Exhibit 1
Draft: December 29, 1997
2,850,000 Shares
CAREER EDUCATION CORPORATION
Common Stock, $.01 par value
UNDERWRITING AGREEMENT
----------------------
________, 1998
Credit Suisse First Boston Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
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 2,850,000 shares of its Common Stock,
$.01 par value ("Securities") (such 2,850,000 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 401,238 additional shares of its Securities, and the stockholder
listed in Schedule A hereto (the "Selling Stockholder") proposes to sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
26,262 additional outstanding shares of Securities, as set forth below (such
427,500 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
Stockholder hereby agree with the several Underwriters named in Schedule B
hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholder. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-37601) 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 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
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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 Statement or the Prospectus based upon written information
furnished to the Company by the Selling Stockholder or by any Underwriter
through the Representatives specifically for use
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therein, it being understood and agreed that 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,
would not have, or reasonably be likely 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 A
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, would not have, or reasonably be
likely 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 (as defined 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. The subsidiaries of the Company that are not
Material Subsidiaries do not, in the aggregate, constitute a "significant
subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the Act.
(v) The Offered Securities (other than the Optional Securities
offered by the Selling Stockholder) 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 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 Firm Securities as contemplated
by this Agreement; on each Closing Date (as defined below), all other
outstanding shares of capital stock of the Company will be duly authorized,
validly issued, fully paid and nonassessable and will have been issued in
compliance with applicable
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federal and state securities laws; the authorized and outstanding capital
stock of the Company on each Closing Date 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 or
described in the Prospectus under the caption "The Transactions," except
such as have been, or will be, obtained or made on or prior to First
Closing Date.
(x) The execution, delivery and performance by the Company of this
Agreement and the agreements, documents or instruments entered into by the
Company in connection with the transactions described in the Prospectus
under the caption "The Transactions" and the consummation by the Company of
the transactions contemplated herein or described in the Prospectus under
the caption "The Transactions" 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) any
statute, rule, regulation, requirement, order or decree of any
governmental, regulatory or accrediting agency or body or any court having
jurisdiction
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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, would not have, or
reasonably be likely to have, a Material Adverse Effect or have, or
reasonably be likely 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 or consummate the transactions
described in the Prospectus under the caption "The Transactions." The
issuance and sale of the Firm Securities or consummation of the other
transactions contemplated by this Agreement or described in the Prospectus
under the caption "The Transactions," will not constitute a change of
ownership resulting in a "change of control" of the Company as defined in
the HEA.
(xi) This Agreement and the agreements, documents or instruments
entered into by the Company in connection with the transactions described
in the Prospectus under the caption "The Transactions" have been duly
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable against the Company 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 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 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 that would, individually or in the aggregate, materially
affect the value thereof or materially interfere with the use made or to be
made thereof by them; and except as disclosed in the Prospectus, the
Company and its Material Subsidiaries hold any leased real or personal
property under valid and enforceable leases with no exceptions that would
materially interfere with the use made or to be made thereof by them.
(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
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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 that, individually or in the
aggregate, would not have, or reasonably be likely 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, would not have, or reasonably be likely
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, would individually or in the aggregate have, or reasonably be
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 would individually or in the
aggregate have, or reasonably be 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
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subsidiaries, would individually or in the aggregate have, or reasonably be
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 consummate the transactions described in the Prospectus under
the caption "The Transactions," or which are otherwise 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) 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 disclosed 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.
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(xxii) Neither the Company nor any of its subsidiaries is in
violation of (A) its charter, by-laws or other organizational documents or
(B) any statute, rule, regulation, requirement, order, decree or judgment
of any 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, would not have, or
reasonably be likely 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 (the
"Investment Company Act").
