-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wx8d+CeoM+S+kM48um0odXt6zLnPe3l0y2im1XkQgv1pMQRySr5d05yoKP0Bcg60 SmLGux73zrfLnjNbauFjAg== 0000950131-98-001263.txt : 19980224 0000950131-98-001263.hdr.sgml : 19980224 ACCESSION NUMBER: 0000950131-98-001263 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980223 SROS: NONE GROUP MEMBERS: FUJI AMERICA HOLDINGS, INC. GROUP MEMBERS: HELLER EQUITY CAPITAL CORPORATION GROUP MEMBERS: HELLER FINANCIAL INC GROUP MEMBERS: THE FUJI BANK, LIMITED SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CAREER EDUCATION CORP CENTRAL INDEX KEY: 0001046568 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 393932190 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-53623 FILM NUMBER: 98546917 BUSINESS ADDRESS: STREET 1: 2800 WEST HIGGINS ROAD, SUITE 790 CITY: HOFFMAN ESTATES STATE: IL ZIP: 60195 BUSINESS PHONE: 8477813600 MAIL ADDRESS: STREET 1: 2800 WEST HIGGINS ROAD STREET 2: SUITE 790 CITY: HOFFMAN ESTATES STATE: IL ZIP: 60195 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HELLER FINANCIAL INC CENTRAL INDEX KEY: 0000046738 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 361208070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 BUSINESS PHONE: 3124417000 MAIL ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 FORMER COMPANY: FORMER CONFORMED NAME: HELLER WALTER E & CO /NEW/ DATE OF NAME CHANGE: 19850503 SC 13D 1 SCHEDULE 13D ------------------------------- / OMB APPROVAL / ------------------------------- / OMB Number: 3235-0145 / / Expires: August 31, 1999 / / Estimated average burden / / hours per response .. 14.90 / ------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ____)* Career Education Corporation ________________________________________________________________________________ (Name of Issuer) common stock, par value $.01 per share ________________________________________________________________________________ (Title of Class of Securities) 141665 10 9 _______________________________________________________________ (CUSIP Number) Charles P. Brissman, Esq. (312/441-6798) Heller Equity Capital Corporation, 500 W. Monroe St., Suite 1000, Chicago, Illinois 60661 ________________________________________________________________________________ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 3, 1998 _______________________________________________________________ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 46 Pages Exhibit Index on Page 12 Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 1746 (10-97) - ----------------------- --------------------- CUSIP NO. 141665 10 9 13D PAGE 2 OF 46 PAGES - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) The Fuji Bank, Limited - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 AF - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 not applicable - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Japan - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF none SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 none OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING none PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 none - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 none - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [X] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 0% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 BK - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! - ----------------------- --------------------- CUSIP NO. 141665 10 9 13D PAGE 3 OF 46 PAGES - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Fuji America Holdings, Inc. (36-4200926) - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 AF - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 not applicable - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware, United States of America - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF none SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 none OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING none PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 none - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 none - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [X] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 0% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 HC, CO - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! - ----------------------- --------------------- CUSIP NO. 141665 10 9 13D PAGE 4 OF 46 PAGES - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Heller Financial, Inc. (36-1208070) - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 AF - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 not applicable - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware, United States of America - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF none SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 none OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING none PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 none - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 none - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [X] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 0% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 CO - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! - ----------------------- --------------------- CUSIP NO. 141665 10 9 13D PAGE 5 OF 46 PAGES - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Heller Equity Capital Corporation (13-3055750) - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 OO - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 not applicable - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware, United States of America - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 2,555,276 SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 none OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 2,555,276 PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 none - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,555,276 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] not applicable - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 36.0% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 CO - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 141665 10 9 Page 6 of 46 ADDENDUM TO COVER PAGES ----------------------- This Schedule 13D is filed by The Fuji Bank, Limited, a Japanese banking corporation ("Fuji"), Fuji America Holdings, Inc., a Delaware corporation which is a wholly-owned subsidiary of Fuji ("FAHI"), Heller Financial, Inc., a Delaware corporation which is a wholly-owned subsidiary of FAHI ("HFI"), and Heller Equity Capital Corporation, a Delaware corporation which is a wholly-owned subsidiary of HFI ("HECC"). On February 3, 1998, Career Education Corporation, a Delaware corporation of which HECC was the majority stockholder (the "Company"), consummated an initial public offering (the "IPO") of its common stock, par value $.01 per share (the "Common Stock"). In connection with the consummation of this offering, the Company registered the Common Stock under Section 12 of the Securities Exchange Act of 1934, as amended (the "Act"). Consequently, HECC now owns in excess of five percent of a class of equity security (the Common Stock) which is registered under Section 12 of the Act. Fuji, FAHI and HFI join HECC in filing this Schedule 13D solely because of their status as indirect parent companies (in the cases of Fuji and FAHI) and direct parent company (in the case of HFI) of HECC. Fuji, FAHI and HFI declare that the filing of this Schedule 13D is not an admission by Fuji, FAHI or HFI that it is the beneficial owner of any of the Company's securities for purposes of Sections 13(d) or 13(g) of the Act, and Fuji, FAHI and HFI expressly disclaim beneficial ownership of any of the Company's securities. Item 1. Security and Issuer This Schedule 13D relates to the Common Stock. According to the final prospectus for the IPO, the Company's principal executive offices are located at 2800 West Higgins Road, Suite 790, Hoffman Estates, Illinois 60195. Item 2. Identity and Background Fuji is a Japanese banking corporation engaged in the business of commercial banking. Its principal office in the United States is located at Two World Trade Center, New York, New York 10048. FAHI is a Delaware corporation formed by Fuji as a holding company to own HFI and other affiliates of Fuji. Its principal office is located at 500 West Monroe Street, Suite 1000, Chicago, Illinois 60661. HFI is a Delaware corporation engaged in various aspects of the commercial finance business. Its principal office is located at 500 West Monroe Street, Suite 1000, Chicago, Illinois 60661. HECC is a Delaware corporation and a "small business investment company" licensed by the Small Business Administration under the Small Business Investment Act of 1958, as amended. Its principal office is located at 500 West Monroe Street, Suite 1000, Chicago, Illinois 60661. The name, principal occupation and citizenship of each director and executive officer of FAHI, HFI and HECC are set forth on Exhibit 1. The business address of each such individual is in care of HECC, 500 West Monroe Street, Suite 1000, Chicago, Illinois 60661. CUSIP No. 141665 10 9 Page 7 of 46 During the last five years, none of Fuji, FAHI, HFI or HECC has been convicted in a criminal proceeding. To the knowledge of Fuji, FAHI, HFI and HECC, none of the individuals listed on Exhibit 1 has, during the last five years, been convicted in a criminal proceeding. During the last five years, none of Fuji, FAHI, HFI or HECC has been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws, and none of Fuji, FAHI, HFI or HECC is currently subject to any such judgment, decree or final order. To the knowledge of Fuji, FAHI, HFI and HECC, none of the individuals listed on Exhibit 1 has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws, and, to the knowledge of Fuji, FAHI, HFI and HECC, none of the individuals listed on Exhibit 1 is currently subject to any such judgment, decree or final order. Item 3. Source and Amount of Funds or Other