UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 10, 2015

 

 

Career Education Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   0-23245   36-3932190
(State or Other Jurisdiction
of Incorporation)
 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

231 N. Martingale Rd., Schaumburg, IL   60173
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (847) 781-3600

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01. Entry into a Material Definitive Agreement.

On March 10, 2015, Career Education Corporation (the “Company”) entered into an agreement (the “Agreement”) with Tenzing Global Management LLC, Tenzing Global Investors LLC, Tenzing Global Investors Fund I LP and Richard Wang (collectively, “Tenzing Global”), which beneficially own, in the aggregate, 2,050,000 shares, representing approximately 3% of the outstanding shares of common stock of the Company (the “Common Stock”). Pursuant to the Agreement, the Company has agreed (i) to appoint Richard Wang to the Company’s Board of Directors (the “Board”), effective immediately, with a term expiring at the Company’s 2015 annual meeting of stockholders (the “2015 Annual Meeting”) and (ii) to nominate Mr. Wang to stand for election as a director at the 2015 Annual Meeting.

In connection with entering into the Agreement, Tenzing Global agreed that until the later to occur of (1) the date that is 45 days prior to the advance notice deadline for submission of director nominations for the Company’s 2016 annual meeting of stockholders (the “2016 Annual Meeting”), and (2) the earlier to occur of (a) the day following the date of the 2016 Annual Meeting, so long as (I) the Board nominates Mr. Wang to stand for election as a director at the 2016 Annual Meeting and (II) Mr. Wang accepts such nomination and (b) the date of Mr. Wang’s resignation from the Board (such period, the “Standstill Period”), Tenzing Global will not, among other things, (i) nominate any person for election as a director, or otherwise bring any business or proposals before a stockholders’ meeting; (ii) acquire in excess of 15% of the Company’s then outstanding shares of common stock or (iii) seek, propose, or make, any proposal relating to a merger, takeover or other type of business combination for the Company. Subject to certain conditions, Tenzing Global has further agreed to cause Mr. Wang to immediately resign from the Board and all applicable committees thereof if, at any time prior to the expiration of the Standstill Period, Tenzing Global beneficially owns, in the aggregate, less than 2.0% of the Company’s then outstanding shares of Common Stock. Mr. Wang has tendered his conditional resignation which shall be effective upon Tenzing Global falling below the 2.0% amount noted above and the Board’s acceptance of such resignation. Until the expiration of the Standstill Period, Tenzing Global has agreed to vote all of the shares of Common Stock it beneficially owns (i) for the election of each of the Company’s director nominees and (ii) otherwise in accordance with the Board’s recommendation on any proposal not related to any business combination transaction involving the Company, its subsidiaries or its business.

The foregoing description of the terms and conditions of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is attached hereto as Exhibit 10.1and incorporated herein by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 10, 2015, the Board appointed Mr. Wang to the Board. The information set forth in Item 1.01 of this Current Report on Form 8-K related to the Agreement is hereby incorporated by reference into this Item 5.02.

As a non-employee director of the Company, Mr. Wang will receive compensation consistent with that provided to all of the Company’s non-employee directors. This compensation includes an annual retainer of $75,000, payable in quarterly installments. In addition, an individual meeting fee of $1,500 will be paid to Mr. Wang for each board and committee meeting commencing with the thirteenth board or thirteenth committee meeting in the 12-month period following the 2015 Annual Meeting. The final quarterly payment with respect to a calendar year is contingent on Mr. Wang having attended at least 75% of the aggregate of the total number of board meetings (held during the portion of the year for which Mr. Wang has been a director) plus the total number of meetings held by all committees of the board on which Mr. Wang served (during the portion of the year that Mr. Wang served on such committee). In the event Mr. Wang has not achieved such attendance level, he will forfeit the entire amount of the final quarterly retainer payment. This forfeiture provision does not apply to (1) board or committee meeting fees payable when the board or committee holds 13 or more meetings during the 12-month period following the annual meeting of the Company’s stockholders, or (2) equity awards (described below). Mr. Wang will be reimbursed for his reasonable out-of-pocket expenses incurred in attending board and committee meetings and associated with board or committee responsibilities, including attendance at one director education program each year.


