1
EXHIBIT 1.1
XXXXXX & BIRD DRAFT
2,600,000 Shares
EDUTREK INTERNATIONAL, INC.
Class A Common Stock
(No Par Value)
UNDERWRITING AGREEMENT
August , 1997
XXXXX XXXXXX INC.
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
As Representatives of the Several Underwriters
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
EduTrek International, Inc., a Georgia corporation (the "Company"),
proposes to issue and sell an aggregate of 2,342,890 shares of its Class A
common stock, no par value ("Class A Common Stock"), to the several
Underwriters named in Schedule II hereto (the "Underwriters"), and the person
named in Schedule I hereto (the "Selling Shareholder") proposes to sell to the
several Underwriters 257,110 shares of Class A Common Stock. The Company and
the Selling Shareholder are hereinafter sometimes referred to as the "Sellers".
The Class A Common Stock and the Company's Class B common stock, no par value
("Class B Common Stock"), are hereinafter referred to collectively as the
"Common Stock," and the 2,342,890 shares of Class A Common Stock to be issued
and sold to the Underwriters by the Company and the 257,110 shares of Class A
Common Stock to be sold to the Underwriters by the Selling Shareholder are
hereinafter referred to as the "Firm Shares". The Company also proposes to
sell to the Underwriters, upon the terms and conditions set forth in Section 2
hereof, up to an additional 390,000 shares (the "Additional Shares") of Class A
Common Stock. The Firm Shares and the Additional Shares (to the extent such
Additional Shares are purchased by the Underwriters) are hereinafter
collectively referred to as the "Shares".
The Company and the Selling Shareholder wish to confirm as follows their
respective agreements with you (the "Representatives") and the other several
Underwriters on whose behalf you are acting, in connection with the several
purchases of the Shares by the Underwriters.
- 1 -
2
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 (File No. 333-__________) under
the Act (the "registration statement"), including a prospectus subject to
completion, relating to the Shares. The term "Registration Statement" as used
in this Agreement means the registration statement (including all financial
schedules and exhibits), as amended at the time it becomes effective, or, if
the registration statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Shares may commence, the term
"Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. If an abbreviated
registration statement is prepared and filed with the Commission in accordance
with Rule 462(b) under the Act ("an Abbreviated Registration Statement"), the
term "Registration Statement" as used in this Agreement includes the
Abbreviated Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement, or, if the prospectus included in the Registration Statement omits
information in reliance on Rule 430A under the Act and such information is
included in a prospectus filed with the Commission pursuant to Rule 424(b)
under the Act, the term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement as supplemented
by the addition of the Rule 430A information contained in the prospectus filed
with the Commission pursuant to Rule 424(b). The term "Prepricing Prospectus"
as used in this Agreement means the prospectus subject to completion in the
form included in the registration statement at the time of the initial filing
of the registration statement with the Commission, and as such prospectus shall
have been amended from time to time prior to the date of the Prospectus.
2. Agreements to Sell and Purchase. Subject to such adjustments as you
may determine in order to avoid fractional shares, the Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company and the Selling Shareholder herein contained and
subject to all the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $__________ per Share (the "purchase price per share"), the number of
Firm Shares which bears the same proportion to the aggregate number of Firm
Shares to be issued and sold by the Company as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule II hereto (or such
number of Firm Shares increased as set forth in Section 12 hereof) bears to the
aggregate number of Firm Shares to be sold by the Company and the Selling
Shareholder.
Subject to such adjustments as you may determine in order to avoid
fractional shares, the Selling Shareholder hereby agrees, subject to all the
terms and conditions set forth herein, to sell to each Underwriter and, upon
the basis of the representations, warranties and agreements of the Company and
the Selling Shareholder herein contained and subject to all the terms and
conditions set forth herein, each Underwriter, severally and not jointly,
agrees to purchase from
- 2 -
3
the Selling Shareholder at the purchase price per share that number of Firm
Shares which bears the same proportion to the number of Firm Shares set forth
opposite the name of such Selling Shareholder in Schedule I hereto as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II hereto (or such number of Firm Shares increased as set forth in
Section 12 hereof) bears to the aggregate number of Firm Shares to be sold by
the Company and the Selling Shareholder.
The Company also agrees, subject to all the terms and conditions set forth
herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Shareholder herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the
Company, at the purchase price per share, pursuant to an option (the
"over-allotment option") which may be exercised in whole or in part at any time
and from time to time prior to 9:00 P.M., New York City time, on the 30th day
after the date of the Prospectus (or, if such 30th day shall be a Saturday or
Sunday or a holiday, on the next business day thereafter when the New York
Stock Exchange is open for trading), up to an aggregate of 390,000 Additional
Shares from the Company. Additional Shares may be purchased only for the
purpose of covering over-allotments made in connection with the offering of the
Firm Shares. Upon any exercise of the over-allotment option, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares (subject to such adjustments as you may determine in order to
avoid fractional shares) which bears the same proportion to the number of
Additional Shares to be sold by the Company as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule II hereto (or such
number of Firm Shares increased as set forth in Section 12 hereof) bears to the
aggregate number of Firm Shares to be sold by the Company and the Selling
Shareholder.
Certificates in transferable form for the Shares which the Selling
Shareholder agrees to sell pursuant to this Agreement have been placed in
custody with the transfer agent for the Company (the "Custodian") for delivery
under this Agreement pursuant to a Custody Agreement and Power of Attorney (the
"Custody Agreement") executed by the Selling Shareholder appointing [R. Xxxxxx
Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx and ______________] as agents and
attorneys-in-fact (the "Attorneys-in-Fact"). The Selling Shareholder agrees
that (i) the Shares represented by the certificates held in custody pursuant to
the Custody Agreement are subject to the interests of the Underwriters and the
Company, (ii) the arrangements made by the Selling Shareholder for such custody
are, except as specifically provided in the Custody Agreement, irrevocable, and
(iii) the obligations of the Selling Shareholder hereunder and under the
Custody Agreement shall not be terminated by any act of such Selling
Shareholder or by operation of law, whether by the dissolution of the Selling
Shareholder or the occurrence of any other event. If the Selling Shareholder
shall be dissolved or if any other event shall occur before the delivery of the
Shares hereunder, certificates for the Shares of such Selling Shareholder shall
be delivered to the Underwriters by the Attorneys-in-Fact in accordance with
the terms and conditions of this Agreement and the Custody Agreement as if such
dissolution or other event had not occurred, regardless of whether or not the
Attorneys-in-Fact or any Underwriter shall have received notice of such
dissolution or other event. Each Attorney-in-Fact is authorized, on behalf of
the Selling Shareholder, to execute this Agreement and any other documents
necessary
- 3 -
4
or desirable in connection with the sale of the Shares to be sold hereunder by
such Selling Shareholder, to make delivery of the certificates for such Shares,
to receive the proceeds of the sale of such Shares, to give receipts for such
proceeds, to pay therefrom any expenses to be borne by such Selling Shareholder
in connection with the sale and public offering of such Shares, to distribute
the balance thereof to such Selling Shareholder, and to take such other action
as may be necessary or desirable in connection with the transactions
contemplated by this Agreement. Each Attorney-in-Fact agrees to perform his
duties under the Custody Agreement.
