1
================================================================================
EXHIBIT 1.2
EDISON SCHOOLS INC.
(a Delaware corporation)
__ Shares of Class A Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: __, 1999
================================================================================
2
TABLE OF CONTENTS
PAGE
----
INTERNATIONAL PURCHASE AGREEMENT...............................................................................................1
SECTION 1. Representations and Warranties.....................................................................4
(a) Representations and Warranties by the Company .....................................................4
(i) Compliance with Registration Requirements.....................................................4
(ii) Independent Accountants......................................................................5
(iii) Financial Statements........................................................................6
(iv) No Material Adverse Change in Business.......................................................6
(v) Good Standing of the Company..................................................................6
(vi) No Subsidiaries..............................................................................6
(vii) Capitalization..............................................................................7
(viii) Authorization of Agreement.................................................................7
(ix) Authorization and Description of Securities..................................................7
(x) Absence of Defaults and Conflicts.............................................................8
(xi) Absence of Labor Dispute.....................................................................9
(xii) Absence of Proceedings......................................................................9
(xiii) Accuracy of Exhibits.......................................................................9
(xiv) Possession of Intellectual Property.........................................................9
(xv) Absence of Further Requirements.............................................................10
(xvi) Possession of Licenses and Permits.........................................................10
(xvii) Compliance with Statutes, Rules and Regulations, etc......................................11
(xviii) Title to Property........................................................................11
(xix) Investment Company Act.....................................................................12
(xx) Environmental Laws..........................................................................12
(xxi) Registration Rights........................................................................13
(xxii) Apex Online Learning Inc..................................................................13
(xxiii) Management Agreements....................................................................13
(xxiv) Insurance.................................................................................13
(xxv) Tax Returns and Payment of Taxes...........................................................14
(xxvi) No Stabilization or Manipulation..........................................................14
(xxvii) Certain Transactions.....................................................................14
(xxviii) Statistical and Market Data.............................................................15
(xxix) Accounting and other Controls.............................................................15
(xxx) Year 2000 Readiness........................................................................15
(xxxi) Recapitalization..........................................................................15
(xxxii) Option Lock-Ups. ......................................................................16
(b) Officer's Certificates..................................................... ......................16
i
3
SECTION 2. Sale and Delivery to International Managers; Closing .............................................16
(a) Initial Securities................................................................................16
(b) Option Securities.................................................................................16
(c) Payment...........................................................................................17
(d) Denominations; Registration.......................................................................17
(e) Appointment of Qualified Independent Underwriter. ................................................18
SECTION 3. Covenants of the Company..........................................................................18
(a) Compliance with Securities Regulations and Commission Requests....................................18
(b) Filing of Amendments..............................................................................18
(c) Delivery of Registration Statements...............................................................19
(d) Delivery of Prospectuses..........................................................................19
(e) Continued Compliance with Securities Laws.........................................................19
(f) Blue Sky Qualifications...........................................................................20
(g) Rule 158..........................................................................................20
(h) Use of Proceeds...................................................................................20
(i) Listing...........................................................................................20
(j) Restriction on Sale of Securities.................................................................21
(k) Reporting Requirements............................................................................21
(l) Compliance with NASD Rules........................................................................22
(m) Compliance with Rule 463..........................................................................22
(n) Filing of Sixth Amended and Restated Certificate of
Incorporation. ...................................................................................22
SECTION 4. Payment of Expenses...............................................................................22
(a) Expenses..........................................................................................22
(b) Termination of Agreement..........................................................................23
SECTION 5. Conditions of International Managers' Obligations ................................................23
(a) Effectiveness of Registration Statement...........................................................23
(b) Opinion of Counsel for Company....................................................................23
(c) Opinion of Counsel for International Managers ....................................................24
(d) Officers' Certificate.............................................................................24
(e) Accountant's Comfort Letter.......................................................................24
(f) Bring-down Comfort Letter.........................................................................25
(g) Approval of Listing...............................................................................25
(h) No Objection......................................................................................25
(i) Lock-up Agreements................................................................................25
(k) Purchase of Initial U.S. Securities...............................................................25
(l) Conditions to Purchase of International Option Securities.........................................25
ii
4
(m) Additional Documents..............................................................................26
(n) Termination of Agreement..........................................................................26
SECTION 6. Indemnification...................................................................................27
(a) Indemnification of International Managers.........................................................27
(b) Indemnification of Company, Directors and Officers ...............................................29
(c) Actions against Parties; Notification.............................................................29
(d) Settlement without Consent if Failure to Reimburse ...............................................30
(e) Indemnification for Reserved Securities...........................................................30
SECTION 7. Contribution......................................................................................31
SECTION 8. Representations, Warranties and Agreements to Survive Delivery....................................32
SECTION 9. Termination of Agreement..........................................................................32
(a) Termination; General..............................................................................32
(b) Liabilities.......................................................................................33
SECTION 10. Default by One or More of the International Managers .............................................33
SECTION 11. Notices...........................................................................................34
SECTION 12. Parties...........................................................................................34
SECTION 13. GOVERNING LAW AND TIME............................................................................35
SECTION 14. Effect of Headings................................................................................35
iii
5
SCHEDULES
Schedule A - List of Underwriters...................................................................Sch A-1
Schedule B - Pricing Information....................................................................Sch B-1
Schedule C - List of Persons subject to Lock-up.....................................................Sch C-1
Schedule D - List of Management Agreements..........................................................Sch D-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Company's Counsel....................................................A-1-1
Exhibit A-2 - Form of Opinion of Company's
Special Regulatory Counsel.............................................................A-2-1
Exhibit A-3 - Form of Opinion of Company's
General Counsel........................................................................A-3-1
Exhibit B-1 - Form of Lock-up Letter....................................................................B-1
Exhibit C - Form of Option Lock-up Pursuant to
Section (1)(A)(Xxxii)...... .............................................................C-1
iv
6
EDISON SCHOOLS INC.
