EXHIBIT 10.35
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CORINTHIAN COLLEGES, INC.
RIGHTS AGREEMENT
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DATED AS OF OCTOBER 17, 1996
RIGHTS AGREEMENT
This is a RIGHTS AGREEMENT dated October 17, 1996 ("Agreement") by and
among CORINTHIAN COLLEGES, INC., a Delaware corporation ("Company"),
CORINTHIAN SCHOOLS, INC., a Delaware corporation ("CSI") and a wholly-owned
subsidiary of the Company, PRIMUS CAPITAL FUND III LIMITED PARTNERSHIP, an
Ohio limited partnership ("Primus"), BOCP II, LIMITED LIABILITY COMPANY, an
Ohio limited liability company and successor by merger to Banc One Capital
Partners II, Limited Partnership ("LLC"), BANC ONE CAPITAL PARTNERS II, LTD.,
an Ohio limited liability company ("BOCP II"), XXXXX X. XXXXX ("Xxxxx"), XXXX
ST. PIERRE ("St. Pierre"), XXXXX X. XXXXXX ("XxXxxx"), XXXXXX X. XXXXXXXX
("Xxxxxxxx") and XXXXX X. XXXXXXX ("Xxxxxxx").
BACKGROUND
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A. STOCK PURCHASE AGREEMENT. Pursuant to a Purchase Agreement dated June
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30, 1995, ("Stock Purchase Agreement") Primus purchased from CSI (i) 14,500
shares of CSI's Class A Preferred Stock, par value $1.00 per share, liquidation
value $100 per share ("CSI Class A Preferred") and (ii) 55,000 shares of CSI's
Class A Common Stock, $0.01 par value ("CSI Class A Common") and LLC purchased
from CSI (x) 3,625 shares of CSI Class A Preferred, (y) 5,410 shares of CSI
Class A Common and (z) 8,340 shares of CSI's Class B Common Stock, $0.01 par
value ("CSI Class B Common"). The shares of CSI Class A Common and CSI Class B
Common received by Primus and LLC are referred to collectively as the "Purchased
Capital Stock."
B. EXISTING NOTES. Pursuant to a Subordinated Secured Note and Warrant
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Purchase Agreement dated June 30, 1995 ("Prior Purchase Agreement") CSI issued
and sold to (i) Primus Subordinated Secured Notes due June 30, 2000 in the
aggregate principal amount of $500,000, and (ii) LLC Subordinated Secured
Notes due June 30, 2000 in the aggregate principal amount of $2,000,000
(collectively the "Existing Notes"). The Existing Notes will be paid in full
and canceled on the Closing Date (as defined herein).
C. EXISTING ADVANCES. Pursuant to a Credit Facility Agreement dated as of
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June 30, 1995 ("Prior Credit Facility") by and between CSI and LLC, LLC agreed
to make advances to CSI in an amount not to exceed $2,000,000 at any one time
outstanding. Any such advances outstanding at the Closing Date ("Existing
Advances") shall be paid in full and canceled as of the Closing Date.
D. PRIOR WARRANT SHARES. Pursuant to the Prior Purchase Agreement, CSI
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issued and sold to (i) Primus warrants to purchase 1,250 shares of CSI Class A
Common, and (ii) LLC warrants to purchase 5,000 shares of CSI Class B Common
(collectively, the "Prior Warrants"). Prior to the Merger Date (as defined
herein) both Primus and LLC exercised the Prior Warrants. The shares issued upon
exercise thereof are referred to collectively as the "Prior Warrant Shares." The
Prior Warrants were evidenced by the "Prior Warrant Certificates."
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E. EXECUTIVE STOCK AGREEMENTS. Each of the Executives is party to an
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Executive Stock Agreement dated June 30, 1995 ("Executive Stock Agreement") by
and between the Executive and CSI. Pursuant to such Executive Stock Agreement,
the Executives purchased shares of Class A Common and Class B Common. The
shares purchased by all the Executives are referred to collectively as the
"Executive Stock." Although not a party to the Stock Purchase Agreement, the
Executives were given certain first refusal rights in regards to their
Executive Stock pursuant to Section 3.1J of the Stock Purchase Agreement.
F. MERGER. On September 30, 1996 ("Merger Date"), Corinthian Merger
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Subsidiary, Inc., a subsidiary of the Company, was merged into CSI, the former
parent corporation of the Company, with CSI being the surviving entity. Pursuant
to the merger, all of the outstanding shares of (i) CSI Class A Preferred were
exchanged for an equal number of the Company's Class A Preferred Stock, $1.00
par value, $100 liquidation value ("Class A Preferred"), (ii) CSI Class A Common
were exchanged for an equal number of the Company's Class A Common Stock, $0.01
par value ("Class A Common"), and (iii) CSI Class B Common were exchanged for an
equal number of the Company's Class B Common Stock, $0.01 par value ("Class B
Common"). In conjunction with the merger, CCI has succeeded to all the rights
and obligations of CSI under the Stock Purchase Agreement, Prior Purchase
Agreement and Executive Stock Agreement pursuant to the Assignment and
Assumption Agreement (as defined herein).
G. Notes. Pursuant to a Subordinated Note and Warrant Purchase Agreement
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dated October 17, 1996 ("Purchase Agreement") by and among the Company, Primus
and BOCP II, the Company issued and sold to (i) Primus and Primus purchased
$1,000,000 aggregate principal amount of Subordinated Notes due October 17,
2004, for $1,000,000, and (ii) BOCP II and BOCP II purchased $4,000,000
aggregate principal amount of Subordinated Notes due October 17, 2004, for
$4,000,000, (collectively the "New Note(s)").