3. Terms of Public Offering. The Sellers have been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New
York City time, on August __, 1997 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement among you,
the Company and the Attorneys-in-Fact.
Delivery to the Underwriters of and payment for any Additional Shares to
be purchased by the Underwriters shall be made at the aforementioned office of
Xxxxx Xxxxxx Inc. at such time on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a
written notice from you on behalf of the Underwriters to the Company and the
Attorneys-in-Fact of the Underwriters' determination to purchase a number,
specified in such notice, of Additional Shares. The place of closing for any
Additional Shares and the Option Closing Date for such Shares may be varied by
agreement among you, the Company and the Attorneys-in-Fact.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. Covenants of the Company. The Company covenants and agrees with the
several Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and will
- 4 -
5
advise you promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement or such post-effective amendment has
become effective.
(b) The Company will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of receipt of
any comments or other communications from the Commission; (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iv) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations
thereunder to be stated therein or necessary in order to make the statements
therein not misleading, or of the necessity to amend or supplement the
Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you, without charge, three (3) signed
copies of the registration statement as originally filed with the Commission
and of each amendment thereto, including financial statements and all exhibits
thereto, and will also furnish to you, without charge, such number of conformed
copies of the registration statement as originally filed and of each amendment
thereto, but without exhibits, as you may request.
(d) The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you shall object after being
so advised or (ii) so long as, in the opinion of counsel for the Underwriters,
a Prospectus is required to be delivered in connection with sales by any
Underwriter or dealer, file any information, documents or reports pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act") without
delivering a copy of such information, documents or reports to you, as
Representatives of the Underwriters, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the Company has
delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Company consents to the
use, in accordance with the provisions of the Act and with the securities or
Blue Sky laws of the jurisdictions in which the Shares are offered by the
several Underwriters and by dealers, prior to the date of the Prospectus, of
each Prepricing Prospectus so furnished by the Company.
- 5 -
6
(f) As soon after the execution and delivery of this Agreement as possible
and thereafter from time to time for such period as in the opinion of counsel
for the Underwriters a prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by all dealers to whom
Shares may be sold, both in connection with the offering and sale of the Shares
and for such period of time thereafter as the Prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer. If
during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with the Act or any other law,
the Company will forthwith prepare and, subject to the provisions of paragraph
(d) above, file with the Commission an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Underwriters and dealers a
reasonable number of copies thereof. In the event that the Company and you, as
Representatives of the several Underwriters, agree that the Prospectus should
be amended or supplemented, the Company, if requested by you, will promptly
issue a press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action which
would subject it to service of process in suits, other than those arising out
of the offering or sale of the Shares, in any jurisdiction where it is not now
so subject. The Company will, from time to time, prepare and file such
statements, reports and other documents, as are or may be required to continue
such qualifications in effect for so long a period as you may reasonably
request for distribution of the Shares.
(h) The Company will make generally available to its security holders a
consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company will furnish to
you (i) as soon as available, a copy of each report of the Company mailed to
shareholders or filed with the Commission or the Nasdaq National Market, and
(ii) from time to time such other information concerning the Company as you may
request.
- 6 -
7
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 hereof or by notice given by you terminating
this Agreement pursuant to Section 12 or Section 13 hereof) or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company or the Selling Shareholder to comply with
the terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Representatives for all out-of-pocket expenses
(including fees and expenses of counsel for the Underwriters) incurred by you
in connection herewith.
(k) The Company shall apply the net proceeds from the sale of the Shares
to be sold by it hereunder substantially in accordance with the description set
forth in the Prospectus and shall file such reports with the Commission with
respect to the sale of the Shares and the application of the proceeds therefrom
as may be required in accordance with Rule 463 under the Act.
(l) If Rule 430A of the Act is employed, the Company will timely file the
Prospectus pursuant to Rule 424(b) under the Act and will advise you of the
time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not (i) sell,
pledge, offer to sell, solicit an offer to buy, contract to sell, grant any
option, right or warrant to purchase, sell any option or contract to purchase,
or otherwise transfer or dispose of, directly or indirectly, any shares of
Class A Common Stock (other than the Shares to be sold by it), or any
securities convertible into or exercisable or exchangeable for Class A Common
Stock, (ii) enter into any swap or other arrangement that transfers all or a
portion of the economic consequences associated with the ownership of the Class
A Common Stock or any securities convertible into or exercisable or
exchangeable for Class A Common Stock, or (iii) make any demand for or exercise
any right with respect to the registration of any shares of Class A Common
Stock or any securities convertible into or exercisable or exchangeable for
Class A Common Stock, for a period of 180 days after the date of the
Prospectus, without the prior written consent of Xxxxx Xxxxxx Inc., except that
the Company may grant options and other awards to its employees pursuant to the
Company's 1997 Incentive Plan, as such plan exists on the date of the
Prospectus, and may issue shares of Common Stock issuable upon the exercise of
options and other awards granted under such plan which are outstanding on the
date of the Prospectus.
(n) The Company has furnished to you "lock-up" letters, in form and
substance satisfactory to you, signed by each of its current officers and
directors and each of its shareholders designated by you.
(o) Except as stated in this Agreement and in the Prepricing Prospectus
and Prospectus, the Company has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
- 7 -
8
(p) The Company will use its best efforts to have the Class A Common Stock
listed, subject to notice of issuance, on the Nasdaq National Market
concurrently with the effectiveness of the registration statement.
6. Agreements of the Selling Shareholder. The Selling Shareholder agrees
with the several Underwriters as follows:
(a) The Selling Shareholder will cooperate to the extent necessary to
cause the registration statement or any post-effective amendment thereto to
become effective at the earliest possible time.
(b) The Selling Shareholder will pay all Federal and other taxes, if any,
on the transfer or sale of the Shares being sold by the Selling Shareholder to
the Underwriters.
(c) The Selling Shareholder will do or perform all things required to be
done or performed by the Selling Shareholder prior to the Closing Date to
satisfy all conditions precedent to the delivery of the Shares pursuant to this
Agreement.
