2,000,000
XXXXXXX EDUCATION, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_________ __, 2002
Credit Suisse First Boston Corporation
Banc of America Securities LLC
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Dear Ladies and Gentlemen:
1. Introductory. New Mountain Partners, L.P. ("New Mountain") and DB
Capital Investors, L.P. ("DB Capital" and, together with New Mountain, the
"SELLING STOCKHOLDERS") propose severally to sell an aggregate of 2,000,000
shares ("FIRM SECURITIES") of common stock, par value $0.01 per share
("SECURITIES"), of Xxxxxxx Education, Inc., a Maryland corporation (the
"COMPANY"), and DB Capital also proposes to sell to the several Underwriters
named in Schedule A hereto ("UNDERWRITERS"), at the option of the Underwriters,
an aggregate of not more than 300,000 additional shares ("OPTIONAL SECURITIES")
of the Company's Securities as set forth below. The Firm Securities and the
Optional Securities are herein collectively called the "OFFERED SECURITIES." The
Selling Stockholders hereby agree with the Company and with the Underwriters as
follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
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(i) A registration statement (No. 333-100407) relating to the
Offered Securities, including a form of prospectus, has been filed with
the Securities and Exchange Commission ("COMMISSION") and either (A)
has been declared effective under the Securities Act of 1933, as
amended (the "ACT"), and is not proposed to be amended or (B) is
proposed to be amended by amendment or post-effective amendment. If
such registration statement (the "INITIAL REGISTRATION STATEMENT") has
been declared effective, either (A) an additional registration
statement (the "ADDITIONAL REGISTRATION STATEMENT") relating to the
Offered Securities may have been filed with the Commission pursuant to
Rule 462(b) ("RULE 462(b)") under the Act and, if so filed, has become
effective upon filing pursuant to such Rule and the Offered Securities
all have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement or (B) such an additional registration statement is proposed
to be filed with the Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration
statement has been filed and the Company does not propose to amend it,
and if any post-effective amendment to either such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, the most recent amendment (if any) to each
such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c)
("RULE 462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement,
"EFFECTIVE TIME" with respect to the initial registration statement or,
if filed prior to the execution and delivery of this Agreement, the
additional registration statement means (A) if the Company has advised
the Representatives that it does not propose to amend such registration
statement, the date and time as of which such registration statement,
or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or
post-effective amendment, as the case may be, is declared effective by
the Commission. If an additional registration statement has not been
filed prior to the execution and delivery of this Agreement but the
Company has advised the Representatives that it proposes to file one,
"EFFECTIVE TIME" with respect to such additional registration statement
means the date and time as of which such registration statement is
filed and becomes effective pursuant to Rule 462(b). "EFFECTIVE DATE"
with respect to the
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initial registration statement or the additional registration statement
(if any) means the date of the Effective Time thereof. The initial
registration statement, as amended at its Effective Time, including all
material incorporated by reference therein, including all information
contained in the additional registration statement (if any) and deemed
to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("RULE
430A(b)") under the Act, is hereinafter referred to as the "INITIAL
REGISTRATION STATEMENT." The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "ADDITIONAL REGISTRATION
STATEMENT." The Initial Registration Statement and the Additional
Registration Statement are hereinafter referred to collectively as the
"REGISTRATION STATEMENTS" and individually as a "REGISTRATION
STATEMENT." The form of prospectus relating to the Offered Securities,
as first filed with the Commission pursuant to and in accordance with
Rule 424(b) ("RULE 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, including all
material incorporated by reference in such prospectus, is hereinafter
referred to as the "PROSPECTUS." No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A)
on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all material respects to
the requirements of the Act and the rules and regulations of the
Commission ("RULES AND REGULATIONS") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement conformed,
or will conform, in all material respects to the requirements of the
Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (C) on
the date of this Agreement, the Initial Registration Statement and, if
the Effective Time of the Additional Registration Statement is prior to
the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required)
at the Effective Date of
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the Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will conform,
in all material respects to the requirements of the Act and the Rules
and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement
and the Prospectus will conform in all material respects to the
requirements of the Act and the Rules and Regulations, neither of such
documents will include any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no
Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by (i) any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(c) hereof or (ii) any Selling Stockholder specifically for
use therein, it being understood and agreed that the only such
information furnished by any such Selling Stockholder consists of the
information about such Selling Stockholder under the caption "Selling
Stockholders" in the Prospectus.
(iii) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Maryland, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, except to
the extent that failure to be so qualified would not individually or in
the aggregate reasonably be expected to have a material adverse effect
on the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole (a
"MATERIAL ADVERSE EFFECT").