In addition, under the director compensation program adopted effective June 2014, Mr. Wang will receive an annual grant of deferred stock units under the Career Education Corporation 2008 Incentive Compensation Plan on the date of the 2015 Annual Meeting. One-third of such deferred stock units will vest on June 14 in each of 2016, 2017 and 2018, subject to continued Board service on each vesting date. Mr. Wang also will receive a pro rata equity award for his service prior to the 2015 Annual Meeting. One-third of such deferred stock units will vest on March 14 in each of 2016, 2017 and 2018, subject to continued Board service on each vesting date. Vested deferred stock units are settled in shares of common stock upon termination of Board service, and deferred stock units that are unvested at the time of termination of Board service are forfeited.

As a non-employee director, Mr. Wang will be subject to the Company’s director stock ownership guidelines and may elect to utilize all or a portion of his annual retainer fee and quarterly meeting fees to acquire shares of the Company’s common stock from the Company in accordance with the Non-employee Director Share Accumulation Program (a copy of which is filed as exhibit 10.36 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009).

Mr. Wang is covered by the Company’s directors’ and officers’ insurance policy and also has an indemnification agreement providing indemnification and advancement of expenses to the fullest extent permitted by Delaware law (a form of which is filed as Exhibit 10.1 to our Current Report on Form 8-K filed on June 25, 2008).

Except as provided in the Agreement, there have been no transactions since the beginning of the last fiscal year, or any currently proposed transactions, in which the Company or any of its affiliates was or is to be a participant and in which Mr. Wang has or had a direct or indirect material interest, nor does Mr. Wang have any family relationship with any director or executive officer of the Company.

Mr. Wang has not yet been named to any committees of the Board.

Item 7.01. Regulation FD Disclosure.

On March 11, 2015, the Company issued a press release announcing the signing of the Agreement. A copy of the release is furnished herewith as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein.

The information in this Item 7.01 and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.


Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit

Number

  

Description of Exhibit

10.1    Agreement, by and among Career Education Corporation, Tenzing Global Management LLC, Tenzing Global Investors LLC, Tenzing Global Investors Fund I LP and Richard Wang, dated March 10, 2015.
99.1    Press release of the Company dated March 11, 2015.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

CAREER EDUCATION CORPORATION

/s/ Jeffrey D. Ayers

Jeffrey D. Ayers
Senior Vice President, General Counsel and Corporate Secretary
Dated: March 11, 2015


Exhibit Index

 

Exhibit
Number

  

Description of Exhibit

10.1    Agreement, by and among Career Education Corporation, Tenzing Global Management LLC, Tenzing Global Investors LLC, Tenzing Global Investors Fund I LP and Richard Wang, dated March 10, 2015.
99.1    Press release of the Company dated March 11, 2015.


Exhibit 10.1

AGREEMENT

This Agreement is made as of March 10, 2015 (this “Agreement”) between Career Education Corporation, a Delaware corporation (the “Company”), and each of the parties listed on Exhibit A hereto (collectively, “Tenzing Global”). The Company and Tenzing Global are referred to herein as the “Parties.” Certain capitalized terms used in this Agreement have the meanings ascribed to them in Section 3(b) below.

WHEREAS, Tenzing Global beneficially owns 2,050,000 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), as of the date of this Agreement; and

WHEREAS, the Company has reached an agreement with Tenzing Global with respect to certain matters related to the composition of the Company’s Board of Directors (the “Board”) and certain other matters, as provided in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

Section 1. Covenants.