(d) The Selling Shareholder has executed or will execute a "lock-up"
letter as provided in Section 5(n) above and will not sell, contract to sell or
otherwise dispose of any Common Stock, except for the sale of Shares to the
Underwriters pursuant to this Agreement, prior to the expiration of 180 days
after the date of the Prospectus, without the prior written consent of Xxxxx
Xxxxxx Inc.
(e) Except as stated in this Agreement and in the Prepricing Prospectus
and the Prospectus, the Selling Shareholder will not take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(f) The Selling Shareholder will advise you promptly, and if requested by
you, will confirm such advice in writing, within the period of time referred to
in Section 5(f) hereof, of any change in the Company's condition (financial or
other), business, prospects, properties, net worth or results of operations or
of any change in information relating to the Selling Shareholder or the Company
or any new information relating to the Company or relating to any matter stated
in the Prospectus or any amendment or supplement thereto which comes to the
attention of the Selling Shareholder that suggests that any statement made in
the Registration Statement or the Prospectus (as then amended or supplemented,
if amended or supplemented) is or may be untrue in any material respect or that
the Registration Statement or Prospectus (as then amended or supplemented, if
amended or supplemented) omits or may omit to state a material fact or a fact
necessary to be stated therein in order to make the statements therein not
misleading in any material respect, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented, if amended or supplemented) in
order to comply with the Act or any other law.
(g) In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982, as amended, with respect to the transactions contemplated herein, the
Selling Shareholder agrees to deliver to
- 8 -
9
you prior to or on the Closing Date a properly completed and executed United
States Treasury Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
7. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the Act, complied when so filed in
all material respects with the provisions of the Act. The Commission has not
issued any order preventing or suspending the use of any Prepricing Prospectus.
(b) The registration statement in the form in which it became or becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective, and the prospectus and any supplement or
amendment thereto when filed with the Commission under Rule 424(b) under the
Act, complied or will comply in all material respects with the provisions of
the Act and did not or will not at any such times contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, except that
this representation and warranty does not apply to statements in or omissions
from the registration statement or the prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by or on behalf of any Underwriter through you expressly for
use therein.
(c) The authorized and outstanding capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectus. All the
outstanding shares of Common Stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and are free of any preemptive
rights, co-sale rights, rights of first refusal or other similar rights that
entitle or will entitle any person to acquire any capital stock of the Company
upon the issuance of the Shares by the Company; the Shares to be issued and
sold to the Underwriters by the Company hereunder have been duly authorized
and, when issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive rights, co-sale rights, rights of
first refusal or other similar rights; and the capital stock of the Company
conforms to the description thereof in the Registration Statement and the
Prospectus. All securities issued by the Company prior to the date hereof were
issued pursuant to valid exemptions from registration under the Act and all
applicable state securities laws, and all securities issuable by the Company
upon the conversion, exercise or exchange of presently outstanding securities
of the Company will be issued pursuant to valid exemptions from registration
under the Act and applicable state securities laws.
(d) The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Georgia with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration
- 9 -
10
Statement and the Prospectus, and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Company
and the Subsidiaries (as hereinafter defined) taken as a whole (a "Material
Adverse Effect").
(e) All the Company's subsidiaries (as defined in the Act) are listed in
an exhibit to the Registration Statement and are referred to herein
individually as a "Subsidiary" and collectively as the "Subsidiaries". As used
herein, the term "Subsidiary" also includes the American Intercontinental
University (the "University"), unless the context otherwise requires. Each
Subsidiary is a corporation or limited liability company, as the case may be,
duly organized, validly existing and in good standing in the jurisdiction of
its incorporation or formation, with full corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a Material Adverse Effect; all the
outstanding shares of capital stock or other ownership interests of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable, and are wholly owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance, except as disclosed in
the Registration Statement and the Prospectus (or any amendment or supplement
thereto). No options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or other ownership interests in the Subsidiaries are
outstanding.
(f) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties, is subject, that are required to be
described in the Registration Statement or the Prospectus but are not described
as required, and there are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the Act.
(g) Neither the Company nor any of the Subsidiaries is or with the giving
of notice or lapse of time or both, will be, in violation of its certificate or
articles of incorporation or by-laws, or other organizational documents, or,
except as disclosed in the Registration Statement and the Prospectus (or any
amendment or supplement thereto) with respect to the Higher Education Act of
1965, as amended (the "HEA"), and the regulations promulgated thereunder, of
any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any decree of any
court or governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries, or in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture,
- 10 -
11
note or any other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound.
(h) Neither the issuance and sale of the Shares, the execution, delivery
or performance of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby (i) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body,
agency or official (except such as may be required for the registration of the
Shares under the Act and the Exchange Act and compliance with the securities or
Blue Sky laws of various jurisdictions, all of which have been or will be
effected in accordance with this Agreement) or accrediting agency or conflicts
or will conflict with or constitutes or will constitute a breach of, or a
default under, the certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries; (ii)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease, mortgage or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties, including, without
limitation, the HEA and the regulations promulgated thereunder, or will result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries pursuant to the
terms of any agreement or instrument to which any of them is a party or by
which any of them may be bound or to which any of the property or assets of any
of them is subject; or (iii) will require a review of the accreditation of the
University by the Commission of Colleges of the Southern Association of
Colleges and Schools, reauthorization or recertification of the University by
the Georgia Nonpublic Postsecondary Education Commission, the [California
Council] or District of Columbia Education Licensure Commission, the [UK and/or
London regulatory agency], the [Dubai regulatory agency] or recertification of
the University by the United States Department of Education. The issuance and
sale of the Shares or consummation of the transactions contemplated by this
Agreement will not constitute a change in ownership resulting in a "change in
control" of the Company as defined in the HEA.
(i) The accountants, Deloitte & Touche LLP, who have certified the
financial statements included in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), are independent public accountants as
required by the Act.
(j) The financial statements, together with related schedules and notes,
included in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) present fairly the consolidated financial position, results
of operations and changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; the pro forma financial
statements and other pro forma financial information included in the
- 11 -
12
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial information (including Article
11 of Regulation S-X), have been properly computed on the basis described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein, and all adjustments necessary for a fair presentation of results for
such periods have been made; and the other financial and statistical
information and data included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company and the Subsidiaries. All financial statements, together with
related schedules and notes, required by the Act to be included in the
Registration Statement and the Prospectus have been included therein.
(k) The Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement. The execution and delivery
of, and the performance by the Company of its obligations under, this Agreement
have been duly and validly authorized by the Company, and this Agreement has
been duly executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(l) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), subsequent to the respective dates as
of which such information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), neither the Company nor
any of the Subsidiaries has incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Company and the Subsidiaries taken as a
whole, and there has not been any change in the capital stock, or material
increase in the short-term debt or long-term debt, of the Company or any of the
Subsidiaries, or any material adverse change, or any development involving or
which may reasonably be expected to involve, a prospective material adverse
change, in the condition (financial or other), business, net worth or results
of operations of the Company and the Subsidiaries taken as a whole.
