2,000,000
Xxxxxxx Education, Inc.
Common Stock
UNDERWRITING AGREEMENT
November 14, 2002
Credit Suisse First Boston Corporation
Banc of America Securities LLC
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Dear Ladies and Gentlemen:
1. Introductory. New Mountain Partners, L.P. ("New Mountain") and DB
Capital Investors, L.P. ("DB Capital" and, together with New Mountain, the
"Selling Stockholders") propose severally to sell an aggregate of 2,000,000
shares ("Firm Securities") of common stock, par value $0.01 per share
("Securities"), of Xxxxxxx Education, Inc., a Maryland corporation (the
"Company"), and DB Capital also proposes to sell to the several Underwriters
named in Schedule A hereto ("Underwriters"), at the option of the Underwriters,
an aggregate of not more than 300,000 additional shares ("Optional Securities")
of the Company's Securities as set forth below. The Firm Securities and the
Optional Securities are herein collectively called the "Offered Securities." The
Selling Stockholders hereby agree with the Company and with the Underwriters as
follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
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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
5
Rule 424(b), if necessary, and (iii) such as may be required under state
securities laws.
(x) The execution, delivery and performance of this Agreement, and the
consummation of the transactions herein contemplated will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over
the Company or any subsidiary of the Company or any of their properties,
including, without limitation, the Higher Education Act of 1965, as
amended, and the regulations promulgated thereunder (the "HEA"), or any
agreement or instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is subject,
except where such breach, violation or default would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect. The execution, delivery and performance of this Agreement, and the
consummation of the transactions herein contemplated will not result in a
breach of the charter or by-laws of the Company or any such subsidiary. The
sale of the Offered Securities by the Selling Stockholders will not
constitute a change in ownership resulting in a "change of control" of the
Company pursuant to the applicable regulations promulgated under the HEA or
any applicable state statute or regulation.
(xi) This Agreement has been duly authorized, executed and delivered
by the Company.
(xii) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would affect the value thereof or interfere
with the use made or to be made thereof by them, except in each case where
such failure would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; and except as disclosed in the
Prospectus, the Company and its subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions
that would interfere with the use made or to be made thereof by them,
except in each case where such failure would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(xiii) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them, including,
without limitation, all authorizations required for participation in
federal financial aid
6
programs under Title IV ("Title IV Programs") of the HEA, except where such
failure would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and have not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is threatened that
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(xv) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names servicemarks and
licenses and other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by them, or presently employed by them, except where such failure
would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, and have not received any notice of infringement
of or conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to the Company
or any of its subsidiaries, would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; and the Company is not aware of any pending
investigation which would reasonably be expected to lead to such a claim.
(xvii) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would reasonably be
expected to have, individually or in the aggregate,
7
a Material Adverse Effect, or would materially and adversely affect the
ability of the Company to perform its obligations under this Agreement, or
which are otherwise material in the context of the sale of the Offered
Securities; and no such actions, suits or proceedings are threatened or, to
the Company's knowledge, contemplated.
(xviii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and, except as
otherwise disclosed in the Prospectus, such financial statements have been
prepared in conformity with the generally accepted accounting principles in
the United States applied on a consistent basis and the schedules included
in each Registration Statement present fairly the information required to
be stated therein.
(xix) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except for dividends paid on the
Securities consistent with past practice, payment-in-kind dividends made by
the Company in respect of the Series A Preferred Stock consistent with the
terms of the Articles Supplementary and as otherwise disclosed in or
contemplated by the Prospectus, there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(xx) The Company is subject to the reporting requirements of either
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 and
files reports with the Commission on the Electronic Data Gathering,
Analysis, and Retrieval (XXXXX) system.
