2.1%
for the 1997 quarter and the first half
9
<PAGE>
of 1997, from 0.4% for the same periods in 1996. The increase in interest
income, both in absolute dollars and as a percentage of revenues was due mainly
to the substantial increase in short term investment funds resulting from the
sale of the environmental business.
Interest expense increased $51,000 or 69.3% for the second quarter of 1997 and
increased $124,000 or 96.5% for the first half of 1997, compared with the same
periods for 1996. As a percentage of revenues, interest expense increased to
1.0% for the 1997 quarter and the first half of 1997, from 0.7% for the same
periods in 1996. The rise in interest expense, both in absolute dollars and as a
percentage of revenues, was due mainly to purchases of equipment under capital
lease arrangements in the second half of 1996, and bank financing for purchases
in the first half of 1997.
GAIN FROM RELEASE OF CERTAIN FRANCHISE OBLIGATIONS
On February 28, 1997 the company received cash consideration of $2,600,000 in
return for releasing the franchise obligations of an owner of four New Horizons
training centers in the State of New York. The company is aggressively
attempting to re-franchise the territories that became available as a result of
this transaction and successfully resold one of the territories in the second
quarter of 1997. There were no items of "other income" in the first half of
1996.
INCOME TAXES
The provision for income taxes as a percentage of income before income taxes
declined to 30.5% for the 1997 quarter and to 37.1% for the first half of 1997,
from 40.9% and 47.6% respectively, for the same periods in 1996. The decrease in
the provision for income taxes as a percentage of income before income taxes was
due principally to higher tax free income in 1997 when compared to 1996 and
substantially lower foreign income taxes in 1997 when compared to 1996.
NET INCOME (LOSS)
Net income for the 1997 quarter increased $401,000 or 761% and $1,824,000 or
503% for the first half of 1997 compared to the same periods of 1996. Included
in the results for the first half of 1997 was the gain from the release of
certain franchise obligations described above.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company's working capital was $23,697,000, and its
cash, cash equivalents and short-term investments totaled $20,013,000. Working
capital as of June 30, 1997 reflected an increase of $868,000 or 3.8% from
$22,830,000 as of December 28, 1996. The increase was due principally to the
gain from the release of certain franchise obligations described above and the
operating and interest income, offset by cash used for capital acquisitions and
increased accounts receivable.
The Company currently maintains a credit facility for the purchases of equipment
with a commercial bank providing availability of $2,750,000. As of June 30, 1997
there was $58,000 outstanding under this facility bearing a variable interest
rate equal to .5% over the bank's prime
10
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rate. When the facility expires on June 1, 1998 the amounts outstanding will be
incorporated into 36 month term loans bearing a fixed interest rate equal to 1%
over the bank's prime rate. At the expiration date the Company expects to enter
into a similar credit facility for future equipment purchases.
The nature of the computer education and training industry requires substantial
cash commitments for the purchase of computer equipment, software and training
facilities. During the first half of 1997 the Company spent approximately
$2,916,000 on capital items and anticipates spending up to $4,500,000 during
1997.
Management believes that its current working capital position and cash flows
from operations, along with its credit facility, will be adequate to support its
current and anticipated capital and operating expenditures and its strategies to
grow its computer education and training business through the end of 1997.
INFORMATION ABOUT FORWARD LOOKING STATEMENTS
The statements made in this Quarterly Report on Form 10-Q that are not
historical facts are forward looking statements. Such statements are based on
current expectations but involve risks, uncertainties, and other factors which
may cause actual results to differ materially from those contemplated by such
forward looking statements. Important factors which may result in variations
from results contemplated by such forward looking statements include, but are by
no means limited to:
(i) the Company's ability to respond effectively to potential changes in the
manner in which computer training is delivered, including the increasing
acceptance of technology based training which could have more favorable
economics with respect to timing and delivery costs and the emergence of "just
in time" interactive training; (ii) the Company's ability to attract and retain
qualified instructors; (iii) the rate at which new software applications are
introduced by manufacturers and the Company's ability to keep up with new
applications and enhancements to existing applications; (iv) the level of
expenditures devoted to enhancements upgrading information systems and computer
software by customers; (v) the Company's ability to compete effectively with low
cost training providers who may not be authorized by software manufacturers; and
(vi) the Company's ability to manage the growth of its business.
The Company's strategy focuses on enhancing revenues and profits at current
locations, and also includes the possible opening of new company-owned
locations, the sale of additional franchises, the selective acquisition of
existing franchises in the United States, and the acquisition of companies in
similar or complementary businesses. The Company's growth strategy is premised
on a number of assumptions concerning trends in the information technology
training industry. These include the continuation of growth in the market for
information technology training and the trend toward outsourcing. To the extent
that the Company's assumptions with respect to any of these matters are
inaccurate, its results of operations and financial condition could be adversely
affected.
11
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NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share," (SFAS
No. 128"). The Company is required to adopt SFAS No. 128 in the fourth quarter
of 1997 and at that time will restate earnings per share (EPS) data for prior
periods to conform with SFAS No. 128. Earlier application is not permitted. SFAS
No. 128 replaces current EPS reporting requirements and requires a dual
presentation of basic and diluted EPS. Basic EPS is computer by dividing net
Income by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
contracts to issue common stock were exercised or converted to common stock.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130. "Reporting Comprehensive Income," (SFAS No. 130). SFAS 130 establishes
standards for the reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses) in a full set of general
purpose financial statements. SFAS 130 requires all items that are required to
be recognized under accounting standards as components of comprehensive income
to be reported in a financial statement that is displayed with the same
prominence as other financial statements. SFAS 130 does not require a specific
format for that financial statement but requires that an enterprise display an
amount representing total comprehensive income for the period covered by that
financial statement. SFAS 130 requires an enterprise to (a) classify items of
other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in-capital in the equity section of a
statement of financial position. SFAS 130 is effective for fiscal years
beginning after December 15, 1997. Management has not determined whether the
adoption of SFAS 130 will have a material impact on the Company's consolidated
financial position or results of operations.
In June 1997, FASB issued Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information (SFAS 131).
SFAS 131 establishes standards for the way public business enterprises are to
report information about operating segments in annual financial statements and
requires those enterprises to report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. Statement 131 uses a "management
approach" concept as the basis for identifying reportable segments. The
management approach is based on the way that management organizes the segments
within the enterprise for making operating decisions and assessing performance.
Consequently, the segments are evident from the structure of the enterprise's
internal organization. Furthermore, the management approach facilitates
consistent descriptions of an enterprise in its annual report and various other
published information. It focuses on financial information that an enterprise's
decision makers use to make decisions about the enterprise's operating matters.
Statement 131 is effective for financial statements for periods beginning after
December 15, 1997. Earlier application is encouraged. In the initial year of
application, comparative information for earlier years is to be restated, unless
it is impracticable to do so. Statement 131 need not be applied to interim
financial statements in the initial year of its application, but comparative
information for interim periods in the initial year of application shall be
reported in financial statement for interim periods in the second year of
application.
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FORM 10Q - PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- ------- ------------------------
4.1 Secured Straight Line of Credit, guaranteed by Registrant*
4.2 Equipment Term Loan for New Horizons of Metropolitan New York,
guaranteed by Registrant*
4.3 Equipment Term Loan for New Horizons of Cleveland, Ltd. L.L.C.,
guaranteed by Registrant*
4.4 Equipment Term Loan for New Horizons of Santa Ana, Inc., guaranteed
by Registrant*
10.1 Form of Non-Employee Director Stock Option Plan Agreement(1)
15.0 Letter from Independent Certified Public Accountants *
27 Financial Data Schedule*
* Filed herewith
(1) Incorporated herein by reference to the appropriate exhibits to the
Registrant's Proxy Statement dated April 11, 1997.
13
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
NEW HORIZONS WORLDWIDE, INC.
(Registrant)
Date: August 13, 1997 By: /s/ JOHN T. ST. JAMES
------------------------------
John T. St. James
(Duly authorized officer and
Principal Financial Officer)
By: /s/ ROBERT S. MCMILLAN
------------------------------
Robert S. McMillan
NEW HORIZONS EDUCATION CORP.
(Duly authorized officer and
Principal Accounting Officer)
14
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EXHIBIT INDEX
EXHIBIT PAGE
- ------- ----
4.1 Secured Straight Line of Credit, guaranteed by
Registrant
4.2 Equipment Term Loan for New Horizons of Metropolitan
New York, guaranteed by Registrant
4.3 Equipment Term Loan for New Horizons of Cleveland,
Ltd. L.L.C., guaranteed by Registrant
4.4 Equipment Term Loan for New Horizons of Santa Ana,
Inc., guaranteed by Registrant
15.0 Letter from Independent Certified Public Accountants
27 Financial Data Schedule
EXHIBIT 4.1
PROMISSARY NOTE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
- -----------------------------------------------------------------------------------------------------
$509,000.00 06-01-97 06-01-2000 20 310
- -----------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- -----------------------------------------------------------------------------------------------------
Borrower: New Horizons Computer Learning Center Lender: Marine National Bank
of Santa Ana, Inc. Newport Beach Office
ATTN: Cheryl Brink, 1231 E. Dyer Road, Suite 140 500 Newport Center Drive
Santa Ana, CA 92705 Newport Beach, CA 92660
=====================================================================================================
Principal Amount: $509,000.00 Interest Rate: 9.500% Date of Note: June 1, 1997
</TABLE>
PROMISE TO PAY. NEW HORIZONS COMPUTER LEARNING CENTER OF SANTA ANA, INC.
