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Draft-- March 19, 2001
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EDISON SCHOOLS INC.
(a Delaware corporation)
- Shares of Class A Common Stock
PURCHASE AGREEMENT
Dated: March 20, 2001
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Table of Contents
Page
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SECTION 1. Representations and Warranties................................................... 3
(a) Representations and Warranties by the Company.................................... 3
(i) Compliance with Registration Requirements........................................ 3
(ii) Incorporated Documents........................................................... 4
(iii) Independent Accountants.......................................................... 4
(iv) Financial Statements............................................................. 5
(v) No Material Adverse Change in Business........................................... 5
(vi) Good Standing of the Company..................................................... 5
(vii) Good Standing of Subsidiary...................................................... 5
(viii) Capitalization................................................................... 6
(ix) Authorization of Agreement....................................................... 6
(x) Authorization and Description of Securities...................................... 7
(xi) Absence of Defaults and Conflicts................................................ 7
(xii) Absence of Labor Dispute......................................................... 8
(xiii) Absence of Proceedings........................................................... 8
(xiv) Accuracy of Exhibits............................................................. 9
(xv) Possession of Intellectual Property.............................................. 9
(xvi) Absence of Further Requirements.................................................. 9
(xvii) Possession of Licenses and Permits............................................... 9
(xviii) Compliance with Statutes, Rules and Regulations, etc............................. 10
(xix) Title to Property................................................................ 11
(xx) Investment Company Act........................................................... 11
(xxi) Environmental Laws............................................................... 11
(xxii) Registration Rights.............................................................. 12
(xxiii) Equity Ownership................................................................. 12
(xxiv) Management Agreements............................................................ 12
(xxv) Insurance........................................................................ 13
(xxvi) Tax Returns and Payment of Taxes................................................. 13
(xxvii) No Stabilization or Manipulation................................................. 14
(xxviii)Certain Transactions............................................................. 14
(xxix) Statistical and Market Data...................................................... 14
(xxx) Accounting and other Controls.................................................... 14
(b) Representations and Warranties by the Selling Shareholders....................... 14
(i) Accurate Disclosure.............................................................. 15
(ii) Authorization of Agreements...................................................... 15
(iii) Valid and Marketable Title....................................................... 16
(iv) Due Execution of Power of Attorney and Custody Agreement......................... 16
(v) Absence of Manipulation.......................................................... 17
(vi) Absence of Further Requirements.................................................. 17
(vii) Restriction on Sale of Securities................................................ 17
(viii) Certificates Suitable for Transfer............................................... 18
(ix) No Association with NASD......................................................... 18
(c) Officer's Certificates........................................................... 18
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Table of Contents
(continued)
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SECTION 2. Sale and Delivery to Underwriters; Closing....................................... 18
(a) Initial Securities............................................................... 18
(b) Option Securities................................................................ 19
(c) Payment.......................................................................... 19
(d) Denominations; Registration...................................................... 20
SECTION 3. Covenants of the Company......................................................... 20
SECTION 4. Payment of Expenses.............................................................. 24
(a) Expenses......................................................................... 24
(b) Expenses of the Selling Shareholders............................................. 24
(c) Termination of Agreement......................................................... 25
(d) Allocation of Expenses........................................................... 25
SECTION 5. Conditions of Underwriters' Obligations.......................................... 25
(a) Effectiveness of Registration Statement.......................................... 25
(b) Opinion of Counsel for Company................................................... 25
(c) Opinion of Counsel for the Selling Shareholders.................................. 26
(d) Opinion of Counsel for Underwriters.............................................. 26
(e) Officers' Certificate............................................................ 26
(f) Certificate of the Selling Shareholder........................................... 26
(g) Accountant's Comfort Letter...................................................... 27
(h) Bring-down Comfort Letter........................................................ 27
(i) Approval of Listing.............................................................. 27
(j) No Objection..................................................................... 27
(k) Lock-up Agreements............................................................... 27
(l) Form W-8 or W-9.................................................................. 27
(m) Conditions to Purchase of Option Securities...................................... 27
(i) Officers' Certificate............................................................ 28
(ii) Certificate of Selling Shareholders.............................................. 28
(iii) Opinion of Counsel for Company................................................... 28
(iv) Opinion of Counsel for the Selling Shareholders.................................. 28
(v) Opinion of Counsel for Underwriters.............................................. 28
(vi) Bring-down Comfort Letter........................................................ 28
(n) Additional Documents............................................................. 29
(o) Termination of Agreement......................................................... 29
SECTION 6. Indemnification.................................................................. 29
(a) Indemnification of Underwriters.................................................. 29
(b) Indemnification of Company, Directors and Officers and Selling Shareholders...... 31
(c) Actions against Parties; Notification............................................ 32
(d) Settlement without Consent if Failure to Reimburse............................... 32
(e) Other Agreements with Respect to Indemnification................................. 33
SECTION 7. Contribution..................................................................... 33
SECTION 8. Representations, Warranties and Agreements to Survive Delivery................... 34
SECTION 9. Termination of Agreement......................................................... 35
(a) Termination; General............................................................. 35
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Table of Contents
(continued)
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(b) Liabilities...................................................................... 35
SECTION 10. Default by One or More of the Underwriters....................................... 36
SECTION 11. Default by One or More of the Selling Shareholders or the Company................ 36
SECTION 12. Notices.......................................................................... 37
SECTION 13. Parties.......................................................................... 37
SECTION 14. GOVERNING LAW AND TIME........................................................... 38
SECTION 15. Effect of Headings............................................................... 38
SCHEDULES
Schedule A - List of Underwriters
Schedule B - List of Selling Shareholders
Schedule C - Pricing Information
Schedule D - List of Persons subject to Lock-up
Schedule E - List of Management Agreements
EXHIBITS
Exhibit A-1 - Form of Opinion of Company's Counsel
Exhibit A-2 - Form of Opinion of Company's General Counsel
Exhibit A-3 - Form of Opinion of Selling Shareholders' Counsel
Exhibit B - Form of Lock-up Letters
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EDISON SCHOOLS INC.
(a Delaware corporation)
- Shares of Class A Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
March 20, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Credit Suisse First Boston Corporation
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
ThinkEquity Partners
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Edison Schools Inc., a Delaware corporation (the "Company"), and the
persons listed in Schedule B hereto (the "Selling Shareholders") confirm their
respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, Credit Suisse First Boston Corporation, Banc of
America Securities LLC, ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co., Inc. and ThinkEquity Partners are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the sale by the Selling Shareholders, acting severally and not
jointly, and the purchase by the Underwriters, acting severally and not jointly,
of the respective numbers of shares of class A common stock, par value $.01 per
share, of the Company ("Common Stock") set forth in said Schedules A and B
hereof, and with respect to the grant by certain of the Selling Shareholders to
the Underwriters, acting
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severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of - additional shares of Common Stock to cover
over-allotments, if any. The aforesaid - shares of Common Stock (the "Initial
Securities") to be purchased by the Underwriters and all or any part of the -
shares of Common Stock subject to the option described in Section 2(b) hereof
(the "Option Securities") are hereinafter called, collectively, the
"Securities."
The Company and the Selling Shareholders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-55840) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus dated February 26, 2001 together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the applicable Term Sheet. For purposes
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of this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include (i) the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇") and (ii) all documents incorporated by reference or deemed to
be incorporated by reference therein.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" (or other
references of like import) in the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b), hereof and agrees with each Underwriter,
as follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for use of Form S-3 under the 1933 Act. Each of
the Registration Statement and any Rule 462(b) Registration Statement
has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement,
the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
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necessary to make the statements therein not misleading. Neither the
Prospectus nor any amendment or supplement thereto (including any
prospectus wrapper), at the time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), included or
will include an untrue statement of a material fact or omitted or will
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially
different," as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
The representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the
Representatives expressly for use in the Registration Statement or the
Prospectus.
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, when they became effective or at the time they were
or hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the 1934 Act and the
rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement became
effective, at the time the Prospectus was issued and at the Closing
Time (and, if any Option Securities are purchased, at the Date of
Delivery), did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(iii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
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(iv) Financial Statements. The financial statements included
in the Registration Statement and the Prospectus, together with the
related schedules and notes, present fairly the financial position and
stockholders' equity of the Company and its consolidated subsidiary at
the dates indicated and the results of operations and cash flows of the
Company and its consolidated subsidiary for the periods specified; said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The selected financial and other data
and the summary financial and operating data included in the Prospectus
present fairly the information shown therein and, in the cases of the
selected financial data and the summary financial data, have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its consolidated subsidiary considered as
one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or its consolidated
subsidiary, other than those in the ordinary course of business, which
are material with respect to the Company and its consolidated
subsidiary considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing could not reasonably be expected to result in a Material
Adverse Effect.
(vii) Good Standing of Subsidiary. The Company's consolidated
subsidiary, Alliance-Edison LLC ("Alliance-Edison"), has been duly
organized and is validly existing as a limited liability company, in
good standing under the laws of the State of Delaware, has limited
liability company power, and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and is duly qualified as a foreign limited liability company, to
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transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of such subsidiary's issued and outstanding
equity interest owned by the Company has been duly authorized and
validly issued, is fully paid and non-assessable and is free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding equity interest of such subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such subsidiary. Alliance Edison is the Company's
only subsidiary and it does not have assets or liabilities or conduct
business which is material to the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company.
