Exhibit 1.1
3,000,000 Shares
CORINTHIAN COLLEGES, INC.
Common Stock
UNDERWRITING AGREEMENT
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October __, 2000
CREDIT SUISSE FIRST BOSTON CORPORATION
CHASE SECURITIES INC.
U. S. BANCORP XXXXX XXXXXXX INC.
SUNTRUST EQUITABLE SECURITIES CORPORATION
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Corinthian Colleges, Inc., a Delaware corporation
("Company") proposes to issue and sell 200,000 shares of its Common Stock, par
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value $0.0001 per share ("Securities"), and the stockholders listed in Schedule
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A hereto propose severally to sell an aggregate of 2,800,000 outstanding shares
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of the Securities (such 3,000,000 shares of Securities being hereinafter
referred to as the "Firm Securities"). The persons named in Schedule A hereto,
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including Primus Capital Fund III Limited Partnership ("Primus"), BOCPII,
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Limited Liability Company ("BOCPII") and Banc One Capital Partners II, LLC
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("Banc One" and, collectively with Primus and BOCPII, the "Investor Selling
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Stockholders") and the persons listed on Schedule A as Executive Selling
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Stockholders (the "Executive Selling Stockholders"), are collectively referred
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to herein as the "Selling Stockholders." The Selling Stockholders also propose
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to sell to the Underwriters, at the option of the Underwriters, an aggregate of
not more than 450,000 additional outstanding shares of the Company's Securities,
as set forth below (such 450,000 additional shares being hereinafter referred to
as the "Optional Securities"). The Firm Securities and the Optional Securities
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are herein collectively called the "Offered Securities". The Company and the
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Selling
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Stockholders hereby agree with the several Underwriters named in Schedule B
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hereto ("Underwriters") as follows:
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2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-45510) relating to the
Offered Securities, including a form of prospectus, has been filed with
the Securities and Exchange Commission ("Commission") and either (A)
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has been declared effective under the Securities Act of 1933 ("Act")
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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,
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either (A) an additional registration statement (the "additional
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registration statement") relating to the Offered Securities may have
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been filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)")
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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
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Act or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "Effective Time" with respect
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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
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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
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means the date and time as of which such registration statement is
filed and becomes effective pursuant to Rule 462(b). "Effective Date"
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with respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its
Effective Time, including all material incorporated by reference
therein, including all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form
on which it is filed and including all information (if any) deemed to
be a part of the initial registration statement as of its Effective
Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
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hereinafter referred to as the "Initial Registration Statement". The
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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
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Statement and the Additional Registration are hereinafter referred to
collectively as the "Registration Statements" and individually as a
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"Registration Statement". The form of prospectus relating to the
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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
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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
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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 respects to the requirements of
the Act and the rules and regulations of the Commission ("Rules and
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Regulations") and did not include any untrue statement of a material
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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 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
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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 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, in light of the circumstances
they were made (with respect only to the Prospectus), 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, in light of the
circumstances they were made (with respect only to the Prospectus), 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 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.
(iii) Each of the Company and its subsidiaries listed on Annex A
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attached hereto (the "Subsidiaries") has been duly incorporated and is
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validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is incorporated with full corporate power
and corporate authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its Subsidiaries, taken as a whole.
(iv) All the outstanding shares of capital stock of each
Subsidiary of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, and, except as otherwise set
forth in the Prospectus, all outstanding shares of capital stock of
such Subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries, free and clear of any perfected security
interest or any other security interests, claims, liens or
encumbrances, except for any security interest, claim, lien or
encumbrance granted to Union Bank of California, or its affiliates, in
connection with the Credit Facility (as
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defined in the Prospectus).
(v) The Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock (including the
Offered Securities being sold hereunder by the Selling Stockholders)
have been duly authorized and validly issued and are fully paid and
nonassessable; the Offered Securities being sold hereunder by the
Company have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the certificates for
the Securities are in valid and sufficient form; the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities; and, except
as set forth and as described in the Prospectus, no options, warrants
or other rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any securities
for, shares of capital stock of or ownership interests in the Company
are outstanding.
(vi) There is no instrument, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, or incorporated by
reference therein, which is not described, filed or incorporated as
required; and the statements incorporated by reference in the
Prospectus under the heading "Governmental Regulation and Financial
Aid" in the Company's Annual Report on Form 10-K filed with the
Commission on September 18, 2000 (the "2000 Form 10-K") fairly
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summarize the matters therein described.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming the due authorization, execution
and delivery by all parties hereto other than the Company, constitutes
a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as to rights to indemnity and
contribution hereunder, which may be limited by federal or state
securities laws or the policies underlying such laws, and subject to
the qualification that the enforceability of the obligations of the
Company hereunder may be limited by applicable bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally and by general
principles of equity.
(viii) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(ix) No consent, approval, authorization, filing with or order
of any court or
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governmental agency or body is required in connection with the
transactions contemplated herein, except (a) such as have been obtained
under the Act, (b)such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Offered Securities by the Underwriters in the manner contemplated
herein and in the Prospectus and (c) filings with the Accrediting
Council for Independent Colleges and Schools ("ACICS") and the
Accrediting Council for Continuing Education and Training ("ACCET") and
the States of Utah, Michigan and New York to the extent, and within the
time limits, required by such agencies to approve a "change in
ownership resulting in a change of control" as defined by such
agencies.
