INSERT NAME/LTRHEAD] , 2007
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[INSERT
NAME/LTRHEAD]
, 2007
Education
Media, Inc.
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▇▇▇▇▇ ▇▇▇▇▇, Incorporated
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- Re:
- Education Media, Inc. Initial Public Offering
Gentlemen:
This letter agreement (this "Letter Agreement") is being delivered to you in accordance with the Underwriting Agreement (the "Underwriting Agreement") entered into by and between Education Media, Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated, a Delaware corporation, as representative of the several underwriters (the "Underwriters"), relating to an underwritten initial public offering (the "Offering"), of 11,500,000 of the Company's units (the "Units"), each comprised of one share of the Company's common stock, par value $0.0001 per share (the "Common Stock"), and one warrant exercisable for one share of Common Stock (each, a "Warrant"). The Units sold in the Offering will be listed and traded on the American Stock Exchange pursuant to a Registration Statement on Form S-1 and prospectus (the "Prospectus") filed by the Company with the Securities and Exchange Commission (the "SEC"). Certain capitalized terms used herein are defined in Section 12.
In order to induce the Company and the Underwriters to enter into the Underwriting Agreement and to proceed with the Offering and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇▇▇ Investment Holdings, LLC ("HIH") hereby agree with the Company and the Underwriters as follows:
1. ▇▇▇▇▇▇▇▇▇ and HIH hereby agree that in the event that the Company fails to consummate a Business Combination within 24 months after the date of the final Prospectus relating to the Offering, the ▇▇▇▇▇▇▇▇▇ and HIH shall, (unless the Company obtains consent of holders of 95% of the stockholders of the Company), in accordance with all applicable requirements of the Delaware General Corporation Law (the "DGCL"), take all reasonable steps to (a) cause the Trust Account to be liquidated and its assets to be distributed to the Public Stockholders and (b) cause the Company to be liquidated as soon as reasonably practicable. ▇▇▇▇▇▇▇▇▇ and HIH agree that in connection with any cessation of the corporate existence of the Company, ▇▇▇▇▇▇▇▇▇ and HIH will take all reasonable steps to cause the Company to adopt a plan of distribution in accordance with Section 281(b) of the DGCL or any successor provision thereto.
2. With respect to HIH's Insiders Shares, ▇▇▇▇▇▇▇▇▇ and HIH hereby waive (a) any and all right, title, interest or claim of any kind in or to any distributions of the Trust Account as a result of any liquidation of the Company ("Claim"), and to any and all amounts distributed in connection with a liquidation of the Company, and hereby agrees to reimburse the Company for any distribution of the Trust Account received by the undersigned in respect of such undersigned's Insiders Shares; and (b) any and all right to exercise conversion rights in connection with a proposed Business Combination. ▇▇▇▇▇▇▇▇▇ and HIH acknowledges and agrees that, upon the Company's liquidation, all warrants relating to the Company that are owned by HIH will terminate worthless. ▇▇▇▇▇▇▇▇▇ and HIH hereby waive any Claim ▇▇▇▇▇▇▇▇▇ and HIH may have in the future as a result of, or arising out of, any contracts or agreements with the Company and ▇▇▇▇▇▇▇▇▇ and HIH will not seek recourse against the Trust Account for any reason whatsoever.
3. In the event of the liquidation of the Trust Account, ▇▇▇▇▇▇▇▇▇ agrees to indemnify and hold harmless the Company, on a joint and several basis with the other Founders, against any and all claims by any third party for services rendered, products sold or financing provided to the Company or by any entity that the Company has entered into a letter of intent or an acquisition agreement with, but only to the extent necessary to ensure that such claims do not reduce the amount of funds in the Trust Account and only if any such third party has not executed an agreement in writing waiving claims against the Trust Account. In the event the Company's assets held outside the Trust Account are insufficient to pay the costs and expenses of liquidation of the Company, ▇▇▇▇▇▇▇▇▇ agrees to indemnify and hold harmless the Company, on a joint and several basis with the other Founders, against any costs and expenses of such liquidation.
