Exhibit 1
2,000,000 Shares
CAREER EDUCATION CORPORATION
Common Stock, $.01 par value
UNDERWRITING AGREEMENT
----------------------
____________________, 1999
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx Xxxxxx Inc.
BancBoston Xxxxxxxxx Xxxxxxxx
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Ladies and Gentlemen:
1. Introductory. Career Education Corporation, a Delaware corporation
("Company"), proposes to issue and sell 250,000 shares of its Common Stock, $.01
par value ("Securities"), and the stockholders listed in Schedule A hereto
("Selling Stockholders") propose to severally sell an aggregate of 1,750,000
outstanding shares of the Securities (such 2,000,000 shares of Securities being
hereinafter referred to as the "Firm Securities"). The Company also proposes to
sell to the Underwriters, at the option of the Underwriters, an aggregate of not
more than 280,000 additional shares of its Securities, and Xxxx X. Xxxxxx
("Xxxxxx"), one of the Selling Stockholders, also proposes to sell to the
Underwriters, at the option of the Underwriters, not more than 20,000 additional
outstanding shares of the Securities (such 300,000 additional shares being
hereinafter referred to as the "Optional Securities"). The Firm Securities and
the Optional Securities are herein collectively called the "Offered Securities."
The Company and the Selling Stockholders hereby agree with the several
Underwriters named in Schedule B hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-70747) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange
Commission ("Commission") and either (A) has been declared effective under
the Securities Act of 1933, as amended ("Act"), and is not proposed to be
amended or (B) is proposed to be amended by amendment or post-effective
amendment. If such registration statement (the "initial registration
statement") has been declared effective, either (A) an additional
registration statement (the "additional registration statement") relating
to the Offered Securities may have been filed with the Commission pursuant
to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has become
effective upon filing pursuant to such Rule, and the Offered Securities all
have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement, or (B) such an additional registration statement is proposed to
be filed with the Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to such Rule and, upon such filing, the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (A) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all information contained in the
additional registration statement (if any) and deemed to be a part of the
initial registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all information (if any) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) ("Rule
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430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement." The additional registration statement, as amended
at its Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all information
(if any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "Additional Registration Statement." The Initial Registration Statement
and the Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement." The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, is hereinafter
referred to as the "Prospectus." No document has been or will be prepared
or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations")
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed or will conform, in all material respects to the requirements of
the Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on the
date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b) or (if no such filing is required) at the Effective
Date of the Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will conform, in
all material respects to the requirements of the Act and the Rules and
Regulations, and none of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all
material respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement of
a material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
and no Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration
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Statement or the Prospectus based upon written information furnished to the
Company by any Selling Stockholder or by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information furnished by any Selling Stockholder
is that described as such in Section 7(b) hereof and the only such
information furnished by any Underwriter is that described as such in
Section 7(c) hereof.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus; and the Company is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification, except for failures to be so
qualified and in good standing that, individually or in the aggregate, do
not have, and are reasonably likely not to have, a material adverse effect
on the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect").
(iv) Each of the subsidiaries of the Company listed in Schedule C
hereto (the "Material Subsidiaries") has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction of
its incorporation, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus; and each Material
Subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified or in good standing
that, individually or in the aggregate, do not have, and are reasonably
likely not to have, a Material Adverse Effect; all of the issued and
outstanding capital stock of each Material Subsidiary of the Company has
been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock of each Material Subsidiary is owned
by the Company, directly or through subsidiaries, free from any mortgage,
pledge, lien, security interest, claim, encumbrance or other defect of any
kind, except any of the foregoing that has been or will be granted under
the Credit Agreement dated as of October 26, 1998, as amended (as
described in the Prospectus); and, there are no rights granted to or in
favor of any third party (whether acting in an individual, fiduciary or
other capacity) other than the Company to acquire such capital stock, any
additional capital stock or any other securities of any such Material
Subsidiary.
(v) The Offered Securities to be sold by the Selling Stockholders and
all other outstanding shares of capital stock of the Company have been duly
authorized and are validly issued, fully paid and nonassessable and have
been issued in compliance with applicable federal and state securities
laws. The Offered Securities to be sold by the Company have been duly
authorized and will be, when issued and paid for in accordance with this
Agreement, validly issued, fully paid and nonassessable, and no further
approval
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or authorization of the stockholders or the Board of Directors of the
Company is or will be required for the issuance and sale of the Offered
Securities as contemplated by this Agreement on each Closing Date (as
defined below). The Offered Securities to be sold by the Selling
Stockholders conform and the Offered Securities to be sold by the Company
will conform to the descriptions thereof contained in the Prospectus under
the captions "Capitalization" and "Description of Capital Stock" and on
each Closing Date the stockholders of the Company will have no preemptive
or similar rights with respect to the Offered Securities or any other
securities of the Company.
(vi) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
this Agreement.
(vii) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(viii) The Securities have been approved for listing, subject to
notice of issuance, on The Nasdaq National Market.
(ix) Except as described in the Prospectus, no consent, approval,
authorization or order of, or filing with, any governmental agency or body
or any court is required to be obtained or made by the Company for the
consummation of the transactions contemplated by this Agreement, except
such as have been, or will be, obtained or made on or prior to the First
Closing Date (as defined below).
(x) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions
contemplated herein have been duly authorized by all necessary corporate
action on the part of the Company and, to the extent required, its
stockholders and do not and will not conflict with or result in a breach or
violation of any of the terms and provisions of, and do not and will not
constitute a default (or an event which with the giving of notice or the
lapse of time or both would constitute a default) under, and do not and
will not result in the creation or imposition of any lien, charge or
encumbrance upon any assets, properties or operations of the Company or any
of its subsidiaries (including any individual institution within such
entity ("subsidiaries")) under, (A) the charter, by-laws or other
organizational documents of the Company or any such subsidiary, (B) except
as described in the Prospectus, any statute, rule, regulation, requirement,
order or decree of any
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governmental, regulatory or accrediting agency or body or any court having
jurisdiction over the Company or any such subsidiary or any of their
properties, assets or operations, including, without limitation, The Higher
Education Act of 1965, as amended, and the regulations promulgated
thereunder (the "HEA"), or (C) any indenture, mortgage, loan or credit
agreement, note, lease, permit, license or other agreement or instrument to
which the Company or any such subsidiary is a party or by which the Company
or any such subsidiary is bound or to which any of the properties, assets
or operations of the Company or any such subsidiary is subject, except, in
each case, for such conflicts, breaches, violations, defaults, liens,
charges or encumbrances that, individually or in the aggregate, do not
have, and are reasonably likely not to have, a Material Adverse Effect or
that, individually or in the aggregate, do not have, and are reasonably
likely not to have, a material adverse effect on the ability of the Company
to consummate the transactions contemplated by this Agreement and perform
its obligations hereunder. The sale of the Offered Securities or
consummation of the other transactions contemplated by this Agreement will
not constitute a change of ownership resulting in a "change of control" of
the Company as defined in the HEA.