(x) Neither the issue and sale of the Offered Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its Subsidiaries
pursuant to, (A) the charter or bylaws of the Company or any of its
Subsidiaries, (B) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its Subsidiaries is a party or bound or to which its
or their property is subject, or (C) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its Subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its Subsidiaries or any of its
or their properties, including, without limitation, the Higher
Education Act of 1965, as amended, and the regulations promulgated
thereunder (the "HEA"), except for any such conflict, breach or
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violation of items (A), (B) or (C), above, that would not (1) have a
material adverse effect on the performance by the Company of this
Agreement or the consummation of the transactions contemplated hereby,
or (2) have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole. The issue and sale of the
Offered Securities and the consummation of the transactions herein
contemplated will not constitute a change in ownership resulting in a
"change of control" of the Company as defined under HEA.
(xi) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement,
except for (A) any such holders who have effectively waived such rights
or (B) any Selling Stockholder whose status as such is derived from the
exercise of such registration rights.
(xii) The consolidated historical financial statements and
schedules of the Company and its consolidated Subsidiaries included in
the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and
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for the periods indicated, comply as to form with the applicable
accounting requirements of the Act and have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as otherwise noted
therein). The selected consolidated financial data set forth under the
caption "Selected Consolidated Financial Data" in the Prospectus and
Registration Statement fairly present, on the basis stated in the
Prospectus and the Registration Statement, the information included
therein.
(xiii) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries or its or their property is pending
or, to the knowledge of the Company, threatened that (A) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (B) could reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(xiv) The Company and each of its Subsidiaries owns or leases all
such properties as are necessary to the conduct of their respective
operations as presently conducted.
(xv) Neither the Company nor any Subsidiary is in violation or
default of (A) any provision of its charter or bylaws, (B) the terms of
any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject (except for any such violation or default that has
been effectively waived by the other parties thereto), or (C) any
statute, including, without limitation, the HEA, any law, rule,
regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or such Subsidiary or any of its
properties, as applicable, except for any such violation or default of
items (A), (B) or (C), above, that would not (1) have a material
adverse effect on the performance by the Company of this Agreement or
the consummation of the transactions contemplated hereby, or (2) have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
Subsidiaries, taken as a whole.
(xvi) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company and its Subsidiaries and delivered their
report with respect to the audited consolidated financial statements
and schedules included in the Prospectus, are independent public
accountants with respect to the Company within the
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meaning of the Act and the Rules and Regulations.
(xvii) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement by the Company or the issuance
by the Company or sale by the Company of the Securities, except for
fees or charges that may be required to be paid in connection with
applicable blue sky laws, which fees and charges the Company has,
pursuant to Section 5(i) hereof, agreed to pay.
(xviii) The Company has filed all federal, state and local tax
returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file or to
request an extension would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)) and has paid all taxes required
to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a material adverse effect
on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(xix) No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or, to the knowledge of the
Company, is threatened or imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or its Subsidiaries' principal suppliers, contractors or customers,
that reasonably could be expected to have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(xx) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which
they are engaged; all policies of insurance insuring the Company or any
of its Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and
its Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no material claims
by the
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Company or any of its Subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending
under a reservation of rights clause; and neither the Company nor any
such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its Subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(xxi) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary from
the Company or from transferring any of such Subsidiary's property or
assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Prospectus.
(xxii) The Company and its Subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities,
including, without limitation, all authorizations required for
participation in federal financial aid programs under Title IV ("Title
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IV Program") of the HEA, as are necessary to conduct their respective
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businesses, except for any such licenses, certificates, permits and
authorizations, the failure to so possess would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its Subsidiaries,
taken as a whole, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(xxiii) The Company, for itself and for each of its Subsidiaries,
maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (C) access to assets
is permitted only in accordance with management's general or specific
authorization;
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and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxiv) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Offered Securities.
(xxv) The Company and its Subsidiaries are (A) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have received and are in
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compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (C) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or
contaminants, except where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or
such actual or potential liability would not, individually or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto). Except as set forth in the Prospectus, neither the Company
nor any of the Subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or has any
material contingent liability in connection with the disposal or
release of hazardous or toxic substances or wastes, pollutants or
contaminants.
(xxvi) Each of the Company and its Subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Xxxxxxx 000
xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
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with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of
the Company and its Subsidiaries are eligible to participate and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. The Company and its Subsidiaries have not incurred any
unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such
plan under Title IV of ERISA.
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(xxvii) Except for the Subsidiaries listed on Annex A attached
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hereto which may be significant subsidiaries of the Company as defined
by Rule 1-02 of Regulation S-X, the Company has no significant
subsidiaries as defined by such Rule.
(xxviii) The Company and its Subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") material to the conduct of
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the Company's business as now conducted. Except as set forth in the
Prospectus, (A) there are no rights of third parties to any such
Intellectual Property (except for the rights of licensors or licensees
of any such Intellectual Property); (B) to the Company's knowledge,
there is no material infringement by third parties of any such
Intellectual Property; (C) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (D) to the Company's knowledge,
there is no pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (E) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any other fact which would form a
reasonable basis for any such claim; (F) to the Company's knowledge,
there is no U.S. patent or published U.S. patent application which
contains claims that dominate or may dominate any Intellectual Property
described in the Prospectus as being owned by or licensed to the
Company or that interferes with the issued or pending claims of any
such Intellectual Property; and (G) there is no prior act of which the
Company is aware that may render any U.S. patent held by the Company
invalid or any U.S. patent application held by the Company unpatentable
which has not been disclosed to the U.S. Patent and Trademark Office.
