Exhibit 1
2,000,000
Xxxxxxx Education, Inc.
Common Stock
UNDERWRITING AGREEMENT
----------------------
November 14, 2002
Credit Suisse First Boston Corporation
Banc of America Securities LLC
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Dear Ladies and Gentlemen:
1. Introductory. New Mountain Partners, L.P. ("New Mountain") and DB
Capital Investors, L.P. ("DB Capital" and, together with New Mountain, the
"Selling Stockholders") propose severally to sell an aggregate of 2,000,000
shares ("Firm Securities") of common stock, par value $0.01 per share
("Securities"), of Xxxxxxx Education, Inc., a Maryland corporation (the
"Company"), and DB Capital also proposes to sell to the several Underwriters
named in Schedule A hereto ("Underwriters"), at the option of the
Underwriters, an aggregate of not more than 300,000 additional shares
("Optional Securities") of the Company's Securities as set forth below. The
Firm Securities and the Optional Securities are herein collectively called the
"Offered Securities." The Selling Stockholders hereby agree with the Company
and with the Underwriters as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-100407) 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 (the "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 material incorporated by
reference therein, 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 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, including all material incorporated by reference in such
prospectus, 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 neither 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 (i) any Underwriter through
the Representatives specifically for use therein, it being understood
and agreed that the only such information is that described as such
in Section 7(c) hereof or (ii) any Selling Stockholder specifically
for use therein, it being understood and agreed that the only such
information furnished by any such Selling Stockholder consists of the
information about such Selling Stockholder under the caption "Selling
Stockholders" in the Prospectus.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Maryland,
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 to
the extent that failure to be so qualified would not individually or
in the aggregate reasonably be expected 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 active 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; and each such 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 where the failure to be so qualified would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; all of the issued and outstanding capital
stock of each such subsidiary of the Company has been duly authorized
and validly issued and is fully paid and nonassessable; and the
capital stock of each such subsidiary of the Company owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(v) All outstanding shares of capital stock of the Company have
been duly authorized and validly issued, fully paid and nonassessable
and conform to the description thereof contained in the Prospectus;
and the stockholders of the Company have no preemptive rights with
respect to the Securities. The Offered Securities have been duly
authorized and reserved for issuance and, when issued upon conversion
of the Series A Convertible Preferred Stock of the Company (the
"Series A Preferred Stock") in accordance with the Articles
Supplementary relating to the Series A Preferred Stock (the "Articles
Supplementary"), will be validly issued, fully paid and
non-assessable, and the issuance of such Offered Securities by the
Company to the Selling Stockholders will not be subject to any
preemptive rights.
(vi) Except as disclosed 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 the offering of the Offered
Securities.
(vii) Other than the registration rights agreement, dated May
15, 2001, entered into by and among the Company and the Selling
Stockholders (the "Registration Rights Agreement"), 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 are listed on the Nasdaq Stock Market's
National Market.
(ix) 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 in connection with the
sale of the Offered Securities, except (i) such as have been obtained
and made under the Act (ii) the filing of the Prospectus in
accordance with Rule 424(b), if necessary, and (iii) such as may be
required under state securities laws.
(x) The execution, delivery and performance of this Agreement,
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, rule, regulation or
order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, including, without
limitation, the Higher Education Act of 1965, as amended, and the
regulations promulgated thereunder (the "HEA"), or any 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 of the Company or any such subsidiary is subject,
except where such breach, violation or default would not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect. The execution, delivery and performance of this
Agreement, and the consummation of the transactions herein
contemplated will not result in a breach of the charter or by-laws of
the Company or any such subsidiary. The sale of the Offered
Securities by the Selling Stockholders will not constitute a change
in ownership resulting in a "change of control" of the Company
pursuant to the applicable regulations promulgated under the HEA or
any applicable state statute or regulation.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) Except as disclosed in the Prospectus, the Company and
its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each
case free from liens, encumbrances and defects that would affect the
value thereof or interfere with the use made or to be made thereof by
them, except in each case where such failure would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect; and except as disclosed in the Prospectus, the
Company and its subsidiaries hold any leased real or personal
property under valid and enforceable leases with no exceptions that
would interfere with the use made or to be made thereof by them,
except in each case where such failure would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.
