\nSCHEDULES
\n Schedule A – List of Underwriters…………………………… Sch A-1
\n Schedule B – List of Selling Shareholders……………………. Sch B-1
\n Schedule C – Pricing Information……………………………. Sch C-1
\n Schedule D – List of Persons subject to Lock-up………………. Sch D-1
\n Schedule E – List of Management Agreements…………………… Sch E-1<\/p>\nEXHIBITS
\n Exhibit A-1 – Form of Opinion of Company’s Counsel…………….. A-1-1
\n Exhibit A-2 – Form of Opinion of Company’s
\n General Counsel……………………………….. A-2-1
\n Exhibit A-3 – Form of Opinion of Selling
\n Shareholders’ Counsel………………………….. A-3-1
\n Exhibit B – Form of Lock-up Letter…………………………. B-1
\n<\/c><\/s><\/table>\n
iv
\n 6
\n EDISON SCHOOLS INC.
\n (a Delaware corporation)<\/p>\n
5,000,000 Shares of Class A Common Stock<\/p>\n
(Par Value $.01 Per Share)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
August -, 2000<\/p>\n
MERRILL LYNCH & CO.
\nMerrill Lynch, Pierce, Fenner & Smith
\n Incorporated
\nBanc of America Securities LLC
\nCredit Suisse First Boston Corporation
\nDonaldson, Lufkin & Jenrette Securities Corporation
\nJ.P. Morgan Securities Inc.
\n as Representatives of the several Underwriters
\nc\/o Merrill Lynch & Co.
\n Merrill Lynch, Pierce, Fenner & Smith
\n Incorporated
\nNorth Tower
\nWorld Financial Center
\nNew York, New York 10281-1209<\/p>\n
Ladies and Gentlemen:<\/p>\n
Edison Schools Inc., a Delaware corporation (the “Company”), and the
\npersons listed in Schedule B hereto (the “Selling Shareholders”) confirm their
\nrespective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and each of the other Underwriters named in
\nSchedule A hereto (collectively, the “Underwriters”, which term shall also
\ninclude any underwriter substituted as hereinafter provided in Section 10
\nhereof), for whom Merrill Lynch, Banc of America Securities LLC, Credit Suisse
\nFirst Boston Corporation, Donaldson, Lufkin & Jenrette Securities Corporation
\nand J.P. Morgan Securities Inc. are acting as representatives (in such capacity,
\nthe “Representatives”), with respect to the issue and sale by the Company and
\nthe sale by the Selling Shareholders, acting severally and not jointly, and the
\npurchase by the Underwriters, acting severally and not jointly, of the
\nrespective numbers of shares of class A common stock, par value $.01 per share,
\nof the Company (“Common Stock”) set forth in said Schedules A
\n 7
\nand B hereof, and with respect to the grant by the Company and the Selling
\nShareholders to the Underwriters, acting severally and not jointly, of the
\noption described in Section 2(b) hereof to purchase all or any part of 750,000
\nadditional shares of Common Stock to cover over-allotments, if any. The
\naforesaid 5,000,000 shares of Common Stock (the “Initial Securities”) to be
\npurchased by the Underwriters and all or any part of the 750,000 shares of
\nCommon Stock subject to the option described in Section 2(b) hereof (the “Option
\nSecurities”) are hereinafter called, collectively, the “Securities”.<\/p>\n
The Company and the Selling Shareholders understand that the
\nUnderwriters propose to make a public offering of the Securities as soon as the
\nRepresentatives deem advisable after this Agreement has been executed and
\ndelivered.<\/p>\n
The Company has filed with the Securities and Exchange Commission (the
\n“Commission”) a registration statement on Form S-1 (No. 333-39516) covering the
\nregistration of the Securities under the Securities Act of 1933, as amended (the
\n“1933 Act”), including the related preliminary prospectus or prospectuses.