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company (a) as of December 31, 2000, was as set
forth in the Prospectus in the column entitled "Actual" under the
caption "Capitalization," and (b) after giving effect to the
transactions contemplated by this Agreement and the Registration
Statement, will be as set forth in the Prospectus in the column
entitled "As Adjusted" under the caption "Capitalization" (except for
issuances subsequent to December 31, 2000, if any, pursuant to this
Agreement, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus or pursuant to the exercise of
convertible securities, options or warrants referred to in the
Prospectus). The shares of issued and outstanding capital stock of the
Company, including, without limitation, the Securities to be sold by
the Selling Shareholders, have been duly authorized and validly issued
and are fully paid and non-assessable; none of the outstanding shares
of capital stock of the Company was issued in violation of the
preemptive or other similar rights of any securityholder of the
Company. The shares of issued and outstanding capital stock of the
Company have been issued in compliance, in all material respects, with
all federal and state securities laws. Except as disclosed in the
Prospectus, there are no outstanding options or warrants to purchase,
or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of the Company's
capital stock or any such options, warrants, rights, convertible
securities or obligations. The description of the Company's stock
option and purchase plans and the options or other rights granted and
exercised thereunder set forth in the Prospectus accurately and fairly
describe, in all material respects, the information required to be
shown with respect to such plans, arrangements, options and rights.
(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
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(x) Authorization and Description of Securities. The
Securities to be purchased by the Underwriters from the Company have
been duly authorized for issuance and sale to the Underwriters pursuant
to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement, against payment of the consideration set
forth herein will be validly issued, fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in
the Prospectus and such description conforms to the rights set forth in
the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company
nor its consolidated subsidiary is in violation of its charter or
by-laws or limited liability company agreement, as applicable, or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or its consolidated subsidiary is a
party or by which it or its consolidated subsidiary may be bound, or to
which any of the property or assets of the Company or its consolidated
subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults under Agreements and Instruments that could
not reasonably be expected to result in a Material Adverse Effect; and
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and in
the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations under this Agreement
have been duly authorized by all necessary corporate action and do not
and will not, whether with or without the giving of notice or passage
of time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or its consolidated subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that could not reasonably be
expected to result in a Material Adverse Effect), nor will such action
result in any violation of (A) the provisions of the charter, by-laws
or limited liability company agreement of the Company or its
consolidated subsidiary, as applicable, or (B) any applicable law,
statute, rule, regulation, judgment, standard, guide, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or its consolidated
subsidiary or any of their assets, properties or operations, including,
without limitation, the Elementary and Secondary Education Act of 1965,
as amended, and all rules and regulations
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promulgated thereunder (collectively, the "ESEA"), the Individuals
with Disabilities in Education Act and all rules and regulations
promulgated thereunder (collectively, the "IDEA") and any other
federal, state or local law, statute, rule, regulation, standard, guide
or order pertaining to the authorization to operate public schools or
the eligibility to receive funding under federal, state or local
programs related to the operation of public schools, except, in the
case of clause (B) above, for such violations which could not
reasonably be expected to result in a Material Adverse Effect. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or its consolidated subsidiary.
(xii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or its consolidated subsidiary (including,
without limitation, all principals, teachers and other personnel
employed by or working for or in any school operated by the Company)
exists or, to the knowledge of the Company, is imminent, and the
Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or its consolidated subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in any of
the foregoing cases, may reasonably be expected to result in a Material
Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign (including, without
limitation, any proceeding before the United States Department of
Education (the "USDE"), the United States Department of Justice (the
"DOJ"), the Equal Employment Opportunity Commission (the "EEOC"), state
and local educational agencies (including school boards and public
school districts) or charter school boards), now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company,
its consolidated subsidiary or any school operated by the Company,
which is required to be disclosed in the Registration Statement (other
than as disclosed therein), or which could reasonably be expected to
result in a Material Adverse Effect, or which could materially and
adversely affect the consummation of the transactions contemplated in
this Agreement or the performance by the Company of its obligations
hereunder or thereunder; the aggregate of all pending legal or
governmental proceedings to which the Company, its consolidated
subsidiary or any school operated by the Company is a party or of which
any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
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(xiv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement, the Prospectus or the documents incorporated by reference
therein or to be filed as exhibits thereto which have not been so
described and filed as required.
(xv) Possession of Intellectual Property. The Company, its
consolidated subsidiary and each of the schools operated by the Company
own or possess, or can acquire on reasonable terms, adequate patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (including, without
limitation, the right to use Success for All, a K-5 reading program
developed by ▇▇▇▇▇ ▇▇▇▇▇▇▇ University and the mathematics programs
developed by the University of Chicago School Mathematics Project)
(collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and none of the Company, its
consolidated subsidiary or, to the knowledge of the Company, any of the
schools operated by it has received any notice or is otherwise aware of
any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which could render any Intellectual Property invalid or inadequate to
protect the interest of the Company therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities under this Agreement or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations and foreign or state securities or blue sky laws.
Neither the Company nor any of the schools operated by the Company is
subject to any requirements of, or regulation under, the Higher
Education Act of 1965, as amended.
(xvii) Possession of Licenses and Permits. The Company, its
consolidated subsidiary and each of the schools operated by it possess
such permits, licenses, approvals, consents and other authorizations,
including, without limitation, authorizations required (A) to
participate in federal, state and local funding programs under the ESEA
and the IDEA to the extent the Company or such school currently
receives material funding thereunder, (B) to operate the
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charter schools currently operated by it, (C) except as described in
the Prospectus, to operate schools, if required by applicable law, as
federal income tax exempt organizations under Sections 501(a) and
501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), and (D) to receive funding under federal, state and local
education laws, statutes, rules, regulations, standards, guides or
orders to the extent the Company or such school currently receives
material funding thereunder (collectively, "Governmental Licenses"),
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them, except where the failure to possess such Governmental Licenses
could not reasonably be expected to have a Material Adverse Effect; the
Company and, to the knowledge of the Company, each of the schools
operated by the Company, is in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to
comply could not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect could not reasonably be expected to have a
Material Adverse Effect; and neither the Company nor, to the knowledge
of the Company, any of the schools operated by it has received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could reasonably
be expected to result in a Material Adverse Effect.
(xviii) Compliance with Statutes, Rules and Regulations, etc.
The Company, its consolidated subsidiary and each of the schools
operated by the Company are in compliance with all applicable laws,
statutes, rules, regulations, standards, guides or orders (including,
without limitation, ESEA, IDEA, Family Education Rights and Privacy Act
of 1974, as amended, Gun-Free Schools Act of 1994, Section 504 of the
Rehabilitation Act of 1973, Americans with Disabilities Act of 1990,
Title VI and Title VII of the Civil Rights Act of 1964, Title IX of the
Education Amendments of 1972, Age Discrimination Act of 1975, Age
Discrimination in Employment Act of 1967, Equal Pay Act of 1963 and the
Drug-Free Workplace Act of 1988) administered, issued or implemented by
any federal, state or local government or any agency or subdivision of
any of the foregoing, including, without limitation, the USDE, the DOJ,
the EEOC, state and local education agencies (including school boards
and public school districts) or charter school boards, to the extent
applicable, except where failure to be so in compliance could not
reasonably be expected to have a Material Adverse Effect. The Company
has not been advised, and has no reason to believe, that either it, its
consolidated subsidiary or any of the schools operated by the Company
is not conducting business in compliance with all applicable laws,
statutes, rules and regulations of the jurisdictions in which it is
conducting business, including,
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without limitation, all applicable federal, state and local laws, rules
and regulations; except where failure to be so in compliance could not
reasonably be expected to have a Material Adverse Effect.
(xix) Title to Property. The Company and its consolidated
subsidiary have good and marketable title to all real property owned by
them and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (A) are described in the Prospectus or (B) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company or its consolidated subsidiary; and all of the leases and
subleases material to the business of the Company, its consolidated
subsidiary and the schools operated by it, and under which the Company,
its consolidated subsidiary or any of the schools operated by it holds
properties described in the Prospectus, are in full force and effect,
and none of the Company, its consolidated subsidiary or any school
operated by it has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company, its
consolidated subsidiary or any of the schools operated by the Company
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company, its consolidated subsidiary or
any of the schools operated by it to the continued possession of the
leased or subleased premises under any such lease or sublease, which
claim, if the subject of an unfavorable decision, ruling or finding,
could reasonably be expected to result in a Material Adverse Effect.