(xxix) Except as disclosed in the Registration Statement and the
Prospectus, the Company, to its knowledge, (A) does not have any
material lending or other relationship with any bank or lending
affiliate of Credit Suisse First Boston Corporation ("CSFBC") and (B)
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does not intend to use any of the proceeds from the sale of the
Securities hereunder to repay any outstanding debt owed to any
affiliate of CSFBC.
(xxx) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would
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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 this offering.
(xxxi) 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 the Subsidiaries taken as a whole, and, except as
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.
Any certificate signed by any officer of the Company (in his capacity as such
and not in his capacity as an Executive Selling Stockholder) and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Offered Securities shall be deemed a representation and warranty
by the Company, as to matters covered thereby, to each Underwriter.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) Such Selling Stockholder is the legal and beneficial owner
of the Offered Securities to be sold by such Selling Stockholder
hereunder and upon sale and delivery of, and payment for, such Offered
Securities, as provided herein, such Selling Stockholder will convey to
the Underwriters good and marketable title to such Offered Securities,
free and clear of all liens, encumbrances, equities and claims
whatsoever.
(ii) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Offered
Securities.
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated herein, except
such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Offered Securities by the
Underwriters and such other approvals as have been obtained.
(iv) Neither the sale of the Offered Securities being sold by
such Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder or the
fulfillment of the terms hereof by
12
such Selling Stockholder will conflict with, result in a breach or
violation of, or constitute a default under any law or the terms of any
indenture or other agreement or instrument to which such Selling
Stockholder is a party or bound, or any judgment, order or decree
applicable to such Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder, except for any of the
foregoing which could not reasonably be expected to have a material
adverse effect on the transactions contemplated hereby, provided that
none of the foregoing affects the ability of such Selling Stockholder
to deliver unencumbered title to the Offered Securities to the
Underwriters at the Closing.
(v) 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 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 respects to the requirements of the Act and the
Rules and Regulations did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit, to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (C) on the date of this
Agreement, the Initial Registration Statement and, if the Effective
Time of the Additional Registration Statement is prior to the execution
and delivery of this Agreement, the Additional Registration Statement
each conforms, and at the time of filing of the Prospectus pursuant to
Rule 424(b) or (if no such filing is required) at the Effective Date of
the Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will conform,
in all 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, in light of the circumstances they were
made (with respect only to the Prospectus), 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, in light of the circumstances they were made
(with respect only to the Prospectus), not misleading. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or Prospectus based upon written information
furnished to the Company by any Underwriter through
13
Representatives specifically for use therein, it being understood and
agreed that the only such information is that described in Section
7(c). The first two sentences of this paragraph apply to each Selling
Stockholder only to the extent that any statements in or omissions from
a Registration Statement or the Prospectus are based on written
information furnished to the Company by such Selling Stockholder,
specifically for use therein, it being understood and agreed that, with
respect to each Selling Stockholder, the only such information is that
described in Section 7(b).
(vi) 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 for a brokerage
commission, finder's fee or other like payment in connection with this
offering.
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, the Company and each Selling
Stockholder agree, severally and not jointly, to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and each Selling Stockholder, at a purchase price of $ per share, that number
of Firm Securities (rounded up or down, as determined by CSFBC in its
discretion, in order to avoid fractions) obtained by multiplying 200,000 Firm
Securities in the case of the Company and the number of Firm Securities set
forth opposite the name of such Selling Stockholder in Schedule A hereto, in the
----------
case of a Selling Stockholder, in each case by a fraction the numerator of which
is the number of Firm Securities set forth opposite the name of such Underwriter
in Schedule B hereto and the denominator of which is the total number of Firm
Securities.
Certificates in negotiable form for the Offered Securities to be sold
by the Executive Selling Stockholders hereunder have been placed in custody, for
delivery under this Agreement, under Custody Agreements made with U. S. Stock
Transfer Corporation, as custodian ("Custodian"). Each Executive Selling
---------
Stockholder agrees that the shares represented by the certificates held in
custody for the Executive Selling Stockholders under such Custody Agreements are
subject to the interests of the Underwriters hereunder, that the arrangements
made by the Executive Selling Stockholders for such custody are to that extent
irrevocable, and that the obligations of the Executive Selling Stockholders
hereunder shall not be terminated by operation of law, whether by the death of
any individual Executive Selling Stockholder or the occurrence of any other
event, or in the case of a trust, by the death of any trustee or trustees or the
termination of such trust. If any individual Executive Selling Stockholder or
any such trustee or trustees should die, or if any other such event should
occur, or if any of such trusts should terminate, before the delivery of the
Offered Securities hereunder, certificates for such Offered Securities shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death or other event or termination had not
14
occurred, regardless of whether or not the Custodian shall have received notice
of such death or other event or termination.