\nPromptly after execution and delivery of this Agreement, the Company will either
\n(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
\n(“Rule 430A”) of the rules and regulations of the Commission under the 1933 Act
\n(the “1933 Act Regulations”) and paragraph (b) of Rule 424 (“Rule 424(b)”) of
\nthe 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
\n434 (“Rule 434”) of the 1933 Act Regulations, prepare and file a term sheet (a
\n“Term Sheet”) in accordance with the provisions of Rule 434 and Rule 424(b). The
\ninformation included in such prospectus or in such Term Sheet, as the case may
\nbe, that was omitted from such registration statement at the time it became
\neffective but that is deemed to be part of such registration statement at the
\ntime it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
\nto as “Rule 430A Information” or (b) pursuant to paragraph (d) of Rule 434 is
\nreferred to as “Rule 434 Information.” Each prospectus used before such
\nregistration statement became effective, and any prospectus that omitted, as
\napplicable, the Rule 430A Information or the Rule 434 Information, that was used
\nafter such effectiveness and prior to the execution and delivery of this
\nAgreement, is herein called a “preliminary prospectus.” Such registration
\nstatement, including the exhibits thereto and schedules thereto at the time it
\nbecame effective and including the Rule 430A Information and the Rule 434
\nInformation, as applicable, is herein called the “Registration Statement.” Any
\nregistration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
\nis herein referred to as the “Rule 462(b) Registration Statement,” and after
\nsuch filing the term “Registration Statement” shall include the Rule 462(b)
\nRegistration Statement. The final prospectus in the form first furnished to the
\nUnderwriters for use in connection with the offering of the Securities is herein
\ncalled the “Prospectus”. If Rule 434 is relied on, the term “Prospectus” shall
\nrefer to the preliminary prospectus dated July 7, 2000 together with the Term
\nSheet and all references in this Agreement to the date of the Prospectus shall
\nmean the date of the applicable Term Sheet. For purposes of this Agreement, all
\nreferences to the<\/p>\n
2
\n 8
\nRegistration Statement, any preliminary prospectus, the Prospectus or any Term
\nSheet or any amendment or supplement to any of the foregoing shall be deemed to
\ninclude the copy filed with the Commission pursuant to its Electronic Data
\nGathering, Analysis and Retrieval system (“EDGAR”).<\/p>\n
SECTION 1. Representations and Warranties.<\/p>\n
(a) Representations and Warranties by the Company. The Company
\nrepresents and warrants to each Underwriter as of the date hereof, as of the
\nClosing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
\n(if any) referred to in Section 2(b), hereof and agrees with each Underwriter,
\nas follows:<\/p>\n
(i) Compliance with Registration Requirements. Each of the
\n Registration Statement and any Rule 462(b) Registration Statement has
\n become effective under the 1933 Act and no stop order suspending the
\n effectiveness of the Registration Statement or any Rule 462(b)
\n Registration Statement has been issued under the 1933 Act and no
\n proceedings for that purpose have been instituted or are pending or, to
\n the knowledge of the Company, are contemplated by the Commission, and
\n any request on the part of the Commission for additional information
\n has been complied with.<\/p>\n
At the respective times the Registration Statement, any Rule
\n 462(b) Registration Statement and any post-effective amendments
\n thereto became effective and at the Closing Time (and, if any Option
\n Securities are purchased, at the Date of Delivery), the Registration
\n Statement, the Rule 462(b) Registration Statement and any amendments
\n and supplements thereto complied and will comply in all material
\n respects with the requirements of the 1933 Act and the 1933 Act
\n Regulations and did not and will not contain an untrue statement of a
\n material fact or omit to state a material fact required to be stated
\n therein or necessary to make the statements therein not misleading.
