Attached files
| file | filename |
|---|---|
| EX-10.5 - FLORHAM CONSULTING CORP | v204773_ex10-5.htm |
| EX-99.1 - FLORHAM CONSULTING CORP | v204773_ex99-1.htm |
| EX-10.8 - FLORHAM CONSULTING CORP | v204773_ex10-8.htm |
| EX-10.1 - FLORHAM CONSULTING CORP | v204773_ex10-1.htm |
| EX-10.7 - FLORHAM CONSULTING CORP | v204773_ex10-7.htm |
| EX-10.4 - FLORHAM CONSULTING CORP | v204773_ex10-4.htm |
| EX-10.6 - FLORHAM CONSULTING CORP | v204773_ex10-6.htm |
| EX-10.2 - FLORHAM CONSULTING CORP | v204773_ex10-2.htm |
| EX-10.9 - FLORHAM CONSULTING CORP | v204773_ex10-9.htm |
| EX-10.3 - FLORHAM CONSULTING CORP | v204773_ex10-3.htm |
| EX-10.10 - FLORHAM CONSULTING CORP | v204773_ex10-10.htm |
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): December 1, 2010
OAK
TREE EDUCATIONAL PARTNERS, INC.
(Exact
name of registrant as specified in charter)
|
Delaware
|
000-52634
|
20-2329345
|
|
(State
or other jurisdiction of incorporation or organization)
|
(Commission
File No.)
|
(IRS
Employer
Identification
No.)
|
845
Third Avenue, 6th
Floor
New
York, New York 10022
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (646) 290-5290
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
This
Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This
current report includes statements regarding our plans, goals, strategies,
intent, beliefs or current expectations. These statements are expressed in good
faith and based upon a reasonable basis when made, but there can be no assurance
that these expectations will be achieved or accomplished. These forward looking
statements can be identified by the use of terms and phrases such as “believe,”
“plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like,
and/or future-tense or conditional constructions (“will,” “may,” “could,”
“should,” etc.). Items contemplating or making assumptions about, actual or
potential future sales, market size, collaborations, and trends or operating
results also constitute such forward-looking statements.
Although
forward-looking statements in this report reflect the good faith judgment of
management, forward-looking statements are inherently subject to known and
unknown risks, business, economic and other risks and uncertainties that may
cause actual results to be materially different from those discussed in these
forward-looking statements. Readers are urged not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
current report. We assume no obligation to update any forward-looking statements
in order to reflect any event or circumstance that may arise after the date of
this report, other than as may be required by applicable law or regulation.
Readers are urged to carefully review and consider the various disclosures made
by us in our reports filed with the SEC which attempt to advise interested
parties of the risks and factors that may affect our business, financial
condition, results of operation and cash flows. If one or more of these risks or
uncertainties materialize, or if the underlying assumptions prove incorrect, our
actual results may vary materially from those expected or
projected.
Item
1.01. Entry into a Material Definitive Agreement.
As
previously reported by Oak Tree Educational Partners, Inc. (the “Company”) in its
Current Report on Form 8-K filed with the Securities and Exchange Commission
(the “SEC”) on
May 27, 2010, effective May 21, 2010, the Company entered into agreements to
acquire 100% of the equity interests of Educational Training Institute, Inc.
(“ETI”),
Culinary Tech Center, LLC (“CTC”) and
Professional Culinary Institute LLC (“PCI” and together
with ETI and CTC, the “Culinary Group”); the
latter two of which are licensed by the New York State Department of
Education. The Culinary Group provides vocational training in
commercial cooking, catering, hotel operations and customer
service.
As
further described below, on December 1, 2010, the Company and the Culinary Group
satisfied all conditions to closing, including, without limitation, obtaining
approval of the acquisition from the New York State Department of Education, and
accordingly, the parties consummated the acquisition of the Culinary Group
pursuant to amended and restated agreements. The cash portion of the purchase
price for the Culinary Group was financed by the Company through a $10 million
senior secured debt facility (the “Loan”) provided by
Deerpath Funding, LP (“Deerpath”), a
NYC-based provider of financing to middle market companies.
