Exhibit 10.1


** Certain information in this exhibit has been
omitted and has been filed separately with the Securities and Exchange
Commission pursuant to a confidential treatment request under Rule 24b-2 of the
General Rules and Regulations under the Securities Act of 1934.


ASSET PURCHASE AGREEMENT


This
Asset Purchase Agreement (“Agreement”) is entered into as of the close
of business on March 31, 2007 (the “Effective Date”) by and among:


New Horizons Computer Learning Center of Cleveland,
Ltd., L.L.C., a Delaware limited liability company (“Seller”) and New
Horizons Worldwide, Inc. (“Parent”), on the one hand;


and NH Cleveland, LLC, a Michigan limited liability
company (“Buyer”), and M&J L.L.C., a Michigan limited liability
company (“M&J”) that is an Affiliate of Buyer, on the other hand.


Seller and Buyer are hereinafter sometimes
individually referred to as a “Party” or collectively as the “Parties”.


WHEREAS,
Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller,
substantially all of Seller’s assets related to Seller’s computer training
business located in Cleveland, Ohio (the “Business”); and


WHEREAS,
concurrent with the transactions described in this Agreement, Buyer desires to
become a franchisee of New Horizons Franchising Group, Inc. (“Franchisor”)
in Cleveland, Ohio, it being understood that Franchisor is an Affiliate of
Seller.


NOW,
THEREFORE, in consideration of the covenants and agreements contained herein,
the Parties agree as follows:


Section 1               Certain Definitions


As
used in this Agreement the following terms shall have the following respective
meanings:


“Accounting
Employees” shall have the meaning set forth in Section 5.7.


“Accounts
Payable” shall mean all of Seller’s trade accounts payable (including all trade
accounts payable with respect to goods and services received by Seller but for
which invoices have not yet been received by Seller) that arise from the
conduct of the Business and relate to the period prior to the Closing.


“Accounts
Payable Aging” shall mean a report prepared by Seller showing the aging of the
Non-Current Accounts Payable of Seller as of the Effective Date.


“Action” shall mean any
action, suit, complaint, charge, hearing, arbitration, inquiry, proceeding or
investigation by or before any court of competent jurisdiction, governmental or
other regulatory or administrative agency or commission or arbitral panel.













“Affiliate”
(and, with a correlative meaning, “Affiliated”) shall mean, 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 first Person.  As used in this
definition, “control” (including, with correlative meanings, “controlled by”
and “under common control with”) shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).


“Agreement”
shall have the meaning set forth in the preamble hereto.


“Ancillary
Agreements” shall mean, collectively, any agreements, certificates or other
documents delivered at or prior to the Closing in connection with the
transactions contemplated by this Agreement and shall include, without limitation,
the Assignment and Assumption Agreement, the Assignment of Lease, the Bill of
Sale, and the Franchisor Consent.


“Assigned
Contracts” shall have the meaning set forth in Section 2.1(F).


“Assignment
and Assumption Agreement” shall have the meaning set forth in Section 3.1(B).


“Assumed
Liabilities” shall have the meaning set forth in Section 3.4.


“Bill
of Sale” shall have the meaning set forth in Section 4.2(A)(3).


“Business”
shall have the meaning set forth in the first recital hereof.


“Buyer”
shall have the meaning set forth in the preamble hereto.


“Buyer
Indemnified Party” shall have the meaning set forth in Section 8.2.


“Cap”
shall have the meaning set forth in Section 8.4.


“Cash”
shall mean all cash, time deposits, certificates of deposit, marketable
securities, short-term investments and other cash equivalents of Seller.


“Cash
Payment” shall have the meaning set forth in Section 3.1(A).


“Claim”
means (i) any right to payment, whether or not such right is reduced to
judgment, liquidated, fixed, contingent, unmatured, disputed, legal, equitable,
or secured and (ii) any right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.


“Chicago
Agreement” shall mean that certain Asset Purchase Agreement dated of even date
herewith between, inter alia, New Horizons Computer Learning Center of Chicago,
Inc., and Chicago Buyer.


“Chicago Buyer” shall
mean NH Chicago, LLC, a Michigan limited liability company.



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“Chicago
Seller” shall mean New Horizons Computer Learning Center of Chicago, Inc.


“Closing”
shall have the meaning set forth in Section 4.1.


“Closing
Balance Sheet” shall have the meaning set forth in Section 3.2(A).


“Closing
Financial Data” shall have the meaning set forth in Section 3.2(A).


“Closing
Working Capital” shall have the meaning set forth in Section 3.2(A).


“CMS”
shall have the meaning set forth in Section 5.7(B).


“Code”
shall mean the Internal Revenue Code of 1986, as amended, and any successor
thereto.


“Contracts”
shall mean all existing instruments, contracts, agreements, arrangements,
understandings and commitments, whether written or oral, of Seller or its
Affiliates related to or arising from the conduct of the Business.


“Customer
Contracts” shall have the meaning set forth in Section 2.1(F).


“Current
Accounts Payable” shall have the meaning set forth in Section 3.4(A)(1).


“Deposits”
shall  have the meaning set forth in
Section 2.1(C).


“Dispute”
shall have the meaning set forth in Section 9.9(A).


“Effective
Date” shall have the meaning set forth in the preamble hereto.


“Employee
Benefit Plans” shall have the meaning set forth in Section 6.15(B).


“Environmental
Law” shall mean any currently applicable local, state or federal statute or any
rule, regulation, code, or ordinance issued or promulgated thereunder, that
relates to the operations of the Business and/or the use of the Leased
Premises, concerning protection of human health, safety, or the environment or
that regulates, restricts or governs the use, storage, disposition or release
of Hazardous Materials.


“Equipment”
shall have the meaning set forth in Section 2.1(B).


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.


“Expiration
Date” shall have the meaning set forth in Section 5.7(B).


 “Facilities Lease” shall have the meaning set
forth in Section 2.1(A).


“Final Closing Working
Capital” shall have the meaning set forth in Section 3.2(C).



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“Final
Purchase Price” shall have the meaning set forth in Section 3.2(E).


“Financial
Statements” shall have the meaning set forth in Section 6.7(A).


“Franchise
Agreement” shall have the meaning set forth in Section 4.5(B).


“Franchisor
Consent” shall have the meaning set forth in Section 4.2(A)(7).


“GAAP”
shall mean United States generally accepted accounting principles, consistently
applied.


“Garfield
Heights Lease” shall have the meaning set forth in Section 2.1(A).


“Goodwill”
shall have the meaning set forth in Section 2.1(C).


“Governmental
Authority” means any United States federal, state or local or any foreign
government, governmental regulatory or administrative authority, agency,
commission, department, board, bureau, or instrumentality or any court,
tribunal or judicial or arbitral body.


“Governmental
Permits” shall have the meaning set forth in Section 2.1(C).


“Hazardous
Materials” shall mean any substance that is designated as a “hazardous
substance”, “hazardous waste”, “hazardous material”, “toxic substance”, “toxic
pollutant”, “contaminant”, “pollutant”, or words of similar import under any
Environmental Law.


“Indemnified
Party” shall have the meaning set forth in Section 8.3(A).


“Indemnifying
Party” shall have the meaning set forth in Section 8.3(A).


“Initial
Franchise Fee” shall have the meaning set forth in Section 4.3(A).


“Initial
Working Capital” shall mean the sum of $25,605, which the Parties agree was the
amount of Seller’s Working Capital as of February 28, 2007 (after the add back
of the March 2007 rent which was inadvertently posted to the February 2007
accounts payable).


“Intangible
Personal Property” shall have the meaning set forth in Section 2.1(C).


“Intellectual
Property” shall mean all patents, patent rights, trade names, trade marks,
trade mark registrations, service marks, service mark registrations,
copyrights, inventions, trade secrets, databases, data collections, know-how,
logos, marks (including brand names, product names, logos and slogans), methods,
network configurations and architectures, processes, software, software code
(in any form, including source code and executable or object code), web sites,
works of authorship, and other similar rights (including other unpatented
and/or unpatentable proprietary or confidential information systems or
procedures), applications for any of the foregoing, and licenses therefor, in
each case presently used or held for use by Seller in the Business.


“Inventory” shall have
the meaning set forth in Section 2.l(B).



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“IRS”
shall mean the United States Internal Revenue Service.


“Knowledge”
and words of similar import shall mean such facts or other matters of which the
referenced Person is aware or which such Person could be expected to discover
or otherwise become aware of after having made due inquiry and reasonable
investigation of the appropriate Persons having responsibility for such matters
or having access to the relevant information. 
A Person that is an entity shall be deemed to have Knowledge of a particular
fact or matter if any individual who is serving as a director, officer,
management level employee, manager, partner, executor or trustee of such Person
(or in any similar capacity) has, or at any time had, Knowledge of such fact or
other matter.


“Leased
Premises” shall have the meaning set forth in Section 2.1(A).


“Liability”
means any liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due and regardless of
when asserted), including, without limitation, any liability for Taxes.


“Liens”
shall have the meaning set forth in Section 4.2(A).


“Losses”
shall mean any loss, cost, Liability, lost profits, diminution of value, damage
(including consequential damages), penalty, fine, judgment, Claim or expense
(including reasonable attorneys’ fees).


“Most
Recent Financial Statements” shall have the meaning set forth in Section
6.7(A).


“Neutral
Auditors” shall have the meaning set forth in Section 3.2(C).


“Non-Current
Accounts Payable” shall have the meaning set forth in Section 3.4(A)(2).


“Order”
means any decree, order, injunction, rule, judgment, consent of or by any court
or Governmental Authority.


“Ordinary
Course” shall mean the ordinary course of Seller’s conduct of the Business
consistent with past practice.


“Permitted
Liens” shall have the meaning set forth in Section 4.2(A).


“Person”
shall mean any individual, firm, corporation, partnership, limited liability
company, joint venture, association, estate, trust, governmental agency or body
or other entity, and shall include any successor (by merger or otherwise) of
such Person.


“Prepayments”
shall have the meaning set forth in Section 2.1(C).


“Purchased
Assets” shall have the meaning set forth in Section 2.1.


“Purchase Price” shall
have the meaning set forth in Section 3.1.



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“Records”
shall have the meaning set forth in Section 2.1(G).


“Receivables”
shall have the meaning set forth in Section 2.1(E).


“Resolution
Period” shall have the meaning set forth in Section 3.2(B).


“Retained
Assets” shall have the meaning set forth in Section 2.2.


“Retained
Liabilities” shall have the meaning set forth in Section 3.4(B).


“Returns”
shall mean returns, reports, statements, notices, forms or other documents or
information required to be filed with any U.S. Taxing Authority or foreign
taxing authority in connection with the determination, assessment, collection
or payment of any Taxes or in connection with the administration, implementation
or enforcement of or compliance with any legal requirement relating to any Tax.


“Royalty
Credit” shall have the meaning set forth in Section 4.5(B).


“Royalty
Payments” shall have the meaning set forth in Section 3.2(D).


“Seller”
shall have the meaning set forth in the preamble hereto.


“Seller
Indemnified Party” shall have the meaning set forth in Section 8.1(A).


“Software”
shall have the meaning set forth in Section 2.1(D).


“Tangible
Personal Property” shall have the meaning set forth in Section 2.1(B).


“Taxes”
shall mean all taxes, charges, fees, levies, impositions, or like other
assessments (whether U.S. federal, state, local or foreign) based upon or
measured by income and any other tax whatsoever, including, without limitation,
single business, gross receipts, profits, premium, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, employment,
unemployment, excise, windfall profits, transfer, license, occupation or real
or personal property taxes, together with any interest, penalties or additions
to tax resulting from, attributable to, or incurred in connection with any such
taxes or any contest or dispute thereof.