(xiii) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them, including, without limitation, all authorizations
required for participation in federal financial aid programs under
Title IV ("Title IV Programs") of the HEA, except where such failure
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and have not received any
notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined
adversely to the Company or any of its subsidiaries, would not
reasonably be expected to have, individually or in the aggregate, 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 threatened
that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(xv) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names
servicemarks and licenses 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 presently employed by
them, except where such failure would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect,
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 reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries is in violation of any statute,
any 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 reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect; and the Company is not aware of any pending
investigation which would reasonably be expected to lead to such a
claim.
(xvii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise material in
the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(xviii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown,
and, except as otherwise disclosed in the Prospectus, such financial
statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a
consistent basis and the schedules included in each Registration
Statement present fairly the information required to be stated
therein.
(xix) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements 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 for dividends paid on the Securities consistent with past
practice, payment-in-kind dividends made by the Company in respect of
the Series A Preferred Stock consistent with the terms of the
Articles Supplementary and as otherwise 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) The Company is subject to the reporting requirements of
either Section 13 or Section 15(d) of the Securities Exchange Act of
1934 and files reports with the Commission on the Electronic Data
Gathering, Analysis, and Retrieval (XXXXX) system.
(xxi) The Company is not and, after giving effect to the
offering and sale of the Offered Securities, will not be an
"investment company" as defined in the Investment Company Act of 1940.
(xxii) Except for Xxxxxxx University, Inc., a Maryland
corporation ("Xxxxxxx University"), the Company has no subsidiary
that meets any of the following conditions: (A) the Company's and its
other subsidiaries' investments in and advances to the subsidiary
exceed five percent of the total assets of the Company and its
subsidiaries consolidated as of the end of the most recently
completed fiscal year; (B) the Company's and its other subsidiaries'
proportionate share of the total assets (after intercompany
eliminations) of the subsidiary exceeds five percent of the total
assets of the Company and its subsidiaries consolidated as of the end
of the most recently completed fiscal year; or (C) the Company's and
its subsidiaries' equity in the income from continuing operations
before income taxes, extraordinary items and cumulative effect of a
change in accounting principle of the subsidiary exceeds five percent
of such income of the Company and its subsidiaries consolidated for
the most recently completed fiscal year.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, the several Underwriters that:
(i) On such Closing Date and on each Closing Date hereinafter
mentioned, such Selling Stockholder will have valid and unencumbered
title to the shares of the Series A Preferred Stock that will be
converted into the Offered Securities to be delivered by such Selling
Stockholder on such Closing Date and on such Closing Date, and on
each Closing Date hereinafter mentioned, such Selling Stockholder
will have valid and unencumbered title to the Offered Securities and
full right, power and authority to enter into this Agreement and to
sell, assign, transfer and deliver the Offered Securities to be
delivered by such Selling Stockholder on such Closing Date hereunder;
and upon the delivery of and payment for the Offered Securities on
each Closing Date hereunder the several Underwriters will acquire
valid and unencumbered title to the Offered Securities to be
delivered by such Selling Stockholder on such Closing Date. The
Selling Stockholders have delivered to the Company the notice
required under the Articles Supplementary relating to the conversion
of shares of Series A Preferred Stock into the Offered Securities.
(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 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 statement
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 neither 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 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 statements in or
omissions from a Registration Statement or the Prospectus are based
upon written information furnished to the Company by such Selling
Stockholder specifically for use therein, it being understood and
agreed that the only such information furnished by any such Selling
Stockholder consists of the information about such Selling
Stockholder under the caption "Selling Stockholders" in the
Prospectus.
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Stockholder and any person that would give rise to a valid claim
against such Selling Stockholder or any Underwriter or, to the
knowledge of such Selling Stockholder, the Company for a brokerage
commission, finder's fee or other like payment in connection with the
offering 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, each Selling Stockholder agrees,
severally and not jointly, to sell to the Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from each Selling Stockholder,
at a purchase price of $49.27 per share, the number of Firm Securities set
forth below the name of such Selling Stockholder and opposite the name of such
Underwriter in Schedule A hereto.