Consideration Prior to the consummation of the IPO, the Company's authorized capital stock consisted of four classes of common stock and three classes of preferred stock. None of these classes of was registered under Section 12 of the Act. HECC owned shares of two classes of the Company's common stock (as well as warrants to purchase shares of a third class of the Company's common stock) and two classes of the Company's preferred stock. In connection with the consummation of the IPO on February 3, 1998, (a) the Company amended its Amended and Restated Certificate of Incorporation to provide, among other things, for: (i) only two classes of authorized capital stock, the Common Stock and a new class of preferred stock; (ii) the conversion of all outstanding shares of the Company's common stock into shares of Common Stock at the rate of 9.376061 shares of Common Stock for each share of previously-outstanding common stock; and (iii) the conversion of all outstanding shares of the Company's preferred stock (including any cumulated or accrued paid-in-kind dividends thereon) into shares of Common Stock at a rate determined by dividing the liquidation value of such shares of preferred stock (including the liquidation value of any cumulated or accrued paid-in- kind dividends thereon) by $16.00 (the initial public offering price of Common Stock), (b) all outstanding warrants (other than warrants held by a former lender to the Company) to purchase shares of the Company's previously-existing classes of common stock were exercised for shares of Common Stock and (c) HECC transferred 147,383 shares of Common Stock to certain of its former employees (the transactions described in (a), (b) and (c), collectively, the CUSIP No. 141665 10 9 Page 8 of 46 "Transactions"). The Transactions resulted in HECC's owning 2,549,944 shares of Common Stock (the "HECC Shares"). HECC paid no separate consideration for the HECC Shares. In connection with the consummation of the IPO, the Company granted stock options (the "HECC Directors' Stock Options") to acquire 16,000 shares of Common Stock to Thomas B. Lally (with respect to 8,000 shares of Common Stock) and Patrick K. Pesch (also with respect to 8,000 shares of Common Stock), both of whom are executive officers of HECC and serve as directors of the Company, pursuant to the Company's 1998 Non-Employee Directors' Stock Option Plan. None of HECC, Mr. Lally and Mr. Pesch paid any separate consideration for the HECC Directors' Stock Options. The HECC Directors' Stock Options are exercisable with respect one- third of the underlying shares of Common Stock on each of the date of grant (January 28, 1998) and the first two anniversaries thereof. If exercised, the HECC Directors' Stock Options will be exercised for the benefit of HECC. The 2,555,276 shares of Common Stock reported in this Schedule 13D as beneficially owned by HECC include the HECC Shares and 5,332 additional shares of Common Stock for which the HECC Directors' Stock Options are currently exercisable. Item 4. Purpose of Transaction HECC has acquired the HECC Shares for investment purposes, and may sell some or all of the HECC Shares from time to time in the future (subject to the terms of the Lock-Up Agreement (as defined in Item 6 below), the Registration Rights Agreement (as also defined in Item 6 below), if applicable, and applicable state and federal securities laws). None of Fuji, FAHI, HFI and HECC has any current plans which relate to or would result in (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (b) an extraordinary corporate transaction involving the Company or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any change in the present Board of Directors or management of the Company (except as provided for in the Board Representation Agreement (as defined in Item 6 below)); (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's charter or bylaws or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or (j) any action similar to any of those enumerated above. Item 5. Interest in Securities of the Issuer (a) According to the final prospectus for the IPO, the Company had 6,666,358 outstanding shares of Common Stock on January 28, 1998; however, the Company has informed HECC that the underwriters of the IPO exercised in full their over-allotment option for 427,500 shares of Common Stock on February 3, 1998. Consequently, HECC believes that the Company CUSIP No. 141665 10 9 Page 9 of 46 now has 7,093,858 outstanding shares of Common Stock. Assuming full exercise, for the benefit of HECC, of the HECC Directors' Stock Options which are currently exercisable (which results in HECC's acquiring 5,332 additional shares of Common Stock), HECC beneficially owns 2,555,276 shares of Common Stock, or 36.0% of the outstanding Common Stock. (b) Assuming full exercise, for the benefit of HECC, of the HECC Directors' Stock Options which are currently exercisable (which results in HECC's acquiring 5,332 additional shares of Common Stock), HECC has the sole power to vote or to direct the vote of, and the sole power to dispose of or to direct the disposition of, 2,555,276 shares of Common Stock. (c) Except as described in Item 3 above, none of Fuji, FAHI, HFI and HECC has effected any transactions in the Common Stock during the past 60 days. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationship With Respect to Securities of the Issuer HECC and the Company are parties to a letter agreement, dated January 27, 1998 (the "Board Representation Agreement"), which entitles HECC to designate two individuals for nomination to the Company's Board of Directors. Mr. Lally and Mr. Pesch are HECC's initial designees pursuant to the Board Representation Agreement, and they currently serve as directors of the Company. Pursuant to the Board Representation Agreement, the Company has agreed to solicit proxies from the Company's stockholders to vote in favor of such designees, and to appoint such designees to the Compensation and Audit Committees of the Company's Board of Directors. The number of designees will be reduced to one if HECC no longer owns at least 25% of the aggregate voting power of the Company. The Board Representation Agreement terminates if HECC no longer owns at least 10% of the aggregate voting power of the Company. A copy of the Board Representation Agreement is attached as Exhibit 2, and is incorporated by reference into this Item 6. HECC and the Company are also parties to that certain Registration Rights Agreement, dated as of February 3, 1998 (the "Registration Rights Agreement"), which entitles HECC, subject to certain exceptions, to demand that the Company register shares of Common Stock held by HECC on up to three occasions and to cause the Company to register such shares in any registration by the Company for the Company's own account or for the account of other security holders. In addition, at any time that the Company is eligible to use Securities and Exchange Commission Form S-3 for registration of securities, the Registration Rights Agreement entitles HECC, subject to certain exceptions, to cause the Company to register shares of Common Stock held by HECC on a registration statement on Form S-3. The HECC Shares and any shares of Common Stock acquired by HECC as a result of the exercise, for HECC's benefit, of the HECC Directors' Stock Options are covered by the Registration Rights Agreement. A copy of CUSIP No. 141665 10 9 Page 10 of 46 the Registration Rights Agreement is attached as Exhibit 3, and is incorporated by reference into this Item 6. In connection with the consummation of the IPO, HECC executed a letter agreement, dated January 23, 1998 (the "Lock-Up Agreement"), in favor of the Company and Credit Suisse First Boston Corporation and Smith Barney Inc., as representatives of the underwriters of the IPO. Pursuant to the Lock-Up Agreement, HECC has agreed, subject to certain exceptions, not to effect any transactions in the Common Stock for a period of 180 days from February 3, 1998 (the date of the final prospectus for the IPO) without the prior written consent of Credit Suisse First Boston Corporation. A copy of the Lock-Up Agreement is attached as Exhibit 4, and is incorporated by reference into this Item 6. Item 7. Material to be Filed as Exhibits Exhibit 1: Directors and Executive Officers of FAHI, HFI and HECC Exhibit 2: Letter Agreement, dated January 27, 1998, between HECC and the Company Exhibit 3: Registration Rights Agreement, dated as of February 3, 1998, between HECC and the Company Exhibit 4: Letter Agreement, dated January 23, 1998, by HECC in favor of the Company and Credit Suisse First Boston Corporation and Smith Barney Inc., as representatives Exhibit 5: Power of Attorney from The Fuji Bank, Limited [signature page follows] CUSIP No. 141665 10 9 Page 11 of 46 SIGNATURES ---------- After reasonable inquiry, and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. February 12, 1998 THE FUJI BANK, LIMITED By: /s/ D.H. Snider -------------------------- Debra H. Snider Attorney-in-Fact FUJI AMERICA HOLDINGS, INC. By: /s/ D.H. Snider -------------------------- Debra H. Snider Secretary HELLER FINANCIAL, INC. By: /s/ D.H. Snider -------------------------- Debra H. Snider Chief Administrative Officer and General Counsel HELLER EQUITY CAPITAL CORPORATION By: /s/ Patrick K. Pesch -------------------------- Patrick K. Pesch Senior Vice President CUSIP No. 141665 10 9 Page 12 of 46 EXHIBIT INDEX -------------
PAGE ---- Exhibit 1 Directors and Executive Officers of FAHI, HFI and HECC 13 Exhibit 2 Letter Agreement, dated January 27, 1998, between HECC and 20 the Company Exhibit 3 Registration Rights Agreement, dated as of February 3, 1998, between 24 HECC and the Company Exhibit 4 Letter Agreement, dated January 23, 1998, by HECC in favor of the 44 Company and Credit Suisse First Boston Corporation and Smith Barney Inc., as representatives Exhibit 5 Power of Attorney from The Fuji Bank, Limited 46
EX-1 2 DIRECTORS AND EXECUTIVE OFFICERS CUSIP No. 141665 10 9 Page 13 of 46 EXHIBIT 1 --------- DIRECTORS OF FUJI AMERICA HOLDINGS, INC.