(m) Each of the Company and the Subsidiaries has good and marketable title
to all property (real and personal) described in the Prospectus as being owned
by it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration Statement and the
Prospectus or in a document filed as an exhibit to the Registration Statement,
and all the property described in the Prospectus as being held under lease by
each of the Company and the Subsidiaries is held by it under valid, subsisting
and enforceable leases.
(n) The Company has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Prepricing
Prospectus, the Prospectus or other materials, if any, permitted by the Act and
state securities or Blue Sky laws.
- 12 -
13
(o) The Company and each of the Subsidiaries has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("Permits"), including, without limitation, all permits required for
participation in Federal financial aid programs ("Title IV Programs") under
Title IV of the HEA, as are necessary to own its respective properties and to
conduct its business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus. The Company and each of
the Subsidiaries has fulfilled and performed all its material obligations with
respect to such Permits, and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any
such Permit, subject in each case to such qualification as may be set forth in
the Prospectus; and, except as described in the Prospectus, none of such
Permits contains any restriction that is materially burdensome to the Company
or any of the Subsidiaries. Except as described in the Prospectus, the Company
has no knowledge that the student loan default rate of any educational
institution operated by the Company and the Subsidiaries is in excess of 20%,
and the Company has no knowledge of any existing or threatened restriction or
termination of any such institution's participation in the student loan
programs administered by the U.S. Department of Education. Except as described
in the Prospectus, the Company and the Subsidiaries are duly qualified under
and in full compliance with all applicable laws and regulations in each
jurisdiction in which such entity participates in student financial aid
programs, with such exceptions that would not and could not be expected,
individually or in the aggregate, to have a Material Adverse Effect, and no
proceedings for the suspension, limitation or termination of any such entity's
participation in any financial aid programs have been initiated or, to the
Company's knowledge, threatened by any federal, state or foreign regulatory
agency. Except as described in the Prospectus, each of the Company and the
Subsidiaries (including any individual institution within any such entity)
meets all applicable fiscal tests and/or bonding requirements imposed by United
States Federal and state regulatory authorities. The Company and the
Subsidiaries possess the accreditations set forth in the Prospectus and are
licensed by the D.C. Education Licensure Commission, the Georgia Nonpublic
Postsecondary Education Commission, the [California Council] and [others
licensing agencies] to operate and to grant degrees and diplomas to students in
the respective jurisdiction of each such licensing agency, and the Company has
no knowledge of any threatened review, suspension, revocation or termination of
such accreditations or licenses other than such reviews as may occur in the
ordinary course in connection with the periodic renewal of such accreditations
and licenses.
(p) Neither the Company nor any of the Subsidiaries has received or is
aware of any communication (written or oral) relating to the termination or
modification or threatened termination or modification of any of the agreements
described in or referred to in the Prospectus, nor is it aware of any
communication (written or oral) relating to any determination not to renew or
extend any agreement described or referred to in the Prospectus at the end of
the current term of any such agreement.
(q) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
- 13 -
14
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(r) To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.
(s) The Company and each of the Subsidiaries have filed all federal,
state, local and foreign tax returns and tax forms required to be filed; such
returns and forms are complete and correct in all material respects; and all
taxes shown by such returns or otherwise assessed that are due and payable have
been paid, except such taxes as are being contested in good faith and as to
which adequate reserves have been provided. All payroll withholdings required
to be made by the Company or any of the Subsidiaries with respect to employees
have been made. The charges, accruals and reserves on the books of the Company
and the Subsidiaries in respect of any tax liability for any year not finally
determined are adequate to meet any assessments or reassessments for additional
taxes; and there have been no tax deficiencies asserted and, to the best
knowledge of the Company, no tax deficiency might be reasonably asserted or
threatened against the Company or any of the Subsidiaries that could,
individually or in the aggregate, have a Material Adverse Effect.
(t) No holder of any security of the Company has any right, which has not
been satisfied or validly waived, to require registration of shares of Common
Stock or any other security of the Company because of the filing of the
registration statement or consummation of the transactions contemplated by this
Agreement, and except as disclosed in the Prospectus, no person has the right
to require subsequent registration under the Act of any shares of Common Stock
or other securities of the Company. No person has the right, contractual or
otherwise, to cause the Company to permit such person to underwrite the sale of
any of the Shares. Except as described in or contemplated by the Prospectus,
there are no outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of the Company or any of the Subsidiaries or any
security convertible into or exchangeable for capital stock of the Company or
any of the Subsidiaries.
(u) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any of them or necessary
for the conduct of their respective businesses, and the Company is not
infringing upon the rights of any other person with respect to the foregoing.
(v) The Company is not now, and after sale of the Shares to be sold by it
hereunder and application of the net proceeds from such sale as described in
the Prospectus under the
- 14 -
15
caption "Use of Proceeds" will not be, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(w) The Company and each of its Subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as is customary in the businesses in which each is engaged; all
policies of insurance insuring the Company and each of the Subsidiaries or
their respective businesses, assets, employees, officers and directors are in
full force and effect; the Company and each of its Subsidiaries is in
compliance with the terms of such policies and instruments in all material
respects; and there are no claims by the Company or any of its Subsidiaries
under any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights.
8. Representations and Warranties of the Selling Shareholder. The Selling
Shareholder represents and warrants to each Underwriter that:
(a) The Selling Shareholder now has, and on the Closing Date will have,
valid and marketable title to the Shares to be sold by the Selling Shareholder,
free and clear of any lien, claim, security interest or other encumbrance,
including, without limitation, any restriction on transfer or other defect in
title.
(b) The Selling Shareholder now has, and on the Closing Date will have,
full legal right, power and authorization, and any approval required by law, to
sell, assign transfer and deliver such Shares in the manner provided in this
Agreement, and upon delivery of and payment for such Shares hereunder, the
several Underwriters will acquire valid and marketable title to such Shares
free and clear of any lien, claim, security interest, or other encumbrance.
(c) This Agreement and the Custody Agreement have been duly authorized,
executed and delivered by or on behalf of the Selling Shareholder and are the
valid and binding agreements of the Selling Shareholder enforceable against the
Selling Shareholder in accordance with their terms, except as enforcement of
rights to indemnity and contribution hereunder may be limited by Federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Selling Shareholder's obligations
hereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles.
