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EXECUTION VERSION
AMENDED & RESTATED
ASSET PURCHASE AGREEMENT
by and among
Ancora Intermediate Holdings LLC
and
Atlantic Coast Colleges, Inc., Berks Technical Institute, Inc., Creative Circus, Inc., Delta
Career Education Corporation, McCann Education Centers, Inc., McCann School of
Business and Technology, Inc., Miller-Motte Business College, Inc., Palmetto Technical
College, Inc., and Piedmont Business Colleges, Inc.
Dated as of January 18, 2018
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1 Definitions.
ARTICLE II PURCHASE AND SALE 12
Section 2.1 Purchase and Sale of Purchased Assets 12
Section 2.2 Excluded Assets 16
Section 2.3 Assumed Liabilities 17
Section 2.4 Excluded Liabilities 18
Section 2.5 Purchase Consideration 18
Section 2.6 Closing 18
Section 2.7 Consents of Third Parties... 22
Section 2.8 Working Capital Adjustment.. 23
Section 2.9 Calculation and Payment of Main Adjustment Amount and Creative
Circus Adjustment Amount from Surety Bond Escrow Account.. 27
Section 2.10 Funding of Buyer Wind Down Funds 28
Section 2.11 Insolvency Proceeding 28
ARTICLE III REPRESENTATIONS AND WARRANTIES. 28
Section 3.1 Representations and Warranties of the Seller 28
Section 3.2 Representations and Warranties of the Buyer 34
ARTICLE IV CONDITIONS OF PURCHASE 37
Section 4.1 Conditions to Obligations of the Buyer 37
Section 4.2 Conditions to Obligations of the Seller. 39
ARTICLE V COVENANTS 42
Section 5.1 Conduct of Business 42
Section 5.2 Publicity 45
Section 5.3 Confidentiality 45
Section 5.4 Access to Information 45
Section 5.5 Preservation of Records . 46
Section 5.6 Commercially Reasonable Efforts . 46
Section 5.7 No Shop; Buyerss Consent Over Alternative Transactions AT
Section 5.8 D&O Tail.. AT
Section 5.9 Wrong Pocket 48
Section 5.10 Title IV Management. 49
Section 5.11 Closing Date Expenses and Post-Closing Expenses... 49
Section 5.12 Seller Employment Arrangements... 49
ARTICLE VI TERMINATION. 50
Section 6.1 Termination 50
Section 6.2 Effect of Termination... 50
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ARTICLE VII MISCELLANEOUS 51
Section 7.1 Non-Survival of Representations Warranties, Covenants and
Agreements.. 51
Section 7.2 Assignment; Binding Effect... 51
Section 7.3 Choice of Law... 51
Section 7.4 Arbitration 51
Section 7.5 Notices 52
Section 7.6 Headings 53
Section 7.7 Fees and Expenses 53
Section 7.8 Entire Agreement 53
Section 7.9 Interpretation.. 53
Section 7.10 Waiver and Amendment . 53
Section 7.11 Counterparts... 54
Section 7.12 Third-Party Beneficiaries 54
Section 7.13 Severability . 54
Section 7.14 Specific Performance 54
Section 7.15 Non-Recourse 54
Section 7.16 Release. 55
Section 7.17 Awomey-Chient Privilege ‘and Conflict Waiver. 56
Section 7.18 Fraud... 57
Section 7.19 No Breach .. 58
Section 7.20 Amendment and Restatement 58
EXHIBIT A-1 BILL OF SALE
EXHIBIT A-2 CREATIVE CIRCUS BILL OF SALE
EXHIBIT B-1 ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT B-2 CREATIVE CIRCUS ASSIGNMENT AND ASSUMPTION
AGREEMENT
EXHIBIT C TRANSITION SERVICES AGREEMENT
EXHIBIT D WIND-DOWN AGREEMENT
EXHIBIT E BUDGET
EXHIBIT F WORKING CAPITAL SCHEDULE
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THIS ASSET PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this “Agreement”), dated as of January 18, 2018, by and among
(a) (i) Atlantic Coast Colleges, Inc., a North Carolina corporation; (ii) Berks Technical Institute,
Inc., a Delaware corporation; (iii) Creative Circus, Inc., a Virginia corporation (“Creative
Circus”); (iv) Delta Career Education Corporation, a Delaware corporation (“Delta”); (v)
McCann Education Centers, Inc., a Pennsylvania corporation; (vi) McCann School of Business
and Technology, Inc., a Louisiana corporation; (vii) Miller-Motte Business College, Inc., a North
Carolina Corporation; (viii) Palmetto Technical College, Inc., a Virginia corporation; and (ix)
Piedmont Business Colleges, Inc., a North Carolina corporation (each and collectively, the
“Seller”); and (b) Ancora Intermediate Holdings LLC, a Texas limited liability company (the
“Buyer”), and amends and restates in its entirety that certain Asset Purchase Agreement, dated as
of October 3, 2017 (the “Initial APA”), by and among the Seller and the Buyer. Unless
otherwise set forth herein, capitalized terms used herein shall have the meanings assigned to such
terms in Section 1.1
RECITALS
WHEREAS, the Seller is engaged in the business of owning and operating the Schools
(as such business is conducted by the Seller on the date of this Agreement, the “Business”);
WHEREAS, the Seller desires to sell, and the Buyer desires to purchase, the Purchased
Assets, and in connection therewith the Buyer is willing to assume the Assumed Liabilities, all
upon the terms and subject to the conditions set forth herein; and
WHEREAS, this Agreement amends and restates the Initial APA in its entirety
NOW, THEREFORE, in consideration of the foregoing, the representations, warranties,
covenants and agreements set forth in this Agreement, and other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
For purposes of this Agreement, except as otherwise expressly provided herein or unless
the context otherwise requires, the following terms, when used in this Agreement and the
Exhibits, Schedules, and other documents delivered in connection herewith, have the meanings
assigned to them in this Section 1.1.
“AAA” has the meaning given to such term in Section 7.4(a) hereof.
“Accrediting Body” means any non-governmental entity, including institutional and
specialized accrediting agencies, which engage in the granting or withholding of accreditation of
postsecondary educational institutions or educational programs in accordance with standards
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relating to the performance, operations, financial condition or academic standards of such
institutions and schools.
“Action” means any action, claim, complaint, investigation, petition, suit, Compliance
Review, or other proceeding, whether civil or criminal, at law or in equity before any
Governmental Authority.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under common control
with, such Person, and the term “control” (including the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether through ownership of
voting securities, by Contract or otherwise.
“Agent” means Antares Capital LP or any successor agent, as administrative agent under
that certain Amended and Restated Credit Agreement, dated as of November 22, 2016, by and
among Delta Educational Systems, Inc., as the borrower thereunder, the other persons party
thereto that are designated as credit parties, Antares Capital LP, as agent for all lenders
thereunder, and the other financial institutions party thereto that are designated as lenders, as
amended by that certain First Amendment to Amended and Restated Credit Agreement, dated as
of May 16, 2017, and that certain Second Amendment to Amended and Restated Credit
Agreement, dated as of June 1, 2017, and as may be amended, restated, amended and restated,
supplemented or otherwise modified from time to time.
“Agreed Principles” means the principals set forth on the Working Capital Schedule, as
attached hereto as Exhibit F.
“Agreement” has the meaning given to such term in the preamble hereof.
“Ancora Confidentiality Agreement” has the meaning given to such term in Section 5.3
hereof.