H. NEW WARRANTS. Pursuant to the Purchase Agreement, Primus purchased
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warrants to acquire 806.45 shares of Class A Common and BOCP II purchased
warrants to acquire 3,225.81 shares of Class B Common. The warrants are referred
to collectively as the "New Warrants." The shares issuable upon exercise thereof
are referred to collectively as the "New Warrant Shares." The Warrants are
evidenced by "New Warrant Certificates."
I. PURPOSE OF AGREEMENT. The Purpose of this Agreement is to provide for
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certain preemptive rights and put options with regard to the Purchased Capital
Stock, Prior Warrant Shares, New Warrants or New Warrant Shares and Purchase
Shares (if any). It is the intention of the Parties that this Agreement will
supersede and replace in their entirety, Sections 3.1J and 3.1M of the Stock
Purchase Agreement and Sections 3.6 and 11 of the Prior Warrant Certificates.
STATEMENT OF AGREEMENT
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In consideration of their mutual promises set forth in this Agreement the
Parties hereby agree as follows.
SECTION 1. DEFINED TERMS.
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As used herein, unless the context otherwise requires, the following terms
have the following respective meanings (the definitions to be applicable to both
the singular and the plural forms of the terms defined where either such form is
used in this Agreement).
1.1 "Additional Shares of Common Stock" means all shares of Common
Stock issued by the Company after the Original Issue Date other than Warrant
Shares and shares issued under the Company's employee stock option plans.
1.2 "Adjusted Permitted Indebtedness" means, as determined as of any
date (i) the aggregate principal amount of all Permitted Indebtedness, excluding
(ii) the aggregate principal amount of the Senior Loans outstanding as of such
date of determination.
1.3 "Affiliate" shall have the meaning set forth in the Purchase
Agreement.
1.4 "Agreement" means this Rights Agreement dated as of October 17,
1996 as modified, amended or restated from time to time.
1.5 "Appraiser" means, with respect to any determination of the Fair
Market Value Amount, an independent appraiser (which shall be an accounting firm
or investment banking firm that is not an Affiliate of either the Company or the
Holder) selected in the manner provided for in this definition. Within ten (10)
days after the exercise of the Put Option, the Company and the Holder shall
endeavor in good faith to select a mutually acceptable Appraiser. If no such
Appraiser is mutually selected within such time period or such longer time
period as the Company and the Holder shall mutually agree upon, then within ten
(10) days thereafter, the Company and the Holder shall each designate an
investment banking firm that is not an Affiliate of either the Company or the
Holder, and within ten (10) days thereafter, such investment banking firms shall
mutually select the Appraiser. The Company shall pay the reasonable fees and
expenses of the Appraiser, and, if applicable, the Company and the Holder shall
each pay the fees and expenses of the investment banking firm designated by each
of them for the purpose of selecting the Appraiser.
1.6 "Assignment and Assumption Agreement" means the Assignment and
Assumption of Purchase Agreement, Registration Agreement and Executive Stock
Agreements (and Related Executive Stock Pledge Agreements and Promissory Notes)
of Corinthian Schools, Inc. Agreement dated as of the Merger Date, pursuant to
which CCI was assigned and assumed the rights and obligations of CSI under Stock
Purchase Agreement, Prior Purchase Agreement and Executive Stock Agreement, and
all references to shares of CSI Capital Stock under those agreements now refer
to CCI Capital Stock.
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1.7 "BOCP II" means Banc One Capital Partners II, Ltd., an Ohio
limited liability company, together with its successors and assigns.
1.8 "Board of Directors" means the board of directors of the Company
and, as applicable and to the extent permitted by law, any committee of such
board of directors authorized to exercise the powers of the board of directors.
1.9 "Business Day" means, any day other than a Saturday, Sunday or
day upon which banking institutions are authorized or required by law or
executive order to be closed in the City of Columbus, Ohio.
1.10 "CSI" means Corinthian Schools, Inc., a Delaware corporation,
together with its successors and assigns.
1.11 "CSI Class A Preferred" is defined in Background Paragraph A.
1.12 "CSI Class A Common" is defined in Background Paragraph A.
1.13 "CSI Class B Common" is defined in Background Paragraph A.
1.14 "Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of
corporate stock, including each class of common stock and preferred stock of
such Person or partnership interests and any warrants, options or other rights
to acquire such stock or interests.
1.15 "Capitalized Earnings Amount" means, as of any date of
determination, an amount equal to five (5) times EBITDA (four (4) times EBITDA
in the case of Prior Warrant Shares or Purchase Shares issued in respect of such
Prior Warrant Shares) (i) reduced by (A) an amount sufficient to pay in full all
of the then outstanding Adjusted Permitted Indebtedness (including all accrued
but unpaid interest with respect thereto), and (B) an amount equal to the total
amount expended or incurred (including the full amount capitalized under capital
leases) for the acquisition of fixed or capital assets as reflected on the most
recent Financial Statements for the twelve-month period ended immediately prior
to any such date of determination, and (ii) increased by the average amount of
cash and marketable securities reflected on the most recent Financial Statements
of the Company as of the date of determination.
1.16 "Change of Control" means (i) an event or series of events by
which any Person or Persons or other entities acting in concert as a partnership
or other group (a "Group of Persons") shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases, merger,
consolidation or otherwise, have become the beneficial owner (within the meaning
of Rule 13d-3 under the Securities Exchange Act), of 50% or more of the Voting
Power of the Company, (ii) the Company is merged with or into another
corporation with the effect that immediately after such transaction the
stockholders of the Company immediately prior to such
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transaction hold less than a majority of the combined Voting Power of the Person
surviving the transaction, or (iii) the direct or indirect, sale, lease,
exchange or other transfer of all or substantially all of the assets of the
Company to any Person or Group of Persons.
