<PAGE>
As filed with the Securities and Exchange Commission on March 31, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
SYLVAN LEARNING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-1492296
(State of Incorporation) (I.R.S. Employer Identification No.)
1000 Lancaster Street
Baltimore, Maryland 21202
(410) 843-8000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Douglas L. Becker
President, Co-Chief Executive Officer and Secretary
Sylvan Learning Systems, Inc.
1000 Lancaster Street
Baltimore, Maryland 21202
(410) 843-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
Richard C. Tilghman, Jr., Esquire
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
(410) 539-2530
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933,other than securities offered in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
--------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================
Title of Shares to be Registered Proposed Maximum Aggregate Offering Price Amount of Registration Fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value $2,006,368 $592.00
============================================================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(o) of the Securities Act of 1933, as
amended.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Subject to Completion
March 31, 1998
PROSPECTUS
43,264 Shares
SYLVAN LEARNING SYSTEMS, INC.
Common Stock
-----------
The shares of Common Stock of Sylvan Learning Systems, Inc. (the "Company")
covered by this Prospectus are outstanding shares which may be offered and sold
from time to time by the stockholders named herein. See "Selling Stockholders."
The Company will not receive any proceeds from the sale of the shares by the
Selling Stockholders.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"SLVN." On March 30, 1998 the last sale price for the Common Stock as reported
on the Nasdaq Stock Market was $46.6875 per share.
The Selling Stockholders may from time to time sell shares of the Common
Stock offered hereby in transactions on the Nasdaq Stock Market, in privately-
negotiated transactions or otherwise, in each case at negotiated prices. See
"Plan of Distribution." The brokers or dealers through or to whom the shares of
Common Stock covered hereby may be sold may be deemed "underwriters" within the
meaning of the Securities Act of 1933, in which event all brokerage commissions
or discounts and other compensation received by such brokers or dealers may be
deemed underwriting compensation.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1998.
[Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction.]
<PAGE>
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission, including the reports and
other information incorporated by reference into this Prospectus, can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its
regional offices located at 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at rates prescribed by the Commission or from the
Commission's Internet web site at http:\\www.sec.gov. The Common Stock of the
Company is quoted on the Nasdaq National Market. Reports, proxy statements and
other information concerning the Company can be inspected at the offices of the
Nasdaq Stock Market, 1735 K Street, Washington, D.C. 20006. This Prospectus
does not contain all the information set forth in the Registration Statement of
which this Prospectus is a part and exhibits relating thereto which the Company
has filed with the Commission. Copies of the information and exhibits are on
file at the offices of the Commission and may be obtained, upon payment of the
fees prescribed by the Commission, may be examined without charge at the offices
of the Commission or through the Commission's Internet web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-22844) pursuant to the 1934 Act are incorporated herein by reference: (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, (ii)
the Company's Current Report on Form 8-K dated March 12, 1998, restating the
Company's selected consolidated financial data schedule to reflect the Company's
adoption of Statement of Financial Accounting Standards No. 128, Earnings Per
Share;" (iii) the description of Common Stock contained in Item 11 of the
Company's Registration Statement on Form 8-A, filed with the Commission under
the 1934 Act; and (iv) all other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of
filing of the Registration Statement of which this Prospectus is a part and
prior to the termination of the offering made hereby.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to Sylvan Learning Systems, Inc., 1000 Lancaster Street,
Baltimore, Maryland 21202, Attention: Chief Financial Officer, telephone: (410)
843-8000.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
<PAGE>
THE COMPANY
Sylvan Learning Systems, Inc. (the "Company" or "Sylvan") is a leading
provider of educational services to families, schools and industry. The Company
provides lifelong educational services through three lines of business: the
Sylvan Prometric division delivers computer-based testing for academic
admissions and professional certification programs, and include the operations
of Wall Street Institute, a European-based franchisor and operator of learning
centers for English language instruction that will also administer certain
computer-based testing programs throughout Europe and Latin America; the Sylvan
Learning Centers division provides personalized instructional services to
students of all ages and skill levels and the Sylvan Contract Educational
Services division provides educational services and professional development
through contracts with school systems and other organizations. Sylvan's services
are delivered through its network of more than 3,000 educational and testing
centers around the globe. In 1997, total system-wide revenues were approximately
$395.5 million, composed of $193.6 million from core educational services
($162.4 million from franchised Learning Centers and $31.2 million from Company-
owned Learning Centers, product sales, franchise sales fees and other franchise
service revenues), $135.3 million from testing services and $66.6 million from
contract educational services.
Core Educational Services. The Company's Core Educational Services
division provides supplemental instruction in reading, mathematics and reading
readiness, featuring an extensive series of standardized diagnostic tests,
individualized instruction, a student motivational system and continued
involvement from both parents and the child's regular school teacher. As of
December 31, 1997, there were a total of 670 Learning Centers in 49 states, five
Canadian provinces, Hong Kong, South Korea and Guam operated by the Company or
its franchisees. As of that date, Sylvan owned and operated 48 Learning Centers,
and 460 franchisees operated 622 Sylvan Learning Centers.
Sylvan Prometric Testing Services. The Company conducts its testing
business through 1,981 testing centers, 1,125 of which are located in North
America and the remainder of which are located in 103 foreign countries. The
Company enters into contracts directly with the testing organization, under
which Sylvan receives a fee based upon the number of tests given. The Company
has entered into a separate agreement with each franchisee that operates a
testing center, whereby the franchisee receives a fee per test that decreases as
the volume of the tests delivered increases. Principal customers for the
Company's testing services are Educational Testing Services ("ETS") and, in the
IT industry, Microsoft Corp. and Novell, Inc. IT customers sponsor worldwide
certification programs for various professionals such as network administrators
and engineers, service technicians and instructors, application specialists and
developers, and system administrators, operators and engineers. The Company is
the exclusive commercial provider of computer-based tests administered by ETS.
This exclusivity provision does not apply to the SAT, PSAT and Achievement Tests
that are sponsored by the College Board. The Company also provides testing
services for organizations responsible for licensing broker-dealers, pilots,
aviation mechanics, computer professionals and medical laboratory technicians.
The Company, in December 1996, purchased Wall Street Institute International,
B.V. and its commonly controlled affiliates (collectively "WSI"), a European-
based franchisor and operator of learning centers where English is taught
through a combination of computer-based and live instruction. WSI has more than
200 company-owned and franchised centers in operation throughout Europe and
Latin America. Effective December 1, 1997, the Company purchased Block Testing
Services L.P., Block State Testing Services L.P. and National Assessment
Institute, Inc., (collectively "NAI/Block"), commonly-contolled companies
engaged in the business of designing, marketing, selling, distributing and
administering paper and pencil test for the licensing of individuals.
Contract Educational Services; PACE; Sylvan-at-Work. Sylvan provides
educational services under federal and various state funding programs to
students in public and non-public schools. In March 1995, the Company acquired
the PACE Group ("Pace"), a provider of educational and training services to
large corporations throughout the United States. Services offered by PACE
include racial and gender workplace diversity training and skills improvement
programs such as writing, advanced reading, listening and public speaking. This
acquisition complements the Sylvan-at-Work program and extends the core
educational services the Company offers to adults in the corporate workplace.
-3-
<PAGE>
USE OF PROCEEDS
All of the proceeds from the sale of the shares of the Company's Common
Stock offered hereby will be received by the Selling Stockholders. The Company
will receive none of the proceeds from the sale of the shares of Common Stock
offered hereby.
SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by the person listed therein (the
"Selling Stockholders") prior to this offering, the maximum number of shares of
Common Stock to be sold by the Selling Stockholders hereby, and the beneficial
ownership of the Company's Common Stock by the Selling Stockholders after this
offering, assuming that all shares of Common Stock offered hereby are sold.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Shares To Owned After Offering
--------------------------- Be Sold In ---------------------------
Name and Address of Number Percent Offering Number Percent
Beneficial Owner
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Vincent J. Donohue 21,632 * 21,632 - -
1229 Sylvan Road
West Chester, PA 19382
Ralph J. Celidonio 21,632 * 21,632 - -
1229 Sylvan Road
West Chester, PA 19382
</TABLE>
- --------------
* Less than 1%.
Pursuant to an agreement and plan of reorganization, dated as of December
10, 1997, by and among the Company, Education and Training Consultants of
Pennsylvania Inc. ("ETC"), and Ralph J. Celidonio and Vincent J. Donohue (each,
a "Holder" and, collectively, the "Holders"), the sole stockholders of ETC and
the sole general partners of Celidonio & Donohue, a general partnership (the
"ETC Agreement"), the Company acquired ETC through a statutory merger and the
acquisition of all of the Partnership interests owned by the Holders in exchange
for the issuance to each of Messrs. Donohue and Celidonio of 21,632 shares of
Common Stock of the Company, all of which are being offered in this Prospectus.
Neither Mr. Donohue, Mr. Celidonio nor any of their affiliates is an officer,
director, employee or affiliate of the Company.
-4-
<PAGE>
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "SLVN." The Shares may be sold from time to time by the Selling
Stockholders directly or through broker-dealers or underwriters who may act
solely as agents, or who may acquire the Shares a principals. In connection
with any sales of the Shares hereunder, the Selling Stockholders and any broker-
dealers participating such sales may be deemed to be "underwriters" within the
meaning of the Securities Act. The distribution of the Shares hereunder by the
Selling Stockholders may be effected in one or more transactions that may take
place on the Nasdaq National Market or otherwise, including block trades or
ordinary brokers' transactions, or through privately negotiated transactions,
through an underwritten public offering, or through a combination of any such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Usual and
customary or specially negotiated brokerage fees or commissions may be paid by
the Selling Stockholders in connection with such sales. The Company will not
bear any commissions or discounts paid or allowed by the Selling Stockholders to
underwriters, dealers, brokers or agents. To the extent required, the specific
shares of Common Stock to be sold, purchase price, public offering price, the
names of any such agent, dealer or underwriter and any applicable commission or
discount with respect to a particular offering may be set forth in an
accompanying Prospectus Supplement. The Company has agreed to bear the cost of
preparing the Registration Statement of which this Prospectus is a part and all
filing fees and legal and accounting expenses in connection with registration of
the shares of Common Stock offered by the Selling Stockholders hereby under
federal and state securities laws.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for the
Company by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The consolidated financial statements and schedule of Sylvan Learning
Systems, Inc. at December 31, 1996 and 1995 and for each of the three years in
the period ended December 31, 1996, incorporated by reference in this Prospectus
and Registration Statement, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon included therein also
incorporated herein by reference which, as to the years 1996 and 1995, are based
in part on the reports of Deloitte & Touche LLP, independent auditors, and as to
the year 1994, is based in part on the report of Canterelli & Vernoia, CPAs,
independent auditors. Such consolidated financial statements have been
incorporated herein by reference in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
-5-
<PAGE>
================================================================================
No person has been authorized by the Company to give any information or to
make any representations other than those contained in this Prospectus in
connection with the offer contained in this Prospectus, and if given or made,
such information or representations may not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities in any jurisdiction
in which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall create an implication that
there has been no change in the affairs of the Company since the date hereof.