(iv) Each active subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with corporate power and
authority to own its properties and conduct its business as described
in the Prospectus; and each such subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification except where
the failure to be so qualified would not reasonably be expected to
have, individually or in the aggregate, a
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Material Adverse Effect; all of the issued and outstanding capital
stock of each such subsidiary of the Company has been duly authorized
and validly issued and is fully paid and nonassessable; and the capital
stock of each such subsidiary of the Company owned by the Company,
directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(v) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued, fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus; and the stockholders of the Company have no preemptive
rights with respect to the Securities. The Offered Securities have been
duly authorized and reserved for issuance and, when issued upon
conversion of the Series A Convertible Preferred Stock of the Company
(the "SERIES A PREFERRED STOCK") in accordance with the Articles
Supplementary relating to the Series A Preferred Stock (the "ARTICLES
SUPPLEMENTARY"), will be validly issued, fully paid and non-assessable,
and the issuance of such Offered Securities by the Company to the
Selling Stockholders will not be subject to any preemptive rights.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the offering of the Offered Securities.
(vii) Other than the registration rights agreement, dated May
15, 2001, entered into by and among the Company and the Selling
Stockholders (the "REGISTRATION RIGHTS AGREEMENT"), there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(viii) The Securities are listed on the Nasdaq Stock Market's
National Market.
(ix) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
to be obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the sale
of the Offered Securities, except (i) such as have been obtained and
made under the Act (ii) the filing of the Prospectus in accordance with
Rule 424(b), if necessary, and (iii) such as may be required under
state securities laws.
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(x) The execution, delivery and performance of this Agreement,
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, rule, regulation or order
of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, including, without limitation, the Higher
Education Act of 1965, as amended, and the regulations promulgated
thereunder (the "HEA"), or any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, except where such breach,
violation or default would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The
execution, delivery and performance of this Agreement, and the
consummation of the transactions herein contemplated will not result in
a breach of the charter or by-laws of the Company or any such
subsidiary. The sale of the Offered Securities by the Selling
Stockholders will not constitute a change in ownership resulting in a
"change of control" of the Company pursuant to the applicable
regulations promulgated under the HEA or any applicable state statute
or regulation.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) Except as disclosed in the Prospectus, the Company and
its subsidiaries have good and marketable title to all real properties
and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would affect the value
thereof or interfere with the use made or to be made thereof by them,
except in each case where such failure would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect;
and except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would interfere with the use
made or to be made thereof by them, except in each case where such
failure would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(xiii) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them, including, without limitation, all authorizations required for
participation in federal financial aid programs under Title IV ("TITLE
IV PROGRAMS") of the HEA, except where such failure would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and have not received any notice of
proceedings
6
relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or any
of its subsidiaries, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or
any subsidiary exists or, to the knowledge of the Company, is
threatened that would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(xv) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names
servicemarks and licenses and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual
property (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to
conduct the business now operated by them, or presently employed by
them, except where such failure would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries is in violation of any statute, any
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates
any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and the
Company is not aware of any pending investigation which would
reasonably be expected to lead to such a claim.
(xvii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, or would materially and adversely affect the
ability of the Company to perform its obligations under this Agreement,
or which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits or proceedings are
threatened or, to the Company's knowledge, contemplated.
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(xviii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and,
except as otherwise disclosed in the Prospectus, such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent
basis and the schedules included in each Registration Statement present
fairly the information required to be stated therein.
(xix) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, and, except for
dividends paid on the Securities consistent with past practice,
payment-in-kind dividends made by the Company in respect of the Series
A Preferred Stock consistent with the terms of the Articles
Supplementary and as otherwise disclosed in or contemplated by the
Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(xx) The Company is subject to the reporting requirements of
either Section 13 or Section 15(d) of the Securities Exchange Act of
1934 and files reports with the Commission on the Electronic Data
Gathering, Analysis, and Retrieval (XXXXX) system.