The Selling Stockholders 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 accounts at a bank acceptable to Credit Suisse First Boston
Corporation ("CSFBC") drawn to the order of New Mountain and DB Capital,
respectively, at the office of Xxxxxxx Xxxx & Xxxxxxxxx, at 8:30 A.M., New
York time, on November 20, 2002, or at such other time not later than seven
full business days thereafter as CSFBC and the Selling Stockholders determine,
such time being herein referred to as the "First Closing Date." The
certificates for the Firm Securities so to be delivered will be duly indorsed
or accompanied by duly executed blank stock powers so as to validly transfer
title to the Representatives for the account of the Underwriters. The Company
will cause its transfer agent to reissue such securities in definitive form,
in such denominations and registered in such names as CSFBC requests and such
reissued securities will be made available by the Company for checking and
packaging at the above office of Xxxxxxx Xxxx & Xxxxxxxxx at least 24 hours
prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and
DB Capital 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 Security to be paid for the Firm
Securities. DB Capital agrees to sell to the Underwriters the number of
Optional Securities specified in such notice. Such Optional Securities shall
be purchased from DB Capital 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 DB Capital.
Each time for the delivery of and payment for the Optional
Securities, being herein referred to as an "Optional Closing Date", which may
be the First Closing Date (the First Closing Date and each Optional Closing
Date, if any, being sometimes referred to as a "Closing Date"), shall be
determined by CSFBC but shall be not later than five full business days after
written notice of election to purchase Optional Securities is given. DB
Capital 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 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 DB Capital, at the above office
of Xxxxxxx Xxxx & Xxxxxxxxx. The certificates for the Optional Securities
being purchased on each Optional Closing Date will be duly indorsed or
accompanied by duly executed blank stock powers so as to validly transfer
title to the Representatives for the account of the Underwriters. The Company
will cause its transfer agent to reissue such securities in definitive form,
in such denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and such reissued
securities will be made available by the Company for checking and packaging at
the above office of Xxxxxxx Xxxx & Xxxxxxxxx at a reasonable time in advance
of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders.
(a) The Company agrees with the several Underwriters and the Selling
Stockholders that:
(i) 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.
(ii) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if
any) or the Prospectus and will not effect such amendment or
supplementation without CSFBC's consent; 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 reasonable best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
(iii) 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 which 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.
(iv) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earning 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.
(v) The Company will furnish to the Representatives copies of
each Registration Statement (five 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 3:00 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.
(vi) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFBC designates; provided, however, that the Company is not required
(a) to file a general consent to service of process in any
jurisdiction in which it is not presently subject or (b) to qualify
as a foreign corporation, or make any education regulatory filing, in
any jurisdiction in which it is not so qualified. The Company will
continue such qualifications in effect so long as required for the
distribution.
(vii) For a period of 90 days after the date of the Prospectus,
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 for (A) grants of stock options to the Company's employees and
directors pursuant to the terms of a plan in effect on the date
hereof, (B) issuances of Securities pursuant to the exercise of such
options or upon conversion of any outstanding shares of Series A
Preferred Stock and (C) issuances of Securities pursuant to the
Company's existing employee stock purchase plan or dividend
reinvestment plan.
(viii) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, for any filing
fees and other expenses (including fees and disbursements of counsel
for the Underwriters up to a maximum of $2,000) incurred 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 the review by the National Association of Securities Dealers, Inc.
of the Offered Securities and for expenses incurred in printing and
distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters and to
prospective purchasers of the Offered Securities. The Underwriters
shall pay for any travel expenses of the Company's officers and
employees (including the cost of the rental of a private airplane
used to travel to meetings with prospective purchasers ("private
airplane fees")) and any other expenses reasonably incurred by the
Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, except as otherwise
provided in this Agreement. The Underwriters shall pay their own
costs and expenses in connection with the transactions contemplated
hereby, including, without limitation, the fees and expenses of their
counsel and the expenses relating to any advertisement initiated by
them of the Offered Securities.
(b) Each Selling Stockholder agrees with the several Underwriters
and the Company that:
(i) Such Selling Stockholder will pay all expenses incident to
the performance of the obligations of such Selling Stockholder under
this Agreement, for all underwriting discounts and commissions, and
for any transfer taxes on the sale by the Selling Stockholder of the
Offered Securities to the Underwriters.
(ii) Each Selling Stockholder agrees to deliver to the
Representatives on or prior to the First Closing Date 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).