1.17 "Class A Common" is defined in Background Paragraph F.
1.18 "Class B Common" is defined in Background Paragraph F.
1.19 "Class A Preferred" is defined in Background Paragraph F.
1.20 "Closing Date" means October 17, 1996, or such later date as the
Parties shall mutually agree.
1.21 "Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
1.22 "Common Stock" means the shares of Class A Common and Class B
Common treated as a single class of stock, at any time outstanding.
1.23 "Company" means Corinthian Colleges, Inc., a Delaware
corporation, together with its successors and assigns.
1.24 "Contingent Warrants" means the warrants held by Prudential,
Primus, BOCP II and LLC which are evidenced by Contingent Stock Warrants dated
as of the date hereof.
1.25 "Convertible Securities" means evidences of indebtedness, shares
of stock or other securities that are convertible into or exchangeable for, with
or without payment of additional consideration in cash or property, or options,
warrants or other rights that are exercisable for, shares of Common Stock that,
when issued, would constitute Additional Shares of Common Stock, either
immediately or upon the occurrence of a specified date or a specified event, but
excluding the shares of Common Stock issuable upon exercise of the Warrants.
1.26 "Devereux "means such individual as identified in the Parties
section hereof, together with his heirs, successors and assigns.
1.27 "Disposition" means (i) a merger, consolidation or other
business combination in which the Company is the surviving entity and the
Company's stockholders receive cash or non-cash consideration in exchange for or
in respect of their shares of Capital Stock of the Company or (ii) the sale,
lease, conveyance, transfer or other disposition (other than the grant of a
security interest) in any single transaction or series of related transactions
of all or substantially all of the assets of the Company.
1.28 "EBITDA" means, as determined as of any date, earnings of the
Company (as
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reflected on the most recent Financial Statements) for the twelve-month period
ended immediately prior to any such date of determination determined excluding
all amounts expensed as reflected on such Financial Statements during such
twelve-month period with respect to (i) interest expense with respect to
Permitted Indebtedness, (ii) federal and state income tax expense, (iii)
depreciation expense, and (iv) amortization expense.
1.29 "Event of Default" shall have the meaning set forth in the
Purchase Agreement.
1.30 "Executives" means Xxxxx, St. Pierre, McCord, Devereux and
Holland, as a group, and "Executive" means any one of them.
1.31 "Executive Stock" is defined in Background Paragraph E.
1.32 "Executive Stock Agreement" is defined in Background Paragraph
E.
1.33 "Existing Advances" is defined in Background Paragraph C.
1.34 "Existing Notes" is defined in Background Paragraph B.
1.35 "Fair Market Value Amount" means, as of any Put Date with
respect to which either the Company or the Holder by written notice within ten
(10) days after the Put Date to the other requests a determination of such
amount, the fair market value of the then Outstanding Common Stock as determined
by the Appraiser assuming the sale of such Outstanding Common Stock by a willing
seller to a willing buyer immediately after giving effect to (i) the redemption
in full of all the outstanding Preferred Stock at the applicable Redemption
Price, and (ii) the payment in full of all outstanding Permitted Indebtedness,
and determined without giving consideration to the tax consequences of such sale
to the seller.
1.36 "Financial Statements" means the Annual Financial Statements,
Quarterly Financial Statements and Monthly Financial Statements (all as defined
in the Purchase Agreement), as applicable, of the Company.
1.37 "Group of Persons" is defined in Section 1.15 hereof.
1.38 "Holder" means with respect to the (i) Purchased Capital Stock,
Primus and LLC, (ii) Prior Warrant Shares, Primus and LLC, (iii) New Warrants
and New Warrant Shares, Primus and BOCP II and (iv) Executive Stock, the
Executives.
1.39 "Holland"means such individual as identified in the Parties
section hereof, together with his heirs, successors and assigns.
1.40 "Indebtedness" means, with respect to the Company, as of any
date of
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determination, the sum (without duplication) at such date of (i) all
indebtedness of the Company for borrowed money or for the deferred purchase
price of property or services or which is evidenced by a note, bond, debenture,
or similar instrument, reflected on the most recent Financial Statements, (ii)
all obligations of the Company under any financing lease, (iii) all obligations
of the Company in respect of letters of credit, acceptances, or similar
obligations issued or created for the account of the Company, (iv) all guaranty
obligations of the Company, and (v) all liabilities secured by any lien on any
property owned by the Company, whether or not the Company has assumed or
otherwise become liable for the payment thereof.
1.41 "Initial Public Offering" means the first offer and sale to the
public by the Company or any holders of shares of any class of its Capital
Stock, pursuant to a registration statement that has been declared effective by
the Commission; provided, however, that the gross proceeds of the shares issued
and sold by the Company are at least $20,000,000.
1.42 "LLC" means BOCP II, Limited Liability Company, an Ohio limited
liability company and successor by merger to Banc One Capital Partners II,
Limited Partnership, together with its successors and assigns.
1.43 "Market Determined Value Amount" means, with respect to any Put
Date, the fair market value of the then Outstanding Common Stock determined in
good faith in connection with a Trigger Event the closing of which has occurred
within six (6) months immediately preceding the Put Date or that will occur
pursuant to an agreement or a binding letter of intent in effect as of the Put
Date and assuming (i) the redemption in full of all the outstanding Preferred
Stock at the applicable Redemption Price and, (ii) the payment in full of all
outstanding Permitted Indebtedness, and determined without giving consideration
to the tax consequences of such sale to the seller.