(xxi) The Company is not and, after giving effect to the
offering and sale of the Offered Securities, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(xxii) Except for Xxxxxxx University, Inc., a Maryland
corporation ("Xxxxxxx University"), the Company has no subsidiary that
meets any of the following conditions: (A) the Company's and its other
subsidiaries' investments in and advances to the subsidiary exceed five
percent of the total assets of the Company and its subsidiaries
consolidated as of the end of the most recently completed fiscal year;
(B) the Company's and its other subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of the subsidiary
exceeds five percent of the total assets of the Company and its
subsidiaries consolidated as of the end of the most recently completed
fiscal year; or (C) the Company's and its subsidiaries' equity in the
income from continuing operations before income taxes, extraordinary
items and cumulative effect of a change in accounting principle of the
subsidiary
8
exceeds five percent of such income of the Company and its subsidiaries
consolidated for the most recently completed fiscal year.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) On such Closing Date and on each Closing Date hereinafter
mentioned, such Selling Stockholder will have valid and unencumbered
title to the shares of the Series A Preferred Stock that will be
converted into the Offered Securities to be delivered by such Selling
Stockholder on such Closing Date and on such Closing Date, and on each
Closing Date hereinafter mentioned, such Selling Stockholder will have
valid and unencumbered title to the Offered Securities and full right,
power and authority to enter into this Agreement and to sell, assign,
transfer and deliver the Offered Securities to be delivered by such
Selling Stockholder on such Closing Date hereunder; and upon the
delivery of and payment for the Offered Securities on each Closing Date
hereunder the several Underwriters will acquire valid and unencumbered
title to the Offered Securities to be delivered by such Selling
Stockholder on such Closing Date. The Selling Stockholders have
delivered to the Company the notice required under the Articles
Supplementary relating to the conversion of shares of Series A
Preferred Stock into the Offered Securities.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A)
on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all material respects to
the requirements of the Act and the Rules and Regulations and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed, or will conform, in all material respects to the
requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact
and did not omit, or will not omit, to state any material fact required
to be stated therein or necessary to make the statement therein not
misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all material
respects to the requirements of the Act and the Rules and Regulations,
and neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or
9
necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement
and the Prospectus will conform in all respects to the requirements of
the Act and the Rules and Regulations, neither of such documents will
include any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading. The two preceding sentences
apply only to the extent that statements in or omissions from a
Registration Statement or the Prospectus are based upon written
information furnished to the Company by such Selling Stockholder
specifically for use therein, it being understood and agreed that the
only such information furnished by any such Selling Stockholder
consists of the information about such Selling Stockholder under the
caption "Selling Stockholders" in the Prospectus.
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Stockholder and any person that would give rise to a valid claim
against such Selling Stockholder or any Underwriter or, to the
knowledge of such Selling Stockholder, the Company for a brokerage
commission, finder's fee or other like payment in connection with the
offering of the Offered Securities.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, each Selling Stockholder agrees,
severally and not jointly, to sell to the Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from each Selling Stockholder, at
a purchase price of $_____ per share, the number of Firm Securities set forth
below the name of such Selling Stockholder and opposite the name of such
Underwriter in Schedule A hereto.
The Selling Stockholders will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to accounts at a bank acceptable to Credit Suisse First Boston
Corporation ("CSFBC") drawn to the order of New Mountain and DB Capital,
respectively, at the office of Mayer, Brown, Xxxx & Maw, at 10:00 A.M., New York
time, on [___________], 2002, or at such other time not later than seven full
business days thereafter as CSFBC and the Selling Stockholders determine, such
time being herein referred to as the "FIRST CLOSING DATE." The certificates for
the Firm Securities so to be delivered will be duly indorsed or accompanied by
duly executed blank stock powers so as to validly transfer title to the
Representatives for the account of the Underwriters. The Company will cause its
transfer agent to reissue such securities in definitive form, in such
denominations and registered in such names as CSFBC requests and such reissued
10
securities will be made available by the Company for checking and packaging at
the above office of Mayer, Brown, Xxxx & Maw at least 24 hours prior to the
First Closing Date.
In addition, upon written notice from CSFBC given to the Company and DB
Capital from time to time not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per Security to be paid for the Firm
Securities. DB Capital agrees to sell to the Underwriters the number of Optional
Securities specified in such notice. Such Optional Securities shall be purchased
from DB Capital for the account of each Underwriter in the same proportion as
the number of Firm Securities set forth opposite such Underwriter's name bears
to the total number of Firm Securities (subject to adjustment by CSFBC to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the Company and
DB Capital.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. DB Capital will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price in Federal (same day) funds by official bank check or checks
or wire transfer to an account at a bank acceptable to CSFBC drawn to the order
of DB Capital, at the above office of Mayer, Brown, Xxxx & Maw. The certificates
for the Optional Securities being purchased on each Optional Closing Date will
be duly indorsed or accompanied by duly executed blank stock powers so as to
validly transfer title to the Representatives for the account of the
Underwriters. The Company will cause its transfer agent to reissue such
securities in definitive form, in such denominations and registered in such
names as CSFBC requests upon reasonable notice prior to such Optional Closing
Date and such reissued securities will be made available by the Company for
checking and packaging at the above office of Mayer, Brown, Xxxx & Maw at a
reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
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5. Certain Agreements of the Company and the Selling Stockholders. (a)
The Company agrees with the several Underwriters and the Selling Stockholders
that:
(i) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Company will file the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to
by CSFBC, subparagraph (4)) of Rule 424(b) not later than the earlier
of (A) the second business day following the execution and delivery of
this Agreement or (B) the fifteenth business day after the Effective
Date of the Initial Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and
an additional registration statement is necessary to register a portion
of the Offered Securities under the Act but the Effective Time thereof
has not occurred as of such execution and delivery, the Company will
file the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time,
on the date of this Agreement or, if earlier, on or prior to the time
the Prospectus is printed and distributed to any Underwriter, or will
make such filing at such later date as shall have been consented to by
CSFBC.