The Company and the Investor Selling Stockholders and the Custodian 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 transfers to accounts at banks
acceptable to CSFBC drawn to the order of the Company in the case of 200,000
shares of Firm Securities and each Investor Selling Stockholder and the
Custodian on behalf of the Executive Selling Stockholders in the case of
2,800,000 shares of Firm Securities, at the office of Xxxxxx, Xxxx & Xxxxxxxx
LLP, at 10:00 A.M., New York time, on October 11, 2000, or at such other time
not later than seven full business days thereafter as CSFBC and the Company
determine, such time being herein referred to as the "First Closing Date". The
------------------
certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as CSFBC requests and
will be made available for checking and packaging at the office of CSFBC, Eleven
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholders 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. The Selling Stockholders agree, severally and not jointly, to
sell to the Underwriters the respective numbers of Optional Securities obtained
by multiplying the number of Optional Securities specified in such notice by a
fraction the numerator of which is the number of shares set forth opposite the
names of such Selling Stockholders in Schedule A hereto under the caption
----------
"Maximum Number of Optional Securities to be Sold" and the denominator of which
is the total number of Optional Securities (subject to adjustment by CSFBC to
eliminate fractions). Such Optional Securities shall be purchased from each
Selling Stockholder 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
the Selling Stockholders.
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
15
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. The Investor Selling Stockholders and the
Custodian 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 therefor in Federal (same day) funds by
official bank check or checks or wire transfers to accounts at banks acceptable
to CSFBC drawn to the order of each Investor Selling Stockholder and the
Custodian on behalf of the Executive Selling Stockholder in the case of the
Optional Securities at the above office of Xxxxxx, Xxxx & Xxxxxxxx LLP. The
certificates for the Optional Securities being purchased on each Optional
Closing Date will be in definitive form, in such denominations and registered in
such names as CSFBC requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the above
office of CSFBC at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) 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.
(b) 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
16
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 best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither CSFBC's consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings 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) which 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.
(e) 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 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
17
will pay the expenses of printing and distributing to the Underwriters all
such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution, provided that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Offered Securities, in any jurisdiction where it is not now so subject.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.
(h) For a period of 90 days after the date of the initial public
offering of the Offered Securities, 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
(i) issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, (ii) grants of
employee stock options pursuant to the terms of the Company's 1998
Performance Award Plan and (iii) sale of its Securities pursuant to its
Employee Stock Purchase Plan, each as described in the Prospectus, or
issuances of Securities pursuant to the exercise of such options.
(i) The Company agrees with the several Underwriters that the Company
will pay all expenses incident to the performance of the obligations of the
Company and the Selling Stockholders under this Agreement, for any filing
fees and other expenses (including fees and disbursements of counsel) 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, for any travel expenses of the Company's officers and employees
and any other expenses of the Company in connection with
18
attending or hosting meetings with prospective purchasers of the Offered
Securities (provided that the Company agrees to pay half of the cost of any
airplane chartered in connection with traveling to such meetings), and for
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters, provided that each Selling Stockholder will pay any
applicable transfer taxes on the sale by the Selling Stockholders of the
Offered Securities to the Underwriters.
(j) Each Investor Selling Stockholder agrees to deliver to CSFBC,
attention: Transactions Advisory Group 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).
(k) Each Selling Stockholder agrees, for a period of 90 days after
the date of the initial public offering of the Offered Securities, 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, enter into a transaction which 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.
(l) The Company agrees that, until the date that is 90 days following
the date of the Prospectus, it shall enforce all, and shall not, without
the prior consent of CSFBC, amend or waive, any lock-up or market standoff
provisions contained in any option agreement, warrant, stock purchase
agreement, registration rights agreement, investor rights agreement or
similar agreement between the Company and any holder of any outstanding
securities of the Company (including any such agreement entered into during
such 90 day period), except to the extent provided in the written lock-up
agreement by and between Xx. Xxxxx Xxxxxxx and CSFBC. The Company
acknowledges that the intent of the foregoing sentence is to restrict,
pursuant to the terms of such option agreements, warrants, stock purchase
agreements, registration rights agreement, investor rights agreements or
similar agreements, the ability of holders of the Company's securities to
dispose of such securities (or securities acquired upon exercise or
exchange of such securities) to the same extent as if each such holder had
executed a written undertaking to CSFBC not to issue, sell, offer or
otherwise dispose of any of the securities of the Company held by such
holder.
19
(m) The Company agrees that, on or before______, 2000, it shall
make or cause to be made all required filings with ACICS, ACCET and the
appropriate state agencies of the States of Utah, Michigan and New
York, and take all other actions necessary or advisable in connection
with obtaining approval of the ACICS and ACCET and such states of the
Offering, the change of control or change of ownership that may be
deemed to be effected by the Offering and the continuation of
accreditation or authorization to operate of the Company's schools as
promptly as possible.