(b) The Selling Stockholder represents and warrants to, and agrees with,
the several Underwriters that:
(i) The Selling Stockholder has and on the Optional Closing Date
hereinafter mentioned, if any, the Selling Stockholder will have valid and
unencumbered title to the Optional Securities to be delivered by the
Selling Stockholder on such Optional Closing Date and full right, power and
authority to enter into this Agreement and to sell, assign, transfer and
deliver the Optional Securities to be delivered by the Selling Stockholder
on such Optional Closing Date hereunder; and upon the delivery of and
payment for the Optional Securities on each Optional Closing Date
hereunder, if any, the several Underwriters will acquire valid and
unencumbered title to the Optional Securities to be delivered by the
Selling Stockholder on such Optional 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 conformed in all material
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respects to the requirements of the Act and the 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.
The two preceding sentences apply only to the extent that any statements
in, or omissions from, a Registration Statement or the Prospectus are based
on written information furnished to the Company by the Selling Stockholder
specifically for use therein.
(iii) This Agreement and, to the extent applicable to the Selling
Stockholder, the agreements, documents or instruments entered into by the
Selling Stockholder in connection with the transactions described in the
Prospectus under the caption "The Transactions" have each been duly
authorized, executed and delivered by or on behalf of the Selling
Stockholder and constitute the legal, valid and binding obligations of the
Selling Stockholder enforceable against the 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.
(iv) No consent, approval, authorization, order, registration or
qualification of, or filing with, any third party (whether acting in an
individual, fiduciary or other capacity) or any governmental or regulatory
agency or body or any court is required to be obtained or
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made for the consummation by the Selling Stockholder of the transactions
contemplated by this Agreement or described in the Prospectus under the
caption "The Transactions," except such as have been obtained and made
under the Act and such as may be required under state securities laws.
(v) The execution, delivery and performance by the Selling
Stockholder of this Agreement and, to the extent applicable to the Selling
Stockholder, the agreements, documents or instruments entered into by the
Selling Stockholder in connection with the transactions described in the
Prospectus under the caption "The Transactions," the sale of the Optional
Securities, if any, by the Selling Stockholder and the consummation by the
Selling Stockholder of any of the other transactions herein contemplated or
described in the Prospectus under the caption "The Transactions," 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 could
reasonably be likely to constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon the Optional
Securities under (A) the charter, by-laws or other organizational documents
of the Selling Stockholder, (B) any statute, any rule, regulation,
requirement, order or decree of any governmental or regulatory agency or
body, or any court having jurisdiction over the Selling Stockholder or any
of its properties, assets or operations or (C) any indenture, mortgage,
loan or credit agreement, note, lease, permit, license or other agreement
or instrument to which the Selling Stockholder is a party or by which the
Selling Stockholder is bound or to which any of the properties, assets or
operations of the Selling Stockholder is subject, except, in each case, for
such conflicts, breaches, violations, defaults, liens, charges and
encumbrances which would not, individually or in the aggregate, have, or
reasonably be likely to have, a material adverse effect on the ability of
the Selling Stockholder to consummate the transactions contemplated by this
Agreement or perform the Selling Stockholder's obligations hereunder or
consummate the transactions described in the Prospectus under the caption
"The Transactions".
(vi) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Selling Stockholder and any third
party that would give rise to a valid claim against the 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.
(vii) The 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 agrees to sell to the
Underwriters, and the Underwriters
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agree, severally and not jointly, to purchase from the Company, at a purchase
price of $_____ per share, the respective numbers of shares of Firm Securities
set forth opposite the names of the Underwriters in Schedule B hereto.
The Company 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 acceptable to Credit Suisse First Boston
Corporation ("CSFBC") drawn to the order of the Company at the office of
____________________, at _____ A.M., New York time, on __________, or at such
other time not later than seven full business days thereafter as CSFBC and the
Company 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at least 24
hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholder 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 the Selling Stockholder 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 ________, in the case of
the Company, and the number of shares set forth opposite the name of the Selling
Stockholder in Schedule A hereto under the caption "Number of Optional
Securities to be Sold," 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 the Selling
Stockholder 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 (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
the Selling Stockholder.