---------------------------------
TABLE OF CONTENTS
PAGE
- ----
AVAILABLE INFORMATION...........................................2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE........................................2
THE COMPANY.....................................................3
USE OF PROCEEDS.................................................4
SELLING STOCKHOLDERS............................................4
PLAN OF DISTRIBUTION............................................5
LEGAL MATTERS...................................................5
EXPERTS.........................................................5
43,264 Shares
SYLVAN LEARNING
SYSTEMS, INC.
Common Stock
PROSPECTUS
, 1998
================================================================================
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the offering. All
of such expenses are estimates, other than the filing fees payable to the
Securities and Exchange Commission.
Filing Fee-Securities and Exchange Commission..... $ 592.00
Nasdaq National Market Listing Fees............... 865.28
Fees and Expenses of Counsel...................... 6,000.00
Miscellaneous Expenses............................ 5,000.00
----------
TOTAL............................................ $12,457.28
==========
Item 15. Indemnification of Directors and Officers.
The Company's Charter provides that, to the fullest extent that limitations
on the liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Company shall have any liability
to the Company or its stockholders for monetary damages. The Maryland General
Corporation Law provides that a corporation's charter may include a provision
which restricts or limits the liability of its directors or officers to the
corporation or its stockholders for money damages except: (1) to the extent that
it is provided that the person actually received an improper benefit or profit
in money, property or services, for the amount of the benefit or profit in
money, property or services actually received, or (2) to the extent that a
judgment or other final adjudication adverse to the person is entered in a
proceeding based on a finding in the proceeding that the person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. The Company's
Charter and By-laws provide that the Company shall indemnify and advance
expenses to its currently acting and its former directors to the fullest extent
permitted by the Maryland General Corporation Law and that the Company shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law.
The Charter and By-laws provides that the Company will indemnify its
directors and officers and may indemnify employees or agents of the Company to
the fullest extent permitted by law against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Company. In addition, the Company's Charter provides that its
directors and officers will not be liable to stockholders for money damages,
except in limited instances. However, nothing in the Charter or By-laws of the
Company protects or indemnifies a director, officer, employee or agent against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director has been
successful in defense of any proceeding, the Maryland General Corporation Law
provides that he shall be indemnified against reasonable expenses incurred in
connection therewith.
II-1
<PAGE>
Item 16. Exhibits.
Exhibit No. Description
- ----------- -----------
3.1 Articles of Amendment and Restatement of the Charter*
3.2 Amended and Restated By-Laws dated September 27, 1996**
4.1 Specimen Stock Certificate*
4.2 Agreement and Plan or Reorganization dated as of December 10,
1997 by and among Sylvan Learning Systems, Inc., Education and
Training Consultants of Pennsylvania Inc., Ralph J. Celidonio,
Vincent J. Donohue and Celidonio & Donohue
5.1 Opinion of Piper & Marbury L.L.P.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Canterelli and Vernoia, CPAs
23.4 Consent of Piper & Marbury L.L.P. (contained in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
______________
* Incorporated by reference from the Registrant's Registration Statement on
Form S-1 (No. 33-69558)
** Incorporated by reference from the Company's Annual Report on Form 10-K for
the Year ended December 31, 1997.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suite or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE>
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs in contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") that are incorporated by reference
in the registration statement.
(2) That for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in Baltimore, Maryland, on this 31st day of March, 1998.
SYLVAN LEARNING SYSTEMS, INC.
By /s/ R. Christopher Hoehn-Saric
--------------------------------------------
R. Christopher Hoehn-Saric, Chairman of the
Board and Co-Chief Executive Officer
Know all men by these presents, that each person whose signature appears
below constitutes and appoints R. Christopher Hoehn-Saric and Douglas L. Becker
(with full power to each of them to act alone) as his true and lawful attorney-
in-fact and agent, with full power of substitution, for him and in his name,
place and stead in any and all capacities to sign any or all amendments or post-
effective amendments to this Registration Statement, including post-effective
amendments filed pursuant to Rule 462(b) of the Securities Act of 1933, as
amended, and to file the same with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, to sign any
and all applications, registration statements, notices or other document
necessary or advisable to comply with the applicable state securities laws, and
to file the same, together with all other documents in connection therewith,
with the appropriate state securities authorities, granting unto said attorneys-
in-fact and agents or any of them, or their or his substitute or substitutes,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ R. Christopher Hoehn-Saric Co-Chief Executive Officer and
- ------------------------------ Chairman of the Board of Directors March 31, 1998
R. Christopher Hoehn-Saric (Principal Executive Officer)
/s/ Douglas L. Becker Co-Chief Executive Officer March 31, 1998
- -------------------------- President, Secretary and Director
Douglas L. Becker
/s/ B. Lee McGee Chief Financial Officer (Principal March 31, 1998
- -------------------------- Financial and Accounting Officer)
B. Lee McGee
/s/ Donald V. Berlanti Director March 31, 1998
- -------------------------
Donald V. Berlanti
/s/ R. William Pollock Director March 31, 1998
- -------------------------
R. William Pollock
/s/ J. Phillip Samper Director March 31, 1998
- -------------------------
J. Phillip Samper
/s/ Nancy A. Cole Director March 31, 1998
- -------------------------
Nancy A. Cole
/s/ James H. McGuire Director March 31, 1998
- -------------------------
James H. McGuire
/s/ Rick Inatome Director March 31, 1998
- -------------------------
Rick Inatome
II-4
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- --------------
3.1 Articles of Amendment and Restatement*
3.2 Amended and Restated By-Laws dated
September 27, 1996**
4.1 Specimen Stock Certificate*
4.2 Agreement and Plan or Reorganization dated as of
December 10, 1997 by and among Sylvan Learning
Systems, Inc., Education and Training Consultants
of Pennsylvania Inc., Ralph J. Celidonio, Vincent
J. Donohue and Celidonio & Donohue
5.1 Opinion of Piper & Marbury LLP
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Canterelli & Vernoia, CPAs
23.4 Consent of Piper & Marbury L.L.P. (contained in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
___________________
* Incorporated by reference from the Registrant's Registration Statement on
Form S-1 (No. 33-69558)
** Incorporated by reference from the Company's Annual Report on Form 10-K for
the Year ended December 31, 1997.
II-5
<PAGE>
EXHIBIT 4.2
-----------
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated
December 10, 1997, by and among SYLVAN LEARNING SYSTEMS, INC., a Maryland
corporation (the "Purchaser"), EDUCATION AND TRAINING CONSULTANTS OF
PENNSYLVANIA INC., a Delaware corporation (the "Company"), and RALPH J.
CELIDONIO and VINCENT J. DONOHUE (each, a "Holder" and, collectively, the
"Holders"), the sole stockholders of the Company and the sole general partners
of CELIDONIO & DONOHUE, a general partnership (the "Partnership") (the
"Holders").
W I T N E S S E T H:
- - - - - - - - - -
The Holders own all of the issued and outstanding capital stock of the
Company and are the sole general partners of the Partnership. The Purchaser and
the Holders wish to enter into an agreement for the acquisition of the Company
through a statutory merger (the "Merger") and the acquisition of all of the
Partnership interests owned by the Holders (the "Partnership Acquisition" and,
together with the Merger, the "Acquisition Transactions") in transactions
intending to qualify as poolings-of-interests under the applicable accounting
rules and, with respect to the Merger only, a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, (the "Code"). The Purchaser, the
Company and the Holders wish to enter into a definitive agreement setting forth
the terms and conditions of the Acquisition Transactions.
Accordingly, in consideration of the foregoing and of the covenants,
agreements, representations and warranties hereinafter contained, the Purchaser,
the Company and the Holders hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Holders and the Company that the statements
contained in this Section 1 are true and correct, except to the extent otherwise
indicated in any periodic reports, statements and other documents including,
without limitation, all exhibits thereto (collectively the "Purchaser SEC
Reports"), filed by the Purchaser with the U.S. Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or as set forth in the disclosure schedule
delivered by the Purchaser to the Companies on or before the date of this
Agreement (the "Purchaser Disclosure Schedule"). The Purchaser Disclosure
Schedule shall be arranged in sections corresponding to the number and lettered
sections contained in this Section 1. The disclosure in any section of the
Purchaser Disclosure Schedule or in any Purchaser SEC Reports, however, shall be
deemed to constitute disclosure for all sections in this Article 1.
1.1 Organization and Standing; Subsidiaries.
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(a) Each of the Purchaser and its subsidiaries whose business
or assets are material to Purchaser, either individually or on a consolidated
basis (collectively, the "Purchaser Subsidiaries," and, together with the
Purchaser, collectively "Sylvan") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not, and reasonably could not
be expected to, individually or in the aggregate, have a material adverse effect
on the business, assets (whether tangible or intangible), financial condition,
results of operations or business prospects ("Material Adverse Effect") of
Sylvan.
(b) Each of the Purchaser and the Purchaser Subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
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nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Sylvan.
1.2 Financial Statements; Exchange Act Filings.
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(a) The Purchaser has heretofore delivered to the Holders
copies of the Purchaser's consolidated financial statements as of and for the
years ended December 31, 1994, 1995 and 1996, which have been audited by Ernst &
Young LLP, independent auditors, and its unaudited interim financial statements
for the nine months ended September 30, 1997 (the "Purchaser Financial
Statements"). The Purchaser Financial Statements fairly present, in conformity
with generally accepted accounting principles applied on a consistent basis by
the Purchaser (except as may be indicated in the notes thereto) and in
conformity with the Commission's Regulation S-X, the consolidated financial
position of the Purchaser and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject in the case of any unaudited financial statements to
normal recurring year-end audit adjustments, which are not expected to be
material in amount). Since January 1, 1996, the Purchaser has not made any
material changes in the accounting policies applied to the Purchaser Financial
Statements, and no such changes are contemplated nor, to the best of the
Purchaser's knowledge, required under generally accepted accounting principles
or the Commission's Regulation S-X.
(b) All Purchaser SEC Reports required to be filed by the
Purchaser with the Commission under the Exchange Act during the 24 months
preceding the date of this Agreement were filed in a timely manner and complied
in all material respects with the applicable requirements of the Exchange Act
and the rules and regulations promulgated thereunder. At the time filed with the
Commission by the Purchaser, no Purchaser SEC Reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
1.3 No Conflict With Other Documents. Neither the execution
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and delivery of this Agreement nor the carrying out of the transactions
contemplated hereby will result in any violation, termination or modification
of, or be in conflict with, the Purchaser's Charter or By-Laws, any terms of any
contract or other instrument to which the Purchaser is a party, or any judgment,
decree or order applicable to the Purchaser, or result in the creation of any
lien, charge or encumbrance upon any of its properties or assets, except where
such event or occurrence would not, singly or in the aggregate, have a Material
Adverse Effect on the Purchaser.