(a Delaware corporation)
__ Shares of Class A Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
__, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
BANK OF AMERICA INTERNATIONAL LIMITED
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ INTERNATIONAL
▇.▇. ▇▇▇▇▇▇ SECURITIES LTD.
as Lead Managers of the several International Managers
c/o Merrill ▇▇▇▇▇ International
International Ropemaker Place
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ GLY
England
Ladies and Gentlemen:
Edison Schools Inc., a Delaware corporation (the "Company"), confirms
its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ International ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the
other International Managers named in Schedule A hereto (collectively, the
"International Managers", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇
▇▇▇▇▇, Bank of America International Limited, Credit Suisse First Boston
(Europe) Limited, ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International and ▇.▇. ▇▇▇▇▇▇
Securities Ltd. are acting as representatives (in such capacity, the "Lead
Managers"), with respect to the issue and sale by the Company and the purchase
by the International Managers, 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 Schedule A, and with respect
to the grant by the Company to the International Managers, acting severally and
not jointly, of the option described in Section 2(b) hereof to purchase all or
any part of __
7
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid __ shares of Common Stock (the "Initial International Securities") to
be purchased by the International Managers and all or any part of the __ shares
of Common Stock subject to the option described in Section 2(b) hereof (the
"International Option Securities") are hereinafter called, collectively, the
"International Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of __ shares of Common Stock (the
"Initial U.S. Securities") through arrangements with certain underwriters in the
United States and Canada (the "U.S. Underwriters") for which ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, Banc of America
Securities LLC, Credit Suisse First Boston Corporation, ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇ Securities Corporation and ▇.▇. ▇▇▇▇▇▇ Securities Inc. are acting as
representatives (the "U.S. Representatives") and the grant by the Company to the
U.S. Underwriters, acting severally and not jointly, of an option to purchase
all or any part of the U.S. Underwriters' pro rata portion of up to __
additional shares of Common Stock solely to cover overallotments, if any (the
"U.S. Option Securities" and, together with the International Option Securities,
the "Option Securities"). The Initial U.S. Securities and the U.S. Option
Securities are hereinafter called the "U.S. Securities". It is understood that
the Company is not obligated to sell and the International Managers are not
obligated to purchase, any Initial International Securities unless all of the
Initial U.S. Securities are contemporaneously purchased by the U.S.
Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities", and the International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated (in such capacity, the "Global Coordinator").
The Company understands that the International Managers propose to make
a public offering of the International Securities as soon as the Lead Managers
deem advisable after this Agreement has been executed and delivered.
The Company and the International Managers agree that up to __ shares
of the Initial International Securities to be purchased by the International
Managers and that up to __ shares of the Initial U.S. Securities to be purchased
by the U.S. Underwriters (collectively, the "Reserved Securities") shall be
reserved for sale by the Underwriters to certain eligible
2
8
employees and persons having business relationships with the Company, as part of
the distribution of the Securities by the Underwriters, subject to the terms of
this Agreement, the applicable rules, regulations and interpretations of the
National Association of Securities Dealers, Inc. and all other applicable laws,
rules and regulations. To the extent that such Reserved Securities are not
orally confirmed for purchase by such eligible employees and persons having
business relationships with the Company by the end of the first business day
after the date of this Agreement, such Reserved Securities may be offered to the
public as part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-84177) 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). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the International Securities (the "Form of
International Prospectus") and one relating to the U.S. Securities (the "Form of
U.S. Prospectus"). The Form of U.S. Prospectus is identical to the Form of
International Prospectus, except for the front cover and back cover pages and
the information under the caption "Underwriting". The information included in
any such prospectus or in any 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 Form of International Prospectus and Form of U.S.
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 and
schedules thereto 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 Form of
International Prospectus and the final Form of U.S. Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "International Prospectus" and the "U.S.
3
9
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International Prospectus dated October 19, 1999 and
preliminary U.S. Prospectus dated October 19, 1999, respectively, each together
with the applicable Term Sheet and all references in this Agreement to the date
of such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the International Prospectus, the U.S. Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
On October __, 1999, the Company filed its fifth amended and restated
Certificate of Incorporation (the "Fifth Amendment"), with the Secretary of
State of the State of Delaware. The Fifth Amendment provides for the automatic
conversion (the "Recapitalization"), immediately prior to the closing of the
offering, of each outstanding share of the Company's capital stock into 0.45
shares of Common Stock and 0.05 shares of the Company's class B common stock,
par value $.01 per share ("Class B common stock"). Immediately after the closing
of the offering, the Company will file its sixth amended and restated
Certificate of Incorporation (the "Sixth Amendment"), substantially in the form
filed as exhibit 3.1 to the Registration Statement.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each International Manager 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
International Manager, as follows:
(i) Compliance with Registration Requirements. 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 International
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and
4
10
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 necessary to make the statements therein not misleading and
the Prospectuses, any preliminary prospectuses and any supplement
thereto or prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time, complied
and will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable,
are distributed in connection with the offer and sale of Reserved
Securities. Neither of the Prospectuses nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectuses or any amendments or supplements thereto were issued and
at the Closing Time (and, if any International 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 Prospectuses shall not be "materially different", as
such term is used in Rule 434, from the prospectuses 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
International Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any International
Manager through the Lead Managers expressly for use in the Registration
Statement or the International Prospectus.