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
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notice of election to purchase Optional Securities is given. The Company and
the Selling Stockholder 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 offered by the Company, and the name of the Selling
Stockholder, in the case of the Optional Securities offered by the Selling
Stockholder. 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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 Stockholder. The
Company agrees with the several Underwriters and the Selling Stockholder and,
with respect to clauses (j) and (k) below, the 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 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
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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.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (four 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.
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(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 180 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
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 the Selling Stockholder agree with the several
Underwriters that the Company and the Selling Stockholder will pay all
expenses incident to the performance of the obligations of the Company and
the Selling Stockholder, as the case may be, under this Agreement, for any
filing fees and other expenses (including fees and disbursements of
counsel) in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions as CSFBC designates and the
printing of memoranda relating thereto, for the filing fee incident to, and
the reasonable fees and disbursements of counsel to the Underwriters in
connection with, 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. The Selling
Stockholder will reimburse the Underwriters (if and to the extent incurred
by them) for any transfer taxes on the sale by the Selling Stockholder of
Optional Securities to the Underwriters.
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(j) The Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group, on or prior to the Optional 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) The Selling Stockholder agrees, for a period of 180 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 of the Company 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 Stockholder, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company and the Selling Stockholder 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) 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;
(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 Company included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of
-16-
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 the Company
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) the information set forth in the Prospectus under the
captions "Summary Consolidated Financial and Other Data" and
"Selected Historical Consolidated Financial and Other Data" does
not agree with the amounts set forth in the unaudited
consolidated financial statements or the audited consolidated
financial statements, as the case may be, from which it was
derived or was not determined on a basis substantially consistent
with that of the corresponding amounts in the audited statements
included in the Registration Statements and the Prospectus;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of this Agreement,
there was any decrease in stockholders' equity or change in the
capital stock or any increase in short-term indebtedness or long-
term debt of the Company and its consolidated subsidiaries or, at
the date of the latest available balance sheet read by such
accountants, there was any decrease in consolidated net current
assets or net assets, as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
(D) 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
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 net income of the Company, or any
increases or decrease, as the case may be, in other items
specified by the Representatives;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
-17-
(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 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
-18-
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 Selling Stockholder, 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 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,
-19-
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, 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 B hereto;
(ii) Each Material Subsidiary of the Company 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; each Material Subsidiary of the Company
is qualified to do business as a foreign corporation in good standing
in each jurisdiction listed opposite its name in Schedule A hereto;
and 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;
(iii) The Offered Securities (other than the Optional Securities
offered by the Selling Stockholder) have been duly authorized and,
when issued and paid for in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable; all other outstanding
shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable; and the authorized and
outstanding capital stock of the Company conforms to the descriptions
thereof contained in the Prospectus under the captions
"Capitalization" and "Description of Capital Stock;"
(iv) Except as described in the Prospectus, to the knowledge of
such counsel, 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 the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Act;
(v) 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 or the Prospectus (it
being understood that such counsel need express
-20-
no opinion as to the matters described in Section 6(g)(ii), as to
which Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ is providing an opinion to the
Underwriters, or Section 6(h)(ii), as to which Fraser & ▇▇▇▇▇▇ is
providing an opinion to the Underwriters);
(vi) The execution, delivery and performance by the Company of
this Agreement and the agreements, documents or instruments entered
into by the Company in connection with the transactions described in
the Prospectus under the caption "The Transactions" and the
consummation by the Company of the transactions herein contemplated
and described in the Prospectus under the caption "The Transactions"
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 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) any statute, rule, regulation,
requirement, order or decree of any governmental, regulatory or
accrediting 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
material indenture, mortgage, loan or credit agreement, note, lease,
permit, license or other agreement or instrument to which the Company
or any 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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ is
providing an opinion to the Underwriters, or Section 6(h)(iii), as to
which Fraser & ▇▇▇▇▇▇ is providing an opinion to the Underwriters);
(vii) 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,
-21-
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; and
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 (it being understood
that such counsel need express no opinion as to the matters described
in Section 6(g)(i), as to which Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ is providing
an opinion to the Underwriters, or Section 6(h)(i), as to which Fraser
& ▇▇▇▇▇▇ is providing an opinion to the Underwriters);
(viii) This Agreement and the agreements, documents or
instruments entered into by the Company in connection with the
transactions described in the Prospectus under the caption "The
Transactions" have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable against the Company 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;
(ix) Except as disclosed in the Prospectus, there are no pending
or, to the knowledge of such counsel, 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 would, individually or in the aggregate, have, or
reasonably be likely to have, a Material Adverse Effect or could
materially and adversely affect the ability of the Company to perform
its obligations under this Agreement or consummate the transactions
described in the Prospectus under the caption "The Transactions" or
which are otherwise material in the context of the sale of the Offered
Securities;
(x) The transactions described in the Prospectus under the
caption "The Transactions" have been consummated; and
In addition, such counsel shall state that 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
-22-
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, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need
express no belief as to the financial statements and schedules and
other financial and accounting data contained in the Registration
Statements or the Prospectus).