("Borrower") promises to pay to MARINE NATIONAL BANK ("Lender"), or order, in
lawful money of the United States of America, the principal amount of Five
Hundred Nine Thousand & 00/100 Dollars ($509,000.00), together with interest at
the rate of 9.500% per annum on the unpaid outstanding principal balance from
June 1, 1997, until paid in full.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in 35
payments of $16,337.86 each payment and an irregular last payment estimated at
$16,337.69. Borrower's first payment is due July 1, 1997, and all subsequent
payments are due on the same day of each month after that. Borrower's final
payment will be due on June 1, 2000, and will be for all principle and all
accrued Interest not yet paid. Payments include principle and interest. Interest
on this Note is computed on a 365/360 simple interest basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments under the payment schedule. Rather, they will reduce the
principal balance due and may result in Borrower making fewer payments..
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $5.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender.
<PAGE>
(c) Any representation or statement made or furnished to Lender by Borrower or
on Borrower's behalf is false or misleading in any material respect either now
or at the time made or furnished. (d) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (e) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(f) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (g) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the indebtedness is impaired. (h) Lender
in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred). If Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15) days;
or (b) if the cure requires more than fifteen (15) days, immediately initiates
steps which Lender deems in Lender's sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, increase the interest rate on this Note to 5.000 percentage points. Lender
may hire or pay someone else to help collect this Note if Borrower does not pay.
Borrower also will pay Lender that amount. This includes, subject to any limits
under applicable law, Lender's attorneys' fees and Lender's legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other sums
provided by law. This Note has been delivered to Lender and accepted by Lender
in the State of California. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of ORANGE County, the State
of California. Lender and Borrower hereby waive the right to any jury trial in
any action, proceeding, or counterclaim brought by either Lender or Borrower
against the other. This Note shall be governed by and construed in accordance
with the laws of the State of California.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by A COMMERICAL SECURITY AGREEMENT DATED JUNE
1, 1997, EXECUTED BY BORROWER OR PLEDGOR IN CONNECTION WITH THIS NOTE.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extend
allowed by law, waive any applicable statute of limitations, presentment, demand
for payment, protest and notice of dishonor. Upon any change in the terms of
this Note, and unless otherwise expressly stated in writing, no party who signs
this Note, whether as maker, guarantor, accommodation maker or endorser, shall
be released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any
<PAGE>
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
==============================================================================
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
NEW HORIZONS COMPUTER LEARNING CENTER OF METROPOLITAN NEW YORK, INC.
By: _______________________________________________
ROBERT S. MCMILLAN, CHIEF FINANCIAL OFFICER
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$509,000 06-01-97 06-01-00 20 310
- ---------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- ---------------------------------------------------------------------------------------------------------
Borrower: NEW HORIZONS COMPUTER LEARNING Lender: MARINE NATIONAL BANK
CENTER OF SANTA ANA, INC. NEWPORT BEACH OFFICE
ATTN: CHERYL BRINK 500 NEWPORT CENTER DRIVE
1231 EAST DYER ROAD, SUITE 140 NEWPORT BEACH, CA 92660
SANTA ANA, CA 92705
Guarantor: NEW HORIZONS WORLDWIDE, INC.
500 CAMPUS DRIVE
MORGANVILLE, NJ 07751
===========================================================================================================
</TABLE>
AMOUNT OF GUARANTY. The principal amount of this Guaranty is Five Hundred Nine
Thousand & 00/100 Dollars ($509,000.00).
GUARANTY. For good and valuable consideration, NEW HORIZONS WORLDWIDE, INC.
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
MARINE NATIONAL BANK (" Lender") or Its order, on demand, in legal tender of the
United States of America, the Indebtedness (as that term is defined below) of
NEW HORIZONS COMPUTER LEARNING CENTER OF SANTA ANA, INC. ("Borrower") to Lender
on the terms and conditions set forth in this Guaranty.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
Borrower. The word Borrower means NEW HORIZONS COMPUTER LEARNING CENTER OF
SANTA ANA, INC.
Guarantor. The word Guarantor means NEW HORIZONS WORLDWIDE, INC.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated JUNE 1, 1997.
INDEBTEDNESS. The word "Indebtedness" means the Note, including (a) all
principal, (b) all interest, (c) all late charges, (d) all loan fees and loan
charges, and (e) all collection costs and expenses relating to the Note or to
any collateral for the Note. Collection costs and expenses include without
limitation all of Lender's attorney's fees and Lender's legal expenses, whether
or not suit is instituted, and attorney's fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
LENDER. The word "Lender" means MARINE NATIONAL BANK, its successors and
assigns.
NOTE. The word "Note" means the promissory note or credit agreement dated June
1, 1997, in the original principal amount of $509,00000 from Borrower to Lender,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the promissory note or agreement.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the sum of the principal amount of $509,000.00, plus
all interest thereon, plus all of Lender's costs, expenses, and attorney's fees
Incurred in connection with or relating to (a) the collection of the
indebtedness, (b) the collection and sale of any collateral for the Indebtedness
or this Guaranty, or (c) the enforcement of this Guaranty. Attorney's fees
include, without limitation, attorney's fees whether or not there is a lawsuit,
and if there is a lawsuit, any fees and costs for trial and appeals.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties The liability of
Guarantor will be the aggregate liability of Guarantor under the terms of this
Guaranty and any such other unterminated guaranties.
<PAGE>
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all Indebtedness within the limits set forth in
the preceding section of this Guaranty.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all indebtedness shall have
been fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. Release of any other
guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of Guarantor under this Guaranty. A revocation received by
Lender from any one or more Guarantors shall not affect the liability of any
remaining Guarantors under this Guaranty.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, without notice
or demand and without lessening Guarantor's liability under this Guaranty, from
time to time: (a) to make one or more additional secured or unsecured loans to
Borrower, to lease equipment or other goods to Borrower, or otherwise to extend
additional credit to Borrower; (b) to alter, compromise, renew, extend,
accelerate, or otherwise change one or more times the time for payment or other
terms of the Indebtedness or any part of the Indebtedness, Including Increases
and decreases of the rate of Interest on the Indebtedness; extensions may be
repeated and may be for longer than the original loan term; (c) to release,
substitute, agree not to sue, or deal with any one or more of Borrower's
sureties, endorsers, or other guarantors on any terms or in any manner Lender
may choose; (d) to determine how, when and what application of payments and
credits shall be made on the Indebtedness; (e) to apply such security and direct
the order or manner of sale thereof, Including without Imitation, any
nonjudicial sale permitted by the terms of the controlling security agreement or
deed of trust, as Lender in its discretion may determine; (f) to sell, transfer,
assign, or grant participations in all or any part of the Indebtedness; and (g)
to assign or transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, liquidate, or otherwise dispose of all or
substantially all of Guarantor's assets, or any interest therein; (f) upon
Lender's request, Guarantor will provide to Lender financial and credit
information in form acceptable to Lender, and all such financial information
which currently has been, and all future financial information which will be
provided to Lender is and will be true and correct in all material respects and
fairly present the financial condition of Guarantor as of the dates the
financial information is provided; (g) no material adverse change has occurred
in Guarantor's financial condition since the date of the most recent financial
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any Information or
documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender to (a) make any presentment, protest, demand, or
notice of any kind, including notice of change of any terms of repayment of the
Indebtedness, default by Borrower or any other guarantor or surety, any action
or nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, or the creation of new or additional Indebtedness; (b) proceed against
any person, including Borrower, before proceeding against Guarantor; (c) proceed
against any collateral for the Indebtedness, including Borrower's collateral,
before proceeding against Guarantor; (d) apply any payments or proceeds received
against the Indebtedness in any order; (e) give notice of the terms, time, and
place of any sale of the collateral pursuant to the Uniform Commercial Code or
any other law governing such sale; (f) disclose any information about the
Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or
about any action or nonaction of Lender; or (g) pursue any remedy or course of
action in Lender's power whatsoever. Guarantor also waives any and all rights or
defenses arising by reason of (h) any disability or other defense of Borrower,
any other guarantor or surety or any other person; (i) the cessation from any
cause whatsoever, other than payment in full, of the Indebtedness; (j) the
application of proceeds of the Indebtedness by Borrower for purposes other than
the purposes understood and intended by Guarantor and Lender; (k) any act of
omission or commission by Lender which directly or indirectly results in or
contributes to the discharge of Borrower or any other guarantor or surety, or
the Indebtedness, or the loss or release of any collateral by operation of law
or otherwise; (I) any statute of limitations in any action under this Guaranty
or on the Indebtedness; or (m) any modification or change in terms of the
Indebtedness, whatsoever, including without limitation, the renewal, extension,
acceleration, or other change in the time payment of the Indebtedness is due and
any change in the interest rate, and including any such modification or change
in terms after revocation of this Guaranty on Indebtedness incurred prior to
such revocation. Until all Indebtedness is paid in full, Guarantor waives all
rights and any defenses Guarantor may have arising out of an election of
remedies by Lender even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
Guarantor's rights of subrogation and reimbursement against Borrower or any