(xxi) The Company is not and, after giving effect to the offering and
sale of the Offered Securities, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(xxii) Except for Xxxxxxx University, Inc., a Maryland corporation
("Xxxxxxx University"), the Company has no subsidiary that meets any of the
following conditions: (A) the Company's and its other subsidiaries'
investments in and advances to the subsidiary exceed five percent of the
total assets of the Company and its subsidiaries consolidated as of the end
of the most recently completed fiscal year; (B) the Company's and its other
subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of the subsidiary exceeds five percent of the total assets of
the Company and its subsidiaries consolidated as of the end of the
8
most recently completed fiscal year; or (C) the Company's and its
subsidiaries' equity in the income from continuing operations before income
taxes, extraordinary items and cumulative effect of a change in accounting
principle of the subsidiary exceeds five percent of such income of the
Company and its subsidiaries consolidated for the most recently completed
fiscal year.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) On such Closing Date and on each Closing Date hereinafter
mentioned, such Selling Stockholder will have valid and unencumbered title
to the shares of the Series A Preferred Stock that will be converted into
the Offered Securities to be delivered by such Selling Stockholder on such
Closing Date and on such Closing Date, and on each Closing Date hereinafter
mentioned, such Selling Stockholder will have valid and unencumbered title
to the Offered Securities and full right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver the Offered
Securities to be delivered by such Selling Stockholder on such Closing Date
hereunder; and upon the delivery of and payment for the Offered Securities
on each Closing Date hereunder the several Underwriters will acquire valid
and unencumbered title to the Offered Securities to be delivered by such
Selling Stockholder on such Closing Date. The Selling Stockholders have
delivered to the Company the notice required under the Articles
Supplementary relating to the conversion of shares of Series A Preferred
Stock into the Offered Securities.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the Rules and Regulations and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, (B) on
the Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all material respects
to the requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact and
did not omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statement therein not misleading,
and (C) on the date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration Statement is
prior to the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required) at
the Effective Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the Prospectus will
conform, in all material
9
respects to the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue statement
of a material fact or omits, or will omit, to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading. If the Effective Time of the Initial Registration Statement
is subsequent to the execution and delivery of this Agreement: on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement and the Prospectus will conform in all respects to
the requirements of the Act and the Rules and Regulations, neither of such
documents will include any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The two preceding sentences
apply only to the extent that statements in or omissions from a
Registration Statement or the Prospectus are based upon written information
furnished to the Company by such Selling Stockholder specifically for use
therein, it being understood and agreed that the only such information
furnished by any such Selling Stockholder consists of the information about
such Selling Stockholder under the caption "Selling Stockholders" in the
Prospectus.
(iii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between such Selling Stockholder and any
person that would give rise to a valid claim against such Selling
Stockholder or any Underwriter or, to the knowledge of such Selling
Stockholder, the Company for a brokerage commission, finder's fee or other
like payment in connection with the offering of the Offered Securities.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, each Selling Stockholder agrees,
severally and not jointly, to sell to the Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from each Selling Stockholder, at
a purchase price of $49.27 per share, the number of Firm Securities set forth
below the name of such Selling Stockholder and opposite the name of such
Underwriter in Schedule A hereto.
The Selling Stockholders will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to accounts at a bank acceptable to Credit Suisse First Boston
Corporation ("CSFBC") drawn to the order of New Mountain and DB Capital,
respectively, at the office of Xxxxxxx Xxxx & Xxxxxxxxx, at 8:30 A.M., New York
time, on November 20, 2002, or at such other time not later than seven full
business days thereafter as CSFBC and the Selling Stockholders determine, such
time being herein referred to as the "First Closing Date." The certificates for
the Firm Securities so to be delivered will be duly indorsed or accompanied by
duly executed blank stock powers so as
10
to validly transfer title to the Representatives for the account of the
Underwriters. The Company will cause its transfer agent to reissue such
securities in definitive form, in such denominations and registered in such
names as CSFBC requests and such reissued securities will be made available by
the Company for checking and packaging at the above office of Xxxxxxx Xxxx &
Xxxxxxxxx at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and DB
Capital from time to time not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per Security to be paid for the Firm
Securities. DB Capital agrees to sell to the Underwriters the number of Optional
Securities specified in such notice. Such Optional Securities shall be purchased
from DB Capital for the account of each Underwriter in the same proportion as
the number of Firm Securities set forth opposite such Underwriter's name bears
to the total number of Firm Securities (subject to adjustment by CSFBC to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the Company and
DB Capital.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. DB Capital will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price in Federal (same day) funds by official bank check or checks
or wire transfer to an account at a bank acceptable to CSFBC drawn to the order
of DB Capital, at the above office of Xxxxxxx Xxxx & Xxxxxxxxx. The certificates
for the Optional Securities being purchased on each Optional Closing Date will
be duly indorsed or accompanied by duly executed blank stock powers so as to
validly transfer title to the Representatives for the account of the
Underwriters. The Company will cause its transfer agent to reissue such
securities in definitive form, in such denominations and registered in such
names as CSFBC requests upon reasonable notice prior to such Optional Closing
Date and such reissued securities will be made available by the Company for
checking and packaging at the above office of Xxxxxxx Xxxx & Xxxxxxxxx at a
reasonable time in advance of such Optional Closing Date.