1.44 "XxXxxx" means such individual as identified in the Parties
section hereof, together with his heirs, successors and assigns.
1.45 "Merger Date" is defined in Background Paragraph F.
1.46 "Xxxxx" means such individual as identified in the Parties
section hereof, together with his heirs, successors and assigns.
1.47 "New Notes" is defined in Background Paragraph G.
1.48 "New Warrants" is defined in Background Paragraph H.
1.49 "New Warrant Certificates" is defined in Background Paragraph H.
1.50 "New Warrant Shares" is defined in Background Paragraph H.
1.51 "Non-Surviving Combination" means any merger, consolidation or
other
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business combination by the Company with one or more other entities in a
transaction in which the Company is not the surviving entity.
1.52 "Original Issue Date" means the date on which the New Warrants
and the New Notes were first issued pursuant to the Purchase Agreement.
1.53 "Outstanding Common Stock" means, as of any date, all shares of
Common Stock then outstanding plus the maximum number of shares of Common Stock
issuable in respect of Convertible Securities and options and warrants to
purchase shares of Common Stock or Convertible Securities outstanding on such
date (whether or not the rights to convert, exchange or exercise thereunder are
presently exercisable), including the maximum number of shares issuable under
the Warrants; provided that the maximum number of shares of Common Stock
issuable in respect of Convertible Securities and options and warrants to
purchase shares of Common Stock or Convertible Securities outstanding on such
date shall be adjusted in accordance with the "treasury stock" method determined
under generally accepted accounting principles pursuant to Accounting Principles
Board Opinion 15.
1.54 "Parties" means the Company, CSI, BOCP II, LLC, Primus and the
Executives, collectively, and "Party" means any one of them.
1.55 "Permitted Indebtedness" means, as of any date of determination
the aggregate principal amount of all Indebtedness of the Company outstanding as
of such date of determination, but only to the extent that the principal amount
of such Indebtedness does not exceed the amounts permitted under the Purchase
Agreement.
1.56 "Person" means any individual, corporation, limited liability
company, partnership, joint venture, trust, estate, unincorporated organization
or government or any agency or political subdivision thereof.
1.57 "Preemption Offering" means any proposed issuance and sale by
the Company after the Original Issue Date and prior to the date of the Initial
Public Offering of any shares of Common Stock or any Convertible Securities
other than the following:
(a) the issuance of the Warrant Shares subject to the Warrants and
shares of Common Stock subject to the Prudential Warrant;
(b) the issuance or sale of Common Stock pursuant to a rights
offering in which the holder hereof elects to participate under
the provisions of Section 3.5 of the New Warrant Certificates;
(c) the issuance or sale of Common Stock or Convertible Securities
in connection with the acquisition by the Company of a business,
which issuance or sale has been approved by a unanimous vote of
the Board of
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Directors of the Company; or
(d) the issuance of shares of Common Stock pursuant to the
Contingent Warrants.
1.58 "Preferred Stock" means any shares of Capital Stock of the
Company ranking senior to the Common Stock with respect to dividends or
liquidation including, without limitation, the shares of Class A Preferred.
1.59 "Primus" means Primus Capital Fund III Limited Partnership, an
Ohio limited partnership, together with its successors and assigns.
1.60 "Prior Credit Facility" is defined in Background Paragraph C.
1.61 "Prior Purchase Agreement" is defined in Background Paragraph B.
1.62 "Prior Warrants" is defined in Background Paragraph D.
1.63 "Prior Warrant Certificates" is defined in Background
Paragraph D.
1.64 "Prior Warrant Shares" is defined in Background Paragraph D.
1.65 "Prudential" means The Prudential Insurance Company of America,
together with its successors and assigns.
1.66 "Prudential Warrants" means the warrants held by Prudential
which are evidenced by a Stock Subscription Warrant dated as of the date hereof.
1.67 "Purchase Agreement" is defined in Background Paragraph G.
1.68 "Purchased Capital Stock" is defined in Background Paragraph A.
1.69 "Purchase Shares" means, as of any date of determination, any
shares of Common Stock purchased by Primus, LLC and BOCP II prior to such date
of determination pursuant to the exercise of its rights under Section 2 hereof,
or directly from the Company in any other transaction after the Original Issue
Date. For purposes of this definition, Purchase Shares shall include any shares
of Common Stock issuable upon the conversion of any Convertible Securities
purchased by Primus, LLC and BOCP II pursuant to the exercise of its rights
under Section 2 hereof.
1.70 "Put Date" shall have the meaning set forth in Section 6.2.
1.71 "Put Event" means the earlier to occur of the following:
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(a) the first to occur of (i) October 31, 2004, or (ii) the later of
(A) the final payment and discharge of all of the Company's
obligations under that certain Note Purchase and Revolving
Credit Agreement entered into in October 17, 1996, with The
Prudential Insurance Company of America and the notes issued
thereunder, as amended, supplemented or otherwise modified from
time to time or (B) June 30, 2001;
(b) a Change of Control; or
(c) a Non-Surviving Combination.
1.72 "Put Option" shall have the meaning set forth in Section 6.1.
1.73 "Redemption Price" means the liquidation value with respect to
the Preferred Stock plus all accrued and unpaid dividends.
1.74 "Registration Rights Agreement" means the Amended and Restated
Registration Agreement dated as of the date hereof by and among the Company,
Prudential and the Holders.