other guarantor or surety by operation of Section 580a, 580b, 580d and 726 of
the California Code of Civil Procedure or otherwise. This waiver includes,
without limitation, any loss
<PAGE>
of rights Guarantor may suffer by reason of any rights or protections of
Borrower in connection with any anti-deficiency laws or other laws limiting or
discharging the Indebtedness or Borrower's obligations (including, without
limitation, Sections 726, 580a, 580b, and 580d of the California Code of Civil
Procedure). Guarantor waives all rights and protections of any kind which
Guarantor may have for any reason, which would affect or limit the amount of any
recovery by Lender from Guarantor following a nonjudicial sale or judicial
foreclosure of any real or personal property security for the Indebtedness
including, but not limited to, the right to any fair market value hearing
pursuant to California Code of Civil Procedure Section 580a. Guarantor
understands and agrees that the foregoing waivers are waivers of substantive
rights and defenses to which Guarantor might otherwise be entitled under state
and federal law. The rights and defenses waived include, without limitation,
those provided by California laws of suretyship and guaranty, anti-deficiency
laws, and the Uniform Commercial Code. Guarantor acknowledges that Guarantor has
provided these waivers of rights and defenses with the intention that they be
fully relied upon by Lender. Until all Indebtedness is paid in full, Guarantor
waives any right to enforce any remedy Lender may have against Borrower or any
other guarantor, surety, or other person, and further, Guarantor waives any
right to participate in any collateral for the Indebtedness now or hereafter
held by Lender.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Guarantor hereby
assigns, conveys, delivers, pledges, and transfers to Lender all of Guarantor's
right, title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, excluding
however all IRA, Keogh, and trust accounts. Every such security interest and
right of setoff may be exercised without demand upon or notice to Guarantor. No
security interest or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Lender or by any neglect to exercise such right of
setoff or to enforce such security interest or by any delay in so doing. Every
right of setoff and security interest shall continue in full force and effect
until such right of setoff or security interest is specifically waived or
released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
INTEGRATION, AMENDMENT. Guarantor warrants, represents and agrees that this
Guaranty, together with any exhibits or schedules incorporated herein, fully
Incorporates the agreements and understandings of Guarantor with Lender with
respect to the subject matter hereof and all prior negotiations, drafts, and
other extrinsic communications between Guarantor and Lender shall have no
evidentiary effect whatsoever. Guarantor further agrees that Guarantor has read
and fully understands the terms of this Guaranty; Guarantor has had the
opportunity to be advised by Guarantor's attorney with respect to this Guaranty;
the Guaranty fully reflects Guarantor's intentions and parol evidence is not
required to interpret the terms of this Guaranty. Guarantor hereby indemnifies
and holds Lender harmless from all losses, claims, damages, and costs (including
Lender's attorneys' fees) suffered or incurred by Lender as a result of any
breach by Guarantor of the warranties, representations and agreements of this
paragraph. No alteration or amendment to this Guaranty shall be effective unless
given in writing and signed by the parties sought to be charged or bound by the
alteration or amendment.
<PAGE>
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of ORANGE County,
State of California. Lender and Guarantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of Lender's
costs and expenses, including attorney's fees and Lender's legal expenses,
incurred in connection with the enforcement of this Guaranty. Lender may pay
someone else to help enforce this Guaranty, and Guarantor shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender's attorneys
fees and legal expenses whether or not there is a lawsuit, including attorney's
fees and legal expenses for bankruptcy proceedings (and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court costs and
such additional fees as may be directed by the court.
NOTICES. All notices required to be given under this Guaranty and all requests
and other communications shall be in writing and shall be deemed to have been
duly delivered if delivered either personally, by overnight delivery service or
three days from the date of mailing by certified mail, return receipt requested,
or on the date of first refusal of delivery, to the parties at their addresses
set forth above or such other address as a party may designate in the manner
provided herein for giving of notices. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors. For
notice purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or Guarantor,
then all words used in this Guaranty in the singular shall be deemed to have
been used in the plural where the context and construction so require; and where
there is more than one Borrower named in this Guaranty or when this Guaranty is
executed by more than one Guarantor, the words "Borrower" and "Guarantor"
respectively shall mean all and any one or more of them. The words "Guarantor,"
"Borrower," and "Lender" include the heirs, successors, assigns, and transferees
of each of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of this
Guaranty. If a court of competent jurisdiction finds any provision of this
Guaranty to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrower or
Guarantor are corporations or partnerships, it is not necessary for Lender to
inquire into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this Guaranty
unless such waiver is given in writing and signed by Lender. No delay or
omission on the part of Lender in exercising any right shall operate as a waiver
of such right or any other right. A waiver by Lender of a provision of this
Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise
to demand strict compliance with that provision or any other provision of this
Guaranty. No prior waiver by Lender, nor any course of dealing between Lender
and Guarantor, shall constitute a waiver of any of Lender's rights or of any of
Guarantor's obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
<PAGE>
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED JUNE 1, 1997.
GUARANTOR:
NEW HORIZONS WORLDWIDE, INC.
BY:
- ----------------------------------
THOMAS J. BRESNAN, PRESIDENT
Signed, acknowledged and delivered in the presence of:
X
- ----------------------------------
Witness
X
- ----------------------------------
Witness
===============================================================================
EXHIBIT 4.2
PROMISSORY NOTE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Principal Loan Maturity Loan No. Call Collateral Account Officer Initials
Date
- ------------------------------------------------------------------------------------------------
$522,226.00 06-01-97 06-01-2000 20 310
- ------------------------------------------------------------------------------------------------
References the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- ------------------------------------------------------------------------------------------------
Borrower: New Horizons Computer Learning Center Lender: Marine National Bank
of Metropolitan New York, Inc. Newport Beach Office
ATTN: Don McCabe, 1 Penn plaza, Suite 5000 500 Newport Center Drive
New York, NY 10119 Newport Beach, CA 92660
================================================================================================
Principal Amount: $522,226.00 Interest Rate: 9.500% Date of Note: June 1, 1997
</TABLE>
PROMISE TO PAY. NEW HORIZONS COMPUTER LEARNING CENTER OF METROPOLITIAN NEW YORK,
INC. ("Borrower") promises to pay to MARINE NATIONAL BANK ("Lender"), or order,
in lawful money of the United States of America, the principal amount of Five
Hundred Twenty Two Thousand Two Hundred Twenty Six & 00/100 Dollars
($522,226.00), together with interest at the rate of 9.500% per annum on the
unpaid outstanding principal balance from June 1, 1997, until paid in full.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in 35
payments of $16,762.38 each payment and an irregular last payment estimated at
$16,762.53. Borrower's first payment is due July 1, 1997, and all subsequent
payments are due on the same day of each month after that. Borrower's final
payment will be due on June 1, 2000, and will be for all principle and all
accrued Interest not yet paid. Payments include principle and interest. Interest
on this Note is computed on a 365/360 simple interest basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments under the payment schedule. Rather, they will reduce the
principal balance due and may result in Borrower making fewer payments..
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $5.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency laws.
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired. (h) Lender in good faith deems itself insecure.
<PAGE>
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred). If Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15) days;
or (b) if the cure requires more than fifteen (15) days, immediately initiates
steps which Lender deems in Lender's sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, increase the interest rate on this Note to 5.000 percentage points. Lender
may hire or pay someone else to help collect this Note if Borrower does not pay.
Borrower also will pay Lender that amount. This includes, subject to any limits
under applicable law, Lender's attorneys' fees and Lender's legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other sums
provided by law. This Note has been delivered to Lender and accepted by Lender
in the State of California. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of ORANGE County, the State
of California. Lender and Borrower hereby waive the right to any jury trial in
any action, proceeding, or counterclaim brought by either Lender or Borrower
against the other. This Note shall be governed by and construed in accordance
with the laws of the State of California.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by A COMMERICAL SECURITY AGREEMENT DATED JUNE
1, 1997, EXECUTED BY BORROWER OR PLEDGOR IN CONNECTION WITH THIS NOTE.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extend
allowed by law, waive any applicable statute of limitations, presentment, demand
for payment, protest and notice of dishonor. Upon any change in the terms of
this Note, and unless otherwise expressly stated in writing, no party who signs
this Note, whether as maker, guarantor, accommodation maker or endorser, shall
be released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan, or release any party
or guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.
===============================================================================
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
NEW HORIZONS COMPUTER LEARNING CENTER OF METROPOLITAN NEW YORK, INC.
By: _______________________________________________
ROBERT S. MCMILLAN, CHIEF FINANCIAL OFFICER
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$522,226 06-01-97 06-01-00 20 310
- ------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- ------------------------------------------------------------------------------------------------------
Borrower: NEW HORIZONS COMPUTER LEARNING Lender: MARINE NATIONAL BANK
CENTER OF METROPOLITAN, NEWPORT BEACH OFFICE
NEW YORK, INC. 500 NEWPORT CENTER DRIVE
ATTN: DON MCCABE NEWPORT BEACH, CA 92660
1 PENN PLAZA, SUITE 5000
NEW YORK, NY 10119
Guarantor: NEW HORIZONS WORLDWIDE, INC.