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4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. (a) The
Company agrees with the several Underwriters and the Selling Stockholders that:
(i) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to Rule
424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as
of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b)
on or prior to 10:00 P.M., New York time, on the date of this Agreement or,
if earlier, on or prior to the time the Prospectus is printed and
distributed to any Underwriter, or will make such filing at such later date
as shall have been consented to by CSFBC.
(ii) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent; and the
Company will also advise CSFBC promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its reasonable best efforts to prevent
the issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(iii) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state
12
any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will promptly notify CSFBC of such event and will promptly prepare
and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(iv) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earning statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) that will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(v) The Company will furnish to the Representatives copies of each
Registration Statement (five of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as CSFBC reasonably requests. The Prospectus shall
be so furnished on or prior to 3:00 P.M., New York time, on the business
day following the later of the execution and delivery of this Agreement or
the Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company will pay
the expenses of printing and distributing to the Underwriters all such
documents.
(vi) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates; provided, however, that the Company is not required (a) to file
a general consent to service of process in any jurisdiction in which it is
not presently subject or (b) to qualify as a foreign corporation, or make
any education regulatory filing, in any jurisdiction in which it is not so
qualified. The Company will continue such qualifications in effect so long
as required for the distribution.
13
(vii) For a period of 90 days after the date of the Prospectus, the
Company will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or file with the Commission a registration
statement under the Act relating to, any additional shares of its
Securities or securities convertible into or exchangeable or exercisable
for any shares of its Securities, or publicly disclose the intention to
make any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC, except for (A) grants of stock options to the
Company's employees and directors pursuant to the terms of a plan in effect
on the date hereof, (B) issuances of Securities pursuant to the exercise of
such options or upon conversion of any outstanding shares of Series A
Preferred Stock and (C) issuances of Securities pursuant to the Company's
existing employee stock purchase plan or dividend reinvestment plan.
(viii) The Company will pay all expenses incident to the performance
of its obligations under this Agreement, for any filing fees and other
expenses (including fees and disbursements of counsel for the Underwriters
up to a maximum of $2,000) incurred in connection with qualification of the
Offered Securities for sale under the laws of such jurisdictions as CSFBC
designates and the printing of memoranda relating thereto, for the filing
fee incident to the review by the National Association of Securities
Dealers, Inc. of the Offered Securities and for expenses incurred in
printing and distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters and
to prospective purchasers of the Offered Securities. The Underwriters shall
pay for any travel expenses of the Company's officers and employees
(including the cost of the rental of a private airplane used to travel to
meetings with prospective purchasers ("private airplane fees")) and any
other expenses reasonably incurred by the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities, except as otherwise provided in this Agreement. The
Underwriters shall pay their own costs and expenses in connection with the
transactions contemplated hereby, including, without limitation, the fees
and expenses of their counsel and the expenses relating to any
advertisement initiated by them of the Offered Securities.
(b) Each Selling Stockholder agrees with the several Underwriters and the
Company that:
(i) Such Selling Stockholder will pay all expenses incident to the
performance of the obligations of such Selling Stockholder under this
Agreement, for all underwriting discounts and commissions, and for any
transfer taxes on the sale by the Selling Stockholder of the Offered
Securities to the Underwriters.