Each preliminary prospectus and the prospectuses 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 Prospectuses
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) 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.
(iii) Financial Statements. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes,
5
11
present fairly the financial position of the Company at the dates
indicated and the statement of operations, stockholders' equity and
cash flows of the Company 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 Prospectuses
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. The pro forma
financial information (including the proforma as adjusted financial
information) included in the Registration Statement and the
Prospectuses present fairly the information shown therein and have been
properly compiled on the bases described therein, and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, 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, 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 other than those in the
ordinary course of business, which are material with respect to the
Company, 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.
(v) 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 Prospectuses 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.
(vi) No Subsidiaries. The Company has no subsidiaries.
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company (a) as of June 30, 1999, was as set forth
in the Prospectuses in the column entitled "Actual" under the caption
"Capitalization", (b) is, as of the date
6
12
hereof, after giving effect to the Recapitalization, as set forth in
the Prospectuses in the column entitled "Pro Forma" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
this Agreement, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities, options or warrants referred to in
the Prospectuses), and (c) after giving effect to the transactions
contemplated by this Agreement, the International Purchase Agreement
and the Registration Statement, will be as set forth in the
Prospectuses in the column entitled "Pro Forma as Adjusted" under the
caption "Capitalization" (except for subsequent issuances, if any,
pursuant to this Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or pursuant to
the exercise of convertible securities, options or warrants referred to
in the Prospectuses). The shares of issued and outstanding capital
stock of the Company 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 Prospectuses, 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 Prospectuses accurately and fairly describe, in all material
respects, the information required to be shown with respect to such
plans, arrangements, options and rights.
(viii) Authorization of Agreement. This Agreement and the U.S.
Purchase Agreement have been duly authorized, executed and delivered by
the Company.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the International Managers and the U.S.
Underwriters from the Company have been duly authorized for issuance
and sale to the International Managers pursuant to this Agreement and
the U.S. Underwriters pursuant to the U.S. Purchase Agreement,
respectively, and, when issued and delivered by the Company pursuant to
this Agreement and the U.S. Purchase Agreement, respectively, against
payment of the consideration set forth herein and the U.S. Purchase
Agreement, respectively, will be validly issued, fully paid and
non-assessable; the Common Stock conforms to all statements relating
thereto contained in the Prospectuses 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
7
13
holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the
Company.
(x) Absence of Defaults and Conflicts. The Company is not in
violation of its charter or by-laws 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 is a party or by which it may be bound, or to which any of
the property or assets of the Company 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 U.S. Purchase Agreement and the consummation of
the transactions contemplated in this Agreement, the U.S. Purchase
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 Prospectuses under the caption "Use of
Proceeds") and compliance by the Company with its obligations under
this Agreement and the U.S. Purchase 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 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 or by-laws of the Company 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 any
of its assets, properties or operations, including, without limitation,
the Elementary and Secondary Education Act of 1965, as amended, and all
rules and regulations 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.
8
14
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company (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 principal
suppliers, manufacturers, customers or contractors, which, in any of
the foregoing cases, may reasonably be expected to result in a Material
Adverse Effect.
(xii) 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
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 and the
U.S. Purchase 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 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.
(xiii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xiv) Possession of Intellectual Property. The Company 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
neither the Company nor, to the knowledge of
9
15
the Company, any of the schools operated by it has received any notice
or is not 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.
(xv) 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 and the U.S. Purchase
Agreement or the consummation of the transactions contemplated by this
Agreement and the U.S. Purchase Agreement, except (i) 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 and
(ii) such as have been obtained under the laws and regulations of
jurisdictions outside the United States in which the Reserved
Securities are offered. 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.
(xvi) Possession of Licenses and Permits. The Company and each
of the schools operated by it possess such permits, licenses,
approvals, consents and other authorizations, (including, without
limitation, authorizations required (i) 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, (ii) to operate the charter schools currently operated by
it, and (iii) 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
10
16
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.
(xvii) Compliance with Statutes, Rules and Regulations, etc.
The Company and each of the schools operated by it 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 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, 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.
(xviii) Title to Property. The Company has good and marketable
title to all real property owned by the Company and good title to all
other properties owned by it, 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
Prospectuses 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; and all
of the leases and subleases material to the business of the Company and
the schools operated by it, and under which the Company or any of the
schools operated by it holds properties described in the Prospectuses,
are in full force and effect, and neither the Company nor 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 or any of the
schools operated by it under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or any of
the schools operated by it to the continued possession of the
11
17
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.
(xix) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xx) 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) neither the Company nor, 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 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 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 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 or the schools operated by it relating to
Hazardous Materials or any Environmental Laws.
(xxi) Registration Rights. Except as disclosed in the
Prospectuses under the caption "Shares Eligible for Future
Sale-Registration Rights", there are no persons with registration
rights or other similar rights to have any securities registered
12
18
pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.
(xxii) Apex Online Learning Inc. The Company owns 1,000,000
shares of Series B preferred stock, par value $0.001 per share, of Apex
Online Learning Inc., a Washington corporation ("APEX"), which
currently represents approximately 16.5% of all of the issued and
outstanding capital stock of APEX, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. The
Company does not own the equity securities or similar interests of any
other entity.