(xi) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except to the extent that (A) enforceability may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to creditors' rights generally and by general principles of
equity, whether applied by a court of law or equity, and (B) rights to
indemnity and contribution may be limited by federal or state securities
laws or policies underlying such laws.
(xii) Except as described in the Prospectus, the Company and its
Material Subsidiaries have good and marketable title to all real properties
and all other material properties and assets owned by them, in each case
free from any mortgage, pledge, lien, security interest, claim, encumbrance
or other defect of any kind, except any of the foregoing that do not have,
and are reasonably likely not to have, a Material Adverse Effect; and,
except as described in the Prospectus, the Company and its Material
Subsidiaries hold any leased real or material personal property under valid
and enforceable leases with no exceptions other than any exceptions that do
not have, and are reasonably likely not to have, a Material Adverse Effect.
(xiii) Except as described in the Prospectus, the Company and its
subsidiaries possess all accreditations, approvals, authorizations,
certificates, permits and licenses (collectively, "Licenses") issued by
appropriate governmental, regulatory or accrediting agencies or bodies,
including, without limitation, all authorizations required for
participation in federal aid programs under Title IV of the HEA ("Title IV
Programs"), as are necessary to own, lease or operate their properties and
to conduct the business now operated by them and all such Licenses are in
full force and effect, except for failures to possess any such Licenses or
failures of any such Licenses to be in full force and effect
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that, individually or in the aggregate, do not have, and are reasonably
likely not to have, a Material Adverse Effect; the Company and its
subsidiaries are in compliance with their respective obligations under such
Licenses, subject to such qualifications as are described in the
Prospectus; and, except as described in the Prospectus, neither the Company
nor any of its subsidiaries has received written notice of any proceedings,
investigations or inquiries (or has knowledge of any facts that could form
a reasonable basis for any proceedings, investigations or inquiries)
relating to the revocation, modification, termination or suspension of any
such License, except for any such revocations, modifications, terminations
or suspensions that, individually or in the aggregate, do not have, and are
reasonably likely not to have, a Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that is
reasonably likely to have a Material Adverse Effect.
(xv) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or currently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, individually or in the aggregate, would be reasonably likely
to have a Material Adverse Effect.
(xvi) Except as described in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic
or foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property contaminated with
any substance that is subject to any environmental laws, is liable for any
off-site disposal or contamination pursuant to any environmental laws, or
is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim, individually or in the
aggregate has, or is reasonably likely to have, a Material Adverse Effect;
and the Company is not aware of any pending investigation that is
reasonably likely to lead to such a claim.
(xvii) Except as described in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect or
would materially and adversely affect the ability of the Company to perform
its obligations under this Agreement or which are otherwise
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material in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are, to the Company's knowledge, threatened.
(xviii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of the
entities covered thereby as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States of America applied on a
consistent basis (except, with respect to unaudited interim financial
statements, as otherwise described in the Prospectus); any financial
statement schedules included in each Registration Statement present fairly
the information required to be stated therein; and the assumptions used in
preparing the pro forma financial information included in each Registration
Statement and the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(xix) Except as described in the Prospectus, since the date of the
latest financial statements of the Company included in the Prospectus there
has been no material adverse change, nor any development or event involving
a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company and
its subsidiaries taken as a whole, and, except as described in or
contemplated by the Prospectus, there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(xx) Except as described in the Prospectus, there are no outstanding
(A) securities or obligations of the Company convertible into or
exchangeable for any capital stock of the Company, (B) warrants, rights or
options to subscribe for or purchase from the Company any such capital
stock or any such convertible or exchangeable securities or obligations or
(C) obligations of the Company to issue any such capital stock, convertible
or exchangeable securities or obligations, or warrants, rights or
obligations.
(xxi) The Company and its Material Subsidiaries maintain a system of
internal accounting controls sufficient in all material respects for
purposes of the prevention or detection of errors or irregularities in
amounts that could be expected to be material to the Company's consolidated
financial statements and the recording of transactions so as to permit the
preparation of such consolidated financial statements in conformity with
generally accepted accounting principles.
(xxii) Neither the Company nor any of its subsidiaries is in
violation of (A) its charter, by-laws or other organizational documents or
(B) except as described in the Prospectus, any statute, rule, regulation,
requirement, order, decree or judgment of any
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governmental, regulatory or accrediting agency or body or any court having
jurisdiction over the Company or any such subsidiary; and no event of
default (or event which with the giving of notice or the lapse of time, or
both, would constitute an event of defaults) exists under any indenture,
mortgage, loan or credit agreement, note, lease, permit, license or other
agreement or instrument to which the Company or any such Subsidiary is a
party or by which the Company or any such subsidiary is bound or to which
any of the properties, assets or operations of the Company or any such
subsidiary is subject, except, in each case, for violations or events of
default that, individually or in the aggregate, do not have, and are
reasonably likely not to have, a Material Adverse Effect.
(xxiii) The Company and its Material Subsidiaries carry or are
entitled to the benefits of insurance in such amounts and covering such
risks as the Company believes are generally maintained by companies of
established repute engaged in the same or a similar business, and all such
insurance is in full force and effect.
(xxiv) The Company has not taken and will not take, directly or
indirectly, any action designed to or that could cause or result in the
stabilization or manipulation of the price of the Offered Securities to
facilitate the sale or resale of the Offered Securities.