“Third
Party Claim” shall have the meaning set forth in Section 8.3(B).


“Training
Obligations” shall have the meaning set forth in Section 3.4(A)(3).


“Vehicles”
shall have the meaning set forth in Section 2.1(B).


“WARN
Act” shall have the meaning set forth in Section 3.4(B)(3).


“Working Capital” shall
mean (a) the book value of the following current assets of Seller that comprise
a part of the Purchased Assets: trade accounts receivable (less A/R
Control-Contra, A/R-Suspense, A/R-CES Suspense, A/R Co-Owned Suspense, Reserve
for Futures, Reserves for Subsequent CM, and Allowance for Doubtful Accounts), A/R-ELS,
A/R-COL to COL and total



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inventory (less
Inventory-Reserve), less (b) the book value of the following current
liabilities of Seller that comprise a part of the Assumed Liabilities: accounts
payable outstanding less than 31 days from the date of invoice, Customer
Deposits, Payable to Other Franchisees and Refund Reserve Liability, all as
determined in accordance with GAAP.  The
calculation of Working Capital shall be made in a manner consistent with the
calculation shown in Exhibit E attached
hereto.


“Working
Capital Adjustment” shall have the meaning set forth in Section 3.2(D).


“Working
Capital Deficiency” shall have the meaning set forth in Section 3.2(D).


“Working
Capital Surplus” shall have the meaning set forth in Section 3.2(D). 


Section 2               Purchase and Sale of Assets; Excluded Assets


2.1           Purchased Assets. 
Pursuant to the terms and subject to the conditions set forth in this
Agreement, on the Effective Date, Seller hereby agrees to sell, grant,
transfer, convey, assign and deliver to Buyer, and Buyer agrees to purchase and
acquire from Seller, all of Seller’s right, title and interest in all of the
properties, assets and rights owned, used, acquired for use, or arising or
existing in connection with the Business wherever located, whether tangible or
intangible, and whether or not recorded on Seller’s books and records, except
for and excluding solely the Retained Assets provided for in Section 2.2 below
(all the foregoing being collectively referred to as the “Purchased Assets”).  The Purchased Assets shall include, but not
be limited to, the following:


(A)          All rights of Seller under its occupancy lease (the “Facilities
Lease”) covering the facilities at 1 Infinity Corporate Centre Dr.,
Garfield Heights, Ohio 44125 (the “Leased Premises”), a true and
complete copy of the Facilities Lease, as amended to date, being included at Schedule 2.1(A) attached hereto;


(B)           All of Seller’s (x) vehicles used in connection with the conduct
of the Business (“Vehicles”), (y) furniture, furnishings,
fixtures, equipment, machinery, trade fixtures, leasehold improvements,
computers, computer discs, telephone systems and security systems (“Equipment”),
and (z) supplies, training and course materials, computer training kits
and manuals, catalogs, advertising copy and other properties of a similar type
used or held for use in the conduct of the Business (“Inventory” and,
together with the Vehicles and Equipment, whether owned or leased, the “Tangible
Personal Property”), a listing of all of which is included at Schedule 2.1(B) attached hereto (which Schedule indicates
whether the Vehicles and Equipment are owned or leased and, if leased, includes
a true and complete copy of the lease or other agreement(s) governing the same,
as amended to date);


(C)           All
of Seller’s (u) telephone and facsimile numbers, post office boxes,
e-mail addresses, websites, Internet domain names, trade names and assumed
names relating to the Business, (v) permits and other governmental
authorizations pertaining to the Business (“Governmental Permits”), to
the extent such authorizations may legally be assigned, (w) goodwill
with customers, vendors or prospective customers, and all customer lists,
relating to the conduct of the Business (“Goodwill”), (x)
security or similar deposits relating to the Business but



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(i) such shall exclude security deposits
under any lease or agreement not comprising a part of the Assigned Contracts,
and (ii) such shall exclude the security deposit made under the Facilities
Lease (“Deposits”), (y) prepaid advertising (inclusive of yellow
page advertising), prepaid expenses and other prepayments relating to the
conduct of the Business (“Prepayments”), and (z) all other
intangible assets relating to the Business or any of the Purchased Assets (the
foregoing being collectively called the “Intangible Personal Property”),
a listing of all of which is included at Schedule 2.1(C)
attached hereto;


(D)          All of Seller’s software (including rights under Seller’s software
licenses), including SAGE accounting software, and other software used in the
conduct of the Business (“Software”), but excluding the CMS software
otherwise provided for in the Franchise Agreement (as defined in Section
4.5(B)), a listing of all of such Software being included at Schedule 2.1(D) attached hereto (and, as to each,
identifying whether such is owned by Seller or licensed for use by Seller and,
if licensed, includes a true and complete copy of the license agreement or
other agreement(s) governing the same, as amended to date, and all of Seller’s
rights in and to all other Intellectual Property used in connection with the
Business (except for such Intellectual Property as is licensed to Buyer
pursuant to the Franchise Agreement);


(E)           All of Seller’s accounts and notes receivable, and other rights to
receive payment, from customers, employees or others arising from the conduct
of the Business (“Receivables”), a listing of all of which (showing, as
to each, the name of the account debtor, the amount owed and an aging schedule
thereof) is included at Schedule
2.1(E) attached hereto;


(F)           Except as provided in Section 2.2(E), all rights of Seller under any
Contracts which relate to or arise from the operation of the Business and are
accepted in writing by Buyer (“Assigned Contracts”), including any
thereof with customers or prospective customers which benefit the Business from
and after the Effective Date, including, but not limited to, computer training
center agreements and, further, including all rights to receive payment from
customers for services to be performed and invoiced after the Effective Date (“Customer
Contracts”), including without limitation the right to payment with regard
to coupon sales and redemptions, PC Club sales, corporate technical club sales
or applications, and future training classes, a listing of all of which
Assigned Contracts is included at Schedule
2.1(F) attached hereto; and


(G)           Seller’s books and records, books of account, personnel files and
records for those employees of Seller who become employees of Buyer, files,
invoices, accounting records, and correspondence relating to any of the
Business, the Purchased Assets or the Assumed Liabilities (“Records”).


2.2           Retained Assets. 
Notwithstanding the provisions of Section 2.1, the Purchased Assets
shall not include any of the following (the “Retained Assets”):


(A)          Any
Customer Contracts between Seller’s Affiliate and third party customers for the
delivery of training managed through the Enterprise Learning Solutions
department of Seller’s Affiliate, provided that Buyer shall be entitled to
deliver training in its capacity as a New Horizons franchisee and shall be
deemed the “selling center” which shall



 8
 









entitle Buyer to receive customary revenue
sharing offered by the Enterprise Learning Solutions department of Seller’s
Affiliate;


(B)           Seller’s Cash;


(C)           Seller’s rights under this Agreement;


(D)          Seller’s corporate minute books, stock records and tax returns or other
similar corporate books and records relating to the Business, to any of the
Retained Assets, to any Retained Liability, or to the negotiation and
consummation of the transactions provided for in this Agreement, and those
Records, if any, originals of which Seller is required to maintain under
applicable law;


(E)           Seller’s rights arising under any Contracts which are not an Assigned
Contract;


(F)           Any rights of Seller relating to its conduct of the Business which
arise from or are related to services previously provided by the regional
office of Seller’s affiliate (such as accounting, payroll, legal or other
similar services, except as otherwise expressly provided herein); and.


(G)           Any assets owned by any of Seller’s Affiliates, none of which is
physically located at the Leased Premises nor used in the conduct of the
Business.


2.3           Non-Transferability of Certain Contracts. 
Nothing in this Agreement shall be construed as an attempt to assign any
Contract intended to be an Assigned Contract included in the Purchased Assets
that is by its terms or law non-assignable without the consent of the other
party or parties thereto, unless such consent shall have been given or as to
which all the remedies for the enforcement thereof enjoyed by Seller would, as
a matter of law, pass to Buyer as an incident of the assignments provided for
by this Agreement.  Seller shall use
commercially reasonable efforts to obtain the consent of any third party to the
assignment to Buyer of any Assigned Contract for which such consent is
required.  In the event (a) an Assigned
Contract either does not permit or expressly prohibits the assignment by Seller
of its rights and obligations thereunder, or (b) Seller has not obtained the
necessary consents to assignment from all parties to any Assigned Contract
prior to the Effective Date, or (c) direct assumption of any Assigned Contract
is not practical, Buyer shall fulfill such Assigned Contract and shall assume
the obligations and liabilities of such Assigned Contract accruing after the
Closing for and on behalf of Seller but for the account of Buyer and Seller
shall cooperate with Buyer in any reasonable arrangements designed to provide
for Buyer the benefits under such Assigned Contracts accruing after the Closing
including the enforcement for the benefit and at the expense of Buyer of any
rights comparable to the rights previously enjoyed by Seller in connection with
such Assigned Contracts.


Section 3               Purchase Price


3.1           Closing
Payment.  In consideration for the transfer of the
Purchased Assets, Buyer shall pay to Seller the following amounts (the “Purchase
Price”):



 9
 









(A)          Cash Payment. 
Subject to the provisions of Section 3.2 below, on April 2, 2007, Buyer
shall pay to Seller the sum of Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00) (the “Cash Payment”) in the form of a wire transfer to an
account of Seller designated in writing by Seller; provided, however, the Cash
Payment shall be reduced by the amount of the Non-Current Accounts Payable of
Seller assumed by Buyer pursuant to Section 3.4(A)(2); and


(B)           Assumption of Liabilities.  Upon
the Effective Date, Buyer shall execute and deliver an agreement (the “Assignment
and Assumption Agreement”) in form and content as provided for in Section
4.2(A)(1) obligating Buyer to assume Seller’s obligations with regard to the
Assumed Liabilities as defined in Section 3.4(A) below.


3.2           Purchase Price Adjustment.


(A)          As soon as practicable, but in no event later than thirty (30) days
following the Closing, Seller shall prepare a balance sheet of the Business as
of the Closing (the “Closing Balance Sheet”) and a calculation of the
Working Capital of the Business as of the Closing based on the Closing Balance
Sheet (the “Closing Working Capital” and, together with the Closing
Balance Sheet, the “Closing Financial Data”).  The Closing Balance Sheet shall be prepared
in accordance with GAAP, consistently applied with the manner in which Seller’s
Most Recent Financial Statements were prepared.


(B)           Seller shall deliver a copy of the Closing Financial Data to Buyer
promptly after it has been prepared. 
After receipt of the Closing Financial Data, Buyer shall have fifteen
(15) days to review the Closing Financial Data. 
Buyer and its authorized representatives shall have reasonable access
during normal business hours to all relevant books and records of Seller to the
extent required to complete their review of the Closing Financial Data.  Unless Buyer delivers written notice to
Seller on or prior to the thirtieth (30th)
day after Buyer’s receipt of the Closing Financial Data specifying in
reasonable detail the amount, nature and basis of all disputed items, Buyer
shall be deemed to have accepted and agreed to the calculation of the Closing
Working Capital.  If Buyer timely
notifies Seller of its objection to the calculation of the Closing Working
Capital as described above, Seller and Buyer shall, within thirty (30) days (or
such longer period as the Parties may agree in writing) following such notice
(the “Resolution Period”), attempt to resolve their differences and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive.