500 CAMPUS DRIVE
MORGANVILLE, NJ 07751
</TABLE>
===============================================================================
AMOUNT OF GUARANTY. The principal amount of this Guaranty is Five Hundred Twenty
Two Thousand Two Hundred Twenty Six & 00/100 Dollars ($522,226.00).
GUARANTY. For good and valuable consideration, NEW HORIZONS WORLDWIDE, INC.
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
MARINE NATIONAL BANK (" Lender") or Its order, on demand, in legal tender of the
United States of America, the Indebtedness (as that term is defined below) of
NEW HORIZONS COMPUTER LEARNING CENTER OF METROPOLITAN NEW YORK, INC.
("Borrower") to Lender on the terms and conditions set forth in this Guaranty.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
Borrower. The word Borrower means NEW HORIZONS COMPUTER LEARNING CENTER OF
METROPLITAN NEYORK, INC.
Guarantor. The word Guarantor means NEW HORIZONS WORLDWIDE, INC.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated JUNE 1, 1997.
INDEBTEDNESS. The word "Indebtedness" means the Note, including (a) all
principal, (b) all interest, (c) all late charges, (d) all loan fees and loan
charges, and (e) all collection costs and expenses relating to the Note or to
any collateral for the Note. Collection costs and expenses include without
limitation all of Lender's attorney's fees and Lender's legal expenses, whether
or not suit is instituted, and attorney's fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
LENDER. The word "Lender" means MARINE NATIONAL BANK, its successors and
assigns.
NOTE. The word "Note" means the promissory note or credit agreement dated June
1, 1997, in the original principal amount of $522,226.00 from Borrower to
Lender, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the promissory note or
agreement.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the sum of the principal amount of $522,226.00, plus
all interest thereon, plus all of Lender's costs, expenses, and attorney's fees
Incurred in connection with or relating to (a) the collection of the
indebtedness, (b) the collection and sale of any collateral for the Indebtedness
or this Guaranty, or (c) the enforcement of this Guaranty. Attorney's fees
include, without limitation, attorney's fees whether or not there is a lawsuit,
and if there is a lawsuit, any fees and costs for trial and appeals.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties The liability of
Guarantor will be the aggregate liability of Guarantor under the terms of this
Guaranty and any such other unterminated guaranties.
<PAGE>
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all Indebtedness within the limits set forth in
the preceding section of this Guaranty.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all indebtedness shall have
been fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. Release of any other
guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of Guarantor under this Guaranty. A revocation received by
Lender from any one or more Guarantors shall not affect the liability of any
remaining Guarantors under this Guaranty.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, without notice
or demand and without lessening Guarantor's liability under this Guaranty, from
time to time: (a) to make one or more additional secured or unsecured loans to
Borrower, to lease equipment or other goods to Borrower, or otherwise to extend
additional credit to Borrower; (b) to alter, compromise, renew, extend,
accelerate, or otherwise change one or more times the time for payment or other
terms of the Indebtedness or any part of the Indebtedness, Including Increases
and decreases of the rate of Interest on the Indebtedness; extensions may be
repeated and may be for longer than the original loan term; (c) to release,
substitute, agree not to sue, or deal with any one or more of Borrower's
sureties, endorsers, or other guarantors on any terms or in any manner Lender
may choose; (d) to determine how, when and what application of payments and
credits shall be made on the Indebtedness; (e) to apply such security and direct
the order or manner of sale thereof, Including without Imitation, any
nonjudicial sale permitted by the terms of the controlling security agreement or
deed of trust, as Lender in its discretion may determine; (f) to sell, transfer,
assign, or grant participations in all or any part of the Indebtedness; and (g)
to assign or transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, liquidate, or otherwise dispose of all or
substantially all of Guarantor's assets, or any interest therein; (f) upon
Lender's request, Guarantor will provide to Lender financial and credit
information in form acceptable to Lender, and all such financial information
which currently has been, and all future financial information which will be
provided to Lender is and will be true and correct in all material respects and
fairly present the financial condition of Guarantor as of the dates the
financial information is provided; (g) no material adverse change has occurred
in Guarantor's financial condition since the date of the most recent financial
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any Information or
documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender to (a) make any presentment, protest, demand, or
notice of any kind, including notice of change of any terms of repayment of the
Indebtedness, default by Borrower or any other guarantor or surety, any action
or nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, or the creation of new or additional Indebtedness; (b) proceed against
any person, including Borrower, before proceeding against Guarantor; (c) proceed
against any collateral for the Indebtedness, including Borrower's collateral,
before proceeding against Guarantor; (d) apply any payments or proceeds received
against the Indebtedness in any order; (e) give notice of the terms, time, and
place of any sale of the collateral pursuant to the Uniform Commercial Code or
any other law governing such sale; (f) disclose any information about the
Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or
about any action or nonaction of Lender; or (g) pursue any remedy or course of
action in Lender's power whatsoever. Guarantor also waives any and all rights or
defenses arising by reason of (h) any disability or other defense of Borrower,
any other guarantor or surety or any other person; (i) the cessation from any
cause whatsoever, other than payment in full, of the Indebtedness; (j) the
application of proceeds of the Indebtedness by Borrower for purposes other than
the purposes understood and intended by Guarantor and Lender; (k) any act of
omission or commission by Lender which directly or indirectly results in or
contributes to the discharge of Borrower or any other guarantor or surety, or
the Indebtedness, or the loss or release of any collateral by operation of law
or otherwise; (I) any statute of limitations in any action under this Guaranty
or on the Indebtedness; or (m) any modification or change in terms of the
Indebtedness, whatsoever, including without limitation, the renewal, extension,
acceleration, or other change in the time payment of the Indebtedness is due and
any change in the interest rate, and including any such modification or change
in terms after revocation of this Guaranty on Indebtedness incurred prior to
such revocation. Until all Indebtedness is paid in full, Guarantor waives all
rights and any defenses Guarantor may have arising out of an election of
remedies by Lender even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
Guarantor's rights of subrogation and reimbursement against Borrower or any
other guarantor or surety by operation of Section
<PAGE>
580a, 580b, 580d and 726 of the California Code of Civil Procedure or otherwise.
This waiver includes, without limitation, any loss of rights Guarantor may
suffer by reason of any rights or protections of Borrower in connection with any
anti-deficiency laws or other laws limiting or discharging the Indebtedness or
Borrower's obligations (including, without limitation, Sections 726, 580a, 580b,
and 580d of the California Code of Civil Procedure). Guarantor waives all rights
and protections of any kind which Guarantor may have for any reason, which would
affect or limit the amount of any recovery by Lender from Guarantor following a
nonjudicial sale or judicial foreclosure of any real or personal property
security for the Indebtedness including, but not limited to, the right to any
fair market value hearing pursuant to California Code of Civil Procedure Section
580a. Guarantor understands and agrees that the foregoing waivers are waivers of
substantive rights and defenses to which Guarantor might otherwise be entitled
under state and federal law. The rights and defenses waived include, without
limitation, those provided by California laws of suretyship and guaranty,
anti-deficiency laws, and the Uniform Commercial Code. Guarantor acknowledges
that Guarantor has provided these waivers of rights and defenses with the
intention that they be fully relied upon by Lender. Until all Indebtedness is
paid in full, Guarantor waives any right to enforce any remedy Lender may have
against Borrower or any other guarantor, surety, or other person, and further,
Guarantor waives any right to participate in any collateral for the Indebtedness
now or hereafter held by Lender.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Guarantor hereby
assigns, conveys, delivers, pledges, and transfers to Lender all of Guarantor's
right, title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, excluding
however all IRA, Keogh, and trust accounts. Every such security interest and
right of setoff may be exercised without demand upon or notice to Guarantor. No
security interest or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Lender or by any neglect to exercise such right of
setoff or to enforce such security interest or by any delay in so doing. Every
right of setoff and security interest shall continue in full force and effect
until such right of setoff or security interest is specifically waived or
released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
INTEGRATION, AMENDMENT. Guarantor warrants, represents and agrees that this
Guaranty, together with any exhibits or schedules incorporated herein, fully
Incorporates the agreements and understandings of Guarantor with Lender with
respect to the subject matter hereof and all prior negotiations, drafts, and
other extrinsic communications between Guarantor and Lender shall have no
evidentiary effect whatsoever. Guarantor further agrees that Guarantor has read
and fully understands the terms of this Guaranty; Guarantor has had the
opportunity to be advised by Guarantor's attorney with respect to this Guaranty;
the Guaranty fully reflects Guarantor's intentions and parol evidence is not
required to interpret the terms of this Guaranty. Guarantor hereby indemnifies
and holds Lender harmless from all losses, claims, damages, and costs (including
Lender's attorneys' fees) suffered or incurred by Lender as a result of any
breach by Guarantor of the warranties, representations and agreements of this
paragraph. No alteration or amendment to this Guaranty shall be effective unless
given in writing and signed by the parties sought to be charged or bound by the
alteration or amendment.
<PAGE>
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of ORANGE County,
State of California. Lender and Guarantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of Lender's
costs and expenses, including attorney's fees and Lender's legal expenses,
incurred in connection with the enforcement of this Guaranty. Lender may pay
someone else to help enforce this Guaranty, and Guarantor shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender's attorneys
fees and legal expenses whether or not there is a lawsuit, including attorney's
fees and legal expenses for bankruptcy proceedings (and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court costs and
such additional fees as may be directed by the court.