1.75 "Reorganization Event" means any of the following events:
(a) capital reorganization or reclassification or recapitalization
of the Capital Stock of the Company (other than any Adjustment
Event as defined in the New Warrant Certificates);
(b) any merger or consolidation of the Company with or into another
corporation; and
(c) the sale or transfer of the property of the Company as an
entirety on substantially as an entirety.
1.76 "Repurchase Price" shall have the meaning set forth in Section
6.3.
1.77 "Restricted Securities" means (a) any Warrant bearing the
applicable legend (set forth in Section 3.1, (b) any Warrant Shares which are
evidenced by a certificate or certificates bearing the legend set forth in
Section 3.1, and (c) unless the context otherwise requires, any share of
Common Stock which, when issued, will be evidenced by a certificate or
certificates bearing the legend set forth in section 3.1.
1.78 "St. Pierre" means such individual as identified in the Parties
section hereof together with his heirs, successors and assigns.
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1.79 "Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute replacing said statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
1.80 "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar Federal statute replacing said statute, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
1.81 "Senior Loans" means (i) loans outstanding under the Credit
Agreement dated as of October 17, 1996, between the Company and Prudential, as
modified, amended, restated, renewed or extended from time to time and (ii) any
extension, renegotiation or refinancing of such loans with Prudential or any
other lender; provided, however, that, in any event, for purposes of this
Agreement, the aggregate outstanding principal amount of the Senior Loans shall
be deemed not to exceed $27,500,000.
1.82 "Stock Purchase Agreement" is defined in Background Paragraph A.
1.83 "Transfer" means with respect to any Restricted Securities, any
sale, assignment, pledge or other disposition thereof, or of any interest
therein, which could constitute a "sale" thereof, as that term is defined in
Section 2(3) of the Securities Act.
1.84 "Trigger Event" means any of the following events: (i) an
Initial Public Offering; (ii) a Change of Control; (iii) a Disposition; or (iv)
a Non-Surviving Combination.
1.85 "Underlying Common Stock" means the shares of Purchased Capital
Stock, Prior Warrant Shares, and New Warrant Shares as if the New Warrants had
been exercised, all as adjusted pursuant to this Agreement.
1.86 "Valuation Amount" means, as of any date of determination, the
Capitalized Earnings Amount, unless (i) a greater Fair Market Value Amount has
been determined, or (ii) a greater Market Determined Value Amount is
determinable with respect to such date of determination, in which case
"Valuation Amount" means the greater amount (if applicable).
1.87 "Voting Power" of any Person means the aggregate number of votes
of all classes of Capital Stock of such Person which ordinarily has voting power
for the election of the Board of Directors or their equivalents of such Person.
1.88 "Warrants" means the Prior Warrants and the New Warrants.
1.89 "Warrant Certificates" means the Prior Warrant Certificates and
the New Warrant Certificates.
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1.90 "Warrant Shares" means the Prior Warrant Shares and the New
Warrant Shares.
SECTION 2. PREEMPTION RIGHTS. In the event of any Preemption Offering,
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(i) the Company shall notify the Holders of the Underlying Common Stock and the
Executive Stock in writing of the number of shares of Common Stock or
Convertible Securities subject to such Preemption Offering and the cash or cash
equivalent purchase price (determined by the Board of Directors of the Company
in good faith) thereof, and (ii) each Holder of the Underlying Common Stock or
the Executive Stock shall have the right for a period of thirty (30) days
following the consummation of such Preemption Offering to purchase up to that
percentage of such shares of Common Stock or Convertible Securities determined
by dividing (A) the total number of Underlying Stock or Executive Stock held by
such holder and (B) the total number of shares of Outstanding Common Stock.
In order to exercise its purchase rights hereunder, a holder of Underlying
Common Stock or Executive Stock must, within 15 days after receipt of written
notice from the Company describing in reasonable detail the Preemption Offering,
including the purchase price hereof, the payment terms and such holder's
percentage allotment, deliver a written notice to the Company stating its
election to participate, in whole or in part, in the Preemption Offering. If all
of the Common Stock and/or Convertible Securities offered to the holders of the
Underlying Common Stock and Executive Stock is not fully subscribed by such
holders, the remaining Common Stock and/or Convertible Securities shall be
reoffered by the Company to the holders purchasing their full allotment upon the
terms set forth in this paragraph, except that such holders must exercise their
purchase rights within five (5) days after receipt of such reoffer.
Upon the expiration of the offering periods described above, the Company
shall be entitled to sell such Common Stock and/or Convertible Securities which
the holders of Underlying Common Stock and Executive Stock have not elected to
purchase during the ninety (90) days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to
such holders. Any Common Stock and/or Convertible Securities offered or sold by
the Company after such 90 day period must be reoffered to the holders of
Underlying Common Stock and Executive Stock pursuant to the terms of this
paragraph.
SECTION 3. RESTRICTIONS ON TRANSFER.
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3.1 RESTRICTIVE LEGENDS. Except as otherwise permitted by this
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Section 3, the Warrants and each Warrant issued in exchange or substitution for
any Warrant, and each Warrant issued upon the registration of transfer of any
Warrant and each certificate representing Warrant Shares and each certificate
issued upon the registration of transfer of any Warrant Shares, shall be stamped
or otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
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SECURITIES LAWS OF ANY STATE, AND MAY NOT BE DISTRIBUTED, SOLD,
TRANSFERRED, ASSIGNED, HYPOTHECATED OR OFFERED UNLESS THERE IS
IN EFFECT A REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS
COVERING SUCH SECURITIES OR THE ISSUER RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE ISSUER OR A NO-ACTION LETTER FROM THE
COMMISSION INDICATING THAT SUCH DISTRIBUTION, SALE, TRANSFER,
ASSIGNMENT, HYPOTHECATION OR OFFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT
AND LAWS."
