1
EXHIBIT 1.01
DL&A Draft
4/11/97
1,322,500 Shares
Xxxxxxx Education, Inc.
Common Stock
UNDERWRITING AGREEMENT
April __, 1997
XXXXX XXXXXX INC.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
As Representatives of the Several Underwriters
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Xxxxxxx Education, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell an aggregate of 600,000 shares of its common stock,
$0.01 par value per share, to the several Underwriters named in Schedule II
hereto (the "Underwriters") and the persons named in Schedule I hereto (the
"Selling Stockholders") propose to sell to the several Underwriters an
aggregate of 550,000 shares of common stock of the Company. The Company and the
Selling Stockholders are hereinafter sometimes referred to as the "Sellers".
The Company's common stock, $0.01 par value, is hereinafter referred to as the
"Common Stock" and the 600,000 shares of Common Stock to be issued and sold to
the Underwriters by the Company and the 550,000 shares of Common Stock to be
sold to the Underwriters by the Selling Stockholders are hereinafter referred
to as the "Firm Shares". The Company also proposes to sell to the Underwriters,
upon the terms and conditions set forth in Section 2 hereof, up to an
additional 172,500 shares (the "Additional Shares") of Common Stock. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as
the "Shares".
The Company and the Selling Stockholders wish to confirm as follows
their respective agreements with you (the "Representatives") and the other
several Underwriters on whose behalf you are acting, in connection with the
several purchases of the Shares by the Underwriters.
2
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement (No. 333-23601) on Form S-1
under the Act (the "Registration Statement"), including a prospectus subject to
completion relating to the Shares. The term "Registration Statement" as used
in this Agreement means the registration statement (including all financial
schedules and exhibits), as amended at the time it becomes effective, or, if
the registration statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Shares may commence, the term
"Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. If an abbreviated
registration statement is prepared and filed with the Commission in accordance
with Rule 462(b) under the Act (an "Abbreviated Registration Statement"), the
term "Registration Statement" as used in this Agreement includes the
Abbreviated Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement, or, if the prospectus included in the Registration Statement omits
information in reliance on Rule 430A under the Act and such information is
included in a prospectus filed with the Commission pursuant to Rule 424(b)
under the Act, the term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement as supplemented
by the addition of the Rule 430A information contained in the prospectus filed
with the Commission pursuant to Rule 424(b). The term "Prepricing Prospectus"
as used in this Agreement means the prospectus subject to completion in the
form included in the registration statement at the time of the initial filing
of the registration statement with the Commission, and as such prospectus shall
have been amended from time to time prior to the date of the Prospectus.
2. Agreements to Sell and Purchase. Subject to such
adjustments as you may determine in order to avoid fractional shares, the
Company hereby agrees, subject to all the terms and conditions set forth
herein, to issue and sell to each Underwriter and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, each Underwriter agrees, severally and not jointly, to purchase
from the Company, at a purchase price of $______ per Share (the "Purchase Price
Per Share"), the number of Firm Shares which bears the same proportion to the
- 2 -
3
aggregate number of Firm Shares to be issued and sold by the Company as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II hereto (or such number of Firm Shares increased as set forth in
Section 12 hereof) bears to the aggregate number of Firm Shares to be sold by
the Company and the Selling Stockholders.
Subject to such adjustments as you may determine in order to avoid
fractional shares, each Selling Stockholder agrees, subject to all the terms
and conditions set forth herein, to sell to each Underwriter and, upon the
basis of the representations, warranties and agreements of the Company and the
Selling Stockholders herein contained and subject to all the terms and
conditions set forth herein, each Underwriter, severally and not jointly,
agrees to purchase from each Selling Stockholder at the Purchase Price Per
Share that number of Firm Shares which bears the same proportion to the number
of Firm Shares set forth opposite the name of such Selling Stockholder in
Schedule I hereto as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule II hereto (or such number of Firm Shares increased
as set forth in Section 12 hereof) bears to the aggregate number of Firm Shares
to be sold by the Company and the Selling Stockholders.
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the
Company at the Purchase Price Per Share, pursuant to an option (the
"over-allotment option"), up to an aggregate of 172,500 Additional Shares.
Additional Shares may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. The
over-allotment option may be exercised as to all or any part of the Additional
Shares at any time and from time to time prior to the Closing Date, but on only
one (1) occasion after the Closing Date, upon written notice given as provided
below at any time prior to 9:00 p.m., New York City time, on the 30th day after
the date of the Prospectus (or, if such 30th day shall be a Saturday or Sunday
or holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading). Xxxxx Xxxxxx Inc. may exercise the over-
allotment option by giving written notice of such exercise to the Company by
facsimile at (000) 000-0000 or to the address specified in Section 15 hereof,
setting forth the number of Additional Shares as to which the several
Underwriters are exercising the option and the time and date for delivery of
and payment for such Additional Shares. Upon any exercise of the
over-allotment option, each Underwriter, severally and not jointly, agrees to
purchase from the Company the number of Additional Shares (subject to such
adjustments as you may
- 3 -
4
determine in order to avoid fractional shares) which bears the same proportion
to the number of Additional Shares to be sold by the Company as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule II
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the Company
and the Selling Stockholders.
Certificates in transferable form for the Shares which each of the
Selling Stockholders agrees to sell pursuant to this Agreement have been placed
in custody with ______________ (the "Custodian") for delivery under this
Agreement pursuant to a Custody Agreement and Power of Attorney (the "Custody
Agreement") executed by each of the Selling Stockholders appointing Xxx X.
Xxxxxx and Xxxxx X. Xxxxxxx as agents and attorneys-in-fact (the
"Attorneys-in-Fact"). Each Selling Stockholder agrees that (i) the Shares
represented by the certificates held in custody pursuant to the Custody
Agreement are subject to the interests of the Underwriters, the Company and
each other Selling Stockholder, (ii) the arrangements made by the Selling
Stockholders for such custody are, except as specifically provided in the
Custody Agreement, irrevocable, and (iii) the obligations of the Selling
Stockholders hereunder and under the Custody Agreement shall not be terminated
by any act of such Selling Stockholder or by operation of law, whether by the
death or incapacity of any Selling Stockholder or the occurrence of any other
event. If any Selling Stockholder shall die or be incapacitated or if any
other event shall occur before the delivery of the Shares hereunder,
certificates for the Shares of such Selling Stockholder shall be delivered to
the Underwriters by the Attorneys-in-Fact in accordance with the terms and
conditions of this Agreement and the Custody Agreement as if such death or
incapacity or other event had not occurred, regardless of whether or not the
Attorneys-in-Fact or any Underwriter shall have received notice of such death,
incapacity or other event. Each Attorney-in-Fact is authorized, on behalf of
each of the Selling Stockholders, to execute this Agreement and any other
documents necessary or desirable in connection with the sale of the Shares to
be sold hereunder by such Selling Stockholder, to make delivery of the
certificates for such Shares, to receive the proceeds of the sale of such
Shares, to give receipts for such proceeds, to pay therefrom any expenses to be
borne by such Selling Stockholder in connection with the sale and public
offering of such Shares, to distribute the balance thereof to such Selling
Stockholder, and to take such other action as may be necessary or desirable in
connection with the transactions contemplated by this Agreement. Each
Attorney-in-Fact agrees to perform his duties under the Custody Agreement.