NOTICES. All notices required to be given under this Guaranty and all requests
and other communications shall be in writing and shall be deemed to have been
duly delivered if delivered either personally, by overnight delivery service or
three days from the date of mailing by certified mail, return receipt requested,
or on the date of first refusal of delivery, to the parties at their addresses
set forth above or such other address as a party may designate in the manner
provided herein for giving of notices. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors. For
notice purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or Guarantor,
then all words used in this Guaranty in the singular shall be deemed to have
been used in the plural where the context and construction so require; and where
there is more than one Borrower named in this Guaranty or when this Guaranty is
executed by more than one Guarantor, the words "Borrower" and "Guarantor"
respectively shall mean all and any one or more of them. The words "Guarantor,"
"Borrower," and "Lender" include the heirs, successors, assigns, and transferees
of each of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of this
Guaranty. If a court of competent jurisdiction finds any provision of this
Guaranty to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrower or
Guarantor are corporations or partnerships, it is not necessary for Lender to
inquire into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this Guaranty
unless such waiver is given in writing and signed by Lender. No delay or
omission on the part of Lender in exercising any right shall operate as a waiver
of such right or any other right. A waiver by Lender of a provision of this
Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise
to demand strict compliance with that provision or any other provision of this
Guaranty. No prior waiver by Lender, nor any course of dealing between Lender
and Guarantor, shall constitute a waiver of any of Lender's rights or of any of
Guarantor's obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
<PAGE>
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED JUNE 1, 1997.
GUARANTOR:
NEW HORIZONS WORLDWIDE, INC.
BY:
- ---------------------------------
THOMAS J. BRESNAN, PRESIDENT
Signed, acknowledged and delivered in the presence of:
X
- ---------------------------------
Witness
X
- ---------------------------------
Witness
===============================================================================
EXHIBIT 4.3
<TABLE>
<CAPTION>
PROMISSORY NOTE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
- -----------------------------------------------------------------------------------------------------
$42,700.00 06-01-97 06-01-2000 20 310
- -----------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- -----------------------------------------------------------------------------------------------------
Borrower: New Horizons Computer Learning Center Lender: Marine National Bank
of Cleveland, LTD., L.L.C. Newport Beach Office
ATTN: Joan Bailey, 6000 Rockside Woods 500 Newport Center Drive
Independence, OH 44131 Newport Beach, CA 92660
====================================================================================================
Principal Amount: $42,700.00 Interest Rate: 9.500% Date of Note: June 1,1997
</TABLE>
PROMISE TO PAY. NEW HORIZONS COMPUTER LEARNING CENTER OF CLEVELAND, LTD., LLC.
("Borrower") promises to pay to MARINE NATIONAL BANK ("Lender"), or order, in
lawful money of the United States of America, the principal amount of Forty Two
Thousand Seven Hundred & 00/100 Dollars ($42,700.00), together with interest at
the rate of 9.500% per annum on the unpaid outstanding principal balance from
June 1, 1997, until paid in full.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in 35
payments of $1,370.58 each payment and an irregular last payment estimated at
$1,370.69. Borrower's first payment is due July 1, 1997, and all subsequent
payments are due on the same day of each month after that. Borrower's final
payment will be due on June 1, 2000, and will be for all principle and all
accrued Interest not yet paid. Payments include principle and interest. Interest
on this Note is computed on a 365/360 simple interest basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first
<PAGE>
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments under the payment schedule. Rather, they will reduce the
principal balance due and may result in Borrower making fewer payments..
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $5.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender.
<PAGE>
(c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency laws.
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired. (h) Lender in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred). If Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15) days;
or (b) if the cure requires more than fifteen (15) days, immediately initiates
steps which Lender deems in Lender's sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, increase the interest rate on this Note to 5.000 percentage points. Lender
may hire or pay someone else to help collect this Note if Borrower does not pay.
Borrower also will pay Lender that amount. This includes, subject to any limits
under applicable law, Lender's attorneys' fees and Lender's legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other sums
provided by law. This Note has been delivered to Lender and accepted by Lender
in the State of California. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of ORANGE County, the State
of California. Lender and Borrower hereby waive the right to any jury trial in
any action, proceeding, or counterclaim brought by either Lender or Borrower
against the other. This Note shall be governed by and construed in accordance
with the laws of the State of California.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by A COMMERICAL SECURITY AGREEMENT DATED JUNE
1, 1997, EXECUTED BY BORROWER OR PLEDGOR IN CONNECTION WITH THIS NOTE.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extend
allowed by law, waive any applicable statute of limitations, presentment, demand
for payment, protest and notice of dishonor. Upon any change in the terms of
this Note, and unless otherwise expressly stated in writing, no party who signs
this Note, whether as maker, guarantor, accommodation maker or endorser, shall
be released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any
<PAGE>
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
===============================================================================
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
NEW HORIZONS COMPUTER LEARNING CENTER OF METROPOLITAN NEW YORK, INC.
By: _______________________________________________
THOMAS J. BRESNAN, Manager
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$42,700 06-01-97 06-01-00 20 310
- --------------------------------------------------------------------------------------------------------
References in the shaded area for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- --------------------------------------------------------------------------------------------------------
Borrower: NEW HORIZONS COMPUTER LEARNING Lender: MARINE NATIONAL BANK
CENTER OF CLEVELAND, LTD., L.L.C. NEWPORT BEACH OFFICE
ATTN: JOAN BAILEY 500 NEWPORT CENTER DRIVE
6000 ROCKSIDE WOODS, BLVD NEWPORT BEACH, CA 92660
INDEPENDENCE, OH 44131
Guarantor: NEW HORIZONS WORLDWIDE, INC.
500 CAMPUS DRIVE
MORGANVILLE, NJ 07751
===============================================================================
</TABLE>
AMOUNT OF GUARANTY. The principal amount of this Guaranty is Forty Two Thousand
Seven Hundred & 00/100 Dollars ($42,700.00).
GUARANTY. For good and valuable consideration, NEW HORIZONS WORLDWIDE, INC.
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
MARINE NATIONAL BANK (" Lender") or Its order, on demand, in legal tender of the
United States of America, the Indebtedness (as that term is defined below) of
NEW HORIZONS COMPUTER LEARNING CENTER OF CLEVELAND, LTD., L.L.C. ("Borrower") to
Lender on the terms and conditions set forth in this Guaranty.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
Borrower. The word Borrower means NEW HORIZONS COMPUTER LEARNING CENTER OF
CLEVELAND, LTD., L.L.C.
Guarantor. The word Guarantor means NEW HORIZONS WORLDWIDE, INC.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated JUNE 1, 1997.
INDEBTEDNESS. The word "Indebtedness" means the Note, including (a) all
principal, (b) all interest, (c) all late charges, (d) all loan fees and loan
charges, and (e) all collection costs and expenses relating to the Note or to
any collateral for the Note. Collection costs and expenses include without
limitation all of Lender's attorney's fees and Lender's legal expenses, whether
or not suit is instituted, and attorney's fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
LENDER. The word "Lender" means MARINE NATIONAL BANK, its successors and
assigns.
NOTE. The word "Note" means the promissory note or credit agreement dated June
1, 1997, in the original principal amount of $42,700.00 from Borrower to Lender,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the promissory note or agreement.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the sum of the principal amount of $42,700.00, plus
all interest thereon, plus all of Lender's costs, expenses, and attorney's fees
Incurred in connection with or relating to (a) the collection of the
indebtedness, (b) the collection and sale of any collateral for the Indebtedness
or this Guaranty, or (c) the enforcement of this Guaranty. Attorney's fees
include, without limitation, attorney's fees whether or not there is a lawsuit,
and if there is a lawsuit, any fees and costs for trial and appeals.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties The liability of
Guarantor will be the aggregate liability of Guarantor under the terms of this
Guaranty and any such other unterminated guaranties.