(ii) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if any)
or the Prospectus and will not effect such amendment or supplementation
without CSFBC's consent; and the Company will also advise CSFBC
promptly of the effectiveness of each Registration Statement (if its
Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration
Statement or the Prospectus and of the institution by the Commission of
any stop order proceedings in respect of a Registration Statement and
will use its reasonable best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if
issued.
(iii) If, at any time when a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, any event occurs as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the
Act, the Company will
12
promptly notify CSFBC of such event and will promptly prepare and file
with the Commission, at its own expense, an amendment or supplement
which will correct such statement or omission or an amendment which
will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(iv) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earning statement covering a period
of at least 12 months beginning after the Effective Date of the Initial
Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) that will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter.
(v) The Company will furnish to the Representatives copies of
each Registration Statement (five of which will be signed and will
include all exhibits), each related preliminary prospectus, and, so
long as a prospectus relating to the Offered Securities is required to
be delivered under the Act in connection with sales by any Underwriter
or dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as CSFBC reasonably
requests. The Prospectus shall be so furnished on or prior to 3:00
P.M., New York time, on the business day following the later of the
execution and delivery of this Agreement or the Effective Time of the
Initial Registration Statement. All other such documents shall be so
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(vi) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFBC designates; provided, however, that the Company is not required
(a) to file a general consent to service of process in any jurisdiction
in which it is not presently subject or (b) to qualify as a foreign
corporation, or make any education regulatory filing, in any
jurisdiction in which it is not so qualified. The Company will continue
such qualifications in effect so long as required for the distribution.
(vii) For a period of 90 days after the date of the
Prospectus, the Company will not offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act relating to, any
additional shares of its Securities or securities convertible into or
exchangeable or
13
exercisable for any shares of its Securities, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of CSFBC, except for (A) grants of
stock options to the Company's employees and directors pursuant to the
terms of a plan in effect on the date hereof, (B) issuances of
Securities pursuant to the exercise of such options or upon conversion
of any outstanding shares of Series A Preferred Stock and (C) issuances
of Securities pursuant to the Company's existing employee stock
purchase plan or dividend reinvestment plan.
(viii) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, for any filing
fees and other expenses (including fees and disbursements of counsel
for the Underwriters up to a maximum of $2,000) incurred in connection
with qualification of the Offered Securities for sale under the laws of
such jurisdictions as CSFBC designates and the printing of memoranda
relating thereto, for the filing fee incident to the review by the
National Association of Securities Dealers, Inc. of the Offered
Securities and for expenses incurred in printing and distributing
preliminary prospectuses and the Prospectus (including any amendments
and supplements thereto) to the Underwriters and to prospective
purchasers of the Offered Securities. The Underwriters shall pay for
any travel expenses of the Company's officers and employees (including
the cost of the rental of a private airplane used to travel to meetings
with prospective purchasers ("private airplane fees")) and any other
expenses reasonably incurred by the Company in connection with
attending or hosting meetings with prospective purchasers of the
Offered Securities, except as otherwise provided in this Agreement. The
Underwriters shall pay their own costs and expenses in connection with
the transactions contemplated hereby, including, without limitation,
the fees and expenses of their counsel and the expenses relating to any
advertisement initiated by them of the Offered Securities.
(b) Each Selling Stockholder agrees with the several Underwriters and
the Company that:
(i) Such Selling Stockholder will pay all expenses incident to
the performance of the obligations of such Selling Stockholder under
this Agreement, for all underwriting discounts and commissions, and for
any transfer taxes on the sale by the Selling Stockholder of the
Offered Securities to the Underwriters.