- 4 -
5
3. Terms of Public Offering. The Sellers have been advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to
the Underwriters of and payment for the Firm Shares shall be made at the office
of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M.,
New York City time, on __________, 1997 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by agreement
among you, the Company and the Attorneys-in-Fact.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Xxxxx Xxxxxx Inc. at such time on such date (the "Option Closing Date"),
which may be the same as the Closing Date, but shall in no event be earlier
than the Closing Date nor earlier than two nor later than ten business days
after the giving of the notice hereinafter referred to, as shall be specified
in a written notice from you on behalf of the Underwriters to the Company of
the Underwriters' determination to purchase a number, specified in such notice,
of Additional Shares. The place of closing for any Additional Shares and the
Option Closing Date for such Shares may be varied by agreement between you and
the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. Agreements of the Company. The Company agrees with the
several Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Shares
may commence, the Company will
- 5 -
6
endeavor to cause the Registration Statement or such post-effective amendment
to become effective as soon as possible and will advise you promptly and, if
requested by you, will confirm such advice in writing, when the Registration
Statement or such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of the receipt of
any comments from the Commission regarding the Registration Statement or of any
request by the Commission for amendment of or a supplement to the Registration
Statement, any Prepricing Prospectus or the Prospectus or for additional
information; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a material fact
required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge,
[number of managers plus one] signed copies of the registration statement as
originally filed with the Commission and of each amendment thereto, including
financial statements and all exhibits thereto, and will also furnish to you,
without charge, such number of conformed copies of the registration statement
as originally filed and of each amendment thereto, but without exhibits, as you
may request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus of
which you shall not previously have been advised or to which you shall
reasonably object after being so advised or (ii) so long as, in the opinion of
counsel for the Underwriters, a Prospectus is required to be delivered in
connection with sales by any Underwriter or dealer, file any information,
documents or reports pursuant to the Securities Exchange Act of 1934, as
- 6 -
7
amended (the "Exchange Act"), without delivering a copy of such information,
documents or reports to you, as Representatives of the Underwriters, prior to
or concurrently with such filing.
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such quantities
as you have requested, copies of each form of the Prepricing Prospectus. The
Company consents to the use, in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions in which the Shares
are offered by the several Underwriters and by dealers, prior to the date of
the Prospectus, of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer, the
Company will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with the Act or any other law,
the Company will forthwith prepare and, subject to the provisions of paragraph
(d) above, file with the Commission an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Underwriters and dealers a
reasonable number of copies thereof. In the event that the Company and you, as
Representatives of the several Underwriters, agree that the Prospectus should
be amended or supplemented, the Company, if requested by you, will promptly
issue a press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.
- 7 -
8
(g) The Company will cooperate with you and with
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offering and sale by the several Underwriters
and by dealers under the securities or Blue Sky laws of such jurisdictions as
you may designate and will file such consents to service of process or other
documents necessary or appropriate in order to effect such registration or
qualification; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Shares, or to taxation in
any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
security holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section ll(a) of the Act.
(i) During the period of five years hereafter, the
Company will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission or the Nasdaq
National Market, and (ii) from time to time such other information concerning
the Company as you may request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 12 hereof or by notice given by you
terminating this Agreement pursuant to Section 12 or Section 13 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure
or refusal on the part of the Company or the Selling Stockholders to comply
with the terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Representatives for all out-of-pocket expenses
(including fees and expenses of counsel for the Underwriters) incurred by you
in connection herewith.
(k) The Company will apply the net proceeds from the
sale of the Shares to be sold by it hereunder in accordance with the
description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company
will timely file the Prospectus pursuant to Rule 424(b) under the Act and will
advise you of the time and manner of such filing.
- 8 -
9
(m) Except as provided in this Agreement and for the
exercise of options granted under the Company's 1996 Stock Option Plan, the
Company will not sell, contract to sell or otherwise dispose of any Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or grant any options or warrants to purchase Common Stock, for a
period of 180 days after the date of the Prospectus, without the prior written
consent of Xxxxx Xxxxxx Inc.
(n) The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by each of
its current officers and directors and each of its stockholders designated by
you.
(o) Except as stated in this Agreement and in the
Prepricing Prospectus and Prospectus, the Company has not taken, nor will it
take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the
Shares listed, subject to notice of issuance, on the Nasdaq National Market
concurrently with the effectiveness of the registration statement.
6. Agreements of the Selling Stockholders. Each of the Selling
Stockholders agrees with the several Underwriters as follows:
(a) Such Selling Stockholder will cooperate to the
extent necessary to cause the registration statement or any post-effective
amendment thereto to become effective at the earliest possible time.
(b) Such Selling Stockholder will pay all Federal and
other taxes, if any, on the transfer or sale of the Shares being sold by the
Selling Stockholder to the Underwriters.
(c) Such Selling Stockholder will do or perform all
things required to be done or performed by the Selling Stockholder prior to the
Closing Date or any Option Closing Date, as the case may be, to satisfy all
conditions precedent to the delivery of the Shares pursuant to this Agreement.
(d) Such Selling Stockholder has executed or will
execute a "lock-up" letter as provided in Section 5(n) above and will not sell,
contract to sell or otherwise dispose of any Common Stock, except for the sale
of Shares to the Underwriters pursuant to this Agreement, prior to the
expiration of 180 days after the date of the Prospectus, without the prior
written
- 9 -
10
consent of Xxxxx Xxxxxx Inc.
(e) Except as stated in this Agreement and in the
Prepricing Prospectus and the Prospectus, such Selling Stockholder will not
take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(f) Such Selling Stockholder will advise you promptly,
and if requested by you, will confirm such advice in writing, within the period
of time referred to in Section 5(f) hereof, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations or of any change in information relating to such Selling
Stockholder or the Company or any new information relating to the Company or
relating to any matter stated in the Prospectus or any amendment or supplement
thereto which comes to the attention of such Selling Stockholder that suggests
that any statement made in the Registration Statement or the Prospectus (as
then amended or supplemented, if amended or supplemented) is or may be untrue
in any material respect or that the Registration Statement or Prospectus (as
then amended or supplemented, if amended or supplemented) omits or may omit to
state a material fact or a fact necessary to be stated therein in order to make
the statements therein not misleading in any material respect, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented, if amended or supplemented) in order to comply with the Act or
any other law.
7. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
(b) The registration statement in the form in which it
became or becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective and the prospectus and
any supplement or amendment thereto when filed with the Commission under Rule
424(b) under the Act, complied or will comply in all material respects with the
provisions of the Act and did not or will not at any such times contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(or, in the case of the Prospectus, in the light of the circumstances under
which they
- 10 -
11
were made), except that this representation and warranty does not apply to
statements in or omissions from the registration statement or the prospectus
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through you expressly for use therein.