(xxiii) 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, any other
party is in default in the performance or observation of any material
obligation, agreement, covenant or condition contained therein.
Schedule D hereto is a true, correct and complete list of the
Management Agreements.
(xxiv) Insurance. The Company and each of the schools operated
by it 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; neither the Company,
nor any of the schools operated by it nor, 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 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
13
19
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.
(xxv) Tax Returns and Payment of Taxes. The Company has timely
filed all federal, state, local and foreign tax returns that are
required to be filed or has 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 has 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 Section 1(a)(iv) 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 has not been finally determined or remains
open to examination by applicable taxing authorities. The Company is
not a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as
amended (the "Code").
(xxvi) 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 Securities Exchange Act of 1934, as
amended (the "1934 Act").
(xxvii) Certain Transactions. Except as disclosed in the
Prospectuses, 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-1.
(xxviii) Statistical and Market Data. The statistical and
market-related data included in the Prospectuses 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.
14
20
(xxix) Accounting and other Controls. The Company has
established a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions were, are and will
be executed in accordance with management's general or specific
authorization; (ii) 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; (iii) access to assets was, is and will be
permitted only in accordance with a management's general or specific
authorizations; and (iv) 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.
(xxx) Year 2000 Readiness. The Company has, to the extent
disclosed in the Prospectus, reviewed its operations and those of the
schools operated by it and of any third party with which the Company or
any of the schools operated by the Company has a material relationship
to evaluate the extent to which the business or operations of the
Company or any of the schools operated by it will be affected by the
Year 2000 Problem. Other than as set forth in the Prospectuses, the
Company does not anticipate incurring operating expenses or costs
material to the financial position or results of operations of the
Company and the schools operated by it in connection with the actions
that the Company currently believes are necessary to address the Year
2000 Problem. As a result of the aforementioned review, the Company has
no reason to believe, and does not believe, that the Year 2000 Problem
could have a Material Adverse Effect. The "Year 2000 Problem" as used
herein means any risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000.
(xxxi) Recapitalization. On October __, 1999 the Company filed
the Fifth Amendment with the Secretary of State of the State of
Delaware, which provides for the Recapitalization and which has been
duly authorized by the Board of Directors and shareholders of the
Company. The Company has undertaken all necessary corporate action,
including obtaining the approval of the Board of Directors and the
shareholders of the Company, in order to file the Sixth Amendment with
the Secretary of State of the State of Delaware immediately after the
closing of the offering.
(xxxii) Option Lock-Ups. The Company has received a written
180-day lock-up agreement from each holder of an option or options to
purchase any class of its capital stock substantially in the form of
Exhibit C hereto, and each such lock-up
15
21
is in full force and effect and has not been amended or supplemented as
of the date hereof.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company and delivered to the Global Coordinator, the Lead Managers or to
counsel for the International Managers shall be deemed a representation and
warranty by the Company to each International Manager as to the matters covered
thereby.
SECTION 2. Sale and Delivery to International Managers;
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 agrees to sell to each International Manager, severally and
not jointly, and each International Manager, severally and not jointly, agrees
to purchase from the Company, at the price per share set forth in Schedule B,
the number of Initial International Securities set forth in Schedule A opposite
the name of such International Manager, plus any additional number of Initial
International Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof.
(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 Company hereby grants an option to the
International Managers, severally and not jointly, to purchase up to an
additional __ shares of Common Stock at the price per share set forth in
Schedule B, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial International Securities but
not payable on the International 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
International Securities upon notice by the Global Coordinator to the Company
setting forth the number of International Option Securities as to which the
several International Managers are then exercising the option and the time and
date of payment and delivery for such International Option Securities. Any such
time and date of delivery for the International Option Securities (a "Date of
Delivery") shall be determined by the Global Coordinator, 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 International Option Securities, each
of the International Managers, acting severally and not jointly, will purchase
that proportion of the total number of International Option Securities then
being purchased which the number of Initial International Securities set forth
in Schedule A opposite the name of such International Manager bears to the total
number of Initial International Securities, subject in each case to
16
22
such adjustments as the Global Coordinator in its 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 ▇▇▇▇ &
▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Global Coordinator and the Company,
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 Global Coordinator and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Manages, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Lead Managers for the respective accounts of the International Managers of
certificates for the International Securities to be purchased by them. It is
understood that each International Manager has authorized the Lead Managers, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial International Securities and the International
Option Securities, if any, which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
individually and not as representative of the International Managers, may (but
shall not be obligated to) make payment of the purchase price for the Initial
International Securities or the International Option Securities, if any, to be
purchased by any International Manager 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 International Manager from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the International
Managers 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 International Securities and the International
Option Securities, if any, will be made available for examination and packaging
by the Lead Managers 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.
17
23
(e) Appointment of Qualified Independent Underwriter. The Company
hereby confirms its engagement of ▇▇▇▇▇▇▇ ▇▇▇▇▇ as, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ hereby
confirms its agreement with the Company to render services as, a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. (the "NASD") with respect
to the offering and sale of the International Securities. ▇▇▇▇▇▇▇ ▇▇▇▇▇, solely
in its capacity as qualified independent underwriter and not otherwise, is
referred to herein as the "Independent Underwriter".
SECTION 3. Covenants of the Company. The Company covenants
with each International Manager 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 Global Coordinator 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 Prospectuses
or any amended Prospectuses shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectuses 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
Global Coordinator 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 Prospectuses, will furnish the
Global Coordinator 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 Global
Coordinator or counsel for the International Managers shall reasonably
object.
