EXHIBIT 1.1
Corinthian Colleges, Inc.
2,700,000 Shares/1/
Common Stock
($0.0001 par value)
Underwriting Agreement
New York, New York
February ___, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Credit Suisse First Boston Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Corinthian Colleges, Inc., a Delaware corporation (the "Company"), proposes
to sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, 2,700,000 shares of Common Stock, $0.0001 par value ("Common
Stock") of the Company (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). The persons named in
Schedule II hereto, including The Prudential Insurance Company of America
("Prudential") and the persons listed as Executive Selling Stockholders on such
Schedule II (the "Executive Selling Stockholders" and, collectively with
Prudential, the "Selling Stockholders"), also propose to grant to the
Underwriters an option to purchase up to 405,000 additional shares of Common
Stock to cover over-allotments (the "Option Securities"; the Option Securities,
together with the Underwritten Securities, being hereinafter called the
"Securities"). To the extent there are no additional Underwriters listed on
Schedule I other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. In addition, to the
extent that there is not more than one Selling Stockholder named in Schedule II,
the term Selling Stockholder shall mean either the singular or plural. The use
of the neuter in this Agreement shall include the feminine and masculine
wherever appropriate. Certain terms used herein are defined in Section 17
hereof.
______________
/1/ Plus an option to purchase from the Selling Stockholders up to 405,000
-------
additional Securities to cover over-allotments.
As part of the offering contemplated by this Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. has agreed to reserve out of the Securities set forth opposite its
name on Schedule II to this Agreement, up to ______ shares for sale to the
Company's employees, officers, and directors and other parties associated with
the Company (collectively, the "Participants"), as set forth in the Prospectus
under the heading "Underwriting" (the "Directed Share Program"). The Securities
to be sold by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. pursuant to the Directed Share Program
(the "Directed Shares") will be sold by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. pursuant to
this Agreement at the public offering price. Any Directed Shares not orally
confirmed for purchase by any Participants by the end of the business day on
which this Agreement is executed will be offered to the public by ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. as set forth in the Prospectus.
1. Representations and Warranties.
-------------------------------
(i) The Company and the Executive Selling Stockholders jointly and
severally represent and warrant to, and agree with, each Underwriter as set
forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-59505) on Form S-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus, each
of which has previously been furnished to you. The Company will next file
with the Commission either (1) prior to the Effective Date of such
registration statement, a further amendment to such registration statement
(including the form of final prospectus) or (2) after the Effective Date of
such registration statement, a final prospectus in accordance with Rules
430A and 424(b). In the case of clause (2), the Company has included in
such registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and the
rules thereunder to be included in such registration statement and the
Prospectus. As filed, such amendment and form of final prospectus, or such
final prospectus, shall contain all Rule 430A Information, together with
all other such required information, and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised
you, prior to the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined herein) and on any
date on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective Date and
at the Execution Time, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and, on the Effective
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Date, the Prospectus, if not filed pursuant to Rule 424(b), will not, and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date
and any settlement date, the Prospectus (together with any supplement
thereto) will not, include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company and the Executive Selling
-------- -------
Stockholders make no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Prospectus
(or any supplement thereto) in reliance upon and in conformity with
information furnished herein or in writing to the Company by or on behalf
of any Underwriter through the Representatives specifically for inclusion
in the Registration Statement or the Prospectus (or any supplement
thereto).
(c) Each of the Company and its subsidiaries listed on Annex A
attached hereto (the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is incorporated with full corporate power and
corporate authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
Subsidiaries, taken as a whole.
(d) All the outstanding shares of capital stock of each
Subsidiary of the Company have been duly authorized and validly issued and
are fully paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of such Subsidiaries
are owned by the Company either directly or through wholly owned
subsidiaries, free and clear of any perfected security interest or any
other security interests, claims, liens or encumbrances, except for any
security interest, claim, lien or encumbrance granted (i) to Prudential, or
its affiliates, in connection with indebtedness owed by the Company to
Prudential, which indebtedness will be paid upon the Closing Date as
described in the Prospectus, or (ii) to Union Bank of California, or its
affiliates, in connection with the Proposed Bank Line of Credit (as defined
in the Prospectus).
(e) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus;
the outstanding shares of Common Stock (including the Securities being sold
hereunder by the Selling Stockholders) have been duly authorized and
validly issued and are fully paid and nonassessable; the Securities being
sold hereunder by the Company have been duly and validly authorized, and,
when issued and delivered to and paid for by the Underwriters pursuant to
this Agreement, will be fully paid and nonassessable; the certificates for
the Securities are in valid and sufficient form; the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Securities; and, except as set forth in
the Prospectus, no options, warrants or other rights to purchase,
agreements or other
3
obligations to issue, or rights to convert any obligations into or exchange
any securities for, shares of capital stock of or ownership interests in
the Company are outstanding.
(f) There is no instrument, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not described or
filed as required; and the statements in the Prospectus under the heading
"Financial Aid and Regulations" fairly summarize the matters therein
described.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by all parties hereto other than the Company, constitutes a valid
and binding obligation of the Company, enforceable in accordance with its
terms, except as to rights to indemnity and contribution hereunder, which
may be limited by federal or state securities laws or the policies
underlying such laws, and subject to the qualification that the
enforceability of the obligations of the Company hereunder may be limited
by applicable bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other laws relating to or affecting
creditors' rights generally and by general principles of equity.
(h) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined
in the Investment Company Act of 1940, as amended.
(i) No consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in the
Prospectus.
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its Subsidiaries pursuant to,
(i) the charter or bylaws of the Company or any of its Subsidiaries, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any of its Subsidiaries is a
party or bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any of its Subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its Subsidiaries or any of
its or their properties, including, without limitation, the Higher
Education Act of 1965, as amended, and the regulations promulgated
thereunder (the "HEA"), except for any such conflict, breach or violation
of items (i), (ii) or (iii), above, that would not (A) have a material
adverse effect on the
4
performance by the Company of this Agreement or the consummation of the
transactions contemplated hereby, or (B) have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole. The issue
and sale of the Securities and the consummation of the transactions herein
contemplated will not constitute a change in ownership resulting in a
"change of control" of the Company as defined under HEA.