\n Neither the Prospectus nor any amendment or supplement thereto
\n (including any prospectus wrapper), at the time the Prospectus or any
\n amendment or supplement thereto was issued and at the Closing Time
\n (and, if any Option Securities are purchased, at the Date of Delivery),
\n included or will include an untrue statement of a material fact or
\n omitted or will omit to state a material fact necessary in order to
\n make the statements therein, in the light of the circumstances under
\n which they were made, not misleading. If Rule 434 is used, the Company
\n will comply with the requirements of Rule 434 and the Prospectus shall
\n not be “materially different”, as such term is used in Rule 434, from
\n the prospectus included in the Registration Statement at the time it
\n became effective. The representations and warranties in this subsection
\n shall not apply to statements in or omissions from the Registration
\n Statement or the Prospectus made in reliance upon and in conformity
\n with information<\/p>\n
3
\n 9
\n furnished to the Company in writing by any Underwriter through the
\n Representatives expressly for use in the Registration Statement or the
\n Prospectus.<\/p>\n
Each preliminary prospectus and the prospectus filed as part
\n of the Registra tion Statement as originally filed or as part of any
\n amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
\n complied when so filed in all material respects with the 1933 Act
\n Regulations and each preliminary prospectus and the Prospectus
\n delivered to the Underwriters for use in connection with this offering
\n was identical to the electronically transmitted copies thereof filed
\n with the Commission pursuant to EDGAR, except to the extent permitted
\n by Regulation S-T.<\/p>\n
(ii) Independent Accountants. The accountants who certified
\n the financial statements and supporting schedules included in the
\n Registration Statement are independent public accountants as required
\n by the 1933 Act and the 1933 Act Regulations.<\/p>\n
(iii) Financial Statements. The financial statements included
\n in the Registra tion Statement and the Prospectus, together with the
\n related schedules and notes, present fairly the financial position and
\n stockholders’ equity of the Company at the dates indicated and the
\n results of operations and cash flows of the Company for the periods
\n specified; said financial statements have been prepared in conformity
\n with generally accepted accounting principles (“GAAP”) applied on a
\n consistent basis throughout the periods involved. The selected
\n financial and other data and the summary financial and operating data
\n included in the Prospectus present fairly the information shown therein
\n and, in the cases of the selected financial data and the summary
\n financial data, have been compiled on a basis consistent with that of
\n the audited financial statements included in the Registration
\n Statement.<\/p>\n
(iv) No Material Adverse Change in Business. Since the
\n respective dates as of which information is given in the Registration
\n Statement and the Prospectus, except as otherwise stated therein, (A)
\n there has been no material adverse change in the condition, financial
\n or otherwise, or in the earnings, business affairs or business
\n prospects of the Company, whether or not arising in the ordinary course
\n of business (a “Material Adverse Effect”), (B) there have been no
\n transactions entered into by the Company other than those in the
\n ordinary course of business, which are material with respect to the
\n Company, and (C) there has been no dividend or distribution of any kind
\n declared, paid or made by the Company on any class of its capital
\n stock.<\/p>\n
(v) Good Standing of the Company. The Company has been duly
\n organized and is validly existing as a corporation in good standing
\n under the laws of the State of Delaware and has corporate power and
\n authority to own, lease and operate its<\/p>\n
4
\n 10
\n properties and to conduct its business as described in the Prospectus
\n and to enter into and perform its obligations under this Agreement; and
\n the Company is duly qualified as a foreign corporation to transact
\n business and is in good standing in each other jurisdiction in which
\n such qualification is required, whether by reason of the ownership or
\n leasing of property or the conduct of business, except where the
\n failure so to qualify or to be in good standing could not reasonably be
\n expected to result in a Material Adverse Effect.<\/p>\n
(vi) No Subsidiaries. The Company has no subsidiaries.<\/p>\n
(vii) Capitalization. The authorized, issued and outstanding
\n capital stock of the Company (a) as of March 31, 2000, was as set forth
\n in the Prospectus in the column entitled “Actual” under the caption
\n “Capitalization”, and (b) after giving effect to the transactions
\n contemplated by this Agreement and the Registration Statement, will be
\n as set forth in the Prospectus in the column entitled “As Adjusted”
\n under the caption “Capitalization” (except for subsequent issuances, if