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.
(f) On any such Closing Date that is also an Optional Closing Date,
if any, the Representatives shall have received an opinion, dated such
Closing Date, of [Name], counsel for the Selling Stockholder, to the effect
that:
(i) Immediately prior to such Closing Date, the Selling
Stockholder was the sole registered owner of the Optional Securities
delivered by the Selling Stockholder on such Closing Date and has full
corporate power and authority to enter into this Agreement and to
sell, assign, transfer and deliver the Optional Securities delivered
by the Selling Stockholder on such Closing Date; assuming the
Underwriters have purchased the Optional Securities delivered by the
Selling Stockholder on such Closing Date for value, in good faith and
without knowledge of any adverse claim, the Underwriters will have
acquired valid title to such shares free of any adverse claim, any
lien in favor of the Company and any restrictions on transfer imposed
by the Company;
(ii) This Agreement and, to the extent applicable to the Selling
Stockholder, the agreements, documents or instruments entered into by
the Selling Stockholder in connection with the transactions described
in the Prospectus under the caption "The Transactions" have each been
duly authorized, executed and delivered on behalf of the Selling
Stockholder and constitute the legal, valid and binding obligations of
the Selling Stockholder enforceable against the 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;
-23-
(iii) No consent, approval, authorization, order, registration
or qualification of, or filing with, any third party (whether acting
in an individual, fiduciary or other capacity) or any governmental or
regulatory agency or body or any court is required to be obtained or
made by the Selling Stockholder for the consummation by the Selling
Stockholder of the transactions contemplated by this Agreement or
described in the Prospectus under the caption "The Transactions" (it
being understood that such counsel need express no opinion as to the
matters described in Section 6(g)(ii), as to which Dow, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ is providing an opinion to the Underwriters, or Section
6(h)(ii), as to which Fraser & ▇▇▇▇▇▇ is providing an opinion to the
Underwriters); and
(iv) The execution, delivery and performance by the Selling
Stockholder of this Agreement and, to the extent applicable to the
Selling Stockholder, the agreements, documents or instruments entered
into by the Selling Stockholder in connection with the transactions
described in the Prospectus under the caption "The Transactions," the
sale of the Optional Securities by the Selling Stockholder and the
consummation by the Selling Stockholder of any of the other
transactions herein contemplated or described in the Prospectus under
the caption "The Transactions," 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 Optional
Securities being sold by the Selling Stockholder under (A) the
charter, by-laws or other organizational documents of the Selling
Stockholder, (B) any statute, rule, regulation, requirement, order or
decree of any governmental or regulatory agency or body, or any court
having jurisdiction over the 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 the
Selling Stockholder is a party or by which the Selling Stockholder is
bound or to which any of the properties, assets or operations of the
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 the Selling Stockholder to consummate the
transactions contemplated by this Agreement or perform the Selling
Stockholder's obligations hereunder or consummate the transactions
described in the Prospectus under the caption "The Transactions" (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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ is providing an opinion
to the Underwriters, or Section 6(h)(iii), as to which Fraser & ▇▇▇▇▇▇
is providing an opinion to the Underwriters).