14
(ii) Each Selling Stockholder agrees to deliver to the Representatives
on or prior to the First Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
(iii) Each Selling Stockholder agrees, for a period of 90 days after
the date of the Prospectus, not to offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any additional shares of the
Securities of the Company or securities convertible into or exchangeable or
exercisable for any shares of Securities, including shares of Series A
Preferred Stock, enter into a transaction that would have the same effect,
or enter into any swap, hedge or other arrangement that transfers, in whole
or in part, any of the economic consequences of ownership of the
Securities, whether any such aforementioned transaction is to be settled by
delivery of the Securities or such other securities, in cash or otherwise,
or publicly disclose the intention to make any such offer, sale, pledge or
disposition, or enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of CSFBC,
except for (A) the transfer of the shares of Series A Preferred Stock to
the Company upon conversion of such shares into the Offered Securities and
(B) dispositions to affiliates of such Selling Stockholder that agree to be
bound by the provisions of this Section 5(b)(iii) for the remainder of such
90-day period.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders, as
applicable, herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholders, as applicable, of their obligations hereunder and to the
following additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of PricewaterhouseCoopers
LLP ("PWC") confirming that they are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating to the effect that:
15
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statements comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements included or incorporated by reference in the Registration
Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements included or
incorporated by reference in the Registration Statements do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations or any material modifications should be
made to such unaudited financial statements for them to be in
conformity with generally accepted accounting principles;
(B) the unaudited income from operations, net income and net
income per share amounts for the three-month periods ended March
31, June 30 and September 30, 2001 and March 31, June 30 and
September 30, 2002 and for the nine-month periods ended September
30, 2001 and September 30, 2002 included in the Prospectus and
incorporated by reference therein do not agree with the amounts
set forth in the unaudited consolidated financial statements for
those same periods or were not determined on a basis
substantially consistent with that of the corresponding amounts
in the audited statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of such letter, there
was any change in the capital stock or any increase in long-term
liabilities of the Company and its consolidated subsidiaries or,
at the date of the
16
latest available balance sheet read by such accountants, there
was any decrease in total assets, as compared with amounts shown
on the latest balance sheet included in the Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year and with the period of corresponding
length ended the date of the latest income statement included in
the Prospectus, in income from operations, net income or net
income per share amounts;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have compared dollar amounts (or percentages derived
from such dollar amounts) and other financial information specified by
the Representatives contained in the Registration Statements (in each
case to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting records
of the Company and its subsidiaries subject to the internal controls
of the Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other
procedures, in each case specified in such letter and have found such
dollar amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in such
letter.
For purposes of this subsection, (A) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (B) if the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (C) "Prospectus" shall mean the
prospectus included in the Registration
17
Statements. All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in
the Registration Statements for purposes of this subsection.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York time, on the date
of this Agreement or such later date as shall have been consented to by
CSFBC. If the Effective Time of the Additional Registration Statement (if
any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to any Underwriter, or shall have occurred at
such later date as shall have been consented to by CSFBC. If the Effective
Time of the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a) of
this Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of any Selling Stockholder, the Company or the Representatives,
shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole which, in the judgment of a majority in
interest of the Underwriters including the Representatives, is material and
adverse and makes it impractical or inadvisable to proceed with completion
of the public offering or the sale of and payment for the Offered
Securities; (ii) any downgrading in the rating, if any, of any debt
securities, if any, of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities, if any, of
the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating, if any); (iii) any material suspension or material limitation of
trading in securities generally on the New York Stock Exchange or on the
Nasdaq National Market, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (iv) any banking
moratorium declared by U.S. Federal or New York authorities; (v) any major
disruption of settlements of securities or clearance services in the United
States or (vi) any attack on, outbreak or escalation of hostilities or act
of terrorism involving the United States, any declaration of war
18
by Congress or any other national or international calamity or emergency
if, in the judgment of a majority in interest of the Underwriters including
the Representatives, the effect of any such attack, outbreak, escalation,
act, declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and
payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Company, to the
effect that:
(i) The Company is duly qualified to do business as a foreign
corporation in good standing in all jurisdictions (other than the
State of Maryland) in which its ownership or lease of property or the
conduct of its business requires such qualification, except to the
extent where such failure to be so qualified would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect;
(ii) Xxxxxxx University is duly qualified to do business as a
foreign corporation in good standing in all jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except to the extent where such failure to be so
qualified would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;
(iii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Offered Securities, except (A) such as have been obtained
and made under the Act and (B) such as may be required under state
securities and education laws;
(iv) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, rule, regulation or order
of any governmental agency or body or any court having jurisdiction
over the Company or any subsidiary of the Company or any of their
properties, or any material agreement or instrument known to such
counsel to which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary of the Company is bound or to
which any of the properties of the Company or any such subsidiary is
subject, except, in each such case, where such breach, violation or
default would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; and
19
(v) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if determinable)
specified in such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b) specified in
such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the best of the knowledge of
such counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto (except for any
material incorporated by reference), as of their respective effective
or issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations.