Name Principal Occupation Citizenship ---- -------------------- ----------- Richard J. Almeida Director, FAHI, HFI, Heller International United States Group, Inc. ("HIG"), Heller International Holdings, Inc. ("HIHI") and HECC; Chairman of the Board and Chief Executive Officer, HFI, HIG, HIHI Yukihiko Chayama Director, FAHI, HFI, HIG and HIHI; Chief Japan Representative, Fuji, Washington, DC Representative Office; Executive Vice President and General Manager, Fuji, Americas Division Osamu Ogura Director, FAHI, HFI, HIG and HIHI; Senior Japan Vice President and Deputy General Manger, Fuji, Americas Division Atsushi Takano Director and Chairman, FAHI; Director, HFI, Japan HIG, HIHI and Fuji; Managing Director, Fuji Kenichiro Tanaka Director, President and Chief Executive Japan Officer, FAHI; Executive Vice President, HFI; Director, HFI, HIG and HIHI
CUSIP No. 141665 10 9 Page 14 of 46 EXECUTIVE OFFICERS OF FUJI AMERICA HOLDINGS, INC.
Name Principal Occupation Citizenship ---- -------------------- ----------- Atsushi Takano Director and Chairman, FAHI; Director, HFI, Japan HIG, HIHI and Fuji; Managing Director, Fuji Kenichiro Tanaka Director, President and Chief Executive Japan Officer, FAHI; Executive Vice President, HFI; Director, HFI, HIG and HIHI Debra H. Snider Secretary, FAHI; Chief Administrative United States Officer, HFI; General Counsel, HFI, HIG and HIHI; Executive Vice President and Secretary, HFI, HIG and HIHI Anthony O'B. Beirne Treasurer, FAHI; Senior Vice President and United States Treasurer, HFI
CUSIP No. 141665 10 9 Page 15 of 46 DIRECTORS OF HELLER FINANCIAL, INC.
Name Principal Occupation Citizenship ---- -------------------- ----------- Richard J. Almeida Director, FAHI, HFI, HIG, HIHI and United States HECC; Chairman of the Board and Chief Executive Officer, HFI, HIG, HIHI Yukihiko Chayama Director, FAHI, HFI, HIG and HIHI; Chief Japan Representative, Fuji, Washington, DC Representative Office; Executive Vice President and General Manager, Fuji, Americas Division Tsutomu Hayano Director, HFI, Fuji; General Manager, Japan Fuji, New York Branch; Chairman, The Fuji Bank and Trust Co. Mark Kessel Partner, Shearman & Sterling United States Michael J. Litwin Director, HFI, HIG, HIHI and HECC; United States Executive Vice President and Chief Credit Officer, HFI; Executive Vice President, HIG, HIHI, HECC Dennis P. Lockhart Director, HFI; Director and President, United States HIG and HIHI; Director Tri Valley Corporation Lauralee E. Martin Director, HFI, HIG, and HIHI; United States Executive Vice President and Chief Financial Officer, HFI, HIG and HIHI; Director, Gables Residential Trust Hideo Nakajima Director, HFI; Executive Vice President Japan and General Manager, Fuji, Los Angeles Agency Osamu Ogura Director, FAHI, HFI, HIG and HIHI; Senior Japan Vice President and Deputy General Manger, Fuji, Americas Division Masahiro Sawada Director, HFI, HIG and HIHI; Senior Vice Japan President, HFI
CUSIP No. 141665 10 9 Page 16 of 46
Name Principal Occupation Citizenship ---- -------------------- ----------- Takeshi Takahashi Director, HFI; Executive Vice President and Japan General Manager, Fuji, Chicago Branch Atsushi Takano Director and Chairman, FAHI; Director, HFI, Japan HIG, HIHI and Fuji; Managing Director, Fuji Kenichiro Tanaka Director, President and Chief Executive Japan Officer, FAHI; Executive Vice President, HFI; Director, HFI, HIG and HIHI Kenichi Tomita Director, HFI; Executive Vice President and Japan General Manager, Fuji, Credit Division for the Americas
CUSIP No. 141665 10 9 Page 17 of 46 EXECUTIVE OFFICERS OF HELLER FINANCIAL, INC.
Name Principal Occupation Citizenship ---- -------------------- ------------ Mark A. Abbott Group President, Corporate Finance United States Group, HFI Anthony O'B. Beirne Treasurer, FAHI; Senior Vice President United States and Treasurer, HFI Michael P. Goldsmith Group President, Heller Real Estate United States Financial Services and Project Finance Division, HFI John L. Guy, Jr. Group President, Heller First Capital United States Division, HFI; President, Heller First Capital Corp.; Director, Monetta Trust Jay S. Holmes Group President, Equipment Finance and United States Leasing Group, HFI; President, Heller Financial Leasing, Inc. Lawrence G. Hund Senior Vice President and Controller, HFI, United States HIG and HIHI David J. Kantes Group President, Heller Business Credit United States Group, HFI Scott Miller Group President, Heller Business Credit United States Group, HFI Michael J. Roche Group President, Current Asset Management United States Group, HFI Charles G. Schultz Group President, Sales Finance Group, HFI United States Debra H. Snider Secretary, FAHI; Chief Administrative United States Officer, HFI; General Counsel, HFI, HIG and HIHI; Executive Vice President and Secretary, HFI, HIG and HIHI Frederick E. Wolfert President and Chief Operating Officer, United States HFI
CUSIP No. 141665 10 9 Page 18 of 46 DIRECTORS OF HELLER EQUITY CAPITAL CORPORATION
Name Principal Occupation Citizenship ---- -------------------- ------------ Richard J. Almeida Director, FAHI, HFI, HIG, HIHI and United States HECC; Chairman of the Board and Chief Executive Officer, HFI, HIG, HIHI Michael J. Litwin Director, HFI, HIG, HIHI and HECC; United States Executive Vice President and Chief Credit Officer, HFI; Executive Vice President, HIG, HIHI and HECC
CUSIP No. 141665 10 9 Page 19 of 46 EXECUTIVE OFFICERS OF HELLER EQUITY CAPITAL CORPORATION
Name Principal Occupation Citizenship ---- -------------------- ----------- Thomas B. Lally President, HECC United States Michael J. Litwin Director, HFI, HIG, HIHI and United States HECC, Executive Vice President and Chief Credit Officer, HFI; Executive Vice President, HIG, HIHI, HECC Patrick K. Pesch Senior Vice President, HECC United States Hugh E. Wilder Senior Vice President, HECC United States Timothy J. Eichenlaub Senior Vice President, HECC United States Daniel O'Donnell Senior Vice President, HECC United States
EX-2 3 LETTER AGREEMENT DATED 1/27/98 Exhibit 2 (4 pages) Page 20 of 46 Heller Equity Capital Corporation 500 West Monroe Street Chicago, Illinois 60661 312-441-7000 - -------------------------------------------------------------------------------- Heller Equity Capital Corporation January 27, 1998 Career Education Corporation 2800 West Higgins Road Hoffman Estates, Illinois 60195 Attention: John M. Larson, Chairman and Chief Executive Officer Ladies and Gentlemen: The purpose of this letter is to set forth the agreement of Career Education Corporation (the "Company") and Heller Equity Capital Corporation ("Heller") regarding representation of Heller on the Company's Board of Directors (the "Board") following an initial public offering by the Company of its common stock, $0.01 par value per share, pursuant to a registration statement on Form S-1, Registration No. 333 - 38545 filed with the U.S. Securities Exchange Commission (the "IPO"), and certain related matters. 1. Heller Directors. Subject to approval by the Company's stockholders, in connection with the IPO, the Company agrees that Article V of the Company's Amended and Restated Certificate of Incorporation (the "Certificate") as filed with the secretary of the State of Delaware prior to the consummation of the IPO shall designate a person nominated by Heller for one (1) Class I director's position (the "Heller I Director") and an additional person nominated by Heller for one (1) Class III director's position (the "Heller III Director") on the Company's initial post-IPO board of directors. (Collectively, the Heller I Director and the Heller III Director are sometimes referred to herein as the "Heller Directors.") Heller hereby designates Patrick K. Pesch as the initial Heller I Director and Thomas B. Lally as the initial Heller III Director. Subject to Sections 3 and 5 below, for each annual meeting at which the term of any Heller Director expires, the Company shall (a) cause such Heller Director (or any replacement therefor designated in writing by Heller prior to the last day for nomination by stockholders of directors for consideration at such meeting, as set forth in the Company's By-laws) to be nominated for the term applicable to the Class of the Heller Director proposed for re-election at such meeting, (b) solicit proxies ("Management Proxies") from the Company's stockholders to vote in favor of the election of such Heller Director, (c) cause the shares represented by Management Proxies which are duly executed and returned to the Company to appear for purposes of a quorum at such annual meeting and (d) vote the shares represented by such Management Proxies which are duly executed and returned to the Company in favor of such Heller Director. Notwithstanding the foregoing, the Company shall not be required to vote any Management Proxy in favor of a Heller Director where (i) the stockholder granting such Management Proxy appears at such meeting to vote or otherwise revokes such Management Proxy or (ii) where the stockholder granting such Management Proxy withholds authority to vote for the election of the Heller Director. Whenever a person then designated as a Heller Director shall cease to serve as a director of the Company for any reason prior to the expiration of the term for which such Heller Director was elected, the Company shall cause the resulting vacancy (and the resulting vacancies in committees of the Board of Directors) to be filled by another person designated by Heller for the remainder of the term of the Heller Director who ceased to serve as a director. 2. Committees. At all times during the tenure of one or more Heller Directors on the Board of Directors of the Company, the Company shall cause a Heller Director to be appointed to each of the audit and compensation committees, and the nominating committee (if established as Board), of the Board of Directors (and any successor committees). Notwithstanding the foregoing, if a Heller Director appointed to the compensation committee of the Board of Directors fails at any time to qualify as an "outside director," as defined in the regulations promulgated by the Internal Revenue Service under Section 162 (m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended, then, to the extent stock option and other compensation awards to any of the Company's executive officers are intended to qualify as "performance-based" compensation under Section 162 (m), such Heller Director will excuse himself from any determinations with respect to such awards and will not be considered part of the compensation committee for purposes thereof. 