(c) All the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares to
be issued and sold by the Company have been duly authorized and, when issued
and delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid and nonassessable and free
of any preemptive or similar rights; and the capital stock of the Company
conforms to the description thereof in the Registration Statement and the
Prospectus.
(d) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Maryland with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify would not
have a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole. The Company does not
own or control, directly or indirectly, any corporation, association or other
entity, other than the Subsidiaries (as hereinafter defined).
(e) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in Exhibit A hereto. Each Subsidiary is a
corporation duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify would not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries taken as a whole; all the outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable, and are owned by the
Company, free
- 11 -
12
and clear of any lien, adverse claim, security interest, equity or other
encumbrance.
(f) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or
to which any of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectus, but are not
described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that are not described or filed as required by the Act.
(g) Neither the Company nor any of the Subsidiaries is
in violation of its certificate or articles of incorporation or by-laws, or
other organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation or any Middle States (as hereinafter defined)
standard applicable to the Company or any of the Subsidiaries, the violation of
which has or would have, individually or in the aggregate, a material adverse
effect on the Company and the Subsidiaries, taken as a whole, or of any decree
of any court or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries, the violation of which has, or would have,
individually or in the aggregate, a material adverse effect on the Company and
the Subsidiaries taken as a whole or in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, the default in the performance of which has, or would
have, individually or in the aggregate, a material adverse effect on the
Company and the Subsidiaries taken as a whole.
(h) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement or any of the agreements
entered into by the Company in connection herewith (the "Company Other
Agreements") by the Company nor the consummation by the Company of the
transactions contemplated hereby and thereby (A) requires any consent,
approval, authorization or other order of or registration or filing with,
Middle States or any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required for the
registration of the Shares under the Act, compliance with the securities or
Blue Sky laws of various jurisdictions, such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") and such as may be
required by the Immigration and Naturalization Service of
- 12 -
13
the U.S. Department of Justice, all of which have been effected or obtained
prior to the date hereof) or conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries; (B) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, or violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree of any governmental, regulatory or
accrediting agency or body or any court having jurisdiction over the Company or
any of the Subsidiaries or any of their respective properties, including,
without limitation, the HEA (as hereinafter defined) and the regulations
promulgated thereunder, except for any such violation that would not,
individually or in the aggregate, (I) adversely affect the valid issuance of
the Shares, performance under this Agreement or any agreement entered into by
the Company or any Subsidiary in connection with the consummation of the
transactions contemplated hereby or thereby or (II) have a material adverse
effect on the Company and the Subsidiaries taken as a whole, or will result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of the Subsidiaries pursuant to the terms of
any agreement or instrument to which any of them is a party or by which any of
them may be bound or to which any of the property or assets of any of them is
subject; or (C) will require a review or approval of the College's
accreditation by Middle States (as hereinafter defined), reauthorization or
relicensing of the College by the D.C. Education Licensure Commission, the
Virginia State Council of Higher Education or the Maryland Higher Education
Commission or recertification of the College by the U.S. Department of
Education for participation in Title IV Programs (as hereinafter defined).
Neither the issuance and sale of the Shares nor the consummation of the
transactions contemplated by this Agreement or the Prospectus will require the
Company to file a Form 8-K with the Commission and, therefore, neither the
issuance and sale of the Shares nor the consummation of the transactions
contemplated by this Agreement or the Prospectus will constitute a "change in
ownership resulting in a change of control" of the Company as defined in the
HEA and the implementing regulations of the U.S. Department of Education
thereunder.
(i) The accountants, Coopers & Xxxxxxx L.L.P., who
have certified or shall certify the financial statements included in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) are independent public accountants as required by the Act.
(j) The financial statements, together with related
- 13 -
14
schedules and notes, included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto), comply as to form with the
requirements of the Act and present fairly the consolidated financial position,
statements of income and changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; and the other financial and
statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company and the Subsidiaries. The pro forma financial data
included in the Registration Statement and the Prospectus have been prepared in
conformity with the applicable published rules and regulations of the
Commission with respect to pro forma financial information; the entries
reflected in such pro forma financial data have been properly applied; and the
assumptions used in such pro forma financial data are reasonable. All financial
statements, together with related schedules and notes, required by the Act to
be included in the Registration Statement and the Prospectus have been included
therein.
(k) The execution and delivery of, and the performance
by the Company of its obligations under, this Agreement and the Company Other
Agreements have been duly and validly authorized by the Company, and this
Agreement and the Company Other Agreements have been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery by you, constitute the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with their respective
terms, except as rights to indemnity and contribution hereunder 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 bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other laws relating to or affecting
creditors' rights generally and by general equitable principles.
(l) Except as disclosed in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any
- 14 -
15
change in the capital stock, or material increase in the short-term debt or
long-term debt, of the Company or any of the Subsidiaries, or any material
adverse change, or any development involving or which may reasonably be
expected to involve, a material adverse change, in the condition (financial or
other), business, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(m) Each of the Company and the Subsidiaries has good
and marketable title to all property (real and personal) described in the
Prospectus as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances, except such as are not material to the Company
and the Subsidiaries taken as a whole and except such as are described in the
Registration Statement and the Prospectus or in a document filed as an exhibit
to the Registration Statement and all the property described in the Prospectus
as being held under lease by each of the Company and the Subsidiaries is held
by it under valid, subsisting and enforceable leases.
(n) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.
(o) The Company and each of the Subsidiaries have such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities or accrediting commissions, including, without limitation, all
permits, licenses, franchises and authorizations required for participation in
Title IV Programs ("permits"), as are necessary to own their respective
properties and to conduct their respective businesses in the manner described
in the Prospectus, subject to such qualifications as may be set forth in the
Prospectus; the Company and each of the Subsidiaries have fulfilled and
performed all their respective material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permit, subject in
each case to such qualification as may be set forth in the Prospectus; and,
except as described in the Prospectus, none of such permits contains any
restriction that is materially burdensome to the Company and the Subsidiaries
taken as a whole.
(p) The Company and the Subsidiaries maintain systems
of internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial
- 15 -
16
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(q) To the Company's knowledge, neither the Company
nor any of its Subsidiaries nor any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(r) The Company and each of the Subsidiaries have
filed all tax returns required to be filed, and neither the Company nor any
Subsidiary is in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto. All such tax
returns are complete and correct, except where any failure of such tax returns
to be complete and correct would not have a material adverse effect on the
condition (financial or other), business, net worth or results of operations of
the Company and the Subsidiaries taken as a whole.
(s) No holder of any security of the Company has any
right to require registration of shares of Common Stock or any other security
of the Company because of the filing of the registration statement or
consummation of the transactions contemplated by this Agreement.
(t) The Company and the Subsidiaries own or possess
all patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights, if any, described in the Prospectus as being owned by them or any of
them or necessary for the conduct of their respective businesses, and the
Company is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company and the Subsidiaries with respect to the
foregoing.