\n any, pursuant to this Agreement, pursuant to reservations, agreements
\n or employee benefit plans referred to in the Prospectus or pursuant to
\n the exercise of convertible securities, options or warrants referred to
\n in the Prospectus). The shares of issued and outstanding capital stock
\n of the Company, including, without limitation, the Securities to be
\n sold by the Selling Shareholders, have been duly authorized and validly
\n issued and are fully paid and non-assessable; none of the outstanding
\n shares of capital stock of the Company was issued in violation of the
\n preemptive or other similar rights of any securityholder of the
\n Company. The shares of issued and outstanding capital stock of the
\n Company have been issued in compliance, in all material respects, with
\n all federal and state securities laws. Except as disclosed in the
\n Prospectus, there are no outstanding options or warrants to purchase,
\n or any preemptive rights or other rights to subscribe for or to
\n purchase, any securities or obligations convertible into, or any
\n contracts or commitments to issue or sell, shares of the Company’s
\n capital stock or any such options, warrants, rights, convertible
\n securities or obligations. The description of the Company’s stock
\n option and purchase plans and the options or other rights granted and
\n exercised thereunder set forth in the Prospectus accurately and fairly
\n describe, in all material respects, the information required to be
\n shown with respect to such plans, arrangements, options and rights.<\/p>\n
(viii) Authorization of Agreement. This Agreement has been
\n duly authorized, executed and delivered by the Company.<\/p>\n
(ix) Authorization and Description of Securities. The
\n Securities to be purchased by the Underwriters from the Company have
\n been duly authorized for issuance and sale to the Underwriters pursuant
\n to this Agreement and, when issued<\/p>\n
5
\n 11
\n and delivered by the Company pursuant to this Agreement, against
\n payment of the consideration set forth herein will be validly issued,
\n fully paid and non-assessable; the Common Stock conforms to all
\n statements relating thereto contained in the Prospectus and such
\n description conforms to the rights set forth in the instruments
\n defining the same; no holder of the Securities will be subject to
\n personal liability by reason of being such a holder; and the issuance
\n of the Securities is not subject to the preemptive or other similar
\n rights of any securityholder of the Company.<\/p>\n
(x) Absence of Defaults and Conflicts. The Company is not in
\n violation of its charter or by-laws or in default in the performance or
\n observance of any obligation, agreement, covenant or condition
\n contained in any contract, indenture, mortgage, deed of trust, loan or
\n credit agreement, note, lease or other agreement or instrument to which
\n the Company is a party or by which it may be bound, or to which any of
\n the property or assets of the Company is subject (collectively,
\n “Agreements and Instruments”) except for such defaults under Agreements
\n and Instruments that could not reasonably be expected to result in a
\n Material Adverse Effect; and the execution, delivery and performance of
\n this Agreement and the consummation of the transactions contemplated in
\n this Agreement and in the Registration Statement (including the
\n issuance and sale of the Securities and the use of the proceeds from
\n the sale of the Securities as described in the Prospectus under the
\n caption “Use of Proceeds”) and compliance by the Company with its
\n obligations under this Agreement have been duly authorized by all
\n necessary corporate action and do not and will not, whether with or
\n without the giving of notice or passage of time or both, conflict with
\n or constitute a breach of, or default or Repayment Event (as defined
\n below) under, or result in the creation or imposition of any lien,
\n charge or encumbrance upon any property or assets of the Company
\n pursuant to, the Agreements and Instruments (except for such conflicts,
\n breaches or defaults or liens, charges or encumbrances that could not
\n reasonably be expected to result in a Material Adverse Effect), nor
\n will such action result in any violation of (a) the provisions of the
\n charter or by-laws of the Company or (b) any applicable law, statute,
\n rule, regulation, judgment, standard, guide, order, writ or decree of
\n any government, government instrumentality or court, domestic or
\n foreign, having jurisdiction over the Company or any of its assets,
\n properties or operations, including, without limitation, the Elementary
\n and Secondary Education Act of 1965, as amended, and all rules and
\n regulations promulgated thereunder (collectively, the “ESEA”), the
\n Individuals with Disabilities in Education Act and all rules and
\n regulations promulgated thereunder (collectively, the “IDEA”) and any
\n other federal, state or local law, statute, rule, regulation, standard,