18
24
(c) Delivery of Registration Statements. The Company
has furnished or will deliver to the Lead Managers and counsel for the
International Managers, 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 signed copies of all consents and certificates
of experts, and will also deliver to the Lead Managers, without charge,
a conformed copy of the Registration Statement as originally filed and
of each amendment thereto (without exhibits) for each of the
International Managers. The copies of the Registration Statement and
each amendment thereto furnished to the International Managers 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 Prospectuses. The Company has
delivered to each International Manager, without charge, as many copies
of each preliminary prospectus as such International Manager reasonably
requested, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to
each International Manager, without charge, during the period when the
International Prospectus is required to be delivered under the 1933 Act
or the 1934 Act, such number of copies of the International Prospectus
(as amended or supplemented) as such International Manager may
reasonably request. The International Prospectus and any amendments or
supplements thereto furnished to the International Managers 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,
the U.S. Purchase Agreement and in the Prospectuses. 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 International Managers or for the
Company, to amend the Registration Statement or amend or supplement any
Prospectus in order that the Prospectuses 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 any 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,
19
25
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 Prospectuses comply with such
requirements, and the Company will furnish to the International
Managers such number of copies of such amendment or supplement as the
International Managers may reasonably request.
(f) Blue Sky Qualifications. The Company will use its
best efforts, in cooperation with the International Managers, to
qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or
foreign) as the Global Coordinator may designate and to maintain such
qualifications in effect for a 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 Prospectuses under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to
effect and maintain the quotation of the Common Stock (including 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.
20
26
(j) Restriction on Sale of Securities. (1) During a
period of 180 days from the date of the Prospectuses, the Company will
not, without the prior written consent of the Global Coordinator, (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 or under the U.S. Purchase Agreement, (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 Prospectuses, (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 the Prospectuses 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 stock into shares of Common Stock pursuant to the
Fifth Amendment or the Sixth Amendment.
(2) During a period of 180 days from the date of
the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, release any holder
of an option or options to purchase any shares of its capital
stock from the lock-up agreement referred to in Section
1(a)(xxxii) and the Company will enforce such lock-up
agreements to the fullest extent permitted by law.
(k) Reporting Requirements. The Company, during the
period when the Prospectuses 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 rules and regulations of the
Commission thereunder.
21
27
(l) Compliance with NASD Rules. The Company hereby
agrees that it will ensure that the Reserved Securities will be
restricted as required by the NASD or the NASD rules from sale,
transfer, assignment, pledge or hypothecation for a period of three
months following the date of this Agreement. The Underwriters will
notify the Company as to which persons will need to be so restricted.
At the request of the Underwriters, the Company will direct the
transfer agent to place a stop transfer restriction upon such
securities for such period of time. Should the Company release, or seek
to release, from such restrictions any of the Reserved Securities, the
Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
(m) Compliance with Rule 463. The Company will comply
with the requirements of Rule 463 of the 1933 Act Regulations.
(n) Filing of Sixth Amended and Restated Certificate
of Incorporation. The Company has taken all necessary corporate action,
including obtaining the approval of the Board of Directors and the
shareholders of the Company, in order to file the Sixth Amendment with
the Secretary of the State of the State of Delaware, and the Company
will file the Sixth Amendment as soon as reasonably practicable after
the closing of the transactions contemplated by this Agreement and the
International Purchase Agreement.
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 and the transfer of the Securities between the International
Managers and the U.S. 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 Prospectuses and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the Underwriters of copies of
the Blue Sky Survey and any supple-
22
28
ment 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, (x) the fees and
expenses incurred in connection with the inclusion of the Securities in the
Nasdaq National Market, (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to employees, directors and other persons with
relationships with the Company who have expressed an interest in purchasing the
Reserved Securities and (xii) the expenses of the Independent Underwriter.
(b) Termination of Agreement. If this Agreement is terminated by
the Lead Managers in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the International Managers for all
of their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the International Managers.
SECTION 5. Conditions of International Managers' Obligations.
The obligations of the several International Managers hereunder are subject to
the accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company 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 International Managers. 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 International Managers shall have received the favorable opinions,
dated as of Closing Time, of:
23
29
(i) ▇▇▇▇ and ▇▇▇▇ LLP, counsel for the
Company, in form and substance satisfactory to counsel for the
International Managers, together with signed or reproduced copies of
such letter for each of the other International Managers to the effect
set forth in Exhibit A-1 hereto and to such further effect as counsel
to the International Managers may reasonably request; and
(ii) ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, general counsel
for the Company, in form and substance satisfactory to counsel for the
International Managers, together with signed or reproduced copies of
such letter for each of the other International Managers to the effect
set forth in Exhibit A-2 hereto and to such further effect as counsel
to the International Managers may reasonably request.
(c) Opinion of Counsel for International Managers. At
Closing Time, the Lead Managers shall have received the favorable
opinion, dated as of Closing Time, of Debevoise & ▇▇▇▇▇▇▇▇, counsel for
the International Managers, together with signed or reproduced copies
of such letter for each of the other International Managers, in form
and substance reasonably satisfactory to the International Managers. 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.
(d) 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 Prospectuses, any
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company,
whether or not arising in the ordinary course of business, and the Lead
Managers 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.