(u) The Company is not now, and after sale of the
Shares to be sold by it hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds" will
not be, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(v) The Company has filed in a timely manner each
document or report required to be filed by it pursuant to the
- 16 -
17
Exchange Act and the rules and regulations thereunder; each such document or
report at the time it was filed conformed to the requirements of the Exchange
Act and the rules and regulations thereunder; and none of such documents or
reports contained an untrue statement of any material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(w) The Company has complied with all provisions of
Florida Statutes, Section 517.075, relating to issuers doing business with
Cuba.
(x) The College is (i) accredited by the Commission on
Higher Education of the Middle States Association of Colleges and Schools
("Middle States"), (ii) licensed by the D.C. Education Licensure Commission to
operate and to grant degrees and diplomas to students at all of its currently
operating campuses, licensed by the Virginia State Council of Higher Education
to operate and grant degrees and diplomas to students in the Commonwealth of
Virginia and licensed by the Maryland Higher Education Commission to operate
and to grant degrees and diplomas in the State of Maryland, and (iii) eligible
and certified to participate in federal student financial aid programs under
Title IV ("Title IV Programs") of the Higher Education Act of 1965, as amended
(the "HEA"), in each case subject to the limitations and qualifications set
forth in the authorizing documents from Middle States or the applicable agency,
as the case may be. None of Middle States, the D.C. Education Licensure
Commission, the Virginia State Council of Higher Education or the Maryland
Higher Education Commission or the U.S. Department of Education has initiated
or, to the knowledge of the Company, threatened proceedings for the suspension,
limitation, revocation or termination of such accreditation by Middle States,
any such license or approval by such licensing bodies or such certification to
participate in Title IV Programs, as the case may be. None of American Student
Assistance Corporation, any other student loan guaranty agency that has
guaranteed Title IV Program loans for students enrolled at the College, the
U.S. Department of Veterans Affairs or the U.S. Immigration and Naturalization
Service has initiated or, to the knowledge of the Company, threatened
proceedings for the suspension, limitation, revocation or termination of such
agency's approval of the College for the purpose of guaranteeing student loans
for the College's students or enrolling students.
(y) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company or any Subsidiary to or for the
benefit of any of the officers or directors of the Company or any Subsidiary or
any of the members of the families of any of them, except as disclosed in the
Registration Statement and the Prospectus.
- 17 -
18
(z) The Company and the Subsidiaries are in compliance
with all applicable existing federal, state, local and foreign laws and
regulations relating to the protection of human health or the environment or
imposing liability or requiring standards of conduct concerning any hazardous
materials (collectively, "environmental laws"). The term "hazardous materials"
means (i) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
(ii) any "hazardous waste" as defined by the Resource Conservation and Recovery
Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) and pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated under or
within the meaning of any other environmental law.
(aa) Except as disclosed in the Registration Statement
and the Prospectus, neither the Company nor any Subsidiary is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened. The Company is not aware that (i) any executive officer, key
employee of the Company or any Subsidiary named in the Prospectus or
significant group of employees of the Company or any Subsidiary plans to
terminate employment with the Company or any such Subsidiary, as the case may
be, or (ii) any executive officer or other employee of the Company or any
Subsidiary named in the Prospectus is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that has been
violated or would be violated by the past, present or proposed business
activities of the Company or any Subsidiary or of the activities of such
officer or employee on behalf of the Company or any Subsidiary. With respect to
each employee benefit plan, program and arrangement (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained or contributed to by the Company or the Subsidiaries, or with
respect to which the Company or the Subsidiaries could incur any liability
under ERISA (collectively, the "benefit plans"), no event has occurred and
there exists no condition or set of circumstances in connection with which the
Company or the Subsidiaries could be subject to any liability under the terms
of such benefit plan or applicable law (including, without limitation, ERISA
and the Internal Revenue Code of 1986, as amended (the "Code")) that could
materially adversely affect the condition (financial or other) business, net
worth or results of operations of the Company and the Subsidiaries taken as a
whole.
(bb) Except as disclosed in the Registration Statement
and the Prospectus, there are no contracts, agreements or understandings
between the Company or any Subsidiary and any third party that would give rise
to a valid claim against the Company, any Subsidiary or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
- 18 -
19
the transactions contemplated by this Agreement.
(cc) The Company and the Subsidiaries have not taken,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(dd) The College duly and properly filed an effective
election to be an S corporation under Section 1362 of the Code and the rules
and regulations thereunder, effective for its taxable year beginning _____, and
such election was in effect, and the College was an S corporation, continuously
during the period from ______________ up to and including ____________.
(ee) Each student loan in respect of which any
receivable is included and identified in "student loans receivable" in the
consolidated balance sheets of the Company included in the Registration
Statement, the Prepricing Prospectus and the Prospectus or any document or
report delivered by the Company hereunder (a) was originated by the Company in
the ordinary course of business and is being managed by the Company or
Education Loan Processing, Inc., a Virginia corporation, ("ELP"), as the case
may be, in accordance with the guidelines therefor of the Company or ELP, as
the case may be; (b) was created in compliance with all requirements of any
law, ordinance, administrative or governmental rule or regulation or any Middle
States standard applicable thereto and applicable to any party thereto; and
(c) all consents, approvals, authorization or other orders of or registrations
or filings with, Middle States or any court, regulatory body, administrative
agency or other governmental body, agency or official have been duly obtained,
effected or given and are in full force and effect as of the date hereof with
respect thereto.
8. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder represents and warrants to each Underwriter that:
(a) Such Selling Stockholder now has, and on the
Closing Date and any Option Closing Date will have, valid and marketable title
to the Shares to be sold by such Selling Stockholder, free and clear of any
lien, claim, security interest or other encumbrance, including, without
limitation, any restriction on transfer.
(b) Such Selling Stockholder now has, and on the
Closing Date and any Option Closing Date will have, full legal right, power and
authorization, and any approval required by law, to sell, assign, transfer and
deliver such Shares in the manner provided in this Agreement, and, upon
delivery of and payment for such Shares hereunder, the several Underwriters
will acquire
- 19 -
20
valid and marketable title to such Shares free and clear of any lien, claim,
security interest or other encumbrance.
(c) This Agreement and the Custody Agreement have been
duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and are the valid and binding agreements of such Selling
Stockholder enforceable against such Selling Stockholder in accordance with
their respective terms.
(d) Neither the execution and delivery of this
Agreement or the Custody Agreement by or on behalf of such Selling Stockholder
nor the consummation of the transactions herein or therein contemplated by or
on behalf of such Selling Stockholder requires any consent, approval,
authorization or order of, or filing or registration with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required under the Act or such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Shares) or conflicts or will conflict with or constitutes
or will constitute a breach of, or default under, or violates or will violate,
any agreement, indenture or other instrument to which such Selling Stockholder
is a party or by which such Selling Stockholder is or may be bound or to which
any of such Selling Stockholder's property or assets is subject, or any
statute, law, rule, regulation, ruling, judgment, injunction, order or decree
applicable to such Selling Stockholder or to any property or assets of such
Selling Stockholder.