1.4 Authority. The execution, delivery and performance of
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this Agreement by the Purchaser have been duly authorized by its Board of
Directors, and this Agreement is a valid, legally binding and enforceable
obligation of the Purchaser. Upon the satisfaction of all conditions contained
herein and the filing of the Articles and Certificate of Merger with the
Maryland State Department of Assessments and Taxation and the Secretary of State
of the State of Delaware, this Agreement will result in the valid, legally
binding and enforceable statutory merger of the Company with and into the
Purchaser.
1.5 Validity of Common Stock. The shares of Common Stock,
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$.01 par value per share, of the Purchaser ("Purchaser Common Stock") to be
issued or delivered by the Purchaser in connection with the Merger and the
Partnership Acquisition (collectively, the "Merger Shares") have been duly
authorized for issuance and will, when issued and delivered as provided in this
Agreement, be duly and validly issued, fully paid and non-assessable.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE HOLDERS.
The Company and each of the Holders, jointly and severally, hereby represent and
warrant to the Purchaser that the statements contained in this Section 2 are
true and correct, except as set forth in the disclosure schedules delivered by
the Company, the Partnership and the Holders on or before the date of this
Agreement (the "Seller Disclosure Schedule"). The Seller Disclosure Schedule
shall be arranged in sections corresponding to the
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numbered and lettered sections contained in this Section 2. The disclosure in
any section, however, shall be deemed to constitute disclosure for all sections
in this Article 2.
2.1 Authorized and Issued Shares of the Company; Partnership
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Interests.
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(a) The entire authorized capital stock of the Company
consists of Two Hundred and Fifty (250) shares of Common Stock, $.01 par value
per share (the "Company Common Stock"), of which 250 shares are issued and
outstanding. No shares of Company Common Stock are held in the Company's
treasury and no shares are reserved for issuance. All outstanding shares of
Company Common Stock have been duly authorized and are validly issued and are
fully paid and non-assessable and are owned of record and beneficially by the
Holders, in the amount set forth opposite their names on Section 2.1(a) of the
Seller Disclosure Schedule. The Company is not a party to or bound by any
options, calls, contracts, preemptive rights or commitments of any character
relating to any issued or unissued capital stock, or any other equity security
issued or to be issued by the Company.
(b) All of the general partnership interests in the
Partnership (the "Partnership Interests") are owned of record and beneficially
by the Holders, free of all pledges, liens, restrictions, claims or encumbrances
of any kind in the manner set forth in Section 2.1(b) of the Seller Disclosure
Schedule. Each such Partnership Interest has been validly issued by the
Partnership in accordance with the Partnership Agreement.
2.2 Organization. The Company is a corporation duly
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organized validly existing and in good standing under the laws of the State of
Delaware. Each of the Company and the Partnership has full corporate or
partnership power and authority to carry on its business as it is now being
conducted and to own or hold under lease the properties or assets it now owns or
holds under lease and to perform the actions contemplated hereby. Complete and
accurate copies of the Company's current Charter, By-Laws, minute books and
stock transfer books and the Partnership's Partnership Agreement have been
provided to the Purchaser, and such copies are complete and correct and in full
force and effect. Neither the Company nor the Partnership owns or has any direct
or indirect interest in any other corporation, firm, partnership, joint venture
enterprise or other business entity.
2.3 Transactions with Affiliates. Except as set forth in
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Section 2.3 of the Seller Disclosure Schedule or in the Company or Partnership
Financial Statements (as hereinafter defined), neither the Company nor the
Partnership is a party to any contract, agreement or other arrangement with any
current or former officer, director, stockholder or partner or any affiliate of
any such persons. Each transaction required to be listed on the Seller
Disclosure Schedule is on terms no less favorable than terms available from
unrelated parties.
2.4 Financial Statements. The Holders have provided to the
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Purchaser (a) audited combined income and cash flow statements for the Company
and the Partnership for the twelve months ended August 31, 1997 and combined
audited balance sheets for the Company and the Partnership as at August 31, 1997
(collectively, the "Audited Financial Statements"); (b) unaudited balance sheets
for the Company and for the Partnership as at November 30, 1997 (the "Unaudited
Balance Sheets," and together with the Audited Financial Statements, the
"Financial Statements), which (i) were prepared in a manner consistent with the
Audited Financial Statements and (ii) do not reflect any adverse changes in the
financial condition of the Company or the Partnership since the date of the
Audited Financial Statements; and (iii) a preliminary income statement for the
1998 fiscal year to date since September 1, 1997 for each of the Company and the
Partnership. The Audited Financial Statements utilize the "percentage of
completion" method of revenue recognition for the Educational Contracts (as
hereinafter defined). The Financial Statements are complete and correct in all
material respects and present fairly and accurately the financial position and
results of operations of the Company or the Partnership, as the case may be, as
of and for the periods indicated. There are no material liabilities or
obligations of the Company or the Partnership, as the case may be, whether
contingent or absolute, as of the dates of such statements, including liability
for taxes of any type, which should have been shown or provided for in the
Financial Statements and are not so shown or provided for or shown as reserved
against. Except as set forth in Section 2.4 of the Seller Disclosure Schedule,
since August 31, 1997, there has been no material adverse change in the
condition (financial or otherwise), assets, liabilities, earnings, net worth,
financial position, business, operations, properties or prospects of the Company
or the Partnership. The accounts
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receivable of the Company and the Partnership arose in each case, and all
accounts receivable that will be outstanding as of the Closing Date relating to
the Company and to the Partnership shall have arisen in each case, from bona
fide transactions in the ordinary course of business and will be collectible by
the Company or the Partnership, as applicable, in full, less applicable reserves
shown in the Audited Financial Statements, in the ordinary course of business
within 90 days of the Closing Date, and there are no offsets or claims related
to such accounts receivable.
2.5 Taxes. The Company, the Partnership and the Holders
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each has properly prepared and filed all federal, state and other tax returns
required to be filed by them in connection with the business and operations of
the Company and the Partnership. True and complete copies of all federal and
state income tax returns for the Company and the Partnership for each of the
years ended December 31, 1994 through December 31, 1996 have been delivered or
made available to the Purchaser on or prior to the date hereof and copies of
other returns will be made available upon request. Except as set forth on
Section 2.5 of the Seller Disclosure Schedule, none of the Company, the
Partnership or the Holders has any liability for any federal, state, county,
local or other taxes whatsoever, or is now subject to audit by any taxing
authority. No proposed taxes, additions to tax, interest or penalties have been
asserted or are pending against the Company or the Holders with respect to
periods ending on or before Closing, and no such matters are under discussion
with the applicable authorities. All deductions taken by each of the Company and
the Partnership on its respective federal and state income tax returns were
valid business deductions. There are no agreements, waivers, or other
arrangements providing for extensions of time with respect to the assessment or
collection of any unpaid tax against the Company or the Holders. The Company,
the Partnership and the Holders have withheld or otherwise collected all taxes
or amounts it was or they were, as the case may be, required to withhold or
collect under any applicable federal, state or local law, including, without
limitation, any amounts required to be withheld or collected with respect to
employee state and federal income tax withholding, social security, unemployment
compensation, sales or use taxes or workmen's compensation, and all such amounts
have been timely remitted to the proper authorities.
2.6 Agreements. Section 2.6 of the Seller Disclosure
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Schedule identifies each of the following agreements, contracts, documents and
other items (whether written or oral) as to which the Company or the Partnership
is a party or otherwise is bound (and all such contracts, or summaries thereof,
have been made available to the Purchaser) as of the date of the execution of
this Agreement: (i) all contracts to provide remedial educational services to
certain non-public schools in the United States under the Federal Chapter I
Program and Act 89 Program contracts (collectively, the "Educational
Contracts"); (ii) all documents relating to indebtedness for money borrowed or
collateral therefor, including guarantees; (iii) all agreements or plans
relating to employment, compensation of or benefits for officers or employees of
the Company or the Partnership, as the case may be; (iv) all contracts for the
purchase of materials, supplies, services, merchandise or equipment involving
consideration of more than $50,000 or involving purchases in excess of normal
operating requirements; (v) any contract, agreement, or instrument not entered
into in the ordinary course of the business of the Company or the Partnership,
as the case may be; (vi) any contract containing restrictions on the operations
of the Company or the Partnership, as the case may be, or its ability to compete
in any geographic region or in any line of business; (vii) any lease of real
property and all personal property leases calling for annual lease payments in
excess of $10,000; and (viii) each and every other contract which is material to
the financial condition, earnings, operation or business of the Company or the
Partnership, as the case may be. Each of the contracts and agreements so listed
(collectively, the "Contracts") is a valid and existing contract or agreement in
full force and effect and there exists no default thereunder. None of the
Contracts will be violated or breached and no default or right of termination or
modification shall arise thereunder as a result of the consummation of the
transactions contemplated by this Agreement.
2.7 Educational Contracts. Except as set forth in Section
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2.7 of the Seller Disclosure Schedule:
(a) The Company is not in breach or default under or in
violation of, nor alleged to have breached, defaulted or violated any of the
Educational Contracts;
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(b) The Company is not under any liability or obligation to
refund any amount previously paid to the Company for services provided by the
Company or the Partnership under the Educational Contracts, and the Company has
paid or has made adequate provision to pay when due all accounts payable,
payroll, payroll taxes, if applicable, and other amounts due on account of the
Educational Contracts;
(c) The Company has not secured any of the Educational
Contracts other than in compliance with all applicable laws, rules and
regulations; and the terms of payment and/or compensation for each of the
Educational Contracts complies with all applicable laws, rules and regulations
relating to competitive bidding; each of the Educational Contracts not obtained
through competitive bidding was secured in an arms' length transaction.
(d) Each of the Educational Contracts is valid and in
full force and effect, and true copies thereof have been heretofore provided to
Purchaser; the Company has in all material respects performed all obligations
required to be performed by it under, and is not in material default in any
respect under, in material conflict in any respect with, or in material
violation in any respect of, any of the Educational Contracts; and the Company
has not received notice of non-compliance or alleged non-compliance with any of
the Educational Contracts; and each Educational Contract, to date, has generated
an operating profit and neither the Company nor the Holders have knowledge of
any facts or circumstances which would cause the Educational Contracts to become
unprofitable.
(e) Neither the Company nor the Holders has knowledge
of any current intention on the part of any of the other parties to the
Educational Contracts to cancel the same or not to renew the same with the
Company at the end of the current term thereof.
(f) Neither the Company nor the Holders has received
any claim of overpayment or alleged overpayment by any other party to any of the
Educational Contracts, and except as described in Section 2.7 of the Seller
Disclosure Schedule, there have been no audits or other reviews of the costs,
billing methods or performance of the Company under any of the Educational
Contracts, and no such audits or other reviews are in progress or, to the
knowledge of the Company or the Partnership, contemplated.