(xxv) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds
therefrom as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) Such Selling Stockholder has, and on the Closing Date hereinafter
mentioned will have, good, clear and marketable title to the Offered
Securities to be delivered by such Selling Stockholder on such Offered
Closing Date and full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver the Offered Securities
to be delivered by such Selling Stockholder on such Closing Date hereunder;
and upon the delivery of and payment for the Offered Securities on each
Closing Date hereunder the several Underwriters will acquire good, clear
and marketable title to the Offered Securities to be delivered by such
Selling Stockholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement did not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (B) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit, to state
any material fact required to be stated therein or necessary to make
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the statements therein not misleading, and (C) on the date of this
Agreement, the Initial Registration Statement and, if the Effective Time of
the Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement, each
does not include or will not include, any untrue statement of a material
fact or omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
If the Effective Time of the Initial Registration Statement is subsequent
to the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement and
the Prospectus will not include any untrue statement of a material fact or
will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The two preceding
sentences apply only to the information in the Registration Statement or
the Prospectus under the caption "Principal and Selling Stockholders" which
specifically relates to such Selling Stockholder.
(iii) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Stockholder and constitutes the legal,
valid and binding obligations of such Selling Stockholder enforceable
against such Selling Stockholder in accordance with its terms, except to
the extent that (A) enforceability may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to creditors' rights generally and by general principles of
equity, whether applied by a court of law or equity, and (B) rights to
indemnity and contribution may be limited by federal and state securities
laws or policies underlying such laws.
(iv) Except as described in the Prospectus, no consent, approval,
authorization or order of, filing with, any governmental agency or body or
any court is required to be obtained or made for the consummation by such
Selling Stockholder of the transactions contemplated by this Agreement,
except such as have been, or will be, obtained or made on or prior to the
First Closing Date.
(v) The execution, delivery and performance by such Selling
Stockholder of the Power of Attorney, the Custody Agreement and this
Agreement, the sale of the Offered Securities to be sold by such Selling
Stockholder and the consummation by such Selling Stockholder of any of the
other transactions herein and therein contemplated, do not and will not
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute or will constitute a default (or an event
which with the giving of notice or the lapse of time or both would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon the Offered Securities under (A) in the
case of a corporate Selling Stockholder, the charter, by-laws or other
organizational documents of such Selling Stockholder, (B) except as
described in the Prospectus, any statute, rule, regulation, requirement,
order or decree of any governmental or accrediting agency or body or any
court having jurisdiction over such Selling Stockholder or any of its
properties, assets or operations or (C) any indenture, mortgage, loan or
credit
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agreement, note, lease, permit, license or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the properties, assets or
operations of such Selling Stockholder is subject, except, in each case,
for such conflicts, breaches, violations, defaults, liens, charges and
encumbrances that individually or in the aggregate, do not have, and are
reasonably likely not to have, a Material Adverse Effect on the ability of
such Selling Stockholder to consummate the transactions contemplated by
this Agreement, the Power of Attorney and the Custody Agreement or perform
such Selling Stockholder's obligations hereunder and thereunder.
(vi) The Power of Attorney and related Custody Agreement with respect
to each Selling Stockholder has been duly authorized, executed and
delivered by such Selling Stockholder and constitute valid and legally
binding obligations of each such Selling Stockholder enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar law of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(vii) Except as described in the Prospectus, there are no contracts,
agreements or understandings between such Selling Stockholder and any third
party that would give rise to a valid claim against such Selling
Stockholder or any Underwriter for a brokerage commission, finder's fee or
other like payment in connection with the transactions contemplated by this
Agreement.
(viii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that could cause or
result in the stabilization or manipulation of the price of the Offered
Securities to facilitate the sale or resale of the Offered Securities.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to the Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Stockholder, at a purchase price of $_____ per share, that number
of Firm Securities (rounded up or down as determined by Credit Suisse First
Boston Corporation ("CSFBC") in its discretion, in order to avoid fractions)
obtained by multiplying 250,000 Firm Securities (in the case of the Company) and
the number of Firm Securities set forth opposite the name of such Selling
Stockholder in Schedule A hereto (in the case of such Selling Stockholder) in
each case by a fraction the numerator of which is the number of Firm Securities
set forth opposite the name of such Underwriter in Schedule B hereto and the
denominator of which is the total number of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders hereunder have been placed in custody, for delivery
pursuant to this Agreement,
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under those certain Custody Agreements made with Xxxxxx Trust and Savings Bank,
as custodian ("Custodian"). Each Selling Stockholder agrees that the shares
represented by the certificates held in custody for the Selling Stockholders
under such Custody Agreements are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Stockholders for such
custody are, to that extent, irrevocable, and that the obligations of the
Selling Stockholders hereunder shall not be terminated by operation of law,
whether by the death of any individual Selling Stockholder or the occurrence of
any other event, or, in the case of a trust, by the death of any trustee or
trustees or the termination of such trust. If any individual Selling Stockholder
or any such trustee or trustees should die, or if any other such event should
occur, or if any of such trusts should terminate, before the delivery of the
Offered Securities to be sold by such Selling Stockholders hereunder,
certificates for such Offered Securities shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such death or
other event or termination had not occurred, regardless of whether or not the
Custodian shall have received notice of such death or other event of
termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank designated by the Company and the Selling
Stockholders and reasonably acceptable to CSFBC drawn to the order of the
Company in the case of the Firm Securities sold by the Company and to each
Selling Stockholder in the case of the Firm Securities sold by such Selling
Stockholder at the office of Xxxxxx Xxxxxx & Zavis, at _____ A.M., New York
time, on __________, 1999 or at such other time not later than seven full
business days thereafter as CSFBC, the Company and the Custodian determine (such
time being herein referred to as the "First Closing Date"). For purposes of
Rule 15c6-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the First Closing Date (if later than the otherwise applicable settlement
date) shall be the settlement date for payment of funds and delivery of
securities for all the Offered Securities sold pursuant to this Agreement. The
certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as CSFBC requests and
will be made available for checking and packaging at the office of CSFBC, Eleven
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from CSFBC given to the Company and Xxxxxx
from time to time not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per share to be paid for the Firm Securities.