(e) Accountant's Comfort Letter. At the time of the
execution of this Agreement, the Lead Managers shall have received from
PricewaterhouseCoopers a letter dated such date, in form and substance
satisfactory to the Lead Managers, together with signed or reproduced
copies of such letter for each of the other International Managers
containing statements and information of the type ordinarily
24
30
included in accountants' "comfort letters" to underwriters with respect
to the financial statements and certain financial information contained
in the Registration Statement and the Prospectuses.
(f) Bring-down Comfort Letter. At Closing Time, the
Lead Managers 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 (e) of
this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(g) 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.
(h) 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.
(i) Lock-up Agreements. At the date of this
Agreement, the Lead Managers shall have received an agreement
substantially in the form of Exhibit B hereto signed by the persons
listed on Schedule C hereto.
(j) Recapitalization. Each share of capital stock of
the Company shall have been converted into 0.45 shares of Common Stock
and 0.05 shares of class B common stock.
(k) Purchase of Initial U.S. Securities.
Contemporaneously with the purchase by the International Managers of
the Initial International Securities under this Agreement, the U.S.
Underwriters shall have purchased the Initial U.S. Securities under
the U.S. Purchase Agreement.
(l) Conditions to Purchase of International Option
Securities. In the event that the International Managers exercise their
option provided in Section 2(b) hereof to purchase all or any portion
of the International Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Lead Managers 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
25
31
of the Company confirming that the certificate delivered at
the Closing Time pursuant to Section 5(d) hereof remains true
and correct as of such Date of Delivery.
(ii) 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 International Managers, dated such Date of
Delivery, relating to the International 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.
(iii) Opinion of Counsel for International Managers. The
favorable opinion of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the
International Managers, dated such Date of Delivery, relating
to the International 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.
(iv) Bring-down Comfort Letter. A letter from
PricewaterhouseCoopers, in form and substance satisfactory to
the Lead Managers and dated such Date of Delivery,
substantially in the same form and substance as the letter
furnished to the Lead Managers pursuant to Section 5(f)
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.
(m) Additional Documents. At Closing Time and at each
Date of Delivery, counsel for the International Managers 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 in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in
form and substance to the Lead Managers and counsel for the
International Managers.
(n) 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 International Option Securities on a Date
of Delivery which is after the Closing Time, the obligations of the
several International Managers to purchase the relevant Option
Securities, may be terminated by the Lead Managers by notice to the
Company at any time at or prior
26
32
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 International Managers. (1) The Company
agrees to indemnify and hold harmless each International Manager and each
person, if any, who controls any International Manager 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 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 Prospectuses (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, arising out of (A) the violation
of any applicable laws or regulations of foreign jurisdictions where
Reserved Securities have been offered and (B) any untrue statement or
alleged untrue statement of a material fact included in the supplement
or prospectus wrapper material distributed in __ in connection with the
reservation and sale of the Reserved Securities to the employees,
directors and other persons with relationships with the Company who
have expressed an interest in purchasing the Reserved Securities or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading;
(iii) 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 or in
connection with any violation of the nature referred to in Section
6(a)(1)(ii)(A)
27
33
hereof; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iv) 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 or in connection with any
violation of the nature referred to in Section 6(a)(1)(ii)(A) hereof,
to the extent that any such expense is not paid under (i), (ii) or
(iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (x) 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
International Manager through the Lead Managers 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 International Prospectus (or any amendment or supplement
thereto), and (y) 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 International Manager results from the fact
that such International Manager 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 International 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
International Manager 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 corrected in the International
Prospectus and (iii) that sending such International 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.
(2) In addition to and without limitation of the Company's obligation
to indemnify ▇▇▇▇▇▇▇ ▇▇▇▇▇ as an Underwriter, the Company also agrees to
indemnify and hold harmless the Independent Underwriter and each person, if any,
who controls the Independent Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, from and against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, incurred as a
result of the Independent Underwriter's participation as a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
NASD in connection with the offering of the International Securities.
28
34
(3) Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of an
International Manager 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. Each
International Manager 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 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
International prospectus or the International Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such International Manager through the Lead Managers
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the International Prospectus (or any amendment or
supplement thereto).
(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 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, that, if indemnity is sought pursuant to Section 6(a)(2), then, in
addition to the fees and expenses of such counsel for the indemnified parties,
the indemnifying party shall be liable for the reasonable fees and expenses
29
35
of not more than one counsel (in addition to any local counsel) separate from
its own counsel and that of the other indemnified parties for the Independent
Underwriter in its capacity as a "qualified independent underwriter" and all
persons, if any, who control the Independent Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of 1934 Act 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 if, in the
reasonable judgment of the Independent Underwriter, there may exist a conflict
of interest between the Independent Underwriter and the other indemnified
parties. Any such separate counsel for the Independent Underwriter and such
control persons of the Independent Underwriter shall be designated in writing by
the Independent Underwriter. 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) and Section 6(a)(1)(iii) 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 date of such settlement.
(e) Indemnification for Reserved Securities. In connection with
the offer and sale of the Reserved Securities, the Company agrees, promptly upon
a request in writing, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of the employees, directors and other persons
with relationships with the Company who have expressed an interest in purchasing
the Reserved Securities to pay for and accept delivery of Reserved Securities
which, by the end of the first business day following the date of this
Agreement, were subject to a properly confirmed agreement to purchase.
30
36
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 on the one hand and the International Managers 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 on the one
hand and of the International Managers on the other hand in connection with the
statements or omissions, or in connection with any violation of the nature
referred to in Section 6(a)(1)(ii)(A) hereof, 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 on the one hand and the
International Managers on the other hand in connection with the offering of the
International 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
International Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
International Managers, in each case as set forth on the cover of the
International Prospectus, or, if Rule 434 is used, the corresponding location on
the Term Sheet, bear to the aggregate initial public offering price of the
International Securities as set forth on such cover.