(xx) Investment Company Act. Neither the Company nor its
consolidated subsidiary is, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will be, an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(xxi) Environmental Laws. Except as described in the
Registration Statement and except as could not, singly or in the
aggregate, be reasonably expected to result in a Material Adverse
Effect, (A) none of the Company, its consolidated subsidiary or, to the
knowledge of the Company, any of the schools operated by it is in
violation of any federal, state, local or foreign law, statute, rule,
regulation, standard, guide, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health or safety, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), natural resources or
wildlife, including, without limitation, laws and
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regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances (including, without limitation, asbestos, polychlorinated
biphenyls, urea-formaldehyde insulation, petroleum or petroleum
products) (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling, release or threatened release of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company, its consolidated
subsidiary and the schools operated by it have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company, its consolidated
subsidiary or any of the schools operated by it, and (D) there are no
events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Company, its consolidated subsidiary or the schools
operated by it relating to Hazardous Materials or any Environmental
Laws.
(xxii) Registration Rights. Except pursuant to the Third
Amended and Restated Shareholders' Agreement, dated as of July 2, 1999,
as amended, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(xxiii) Equity Ownership. The Company owns (A) 2,000,000
shares of Series B preferred stock, par value $0.001 per share, of Apex
Online Learning Inc., a Washington corporation ("APEX"), (B) a 35%
limited liability company interest in Ksixteen LLC, a limited liability
company ("Ksixteen"), and (C) a 54.3% limited liability company
interest in Alliance-Edison, in each case, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity. The Company does not own the equity securities, limited
liability company interests or other similar interests of any other
entity.
(xxiv) Management Agreements. The Company has provided to
Debevoise & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, true, correct and
complete copies of each of the management agreements and school
charters to which the Company or any of the schools operated by the
Company is a party or pursuant to which any such school is operated, as
amended (collectively, the "Management Agreements"), none of which have
been subsequently amended, supplemented or modified, and each of the
Management Agreements is in full force and effect on the date hereof,
and, neither the Company, nor, to the knowledge of Company,
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any other party is in default in the performance or observation of any
material obligation, agreement, covenant or condition contained
therein. Schedule E hereto is a true, correct and complete list of the
Management Agreements.
(xxv) Insurance. The Company, its consolidated subsidiary and
each of the schools operated by the Company and, to the knowledge of
the Company, the school districts and charter school boards responsible
for supervising the schools operated by the Company, are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the education
industry; none of the Company, its consolidated subsidiary or any of
the schools operated by the Company or, to the knowledge of the
Company, any school district or charter school board responsible for
supervising any school operated by the Company, has been refused any
insurance coverage sought or applied for; and the Company does not have
any reason to believe that it, its consolidated subsidiary or any of
the schools operated by it or any school district or charter school
board responsible for supervising any school operated by the Company,
will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its operations except where
the failure to renew or maintain such coverage could not reasonably be
expected to result in a Material Adverse Effect. The officers and
directors of the Company are insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as the Company believes are prudent and customary for officers'
and directors' liability insurance of a public company and as the
Company believes could cover claims which could reasonably be expected
to be made in connection with the issuance of the Securities; and the
Company has no reason to believe that it will not be able to renew its
existing directors' and officers' liability insurance coverage as and
when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to cover its officers and directors.
(xxvi) Tax Returns and Payment of Taxes. The Company and its
consolidated subsidiary have timely filed all federal, state, local and
foreign tax returns that are required to be filed or have duly
requested extensions thereof and all such tax returns are true, correct
and complete, except to the extent that any failure to file or request
an extension, or any incorrectness could not reasonably be expected to
result in a Material Adverse Effect. The Company and its consolidated
subsidiary have timely paid all taxes shown as due on such filed tax
returns (including any related assessments, fines or penalties), except
to the extent that any such taxes are being contested in good faith and
by appropriate proceedings, or to the extent that any failure to pay
could not reasonably be expected to result in a Material Adverse
Effect; and adequate charges, accruals and reserves have been provided
for in the financial statements referred to in
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Section 1(a)(iii) above in accordance with GAAP in respect of all
Federal, state, local and foreign taxes for all periods as to which the
tax liability of the Company and its consolidated subsidiary have not
been finally determined or remains open to examination by applicable
taxing authorities. Neither the Company nor its consolidated subsidiary
is a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
(xxvii) No Stabilization or Manipulation. Neither the Company
nor, to the best of its knowledge, any of its directors, officers or
affiliates has taken or will take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result
in stabilization or manipulation of the price of the Securities in
violation of Regulation M under the 1934 Act.
(xxviii) Certain Transactions. Except as disclosed in the
Prospectus, there are no outstanding loans, advances, or guarantees of
indebtedness by the Company to or for the benefit of any of the
executive officers or directors of the Company or any of the members of
the families of any of them that would be required to be so disclosed
under the 1933 Act, the 1933 Act Regulations or Form S-3.
(xxix) Statistical and Market Data. The statistical and
market-related data included in the Prospectus are derived from sources
which the Company reasonably and in good faith believes to be accurate,
reasonable and reliable and agrees with the sources from which it was
derived.
(xxx) Accounting and other Controls. The Company has
established a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions were, are and will
be executed in accordance with management's general or specific
authorization; (B) transactions were, are and will be recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets was, is and will be
permitted only in accordance with a management's general or specific
authorizations; and (D) the recorded accountability for assets was, is
and will be compared with existing assets at reasonable intervals and
appropriate action was, is and will be taken with respect to any
differences.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder, and in the case of Section 1(b)(i)(A) below, each Selling
Shareholder and H. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, severally represents and warrants to
each Underwriter as of the date hereof, as of the Closing Time, and, if the
Selling Shareholder is selling Option Securities on a Date of Delivery, as of
each such Date of Delivery, and agrees with each Underwriter, as follows:
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(i) Accurate Disclosure. (A) Such Selling Shareholder (other
than the Selling Shareholders listed on Schedule B-1) and H.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has reviewed and is familiar with the Registration
Statement and the Prospectus and, to the best knowledge of such Selling
Shareholder and H. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as applicable, none of the
preliminary prospectus, the Registration Statement, the Prospectus or
any amendments or supplements thereto (including any prospectus
wrapper) includes any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading and such Selling Shareholder is not prompted to sell the
Securities to be sold by such Selling Shareholder under this Agreement
by any information concerning the Company or the consolidated
subsidiary of the Company which is not set forth in the preliminary
prospectus, the Registration Statement and the Prospectus; (B) the
information furnished in writing by or on behalf of such Selling
Shareholder for use in the preliminary prospectus, the Registration
Statement and the Prospectus and any further amendments or supplements
thereto does not and will not, as of the applicable effective date (as
to the Registration Statement and any amendment thereto) and as of the
applicable filing date, the date hereof, the Closing Time and each
Delivery Date (as to the preliminary prospectus and the Prospectus and
any amendments or supplements thereto) contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(C) such Selling Shareholder (other than WSI Inc. and ▇▇▇▇ ▇▇▇▇▇) is
not aware that the preliminary prospectus, the Registration Statement,
the Prospectus or any amendments or supplements thereto (including any
prospectus wrapper) include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(ii) Authorization of Agreements. Such Selling Shareholder has
the full right, power and authority to enter into this Agreement, and a
Power of Attorney (the "Power of Attorney") and a Custody Agreement
(the "Custody Agreement") and to sell, transfer and deliver the
Securities to be sold by such Selling Shareholder under this Agreement.
The execution and delivery of this Agreement, the Power of Attorney and
the Custody Agreement, the sale and delivery of the Securities to be
sold by such Selling Shareholder, the consummation by such Selling
Shareholder of the transactions contemplated under this Agreement and
compliance by such Selling Shareholder with its obligations under this
Agreement have been duly authorized by such Selling Shareholder and do
not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any tax,
lien, charge or encumbrance upon the Securities to be sold by such
Selling Shareholder or any
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property or assets of such Selling Shareholder pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, license, lease or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder may
be bound, or to which any of the property or assets of such Selling
Shareholder is subject, nor will such action result in any violation of
the provisions of the charter or by-laws or other organizational
instrument of such Selling Shareholder, if applicable, or any
applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Shareholder
or any of its properties.
(iii) Valid and Marketable Title. Such Selling Shareholder (A)
has at the date hereof (excluding WSI Inc. and ▇.▇. Childs Equity
Partners, L.P.) valid and marketable title to the Securities to be sold
by such Selling Shareholder under this Agreement, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind (collectively, the "Lien"), other than pursuant
to this Agreement, the Custody Agreement and the Power of Attorney, and
(B) will at the Closing Time (including WSI Inc. and ▇.▇. Childs Equity
Partners, L.P.) and, if any Option Securities are purchased, on the
Date of Delivery, have valid and marketable title to the Securities to
be sold by such Selling Shareholder under this Agreement, free and
clear of any Lien, other than pursuant to this Agreement, the Custody
Agreement and the Power of Attorney; and upon delivery of such
Securities and payment of the purchase price therefor as contemplated
in this Agreement (assuming each such Underwriter has no notice of any
adverse claim, as defined in Uniform Commercial Code as adopted in the
State of New York (the "UCC")), each of the Underwriters will receive
valid and marketable title to the Securities purchased by it from such
Selling Shareholder, free and clear of any Lien.
(iv) Due Execution of Power of Attorney and Custody Agreement.