(C)           If, at the conclusion of the Resolution Period, there are any amounts
remaining in dispute, then such amounts remaining in dispute shall be submitted
to a firm of nationally recognized independent certified public accountants
(the “Neutral Auditors”) selected by Seller and Buyer within ten (10)
days after the expiration of the Resolution Period.  If Seller and Buyer are unable to agree on
the Neutral Auditors, then each of Seller and Buyer shall have the right to
request the office of the American Arbitration Association to appoint the Neutral
Auditors, which Neutral Auditors shall not have had a material relationship
with Seller, Buyer or any of their respective Affiliates within the past two
years.  Each of Seller and Buyer agree to
execute, if requested by the Neutral Auditors, a reasonable engagement letter,
including customary indemnities.  All
fees and expenses relating to the work, if any, to be performed by



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the Neutral Auditors shall be borne equally
between Seller and Buyer. The Neutral Auditors shall act as an arbitrator to
determine, based solely on the provisions of this Section 3.2 and the
presentations by Seller and Buyer only those issues still in dispute.  The Neutral Auditors’ determination shall be
made within thirty (30) days of their selection, shall be set forth in a written
statement delivered to Seller and Buyer and shall be deemed a final, binding
and conclusive arbitration award.  A
judgment of a court of competent jurisdiction may be entered upon the Neutral
Auditors’ determination.  The term “Final
Closing Working Capital” shall mean the definitive Closing Working Capital
agreed to (or deemed to be agreed to) by Buyer and Seller in accordance with
Section 3.2(B) hereof or resulting from the determinations made by the Neutral
Auditors in accordance with this Section 3.2(C) (in addition to those items
theretofore agreed to by Seller and Buyer).


(D)          Seller, Parent and Franchisor expressly agree that, subject to
adjustment as provided in the last sentence of this Section 3.2(D), Buyer and
Cleveland Buyer shall be entitled to a credit in the aggregate amount of
$126,120 (the “Royalty Credit”) against any royalty or other payments (“Royalty
Payments”) coming due by Buyer under the Franchise Agreement or Cleveland
Buyer under its franchise agreement.  The
Royalty Credit shall be applied against Royalty Payments of Buyer and Cleveland
Buyer first coming due after the Effective Date at the aggregate rate of
$10,000 per month.


In
addition to the Royalty Credit, if the Final Closing Working Capital is less
than the Initial Working Capital by more than $7,500, then the amount of such
deficiency (the “Working Capital Deficiency”) shall be set off against the
Royalty Payments as follows:


(i)            If the sum (the “Working
Capital Adjustment”) of (a) the Working Capital Deficiency under this Agreement,
plus (b) the Working Capital Deficiency or less the Working Capital Surplus
under the Cleveland Agreement, as applicable, is greater than $53,880 (such
that the total credit against the Royalty Payments, consisting of the $126,120
Royalty Credit plus the $53,880 or greater Working Capital Adjustment, is
greater than $180,000), then the amount of the Working Capital Adjustment shall
be set off by Buyer and/or its Affiliates:


(1)           against the Royalty
Payments coming due over the six (6) month period immediately following the
first anniversary of the Effective Date at the rate of $10,000 per month, plus


(2)           with respect to the
amount of the Working Capital Adjustment in excess of $53,880, at the rate of
an additional $10,000 per month, commencing with the first month following the
date of determination of the Working Capital Adjustment, and continuing until
such excess amount of the Working Capital Adjustment is exhausted; and


(ii)           If the Working Capital
Adjustment is less than or equal to $53,880, then such amount shall be set off
by Buyer and/or its Affiliates against the Royalty Payments coming due
immediately following the first anniversary of the Effective Date at the rate
of $10,000 per month.



 11
 









If the Final Closing Working Capital is greater than the Initial
Working Capital by more than $7,500 (the “Working Capital Surplus”), then the
amount of such Working Capital Surplus shall reduce the Royalty Credit.


(E)           The Cash Payment, as adjusted pursuant to this Section 3.2, plus the
amount of the Assumed Liabilities assumed by Buyer pursuant to Section 3.4 is
referred to herein as the “Final Purchase Price.”


3.3           Purchase Price Allocation. 
Buyer and Seller agree to allocate the Final Purchase Price as follows:
first, to the current assets comprising a part of the Purchased Assets at their
respective book values as determined in the Final Closing Working Capital;
second, to the fixed assets comprising a part of the Purchased Assets at their
respective book values as determined in the Closing Balance Sheet; [***************************************************].  For purposes of all Taxes, the Parties agree
to report the transactions contemplated in this Agreement in a manner
consistent with this Section 3.3 and the allocation to be so agreed upon and
none of them will take any position inconsistent therewith in any Returns, in
any refund claim, in any litigation, or otherwise.  Each Party agrees to notify the other if any
taxing authority proposes to reallocate the Final Purchase Price.  Seller and Buyer shall cooperate in good
faith in the joint preparation of IRS Form 8594 on a basis consistent with the
allocation of the Final Purchase Price in accordance with this Section 3.3.


3.4           Assumed and Retained Liabilities.


(A)          Assumed Liabilities.  The
following shall constitute, and are herein together referred to as, the “Assumed
Liabilities”:


(1)           the Accounts Payable that, as of the Effective Date, are outstanding
[********************** ****************************************], all accrued
expenses of Seller and all other current liabilities of Seller, in each case
solely to the extent included in the calculation of the Final Closing Working
Capital;


(2)           the
Accounts Payable of Seller that, as of the Effective Date, are outstanding
[********** ******************************************************], but only
to the extent included in the reduction to the Cash Purchase Price as provided
in Section 3.1(A) [*****************************************************************
***********************************************************************************************************
***********************************************************************************************************
*****************************************************************].


(3)           Subject to the provisions set forth in Section 4.3(D), Seller’s
obligations to all individual and corporate customers to provide training which
has been purchased by such customers prior to the Effective Date but not yet
delivered as of the Effective Date (the “Training Obligations”), which
Training Obligations are listed in Schedule
3.4(A)(3) attached hereto;



 12
 









(4)           Any obligation for cash refunds to customers in respect to any prepaid
training;


(5)           Any obligation to pay for training provided by any other franchisee or
Affiliate of the Franchisor in respect to national training coupons sold by
Seller, except to the extent such constitutes a Retained Liability under
Section 3.4(B)(5)(e); and


(6)           all liabilities and obligations of Seller (other than liabilities or
obligations arising out of any breach or default by Seller prior to the
Closing) under the Assigned Contracts that are assigned to Buyer pursuant to
Section 2.1 or under which the full benefits are provided to Buyer by Seller
pursuant to Section 2.3, and which were incurred or otherwise first arise from
and after the Closing; provided that, notwithstanding anything to the contrary,
Buyer does not assume, and shall not be responsible for, any Liabilities which
arise from (i) defaults thereunder or breaches thereof on or prior to the
Closing; or (ii) events occurring on or prior to the Closing, which, after
notice or lapse of time or both, would constitute a default or breach, in each
case whether or not a claim for such default or breach is made prior to or
following the Closing.


(B)           Retained Liabilities. 
Buyer shall not be obligated to pay, perform or abide by, and Seller
shall retain exclusive responsibility for, any Liabilities, debts, obligations,
undertakings or commitments of Seller (the “Retained Liabilities”),
other than the Assumed Liabilities.  The
Retained Liabilities shall include, but not be limited to, the following:


(1)           Any Tax imposed by or payable to any Governmental Authority with
respect to any period ending on or prior to the Effective Date;


(2)           Any Liability or obligation accruing, arising out of or relating to any
fact or circumstance which occurred on or prior to the Effective Date in
respect to (a) Liabilities and obligations to employees of Seller, including
those for accident, disability, health (including unfunded medical liabilities)
and worker’s compensation insurance or benefits, and all other Liabilities and
obligations to employees arising from facts or circumstances which occurred on
or prior to the Effective Date, (b) any Employee Benefit Plan or any other
employee benefit arrangement or commitment which is or has been maintained or
contributed to by Seller, (c) any portion of any bonuses earned or accrued upon
the basis of any events occurring on or prior to the Effective Date, (d) any
accrued vacation benefits, (e) any obligation to reimburse any employee for
expenses incurred on or prior to the Effective Date, or (f) any obligation to
pay sales commissions to employees on account of sales made on or prior to the
Effective Date and with respect to which sales Seller has received payment on
or prior to the Effective Date;


(3)           Liabilities and obligations arising from or relating to claims or
Liabilities for benefits or pay under any severance arrangement of or binding
upon Seller, including those related to any alleged wrongful termination of
employment solely as a result of the transactions contemplated hereby including
Workers Adjustment Retraining and Notification Act (the “WARN Act”)
liabilities and obligations;


(4)           Any Liability or obligation which, absent this provision, comprises a
part of the Assumed Liabilities but which is covered by any insurance policy
maintained by Seller or any of Seller’s Affiliates (but, then, only to the
extent of such insurance coverage and the amount of any deductible or
self-insured retention);



 13
 









(5)           Any (a) inter-company charges or amounts due to Parent or any Affiliate
of Seller or Parent, (b) claims relating to inter-franchise payment obligations
which are based on the non-payment of amounts owing any other franchisee of the
Franchisor, except to the extent that amounts therefor are included in the
calculation of the Final Closing Working Capital, (c) amounts due for borrowed
money, (d) obligations arising under any agreement, instrument or other
contractual undertaking or commitment that is not an Assigned Contract or which
is not an Assumed Liability, (e) inter-franchise obligations relating to
payment for training provided by franchisees of the Franchisor other than Buyer
or its Affiliates upon redemption of national training coupons sold by Seller
on or prior to the Effective Date in circumstances where the same are redeemed
more than one (1) year after the issuance of such coupons.


(6)           Any Accounts Payable not included in the calculation of the Final
Closing Working Capital or not included in the reduction to the Cash Purchase
Price as provided in Section 3.1(A);


(7)           Any (a) Liability or obligation to indemnify any director, officer,
employee or agent of Seller, except with regard to indemnification obligations
owed to Seller from Buyer arising under this Agreement, (b) with respect to
periods ending on or prior to the Effective Date, Liability arising out of or
in connection with any violation of a statute or governmental rule, regulation,
directive or other requirement, and any Liability or obligation of a
conditional, contingent or similar nature, or (c) Liability or obligation which
arises from or is based on a claim for injury to or death of persons, or damage
to or destruction of property, regardless of when asserted, but which arises
from facts or circumstances which occurred on or prior to the Effective Date;


(8)           [This section intentionally left blank.];


(9)           The obligations of Seller, Parent or their Affiliate(s) on any guaranty
of the Facilities Lease;


(10)         Any debts, Liabilities or obligations incurred by Seller, or actions,
claims or lawsuits asserted against either Buyer or Seller which relate to the
operation of the Business prior to the Effective Date, except for (y)
the Assumed Liabilities, and/or (z) the Training Obligations;


(11)         Any Liabilities or obligations which arise from or relate to any
Retained Asset;


(12)         Any Liabilities and obligations relating to the operation prior to
Closing of the Leased Premises or the Business or any other real property,
buildings, improvements or other premises utilized by Seller or its Affiliates,
including Liabilities arising from any Environmental Laws;



 14
 









(13)         Any Liabilities and obligations of Seller to any of its Affiliates or
to any of Seller’s or its Affiliates’ past or present directors, officers or
stockholders; and


(14)         Except for the Assumed Liabilities, all other Liabilities and
obligations of Seller or related to the operation of the Business prior to
Closing.


Section 4          Closing


4.1           Closing.  The consummation of the
transactions provided for in this Agreement (the “Closing”) has been
held on, and shall be effective as of the close of business on, the Effective
Date.