(e) The Registration Statement and the Prospectus,
insofar as they relate to such Selling Stockholder, do not and will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(f) Such Selling Stockholder does not have any
knowledge or any reason to believe that the Registration Statement or the
Prospectus (or any amendment or supplement thereto) contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(g) The representations and warranties of such Selling
Stockholder in the Custody Agreement are, and on the Closing Date and any
Option Closing Date will be, true and correct.
(h) Such Selling Stockholder has not taken, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares, except for the lock-up
arrangements described in the Prospectus.
- 20 -
21
9. Indemnification and Contribution.
(a) The Company and each Selling Stockholder, jointly
and severally, agree to indemnify and hold harmless each of you and each other
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Prepricing Prospectus or in the Registration Statement or the Prospectus or
in any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Shares by such Underwriter to any person if a copy of the Prospectus shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to the several Underwriters in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company or
any Selling Stockholder may otherwise have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter in respect of
which indemnity may be sought against the Company or any Selling Stockholder,
such Underwriter or such controlling person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such Underwriter
or any such controlling person shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but
- 21 -
22
the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named
parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
indemnifying parties and such Underwriter or such controlling person shall have
been advised by its counsel that representation of such indemnified party and
any indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Underwriter or such controlling person). It is
understood, however, that the indemnifying parties shall, in connection with
any one such action, suit or proceeding or separate but substantially similar
or related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of only one separate firm of attorneys (in addition to any
local counsel) at any time for all such Underwriters and controlling persons
not having actual or potential differing interests with you or among
themselves, which firm shall be designated in writing by Xxxxx Xxxxxx Inc., and
that all such fees and expenses shall be reimbursed as they are incurred. The
indemnifying parties shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify
and hold harmless any Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement, each Selling Stockholder, and any
person who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to each Underwriter,
but only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, any
Selling Stockholder, or any such
- 22 -
23
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Company by paragraph (b) above (except that if the Company shall have assumed
the defense thereof such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at such Underwriter's expense), and
the Company, its directors, any such officer, the Selling Stockholder, and any
such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall
be in addition to any liability which any Underwriter may otherwise have.
(d) If the indemnification provided for in this
Section 9 is unavailable to an indemnified party under paragraphs (a) or (c)
hereof in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other hand from the offering of the Shares, or (ii)
if the allocation provided by clause (i) above, is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above, but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Selling 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, in each case as set forth in the table on the cover page
of the Prospectus; provided that, in the event that the Underwriters shall have
purchased any Additional Shares hereunder, any determination of the relative
benefits received by the Company, the Selling Stockholders or the Underwriters
from the offering of the Shares shall include the net proceeds (before
deducting expenses) received by the Company and the Selling Stockholders, and
the underwriting discounts and commissions received by the Underwriters, from
the sale of such Additional Shares, in each case computed on the basis of the
respective amounts set forth in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company
- 23 -
24
and the Selling Stockholders on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Selling Stockholders on the one hand or by the Underwriters
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by a pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in paragraph (d) above shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any claim
or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule II
hereto (or such numbers of Firm Shares increased as set forth in Section 12
hereof) and not joint.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or
contribution under this Section 9 shall be
- 24 -
25
paid by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred. The indemnity and contribution
agreements contained in this Section 9 and the representations and warranties
of the Company and the Selling Stockholders set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or the Selling
Stockholders or any person controlling the Company, (ii) acceptance of any
Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 9.
(h) The liability of any Selling Stockholder for
indemnification or contribution pursuant to this Section 9 shall be limited to
the net proceeds received by such Selling Stockholder from the sale of Shares
pursuant to this Agreement.
(i) The parties hereto hereby irrevocably consent to
the nonexclusive jurisdiction and venue of any Federal court located in the
City of New York, State of New York or to the extent such courts are not
available due to lack of jurisdiction, any court in the City of New York, State
of New York, in connection with any action or proceeding arising out of or
relating to this Agreement. The parties hereto hereby waive personal service
of any process in connection with any such action or proceeding and agree that
the service thereof may be made by certified or registered mail addressed to or
by personal delivery to such party at such party's address set forth pursuant
to Section 15 hereof. In the alternative, service may be effected upon any
party in any other form or manner permitted by law.
10. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the registration statement or a post-effective
amendment thereto to be declared effective before the offering of the Shares
may commence, the registration statement or such post-effective amendment shall
have become effective not later than 5:30 P.M., New York City time, on the date
hereof, or at such later date and time as shall be consented to in writing by
you, and all filings, if any, required by Rules 424 and 430A under the Act
shall have been timely made; no stop order suspending the effectiveness of the
registration statement shall have been issued and no proceeding for that
purpose shall
- 25 -
26
have been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the registration statement or the prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, or results of operations of the
Company or the Subsidiaries not contemplated by the Prospectus, which in your
opinion, as Representatives of the several Underwriters, would materially,
adversely affect the market for the Shares, or (ii) any event or development
relating to or involving the Company or any officer or director of the Company
or any Selling Stockholder which makes any statement made in the Prospectus
untrue or which, in the opinion of the Company and its counsel or the
Underwriters and their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact required by the Act
or any other law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the Prospectus
to reflect such event or development would, in your opinion, as Representatives
of the several Underwriters, materially adversely affect the market for the
Shares.