(a) Board Matters. The Parties agree as follows:

(i) the Board and all applicable committees of the Board shall take all necessary actions to immediately appoint Richard Wang (the “New Director”) to the Board as a director with a term expiring at the Company’s 2015 annual meeting of stockholders (the “2015 Annual Meeting”);

(ii) the Board and all applicable committees of the Board shall nominate the New Director for election to the Board as a director at the 2015 Annual Meeting;

(iii) the Company shall recommend that the Company’s stockholders vote, and shall solicit proxies, in favor of the election of the New Director to the Board at the 2015 Annual Meeting and otherwise support the New Director for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees; and

(iv) if the New Director is elected to serve at the 2015 Annual Meeting, the New Director shall be considered with all other Board members for Board committee appointment in connection with the Board’s annual review of committee composition.


(b) Board Policies and Procedures. The New Director agrees, during the term of any service as a director of the Company: (i) to comply with all policies, procedures, processes, codes, rules, standards and guidelines applicable to independent members of the Board, including, without limitation, the Company’s codes of conduct and ethics, insider trading policy, its related party transactions policy and corporate governance guidelines and (ii) to keep confidential and not publicly disclose discussions and matters considered in meetings of the Board and Board committees and other information received regarding the Company in connection with his capacity as a member of the Board, in each case, unless previously disclosed publicly by the Company or as required by the federal securities laws. Subject to the confidentiality obligations hereunder, the New Director will be: (A) entitled to receive copies of any notices, documents and other materials and information distributed to the independent directors of the Company in their capacity as a member of the Board, (B) afforded the same access to information of the Company as that afforded to other independent directors of the Company in their capacity as a member of the Board, (C) entitled to receive the same form of cash or equity compensation from the Company for his service as a director of the Company as is afforded to the other independent directors of the Company in their capacity as a member of the Board and (D) permitted to contact or communicate with management or employees of the Company to the same extent the other independent directors of the Company, in their capacity as a member of the Board, are permitted to contact or communicate with management or employees of the Company. To the extent permitted by law and the Company’s existing insurance coverage, the New Director will be covered by the same indemnification and insurance provisions and coverage as are applicable to the individuals that are currently independent directors of the Company. The New Director shall provide the Company with such information concerning the New Director as is required to be disclosed under applicable law or stock exchange regulations, as promptly as necessary to enable timely filing of the Company’s proxy statement and other required filings.

(c) Resignation. Any provision in this Agreement to the contrary notwithstanding, if at any time after the date of this Agreement Tenzing Global disposes of any securities, and following such disposition, Tenzing Global ceases to have an aggregate beneficial ownership (as defined in Rule 13d-3 promulgated by the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of 2% or more of the Company’s then outstanding Common Stock (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments), then (A) Tenzing Global shall cause the New Director to immediately tender his resignation from the Board and any committee of the Board on which he then sits and (B) the parties shall have no further obligations under this Section 1. In furtherance of the foregoing, the New Director shall, prior to his appointment to the Board, and Tenzing Global shall cause the New Director to, execute an irrevocable resignation as director in the form attached hereto as Exhibit B and deliver it to the Company.

(d) Affiliates and Associates; Ownership. Tenzing Global agrees that it will cause its Affiliates and Associates (as such terms are defined in Section 3(b)(i) below) to comply with the terms of this Agreement. Tenzing Global shall keep the Company regularly apprised of collective and beneficial ownership of Tenzing Global to the extent that such position differs from the ownership positions provided to the Company concurrent with the execution of this Agreement. Tenzing Global shall not increase its beneficial ownership of Common Stock through purchases or acquisitions to more than 15% of the Company’s then outstanding Common Stock (other than securities issued or purchased by the Company pursuant to a stock split, stock dividend, stock repurchase or similar corporate action initiated by the Company with respect to any Common Stock beneficially owned by Tenzing Global on the date of this Agreement).