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement, except
for (i) any such holders who have effectively waived such rights or (ii)
any Selling Stockholder whose status as such is derived from the exercise
of such registration rights.
(l) The consolidated historical financial statements and
schedules of the Company and its consolidated Subsidiaries included in the
Prospectus and the Registration Statement present fairly in all material
respects the financial condition, results of operations and cash flows of
the Company as of the dates and for the periods indicated, comply as to
form with the applicable accounting requirements of the Act and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). The selected consolidated financial data set
forth under the caption "Selected Historical Consolidated Financial and
Other Data" in the Prospectus and Registration Statement fairly present, on
the basis stated in the Prospectus and the Registration Statement, the
information included therein.
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries or its or their property is pending or,
to the knowledge of the Company, threatened that (i) could reasonably be
expected to have a material adverse effect on the performance of this
Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(n) Each of the Company and its Subsidiaries owns or leases all
such properties as are necessary to the conduct of its operations as
presently conducted.
(o) Neither the Company nor any Subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject (except for any such violation or default that has been effectively
waived by the other parties thereto), or (iii) any statute, including,
without limitation, the HEA, any law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the
5
Company or such Subsidiary or any of its properties, as applicable, except
for any such violation or default of items (i), (ii) or (iii), above, that
would not (A) have a material adverse effect on the performance by the
Company of this Agreement or the consummation of the transactions
contemplated hereby, or (B) have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its Subsidiaries, taken as a whole.
(p) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules included in the Prospectus, are independent public
accountants with respect to the Company within the meaning of the Act and
the applicable published rules and regulations thereunder.
(q) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery
of this Agreement by the Company or the issuance by the Company or sale by
the Company of the Securities, except for fees or charges that may be
required to be paid in connection with applicable blue sky laws, which fees
and charges the Company has, pursuant to Section 5(i)(h) hereof, agreed to
pay.
(r) The Company has filed all federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file or to request an
extension would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus (exclusive of any supplement thereto))
and has paid all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the foregoing
is due and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its Subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(s) No labor problem or dispute with the employees of the Company
or any of its Subsidiaries exists or, to the knowledge of the Company, is
threatened or imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or its
Subsidiaries' principal suppliers, contractors or customers, that
reasonably could be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
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(t) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which they
are engaged; all policies of insurance insuring the Company or any of its
Subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect; the Company and its
Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no material claims by
the Company or any of its Subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending under a
reservation of rights clause; and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(u) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's property or assets to
the Company or any other subsidiary of the Company, except as described in
or contemplated by the Prospectus.
(v) The Company and its Subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities, including, without
limitation, all authorizations required for participation in federal
financial aid programs under Title IV ("Title IV Program") of the HEA, as
are necessary to conduct their respective businesses, except for any such
licenses, certificates, permits and authorizations, the failure to so
possess would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its Subsidiaries, taken as a whole, and neither the Company
nor any such Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(w) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's
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general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(y) The Company and its Subsidiaries are (i) in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability for
the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability would not, individually
or in the aggregate, have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus (exclusive of any supplement thereto).
Except as set forth in the Prospectus, neither the Company nor any of the
Subsidiaries has been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or has any material contingent liability in connection
with the disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants.
(z) Each of the Company and its Subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Retirement Income Security Act of 1974 ("ERISA")
and the regulations and published interpretations thereunder with respect
to each "plan" (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company and its
Subsidiaries are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations.
The Company and its Subsidiaries have not incurred any unpaid liability to
the Pension Benefit Guaranty Corporation (other than for the payment of
premiums in the ordinary course) or to any such plan under Title IV of
ERISA.
(aa) The subsidiaries listed on Annex A attached hereto are the
only significant subsidiaries of the Company as defined by Rule 1-02 of
Regulation S-X.
(bb) The Company and its Subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service
8
marks, trade and service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property") material
to the conduct of the Company's business as now conducted. Except as set
forth in the Prospectus, (a) there are no rights of third parties to any
such Intellectual Property (except for the rights of licensors of any such
Intellectual Property); (b) to the Company's knowledge, there is no
material infringement by third parties of any such Intellectual Property;
(c) there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's rights in or
to any such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (d) to the
Company's knowledge, there is no pending or threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such
Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (e) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others,
and the Company is unaware of any other fact which would form a reasonable
basis for any such claim; (f) to the Company's knowledge, there is no U.S.
patent or published U.S. patent application which contains claims that
dominate or may dominate any Intellectual Property described in the
Prospectus as being owned by or licensed to the Company or that interferes
with the issued or pending claims of any such Intellectual Property; and
(g) there is no prior act of which the Company is aware that may render any
U.S. patent held by the Company invalid or any U.S. patent application held
by the Company unpatentable which has not been disclosed to the U.S. Patent
and Trademark Office.
(cc) Except as disclosed in the Registration Statement and the
Prospectus, the Company, to its knowledge, (i) does not have any material
lending or other relationship with any bank or lending affiliate of ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and (ii) does not intend to use any of the proceeds from
the sale of the Securities hereunder to repay any outstanding debt owed to
any affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
(dd) The Company and its Subsidiaries are implementing a Company-
wide (including the Subsidiaries) program to analyze and address the risk
that the computer hardware and software used by them may be unable to
recognize and properly execute date-sensitive functions involving certain
dates prior to and any dates after December 31, 1999 (the "Year 2000
Problem"), and reasonably believe that (i) such risk will be remedied on a
timely basis and at a cost that will not materially deviate from the
estimated costs set forth in the Prospectus and (ii) such costs will not
have a material adverse effect upon the financial condition and results of
operations of the Company and its Subsidiaries, taken as a whole; and the
Company believes, after reasonable inquiry, that each supplier, vendor or
financial service organization (other than the Department of Education, as
to which no representation is made) used or serviced by the Company and its
Subsidiaries has remedied or will remedy on a timely basis the Year 2000
Problem, except to the extent that a failure to remedy by any such
supplier, vendor, customer or financial service organization would not have
a material adverse effect on the Company and its subsidiaries, taken as a
whole.