(g) No consent, approval or authorization of, notice to
or declaration, filing or registration with, any third party is required in
connection with the Acquisition Transactions or the execution, delivery and
performance of this Agreement and the Closing Documents and the consummation of
the transactions contemplated thereby.
2.8 Property. Section 2.8 of the Seller Disclosure Schedule
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sets forth a schedule (the "Property Schedule") of (i) all real property owned
or leased by the Company or the Partnership (the "Real Property"), (ii) all
individual items of tangible personal property, including all mobile classrooms
and trailers, and assets (other than inventory) of the Company and the
Partnership; and (iii) all patents, trademarks, trade names, service marks,
trade secrets, copyrights, franchise rights or applications therefor which are
held, used, prepared in connection with or otherwise related to the conduct of
the business of the Company or the Partnership. Except as set forth in the
Property Schedule, the Company or the Partnership, as the case may be, has good
and marketable title to all of such property and assets owned by it, free of any
pledge, mortgage, lien, lease, security agreement, encumbrance, charge or claim
of any nature whatsoever. The machinery and equipment of the Company and the
Partnership are, in all material respects, in good operating condition and
repair, ordinary wear and tear excepted. Neither the Company nor the Partnership
is infringing on any patent, trademark, trade name, service mark, trade secret
or copyright of another entity and has received no notice or claim of any such
infringement.
2.9 Legal Proceedings, Etc. Except as set forth in Section
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2.9 of the Seller Disclosure Schedule, there are no legal, administrative,
arbitration, or other proceedings or governmental investigations pending or, to
the best of the Company's, the Partnership's and the Holders' knowledge,
threatened against the Company, the Partnership or the Holders, or their
respective properties or assets.
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2.10 Compliance; Licenses. Each of the Company and the
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Partnership has at all times in the past operated and used its assets in
material compliance with, and currently is not in violation of, and has obtained
all material licenses and permits required by, any law, rule or regulation. Each
of the Company and the Partnership is duly qualified to do business as a foreign
corporation or partnership in good standing in those jurisdictions in which the
ownership and operation of its business requires such qualification. Section
2.10 of the Seller Disclosure Schedule contains a true and complete list of all
material licenses, permits, approvals, franchises and other authorizations as
are necessary in order to enable each of the Company and the Partnership to own
and conduct its business.
2.11 Bank Accounts, Etc. Section 2.11 of the Seller Disclosure
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Schedule sets forth a true and complete list of all bank accounts, safe deposit
boxes and lock boxes of each of the Company and the Partnership including, with
respect to each such account and lock box, identification of all authorized
signatories.
2.12 Insurance. Section 2.12 of the Seller Disclosure Schedule
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sets forth a summary of all general liability, product liability, fire,
casualty, motor vehicle and other insurance currently maintained by or on behalf
of the Company or the Partnership. All requirements and provisions thereof are
being complied with. True and correct copies of all insurance policies relating
to such coverage have been provided by the Holders to the Purchaser. No notice
of cancellation has been given to or received by either the Company or the
Partnership with respect to any of its insurance policies. No such policies are
or will become subject to an assessment due to any retroactive rate or audit
adjustments or coinsurance arrangements.
2.13 Employee Matters. Except as set forth in Section 2.13 of
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the Seller Disclosure Schedule, neither the Company nor the Partnership
maintains, sponsors or contributes to any plans in effect for pension, profit-
sharing, deferred compensation, severance pay, bonuses, stock options, stock
purchases (if applicable), or any other retirement or deferred benefit, or for
any health, accident or other welfare plan, or any other employee or retired
employee benefits or incentive plan, program, contract, understanding or
arrangement in which any employee, former employee, retired employee, or
beneficiary of any of these, of the Company or the Partnership is entitled to
participate. The plans, programs, contracts, understandings and arrangements
listed on the Seller Disclosure Schedule pursuant to this Section 2.13 are
hereinafter referred to as the "Employee Plans." The Company and the Partnership
have supplied the Purchaser with complete and accurate copies of each such
Employee Plan. Each Employee Plan has been operated according to its terms in
compliance with all applicable laws.
2.14 Recent Operations. Since August 31, 1997, (i) each of the
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Company and the Partnership has operated its business substantially as it was
operated immediately prior to said date and only in the ordinary course; the
Company, the Partnership and the Holders have used their best efforts to
preserve intact the Company's business relationships, (ii) there have been no
bonuses paid to or increases in the compensation of officers or employees of the
Company or the Partnership, except as set forth in Section 2.14(ii) of the
Seller Disclosure Schedule, and (iii) except as set forth in Section 2.14(iii)
of the Seller Disclosure Schedule, the Company has not declared or paid any
dividend or made any other distribution with respect to its capital stock.
Section 2.14(iv) of the Seller Disclosure Schedule sets forth the name and job
title of each individual who has left the employ of the Company or the
Partnership since August 31, 1997. Section 2.14(v) of the Seller Disclosure
Schedule sets forth the name of each of those individuals, the loss of whose
services would have an adverse impact on the operations of the Company or the
Partnership.
2.15 Working Capital and Net Earnings of the Company and the
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Partnership. As at August 31, 1997 the Company and the Partnership had, and,
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as of the date hereof, have on a combined basis (after reductions for
intercompany transactions): (i) working capital, after payment of, or accrual
for, all distributions of cash or property to be made to the Stockholders as of
and through the date hereof ("Combined Working Capital") of no less than
$50,000; and (ii) no long-term bank debt ("Combined Long-Term Bank Debt"). For
the twelve months ended August 31, 1997, the combined recurring earnings before
income taxes for the Company and the Partnership were no
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less than $360,000.00 after payment of, or accrual for, all distributions of
cash or property to the Holders through August 31, 1997.
2.16 Environmental Matters. No storage tanks, underground or
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otherwise, are now located on any properties occupied by the Company or the
Partnership. Each of the Company and the Partnership has complied with all
environmental laws relating to its operations or properties occupied by it.
There are no asbestos containing materials located on properties occupied by the
Company or the Partnership. Neither the Company nor the Partnership has
received any notice, demand, suit or information request pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
or any comparable state law, nor does it have knowledge of any other party's
receipt of same relating to any properties occupied by the Company or by the
Partnership, as the case may be.
2.17 Disclosure. The Company and the Holders have disclosed to
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the Purchaser all facts material to the assets, business, operations, financial
condition and prospects of the Company and the Partnership. All agreements,
schedules, exhibits, documents, certificates, reports or statements furnished or
to be furnished to the Purchaser by or on behalf of the Holders, the Company or
the Partnership in connection with this Agreement or the transactions
contemplated hereby are true, complete and accurate in all material respects,
and no such items contain any untrue statement of a material fact or omit a
material fact necessary in order to make the statements contained herein and
therein not misleading.
2.18 No Conflict With Other Documents. Except as disclosed in
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Section 2.18 of the Seller Disclosure Schedule, neither the execution and
delivery of this Agreement, nor the carrying out of any of the transactions
contemplated hereby, will result in any violation, termination or modification
of, or be in conflict with, the Company's Charter or By-Laws or the
Partnership's Partnership Agreement, any terms of any contract, instrument or
other agreement to which the Company or the Partnership is a party or by which
it or any of its properties is bound or affected, or any law, rule, regulation,
license, permit, judgment, decree or order applicable to the Company or the
Partnership or by which any of its properties or assets are bound or affected,
or result in any breach of or constitute a default (or with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation, or result in the creation
of any lien, charge or encumbrance upon any of its properties or assets pursuant
to any contract, instrument or other agreement to which the Company or the
Partnership is a party or by which it or any of its properties or assets is
bound or affected.
2.19 Conduct of Business. After August 31, 1997 and through the
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date of the Closing, with respect to the Company and the Partnership (a) the
business of the Company and the business of the Partnership has been conducted
only in the ordinary course; (b) the Company and the Partnership have terminated
such of its Employee Plans as required by Purchaser and have not entered into,
adopted or amended any employee benefit plan, agreement or arrangement, entered
into or amended any employment contracts, or increased the salaries of or
compensation of its officers or employees, other than ordinary increases in
salaries of employees other than the Holders in accordance with past practices;
(c) all outstanding loans payable by the Company or the Partnership to the
Holders or receivable by the Company or the Partnership from the Holders or any
employee have been repaid in full by the appropriate party; (d) Holders have
used their best efforts to preserve the business organization of the Company and
of the Partnership intact, to keep available the service of the officers and
employees of the Company and the Partnership and to preserve the goodwill of
suppliers, customers and others doing business with the Company and the
Partnership; (e) neither the Company nor the Partnership has entered into any
agreement for the purchase, sale or other disposition, or to purchase, sell or
dispose of, any equipment, supplies, inventory, investments or other assets
(other than sales of inventory and purchases of materials and supplies in the
ordinary course of business and in accordance with past practices); (f) neither
the Company nor the Partnership has compromised or written off any material
account receivable other than by collection of the full recorded amount thereof;
(g) no change has been made in the Charter or By-Laws of the Company or to the
Partnership Agreement of the Partnership; (h) no change has been made in the
number of shares or terms of the authorized, issued or outstanding capital stock
of the Company, nor has the Company entered into or granted any options, calls,
contracts or commitments of any character relating to any issued or unissued
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capital stock; and (i) no dividend or other distribution or payment has been
declared or paid in respect of the capital stock of the Company, except as
permitted by Section 2.15.
2.20 Brokers and Advisors. Neither the Company nor the
--------------------
Partnership has taken any action which would give rise to a valid claim against
the Purchaser for a brokerage commission, finder's fee, counseling or advisory
fee, or like payment.
2.21 Authority; Binding Obligation. The Company has all
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necessary corporate or partnership power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby by the Company have been duly authorized
by the Company's board of directors and the Holders. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with its terms. Upon the satisfaction of all conditions contained
herein and the filing of the Articles and Certificate of Merger with the
Maryland State Department of Assessments and Taxation and the Secretary of State
of the State of Delaware, this Agreement will result in the valid, legally
binding and enforceable statutory merger of the Company with and into the
Purchaser (the "Merger").
3. REPRESENTATIONS AND WARRANTIES OF THE HOLDERS. Each of the
Holders, severally, and not jointly, hereby represents and warrants to the
Purchaser as follows:
3.1 Ownership of Company Common Stock and Partnership Interests
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The Holder has good and marketable title to the number of issued and outstanding
shares of Company Common Stock and to the Partnership Interests set forth
opposite his name in Section 2.1 of the Seller Disclosure Schedule, free and
clear of any pledges, liens, restrictions, claims or encumbrances of any kind.
The Holder is not a party to or bound by any options, calls, contracts, or
commitments of any character relating to any issued or unissued stock,
partnership or any other equity security issued or to be issued by the Company
or the Partnership.
3.2 No Conflicts. Neither the execution and delivery of this
------------
Agreement nor the carrying out of the transactions contemplated hereby, will
result in any breach of or constitute a default (or with notice or lapse of time
or both would become a default), or give to others any rights, under the terms
of any contract, instrument or other agreement to which the Holder is a party or
is otherwise bound, or any judgment, decree or order applicable to the Holder.