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 in all material
respects of the representations and warranties on the part of the Company and
the Selling Stockholders herein, to the accuracy in all material respects of the
statements of Company officers made pursuant to the provisions hereof, to the
performance by the Company and the Selling Stockholders 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 Xxxxxx
Xxxxxxxx LLP 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 consolidated financial
statements and financial statement 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) on the basis of 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) 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 this Agreement,
there was
20
any change in the capital stock or any increase in
short-term indebtedness or long-term debt 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
consolidated net assets, as compared with amounts
shown on the latest balance sheet included in the
Prospectus; or
(B) 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, in
consolidated net sales or net operating income in the
total or per share amounts of consolidated net
income;
except in all cases set forth in clauses (A) and (B) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(iii) they have compared specified dollar amounts
(or percentages derived from such dollar amounts) and other
financial information 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 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, (i) if the Effective Time of the
Initial Registration Statements 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, (ii) if the Effective Time of the Initial Registration
Statements 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 (iii) "Prospectus" shall mean the prospectus
----------
included in the Registration Statements. All financial statements and
21
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 one enterprise 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 of any debt securities 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 of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any material suspension or material
limitation of trading in securities generally on the New York Stock
Exchange, 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; or (v) any
outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by Congress or any other
substantial 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 outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
22
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 O'Melveny & Xxxxx LLP, counsel for the Company, to the
effect that:
(i) each of the Company and each Subsidiary has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it
is incorporated, with the corporate power and the corporate
authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation in, and is in good standing under the laws under,
each of the applicable jurisdictions set forth on Annex A
-------
hereto;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly authorized by all necessary
corporate action on the part of such Subsidiary, validly
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Prospectus, are owned of record by
the Company either directly or through wholly owned
subsidiaries;
(iii) the statements in the Prospectus under the
caption "Description of Capital Stock", insofar as they
summarize provisions of the Certificate of Incorporation and
Bylaws of the Company, fairly present the information required
by Form S-3; the outstanding shares of Common Stock (including
the Offered Securities being sold hereunder by the Selling
Stockholders) have been duly authorized by all necessary
corporate action on the part of the Company, and are validly
issued, fully paid and nonassessable; the Securities have been
duly authorized by all necessary corporate action on the part
of the Company and, upon payment for and delivery of the
Offered Securities in accordance with this Agreement and the
countersigning of the certificate or certificates representing
the Offered Securities by a duly authorized signatory of the
registrar for the Company's Common Stock, the Offered
Securities will be validly issued, fully paid and non-
assessable; the certificates for the Offered Securities comply
with the provisions of the Delaware General Corporation Law;
the holders of outstanding shares of capital stock of the
Company are not entitled to preemptive or other rights to
subscribe for the Offered Securities or any additional shares
of the Company's capital stock under the Company's Certificate
of Incorporation and Bylaws, or, to the knowledge of such
counsel based solely on a review of corporate minutes and
factual certificates of responsible officers of the Company,
any other agreement or instrument; and, except as set forth in
the Prospectus, based solely upon the review by such counsel
of corporate minutes for matters occurring
23
after June 1, 1995 and upon factual certificates of
responsible officers of the Company, the authorized but
unissued shares of capital stock of the Company are not
subject to any warrants, options, rights or commitments
granted by the Company, and the Company is not obligated to
issue, purchase or redeem any shares of the Company's capital
stock;
(iv) the Registration Statement has been declared
effective under the Act; any required filing of the
Prospectus, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to the knowledge of such counsel,
based solely upon telephonic advice from the Commission, no
stop order suspending the effectiveness of the Registration
Statement has been issued, and proceedings for that purpose
have been instituted or threatened, and the Registration
Statement and the Prospectus (other than the financial
statements and other financial information contained therein,
as to which such counsel need express no opinion) each appear
on their face to comply as to form in all material respects
with the applicable requirements of the Act and the rules
thereunder as of the date hereof;
(v) in connection with such counsel's participation
in conferences in connection with the preparation of the
Registration Statement and the Prospectus, such counsel has
not independently verified the accuracy, completeness or
fairness of the statements contained therein, and the
limitations inherent in the examination made by such counsel
and the knowledge available to such counsel are such that such
counsel is unable to assume, and does not assume, any
responsibility for such accuracy, completeness and fairness;
however, on the basis of such counsel's review and
participation in conferences in connection with the
preparation of the Registration Statement and Prospectus, and
relying as to materiality to an extent upon opinions of
officers and other representatives of the Company, such
counsel does not believe that the Registration Statement as of
the Effective Date contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements included
therein not misleading, and such counsel does not believe that
the Prospectus on the date hereof and as of the Closing Date
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading; provided, however, that such counsel
need not express any opinion or belief as to the financial
statements and other financial information contained in the
Registration Statement or Prospectus;
(vi) the Company has the corporate power and corporate
authority to enter into this Agreement and to issue and sell
the Offered Securities as provided herein, and the execution
and delivery of this
24
Agreement have been duly authorized by all necessary corporate
action on the part of the Company;
(vii) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be, an "investment company" as defined in the Investment
Company Act of 1940, as amended;
(viii) no order, consent, permit, approval or filing
with or of any federal, New York or California governmental
authority that such counsel has, in the exercise of customary
professional diligence, recognized as applicable to the
Company or its Subsidiaries or to the transactions
contemplated by this Agreement, is required on the part of the
Company for the execution and delivery of this Agreement, or
for the issuance and sale of the Securities, except such as
have been obtained under the Act and such as may be required
under applicable Blue Sky or state securities laws;
(ix) neither the issue and sale of the Offered
Securities, nor the Company's execution and delivery of, and
the performance of its obligations under, this Agreement, will
result in a breach or violation of or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company or its Subsidiaries pursuant to, (A) the charter or
bylaws of the Company or its Subsidiaries, (B) any existing
obligation of, or restriction on, the Company or its
Subsidiaries under any instrument, agreement or contract filed
or incorporated by reference as an exhibit to the Registration
Statement or the 2000 Form 10-K (the "Filed Exhibits"), (C)
--------------
any federal, New York or California statute, rule or
regulation that such counsel has, in the exercise of customary
professional diligence, recognized as applicable to the
Company or its Subsidiaries or to the transactions
contemplated by this Agreement (except that such counsel need
express no opinion regarding any federal securities laws or
Blue Sky or state securities laws or Section 7 hereof, except
as otherwise expressly stated herein), or (D) any judgment,
order or decree of any federal, New York or California
governmental authority having jurisdiction over the Company or
its Subsidiaries or any of its or their properties, which such
judgment, order or decree has been identified, in a
certificate of responsible officers of the Company, to such
counsel as being applicable to the Company or its
Subsidiaries; provided, however, that such counsel need not
express any opinion as to the effect of the Company's
performance of its obligations under this Agreement on the
Company's compliance with financial covenants in the Filed
Exhibits.