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(ee) The Company has not offered, or caused the Underwriters to
offer, Securities to any person pursuant to the Directed Share Program with
the specific intent to unlawfully influence (i) a customer or supplier of
the Company to alter the customer's or supplier's level or type of business
with the Company, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
Furthermore, the Company represents and warrants to ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. that (i) the Registration Statement, the Prospectus and any
preliminary prospectus comply, and any further amendments or supplements thereto
will comply, with any applicable laws or regulations of foreign jurisdictions
outside the United States in which the Prospectus or any preliminary prospectus,
as amended or supplemented, if applicable, are distributed in connection with
the Directed Share Program, and that (ii) no authorization, approval, consent,
license, order, registration or qualification of or with any government,
governmental instrumentality or court, other than such as have been obtained, is
necessary under the securities laws and regulations of any foreign jurisdiction
in which the Directed Shares are offered outside the United States.
Any certificate signed by any officer of the Company (in his capacity
as such and not in his capacity as an Executive Selling Stockholder) and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
(ii) Prudential, as to itself, represents and warrants to, and agrees
with, each Underwriter, and each Executive Selling Stockholder, as to
themselves, represents and warrants to, and agrees with, each Underwriter,
that:
(a) Such Selling Stockholder is the legal and beneficial owner of
the Securities to be sold by such Selling Stockholder hereunder and upon
sale and delivery of, and payment for, such Securities, as provided herein,
such Selling Stockholder will convey to the Underwriters good and
marketable title to such Securities, free and clear of all liens,
encumbrances, equities and claims whatsoever.
(b) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(c) Certificates in negotiable form for such Executive Selling
Stockholder's Securities have been placed in custody, for delivery pursuant
to the terms of this Agreement, under a Custody Agreement and Power of
Attorney executed and delivered by such Executive Selling Stockholder, in
the form heretofore furnished to you (the "Custody Agreement") with U.S.
Stock Transfer Corporation, as Custodian (the "Custodian"); the Securities
represented by the certificates so held in custody for each Executive
Selling Stockholder are subject to the interests hereunder of the
Underwriters; the arrangements for custody and delivery of such
certificates, made by such Executive Selling Stockholder hereunder and
under the Custody Agreement, are not subject to termination by any acts of
such Executive Selling Stockholder, or by operation of law,
10
whether by the death or incapacity of such Executive Selling Stockholder or
the occurrence of any other event; and if any such death, incapacity or any
other such event shall occur before the delivery of such Securities
hereunder, certificates for the Securities will be delivered by the
Custodian in accordance with the terms and conditions of this Agreement and
the Custody Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodian shall have received
notice of such death, incapacity or other event.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other approvals
as have been obtained.
(e) Neither the sale of the Securities being sold by such Selling
Stockholder nor the consummation of any other of the transactions herein
contemplated by such Selling Stockholder or the fulfillment of the terms
hereof by such Selling Stockholder will conflict with, result in a breach
or violation of, or constitute a default under any law or the terms of any
indenture or other agreement or instrument to which such Selling
Stockholder is a party or bound, or any judgment, order or decree
applicable to such Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over such Selling Stockholder.
Any certificate signed by any Selling Stockholder and delivered
to the Representatives or counsel for the Underwriters on behalf of such
Selling Stockholder in connection with the offering of the Securities shall
be deemed a representation and warranty by such Selling Stockholder, as to
matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
------------------
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company at a purchase price of $______________
per share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Selling Stockholders named
in Schedule II hereto hereby grant an option to the several Underwriters to
purchase, severally and not jointly, up to 405,000 Option Securities at the same
purchase price per share as the Underwriters shall pay for the Underwritten
Securities. Said option may be exercised only to cover over-allotments in the
sale of the Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or before
the 30th day after the date of the Prospectus upon written or facsimile notice
by the Representatives to such Selling Stockholders setting forth the number of
shares of the Option Securities as to which the several Underwriters are
exercising the option and the settlement date. The maximum aggregate number of
Option Securities to be sold by the Selling Stockholders is 405,000. The
maximum number of
11
Option Securities which each Selling Stockholder agrees to sell is set forth in
Schedule II hereto. In the event that the Underwriters exercise less than their
full over-allotment option, Option Securities shall first be sold by Prudential
until all of the amount set forth with respect to Prudential on Schedule II is
sold; the number of Option Securities to be sold by each Executive Selling
Stockholder listed on Schedule II shall be, as nearly as practicable, in the
same proportion as the maximum number of Option Securities to be sold by each
Executive Selling Stockholder bears to the maximum aggregate number of Option
Securities to be sold by all Executive Selling Stockholders. The number of
Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
---------------------
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on
_____________________, 1999, or at such time on such later date not more than
three Business Days after the foregoing date as the Representatives shall
designate, which date and time may be postponed by agreement among the
Representatives, the Company and the Selling Stockholders or as provided in
Section 9 hereof (such date and time of delivery and payment for the Securities
being herein called the "Closing Date"). Delivery of the Securities shall be
made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the respective aggregate purchase prices of the Securities
being sold by the Company and each of the Selling Stockholders to or upon the
order of the Company and the Selling Stockholders by wire transfer payable in
same-day funds to the accounts specified by the Company and the Selling
Stockholders. Delivery of the Underwritten Securities and the Option Securities
shall be made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
Each Selling Stockholder will pay all applicable state transfer taxes, if
any, involved in the transfer to the several Underwriters of the Securities to
be purchased by them from such Selling Stockholder and the respective
Underwriters will pay any additional stock transfer taxes involved in further
transfers.