3.2 NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to any
transfer of any Restricted Securities, the Holder will give written notice to
the Company of the Holder's intention to effect such transfer and to comply in
all other respects with this Section 3.2. Each such notice of a proposed
transfer (a) shall describe the manner and circumstances of the proposed
transfer in sufficient detail to enable counsel to render the opinion referred
to below, and (b) shall designate counsel for the Holder. The Holder will submit
a copy thereof to the counsel designated in such notice and the Company will
promptly submit a copy thereof to its counsel. The following provisions shall
then apply:
(a) If in the opinion of counsel to the Company the proposed
transfer may be effected without registration of such Restricted
Securities under the Securities Act, the Company will promptly
notify the Holder and the Holder shall thereupon be entitled to
transfer such Restricted Securities in accordance with the terms
of the notice delivered by the Holder to the Company. Each
Warrant or certificate, if any, issued upon or in connection
with such transfer shall bear the restrictive legend set forth
in section 3.1, unless in the opinion of such counsel such
legend is no longer required to ensure compliance with the
Securities Act. If for any reason counsel for the Company (after
having been furnished with the information required to be
furnished by clause (a) of this Section 3.2) shall fail to
deliver an opinion to the Company, or the Company shall fail to
notify the Holder as aforesaid, within thirty (30) days after
receipt of notice of the Holder's intention to effect a
transfer, then for all purposes of the Warrants the opinion of
counsel for the Holder shall be sufficient to authorize the
proposed transfer and the opinion of counsel for the Company
shall not be required in connection with such proposed transfer;
and
(b) If in the opinion of counsel to the Company the proposed
transfer may not be effected without registration of such
Restricted Securities under the Securities Act, the Company will
promptly so notify the Holder and the Holder shall not be
entitled to transfer such Restricted Securities until receipt of
a further notice from the Company under clause (i) above or
until registration of such
13
Restricted Securities under the Securities Act has become effective.
SECTION 4. AVAILABILITY OF INFORMATION. Within ninety (90) days after
---------------------------
a registration statement under the Securities Act is declared effective with
respect to an Initial Public Offering, the Company will comply with the
reporting requirements of Sections 13 and 15(d) of the Securities Exchange Act
insofar as they are applicable to the Company and will comply with all other
public information reporting requirements of the Commission (including the
requirements of Rule 144 promulgated by the Commission under the Securities
Act) from time to time in effect and relating to the availability of an
exemption from the Securities Act for the sale of any Restricted Securities or
the sale of securities by Affiliates. The Company will also cooperate with the
Holder at the Holder's expense to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities or the sale of securities by Affiliates.
SECTION 5. REGISTRATION RIGHTS. The Holders of the Purchased Capital
-------------------
Stock, Warrants and Warrant Shares and Purchase Shares, if any, shall have
registration rights as provided in the Registration Rights Agreement dated as of
the date hereof by and between the Holders of the Purchased Capital Stock,
Warrants or Warrant Shares, and Purchase Shares, if any, Prudential and the
Company.
SECTION 6. PUT OPTIONS.
------------
6.1 PUT OPTION EXERCISE PERIODS. Unless and until an Initial Public
---------------------------
Offering has occurred, the holders of the Purchased Capital Stock, and Warrants
and Warrant Shares and Purchase Shares, if any, shall have the option (the "Put
Option") to require the Company to purchase all (and in the case of the Warrants
and Warrant Shares not less than all) of the Purchased Capital Stock, Warrants
and Warrant Shares and Purchase Shares, if any, at anytime after a Put Event has
occurred.
6.2 MANNER OF EXERCISE. The put option may be exercised by the
------------------
Holders of the Purchased Capital Stock, Warrants and Warrant Shares and Purchase
Shares, if any, by such Holder giving written notice to the Company that such
Holder elects to sell the Purchased Capital Stock, Warrants and Warrant Shares
and Purchase Shares, if any, then held by such Holder to the Company ("Put
Date") at the repurchase price set forth in Section 6.3 (the "Repurchase
Price"). Such written notice of election by the Holders shall be irrevocable.
Upon final determination of the Repurchase Price as set forth in Section 6.3,
the Company shall be required to repurchase the Purchased Capital Stock,
Warrants and Warrant Shares and Purchase Shares, if any, then held by such
Holder. The Company shall take all such actions, including selling assets,
borrowing funds and giving liens in connection therewith, determining its
capital surplus based upon appraisals or valuations of its assets and obtaining
assets of its lenders, as may be required to permit it to purchase any shares so
requested to be purchased. In the event that, notwithstanding compliance with
its obligations hereunder the Company is legally prohibited from completing such
purchase, the Company shall unless waived by the selling Holder, purchase the
maximum number of shares then legally permitted,
14
thereafter conduct its affairs so as to purchase any remaining shares as quickly
as possible and offer to purchase any shares which cannot be purchased for cash
for promissory notes which bear the highest interest rate, have the shortest
maturity rate and are secured by the most collateral as is then or subsequently
permitted.
6.3 THE REPURCHASE PRICE. The Repurchase Price per shall be equal to:
--------------------
(a) With respect to the Purchased Capital Stock, the Fair Market
Valuation Amount divided by the number of shares of Outstanding
Common Stock determined as of the Put Date; and
(b) With respect to the Warrants and Warrant Shares, the Valuation
Amount divided by the number of Outstanding Common Stock
determined as of the Put Date.