4.2           Acts of Seller and Parent.  At
the Closing, Seller and Parent have taken such actions and executed and
delivered, or caused to be executed and delivered, to Buyer such certificates,
instruments and documents, as are required by this Agreement or as are required
to give full effect to the transactions provided for herein.  Such actions and materials include, but are
not limited to, the following:


(A)          Conveyance Documentation. 
Seller has executed and delivered to Buyer or shall execute and deliver
to Buyer (with such acknowledgments required by the circumstances) documents of
conveyance which are required to convey to Buyer the Purchased Assets free and
clear of all restrictions or conditions to sale, conveyance or transfer and
free and clear of all liens, mortgages, pledges, encumbrances, charges, claims,
security interests, Taxes, conditions or restrictions of any nature or
description whatsoever, whether secured or unsecured, choate or inchoate, fixed
or contingent, scheduled or unscheduled, noticed or unnoticed, recorded or
unrecorded, known or unknown (“Liens”) (other than those specifically
identified on Schedule
4.2(A) hereto, the “Permitted
Liens”) and consistent with the other requirements of this Agreement.  Except as otherwise expressly provided in
this Agreement, the Purchased Assets are being sold “as is, where is” without
any express or implied warranties whatsoever. 
Without limiting the generality of the foregoing, the documents of
conveyance shall include the following:


(1)           An assignment and assumption agreement (“Assignment and Assumption
Agreement”) in form and content substantially as shown on Exhibit A attached hereto pursuant to which, among
other things, Seller conveys and assigns to Buyer all right, title and interest
of Seller arising under, provided for in, or governed by any Assigned Contracts
(other than the Facilities Lease);


(2)           An assignment and assumption agreement (“Assignment of Lease”)
in form and content substantially as shown on Exhibit B attached
hereto pursuant to which, among other things, Seller conveys and assigns to
Buyer all right, title and interest of Seller arising under, provided for in,
or governed by the Facilities Lease (included herewith at Exhibit B); and, therewith, Seller shall deliver a
writing signed by the landlord named in the Facilities Lease or other Person
whose approval or consent is required in connection therewith setting forth
such Person’s consent to said assignment and certifying to Buyer that the lease
attached to the consent is a true and complete copy of the lease as amended to
date, that there is no default existing under the lease and there is no fact,
circumstance or condition known to such



 15
 









person that would, with or without the giving
of notice, the lapse of time, or both, constitute a breach or default under the
lease, and certifying as to the amount of the current monthly rent and of the
security deposit, if any;


(3)           A bill of sale (“Bill of Sale”) in form and content
substantially as shown on Exhibit
C attached hereto and
conveying to Buyer all of the Purchased Assets (other than as provided for in
the Assignment and Assumption Agreement, the Assignment of Lease, or in any
document of title provided for in Section 4.2(A)(4) below;


(4)           An endorsement and delivery of certificates of title required to
effectuate the transfer to Buyer of any Vehicles or other Equipment, and any
instruments the endorsement and delivery of which is required to effectuate
transfer to Buyer;


(5)           The written consent to assignment (in form and substance reasonably
satisfactory to Buyer) of third Persons whose approval of any conveyance
contemplated herein is required in order to comply with the requirements of any
agreement or legal requirement binding on Seller, Parent or their Affiliates.


(6)           The written consent of Franchisor (the “Franchisor Consent”) to
Buyer’s and its Affiliates’ right to setoff or recoup the amount of any of
Seller’s and/or Parent’s indemnification obligations under Section 8.2 hereof
against any payments that become due under their respective franchise
agreements with Franchisor, dated the Effective Date, in form and content
substantially as shown on Exhibit
D attached hereto.


(7)           An executed Ohio Form 590 (Consent for Use of Similar Name) by which
Seller consents to the use by Buyer of the name “New Horizons Computer Learning
Center of Cleveland” for the transaction of business in the State of Ohio.


(8)           Consents to the transactions contemplated by this Agreement and
discharge(s) of all Liens on any of the Purchased Assets by each of the senior
lenders to Seller; and


(9)           Any other documents and instruments required by this Agreement or
reasonably requested by Buyer to effect or evidence the transactions
contemplated by this Agreement.


(B)           Delivery of Possession. 
Seller has delivered or will deliver to Buyer, or cause to be delivered
to Buyer, physical possession of all Records, the originals of all Assigned
Contracts, and other tangible properties comprising any part of the Purchased
Assets, and all keys, combinations and other mechanisms for controlling access
to the Leased Premises and to any lock box or other repository to which
Receivables or other correspondence of Seller is routinely received.


(C)           Receivables.  Seller maintains with Sun
Trust (the “Custodial Bank”) administrative arrangements regarding the
collection of Receivables.  Such arrangement
provides for a lock box arrangement with all items of payment delivered
thereto.  At the Closing, Seller will
deliver, or cause to be delivered, to the Custodial Bank a writing which
cancels the



 16
 









account/lock box arrangement and irrevocably
instructs the Custodial Bank to remit directly to Buyer all correspondence,
items of payment and other materials received by it pursuant to any
arrangements maintained with Seller.  To
the extent that Seller shall, from and after the Effective Date, receive any items
of payment or be credited with any items of payment in respect to any
Receivables, Seller will hold such items in trust for Buyer and promptly remit
such items of payment to Buyer in the form received and pay to Buyer any
amounts so credited to Seller.


(D)          Closing Certificates. 
Seller and Parent will cause the Franchisor to execute and deliver to
Buyer a certificate, dated as of the Effective Date, and to the effect that the
execution of the Franchise Agreement with Franchisor shall comply with federal
and state law regarding the sale of franchises in the State of Ohio.


(E)           Secretary’s Certificate; Resolutions.  The
secretary or other executive officer of Seller and Parent shall deliver to
Buyer a certificate, dated as of the Effective Date, and to the effect (i) that
all action required to authorize and direct Seller’s and Parent’s execution and
performance of this Agreement and any other agreement or instrument of
conveyance provided for herein has been taken; and (ii) that all such action so
taken remains in effect without modification or revocation.  There shall be or is attached to such
certificate a true and complete copy of the resolutions adopted by Seller’s and
Parent’s governing bodies which are required in order to effectuate such
actions.


(F)           Seller’s Name. 
Seller agrees to and shall permit Buyer to use the name “New Horizons
Computer Learning Center of Cleveland” as a fictitious business name for so
long as the Franchise Agreement remains in effect and, in that regard, shall
(i) from time to time at or after the Closing, execute such documents and take
such actions as are reasonably requested by Buyer to effectuate such result and
(ii) refrain from using or permitting others to use such name or any name
similar thereto in the active conduct of business.


(G)           Deliveries Regarding Receivables.  From
time to time at the request of Buyer, Seller will provide Buyer with such
assistance as Buyer shall reasonably request in order to enable Buyer to enjoy
the benefits intended to be conveyed with regard to the Receivables (but no
such request shall require the expenditure of funds by Seller).


4.3           Acts of Buyer.  At
the Closing, Buyer will execute and deliver or cause to be executed and
delivered to Seller such certificates, instruments and documents as are
required by this Agreement or as are required to give full effect to the
transactions provided for herein.  Such
shall include, but not be limited to, the following:


(A)          Cash Payment. 
Buyer shall pay to Seller the Cash Payment, subject to adjustment as
provided for in Section 3.1(A), which shall also satisfy Buyer’s obligation to
pay an initial franchise fee (the “Initial Franchise Fee”) to Franchisor
in connection with the matters provided for in Section 4.5(B) below.


(B)           Assumption.  Buyer will execute and
deliver, or has executed and delivered, to Seller (i) the Assignment and
Assumption Agreement pursuant to which Buyer assumes the Assumed Liabilities,
and (ii) the Assignment of Lease pursuant to which Buyer assumes the
obligations of Seller under the Facilities Lease to the extent such obligations
accrue from and after the Effective Date.



 17
 









(C)           Secretary’s Certificate; Resolutions.  The
secretary or other officer of Buyer has delivered or shall deliver to Seller a
certificate, dated as of the Effective Date, and to the effect that all action
required to authorize and direct the execution and performance of this
Agreement and any other agreement or instrument of conveyance provided for
herein has been taken; and that all such action so taken remains in effect
without modification or revocation. 
There shall be attached to such certificate a true and complete copy of
the resolutions adopted by the members of Buyer authorizing such actions.


(D)          [This section intentionally left blank.]


4.4           Prorations at Closing. 
Except to the extent included in the calculation of the Final Closing
Working Capital, any and all real property Taxes, personal property taxes,
assessments, lease rentals, and other charges applicable to the Leased
Premises, the Purchased Assets or the Assumed Liabilities will be prorated to
the Effective Date, and such Taxes and other charges shall be allocated between
the Parties by adjustment at the Closing, or as soon thereafter as the Parties
may agree.


4.5           Other Agreements.  In
addition to the matters provided for elsewhere in this Agreement, at or prior
to the Closing, the Parties shall additionally execute, or cause their
affiliates named therein to execute, the following separate agreements:


(A)          Employment Arrangements. 
Notwithstanding any restrictions to the contrary contained in this
Agreement or in any other agreement contemplated hereby, Seller shall permit
Buyer to offer employment to, and to employ, such Persons employed in
connection with the operation of the Business as may be designated by Buyer in
its sole discretion.  Buyer shall have no
obligation to offer to employ or to employ any employees of Seller and, with
respect to any employee of Seller to whom Buyer makes an offer of employment,
Buyer shall be free to determine in its sole discretion the terms of such
offer; provided, however, Buyer shall be responsible for and shall indemnify
and defend Seller and Parent in accordance with Section 8 hereof against Claims
brought by any employee of Seller alleging unlawful discrimination by Buyer as
the basis for Buyer’s decision not to hire such employee.


(B)           Franchise Agreement. 
Buyer and Franchisor (a wholly-owned direct or indirect subsidiary of
Parent), shall execute a franchise agreement with a term from the Effective
Date through [*****************] (the “Franchise Agreement”).  The Franchise Agreement shall be in
substantially the same form as the franchise agreement between the Franchisor
and M&J, Buyer’s Affiliate, for the Detroit, Michigan territory.  Seller further acknowledges and agrees that
Buyer shall have the right to setoff or recoup against amounts that may become
due to Buyer under this Agreement any amounts now or hereafter owing by Buyer
to Franchisor or its Affiliates under the Franchise Agreement as provided in
the Franchisor Consent.


(C)           Consents and Approvals.  All
consents, approvals or authorizations of any governmental agency, the landlord
named in the Facilities Lease and any other person whose approval is required
to assign and convey to Buyer the Assigned Contracts and any other



 18















Purchased Assets shall have been obtained on
terms satisfactory to Buyer and shall be in full force and effect; and, except
as contemplated in Section 4.3(D),
all Permits required to allow Buyer to conduct the operations of the Business
following the Effective Date shall have been assigned to Buyer by Seller or
otherwise obtained by Buyer.


Section 5               Additional Covenants and Agreements


5.1           Indemnity of M&J Regarding Guarantee of
Facilities Leases.  Buyer is acquiring, by way of assignment, the
leasehold interest of Seller under the Facilities Lease.  Parent is or may be a guarantor or otherwise
obligated for the performance by the tenant or lessee named in the Facilities
Lease, which tenant or lessee will include Buyer or its Affiliates from and
after the Effective Date, and Parent may not be permitted to modify or cancel
its guaranty of the Facilities Lease in connection with the assignment of the
Facilities Lease.  Accordingly, Parent
may remain liable on the Facilities Lease in the event Buyer is unable to perform
thereunder as required in the Assignment of Lease.  In consideration of the transfers
contemplated in this Agreement and the assignment of the Facilities Lease, if
and for so long as Parent is a guarantor of the Facilities Lease, M&J
agrees and does hereby indemnify and agree to hold Parent harmless of and from
any claims made by the landlord named in the Facilities Lease based on a breach
by Buyer of such Facilities Lease; provided, however, the aggregate
liability of M&J hereunder in respect to the Facilities Lease shall be and
is limited to the sum of [***************************].