“Assignment and Assumption Agreement” has the meaning given to such term in
Section 2.6(b)(i)(2) hereof.
“Assumed Liabilities” has the meaning given to such term in Section 2.3 hereof.
“Bill of Sale” has the meaning given to such term in Section 2.6(b)(i)(1) hereof.
“‘Brissman Employment Agreement” means that certain Employment Agreement, dated
May 30, 2013, by and between Charles P. Brissman (“Brissman”) and Delta, as amended.
“Budget” means that certain forward-looking budget of the Seller in the form attached
hereto as Exhibit E.
“Business” has the meaning given to such term in the recitals hereof.
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“Business Day” means any day other than a Saturday, a Sunday or a day on which the
banks in New York are authorized or obligated by Law or executive order to close
“Buyer” has the meaning given to such term in the preamble hereof.
“Buyer Parties” has the meaning given to such term in Section 7.17(b)(i) hereof.
“Buyer Wind Down Funds” means an amount in cash equal to (x) a minus (y)
| which amount will be deposited by the Buyer in accordance with the
terms of Section 2.10 hereof, together with interest accrued thereon from the Closing Date, as
such amount may be reduced from time to time in accordance with this Agreement, the Main
Closing Escrow Agreement and the Lender Consent. Any reference to the Buyer Wind Down
Funds used in this Agreement shall mean and be a reference to the dollar amount referred to in
the immediately preceding sentence to the extent such amount remains in the Main Closing
Escrow Account.
“Buyer’s Counsel” means each of (i) Stroock & Stroock & Lavan LLP and (ii)
Thompson Coburn LLP, each in their respective capacity as legal counsel to the Buyer.
“Closing” has the meaning given to such term in Section 2.6(a)(i) hereof.
“Closing Date” has the meaning given to such term in Section 2.6(a)(i) hereof.
“Competing Proposal” has the meaning given to such term in Section 5.7 hereof.
“Compliance Date” means July 1, 2014.
“Compliance Review” means any program review, audit (including any Title IV
Program compliance audit by an independent auditor pursuant to 34 C.F.R. § 668.23),
investigation, subpoena or any other compliance-related review conducted by a Governmental
Authority and seeking information concerning any Seller’s, any Institution’s or any School’s
compliance with any Laws.
“Confidentiality Agreements” has the meaning given to such term in Section 5.3 hereof.
“Contract” means any written or oral agreement, arrangement, commitment, indenture,
instrument, lease, purchase order or license
“Contracting Parties” has the meaning given to such term in Section 7.15 hereof.
“Creative Circus” has the meaning given to such term in the preamble hereof.
6
Creative Circus Adjustment Amount” means an_amount equal to (x
ee minus (y)
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“Creative Circus Assets” has the meaning given to such term in Section 2.1(a) hereof.
“Creative Circus Assignment and Assumption Agreement” has the meaning given to
such term in Section 2.6(b)(ii)(2) hereof.
“Creative Circus Assumed Current Liabilities’ means, as of the Creative Circus
Measurement Time, the Creative Circus Liabilities of Creative Circus, as determined in
accordance with the Agreed Principles.
“Creative Circus Bill of Sale” has the meaning given to such term in Section
2.6(b)(ii)(1) hereof.
“Creative Circus Calculated Amount” has the meaning given to such term in Section
2.8(b)(ii) hereof.
“Creative Circus Closing” has the meaning given to such term in Section 2.6(a)(ii)
hereof.
“Creative Circus Closing Certificate” has the meaning given to such term in Section
2.8(b)(i) hereof.
“Creative Circus Closing Date” has the meaning given to such term in Section 2.6(a)(ii)
hereof.
“Creative Circus Estimated Net Working Capital” has the meaning given to such term
in Section 2.8(b)(i) hereof.
“Creative Circus Final Statement” has the meaning given to such term in Section
2.8(b)(iv) hereof.
“Creative Circus Liabilities” has the meaning given to such term in Section 2.3(a)
hereof.
“Creative Circus Measurement Time” means 11:59 p.m. (prevailing Eastern Time) on
the day immediately prior to the Creative Circus Closing Date.
“Creative Circus Net Working Capital” means (a
minus (b) i
“Creative Circus Purchased Current Assets” means, as of the Creative Circus
Measurement Time, the Creative Circus Assets, as determined in accordance with the Agreed
Principles.
“Creative Circus Statement” has the meaning given to such term in Section 2.8(b)(ii
hereof.
“Creative Circus Target Working Capital” means an amount a
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“Curriculum” means the curriculum used in the educational programs of the Business in
the form of computer programs or software, slide shows, texts, films, web site content, videos or
any other form or media, including, without limitation, the following items: (a) course
objectives, (b) lesson plans, (c) exams, (d) class materials (including interactive or computer-
aided materials), (e) faculty notes, (f) course handouts, (g) diagrams, (h) syllabi, (i) sample
externship and placement materials, (j) clinical checklists, (k) course and faculty evaluation
materials, (1) policy and procedure manuals, and (m) other related materials. The Curriculum
shall also include: (i) all copyrights, copyright applications, copyright registrations and trade
secrets relating to the above-listed items, and (ii) all periodic updates or revisions to the
Curriculum as developed.
“Deal Communications” has the meaning given to such term in Section 7.17(a)(ii)
hereof.
“Delta” has the meaning given to such term in the preamble hereof.
“Delta Confidentiality Agreement” has the meaning given to such term in Section 5.3
hereof.
“Demand for Arbitration” has the meaning given to such term in Section 7.4(b) hereof.
“Dispute Notice” has the meaning given to such term in Section 2.8(a)(iii) hereof.
“DOE” means the U.S. Department of Education.
“D&O Tail” has the meaning given to such term in Section 5.8 hereof.
“D&O Tail Payment” has the meaning given to such term in Section 5.8 hereof.
“D&O Tail Payment Terms” has the meaning given to such term in Section 5.8 hereof.
“Educational Agency” means any Person, entity or organization, whether governmental,
government chartered, private, or quasi-private, that engages in granting or withholding
Educational Approvals for, administers financial assistance to or for students of, or otherwise
regulates private postsecondary schools in accordance with standards relating to the
performance, operation, financial condition or academic standards of such schools, including,
without limitation, the DOE, an Accrediting Body, or any state educational agency, as
applicable.
“Educational Approval” means any license, permit, authorization, program
participation agreement, certification, accreditation, or similar approval issued or required to be
issued by an Educational Agency to any Institution or School subject to the oversight of such
Educational Agency, including any such approval for the Institution or School to participate in
any Student Financial Assistance program, including the Title [V Programs
“Educational Consent” means any approval, authorization or consent by any
Educational Agency or any notification to be made by the parties hereto to an Educational
Agency, with regard to the transactions contemplated herein, whether required to be effectuated
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or obtained before, on or after the Closing Date, which is necessary under applicable laws or
regulations in order to maintain or continue any Educational Approval held by any Institution or
School as of the date of this Agreement.
“Educational Law” means any federal, state, municipal, foreign or other Law,
regulation, order, Accrediting Body standard or other requirement applicable thereto, including
the provisions of the Title IV Programs and any regulations implementing or relating thereto,
issued or administered by, or related to, any Educational Agency or Student Financial Assistance
program.
“Encumbrance” means any claim, charge, lease, covenant, easement, encumbrance,
security interest, lien, option, right of others, mortgage, deed of trust, hypothecation, conditional
ale, or restriction (whether on voting, sale, transfer, disposition, or otherwise), whether imposed
by Contract or Law.