4. (a) With respect to HIH's Insiders Shares, HIH will escrow all of the Insider Shares beneficially owned by it, if any, for the period commencing on the effective date of the Registration Statement and ending six (6) months following a Business Combination, subject to the terms of a Securities Escrow Agreement which the Company will enter into with HIH and Continental Stock Transfer & Trust Company.
(b) With respect to HIH's Placement Warrants, HIH will escrow all of its Placement Warrants until the 90th day after the date of the consummation of the initial Business Combination, subject to the terms of a Securities Escrow Agreement which the Company will enter into with HIH and Continental Stock Transfer & Trust Company.
5. ▇▇▇▇▇▇▇▇▇ hereby agrees that until after the consummation of a Business Combination, ▇▇▇▇▇▇▇▇▇ shall not sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any securities or other interests owned by ▇▇▇▇▇▇▇▇▇ in HIH.
6. ▇▇▇▇▇▇▇▇▇ and HIH agree that in connection with any proposed Business Combination, ▇▇▇▇▇▇▇▇▇ and HIH will vote (a) all Insiders Shares owned by HIH in accordance with the majority of the votes cast by the Public Stockholders in connection with the vote required to approve the Business Combination; (b) all shares of Common Stock acquired by HIH in the Offering or in the secondary market in favor of the Business Combination; and (c) all Insiders Shares and all shares of Common Stock acquired by HIH in the Offering or in the secondary market in favor of an amendment to the Restated Certificate providing for the Company's perpetual existence.
7. ▇▇▇▇▇▇▇▇▇ agrees to serve as special advisor to the Company until the earlier of the consummation by the Company of a Business Combination or the liquidation of the Company; provided, however, that nothing herein shall be construed as providing a right of ▇▇▇▇▇▇▇▇▇ to maintain any position if removed by proper corporate action. ▇▇▇▇▇▇▇▇▇'▇ biographical information furnished to the Company and the Underwriters and attached hereto as Exhibit A is true and accurate in all material respects, does not omit any material information with respect to ▇▇▇▇▇▇▇▇▇'▇ background and contains all of the information required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated under the Securities Act. ▇▇▇▇▇▇▇▇▇'▇ completed questionnaires furnished to the Company and the Underwriters and attached hereto as Exhibit B are true and accurate in all material respects. ▇▇▇▇▇▇▇▇▇ represents and warrants that:
(a) ▇▇▇▇▇▇▇▇▇ is not subject to or a respondent in any legal action for, any injunction, cease-and desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
(b) ▇▇▇▇▇▇▇▇▇ has never been convicted of or pleaded guilty to any crime (i) involving any fraud or (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and ▇▇▇▇▇▇▇▇▇ is not currently a defendant in any such criminal proceeding;
(c) ▇▇▇▇▇▇▇▇▇ has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked; and
(d) together as a group, the Founders are capable of funding a shortfall in the Trust Account to satisfy their foreseeable indemnification obligations under Section 3 above.
7. Except as disclosed in the Prospectus, neither ▇▇▇▇▇▇▇▇▇ nor HIH nor any family member or affiliate of ▇▇▇▇▇▇▇▇▇ or HIH will be entitled to receive, and no such person will accept:
(a) any compensation, finder's fee, reimbursement or cash payment from the Company for services rendered to the Company prior to or in connection with the consummation of a Business Combination, other than reimbursement from the Company for ▇▇▇▇▇▇▇▇▇' reasonable out-of-pocket expenses related to the Offering and identifying, investigating and consummating a Business Combination; and
(b) any finder's fee, consulting fee or any other compensation or fees from the Company or any other person or entity in the event ▇▇▇▇▇▇▇▇▇ and HIH or any family member or affiliate of ▇▇▇▇▇▇▇▇▇ or HIH originates a Business Combination.
8. ▇▇▇▇▇▇▇▇▇ and HIH acknowledge and agree that the Company will not consummate any Business Combination with any entity that is affiliated with any Insiders or any of their respective affiliates.
9. ▇▇▇▇▇▇▇▇▇ and HIH have full right and power, without violating any agreement by which ▇▇▇▇▇▇▇▇▇ or HIH is bound (including, without limitation, any non-competition or non-solicitation agreement), to enter into this Letter Agreement and ▇▇▇▇▇▇▇▇▇ has full right and power, without violating any agreement by which ▇▇▇▇▇▇▇▇▇ is bound (including, without limitation, any non-competition or non-solicitation agreement to serve as special advisor to the Company. ▇▇▇▇▇▇▇▇▇ and HIH hereby consent to being named in the Prospectus.