Such Selling Shareholder has duly executed and delivered, in the form
heretofore furnished to the Representatives, the Power of Attorney with
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇, or any of them, as
attorneys-in-fact (the "Attorneys-in-Fact") and the Custody Agreement
with the Company, as custodian (the "Custodian"); the Custodian is
authorized to deliver the Securities to be sold by such Selling
Shareholder under this Agreement and to accept payment therefor; and
each Attorney-in-Fact is authorized to execute and deliver this
Agreement and the certificate referred to in Section 5(f) or that may
be required pursuant to Sections 5(n) and 5(o) of this Agreement on
behalf of such Selling Shareholder, to sell, assign and transfer to the
Underwriters the Securities to be sold by such Selling Shareholder
under this Agreement, to determine the purchase price to be paid by the
Underwriters and to such Selling Shareholder, as provided in Section
2(a) of this Agreement and subject to the terms of the Power of
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Attorney, to authorize the delivery of the Securities to be sold by
such Selling Shareholder under this Agreement, to accept payment
therefor, and otherwise to act on behalf of such Selling Shareholder in
connection with this Agreement.
(v) Absence of Manipulation. Such Selling Shareholder has not
taken, and will not take, directly or indirectly, any action designed
to, or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Securities in
violation of Regulation M under the 1934 Act.
(vi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by such Selling
Shareholder of its obligations under this Agreement or in the Power of
Attorney or the Custody Agreement, or in connection with the offer,
sale and delivery by such Selling Shareholder of the Securities under
this Agreement or the consummation by such Selling Shareholder of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations and state securities laws.
(vii) Restriction on Sale of Securities. During a period of 90
days from the date of the Prospectus, such Selling Shareholder will
not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (A) offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise lend, transfer or dispose of,
directly or indirectly, any share of Common Stock, class B common stock
or any securities convertible into, exercisable or exchangeable for or
repayable with Common Stock or class B common stock, whether now owned
or hereafter acquired by such Selling Shareholder or with respect to
which such Selling Shareholder has or hereafter acquires the power of
disposition, or file, or request or demand that the Company file, any
registration statement under the 1933 Act with respect to any of the
foregoing or (B) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock
or class B common stock, whether any such swap or transaction described
in clause (A) or (B) above is to be settled by delivery of Common
Stock, class B common stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the Securities to
be sold under this Agreement.
Notwithstanding the foregoing restrictions on transfer, such
Selling Shareholder shall be permitted to make the following transfers:
(A) transfers made by gift, will or intestacy, provided the donee
thereof agrees in writing to be bound by the terms of this Section
1(b)(vii); (B) transfers to the Selling
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Shareholders' affiliates, as such term is defined in Rule 405
promulgated under the 1933 Act, provided that each transferee agrees in
writing to be bound by the terms of this Section 1(b)(vii); (C)
transfers made with prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇; and (D) in
the event such Selling Shareholder is an individual, transfers to his
or her immediate family or to a trust the beneficiaries of which are
exclusively such Selling Shareholder or a member or members of his or
her immediate family, provided that any transferee agrees in writing to
be bound by the terms of this Section 1(b)(vii).
(viii) Certificates Suitable for Transfer. Certificates for
all of the Securities to be sold by such Selling Shareholder pursuant
to this Agreement, in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in
blank with signatures guaranteed, have been placed in custody with the
Custodian with irrevocable conditional instructions to deliver such
Securities to the Underwriters pursuant to this Agreement.
(ix) No Association with NASD. Neither such Selling
Shareholder (other than the Selling Shareholders listed on Schedule
B-2), nor any of its affiliates directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning of
Article I, Section (ee) of the By-laws of the National Association of
Securities Dealers, Inc. (the "NASD")) any member firm of the NASD.
(c) Officer's Certificates. Any certificate signed by any officer of
the Company delivered to ▇▇▇▇▇▇▇ ▇▇▇▇▇, the Representatives or to counsel for
the Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby; and any certificate signed
by or on behalf of the Selling Shareholders as such and delivered to ▇▇▇▇▇▇▇
▇▇▇▇▇, the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by such Selling Shareholder to the Underwriters as
to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company and each Selling Shareholder, severally and not jointly,
agree to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company and
each Selling Shareholder, at the price per share set forth in Schedule C, that
proportion of the number of Initial Securities set forth in Schedule B opposite
the name of the Company or such Selling Shareholder, as the case may be, which
the number of Initial Securities set forth in Schedule A opposite the name of
such
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Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Selling Shareholders specified on Schedule B, acting severally
and not jointly, hereby grant an option to the Underwriters, severally and not
jointly, to purchase up to an additional - shares of Common Stock, as set forth
in Schedule B, at the price per share set forth in Schedule C, less an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Company and the Selling Shareholders setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery for the Option Securities (a "Date of Delivery")
shall be determined by the Representatives, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the Option Securities, the purchase of Option Securities shall
be made initially among the Selling Shareholders in proportion to the maximum
number of Option Securities to be sold by each Selling Shareholder as set forth
in Schedule B until the Selling Shareholders have sold the maximum number of
Option Securities to be sold by the Selling Shareholders as set forth in
Schedule B and then from the Company, and each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Securities then being purchased which the number of Initial Securities
set forth in Schedule A opposite the name of such Underwriter bears to the total
number of Initial Securities, subject in each case to such adjustments as the
Representatives in their discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other
place as shall be agreed upon by the Representatives and the Company and the
Selling Shareholders, at 9:00 A.M. (New York City time) on the third (fourth, if
the pricing occurs after 4:30 P.M. (New York City time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Company
and the
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Selling Shareholders (such time and date of payment and delivery being herein
called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company and the Selling Shareholders, on each Date of Delivery as
specified in the notice from the Representatives to the Company and the Selling
Shareholders.
Payment shall be made to the Company and the Selling Shareholders by
wire transfer of immediately available funds to bank accounts designated by the
Company and the Custodian pursuant to each Selling Shareholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Representatives immediately, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any
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request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule
424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus. The Company
will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) Filing of Amendments. The Company will give the
Representatives notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision
to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, whether pursuant to the
1933 Act, the 1934 Act or otherwise, will furnish the Representatives
with copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference
therein) and signed copies of all consents and certificates of experts,
and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of
each amendment thereto (without exhibits) for each of the Underwriters.
The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectus. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will
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furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement, and
in the Prospectus. If at any time when a prospectus is required by the
1933 Act or the 1934 Act to be delivered in connection with sales of
the Securities, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement
or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act or
the 1934 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectus comply with such
requirements, and the Company will furnish to the Underwriters such
number of copies of such amendment or supplement as the Underwriters
may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Representatives may designate and to maintain such qualifications in
effect for a
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period of not less than one year from the later of the effective date
of the Registration Statement and any Rule 462(b) Registration
Statement; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as
may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(g) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect
and maintain the quotation of the Securities on the Nasdaq National
Market and will file with the Nasdaq National Market all documents and
notices required by the Nasdaq National Market of companies that have
securities that are traded in the over-the-counter market and
quotations for which are reported by the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of
90 days from the date of the Prospectus, the Company will not, without
the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or class B common stock or
any securities convertible into or exercisable or exchangeable for
Common Stock or class B common stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock or the class B
common stock, whether any such swap or the transaction described in
clause (i) or (ii) above is to be settled by delivery of Common
Stock, class B common stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the
Securities to be sold hereunder, (B) any shares of Common Stock or
class B common stock issued by the Company upon the exercise of an
option or warrant or the conversion of a security outstanding on
the date hereof and referred to in the Prospectus, (C) any shares of
Common Stock or class B common stock issued or options to purchase
shares of Common Stock or class B common stock granted pursuant to
existing employee benefit plans of the Company referred to in or
filed as an exhibit to the Company's annual report on Form 10-K for
the year ended June 30, 2000, or (D) any shares of Common Stock that
may be issued by the Company from time to time upon the conversion
of shares of class B common
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stock into shares of Common Stock pursuant to its sixth amended and
restated certificate of incorporation.
(k) Reporting Requirements. The Company, during the period
when the Prospectus are required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent or registrar for the Securities,
(ix) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the NASD of the
terms of the sale of the Securities and (x) the fees and expenses incurred in
connection with the inclusion of the Securities in the Nasdaq National Market.
(b) Expenses of the Selling Shareholders. Each Selling Shareholder
shall pay all expenses incident to the performance of its respective obligations
under, and the consummation of the transactions contemplated by the Agreement,
including (i) any stamp duties, capital duties and stock transfer taxes, if any,
payable upon the sale of the Securities by it to the Underwriters, and the
transfer of the Securities between the Underwriters pursuant to an agreement
between such Underwriters and (ii) the fees and disbursements of its respective
counsel and accountants.
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(c) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company and the Selling Shareholders shall reimburse the
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriters.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Shareholders may make for
the sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
contained in Section 1 hereof or in certificates of any officer of the Company
or on behalf of any Selling Shareholder delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of Closing
Time, of:
(i) ▇▇▇▇ and ▇▇▇▇ LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit A-1 hereto and to such
further effect as counsel to the Underwriters may reasonably request;
and
(ii) ▇▇▇▇▇ ▇. ▇▇▇▇▇, general counsel for the Company, in form
and substance satisfactory to counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters to the effect
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set forth in Exhibit A-2 hereto and to such further effect as counsel
to the Underwriters may reasonably request.