(x) no holder of securities of the Company has the
right under any instrument, agreement or contract filed as an
exhibit to the Registration Statement to register such
securities on or as a part of the
25
Registration Statement, except for (A) any such holder who has
effectively waived such right, and (B) each Selling
Stockholder who has agreed to exercise such right only with
respect to the Offered Securities and Option Securities which
are proposed to be sold by such Selling Stockholder hereunder.
In rendering such opinion, such counsel (A) may rely as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials and (B), need express no opinion regarding the
matters addressed in the opinion of Drinker, Xxxxxx & Xxxxx LLP, including
specifically the Company's compliance with, and authorization to participate in,
federal Title IV Programs and other federal or state laws or regulations
governing or concerning educational services. References to the Prospectus in
this paragraph (d) include any supplements thereto at the Closing Date.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Drinker, Xxxxxx & Xxxxx LLP, special regulatory
counsel for the Company, to the effect that:
(i) The statements in the Prospectus under the
captions "Risk Factors - Risks Related to Extensive Regulation
of Our Business" and "Notes to Consolidated Financial
Statements - Note 12 - Governmental Regulation" in the
Prospectus and "Governmental Regulation and Financial Aid" and
"Risks Related to Our Business -- Risks Related to Extensive
Regulation of our Business", "Item 1 -- Business - Tuition"
(the second paragraph thereunder) and "Notes to Consolidated
Financial Statements - Note 12 - Governmental Regulation" in
the 2000 10-K (collectively, the "Regulatory Disclosure") and
---------------------
other references therein to educational regulatory matters,
insofar as such statements constitute a summary of applicable
federal and state laws and regulations or a summary of
judicial or administrative proceedings, are accurate and
present fairly the information purported to be shown;
(ii) Such counsel have 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 required to be stated therein or necessary to make the
statements therein not misleading;
(iii) The Offering will not constitute a change in
ownership resulting in a change in control under the HEA,
provided that the Accrediting Council for Independent Colleges
and Schools, the Accrediting Council for Continuing Education
and Training, the States of Utah, Michigan and New York have
determined that the Offering will
26
constitute a change of ownership as defined by such agencies
such that the Company will be required to make timely filings
with such agencies to ensure the continuation of accreditation
or authorization to operate of the Company's schools under the
jurisdiction of such agencies; and
(iv) To the best of such counsel's knowledge, each
of the Company and the Subsidiaries has all necessary
licenses, certificates, permits and other authorizations
required for each of the Company and the Subsidiaries to
participate in Title IV Programs or pursuant to which the
Company or any of the Subsidiaries must be authorized by
applicable states to engage in rendering educational services
as described in the Prospectus except where the failure to so
have any such licenses, certificates, permits and other
authorizations, individually or in the aggregate, would not
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its Subsidiaries, taken as a whole.
(f) The Representatives shall have received the opinion of
O'Melveny & Xxxxx LLP, in its capacity as counsel to the Executive
Selling Stockholders, to the effect that:
(i) This Agreement and the Custody Agreement and
Power of Attorney have been duly executed and delivered by the
Executive Selling Stockholders, the Custody Agreement is valid
and binding on the respective Executive Selling Stockholders
and the respective Executive Selling Stockholders have full
legal right and authority to sell, transfer and deliver in the
manner provided in this Agreement and the Custody Agreement
the Offered Securities being sold by the respective Executive
Selling Stockholders hereunder;
(ii) Upon payment for and delivery of the Offered
Securities by the Executive Selling Stockholders in accordance
with this Agreement, assuming the Underwriters are acquiring
the Offered Securities without notice of any adverse claims,
the several Underwriters will acquire the Securities free and
clear of any adverse claims; and
(iii) No order, consent, permit, approval or filing
with or of any California, New York or federal governmental
authority that such counsel has, in the exercise of customary
professional diligence, recognized as applicable to
transactions of the type contemplated by this Agreement, is
required for the consummation by the respective Executive
Selling Stockholders of the transactions contemplated herein,
except such as may have been obtained under the Act and such
as may be required under the blue sky laws of any jurisdiction
in connection with the purchase and
27
distribution of the Securities by the Underwriters and such
other approvals (specified in such opinion) as have been
obtained.
In rendering such opinion, such counsel (A) may rely as to matters of fact, to
the extent they deem proper, on certificates of the respective Executive Selling
Stockholders and public officials and (B) need express no opinion regarding the
matters addressed in the opinion of Drinker, Xxxxxx & Xxxxx LLP, including
specifically the compliance of the Company or any Executive Selling Stockholder
with, and authorization to participate in, federal Title IV Programs and other
federal or state laws or regulations governing or concerning educational
services.