The
Amended and Restated Agreement and Plan of Merger
On
December 1, 2010 (the “Closing Date”), the
Company consummated the acquisition of ETI pursuant to an amended and restated
agreement and plan of merger dated as of November 30, 2010 (the “Merger Agreement”) by
and among the Company, ETI Acquisition Corp. (a newly formed acquisition
subsidiary of the Company) (“Mergerco”), ETI and
its stockholders being Messrs. Joseph Monaco, Harold Kaplan and their wives and
daughters (collectively, the “ETI Stockholders”)
pursuant to which Mergerco was merged with and into ETI, with ETI as the
surviving corporation of the merger (the “Merger”). Upon
consummation of the Merger, ETI became a wholly-owned subsidiary of the Company.
Under the terms of the Merger Agreement, the ETI Stockholders were issued an
aggregate of 1,200,000 shares of Company common stock (the “Merger Shares”),
representing $3.0 million of Company common stock valued at $2.50 per
share. In addition, under the Merger Agreement, the ETI Stockholders
are entitled to receive contingent merger consideration in the form of $500,000
of additional shares of Company common stock, based upon the Culinary Group
reaching a certain cumulative EBITDA level in 2011. The contingent
merger consideration is valued based on the volume weighted average price of
Company common stock for the 20 trading days prior to determination of the
applicable EBITDA of the Culinary Group in fiscal 201l.
-1-
The
Amended and Restated Membership Interest Purchase Agreement
Immediately
following consummation of the Merger referred to above, the Company consummated
the acquisition of CTC and PCI pursuant to an amended and restated membership
interest purchase agreement (the “Purchase Agreement”)
with the Culinary Group and Messrs. Monaco and Kaplan, the sole members of CTC
and PCI. Under the terms of the Purchase Agreement, ETI (now a
wholly-owned subsidiary of the Company) purchased from Messrs. Monaco and Kaplan
100% of the membership interests of each of CTC and PCI. The purchase
price for such equity membership interests paid at closing was $1.5 million, in
cash, in equal amounts to Messrs. Monaco and Kaplan or their
designee(s).
On the
Closing Date, Messrs. Monaco and Kaplan entered into employment agreements (the
“Employment
Agreements”) with the Company expiring December 31, 2013, pursuant to
which they shall serve as Executive Vice Presidents of the Company and the
President and Chief Operating Officer, respectively, of the Culinary Group. Such
executives shall each receive base salaries of $150,000 in 2010, increasing to
$200,000 in 2011 and $250,000 in each of 2012 and 2013; provided, that, in the
event that the cumulative pre-tax income of the Culinary Group in 2011 does not
equal or exceed the cumulative pre-tax income in 2010, then the base salaries
for 2012 and 2013 shall remain at $200,000. In addition, Messrs.
Monaco and Kaplan shall be entitled to discretionary bonuses, as determined by
the Company’s board of directors.
The
Loan Agreement
On the
Closing Date, the Company completed the Loan with Deerpath pursuant to a Loan
Agreement dated November 30, 2010 by and among the Company and its subsidiaries
and Deerpath (the “Loan Agreement”), and
received gross proceeds of $3,000,000 as an initial drawdown (the “Initial Loan”), a
portion of which was used to fund the acquisition of CTC and PCI. The Company
paid an aggregate amount of $185,000 to Deerpath at the closing, consisting of
structuring and closing fees and expenses. Deerpath may, at its sole
discretion, make additional Loans up to an aggregate amount equal to $7,000,000
(the “Additional
Loans”).
In
exchange for the Initial Loan the Company issued to Deerpath (i) a senior
secured initial term promissory note in the principal amount of $3,000,000 (the
“Note”); (ii) a
warrant (the “Warrant”) initially
exercisable to purchase 628,857 shares of Company common stock, representing
2.5% of the Company’s fully diluted common stock as of the Closing Date, at an
exercise price of $0.50 per share; and (iii) 1,886,571 shares of Company common
stock (the “Deerpath
Shares”), representing 7.5% of the Company’s fully diluted common stock
as of the Closing Date. In the event that after the Closing Date, the number of
shares of fully diluted common stock of the Company increases (with certain
exceptions as set forth in the Loan Agreement), the Company will be required to
issue additional Warrants and Deerpath Shares so that Deerpath maintains its
ownership of warrants to purchase 2.5% of the then fully diluted common stock of
the Company, and Deerpath Shares representing 7.5% of the then fully diluted
shares.