(c) You shall have received on the Closing Date, an
opinion of Xxxxx & Xxxxxxx L.L.P., counsel for the Company and the Selling
Stockholders, dated the Closing Date and addressed to you, as Representatives
of the several Underwriters, to the effect that:
(i) The Company is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Maryland with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), and is
duly registered and qualified to conduct its business and is in good standing
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and the Subsidiaries taken as a whole;
(ii) Each of the Subsidiaries is a
corporation, which is validly existing and in good standing under the laws of
the jurisdiction of its organization, with full corporate power and authority
to own, lease, and operate its properties and to
- 26 -
27
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto); and all the outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable. There are no outstanding
options, warrants or other rights calling for the issuance of, and such counsel
does not know of any commitment, plan or arrangement to issue, any shares of
capital stock of any Subsidiary or any security convertible into or
exchangeable or exercisable for capital stock of any Subsidiary;
(iii) The authorized and outstanding capital
stock of the Company is as set forth under the caption "Capitalization" in the
Prospectus; and the authorized and outstanding capital stock of the Company
conforms in all material respects as to legal matters to the description
thereof contained in the Prospectus under the caption "Description of Capital
Stock";
(iv) All the shares of capital stock of the
Company outstanding prior to the issuance of the Shares to be issued and sold
by the Company hereunder, have been duly authorized and validly issued, and are
fully paid and nonassessable;
(v) The Shares to be issued and sold to the
Underwriters by the Company hereunder have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and nonassessable and
free of any preemptive rights arising under the Maryland General Corporation
Law or, to the best knowledge of such counsel after reasonable inquiry, similar
rights that entitle or would entitle any person to acquire any Shares upon the
issuance thereof by the Company;
(vi) The form of certificates for the Shares
conforms to the requirements of the Maryland General Corporation Law;
(vii) The Registration Statement and all
post-effective amendments, if any, have become effective under the Act and, to
the best knowledge of such counsel after reasonable inquiry, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectus pursuant to Rule 424(b)
has been made in accordance with Rule 424(b);
(viii) The Company has the corporate power and
authority to enter into this Agreement and the Company Other Agreements and to
issue, sell and deliver the Shares to be sold by it to the Underwriters as
provided herein, and this Agreement
- 27 -
28
and the Company Other Agreements have been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery by you, are the valid, legal and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as enforcement of rights to indemnity and contribution hereunder may be
limited by Federal or state securities laws or principles of public policy and
subject to the qualification that the enforceability of the Company's
obligations hereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles;
(ix) Neither the Company nor any of the
Subsidiaries is in violation of its respective certificate or articles of
incorporation or bylaws, or other organizational documents, or to the best
knowledge of such counsel after reasonable inquiry, is in default in the
performance of any material obligation, agreement or condition contained in any
bond, debenture, note or other evidence of indebtedness, except as may be
disclosed in the Prospectus;
(x) Neither the issuance, offer, sale or
delivery of the Shares, the execution, delivery or performance of this
Agreement and the Company Other Agreements, compliance by the Company with the
provisions hereof or thereof, nor consummation by the Company of the
transactions contemplated hereby or thereby conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation or bylaws, or other organizational documents, of
the Company or any of the Subsidiaries, any agreement, indenture, lease or
other instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their respective properties is bound that is an
exhibit to the Registration Statement, or is known to such counsel after
reasonable inquiry (collectively, the "Identified Agreements"), will result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of the Subsidiaries pursuant to any of the
Identified Agreements, nor will any such action result in any violation of any
existing law, regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree known to
such counsel after reasonable inquiry, applicable to the Company, the
Subsidiaries or any of their respective properties, violates or will violate
any regulations (or any law pursuant to which such regulations were
promulgated) of the Commission, the U.S. Department of Education, the D.C.
Education Licensure Commission, the Virginia State Council of Higher Education,
the Maryland Higher Education Commission, the U.S. Department of Veterans
Affairs or the Immigration and Naturalization Service of the U.S.
- 28 -
29
Department of Justice or any judgment, injunction, order or decree applicable
to the Company or any of the Subsidiaries or any of their respective
properties, or will require a review or approval of the College's accreditation
by Middle States, reauthorization or relicensing of the College by the D.C.
Education Licensure Commission, the Virginia State Council of Higher Education
or the Maryland Higher Education Commission or recertification of the College
by the U.S. Department of Education for participation in Title IV Programs;
(xi) No consent, approval, authorization or
other order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency, or official is
required on the part of the Company, including, without limitation, the
Commission, the U.S. Department of Education, the D.C. Education Licensure
Commission, the Virginia State Council of Higher Education, the Maryland Higher
Education Commission, the U.S. Department of Veterans Affairs or the
Immigration and Naturalization Service of the U.S. Department of Justice
(except such as may be required under the Act and the Exchange Act, such as may
be required under state securities or Blue Sky laws governing the purchase and
distribution of the Shares and such as may be required by the Immigration and
Naturalization Service, all of which have been obtained or effected by the
Company) for the issuance, offer, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement and the Company Other
Agreements, compliance by the Company with the provisions hereof and thereof
and the consummation by the Company of the transactions contemplated hereby and
thereby;
(xii) The Registration Statement and the
Prospectus and any supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other financial and
statistical data included therein, as to which such counsel need not express
any opinion) comply as to form in all material respects with the requirements
of the Act; the statements in the Registration Statement and the Prospectus
with respect to written contracts, agreements or other legal documents, to the
extent that they involve matters of law or legal conclusions, have been
reviewed by such counsel and are accurate in all material respects; and the
statements in the Registration Statement and the Prospectus set forth under the
captions "Risk Factors - Potential Adverse Effects of Regulation," "Business -
Accreditation and Approvals" and "Licensing, Accreditation and Financial Aid
Regulation," to the extent that they involve matters of law or legal
conclusions, have been reviewed by such counsel and are accurate in all
material respects.
(xiii) To the best knowledge of such counsel
after reasonable inquiry, (A) other than as described or
- 29 -
30
contemplated in the Prospectus (or any supplement thereto), there are no legal
or governmental proceedings pending or threatened against the Company or any of
the Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement thereto)
and (B) there are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement that are not described or filed as
required, as the case may be;
(xiv) To the best knowledge of such counsel
after reasonable inquiry, neither the Company nor any of the Subsidiaries is in
violation of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries or of any
decree of any court or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries;
(xv) The statements in the Registration
Statement and Prospectus, insofar as they are descriptions of contracts,
agreements or other legal documents, or refer to statements of law or legal
conclusions, are accurate and present fairly the information required to be
shown;
(xvi) This Agreement and the Custody Agreement
have each been duly executed and delivered by or on behalf of each of the
Selling Stockholders and, assuming due authorization, execution and delivery by
the other parties thereto, are valid and binding agreements of each Selling
Stockholder enforceable against each Selling Stockholder in accordance with
their respective terms, except as enforcement of rights to indemnity and
contribution may be limited by Federal or state securities laws or principles
of public policy and subject to the qualification that the enforceability of
each Selling Stockholder's obligations may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights generally and by general equitable principles;
(xvii) Xxxxxxx College Educational Foundation
("SCEF") is a corporation duly incorporated and validly existing in good
standing under the laws of the State of ______ with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as currently conducted, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties and the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on
- 30 -
31
its condition (financial or otherwise), business properties, net worth or
results of operations. SCEF has corporate power and authority to enter into
this Agreement and the Custody Agreement and to sell and deliver the Shares to
be sold by it to the Underwriters as provided herein and this Agreement and the
Custody Agreement have been duly authorized by SCEF;
(xviii) To the best knowledge of such counsel