(d) Neither the execution and delivery of this Agreement or the Custody
Agreement by or on behalf of the Selling Shareholder nor the consummation of
the transactions herein or therein contemplated by or on behalf of the Selling
Shareholder requires any consent, approval, authorization or order of, or
filing or registration with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as may be required
under the Act or such as may be required under state securities or Blue Sky
laws governing the purchase and distribution of the Shares) or conflicts or
will conflict with or constitutes or will constitute a breach of, or default
under, or violates or will violate, any agreement, indenture or other
instrument to which the Selling Shareholder is a party or by which the Selling
Shareholder is or may be bound or to which any of the Selling Shareholder's
property or assets is subject, or any statute, law, rule, regulation, ruling,
judgment, injunction, order or
- 15 -
16
decree applicable to the Selling Shareholder or to any property or assets of
the Selling Shareholder.
(e) The Registration Statement and the Prospectus, insofar as they relate
to the Selling Shareholder, do not and will not contain an 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.
(f) The Selling Shareholder does not have any knowledge or any reason to
believe that the Registration Statement or the Prospectus (or any amendment or
supplement thereto) contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(g) The representations and warranties of the Selling Shareholder in the
Custody Agreement are, and on the Closing Date and any Option Closing Date will
be, true and correct.
(h) The Selling Shareholder has not taken, directly or indirectly, any
action designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares, except for the lock-up arrangements described
in the Prospectus.
9. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each of you and each other Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20(a) the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Prepricing Prospectus or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which has
been made therein or omitted therefrom in reliance upon and in conformity with
the information relating to such Underwriter furnished in writing to the
Company by or on behalf of any Underwriter through you expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any Prepricing Prospectus shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter) on account of any such loss, claim, damage, liability or
expense arising from the sale of the Shares by such Underwriter to any person
if a copy of the Prospectus shall not have been delivered or sent to such
person within the time required by the Act and the regulations thereunder, and
the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, provided that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The foregoing indemnity agreement shall be
in addition to any liability which the Company may otherwise have.
- 16 -
17
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter
or such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the indemnifying parties
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and any indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the indemnifying party shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or
such controlling person). It is understood, however, that the indemnifying
parties shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be
designated in writing by Xxxxx Xxxxxx Inc., and that all such fees and expenses
shall be reimbursed as they are incurred. The indemnifying parties shall not
be liable for any settlement of any such action, suit or proceeding effected
without their written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the indemnifying parties agree to indemnify and hold harmless any
Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) The Selling Shareholder agrees to indemnify and hold harmless each of
you and each other Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act to the
same extent as the foregoing indemnity from the Company to each Underwriter,
but only with respect to the information furnished in writing by or on behalf
of the Selling Shareholder expressly for use in the Registration Statement, the
Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against any
Underwriter, any such controlling person of any Underwriter, the Company, any
of its directors, any such officer, or any such controlling person of the
Company, based on the Registration Statement, the Prospectus or any Prepricing
Prospectus or any amendment or supplement thereto, and in respect
- 17 -
18
of which indemnity may be sought against the Selling Shareholder pursuant to
this paragraph (c), the Selling Shareholder shall have the rights and duties
given to the Company by paragraph (b) above (except that if the Company shall
have assumed the defense thereof the Selling Shareholder shall not be required
to do so, but may employ separate counsel therein and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
Selling Shareholder's expense), and each Underwriter, each such controlling
person of any Underwriter, the Company, its directors, any such officer, and
any such controlling person of the Company shall have the rights and duties
given to the Underwriters by paragraph (b) above. The foregoing indemnity
agreement shall be in addition to any liability which the Selling Shareholder
may otherwise have.
(d) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement, the Selling Shareholder, and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the Company
and the Selling Shareholder to each Underwriter, but only with respect to
information relating to such Underwriter furnished in writing by or on behalf
of such Underwriter through you expressly for use in the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer, the Selling Shareholder,
or any such controlling person based on the Registration Statement, the
Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph (d), such Underwriter shall have the
rights and duties given to the Company by paragraph (b) above (except that if
the Company shall have assumed the defense thereof such Underwriter shall not
be required to do so, but may employ separate counsel therein and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
such Underwriter's expense), and the Company, its directors, any such officer,
the Selling Shareholder, and any such controlling person shall have the rights
and duties given to the Underwriters by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which any Underwriter
may otherwise have.
(e) If the indemnification provided for in this Section 9 is unavailable
to an indemnified party under paragraphs (a), (c) or (d) hereof in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
an 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 such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Shareholder on the one hand and the Underwriters on the other hand
from the offering of the Shares, 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 Shareholder on
the one hand and the Underwriters on the other in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholder on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds
- 18 -
19
from the offering (before deducting expenses) received by the Company and the
Selling Shareholder bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus; provided that, in the event that the Underwriters
shall have purchased any Additional Shares hereunder, any determination of the
relative benefits received by the Company, the Selling Shareholder or the
Underwriters from the offering of the Shares shall include the net proceeds
(before deducting expenses) received by the Company and the Selling
Shareholder, and the underwriting discounts and commissions received by the
Underwriters, from the sale of such Additional Shares, in each case computed on
the basis of the respective amounts set forth in the notes to the table on the
cover page of the Prospectus. The relative fault of the Company and the
Selling Shareholder on the one hand and the Underwriters on the other hand
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 or the
Selling Shareholder on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(f) The Company, the Selling Shareholder and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by a pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (e)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (e)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Shares underwritten by it and distributed 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 to contribute pursuant to
this Section 9 are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in Schedule II hereto (or such numbers of
Firm Shares increased as set forth in Section 12 hereof) and not joint.
(g) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding 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 includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the
- 19 -
20
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred. The indemnity and contribution
agreements contained in this Section 9 and the representations and warranties
of the Company and the Selling Shareholder set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or the Selling
Shareholder or any person controlling the Company, (ii) acceptance of any
Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 9.
(i) Notwithstanding any other provision of this Section 9, the total liability
of the Selling Shareholder for indemnification or contribution under this
Section 9 shall not exceed an amount equal to the number of Shares sold by such
Selling Shareholder hereunder multiplied by the purchase price per share set
forth in Section 2 hereof.
10. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the registration
statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the registration statement or the prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectus, which in your opinion, as
Representatives of the several Underwriters, would materially adversely affect
the market for the Shares, or (ii) any event or development relating to or
involving the Company or any officer or director of the Company or the Selling
Shareholder which makes any statement made in the Prospectus untrue or which,
in the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such event
or development would, in your opinion, as Representatives of the several
Underwriters, materially adversely affect the market for the Shares.