“Escrow Agent” means the party defined as “Escrow Agent” in the Main Closing
Escrow Agreement and the Surety Bond Escrow Agreement.
“Escrow Agreements” means the Main Closing Escrow Agreement and the Surety Bond
Escrow Agreement.
“Excluded Assets” has the meaning given to such term in Section 2.2 hereof.
“Excluded Contracts” has the meaning given to such term in Section 2.2(a) hereof.
“Excluded Insurance Policies” has the meaning given to such term in Section 2.2(g
hereof.
“Excluded Liabilities” has the meaning given to such term in Section 2.4 hereof.
“Executive Payments” has the meaning given to such term in Section 5.12 hereof.
“Flow of Funds Memorandum” means that certain Flow of Funds Memorandum, which
sets forth the wire transfers, together with wire transfer instructions, that are required to occur to
consummate the Closing
“Fraud” by any party means actual and intentional fraud with respect to the specific
representations and warranties in Section 3.1 and Section 3.2, as the case may be, (a) with the
actual knowledge (as opposed to imputed or constructive knowledge, knowledge that could have
been obtained after inquiry, or reckless disregard) that the applicable representation and warranty
was actually untrue when made, and with the express intention that another party rely thereon to
its detriment, (b) the other party did not have actual knowledge (as opposed to imputed or
constructive knowledge, knowledge that could have been obtained after inquiry, or reckless
disregard) that such representation or warranty was untrue as of the execution of this Agreement,
(c) the other party acted or did not act in justifiable reliance on the representation or warranty
made and (d) as a result of such untrue representation or warranty, the other party suffered
damages.
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“GAAP” means generally accepted accounting principles in the United States, as in
effect from time to time, consistently applied.
“Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any Educational Agency, and any
corporation or other entity owned or controlled, through stock or capital ownership or otherwise,
by any of the foregoing
“HEA” means the Higher Education Act of 1965, as amended.
“In Accordance With the Budget” means any expenditure, cost, fee or expense that
deviates from the amounts specified in the Budget by not more than five percent (5%).
“Independent Accounting Firm” has the meaning given to such term in Section
2.8(a)(v) hereof.
“Initial APA” has the meaning given to such term in the preamble hereof.
“Insolvency Proceeding” has the meaning given to such term in the Lender Consent.
“Institution” means a school group including one or more Schools that has been
designated by the DOE as an eligible institution and assigned a unique six-digit Office of
Postsecondary Identification Number by the DOE.
“Knowledge of the Seller” means the actual knowledge of any of John Olsen, Charlie
Brissman, Tim Ryder and/or William Nance, and any knowledge that any such individual should
reasonably be expected to obtain upon a reasonable inquiry.
“Law” means, in any jurisdiction, any statute or law (including common law), ordinance,
tule, treaty, code or regulation and any decree, injunction, judgment, order, ruling, assessment or
writ of any applicable Governmental Authority, excluding any Educational Law.
“Lender Consent” means that certain Limited Waiver and Consent, Authorization and
Direction, dated as of October 3, 2017, by and among the Buyer, the Seller, and the other parties
thereto.
“Limited Guarantee” has the meaning given to such term in Section 2.6(c)(i)(6) hereof.
“Main Adjustment’ t_Amount” means an amount _ to = aT
minus (y)
“Main Assumed Current Liabilities” means, as of the Main Measurement Time, the
Assumed Liabilities (other than the Creative Circus Liabilities) of the Seller on a consolidated
basis, as determined in accordance with the Agreed Principles.
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“Main Calculated Amount” has the meaning given to such term in Section 2.8(a)(ii
hereof.
“Main Closing Certificate” has the meaning given to such term in Section 2.8(a)(i)
hereof.
“Main Closing Escrow Account” means that certain escrow account in accordance with
which the Buyer Wind Down Funds will be maintained by the Escrow Agent in accordance with,
and subject to the terms of, the Main Closing Escrow Agreement and the Lender Consent.
“Main Closing Escrow Agreement” means an escrow agreement to be executed by and
among the Escrow Agent, the Buyer and the Seller in a form to be mutually agreed upon by the
Escrow Agent, the Buyer and the Seller.
“Main Estimated Net Working Capital” has the meaning given to such term in Section
2.8(a)(i) hereof.
“Main Final Statement” has the meaning given to such term in Section 2.8(a)(iv
hereof.
“Main Measurement Time” means 11:59 p.m. (prevailing Eastern Time) on the day
immediately prior to the Closing Date.
«
“Main Net Workin : Capital” means (a) ius
ee
(b) ma
“Main Purchased Current Assets” means, as of the Main Measurement Time, the
Purchased Assets (other than the Creative Circus Assets) of the Seller on a consolidated basis, as
determined in accordance with the Agreed Principles.
“Main Statement” has the meaning given to such term in Section 2.8(a)(ii) hereof.
“Main Target Working Capital” means an amount a
“Material Adverse Effect” means any event, circumstance, change, occurrence or effect
(collectively, “Events”) that, individually or in the aggregate, has had or would reasonably be
expected to have a material and adverse effect upon the business, assets, liabilities, financial
condition or operating results of the Business, taken as a whole; provided, however, that none of
the following (either alone or in combination with any other Event) shall be deemed to
constitute, and none of the following shall be taken into account in determining whether there
has been, a Material Adverse Effect: any adverse Event arising from or relating to (i) general
business, industry, regulatory or economic conditions, to the extent (and solely to the extent) the
Seller are not disproportionately affected thereby in a material adverse manner relative to the
other participants in the industries in which the Seller conducts the Business (including ACICS
accredited schools), (ii) the effect of any change that generally affects any industry in which the
Business operates, to the extent (and solely to the extent) the Seller is not disproportionately
affected thereby in a material adverse manner relative to the other participants in the industries in
which the Seller conducts the Business, (iii) the failure by the Business to meet its internal
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financial projections, estimates or budgets (it being understood that the underlying causes of such
failure may be taken into account in any determination that a Material Adverse Effect has
occurred or would reasonably be expected to occur), (iv) national or international political or
social conditions, including the engagement by the United States or any other country or group in
hostilities, whether or not pursuant to the declaration of a national emergency or war, or the
occurrence of any military or terrorist attack upon the United States or any other country, or any
of their respective territories, possessions, or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States or any other country or group,
(v) changes in GAAP, to the extent (and solely to the extent) the Seller is not disproportionately
affected thereby in a material adverse manner relative to the other participants in the industries in
which the Seller conducts the Business, (vi) the financial, banking or securities markets
(including any disruption thereof and any decline in the price of any security or any market
index), to the extent (and solely to the extent) the Seller is not disproportionately affected thereby
in a material adverse manner relative to the other participants in the industries in which the Seller
conducts the Business, (vii) changes in Law or other binding directives issued by any
Governmental Authority after the date hereof, to the extent (and solely to the extent) the Seller is
not disproportionately affected thereby in a material adverse manner relative to the other
participants in the industries in which the Seller conducts the Business, (viii) any “act of God,”
including, but not limited to, weather, natural disasters and earthquakes, to the extent (and solely
to the extent) the Seller is not disproportionately affected thereby in a material adverse manner
relative to the other participants in the industries in which the Seller conducts the Business, (ix)
any action taken by the Buyer or its Affiliates or any omission by the Buyer or its Affiliates of
any action expressly contemplated by this Agreement other than actions or omissions required to
be taken pursuant to Article V, (x) any action taken by the Seller or any omission to act by the
Seller or, in each case, that is expressly contemplated by the terms of this Agreement or was
otherwise taken (or not taken) with the written consent of or at the written request of Purchaser
or any of its Affiliates, or (xi) changes resulting from the announcement or pendency of this
Agreement or the announcement of the transactions contemplated hereunder.