-24-
(g) The Representatives shall have received from Dow, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, 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
captions "Risk Factors -- Substantial Dependence on Student Financial
Aid; Potential Adverse Effects of Regulation; -- Potential Loss of
Student Financial Aid Due to Failure to Meet Financial Responsibility
Standards; -- Potential Loss of Student Financial Aid Due to High
Student Loan Default Rates; -- Potential Adverse Regulatory
Consequences of a Change of Ownership or Control; -- Potential Loss of
Student Financial Aid Due to Failure to Maintain State Licenses or
Authorizations; and -- Potential Loss of Student Financial Aid Due to
Failure to Maintain Accreditations" and "Financial Aid and Regulation"
to the extent related to educational regulatory matters other than
Canadian educational regulatory matters (collectively, "U.S.
Regulatory Matters"), insofar as such statements constitute a summary
of legal matters, documents or proceeding with respect to the
operation of post-secondary educational institutions and the offering
of programs of post-secondary education in the United States of
America, are accurate in all material respects;
(ii) No consent, approval, authorization, order, registration or
qualification of, or filing with, any governmental or regulatory
agency or body under the HEA or any similar state statute governing
the authorization to operate post-secondary educational institutions
is required for the consummation by the Company of the transactions
contemplated by this Agreement or described in the Prospectus under
the caption "The Transactions;"
(iii) The execution, delivery and performance by the Company of
this Agreement and the agreements, documents or instruments entered
into by the Company in connection with the transactions described in
the Prospectus under the caption "The Transactions" and the
consummation by the Company of the transactions contemplated herein or
described in the Prospectus under the caption "The Transactions" 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, except for any such violations that, individually or in
the aggregate, would not have, or reasonably be likely to have, a
Material Adverse Effect;
(iv) The issuance and sale of the Offered Securities and the
consummation of the other transactions contemplated by this Agreement
or described in the Prospectus under the caption "The Transactions"
will not constitute a change of ownership resulting in a "change of
control" as defined in the HEA; and
-25-
(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 failures to possess any such Licenses that,
individually or in the aggregate, would not have, or reasonably be
likely to have, a Material Adverse Effect.
Such counsel shall also state that they have participated in the
preparation of those portions of the Registration Statements and the
Prospectus relating to U.S. Regulatory Matters and have no reason to
believe that the information relating to U.S. Regulatory Matters
contained in any 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 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 & ▇▇▇▇▇▇, special Canadian regulatory counsel for
the Company, to the effect that:
(i) The statements contained in the Prospectus under the
captions "Risk Factors -- Dependence on Canadian Financial Aid;
Potential Adverse Effects of Canadian Regulation" and "Financial Aid
and Regulation -- Canadian Regulation" and other references in the
Prospectus, in each case, only to the extent related to Ontario and
Quebec educational regulatory matters and the federal laws of Canada
applicable thereto (collectively, "Canadian Regulatory Matters"),
insofar as such statements constitute a summary of legal matters,
documents or proceedings, are accurate in all material respects;
(ii) No consent, approval, authorization, order, registration or
qualification of, or filing with, any governmental or regulatory
agency or body under any statute, rule, regulation or requirement
related to Canadian Regulatory Matters ("Canadian Educational Laws")
is required for the consummation by the Company of the transactions
contemplated by this Agreement or described in the Prospectus under
the caption "The Transactions;" and
(iii) The execution, delivery and performance by the Company of
this Agreement and the agreements, documents or instruments entered
into by the Company in connection with the transactions described in
the Prospectus under the
-26-
caption "The Transactions" and the consummation by the Company of the
transactions contemplated herein and described in the Prospectus under
the caption "The Transactions" do not result in a breach or violation
of any Canadian Educational Law.