(ii) Each Selling Stockholder agrees to deliver to the
Representatives on or prior to the First Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
14
(iii) Each Selling Stockholder agrees, for a period of 90 days
after the date of the Prospectus, not to offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any additional
shares of the Securities of the Company or securities convertible into
or exchangeable or exercisable for any shares of Securities, including
shares of Series A Preferred Stock, enter into a transaction that would
have the same effect, or enter into any swap, hedge or other
arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the Securities, whether any such
aforementioned transaction is to be settled by delivery of the
Securities or such other securities, in cash or otherwise, or publicly
disclose the intention to make any such offer, sale, pledge or
disposition, or enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of CSFBC,
except for (A) the transfer of the shares of Series A Preferred Stock
to the Company upon conversion of such shares into the Offered
Securities and (B) dispositions to affiliates of such Selling
Stockholder that agree to be bound by the provisions of this Section
5(b)(iii) for the remainder of such 90-day period.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders, as
applicable, herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholders, as applicable, of their obligations hereunder and to the
following additional conditions precedent:
(a) The Representatives shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement, shall be
prior to the filing of the amendment or post-effective amendment to the
registration statement to be filed shortly prior to such Effective
Time), of PricewaterhouseCoopers LLP ("PWC") confirming that they are
independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating to
the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included or incorporated by
reference in the Registration Statements comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
15
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited financial statements included or
incorporated by reference in the Registration Statements;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Company, inquiries of officials of
the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements
included or incorporated by reference in the
Registration Statements do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published
Rules and Regulations or any material modifications
should be made to such unaudited financial statements
for them to be in conformity with generally accepted
accounting principles;
(B) the unaudited income from operations,
net income and net income per share amounts for the
three-month periods ended March 31, June 30 and
September 30, 2001 and March 31, June 30 and
September 30, 2002 and for the nine-month periods
ended September 30, 2001 and September 30, 2002
included in the Prospectus and incorporated by
reference therein do not agree with the amounts set
forth in the unaudited consolidated financial
statements for those same periods or were not
determined on a basis substantially consistent with
that of the corresponding amounts in the audited
statements of income;
(C) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of such letter, there
was any change in the capital stock or any increase
in long-term liabilities of the Company and its
consolidated subsidiaries or, at the date of the
latest available balance sheet read by such
accountants, there was any decrease in total assets,
as compared with amounts shown on the latest balance
sheet included in the Prospectus; or
16
(D) for the period from the closing date of
the latest income statement included in the
Prospectus to the closing date of the latest
available income statement read by such accountants
there were any decreases, as compared with the
corresponding period of the previous year and with
the period of corresponding length ended the date of
the latest income statement included in the
Prospectus, in income from operations, net income or
net income per share amounts;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(iv) they have compared dollar amounts (or
percentages derived from such dollar amounts) and other
financial information specified by the Representatives
contained in the Registration Statements (in each case to the
extent that such dollar amounts, percentages and other
financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the
internal controls of the Company's accounting system or are
derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such
general accounting records and other procedures, in each case
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement
with such results, except as otherwise specified in such
letter.
For purposes of this subsection, (A) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (B) if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement but
the Effective Time of the Additional Registration Statement is
subsequent to such execution and delivery, "REGISTRATION STATEMENTS"
shall mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to
its Effective Time, and (C) "PROSPECTUS" shall mean the prospectus
included in the Registration Statements. All financial statements and
schedules included in material incorporated by reference into the
Prospectus shall be deemed included in the Registration Statements for
purposes of this subsection.
17
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than 10:00 P.M., New
York time, on the date of this Agreement or such later date as shall
have been consented to by CSFBC. If the Effective Time of the
Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by CSFBC. If the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with
the Commission in accordance with the Rules and Regulations and Section
5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of a Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company
or the Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole which, in the
judgment of a majority in interest of the Underwriters including the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Offered Securities; (ii) any downgrading in
the rating, if any, of any debt securities, if any, of the Company by
any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Act), or any public announcement
that any such organization has under surveillance or review its rating
of any debt securities, if any, of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating, if any); (iii)
any material suspension or material limitation of trading in securities
generally on the New York Stock Exchange or on the Nasdaq National
Market, or any setting of minimum prices for trading on such exchange,
or any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal or New York authorities; (v) any major
disruption of settlements of securities or clearance services in the
United States or (vi) any attack on, outbreak or escalation of
hostilities or act of terrorism involving the United States, any
declaration of war by Congress or any other national or international
calamity or
18
emergency if, in the judgment of a majority in interest of the
Underwriters including the Representatives, the effect of any such
attack, outbreak, escalation, act, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated
such Closing Date, of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the
Company, to the effect that:
(i) The Company is duly qualified to do business as a
foreign corporation in good standing in all jurisdictions
(other than the State of Maryland) in which its ownership or
lease of property or the conduct of its business requires such
qualification, except to the extent where such failure to be
so qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(ii) Xxxxxxx University is duly qualified to do
business as a foreign corporation in good standing in all
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification,
except to the extent where such failure to be so qualified
would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;
(iii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required to be obtained or made by the Company for
the consummation of the transactions contemplated by this
Agreement in connection with the sale of the Offered
Securities, except (A) such as have been obtained and made
under the Act and (B) such as may be required under state
securities laws;
(iv) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any statute, rule, regulation or order of any governmental
agency or body or any court having jurisdiction over the
Company or any subsidiary of the Company or any of their
properties, or any material agreement or instrument known to
such counsel to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary of the
Company is bound or to which any of the properties of the
Company or any such subsidiary is subject, except, in each
such case, where such breach, violation or default would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; and
(v) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in
such opinion, the Additional
19
Registration Statement (if any) was filed and became effective
under the Act as of the date and time (if determinable)
specified in such opinion, the Prospectus either was filed
with the Commission pursuant to the subparagraph of Rule
424(b) specified in such opinion on the date specified therein
or was included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and,
to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or
any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or threatened
under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto (except
for any material incorporated by reference), as of their
respective effective or issue dates, complied as to form in
all material respects with the requirements of the Act and the
Rules and Regulations.