(iii) Each Selling Stockholder agrees, for a period of 90 days
after the date of the Prospectus, 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, including shares of Series A Preferred Stock, enter into
a transaction that would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part,
any of the economic consequences of ownership of the Securities,
whether any such aforementioned transaction is to be settled by
delivery of the Securities or such other securities, in cash or
otherwise, or publicly disclose the intention to make any such offer,
sale, pledge or disposition, or enter into any such transaction,
swap, hedge or other arrangement, without, in each case, the prior
written consent of CSFBC, except for (A) the transfer of the shares
of Series A Preferred Stock to the Company upon conversion of such
shares into the Offered Securities and (B) dispositions to affiliates
of such Selling Stockholder that agree to be bound by the provisions
of this Section 5(b)(iii) for the remainder of such 90-day period.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each
Optional Closing Date will be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Stockholders, as
applicable, herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholders, as applicable, 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 PricewaterhouseCoopers LLP ("PWC")
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 schedules
examined by them and included or incorporated by reference 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 included or incorporated by reference 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 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 included or
incorporated by reference 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 unaudited income from operations, net income and
net income per share amounts for the three-month periods ended
March 31, June 30 and September 30, 2001 and March 31, June 30
and September 30, 2002 and for the nine-month periods ended
September 30, 2001 and September 30, 2002 included in the
Prospectus and incorporated by reference therein do not agree
with the amounts set forth in the unaudited consolidated
financial statements for those same periods or were not
determined on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(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 such letter,
there was any change in the capital stock or any increase in
long-term liabilities 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 total
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 and with the period
of corresponding length ended the date of the latest income
statement included in the Prospectus, in income from
operations, net income or net income per share amounts;
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
(iv) they have compared dollar amounts (or percentages
derived from such dollar amounts) and other financial
information specified by the Representatives 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, in each case 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, (A) if the Effective Time of the
Initial Registration Statement 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, (B) if the Effective Time of the Initial
Registration Statement 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 (C) "Prospectus" shall mean
the prospectus included in the Registration Statements. All financial
statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the
Registration Statements for purposes of this subsection.
(b) 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 any Selling Stockholder, the Company
or the Representatives, shall be contemplated by the Commission.
(c) 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 and 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 downgrading in the rating, if any, of any
debt securities, if any, of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities, if any,
of the Company (other than an announcement with positive implications of
a possible upgrading, and no implication of a possible downgrading, of
such rating, if any); (iii) any material suspension or material
limitation of trading in securities generally on the New York Stock
Exchange or on the Nasdaq National Market, 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; (iv) any banking moratorium declared by U.S. Federal or New York
authorities; (v) any major disruption of settlements of securities or
clearance services in the United States or (vi) any attack on, outbreak
or escalation of hostilities or act of terrorism involving the United
States, any declaration of war by Congress or any other 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 attack, outbreak, escalation, act, 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.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Company, to
the effect that:
(i) The Company is duly qualified to do business as a foreign
corporation in good standing in all jurisdictions (other than the
State of Maryland) in which its ownership or lease of property or the
conduct of its business requires such qualification, except to the
extent where such failure to be so qualified would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect;
(ii) Xxxxxxx University is duly qualified to do business as a
foreign corporation in good standing in all jurisdictions in which
its ownership or lease of property or the conduct of its business
requires such qualification, except to the extent where such failure
to be so qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(iii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required
to be obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Offered Securities, except (A) such as have been obtained
and made under the Act and (B) such as may be required under state
securities and education laws;
(iv) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, rule, regulation or
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company or any
of their properties, or any material agreement or instrument known to
such counsel to which the Company or any such subsidiary is a party
or by which the Company or any such subsidiary of the Company is
bound or to which any of the properties of the Company or any such
subsidiary is subject, except, in each such case, where such breach,
violation or default would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and
(v) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if determinable)
specified in such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b) specified in
such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the best of 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 (except for any
material incorporated by reference), as of their respective effective
or issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations.
In rendering such opinions, such counsel may state that (i) its
opinion is limited to matters governed by the Federal laws of the United
States of America and the laws of the State of New York and (ii) it has
relied, as to matters of fact and to the extent it deems proper, on
certificates of responsible officers of the Company or public officials. In
addition, such counsel may state that, notwithstanding the foregoing, it does
not express any opinion with the respect to any federal, state or other
applicable education laws or regulations.