 

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Section 2. Voting. From the date of this Agreement until the expiration of the Standstill Period (as such term is defined in Section 3(b)(iv) below), Tenzing Global agrees to cause to be present for quorum purposes and to vote by proxy and vote all shares of Common Stock beneficially owned by Tenzing Global in favor of (i) the election of directors nominated by the Board and (ii) otherwise in accordance with the Board’s recommendation on any precatory or non-binding proposals and any non-Transaction-related proposals.

Section 3. Standstill.

(a) Tenzing Global agrees that, from the date of this Agreement until the expiration of the Standstill Period, neither it nor any of its Affiliates or Associates will, and it will cause each of its Affiliates and Associates not to, directly or indirectly, in any manner, acting alone or in concert with others:

(i) engage in, directly or indirectly, any “solicitation” (as defined in Rule 14a-l of Regulation 14A) of proxies (or written consents) or otherwise become a “participant in a solicitation” (as such term is defined in Instruction 3 of Schedule 14A of Regulation 14A under the Exchange Act) in opposition to the recommendation or proposal of the Board, or directly or indirectly recommend or request or induce or attempt to induce any other person to take any such actions, or seek to advise, encourage or influence any other person with respect to the voting of the Common Stock (including any withholding from voting or any solicitation of consents that improperly seeks to call a special meeting of stockholders) or grant a proxy, consent or other authority with respect to the voting of the Common Stock or other voting securities to any person other than to the Board or persons appointed as proxies by the Board;

(ii) form, join or in any way participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the Common Stock (other than a “group” that includes all or some of the persons identified on Exhibit A, but does not include any other entities or persons not identified on Exhibit A as of the date hereof); provided, however, that nothing herein shall limit the ability of an Affiliate of Tenzing Global to join the “group” following the execution of this Agreement, so long as any such Affiliate agrees to be bound by the terms and conditions of this Agreement;

(iii) deposit any Common Stock in any voting trust or subject any Common Stock to any arrangement or agreement with respect to the voting of any Common Stock, other than any such voting trust, arrangement or agreement solely among the members of Tenzing Global and otherwise in accordance with this Agreement;

(iv) seek, or encourage any person, to submit nominations in furtherance of a “contested solicitation” for the election or removal of directors with respect to the Company or seek, encourage or take any other action with respect to the election or removal of any directors;

(v) (A) make any proposal for consideration by stockholders at any annual or special meeting of stockholders of the Company, (B) make any offer or proposal (with or without conditions) with respect to any merger, acquisition, recapitalization, restructuring, disposition or other business combination involving the Company, or encourage, initiate or support any other third party in any such related activity or (C) make any public communication in opposition to any Company acquisition or disposition activity approved by the Board;

 

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(vi) seek, alone or in concert with others, representation on the Board, except as specifically contemplated in this Agreement;

(vii) vote for any nominee or nominees for election to the Board, other than those nominated or supported by the Board;

(viii) except as specifically provided in Section 1 of this Agreement, seek to place a representative or other Affiliate, Associate or nominee on the Board or seek the removal of any member of the Board, a change in the size, structure or composition of the Board or a change in executive officers of the Company, other than through non-public communications with the Company that would not reasonably be expected to trigger public disclosure obligations for any Party;

(ix) seek to advise, encourage, support or influence any person with respect to the voting or disposition of any securities of the Company at any annual or special meeting of stockholders (other than such encouragement, support or influence that is consistent with Company’s management or the Board’s recommendation in connection with such matter);

(x) other than through action at the Board by the New Director acting in his capacity as a director of the Company, seek to call, or to request the call of, a special meeting of the Company’s stockholders, or make a request for a list of the Company’s stockholders or for any books and records of the Company;

(xi) seek, propose, or make any statement with respect to, or solicit, negotiate with, or provide any information to any person with respect to, a merger, consolidation, acquisition of control or other business combination, tender or exchange offer, purchase, sale or transfer of assets or securities, dissolution, liquidation, reorganization, change in capital structure, recapitalization, dividend, share repurchase or similar transaction involving the Company, its subsidiaries, its Affiliates or its business(es), whether or not any such transaction involves a change of control of the Company (any of the transactions or events described in this subsection (xii), a “Transaction”);