3.3 Binding Effect. This Agreement is a valid and legally
--------------
binding obligation of the Holder, enforceable against the Holder in accordance
with its terms.
3.4 Litigation. There is no litigation, proceeding or
----------
governmental investigation pending or threatened or in prospect against or
relating to (i) the Holder, (ii) the shares of Company Common Stock owned by
him, (iii) the Partnership Interests owned by him or (iv) the transactions
contemplated by this Agreement.
3.5 Brokers and Advisors. The Holder has taken no action which
--------------------
would give rise to a valid claim against the Purchaser for a brokerage
commission, finder's fee, counseling or advisory fee or like payment.
3.6 Investment Intent. It is understood that the Merger Shares
-----------------
are not being registered, for purposes of the transactions hereunder, under the
Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws, and the shares are being delivered without registration in
reliance upon an exemption from the registration requirements of the Securities
Act or any state securities laws. The Holder is acquiring the Purchaser Common
Stock hereunder only for his own account for investment and not with any
intention of making, or with a view to, or for sale in connection with, any
distribution thereof within the meaning of the Securities Act unless such shares
first are registered under the Securities Act.
8
<PAGE>
In connection with each foregoing, each Holder hereby represents
and warrants that:
(a) he has reviewed, discussed and evaluated the
information delivered under Section 1.2 and has had the opportunity to ask
questions of, and receive answers from, executive officers of the Purchaser
concerning the terms and conditions of this Agreement and to obtain any
additional information which he considered necessary to verify the accuracy of
the information delivered under Section 1.2;
(b) he understands that he must bear the economic risks of
the investment in Purchaser Common Stock to be made hereunder for an indefinite
period of time because such stock has not been registered under the Securities
Act and, therefore, may not be sold until such stock subsequently is registered
under the Securities Act or an exemption from registration is available; and
(c) he has sufficient knowledge and experience in
financial and business matters to enable him to be capable of evaluating the
merits and the risks of the exchange of the Company Common Stock and Partnership
Interests for the Purchaser Common Stock contemplated by this Agreement and his
prospective investment in the Purchaser.
3.7 Legends. It is understood and agreed that, to implement the
-------
requirements of the Securities Act and state securities laws and evidence the
restrictions upon transfer contained in this Agreement, the Purchaser will cause
a legend to be conspicuously noted on the certificates representing the
Purchaser Common Stock deliverable hereunder, and that the Purchaser will issue
stop transfer instructions to its transfer agent, to the effect that such stock
has not been registered under the Securities Act and that no transfer may take
place except as permitted by Section 10 of this Agreement and after delivery of
an opinion of counsel satisfactory to the Purchaser to the effect that
registration thereof for the purpose of transfer is not required under the
Securities Act or that the stock proposed to be transferred has been effectively
registered for that purpose under the Securities Act.
3.8 No Agreements Regarding Purchaser Common Stock. Each of the
----------------------------------------------
Holders has not entered into any agreement or understanding with anyone for the
sale, at the Holder's option or otherwise, of any of the Common Stock to be
delivered hereunder to the Holders at the Closing.
3.9 Expenses Relating to Leased Property. All of the expenses
------------------------------------
which were due and payable during the twelve months ended August 31, 1997
relating to ownership and maintenance of the property owned by the Holders which
is located at 301 North Jordan Street, Allentown, Pennsylvania 19382, and which
is currently leased by the Partnership from the Holders, were paid by the
Company or the Partnership and were reflected on the Audited Financial
Statements.
4. COVENANTS OF THE PURCHASER. The Purchaser covenants to the
Company and to each of the Holders that, except as otherwise consented to in
writing by the Company and each of the Holders after the date of this Agreement:
4.1 Cause Conditions to be Satisfied. The Purchaser will use
--------------------------------
its best efforts to cause all of the conditions described in Sections 7 and 8 of
this Agreement to be satisfied (to the extent such matters reasonably are within
its control).
4.2 Tax-Free Reorganization. The Purchaser recognizes that the
-----------------------
Company and the Holders desire to treat the Merger as tax-free reorganization
under Section 368(a)(1)(A) of the Code and will use its best efforts to
cooperate with the Company and the Holders in this regard.
4.3 Consents. Purchaser agrees to take all necessary corporate
--------
or other action and use its best efforts to obtain all consents and approvals
required, or deemed advisable in the Holders' opinion, for consummation of the
transactions contemplated by this Agreement.
9
<PAGE>
4.4 SEC Reports. Purchaser will timely file all SEC reports
-----------
required to be filed by it after the date hereof.
5. COVENANTS OF THE COMPANY AND THE HOLDERS. The Company and each of
the Holders, jointly and severally, covenant to the Purchaser that, except as
otherwise consented to in writing by the Purchaser after the date of this
Agreement:
5.1 Consents. Each shall take all necessary action (including
--------
obtaining consents from the other parties to those of the Educational Contracts
the terms of which require prior consent to the indirect transfer of the
Educational Contracts, in transactions such as the Acquisition Transactions) and
to use their best efforts to obtain all consents and approvals required, or
deemed advisable in the Purchaser's opinion, for consummation of the
transactions contemplated by this Agreement.
5.2 No Solicitation. The Holders, the Company, the Partnership,
---------------
their affiliates and their respective officers, directors, employees,
representatives and agents (i) shall immediately cease any existing discussions
or negotiations, if any, with any parties with respect to any acquisition (other
than the transactions contemplated by this Agreement) of all or any material
portion of the assets of, or any equity interest in, either of the Company or
the Partnership or any business combination with either of the Company or the
Partnership, (ii) shall not solicit, initiate, encourage, or furnish information
in response to any inquiries or proposals that constitute, or could reasonably
be expected to lead to, a proposal or offer for a merger, consolidation,
business combination, sale of substantial assets, sale of shares of capital
stock (including without limitation by way of a tender offer or similar
transactions involving either of the Company or the Partnership, other than the
transactions contemplated by this Agreement) (any of the foregoing transactions
being referred to in this Agreement as a "Purchase Transaction") (iii) shall not
engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any Purchase Transaction, and
(iv) shall not agree to, approve or recommend any Purchase Transaction. If the
Company, the Holders or the Partnership shall nevertheless receive any
indications of interests or proposals with respect to any Purchase Transaction,
it shall provide a copy of any such written proposal to the Purchaser
immediately after receipt thereof. Each of the Holders agrees that the
Purchaser's remedy at law for breach of the covenants contained in this Section
5.2 would be inadequate and, accordingly agree that the Purchaser shall be
entitled to equitable relief, including injunction and specific performance, to
prevent breach of the covenants contained in this Section 5.2.
5.3 Non-Competition.
---------------
(a) Each of the Holders agrees that during the period
beginning on the date hereof and terminating on the fifth anniversary of the
date hereof (the "Noncompetition Period"), he will not, directly or indirectly,
either individually or in his capacity as an employee, owner, partner,
subcontractor, consultant, licensee, franchisee or agent of a business or
enterprise other than the Company or the Partnership: (i) engage in the business
of providing educational services to non-public schools in the Commonwealth of
Pennsylvania or the State of Ohio (the "Business"), except (A) on behalf of the
Purchaser, the Company or the Partnership and (B) in his current teaching
position at Arch Bishop Bonner High School or in another substantially
equivalent teaching position at a private, public or parochial high school; (ii)
interfere with, solicit, or accept for himself, or otherwise for his benefit or
for anyone other than the Company, the Partnership and/or the Purchaser, in
connection with the Business during the Noncompetition Period, any existing or
potential customers of the Company, the Partnership and/or the Purchaser; or
(iii) solicit, hire or arrange to hire any person who at the time of such hire
or within six (6) months prior to the time of such hire was an employee of the
Company, the Partnership and/or the Purchaser and was not involuntarily
terminated by the Company, the Partnership and/or the Purchaser, as the case may
be, or for himself or for any business entity with which he may be, or may be
planning to be, affiliated or associated with, or otherwise interfere with the
retention of employees of the Company, the Partnership and/or the Purchaser.
10
<PAGE>
(b) It is recognized that damages in the event of breach of the
terms of this Section 5.4 by either of the Holders would be difficult, if not
impossible, to ascertain, and it is therefore agreed that the Purchaser, in
addition to and without limiting any other remedy or right it may have, shall
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach. The existence of this right
shall not preclude any other rights and remedies at law or in equity which the
Purchaser may have.
(c) The invalidity of any provision of this Section 5.4 shall
not affect the validity of any other provision. In the event that any provision
of this Section 5.4 or any word, phrase, clause, sentence or other portion
thereof (including, without limitation, the temporal or substantive scope of the
restrictions contained herein) should be held to be unenforceable or invalid for
any reason, such provision or portion thereof shall be modified or deleted in
such a manner as is required to make this Section 5.4 as modified legal and
enforceable to the fullest extent permitted under applicable laws.
5.4 Lease. The Holders shall enter into a year-to-year lease
-----
with the Purchaser with regard to the property owned by the Holders which is
located at 301 North Jordan Street, Allentown, Pennsylvania 19382, which such
property is currently leased by the Partnership from the Holders. The Holders
have no reason to believe that the operating expenses associated with the leased
premises will be materially higher than those currently paid by the Partnership.
5.5 Other Covenants. For a period beginning on the date of the
----------------
Closing of the transactions contemplated by this Agreement and ending six (6)
months thereafter, each of the Holders shall be available from time to time to
the Purchaser for purposes of consultation and other assistance with the
transition of the operations of the Company and the Partnership to the
Purchaser. Subsequent to this period, neither of the Holders shall have an
ongoing role in the operations of the Company or the Partnership unless
otherwise to agreed to by the Purchaser and the Holders.
5.6 Cause Conditions to Be Satisfied. The Company and each of
--------------------------------
the Holders will use their best efforts to cause all of the conditions described
in Sections 7 and 8 of this Agreement to be satisfied (to the extent such
matters reasonably are within their control).
5.7 Further Assurances. At and after the Closing, each of the
------------------
Holders agrees, and authorizes the officers of the Purchaser, to execute and
deliver, in the name of and on behalf of the Company, the Partnership and the
Holders, any deeds, bills of sale, assignments or assurances and to take and do,
in the name and on behalf of the Company, the Partnership and the Holders, any
other actions and things to vest, perfect or confirm of record or otherwise in
the Purchaser any and all right, title and interest in, to and under any of the
rights, properties or assets of the Company or the Partnership acquired or to be
acquired by the Purchaser as a result of the, or in connection with, the Merger
and the Partnership Acquisition, including delivery and assignment of
Certificates of Title or Certificates of Origin, as the case may be,
representing ownership of mobile classrooms and trailers.