(g) The Representatives shall have received an opinion, dated such
Closing Date, of Squire, Xxxxxxx & Xxxxxxx LLP, counsel for BOCPII and
Banc One and Xxxxxxxx & Xxxxx, counsel for Primus, with respect to the
applicable Investor Selling Stockholders, to the effect that:
(i) Such Investor Selling Stockholder had valid and
unencumbered title to the Offered Securities delivered by such
Investor Selling Stockholder on such Closing Date and had full
right, power and authority to sell, assign, transfer and
deliver the Offered Securities delivered by such Investor
Selling Stockholder on such Closing Date hereunder; and the
several Underwriters have acquired valid and unencumbered
title to the Offered Securities purchased by them from such
Investor Selling Stockholder on such Closing Date hereunder;
(ii) 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 such Investor Selling
Stockholder for the consummation of the transactions
contemplated by this Agreement in connection with the sale of
the Offered Securities sold by such Investor Selling
Stockholder, except such as have been obtained and made under
the Act and such as may be required under state securities
laws;
(iii) 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, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over such
Investor Selling Stockholder or any of its properties or any
agreement or instrument to which such Investor Selling
Stockholder is a party or by which such Investor Selling
Stockholder is bound or to which any of the properties of such
Investor Selling Stockholder is subject, or the charter, by-
laws or other organizational documents of any of such Investor
Selling Stockholder; and
28
(iv) This Agreement has been duly authorized, executed and
delivered by such Investor Selling Stockholder.
In rendering such opinion, such counsel (A) may rely as to matters of fact, to
the extent they deem proper, on certificates of the respective Investor Selling
Stockholders and public officials and (B) need express no opinion regarding the
matters addressed in the opinion of Drinker, Xxxxxx & Xxxxx LLP, including
specifically the compliance of the Company or any Investor Selling Stockholder
with, and authorization to participate in, federal Title IV Programs and other
federal or state laws or regulations governing or concerning educational
services.
(h) The Representatives shall have received from Xxxxxx, Xxxx &
Xxxxxxxx LLP, 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.
(i) 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 in all material
respects; 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) of 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 dates 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.
(h) The Representatives shall have received a letter, dated such
Closing Date, of Xxxxxx Xxxxxxxx LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date
29
not more than three days prior to such Closing Date for the purposes of
this subsection.
(i) On or prior to the date of this Agreement, the
Representatives shall have received lockup letters from each of the
persons set forth on Schedule C hereto.
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 request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless each Underwriter, its partners, directors and officers and
each person, if any who controls such Underwriter within the meaning of Section
15 of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by 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; and provided, further,
that with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus the indemnity
agreement 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 (exclusive of material incorporated by reference) if the Company
had previously furnished copies thereof to such Underwriter.
30
(b) The Selling Stockholders severally and not jointly will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person 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 Selling
Stockholders 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 an 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; and provided, further,
that with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus the indemnity
agreement contained in this subsection (b) shall not inure to the benefit of any
Underwriter for 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 (exclusive of material incorporated by reference) if the Company
had previously furnished copies thereof to such Underwriter; and provided,
further, that each Selling Stockholder shall be liable in any such case only to
the extent that any such loss, claim, damage or liability arises out of or is
based upon statements or omissions from a Registration Statement or Prospectus
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 each Selling Stockholder consists of the
information in the Prospectus relating to such Selling Stockholder under the
caption "Selling Stockholders" (including without limitation the information set
forth in the footnotes thereto).
(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, and
31
each person, if any, who controls each Selling Stockholder within the meaning of
Section 15 of the Act, against any losses, claims, damages or liabilities to
which the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company and
each Selling Stockholder in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished on
behalf of each Underwriter: the concession and reallowance figures appearing in
the fourth paragraph under the caption "Underwriting" and the information
contained in the ninth paragraph under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this Section 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 omission so to notify the indemnifying party (i)
will not relieve it from any liability under subsections (a), (b) or (c) above
unless and to the extent it did not otherwise learn of such action and such
omission materially prejudices the ability of such party to defend such action
and (ii) will not, in any event, relieve the indemnifying party from any of the
obligations to any indemnified party other than the indemnification obligations
provided in subsections (a), (b) and (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
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 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, [compromise or consent to the entry of any judgment] of any pending
or threatened action in respect of which any indemnified party is or could have
32
been a party and indemnity could have been sought hereunder by such indemnified
party unless such (i) settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying 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), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders, on the one hand, and the Underwriters, on
the other, from the offering of the 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 the Company and the
Selling Stockholders, 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. The relative benefits received by the Company and 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 Company and 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 the first sentence of 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 Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
33
(f) The obligations of the Company and the Selling Stockholders under this
Section 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 (as hereinafter
defined) within the meaning of the Act; and the obligations of the Underwriters
under this Section 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.
(g) The liability of any Selling Stockholder under this Section 7 shall
not exceed an amount equal to the proceeds, net of underwriting discounts, from
the sale of the Offered Securities sold by such Selling Stockholder to the
Underwriters.
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 Company and 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, the Company 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. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any
34
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) or (v) 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.