If the option provided for in Section 2(b) hereof is exercised after the
third Business Day prior to the Closing Date, the Company and the Selling
Stockholders named in Schedule II hereto will deliver the Option Securities (at
the expense of the Company) to the Representatives on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Selling Stockholders named in Schedule
II by wire transfer payable in same-day funds to the accounts specified by the
Selling Stockholders named in Schedule II hereto. If settlement for the Option
Securities occurs after the Closing Date, such Selling Stockholders will deliver
to the Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental
12
opinions, certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to Section 6
hereof.
4. Offering by Underwriters. It is understood that the several
-------------------------
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements.
-----------
(i) The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished you a copy for your
review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required
under Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives of
such timely filing. The Company will promptly advise the Representatives
(1) when the Registration Statement, if not effective at the Execution
Time, shall have become effective, (2) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement
shall have been filed with the Commission, (3) when, prior to termination
of the offering of the Securities, any amendment to the Registration
Statement shall have been filed or become effective, (4) of any request by
the Commission or its staff for any amendment of the Registration
Statement, or any Rule 462(b) Registration Statement, or for any supplement
to the Prospectus or for any additional information, (5) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (6) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the institution or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules thereunder, the Company promptly will (1) notify the
Representatives of any
13
such event; (2) prepare and file with the Commission, subject to the second
sentence of paragraph (i)(a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such compliance;
and (3) supply any supplemented Prospectus to you in such quantities as you
may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Company will furnish to the Representatives and counsel
for the Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each Preliminary Prospectus and the Prospectus and any supplement
thereto as the Representatives may reasonably request.
(e) The Company will cooperate with you and with counsel for the
Underwriters in connection with the qualification of the Securities for
sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as
required for the distribution of the Securities; provided that in no event
shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that
would subject it to service of process in suits, other than those arising
out of the offering or sale of the Securities, in any jurisdiction where it
is not now so subject.
(f) The Company will not, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., for a period of 180 days following the Execution
Time, offer, sell or contract to sell, or otherwise dispose of (or enter
into any transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Company or
any affiliate of the Company or any person in privity with the Company or
any affiliate of the Company) directly or indirectly, or announce the
offering of, any other shares of Common Stock or any securities convertible
into, or exchangeable for, shares of Common Stock; provided, however, that
the Company may issue and sell Common Stock pursuant to any employee stock
option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the Execution Time and the Company may issue Common
Stock issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time.
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
14
(h) The Company agrees to pay the costs and expenses relating to
the following matters: (i) the preparation, printing or reproduction and
filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary Prospectus,
the Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Securities; (v) the registration of the Securities under the Exchange
Act and the listing of the Securities on the Nasdaq National Market; (vi)
any registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (vii) any
filings required to be made with the National Association of Securities
Dealers, Inc. (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such filings); (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers
of the Securities; (ix) the fees and expenses of the Company's accountants
and the fees and expenses of counsel (including local and special counsel)
for the Company and the Selling Stockholders; and (x) all other costs and
expenses incident to the performance by the Company and the Selling
Stockholders of their obligations hereunder (excluding discounts and
commissions charged to the Selling Stockholders in connection with their
sale of Option Securities).
(i) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer restrictions during such
period of time.
(j) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program
and stamp duties, similar taxes or duties or other taxes, if any, incurred
by the Underwriters in connection with the Directed Share Program.
Furthermore, the Company covenants with ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. that
the Company will comply with all applicable securities and other applicable
laws, rules and regulations in each foreign jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
15
(ii) Each Selling Stockholder, severally as to itself and not jointly
or jointly and severally, agrees with the several Underwriters that:
(a) Such Selling Stockholder will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., offer, sell, contract to sell, pledge
or otherwise dispose of, or file (or participate in the filing of) a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act
with respect to, any shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for such capital
stock, or publicly announce an intention to effect any such transaction,
for a period of 180 days after the date of this Agreement, other than
shares of Common Stock disposed of as bona fide gifts approved by ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. Notwithstanding the foregoing, nothing herein shall
prohibit Prudential from effecting, after the lapse of 90 days from the
date hereof, a private sale of shares of Common Stock to an institutional
investor, in accordance with applicable federal and state securities laws,
as long as such institutional investor, prior to or concurrently with such
sale, executes an agreement providing that such institutional investor
shall be subject to the restrictions set forth in the preceding sentence
for the remainder of such 180 day period.
(b) Such Selling Stockholder will not take any action designed
to or which has constituted or which might reasonably be expected to cause
or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities.
(c) Such Selling Stockholder will, if such Selling Stockholder
is an Executive Selling Stockholder, advise you promptly, and if requested
by you, will confirm such advice in writing, so long as delivery of a
prospectus relating to the Securities by an underwriter or dealer may be
required under the Act, of (i) any material change in the Company's
condition (financial or otherwise), prospects, earnings, business or
properties, (ii) any change in information in the Registration Statement or
the Prospectus relating to such Selling Stockholder or (iii) any new
material information relating to the Company or relating to any matter
stated in the Prospectus which comes to the attention of such Selling
Stockholder.
(d) Such Selling Stockholder will, if such Selling Stockholder
is Prudential, advise you promptly, and if requested by you, will confirm
such advice in writing, so long as delivery of a prospectus relating to the
Securities by an underwriter or dealer may be required under the Act, of
any change in information in the Registration Statement or the Prospectus
relating to Prudential.