In rendering such opinions, such counsel may state that (i)
its opinion is limited to matters governed by the Federal laws of the
United States of America and the laws of the State of New York and (ii)
it has relied, as to matters of fact and to the extent it deems proper,
on certificates of responsible officers of the Company or public
officials. In addition, such counsel may state that, notwithstanding
the foregoing, it does not express any opinion with the respect to any
federal, state or other applicable education laws or regulations.
In addition to the matters set forth above, such counsel shall
state that, although it has not undertaken to investigate or verify
independently, and does not assume responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or any amendment thereto except to the extent
stated above, no facts have come to such counsel's attention that would
lead them to believe that the Registration Statement or any amendment
thereto, as of its effective date or as of such Closing Date, contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, or any
amendment or supplement thereto, as of its issue date or as of such
Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; it being understood that such counsel need
not express any opinion as to (A) the financial statements or other
financially derived statistical data, or (B) any statements related to
education regulatory issues.
20
(e) The Representatives shall have received an opinion, dated
such Closing Date, of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP, special
Maryland counsel for the Company, substantially in the form attached
hereto as Exhibit A.
(f) The Representatives shall have received an opinion, dated
such Closing Date, of Powers Xxxxx Xxxxxx & Xxxxxxxx, P.C., special
regulatory counsel for the Company, to the effect that:
(i) The statements in the Registration Statements and
the Prospectus under the captions "Risk Factors--Risks Related
to Extensive Regulation of Our Business," "Risk Factors--Risks
Related to Our Business--Our strategy of opening new schools
and adding new services is dependent on regulatory approvals
and requires significant resources," "Risk Factors--Risks
Related to Our Business--Regulatory requirements may make it
more difficult to acquire us," "Risk Factors--Risks Related to
Our Business--We may not be able to successfully complete or
integrate future acquisitions," "Risk Factors--Risks Related
to Strayer ONLINE's Business--Government regulations relating
to the internet could increase Strayer ONLINE's cost of doing
business or affect its ability to grow," "Business--
Regulation," and in "Notes to Consolidated Financial
Statements--Short-Term Investments--Restricted"
(collectively, the "Regulatory Disclosure"), insofar as such
statements constitute a summary of applicable federal and
state or other applicable laws and regulations or a summary of
the judicial or administrative proceedings, are accurate and
present fairly the information purported to be shown;
(ii) Such counsel has no knowledge that leads them to
believe that the information contained in the Regulatory
Disclosure as of the Effective Date and as of the date of the
Prospectus and as of the Closing Date, contained any untrue
statement of a material fact, or omitted to state any material
fact necessary to make the statements therein not misleading;
(iii) Based upon the assumption that the Offering
will not result in a person acquiring ownership and control of
the Company such that the Company is required to file a Form
8-K with the Commission notifying that agency of the change in
control, the Offering will not constitute a change in
ownership resulting in a change in control under the HEA or
the higher education regulatory body in each state where
Xxxxxxx University is physically located and engages in
rendering educational services as described in the Prospectus;
21
(iv) Except as disclosed in the Prospectus, no
consent, approval, authorization or order of, or filing with,
the U.S. Department of Education or any state higher education
regulatory body under the HEA or state higher education
regulatory law is required to be obtained or made by the
Company for the consummation of the transactions contemplated
by this Agreement in connection with the sale of the Offered
Securities except such as have been obtained and made or
except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
and
(v) To the best of such counsel's knowledge, each of
the Company and its subsidiaries has all necessary licenses,
certificates, permits and other authorizations required for
Xxxxxxx University to participate in Title IV Programs or
pursuant to which the Company or any of its subsidiaries must
be authorized by each state in which Xxxxxxx University is
physically located and engages in rendering educational
services as described in the Prospectus except where the
failure to have any such licenses, certificates, permits and
other authorizations would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(g) The Representatives shall have received an opinion, dated
such Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel
for New Mountain, substantially in the form attached hereto as Exhibit
B.