6. MERGER OF PURCHASER AND THE COMPANY AND ACQUISITION OF THE
PARTNERSHIP INTERESTS. Subject to the terms and conditions of this Agreement,
the Purchaser, the Holders and the Company agree to effect the following
transactions at the Closing:
6.1 Conditions. The Purchaser, the Holders and the Company will
----------
deliver to the other appropriate evidence of the satisfaction of the conditions
to their respective obligations hereunder.
6.2 Acquisition Transactions.
------------------------
(a) At the Effective Time, the Company will be merged with
and into the Purchaser pursuant to the provisions and with the effect provided
in the general corporation laws of the State of Maryland and State of Delaware.
The parties shall prepare and execute appropriate merger documents under the
corporate laws of Maryland and Delaware, containing the terms provided in this
Agreement, including the Articles and
11
<PAGE>
Certificate of Merger which shall be filed with the Maryland State Department of
Assessments and Taxation and with the Secretary of State of the State of
Delaware on the Closing Date. The Purchaser shall be the surviving corporation
in the Merger.
(b) At the Partnership Effective Time (together with the
Company Effective Time, the "Effective Time"), the Holders will sell and
transfer and the Purchaser will acquire the Partnership Interests pursuant to
the provisions and with the effect provided in the general corporate and
partnership laws of the State of Maryland and the State of Delaware. The parties
shall prepare and execute appropriate acquisition documents under the corporate
and partnership laws of Maryland and Delaware, containing the terms provided in
this Agreement, including a General Assignment and Bill of Sale and an
Assignment and Assumption Agreement on the Closing Date. The Purchaser shall be
the sole owner of the Partnership from and after the Partnership Effective Time.
6.3 Purchaser Common Stock; Conversion of Company Common Stock.
----------------------------------------------------------
(a) As a result of the Merger and without any action by
the holders thereof, all of the shares of the issued and outstanding equity
interests of the Company immediately prior to the Merger, and all rights in
respect thereof, shall be converted into an aggregate of Forty Thousand Eight
Hundred Sixty One (40,861) shares of Common Stock of Sylvan ("Purchaser Common
Stock"), par value $0.01 per share (collectively, the "Merger Shares"). The
allocation of the Merger Shares to the Holders shall be in accordance with each
of the Holder's respective ownership interests in the Company, as set forth in
Section 2.1 of the Company Disclosure Schedule.
(b) In order to effect such conversion, (i) the Holders
will deliver to the Purchaser at the Closing certificates in due and proper form
representing all of the issued and outstanding shares of Company Common Stock
and (ii) the Purchaser shall deliver to each of the Holders a certificate or
certificates, in due and proper form, representing the number of shares of
Purchaser Common Stock to which each of such Holders is entitled as a result of
the Merger. All Purchaser Common Stock issued pursuant to the Merger shall be
fully paid and non-assessable.
6.4 Purchaser Common Stock; Acquisition of Partnership
--------------------------------------------------
Interests.
- ---------
(a) At the Closing, the Holders will sell and transfer to
Purchaser, and Purchaser will purchase from the Holders, all of the Partnership
Interests owned by the Holders. As payment for the acquisition of the
Partnership Interests from the Holders, the Purchaser shall issue and deliver to
the Holders an aggregate of Two Thousand Four Hundred and Three (2,403) shares
of Purchaser Common Stock (collectively, the "Acquisition Shares"). The
allocation of the Acquisition Shares to the Holders shall be in accordance with
each of the Holder's respective Partnership Interests, as set forth in Section
2.1 of the Company Disclosure Schedule.
(b) In order to effect such acquisition, (i) the Holders
will deliver to the Purchaser at the Closing certificates in due and proper form
representing all of the Partnership Interests, duly endorsed and (ii) the
Purchaser shall deliver to each of the Holders a certificate or certificates, in
due and proper form, representing the number of shares of Purchaser Common Stock
to which each of such Holders is entitled in connection with the Partnership
Acquisition. All Purchaser Common Stock issued pursuant to the Partnership
Acquisition shall be fully paid and non-assessable.
6.5 Closing. The closing (the "Closing") of the transactions
-------
contemplated by this Agreement shall take place at the offices of Piper &
Marbury L.L.P., Charles Center South, 36 South Charles Street, Baltimore,
Maryland 21201 beginning at 10:00 a.m. on December 10, 1997, or at such other
time and place as may be agreed upon in writing by the Purchaser, the Company
and the Holders (the "Closing Date").
12
<PAGE>
7. CONDITIONS TO THE PURCHASER'S OBLIGATIONS. Unless waived by the
Purchaser in writing in its sole discretion, all obligations of the Purchaser
under this Agreement are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions:
7.1 Covenants and Representations of the Company and the
----------------------------------------------------
Holders. The Company and the Holders shall have executed all agreements
- -------
contemplated by this Agreement and the Closing Documents to be executed on or
prior to Closing and shall have performed and complied in all material respects
with all agreements, covenants, obligations and conditions required thereby to
be performed or complied with by them on or prior to Closing. All
representations and warranties of the Company and each of the Holders shall be
true and correct as if made for the first time on the Closing Date.
7.2 Approvals of Governmental Authorities. All governmental
-------------------------------------
approvals necessary or advisable in the opinion of the Purchaser's counsel to
consummate the transactions contemplated by this Agreement shall have been
received.
7.3 No Adverse Proceedings or Events. Except for those matters
--------------------------------
disclosed in Section 7.3 of the Seller Disclosure Schedule, no suit, action or
other proceeding against the Company or its officers or directors, the
Partnership or its officers or directors, or the Holders, shall be threatened or
pending before any court or governmental agency including any in which it will
be, or it is, sought to restrain or prohibit any of the transactions
contemplated by this Agreement or to obtain damages or other relief in
connection with this Agreement or the transactions contemplated hereby.
7.4 Consents and Actions; Contracts. All requisite consents of
-------------------------------
any third parties and other actions which the Company and the Holders have
covenanted to use its best efforts to obtain and take under Section 5.1 hereof
shall have been obtained and completed. All material contracts and agreements of
the Company and the Partnership, including, without limitation, all contracts
and agreements listed on Section 2.6 of the Seller Disclosure Schedule, shall be
in full force and effect and shall not be affected by the consummation of the
transactions contemplated hereby.
7.5 Employee Matters. The persons listed in Section 2.14(v) of
----------------
the Seller Disclosure Schedule shall each have become employees of the
Purchaser; Purchaser shall have employed such of the Company's current employees
as the Purchaser, in its sole discretion, shall deem necessary to provide the
services called for by the Educational Contracts; Purchaser shall be satisfied
with the terms of employment (including salaries and benefits) of such
employees; and there shall be no employment agreements between the Purchaser and
any such employees.
7.6 Lease. The Holders and the Purchaser shall have entered
-----
into the lease referred to in Section 5.4 of this Agreement.
7.7 Bill of Sale. The Holders shall have executed and delivered
------------
an Bill of Sale in a form reasonably satisfactory to the Purchaser, evidencing
the sale of the Partnership Interests to the Purchaser.
7.8 Other Evidence. The Purchaser shall have received from the
--------------
Company and each of the Holders such further certificates and documents
evidencing due action in accordance with this Agreement, including certified
copies of proceedings of the stockholders of the Company or of the partners of
the Partnership, as the Purchaser reasonably shall request.
7.9 Accountant Pooling Letter. Purchaser shall have received a
-------------------------
letter from Ernst & Young LLP that the transactions contemplated herein may be
accounted for as a pooling of interests, as defined in Accounting Principles
Board Opinion No. 16.
7.10 Projections. Purchaser shall have received from the Holders
-----------
written projections of the Company's revenue for the 1997/1998 school year.
13
<PAGE>
8. CONDITIONS TO THE COMPANY'S AND THE HOLDERS' OBLIGATIONS. Unless
waived in writing by the Company and the Holders in their discretion, all
obligations of the Company and the Holders under this Agreement are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions:
8.1 Covenants and Representations of the Purchaser. The Purchaser
-----------------------------------------------
shall have executed all agreements contemplated by this Agreement and the
Closing Documents to be executed on or prior to Closing and shall have performed
and complied in all material respects with all agreements, covenants,
obligations and conditions required thereby to be performed or complied with by
them on or prior to Closing. All representations and warranties of the
Purchaser shall be true and correct as if made for the first time on the Closing
Date.
8.2 No Adverse Proceedings or Events. No suit, action or other
--------------------------------
proceeding against the Company, the Partnership or the Purchaser, or their
respective officers or directors or employees, or either of the Holders, shall
be threatened or pending before any court or governmental agency in which it
will be, or it is, sought to restrain or prohibit or to obtain damages or other
relief in connection with this Agreement or the transactions contemplated
hereby.
8.3 Consents and Actions. All requisite consents of any third
--------------------
parties and other actions which the Purchaser has covenanted to use its best
efforts to obtain and take under Section 4.3 of this Agreement shall have been
obtained and completed.
8.4 Other Evidence. The Company, the Partnership and the Holders
--------------
shall have received from the Purchaser such further certificates and documents
evidencing due action in accordance with this Agreement, including certified
copies of proceedings of the Board of Directors of the Purchaser, as the
Company, the Partnership and the Holders reasonably shall request.
8.5 Approvals of Governmental Authorities. All governmental
-------------------------------------
approvals necessary or advisable in the opinion of the Holders to consummate the
transactions contemplated by this Agreement, shall have been received.
9. INDEMNIFICATION.
9.1. Indemnification by the Holders. Each of the Holders, jointly
------------------------------
and severally (except that indemnity shall be several and not joint with respect
to any representation and warranty or covenant made by the Holders severally and
not jointly), hereby covenants and agrees to indemnify and hold harmless the
Purchaser and its respective successors and assigns, at all times from and after
the Closing Date against and in respect of the following:
(a) any liability, loss, damage, expense or other cost resulting from
any misrepresentation, breach of representation or warranty or breach or non-
fulfillment of any agreement or covenant on the part of the Company or either of
the Holders under this Agreement, or from any inaccuracy or misrepresentation in
or omission from the Seller Disclosure Schedule, any certificate or other
instrument or document furnished or to be furnished by the Company or either of
the Holders hereunder;
(b) any loss, damage, expense or other cost which arises out of any
liabilities or obligations of the Company, the Partnership or either of the
Holders (including federal, state or local income and other taxes, if
applicable) incurred prior to the Closing (but only to the extent that such
liabilities and obligations should have been shown or provided for in the
Audited Financial Statements or the Unaudited Balance Sheet and are not so
shown, provided for or reserved against) arising from operations of the Company
or the Partnership.
(c) any additional federal, state or local income and other taxes
assessed against the Purchaser as successor in interest to the Company and the
Partnership.
14
<PAGE>
(d) all claims, actions, suits, proceedings, demands,
assessments, judgments, costs, and expenses, including without limitation
reasonable attorneys' fees and expenses, of any nature incident to any of the
matters indemnified against pursuant to this Section 9.1, including, without
limitation, all such costs and expenses incurred in the defense thereof or in
the enforcement of any rights of the Purchaser hereunder.