6. Conditions to the Obligations of the Underwriters. The obligations of
-------------------------------------------------
the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of
16
the Company and the Selling Stockholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later than
(i) 6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company shall have caused O'Melveny & ▇▇▇▇▇ LLP, counsel
for the Company, to have furnished to the Representatives its opinion,
dated the Closing Date and addressed to the Representatives (a copy of
which shall be delivered to Prudential, but upon which Prudential shall not
be entitled to rely), to the effect that:
(i) each of the Company and each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is incorporated, with
the corporate power and the corporate authority to own or lease, as
the case may be, and to operate its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation in, and is in good standing under
the laws under, each of the applicable jurisdictions set forth on
Annex A hereto;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly authorized by all necessary corporate action
on the part of such Subsidiary, validly issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus,
are owned of record by the Company either directly or through wholly
owned subsidiaries;
(iii) the statements in the Prospectus under the caption
"Description of Capital Stock", insofar as they summarize provisions
of the Certificate of Incorporation and Bylaws of the Company, fairly
present the information required by Form S-1; the outstanding shares
of Common Stock (including the Securities being sold hereunder by the
Selling Stockholders) have been duly authorized by all necessary
corporate action on the part of the Company, and are validly issued,
fully paid and nonassessable; the Securities have been duly authorized
by all necessary corporate action on the part of the Company and, upon
payment for and delivery of the Securities in accordance with this
Agreement and the countersigning of the certificate or certificates
representing the Securities by a
17
duly authorized signatory of the registrar for the Company's Common
Stock, the Securities will be validly issued, fully paid and non-
assessable; the certificates for the Securities comply with the
provisions of the Delaware General Corporation Law; the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities or any
additional shares of the Company's capital stock under the Company's
Certificate of Incorporation and Bylaws, or, to the knowledge of such
counsel based solely on a review of corporate minutes and factual
certificates of responsible officers of the Company, any other
agreement or instrument; and, except as set forth in the Prospectus,
based solely upon the review by such counsel of corporate minutes for
matters occurring after June 1, 1995 and upon factual certificates of
responsible officers of the Company, the authorized but unissued
shares of capital stock of the Company are not subject to any
warrants, options, rights or commitments granted by the Company, and
the Company is not obligated to issue, purchase or redeem any shares
of the Company's capital stock;
(iv) the Registration Statement has been declared effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, based solely upon telephonic advice from
the Commission, no stop order suspending the effectiveness of the
Registration Statement has been issued, and proceedings for that
purpose have been instituted or threatened, and the Registration
Statement and the Prospectus (other than the financial statements and
other financial information contained therein, as to which such
counsel need express no opinion) each appear on their face to comply
as to form in all material respects with the applicable requirements
of the Act and the rules thereunder;
(v) in connection with such counsel's participation in
conferences in connection with the preparation of the Registration
Statement and the Prospectus, such counsel has not independently
verified the accuracy, completeness or fairness of the statements
contained therein, and the limitations inherent in the examination
made by such counsel and the knowledge available to such counsel are
such that such counsel is unable to assume, and does not assume, any
responsibility for such accuracy, completeness and fairness; however,
on the basis of such counsel's review and participation in conferences
in connection with the preparation of the Registration Statement and
Prospectus, and relying as to materiality to an extent upon opinions
of officers and other representatives of the Company, such counsel
does not believe that the Registration Statement as of the Effective
Date contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements included therein not misleading, and such counsel
does not believe that the Prospectus on the date hereof and as of the
Closing Date contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that such counsel need not express any opinion or
18
belief as to the financial statements and other financial information
contained in the Registration Statement or Prospectus;
(vi) the Company has the corporate power and corporate
authority to enter into this Agreement and to issue and sell the
Securities as provided herein, and the execution and delivery of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Company;
(vii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as defined in the Investment Company Act of 1940,
as amended;
(viii) no order, consent, permit, approval or filing with
or of any federal, New York or California governmental authority is
required on the part of the Company for the execution and delivery of
this Agreement, or for the issuance and sale of the Securities, except
such as have been obtained under the Act and such as may be required
under applicable Blue Sky or state securities laws;
(ix) neither the issue and sale of the Securities, nor the
Company's execution and delivery of, and the performance of its
obligations under, this Agreement, will result in a breach or
violation of or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its Subsidiaries pursuant to, (i)
the charter or bylaws of the Company or its Subsidiaries, (ii) any
existing obligation of, or restriction on, the Company or its
Subsidiaries under any instrument, agreement or contract filed as an
exhibit to the Registration Statement, (iii) any federal, New York or
California statute, rule or regulation (except that such counsel need
express no opinion regarding any federal securities laws or Blue Sky
or state securities laws or Section 8 hereof, except as otherwise
expressly stated herein), or (iv) any judgment, order or decree of any
federal, New York or California governmental authority having
jurisdiction over the Company or its Subsidiaries or any of its or
their properties, which such judgment, order or decree has been
identified, in a certificate of responsible officers of the Company,
to such counsel as being applicable to the Company or its
Subsidiaries;
(x) no holder of securities of the Company has the right
under any instrument, agreement or contract filed as an exhibit to the
Registration Statement to register such securities on or as part of
the Registration Statement, except for (i) any such holder who has
effectively waived such right, and (ii) each Selling Stockholder who
has agreed to exercise such right only with respect to the Option
Securities which are proposed to be sold by such Selling Stockholder
hereunder.
In rendering such opinion, such counsel (A) may rely as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of
the Company and public officials and (B), need express no opinion regarding
the matters addressed in the opinion
19
of Drinker, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, including specifically the Company's
compliance with, and authorization to participate in, federal Title IV
Programs and other federal or state laws or regulations governing or
concerning educational services. References to the Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date.