The Company and Xxxxxx agree, severally and not jointly, to sell to the
Underwriters the respective numbers of Optional Securities obtained by
multiplying the number of Optional Securities specified in such notice by a
fraction the numerator of which is 280,000, in the case of the Company, and
20,000, in the case of Xxxxxx, respectively, and the denominator of which is the
total number of Optional Securities (subject to adjustment by CSFBC to eliminate
fractions). Such Optional Securities shall be purchased from the Company and
Xxxxxx for the account of each Underwriter in the same proportion as the number
of Firm Securities set forth opposite such Underwriter's name bears to the total
number of Firm Securities
-12-
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company and Xxxxxx.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company and the
Custodian will deliver the Optional Securities being purchased on each Optional
Closing Date to the Representatives for the accounts of the several Underwriters
against payment of the purchase price therefor in Federal (same day) funds by
official bank check or checks or wire transfer to an account at a bank
acceptable to CSFBC drawn to the order of the Company, in the case of Optional
Securities sold by the Company, and Xxxxxx, in the case of the Optional
Securities sold by Xxxxxx. The certificates for the Optional Securities being
purchased on each Optional Closing Date will be in definitive form, in such
denominations and registered in such names as CSFBC requests upon reasonable
notice prior to such Optional Closing Date and will be made available for
checking and packaging at the office of CSFBC, Eleven Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders and,
with respect to clauses (j) and (k) below, each Selling Stockholder agrees with
the Company and the several Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is
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necessary to register a portion of the Offered Securities under the Act but
the Effective Time thereof has not occurred as of such execution and
delivery, the Company will file the additional registration statement or,
if filed, will file a post-effective amendment thereto with the Commission
pursuant to and in accordance with Rule 462(b) on or prior to 10:00 P.M.,
New York time, on the date of this Agreement or, if earlier, on or prior to
the time the Prospectus is printed and distributed to any Underwriter, or
will make such filing at such later date as shall have been consented to by
CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent, which
consent shall not be unreasonably withheld; and the Company will also
advise CSFBC promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration
Statement or the Prospectus and of the institution by the Commission of any
stop order proceedings in respect of a Registration Statement and will use
its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an 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 is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement that will
correct such statement or omission or an amendment which will effect such
compliance. Neither CSFBC's consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) that will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
-14-
(e) The Company will furnish to the Representatives copies of each
Registration Statement (three of which will be signed and will include all
exhibits), each related preliminary prospectus and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the
Act in connection with sales by any Underwriter or dealer, the Prospectus
and all amendments and supplements to such documents, in each case in such
quantities as CSFBC reasonably requests. The Prospectus shall be so
furnished on or prior to 5:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company will pay
the expenses of printing and distributing to the Underwriters all such
documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution; provided, that the Company shall not be
required to file a general consent to service of process or qualify to do
business in any jurisdiction in which it is not so qualified.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Exchange Act or mailed to stockholders, and (ii)
from time to time, such other information concerning the Company as CSFBC
may reasonably request.
(h) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act relating
to, any additional shares of its Securities or securities convertible into
or exchangeable or exercisable for any shares of its Securities, or
publicly disclose the intention to make any such offer, sale, pledge,
disposition or filing, without the prior written consent of CSFBC, except
issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, or grants of employee
or director stock options pursuant to the terms of a plan in effect on the
date hereof or issuances of Securities pursuant to the exercise of such
options.
(i) The Company and each Selling Stockholder agree with the several
Underwriters that the Company will pay all expenses incident to the
performance of the obligations of the Company and such Selling Stockholder,
as the case may be, under this Agreement, for any filing fees and other
expenses (including fees and disbursements of counsel to the Company) in
connection with qualification of the Offered Securities for
-15-
sale under the laws of such jurisdictions as CSFBC designates and the
printing of memoranda relating thereto, for the filing fee incident to, the
review by the National Association of Securities Dealers, Inc. (the "NASD")
of the Offered Securities, for any travel expenses of the Company's
officers and employees and any other expenses of the Company in connection
with attending or hosting meetings with prospective purchasers of the
Offered Securities and for expenses incurred in distributing preliminary
prospectuses and the Prospectus (including any amendments and supplements
thereto) to the Underwriters. Each Selling Stockholder will reimburse the
Underwriters (if and to the extent incurred by them) for any transfer taxes
on the sale by such Selling Stockholder of the Offered Securities to the
Underwriters.
(j) Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group, on or prior to the First Closing Date, if any,
a properly completed and executed United States Treasury Department Form W-
9 (or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(k) Each Selling Stockholder agrees, for a period of 90 days after
the date of the initial public offering of the Offered Securities, not to
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any additional shares of the Securities or securities
convertible into or exchangeable or exercisable for any shares of
Securities, or publicly disclose the intention to make any such offer,
sale, pledge or disposal, without the prior written consent of CSFBC.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of Xxxxxx Xxxxxxxx LLP
confirming that they are independent public accountants with respect to the
Company within the meaning of the Act and the applicable Rules and
Regulations thereunder adopted by the SEC and stating substantially to the
effect that:
-16-
(i) in their opinion the financial statements and schedule of the
Company audited by them and included in the Registration Statements
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related Rules and
Regulations adopted by the SEC;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements of The Xxxxxxxxx Xxxxx Schools, Inc. and subsidiaries
("Xxxxx") and Scottsdale Culinary Institute, Inc. ("Scottsdale
Culinary") included in the Registration Statements;
(iii) on the basis of the reviews referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements of Xxxxx and
Scottsdale Culinary included in the Registration Statements do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations or any material modifications
should be made to such unaudited financial statements for them to
be in conformity with generally accepted accounting principles;
(B) at the date of the latest available balance sheet read
by such accountants, and at a subsequent specified date not more
than three business days prior to the date of this Agreement,
there was any decrease in stockholders' investment or change in
the capital stock or any increase in total current liabilities or
long term debt of the Company and its consolidated subsidiaries
or any decrease in consolidated total current assets or total
assets as compared with amounts shown on the latest balance sheet
included in the Prospectus; or
(C) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
and at a subsequent specified date not more than three business
days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period of the
previous year, in consolidated total net revenue or income from
operations of the Company or in the total or per share amounts of
consolidated total net income of the Company;
-17-
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have read any unaudited pro forma information included
in the Prospectus; inquired of certain officials of the Company who
have responsibility for financial and accounting matters about the
basis for their determination of the pro forma adjustments and whether
such unaudited pro forma financial information complies as to form in
all material respects with the applicable requirements of Rule 11-02
of Regulation S-X under the Act; and proved the arithmetic accuracy of
the application of the pro forma adjustments to the historical amounts
in the unaudited pro forma financial information;
(v) on the basis of the procedures specified in clause (iv)
above, nothing came to their attention that caused them to believe
that the unaudited pro forma financial information referred to in
clause (iv) above does not comply as to form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Regulation S-X under the Act and that the pro forma adjustments have
not been properly applied to the historical amounts in the compilation
of that information; and
(vi) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statements is subsequent to the execution and delivery
of this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the amendment or post-
effective amendment to be filed shortly prior to its Effective Time, (ii)
if the Effective Time of the Initial Registration Statements is prior to
the execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective
-18-
amendment to be filed shortly prior to its Effective Time, and (iii)
"Prospectus" shall mean the prospectus included in the Registration
Statements.