3. Reduction in Number of Heller Directors. Notwithstanding any provision of Sections 1 or 2 to the contrary, in the event that Heller and its Approved Transferees (as defined in paragraph 6 below), if any, cease to own, collectively, securities representing (or converting into other securities representing) at least 25% of the aggregate voting power of the Company's outstanding capital stock, the rights of Heller pursuant to Sections 1 and 2 shall terminate with respect to the Heller Director whose then current term is the later to expire following the date on which Heller's ownership falls below such 25% threshold; provided, that such Heller Director shall serve out the balance of his or her then current term on the Board of Directors in accordance with the Certificate and the Company's By-Laws. Following any such termination, Heller's rights hereunder with respect to the remaining Heller Director shall remain in full force and effect, subject only to termination in accordance with Section 5 below. 4. Heller Representative. So long as this Agreement remains in effect, Heller shall also have the right to have one other person (as such person may be designated or redesignated from time to time, the "Heller Representative") present (whether in person or by telephone) at all meetings of the Company's Board of Directors and at all meetings of committees thereof which are attended by a Heller Director. The Heller Representative shall not be entitled to vote at any such meetings. The Company shall send to the Heller Representative all of the notices, information and other materials that are distributed to -2- directors of the Company at the same time, and in the same manner, as the same are distributed to the directors of the Company. The Heller Representative will be subject to the Company's insider trading and similar policies and will execute reasonable confidentiality and other agreements intended to protect the interests of the Company and the Board of Directors. 5. Termination. Upon Heller and its Approved Transferees, if any, ceasing to own, collectively, securities representing (or convertible into other securities representing) at least 10% of the aggregate voting power of the Company's outstanding capital stock, this Agreement will terminate, and Heller and its Approved Transferees, if any, will have no continuing rights hereunder. 6. General. The agreement set forth in this letter will be governed and enforced in accordance with the laws of the State of Delaware, without giving effect to that State's principles of conflicts of laws. The rights granted to Heller hereunder may not be assigned, transferred or sold in connection with the sale of voting securities of the Company, other than to Heller Financial, Inc., a Delaware corporation ("HFI"), or to a wholly-owned subsidiary of Heller or HFI (collectively, the "Approved Transferees"), but shall be solely for the benefit of Heller (or any Approved Transferee in the event of a transfer thereto) so long as Heller and its Approved Transferees hold, collectively, not less than the requisite amount of such securities described in Section 5 above. 7. This letter agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement. [Signature page follows] -3- The Company's execution of this letter will confirm its acceptance of this letter as the agreement between the Company and Heller regarding the matters set forth herein. Very truly yours HELLER EQUITY CAPITAL CORPORATION By: /s/ Patrick Pesch ----------------------------- Name: Patrick Pesch ----------------------------- Title: Senior Vice President ----------------------------- Accepted and agreed to as of the date of this letter. CAREER EDUCATION CORPORATION By: /s/ William A. Klettke ---------------------- Name: William A. Klettke ---------------------- Title: Senior V.P & CFO ---------------------- -4- EX-3 4 REGISTRATION RIGHTS AGREEMENT Exhibit 3 (20 pages) Page 24 of 46 REGISTRATION RIGHTS AGREEMENT ----------------------------- REGISTRATION RIGHTS AGREEMENT, dated as of February 3, 1998, between Career Education Corporation, a corporation organized under the laws of Delaware (the "Company"), and Heller Equity Capital Corporation, a corporation organized under the laws of Delaware ("Stockholder"). W I T N E S S E T H: WHEREAS, the Stockholder owns 2,549,944 shares (the "Shares") of Common Stock, par value $.01 per share, of the Company (the "Common Stock"); and WHEREAS, in connection with, and as consideration for Stockholder's approval of, the consummation of an initial public offering, the Company has agreed to provide the Stockholder certain registration rights pursuant to the terms of this Agreement; and WHEREAS, Electra Investment Trust P.L.C., a corporation organized under the laws of England and Wales, and Electra Associates, Inc., a Delaware corporation, are parties to that certain Registration Rights Agreements with the Company dated as of July 31, 1995, as amended by Amendment No. 1 dated the date hereof (as so amended, the "Electra Registration Rights Agreement"); NOW, THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Definitions. For purposes of this Agreement, capitalized terms used herein shall have the meanings set forth in the preambles hereto and in this Section 1. 1.1. "Affiliate" shall mean a person who controls or is controlled by or under common control with another person. 1.2. "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. 1.3. "Common Stock" shall mean the Common Stock of the character authorized on the date hereof or, in the case of a conversion, reclassification or exchange of such shares of such Common Stock, shares of the stock into or for which such shares of Common Stock shall be converted, reclassified or exchanged, and all provisions of this Agreement shall be applied appropriately thereto and to any stock resulting from any subsequent conversion, reclassification or exchange therefor. 1.4. "Electra" shall mean collectively Electra Investment Trust P.L.C., a corporation organized under the laws of England and Wales, and Electra Associates, Inc., a Delaware corporation, together with their respective successors and permitted assigns under the Electra Registration Rights Agreement. 1.5. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute enacted hereafter, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. 1.6. "Holder" shall mean any holder of Registrable Securities; provided, however, that any Person who acquires any of the Registrable Securities in a distribution pursuant to a registration statement filed by the Company under the Securities Act or pursuant to a sale under Rule 144 under the Securities Act shall not be considered a Holder. 1.7. "Initiating Holders" shall mean the Holders of Registrable Securities representing (i) at least fifty-one percent (51%) of the Registrable Securities then outstanding. 1.8. "IPO" shall mean (i) the time at which the Company becomes a registered public company under the Exchange Act subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or (ii) the first time at which an offering, whether primary or secondary, of Common Stock or options, warrants or other securities convertible into or exchangeable or exercisable for Common Stock, is registered pursuant to an effective registration statement (other than a registration statement on Form S-4 or Form S-8 or any successor forms thereto) filed by the Company under the Securities Act or (iii) the merger of the Company into a corporation or other entity which at the time of such merger is required to file reports, proxy statements and other information with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act. An Initial Public Offering will be deemed to be consummated (i) on the date such registration is declared effective by the Commission and (ii) in the case of a merger, upon the effectiveness of the merger. 1.9. "Person" shall mean any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. 1.10. "Register", "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement with the Commission in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement by the Commission. 1.11. "Registrable Securities" shall mean the (i) the Shares and (ii) any other shares of Common Stock acquired after the date of this Agreement and held by the Stockholder from time to time; provided, however, that any such Registrable Securities shall cease to be included within the definition of Registrable Securities when (a) a registration statement with respect to the sale of such securities shall have become effective under the -2- Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) they shall have been sold as permitted by Rule 144 (or any successor provision) under the Securities Act, (c) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration of them under the Securities Act or (d) they shall have ceased to be outstanding. 1.12. "Registration Expenses" shall mean all expenses incurred by the Company in compliance with this Agreement, excluding underwriters' discounts and commissions but including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, the compensation of regular employees of the Company and the fees and expenses of one counsel for all Holders, all blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration. 1.13. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute enacted hereafter, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time . 1.14. "Selling Expenses" shall mean all underwriting discounts and commissions applicable to the sale of Registrable Securities. 2. Requested Registration. 2.1. Request for Registration. The Initiating Holders, by written request to the Company, may require the Company to effect a registration with respect to Registrable Securities at any time after an IPO. If the Initiating Holders elect to exercise their rights under this Section 2.1 the Company shall: (a) promptly give written notice of the proposed registration to all other Holders (the "Demand Registration Notice"); and (b) as soon as practicable but not later than sixty (60) days after receipt of the request from the Initiating Holders, use its best efforts and take all appropriate action to file such registration statement with the Commission, and shall use its best efforts and take all appropriate action to effect such registration as soon as possible following such filing (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under the blue sky or other state securities laws requested by Initiating Holders and appropriate compliance with applicable regulations issued under the Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of all or such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request given within thirty (30) days after receipt of the Demand Registration Notice; provided, however, that the Company shall not be obligated to -3- effect any such registration pursuant to this Section 2 (i) if a registration pursuant to this Section 2 has been declared or ordered effective within the prior twelve months or (ii) after the third such registration pursuant to this Section 2 has been declared or ordered effective; provided, further, however, that if with respect to the last remaining demand registration right the Holders shall not be permitted to include all of the Registrable Securities requested to be so included therein pursuant to the operation of Section 2.5 below, the Holders shall be granted an additional demand registration exercisable in accordance with this Section 2. 