In rendering such opinions, such counsel may state that (i) its
opinion is limited to matters governed by the Federal laws of the United
States of America and the laws of the State of New York and (ii) it has
relied, as to matters of fact and to the extent it deems proper, on
certificates of responsible officers of the Company or public officials. In
addition, such counsel may state that, notwithstanding the foregoing, it
does not express any opinion with the respect to any federal, state or
other applicable education laws or regulations.
In addition to the matters set forth above, such counsel shall state
that, although it has not undertaken to investigate or verify
independently, and does not assume responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or any amendment thereto except to the extent stated above, no
facts have come to such counsel's attention that would lead them to believe
that the Registration Statement or any amendment thereto, as of its
effective date or as of such Closing Date, contained any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
or that the Prospectus, or any amendment or supplement thereto, as of its
issue date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; it being understood that such counsel need
not express any opinion as to (A) the financial statements or other
financially derived statistical data, or (B) any statements related to
education regulatory issues.
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.
22
(j) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) or Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any underwriter; and, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(k) The Representatives shall have received a letter, dated such
Closing Date, of PWC, which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection
will be a date not more than three days prior to such Closing Date for the
purposes of this subsection.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably requests. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by
23
such Underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by (i) any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below or (ii) any Seller
Stockholder specifically for use therein, it being understood and agreed that
the only such information furnished by any Selling Stockholder consists of the
information about such Selling Stockholder under the caption "Selling
Stockholders" in the Prospectus; provided, however, that with respect to any
untrue statement or alleged untrue statement in or omission or alleged omission
from any preliminary prospectus the indemnity, hold harmless and reimbursement
agreements contained in this subsection (a) shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims, damages
or liabilities purchased the Offered Securities concerned, to the extent that a
prospectus relating to such Offered Securities was required to be delivered by
such Underwriter under the Act in connection with such purchase and any such
loss, claim, damage or liability of such Underwriter results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus if the Company had previously furnished copies thereof to such
Underwriter;.
Insofar as the foregoing indemnity agreement, or the representations and
warranties contained in Section 2(a)(ii), may permit indemnification for
liabilities under the Act of any person who is an Underwriter or a partner or
controlling person of an Underwriter within the meaning of Section 15 of the Act
and who, at the date of this Agreement, is a director, officer or controlling
person of the Company, the Company has been advised that in the opinion of the
Commission such provisions may contravene Federal public policy as expressed in
the Act and may therefore be unenforceable. In the event that a claim for
indemnification under such agreement or such representations and warranties for
any such liabilities (except insofar as such agreement provides for the payment
by the Company of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such a person, the Company will submit to a court of appropriate
jurisdiction (unless in the opinion of counsel for the Company the matter has
already been settled by controlling precedent) the question of whether or not
indemnification by it for such liabilities is against public policy as expressed
in the Act and therefore unenforceable, and the Company will be governed by the
final adjudication of such issue.