-2-
Under the
terms of the Loan Agreement, the principal amount of the Loan and Additional
Loans (collectively, the “Principal Debt”)
shall bear interest at a rate equal to the lesser of (i) 13.50% per annum; and
(ii) the maximum rate of interest Deerpath may receive under applicable law. The
principal amount and all accrued and unpaid interest under the Loan and
Additional Loans shall be repaid by the Company on or prior to November 30, 2015
(the “Maturity
Date”). Commencing on January 1, 2011 and continuing until the Principal
Debt is paid in full (a) accrued and unpaid interest shall be paid by the
Company in arrears on the first day of each month; and (b) the Company shall
make payments of Principal Debt on a quarterly basis in an amount equal to
$75,000 per quarter. In addition, the Company may elect to prepay any or all of
the Principal Debt upon 2 business day’s prior written notice to Deerpath in a
minimum amount of $100,000 and in minimum increments of $10,000 for any amounts
in excess of $100,000. The Company shall pay a cash prepayment premium of 3%, 2%
or 1% of the Principal Debt being prepaid if such prepayment occurs on or prior
to the first, second or third anniversaries of the Closing Date,
respectively.
The Loan
and Additional Loans are secured by a first priority lien and security interest
on all of the assets of the Company and its subsidiaries pursuant to a security
agreement (the “Security Agreement”)
dated as of November 30, 2010, among the Company, each of its subsidiaries and
Deerpath, as well as by a pledge of all of the equity that the Company and
certain of its subsidiaries owns in each of their respective subsidiaries
pursuant to a pledge agreement (the “Pledge Agreement”)
dated as of November 30, 2010, among the Company, certain of its subsidiaries
and Deerpath. Due to
the entry by the Company into the Security Agreement with Deerpath, Valley
Anesthesia, Inc. (“Valley”), the
Company’s wholly owned subsidiary, entered into a Subordination and
Intercreditor Agreement (the “Subordination
Agreement”) and Amended and Restated Security Agreement (the “Valley Security
Agreement”) with Valley Anesthesia Educational Programs, Inc. (“VAEP”), pursuant to
which VAEP agreed to subordinate its security interest in all of Valley’s
assets, as well as repayment, covering a 6-year installment promissory note in
the principal amount of $2,000,000 (the “VAEP Note”)
previously issued by Valley to VAEP in connection with Valley’s August 2009
purchase of a majority of the equity of VAEP, in favor of Deerpath’s priority
first lien and security interest.
In
consideration for its execution of the Subordination Agreement, Oak Tree and
each of its subsidiaries guaranteed the VAEP Note and, pursuant to an amended
and restated security agreement, Oak Tree and its subsidiaries granted VAEP a
lien, subordinated to the Deerpath lien and any other senior secured
indebtedness (including acquisition indebtedness), on the assets and properties
of Oak Tree and its subsidiaries. In addition, Oak Tree’s principal
shareholders, Kinder Investments, LP, Joseph J. Bianco and Anil Narang agreed to
guaranty, under certain circumstances, the payment when due of up to nine
monthly installments, totaling a maximum of approximately $319,500, of the VAEP
Note.
The
foregoing is a summary of certain material terms and conditions of the Merger
Agreement, the Purchase Agreement, the Employment Agreements, the Loan
Agreement, the Note, the Warrant, the Security Agreement, the Pledge Agreement,
the Subordination Agreement, and the Valley Security Agreement, and not a
complete discussion of such agreements. Accordingly, the foregoing is
qualified in its entirety by reference to the full text of those agreements
attached to this Current Report on Form 8-K in Exhibits 10.1, 10.2, 10.3,
10.4, 10.5, 10.6, 10.7, 10.8, 10.9 and 10.10, respectively, and incorporated
herein by reference.