The relative fault of the Company on the one hand and the International
Managers on the other hand 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 or by the International Managers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or any violation of the nature referred to in
Section 6(a)(1)(ii)(A) hereof.
The Company and the International Managers agree that ▇▇▇▇▇▇▇ ▇▇▇▇▇
will not receive any additional benefits hereunder for serving as the
Independent Underwriter in connection with the offering and sale of the
International Securities.
The Company and the International Managers agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the International Managers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations
31
37
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, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Manager has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) 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
International Manager 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
International Manager, 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 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.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial International
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
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 International Manager or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the International Managers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Managers may terminate this
Agreement, by notice to the Company, 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
32
38
is given in the International Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, 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 Lead Managers,
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.
SECTION 10. Default by One or More of the International
Managers. If one or more of the International Managers 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
Lead Managers shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting International Managers, 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 Lead Managers 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 International Securities to be purchased on
such date, each of the non-defaulting International Managers 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 International Managers, or
(b) if the number of Defaulted Securities exceeds 10%
of the number of International 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
33
39
of the International Managers 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
International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager 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
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Managers or
the Company 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 "International
Manager" includes any person substituted for a International Manager under this
Section 10.
SECTION 11. 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
International Managers shall be directed to the Lead Managers at North Tower,
World Financial Center, New York, New York 10281-1201, attention of Syndicate
Operations, with a copy to Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; and notices to the Company shall be
directed to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of
▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President and Chief Financial Officer, with a
copy to ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇.
SECTION 12. Parties. This Agreement shall each inure to the
benefit of and be binding upon the International Managers and the Company 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 International Managers and the Company and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their 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 International Managers and the
Company 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 International Manager shall be deemed to be a successor by reason merely of
such purchase.
34
40
SECTION 13. 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 14. 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.
35
41
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the International Managers and the Company in accordance with its terms.
Very truly yours,
EDISON SCHOOLS INC.
By:
---------------------------------
Title:
Name:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
BANK OF AMERICA INTERNATIONAL LIMITED,
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED,
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ INTERNATIONAL,
▇.▇. ▇▇▇▇▇▇ SECURITIES LTD.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
By
--------------------------------
Authorized Signatory
For themselves and as Lead Managers of the
other International Managers named in
Schedule A hereto.
36
42
SCHEDULE A
Number of
Initial International.
Name of International Manager Securities
----------------------------- ----------
▇▇▇▇▇▇▇ ▇▇▇▇▇ International......................................................... __
Bank of America International Limited............................................... __
Credit Suisse First Boston (Europe) Limited......................................... __
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International.......................................... __
▇.▇. ▇▇▇▇▇▇ Securities Ltd.......................................................... __
-----------
Total............................................................................... __
===========
Sch A-1
43
SCHEDULE B
EDISON SCHOOLS INC.
__ Shares of Common Stock
(Par Value $.01 Per Share)
I. The initial 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 International
Securities to be paid by the several International Managers shall be
$__, being an amount equal to the initial public offering price set
forth above less $__ per share; provided that the purchase price per
share for any International 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
International Securities but not payable on the International Option
Securities.
Sch B-1
44
SCHEDULE C
List of persons and entities
subject to lock-up
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
H. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, Ph.D
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D
▇▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. Childs
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
All other holders of any class of the Company's capital stock.
All holders of options or warrants to purchase shares of any class of the
Company's capital stock except [To come].
Sch C-1
45
SCHEDULE D
[List of Management Agreements to Come]
46
Exhibit A-1
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 Prospectuses and to enter into and perform its
obligations under the U.S. Purchase Agreement and the International
Purchase Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is 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 June 30, 1999, as set
forth in the Prospectuses in the column entitled "Actual" under the
caption "Capitalization" (b) is, as of the date hereof, after giving
effect to the Recapitalization, as set forth in the Prospectus in the
column entitled "Pro Forma" under the caption "Capitalization", (except
for issuances subsequent to June 30, 1999, if any, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities,
options or warrants referred to in the Prospectuses), and (c) after
giving effect to the transactions contemplated by this Agreement, the
International Purchase Agreement and the Registration Statement, will
be as set forth in the Prospectuses in the column entitled "Pro Forma
as Adjusted" under the caption "Capitalization" (except for issuances
subsequent to June 30, 1999, if any, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectuses or
pursuant to the exercise of convertible securities, options or warrants
referred to in the Prospectuses); the shares of issued and outstanding
capital stock 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
A-1-1
47
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 U.S.
Underwriters and the International Managers from the Company have been
duly authorized for issuance and sale to the Underwriters pursuant to
the U.S. Purchase Agreement and the International Purchase Agreement,
respectively, and, when issued and delivered by the Company pursuant to
the U.S. Purchase Agreement and the International Purchase Agreement,
respectively, against payment of the consideration set forth in the
U.S. Purchase Agreement and the International 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 is not subject to
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 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 does not have any
subsidiaries, and, to our knowledge, the Company does not have any
equity investments in other companies, except the Company's interest in
APEX.
(viii) The U.S. Purchase Agreement and the International
Purchase Agreement have 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 Prospectuses 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 Prospectuses and each
amendment or supplement to the Registration Statement and the
Prospectuses as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein
or omitted therefrom,
A-1-2
48
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) If Rule 434 has been relied upon, the Prospectuses
were not "materially different," as such term is used in Rule 434, from
the prospectuses included in the Registration Statement at the time it
became effective.