<PAGE>
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all Indebtedness within the limits set forth in
the preceding section of this Guaranty.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all indebtedness shall have
been fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. Release of any other
guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of Guarantor under this Guaranty. A revocation received by
Lender from any one or more Guarantors shall not affect the liability of any
remaining Guarantors under this Guaranty.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, without notice
or demand and without lessening Guarantor's liability under this Guaranty, from
time to time: (a) to make one or more additional secured or unsecured loans to
Borrower, to lease equipment or other goods to Borrower, or otherwise to extend
additional credit to Borrower; (b) to alter, compromise, renew, extend,
accelerate, or otherwise change one or more times the time for payment or other
terms of the Indebtedness or any part of the Indebtedness, Including Increases
and decreases of the rate of Interest on the Indebtedness; extensions may be
repeated and may be for longer than the original loan term; (c) to release,
substitute, agree not to sue, or deal with any one or more of Borrower's
sureties, endorsers, or other guarantors on any terms or in any manner Lender
may choose; (d) to determine how, when and what application of payments and
credits shall be made on the Indebtedness; (e) to apply such security and direct
the order or manner of sale thereof, Including without Imitation, any
nonjudicial sale permitted by the terms of the controlling security agreement or
deed of trust, as Lender in its discretion may determine; (f) to sell, transfer,
assign, or grant participations in all or any part of the Indebtedness; and (g)
to assign or transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, liquidate, or otherwise dispose of all or
substantially all of Guarantor's assets, or any interest therein; (f) upon
Lender's request, Guarantor will provide to Lender financial and credit
information in form acceptable to Lender, and all such financial information
which currently has been, and all future financial information which will be
provided to Lender is and will be true and correct in all material respects and
fairly present the financial condition of Guarantor as of the dates the
financial information is provided; (g) no material adverse change has occurred
in Guarantor's financial condition since the date of the most recent financial
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any Information or
documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender to (a) make any presentment, protest, demand, or
notice of any kind, including notice of change of any terms of repayment of the
Indebtedness, default by Borrower or any other guarantor or surety, any action
or nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, or the creation of new or additional Indebtedness; (b) proceed against
any person, including Borrower, before proceeding against Guarantor; (c) proceed
against any collateral for the Indebtedness, including Borrower's collateral,
before proceeding against Guarantor; (d) apply any payments or proceeds received
against the Indebtedness in any order; (e) give notice of the terms, time, and
place of any sale of the collateral pursuant to the Uniform Commercial Code or
any other law governing such sale; (f) disclose any information about the
Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or
about any action or nonaction of Lender; or (g) pursue any remedy or course of
action in Lender's power whatsoever. Guarantor also waives any and all rights or
defenses arising by reason of (h) any disability or other defense of Borrower,
any other guarantor or surety or any other person; (i) the cessation from any
cause whatsoever, other than payment in full, of the Indebtedness; (j) the
application of proceeds of the Indebtedness by Borrower for purposes other than
the purposes understood and intended by Guarantor and Lender; (k) any act of
omission or commission by Lender which directly or indirectly results in or
contributes to the discharge of Borrower or any other guarantor or surety, or
the Indebtedness, or the loss or release of any collateral by operation of law
or otherwise; (I) any statute of limitations in any action under this Guaranty
or on the Indebtedness; or (m) any modification or change in terms of the
Indebtedness, whatsoever, including without limitation, the renewal, extension,
acceleration, or other change in the time payment of the Indebtedness is due and
any change in the interest rate, and including any such modification or change
in terms after revocation of this Guaranty on Indebtedness incurred prior to
such revocation. Until all Indebtedness is paid in full, Guarantor waives all
rights and any defenses Guarantor may have arising out of an election of
remedies by Lender even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
Guarantor's rights of subrogation and reimbursement against Borrower or any
other guarantor or surety by operation of Section 580a, 580b, 580d and 726 of
the California Code of Civil Procedure or otherwise. This waiver includes,
without limitation, any loss
<PAGE>
of rights Guarantor may suffer by reason of any rights or protections of
Borrower in connection with any anti-deficiency laws or other laws limiting or
discharging the Indebtedness or Borrower's obligations (including, without
limitation, Sections 726, 580a, 580b, and 580d of the California Code of Civil
Procedure). Guarantor waives all rights and protections of any kind which
Guarantor may have for any reason, which would affect or limit the amount of any
recovery by Lender from Guarantor following a nonjudicial sale or judicial
foreclosure of any real or personal property security for the Indebtedness
including, but not limited to, the right to any fair market value hearing
pursuant to California Code of Civil Procedure Section 580a. Guarantor
understands and agrees that the foregoing waivers are waivers of substantive
rights and defenses to which Guarantor might otherwise be entitled under state
and federal law. The rights and defenses waived include, without limitation,
those provided by California laws of suretyship and guaranty, anti-deficiency
laws, and the Uniform Commercial Code. Guarantor acknowledges that Guarantor has
provided these waivers of rights and defenses with the intention that they be
fully relied upon by Lender. Until all Indebtedness is paid in full, Guarantor
waives any right to enforce any remedy Lender may have against Borrower or any
other guarantor, surety, or other person, and further, Guarantor waives any
right to participate in any collateral for the Indebtedness now or hereafter
held by Lender.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Guarantor hereby
assigns, conveys, delivers, pledges, and transfers to Lender all of Guarantor's
right, title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, excluding
however all IRA, Keogh, and trust accounts. Every such security interest and
right of setoff may be exercised without demand upon or notice to Guarantor. No
security interest or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Lender or by any neglect to exercise such right of
setoff or to enforce such security interest or by any delay in so doing. Every
right of setoff and security interest shall continue in full force and effect
until such right of setoff or security interest is specifically waived or
released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
INTEGRATION, AMENDMENT. Guarantor warrants, represents and agrees that this
Guaranty, together with any exhibits or schedules incorporated herein, fully
Incorporates the agreements and understandings of Guarantor with Lender with
respect to the subject matter hereof and all prior negotiations, drafts, and
other extrinsic communications between Guarantor and Lender shall have no
evidentiary effect whatsoever. Guarantor further agrees that Guarantor has read
and fully understands the terms of this Guaranty; Guarantor has had the
opportunity to be advised by Guarantor's attorney with respect to this Guaranty;
the Guaranty fully reflects Guarantor's intentions and parol evidence is not
required to interpret the terms of this Guaranty. Guarantor hereby indemnifies
and holds Lender harmless from all losses, claims, damages, and costs (including
Lender's attorneys' fees) suffered or incurred by Lender as a result of any
breach by Guarantor of the warranties, representations and agreements of this
paragraph. No alteration or amendment to this Guaranty shall be effective unless
given in writing and signed by the parties sought to be charged or bound by the
alteration or amendment.
<PAGE>
Applicable Law. This Guaranty has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of ORANGE County,
State of California. Lender and Guarantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's
costs and expenses, including attorney's fees and Lender's legal expenses,
incurred in connection with the enforcement of this Guaranty. Lender may pay
someone else to help enforce this Guaranty, and Guarantor shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender's attorneys
fees and legal expenses whether or not there is a lawsuit, including attorney's
fees and legal expenses for bankruptcy proceedings (and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court costs and
such additional fees as may be directed by the court.
Notices. All notices required to be given under this Guaranty and all requests
and other communications shall be in writing and shall be deemed to have been
duly delivered if delivered either personally, by overnight delivery service or
three days from the date of mailing by certified mail, return receipt requested,
or on the date of first refusal of delivery, to the parties at their addresses
set forth above or such other address as a party may designate in the manner
provided herein for giving of notices. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors. For
notice purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or Guarantor,
then all words used in this Guaranty in the singular shall be deemed to have
been used in the plural where the context and construction so require; and where
there is more than one Borrower named in this Guaranty or when this Guaranty is
executed by more than one Guarantor, the words "Borrower" and "Guarantor"
respectively shall mean all and any one or more of them. The words "Guarantor,"
"Borrower," and "Lender" include the heirs, successors, assigns, and transferees
of each of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of this
Guaranty. If a court of competent jurisdiction finds any provision of this
Guaranty to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrower or
Guarantor are corporations or partnerships, it is not necessary for Lender to
inquire into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights under this Guaranty
unless such waiver is given in writing and signed by Lender. No delay or
omission on the part of Lender in exercising any right shall operate as a waiver
of such right or any other right. A waiver by Lender of a provision of this
Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise
to demand strict compliance with that provision or any other provision of this
Guaranty. No prior waiver by Lender, nor any course of dealing between Lender
and Guarantor, shall constitute a waiver of any of Lender's rights or of any of
Guarantor's obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
<PAGE>
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED JUNE 1, 1997.
GUARANTOR:
NEW HORIZONS WORLDWIDE, INC.
BY:
- ----------------------------------
THOMAS J. BRESNAN, PRESIDENT
Signed, acknowledged and delivered in the presence of:
X
- ----------------------------------
Witness
X
- ----------------------------------
Witness
===============================================================================
EXHIBIT 4.4
PROMISSORY NOTE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
$2,750,000.00 06-01-97 06-01-98 81 310
- -------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- --------------------------------------------------------------------------------------------------------
Borrower: New Horizons Education Corporation Lender: Marine National Bank
1231 East Dyer Road, Suite 110 Newport Beach Office
Santa Ana, CA 92705 500 Newport Center Drive
Newport Beach, CA 92660
=======================================================================================================
Principal Amount: $2,750,000.00 Initial Rate: 9.000% Date of Note: June 1, 1997
</TABLE>
PROMISE TO PAY. NEW HORIZONS EDUCATION CORPORATION ("Borrower") promises to pay
to MARINE NATIONAL BANK ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Two Million Seven Hundred Fifty
Thousand & 00/100 Dollars ($2,750,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each advance until
repayment of each advance.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid interest on June 1,
1998. In addition, Borrower will pay regular monthly payments of accrued unpaid
interest beginning July 1, 1997, and all subsequent interest payments are due on
the same day of each month after that. Interest on this Note is computed on a
365/360 simple interest basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Lender's address shown above or at such
other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an Independent Index which is the NATIONAL
PRIME, WHICH IS THE COMMERICAL PRIME RATE AS REPORTED IN THE WESTERN EDITION OF
THE WALL STREET JOURNAL (the "Index"). The Index is not necessarily the lowest
rate charged by Lender on its loans. If the Index becomes unavailable during the
term of this loan, Lender may designate a substitute Index after notice to
Borrower. Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates as
well. The interest rate change will not occur more often than each DAY. The
Index currently is 8.500% per annum. The interest rate to be applied to the
unpaid principal balance of this Note will be at a rate of 0.500 percentage
points over the Index, resulting in an initial rate of 9.000% per annum. NOTICE:
Under no circumstances will the interest rate on this Note be more than the
maximum rate allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of
this Note, Borrower understands that Lender is entitled to a minimum interest
charge of $100.00. Other than Borrower's obligation to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather they will reduce the principal balance due.