10. ▇▇▇▇▇▇▇▇▇ and HIH agree, in order to minimize potential conflicts of interest which may arise from multiple affiliations, to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable Business Combination opportunity in the education industry, until the earlier of (i) the consummation by the Company of a Business Combination or (ii) the dissolution of the Company, subject to any pre-existing fiduciary and contractual obligations ▇▇▇▇▇▇▇▇▇ and HIH might have.
11. ▇▇▇▇▇▇▇▇▇ and HIH agree that until the consummation of a Business Combination, ▇▇▇▇▇▇▇▇▇ and HIH will not recommend or take any action to amend or waive any provisions of Article Ninth or Article Tenth of the Restated Certificate.
12. As used herein, (a) a "Business Combination" shall mean the Company's initial acquisition of one or more operating businesses, through a merger, capital stock exchange, stock purchase, asset acquisition, or other similar business combination, having an aggregate fair market value of at least eighty percent (80%) of the balance held in the Trust Account (excluding the amount held in the Trust Account representing the deferred underwriting discounts and commissions and taxes payable) at the time of such acquisition; (b) "Founders" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; (c) "Insiders" shall mean the Founders and all other officers, directors and stockholders of the Company immediately prior to the Offering; (d) "Insiders Shares" shall mean all of the shares of Common Stock owned by an Insider prior to the Offering (and shall include any shares of Common Stock issued as dividends with respect to such shares); (e) "Placement Warrants" shall mean warrants purchased by the undersigned in a private placement immediately prior to the Offering; (f) "Public Stockholders" shall mean the holders of securities issued in the Offering; (g) "Restated Certificate" shall mean the Company's Amended and Restated Certificate of Incorporation, as the same may be amended from time to time; and (h) "Trust Account" shall mean the trust account established for the benefit of the Public Stockholders into which a portion of the net proceeds of the Offering will be deposited.
13. ▇▇▇▇▇▇▇▇▇ and HIH acknowledge and understand that the Company will rely upon the agreements, representations and warranties set forth herein in proceeding with the Offering. Nothing contained herein shall be deemed to render the Underwriters a representative of, or a fiduciary with respect to, the Company, its stockholders, or any creditor or vendor of the Company with respect to the subject matter hereof.
14. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of its subject matter and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be amended, modified or waived as to any particular provision, except by a written instrument executed by all parties hereto. No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties hereto. Any purported assignment in violation of this Section 14 shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement, the entire relationship of the parties hereto, and any litigation between the parties (whether grounded in contract, tort, statute, law or equity) shall be governed by, construed in accordance with, and interpreted pursuant to the laws of the State of New York, without giving effect to its choice of laws principles. The undersigned hereby agrees that any action, proceeding or claim against the undersigned arising out of, or relating in any way to this Letter Agreement shall be brought and enforced in the courts of the District of Columbia, and irrevocably submits to such jurisdiction. The undersigned hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of, connected with or relating to this Letter Agreement. This Letter Agreement shall be binding on the undersigned and such person's respective heirs, personal representatives, successors and assigns. This Letter Agreement shall terminate on the earlier of (a) the expiration of the Lock-Up Period applicable to the undersigned's Insiders Shares, and (b) the liquidation of the Company; provided that such termination shall not relieve the undersigned from liability for any breach of this Letter Agreement prior to its termination; and provided further that Section 3 of this Letter Agreement shall survive the termination of this Letter Agreement.
| Sincerely, | ||||||
▇▇▇▇▇▇▇▇▇ INVESTMENT HOLDINGS, LLC. |
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By: |
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| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||||
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
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Agreed and Accepted: |
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EDUCATION MEDIA, INC. |
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By: |
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, INCORPORATED |
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By: |
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EXHIBIT A
INFORMATION FURNISHED TO THE COMPANY
EXHIBIT A INFORMATION FURNISHED TO THE COMPANY
EXHIBIT B QUESTIONNAIRE