(xii) 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.
(xiii) To our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Company or any school operated by the Company is a party, or
to which the property of the Company 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 U.S. Purchase Agreement and
International Purchase Agreement or the performance by the Company of
its obligations thereunder.
(xiv) The information in the Prospectuses under
"Summary - Description of Capital Stock", "Description of Capital
Stock", "Shares Eligible for Future Sale", "Certain United States Tax
Considerations for Non-United States Holders", and in the first
paragraph and the first and third sentences in the second paragraph
under "Management--Election of Directors", the last sentence of
"Management--Executive Officers and Directors", 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.
(xv) To our knowledge, there are no statutes or
regulations that are required to be described in the Prospectuses that
are not described as required.
(xvi) 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.
A-1-3
49
(xvii) To our knowledge, the Company is not in violation
of its charter or by-laws.
(xviii) 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 U.S. Purchase Agreement and the
International Purchase Agreement or for the offering, issuance, sale or
delivery of the Securities.
(xix) The execution, delivery and performance of the
U.S. Purchase Agreement and the International Purchase Agreement and
the consummation of the transactions contemplated in the U.S. Purchase
Agreement, the International 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 U.S. Purchase
Agreement and the International 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)(x) of the Purchase Agreements) 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 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,
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.
(xx) To our knowledge, except as described in the
Prospectuses under the caption "Shares Eligible for Future
Sale--Registration Rights" 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.
(xxi) To our knowledge, except as disclosed in the
prospectuses, 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
A-1-4
50
contracts or commitments to issue or sell, shares of the company's
capital stock or any such options, rights, convertible securities or
obligations.
(xxii) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the 1940 Act.
(xxiii) The Fifth Amendment filed by the Company with the
Secretary of State of the State of Delaware on October __, 1999 was
duly authorized by the Board of Directors and shareholders of the
Company. Each share of the Company's capital stock has been converted
into 0.45 shares of Common Stock and 0.05 shares of class B common
stock. The Company has undertaken all necessary corporate action,
including obtaining the approval of the Board of Directors and the
shareholders of the Company, in order to execute, deliver and file the
Sixth Amendment with the Secretary of State of the State of Delaware
immediately after the closing of the offering, substantially in the
form of Exhibit 3.1 to the Registration Statement.
In connection with the preparation of the Registration
Statement and the Prospectuses, 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 Prospectuses. 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
Prospectuses, 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 misleading or
that the Prospectuses 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.
A-1-5
51
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-1-6
52
Exhibit A-2
FORM OF OPINION OF THE GENERAL COUNSEL
FOR THE COMPANY TO BE DELIVERED
PURSUANT TO SECTION 5(b)(iii)
(i) All descriptions in the Prospectuses of and
references in the Prospectuses 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 Prospectuses or filed or incorporated
by reference as an exhibit to the Registration Statement.
(iii) The execution, delivery and performance of the
U.S. Purchase Agreement and the International Purchase Agreement and
the consummation of the transactions contemplated in the U.S. Purchase
Agreement, the International 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 U.S. Purchase
Agreement and the International 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)(x) of the Purchase Agreements) 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
53
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
U.S. Purchase Agreement and the International Purchase Agreement and
the consummation of the transactions contemplated in the U.S. Purchase
Agreement, the International 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 U.S. Purchase
Agreement and the International 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.
(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
U.S. Purchase Agreement and the International Purchase Agreement or for
the offering, issuance, sale or delivery of the Securities.
(vi) To my knowledge, the Company and each of the
schools operated by it possess all permits, licenses, approvals,
consents and other authorizations required, including without
limitation authorizations required (i) 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, (ii) to
operate charter schools under state charter statutes, and (iii) 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
A-2-2
54
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 or any school operated by the Company is a party, or
to which the property of the Company 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 U.S. Purchase
Agreement and International Purchase Agreement or the performance by
the Company of its obligations thereunder.
(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 Prospectuses under "Risk
Factors--The operation of our charter schools depends on the
maintenance of the underlying charter grant", "Risk Factors--Risks
Related to Governmental Regulation of the Education Industry and
Government Subsidies", "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.
A-2-3
55
(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.
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-2-4
56
Form of lock-up from directors, officers or other stockholders
pursuant to Section 5(i)
Exhibit B
__, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated,
Banc of America Securities LLC
Credit Suisse First Boston Corporation
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
as U.S. Representative(s) of the several
U.S. Underwriters to be named in the
within-mentioned U.S. 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 ("▇▇▇▇▇▇▇ ▇▇▇▇▇"),
Credit Suisse First Boston Corporation, ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, ▇.▇. ▇▇▇▇▇▇ Securities Inc. propose to enter into a U.S. Purchase
Agreement (the "U.S. Purchase Agreement") with the Company providing for the
public offering of shares (the "Securities") of the Company's 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 U.S. Purchase Agreement that, during a
period of 180 days from the date of the U.S. 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,
B-5
57
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 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 (the "Securities 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, whether any such swap or transaction is to be
settled by delivery of Common Stock or other securities, in cash or otherwise.
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,
Signature:
----------------------------------
Print Name:
---------------------------------
B-6
58
Exhibit C-1
FORM OF OPTION LOCK-UP PURSUANT TO SECTION (1)(A)(XXXII)
[To come]
C-1