(h) The Representatives shall have received an opinion, dated
such Closing Date, of in-house counsel of Deutsche Bank, AG, counsel
for DB Capital, substantially in the form attached hereto as Exhibit C.
(i) The Representatives shall have received from Mayer, Brown,
Xxxx & Maw, counsel for the Underwriters, such opinion or opinions,
dated such Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities delivered on such
Closing Date, the Registration Statements, the Prospectus and other
related matters as the Representatives may require, and the Selling
Stockholders and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion, Mayer, Brown, Xxxx & Maw may
rely as to the incorporation of the Company and all other matters
governed by Maryland law upon the opinion of Xxxxxxx, Baetjer and
Xxxxxx, LLP referred to above.
(j) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting
22
officer of the Company in which such officers, to the best of their
knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this Agreement are
true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date; no stop order suspending
the effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission; the Additional Registration Statement (if any)
satisfying the requirements of subparagraphs (1) and (3) or Rule 462(b)
was filed pursuant to Rule 462(b), including payment of the applicable
filing fee in accordance with Rule 111(a) or (b) under the Act, prior
to the time the Prospectus was printed and distributed to any
underwriter; and, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse
change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the
Prospectus or as described in such certificate.
(k) The Representatives shall have received a letter, dated
such Closing Date, of PWC, which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably requests. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the
23
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by (i) any Underwriter through the Representatives specifically
for use therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in
subsection (c) below or (ii) any Seller Stockholder specifically for use
therein, it being understood and agreed that the only such information furnished
by any Selling Stockholder consists of the information about such Selling
Stockholder under the caption "Selling Stockholders" in the Prospectus;
provided, however, that with respect to any untrue statement or alleged untrue
statement in or omission or alleged omission from any preliminary prospectus the
indemnity, hold harmless and reimbursement agreements contained in this
subsection (a) shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Offered Securities concerned, to the extent that a prospectus relating to such
Offered Securities was required to be delivered by such Underwriter under the
Act in connection with such purchase and any such loss, claim, damage or
liability of such Underwriter results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Offered Securities to such person, a copy of the Prospectus if the Company
had previously furnished copies thereof to such Underwriter;.
Insofar as the foregoing indemnity agreement, or the representations
and warranties contained in Section 2(a)(ii), may permit indemnification for
liabilities under the Act of any person who is an Underwriter or a partner or
controlling person of an Underwriter within the meaning of Section 15 of the Act
and who, at the date of this Agreement, is a director, officer or controlling
person of the Company, the Company has been advised that in the opinion of the
Commission such provisions may contravene Federal public policy as expressed in
the Act and may therefore be unenforceable. In the event that a claim for
indemnification under such agreement or such representations and warranties for
any such liabilities (except insofar as such agreement provides for the payment
by the Company of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such a person, the Company will submit to a court of appropriate
jurisdiction (unless in the opinion of counsel for the Company the matter has
already been settled by controlling precedent) the question of whether or not
indemnification by it for such liabilities is against public policy as expressed
in the Act and therefore unenforceable, and the Company will be governed by the
final adjudication of such issue.
(b) Each of the Selling Stockholders, severally and not jointly, will
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may
24
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that such Selling Stockholder shall only be subject
to indemnification, hold harmless and reimbursement obligations under this
subsection (b) only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission is based upon and in conformity with
written information provided by such Selling Stockholder relating to such
Selling Stockholder specifically for use therein, it being understood and agreed
that the only such information furnished by any such Selling Stockholder
consists of the information about such Selling Stockholder under the caption
"Selling Stockholders" in the Prospectus; provided, however, that with respect
to any untrue statement or alleged untrue statement in or omission or alleged
omission from any preliminary prospectus the indemnity, hold harmless and
reimbursement agreements contained in this subsection (b) shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Offered Securities concerned, to
the extent that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such purchase
and any such loss, claim, damage or liability of such Underwriter results from
the fact that there was not sent or given to such person, at or prior to the
written confirmation of the sale of such Offered Securities to such person, a
copy of the Prospectus if the Company had previously furnished copies thereof to
such Underwriter; and provided, further, that the liability under this Section 7
of each Selling Stockholder shall be limited to an amount equal to the aggregate
net proceeds, after deducting underwriting discounts and commissions, received
by such Selling Stockholder from the sale of the Offered Securities sold by such
Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, and each
Selling Stockholder, its partners, directors and officers and each person, if
any, who controls each Selling Stockholder within the meaning of Section 15 of
the Act against any losses, claims, damages or liabilities to which the Company
or such Selling Stockholder may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or
25
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any amendment
or supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and each Selling Stockholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the fourth paragraph under the caption
"Underwriting" and the information contained in the eleventh paragraph under the
caption "Underwriting."