9.2 Indemnification Procedure. The procedure for indemnification of
-------------------------
parties under Section 9.1 shall be as follows:
(a) If at any time the Purchaser is entitled to indemnification hereunder
(the "Indemnitee") shall receive notice of any state of facts that have resulted
----------
or may result in a Loss, the Indemnitee shall promptly give written notice (a
"Notice of Claim") to the Holders obligated to provide indemnification (the
- ----------------
"Indemnitor") of the discovery of such potential or actual Loss. A Notice of
- -----------
Claim shall set forth (x) a brief description of the nature of the potential or
actual Loss, and (y) the total amount of Loss anticipated (including any costs
or expenses which have been or may be reasonably incurred in connection
therewith). Upon receipt of a Notice of Claim, the Indemnitor may elect to cure
the event of Loss within 90 days after the date of receipt of the Notice of
Claim. Except for a failure to deliver a Notice of Claim within the applicable
survival period as provided under Section 10 (which failure shall constitute a
complete defense) the Indemnitee's failure to give prompt notice or to provide
copies of documents or to furnish relevant data shall not constitute a defense
(in whole or in part) to any claim by the Indemnitee against the Indemnitor for
indemnification, except and only to the extent that such failure shall have
caused or increased such liability or adversely affected the ability of the
Indemnitor to defend against or reduce its liability.
(b) The Indemnitor shall accept or reject any Loss as to which a Notice of
Claim is sent by the Indemnitee by giving written notice of such acceptance or
rejection to the Indemnitee within 30 days after the date of receipt of the
Notice of Claim. Failure of the Indemnitor to reject a Loss within 30 days of
receipt of the Notice of Claim, shall be conclusive evidence of the Indemnitor's
acceptance of his responsibility to indemnify the Indemnitee against such Loss.
Even if the Indemnitor assumes the defense thereof, the Indemnitee shall have
the right to settle any matter for which a claim for indemnification is made
hereunder upon notice to the Indemnitor and by waiving any right against the
Indemnitor with respect to such matter.
(c) If any Notice of Claim relates to any claim made against an Indemnitee
by any third person, the Notice of Claim shall state the nature, basis and
amount of such claim. The Indemnitor shall have the right, at its election, by
written notice given to the Indemnitee, to assume the defense of the claim as to
which such notice has been given with counsel reasonably acceptable to the
Indemnitee. Except as provided in the next sentence, if the Indemnitor so
elects to assume such defense, it shall diligently and in good faith defend such
claim and shall keep the Indemnitee reasonably informed of the status of such
defense, and the Indemnitee shall cooperate with the Indemnitor in the defense
of such claim, provided that in the case of any settlement providing for
remedies other than monetary damages for which indemnification is provided, the
Indemnitee shall have the right to approve the settlement, which approval shall
not be unreasonably withheld or delayed. If the Indemnitor does not so elect to
defend any claim as aforesaid or shall fail to defend any claim diligently and
in good faith (after having so elected), the Indemnitee may, at the Indemnitor's
expense, assume the defense of such claim and take such other action as it may
elect to defend or settle such claim as it may determine in its reasonable
discretion.
(d) In the event there arises a dispute between the parties as to whether a
Loss is required to be indemnified pursuant to this Section 9.1, the parties
agree to resolve such dispute in accordance with the provisions of Section
9.2(e).
(e) Holders and the Purchaser agree that any controversy or claim arising
out of or relating to this Agreement or breach thereof shall be settled by
arbitration in accordance with the National Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereover. In reaching its decision,
the arbitrator shall have no authority to change or modify any provision of this
Agreement.
15
<PAGE>
9.3 Indemnification by the Purchaser. The Purchaser hereby covenants
--------------------------------
and agrees to indemnify and hold harmless each of the Holders, their successors
and assigns, at all times from and after the Closing Date, against and in
respect of the following:
(a) any liability, loss, damage or expense resulting from any
misrepresentation, breach of representation or warranty or breach or non-
fulfillment of any agreement or covenant on the part of the Purchaser under this
Agreement, or from any inaccuracy or misrepresentation in or omission from any
certificate or other instrument or document furnished or to be furnished by the
Purchaser hereunder; and
(b) all claims, actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including without limitation,
reasonable attorneys' fees and expenses, of any nature incident to any of the
matters indemnified against pursuant to this Section 9.3, including without
limitation, all such costs and expenses incurred in the defense thereof or in
the enforcement of any rights of the Holders hereunder.
The Holders shall promptly notify the Purchaser of any asserted
liability, damage, loss or expense claimed to give rise to indemnification
hereunder and thereafter the Purchaser shall have the right to defend,
compromise and settle such matter, provided that the Purchaser takes all such
actions as are necessary to cause the Holders not to be required to pay any cost
or expense in connection therewith.
10. SURVIVAL. The representations, warranties and agreements
made by the parties in this Agreement and in any other certificates and
documents delivered in connection herewith, including the indemnification
obligations of the Holders and the Purchaser set forth in Section 9 hereof,
shall survive the Closing under this Agreement regardless of any investigation
made by the party making claim hereunder, except that, subject to the provisions
of the next sentence, neither the Purchaser, on the one hand, nor the Holders,
on the other hand, shall have any liability with respect to any matter if notice
of a claim has not been provided on or prior to the third anniversary of the
date of this Agreement. Notwithstanding the foregoing, (i) any indemnification
obligations of the Holders relating to federal, state or local tax matters or
environmental matters of any sort shall continue in full force and effect
without limitation until expiration of the statute of limitations applicable to
such tax or environmental matters, (ii) the representation and warranty
contained in Sections 3.1, 3.3 or 3.6 and any indemnification obligations of the
Holders in connection therewith shall continue in full force and effect without
any limitation, and (iii) any claims, actions or suits based upon fraud, willful
misconduct or negligent or intentional misrepresentation on the Purchaser or any
representative of it, on the one hand, and the Company, the Partnership and the
Holders, on the other hand, shall continue in full force and effect without
limitation until expiration of the statute of limitations applicable thereto.
11. REGISTRATION RIGHTS.
11.1 Registration Procedures and Expenses. Purchaser acknowledges
------------------------------------
the importance of the Holders being able to sell the Merger Shares and the
Acquisition Shares on the open market as soon as reasonably possible.
Accordingly, the Purchaser agrees with Mr. Celidonio and Mr. Donohue that the
Purchaser shall:
(a) subject to receipt of necessary information from the Holders,
as soon as reasonably possible after the date which the Purchaser can
incorporate by reference into a registration statement on Form S-3 either a
Quarterly Report on Form 10-Q or, if required by paragraph (b) below, a Current
Report on Form 8-K of the Purchaser that includes at least 30 days of combined
operating results subsequent to the Effective Time ("Reporting Date"), prepare
and use its best efforts to file with the Commission a registration statement on
Form S-3 which meets the requirements of Rule 415 promulgated under the
Securities Act (the "Shelf Registration Statement") covering the sale by the
Holders from time to time of the Merger Shares issuable to them hereunder (the
"Registrable Shares") and will use its best efforts to have the Shelf
Registration Statement declared effective by the Commission as soon after filing
as possible;
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(b) prepare and file with the Commission such amendments and
supplements to the Shelf Registration Statement relating to the Registrable
Shares and the prospectus used in connection therewith as may be necessary to
keep the Shelf Registration Statement relating to the Registrable Shares
effective until the date on which the Purchaser Common Stock registered by the
Shelf Registration Statement relating to the Registrable Shares has been sold;
(c) during the period referred to in (b) above, prepare and promptly
file with the Commission, and promptly notify the Holders of the filing of, such
amendment or supplement to the Shelf Registration Statement relating to the
Registrable Shares and the prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to the
Purchaser Common Stock is required to be delivered under the Securities Act, any
event has occurred the result of which is that any such prospectus then in
effect would include or incorporate an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
(d) advise the Holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of the Shelf Registration Statement relating to the
Registrable Shares or the initiation or threatening of any proceeding for that
purpose and promptly use its diligent best efforts to prevent the issuance of
any stop order and to obtain its withdrawal if such stop order should be issued;
(e) furnish to the Holders with respect to the Purchaser Common Stock
registered under the Shelf Registration Statement relating to the Registrable
Shares such number of copies of prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act and such other documents
as the Holders may reasonably request (but in no event more than 50), in order
to facilitate the public sale or other disposition of all or any of the
registered Purchaser Common Stock by the Holders; provided, however, that the
-------- -------
obligation of Purchaser to deliver copies of prospectuses or preliminary
prospectuses to the Holders shall be subject to the receipt by the Purchaser of
reasonable assurances from the Holders that the Holders will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such prospectuses or
preliminary prospectuses;
(f) file documents required of Purchaser for normal blue sky clearance
in states reasonably specified in writing by the Holders, provided, however,
that Purchaser shall not be required to qualify to do business or consent
generally to service of process in any jurisdiction in which it is not now so
qualified or has not so consented; and
(g) bear all expenses in connection with the procedures in paragraphs
(a) through (f) of this Section 11.1 and the registration of the Purchaser
Common Stock pursuant to the Shelf Registration Statement relating to the
Registrable Shares, other than fees and expenses, if any, of counsel or other
advisers to the Holders;
(h) at all times take such actions as are commercially reasonable to
cause the Purchaser to continue to satisfy the "Registrant Requirements" set
forth in the General Instructions to the Form S-3 (and the Purchaser represents
and warrants that it currently satisfies such Registrant Requirements); and
(i) cause the Registrable Shares be included and authorized for
quotation in the NASDAQ National Market System.
11.2 Engagement of Underwriters. The parties hereto agree that the
--------------------------
Purchaser shall have no obligation to (i) conduct, arrange or coordinate any
distribution or sales activities on behalf of the Holders with respect to the
Purchaser Common Stock other than as set forth in Section 11.1 above or (ii)
retain any underwriter(s) in connection with the registration and/or
distribution of the Purchaser Common Stock pursuant to this Section 11. The
Holders agree that: (i) any underwriter(s) or counsel engaged in connection with
the registration or
17
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distribution of the Purchaser Common Stock required to be registered pursuant to
this Section 11 will be retained by and at the sole expense of the Holders, (ii)
any such underwriter must be reasonably acceptable to Purchaser and (iii) any
discounts or commissions payable to such underwriter(s) shall also be an expense
solely of the Holders. In the event the Holders engage one or more underwriters
pursuant to this Section 11.2, each of the Holders shall enter into an
underwriting agreement with the managing or lead managing underwriter in the
form customarily used by such underwriter with such changes thereto as the
parties thereto shall agree; and, further, shall provide to such underwriter any
documents or other information as is necessary, in the underwriter's reasonable
opinion, to facilitate the effectiveness of the Shelf Registration Statement
relating to the Registrable Shares and the completion of the distribution of the
Purchaser Common Stock so registered.