- 20 -
21
(c) You shall have received on the Closing Date an opinion of Xxxxx,
Xxxxxxxx & Xxxxxxx, LLP, counsel for the Company and the Selling Shareholder,
dated the Closing Date and addressed to you, as Representatives of the several
Underwriters, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Georgia with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify would not have a Material Adverse Effect;
(ii) Each of the Subsidiaries is a corporation or limited
liability company, as the case may be, duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization or
formation, with full corporate power and authority to own, lease, and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto); each
Subsidiary is duly registered and qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its properties
or the conduct of its business requires such registration or qualification,
except where the failure so to register or qualify would not have a Material
Adverse Effect; all the outstanding shares of capital stock or other ownership
interests of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are wholly owned by the Company
directly, or indirectly through one of the other Subsidiaries, free and clear
of any perfected security interest, or, to the best knowledge of such counsel
after reasonable inquiry, any other security interest, lien, adverse claim,
equity or other encumbrance, except as disclosed in the Registration Statement
and the Prospectus (or any amendment or supplement thereto); and no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into any shares of capital stock or
other ownership interests in the Subsidiaries are outstanding;
(iii) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the Prospectus;
and the authorized capital stock of the Company conforms in all material
respects as to legal matters to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock;"
(iv) All the shares of Common Stock of the Company outstanding
prior to the issuance of the Shares to be issued and sold by the Company
hereunder have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights that entitle or
will entitle any person to acquire any capital stock of the Company upon the
issuance of the Shares by the Company. All securities issued by the Company
prior to the Closing Date or the Option Closing Date, as the case may be, were
issued pursuant to valid exemptions from registration under the Act and all
applicable state securities laws, and valid exemptions from registration under
the Act and all applicable state securities laws exist for all securities
issuable by the Company upon the conversion, exercise or exchange
- 21 -
22
of securities of the Company outstanding on the Closing Date or the Option
Closing Date, as the case may be;
(v) The Shares to be issued and sold to the Underwriters by
the Company hereunder have been duly authorized and, when issued and delivered
to the Underwriters against payment therefor in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable and free of any
preemptive or, to the best knowledge of such counsel after reasonable inquiry,
co-sale rights, rights of first refusal or other similar rights that entitle or
will entitle any person to acquire any Shares upon the issuance thereof by the
Company;
(vi) The form of certificate for the Shares conforms to the
requirements of the Georgia Business Corporation Code;
(vii) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and no stop order
suspending the effectiveness of the Registration Statement has been issued and,
to the best knowledge of such counsel after reasonable inquiry, no proceedings
for that purpose are pending before or contemplated by the Commission; and any
required filing of the Prospectus pursuant to Rule 424(b) has been made in
accordance with Rule 424(b);
(viii) The Company has corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to be sold by it
to the Underwriters as provided herein. This Agreement has been duly
authorized, executed and delivered by the Company and, assuming that the laws
of the State of New York are the same as the laws of the State of Georgia, is a
valid, legal and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as enforcement of rights to
indemnity and contribution hereunder may be limited by Federal or state
securities laws or principles of public policy and subject to the qualification
that the enforceability of the Company's obligations hereunder may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors' rights generally and by
general equitable principles;
(ix) Neither the Company nor any of the Subsidiaries is, or
with the giving of notice or lapse of time or both, will be, in violation of
its respective certificate or articles of incorporation or bylaws, or other
organizational documents or, to the best knowledge of such counsel after
reasonable inquiry, in default in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, except as may be
disclosed in the Prospectus;
(x) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement, compliance by the Company
with the provisions hereof, nor consummation by the Company of the transactions
contemplated hereby conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or
- 22 -
23
articles of incorporation or bylaws, or other organizational documents, of the
Company or any of the Subsidiaries or any agreement, indenture, lease, mortgage
or other instrument to which the Company or any of the Subsidiaries is a party
or by which any of them or any of their respective properties is bound that is
an exhibit to the Registration Statement, or which is otherwise known to such
counsel after reasonable inquiry, or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
or any of the Subsidiaries, nor will any such action result in any violation of
any existing statute, law, regulation, ruling (assuming compliance with all
applicable state securities and Blue Sky laws), judgment, injunction, order or
decree known to such counsel after reasonable inquiry, applicable to the
Company, the Subsidiaries or any of their respective properties;
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act and the Exchange Act or
such as may be required under state securities or Blue Sky laws governing the
purchase and distribution of the Shares) for the valid issuance and sale of the
Shares to the Underwriters as contemplated by this Agreement;
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and the
notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) comply
as to form in all material respects with the requirements of the Act;
(xiii) To the best knowledge of such counsel after reasonable
inquiry, (A) other than as described or contemplated in the Prospectus (or any
supplement thereto), there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or to which the
Company or any of the Subsidiaries, or any of their property, is subject, which
are required to be described in the Registration Statement or Prospectus (or
any amendment or supplement thereto) and (B) there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the Registration Statement
that are not described or filed as required, as the case may be;
(xiv) To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the Subsidiaries is in violation of any
law, ordinance, administrative or governmental rule or regulation applicable to
the Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries;
(xv) The statements in the Registration Statement and
Prospectus, insofar as they are descriptions of contracts, agreements or other
legal documents, or refer to statements of law or legal conclusions, are
accurate and present fairly the information required to be shown (except with
respect to statements in the Prospectus under the captions "Risk Factors --
Potential Adverse Effects of Regulation; Impairment of Federal Funding," "Risk
Factors -- Risks
- 23 -
24
Associated with Possible Expansion and Acquisition Plans" (second paragraph
only) and "Business -- Regulatory Environment" and other references therein to
the regulation of educational institutions, as to which such counsel need not
express an opinion);
(xvi) To the best knowledge of such counsel after reasonable
inquiry, each of the Company and the Subsidiaries has all necessary Permits
(other than those Permits specifically required to participate in Title IV
Programs or pursuant to which the Company or any of the Subsidiaries must be
authorized by applicable states to engage in rendering educational services, as
to which such counsel need not express an opinion) to own its properties and to
conduct its business as now being conducted as described in the Registration
Statement and the Prospectus, except where the failure to so have any such
Permits, individually or in the aggregate, would not have a Material Adverse
Effect;
(xvii) Except as described in the Prospectus, such counsel
does not know of any person who has the right, as a result of the filing of the
Registration Statement or otherwise, to require the Company to register under
the Act any shares of Common Stock or other securities of the Company in
connection with the offering contemplated hereby, and any registration rights
in connection with the offering contemplated hereby have been validly waived;
and
(xviii) The Company is not now, and after sale of the Shares
to be sold by it hereunder and application of the net proceeds from such sale
as described in the Prospectus under the caption "Use of Proceeds" will not be,
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(xix) Upon delivery of the Shares to be sold by the Company
pursuant to this Agreement and payment therefor as contemplated herein, the
Underwriters will acquire good, valid and marketable title to such Shares free
and clear of any lien, claim, security interest, or other encumbrance,
restriction on transfer or other defect in title.