\n guide or order pertaining to the authorization to operate public
\n schools or the eligibility to receive funding under federal, state or
\n local programs related to the operation of public schools, except, in
\n the case of clause (b) above, for such violations which could not
\n reasonably be expected to result in a Material Adverse Effect. As used
\n herein, a “Repayment<\/p>\n
6
\n 12
\n Event” means any event or condition which gives the holder of any note,
\n debenture or other evidence of indebtedness (or any person acting on
\n such holder’s behalf) the right to require the repurchase, redemption
\n or repayment of all or a portion of such indebtedness by the Company.<\/p>\n
(xi) Absence of Labor Dispute. No labor dispute with the
\n employees of the Company (including, without limitation, all
\n principals, teachers and other personnel employed by or working for or
\n in any school operated by the Company) exists or, to the knowledge of
\n the Company, is imminent, and the Company is not aware of any existing
\n or imminent labor disturbance by the employees of any of its principal
\n suppliers, manufacturers, customers or contractors, which, in any of
\n the foregoing cases, may reasonably be expected to result in a Material
\n Adverse Effect.<\/p>\n
(xii) Absence of Proceedings. There is no action, suit,
\n proceeding, inquiry or investigation before or brought by any court or
\n governmental agency or body, domestic or foreign (including, without
\n limitation, any proceeding before the United States Department of
\n Education (the “USDE”), the United States Department of Justice (the
\n “DOJ”), the Equal Employment Opportunity Commission (the “EEOC”), state
\n and local educational agencies (including school boards and public
\n school districts) or charter school boards), now pending, or, to the
\n knowledge of the Company, threatened, against or affecting the Company
\n or any school operated by the Company, which is required to be
\n disclosed in the Registration Statement (other than as disclosed
\n therein), or which could reasonably be expected to result in a Material
\n Adverse Effect, or which could materially and adversely affect the
\n consummation of the transactions contemplated in this Agreement or the
\n performance by the Company of its obligations hereunder or thereunder;
\n the aggregate of all pending legal or governmental proceedings to which
\n the Company or any school operated by the Company is a party or of
\n which any of their respective property or assets is the subject which
\n are not described in the Registration Statement, including ordinary
\n routine litigation incidental to the business, could not reasonably be
\n expected to result in a Material Adverse Effect.<\/p>\n
(xiii) Accuracy of Exhibits. There are no contracts or
\n documents which are required to be described in the Registration
\n Statement or the Prospectus or to be filed as exhibits thereto which
\n have not been so described and filed as required.<\/p>\n
(xiv) Possession of Intellectual Property. The Company and
\n each of the schools operated by the Company own or possess, or can
\n acquire on reasonable terms, adequate patents, patent rights, licenses,
\n inventions, copyrights, know-how (including trade secrets and other
\n unpatented and\/or unpatentable proprietary or confidential information,
\n systems or procedures), trademarks, service marks, trade<\/p>\n
7
\n 13
\n names or other intellectual property (including, without limitation,
\n the right to use Success for All, a K-5 reading program developed by
\n Johns Hopkins University and the mathematics programs developed by the
\n University of Chicago School Mathematics Project) (collectively,
\n “Intellectual Property”) necessary to carry on the business now
\n operated by them, and neither the Company nor, to the knowledge of the
\n Company, any of the schools operated by it has received any notice or
\n is otherwise aware of any infringement of or conflict with asserted
\n rights of others with respect to any Intellectual Property or of any
\n facts or circumstances which could render any Intellectual Property
\n invalid or inadequate to protect the interest of the Company therein,
\n and which infringement or conflict (if the subject of any unfavorable
\n decision, ruling or finding) or invalidity or inadequacy, singly or in
\n the aggregate, could reasonably be expected to result in a Material
\n Adverse Effect.<\/p>\n
(xv) Absence of Further Requirements. No filing with, or
\n authorization, approval, consent, license, order, registration,
\n qualification or decree of, any court or governmental authority or
\n agency is necessary or required for the performance by the Company of
\n its obligations hereunder, in connection with the offering, issuance or
\n sale of the Securities under this Agreement or the consummation of the
\n transactions contemplated by this Agreement, except such as have been
\n already obtained or as may be required under the 1933 Act or the 1933
\n Act Regulations and foreign or state securities or blue sky laws.