“Material Contracts” means, collectively, the Contracts set forth on Schedule II hereto.
“Nonassignable Assets” has the meaning given to such term in Section 2.7 hereof.
“Non-Budgeted Payment” has the meaning given to such term in Section 5.1 hereof.
“Nonparty Persons” has the meaning given to such term in Section 7.15 hereof.
“Olsen Employment Agreement” means that certain Employment Agreement, dated
March 26, 2013, by and between John Olsen (“Olsen”) and Delta, as amended.
“Ordinary Course of Business” means the ordinary course of operations of the Business
as of the date hereof.
“Other Educational Consent” means any of those Educational Consents set forth in
Schedule 3.1(b) hereof.
“Outside Date” has the meaning given to such term in Section 6.1(b) hereof.
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“Permitted Encumbrances” means (a) all statutory or other liens for Taxes which are
not yet due and payable or delinquent (or which may be paid without interest or penalties) or the
validity of which are being contested in good faith by appropriate proceedings; (b) all cashiers’,
landlords’, workmens’, repairmens’, mechanics’, warehousemens’ and carriers’ liens and other
similar liens imposed by Law, incurred in the Ordinary Course of Business for amounts not yet
due and payable or the validity or amount of which is being contested in good faith by
appropriate proceedings, or pledges, deposits or other liens securing the performance of bids,
trade contracts, leases or statutory obligations; (c) all leases to which the Seller is a party and
which are Purchased Contracts; (d) all zoning, entitlement, conservation restriction and other
land use and environmental regulations by Governmental Authorities which do not materially
interfere with the present use of the assets and properties of the Seller; (e) all covenants,
conditions, restrictions, easements, charges, rights-of-way and other similar charges or
encumbrances, or other minor irregularities of title, that do not materially impair the current use
or value of any of the properties or assets of the Seller; and (f) matters which would be disclosed
by an accurate survey or inspection of real property which do not materially impair the
occupancy or current use of the real property they encumber.
“Person” means an association, a corporation, an individual, a partnership, a limited
liability company, a trust, or any other entity or organization, including a Governmental
Authority.
“Pre-Closing Educational Consent” means any of those Educational Consents set forth
in Schedule 3.1(b) hereof that are identified as Pre-Closing Educational Consents.
“Privileged Deal Communications” has the meaning given to such term in Section
7.17(a)(ii) hereof.
“Purchased Assets” has the meaning given to such term in Section 2.1 hereof.
“Purchased Contracts” means all Contracts that relate to the Business that are not
Excluded Contracts.
“Released Party” has the meaning give to such term in Section 7.16 hereof.
“Rules” has the meaning given to such term in Section 7.4(a) hereof.
“Satisfactory Pre-Acqu ion Review Response” means a written notice from the DOE
following its review of any pre-acquisition review application filed in connection with the
transactions contemplated by this Agreement that does not, as a condition of such approval, (A)
require that an Institution or the Buyer post or maintain a letter of credit or other surety, in an
amount that would exceed 10% of the total Title IV Program funds received by the Institutions in
the most recently completed fiscal year or (B) otherwise contain any limitation that would
reasonably be expected to impair the ability of the Buyer to operate the Schools in substantially
the same manner as they operated before Closing.
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“School” means any educational institution as set forth on Schedule I hereto, including
any main campus, branch campus, additional location, satellite or other facility thereof, where
such institution provides or offers or has provided or offered all or any portion of an educational
program.
“Seller” has the meaning given to such term in the preamble hereof.
“Seller’s Counsel” means each of (i) Kirkland & Ellis LLP, (ii) Cooley LLP and (iii)
Hogan Marren Babbo & Rose, Ltd., each in their capacity as legal counsel to the Seller and/or
Gryphon Investors and its Affiliates.
“Seller Parties” has the meaning given to such term in Section 7.17(a)(i) hereof.
“Seller Permits” has the meaning given to such term in Section 3.1(s) hereof.
“Specified Employees” has the meaning given to such term in Section 5.4 hereof.
“Student Financial Assistance” means any form of student financial assistance, grants
or loans that is sponsored, administered or funded by any Educational Agency, which provided
more than $50,000 to any Institution or School in fiscal year 2016, including the Title IV
Programs and any other program authorized by the HEA.
“STVT-AAI Education” has the meaning given to such term in Section 2.6(d)(i).
“Substantial Control” means, with respect to a Person, (a) holding at least a 25%
ownership interest in the Person, whether directly, indirectly, or together with family members
(as that term is defined at 34 C.F.R. § 600.21(f)), (b) representing the holder or holders of at least
a 25% ownership interest in the Person, including under a voting trust, power of attorney, proxy,
or similar agreement, or (c) being a member of the board of directors, a general partner, the chief
executive officer, or other executive officer of the Person or an entity that holds at least a 25%
ownership interest in the Person, in each case as the term “ownership interest” is defined at 34
CFR. § 668.174(c)(2)
“Surety Bond Escrow Account” means that certain escrow account contemplated by the
Surety Bond Escrow Agreement that will be maintained by the Escrow Agent in accordance
with, and subject to the terms of, the Surety Bond Escrow Agreement and the Lender Consent
“Surety Bond Escrow Agreement” means an escrow agreement to be executed by and
among the Escrow Agent, the Buyer and the Seller in a form to be mutually agreed upon by the
Escrow Agent, the Buyer and the Seller.
“Surety Bonds” means those certain surety bonds issued in respect of the Seller by RLI
Corp. and International Fidelity Insurance Company.
“Tax” means any foreign, federal, state, county, or local income, sales and use, excise,
franchise, real and personal property, gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, severance, or withholding tax or other tax, duty, fee,
assessment or charge imposed by any taxing authority or any interest or penalties related thereto.
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NY 768725714
Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305
0E330 - R3
“Transition Services Agreement” has the meaning given to such term in Section
2.6(b)(i)(3) hereof.
“Title IV Programs” means the programs of federal student financial assistance
administered pursuant to Title IV of the Higher Education Act of 1965, as amended, 20 U.S.C.
Section 1001 et seq. (including, without limitation, all Title ['V HEA Programs as defined in 34
CFR. 668.1(0)).
“Transaction Documents” means, collectively, this Agreement, the Bill of Sale, the
Creative Circus Bill of Sale, the Assignment and Assumption Agreement, the Creative Circus
Assignment and Assumption Agreement, the Transition Services Agreement, the Wind-Down
Agreement, the Escrow Agreement, the Limited Guarantee, the Lender Consent and the
certificates delivered at the Closing or the Creative Circus Closing pursuant to Section
4.1(a)(i)(3) and Section 4.1(b)(i)(3)
“Wind-Down Agreement” has the meaning given to such term in Section 2.6(b)(i)(4
hereof.
“Wind Down Completion Time” has the meaning given to such term in the Lender
Consent.
“Wind-Down Expenses” has the meaning given to such term in Section 2.9.
ARTICLE I
PURCHASE AND SALE
Section 2.1 Purchase and Sale of Purchased Assets.