In addition to the matters set forth above, such counsel shall state
that, although it has not undertaken to investigate or verify independently,
and does not assume responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or any amendment
thereto except to the extent stated above, no facts have come to such
counsel's attention that would lead them to believe that the Registration
Statement or any amendment thereto, as of its effective date or as of such
Closing Date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, or any amendment or
supplement thereto, as of its issue date or as of such Closing Date, contained
any untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; it being understood
that such counsel need not express any opinion as to (A) the financial
statements or other financially derived statistical data, or (B) any
statements related to education regulatory issues.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP, special Maryland counsel
for the Company, substantially in the form attached hereto as Exhibit A.
(f) The Representatives shall have received an opinion, dated such
Closing Date, of Powers Xxxxx Xxxxxx & Xxxxxxxx, P.C., special regulatory
counsel for the Company, to the effect that:
(i) The statements in the Registration Statements and the
Prospectus under the captions "Risk Factors-Risks Related to
Extensive Regulation of Our Business," "Risk Factors-Risks Related to
Our Business-Our strategy of opening new schools and adding new
services is dependent on regulatory approvals and requires
significant resources," "Risk Factors-Risks Related to Our
Business-Regulatory requirements may make it more difficult to
acquire us," "Risk Factors-Risks Related to Our Business-We may not
be able to successfully complete or integrate future acquisitions,"
"Risk Factors-Risks Related to Strayer ONLINE's Business-Government
regulations relating to the internet could increase Strayer ONLINE's
cost of doing business or affect its ability to grow,"
"Business-Regulation," and in "Notes to Consolidated Financial
Statements-Short-Term Investments -Restricted" (collectively, the
"Regulatory Disclosure"), insofar as such statements constitute a
summary of applicable federal and state or other applicable laws and
regulations or a summary of the judicial or administrative
proceedings, are accurate and present fairly the information
purported to be shown;
(ii) Such counsel has no knowledge that leads them to believe
that the information contained in the Regulatory Disclosure as of the
Effective Date and as of the date of the Prospectus and as of the
Closing Date, contained any untrue statement of a material fact, or
omitted to state any material fact necessary to make the statements
therein not misleading;
(iii) Based upon the assumption that the Offering will not
result in a person acquiring ownership and control of the Company
such that the Company is required to file a Form 8-K with the
Commission notifying that agency of the change in control, the
Offering will not constitute a change in ownership resulting in a
change in control under the HEA or the higher education regulatory
body in each state where Xxxxxxx University is physically located and
engages in rendering educational services as described in the
Prospectus;
(iv) Except as disclosed in the Prospectus, no consent,
approval, authorization or order of, or filing with, the U.S.
Department of Education or any state higher education regulatory body
under the HEA or state higher education regulatory law is required to
be obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Offered Securities except such as have been obtained and
made or except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and
(v) To the best of such counsel's knowledge, each of the
Company and its subsidiaries has all necessary licenses,
certificates, permits and other authorizations required for Xxxxxxx
University to participate in Title IV Programs or pursuant to which
the Company or any of its subsidiaries must be authorized by each
state in which Xxxxxxx University is physically located and engages
in rendering educational services as described in the Prospectus
except where the failure to have any such licenses, certificates,
permits and other authorizations would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(g) The Representatives shall have received an opinion, dated such
Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for New
Mountain, substantially in the form attached hereto as Exhibit B.
(h) The Representatives shall have received an opinion, dated such
Closing Date, of in-house counsel of Deutsche Bank, AG, counsel for DB
Capital, substantially in the form attached hereto as Exhibit C.
(i) The Representatives shall have received from Mayer, Brown, Xxxx &
Maw, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the validity
of the Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the Representatives
may require, and the Selling Stockholders and the Company shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters. In rendering such opinion, Mayer, Brown, Xxxx
& Maw may rely as to the incorporation of the Company and all other matters
governed by Maryland law upon the opinion of Xxxxxxx, Baetjer and Xxxxxx, LLP
referred to above.
(j) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state 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 contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs
(1) and (3) or 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.
(k) The Representatives shall have received a letter, dated such
Closing Date, of PWC, which meets the requirements of subsection (a) of this
Section, except that the specified date referred to in such subsection will be
a date not more than three days prior to such Closing Date for the purposes of
this subsection.