(c) Opinion of Counsel for the Selling Shareholders. At Closing Time,
the Representatives shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇ and ▇▇▇▇ LLP, counsel for certain of the Selling
Shareholders, together with the favorable opinion of each counsel for the other
Selling Shareholders (which counsel shall be satisfactory to the
Representatives), each in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letters for each
of the other Underwriters to the effect set forth in Exhibit A-3 hereto and to
such other effect as counsel for the Underwriters may reasonably request. In
giving such opinion such counsel may rely, insofar as such opinion involves
factual matters, to the extent they deem proper, upon certificates of officers
of the Selling Shareholders and certificates of public officials.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters,
in form and substance reasonably satisfactory to the Underwriters. In giving
such opinion such counsel may rely, insofar as such opinion involves factual
matters, to the extent they deem proper, upon certificates of officers of the
Company and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its consolidated subsidiary considered as one enterprise, whether or
not arising in the ordinary course of business, and the Representatives shall
have received a certificate of the Chief Executive Officer, Chief Financial
Officer and Chief Operating Officer of the Company, dated as of Closing Time, to
the effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of Closing Time,
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time, and (iv)
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission.
(f) Certificate of the Selling Shareholder. At Closing Time, the
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Shareholder, dated as of the Closing Time, to the effect
that (i) the representations and warranties of each Selling Shareholder
contained in Section 1(b) hereof are true and correct in all respects with the
same force and effect as though expressly made at and as
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of Closing Time and (ii) each Selling Shareholder has complied in all material
respects with all agreements and all conditions on its part to be performed
under the Agreement at or prior to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule D hereto.
(l) Form W-8 or W-9. At the date of this Agreement, the Representatives
shall have received form W-8 or W-9, as required, signed by each Selling
Shareholder.
(m) Release of Liens. At Closing Time, the Representatives shall have
received duly executed copies of the releases, each in form and substance
satisfactory to counsel to the Underwriters, dated Closing Time, by RWJ
Education Company I, L.L.C. and ▇▇▇▇▇▇ Guaranty Trust Company of New York with
respect to Initial Securities to be sold by WSI Inc. and by Citicorp USA, Inc.
with respect to Initial Securities to be sold by ▇.▇. Childs Equity Partners,
L.P., and all necessary UCC-3 statements in respect of all such Initial
Securities, each in form and substance satisfactory to the counsel for the
Underwriters.
(n) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any
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portion of the Option Securities, the representations and warranties of the
Company and the Selling Shareholders contained herein and the statements in any
certificates furnished by the Company and the Selling Shareholders hereunder
shall be true and correct as of each Date of Delivery and, at the relevant Date
of Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Chief Executive Officer, Chief Financial Officer and
Chief Operating Officer of the Company confirming that the certificate
delivered at the Closing Time pursuant to Section 5(e) hereof remains
true and correct as of such Date of Delivery.
(ii) Certificate of Selling Shareholders. A certificate, dated
such Date of Delivery, of an Attorney-in-Fact on behalf of each Selling
Shareholder confirming that the certificate delivered at Closing Time
pursuant to Section 5(f) remains true and correct as of such Date of
Delivery.
(iii) Opinion of Counsel for Company. The favorable opinion of
▇▇▇▇ and ▇▇▇▇ LLP, counsel for the Company, together with the favorable
opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇, general counsel for the Company, each in
form and substance satisfactory to counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof.
(iv) Opinion of Counsel for the Selling Shareholders. The
favorable opinion of ▇▇▇▇ and ▇▇▇▇ LLP, counsel for certain of the
Selling Shareholders, together with the favorable opinion of each
counsel for the other Selling Shareholders (which counsel shall be
satisfactory to the Representatives), each in form and substance
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(v) Opinion of Counsel for Underwriters. The favorable opinion
of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
(vi) Bring-down Comfort Letter. A letter from
PricewaterhouseCoopers, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in the
same form and substance as the letter furnished to the Representatives
pursuant to Section
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5(g) hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than two days prior
to such Date of Delivery.
(vii) Release of Liens. At Closing Time, the Representatives
shall have received duly executed copies of the releases, each in form
and substance satisfactory to counsel to the Underwriters, dated
Closing Time, by RWJ Education Company I, L.L.C. and ▇▇▇▇▇▇ Guaranty
Trust Company of New York with respect to Option Securities to be sold
by WSI Inc. and by Citicorp USA, Inc. with respect to Option Securities
to be sold by ▇.▇. Childs Equity Partners, L.P., and all necessary
UCC-3 statements in respect of all such Option Securities, each in form
and substance satisfactory to the counsel for the Underwriters.
(o) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents,
certificates and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein contemplated, or
in order to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company and the Selling Shareholders in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Representatives and counsel for the
Underwriters.
(p) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. (1) The Company and the Selling
Shareholders (other than WSI Inc.), severally agree, and WSI Inc. and H.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, jointly and severally agree, to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue
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statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that (x) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense (a) to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), (b) with
respect to any preliminary prospectus, to the extent that the Company shall
sustain the burden of proving (i) that any such loss, claim, expense, damage or
liability of such Underwriter results from the fact that such Underwriter sold
Securities to a person as to whom there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the Prospectus (as then amended
or supplemented) in any case where such delivery is required by the 1933 Act,
(ii) that the Company had previously furnished copies thereof in sufficient
quantities to such Underwriter and the loss, claim, expense, damage or liability
of such Underwriter results from an untrue statement or omission of a material
fact contained in the preliminary prospectus that was
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corrected in the Prospectus and (iii) that sending such Prospectus by the
Closing Time to the person or persons asserting such loss, liability, claim,
damage or expense would have constituted a defense to the claim asserted by such
person or persons, and (y) that with respect to each Selling Shareholder other
than WSI Inc. and ▇▇▇▇ ▇▇▇▇▇, the indemnification provision in this Section
6(a)(1) shall be only with respect to information furnished in writing by or on
behalf of such Selling Shareholder expressly for use in the Registration
Statement (or any amendment thereto), including Rule 430A Information and the
Rule 434 Information, if applicable, or any preliminary prospectus or Prospectus
(or any amendment or supplement thereto); and provided, further, that the
aggregate liability of any Selling Shareholder (other than WSI Inc.) pursuant to
this Section 6(a)(1) shall be limited to the net proceeds received by such
Selling Shareholder from the Securities purchased by the Underwriters from such
Selling Shareholder pursuant to this Agreement and that the aggregate liability
of WSI Inc. and H. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to this Section 6(a)(1) shall be
limited to the net proceeds received by WSI Inc. from the Securities purchased
by the Underwriters from WSI Inc. pursuant to this Agreement; and provided
further, that no Selling Shareholder shall be liable for any untrue statement,
omission or alleged omission of any other Selling Shareholder.
(2) Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of an Underwriter
or who controls an Underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and who, at the date of this Agreement, is a
director or officer of the Company or controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, such indemnity
agreement is subject to the undertaking of the Company in the Registration
Statement under Item 12.
(b) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Selling
Shareholder and each person, if any, who controls the Selling Shareholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a)(1) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through the Representatives expressly for use
in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
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(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party, and any delay in such
notification, shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a)(1) above, counsel to the indemnified parties shall be
selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances
provided, however, that if the indemnifying party is the Company, H. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or any of the Selling Shareholders, then the indemnifying party shall be
liable for the fees and expenses of one separate legal counsel for all Selling
Shareholders (other than the indemnifying party if the indemnifying party is a
Selling Shareholder), which counsel shall be designated by agreement of the
Selling Shareholders (other than the indemnifying party if the indemnifying
party is a Selling Shareholder) or, in the absence of an agreement, by the
Attorney-In-Fact. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(1)(ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the
32
37
date of such settlement; provided, however, that the aggregate liability of any
Selling Shareholder pursuant to this Section 6(d) shall be limited to the net
proceeds received by such Selling Shareholder from the Securities purchased by
the Underwriters from such Selling Shareholder pursuant to this Agreement.
(e) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Shareholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Shareholders on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Shareholders and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding location
on the Term Sheet, bear to the aggregate initial public offering price of the
Securities as set forth on such cover.
The relative fault of the Company, the Selling Shareholders and the
Underwriters shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Shareholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro
33
38
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, (i) no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission and (ii) no Selling
Shareholder shall be required to contribute any amount in excess of the amount
of the total net proceeds received by such Selling Shareholder from the sale of
Securities pursuant to this Agreement or on a basis other than as specified in
Section 6(a).
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or any
Selling Shareholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
such Selling Shareholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Shareholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any
34
39
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Shareholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its consolidated subsidiary considered as one enterprise, whether or
not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the NASD
or any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
35
40
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either (i) the Representatives or (ii) the Company and any
Selling Shareholder shall have the right to postpone Closing Time or the
relevant Date of Delivery, as the case may be, for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Default by One or More of the Selling Shareholders or the
Company.