(a) Purchase and Sale of Purchased Assets at Closing. Subject to the terms
and conditions set forth in this Agreement, at the Closing, the Seller shall sell, assign, transfer
and deliver to the Buyer, and the Buyer shall purchase, acquire and take assignment and delivery
of, free and clear of all Encumbrances (other than Permitted Encumbrances and subject to
Section 2.6 hereof), all of the right, title and interest of the Seller in and to the assets that relate to
the operation of the Business, as the same shall exist on the Closing Date, but in all cases
excluding the Excluded Assets (all of which assets are hereinafter referred to collectively as the
“Purchased Assets”) (other than all of the right, title and interest of Creative Circus in and to the
assets that relate to the operation of the Business of Creative Circus (the “Creative Circus
Assets”)), including, without limitation, all of the right, title and interest of the Seller in and to
the following
Preview
Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R1 EXECUTION VERSION AMENDED & RESTATED ASSET PURCHASE AGREEMENT by and among Ancora Intermediate Holdings LLC and Atlantic Coast Colleges, Inc., Berks Technical Institute, Inc., Creative Circus, Inc., Delta Career Education Corporation, McCann Education Centers, Inc., McCann School of Business and Technology, Inc., Miller-Motte Business College, Inc., Palmetto Technical College, Inc., and Piedmont Business Colleges, Inc. Dated as of January 18, 2018 NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.1 Definitions. ARTICLE II PURCHASE AND SALE 12 Section 2.1 Purchase and Sale of Purchased Assets 12 Section 2.2 Excluded Assets 16 Section 2.3 Assumed Liabilities 17 Section 2.4 Excluded Liabilities 18 Section 2.5 Purchase Consideration 18 Section 2.6 Closing 18 Section 2.7 Consents of Third Parties... 22 Section 2.8 Working Capital Adjustment.. 23 Section 2.9 Calculation and Payment of Main Adjustment Amount and Creative Circus Adjustment Amount from Surety Bond Escrow Account.. 27 Section 2.10 Funding of Buyer Wind Down Funds 28 Section 2.11 Insolvency Proceeding 28 ARTICLE III REPRESENTATIONS AND WARRANTIES. 28 Section 3.1 Representations and Warranties of the Seller 28 Section 3.2 Representations and Warranties of the Buyer 34 ARTICLE IV CONDITIONS OF PURCHASE 37 Section 4.1 Conditions to Obligations of the Buyer 37 Section 4.2 Conditions to Obligations of the Seller. 39 ARTICLE V COVENANTS 42 Section 5.1 Conduct of Business 42 Section 5.2 Publicity 45 Section 5.3 Confidentiality 45 Section 5.4 Access to Information 45 Section 5.5 Preservation of Records . 46 Section 5.6 Commercially Reasonable Efforts . 46 Section 5.7 No Shop; Buyerss Consent Over Alternative Transactions AT Section 5.8 D&O Tail.. AT Section 5.9 Wrong Pocket 48 Section 5.10 Title IV Management. 49 Section 5.11 Closing Date Expenses and Post-Closing Expenses... 49 Section 5.12 Seller Employment Arrangements... 49 ARTICLE VI TERMINATION. 50 Section 6.1 Termination 50 Section 6.2 Effect of Termination... 50 -i- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 ARTICLE VII MISCELLANEOUS 51 Section 7.1 Non-Survival of Representations Warranties, Covenants and Agreements.. 51 Section 7.2 Assignment; Binding Effect... 51 Section 7.3 Choice of Law... 51 Section 7.4 Arbitration 51 Section 7.5 Notices 52 Section 7.6 Headings 53 Section 7.7 Fees and Expenses 53 Section 7.8 Entire Agreement 53 Section 7.9 Interpretation.. 53 Section 7.10 Waiver and Amendment . 53 Section 7.11 Counterparts... 54 Section 7.12 Third-Party Beneficiaries 54 Section 7.13 Severability . 54 Section 7.14 Specific Performance 54 Section 7.15 Non-Recourse 54 Section 7.16 Release. 55 Section 7.17 Awomey-Chient Privilege ‘and Conflict Waiver. 56 Section 7.18 Fraud... 57 Section 7.19 No Breach .. 58 Section 7.20 Amendment and Restatement 58 EXHIBIT A-1 BILL OF SALE EXHIBIT A-2 CREATIVE CIRCUS BILL OF SALE EXHIBIT B-1 ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT B-2 CREATIVE CIRCUS ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT C TRANSITION SERVICES AGREEMENT EXHIBIT D WIND-DOWN AGREEMENT EXHIBIT E BUDGET EXHIBIT F WORKING CAPITAL SCHEDULE -ii- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 THIS ASSET PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”), dated as of January 18, 2018, by and among (a) (i) Atlantic Coast Colleges, Inc., a North Carolina corporation; (ii) Berks Technical Institute, Inc., a Delaware corporation; (iii) Creative Circus, Inc., a Virginia corporation (“Creative Circus”); (iv) Delta Career Education Corporation, a Delaware corporation (“Delta”); (v) McCann Education Centers, Inc., a Pennsylvania corporation; (vi) McCann School of Business and Technology, Inc., a Louisiana corporation; (vii) Miller-Motte Business College, Inc., a North Carolina Corporation; (viii) Palmetto Technical College, Inc., a Virginia corporation; and (ix) Piedmont Business Colleges, Inc., a North Carolina corporation (each and collectively, the “Seller”); and (b) Ancora Intermediate Holdings LLC, a Texas limited liability company (the “Buyer”), and amends and restates in its entirety that certain Asset Purchase Agreement, dated as of October 3, 2017 (the “Initial APA”), by and among the Seller and the Buyer. Unless otherwise set forth herein, capitalized terms used herein shall have the meanings assigned to such terms in Section 1.1 RECITALS WHEREAS, the Seller is engaged in the business of owning and operating the Schools (as such business is conducted by the Seller on the date of this Agreement, the “Business”); WHEREAS, the Seller desires to sell, and the Buyer desires to purchase, the Purchased Assets, and in connection therewith the Buyer is willing to assume the Assumed Liabilities, all upon the terms and subject to the conditions set forth herein; and WHEREAS, this Agreement amends and restates the Initial APA in its entirety NOW, THEREFORE, in consideration of the foregoing, the representations, warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, the following terms, when used in this Agreement and the Exhibits, Schedules, and other documents delivered in connection herewith, have the meanings assigned to them in this Section 1.1. “AAA” has the meaning given to such term in Section 7.4(a) hereof. “Accrediting Body” means any non-governmental entity, including institutional and specialized accrediting agencies, which engage in the granting or withholding of accreditation of postsecondary educational institutions or educational programs in accordance with standards NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 relating to the performance, operations, financial condition or academic standards of such institutions and schools. “Action” means any action, claim, complaint, investigation, petition, suit, Compliance Review, or other proceeding, whether civil or criminal, at law or in equity before any Governmental Authority. “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by Contract or otherwise. “Agent” means Antares Capital LP or any successor agent, as administrative agent under that certain Amended and Restated Credit Agreement, dated as of November 22, 2016, by and among Delta Educational Systems, Inc., as the borrower thereunder, the other persons party thereto that are designated as credit parties, Antares Capital LP, as agent for all lenders thereunder, and the other financial institutions party thereto that are designated as lenders, as amended by that certain First Amendment to Amended and Restated Credit Agreement, dated as of May 16, 2017, and that certain Second Amendment to Amended and Restated Credit Agreement, dated as of June 1, 2017, and as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time. “Agreed Principles” means the principals set forth on the Working Capital Schedule, as attached hereto as Exhibit F. “Agreement” has the meaning given to such term in the preamble hereof. “Ancora Confidentiality Agreement” has the meaning given to such term in Section 5.3 hereof. “Assignment and Assumption Agreement” has the meaning given to such term in Section 2.6(b)(i)(2) hereof. “Assumed Liabilities” has the meaning given to such term in Section 2.3 hereof. “Bill of Sale” has the meaning given to such term in Section 2.6(b)(i)(1) hereof. “‘Brissman Employment Agreement” means that certain Employment Agreement, dated May 30, 2013, by and between Charles P. Brissman (“Brissman”) and Delta, as amended. “Budget” means that certain forward-looking budget of the Seller in the form attached hereto as Exhibit E. “Business” has the meaning given to such