5.2           Non-Solicitation. 
Excluding persons employed by Seller in connection with the Business to
whom Buyer may make offers of employment as provided for in Section 4.5(A),
except as otherwise agreed by Seller and Buyer, Buyer and Seller, on behalf of
themselves and their respective Affiliates, agree not to solicit, recruit or
hire any employees of the other Party, or the other Party’s Affiliates, for so
long as the Franchise Agreement remains in effect or, if a shorter period of
time, for six (6) months following the termination of the applicable employee’s
employment with such Party or such Party’s Affiliates.


5.3           Customer Records. The Parties will maintain the confidentiality
of all customer records and files in accordance with applicable federal and
state laws and regulations.  On the
Effective Date, Seller agrees to deliver to Buyer all original customer records
and files that relate to the purchase and delivery of computer training for the
Business, including the files which relate to the Training Obligations.  Seller shall retain all books and records
relating to the Business that are not sold and delivered to Buyer under this Agreement.  In the event that Seller, Buyer or any of
their respective Affiliates is audited by any federal, state or local entity
following the Effective Date, or if any of them should otherwise need access to
any of the books and records maintained by the other for any legitimate
business purpose (other than any litigation or arbitration matter involving the
Parties), then the Party in possession of the books and records shall provide
the other Party, its Affiliates and their respective designees with reasonable
access, during normal business hours, to all such books and records; provided,
however, if at any time the Party in possession of the books and records
determines to destroy or otherwise dispose of any such books and records, it
may do so provided such Party first gives the other Party thirty (30) days
advance notice and the other Party may, at its expense, arrange to pick up such
books and records from the Party in possession thereof.



 19
 









5.4           Further Assurances.  Each
of the Parties agrees to use its commercially reasonable efforts to timely satisfy
any conditions to Closing provided for herein and to assist each other in doing
such things and matters as are required to consummate the transactions provided
for herein.  Without limiting the
generality of the foregoing, Seller and Parent agree to assist the Buyer in
procuring the timely transfer of all Assigned Contracts (including licenses,
authorized training center agreements, vendor contracts and Software licenses).


5.5           Announcements; Confidentiality.  The
Parties (or certain of the Parties or their predecessors) have previously
executed a Confidentiality Agreement in connection with the transactions
contemplated herein.  As of the Effective
Date, said Confidentiality Agreement shall be of no further force or effect
and, instead, the Parties agree as follows:


(A)          Confidentiality Agreement. 
Except to the extent of the representations and warranties provided for
in this Agreement, no Party shall have any liability to the other based on any
claim that the information provided by such Party pursuant to the
Confidentiality Agreement was untrue, incomplete or misleading in any way.  Rather, the Parties shall be entitled to rely
only upon the representations and warranties set forth or provided for in this
Agreement and any agreements and instruments delivered pursuant to this
Agreement.


(B)           Public Announcements. 
Seller and Parent, on the one hand, and Buyer, on the other hand, will
consult with each other before issuing any press release or otherwise making
any public statement with respect to the transactions contemplated herein and
shall not issue any such press release or make any such public statement
without the approval of the others, unless counsel has advised such Party that
such release or other public statement must be issued immediately and the
issuing Party has not been able, despite its good faith efforts, to secure the
prior approval of the other Parties.


5.6           Financial Audit Cooperation. 
Buyer shall provide reasonable assistance to Seller and Parent regarding
the 2006 and 2007 financial audits for Parent, which assistance shall include
gathering documentation, providing requested account analysis and generally
responding to inquires from Seller’s outside auditors; provided, however,
Seller shall reimburse Buyer for any out-of-pocket expense incurred by Buyer in
connection with the rendering of such assistance.


5.7           Transition Services.


(A)          [This section intentionally left blank.]  


(B)           CMS Conversion. 
Seller agrees that, effective as of the Effective Date, and continuing
until September 30, 2007 (the “Expiration Date”), neither Buyer nor
Chicago Buyer shall be liable for any monthly fees, under their franchise
agreements or otherwise, for the use of Seller’s ASP or Center Management
System (“CMS”), provided that Buyer and Chicago Buyer shall have
transitioned to a local model CMS by such Expiration Date.  Subsequent to the Expiration Date, Buyer and
Chicago Buyer shall be liable for Seller’s standard local CMS fees.  Seller further agrees that Seller will
provide, or cause to be provided to Buyer and Chicago Buyer, at Seller’s sole
expense, all user licenses, software and associated data necessary for Buyer
and Chicago Buyer to transition from Seller’s ASP system and have CMS for their



 20
 









Chicago and Chicago territories installed at
Buyer’s or its Affiliate’s facility in Livonia, Michigan.


(C)           [This section intentionally left blank.]


(D)          Within one (1) year following the Effective Date, Buyer shall assign to
Seller its security deposit under the Facilities Lease, and Buyer, concurrently
therewith, shall pay to Seller the value of the security deposit so assigned.


Section 6               Representations And Warranties Of Seller And
Parent.  Seller and Parent
jointly and severally represent and warrant to Buyer as follows:


6.1           Organization and Existence. 
Seller is a Delaware limited liability company and Parent is a Delaware
corporation, each duly organized, validly existing and in good standing under
the laws of the State of Delaware and each has all necessary power to own its
assets (including the Purchased Assets) and to operate its business (including
the Business) as now owned and operated by them.  Seller is duly qualified and in good standing
under the laws of the State of Ohio and in any other jurisdiction wherein the
nature of the activities conducted or the character of the assets owned require
such qualification or licensing, and where a failure to be so qualified or
licensed would adversely affect (i) the value of the Purchased Assets, or (ii)
the amount of the Assumed Liabilities. 
Neither Seller nor Parent conducts any of the Business through any
subsidiary, joint venture, partnership, or other Affiliate; and Seller does not
maintain any offices, places of business, or personnel assigned to locations
outside of the State of Ohio.


6.2           Authority.  Seller and Parent have the
full legal right, power, capacity, and authority required to enter into and
perform their obligations under this Agreement and the Ancillary
Agreements.  All approvals of Seller’s
and Parent’s board of directors or other governing body required to authorize
the execution, delivery and performance of this Agreement and the Ancillary
Agreements by such Parties has been obtained and, assuming due execution and
delivery by Buyer and M&J, this Agreement and the Ancillary Agreements represent
the legal, valid and binding obligations of Seller and Parent that are
enforceable against them in accordance with their respective terms, subject to
(i) as to enforceability, bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors rights generally, and (ii)
general equitable principles and to the discretion of the court before which
any proceedings seeking the remedy of specific performance and injunctive and
other forms of equitable relief may be brought.


6.3           Title.  Seller has good and marketable
title to, or a valid leasehold or licensed interest in, all of the Purchased
Assets and such Purchased Assets are free and clear of any Liens (including
Liens for Taxes) other than the Permitted Liens.


6.4           No Breach; Required Approvals.  The
execution and delivery by Seller and Parent of this Agreement and the Ancillary
Agreements, the consummation of the transactions contemplated hereby and
thereby, and the performance of Seller’s and Parent’s obligations under this Agreement
and the Ancillary Agreements:



 21
 









(A)          will not violate (i) any provision of Seller’s or Parent’s charter or
bylaws, (ii) any statutes, laws, regulations, rules, injunctions, orders,
decrees, judgments or rulings of any judicial or governmental body applicable
to Seller or Parent , or (iii) except to the extent that any third party
consent or approval is required to convey same to Buyer as disclosed on Schedule 6.4(B), any provision of any Facilities Lease,
Software license or Assigned Contract; and


(B)           except as shown on Schedule
6.4(B) attached hereto, will
not require Seller or Parent to obtain any consents or approvals of, or make
any filings with or give any notices to, any governmental bodies or any other
person and will not violate, result in the breach of, or constitute (or with
notice or lapse of time or both, constitute) a default under any Contract,
lease, license, permit or other agreement to which Seller or Parent is a party
or is bound.


6.5           Books and Records.  The
books of account and other Records of Seller, all of which have been made
available to Buyer, are complete and correct in all material respects and have
been maintained in accordance with sound business practices.


6.6           Tax Matters.  Except as disclosed on Schedule 6.6:


(A)          Seller has duly filed all Returns required to be filed by Seller in
connection with the Business.  All such
Returns are true, complete and correct, and all Taxes (whether or not shown on
any Return) due in connection with such Returns or otherwise due have been paid
in full or adequate provision for their payment has been made in the Most
Recent Financial Statements.


(B)           Claims and Assessments. 
There are no pending issues raised in an examination by any taxing
authority that might give rise to claims for Taxes or assessments upon, and
there are no Tax liens outstanding or, to the best of Seller’s or Parent’s
Knowledge, threatened against, the Purchased Assets.  No issue has been raised in writing by any
taxing authority in connection with an audit or examination of any Return in
connection with the Business that, if raised with regard to any other Return
not so audited or examined, would reasonably be expected to result in a
proposed deficiency with respect to the period covered by such other Return.  No taxing authority in a jurisdiction where
Seller does not file Returns has made a claim, assertion or threat in writing
that Seller is or may be subject to taxation in such jurisdiction in connection
with the Business.


(C)           Withholding Taxes. 
Seller has withheld and paid, or caused to be paid to the proper taxing
authority, all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.


(D)          Taxes Relating to Transaction.  The
transactions contemplated herein are not subject to Tax withholding under any
provisions of law.  The Party responsible
under applicable law shall be solely responsible for the payment of all sales,
use and similar Taxes which may be imposed by reason of any transfers provided
for in this Agreement.



 22
 









6.7           Financial Matters


(A)          Financial Statements Delivered to Buyer.  At Schedule 6.7(A) are the following financial statements of
Seller (“Financial Statements”): (i) unaudited income statements and
balance sheets for the periods from January 1, 2004 through December 31, 2004,
January 1, 2005 through December 31, 2005 and January 1, 2006 through December
31, 2006, and (ii) the unaudited income statement and balance sheet for the
period from January 1, 2007 through February 28, 2007 (the “Most Recent
Financial Statements”).  The
Financial Statements are complete and correct in all material respects, were
prepared in accordance with GAAP (except the Most Recent Financial Statement
are subject to changes resulting from normal year-end adjustments and subject
to the absence of footnotes) consistently applied throughout the periods
covered thereby, present fairly the financial condition, results of operations
and cash flows of Seller as of such dates and for the periods covered thereby,
and have been prepared from and are in accordance with the books and Records of
Seller.


(B)           Accounts Payable.  At Schedule 6.7(B) is a true and complete current listing of
all of the Accounts Payable of Seller, showing as to each the aging, amount and
name of the creditor.


(C)           Unredeemed Coupons.  At Schedule 6.7(C) is a true and complete current listing of
all of the unredeemed but prepaid coupons sold by Seller which remain
outstanding and in respect to which Seller is obligated to deliver
training.  Such listing reflects the
expiration date as to each.  To the
Knowledge of Seller and Parent, there exists no further or additional
obligations of Seller to deliver training for which payment has been received
or prepaid.


6.8           No Other Liabilities. 
Except for the Assumed Liabilities and the Liabilities specifically
listed on Schedule 6.8, there is no Liability, claim, deficiency,
guarantee or obligation (absolute, accrued,
contingent or otherwise), and there is no basis for any such Liability
or obligation, with regard to the Business. 
To the Knowledge of Seller and Parent, no supplier, client or customer
intends to make a reduction in its present level of business conducted with the
Business after the Effective Date, either as a result of this Agreement and the
transactions contemplated hereby or for any other reason.