6.4 CLOSING AND PAYMENT. The closing for the repurchase of the
-------------------
Purchased Capital Stock, Warrants and Warrant Shares and Purchase Shares, if
any, by the Company pursuant to this Section 6 shall occur within ten (10)
Business Days following the date of the determination of the Repurchase Price
which shall be payable by the Company by delivery of a certified or cashiers'
check to the selling Holder.
SECTION 7. MISCELLANEOUS.
(1) No Implied Rights or Waivers. No notice to or demand on CCI
----------------------------
in any case shall entitle CCI to any other or further
notice or demand in the same, similar and other
circumstances. Neither any failure nor any delay on the
part of a Holder in exercising any right, power or
privilege hereunder or under the New Notes or Warrant
Certificates shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or
further exercise of the same or the exercise of any other
right, power or privilege.
(2) Modifications. Amendments or Waivers. The Company and the
------------------------------------
Holders may from time to time enter into written agreements
amending or changing any provision of this Agreement or the
rights hereunder or give waivers or consents to a departure
from the due performance of their obligations hereunder
provided that no departure from the Company's due
performance of its obligations hereunder shall be effective
unless agreed to in writing by each Holder.
(3) Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP.
15
(4) Entire Agreement. This Agreement including the Exhibits
----------------
or Schedules hereto, constitutes the entire agreement
relating to the subject matter hereof among the Parties
hereto. Each Party acknowledges that no representation,
inducement, promise or agreement has been made, orally or
otherwise, by any other Party, or anyone acting on behalf
of any other Party, unless such representation,
inducement, promise or agreement is embodied in this
Agreement expressly or by incorporation.
(5) Governing Law. This Agreement shall be governed by and
------------
construed in accordance with the laws of the State of Ohio.
(6) Severability. If any provision of this Agreement is held
------------
to be invalid, void or unenforceable, the remaining
provisions of this Agreement shall nevertheless continue
in full force and effect.
(7) Third Party Beneficiaries. The obligations of each Party
-------------------------
under this Agreement shall inure solely to the benefit of
the other Parties, and no other person or entity shall be
a third party beneficiary of this Agreement.
(8) Rules of Construction. Unless otherwise specified, the
---------------------
following rules shall be applied in construing the
provisions of this Agreement.
(i) Terms that imply gender shall be construed to apply to
all genders.
(ii) References to Sections, Schedules and Exhibits refer to
the numbered Sections of, the Schedules of and the
Exhibits attached to this Agreement.
(iii) Headings to the various Sections of this Agreement are
included solely for purposes of reference and shall be
ignored in construing the provisions of this Agreement.
(iv) The Exhibits and Schedules attached to this Agreement are
incorporated herein by reference.
(v) "Herein", "hereto", "hereof" and words of similar import
refer to this Agreement.
(vi) The word "and" connotes "each and every", and the word
"or" connotes "any one or more".
16
(vii) The word "including" connotes "including without limitation".
(viii) Any reference to any law or regulation refers to that law or
regulation as amended from time-to-time after the date of this
Agreement and to the corresponding provision of any successor law
or regulation.
(ix) Any reference to any agreement or other document in this
Agreement refers to that agreement or other document as amended
from time-to-time after the date of this Agreement.
(x) The recitals included in this Agreement are the mutual
representations of the Parties and are a part of this Agreement.
(9) Notices. Any notice or other communication required or permitted
-------
to be made or given under this Agreement, shall be in writing and
shall be deemed to have been received by the Party to whom it is
addressed: (i) on the date indicated on the certified mail return
receipt if sent by certified mail return receipt requested; (ii)
on the date actually received if hand delivered or if transmitted
by telefax (receipt of which is confirmed to sender); (iii) three
business days after such notice was deposited in the United
States Mail postage prepaid; or (iv) one business day after such
notice was delivered to an overnight delivery service, addressed,
delivered or transmitted in each case as follows:
HOLDERS:
Banc One Capital Partners II, Ltd.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
ATTENTION: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telefax: (000) 000-0000
With A Copy to:
Banc One Capital Corporation
000 Xxxx Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
ATTENTION: General Counsel
Telephone: (000) 000-0000
Telefax: (000) 000-0000
17
Primus Capital Fund III Limited Partnership
0000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
ATTENTION: Loyal X. Xxxxxx
Telephone: (000) 000-0000
Telefax: (000) 000-0000
With A Copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
ATTENTION: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telefax: (000) 000-0000
To the Executives:
Corinthian Colleges, Inc.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
COMPANY:
Corinthian Colleges, Inc.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000-0000
ATTENTION: Xxxxx X. Xxxxx
Telephone: (000)000-0000
Telefax: (000)000-0000
With a Copy to:
O'Melveny & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
ATTENTION: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telefax: (000) 000-0000
18
A Party's address for notice may be changed from time-to-time only by
written notice given to each of the other Parties in accordance with this
Section.
(10) Assignment. Neither this Agreement nor any of the rights or
----------
duties hereunder may be assigned by any Party without the
prior written consent of each of the other Parties, and any
assignment attempted without such prior consent shall be
null and void.
(11) Further Acts and Documents. Each of the Parties hereby
--------------------------
agrees to execute and deliver such further instruments and
to do such further acts and things as may be necessary or
desirable to carry out the purposes of this Agreement.
(12) Counterparts. The Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed to be an
original and all of which shall constitute one in the same
agreement.
19
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
COMPANY: HOLDERS:
BANC ONE CAPITAL PARTNERS II,
CORINTHIAN COLLEGES, INC. LTD.