11.3 Indemnification With Respect to Shelf Registration Statements.
-------------------------------------------------------------
Purchaser hereby agrees to indemnify the Holders against liability arising out
of or based upon any untrue statement or alleged untrue statement of material
fact in any Shelf Registration Statement filed by Purchaser pursuant hereto, or
the omission or alleged omission to state or incorporate by reference in such
Shelf Registration Statement any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, other than any
such statement included or incorporated by reference in, or omitted from, the
Shelf Registration Statement by Purchaser in reliance upon and in conformity
with written information furnished to Purchaser specifically for use therein by
or on behalf of the Holders. The Holders hereby agree to indemnify Purchaser
against liability arising out of or based upon any untrue statement or alleged
untrue statement of a material fact included or incorporated by reference in any
Shelf Registration Statement or the omission or alleged omission to state or
incorporate by reference therein any material fact required to be stated therein
or necessary in order to make the statements therein not misleading, if such
statement or omission was made by Purchaser in reliance upon and in conformity
with written information furnished to Purchaser by the Holders for use or
incorporation by reference in such Shelf Registration Statement.
12. OTHER AGREEMENTS.
12.1 Access. Each of the Holders and the Company will, and will
------
cause their respective affiliates, directors, officers, employees and agents to,
afford to the Purchaser and its advisors, officers, employees and agents
reasonable access at all reasonable times to the Company's and the Partnership's
officers, employees, agents, properties, books, records and contracts and will
furnish to the Purchaser and its advisors all financial, operating and other
data and information relating to the Company and the Partnership as the
Purchaser or its advisors may reasonably request, and the Purchaser will, and
will cause its affiliates, directors, officers, employees and agents to, afford
to the Holders and their respective advisors, officers, employees and agents
reasonable access at all reasonable time to the Purchaser's officers, employees,
agents, properties, books, records and contracts and will furnish to the Holders
and their respective advisors all financial, operating and other data and
information relating to the Purchaser as the Holders or their respective
advisors may reasonably request. Except as otherwise required by law, the
Purchaser and the Holders agree that they and their respective officers,
employees, agents and advisors (i) will use any such information acquired from
the other solely for the purpose of due diligence review and for no other
purpose, (ii) will maintain such information confidential, (iii) will not at any
time or in any manner, directly or indirectly, disclose to any person any or all
of such information (other than for the purpose of due diligence review, (iv)
will not use for their benefit or the benefit of any third party any such
information (other than benefits resulting from the consummation of the
Acquisition Transactions and (v) upon the termination of this Agreement and the
Acquisition Transactions will either (A) deliver to the party that originally
provided it all such information, including originals or copies thereof, that
are in the possession of such party or its officers, employees, agents and
advisors or (B) certify to each such party that such information has been
destroyed.
12.2 Public Statements. Neither the Company nor the Holders, from
-----------------
and after the date of this Agreement shall, nor the Purchaser (in either case,
an "Announcing Party"), from and after the date of this Agreement until the
Effective Time shall make any public announcement or other disclosure concerning
this Agreement or the Acquisition Transactions without the prior consent of the
other (the "Reviewing Party") as to form, content and timing; provided, however,
that the consent of the Reviewing Party shall not be unreasonably withheld and,
if upon
18
<PAGE>
advice of legal counsel, the Announcing Party determines that public
announcement or disclosure is required by law or any securities exchange on
which the Announcing Party's stock is listed and the Reviewing Party fails to
give its consent in a timely manner (considering the circumstances), the
Announcing Party shall not be prohibited from disseminating and/or filing the
public announcement or disclosure without obtaining such consent.
12.3 Dispositions of Purchaser Common Stock; Other Actions. Each of
-----------------------------------------------------
the Holders agrees not to (i) sell, pledge, hypothecate, hedge or in any manner
transfer or dispose of the shares of Purchaser Common Stock acquired pursuant to
this Agreement until the Shelf Registration Statement relating to such shares
has been declared effective with the Commission nor (ii) take any other action
which could prevent the Purchaser from treating the Acquisition Transactions as
a pooling of interests for accounting purposes.
13. CONFIDENTIALITY. After the date hereof, the Holders will hold in
confidence and not reveal to any third parties any knowledge or information of a
confidential nature with respect to the business, products, know-how and methods
of operation of the Company, the Partnership or the Purchaser, and will not
disclose, publish or make use of the same, provided, however, that the foregoing
shall not be applicable to any disclosure or use of confidential information or
knowledge that can be demonstrated to have (i) been publicly known prior to the
date of this Agreement, (ii) become well known by publication or otherwise not
due to the unauthorized act or omission on the part of the Holders, or (iii)
been supplied to the Holders by a third party without violation of the rights of
the Company or the Purchaser or any other party. The parties agree that the
remedy at law for any breach by the Holders of this Section 13 shall be
inadequate and that the aggrieved party shall be entitled to injunctive relief
in addition to any other remedy.
14. EXPENSES. Each party to this Agreement shall pay all of its
expenses relating hereto, including fees and disbursements of its counsel,
accountants and financial advisors, whether or not the transactions hereunder
are consummated. It is expressly understood that the Holders will bear, and
will not cause the Purchaser to pay the fees and other expenses of counsel and
financial advisors to the Company, the Partnership and the Holders or other
types of fees and expenses incurred in connection with the transactions
contemplated by this Agreement. The Holders will bear the cost of furnishing
the Audited Financial Statements.
15. NOTICES. Except as otherwise provided herein, all notices,
requests, demands and other communications under or in connection with this
Agreement shall be in writing, and, (a) if to the Purchaser, shall be addressed
to:
B. Lee McGee
Sylvan Learning Systems, Inc.
1000 Lancaster Street
Baltimore, Maryland 21202
with a copy to:
Richard C. Tilghman, Jr., Esquire
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
(b) if to the Company or the Holders, shall be addressed to:
Mr. Vincent J. Donohue
Mr. Ralph J. Celidonio
Education and Training Consultants of Pennsylvania Inc.
1229 Sylvan Road
19
<PAGE>
West Chester, Pennsylvania 19382
All such notices, requests, demands or communications shall be mailed
postage prepaid, certified mail, return receipt requested, or by overnight
delivery or delivered personally, and shall be sufficient and effective
when delivered to or received at the address so specified. Any party may change
the address at which it is to receive notice by like written notice to the
other.
16. TERMINATION. The parties, by mutual written consent, may
terminate this Agreement at any time prior to the Closing and, unless otherwise
specifically provided in such consent, any such termination shall be without
liability on the part of any party hereto. The Purchaser may elect to terminate
this Agreement and the Acquisition Transactions in the event that any condition
for its obligation to close has not been met or waived by it in its sole
discretion and the Acquisition Transactions shall not have become effective on
or before December 16, 1997. Any such termination shall be without liability to
the Company, the Partnership or the Holders, except to the extent that there
shall have occurred any willful or intentional breach of this Agreement or any
intentional misrepresentation or breach of warranty, as to each of which all
legal remedies of the party adversely affected shall survive and be enforceable.
17. ENTIRE AGREEMENT. This Agreement (including the exhibits hereto
and the lists, schedules and documents delivered pursuant hereto, which are a
part hereof) is intended by the parties to and does constitute the entire
agreement of the parties with respect to the transactions contemplated by this
Agreement. This Agreement supersedes any and all prior understandings, written
or oral, between the parties, and this Agreement may be amended, modified,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the amendment, modification, waiver,
discharge or termination is sought. This Agreement may not be amended except by
an instrument in writing signed on behalf of the parties hereto.
18. GENERAL. The paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns, but nothing herein, express or implied, is
intended to or shall confer any rights, remedies or benefits upon any person
other than the parties hereto. This Agreement may not be assigned by any party
hereto. This Agreement shall be construed in accordance with and governed by
the laws of the State of Maryland.
20
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IN WITNESS WHEREOF, the Purchaser, the Company and the Holders have
caused this Agreement to be duly executed and their respective seals to be
hereunto affixed as of the date first above written.
ATTEST: SYLVAN LEARNING SYSTEMS, INC.
By:
-------------------------- -----------------------------
ATTEST: EDUCATION AND TRAINING CONSULTANTS OF
PENNSYLVANIA, INC.
By:
-------------------------- -----------------------------
WITNESS: HOLDERS:
(Seal)
--------------------------- ---------------------------
Ralph Celidonio
(Seal)
--------------------------- ---------------------------
Vince Donohue
21
<PAGE>
EXHIBIT 5.1
-----------
[LETTERHEAD OF PIPER & MARBURY APPEARS HERE]
March 31, 1998
Sylvan Learning Systems, Inc.
1000 Lancaster Street
Baltimore, Maryland 21201
Re: Registration Statement on Form S-3
----------------------------------
Dear Sirs:
We have acted as counsel to Sylvan Learning Systems, Inc., a Maryland
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed on the date hereof
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to 43,264 shares of the Company's Common Stock, par value $.01 per share
(the "Shares"), which were previously issued by the Company and are being
registered for resale by the holders thereof.
In this capacity, we have examined the Company's Charter and By-Laws, the
proceedings of the Board of Directors of the Company relating to the issuance of
the Shares and such other documents, instruments and matters of law as we have
deemed necessary to the rendering of this opinion. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, and the conformity with originals of all documents
submitted to us as copies.
Based upon the foregoing, we are of the opinion and advise you that each of
the Shares described in the Registration Statement has been duly authorized and
validly issued and is fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ PIPER & MARBURY L.L.P.
<PAGE>
EXHIBIT 23.1
------------
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
--------------------------------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-_______) and related Prospectus of
Sylvan Learning Systems, Inc. for the registration of 43,264 shares of its
common stock and to the incorporation by reference therein of our report dated
July 10, 1997, with respect to the consolidated financial statements and
schedule of Sylvan Learning Systems, Inc. and subsidiaries included in its
Current Report on Form 8-K dated July 15, 1997, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Baltimore, MD
March 27, 1998
<PAGE>
EXHIBIT 23.2
------------
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
------------------------------------------------------
We consent to the incorporation by reference in this Registration Statement
of Sylvan Learning Systems, Inc. on Form S-3 of our reports on the financial
statements of Independent Child Study Teams, Inc. and I--R, Inc., dated March
14, 1997, appearing in the Form 8-K of Sylvan Learning Systems, Inc. dated
November 3, 1997.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
March 27, 1998
<PAGE>
EXHIBIT 23.3
------------
CONSENT OF CANTERELLI & VERNOIA, CPAs, INDEPENDENT AUDITORS
-----------------------------------------------------------
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated April 25, 1995 and May 10, 1995, with respect to the
financial statements of I--R, Inc. and Independent Child Study Teams, Inc.,
respectively, included in the Registration Statement (Form S-3 No. 333-
_________) and related Prospectus of Sylvan Learning Systems, Inc. for the
registration of 43,264 shares of its common stock.
/s/ CANTERELLI & VERNOIA, CPAs
Sommerville, New Jersey
March 25, 1998