6.9           Purchased Assets.  The
only real property at which Seller conducts operations relating to its
Business, or which are otherwise leased or used by Seller or its Affiliates in
connection with the Business, are the Leased Premises.  Except for those items of Tangible Personal
Property identified on Schedule
6.9, all Tangible Personal
Property is (and will be as of the Effective Date) physically located at the
Leased Premises.  To the extent any
Tangible Personal Property included in the Purchased Assets is located at any
other location, Seller shall, at its sole cost and expense, promptly move same
to the Leased Premises or whichever thereof is designated by Buyer.  Each item of Tangible Personal Property is in
good operating condition, normal wear and tear excepted.  The Purchased Assets constitute all of the
assets, rights and properties necessary to conduct the Business as presently
conducted.


6.10         Legal Compliance; Permits


(A)          Compliance With Law. 
Except as set forth on Schedule
6.10(A), the Business is in
compliance in all material respects with all applicable laws (including
statutes, rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, and rulings) of federal,



 23
 









state, local, and foreign governments and all
agencies thereof (including, but not limited to, laws respecting employment,
employment practices, employee classification, labor relations, family and
medical leaves, military leaves, leaves of absence generally, environment,
safety and health, wages, hours and terms and conditions of employment); and
neither Seller nor Parent has any Knowledge of circumstances which are likely
to result in a violation of any of the foregoing.  The foregoing includes, but is not limited
to, all laws relating to the protection of the environment, laws relating to
discrimination in the work place, laws relating to the use of proprietary
computer software, and laws governing the reporting, withholding or payment of
payroll, income, franchise or excise taxes.


(B)           Governmental Permits. 
Except as shown at Schedule
6.10(B), the Governmental
Permits to be conveyed to Buyer comprise all of the permits, concessions,
grants, franchises, licenses, filings, authorizations and approvals required
from any governmental division or agency which are necessary for the conduct of
the Business.  A complete and correct
list of the Governmental Permits is shown at Schedule 6.10(B)
and, except as shown on said Schedule: (i) Seller is in compliance with the
respective terms and conditions of all such Governmental Permits; and (ii)
there are no proceedings pending or, to the Knowledge of Seller or Parent,
threatened which may result in the revocation, cancellation, suspension or adverse
modification of any Governmental Permit; and (iii) the consummation of the
transactions provided for in this Agreement will not result in any revocation,
cancellation, suspension or adverse modification of any Governmental Permit.


6.11         Receivables. At Schedule
6.11 is a true and complete
current listing of all of the outstanding Receivables, showing as to each the
aging, amount and name of the account debtor. 
All Receivables reflected in the Financial Statements and which will be
reflected in the Closing Balance Sheet represent or will represent valid
obligations arising from bona fide sales actually made or services actually
performed by Seller in the Ordinary Course. 
All Receivables of Seller as of the Closing will be reflected in the
Closing Balance Sheet.  Subject to any
reserves reflected in the Financial Statements or to be reflected in the
Closing Balance Sheet, Seller has not received written notice of any contest,
claim, defense or right of setoff with respect to the amount or validity of any
Receivable.  The reserves in the
Financial Statements and in the Closing Balance Sheet against the Receivables
for returns, allowances, chargebacks, and bad debts are commercially reasonable
and have been determined in accordance with GAAP, consistently applied.


6.12         Intellectual Property.


(A)          Except as disclosed on Schedule 6.12(A) and except
for Intellectual Property validly licensed to Buyer by Franchisor pursuant to
the Franchise Agreement, Seller owns or possesses or has the right to use
pursuant to a valid and enforceable, written license, sublicense, agreement, or
permission all Intellectual Property necessary for the operation of the
Business as presently conducted including, without limitation, all Intellectual
Property used in any service, product, technology or process (i) currently
being used, published or marketed by Seller or (ii) currently under development
for possible future publication, marketing or other use by Seller.  Each item of Intellectual Property owned or
used by Seller in connection with the Business immediately prior to the Closing
will be owned or available for use by Buyer on



 24
 









identical terms and conditions immediately
subsequent to the Closing (except that any Intellectual Property licensed to
Buyer pursuant to the Franchise Agreement shall be subject to the terms of the
Franchise Agreement).  Seller has taken
all necessary action to maintain and protect each item of Intellectual Property
that it owns or uses in connection with the Business.


(B)           Seller has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and there has been no charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that Seller must license or refrain from using any
Intellectual Property rights of any third party). To Seller’s or Parent’s
Knowledge, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of
Seller.


(C)           Seller has delivered to Buyer true and complete copies of all licenses,
sublicenses, agreements, and permissions (as amended to date) for each item of
Intellectual Property that any third party owns and that Seller uses in
connection with the Business.


(D)          Except as set forth on Schedule
6.12(D), the Software used
by Seller and comprising a part of the Purchased Assets is all thereof which is
necessary to be assigned hereunder in order to enable Buyer to conduct the
Business on and after the Effective Date in a manner consistent with the manner
in which the Business is presently conducted and has been conducted during the
year prior to the Effective Date, and without infringing upon or conflicting
with the rights of any other Person. 
Neither Seller nor Parent has any Knowledge of any infringement or
improper use by any third Person of the Software of Seller.


6.13         Assigned Contracts.  At Schedule 6.13 is a list of all the Assigned
Contracts.  Except as reflected on Schedule 6.13:


(A)          The Assigned Contracts are, and on the Effective Date will be, in full
force and effect and there does not exist, and will not exist, any default or
event or condition which, after notice or lapse of time or both, would
constitute a default thereunder by Seller or, to the best of Seller’s and
Parent’s  Knowledge, by any other Person.


(B)           Neither Seller nor Parent has received notice that any Person who is a
party to any of the Assigned Contracts intends to cancel or terminate such
agreements, or to discontinue or materially decrease the amount of business it
does with Seller; and no party has repudiated any provision of any Assigned
Contract.


(C)           At Schedule
6.13 are true and complete
copies of each written agreement (as amended to date) listed on Schedule 6.13 and a written summary setting forth the
terms and conditions of each oral agreement referred to on Schedule 6.13.


6.14         Litigation.  Except as set forth on Schedule 6.14, (A) there are no pending or, to the
Knowledge of Seller or Parent, threatened claims or Actions, whether initiated
by Seller or other Persons, before any court, arbitrator or Governmental
Authority, administrative or regulatory agency which involve Seller, the
Business or any of the Purchased Assets or Assumed Liabilities; and (B) there
is no outstanding or unsatisfied writ, order, judgment, stipulation,



 25
 









injunction, decree, determination, award or
other order of any court, arbitrator or governmental agency or instrumentality,
domestic or foreign, against Seller or Parent that adversely affects or
involves any of the Purchased Assets, the Assumed Liabilities or the Business.


6.15         Employees and Compensation.


(A)          Shown on Schedule
6.15(A) is a list of the
name of each employee, sales agent or other Person, separately identified as to
part-time or full-time, who is currently employed in the Business by Seller,
together with each Person’s job classification, date of hire, and current rate
of compensation (or method for computing same). 
All employees of Seller are “at will” employees whose employment may be
terminated by Seller at any time, with or without notice or cause.


(B)           Schedule 6.15(B)
hereto lists all compensation and benefit plans, contracts and arrangements
maintained, sponsored or participated in by Seller or any of its Affiliates in
connection with the Business and in effect as of the date hereof including,
without limitation, all pension (including all such employee pension benefit
plans as defined in Section 3(2) of ERISA), profit-sharing, savings and thrift,
fringe benefit, bonus, incentive or deferred compensation, severance pay and
medical and life insurance plans and employee welfare plans as defined in
Section 3(1) of ERISA that are sponsored by Seller or any of its Affiliates and
in which any employees of Seller participate (collectively, “Employee
Benefit Plans”).


(C)           As to Employee Benefit Plans sponsored by Seller or its Affiliates that
are “employee pension benefit plans” as defined in Section 3(2) of ERISA, such
plans sponsored by Seller or its Affiliates are tax qualified under Section
401(a) of the Code, are not currently under examination by, nor are any matters
pending before, the Internal Revenue Service, the Employee Benefits Security
Administration or any quasi-government agency, are not subject to any claim,
suit or arbitration (other than routine claims for benefits), are not subject
to the minimum funding standards of Code Section 412, are in compliance with
and have been administered in accordance with their terms and in compliance
with all applicable requirements of law, including, but not limited to, the
Code and ERISA, and there have been no prohibited transactions as defined in
Code Section 4975 or ERISA Section 406 with respect to such plans that could
subject Seller or its Affiliates to a tax or penalty under Code Section 4975 or
ERISA Section 502(i).


(D)          Neither Seller nor any of its Affiliates has incurred any Liability
under Title IV of ERISA that has or could, after the Effective Date, become a
Lien upon any of the Purchased Assets pursuant to ERISA Section 4068.


(E)           Neither Seller nor any of its Affiliates is or has ever been required
to contribute to any “multiemployer plan,” as such term is defined in Section
4001(a)(3) of ERISA, in which any employees of Seller in connection with the
Business participate.


(F)           Except as set forth in Schedule
6.15(F), no Employee Benefit
Plan provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees for period extending beyond their retirement
or other termination of service, other than (i) coverage mandated by applicable
law, or (ii) death benefits under any pension plan.



 26
 









(G)           For the purposes of this Section 6.15, Seller shall include all trades
or business under common control with Seller as provided in the regulations
under Code Section 414(c).


6.16         Environmental Matters. 
Seller at all times has complied with and currently is in compliance
with all Environmental Laws.  The
Business has been conducted by Seller and the condition of the Purchased Assets
and the Leased Premises is and at all times has been in compliance with all
requirements of all Environmental Laws.


6.17         Brokers’ Fees. 
Seller does not have, and shall not have, any liability to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.


Section 7               Representations of Buyer And M&J.


7.1           Buyer.  Buyer represents and warrants
to Seller as follows:


(A)          Organization and Existence. 
Buyer is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Michigan.


(B)           Authority and Binding Effect. 
Subject to receipt of any approvals required to be obtained from ISBE
for which provision is made in Section 4.3(D) hereof, Buyer has the full legal
right, power, capacity, and authority required to enter into and perform its
obligations under this Agreement and the Ancillary Agreements and the execution
of this Agreement and the Ancillary Agreements have been duly authorized.  Assuming due execution and delivery by Seller
and Parent, this Agreement and the Ancillary Agreements represent legal, valid
and binding obligations of Buyer that are enforceable against it in accordance
with their respective terms, subject to (i) as to enforceability, bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors rights generally, and (ii) general equitable principles and to the
discretion of the court before which any proceedings seeking the remedy of
specific performance and injunctive and other forms of equitable relief may be
brought.


(C)           Noncontravention; Consents Required. 
Neither the execution and the delivery of this Agreement or of any other
agreements and documents to be executed pursuant hereto, nor the consummation
of the transactions contemplated hereby, will conflict with or violate any
provision of (i) any statute, law, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which Buyer or any of its assets is subject, or (ii) any
provision of the organizational documents governing the affairs of Buyer, or
(iii) conflict with or constitute a default (or, with notice or lapse of time
or both, would become a default) under any promissory note, mortgage, bond,
instrument, indenture, agreement, contract, lease, license, permit, instrument,
or other arrangement to which Buyer is a party or by which it is bound, or (iv)
except as contemplated in Section 4.3(D), require the giving of any notice to,
any filing with, or obtaining any comment or approval from any Person.



 27
 









(D)          Brokers’ Fees. 
Buyer does not have, and shall not have, any liability to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.