term in the recitals hereof. -2- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 “Business Day” means any day other than a Saturday, a Sunday or a day on which the banks in New York are authorized or obligated by Law or executive order to close “Buyer” has the meaning given to such term in the preamble hereof. “Buyer Parties” has the meaning given to such term in Section 7.17(b)(i) hereof. “Buyer Wind Down Funds” means an amount in cash equal to (x) a minus (y) | which amount will be deposited by the Buyer in accordance with the terms of Section 2.10 hereof, together with interest accrued thereon from the Closing Date, as such amount may be reduced from time to time in accordance with this Agreement, the Main Closing Escrow Agreement and the Lender Consent. Any reference to the Buyer Wind Down Funds used in this Agreement shall mean and be a reference to the dollar amount referred to in the immediately preceding sentence to the extent such amount remains in the Main Closing Escrow Account. “Buyer’s Counsel” means each of (i) Stroock & Stroock & Lavan LLP and (ii) Thompson Coburn LLP, each in their respective capacity as legal counsel to the Buyer. “Closing” has the meaning given to such term in Section 2.6(a)(i) hereof. “Closing Date” has the meaning given to such term in Section 2.6(a)(i) hereof. “Competing Proposal” has the meaning given to such term in Section 5.7 hereof. “Compliance Date” means July 1, 2014. “Compliance Review” means any program review, audit (including any Title IV Program compliance audit by an independent auditor pursuant to 34 C.F.R. § 668.23), investigation, subpoena or any other compliance-related review conducted by a Governmental Authority and seeking information concerning any Seller’s, any Institution’s or any School’s compliance with any Laws. “Confidentiality Agreements” has the meaning given to such term in Section 5.3 hereof. “Contract” means any written or oral agreement, arrangement, commitment, indenture, instrument, lease, purchase order or license “Contracting Parties” has the meaning given to such term in Section 7.15 hereof. “Creative Circus” has the meaning given to such term in the preamble hereof. 6 Creative Circus Adjustment Amount” means an_amount equal to (x ee minus (y) -3- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 “Creative Circus Assets” has the meaning given to such term in Section 2.1(a) hereof. “Creative Circus Assignment and Assumption Agreement” has the meaning given to such term in Section 2.6(b)(ii)(2) hereof. “Creative Circus Assumed Current Liabilities’ means, as of the Creative Circus Measurement Time, the Creative Circus Liabilities of Creative Circus, as determined in accordance with the Agreed Principles. “Creative Circus Bill of Sale” has the meaning given to such term in Section 2.6(b)(ii)(1) hereof. “Creative Circus Calculated Amount” has the meaning given to such term in Section 2.8(b)(ii) hereof. “Creative Circus Closing” has the meaning given to such term in Section 2.6(a)(ii) hereof. “Creative Circus Closing Certificate” has the meaning given to such term in Section 2.8(b)(i) hereof. “Creative Circus Closing Date” has the meaning given to such term in Section 2.6(a)(ii) hereof. “Creative Circus Estimated Net Working Capital” has the meaning given to such term in Section 2.8(b)(i) hereof. “Creative Circus Final Statement” has the meaning given to such term in Section 2.8(b)(iv) hereof. “Creative Circus Liabilities” has the meaning given to such term in Section 2.3(a) hereof. “Creative Circus Measurement Time” means 11:59 p.m. (prevailing Eastern Time) on the day immediately prior to the Creative Circus Closing Date. “Creative Circus Net Working Capital” means (a minus (b) i “Creative Circus Purchased Current Assets” means, as of the Creative Circus Measurement Time, the Creative Circus Assets, as determined in accordance with the Agreed Principles. “Creative Circus Statement” has the meaning given to such term in Section 2.8(b)(ii hereof. “Creative Circus Target Working Capital” means an amount a -4- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 “Curriculum” means the curriculum used in the educational programs of the Business in the form of computer programs or software, slide shows, texts, films, web site content, videos or any other form or media, including, without limitation, the following items: (a) course objectives, (b) lesson plans, (c) exams, (d) class materials (including interactive or computer- aided materials), (e) faculty notes, (f) course handouts, (g) diagrams, (h) syllabi, (i) sample externship and placement materials, (j) clinical checklists, (k) course and faculty evaluation materials, (1) policy and procedure manuals, and (m) other related materials. The Curriculum shall also include: (i) all copyrights, copyright applications, copyright registrations and trade secrets relating to the above-listed items, and (ii) all periodic updates or revisions to the Curriculum as developed. “Deal Communications” has the meaning given to such term in Section 7.17(a)(ii) hereof. “Delta” has the meaning given to such term in the preamble hereof. “Delta Confidentiality Agreement” has the meaning given to such term in Section 5.3 hereof. “Demand for Arbitration” has the meaning given to such term in Section 7.4(b) hereof. “Dispute Notice” has the meaning given to such term in Section 2.8(a)(iii) hereof. “DOE” means the U.S. Department of Education. “D&O Tail” has the meaning given to such term in Section 5.8 hereof. “D&O Tail Payment” has the meaning given to such term in Section 5.8 hereof. “D&O Tail Payment Terms” has the meaning given to such term in Section 5.8 hereof. “Educational Agency” means any Person, entity or organization, whether governmental, government chartered, private, or quasi-private, that engages in granting or withholding Educational Approvals for, administers financial assistance to or for students of, or otherwise regulates private postsecondary schools in accordance with standards relating to the performance, operation, financial condition or academic standards of such schools, including, without limitation, the DOE, an Accrediting Body, or any state educational agency, as applicable. “Educational Approval” means any license, permit, authorization, program participation agreement, certification, accreditation, or similar approval issued or required to be issued by an Educational Agency to any Institution or School subject to the oversight of such Educational Agency, including any such approval for the Institution or School to participate in any Student Financial Assistance program, including the Title [V Programs “Educational Consent” means any approval, authorization or consent by any Educational Agency or any notification to be made by the parties hereto to an Educational Agency, with regard to the transactions contemplated herein, whether required to be effectuated -5- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 or obtained before, on or after the Closing Date, which is necessary under applicable laws or regulations in order to maintain or continue any Educational Approval held by any Institution or School as of the date of this Agreement. “Educational Law” means any federal, state, municipal, foreign or other Law, regulation, order, Accrediting Body standard or other requirement applicable thereto, including the provisions of the Title IV Programs and any regulations implementing or relating thereto, issued or administered by, or related to, any Educational Agency or Student Financial Assistance program. “Encumbrance” means any claim, charge, lease, covenant, easement, encumbrance, security interest, lien, option, right of others, mortgage, deed of trust, hypothecation, conditional ale, or restriction (whether on voting, sale, transfer, disposition, or otherwise), whether imposed by Contract or Law. “Escrow Agent” means the party defined as “Escrow Agent” in the Main Closing Escrow Agreement and the Surety Bond Escrow Agreement. “Escrow Agreements” means the Main Closing Escrow Agreement and the Surety Bond Escrow Agreement. “Excluded Assets” has the meaning given to such term in Section 2.2 hereof. “Excluded Contracts” has the meaning given to such term in Section 2.2(a) hereof. “Excluded Insurance Policies” has the meaning given to such term in Section 2.2(g hereof. “Excluded Liabilities” has the meaning given to such term in Section 2.4 hereof. “Executive Payments” has the meaning given to such term in Section 5.12 hereof. “Flow of Funds Memorandum” means that certain Flow of Funds Memorandum, which sets forth the wire