\n Neither the Company nor any of the schools operated by the Company is
\n subject to any requirements of, or regulation under, the Higher
\n Education Act of 1965, as amended.<\/p>\n
(xvi) Possession of Licenses and Permits. The Company and each
\n of the schools operated by it possess such permits, licenses,
\n approvals, consents and other authorizations, including, without
\n limitation, authorizations required (i) to participate in federal,
\n state and local funding programs under the ESEA and the IDEA to the
\n extent the Company or such school currently receives material funding
\n thereunder, (ii) to operate the charter schools currently operated by
\n it, and (iii) to receive funding under federal, state and local
\n education laws, statutes, rules, regulations, standards, guides or
\n orders to the extent the Company or such school currently receives
\n material funding thereunder (collectively, “Governmental Licenses”),
\n issued by the appropriate federal, state, local or foreign regulatory
\n agencies or bodies necessary to conduct the business now operated by
\n them, except where the failure to possess such Governmental Licenses
\n could not reasonably be expected to have a Material Adverse Effect; the
\n Company and, to the knowledge of the Company, each of the schools
\n operated by the Company, is in compliance with the terms and conditions
\n of all such Governmental Licenses, except where the failure so to
\n comply could not, singly or in the aggregate, reasonably be expected to
\n have a Material Adverse Effect; all of the Governmental Licenses are
\n valid and in full force and effect, except when the<\/p>\n
8
\n 14
\n invalidity of such Governmental Licenses or the failure of such
\n Governmental Licenses to be in full force and effect could not
\n reasonably be expected to have a Material Adverse Effect; and neither
\n the Company nor, to the knowledge of the Company, any of the schools
\n operated by it has received any notice of proceedings relating to the
\n revocation or modification of any such Governmental Licenses which,
\n singly or in the aggregate, if the subject of an unfavorable decision,
\n ruling or finding, could reasonably be expected to result in a Material
\n Adverse Effect.<\/p>\n
(xvii) Compliance with Statutes, Rules and Regulations, etc.
\n The Company and each of the schools operated by it are in compliance
\n with all applicable laws, statutes, rules, regulations, standards,
\n guides or orders (including, without limitation, ESEA, IDEA, Family
\n Education Rights and Privacy Act of 1974, as amended, Gun-Free Schools
\n Act of 1994, Section 504 of the Rehabilitation Act of 1973, Americans
\n with Disabilities Act of 1990, Title VI and Title VII of the Civil
\n Rights Act of 1964, Title IX of the Education Amendments of 1972, Age
\n Discrimination Act of 1975, Age Discrimination in Employment Act of
\n 1967, Equal Pay Act of 1963 and the Drug-Free Workplace Act of 1988)
\n administered, issued or implemented by any federal, state or local
\n government or any agency or subdivision of any of the foregoing,
\n including, without limitation, the USDE, the DOJ, the EEOC, state and
\n local education agencies (including school boards and public school
\n districts) or charter school boards, to the extent applicable, except
\n where failure to be so in compliance could not reasonably be expected
\n to have a Material Adverse Effect. The Company has not been advised,
\n and has no reason to believe, that either it or any of the schools
\n operated by the Company is not conducting business in compliance with
\n all applicable laws, statutes, rules and regulations of the
\n jurisdictions in which it is conducting business, including, without
\n limitation, all applicable federal, state and local laws, rules and
\n regulations; except where failure to be so in compliance could not
\n reasonably be expected to have a Material Adverse Effect.<\/p>\n
(xviii) Title to Property. The Company has good and marketable
\n title to all real property owned by the Company and good title to all
\n other properties owned by it, in each case, free and clear of all
\n mortgages, pledges, liens, security interests, claims, restrictions or
\n encumbrances of any kind except such as (a) are described in the
\n Prospectus or (b) do not, singly or in the aggregate, materially affect
\n the value of such property and do not interfere with the use made and
\n proposed to be made of such property by the Company; and all of the
\n leases and subleases material to the business of the Company and the
\n schools operated by it, and under which the Company or any of the
\n schools operated by it holds properties described in the Prospectus,
\n are in full force and effect, and neither the Company nor any school
\n operated by it has any notice of any claim of any sort that has been
\n asserted by anyone adverse to the rights of the Company or any of the
\n schools operated by it under any<\/p>\n
9
\n 15
\n of the leases or subleases mentioned above, or affecting or questioning
\n the rights of the Company or any of the schools operated by it to the