(b) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of each of the accounting
firms whose report as to audited financial statements of a company other
than the Company is included in the Registration Statement to the effect
that (i) they are independent public accountants within the meaning of the
Act and the applicable published Rules and Regulations thereunder and (ii)
in their opinion the financial statements and any schedules examined by
them and included in the Registration Statements comply as to form in all
material respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations.
(c) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBC. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to any Underwriter, or shall have occurred at
such later date as shall have been consented to by CSFBC. If the Effective
Time of the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a) of
this Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Representatives, shall be threatened by the
Commission.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries, taken as a whole, which, in the judgment of a majority in
interest of the Underwriters (including the Representatives), is material
and adverse and makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Offered Securities; (ii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of trading
of any
-19-
securities of the Company on any exchange or in the over-the-counter
market; (iii) any banking moratorium declared by U.S. Federal or New York
authorities; or (iv) any outbreak or escalation of major hostilities in
which the United States of America is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
(including the Representatives), the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Offered Securities.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxx Xxxxxx & Xxxxx, counsel for the Company, to the
effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus; and the Company is
qualified to do business as a foreign corporation in good standing in
each jurisdiction listed in Schedule D hereto;
(ii) The Offered Securities to be sold by the Selling
Stockholders on such Closing Date and all other outstanding shares of
capital stock of the Company have been duly authorized and are validly
issued, fully paid and nonassessable. The Offered Securities to be
sold by the Company have been duly authorized and will be, when issued
and paid for in accordance with this Agreement, validly issued, fully
paid and nonassessable. The Offered Securities conform in all material
respects to the descriptions thereof contained in the Prospectus under
the captions "Capitalization" and "Description of Capital Stock;"
(iii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement, other than as required
under state securities laws or as have been obtained or made under the
Act (it being understood that such counsel need express no opinion as
to the matters described in Section 6(g)(ii), as to which Dow, Xxxxxx
& Xxxxxxxxx, PLLC, is providing an opinion to the Underwriters, or
Section 6(h)(ii), as to which Fraser Xxxxxx is providing an opinion to
the Underwriters);
(iv) The execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
herein contemplated have been duly authorized by all necessary
corporate action on the part of the Company and, to the extent
required, its stockholders and do not result in a breach or violation
of any of the terms and provisions of, and do not
-20-
constitute a default (or an event which with the giving of notice or
the lapse of time or both would constitute a default) under, and do
not result in the creation or imposition of any lien, charge or
encumbrance upon any assets, properties or operations of the Company
or any of its Material Subsidiaries under, (A) the charter, by-laws or
other organizational documents of the Company or any such Material
Subsidiary, (B) to the knowledge of such counsel, any statute, rule,
regulation, requirement, order or decree of any governmental or
regulatory agency or body or any court having jurisdiction over the
Company or any such Material Subsidiary or any of their properties,
assets or operations or (C) to the knowledge of such counsel, any
indenture, mortgage, loan or credit agreement, note, lease, permit,
license or other agreement or instrument that is material to the
Company and the Material Subsidiaries, taken as a whole, and to which
the Company or such Material Subsidiary is a party or by which the
Company or any such Material Subsidiary is bound or to which any of
the properties, assets or operations of the Company or any such
Material Subsidiary is subject (it being understood that, in the case
of clause (B) above, such counsel need express no opinion as to the
matters described in Section 6(g)(iii), as to which Dow, Xxxxxx &
Xxxxxxxxx, PLLC, is providing an opinion to the Underwriters, or
Section 6(h)(iii), as to which Fraser Xxxxxx is providing an opinion
to the Underwriters);
(v) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if determinable)
specified in such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b) specified in
such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the knowledge of such counsel,
no stop order suspending the effectiveness of a Registration Statement
or any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Act, and each Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations; the
descriptions in the Registration Statements and Prospectus of
statutes, legal and governmental proceedings and contracts and other
documents are accurate and fairly present the information required to
be shown (it being understood that such counsel need express no
opinion as to the matters described in Section 6(g)(i), as to which
Dow, Xxxxxx & Xxxxxxxxx, PLLC, is providing an opinion to the
Underwriters, or Section 6(h)(i), as to which Fraser Xxxxxx is
providing an opinion to the Underwriters); and
(vi) This Agreement has been duly executed and delivered by the
Company and is enforceable against the Company in accordance with its
terms,
-21-
except to the extent that (A) enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or
other similar laws relating to creditors' rights generally and by
general principles of equity, whether applied by a court of law or
equity, and (B) rights to indemnity and contribution may be limited by
federal and state securities laws or policies underlying such laws.
In addition, such counsel shall state that (A) except as
described in the Prospectus, to the knowledge of such counsel, there
are no contracts or agreements between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act; (B) such counsel do not know of any legal or
governmental proceedings required to be described in a Registration
Statement or the Prospectus which are not described as required or of
any contracts or documents of a character required to be described in
a Registration Statement or the Prospectus or to be filed as exhibits
to a Registration Statement which are not described and filed as
required; (C) except as described in the Prospectus, to the knowledge
of such counsel, there are no pending or threatened actions, suits,
proceedings or investigations against or affecting the Company or any
of its subsidiaries or any of their respective properties, assets or
operations that, if determined adversely to the Company or any of its
subsidiaries, individually or in the aggregate, would be reasonably
likely to have, a Material Adverse Effect or would be reasonably
likely to materially and adversely affect the ability of the Company
to perform its obligations under this Agreement; and (D) they have no
reason to believe that any part of a Registration Statement or any
amendment thereto, as of its effective date or as of such 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; or that the Prospectus or
any amendment or supplement thereto, as of its issue date or as of
such Closing Date, contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the
statements therein, the light of the circumstances under which they
were made, not misleading (it being understood that for purposes of
this subparagraph such counsel need express no opinion as to the
financial statements and schedules and other financial and accounting
data contained in the Registration Statements or the Prospectus or as
to any matters described in Section 6(g), as to which Dow, Xxxxxx &
Xxxxxxxxx, PLLC, is providing an opinion to the Underwriters, or
Section 6(h), as to which Fraser Xxxxxx is providing an opinion to the
Underwriters).