transfers, together with wire transfer instructions, that are required to occur to consummate the Closing “Fraud” by any party means actual and intentional fraud with respect to the specific representations and warranties in Section 3.1 and Section 3.2, as the case may be, (a) with the actual knowledge (as opposed to imputed or constructive knowledge, knowledge that could have been obtained after inquiry, or reckless disregard) that the applicable representation and warranty was actually untrue when made, and with the express intention that another party rely thereon to its detriment, (b) the other party did not have actual knowledge (as opposed to imputed or constructive knowledge, knowledge that could have been obtained after inquiry, or reckless disregard) that such representation or warranty was untrue as of the execution of this Agreement, (c) the other party acted or did not act in justifiable reliance on the representation or warranty made and (d) as a result of such untrue representation or warranty, the other party suffered damages. -6- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 “GAAP” means generally accepted accounting principles in the United States, as in effect from time to time, consistently applied. “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any Educational Agency, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing “HEA” means the Higher Education Act of 1965, as amended. “In Accordance With the Budget” means any expenditure, cost, fee or expense that deviates from the amounts specified in the Budget by not more than five percent (5%). “Independent Accounting Firm” has the meaning given to such term in Section 2.8(a)(v) hereof. “Initial APA” has the meaning given to such term in the preamble hereof. “Insolvency Proceeding” has the meaning given to such term in the Lender Consent. “Institution” means a school group including one or more Schools that has been designated by the DOE as an eligible institution and assigned a unique six-digit Office of Postsecondary Identification Number by the DOE. “Knowledge of the Seller” means the actual knowledge of any of John Olsen, Charlie Brissman, Tim Ryder and/or William Nance, and any knowledge that any such individual should reasonably be expected to obtain upon a reasonable inquiry. “Law” means, in any jurisdiction, any statute or law (including common law), ordinance, tule, treaty, code or regulation and any decree, injunction, judgment, order, ruling, assessment or writ of any applicable Governmental Authority, excluding any Educational Law. “Lender Consent” means that certain Limited Waiver and Consent, Authorization and Direction, dated as of October 3, 2017, by and among the Buyer, the Seller, and the other parties thereto. “Limited Guarantee” has the meaning given to such term in Section 2.6(c)(i)(6) hereof. “Main Adjustment’ t_Amount” means an amount _ to = aT minus (y) “Main Assumed Current Liabilities” means, as of the Main Measurement Time, the Assumed Liabilities (other than the Creative Circus Liabilities) of the Seller on a consolidated basis, as determined in accordance with the Agreed Principles. -7- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R2 “Main Calculated Amount” has the meaning given to such term in Section 2.8(a)(ii hereof. “Main Closing Certificate” has the meaning given to such term in Section 2.8(a)(i) hereof. “Main Closing Escrow Account” means that certain escrow account in accordance with which the Buyer Wind Down Funds will be maintained by the Escrow Agent in accordance with, and subject to the terms of, the Main Closing Escrow Agreement and the Lender Consent. “Main Closing Escrow Agreement” means an escrow agreement to be executed by and among the Escrow Agent, the Buyer and the Seller in a form to be mutually agreed upon by the Escrow Agent, the Buyer and the Seller. “Main Estimated Net Working Capital” has the meaning given to such term in Section 2.8(a)(i) hereof. “Main Final Statement” has the meaning given to such term in Section 2.8(a)(iv hereof. “Main Measurement Time” means 11:59 p.m. (prevailing Eastern Time) on the day immediately prior to the Closing Date. « “Main Net Workin : Capital” means (a) ius ee (b) ma “Main Purchased Current Assets” means, as of the Main Measurement Time, the Purchased Assets (other than the Creative Circus Assets) of the Seller on a consolidated basis, as determined in accordance with the Agreed Principles. “Main Statement” has the meaning given to such term in Section 2.8(a)(ii) hereof. “Main Target Working Capital” means an amount a “Material Adverse Effect” means any event, circumstance, change, occurrence or effect (collectively, “Events”) that, individually or in the aggregate, has had or would reasonably be expected to have a material and adverse effect upon the business, assets, liabilities, financial condition or operating results of the Business, taken as a whole; provided, however, that none of the following (either alone or in combination with any other Event) shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect: any adverse Event arising from or relating to (i) general business, industry, regulatory or economic conditions, to the extent (and solely to the extent) the Seller are not disproportionately affected thereby in a material adverse manner relative to the other participants in the industries in which the Seller conducts the Business (including ACICS accredited schools), (ii) the effect of any change that generally affects any industry in which the Business operates, to the extent (and solely to the extent) the Seller is not disproportionately affected thereby in a material adverse manner relative to the other participants in the industries in which the Seller conducts the Business, (iii) the failure by the Business to meet its internal -8- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R3 financial projections, estimates or budgets (it being understood that the underlying causes of such failure may be taken into account in any determination that a Material Adverse Effect has occurred or would reasonably be expected to occur), (iv) national or international political or social conditions, including the engagement by the United States or any other country or group in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any other country, or any of their respective territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States or any other country or group, (v) changes in GAAP, to the extent (and solely to the extent) the Seller is not disproportionately affected thereby in a material adverse manner relative to the other participants in the industries in which the Seller conducts the Business, (vi) the financial, banking or securities markets (including any disruption thereof and any decline in the price of any security or any market index), to the extent (and solely to the extent) the Seller is not disproportionately affected thereby in a material adverse manner relative to the other participants in the industries in which the Seller conducts the Business, (vii) changes in Law or other binding directives issued by any Governmental Authority after the date hereof, to the extent (and solely to the extent) the Seller is not disproportionately affected thereby in a material adverse manner relative to the other participants in the industries in which the Seller conducts the Business, (viii) any “act of God,” including, but not limited to, weather, natural disasters and earthquakes, to the extent (and solely to the extent) the Seller is not disproportionately affected thereby in a material adverse manner relative to the other participants in the industries in which the Seller conducts the Business, (ix) any action taken by the Buyer or its Affiliates or any omission by the Buyer or its Affiliates of any action expressly contemplated by this Agreement other than actions or omissions required to be taken pursuant to Article V, (x) any action taken by the Seller or any omission to act by the Seller or, in each case, that is expressly contemplated by the terms of this Agreement or was otherwise taken (or not taken) with the written consent of or at the written request of Purchaser or any of its Affiliates, or (xi) changes resulting from the announcement or pendency of this Agreement or the announcement of the transactions contemplated hereunder. “Material Contracts” means, collectively, the Contracts set forth on Schedule II hereto. “Nonassignable Assets” has the meaning given to such term in Section 2.7 hereof. “Non-Budgeted Payment” has the meaning given to such term in