By: BOCP Holdings Corporation
By
-------------------------------
Xxxxx X. Xxxxx, President By
----------------------------------
Its: Authorized Signer
EXECUTIVES:
----------------------------------
Xxxxx X. Xxxxx PRIMUS CAPITAL FUND III
LIMITED PARTNERSHIP
---------------------------------- By: Primus Venture Partners, Inc.
Xxxx St. Pierre
By
-----------------------------------
---------------------------------- Loyal X. Xxxxxx
Xxxxx X. XxXxxx
Its
----------------------------------
----------------------------------
Xxxxxx X. Xxxxxxxx
BOCP II, LIMITED LIABILITY COMPANY
----------------------------------
Xxxxx X. Xxxxxxx By: BOCP Holdings Corporation
By
-----------------------------------
Its: Authorized Signer
20
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
COMPANY: HOLDERS:
BANC ONE CAPITAL PARTNERS II,
CORINTHIAN COLLEGES, INC. LTD.
By: BOCP Holdings Corporation
By /s/ Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx, President By
----------------------------------
Its: Authorized Signer
EXECUTIVES:
/s/ Xxxxx X. Xxxxx
----------------------------------
Xxxxx X. Xxxxx PRIMUS CAPITAL FUND III
LIMITED PARTNERSHIP
---------------------------------- By: Primus Venture Partners, Inc.
Xxxx St. Pierre
By /s/ Loyal X. Xxxxxx
/s/ Xxxxx St. Pierre -----------------------------------
---------------------------------- Loyal X. Xxxxxx
Xxxxx X. XxXxxx
Its President
----------------------------------
----------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxx BOCP II, LIMITED LIABILITY COMPANY
----------------------------------
Xxxxx X. Xxxxxxx By: BOCP Holdings Corporation
By
-----------------------------------
Its: Authorized Signer
21
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
COMPANY: HOLDERS:
BANC ONE CAPITAL PARTNERS II,
CORINTHIAN COLLEGES, INC. LTD.
By: BOCP Holdings Corporation
By
-------------------------------
Xxxxx X. Xxxxx, President By
----------------------------------
Its: Authorized Signer
EXECUTIVES:
----------------------------------
Xxxxx X. Xxxxx PRIMUS CAPITAL FUND III
LIMITED PARTNERSHIP
/s/ Xxxx St. Pierre
---------------------------------- By: Primus Venture Partners, Inc.
Xxxx St. Pierre
By
-----------------------------------
---------------------------------- Loyal X. Xxxxxx
Xxxxx X. XxXxxx
Its
----------------------------------
----------------------------------
Xxxxxx X. Xxxxxxxx
BOCP II, LIMITED LIABILITY COMPANY
----------------------------------
Xxxxx X. Xxxxxxx By: BOCP Holdings Corporation
By
-----------------------------------
Its: Authorized Signer
22
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
COMPANY: HOLDERS:
BANC ONE CAPITAL PARTNERS II,
CORINTHIAN COLLEGES, INC. LTD.
By: BOCP Holdings Corporation
By
-------------------------------
Xxxxx X. Xxxxx, President By
----------------------------------
Its: Authorized Signer
EXECUTIVES:
----------------------------------
Xxxxx X. Xxxxx PRIMUS CAPITAL FUND III
LIMITED PARTNERSHIP
---------------------------------- By: Primus Venture Partners, Inc.
Xxxx St. Pierre
By
---------------------------------- -----------------------------------
Xxxxx X. XxXxxx Loyal X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxx Its
---------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxx
BOCP II, LIMITED LIABILITY COMPANY
----------------------------------
Xxxxx X. Xxxxxxx By: BOCP Holdings Corporation
By
-----------------------------------
Its: Authorized Signer
23
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
COMPANY: HOLDERS:
BANC ONE CAPITAL PARTNERS II,
CORINTHIAN COLLEGES, INC. LTD.
By: BOCP Holdings Corporation
By
-------------------------------
Xxxxx X. Xxxxx, President By
----------------------------------
Its: Authorized Signer
EXECUTIVES:
----------------------------------
Xxxxx X. Xxxxx PRIMUS CAPITAL FUND III
LIMITED PARTNERSHIP
---------------------------------- By: Primus Venture Partners, Inc.
Xxxx St. Pierre
By /s/ Loyal X. Xxxxxx
---------------------------------- -----------------------------------
Xxxxx X. XxXxxx Loyal X. Xxxxxx
Its President
---------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxx
BOCP II, LIMITED LIABILITY COMPANY
----------------------------------
Xxxxx X. Xxxxxxx By: BOCP Holdings Corporation
By
-----------------------------------
Its: Authorized Signer
24
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
COMPANY: HOLDERS:
BANC ONE CAPITAL PARTNERS II,
CORINTHIAN COLLEGES, INC. LTD.
By: BOCP Holdings Corporation, Manager
By
-------------------------------
Xxxxx X. Xxxxx, President By /s/ Xxxxx X. Xxxxxxx
----------------------------------
Its: Authorized Signer
EXECUTIVES:
----------------------------------
Xxxxx X. Xxxxx PRIMUS CAPITAL FUND III
LIMITED PARTNERSHIP
---------------------------------- By: Primus Venture Partners, Inc.
Xxxx St. Pierre
By
-----------------------------------
---------------------------------- Loyal X. Xxxxxx
Xxxxx X. XxXxxx
---------------------------------- Its
Xxxxxx X. Xxxxxxxx ----------------------------------
---------------------------------- BOCP II, LIMITED LIABILITY COMPANY
Xxxxx X. Xxxxxxx
By: BOCP Holdings Corporation, Manager
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Its: Authorized Signer
25