-22-
In rendering such opinion, such counsel may rely as to matters governed by
the laws of jurisdictions other than the laws of jurisdictions in which such
counsel is admitted to practice and the federal laws of the United States of
America and, to the extent deemed appropriate by such counsel, as to other
matters upon the opinions of counsel reasonably satisfactory to the
Representatives and counsel for the Underwriters.
(f) The Representatives shall have received an opinion, dated such
Closing Date, of [Name], counsel for the Selling Stockholders, to the
effect that:
(i) Immediately prior to the delivery of the Offered Securities
being sold by such Selling Stockholder, such Selling Stockholder was
the sole registered owner of the Offered Securities and has legal
right and power, or, in the case of a corporate Selling Stockholder,
corporate power and authority, to enter into this Agreement and to
sell, assign, transfer and deliver the Offered Securities delivered by
such Selling Stockholder on such Closing Date; and, upon payment for
such Offered Securities, delivery to the Underwriters by such Selling
Stockholder of such Offered Securities and registration of such
Offered Securities in the names of the Underwriters or their nominees,
assuming the Underwriters have purchased such Offered Securities for
value, in good faith and without notice of any adverse claim as
defined in Section 8-105 of the Uniform Commercial Code, the
Underwriters will have acquired all the rights of such Selling
Stockholder in such Offered Securities free of any adverse claim, any
lien in favor of the Company and any restrictions on transfer imposed
by the Company;
(ii) This Agreement, the Power of Attorney and Custody Agreement
have been duly authorized, executed and delivered by or on behalf of
such Selling Stockholder and constitutes the legal, valid and binding
obligations of such Selling Stockholder enforceable against such
Selling Stockholder in accordance with their respective terms, except
to the extent that (A) enforceability may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar
laws relating to creditors' rights generally and by general principles
of equity, whether applied by a court of law or equity, and (B) rights
to indemnity and contribution may be limited by federal and state
securities laws or policies underlying such laws;
(iii) No consent, approval, authorization, order of or filing
with, any governmental agency or body or any court is required to be
obtained or made by such Selling Stockholder for the consummation by
such Selling Stockholder of the transactions contemplated by this
Agreement (it being understood that such counsel need express no
opinion as to the matters described in Section 6(g)(ii), as to which
Dow, Xxxxxx & Xxxxxxxxx, PLLC, is providing an opinion to the
Underwriters, or Section 6(h)(ii), as to which Fraser Xxxxxx is
providing an opinion to the Underwriters);
-23-
(iv) The execution, delivery and performance by such Selling
Stockholder of the Power of Attorney, the Custody Agreement and this
Agreement and the consummation of the transactions contemplated herein
and therein by such Selling Stockholder do not result in a breach or
violation of any of the terms and provisions of, and do not constitute
a default (or an event which with the giving of notice or the lapse of
time or both would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon the
Offered Securities being sold by such Selling Stockholder under (A) in
the case of a corporate Selling Stockholder, the charter, by-laws or
other organizational documents of such Selling Stockholder, (B) to the
knowledge of such counsel, any statute, rule, regulation, requirement,
order or decree of any governmental or regulatory agency or body, or
any court having jurisdiction over such Selling Stockholder or any of
its properties, assets or operations or (C) to the knowledge of such
counsel, any indenture, mortgage, loan or credit agreement, note,
lease, permit, license or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the properties, assets or operations of such
Selling Stockholder is subject, except, in each case, for such
breaches, violations, defaults, liens, charges and encumbrances which
could not, individually or in the aggregate, have a material adverse
effect on the ability of such Selling Stockholder to consummate the
transactions contemplated by this Agreement , the Power of Attorney
and the Custody Agreement or perform such Selling Stockholder's
obligations hereunder and thereunder (it being understood that, in the
case of clause (B) above, such counsel need express no opinion as to
the matters described in Section 6(g)(iii), as to which Dow, Xxxxxx &
Xxxxxxxxx, PLLC, is providing an opinion to the Underwriters, or
Section 6(h)(iii), as to which Fraser Xxxxxx is providing an opinion
to the Underwriters);
(v) The Power of Attorney and related Custody Agreement with
respect to each Selling Stockholder has been duly authorized, executed
and delivered by such Selling Stockholder and constitute valid and
legally binding obligations of such Selling Stockholder enforceable in
accordance with its terms, except to the extent that (A)
enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws
relating to creditors' rights generally and by general principles of
equity, whether applied by a court of law or equity, and (B) rights to
indemnity and contribution may be limited by federal and state
securities laws or policies underlying such laws; and
(vi) Upon execution and delivery of the Underwriting Agreement
by each of the Attorneys (as defined in each Power of Attorney) on
behalf of each Selling Stockholder, the Underwriting Agreement will
have been duly authorized, executed and delivered by such Selling
Stockholder.
-24-
(g) The Representatives shall have received from Dow, Xxxxxx &
Xxxxxxxxx, PLLC, special United States regulatory counsel to the Company,
such opinion or opinions, dated as of such Closing Date, to the effect
that:
(i) The statements contained in the Prospectus under the caption
"Risk Factors -- Our U. S. schools are extensively regulated" to the
extent related to educational regulatory matters other than Canadian
educational regulatory matters, insofar as such statements constitute
a summary of legal matters, documents or proceedings with respect to
the operation of postsecondary educational institutions and the
offering of programs of postsecondary education in the United States
of America (collectively, "U.S. Regulatory Matters"), are accurate in
all material respects;
(ii) Except as disclosed in the Prospectus, no consent,
approval, authorization, order, registration or qualification of, or
filing with, the U.S. Department of Education under Title IV of the
HEA or any state education agency under any similar state statute
governing the authorization to operate postsecondary educational
institutions is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance and
sale of the Offered Securities.
(iii) To the knowledge of such counsel, except as disclosed in
the Prospectus, the execution, delivery and performance by the Company
of this Agreement and the consummation of the transactions
contemplated herein in connection with the issuance and sale of the
Offered Securities do not result in a breach or violation of (A) Title
IV of the HEA; (B) any rule, regulation or requirement of the U.S.