7.2           M&J.  M&J represents and
warrants to Seller as follows:


(A)          Ownership of Buyer.  New
Horizons of Michigan Holding Corporation, a Michigan corporation, owns 100% of
the issued and outstanding capital stock of Buyer.


(B)           Binding Effect. 
Assuming due execution and delivery by Seller and Parent, this Agreement
represents a legal, valid and binding obligation of M&J (with respect only
to those provisions hereof that are specifically applicable to M&J) that is
enforceable against M&J in accordance with its terms, subject to (i) as to
enforceability, bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors rights generally, (ii) the obtaining of
any approvals or consents required in connection herewith and as provided for
therein, and (iii) general equitable principles and to the discretion of the
court before which any proceedings seeking the remedy of specific performance
and injunctive and other forms of equitable relief may be brought.


(C)           Brokers’ Fees. 
M&J does not have, and shall not have, any liability to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller could become liable or
obligated.


Section 8               Indemnification


8.1           Indemnity by Buyer and M&J.


(A)          Buyer shall indemnify, hold harmless and defend Seller and its
Affiliates, and their respective shareholders, members, managers, directors,
officers, agents and employees (each, a “Seller Indemnified Party”),
from and against any cause of action, claim, Loss or Liability arising out of
or resulting in any way from any breach or violation of the representations and
warranties set forth in Section 7.


(B)           Buyer shall indemnify, hold harmless and defend each Seller Indemnified
Party from and against any cause of action, claim, Loss or Liability arising
out of or resulting in any way from: (i) any breach of any covenant of Buyer
set forth in this Agreement; (ii) any Liability which relates to and is based
upon the operation of the Business or the Purchased Assets after the Effective
Date, except for any Liability as shall arise from a breach of Seller’s
representations, warranties or covenants set forth in this Agreement; (iii) a
claim of unlawful discrimination by Buyer asserted by a former employee of
Seller as set forth in Section 4.5(a); and (iv) the failure of Buyer to fully
and adequately pay, perform or observe the requirements of the Assumed
Liabilities, including the Training Obligations.


(C)           M&J shall indemnify, hold harmless and defend each Seller
Indemnified Party from and against any cause of action, claim, Loss or
Liability arising out of or resulting in any way from any breach or violation
of the representations and warranties set forth in Section 7.2.



 28
 









8.2           Indemnity by Seller and Parent. 
Subject to the limitations set forth in Section 8.4, Seller and Parent
jointly and severally shall indemnify, hold harmless and defend Buyer and its
Affiliates, and their respective shareholders, members, managers, directors,
officers, agents and employees (each, a “Buyer Indemnified Party”) from
and against any cause of action, claim, Loss or Liability arising out of or
resulting in any way from: (i) any breach or violation of the representations
and warranties set forth in Section 6; (ii) any breach of any covenant of
Seller or Parent set forth in this Agreement; and (iii) any debts, claims,
liabilities or lawsuits which relate to the use or operation of the Business or
the Purchased Assets prior to the Effective Date, including the Retained
Liabilities.


8.3           Indemnification Procedure.


(A)          Notification of Claim.  Any
person seeking indemnification under Section 8.1 or Section 8.2 (the “Indemnified
Party”) shall promptly notify the other party or parties from whom
indemnification is being sought (the
“Indemnifying Party”)
in writing of any claim or demand for which the Indemnified Party is asserting
an indemnification claim.  Such notice
shall be accompanied by a reasonably full description of the basis for such
claim or demand, a reference to the provisions of this Agreement under which
liability is asserted and a statement as to the known amount of the loss or
damage (or, if not known, an estimate thereof if a reasonable basis exists for
estimating the same); provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party for any liability or obligation hereunder unless (and then
solely to the extent) the Indemnifying Party is prejudiced by the delay.


(B)           Defense of Legal Actions.  If
the claim which is the subject of any notification given pursuant to Section
8.3(A) is based on a legal action filed by any third person (a “Third Party
Claim”), the Indemnifying Party shall be entitled to participate in the
defense of such Third Party Claim and, provided that within fifteen (15) days
after receipt of such written `notice the Indemnifying Party confirms in
writing its responsibility therefor and demonstrates to the reasonable
satisfaction of the Indemnified Party its financial capability to undertake the
defense and provide indemnification with respect to such Third-Party Claim, to
have the right to take over the defense thereof with counsel reasonably satisfactory
to the Indemnified Party


(1)           If the Indemnifying Party elects to take over the defense of such Third
Party Claim, then: (aa) it shall keep the Indemnified Party informed as to the
status thereof and promptly provide copies of pleadings and other filings in
the case; (bb) the Indemnifying Party shall have the sole right to contest,
settle or otherwise dispose of such Third Party Claim on such terms as the
Indemnified Party, in its sole discretion, shall deem appropriate, provided
that the consent of the Indemnified Party to any settlement or disposition
shall be required if (x) it results in any liability to or equitable relief
against the Indemnified Party not fully satisfied by the Indemnifying Party,
(y) the result would in any way restrict the future activity of the Indemnified
Party or any of its Affiliates or (z) it would result in the admission or
finding of a violation of law or violation of the rights of any Person by the
Indemnified Party or any of its Affiliates; and (cc) the Indemnified Party
shall have the right to participate jointly in the defense of such Third Party
Claim, but shall do so at its own cost; provided, however, that the
Indemnifying Party shall be liable for the Indemnified Party’s legal expenses
if the Indemnified



 29
 









Party determines in good faith that the
incurrence of the same is appropriate in light of defenses not available to the
Indemnifying Party, conflicts of interest or other similar circumstances.


(2)           If the Indemnifying Party does not elect to take over the defense of
such Third Party Claim, then:  (aa) the
Indemnified Party shall keep the Indemnifying Party informed as to the status
thereof and promptly provide copies of all pleadings and other filings in the
case; (bb) the Indemnified Party shall have the sole right to contest, settle
or otherwise dispose of such Third Party Claim on such terms as the Indemnified
Party, in its sole discretion, shall deem appropriate; (cc) the Indemnifying
Party shall have the right to participate jointly in the defense of such Third Party
Claim, but shall do so at its own cost; and (dd) the Indemnified Party may
preserve its rights to indemnification for the recovery of any Losses arising
from such Third Party Claim or the costs of defending the same, including,
without limitation, reasonable attorney’s fees. 
The reimbursement of fees, costs and expenses required by this Section 8
shall be  made by periodic payments
during the course of the investigations or defense, as and when bills are
received or expenses incurred.


(3)           The Indemnified Party and the Indemnifying Party shall cooperate with
each other in the defense of any Third Party Claim.


8.4           Limitation on Seller and Parent’s Indemnity
Liability.  Notwithstanding the provisions of Section
8.2, the right of the Buyer Indemnified Parties under this Agreement and the
Buyer Indemnified Parties under the Chicago Agreement to recover damages from
Seller, Chicago Seller or Parent on account of the obligation of Seller,
Chicago Seller and Parent to indemnify or hold harmless the Buyer Indemnified
Parties under this Agreement and the Buyer Indemnified Parties under the
Chicago Agreement with respect to a breach or violation of the representations
and warranties set forth in Section 6 of this Agreement or the Chicago
Agreement, respectively, (as set forth in Clause (i) of Section 8.2) shall be
limited to the aggregate amount of [**********] (the “Cap”); provided
that the Cap shall not apply in the event of a breach or violation of the
warranties and representations set forth in Sections 6.1, 6.2, 6.3 or 6.4(A) of
this Agreement or the Chicago Agreement; provided  further, that,
subject to the Cap, the Buyer Indemnified Parties under this Agreement and the
Buyer Indemnified Parties under the Chicago Agreement may enforce their right
to indemnification directly against Seller, Chicago Seller or Parent or, at
their option, exercise the right to setoff or recoup from any Royalty Payments
due by any of them or their Affiliates to Franchisor or its Affiliates, from
time to time, pursuant to the Franchisor Consent.


8.5           Exclusivity of Remedies.  The
Parties hereby acknowledge and agree that their sole and exclusive remedy with
respect to any and all claims relating to the subject matter of this Agreement
(other than a claim for fraud or for specific performance of the terms of this
Agreement) shall be pursuant to, and limited by, the indemnification provisions
set forth in this Section 8.


Section 9               Miscellaneous


9.1           Notices.  All notices with respect to
this Agreement will be in writing and sent by hand delivery, overnight delivery
via a national courier service, certified mail or facsimile to the Parties at
their addresses or facsimile numbers as follows:



 30
 









If to Seller or Parent:


New Horizons Computer
Learning Center of Cleveland, Ltd., L.L.C.


Attention:  Office of General Counsel


1900 S. State College
Blvd., Suite 650


Anaheim, CA  92806


Tel:  (714) 940-8000


Fax:  (714)
938-6007


If to Buyer or M&J:


NH Cleveland, LLC

14115 Farmington Road

Livonia, MI  48154

Tel:  (734) 525-1501

Fax:  (734) 525-1401


The
date of giving of any such notice shall be (i) the date of delivery if hand
delivered, (ii) the date of receipt for certified mail, (iii) the day after
delivery to the overnight courier service if sent thereby, and (iv) the date of
telephone facsimile transmission on production of a transmission report by the
machine from which the facsimile was sent that indicates that the facsimile was
sent in its entirety to the facsimile number of the recipient.


9.2           Entire Agreement; Assignment.  This
Agreement, together with the Exhibits and Schedules provided for herein and
attached hereto, represents the entire agreement and understanding between the
Parties and supersedes all prior or contemporaneous agreements, promises or
understandings, verbal or written, including, without limitation, that certain
non-binding letter of intent dated as of January 24, 2007 between Parent and an
Affiliate of Buyer.  This Agreement is
and shall be binding on each Party and its or his respective successors, heirs
and permitted assigns.  Except for any
assignment by Buyer to any Affiliates of Buyer or to any Person that acquires
the business of Buyer (whether through merger, share exchange, stock purchase,
acquisition of substantially all of the assets or other similar transaction),
this Agreement may not be assigned without the written consent of the other
Party, and may only be amended by a written agreement signed by authorized
representatives of all Parties.


9.3           Waiver.  The failure of either party to enforce any right, remedy or condition of
this Agreement shall not be deemed a waiver thereof nor shall it void or
otherwise affect its right to enforce the same right, remedy or condition at
any subsequent time.


9.4           Survival of Representations and Warranties.
All of the representations,
warranties, covenants and agreements set forth in this Agreement and in any
certificate or document delivered pursuant to this Agreement shall survive the
Closing and continue until the expiration of the applicable statute of
limitations and shall be deemed to have been relied upon and shall not be
affected in any respect by the Closing, any investigation conducted by any
Party hereto or by any information that any Party may receive.



 31
 









9.5           Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute but one and the
same instrument.


9.6           Facsimile Signatures.  For
purposes of execution of this Agreement, faxed signature pages shall be deemed
the same as original signature pages.


9.7           Governing Law.  This Agreement will be governed by and construed in accordance with the
laws of the State of Michigan applicable to agreements made and to be performed
entirely within the State of Michigan without giving effect to conflicts of
laws principles.


9.8           Headings; Definitions. 
Captions, titles and headings to sections or paragraphs of this
Agreement are inserted for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.  All references in this Agreement to “Section”
or “Paragraph” refer to the corresponding sections or paragraphs of this
Agreement unless otherwise stated and, unless the context otherwise
specifically requires, refer to all subsections or subparagraphs thereof.  All defined terms and phrases used in this
Agreement are equally applicable to both the singular and plural forms of such
terms.  Nouns and pronouns will be deemed
to refer to the masculine, feminine or neuter, singular and plural, as the
identity of the person or persons may in the context require.