(xx) This Agreement and the Custody Agreement have each been
duly executed and delivered by or on behalf of the Selling Shareholder and are
valid and binding agreements of the Selling Shareholder enforceable against the
Selling Shareholder in accordance with their terms, except as enforcement of
rights to indemnity and contribution hereunder may be limited by Federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Company's obligations hereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles;
(xxi) To the knowledge of such counsel, the Selling Shareholder
has full legal right, power and authorization, and any approval required by
law, to sell, assign, transfer and deliver good and marketable title to the
Shares which the Selling Shareholder has agreed to sell pursuant to this
Agreement;
(xxii) The execution and delivery of this Agreement and the
Custody Agreement by the Selling Shareholder and the consummation of the
transactions contemplated
- 24 -
25
hereby and thereby will not conflict with, violate, result in a breach of or
constitute a default under the terms or provisions of any agreement, indenture,
mortgage or other instrument known to such counsel to which the Selling
Shareholder is a party or by which it or any of its assets or property is
bound, or any court order or decree or any law, rule, or regulation applicable
to the Selling Shareholder or to any of the property or assets of the Selling
Shareholder; and
(xxiii) Upon delivery of the Shares to be sold by the Selling
Shareholder pursuant to this Agreement and payment therefor as contemplated
herein, the Underwriters (assuming that they are bona fide purchasers within
the meaning of the Uniform Commercial Code as adopted in the State of Georgia)
will acquire good, valid and marketable title to such Shares free and clear of
any lien, claim, security interest, or other encumbrance, restriction on
transfer or other defect in title.
Such opinion shall include a statement that, although such counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof, and
nothing has come to the attention of such counsel that has caused them to
believe that the Registration Statement, at the time the Registration Statement
became effective, or the Prospectus, as of its date and as of the Closing Date
or the Option Closing Date, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that any
amendment or supplement to the Prospectus, as of its respective date, and as of
the Closing Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included in the Registration Statement or the Prospectus).
In rendering their opinion as aforesaid, such counsel may rely as to
factual matters (i) upon certificates of officers of the Company and
certificates of the Selling Shareholder and (ii) the representations of the
Company contained herein and the representations of the Selling Shareholder
contained herein and in the Custody Agreement. In rendering their opinion as
aforesaid, such counsel may also rely upon an opinion or opinions, each dated
the Closing Date, of other counsel retained by them or the Company as to laws
of any jurisdiction other than the United States or the States of Georgia and
Delaware, provided that (1) each such local counsel is acceptable to the
Representatives, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the Representatives
and is, in form and substance, satisfactory to them and their counsel, and (3)
counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date an opinion of Xxxx and
Marks, special regulatory counsel for the Company, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, to the effect
that:
- 25 -
26
(i) The statements in the Prospectus under the captions "Risk
Factors -- Potential Adverse Effects of Regulation; Impairment of Federal
Funding," "Risk Factors -- Risks Associated With Possible Expansion and
Acquisition Plans" (second paragraph only) and "Business -- Regulatory
Environment" and other references therein to the regulation of educational
institutions, insofar as such statements constitute a summary of applicable
federal and state laws and regulations, a summary of accreditation matters or a
summary of judicial or administrative proceedings, are accurate and present
fairly the information purported to be shown;
(ii) Based on the determination made by the United States
Department of Education and communicated to the Company by letter dated _______
__, 1997, consummation of the offering contemplated hereby will not constitute
a change in ownership of the University resulting in a "change in control" as
defined in the HEA or the regulations promulgated thereunder; and
(iii) To the best of such counsel's knowledge after reasonable inquiry,
each of the Company and the Subsidiaries has all necessary Permits required for
each of the Company and the Subsidiaries to participate in Title IV Programs or
pursuant to which the Company or any Subsidiary must be authorized by
applicable states to engage in rendering educational services as described in
the Registration Statement and the Prospectus. The Company and each of the
Subsidiaries has fulfilled and performed all its material obligations with
respect to such Permits, and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any
such Permit, subject in each case to such qualification as may be set forth in
the Prospectus. Except as described in the Prospectus, to the best of such
counsel's knowledge after reasonable inquiry, the student loan default rate of
any educational institution operated by the Company and the Subsidiaries is not
in excess of 20%, and, to the best of such counsel's knowledge after reasonable
inquiry, there are no existing or threatened restrictions or terminations of
any such institution's participation in the student loan programs administered
by the U.S. Department of Education. Except as described in the Prospectus,
the Company and the Subsidiaries are duly qualified under and in full
compliance with all applicable laws and regulations in each jurisdiction in
which such entity participates in student financial aid programs, with such
exceptions that would not and could not be expected, individually or in the
aggregate, to have a Material Adverse Effect, and no proceedings for the
suspension, limitation or termination of any such entity's participation in any
financial aid programs have been initiated or, to the best of such counsel's
knowledge after reasonable inquiry, threatened by any federal, state or foreign
regulatory agency. Except as described in the Prospectus, each of the Company
and the Subsidiaries (including any individual institution within any such
entity) meets all applicable fiscal tests and/or bonding requirements imposed
by United States Federal and state regulatory authorities. The Company and the
Subsidiaries possess the accreditations set forth in the Prospectus and are
licensed by the D.C. Education Licensure Commission, the Georgia Nonpublic
Postsecondary Education Commission, the [California Council] and [others
licensing agencies] to operate and to grant degrees and diplomas to students in
the respective jurisdiction of each such licensing agency, and, to the best of
such counsel's knowledge after reasonable inquiry, there is no threatened
review, suspension, revocation or termination of such
- 26 -
27
accreditations or licenses other than such reviews as may occur in the ordinary
course in connection with the periodic renewal of such accreditations and
licenses.
Such opinion shall also include a statement to the effect that such
counsel have no actual knowledge that lead them to believe that the information
contained in the Registration Statement and the Prospectus forming a part
thereof under the captions "Risk Factors -- Potential Adverse Effects of
Regulation; Impairment of Federal Funding," "Risk Factors -- Risks Associated
With Possible Expansion and Acquisition Plans" (second paragraph only) and
"Business -- Regulatory Environment", as of the time the Registration Statement
became effective and as of the Closing Date and the Option Closing Date, as
applicable, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(e) You shall have received on the Closing Date an opinion of Xxxxxx &
Bird LLP, counsel for the Underwriters, dated the Closing Date and addressed to
you, as Representatives of the several Underwriters, with respect to the
matters referred to in clauses (v), (vii), (viii) and (xii) of the foregoing
paragraph (c) and such other matters as you may request, and a statement from
Xxxxxx & Bird LLP with respect to the matters referred to in the penultimate
subparagraph of the foregoing paragraph (c) and such other related matters as
you may request. In rendering their opinion as aforesaid, such counsel may
rely as to factual matters upon certificates of officers of the Company and the
representations of the Company contained herein.