(c) The Company shall have caused Drinker, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
special regulatory counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives (a copy of which shall be delivered to Prudential, but upon
which Prudential shall not be entitled to rely), to the effect that:
(i) The statements in the Prospectus under the captions
"Risk Factors-Substantial Dependence on Student Financial Aid;
Potential Adverse Effects of Governmental Regulation," "Risk Factors-
Risk That Legislative Action Will Reduce Financial Aid Funding or
Increase Regulatory Burden," "Financial Aid and Regulation," and other
references therein to educational regulatory matters, insofar as such
statements constitute a summary of applicable federal and state laws
and regulations or a summary of judicial or administrative
proceedings, are accurate and present fairly the information purported
to be shown;
(ii) Such counsel have no knowledge that leads them to
believe that the information contained in the Registration Statement
and the Prospectus forming a part thereof under the captions "Risk
Factors-Substantial Dependence on Student Financial Aid; Potential
Adverse Effects of Governmental Regulation," "Risk Factors-Risk That
Legislative Action Will Reduce Financial Aid Funding or Increase
Regulatory Burden," "Financial Aid and Regulation," as of the
Effective Date and as of the date of the Prospectus and as of the
Closing Date, contained any untrue statement of a material fact, or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(iii) The Offering will not constitute a change in
ownership resulting in a change in control under the HEA; and
(iv) To the best of such counsel's knowledge, each of the
Company and the Subsidiaries has all necessary licenses, certificates,
permits and other authorizations required for each of the Company and
the Subsidiaries to participate in Title IV Programs or pursuant to
which the Company or any of the Subsidiaries must be authorized by
applicable states to engage in rendering educational services as
described in the Prospectus except where the failure to so have any
such licenses, certificates, permits and other authorizations,
individually or in the aggregate, would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its Subsidiaries, taken as a
whole.
20
(d) The Executive Selling Stockholders shall have caused
O'Melveny & ▇▇▇▇▇ LLP, counsel for the Executive Selling Stockholders, to
have furnished to the Representatives their opinions dated the Closing Date
and addressed to the Representatives, to the effect that:
(i) this Agreement and the Custody Agreement and Power of
Attorney have been duly executed and delivered by the Executive
Selling Stockholders, the Custody Agreement is valid and binding on
the respective Executive Selling Stockholders and the respective
Executive Selling Stockholders have full legal right and authority to
sell, transfer and deliver in the manner provided in this Agreement
and the Custody Agreement the Securities being sold by the respective
Executive Selling Stockholders hereunder;
(ii) upon payment for and delivery of the Securities by the
Executive Selling Stockholders in accordance with this Agreement,
assuming the Underwriters are acquiring the Securities without notice
of any adverse claims, the several Underwriters will acquire the
Securities free and clear of any adverse claims; and
(iii) no order, consent, permit, approval or filing with or
of any California, New York or federal governmental authority that
such counsel has, in the exercise of customary professional diligence,
recognized as applicable to transactions of the type contemplated by
this Agreement, is required for the consummation by the respective
Executive Selling Stockholders of the transactions contemplated
herein, except such as may have been obtained under the Act and such
as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters and such other approvals (specified in such opinion) as
have been obtained.
In rendering such opinion, such counsel (A) may rely as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of
the respective Executive Selling Stockholders and public officials and (B),
need express no opinion regarding the matters addressed in the opinion of
Drinker, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, including specifically the compliance of the
Company or any Executive Selling Stockholder with, and authorization to
participate in, federal Title IV Programs and other federal or state laws
or regulations governing or concerning educational services.
(e) Prudential shall have caused the Assistant General Counsel
of Prudential to have furnished to the Representatives his or her opinion
dated the Closing Date and addressed to the Representatives, to the effect
that:
(i) this Agreement has been duly executed and delivered by
Prudential and Prudential has full legal right and authority to sell,
transfer and deliver in the manner provided in this Agreement the
Securities being sold by Prudential hereunder;
21
(ii) the delivery by Prudential to the several Underwriters
of certificates for the Securities being sold hereunder by Prudential
against payment therefor as provided herein, will pass good and
marketable title to such Securities to the several Underwriters, free
and clear of all liens, encumbrances, equities and claims created by,
or with the knowledge of, Prudential;
(iii) no consent, approval, authorization or order of any
federal, New York (assuming New York law is identical to Illinois law)
court or governmental agency or body is required for the consummation
by Prudential of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase
and distribution of the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been obtained; and
(iv) neither the sale of the Securities being sold by
Prudential nor the consummation of any other of the transactions
herein contemplated by Prudential or the fulfillment of the terms
hereof by Prudential will conflict with, result in a breach or
violation of, or constitute a default under any federal, New York
(assuming New York law is identical to Illinois) law or the terms of
any indenture or other agreement or instrument known to such counsel
(and identified to such counsel in a certificate of Prudential) and to
which Prudential is a party or bound, or any judgment, order or decree
known to such counsel to be applicable to Prudential of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Prudential.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of
Prudential and public officials.
(f) The Representatives shall have received from ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related matters
as the Representatives may reasonably require, and the Company and each
Selling Stockholder shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(g) The Company shall have furnished to the Representatives a
certificate of the Company (a copy of which shall be delivered to
Prudential), signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplements to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in
this Agreement are true and correct in all material respects on and as
of the Closing
22
Date with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any supplement
thereto), there has been no material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(h) Each Executive Selling Stockholder shall have furnished to
the Representatives a certificate (a copy of which shall be delivered to
Prudential), signed by such Executive Selling Stockholder, dated the
Closing Date, to the effect that the signer of such certificate have
carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that the
representations and warranties of such Executive Selling Stockholder in
this Agreement are true and correct in all material respects on and as of
the Closing Date to the same effect as if made on the Closing Date.
Prudential shall have furnished to the Representatives a certificate,
signed by Prudential, dated the Closing Date, to the effect that the signer
of such certificate shall have carefully examined the information in the
Prospectus relating to Prudential furnished to the Company in writing by or
on behalf of Prudential specifically for inclusion therein, and that the
representations and warranties of Prudential in this Agreement are true and
correct in all material respects on and as of the Closing Date to the same
effect as if made on the Closing Date.