Section 5.1 hereof. “Nonparty Persons” has the meaning given to such term in Section 7.15 hereof. “Olsen Employment Agreement” means that certain Employment Agreement, dated March 26, 2013, by and between John Olsen (“Olsen”) and Delta, as amended. “Ordinary Course of Business” means the ordinary course of operations of the Business as of the date hereof. “Other Educational Consent” means any of those Educational Consents set forth in Schedule 3.1(b) hereof. “Outside Date” has the meaning given to such term in Section 6.1(b) hereof. -9- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R3 “Permitted Encumbrances” means (a) all statutory or other liens for Taxes which are not yet due and payable or delinquent (or which may be paid without interest or penalties) or the validity of which are being contested in good faith by appropriate proceedings; (b) all cashiers’, landlords’, workmens’, repairmens’, mechanics’, warehousemens’ and carriers’ liens and other similar liens imposed by Law, incurred in the Ordinary Course of Business for amounts not yet due and payable or the validity or amount of which is being contested in good faith by appropriate proceedings, or pledges, deposits or other liens securing the performance of bids, trade contracts, leases or statutory obligations; (c) all leases to which the Seller is a party and which are Purchased Contracts; (d) all zoning, entitlement, conservation restriction and other land use and environmental regulations by Governmental Authorities which do not materially interfere with the present use of the assets and properties of the Seller; (e) all covenants, conditions, restrictions, easements, charges, rights-of-way and other similar charges or encumbrances, or other minor irregularities of title, that do not materially impair the current use or value of any of the properties or assets of the Seller; and (f) matters which would be disclosed by an accurate survey or inspection of real property which do not materially impair the occupancy or current use of the real property they encumber. “Person” means an association, a corporation, an individual, a partnership, a limited liability company, a trust, or any other entity or organization, including a Governmental Authority. “Pre-Closing Educational Consent” means any of those Educational Consents set forth in Schedule 3.1(b) hereof that are identified as Pre-Closing Educational Consents. “Privileged Deal Communications” has the meaning given to such term in Section 7.17(a)(ii) hereof. “Purchased Assets” has the meaning given to such term in Section 2.1 hereof. “Purchased Contracts” means all Contracts that relate to the Business that are not Excluded Contracts. “Released Party” has the meaning give to such term in Section 7.16 hereof. “Rules” has the meaning given to such term in Section 7.4(a) hereof. “Satisfactory Pre-Acqu ion Review Response” means a written notice from the DOE following its review of any pre-acquisition review application filed in connection with the transactions contemplated by this Agreement that does not, as a condition of such approval, (A) require that an Institution or the Buyer post or maintain a letter of credit or other surety, in an amount that would exceed 10% of the total Title IV Program funds received by the Institutions in the most recently completed fiscal year or (B) otherwise contain any limitation that would reasonably be expected to impair the ability of the Buyer to operate the Schools in substantially the same manner as they operated before Closing. -10- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R3 “School” means any educational institution as set forth on Schedule I hereto, including any main campus, branch campus, additional location, satellite or other facility thereof, where such institution provides or offers or has provided or offered all or any portion of an educational program. “Seller” has the meaning given to such term in the preamble hereof. “Seller’s Counsel” means each of (i) Kirkland & Ellis LLP, (ii) Cooley LLP and (iii) Hogan Marren Babbo & Rose, Ltd., each in their capacity as legal counsel to the Seller and/or Gryphon Investors and its Affiliates. “Seller Parties” has the meaning given to such term in Section 7.17(a)(i) hereof. “Seller Permits” has the meaning given to such term in Section 3.1(s) hereof. “Specified Employees” has the meaning given to such term in Section 5.4 hereof. “Student Financial Assistance” means any form of student financial assistance, grants or loans that is sponsored, administered or funded by any Educational Agency, which provided more than $50,000 to any Institution or School in fiscal year 2016, including the Title IV Programs and any other program authorized by the HEA. “STVT-AAI Education” has the meaning given to such term in Section 2.6(d)(i). “Substantial Control” means, with respect to a Person, (a) holding at least a 25% ownership interest in the Person, whether directly, indirectly, or together with family members (as that term is defined at 34 C.F.R. § 600.21(f)), (b) representing the holder or holders of at least a 25% ownership interest in the Person, including under a voting trust, power of attorney, proxy, or similar agreement, or (c) being a member of the board of directors, a general partner, the chief executive officer, or other executive officer of the Person or an entity that holds at least a 25% ownership interest in the Person, in each case as the term “ownership interest” is defined at 34 CFR. § 668.174(c)(2) “Surety Bond Escrow Account” means that certain escrow account contemplated by the Surety Bond Escrow Agreement that will be maintained by the Escrow Agent in accordance with, and subject to the terms of, the Surety Bond Escrow Agreement and the Lender Consent “Surety Bond Escrow Agreement” means an escrow agreement to be executed by and among the Escrow Agent, the Buyer and the Seller in a form to be mutually agreed upon by the Escrow Agent, the Buyer and the Seller. “Surety Bonds” means those certain surety bonds issued in respect of the Seller by RLI Corp. and International Fidelity Insurance Company. “Tax” means any foreign, federal, state, county, or local income, sales and use, excise, franchise, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, or withholding tax or other tax, duty, fee, assessment or charge imposed by any taxing authority or any interest or penalties related thereto. -ll- NY 768725714 Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305 0E330 - R3 “Transition Services Agreement” has the meaning given to such term in Section 2.6(b)(i)(3) hereof. “Title IV Programs” means the programs of federal student financial assistance administered pursuant to Title IV of the Higher Education Act of 1965, as amended, 20 U.S.C. Section 1001 et seq. (including, without limitation, all Title ['V HEA Programs as defined in 34 CFR. 668.1(0)). “Transaction Documents” means, collectively, this Agreement, the Bill of Sale, the Creative Circus Bill of Sale, the Assignment and Assumption Agreement, the Creative Circus Assignment and Assumption Agreement, the Transition Services Agreement, the Wind-Down Agreement, the Escrow Agreement, the Limited Guarantee, the Lender Consent and the certificates delivered at the Closing or the Creative Circus Closing pursuant to Section 4.1(a)(i)(3) and Section 4.1(b)(i)(3) “Wind-Down Agreement” has the meaning given to such term in Section 2.6(b)(i)(4 hereof. “Wind Down Completion Time” has the meaning given to such term in the Lender Consent. “Wind-Down Expenses” has the meaning given to such term in Section 2.9. ARTICLE I PURCHASE AND SALE Section 2.1 Purchase and Sale of Purchased Assets. (a) Purchase and Sale of Purchased Assets at Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing, the Seller shall sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase, acquire and take assignment and delivery of, free and clear of all Encumbrances (other than Permitted Encumbrances and subject to Section 2.6 hereof), all of the right, title and interest of the Seller in and to the assets that relate to the operation of the Business, as the same shall exist on the Closing Date, but in all cases excluding the Excluded Assets (all of which assets are hereinafter referred to collectively as the “Purchased Assets”) (other than all of the right, title and interest of Creative Circus in and to the assets that relate to the operation of the Business of Creative Circus (the “Creative Circus Assets”)), including, without limitation, all of the right, title and interest of the Seller in and to the following