The Selling Stockholders and the Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters
and documents as the Representatives reasonably requests. 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, its partners, directors and officers and
each person, if any, who controls such Underwriter within the meaning of
Section 15 of the Act, 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 (i) 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 or (ii) any Seller Stockholder specifically for use
therein, it being understood and agreed that the only such information
furnished by any Selling Stockholder consists of the information about such
Selling Stockholder under the caption "Selling Stockholders" in the
Prospectus; provided, however, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any
preliminary prospectus the indemnity, hold harmless and reimbursement
agreements contained in this subsection (a) shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased the Offered Securities concerned, to the
extent that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such
purchase and any such loss, claim, damage or liability of such Underwriter
results from the fact that there 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, a copy of the Prospectus if the Company had previously furnished
copies thereof to such Underwriter.
Insofar as the foregoing indemnity agreement, or the representations
and warranties contained in Section 2(a)(ii), may permit indemnification for
liabilities under the Act of any person who is an Underwriter or a partner or
controlling person of an Underwriter within the meaning of Section 15 of the
Act and who, at the date of this Agreement, is a director, officer or
controlling person of the Company, the Company has been advised that in the
opinion of the Commission such provisions may contravene Federal public policy
as expressed in the Act and may therefore be unenforceable. In the event that
a claim for indemnification under such agreement or such representations and
warranties for any such liabilities (except insofar as such agreement provides
for the payment by the Company of expenses incurred or paid by a director,
officer or controlling person in the successful defense of any action, suit or
proceeding) is asserted by such a person, the Company will submit to a court
of appropriate jurisdiction (unless in the opinion of counsel for the Company
the matter has already been settled by controlling precedent) the question of
whether or not indemnification by it for such liabilities is against public
policy as expressed in the Act and therefore unenforceable, and the Company
will be governed by the final adjudication of such issue.
(b) Each of the Selling Stockholders, severally and not jointly, will
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, 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 such Selling
Stockholder shall only be subject to indemnification, hold harmless and
reimbursement obligations under this subsection (b) only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission is based upon and in conformity with written information provided by
such Selling Stockholder relating to such Selling Stockholder specifically for
use therein, it being understood and agreed that the only such information
furnished by any such Selling Stockholder consists of the information about
such Selling Stockholder under the caption "Selling Stockholders" in the
Prospectus; provided, however, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any
preliminary prospectus the indemnity, hold harmless and reimbursement
agreements contained in this subsection (b) shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased the Offered Securities concerned, to the
extent that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such
purchase and any such loss, claim, damage or liability of such Underwriter
results from the fact that there 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, a copy of the Prospectus if the Company had previously furnished
copies thereof to such Underwriter; and provided, further, that the liability
under this Section 7 of each Selling Stockholder shall be limited to an amount
equal to the aggregate net proceeds, after deducting underwriting discounts
and commissions, received by such Selling Stockholder from the sale of the
Offered Securities sold by such Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company, its directors and officers and each person, if any,
who controls the Company within the meaning of Section 15 of the Act, and each
Selling Stockholder, its partners, directors and officers and each person, if
any, who controls each Selling Stockholder within the meaning of Section 15 of
the Act against any losses, claims, damages or liabilities to which the
Company or such Selling Stockholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through the Representatives specifically for use therein, and
will reimburse any legal or other expenses reasonably incurred by the Company
and each Selling Stockholder in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred,
it being understood and agreed that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished
on behalf of each Underwriter: the concession and reallowance figures
appearing in the fourth paragraph under the caption "Underwriting" and the
information contained in the eleventh paragraph under the caption
"Underwriting."
(d) Promptly after receipt by an indemnified party under this Section
7 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 failure to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under subsection (a), (b) or (c) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided further that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an 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 the 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 7 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 indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement (i) includes an unconditional release
of such indemnified party from all liability on any claims that are the
subject matter of such action and (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) above or, where the indemnified party is the Company or its
officers, directors or controlling persons, under subsection (c) above, then
each indemnifying party, in lieu of indemnifying such indemnified 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) or
(c) above in such proportion as is appropriate to reflect the relative fault
of the Company 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.