(i) The Company shall have caused ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP to have
furnished to the Representatives letters (a copy of which shall be
delivered to Prudential), at the Execution Time and at the Closing Date,
dated respectively as of the Execution Time and as of the Closing Date, in
form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and the
applicable published rules and regulations thereunder, and stating in
effect that:
(i) in their opinion the consolidated financial statements
and financial statement schedules audited by them and included in the
Registration Statement and the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
23
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of the
minutes of the meetings of the stockholders, directors and relevant
committees of the Company and the Subsidiaries; and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to June 30, 1998, nothing came to
their attention which caused them to believe that:
(1) with respect to the period subsequent to September 30, 1998,
there were any changes, at a specified date not more than five
days prior to the date of the letter, in the capital stock, long-
term debt, consolidated net current assets or stockholders'
equity of the Company and its Subsidiaries, in each case as
compared with the amounts shown on the September 30, 1998
consolidated balance sheet included in the Registration Statement
and the Prospectus, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives; or
(2) the information included in the Registration Statement and
Prospectus in response to Regulation S-K, Item 301 (Selected
Financial Data), Item 302 (Supplementary Financial Information),
Item 402 (Executive Compensation) and Item 503(d) (Ratio of
Earnings to Fixed Charges) is not in conformity with the
applicable disclosure requirements of Regulation S-K; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectus, agrees with
the accounting records of the Company and its subsidiaries, excluding
any questions of legal interpretation.
References to the Prospectus in this paragraph (i) include any
supplement thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (i) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the
24
Company and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto) the
effect of which, in any case referred to in clause (i) or (ii) above, is,
in the sole judgment of the Representatives, so material and adverse as to
make it impractical or inadvisable to proceed with the offering or delivery
of the Securities as contemplated by the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(k) The Securities shall have been listed and admitted and
authorized for trading on the Nasdaq Stock Market's National Market, and
satisfactory evidence of such actions shall have been provided to the
Representatives.
(l) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A hereto
from each executive officer, director and stockholder of the Company
addressed to the Representatives.
(m) Each of the Transactions (as defined in the Prospectus) has
been approved by all necessary corporate action on behalf of the Company
and, on the Closing Date, such Transactions shall have been effectuated.
(n) On the Closing Date, the Company shall have furnished to the
Representatives evidence reasonably satisfactory to the Representatives and
their counsel of the execution and delivery of that certain Credit
Agreement, dated as of the Closing Date, among the Company, as borrower,
and Union Bank of California, as lender.
(o) Prior to the Closing Date, the Company and the Selling
Stockholders shall have furnished to the Representatives such further
information, certificates and documents as the Representatives may
reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company and each Selling Stockholder in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the offices of O'Melveny & ▇▇▇▇▇ LLP, counsel for the Company, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the Securities
---------------------------------------
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof (other than Section 6(f)
hereof) is not satisfied, because of any termination pursuant to Section 10
hereof or because of any refusal, inability or failure on the part
25
of the Company or any Selling Stockholders to perform any agreement herein or
comply with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally through
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. on demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution.
---------------------------------
(a) The Company and, subject to the limitations of Section 8(h)
hereof, the Executive Selling Stockholders, jointly and severally, agree to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company and the Executive Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion therein,
provided further, however, that the indemnification provided in this paragraph
-------
(a) with respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter (or to the benefit of any person controlling such Underwriter)
on account of any such losses, claims, damages or liabilities arising from the
sale of the Securities by such Underwriter to any person if a copy of the
Prospectus shall not have been delivered or sent to such person within the time
required by the Act and the regulations thereunder, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus,
provided that the Company has delivered the Prospectus to the several
Underwriters in requisite quantity on a timely basis to permit such delivery or
sending. This indemnity agreement will be in addition to any liability which
the Company or the Executive Selling Stockholders may otherwise have.
(b) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc., the directors, officers, employees and agents of ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. and each person who controls ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. within the
meaning of either the Act or the Exchange Act (collectively, the "▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. Entities"), against any and all losses, claims, damages and
liabilities to which they may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as
26
such losses, claims, damages or liabilities (or actions in respect thereof) (i)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the prospectus wrapper material prepared by or
with the consent of the Company for distribution in foreign jurisdictions in
connection with the Directed Share Program attached to the Prospectus or any
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein, when considered in conjunction with
the Prospectus or any applicable preliminary prospectus, not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of the
securities which immediately following the Effective Date of the Registration
Statement, were subject to a properly confirmed agreement to purchase; or (iii)
related to, arising out of, or in connection with the Directed Share Program,
provided that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. specifically for inclusion therein.
(c) Prudential agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, and each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Underwriter, but
only with reference to information relating to Prudential furnished to the
Company in writing by or on behalf of Prudential specifically for inclusion in
the documents referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which Prudential may otherwise have. The
Company and each Underwriter acknowledge that the statements regarding
Prudential set forth in the Prospectus under the heading "Security Ownership of
Certain Beneficial Owners and Management" constitute the only information
furnished in writing by or on behalf of Prudential for inclusion in any
Preliminary Prospectus or the Prospectus.
(d) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each Selling
Stockholder, the directors, officers, employees and agents of each Selling
Stockholder and each person who controls such Selling Stockholder within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity to each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Company and each Selling Stockholder acknowledge that
the statements set forth in the last paragraph of the cover page regarding
delivery of the Securities, the legend in block capital letters on the inside
front cover related to stabilization, syndicate covering transactions and
penalty bids and, under the heading "Underwriting", (i) the paragraph related to
concessions and reallowances and (ii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in any Preliminary Prospectus
and the Prospectus constitute the only information furnished in writing by
27
or on behalf of the several Underwriters for inclusion in any Preliminary
Prospectus or the Prospectus.
(e) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a), (b), (c) or (d) above unless and to the extent it
did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraph (a), (b), (c) or (d) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
-------- -------
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(f) Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 8(b) hereof in respect of such
action or proceeding, then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of no more than one separate firm (in addition to any local counsel)
for the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. Entities for the defense of any losses,
claims, damages and liabilities arising out of the Directed Share Program.