after reasonable inquiry, each Selling Stockholder has full legal right, power
and authorization, and any approval required by law, to sell, assign, transfer
and deliver good and marketable title to the Shares which such Selling
Stockholder has agreed to sell pursuant to this Agreement;
(xix) The execution and delivery of this
Agreement and the Custody Agreement by the Selling Stockholders and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, violate, result in a breach of or constitute a default under the
terms or provisions of any agreement, indenture, mortgage or other instrument
known to such counsel to which any Selling Stockholder is a party or by which
any of them or any of their assets or property is bound, or any court order or
decree or any law, rule, or regulation applicable to any Selling Stockholder or
to any of the property or assets of any Selling Stockholder;
(xx) Upon delivery of the Shares pursuant to
this Agreement and payment therefor as contemplated herein the Underwriters
will acquire good and marketable title to the Shares free and clear of any
perfected security interest or, to the best knowledge of such counsel after
reasonable inquiry, any lien, adverse claim, security interest, equity or other
encumbrance;
(xxi) The Company and each of the Subsidiaries
has full corporate power and authority, and all necessary governmental and
accreditation authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental regulatory and accrediting
officials and bodies (except where the failure so to have any such
authorizations, approvals, orders, licenses, certificates, franchises or
permits, individually or in the aggregate, would not have a material adverse
effect on the business, properties, operations or financial condition of the
Company and the Subsidiaries taken as a whole), to own their respective
properties and to conduct their respective businesses as now being conducted,
as described in the Prospectus;
(xxii) The Company owns all the outstanding
shares of capital stock of each of the Subsidiaries free and clear of any
perfected security interest or, to the best knowledge of such counsel after
reasonable inquiry, any lien, adverse claim, security interest, equity or other
encumbrance;
- 31 -
32
(xxiii) The Company and the Subsidiaries own all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights, if any, described in the Prospectus as being owned by them or any of
them or necessary for the conduct of their respective businesses, and such
counsel is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company and the Subsidiaries with respect to the
foregoing;
(xxiv) Except as described in the Prospectus,
there are no outstanding options, warrants or other rights calling for the
issuance of, and such counsel does not know of any commitment, plan or
arrangement to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable or exercisable for capital stock of
the Company;
(xxv) To the best knowledge of such counsel,
after reasonable inquiry, except as described in the Prospectus, there is no
holder of any security of the Company or any other person who has the right,
contractual or otherwise, to cause the Company to sell or otherwise issue to
them, or to permit them to underwrite the sale of, the Shares or the right to
have any Common Stock or other securities of the Company included in the
registration statement or the right, as a result of the filing of the
registration statement, to require registration under the Act of any shares of
Common Stock or other securities of the Company;
(xxvi) The College duly and properly filed an
effective election to be an S corporation under Section 1362 of the Code and
the rules and regulations thereunder, effective for its taxable year beginning
_____, and such election was in effect, and the College was an S corporation,
continuously during the period from ______________ up to and including
____________;
(xxvii) Neither the issuance and sale of the
Shares nor the consummation of the transactions contemplated by this Agreement
or the Prospectus requires the Company to file a Form 8-K with the Commission
and, therefore, neither the issuance and sale of the Shares nor the
consummation of the transactions contemplated by this Agreement or the
Prospectus will constitute a "change in ownership resulting in a change of
control" of the Company as defined in the HEA and the implementing regulations
of the U.S. Department of Education thereunder and will not require a review or
approval of the College's accreditation by Middle States, reauthorization or
relicensing of the College by the D.C. Education Licensure Commission, the
Virginia State Council of Higher Education or the Maryland Higher Education
Commission or recertification of the College by the U.S. Department of
Education for participation in Title IV Programs; and
- 32 -
33
(xxviii) Based on such counsel's review of
documents provided by the College, inquiry of officers of the College and
review of such matters of law as such counsel considers appropriate:
(A) Middle States reaffirmed the
College's accreditation to the extent and on the terms and conditions set forth
in the Statement of Affiliation Status effective November 30, 1995;
(B) on March 27, 1997, the D.C.
Education Licensure Commission extended the College's license through March 31,
1998, to operate at those locations and to offer those programs set forth in
Resolution No. D-97-07;
(C) on November 13, 1995, the
Virginia State Council of Higher Education granted the College a term of full
approval ending November 30, 1998, to offer certain degree programs at sites in
Northern Virginia and Fredericksburg as set forth in that certain letter from
Xxxxxx X. Xxxxxx to Xxx X. Xxxxxx dated November 13, 1995;
(D) on February 27, 1996, the
Secretary of the Maryland Higher Education Commission advised the College that
its application to operate in the State of Maryland as an out-of-state
institution was approved on the terms and conditions set forth in that certain
letter from Xxxxxxxx X. Xxxxxxxxxx, Ph.D., to Xxx X. Xxxxxx dated February 27,
1996;
(E)(1) on or about April 24,
1992, the College submitted to the Department an Application for Institutional
Eligibility and Certification noting a change of address for an additional
location from 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X., to 0000 Xxxxxx Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000;
(2) the Department certified the
College to participate in certain Title IV Programs effective June 15, 1992, as
set forth in that certain Program Participation Agreement between the College
and the Department executed for the Secretary on June 15, 1992 (the "PPA");
(3) the Department designated as
eligible those locations of the College listed in that certain letter from
Xxxxx X. Xxxxxx to Xxx Xxxxxx dated June 23, 1992;
(4) on or about June 18, 1993, the
College submitted to the Department an Application for Institutional
Participation noting an additional location at 0000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx;
(5) on or about April 11, 1995,
- 33 -
34
the Department issued an addendum to the College's PPA reflecting a change of
address for an additional location from 0000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000, to 0000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000;
(6) on or about January 18, 1996, the
College submitted to the Department an Application for Institutional
Participation reflecting a change of address for an additional location from
0000 XX Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, to 0000 Xxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx;
(7) on or about December 18, 1996,
the Department notified the College that its certification to participate in
Title IV Programs would expire on March 31, 1997, unless the Department
received from the College a materially complete application for recertification
on or before that date; and
(8) on March 14, 1997, the College
submitted an application for recertification to the Department.
Nothing has come to such counsel's attention that would lead such counsel to
conclude that since the dates of the actions identified above, Middle States,
the D.C. Education Licensure Commission, the Virginia State Council of Higher
Education, the Maryland Higher Education Commission or the Department has taken
any action to suspend, limit, revoke or terminate the College's accreditation,
licenses or certification to participate in the Title IV Programs, as
applicable. None of American Student Assistance Corporation, any other student
loan guaranty agency that has guaranteed Title IV Program loans for students
enrolled at the College, the U.S. Department of Veterans Affairs or the U.S.
Immigration and Naturalization Service has initiated or, to the best knowledge
of such counsel after reasonable inquiry, threatened proceedings for the
suspension, limitation, revocation or termination of such agency's approval of
the College for the purpose of guaranteeing student loans for the College's
students or enrolling students.
In addition, such counsel shall state that, although such counsel has
not undertaken, except as otherwise indicated in its opinion delivered pursuant
to this Section 10(c), to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof, and nothing has come to the attention of such counsel
that has caused it to believe that the Registration Statement at the time the
Registration Statement became effective, or the Prospectus, as of its date and
as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to
- 34 -
35
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that any amendment or supplement to the
Prospectus, as of its respective date, and as of the Closing Date or the Option
Closing Date, as the case may be, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and the notes thereto and the
schedules and other financial and statistical data included in the Registration
Statement or the Prospectus).
In rendering such statement and its opinion as aforesaid, counsel may
rely upon an opinion or opinions, each dated the Closing Date, of other counsel
retained by it or the Company as to laws of any jurisdiction other than the
United States, the State of New York or the State of Maryland, provided that
(1) each such local counsel is acceptable to the Representatives, (2) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to the Representatives and is, in form and
substance satisfactory to them and their counsel, and (3) counsel shall state
in its opinion that it believes that it and the Underwriters are justified in
relying thereon.