(b) Each of the Selling Stockholders, severally and not jointly, will
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any,
24
who controls such Underwriter within the meaning of Section 15 of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that such Selling Stockholder
shall only be subject to indemnification, hold harmless and reimbursement
obligations under this subsection (b) only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission is based
upon and in conformity with written information provided by such Selling
Stockholder relating to such Selling Stockholder specifically for use therein,
it being understood and agreed that the only such information furnished by any
such Selling Stockholder consists of the information about such Selling
Stockholder under the caption "Selling Stockholders" in the Prospectus;
provided, however, that with respect to any untrue statement or alleged untrue
statement in or omission or alleged omission from any preliminary prospectus the
indemnity, hold harmless and reimbursement agreements contained in this
subsection (b) shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Offered Securities concerned, to the extent that a prospectus relating to such
Offered Securities was required to be delivered by such Underwriter under the
Act in connection with such purchase and any such loss, claim, damage or
liability of such Underwriter results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Offered Securities to such person, a copy of the Prospectus if the Company
had previously furnished copies thereof to such Underwriter; and provided,
further, that the liability under this Section 7 of each Selling Stockholder
shall be limited to an amount equal to the aggregate net proceeds, after
deducting underwriting discounts and commissions, received by such Selling
Stockholder from the sale of the Offered Securities sold by such Selling
Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, and each
Selling Stockholder, its partners, directors and officers and each person, if
any, who controls each Selling Stockholder within the meaning of Section 15 of
the Act against any losses, claims, damages or liabilities to which the Company
or such Selling Stockholder may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of
25
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
27
to the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section 7 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 7
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Selling Stockholders for the purchase of
such Offered Securities by other persons, including any of the Underwriters, but
if no such arrangements are made by such Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Offered Securities that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC and the Selling Stockholders for the purchase of such Offered Securities
by other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter,
the Company or the Selling Stockholders, except as provided in Section 9,
(provided that if such default occurs with respect to Optional Securities after
the First Closing Date, this Agreement will not terminate as to the Firm
Securities or any Optional Securities purchased prior to such termination). As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section 8. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
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)(iii).
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives at, c/o Credit Suisse First Boston Corporation, Xxx Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Transactions Advisory Group, or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
it at Xxxxxxx Education, Inc., 0000 Xxxxxx Xxxx., Xxxxx 0000, Xxxxxxxxx, XX
00000, Attention: Xxxxxx X. XxXxxxxx, if sent to New Mountain, will be mailed,
delivered or telegraphed and confirmed to it at 000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000, or, if sent to DB Capital, will be mailed, delivered or
telegraphed and confirmed to it, at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
XX 00000; provided, however, that any notice to an Underwriter pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such
Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
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: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Member
DB CAPITAL INVESTORS, L.P.
By: DB Capital Partners, L.P.,
its General Partner
By: DB Capital Partners, Inc.,
its General Partner
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
XXXXXXX EDUCATION, INC.
By: /s/ Xxxxxx X. XxXxxxxx
-----------------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Senior Vice President and
General Counsel
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
XXXX XXXXX XXXX XXXXXX, INCORPORATED
Acting on behalf of themselves and as the
Representatives of the several Underwriters
BY: CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
SCHEDULE A
Number of Firm Securities to be
-------------------------------
Sold by
-------
New Mountain DB Capital Total Number of
------------ ---------- Firm Securities
Underwriter Partners, L.P. Investors, L.P. to be Purchased
----------- -------------- --------------- ---------------
Credit Suisse First Boston Corporation................... - - 786,250
Banc of America Securities LLC........................... - - 550,375
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated..................... - - 235,875
X.X. Xxxxxx Securities Inc............................... - - 235,500
Barrington Research Associates, Inc...................... - - 32,000
First Analysis Securities Corporation.................... - - 32,000
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc........................ - - 32,000
Invemed Associates LLC................................... - - 32,000
SunTrust Capital Markets, Inc............................ - - 32,000
Xxxxxx Xxxxxx Partners LLC............................... - - 32,000
Total.................................. 1,700,000 300,000 2,000,000
========= ======= =========
EXHIBIT A
[Opinion of Xxxxxxx, Baetjer and Xxxxxx, LLP]
EXHIBIT B
[Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP]
EXHIBIT C
[Opinion of In-House Counsel for DB Capital Investors, L.P.]