(d) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the failure to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under subsection (a), (b) or (c) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided further that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under subsection (a), (b) or (c) above. In
case any such action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.
26
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) above or, where the indemnified party is the Company or its
officers, directors or controlling persons, under subsection (c) above, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in subsection (a) or
(c) above in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. If the
indemnification provided for in this Section 7 is unavailable to an indemnified
party under subsection (b) above or, where the indemnified party is a Selling
Stockholder, under subsection (c) above, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (b) or (c) above (i) in such proportion as
is appropriate to reflect the relative benefits received by such Selling
Stockholder on the one hand and the Underwriters on the other hand from the
offering of the Offered Securities, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of such Selling Stockholder on the one hand
and the Underwriters on the other in connection with the statements and
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations; provided, however, that the
liability under this Section 7 of each Selling Stockholder shall be limited to
an amount equal to the aggregate net proceeds, after deducting underwriting
discounts and commissions, received by such Selling Stockholder from the sale of
the Offered Securities sold by such Selling Stockholder. The relative benefits
received by the Selling Stockholders on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in this subsection (e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise
27
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section 7 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 7
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Selling Stockholders for the purchase of
such Offered Securities by other persons, including any of the Underwriters, but
if no such arrangements are made by such Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Offered Securities that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC and the Selling Stockholders for the purchase of such Offered Securities
by other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter,
the Company or the Selling Stockholders, except as provided in Section 9,
(provided that if such default occurs with respect to Optional Securities after
the First Closing Date, this Agreement will not terminate as to the Firm
Securities or any Optional Securities purchased prior to such termination). As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section 8. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
28
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholders, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv), (v) or (vi) of Section 6(c), the Company will reimburse
the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities. If the purchase of the Offered Securities by
the Underwriters is not consummated because of the termination of this Agreement
because of the occurrence of any event specified in clause (iii), (iv), (v) or
(vi) of Section 6(c), the Company will reimburse the Underwriters for 50% of the
cost of the private airplane fees paid by the Underwriters pursuant to Section
5(a)(ix).
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives at, c/o Credit Suisse First Boston Corporation, Xxx
Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Transactions Advisory Group,
or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at Xxxxxxx Education, Inc., 0000 Xxxxxx Xxxx., Xxxxx 0000,
Xxxxxxxxx, XX 00000, Attention: Xxxxxx X. XxXxxxxx, if sent to New Mountain,
will be mailed, delivered or telegraphed and confirmed to it at 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, or, if sent to DB Capital, will be
mailed, delivered or telegraphed and confirmed to it, at 00 Xxxx 00xx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
29
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company and each of the Selling Stockholders hereby submit to the
non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
30
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P.,
its general partner
By: New Mountain GP, LLC,
its general partner
By:
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Member
DB CAPITAL INVESTORS, L.P.
By: DB Capital Partners, L.P.,
its General Partner
By: DB Capital Partners, Inc.,
its General Partner
By:
--------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
XXXXXXX EDUCATION, INC.
By:
--------------------------------------------
Name:
Title:
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first
above written.
31
Acting on behalf of themselves and as the
Representatives of the several Underwriters
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
---------------------------------------
Name:
Title:
BANC OF AMERICA SECURITIES LLC
By:
---------------------------------------
Name:
Title:
XXXX XXXXX XXXX XXXXXX, INCORPORATED
By:
---------------------------------------
Name:
Title:
32
SCHEDULE A
NUMBER OF FIRM SECURITIES
TO BE SOLD BY TOTAL
-------------------------------- NUMBER OF
NEW MOUNTAIN DB CAPITAL FIRM SECURITIES
UNDERWRITER PARTNERS, L.P. INVESTORS, L.P. TO BE PURCHASED
----------- -------------- --------------- ---------------
Credit Suisse First Boston Corporation.........
Banc of America Securities LLC.................
Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated...................................
Total................................. 1,700,000 300,000 2,000,000
========= ======= =========