(d) You shall have received on the Closing Date an
opinion of Dow, Xxxxxx & Xxxxxxxxx, PLLC, counsel for the Underwriters, dated
the Closing Date and addressed to you, as Representatives of the several
Underwriters, with respect to the matters referred to in subparagraph (vii),
the first clause of subparagraph (xii) and the penultimate paragraph of the
foregoing Section 10(c) and such other related matters as you may request.
(e) You shall have received letters addressed to you,
as Representatives of the several Underwriters, and dated the date hereof and
the Closing Date from Coopers & Xxxxxxx L.L.P., independent certified public
accountants, and Wooden & Xxxxxx, independent certified public accountants,
substantially in the forms heretofore approved by you.
(f) (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or contemplated in
the Registration Statement or the Prospectus (or any amendment or Supplement
thereto); (iii) there shall not have been, since the respective dates as of
which
- 35 -
36
information is given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and
the Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall
not have any liabilities or obligations, direct or contingent (whether or not
in the ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall
have received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company (or such other
officers as are acceptable to you), to the effect set forth in this Section
10(f) and in Section 10(g) hereof.
(g) The Company shall not have failed at or prior to
the Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date.
(h) All the representations and warranties of the
Selling Stockholders contained in this Agreement shall be true and correct on
and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and you shall have received a certificate, dated the
Closing Date and signed by or on behalf of the Selling Stockholders to the
effect set forth in this Section 10(h) and in Section 10(i) hereof.
(i) The Selling Stockholders shall not have failed at
or prior to the Closing Date to have performed or complied with any of their
agreements herein contained and required to be performed or complied with by
them hereunder at or prior to the Closing Date.
(j) The Shares shall have been listed or approved for
listing upon notice of issuance on the Nasdaq National Market.
(k) The Sellers shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
requested.
(l) No suit, proceeding or other action by Middle
States or any governmental or regulatory body (including, without limitation,
the U.S. Department of Education, the D.C. Education Licensure Commission, the
Virginia State Council of Higher
- 36 -
37
Education or the Maryland Higher Education Commission) affecting the Company
which is material and adverse to the Company or which affects or may affect
adversely the ability of the Company to perform its obligations under this
Agreement shall have been instituted or threatened, and there shall have
occurred no material adverse development in any suit, proceeding or other
action instituted prior to the effective date of the Registration Statement.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of the Company or
any Attorney-in-Fact or any Selling Stockholder and delivered to you, as
Representatives of the Underwriters, or to counsel for the Underwriters, shall
be deemed a representation and warranty by the Company, the Selling
Stockholders or the particular Selling Stockholder, as the case may be, to each
Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 10, except that, if
any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (h) shall be dated
the Option Closing Date in question and the opinions called for by paragraphs
(c) and (d) shall be revised to reflect the sale of Additional Shares.
11. Expenses. The Sellers (in proportion to the number of
Shares being offered by each of them, including any Additional Shares which the
Underwriters shall have elected to purchase) agree to pay the following costs
and expenses and all other costs and expenses incident to the performance by
them of their obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
any Blue Sky Memoranda and all other agreements or documents printed (or
reproduced) and delivered in connection
- 37 -
38
with the offering of the Shares; (v) the listing of the Shares on the Nasdaq
National Market; (vi) the registration or qualification of the Shares for offer
and sale under the securities or Blue Sky laws of the several states as
provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction and delivery of any Blue Sky Memoranda and such
registration and qualification); (vii) the filing fees and the fees and
expenses of counsel for the Underwriters in connection with any filings
required to be made with the NASD; (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; and (ix) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company and the Selling
Stockholders.
12. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Company and the Selling Stockholders.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase is
not more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number
of Firm Shares set forth opposite its name in Schedule II hereto bears to the
aggregate number of Firm Shares set forth opposite the names of all
non-defaulting Underwriters or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of Xxxxx
Xxxxxx Inc., to purchase the Shares which such defaulting Underwriter or
Underwriters are obligated, but fail or refuse, to purchase. If any one or
more of the Underwriters shall fail or refuse to purchase Shares which it or
they are obligated to purchase on the Closing Date and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more
- 38 -
39
non-defaulting Underwriters or other party or parties approved by you and the
Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement. The
term "Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule II hereto who, with your approval
and the approval of the Company, purchases Shares which a defaulting
Underwriter is obligated, but fails or refuses, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be subject
to termination in your absolute discretion, without liability on the part of
any Underwriter to the Company or any Selling Stockholder, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market shall have been suspended
or materially limited, (ii) a general moratorium on commercial banking
activities in New York or Washington, D.C. shall have been declared by either
federal or state authorities, or (iii) there shall have occurred any outbreak
or escalation of hostilities or other international or domestic calamity,
crisis or change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it, in
your judgment, impracticable or inadvisable to commence or continue the
offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently confirmed
by letter.
14. Information Furnished by the Underwriters. The statements
set forth in the last paragraph on the cover page, the stabilization legend on
the inside cover page, and the statements in the first and third paragraphs
under the caption "Underwriting" in any Prepricing Prospectus and in the
Prospectus, constitute the only information furnished by or on behalf of the
Underwriters through you as such information is
- 39 -
40
referred to in Sections 7(b) and 9 hereof.
15. Miscellaneous. Except as otherwise provided in Sections 2,
5, 12 and 13 hereof, notice given pursuant to any provision of this Agreement
shall be in writing and shall be delivered (i) if to the Company, at the office
of the Company at 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attention:
Xxx X. Xxxxxx, President; or (ii) if to the Selling Stockholders, at 0000 00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attention: Xxx X. Xxxxxx, or (iii) if
to you, as Representatives of the several Underwriters, care of Xxxxx Xxxxxx
Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager,
Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 9 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from any Underwriter of any of the Shares
in his status as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
- 40 -
41
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
XXXXXXX EDUCATION, INC.
By:
------------------------------------
Each of the Selling Stockholders named
in Schedule I hereto
By:
------------------------------------
Attorney-in-Fact
By:
------------------------------------
Attorney-in-Fact
- 41 -
42
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule II
hereto.
XXXXX XXXXXX INC.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
As Representatives of the Several Underwriters
By: XXXXX XXXXXX INC.
By:
------------------------
Director
- 42 -
43
SCHEDULE I
XXXXXXX EDUCATION, INC.
Part A - Firm Shares
Number of
Selling Stockholders Firm Shares
-------------------- -----------
Xxx X. Xxxxxx and Xxxxxxx X. Xxxxxx, 450,000
as joint tenants with rights of
survivorship
Xxxxxxx College Education Foundation 100,000
-------
Total . . . . . . . 550,000
-------
- 43 -
44
SCHEDULE II
XXXXXXX EDUCATION, INC.
Number of Number of
Underwriter Firm Shares Underwriter Firm Shares
----------- ----------- ----------- -----------
Xxxxx Xxxxxx Inc. . . . .
Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated . . . . . .
Total . . . . .
- 44 -
45
Exhibit A
Subsidiaries
Xxxxxxx College, Inc., a Maryland corporation
Education Loan Processing, Inc., a Virginia corporation
- 45 -