Such counsel shall also state that they have participated in the
preparation of those portions of the Registration Statements and the
Prospectus relating to Canadian Regulatory Matters but (a) have not
conducted any special or independent investigation or due diligence to
determine the existence or absence of any facts or circumstances
relating to the Company, except in requesting and reviewing certain
documents relating to the Company's two schools in Ontario and one
school in Quebec, and no inference as to such counsel's knowledge of
the existence of such facts or circumstances should be drawn merely
from such counsel's representation of the Company; (b) have not
participated in any due diligence sessions or drafting meetings
relating to the Registration Statements or Prospectus; (c) have
received instructions from, and communicated exclusively through, Dow,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, special United States regulatory counsel to the
Company; and (d) have acted as special Canadian regulatory counsel for
the Company in respect of Canadian Regulatory Matters only; and,
subject to the foregoing qualifications, such counsel have no reason
to believe that the information relating to Canadian Regulatory
Matters contained in any 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 any such information
relating to Canadian Regulatory Matters 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.
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.
(i) The Company shall have delivered to the Representatives
agreements of certain officers, directors and stockholders (other than the
Selling Stockholder) of the Company specified by the Representatives to the
effect that, for a period of 180 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
-27-
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 Stockholder 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 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) On any such Closing Date that is also an Optional Closing Date,
if any, the Representatives shall have received a certificate, dated such
Closing Date, of the Selling Stockholder, which shall be executed on behalf
of the Selling Stockholder by a senior executive officer of the Selling
Stockholder, after reasonable investigation, to the effect that: the
representations and warranties of the Selling Stockholder in this Agreement
are true and correct and the 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, which meets the requirements of
subsection (a) of this Section, and from each of the accounting firms
described in subsection (b) of this Section, which meets the requirements
of such subsection, except, in each case, that the specified date referred
-28-
to in such subsections 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 such other opinions,
certificates, letters and other documents from or on behalf of the Company
or the Selling Stockholder as the Representatives shall reasonably request.
The Selling Stockholder 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 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 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.
(b) The Selling Stockholder 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
-29-
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 or its
representatives by or on behalf of the 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; provided, however, that the liability of the Selling Stockholder
pursuant to this Section 7(b) is limited to the proceeds received (less
underwriting discounts and commissions) by the Selling Stockholder, if any, from
the sale of the Optional Securities; 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 the Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or the 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 the 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 legend responsive to Regulation M under the Act on the inside
front cover page, 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," and the information regarding
sales to discretionary accounts and/or passive market making and other
transactions contained in the sixth and eleventh paragraphs under the caption
"Underwriting."
-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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder 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 legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or
-31-
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 the Selling Stockholder shall not
be required to contribute any amount in excess of the amount by which the
proceeds received (less underwriting discounts and commissions) by the Selling
Stockholder, if any, from the sale of the Optional Securities exceeds the amount
of any damages which the 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 Stockholder under this
Section shall be in addition to any liability which the Company and the Selling
Stockholder 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 Stockholder 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 Stockholder 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 Stockholder, except as
provided in 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
-32-
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 Stockholder 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,
the 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 and the Selling Stockholder shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling Stockholder
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. 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 and the Selling
Stockholder will, jointly and severally, 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 ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer, or, if sent to the Selling Stockholder, 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 Agreement taken by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters.
-33-
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
Stockholder, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
CAREER EDUCATION CORPORATION
By...............................
THE PROVIDENT BANK
By...............................
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
Acting on behalf of themselves and as the Representatives of the
several Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By..............................
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SCHEDULE A
Number of Optional
Selling Stockholder Securities to be Sold
------------------- ---------------------
The Provident Bank 26,262
[Address]
[City, State Zip]
A-1
SCHEDULE B
Number of Firm
Underwriter Securities to be Purchased
----------- --------------------------
Credit Suisse First Boston Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
-------------
TOTAL 2,850,000
=============
B-1