(f) You shall have received letters addressed to you, as Representatives
of the several Underwriters, and dated the date hereof and the Closing Date
from Deloitte & Touche, LLP, independent certified public accountants,
substantially in the forms heretofore approved by you.
(g)(i) The Registration Statement shall have become effective under the
Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the best knowledge of the Company after reasonable inquiry,
shall be contemplated by the Commission at or prior to the Closing Date; (ii)
there shall not have been any change in the capital stock of the Company nor
any material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or contemplated in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and
the Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall
not have any liabilities or obligations, direct or contingent (whether or not
in the ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); (v) all
filings required to have been made pursuant to
- 27 -
28
Rule 424 or 430A under the Act shall have been made; and (vi) all the
representations and warranties of the Company and the Selling Shareholder
contained in this Agreement shall be true and correct on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date, and you shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 10(g) and in Section 10(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date to
have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) All the representations and warranties of the Selling Shareholder
contained in this Agreement shall be true and correct on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date, and you shall have received a certificate, dated the Closing Date and
signed by or on behalf of the Selling Shareholder, to the effect set forth in
this Section 10(i) and in Section 10(j) hereof.
(j) The Selling Shareholder shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by them hereunder at or
prior to the Closing Date.
(k) The Shares shall have been listed or approved for listing upon
notice of issuance on the Nasdaq National Market.
(l) The Sellers shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have requested.
(m) The lockup agreements referenced in Section 5(n) shall be in full
force and effect.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
Any certificate or document signed by any officer of the Company or any
Attorney-in-Fact or the Selling Shareholder and delivered to you, as
Representatives of the Underwriters, or to counsel for the Underwriters, shall
be deemed a representation and warranty by the Company or the Selling
Shareholder, as the case may be, to each Underwriter as to the statements made
therein.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction on and as of any Option Closing Date
of the conditions set forth in this Section 10, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (g) shall be dated the Option
Closing Date and the opinions called for by paragraphs (c), (d) and (e) shall
be revised to reflect the sale of Additional Shares.
- 28 -
29
If any of the conditions hereinabove provided for in this Section 10 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company and the Selling Shareholder of such
termination in writing or by telecopy at or prior to the Closing Date or the
Option Closing Date, as the case may be.
In such event, the Company, the Selling Shareholder and the Underwriters
shall not be under any obligation to each other (except to the extent provided
in Sections 9 and 11 hereof).
11. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by the Sellers of
their obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the registration statement, each
Prepricing Prospectus, the Prospectus, and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Shares; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp taxes
in connection with the original issuance and sale of the Shares; (iv) the
printing (or reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Shares;
(v) the registration of the Shares under the Exchange Act and the listing of
the Shares on the Nasdaq National Market; (vi) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the transportation and
other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Shares; and (ix)
the fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company and the Selling
Shareholder.
12. Effective Date of Agreement. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if,
at the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective
amendment has been released by the Commission. Until such time as this
Agreement shall have become effective, it may be terminated by the Company, by
notifying you, or by you, as Representatives of the several Underwriters, by
notifying the Company and the Selling Shareholder.
- 29 -
30
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date
or the Option Closing Date, and the aggregate number of Shares which such
defaulting Underwriter or Underwriters are obligated but fail or refuse to
purchase is not more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date or the Option
Closing Date, as the case may be, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule II hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Underwriters or
in such other proportion as you may specify in accordance with Section 20 of
the Master Agreement Among Underwriters of Xxxxx Xxxxxx Inc., to purchase the
Shares which such defaulting Underwriter or Underwriters are obligated, but
fail or refuse, to purchase. If any one or more of the Underwriters shall fail
or refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date or the Option Closing Date and the aggregate number of Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Shares which the Underwriters are obligated to purchase on the
Closing Date or the Option Closing Date, as the case may be, and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date or the Option Closing Date, as the case may be, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement. The term "Underwriter"
as used in this Agreement includes, for all purposes of this Agreement, any
party not listed in Schedule II hereto who, with your approval and the approval
of the Company, purchases Shares which a defaulting Underwriter is obligated,
but fails or refuses, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be subject to
termination: (A) in your absolute discretion, without liability on the part of
any Underwriter to the Company or the Selling Shareholder, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market shall have been suspended
or materially limited, (ii) a general moratorium on commercial banking
activities in New York or Georgia shall have been declared by either federal or
state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis
or change in political, financial or economic conditions, the effect of which
on the financial markets of the United States is such as to make it, in your
judgment, impracticable or inadvisable to commence or continue the offering of
the Shares at the offering price to the public set forth on the cover
- 30 -
31
page of the Prospectus or to enforce contracts for the resale of the Shares by
the Underwriters or (B) as otherwise provided in this Agreement. Notice of
such termination may be given to the Company by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
14. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the inside
front cover page, and the statements in the first and third paragraphs under
the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 7(b) and 9 hereof.
15. Miscellaneous. Except as otherwise provided in Sections 5, 12 and 13
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 0000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Attention:
Xxxxx Xxxxxx, Chairman and Chief Executive Officer; or (ii) if to the Selling
Shareholder, at NationsBank Corporate Center, 000 Xxxxx Xxxxx Xxxxxx,
XX0-000-00-00, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: ___________________;
or (iii) if to you, as Representatives of the several Underwriters, care of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
[Xxxxxxx Xxxx], Investment Banking Division.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, its directors and officers, the Selling Shareholder
and the other controlling persons referred to in Section 9 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Shares in his status as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
- 31 -
32
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Shareholder and the several Underwriters.
Very truly yours,
EDUTREK INTERNATIONAL, INC.
By ______________________________
Chairman and Chief Executive Officer
ATLANTIC EQUITY CORPORATION
as the Selling Shareholder
named in Schedule I hereto
By ______________________________
Attorney-in-Fact
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule II
hereto.
XXXXX XXXXXX INC.
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
As Representatives of the Several Underwriters
By: XXXXX XXXXXX INC.
By: _____________________________
Managing Director
- 32 -
33
SCHEDULE I
EDUTREK INTERNATIONAL, INC.
Number of
Selling Shareholder Firm Shares
------------------- -----------
Atlantic Equity Corporation 257,110
- 33 -
34
SCHEDULE II
EDUTREK INTERNATIONAL, INC.
Number of
Underwriter Number of Firm Shares Underwriter Firm Shares
----------- ------------------------- ----------- -------------
Xxxxx Xxxxxx Inc. .........................
The Xxxxxxxx-Xxxxxxxx Company, Inc.
_____________
Total..... _____________
- 34 -