(xii) acquire, announce an intention to acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, beneficial ownership of any Common Stock of the Company representing in the aggregate (among Tenzing Global and its Affiliates and Associates) in excess of 15% of the Company’s then outstanding Common Stock (other than securities issued or purchased by the Company pursuant to a stock split, stock dividend, stock repurchase or similar corporate action initiated by the Company with respect to any Common Stock beneficially owned by Tenzing Global on the date of this Agreement);

 

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(xiii) make any request or submit any proposal to amend the terms of this Agreement other than through non-public communications with the Company that would not reasonably be expected to trigger public disclosure obligations for any Party; or

(xiv) enter into any agreement, arrangement or understanding with a third party concerning any of the foregoing (other than this Agreement) or encourage or solicit any person to undertake any of the foregoing activities;

provided, that, notwithstanding anything in this Section 3(a), it is understood and agreed that this Agreement shall not be deemed to prohibit (x) the New Director from engaging in any lawful act in his capacity as a director of the Company that is either expressly approved by the Board or required in order to comply with his fiduciary duties as a director of the Company or (y) solely with respect to any Transaction that has been approved by a majority of the Board and has been announced by the Company, Tenzing Global from making public statements, engaging in discussions with other shareholders, soliciting proxies or voting any shares or proxies consistent with the Board’s recommendation in connection with such matter.

(b) As used in this Agreement:

(i) the terms “Affiliate” and “Associate” shall have the respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act; provided that neither “Affiliate” nor “Associate” shall include (A) any person that is a publicly held corporation or organization and is an Affiliate or Associate solely by reason of the fact that a principal or representative of Tenzing Global serves as a member of the board of directors or similar governing body of such corporation or organization, (B) any principal or representative of Tenzing Global solely in its capacity as a member of the board of directors or similar governing body of a publicly held corporation or organization, or (C) any corporation or organization that is an Associate of a person solely because such person, directly or indirectly, is the beneficial owner of 10% or more of any class of equity securities of such corporation or organization and is not an Affiliate of such person;

(ii) the terms “beneficial owner” and “beneficial ownership” shall have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act;

(iii) the terms “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature; and

(iv) the term “Standstill Period” shall mean the period commencing on the date of this Agreement and ending on the later to occur of (i) 45 days prior to the advance notice deadline for the submission of director nominations for the Company’s 2016 annual meeting of stockholders, including any adjournments or postponements thereof; and (ii) the earlier to occur of (a) the day following the date of the Company’s 2016 annual meeting of stockholders if the New Director is nominated to serve as a director on the Board for 2016 and the New Director accepts such nomination; and (b) the date of the New Director’s resignation from the Board.

 

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Section 4. Representations and Warranties of the Company. The Company represents and warrants to Tenzing Global that (a) the Company has the corporate power and authority to execute this Agreement and to bind it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles and (c) the execution, delivery and performance of this Agreement by the Company does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to the Company or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding, or arrangement to which the Company is a party or by which it is bound.