<PAGE>
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $5.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency laws.
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired. (h) Lender in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred). If Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15) days;
or (b) if the cure requires more than fifteen (15) days, immediately initiates
steps which Lender deems in Lender's sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, increase the variable interest rate on this Note to 5.500 percentage points
over the Index. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of California. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of ORANGE County, the State of California. Lender and Borrower hereby
waive the right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Borrower against the other. This Note shall be
governed by and construed in accordance with the laws of the State of
California.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by SIX COMMERCIAL SECURITY AGREEMENTS DATED
June 1, 1997, EXECUTED BY BORROWER OR PLEDGOR IN CONNECTION WITH THIS NOTE.
LINE OF CREDIT. This Note evidences a straight line of credit. Once the total
amount of principal has been advanced, Borrower is not entitled to further loan
advances. Advances under this Note may be requested either orally or in writing
by Borrower or by an authorized person. Lender may, but need not,
<PAGE>
require that all oral requests be confirmed in writing. All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown above. The following party or parties are
authorized to request advances under the line of credit until Lender receives
from Borrower at Lender's address shown above written notice of revocation of
their authority: ROBERT S. MCMILLAN, CHIEF FINANCIAL OFFICER; CHARLES G. KINCH,
PRESIDENT AND CEO; and THOMAS J. BRESNAN, CHAIRMAN OF THE BOARD & CEO. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guarantee of this Note or any other loan with Lender; (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (e) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and Borrower.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extend
allowed by law, waive any applicable statute of limitations, presentment, demand
for payment, protest and notice of dishonor. Upon any change in the terms of
this Note, and unless otherwise expressly stated in writing, no party who signs
this Note, whether as maker, guarantor, accommodation maker or endorser, shall
be released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan, or release any party
or guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.
===============================================================================
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
NEW HORIZONS EDUCATION CORPORATION
By: _______________________________________________
ROBERT S. MCMILLAN, CHIEF FINANCIAL OFFICER
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$2,750,000 06-01-97 06-01-98 20 310
- ---------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- ---------------------------------------------------------------------------------------------------------
Borrower: NEW HORIZONS EDUCATION CORPORATION Lender: MARINE NATIONAL BANK
1231 EAST DYER ROAD, SUITE 110 NEWPORT BEACH OFFICE
SANTA ANA, CA 92705-5643 500 NEWPORT CENTER DRIVE
NEWPORT BEACH, CA 92660
Guarantor: NEW HORIZONS WORLDWIDE, INC.
500 CAMPUS DRIVE
MORGANVILLE, NJ 07751
===============================================================================
</TABLE>
AMOUNT OF GUARANTY. The principal amount of this Guaranty is Three Million Eight
Hundred and Twenty-Five Thousand & 00/100 Dollars ($3,825,000.00).
CONTINUING GUARANTY. For good and valuable consideration, NEW HORIZONS
WORLDWIDE, INC. ("Guarantor") absolutely and unconditionally guarantees and
promises to pay to MARINE NATIONAL BANK (" Lender") or Its order, on demand, in
legal tender of the United States of America, the Indebtedness (as that term is
defined below) of NEW HORIZONS EDUCATION CORPORATION ("Borrower") to Lender on
the terms and conditions set forth in this Guaranty. The obligations of
Guarantor under this Guaranty are continuing.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
Borrower. The word Borrower means NEW HORIZONS EDUCATION CORPORATION
Guarantor. The word Guarantor means NEW HORIZONS WORLDWIDE, INC.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated JUNE 1, 1997.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive sense
and means and including any and all of Borrower's liabilities, obligations,
debts and indebtedness to Lender, now existing or hereinafter incurred or
created, including, without limitation, all loans, advances, interest, costs,
debts, overdraft Indebtedness, credit card indebtedness, lease obligations,
other obligations, and liabilities of Borrower, or any of them, and any present
or future judgments against Borrower, or any of them: and whether any such
indebtedness is voluntarily or involuntarily incurred, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined: whether
Borrower may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety: whether recovery on the Indebtedness may
be or any become barred or unenforceable against Borrower for any reason
whatsoever: and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.
LENDER. The word "Lender" means MARINE NATIONAL BANK, its successors and
assigns.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the sum of the principal amount of $3,825,000.00,
plus all interest thereon, plus all of Lender's costs, expenses, and attorney's
fees Incurred in connection with or relating to (a) the collection of the
indebtedness, (b) the collection and sale of any collateral for the Indebtedness
or this Guaranty, or (c) the enforcement of this Guaranty. Attorney's fees
include, without limitation, attorney's fees whether or not there is a lawsuit,
and if there is a lawsuit, any fees and costs for trial and appeals.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties The liability of
Guarantor will be the aggregate liability of Guarantor under the terms of this
Guaranty and any such other unterminated guaranties.
<PAGE>
NATURE OF GUARANTY. Guarantor liability under this Guaranty shall be open and
continuous for so long as the Guaranty remains in force. Guarantor intends to
guarantee at all times the performance and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of all Indebtedness
within the limits set forth in the preceding section of this Guaranty.
Accordingly, no payments made upon the Indebtedness will discharge or diminish
the continuing liability of Guarantor in connection with any remaining portions
of the Indebtedness or any of the Indebtedness which subsequently arises or is
thereafter incurred or contracted.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all indebtedness incurred or
contracted before receipt by Lender of any notice or revocation shall have been
fully and finally paid and satisfied and all other obligations of Guaranty shall
have been performed in full. If Guarantor elects to revoke this Guaranty,
Guarantor may only do so in writing. Guarantor's written notice of revocation
must be mailed to Lender, by certified mail, at the address of Lender listed
above or such other place as Lender may designate in writing. Written revocation
of this Guaranty will apply only to advance or new Indebtedness creted after
actual receipt by Lender of Guarantor's written revocation. For this purpose and
without limitation, the term "new Indebtedness" does not include Indebtedness
which at the time of notice of revocation is contingent, unliquidated,
undetermined or not due and which later becomes absolute, liquidated, determined
or due. This Guaranty will continue to bind Guarantor for all Indebtedness
incurred by Borrower or committed by Lender prior to receipt of Guarantor's
written notice of revocation, including any extensions, renewals, substitutions
or modification of the Indebtedness. All renewals, extensions, substitutions,
and modification of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of Guarantor,
regardless of Lender's actual notice of Guarantor's death. Subject to the
foregoing, Guarantors executor or administrator or other legal representative
may terminate this Guaranty in the same manner in which Guarantor might have
terminated it and with the same effect. Release of any other guarantor or
termination of any other guaranty of the Indebtedness shall not affect the
liability of Guarantor under this Guaranty. A revocation received by Lender from
any on or more Guarantors shall not affect the liability of any remaining
Guarantors under this Guaranty. It is anticipated that fluctuations may occur in
the aggregate amount of Indebtedness covered by this Guaranty, and it is
specifically acknowledged and agreed by Guarantor that reductions in the amount
of Indebtedness, even to zero dollars ($0.00), prior to written revocation of
this Guaranty by Guarantor shall not constitute a termination of this Guaranty.
This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and
assigns so long as any of the guaranteed Indebtedness remains unpaid and even
though the Indebtedness guaranteed may from time to time be zero dollars
($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (a) prior to
revocation as set forth above, make one or more additional secured or unsecured
loans to Borrower, to lease equipment or other goods to Borrower, or otherwise
to extend additional credit to Borrower; (b) to alter, compromise, renew,
extend, accelerate, or otherwise change one or more times the time for payment
or other terms of the Indebtedness or any part of the Indebtedness, Including
Increases and decreases of the rate of Interest on the Indebtedness; extensions
may be repeated and may be for longer than the original loan term; (c) to
release, substitute, agree not to sue, or deal with any one or more of
Borrower's sureties, endorsers, or other guarantors on any terms or in any
manner Lender may choose; (d) to determine how, when and what application of
payments and credits shall be made on the Indebtedness; (e) to apply such
security and direct the order or manner of sale thereof, Including without
Imitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(f) to sell, transfer, assign, or grant participations in all or any part of the
Indebtedness; and (g) to assign or transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, liquidate, or otherwise dispose of all or
substantially all of Guarantor's assets, or any interest therein; (f) upon
Lender's request, Guarantor will provide to Lender financial and credit
information in form acceptable to Lender, and all such financial information
which currently has been, and all future financial information which will be
provided to Lender is and will be true and correct in all material respects and
fairly present the financial condition of Guarantor as of the dates the
financial information is provided; (g) no material adverse change has occurred
in Guarantor's financial condition since the date of the most recent financial
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any Information or
documents acquired by Lender in the course of its relationship with Borrower.