9.9           Dispute Resolution.


(A)          Negotiation.  In the event of any dispute or
disagreement between any of the Parties hereto as to the interpretation of any
provision of this Agreement or any agreement incorporated herein, the
performance of obligations hereunder or thereunder, or any other disputed
matter relating hereto or thereto (“Dispute”), such Dispute, upon the
written request of any Party hereto, shall be referred to the chief executive
officers of each Party.  The chief
executive officers shall promptly meet in good faith to resolve the
Dispute.  If the chief executive officers
do not agree upon a decision within thirty (30) calendar days after the
reference of the matter to them, any party hereto shall be free to exercise the
remedies available to it under Section 9.9(B).


(B)           Arbitration.  The parties hereto agree that
if a Dispute arises between them that is not resolved by good faith negotiation
as provided in Section 9.9(A), then such Dispute, upon ten (10) days’ prior
written notice from one party to the other of its intent to arbitrate (an “Arbitration
Notice”), shall be submitted to and settled exclusively by final and
binding arbitration in lieu of any judicial proceeding; provided, however, that
nothing contained in this Section 9.9 shall preclude any party hereto from at
any time seeking or obtaining from a court of competent jurisdiction (a)
injunctive relief, or (b) equitable or other judicial relief to specifically
enforce the provisions hereof or to preserve the status quo ante pending
resolution of Disputes hereunder. Subject only to the foregoing, no such
Dispute shall be made the subject of an action in a court of law or equity by
any party hereto but shall be submitted to arbitration and finally determined
in accordance with the provisions of this Section 9.9(B). Such arbitration
shall be conducted by the American Arbitration Association in Chicago, Illinois
before three (3) arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration



 32
 









Association
existing at the date of submission of the Dispute to arbitration; provided,
however, the parties shall be entitled to discovery as provided in the Federal
Rules of Civil Procedure. If an arbitrator so selected becomes unable to serve,
his or her successor shall be similarly selected or appointed.  All arbitration hearings shall be conducted
on an expedited schedule commencing not later than one hundred twenty (120)
days following selection of the arbitrators, and all proceedings shall be
confidential. Any party may at its expense make a stenographic record
thereof.  Each party shall pay its own
expenses and each party shall pay one-half of the costs and expenses of the
arbitrators and the American Arbitration Association. Any arbitration award
shall be binding and enforceable against the parties hereto and judgment may be
entered thereon in any court of competent jurisdiction.


9.10         Time of the Essence.  With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.


9.11         Third Parties. 
Nothing in this Agreement, express or implied, is intended to or shall
be construed to confer upon or give any person other than the Parties and their
respective successors and permitted assigns, any legal or equitable right,
remedy or claim under or with respect to this Agreement.


9.12         Severability.  In
the event that a court or arbitral body of competent jurisdiction holds any
provision of this Agreement invalid, illegal or unenforceable, such decision shall
not affect the validity or enforceability of any of the other provisions of
this Agreement, which other provisions shall remain in full force and effect,
and the application of such invalid, illegal or unenforceable provision to
persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable shall be valid and be enforced to the fullest extent
permitted by law.  To the extent
permitted by applicable law, each party waives any provision of law that
renders any provision of this Agreement invalid, illegal or unenforceable in
any respect.


[SIGNATURE
PAGE FOLLOWS]



 33
 









IN WITNESS WHEREOF, the
Parties have executed this Asset Purchase Agreement as of the date first
written above.


	
  SELLER:

  
	
   

  
	
  NEW HORIZONS COMPUTER
  LEARNING

  
	
  CENTER OF
  CLEVELAND, LTD., L.L.C.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  
	
  Chief Executive Officer

  
	
   

  
	
  PARENT:

  
	
   

  
	
  NEW HORIZONS
  WORLDWIDE, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  
	
  Chief Executive Officer

  
	
   

  
	
  BUYER:

  
	
   

  
	
  NH CLEVELAND,
  LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark McManus, Jr.

  
	
  Chief Executive Officer

  
	
  M&J:

  
	
   

  
	
  M&J L.L.C.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark McManus, Jr.

  
	
  Chief Executive Officer

  




 34
 









EXHIBIT
A


ASSIGNMENT AND ASSUMPTION AGREEMENT


This Assignment and Assumption Agreement (the
“Assignment”) is made for the consideration provided for in, and pursuant to
the requirements of, a certain Asset Purchase Agreement (“Agreement”) of even
date herewith by and between NEW HORIZONS COMPUTER LEARNING CENTER OF
CLEVELAND, LTD., L.L.C., a Delaware limited liability company (“Assignor”), and
NH CLEVELAND, LLC, a Michigan limited liability company (“Assignee”).


WITNESSETH:


WHEREAS, pursuant to the Agreement, Assignee desires
to purchase and acquire from Assignor all of the Assignor’s right, title and
interest in, or arising under or pursuant to, those certain agreements defined
in the Agreement as the “Assigned Contracts”, being those (excluding, for these
purposes, the Facilities Lease) identified on the Attachment hereto, as a
consequence of which the Assignee is willing to assume Assignor’s obligations,
responsibilities and liabilities under the said Assigned Contracts which accrue
from and after the date hereof in accordance with the terms hereof and the
Agreement;


NOW, THEREFORE:


1.             Assignor
hereby assigns, transfers and conveys to Assignee, all of Assignor’s right,
title and interest in, to and under the Assigned Contracts as defined in the
Agreement and identified on the Attachment hereto effective as of the date
hereof.


2.             Assignee does hereby accept the foregoing
assignment and does hereby assume, and agree to perform and be bound by, all of
the covenants, conditions, obligations and liabilities of Assignor under the
said Assigned Contracts which accrue after the date hereof; provided that,
notwithstanding anything to the contrary, Assignee does not assume, and shall
not be responsible for, any of Assignor’s obligations, responsibilities or
liabilities which arise from (i) defaults under any of the Assigned Contracts
or breaches thereof on or prior to the date hereof; or (ii) events occurring on
or prior to the date hereof, which, after notice or lapse of time or both,
would constitute a default or breach, in each case whether or not a claim for
such default or breach is made prior to or following the date hereof.


(Signatures on Next Page)



 35
 









IN WITNESS WHEREOF, the parties hereto have caused
this instrument to be duly executed and delivered as of the Effective Date
provided for in the Agreement.


	
  ASSIGNOR:

  	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  	
   

  
	
  NEW HORIZONS
  COMPUTER LEARNING

  	
   

  	
  NH CLEVELAND, LLC

  
	
  CENTER OF
  CLEVELAND, LTD., L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  	
   

  	
  Mark McManus,
  Jr.

  
	
  Chief Executive Officer

  	
   

  	
  Chief Executive
  Officer

  
							



 



 36














ATTACHMENT


TO


ASSIGNMENT AND ASSUMPTION AGREEMENT


The following is a
listing of the Assigned Contracts, including the Customer Contracts but
excluding the Facilities Lease, to be and herewith assigned to the
Assignee.  To the extent in writing,
there is attached hereto a true and complete copy of each of the Assigned
Contracts.











EXHIBIT B-1


ASSIGNMENT
OF LEASE


	
  STATE OF OHIO

  	
  )

  	
   

  
	
   

  	
  )

  	
  ASSIGNMENT OF LEASE

  
	
  COUNTY OF CUYAHOGA

  	
  )

  	
   

  



 


FOR
VALUABLE CONSIDERATION, and in consideration of the agreements of the parties
set forth in a certain Asset Purchase Agreement (“Agreement”) of even date
herewith by and between NEW HORIZONS COMPUTER LEARNING CENTER OF CLEVELAND,
LTD., L.L.C., a Delaware limited liability company (herein called “ASSIGNOR”), and
NH CLEVELAND, LLC, a Michigan limited liability company (herein called
“ASSIGNEE”), the undersigned ASSIGNOR does hereby set over, transfer, sell and
assign unto ASSIGNEE all of ASSIGNOR’S right, title and interest in and to the
following described Lease (the “Facilities Lease”) entered into by and between
ASSIGNOR, as tenant or lessee, and the landlord or lessor named below:


	
  Name of Landlord:

  	
  Infinity Corporate Centre LLC

  
	
   

  	
   

  
	
  Address of Premises:

  	
  1 Infinity Corporate Centre Dr., Garfield Heights,
  Ohio

  
	
   

  	
   

  
	
  Date of Lease:

  	
  October 1, 2002

  
	
   

  	
   

  
	
  Amendments:

  	
  None

  



 


ASSIGNOR
warrants that it has full title to the foregoing leasehold estate, the
Facilities Lease is in full force and effect, no condition or state of facts
exists which (with or without the giving of notice and/or the lapse of time)
would constitute a default by ASSIGNOR or, to the Knowledge (as defined in the
Agreement) of ASSIGNOR, by any other party to the Facilities Lease, and
ASSIGNOR has the power and right to assign its rights as herein provided
(subject to the approval of the landlord above named).


By
its execution below, ASSIGNEE agrees to assume, and to pay, perform and abide
by, all of the obligations, indebtedness, terms, provisions and conditions
undertaken to be paid, performed or complied with by ASSIGNOR under or pursuant
to the Facilities Lease at any time after the date hereof; provided that,
notwithstanding anything to the contrary, Assignee does not assume, and shall
not be responsible for, any obligations, indebtedness or liabilities which
arise from (i) defaults under the Facilities Lease or breaches thereof on or
prior to the date hereof; or (ii) events occurring on or prior to the date
hereof, which, after notice or lapse of time or both, would constitute a
default or breach, in each case whether or not a claim for such default or
breach is made prior to or following the date hereof.


(Signatures on Next Page)











IN
WITNESS WHEREOF, the undersigned parties have executed this Assignment of Lease
effective as of the 31st day of March, 2007.


	
  ASSIGNOR:

  
	
   

  
	
  NEW HORIZONS COMPUTER LEARNING CENTER OF CLEVELAND,
  LTD., L.L.C.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  
	
  Chief Executive
  Officer

  
	
   

  
	
  ASSIGNEE:

  
	
   

  
	
  NH CLEVELAND, LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark McManus,
  Jr.

  
	
  Chief Executive
  Officer

  



 











EXHIBIT C


BILL OF SALE


FOR GOOD AND VALUABLE CONSIDERATION, the
receipt of which is hereby acknowledged, the undersigned, New Horizons Computer
Learning Center of Cleveland, Ltd., L.L.C., a Delaware limited liability
company (“Seller”), hereby sells, conveys, transfers, assigns and delivers to
NH Cleveland, LLC, a Michigan limited liability company (“Buyer”), all of
Seller’s right, title and interest in and to the Purchased Assets as such term
is defined in that certain Asset Purchase Agreement (“Agreement”) dated as of
March 31, 2007 by and among, inter alia,
Buyer and Seller.


TO HAVE AND TO HOLD the same unto Buyer,
its successors and assigns forever, free and clear of all Liens other than any
Permitted Liens (each of which terms being as defined in the Agreement).


This
Bill of Sale is delivered pursuant to and is subject to and governed by the
terms and conditions of the Agreement. The representations, warranties and
covenants as set forth in the Agreement shall survive delivery of this Bill of
Sale as set forth in the Agreement.


This
Bill of Sale is ancillary to the Agreement, and in the event of a conflict
between the terms of this Bill of Sale and the terms of the Agreement, the
terms of the Agreement shall govern.


IN WITNESS WHEREOF, the undersigned has
caused this instrument to be duly executed as of the 31st day of March 2007.


	
  NEW HORIZONS COMPUTER LEARNING CENTER OF
  CLEVELAND, LTD., L.L.C.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  
	
  Chief Executive
  Officer