10. Notices. All communications hereunder will be in writing and, if sent
to (a) the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Transaction Advisory
Group, or (b) if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at 0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx
00000-0000, Attention: Chief Executive Officer, or, if sent to the Selling
Stockholders or any of them, will be mailed, delivered or telegraphed and
confirmed to the address specified in Schedule A hereto; 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 personal representatives and
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CSFB will be binding upon all the Underwriters. Xxxxx X. Xxxxx will act for the
Executive Selling Stockholders in connection with such transactions, and any
action under or in respect of this Agreement taken by Xxxxx X. Xxxxx will be
binding upon all the Executive Selling Stockholders.
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.
35
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 hereby submits 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.
36
SCHEDULE A
Maximum
Number of
Number of Optional
Firm Securities Securities to
Selling Stockholder to be Sold be Sold
------------------- --------------- ----------
Investor Selling Stockholders
-----------------------------
Primus Capital Fund III Limited Partnership (1)............. 1,616,324 235,714
Banc One Capital Partners II, LLC (2)....................... 306,538 44,704
BOCPII, Limited Liability Company (2)....................... 477,138 69,582
Executive Selling Stockholders (3)
----------------------------------
Xxxxx X. Xxxxx.............................................. 100,000 25,000
Xxxx X. St. Pierre and Xxxxx X. St. Pierre CO TR
UA DTD March 31, 1999, The St. Pierre Family Trust.......... 100,000 25,000
Xxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx CO
TR UA DTD April 28, 1990, The Devereux Family Trust......... 100,000 25,000
Xxxxx Xxxxxx XxXxxx and Xxxxx Xxxxxx XxXxxx TR
UA DTD January 14, 1998, The XxXxxx Family Trust............ 100,000 25,000
---------- --------
Total..................................................... 2,800,000 450,000
========== ========
Addresses for notification to Selling Stockholders are as follows:
(1) c/o Primus Venture Capital Partners, Inc., 0000 Xxxxxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxxx Xxxx 00000-000
(2) c/o Stonehenge Services, Inc., 000 Xxxx Xxx Xxxxxx, Xxxxxxxx, Xxxx 00000
(3) Each of the Executive Selling Stockholders c/o the Company, at the address
set forth in Section 10 hereof.
SCHEDULE B
Number of
Firm Securities
Underwriter to be Purchased
----------- ---------------
Credit Suisse First Boston Corporation.................
Chase Securities Inc...................................
U. S. Bancorp Xxxxx Xxxxxxx Inc........................
SunTrust Equitable Securities Corporation..............
----------
Total............................ 3,000,000
==========
SCHEDULE C
----------
ANNEX A
-------
---------------------------------------- --------------------------------------- -------------------------------------
Subsidiary Name State of Incorporation Qualification as a Foreign
Corporation
---------------------------------------- --------------------------------------- -------------------------------------
Corinthian Colleges, Inc. Delaware California
Florida
Nevada
Virginia
---------------------------------------- --------------------------------------- -------------------------------------
Corinthian Schools, Inc. Delaware California
Georgia
Louisiana
Massachusetts
Michigan
Texas
Xxxxxxxx
Xxxxxxxxxx
West Virginia
---------------------------------------- --------------------------------------- -------------------------------------
Corinthian Property Group, Inc. Florida California
Colorado
---------------------------------------- --------------------------------------- -------------------------------------
Florida Metropolitan University, Inc. Florida California
---------------------------------------- --------------------------------------- -------------------------------------
---------------------------------------- --------------------------------------- -------------------------------------
Xxxxxx Colleges, Inc. Delaware Arizona
California
Colorado
Florida
Mississippi
Missouri
Nevada
Oregon
Washington
---------------------------------------- --------------------------------------- -------------------------------------
Xxxxxx Business Group, Inc. Delaware California
New York
Pennsylvania
---------------------------------------- --------------------------------------- -------------------------------------
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,
Primus Capital Fund III Limited Partnership
By Primus Venture Partners III
Limited Partnership,
its General Partner
By Primus Venture Partners, Inc.
By _______________________________
Name:
Title:
Banc One Capital Partners II, LLC
By __________________________________
Name:
Title:
BOCPII, Limited Liability Company
By __________________________________
Name:
Title:
_____________________________________
Xxxxx X. Xxxxx
XXXX X. ST. PIERRE AND XXXXX X. ST. PIERRE
CO TR UA DTD MARCH 31, 1999, THE ST. PIERRE
FAMILY TRUST
By __________________________________
Xxxx X. St. Pierre, Trustee
Xxxxx X. St. Pierre, Trustee
XXXXXX X. XXXXXXXX AND XXXXXX X. XXXXXXXX CO
TR UA DTD APRIL 28, 1990, THE DEVEREUX
FAMILY TRUST
By __________________________________
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, Trustee
S-1
XXXXX XXXXXX XXXXXX AND XXXXX XXXXXX XXXXXX
TR UA DTD JANUARY 14, 1998, THE XXXXXX
FAMILY TRUST
By __________________________________
Xxxxx X. XxXxxx
*By _________________________________
Xxxxx X. Xxxxx,
As Attorney-In-Fact
Corinthian Colleges, Inc.
By __________________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
Credit Suisse First Boston Corporation
Chase Securities Inc.
U. S. Bancorp Xxxxx Xxxxxxx Inc.
Suntrust Equitable Securities Corporation
Acting on behalf of themselves and
as the Representatives of the
several Underwriters.
By Credit Suisse First Boston Corporation
By_____________________________________
Name: _________________________________
Title: ________________________________
S-2