2.2. Additional Shares to be Included. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 2.5 below, include (a) other securities of the Company (the "Additional Shares") which are held by officers or directors of the Company or which are held by Persons who, by virtue of agreements with the Company, are entitled to include their securities with the Holders referred to in Section 2.1 above (collectively, the "Other Shareholders"), and (b) securities of the Company being sold for the account of the Company (the "Company Shares"). 2.3. Withdrawal of Registration. If the Initiating Holders inform the Company by written notice that they are withdrawing their registration request made pursuant to Section 2.1 above and the Initiating Holders pay all of the Company's Registration Expenses with respect to such registration incurred to the date of such notice, then the registration statement need not be filed and all efforts pursuant to this Agreement will not count as a registration (or an exercise of rights) under this Section 2, provided, however, that if the Company decides to proceed with the registration on its own behalf, or on behalf of any other shareholders, then the Initiating Holders shall not be required to pay any of the Company's Registration Expenses and such registration will not count as a registration (or an exercise of rights) under this Section 2. 2.4. Underwriting. (a) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 2 and the Company shall include such information in the Demand Registration Notice, and such Demand Registration Notice shall also state that any registration pursuant to this Section 2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein and subject to the limitations provided herein. A Holder may elect to include in such underwriting all or a part of the Registrable Securities he holds. (b) The Company shall (together with all Holders, officers, directors and Other Shareholders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the -4- underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders. 2.5. Limitations on Shares to be Included. Notwithstanding any other provision of this Section 2, if the representative of the underwriters advises the Company or the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten or that the inclusion of Additional Shares or Company Shares may adversely affect the sale price (of the shares to be registered) that may be obtained, first the Additional Shares shall be excluded from such registration to the extent so required by such limitation, then the Company Shares shall be excluded from such registration to the extent so required by such limitation, and if a limitation of the number of shares is still required, the number of shares that may be included in the registration and underwriting shall be allocated (i) first to the Holders, such that the Holders shall be entitled to include a number of shares equal to seventy percent (70%) of the shares requested for inclusion in such registration, and (ii) the remaining shares, if any to the Holders and Electra, pro rata based on the number of Registratable Securities or Additional Shares requested to be included in such registration after excluding shares already included in such registration as provided in clause (i) above. If the Company or any Holder of Registrable Securities, officer, director or Other Shareholder who has requested inclusion in such registration as provided above disapproves of the terms of any such underwriting, such Person may elect to withdraw such Person's Registrable Securities, Additional Shares or Company Shares, as the case may be, therefrom by written notice to the Company, the underwriter and the Initiating Holders. If the withdrawal of any Registrable Securities, Additional Shares or Company Shares, as the case may be, would allow, within the marketing limitations set forth above, the inclusion in the underwriting of a greater number of shares of Registrable Securities, Company Shares or Additional Shares, then, to the extent practicable and without delaying the underwriting, the Company shall offer first to the Holders and/or Electra, as the case may be, second for the Company's own account and third to the Other Shareholders an opportunity to include additional shares of Registrable Securities, Company Shares or Additional Shares, as the case may be, in the proportions discussed above. 3. Company Registration. 3.1. If the Company shall determine to register any of its securities either for its own account or the account of a security holder or holders exercising any demand registration rights, other than a registration relating solely to employee benefit plans, or a registration relating solely to a Rule 145 (under the Securities Act) transaction, the Company will: (a) promptly give to each Holder written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and -5- (b) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made by any Holder within thirty (30) days after receipt of the written notice from the Company described in clause (a) above, except as set forth in Section 3.3 below. Such written request may specify all or a part of a Holder's Registrable Securities. 3.2. Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 3.1(a). The right of any Holder to require registration pursuant to this Section 3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any officers, directors or Other Shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Company. 3.3. Limitations on Shares to be Included. With respect to Company registrations or registrations effected by the Company for the account of a security holder or holders exercising any demand registration rights, notwithstanding any other provision of this Section 3, if the representative of the underwriters advises the Company in writing that marketing factors require a limitation or elimination on the number of shares to be underwritten, the representative may (subject to the allocation priority set forth below) limit the number of Registrable Securities to be included in the registration and underwriting. The Company shall so advise all Holders of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated first, to the Company for securities being sold for its own account, second, if any among Electra and Holders in the ratio of two-thirds (2/3) to Electra and one-third to the Holders, until such time as Electra holds less than thirty-five percent (35%) of the shares of Registrable Securities (as defined in the Electra Registration Rights Agreement) held by Electra as of the date of this Agreement (as such number may be adjusted for stock splits, dividends, recapitalizations, reorganizations or similar events), third, if any, among the Holders and Electra pro rata based upon the number of Registratable Securities or Additional Shares, as the case may be, requested to be so included in such registration after excluding shares already included in such registration as provided in clause first and clause second, and fourth, among all officers, directors or Other Shareholders (including those Shareholders other than Electra exercising demand registration rights and on whose account the Company determined to register its securities pursuant to the exercise of such demand registration right, or otherwise), in each case in proportion, as nearly as practicable, to the respective amounts of Registrable Securities or Additional Shares which they had requested to be included in such registration at the time of filing the registration statement; provided, however, that if such registration is effected by the Company on behalf of Electra exercising any demand registration rights pursuant to the Electra Registration Rights Agreement, the number of -6- shares that are entitled to be included in the registration and underwriting shall be allocated first, to Electra such that Electra shall be entitled to include a number of shares equal to seventy-five percent (75%) of the shares requested for inclusion in such registration, second, if any, among the Holders and Electra, pro rata based on the number of Registratable Securities or Additional Shares requested to be included in such registration after excluding shares already included in such registration as provided in clause first above, third, if any, to the Company for securities being sold for its own account, and fourth, among all officers, directors or Other Shareholders (including those shareholders (other than Electra) exercising demand registration rights and on whose account the Company determined to register its securities pursuant to the exercise of such demand registration right, or otherwise). If any Holder of Registrable Securities or any officer, director or Other Shareholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. 3.4. Withdrawal from Registration. Any Holder requesting inclusion of Registrable Securities pursuant to this Section 3 may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request by delivering written notice of such revocation to the Company; provided, however, that if the Company, in consultation with its financial and legal advisors, determines that such revocation would materially delay the registration or otherwise require a recirculation of the prospectus contained in the registration statement, then such Holder shall have no such right to revoke its request. If the withdrawal of any Registrable Securities or Additional Shares would allow, within the marketing limitations set forth above, the inclusion in the underwriting of a greater number of shares of Registrable Securities or Additional Shares, then, to the extent practicable and without delaying the underwriting, the Company shall offer first to the Holders and/or Electra and second to the Other Shareholders an opportunity to include additional shares of Registrable Securities or Additional Shares, as the case may be, in the proportions discussed in Section 3.3 above. 3.5. Termination or Withdrawal by Company. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. 4. Registration on Form S-3. In addition to the their rights set forth in Sections 2 and 3 above, if at any time (i) Initiating Holders request that the Company file a registration statement on Form S-3 (or any successor form thereto) for a public offering of all or any portion of the Registrable Securities held by such requesting Holder or Holders, and (ii) the Company is a registrant entitled to use Form S-3 (or any successor form thereto) to register such securities, then the Company shall use its best efforts to register (including by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested in such request) under the Securities Act on Form S-3 (or any successor form thereto), for public sale in accordance with the method of disposition specified in such notice, the number of shares of Registrable Securities specified in such notice. -7- 5. Expenses of Registration. Subject to Section 2.3, all Registration Expenses incurred in connection with the registration or qualification of, or compliance with, any registration statement under Sections 2, 3 and 4 of this Agreement, shall be borne by the Company. All Selling Expenses shall be borne pro rata by each Holder and each Other Shareholder in accordance with the number of shares sold. 6. Registration Procedures. 