Section 5. Representations and Warranties of Tenzing Global. Tenzing Global represents and warrants to the Company that (a) the authorized signatories of Tenzing Global set forth on the signature page hereto have the power and authority to execute this Agreement and any other documents or agreements to be entered into in connection with this Agreement and to bind it thereto, (b) this Agreement has been duly authorized, executed and delivered by Tenzing Global, and is a valid and binding obligation of Tenzing Global, enforceable against Tenzing Global in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles, (c) the execution of this Agreement, the consummation of any of the transactions contemplated hereby, and the fulfillment of the terms hereof, in each case in accordance with the terms hereof, will not conflict with, or result in a breach or violation of the organizational documents of Tenzing Global as currently in effect, (d) the execution, delivery and performance of this Agreement by Tenzing Global does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to Tenzing Global, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which such member is a party or by which it is bound and (e) as of the date of this Agreement, (i) Tenzing Global is deemed to beneficially own in the aggregate 2,050,000 shares of Common Stock and (ii) Tenzing Global does not currently have, and does not currently have any right to acquire, any interest in any other securities of the Company (or any rights, options or other securities convertible into or exercisable or exchangeable (whether or not convertible, exercisable or exchangeable immediately or only after the passage of time or the occurrence of a specified event) for such securities or any obligations measured by the price or value of any securities of the Company or any of its Affiliates, including any swaps or other derivative arrangements designed to produce economic benefits and risks that correspond to the ownership of Common Stock, whether or not any of the foregoing would give rise to beneficial ownership (as determined under Rule 13d-3 promulgated under the Exchange Act), and whether or not to be settled by delivery of Common Stock, payment of cash or by other consideration, and without regard to any short position under any such contract or arrangement.

 

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Section 6. Mutual Non-Disparagement. Subject to applicable law (and including Company disclosure deemed advisable under the federal securities laws), each of the Parties covenants and agrees that, during the Standstill Period, or if earlier, until such time as the other Party or any of its agents, subsidiaries, affiliates, successors, assigns, officers, key employees, members, managers or directors shall have breached this Section 6, neither it nor any of its respective agents, subsidiaries, affiliates, successors, assigns, officers, key employees, members, managers or directors, shall in any way publicly disparage, call into disrepute, or otherwise defame or slander the other Parties or such other Parties’ subsidiaries, affiliates, successors, assigns, officers (including any current officer of a Party or a Parties’ subsidiaries who no longer serves in such capacity following the execution of this Agreement), directors (including any current director of a Party or a Parties’ subsidiaries who no longer serves in such capacity following the execution of this Agreement), employees, stockholders, agents, attorneys or representatives, or any of their products, services or businesses in any manner that would damage the business or reputation of such other Parties, their products, services or businesses or their subsidiaries, affiliates, successors, assigns, officers (or former officers), directors (or former directors), employees, stockholders, agents, attorneys or representatives.

Section 7. Public Announcements. Promptly following the execution of this Agreement, the Company shall issue a press release, in form and substance reasonably acceptable to Tenzing Global, announcing certain terms of this Agreement (the “Press Release”), which Press Release shall include a quotation from Tenzing Global reasonably acceptable to the Company. Prior to the issuance of the Press Release, neither the Company nor Tenzing Global shall issue any press release or public announcement regarding this Agreement or take any action that would require public disclosure thereof without the prior written consent of the other Party except as required by law. No Party or any of its Affiliates shall make any public statement (including, without limitation, in any filing required under the Exchange Act) concerning the subject matter of this Agreement inconsistent with the Press Release. Additionally, promptly following the execution of this Agreement, the Company will file a mutually agreed upon Current Report on Form 8-K, which will report the entry into this Agreement.

Section 8. Expenses. Each Party shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution and effectuation of this Agreement and the transactions contemplated hereby.

Section 9. Specific Performance. Each of Tenzing Global, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the other Party hereto may occur in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached and that such injury would not be adequately compensable in monetary damages. It is accordingly agreed that Tenzing Global, on the one hand, and the Company, on the other hand (the “Moving Party”), shall each be entitled to seek specific enforcement of, and injunctive or other equitable relief, without the posting of any bond, to prevent any violation of, the terms hereof, and the other party hereto will not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available.

 

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Section 10. Notice. Any notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile or email (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

To the Company:

Career Education Corporation

231 N. Martingale Rd.

Schaumburg, IL 60173

Fax No.: (847) 551-7700

E-mail: jayers@careered.com

Attention: Jeffrey D. Ayers

Senior Vice President, General Counsel and Corporate Secretary

with a copy to (which shall not constitute notice):

Katten Muchin Rosenman LLP

525 W. Monroe Street

Chicago, IL 60661

Fax No.: (312) 577-8641

E-mail: lawrence.levin@kattenlaw.com

Attention: Lawrence D. Levin, Esq.