Item
2.01 Completion of Acquisition or Disposition of Assets.
The
disclosure set forth in Item 1.01 to this Current Report is incorporated into
this item by reference.
-3-
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
The
disclosure set forth in Item 1.01 to this Current Report is incorporated into
this item by reference.
Item
3.02 Unregistered Sales of Equity Securities.
The
disclosure set forth in Item 1.01 to this Current Report is incorporated into
this item by reference. The Company’s issuance of the Merger Shares,
the Note, the Warrant, and the Deerpath Shares were made in reliance upon the
exemption from registration for non-public offerings under §4(2) of the
Securities Act of 1933, as amended.
Item
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
The
disclosure set forth in Item 1.01 to this Current Report is incorporated into
this item by reference.
Item
8.01 Other Events.
On
December 2, 2010, the Company issued a press release discussing the Culinary
Group acquisition and the consummation of the Loan. A copy of the press release
is annexed hereto as Exhibit 99.1 and incorporated herein by
reference.
Item
9.01 Financial Statements and Exhibits.
(a) Financial statements of
businesses acquired.
To be
filed by amendment to this Current Report of Form 8-K by no later than February
16, 2011, representing 71 calendar days after the date that this Form 8-K must
be filed.
(b) Pro forma financial
information.
To be
filed by amendment to this Current Report of Form 8-K by no later than February
16, 2011, representing 71 calendar days after the date that this Form 8-K must
be filed.
(c) Shell company
transactions.
Not
applicable.
-4-
(d) Exhibits.
|
Exhibit
Number
|
Description
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|
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10.1
|
Amended
and Restated Agreement and Plan of Merger dated November 30, 2010 by and
among Oak Tree Educational Partners, Inc., ETI Acquisition Corp.,
Educational Training Institute, Inc., and the stockholders of Educational
Training Institute, Inc.
|
|
|
10.2
|
Amended
and Restated Interest Purchase Agreement dated November 30, 2010 by and
among Oak Tree Educational Partners, Inc., Culinary Tech Center LLC,
Professional Culinary Institute LLC, Educational Training Institute, Inc.,
Joseph Monaco and Harold Kaplan.
|
|
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10.3
|
Form
of Employment Agreement with Joseph Monaco and Harold
Kaplan.
|
|
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10.4
|
Loan
Agreement dated November 30, 2010 by and among Oak Tree Educational
Partners, Inc. and its subsidiaries, and Deerpath Funding,
LP.
|
|
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10.5
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$3,000,000
Initial Term Promissory Note dated November 30, 2010 issued to Deerpath
Funding, LP.
|
|
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10.6
|
Warrant
to Purchase Shares of Common Stock dated November 30,
2010.
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10.7
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Security
Agreement dated November 30, 2010 by and among Oak Tree Educational
Partners, Inc. and its subsidiaries, and Deerpath Funding,
LP.
|
|
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10.8
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Pledge
Agreement dated November 30, 2010 by and among Oak Tree Educational
Partners, Inc. and certain its subsidiaries, and Deerpath Funding,
LP.
|
|
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10.9
|
Subordination
and Intercreditor Agreement dated November 30, 2010 by and among Valley
Anesthesia, Inc., Valley Anesthesia Educational Programs, Inc. and
Deerpath Funding, LP.
|
|
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10.10
|
Amended
and Restated Security Agreement dated November 30, 2010 by and among Oak
Tree Educational Partners, Inc., Valley Anesthesia, Inc. and their
respective subsidiaries, and Valley Anesthesia Educational Programs,
Inc.
|
|
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99.1
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Press
Release of Oak Tree Educational Partners, Inc. dated December 2,
2010.
|
-5-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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OAK
TREE EDUCATIONAL PARTNERS, INC.
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||
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(Registrant)
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||
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By:
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/s/ Joseph J. Bianco
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Name:
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Joseph
J. Bianco
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Title:
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Chief
Executive Officer
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|
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Date: December
7, 2010
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||
-6-