6.1. In the case of each registration to be effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of each registration and all amendments thereto and as to the completion thereof, advise any such Holder, upon request, of the progress of such proceedings, use its best efforts to effect the registration of any Registrable Securities under the Securities Act, and will, at its expense: (a) Prepare and file with the Commission a registration statement covering such Registrable Securities and use its best efforts to cause such registration statement to be declared effective by the Commission and to keep such registration effective for a period of one hundred eighty (180) days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that the Company shall keep such registration effective for longer than one hundred and eighty (180) days if the costs and expenses associated with such extended registration are borne by the selling Holders; provided, further, however, that in the case of any registration of Registrable Securities" on Form S-3 which are intended to be offered on a continuous or delayed basis, such 180-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that (1) Rule 415 under the Securities Act, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and (2) applicable rules and regulations under the Securities Act governing the obligation to file a post-effective amendment permit the incorporation by reference into the registration statement of information contained in periodic report" filed pursuant to Section 13 or 15(d) of the Exchange Act, in lieu of filing a post-effective amendment which (y) includes any prospectus required by Section 10(a)(3) of the Securities Act or (z) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement; (b) Subject to the provisos set forth in Section 6.1(a) above, prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement until such time as all of such Registrable Securities have -8- been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; (c) Furnish to each seller of Registrable Securities covered by such registration statement and each Holder two conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as such seller or Holder, as the case may be, may reasonably request; (d) Promptly notify each seller of Registrable Securities covered by such registration statement and each Holder at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include 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 incomplete in the light of the circumstances then existing; (e) Use its best efforts (i) to register or qualify all Registrable Securities and other securities covered by such registration statement under such other securities or blue sky laws of such states of the United States of America where an exemption is not available and as the sellers of Registrable Securities covered by such registration statement shall reasonably request, (ii) to keep such registration or qualification in effect for so long as such registration statement remains in effect and (iii) to take any other action which may be reasonably necessary or advisable to enable such sellers to consummate the disposition in such jurisdictions of the securities to be sold by such sellers, except that the Company shall not for any such purpose be required to (x) qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (e) be obligated to be so qualified, or (y) subject itself to taxation in any such jurisdiction; (f) Use its best efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other federal or state governmental agencies or authorities as may be necessary in the opinion of counsel to the Company and counsel to the seller or sellers of Registrable Securities to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities; -9- (g) Use its best efforts to list all such Registrable Securities registered in such registration on each securities exchange or automated quotation system on which the Common Stock of the Company is then listed; (h) Provide and cause to be maintained a transfer agent and registrar for all Registrable Securities and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; (i) Enter into such customary agreements (including underwriting agreements in customary form and reasonably acceptable to the Company) and take all such other actions as the holders of a majority of the Registration Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities; (j) Make available for inspection by any seller of Registrable Securities and each Holder, any underwriter participating in any disposition pursuant to such registration statement, and any attorney or accountant retained by any such seller, Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, Holder, underwriter, attorney or accountant in connection with such registration statement, which information shall be subject to reasonable restrictions concerning confidentiality and non-disclosure; (k) Furnish to each selling Holder upon request a signed counterpart, addressed to the selling Holder, of (i) an opinion of counsel for the Company, dated the effective date of the registration statement and in form reasonably acceptable to the Company and such Holder, and (ii) "comfort" letters signed by the Company's independent public accountants who have examined and reported on the Company's financial statements included in the registration statement, to the extent permitted by the standards of the American Institute of Certified Public Accountants, in the case of (i) and (ii) covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and (in the case of the accountants' "comfort" letters) with respect to events subsequent to the date of the financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' "comfort" letters delivered to the underwriters in underwritten public offerings of securities; -10- (l) Furnish to each selling Holder a copy of all correspondence from or to the Commission in connection with any such offering; (m) In the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Registrable Securities included in such registration statement for sale in any jurisdiction, the Company will use its reasonable best efforts promptly to obtain the withdrawal of such order; and (n) Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and, if required, make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first month after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder. 6.2. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the Holders proposing to register Registrable Securities shall furnish to the Company such information regarding them, the Registrable Securities held by them, and the intended method of distribution of such Registrable Securities as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company. 6.3. In connection with the preparation and filing of each registration statement under this Agreement, the Company will give the Holders on whose behalf such Registrable Securities are to be registered and their underwriters, if any, and their respective counsel and accountants, the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and will give each such Holder such access to the Company's books and records and such opportunities to discuss the business of the Company with its officers, its counsel and the independent public accountants who have certified the Company's financial statements, as shall be necessary, in the opinion of such Holders or such underwriters or their respective counsel, in order to conduct a reasonable and diligent investigation within the meaning of the Securities Act. Without limiting the foregoing, each registration statement, prospectus, amendment, supplement or any other document filed with respect to a registration under this Agreement shall be subject to review and reasonable approval by the Holders registering Registrable Securities in such registration and by their counsel. 7. Indemnification. 7.1. Indemnification by the Company. In the event of any registration of any securities of the Company under the Securities Act, the Company will indemnify and -11- hold harmless each Holder, each of its officers, directors, partners, employees, agents, attorneys and consultants and each Person controlling such Holder, and each underwriter, if any, and each Person who controls any underwriter, against all claims, losses, damages and liabilities, joint and several (or actions, proceedings or settlements in respect thereof) arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, 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, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each such Holder, each of its officers, directors, partners, employees, agents, attorneys and consultants and each Person controlling such Holder, each such underwriter and each Person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission made in reliance upon and based upon written information furnished to the Company by such Holder or underwriter and expressly stated to be specifically for use therein. 7.2. Indemnification by the Holders. Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its officers, directors, partners, employees, agents, attorneys and consultants, and each underwriter, if any, of the Company's securities covered by such a registration statement, each Person who controls the Company (other than such Holder) or such underwriter within the meaning of the Securities Act and the rules and regulations thereunder, each other such Holder and each of their officers, directors, partners, employees, agents, attorneys and consultants, and each Person controlling such Holder or other stockholder, against all claims, losses, damages, expenses and liabilities, joint and several (or actions in respect thereof) arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to he stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, each of its officers, directors, partners, employees, agents, attorneys and consultants, each underwriter or control Person, each other Holder and each of their officers, directors, partners, employees, agents, attorneys and consultants and each Person controlling such Holder or other shareholder for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, -12- prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder with respect to such Holder and expressly stated to be specifically for use therein; provided, however, that the liability of any such Holder under this Section 7.2 shall be limited to the amount of proceeds received by such Holder in the offering giving rise to such liability. 