To Tenzing Global:

Tenzing Global Management LLC

388 Market Street, Suite 860

San Francisco, CA 94111 7700

Fax No.: (415) 645-2401

E-mail: rwang@tenzing-global.com

Attention: Richard Wang

with a copy to (which shall not constitute notice):

Crowell & Moring LLP

275 Battery Street, 23rd Floor

San Francisco, CA 94111

Fax No.: (415) 986-2827

Email: mindick@crowell.com

Attention: Murray A. Indick

 

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Section 11. Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without reference to the conflict of laws principles thereof. Each of the Parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the Parties hereto hereby irrevocably submits, with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement in any court other than the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert in any action or proceeding with respect to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by applicable legal requirements, any claim that (A) the suit, action or proceeding in such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 12. Entire Agreement; Amendment and Waiver; Successors and Assigns; Third Party Beneficiaries. This Agreement constitutes the entire understanding of the Parties hereto with respect to its subject matter and supersedes all prior agreements with respect to the subject matter hereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings between the Parties other than as set forth in the preceding sentence. No modifications of this Agreement can be made except in writing signed by an authorized representative of each the Company and Tenzing Global, except that the signature of an authorized representative of the Company will not be required to permit an Affiliate of Tenzing Global to agree to be listed on Exhibit A and be bound by the terms and conditions of this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The terms and conditions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties hereto and their respective successors, heirs, executors, legal representatives, and permitted assigns. No party shall assign this Agreement or any rights or obligations hereunder without, with respect to any member of Tenzing Global, the prior written consent of the Company, and with respect to the Company, the prior written consent of Tenzing Global. This Agreement is solely for the benefit of the Parties hereto and is not enforceable by any other persons.

 

9


Section 13. Receipt of Adequate Information: No Reliance; Representation by Counsel. Each Party acknowledges that it has received adequate information to enter into this Agreement, that is has not relied on any promise, representation or warranty, express or implied not contained in this Agreement and that it has been represented by counsel in connection with this Agreement. Accordingly, any rule of law or any legal decision that would provide any party with a defense to the enforcement of the terms of this Agreement against such party shall have no application and is expressly waived. The provisions of the Agreement shall be interpreted in a reasonable manner to effect the intent of the Parties.

Section 14. Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The Parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid or unenforceable provision.

Section 15. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Party (including by means of electronic delivery or facsimile).

[Signature Page Follows]

 

10


IN WITNESS WHEREOF, the Parties hereto have duly executed and delivered this Agreement as of the date first above written.

 

CAREER EDUCATION CORPORATION
By:

/s/ Ronald D. McCray

Name: Ronald D. McCray
Title: Chairman of the Board of Directors and Interim President and Chief Executive Officer
TENZING GLOBAL MANAGEMENT LLC:
By:

/s/ Richard Wang

Name: Richard Wang
Title: Managing Partner
TENZING GLOBAL INVESTORS LLC:
By:

/s/ Richard Wang

Name: Richard Wang
Title: Managing Partner
TENZING GLOBAL INVESTORS FUND I LP:
By: Tenzing Global Investors, LLC, its General
Partner
By:

/s/ Richard Wang

Name: Richard Wang
Title: Managing Partner

/s/ Richard Wang

RICHARD WANG

 

11


Exhibit A

Tenzing Global Management LLC

Tenzing Global Investors LLC

Tenzing Global Investors Fund I LP

Richard Wang


Exhibit B

FORM OF IRREVOCABLE RESIGNATION

March 10, 2015

Attention: Board of Directors

Career Education Corporation

231 N. Martingale Rd.

Schaumburg, IL 60173

Re: Resignation

Ladies and Gentlemen:

Reference is made to the Agreement, dated as of March 10, 2015 (the “Agreement”), by and between Career Education Corporation (the “Company”) and each of the parties listed on Exhibit A thereto. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Agreement.