(a) If a Selling Shareholder shall fail at Closing Time or at a Date of
Delivery to sell and deliver the number of Securities which such Selling
Shareholder or Selling
36
41
Shareholders are obligated to sell hereunder, and the remaining Selling
Shareholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Securities to be sold by them hereunder to the total
number to be sold by all Selling Shareholders as set forth in Schedule B hereto,
then the Underwriters may, at the option of the Representatives, by notice from
the Representatives to the Company and the non-defaulting Selling Shareholders,
either (a) terminate this Agreement without any liability on the fault of any
non-defaulting party except that the provisions of Sections 1, 4, 6, 7 and 8
shall remain in full force and effect or (b) elect to purchase the Securities
which the non-defaulting Selling Shareholders and the Company have agreed to
sell hereunder. No action taken pursuant to this Section 11 shall relieve any
Selling Shareholder so defaulting from liability, if any, in respect of such
default.
In the event of a default by any Selling Shareholder as referred to in
this Section 11, each of the Representatives, the Company and the non-defaulting
Selling Shareholders shall have the right to postpone Closing Time or Date of
Delivery for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectus or in any other documents or
arrangements.
(b) If the Company shall fail at Closing Time or at the Date of
Delivery to sell the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any nondefaulting party; provided, however, that the provisions of Sections
1, 4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant
to this Section shall relieve the Company from liability, if any, in respect of
such default.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Syndicate
Operations, with a copy to Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; notices to the Company shall be directed to
it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of ▇▇▇▇ ▇▇▇▇▇,
Chief Financial Officer, with a copy to ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇; and notices
to the Selling Shareholders shall be directed to the Selling Shareholders,
attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇, c/o the Company
at the foregoing address.
SECTION 13. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters, the Company and the Selling Shareholders
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company and the Selling
Shareholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their
37
42
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Company and the Selling
Shareholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO
THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION). SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
38
43
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in Fact for
the Selling Shareholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement between the Underwriters,
the Company and the Selling Shareholders in accordance with its terms.
Very truly yours,
EDISON SCHOOLS INC.
By:______________________________________
Name:
Title:
SELLING SHAREHOLDERS
By:______________________________________
Name:
As Attorney-In-Fact acting on behalf of
the Selling Shareholders named in
Schedule B hereto
39
44
CONFIRMED AND ACCEPTED, as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
THINKEQUITY PARTNERS
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
By:________________________________
Name:
Title: Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
40
45
SCHEDULE A
Number of Initial
Name of Underwriter Securities
------------------- ----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated -
Credit Suisse First Boston Corporation -
Banc of America Securities LLC -
▇.▇. ▇▇▇▇▇▇ Securities Inc -
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc. -
ThinkEquity Partners -
---------------
Total......................................................... -
===============
46
SCHEDULE B
Number of Initial Maximum Number of Option
Securities to be Sold Securities to Be Sold
--------------------- ---------------------
Edison Schools Inc. - -
[Selling Shareholders]
Total...................................... - -
47
SCHEDULE B-1
Duba ▇▇
▇▇▇▇ Family Trust
▇▇▇▇ ▇. Childs
▇▇▇▇▇ ▇. Childs
▇▇▇▇▇▇▇ ▇. Childs
Estate of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇.▇. Childs Equity Partners, L.P.
OFS Investment Partners
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1995 Irrevocable Trust
SGS 1995 Family Limited Partnership
SGS-III Family Limited Partnership
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ Family Trust
▇▇▇▇▇▇ ▇. ▇▇▇
▇.▇. ▇▇▇▇▇▇ SBIC LLC
Sixty Wall Street SBIC Fund, L.P.
Vulcan Ventures Incorporated
Progressive Investment Company, Inc.
Sch. B-1
48
SCHEDULE B-2
▇.▇. ▇▇▇▇▇▇ SBIC LLC
Sixty Wall Street SBIC Fund, L.P.
Sch. B-2
49
SCHEDULE C
EDISON SCHOOLS INC.
- Shares of Common Stock
(Par Value $.01 Per Share)
I. The public offering price per share for the Securities, determined
as provided in said Section 2, shall be $ - .
II. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $ - , being an amount equal to the public offering
price set forth above less $ - per share; provided that the purchase price
per share for any Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
Sch. C-1
50
SCHEDULE D
List of persons and entities subject to lock-up
H. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ed.D.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. Childs
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ SBIC LLC
Progressive Investment Company
Sprout Capital VI L.P.
Sprout Capital VII L.P.
Sprout CEO Fund, L.P.
DLJ Capital Corporation
Credit Suisse First Boston (USA), Inc.
Norwest Bank Indiana N.A., as voting trustee
Sixty Wall Street SBIC Fund, L.P.
UBS Capital LLC
Vulcan Ventures Incorporated
WSI Inc.
WPA Investment L.P.
J.W. Childs Equity Partners, L.P.
Citicorp USA, Inc.
▇▇▇▇ ▇▇
▇▇▇▇ Field
▇▇▇▇▇▇▇ Leeds Education Company LLC
▇▇▇▇ Family Trust
Sch D-1
51
▇▇▇▇▇ ▇. Childs
▇▇▇▇▇▇▇ ▇. Childs
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
Estate of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
OFS Investment Partners
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
SGS-III Family Limited Partnership
SGS 1995 Family Limited Partnership
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1995 Irrevocable Trust
▇▇▇▇ ▇. ▇▇▇▇▇▇
Suttin Family Trust
▇▇▇▇▇▇ ▇. ▇▇▇
Sch D-2
52
SCHEDULE E
List of Management Agreements
1. Agreement between the Company and the Board of Education of the Chula
Vista Elementary School District, Chula Vista, California.
2. Agreement between the Company and the Board of Education of the
Ravenswood City School District, East Palo Alto, California.
3. Agreement among the Company, the Board of Education of the Fresno
Unified School District and the Board of Education of the Fresno County
Office of Education, Fresno, California.
4. Agreement between the Company and the Board of Education of the Napa
Unified School District, California.
5. Agreement between the Company and the Board of Education of the San
Francisco Unified School District, West Covina, California.
6. Agreement between the Company and the Board of Education of the West
Covina Unified School District, California, as amended.
7. Agreement between the Company and the Long Beach Unified School
District, Long Beach, California.
8. Agreement between the Company and the Board of Education of the Academy
School District, Colorado Springs, Colorado.
9. Agreement between the Company and Colorado Springs School District No.
11, Colorado Springs, Colorado, as amended.
10. Agreement between the Company and the Board of Trustees of the
Denver-Edison Charter School, Denver, Colorado.
11. Agreement between the Company and the Governing Board of Area
Cooperative Educational Services, Hamden, Connecticut.
12. Agreement between the Company and the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Charter School
of Wilmington, Inc., Wilmington, Delaware, as amended.
13. Agreement between the Company and the Friendship Public Charter School,
Inc., Washington, D.C.
Sch ▇-▇
▇▇
▇▇. Agreement between the Company and the School Board of Dade County,
Miami, Florida.
15. Agreement between the Company and the ▇▇▇▇ County School District,
Macon, Georgia.
16. Agreement between the Company and the Drew Charter School, Inc.,
Atlanta, Georgia.
17. Agreement between the Company and the Board of Education of the Peoria
Public Schools, Peoria, Illinois, as amended.
18. Agreement between the Company and the Board of Education of the
Springfield Public Schools, Springfield, Illinois.
19. Agreement between the Company and the Chicago Charter School
Foundation, Chicago, Illinois.
20. Agreement between the Company and the Board of Education of the
▇▇▇▇▇▇▇▇▇ Community School District, Davenport, Iowa.
21. Agreement between the Company and the Board of Education of the Unified
School District No. 259, Wichita, Kansas.
22. Agreement among the Company, the New Baltimore City Board of School
Commissioners and the Maryland State Department of Education,
Baltimore, Maryland, as amended.
23. Agreement between the Company and the Board of Trustees of the Boston
Renaissance Charter Public School Inc., Boston, Massachusetts.
24. Agreement between the Company and the Board of Trustees of the Seven
Hills Charter School, Worcester, Massachusetts.
25. Agreement between the Company and the Board of Education of the School
District of the City of Battle Creek, Battle Creek, Michigan, as
amended.
26. Agreement between the Company and the Edison Public School Academy,
Detroit, Michigan.
27. Agreement between the Company and the Board of Directors of the Detroit
Academy of Arts and Sciences, Detroit, Michigan.
Sch ▇-▇
▇▇
▇▇. Agreement between the Company and the YMCA Service Learning Academy,
Detroit, Michigan.
29. Agreement between the Company and the Board of Directors of the Edison
Oakland Public School Academy, Ferndale, Michigan.
30. Agreement between the Company and the School District of the City of
Flint, Flint, Michigan.
31. Agreement between the Company and the Board of Trustees of the
Mid-Michigan Public School Academy, Lansing, Michigan, as amended.
32. Agreement between the Company and the Board of Education of the Mount
▇▇▇▇▇▇▇ Community School District, Mt. ▇▇▇▇▇▇▇, Michigan.
33. Agreement between the Company and the Board of Education of the School
District of the City of Pontiac, Pontiac, Michigan.
34. Agreement between the Company and the Inkster School District Board,
Inkster, Michigan, as amended.