7.3. Notices of Claims Procedures etc. Each party entitled to indemnification under this Section 7 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual :knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at the Indemnified Party's sole expense, provided, further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 7 unless such failure is prejudicial to the ability of Indemnifying Party to defend such claim or action. Notwithstanding the foregoing, such Indemnified Party shall have the right to employ its own counsel in any such litigation, proceeding or other action if (i) the employment of such counsel has been authorized by the Indemnifying Party, in its sole and absolute discretion, or (ii) the named parties in any such claims (including any impleaded parties) include any such Indemnified Party and the Indemnified Party and the Indemnifying Party shall have been advised in writing (in suitable detail) by counsel to the Indemnified Party either (A) that there may be one or more legal defenses available to such Indemnified Party which are different from or additional to those available to the Indemnifying Party, or (B) that there is a conflict of interest by virtue of the Indemnified Party and the Indemnifying Party having common counsel, in any of which events, the legal fees and expenses of a single counsel for all Indemnified Parties with respect to each such claim, defense thereof, or counterclaims thereto, shall be borne by Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement (x) which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation, or (y) which requires action other than the payment of money by the Indemnifying Party. Each Indemnified Party shall cooperate to the extent reasonably required and furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom. 7.4. Contribution. If the indemnification provided for in this Section 7 shall for any reason be held by a court to be unavailable to an Indemnified Party under Section 7.1 or 7.2 hereof in respect of any loss, claim, damage or liability, or any action in respect thereof, then, in lieu of the amount paid or payable under Section 7.1 or 7.2, the Indemnified -13- Party and the Indemnifying Party under Section 7.1 or 7.2 shall contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating the same), (i) in such proportion as is appropriate to reflect the relative fault of the Company and the prospective sellers of Registrable Securities covered by the registration statement which resulted in such loss, claim, damage or liability, or action or proceeding in respect thereof, with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action or proceeding in respect thereof, as well as any other relevant equitable considerations or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as shall be appropriate to reflect the relative benefits received by the Company and such prospective sellers from the offering of the securities covered by such registration statement; provided, that for purposes of this clause (ii), the relative benefits received by the prospective sellers shall be deemed not to exceed the amount of proceeds received by such prospective sellers. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Such prospective sellers' obligations to contribute as provided in this Section 7.4 are several in proportion to the relative value of their respective Registrable Securities covered by such registration statement and not joint. In addition, no Person shall be obligated to contribute hereunder any amounts in payment for any settlement of any action or claim effected without such Person's consent, which consent shall not be unreasonably withheld. 8. Information by Holder. Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement. 9. Transfer or Assignment of Registration Rights. The rights with respect to any Registrable Securities to cause the Company to register such securities granted to a Holder by the Company under this Agreement may be transferred or assigned by a Holder, in whole or in part, to a transferee or assignee of any Registrable Securities, and, in such case, the Company shall be given written notice stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned. 10. Rule 144 and Rule 144A. At such time as the Company becomes subject to the reporting requirements of the Exchange Act, the Company shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder, and will take all actions reasonably necessary to enable holders of Registrable Securities to sell such securities without registration under the Securities Act within the limitation of the provisions of (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, (b) Rule 144A under the Securities Act, as such Rule may be amended from time to time, if applicable or (c) any similar rules or -14- regulations hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with such requirements. 11. Liquidated Damages. In the event that the Company fails to comply with any provision of Section 2, 3 or 4 hereof upon written request of the Holder(s) of Registrable Securities requesting registration thereunder, the Company shall, within thirty (30) days after the date of receipt by the Company of a demand from such Holder(s) for payment, pay to such Holder as liquidated damages for its noncompliance an amount equal to the Current Market Price multiplied by (x) the number of shares of Common Stock proposed to be sold pursuant to the registration or qualification in question or (y) in the case of a request in accordance with Section 4 hereof for a shelf registration pursuant to Rule 415 under the Securities Act, such lesser number of shares of Common Stock as may be specified by the Holder(s) in such demand for payment; provided, however, that the election of the Holder(s) to demand payment of liquidated damages with respect to less than all of the shares of Common Stock proposed to be sold pursuant to such shelf registration shall not prevent the Holder(s) from any subsequent exercise of registration rights under this Agreement with respect to the shares of Common Stock for which payment was not demanded. Payment of such amount at any closing shall be made in immediately available funds. Upon payment to such Holder of such liquidated damages, such Holder shall assign to the Company the Registrable Securities proposed to be sold pursuant to the registration or qualification (or such lesser number of shares of Registrable Securities as specified in the demand for payment) in question without any representation or warranty (other than that the Holder has not taken any action which would impair its ownership of or right to transfer to the Company the Registrable Securities). At any such closing, the Holders of the Registrable Securities shall deliver the certificates evidencing such securities to the Company, accompanied by stock powers duly endorsed in blank or duly executed instruments of transfer, any other documents that are necessary to transfer to the Company good title to such of the securities to be transferred, free and clear of all pledges, security interests, liens, charges, encumbrances, equities, claims and options of whatever nature other than those imposed hereunder. The Company agrees that the amount of actual damages that would be sustained by the Holder as a result of the failure of the Company to comply with any provisions of Section 2, 3 or 4 hereof is not capable of ascertainment on any other basis. The Holders hereby acknowledge that the refusal of the Commission to declare effective any registration statement filed by the Company or the inability of any Holder to sell any offered Registrable Securities due to a lack of liquidity or marketability shall not, in and of itself, be evidence of a failure by the Company to comply with Section 2, 3 or 4 hereof. "Current Market Price" shall mean the average closing price per share of Common Stock for the forty-five (45) consecutive trading days beginning on the Determination Date. "Determination Date" shall mean, with respect to a requested registration pursuant to Section 2 or 3 of this Agreement, the date which is thirty (30) days after the date of such request, and with respect to a requested registration pursuant to Section 4 of this Agreement, the date which is fifteen (15) days after the date of such -15- request. The closing price for each day shall be, as reported in The Wall Street Journal or, if not reported therein, as reported in another newspaper of national circulation chosen by the Board of Directors of the Corporation, the closing sales price or, in case no such sale takes place on such day, the average of the closing bid and asked prices regular way, on the New York Stock Exchange Composite Tape, or if the Common Stock is not then listed or admitted to trading on the New York Stock Exchange, on the largest principal national securities exchange on which such stock is then listed or admitted to trading, or if not listed or admitted to trading on any national securities exchange, then the average of the last reported sales price for such shares in the over- the-counter market, as reported on the National Association of Securities Dealers Automated Quotation System, or, if such sales prices shall not be reported thereon, the average of the closing bid and asked prices so reported, or, if such bid and asked prices shall not be reported thereon, as the same shall be reported by the National Quotation Bureau Incorporated, or, if such firm at the time is not engaged in the business of reporting such prices, as furnished by any similar firm then engaged in such business and selected by the Company or, if there is no such firm, as furnished by any member of the National Association of Securities Dealers, Inc., selected by the Company. If the Company shall not have a class of equity securities registered under the Securities Exchange Act of 1934, as amended, "Current Market Price" shall be determined as follows: first, by an investment banking firm selected by the holders of a majority of the Registrable Securities requested to be included in such registration, which determination shall be made within thirty (30) days after the delivery of the demand for payment, second, if such determination shall not be satisfactory to the Company, as evidenced by a written objection by the Company to the holders of the Registrable Securities requested to be included in such registration, within two weeks of receipt by the Company of such determination, the Company shall be entitled to select an investment banking firm which shall make its own determination within thirty (30) days of its appointment, and if such determination shall differ by less than 10% from the determination of the investment banking firm selected by the holders of a majority of the Registrable Securities requested to be included in such registration, the Current Market Price shall be the average of such determinations and third, if such determinations shall differ by 10% or more, such investment banking firms shall appoint a third investment banking firm which shall make its own determination within two weeks of its appointment, which determination shall be binding upon the