Department of Education promulgated under Title IV of the HEA; or (C)
any similar state statute governing the authorization to operate
postsecondary educational institutions, except for any such breaches
or violations that, individually or in the aggregate, do not have, and
are reasonably likely not to have, a Material Adverse Effect;
(iv) The consummation of the transactions contemplated by this
Agreement in connection with the issuance and sale of the Offered
Securities will not constitute a change of ownership resulting in a
"change of control" as defined in the HEA; and
(v) To the knowledge of such counsel, except as disclosed in the
Prospectus, the Company and its subsidiaries have all necessary
Licenses required for the Company and such subsidiaries to participate
in the Title IV Programs as described in the Registration Statements
and the Prospectus, except for any
-25-
failures to possess any such Licenses that, individually or in the
aggregate, do not have, and are not reasonably likely to have, a
Material Adverse Effect.
Such counsel shall also describe the extent to which they have
participated in the preparation of those portions of the Registration
Statements and the Prospectus relating to U.S. Regulatory Matters and
state that nothing has come to their attention in the course of such
participation to cause them to believe that the information relating
to U.S. Regulatory Matters contained in any Registration Statement or
any amendment thereto (and specifically excluding the financial
statements and schedules and other financial and accounting data), as
of its effective date or as of such 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, or that any such information contained in the
Prospectus or any amendment or supplement thereto, as of its issue
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(h) The Representatives shall have received an opinion, dated such
Closing Date, of Fraser Xxxxxx, special Canadian regulatory counsel for the
Company, to the effect that:
(i) The statements contained in the Prospectus under the caption
-- "Our Canadian schools are also extensively regulated" in the
section "Risk Factors" and the caption "Canadian Regulation" in the
section "Financial Aid and Regulation" (collectively, the "Canadian
Captions"), in each case, only to the extent related to legislation,
regulations and other legal requirements applicable specifically to
the regulation of private vocational schools and student financial
assistance programs thereat in the Province of Ontario and the
regulation of private educational institutions and student financial
assistance programs thereat in the Province of Quebec (collectively,
"Canadian Educational Regulatory Matters"), insofar as such statements
constitute a summary of Canadian Educational Regulatory Matters are,
accurate in all material respects;
(ii) Except as described in the Prospectus, no prior consent,
approval, authorization, order, registration or qualification of, or
filing with, any governmental or regulatory agency or body under any
legislation or regulation related to Canadian Educational Regulatory
Matters ("Canadian Educational Legislation") is required for the
consummation of the transactions contemplated by this Agreement; and
(iii) The execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated
herein do not
-26-
result in a breach or violation of Canadian Educational Legislation,
except for any such breaches or violations that, individually or in
the aggregate, do not have, and are reasonably likely not to have, a
Material Adverse Effect.
Such counsel shall also state that they have no reason to believe
that any statements relating to Canadian Educational Regulatory
Matters contained in any Registration Statement or any amendment
thereto under the Canadian Captions, as of its effective date or as of
such 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, or that any
statements relating to Canadian Educational Regulatory Matters
contained in the Prospectus or any amendment or supplement thereto
under the Canadian Captions, as of its issue date or as of such
Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters governed by
the laws of jurisdictions other than the laws of jurisdictions in which such
counsel is admitted to practice and the federal laws of the United States of
America upon the opinions of counsel reasonably satisfactory to the
Representatives and counsel for the Underwriters. Further, Fraser Xxxxxx may
qualify its opinion in such manner as counsel for the Underwriters may agree.
(i) The Company shall have delivered to the Representatives
agreements of certain officers, directors and stockholders of the Company
and other persons specified by the Representatives to the effect that, for
a period of 90 days after the date of the initial public offering of the
Offered Securities, such officers, directors and stockholders will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any additional shares of Securities or securities convertible
into or exchangeable or exercisable for any shares of Securities, or
publicly disclose the intention to make any such offer, sale, pledge or
disposition, without the prior written consent of CSFBC.
(j) The Representatives shall have received from Sidley & Austin,
counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the validity of the
Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the Representatives
may require, and the Selling Stockholders and the Company shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass upon such matters.
(k) The Representatives shall have received a certificate of the
Company, dated such Closing Date, executed on behalf of the Company by the
President or any Vice President and a principal financial or accounting
officer of the Company after their
-27-
reasonable investigation, to the effect that: the representations and
warranties of the Company in this Agreement are true and correct; the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to such Closing
Date; no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are, to the knowledge of such officers, threatened by the
Commission; the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed pursuant
to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any Underwriter; and, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole, except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(l) The Representatives shall have received a certificate, dated such
Closing Date, of each Selling Stockholder, which, in the case of a
corporate Selling Stockholder, shall be executed on behalf of such Selling
Stockholder by a senior executive officer of such Selling Stockholder,
after reasonable investigation, to the effect that: the representations and
warranties of such Selling Stockholder in this Agreement are true and
correct and such Selling Stockholder has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date.
(m) The Representatives shall have received a letter, dated such
Closing Date, of Xxxxxx Xxxxxxxx LLP, which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to such Closing Date for the purposes of this subsection.
(n) The Representatives shall have received copies of the certificate
of incorporation or other equivalent document of each Material Subsidiary,
certified as of a date within five days prior to the Closing Date by the
secretary of state or other equivalent governmental official of the
jurisdiction of incorporation of such Material Subsidiary and certificates
of appropriate governmental officials as to the good standing of such
Material Subsidiary under the laws of the jurisdiction of its incorporation
and as to the qualification of each Material Subsidiary to do business as a
foreign corporation in good standing in each jurisdiction listed opposite
its name in Schedule C hereto.
(o) The Representatives shall have received such other opinions,
certificates, letters and other documents from or on behalf of the Company
or the Selling Stockholders as the Representatives shall reasonably
request.