(g) In the event that the indemnity provided in paragraph (a), (b),
(c) or (d) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company and the Executive Selling
Stockholders, on a joint and several basis,
28
Prudential (with respect to claims under Section 8(c) only) and the Underwriters
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company,
one or more of the Executive Selling Stockholders, Prudential (with respect to
claims under Section 8(c) only) and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company, by the Executive Selling Stockholders, by Prudential
and by the Underwriters from the offering of the Securities; provided, however,
-------- -------
that in no case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Executive Selling Stockholders, on a joint and
several basis, Prudential (with respect to claims under Section 8(c) only) and
the Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company, of the Executive Selling Stockholders, of Prudential and of the
Underwriters in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Company, by the Executive Selling Stockholders and by Prudential
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by each of them, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by (i)
the Company, (ii) the Executive Selling Stockholders, (iii) Prudential and (iv)
the Underwriters, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The Company, the Executive Selling Stockholders, Prudential and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (g), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (g).
(h) The total liability of each Selling Stockholder under such
Selling Stockholder's representations and warranties contained in Section 1
hereof and under the indemnity and contribution agreements contained in this
Section 8 shall be limited to an amount equal to the proceeds, net of the
underwriting discounts, from the sale of the Securities sold by such Selling
Stockholder to the Underwriters. The Company and the Selling Stockholders may
29
agree, as among themselves and without limiting the rights of the Underwriters
under this Agreement, as to the respective amounts of such liability for which
they each shall be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall fail
--------------------------
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
-------- -------
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Selling Stockholders and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
------------
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchange or National Market, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war, or other calamity or crisis the
effect of which on financial markets is such as to make it, in the sole judgment
of the Representatives, impractical or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Prospectus (exclusive of
any supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
-------------------------------------------
representations, warranties, indemnities and other statements of the Company or
its officers, of each Selling Stockholder and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, any
Selling Stockholder or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
30
12. Notices. All communications hereunder will be in writing and
--------
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. General Counsel (fax
no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. at ▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: General Counsel; or, if sent
to the Company, will be mailed, delivered or telefaxed to (▇▇▇) ▇▇▇-▇▇▇▇ and
confirmed to it at (▇▇▇) ▇▇▇-▇▇▇▇, attention of the Legal Department; or if sent
to any Selling Stockholder, will be mailed, delivered or telefaxed and confirmed
to it at the address set forth in Schedule II hereto.
13. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
---------------
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only
---------
and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement,
------------
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
31
"Preliminary Prospectus" shall mean any preliminary prospectus referred to
in paragraph 1(i)(a) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities that is
first filed pursuant to Rule 424(b) after the Execution Time or, if no filing
pursuant to Rule 424(b) is required, shall mean the form of final prospectus
relating to the Securities included in the Registration Statement at the
Effective Date.
"Registration Statement" shall mean the registration statement referred to
in paragraph 1(i)(a) above, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any post-
effective amendment thereto or any Rule 462(b) Registration Statement becomes
effective prior to the Closing Date, shall also mean such registration statement
as so amended or such Rule 462(b) Registration Statement, as the case may be.
Such term shall include any Rule 430A Information deemed to be included therein
at the Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the
offering covered by the registration statement referred to in Section 1(a)
hereof.
32
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
CORINTHIAN COLLEGES, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
▇▇▇▇ St. Pierre
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
33
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Credit Suisse First Boston Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
By:
-----------------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
34
SCHEDULE I
----------
Number of Underwritten
Securities to be
Underwriters Purchased
------------ ---------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ___________________
Credit Suisse First Boston Corporation ___________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. ___________________
_________________________ ___________________
_________________________ ___________________
_________________________ ___________________
_________________________ ___________________
_________________________ ___________________
_________________________ ___________________
_________________________ ___________________
TOTAL 2,700,000
=========
SCHEDULE II
-----------
SELLING STOCKHOLDERS
Maximum Number of Option
Executive Selling Stockholders Securities to be Sold
------------------------------ ---------------------
▇▇▇▇▇ ▇▇▇▇▇ ______
▇▇▇▇ St. Pierre ______
▇▇▇▇▇ ▇▇▇▇▇▇▇ ______
▇▇▇▇▇ ▇▇▇▇▇▇ ______
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ______
c/o Corinthian Colleges, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Prudential
----------
The Prudential Insurance Company of America
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ _______
TOTAL 405,000
=======
ANNEX A
------------------------------------------------------------------------------
Qualification as a Foreign
Subsidiary Incorporation Corporation
------------------------------------------------------------------------------
Corinthian Schools, Inc.
------------------------------------------------------------------------------
▇▇▇▇▇▇ Colleges, Inc.
------------------------------------------------------------------------------
Florida Metropolitan
University, Inc.
------------------------------------------------------------------------------
▇▇▇▇▇▇ Business Group, Inc.
------------------------------------------------------------------------------
Corinthian Property Group,
Inc.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Qualification as a Foreign
Company Incorporation Corporation
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Corinthian Colleges, Inc. Delaware
------------------------------------------------------------------------------
EXHIBIT A
[Form of Lock-Up Agreement]
[Letterhead of officer, director or major stockholder of
Corinthian Colleges, Inc.]
Corinthian Colleges, Inc.
-------------------------
Public Offering of Common Stock
-------------------------------
________________, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Credit Suisse First Boston Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Corinthian
Colleges, Inc., a Delaware corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, $0.0001 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder with respect to, any shares of
capital stock of the Company or any securities convertible into or exercisable
or exchangeable for such capital stock, or publicly announce an intention to
effect any such transaction, for a period of 180 days after the date of this
Agreement, other than shares of Common Stock disposed of as bona fide gifts
approved by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.*
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
Yours very truly,
[Name]
[Address]
* The actual Lock-Up Agreement executed by Prudential shall include the
following:
Notwithstanding the foregoing, nothing herein shall prohibit Prudential from
effecting, after the lapse of 90 days from the date hereof, a private sale of
shares of Common Stock to an institutional investor, in accordance with
applicable federal and state securities laws, as long as such institutional
investor, prior to or concurrently with such sale, executes an agreement
providing that such institutional investor shall be subject to the restrictions
set forth in the preceding sentence for the remainder of such 180 day period.