In accordance with Section 1(c) of the Agreement, I hereby tender my conditional resignation as a director of the Board and as a member of any committees of the Board, provided that this resignation shall be effective upon the Board’s acceptance of this resignation, and only in the event that at any time Tenzing Global disposes of any securities, and following such disposition, Tenzing Global ceases to have an aggregate beneficial ownership (as defined in Rule 13d-3 promulgated by the SEC under the Exchange Act) of 2% or more of the Company’s then-outstanding Common Stock (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments). I hereby acknowledge that this conditional resignation as a director of the Board is as a result of the terms and conditions of the Agreement.

This resignation may not be withdrawn by me at any time during which it is effective.

 

Very truly yours,

/s/ Richard Wang

Richard Wang


Exhibit 99.1

 

LOGO

Richard Wang Named to Career Education Corporation Board of Directors

Schaumburg, Ill. (March 11, 2015)Career Education Corporation (NASDAQ: CECO), a provider of postsecondary education programs and services, today announced that Richard Wang has been appointed to the Company’s Board of Directors. Mr. Wang’s appointment follows a March 4, 2015 vote by the Board of Directors to expand the number of eligible board seats from eight to nine.

Mr. Wang, 40, is a co-founder and Managing Partner of Tenzing Global Management (“Tenzing Global”), which beneficially owns approximately three percent of Career Education Corporation’s outstanding common stock. The firm is a value-oriented, cautiously contrarian, long-term investment firm based in San Francisco. Tenzing Global focuses on companies in the technology, media, telecommunications, consumer and retail sectors. Prior to Tenzing Global, Wang was a Managing Director at Och-Ziff Capital Management. Wang received a B.A. from the University of Chicago and an M.B.A. from Stanford Graduate School of Business.

“We are pleased to bring new and fresh perspectives from the investment community to our boardroom with the addition of Mr. Wang,” said Thomas Lally, Lead Independent Director of the Board of Directors. “Mr. Wang’s varied expertise will complement and enhance our discussions around ways to continue moving Career Education along a path toward sustained financial strength and excellent outcomes for students.”

“Career Education provides innovative, career-oriented education to students looking to better themselves professionally,” Wang said. “Its institutions and its adaptive learning technology development show tremendous potential for growth and success. The company has made steady progress and I look forward to actively working together with the board and management team to improve student outcomes and create shareholder value.”

Wang was appointed to the Board in connection with an agreement with Tenzing Global and certain of its affiliates. The agreement contains restrictions on the voting of Tenzing Global’s stock and customary standstill provisions which, subject to certain exceptions, terminate in connection with the Company’s 2016 Annual Meeting. The full agreement has been filed in a Form 8-K with the Securities and Exchange Commission.

About Career Education Corporation

The colleges, institutions and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. In addition to its online offerings, Career Education serves students from campuses throughout the United States offering programs that lead to doctoral, master’s, bachelor’s and associate degrees, as well as to diplomas and certificates.

CEC’s institutions include both universities that provide degree programs through the master or doctoral level and colleges that provide programs through the associate or bachelor level. The University group includes American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – predominantly serving students online with career-focused degree programs that meet the educational demands of today’s busy adults. The Career Schools group offers career-centered education primarily through ground-based campuses and includes Briarcliffe College, Brooks Institute, Harrington College of Design, Missouri College and Sanford-Brown Institutes and Colleges (“SBI” and “SBC,” respectively). Through its colleges, institutions and universities, CEC is committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.


A detailed listing of individual campus locations and web links to Career Education’s colleges, institutions and universities can be found at www.careered.com.

###

CONTACT

Investors:

Alpha IR Group

Chris Hodges or Sam Gibbons

(312) 445-2870

CECO@alpha-ir.com

or

Media:

Career Education Corporation

Mark Spencer

Director, Corporate Communications

(847) 585-3802

Source: Career Education Corporation

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