Company and the holders of the Registrable Securities requested to be included in such registration. Any and all determinations made pursuant to this Section 11 shall be performed by an investment banking firm experienced in the conduct of corporate valuations and shall be based upon the fair market value of 100% of the Company on a consolidated basis if sold as a going concern, without giving effect to any discount for lack of liquidity of the shares of Common Stock or to the fact that the shares of Common Stock are privately held or that the Company has no class of equity securities registered under the Securities Exchange Act of 1934, as amended, or to any discount relating to, or reclassification because of, the right of any stockholder of the Company to sell its shares of Common Stock to the Company. -16- 12. No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted to the holders of Registrable Securities in this Agreement. Without limiting the generality of the foregoing, the Company will not hereafter enter into any agreement with respect to its securities which grants or modifies any existing agreement with respect to its securities to grant to the holder of its securities (a) in connection with an incidental registration of such securities equal or higher priority to the rights granted to the Holders under Sections 2, 3 and 4 of this Agreement or (b) in connection with a demand registration the right to require registration of any of its securities before the earlier of (i) the date on which the holders shall have exercised any demand registration rights under Section 2 hereof or (ii) the Company shall have consummated an IPO and any lock-up period applicable to the Holders of the Registrable Securities shall have terminated. 13. Benefits of Agreement; Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns, legal representatives and heirs. This Agreement does not create, and shall not be construed as creating any rights enforceable by any other Person. 14. Transfer of Rights. All rights of Stockholder under this Agreement shall be transferable by Stockholder to an Affiliate who executes an instrument in form and substance satisfactory to the Company in which it agrees to be bound by the terms of this Agreement as if an original signatory hereto, in which case such Transferee shall thereafter be a "Stockholder" for all purposes of this Agreement. Upon any transfer of the registration rights or benefits of this Agreement, Stockholder shall give Company written notice prior to or promptly following such transfer stating the name and address of the transferee and identifying the securities with respect to which such rights are being assigned. Such notice shall include or be accompanied by a written undertaking by the transferee to comply with the obligations imposed hereunder. 15. Best Registration Rights. If the Company grants to any Person with respect to any security issued by the Company or any of its Affiliates registration rights that provide for terms that are in any manner more favorable to the holder of such registration rights than the terms granted to Stockholder other than the number of demand registrations or the minimum amount of shares required to exercise demand registration rights (or if the Company amends or waives any provision of any agreement providing registration rights of others or takes any other action whatsoever to provide for terms that are more favorable to other holders than the terms provided to Stockholder other than the number of demand registration rights), then this Agreement shall immediately be deemed amended to provide the Stockholder with any (or all) of such more favorable terms as Stockholder shall elect to include herein. 16. Complete Agreement. This Agreement constitutes the complete understanding among the parties with respect to its subject matter and supersedes all existing agreements and understandings, whether oral or written, among them. No alteration or modification of any provisions of this Agreement shall be valid unless made in writing and signed, on the one -17- hand, by a majority of the Registrable Securities then outstanding and, on the other, by the Company. 17. Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Notices. All notices, offers, acceptances and other communications required or permitted to be given or to otherwise be made to any party to this Agreement shall be deemed to be sufficient if contained in a written instrument delivered by hand, first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, if to the Company, to it at 2800 West Higgins Road, Suite 790, Hoffman Estates, Illinois 60195, Attention: President, and if to any Holder, to the address of such Holder as set forth in the stock transfer books of the Corporation. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any party may change the address to which each such notice or communication shall be sent by giving written notice to the other parties of such new address in the manner provided herein for giving notice. 18. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to the provisions, policies or principles thereof respecting conflict or choice of laws. 19. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY MATTERS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, AND ANY ACTION FOR ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF SHALL BE BROUGHT EXCLUSIVELY IN THE STATE OF FEDERAL COURTS LOCATED IN THE STATE OF ILLINOIS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY AND STOCKHOLDER EACH IRREVOCABLY CONSENT TO SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR BY RECOGNIZED INTERNATIONAL EXPRESS CARRIER OR DELIVERY SERVICE, TO THE COMPANY OR STOCKHOLDER AT THEIR RESPECTIVE ADDRESSES REFERRED TO IN THIS AGREEMENT. THE COMPANY AND THE STOCKHOLDER EACH HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY -18- FURTHER IRREVOCABLY WAIVES AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 20. Counterparts. This Agreement may be executed in one or more counterparts each of which shall be deemed an original but all of which taken together shall constitute one and the same agreement. 21. Severability. Any provision of this Agreement which is determined to be illegal, prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such illegality, prohibition or unenforceability without invalidating the remaining provisions hereof which shall be severable and enforceable according to their terms and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. -19- IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first set forth above. CAREER EDUCATION CORPORATION By: /s/ William A. Klettke ------------------------------ Name: William A. Klettke Title: Senior Vice President & CFO HELLER EQUITY CAPITAL CORPORATION By: /s/ Patrick Pesch ------------------------------ Name: Patrick Pesch Title: Senior Vice President 20 EX-4 5 LETTER AGREEMENT DATED 1/23/98 Exhibit 4 (2 pages) Page 44 of 46 January 23, 1998 Career Education Corporation 2800 West Higgins Road Hoffman Estates, IL 60195 Credit Suisse First Boston Corporation Smith Barney Inc. As Representative of the Several Underwriters, c/o Credit Suisse First Boston Corporation Eleven Madison Avenue New York, NY 10010-3629 Dear Sirs: As an inducement to the Underwriters to execute the Underwriting Agreement, pursuant to which an offering will be made that is intended to result in the establishment of a public market for shares of its Common Stock, $.01 par value (the "Securities"), of Career Education Corporation, a Delaware corporation (the "Company"), the undersigned hereby agrees that, for a period of 180 days after the date of the final Prospectus relating to the initial public offering (the "Commencement Date") of the Securities pursuant to the Underwriting Agreement to which you are or expect to become parties, the undersigned will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of Securities or securities convertible into or exchangeable or exercisable for any shares of Securities, or publicly disclose the intention to make any such offer, sale, pledge or disposal without the prior written consent of Credit Suisse First Boston Corporation, otherwise than (i) as to any individual, during his or her lifetime or upon death, by gift, will or intestacy, to a member or members of his or her immediate family or to a trust of which the beneficiaries are exclusively the undersigned and/or a member or members of his or her immediate family, or (ii) as to any corporation or other entity, by transfer to an affiliated entity or to an officer, employee or former officer or employee of the undersigned or an affiliated entity; provided that, in the case of either (i) or (ii), the donee or transferee agrees in writing to be bound by this lock-up agreement. In furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to decline to make any transfer of shares of Securities if such transfer would constitute a violation or breach of this Agreement. This Agreement shall be binding on the undersigned and the respective successors, heirs, personal representatives and assigns of the undersigned. This Agreement shall lapse and become null and void if the Commencement Date shall not have occurred on or before February 15, 1998. Very truly yours, HELLER EQUITY CAPITAL CORPORATION By: /s/ Patrick Pesch ----------------------------- Its: Senior Vice President ----------------------------- EX-5 6 POWER OF ATTORNEY Exhibit 5 (1 page) Page 46 of 46 POWER OF ATTORNEY ----------------- The undersigned, THE FUJI BANK, LIMITED, a Japanese banking corporation, hereby constitutes and appoints DEBRA H. SNIDER, DENNIS K. HOLLAND and CHARLES P. BRISSMAN, and each of them (with full power to act alone), its true and lawful attorneys-in-fact and agents to execute and file with the Securities and Exchange Commission (or any successor agency) and any applicable state regulatory authority, national securities exchange or self-regulatory organization, in the name and on behalf of the undersigned, any and all: (a) Schedules 13D or 13G; (b) Forms 3, 4 or 5; (c) other statements or reports required under the Securities Exchange Act of 1934, as amended, or any other federal or state securities law; (d) instruments and documents which are filed as a part of or in connection with such Schedules, Forms, statements or reports; and (e) amendments, extensions or other modifications of any of the foregoing; all with respect to the investment of Heller Equity Capital Corporation (or any of its affiliates) in securities of Career Education Corporation (and securities of any other issuer which are hereafter issued on account of such securities of Career Education Corporation). The undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents, or either of them, shall do or cause to be done by virtue of this Power of Attorney. Dated: January 28, 1998 THE FUJI BANK, LIMITED ----------- By: /s/ Atsushi Takano ------------------------ Title: Managing Director --------------------- -----END PRIVACY-ENHANCED MESSAGE-----