35. Agreement between the Company and the Board of Directors of the Duluth
Public Schools Academy, Duluth, Minnesota.
36. Agreement among the Company, Special School District No. 1 (Minneapolis
Public Schools) and Project for Pride in Living, Inc., Minneapolis,
Minnesota, as amended.
37. Agreement between the Company and the Westport Community Secondary
Schools, Kansas City, Missouri.
38. Agreement between the Company and the Westport ▇▇▇▇▇-▇▇▇▇▇▇ Village
Educational School, Kansas City, Missouri.
39. Agreement between the Company and the Board of Education of the Kansas
City Municipal School District, Kansas City, Missouri.
40. Agreement between the Company and the Granville Charter School,
Trenton, New Jersey.
41. Agreement between the Company and the Granville Charter Middle School,
Trenton, New Jersey.
Sch ▇-▇
▇▇
▇▇. Agreement between the Company and the Granville Charter High School,
Trenton, New Jersey.
43. Agreement between the Company and the ▇▇▇▇▇▇▇▇▇ Charter School, Inc.,
Jersey City, New Jersey.
44. Agreement between the Company and the Charter School of Science and
Technology, Rochester, New York.
45. Agreement between the Company and the New Covenant Charter School,
Albany, New York.
46. Agreement between the Company and the Board of Education of the ▇▇▇▇▇
County Public Schools, Goldsboro, North Carolina, as amended.
47. Agreement between the Company and the Board of Education of the
▇▇▇▇-Rocky Mount Public Schools, ▇▇▇▇▇▇▇▇, North Carolina.
48. Management Agreement between the Company and Alliance Community
Schools, Inc., Dayton, Ohio, as amended.
49. Agreement between the Company and the Renaissance Academy-Edison
Charter School, Phoenixville, Pennsylvania.
50. Agreement between the Company and the Lincoln-Edison Charter School,
York, Pennsylvania.
51. Agreement between the Company and the Board of Directors of the
Southwest Independent School District, San Antonio, Texas, as amended.
52. Agreement between the Company and the Board of Education of the Tyler
Independent School District, Tyler, Texas.
53. Agreement between the Company and the Dallas Independent School
District, Dallas, Texas.
54. Agreement between the Company and the Milwaukee Urban League Academy of
Business and Economics, Inc., Milwaukee, Wisconsin.
55. Agreement between the Company and Milwaukee Science Education
Consortium, Inc., Milwaukee, Wisconsin, as amended.
Sch ▇-▇
▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
(i) The Company has been duly incorporated, and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and the Company has the corporate power and authority to enter into
and perform its obligations under the Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and in good standing in each jurisdiction listed on Schedule A
to this opinion.
(iv) The authorized, issued and outstanding capital stock of record of
the Company (a) was, as of December 31, 2000, as set forth in the Prospectus in
the column entitled "Actual" under the caption "Capitalization" and (b) after
giving effect to the transactions contemplated by this Agreement and the
Registration Statement, will be as set forth in the Prospectus in the column
entitled "As Adjusted" under the caption "Capitalization" (except for issuances
subsequent to December 31, 2000, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus or pursuant to the exercise
of convertible securities, options or warrants referred to in the Prospectus);
the shares of issued and outstanding capital stock of the Company, including the
Securities to be purchased by the Underwriters from the Selling Shareholders,
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of record of
the Company was issued in violation of any preemptive or other similar rights of
any securityholder of the Company arising under (a) the Company's certificate of
incorporation or by-laws (as in effect from time to time), (b) any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument filed as an exhibit to the Registration Statement, (c) the Delaware
General Corporation Law or (d) to our knowledge, arising otherwise.
(v) The Securities to be purchased by the Underwriters from the Company
have been duly authorized for issuance and sale to the Underwriters pursuant to
the Purchase Agreement and, when issued and delivered by the Company pursuant to
the Purchase Agreement against payment of the consideration set forth in the
Purchase Agreement, will be validly issued and fully paid and non-assessable and
no holder of the Securities is or will be subject to personal liability by
reason of being such a holder.
(vi) The issuance of the Securities by the Company and the sale of the
Securities by the Selling Shareholders is not subject to any preemptive or other
similar rights of any securityholder of the Company arising under (a) the
Company's certificate
A-1-1
57
of incorporation or by-laws (as in effect on the date hereof), (b) any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument filed as an exhibit to the Registration Statement, (c) the Delaware
General Corporation Law or (d) to our knowledge, arising otherwise.
(vii) To our knowledge, the Company's only subsidiary is
Alliance-Edison, and, to our knowledge, the Company does not have any equity
investments in other companies, except the Company's interests in APEX and
Ksixteen.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.
(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus, excluding the documents incorporated by reference
therein, and each amendment or supplement to the Registration Statement and the
Prospectus, excluding the documents incorporated by reference therein, as of
their respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to which we
need express no opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xi) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we need express no opinion), when they were filed
with the Commission complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations.
(xii) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
(xiii) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the charter and by-laws of the Company and
the requirements of the Nasdaq National Market.
A-1-2
58
(xiv) To our knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company, its
consolidated subsidiary or any school operated by the Company is a party, or to
which the property of the Company, its consolidated subsidiary or any school
operated by the Company is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the consummation of the transactions
contemplated in the Purchase Agreement or the performance by the Company of its
obligations thereunder.
(xv) The information in the Prospectus under "Prospectus Summary --
Description of Common Stock" and "Description of Capital Stock", and in the
Registration Statement in the first two paragraphs under Item 14, to the extent
that it constitutes matters of law, summaries of legal matters, the Company's
charter and bylaws or legal proceedings, or legal conclusions, has been reviewed
by us and is correct in all material respects.
(xvi) To our knowledge, there are no statutes or regulations that are
required to be described in the Prospectus that are not described as required.
(xvii) To our knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration Statement or to be
filed as exhibits thereto other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto.
(xviii) To our knowledge, the Company is not in violation of its
charter or by-laws.
(xix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and the
1933 Act Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering, issuance,
sale or delivery of the Securities.
(xx) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities) and compliance by the Company with its obligations under the
Purchase Agreement do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(xi) of the Purchase
Agreement) under or result in the creation or imposition of any lien, charge
A-1-3
59
or encumbrance upon any property or assets of the Company or its consolidated
subsidiary pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument filed as an
exhibit to the Registration Statement (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that could not reasonably be expected
to have a Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company, any applicable law,
statute, rule or regulation or any judgment, order, writ or decree specifically
naming the Company, known to us, of any government, government instrumentality
or court, domestic or foreign, having jurisdiction over the Company or any of
its properties, assets or operations.
(xxi) To our knowledge, there are no persons with registration rights
or other similar rights to have any securities registered pursuant to the
Registration Statement except such as have been exercised or waived or otherwise
registered by the Company under the 1933 Act, except pursuant to the Third
Amended and Restated Shareholders' Agreement, dated as of July 2, 1999, as
amended.
(xxii) To our knowledge, except as disclosed in the Prospectus, there
are no outstanding options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations convertible into,
or any contracts or commitments to issue or sell, shares of the Company's
capital stock or any such options, rights, convertible securities or
obligations.
(xxiii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
In connection with the preparation of the Registration Statement and
the Prospectus, we have participated in conferences with officers and
representatives of the Company, counsel for the Underwriters and independent
accountants of the Company, at which conferences we made inquiries of such
persons and others and discussed the contents of the Registration Statement and
the Prospectus. While the limitations inherent in the independent verification
of factual matters and the character of determinations involved in the
registration process are such that we are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, subject to the
foregoing and based on such participation, inquiries and discussions, nothing
has come to our attention that would lead us to believe that the Registration
Statement or any amendment thereto, including the Rule 430A Information and Rule
434 Information (if applicable) (except for financial statements and schedules
and other financial data included therein or omitted therefrom and percentages
derived from financial data included therein, as to which we need make no
statement), at the time such Registration Statement or any such amendment became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not
A-1-4
60
misleading or that the Prospectus or any amendment or supplement thereto (except
for financial statements and schedules and other financial data included therein
or omitted therefrom and percentages derived from financial data included
therein, as to which we need make no statement), as of their respective dates or
at the Closing Time, included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Such opinion shall not state that it is to be governed or qualified by,
or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
A-1-5
61
Exhibit A-2
FORM OF OPINION OF THE GENERAL COUNSEL
FOR THE COMPANY TO BE DELIVERED
PURSUANT TO SECTION 5(b)(ii)
(i) All descriptions in the Prospectuses of and references in the
Prospectus to franchises, contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments or documents or transactions to which the
Company is or was a party are accurate in all material respects;
(ii) To my knowledge, no default by the Company exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any Management Agreement or any other contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(iii) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities, and compliance by the Company with its obligations under the
Purchase Agreement do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(xi) of the Purchase
Agreement) under or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to any
Management Agreement or other contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument filed as
an exhibit to the Registration Statement or otherwise known to me (except for
such conflicts, breaches or defaults or liens, charges or encumbrances that
could not reasonably be expected to have a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or by-laws
of the Company, applicable law, statute, rule, regulation, judgment, order, writ
or decree, known to me, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties, assets or operations.