<PAGE>
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender to (a) make any presentment, protest, demand, or
notice of any kind, including notice of change of any terms of repayment of the
Indebtedness, default by Borrower or any other guarantor or surety, any action
or nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, or the creation of new or additional Indebtedness; (b) proceed against
any person, including Borrower, before proceeding against Guarantor; (c) proceed
against any collateral for the Indebtedness, including Borrower's collateral,
before proceeding against Guarantor; (d) apply any payments or proceeds received
against the Indebtedness in any order; (e) give notice of the terms, time, and
place of any sale of the collateral pursuant to the Uniform Commercial Code or
any other law governing such sale; (f) disclose any information about the
Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or
about any action or nonaction of Lender; or (g) pursue any remedy or course of
action in Lender's power whatsoever. Guarantor also waives any and all rights or
defenses arising by reason of (h) any disability or other defense of Borrower,
any other guarantor or surety or any other person; (i) the cessation from any
cause whatsoever, other than payment in full, of the Indebtedness; (j) the
application of proceeds of the Indebtedness by Borrower for purposes other than
the purposes understood and intended by Guarantor and Lender; (k) any act of
omission or commission by Lender which directly or indirectly results in or
contributes to the discharge of Borrower or any other guarantor or surety, or
the Indebtedness, or the loss or release of any collateral by operation of law
or otherwise; (I) any statute of limitations in any action under this Guaranty
or on the Indebtedness; or (m) any modification or change in terms of the
Indebtedness, whatsoever, including without limitation, the renewal, extension,
acceleration, or other change in the time payment of the Indebtedness is due and
any change in the interest rate, and including any such modification or change
in terms after revocation of this Guaranty on Indebtedness incurred prior to
such revocation. Until all Indebtedness is paid in full, Guarantor waives all
rights and any defenses Guarantor may have arising out of an election of
remedies by Lender even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
Guarantor's rights of subrogation and reimbursement against Borrower or any
other guarantor or surety by operation of Section 580a, 580b, 580d and 726 of
the California Code of Civil Procedure or otherwise. This waiver includes,
without limitation, any loss of rights Guarantor may suffer by reason of any
rights or protections of Borrower in connection with any anti-deficiency laws or
other laws limiting or discharging the Indebtedness or Borrower's obligations
(including, without limitation, Sections 726, 580a, 580b, and 580d of the
California Code of Civil Procedure). Guarantor waives all rights and protections
of any kind which Guarantor may have for any reason, which would affect or limit
the amount of any recovery by Lender from Guarantor following a nonjudicial sale
or judicial foreclosure of any real or personal property security for the
Indebtedness including, but not limited to, the right to any fair market value
hearing pursuant to California Code of Civil Procedure Section 580a. Guarantor
understands and agrees that the foregoing waivers are waivers of substantive
rights and defenses to which Guarantor might otherwise be entitled under state
and federal law. The rights and defenses waived include, without limitation,
those provided by California laws of suretyship and guaranty, anti-deficiency
laws, and the Uniform Commercial Code. Guarantor acknowledges that Guarantor has
provided these waivers of rights and defenses with the intention that they be
fully relied upon by Lender. Until all Indebtedness is paid in full, Guarantor
waives any right to enforce any remedy Lender may have against Borrower or any
other guarantor, surety, or other person, and further, Guarantor waives any
right to participate in any collateral for the Indebtedness now or hereafter
held by Lender.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Guarantor hereby
assigns, conveys, delivers, pledges, and transfers to Lender all of Guarantor's
right, title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, excluding
however all IRA, Keogh, and trust accounts. Every such security interest and
right of setoff may be exercised without demand upon or notice to Guarantor. No
security interest or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Lender or by any neglect to exercise such right of
setoff or to enforce such security interest or by any delay in so doing. Every
right of setoff and security interest shall continue in full force and effect
until such right of setoff or security interest is specifically waived or
released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does
<PAGE>
hereby assign to Lender all claims which it may have or acquire against Borrower
or against any assignee or trustee in bankruptcy of Borrower; provided however,
that such assignment shall be effective only for the purpose of assuring to
Lender full payment in legal tender of the Indebtedness. If Lender so requests,
any notes or credit agreements now or hereafter evidencing any debts or
obligations of Borrower to Guarantor shall be marked with a legend that the same
are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees,
and Lender hereby is authorized, in the name of Guarantor, from time to time to
execute and file financing statements and continuation statements and to execute
such other documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
INTEGRATION, AMENDMENT. Guarantor warrants, represents and agrees that this
Guaranty, together with any exhibits or schedules incorporated herein, fully
Incorporates the agreements and understandings of Guarantor with Lender with
respect to the subject matter hereof and all prior negotiations, drafts, and
other extrinsic communications between Guarantor and Lender shall have no
evidentiary effect whatsoever. Guarantor further agrees that Guarantor has read
and fully understands the terms of this Guaranty; Guarantor has had the
opportunity to be advised by Guarantor's attorney with respect to this Guaranty;
the Guaranty fully reflects Guarantor's intentions and parol evidence is not
required to interpret the terms of this Guaranty. Guarantor hereby indemnifies
and holds Lender harmless from all losses, claims, damages, and costs (including
Lender's attorneys' fees) suffered or incurred by Lender as a result of any
breach by Guarantor of the warranties, representations and agreements of this
paragraph. No alteration or amendment to this Guaranty shall be effective unless
given in writing and signed by the parties sought to be charged or bound by the
alteration or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of ORANGE County,
State of California. Lender and Guarantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of Lender's
costs and expenses, including attorney's fees and Lender's legal expenses,
incurred in connection with the enforcement of this Guaranty. Lender may pay
someone else to help enforce this Guaranty, and Guarantor shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender's attorneys
fees and legal expenses whether or not there is a lawsuit, including attorney's
fees and legal expenses for bankruptcy proceedings (and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court costs and
such additional fees as may be directed by the court.
NOTICES. All notices required to be given under this Guaranty and all requests
and other communications shall be in writing and shall be deemed to have been
duly delivered if delivered either personally, by overnight delivery service or
three days from the date of mailing by certified mail, return receipt requested,
or on the date of first refusal of delivery, to the parties at their addresses
set forth above or such other address as a party may designate in the manner
provided herein for giving of notices. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors. For
notice purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or Guarantor,
then all words used in this Guaranty in the singular shall be deemed to have
been used in the plural where the context and construction so require; and where
there is more than one Borrower named in this Guaranty or when this Guaranty is
executed by more than one Guarantor, the words "Borrower" and "Guarantor"
respectively shall mean all and any one or more of them. The words "Guarantor,"
"Borrower," and "Lender" include the heirs, successors, assigns, and transferees
of each of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of this
Guaranty. If a court of competent jurisdiction finds any provision of this
Guaranty to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrower or
Guarantor are corporations or partnerships, it is not necessary for Lender to
inquire into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this Guaranty
unless such waiver is given in writing and signed by Lender. No delay or
omission on the part of Lender in exercising any right shall operate as a waiver
of such right or any other right. A waiver by Lender of a provision of this
Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise
to demand strict compliance with that provision or any other provision of this
Guaranty. No prior waiver by Lender, nor any course of dealing between Lender
and Guarantor, shall constitute a waiver of any of Lender's rights or of any of
Guarantor's obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
<PAGE>
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED JUNE 1, 1997.
GUARANTOR:
NEW HORIZONS WORLDWIDE, INC.
BY:
- -----------------------------------
THOMAS J. BRESNAN, PRESIDENT
Signed, acknowledged and delivered in the presence of:
X
- -----------------------------------
Witness
X
- -----------------------------------
Witness
================================================================================
EXHIBIT 15.0
Independent Accountants' Review Report
The Board of Directors
New Horizons Worldwide, Inc.
and Subsidiaries
We have reviewed the condensed consolidated balance sheet of New Horizons
Worldwide, Inc. and subsidiaries as of June 30, 1997, and the related condensed
consolidated statements of income for the three month and six month periods
ended June 30, 1997 and June 29, 1996, and cash flows for the six month periods
ended June 30, 1997 and June 29, 1996. These condensed consolidated financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquires of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of New Horizons Worldwide, Inc. and
subsidiaries as of December 28, 1996, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 14, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 28, 1996 is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Los Angeles, California
August 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,957,779
<SECURITIES> 18,055,000
<RECEIVABLES> 17,362,928
<ALLOWANCES> (1,675,492)
<INVENTORY> 776,383
<CURRENT-ASSETS> 37,719,026
<PP&E> 13,654,007
<DEPRECIATION> (5,634,120)
<TOTAL-ASSETS> 62,974,252
<CURRENT-LIABILITIES> 14,021,361
<BONDS> 2,425,247
0
0
<COMMON> 72,561
<OTHER-SE> 46,339,481
<TOTAL-LIABILITY-AND-EQUITY> 62,974,252
<SALES> 25,090,413
<TOTAL-REVENUES> 25,090,413
<CGS> 13,017,035
<TOTAL-COSTS> 24,496,223
<OTHER-EXPENSES> (279,058)
<LOSS-PROVISION> 171,775
<INTEREST-EXPENSE> 125,799
<INCOME-PRETAX> 3,474,491
<INCOME-TAX> 1,288,655
<INCOME-CONTINUING> 2,185,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,185,836
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