-28-
The Selling Stockholders and the Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters and documents
as the Representatives reasonably request. CSFBC may in its sole discretion
waive on behalf of the Underwriters compliance with any conditions to the
obligations of the Underwriters hereunder, whether in respect of an Optional
Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act 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 any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related 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 statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, 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 an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Selling Stockholder or by
any Underwriter through the Representatives specifically for use therein, it
being understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in subsection (c)
below; and provided, further, however, that the foregoing indemnity with respect
to any untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary prospectus or the Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities if a copy of the Prospectus or any
amendment or supplement thereto was not sent or given to such person at or prior
to the written confirmation of the sale of such Offered Securities to such
person if required by the Act and the Prospectus or any amendment or supplement
thereto would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) Each Selling Stockholder will, severally and not jointly, indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, to which such Underwriter may become subject, under the Act 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 any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
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 statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement was made in reliance upon and in conformity with written information
furnished to the Company
-29-
or its representatives by or on behalf of such Selling Stockholder specifically
for use therein, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Selling Stockholder consists of the information in
the Prospectus under the caption "Principal and Selling Stockholders" relating
to such Selling Stockholder; provided, however, that the liability of each
Selling Stockholder pursuant to this Section 7(b) is limited to the proceeds
received (less underwriting discounts and commissions) by such Selling
Stockholder, if any, from the sale of the Firm Securities (or in the case of
Xxxxxx, the sale of the Offered Securities sold by him); and provided, further,
however, that the foregoing indemnity 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) from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities if a
copy of the Prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such Offered Securities to such person if
required by the Act and the Prospectus would have cured the defect giving rise
to such loss, claim, damage or liability.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder may
become subject, under the Act 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 any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and each Selling Stockholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the last paragraph at the
bottom of the cover page concerning the terms of the offering by the
Underwriters, the list under the caption "Underwriting" setting forth the names
of the Underwriters and the number of Offered Securities to be purchased by each
Underwriter, the concession and reallowance figures appearing in the fourth
paragraph under the caption "Underwriting," the information responsive to
Regulation M under the Act contained in the ninth paragraph under the caption
"Underwriting," and the information regarding sales to discretionary accounts
and/or passive market making and other transactions contained in the sixth and
ninth paragraphs under the caption "Underwriting" and the information contained
under the caption "Notice to Canadian Residents."
-30-
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of such indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the relevant
indemnified party, effect any settlement of any pending or threatened action in
respect of which indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities (before deducting
expenses) received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (e) shall be deemed to include any
-31-
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no Selling Stockholder shall be required to contribute
any amount in excess of the amount by which the proceeds received (less
underwriting discounts and commissions) by such Selling Stockholder, if any,
from the sale of the Offered Securities exceeds the amount of any damages which
such Selling Stockholder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. 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. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section shall be in addition to any liability which the Company and the Selling
Stockholders may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in
-32-
Section 9 (provided that if such default occurs with respect to Optional
Securities after the First Closing Date, this Agreement will not terminate as to
the Firm Securities or any Optional Securities purchased prior to such
termination). As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders or their officers (if applicable), of the Company or its
officers and of the several Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Underwriter,
any Selling Stockholder, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company, the Selling Stockholders and the Underwriters
pursuant to Section 7 shall remain in effect, and if any Offered Securities have
been purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect; provided, however, that
the obligations of the Company in Sections 5 and 7 shall not affect any rights
of the Company against any defaulting Underwriter. If the purchase of the
Offered Securities by the Underwriters is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 8
or the occurrence of any event specified in clause (ii), (iii) or (iv) of
Section 6(d), the Company will reimburse the Underwriters for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred by
them in connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed or delivered to the Representatives, c/o
Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, N.Y.
10010-3629, Attention: Investment Banking Department - Transactions Advisory
Group, or, if sent to the Company, will be mailed or delivered to it at 0000
Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: Chief
Financial Officer, or, if sent to the Selling Stockholders or any of them, will
be mailed or delivered to the addresses set forth in Schedule A hereto;
provided, however, that any notice to an Underwriter pursuant to Section 7 will
be mailed or delivered, telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective personal representatives and
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this
-33-
Agreement taken by the Representatives jointly or by CSFBC will be binding upon
all the Underwriters. [_______________ will act for Xxxxxx Equity Capital
Corporation in connection with such transactions, and any action under or in
respect of this Agreement taken by _______________ will be binding upon Xxxxxx
Equity Capital Corporation. _______________ will act for Electra Investment
Trust P.L.C. and Electra Associates, Inc. (" Electra") in connection with such
transactions, and any action under or in respect to this Agreement taken by
_______________ will be binding on Electra. _______________ will act for Messrs.
Bounds, Goense, Xxxxxx and Xxxxxxxxx in connection with such transactions, and
any action under or in respect of this Agreement taken by _______________ will
be binding on Messrs. Bounds, Goense, Xxxxxx and Xxxxxxxxx.]
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflict of laws.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
-34-
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholders, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
CAREER EDUCATION CORPORATION
By:________________________________
Xxxxxxx X. Xxxxxxx
Senior Vice President
Chief Financial Officer and Treasurer
SELLING STOCKHOLDERS
By:________________________________
[Name]
[As attorney-in-fact acting on behalf Xxxxxx
Equity Capital Corporation]
By:________________________________
[Name]
[As attorney-in-fact acting on behalf of
Electra]
By:________________________________
Xxxx X. Xxxxxx
-35-
By:________________________________
[Name]
[As attorney-in-fact acting on behalf of
Messrs. Bounds, Goense and Xxxxxxxxx]
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXX XXXXX BARNEY INC.
BANCBOSTON XXXXXXXXX XXXXXXXX
Acting on behalf of themselves and as the Representatives of the
several Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By...................................
-36-
SCHEDULE A
Number of Firm Number of Optional
Securities to be Sold Securities to be Sold
--------------------- ---------------------
Company 250,000 280,000
Selling Stockholders
--------------------
Xxxxxx Equity Capital Corporation 987,937
000 Xxxx Xxxxxx Xx.
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Electra Investment Trust P.L.C. 710,000
and Electra Associates, Inc.
00 Xxxxxxxx
Xxxxxx, Xxxxxxx WC2B
Xxxx X. Xxxxxx 30,000 20,000
c/o Career Education Corporation
0000 Xxxx Xxxxxxx Xxxx - Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Xxxx X. Xxxxxx 6,000
c/o Allstate Private Equity
0000 Xxxxxxx Xxxx - Xxxxx X-0X
Xxxxxxxxxx, Xxxxxxxx 00000
Xxxx X. Xxxxxx 10,000
c/o Allstate Private Equity
0000 Xxxxxxx Xxxx - Xxxxx X-00
Xxxxxxxxxx, Xxxxxxxx 00000
Xxxx X. Xxxxxxxxx 6,063
c/o Pfingsten Partners, LLC
000 X. Xxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
TOTAL
---------
2,000,000 300,000
========= =======
A-1
SCHEDULE B
Number of Firm
Underwriter Securities to be Purchased
----------- --------------------------
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx Barney Inc.
BancBoston Xxxxxxxxx Xxxxxxxx
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
---------
TOTAL 2,000,000
=========
B-1
SCHEDULE C
Material Subsidiaries
and
Foreign Qualifications
C-1
SCHEDULE D
Foreign Qualifications of the Company
D-1