(iv) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities, and compliance by the Company with its obligations under the
Purchase Agreement) do not and will not result in any violation of the ESEA, the
IDEA, including any rules or regulations promulgated pursuant to such laws, or
any other federal, state or local statute pertaining to the authorization to
operate public schools or eligibility for funding under federal, state or local
programs.
A-2-1
62
(v) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, the USDE or, to my knowledge,
any state agency under any state statute pertaining to authorization to operate
public schools or eligibility for funding under federal or state programs is
necessary or required in connection with the due authorization, execution and
delivery of the Purchase Agreement or for the offering, issuance, sale or
delivery of the Securities.
(vi) To my knowledge, the Company, its consolidated subsidiary and each
of the schools operated by it possess all permits, licenses, approvals, consents
and other authorizations required, including without limitation authorizations
required (A) to participate in federal funding programs under the ESEA and the
IDEA to the extent the Company or such school currently receives material
funding thereunder, (B) to operate charter schools currently operated by it, (C)
except as disclosed in the Prospectus, to operate schools, if required by
applicable law, as federal income tax exempt organizations under Sections 501(a)
and 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and
(D) to receive funding under federal, state or local education laws, statutes,
rules, regulations, standards, guides and orders to the extent the Company or
such school currently receives material funding thereunder (collectively,
"Governmental Licenses"), issued by the appropriate federal, state or local
regulatory agencies or bodies necessary to conduct the business now operated by
them, except where the failure to possess such Governmental Licenses could not
reasonably be expected to have a material Adverse Effect; the Company and, to my
knowledge each of the schools operated by it, is in compliance with the terms
and conditions of all such Governmental Licenses, except where the failure so to
comply could not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect could not have a Material
Adverse Effect; and, to my knowledge, the Company has not received any notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Effect.
(vii) To my knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company, its
consolidated subsidiary or any school operated by the Company is a party, or to
which the property of the Company, its consolidated subsidiary or any school
operated by the Company is subject, before or brought by the USDE, the DOJ, the
EEOC, state and local educational agencies (including school boards and public
school districts) or charter school boards which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the consummation of the transactions
contemplated in the Purchase Agreement or the performance by the Company of its
obligations thereunder.
A-2-2
63
(viii) To my knowledge, the Company and each of the schools operated by
the Company are in compliance with all applicable education laws, statutes,
rules, regulations, standards, guides or orders administered, issued or
implemented by any federal, state or local government or any agency or
subdivision of any of the foregoing, including, without limitation, the USDE,
the DOJ, the EEOC, state and local education agencies (including school boards
and public school districts) or charter school boards, except where the failure
to be in compliance would not reasonably be expected to have a Material Adverse
Effect. To my knowledge, neither the Company nor any of the schools operated by
it has been advised that either the Company or any of the schools operated by
the Company is not conducting business in compliance with all applicable
federal, state and local education laws, statutes, rules, regulations,
standards, guides and orders, except where failure to be so in compliance could
not reasonably be expected to have a Material Adverse Effect.
(ix) The information in the Prospectus under "Risk Factors -- Risks
Related to Governmental Funding and Regulation of the Education Industry",
"Business -- Government Laws and Regulations", to the extent that it constitutes
matters of law, summaries of legal matters, or legal conclusions (collectively,
"Education Matters"), has been reviewed by me and is correct in all material
respects.
(x) Neither the Company, nor any of the schools operated by the Company
is subject to any requirements of, or regulation under, the Higher Education Act
of 1965, as amended.
Nothing has come to my attention that would lead me to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable) (except for financial
statements and schedules and other financial data included therein or omitted
therefrom and percentages derived from financial data included therein, as to
which I need make no statement), at the time such Registration Statement or any
such amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
or any amendment or supplement thereto (except for financial statements and
schedules and other financial data included therein or omitted therefrom and
percentages derived from financial data included therein, as to which we need
make no statement), as of their respective dates or at the Closing Time,
included or includes an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Such opinion shall not state that it is to be governed or qualified by,
or that it is otherwise subject to, any treatise, written policy or other
document relating to legal
A-2-3
64
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
A-2-4
65
Exhibit A-3
FORM OF OPINION OF COUNSEL FOR THE
SELLING SHAREHOLDER(S)
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than the issuance of the order
of the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which [I][we] need express no opinion), is necessary or required to
be obtained by the Selling Shareholder(s) for the performance by [each/the]
Selling Shareholder of its obligations under the Purchase Agreement or in the
Power of Attorney and Custody Agreement, or in connection with the offer, sale
or delivery of the Securities.
(ii) [Each/The] Power of Attorney and Custody Agreement has been duly
executed and delivered by the [respective] Selling Shareholder(s) [named
therein] and constitutes the legal, valid and binding agreement of [such/the]
Selling Shareholder. The Purchase Agreement has been duly authorized, executed
and delivered by or on behalf of [each/the] Selling Shareholder.
(iii) [Each/The] Attorney-in-Fact has been duly authorized by the
Selling Shareholder(s) to deliver the Securities on behalf of the Selling
Shareholder(s) in accordance with the terms of the Purchase Agreement.
(iv) The execution, delivery and performance of the Purchase Agreement
and the Power of Attorney and Custody Agreement and the sale and delivery of the
Securities and the consummation of the transactions contemplated in the Purchase
Agreement and in the Registration Statement and compliance by the Selling
Shareholder(s) with its obligations under the Purchase Agreement have been duly
authorized by all necessary action on the part of the Selling Shareholder(s) and
do not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under or
result in the creation or imposition of any tax, lien, charge or encumbrance
upon the Securities or any property or assets of the Selling Shareholder(s)
pursuant to, any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, license, lease or other instrument or agreement to which
[any/the] Selling Shareholder is a party or by which [his/her/it/they] may be
bound, or to which any of the property or assets of the Selling Shareholder(s)
may be subject nor will such action result in any violation of the provisions of
the charter or by-laws of the Selling Shareholder(s), if applicable, or any law,
administrative regulation, judgment or order of any governmental agency or body
or any administrative or court decree having jurisdiction over [such/the]
Selling Shareholder or any of its properties.
A-3-1
66
(v) To the best of [our][my] knowledge, [each/the] Selling Shareholder
has valid and marketable title to the Securities to be sold by [such/the]
Selling Shareholder pursuant to the Purchase Agreement, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind, and has full right, power and authority to sell, transfer and deliver such
Securities pursuant to the Purchase Agreement. By delivery of a certificate or
certificates therefor [such/the] Selling Shareholder will transfer to the
Underwriters who have purchased such Securities pursuant to the Purchase
Agreement (assuming each such Underwriter has no notice of any adverse claim, as
defined in Uniform Commercial Code as adopted in the State of New York (the
"NYUCC")), valid and marketable title to such Securities, free and clear of any
adverse claim (as defined in the NYUCC), pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind.
Such opinion shall not state that it is to be governed or qualified by,
or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
A-3-2
67
Exhibit B
[Form of lock-up from directors, officers or other stockholders]
_________ __, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated,
Credit Suisse First Boston Corporation
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
ThinkEquity Partners
as Representatives of the several Underwriters to
be named in the within-mentioned Purchase Agreement
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by Edison Schools Inc.
Dear Sirs:
The undersigned, a stockholder, officer or director of Edison Schools
Inc., a Delaware corporation (the "Company"), understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and
Credit Suisse First Boston Corporation, Banc of America Securities LLC, ▇.▇.
▇▇▇▇▇▇ Securities Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc. and ThinkEquity
Partners propose to enter into a Purchase Agreement (the "Purchase Agreement")
with the Company and the selling shareholders listed in the Purchase Agreement
(the "Selling Shareholders") providing for the public offering of shares (the
"Securities") of the Company's Class A common stock, par value $.01 per share
(the "Common Stock"). In recognition of the benefit that such an offering will
confer upon the undersigned as a stockholder, officer or director of the
Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreement that, during a period of 90
days from the date of the Purchase Agreement, the undersigned will not, without
the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
Common Stock or any securities convertible into or exchangeable or exercisable
for
B-1
68
Common Stock, whether now owned or hereafter acquired by the undersigned or
with respect to which the undersigned has or hereafter acquires the power of
disposition, or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. The foregoing
restriction will not apply to Securities to be sold by the Selling Shareholders
under the Purchase Agreement.
Notwithstanding the foregoing restrictions on transfer, the undersigned
shall be permitted to make the following transfers: (i) transfers made by gift,
will or intestacy, provided the donee thereof agrees in writing to be bound by
the terms hereof; (ii) transfers to the transferor's affiliates, as such term is
defined in Rule 405 promulgated under the Securities Act, provided that each
transferee agrees in writing to be bound by the terms hereof; (iii) transfers
made with prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇; and (iv) in the event the
undersigned is an individual, transfers to his or her immediate family or to a
trust the beneficiaries of which are exclusively the undersigned or a member or
members of his or her immediate family, provided that any transferee agrees in
writing to be bound by the terms hereof.
Very truly yours,
Name of company,
corporation, partnership or
trust (if applicable):
By: ____________________________________
Name:
Title (if applicable):
B-2