If the indemnification provided for in this Section 7 is unavailable to an
indemnified party under subsection (b) above or, where the indemnified party
is a Selling Stockholder, under subsection (c) above, then each indemnifying
party, in lieu of indemnifying such indemnified 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 (b) or (c) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by such Selling Stockholder on the one hand and the Underwriters on the other
hand from the offering of the Offered 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 such Selling
Stockholder on the one hand and the Underwriters on the other in connection
with the statements and omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations; provided, however, that the liability under this Section 7 of
each Selling Stockholder shall be limited to an amount equal to the aggregate
net proceeds, after deducting underwriting discounts and commissions, received
by such Selling Stockholder from the sale of the Offered Securities sold by
such Selling Stockholder. The relative benefits received by the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in 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 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 Offered 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. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section 7 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within
the meaning of the Act; and the obligations of the Underwriters under this
Section 7 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 Selling
Stockholders for the purchase of such Offered Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by
such Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to
purchase the Offered Securities that such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of shares of Offered Securities with respect
to which such default or defaults occur exceeds 10% of the total number of
shares of Offered Securities that the Underwriters are obligated to purchase
on such Closing Date and arrangements satisfactory to CSFBC and the Selling
Stockholders for the purchase of such Offered Securities by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Company
or the Selling Stockholders, except as provided in Section 9, (provided that
if such default occurs with respect to Optional Securities after the First
Closing Date, this Agreement will not terminate as to the Firm Securities or
any Optional Securities purchased prior to such termination). As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 8. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Selling Stockholders, of the Company or its officers and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of any Underwriter, any
Selling Stockholder, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated
pursuant to Section 8 or if for any reason the purchase of the Offered
Securities by the Underwriters is not consummated, the Company and the Selling
Stockholders 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 Stockholders, and the Underwriters pursuant to Section 7
shall remain in effect, and if any Offered Securities have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 shall also remain in effect. 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 (iii), (iv), (v) or (vi) of
Section 6(c), the Company will reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities. If the purchase of the Offered Securities by the Underwriters is
not consummated because of the termination of this Agreement because of the
occurrence of any event specified in clause (iii), (iv), (v) or (vi) of
Section 6(c), the Company will reimburse the Underwriters for 50% of the cost
of the private airplane fees paid by the Underwriters pursuant to Section
5(a)(iii).
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representatives at, c/o Credit Suisse First Boston
Corporation, Xxx Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention:
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Xxxxxxx Education, Inc., 0000
Xxxxxx Xxxx., Xxxxx 0000, Xxxxxxxxx, XX 00000, Attention: Xxxxxx X. XxXxxxxx,
if sent to New Mountain, will be mailed, delivered or telegraphed and
confirmed to it at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, or, if
sent to DB Capital, will be mailed, delivered or telegraphed and confirmed to
it, at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or 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 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.
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 conflicts of laws.
The Company and each of the Selling Stockholders hereby submit 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.
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of
the counterparts hereof, whereupon it will become a binding agreement among
the Selling Stockholders, the Company and the several Underwriters in
accordance with its terms.
Very truly yours,
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P.,
its general partner
By: New Mountain GP, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Member
DB CAPITAL INVESTORS, L.P.
By: DB Capital Partners, L.P.,
its General Partner
By: DB Capital Partners, Inc.,
its General Partner
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
XXXXXXX EDUCATION, INC.
By:/s/ Xxxxxx X. XxXxxxxx
----------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Senior Vice President and
General Counsel
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
XXXX XXXXX XXXX XXXXXX, INCORPORATED
Acting on behalf of themselves and as the
Representatives of the several Underwriters
BY: CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
SCHEDULE A
Number of Firm Securities
to be Sold by
Total Number of Firm
New Mountain DB Capital Securities
Underwriter Partners, L.P. Investors, L.P. to be Purchased
Credit Suisse First Boston Corporation............. - - 786,250
Banc of America Securities LLC..................... - - 550,375
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated............... - - 235,875
X.X. Xxxxxx Securities Inc......................... - - 235,500
Barrington Research Associates, Inc................ - - 32,000
First Analysis Securities Corporation.............. - - 32,000
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.................. - - 32,000
Invemed Associates LLC............................. - - 32,000
SunTrust Capital Markets, Inc...................... - - 32,000
Xxxxxx Xxxxxx Partners LLC......................... - - 32,000
Total......................... 1,700,000 300,000 2,000,000
EXHIBIT A
[Opinion of Xxxxxxx, Baetjer and Xxxxxx, LLP]
EXHIBIT B
[Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP]
EXHIBIT C
[Opinion of In-House Counsel for DB Capital Investors, L.P.]