\n continued possession of the leased or subleased premises under any such
\n lease or sublease, which claim, if the subject of an unfavorable
\n decision, ruling or finding, could reasonably be expected to result in
\n a Material Adverse Effect.<\/p>\n
(xix) Investment Company Act. The Company is not, and upon the
\n issuance and sale of the Securities as herein contemplated and the
\n application of the net proceeds therefrom as described in the
\n Prospectus will not be, an “investment company” as such terms are
\n defined in the Investment Company Act of 1940, as amended (the “1940
\n Act”).<\/p>\n
(xx) Environmental Laws. Except as described in the
\n Registration Statement and except as could not, singly or in the
\n aggregate, be reasonably expected to result in a Material Adverse
\n Effect, (A) neither the Company nor, to the knowledge of the Company,
\n any of the schools operated by it is in violation of any federal,
\n state, local or foreign law, statute, rule, regulation, standard,
\n guide, ordinance, code, policy or rule of common law or any judicial or
\n administrative interpretation thereof, including any judicial or
\n administrative order, consent, decree or judgment, relating to
\n pollution or protection of human health or safety, the environment
\n (including, without limitation, ambient air, surface water,
\n groundwater, land surface or subsurface strata), natural resources or
\n wildlife, including, without limitation, laws and regulations relating
\n to the release or threatened release of chemicals, pollutants,
\n contaminants, wastes, toxic substances, hazardous substances
\n (including, without limitation, asbestos, polychlorinated biphenyls,
\n urea-formaldehyde insulation, petroleum or petroleum products)
\n (collectively, “Hazardous Materials”) or to the manufacture,
\n processing, distribution, use, treatment, storage, disposal, transport
\n or handling, release or threatened release of Hazardous Materials
\n (collectively, “Environmental Laws”), (B) the Company and the schools
\n operated by it have all permits, authorizations and approvals required
\n under any applicable Environmental Laws and are each in compliance with
\n their requirements, (C) there are no pending or threatened
\n administrative, regulatory or judicial actions, suits, demands, demand
\n letters, claims, liens, notices of noncompliance or violation,
\n investigation or proceedings relating to any Environmental Law against
\n the Company or any of the schools operated by it, and (D) there are no
\n events or circumstances that might reasonably be expected to form the
\n basis of an order for clean-up or remediation, or an action, suit or
\n proceeding by any private party or governmental body or agency, against
\n or affecting the Company or the schools operated by it relating to
\n Hazardous Materials or any Environmental Laws.<\/p>\n
10
\n 16
\n (xxi) Registration Rights. Except as disclosed in the
\n Prospectus under the caption “Description of Capital Stock-Registration
\n Rights”, there are no persons with registration rights or other similar
\n rights to have any securities registered pursuant to the Registration
\n Statement or otherwise registered by the Company under the 1933 Act.<\/p>\n
(xxii) Apex Online Learning Inc. The Company owns 2,000,000
\n shares of Series B preferred stock, par value $0.001 per share, of Apex
\n Online Learning Inc., a Washington corporation (“APEX”), which
\n currently represents approximately 19.7% of all of the issued and
\n outstanding capital stock of APEX, free and clear of any security
\n interest, mortgage, pledge, lien, encumbrance, claim or equity. The
\n Company does not own the equity securities or similar interests of any
\n other entity.<\/p>\n
(xxiii) Management Agreements. The Company has provided to
\n Debevoise & Plimpton, counsel for the Underwriters, true, correct and
\n complete copies of each of the management agreements and school
\n charters to which the Company or any of the schools operated by the
\n Company is a party or pursuant to which any such school is operated, as
\n amended (collectively, the “Management Agreements”), none of which have
\n been subsequently amended, supplemented or modified, and each of the
\n Management Agreements is in full force and effect on the date hereof,
\n and, neither the Company, nor, to the knowledge of Company, any other
\n party is in default in the performance or observation of any material
\n obligation, agreement, covenant or condition contained therein.
\n Schedule E hereto is a true, correct and complete list of the
\n Management Agreements.<\/p>\n
(xxiv) Insurance. The Company and each of the schools operated
\n by it and, to the knowledge of the Company, the school districts and
\n charter school boards responsible for supervising the schools operated
\n by the Company, are insured by insurers of recognized financial
\n responsibility against such losses and risks and in such amounts as are
\n prudent and customary in the education industry; neither the Company,
\n nor any of the schools operated by it nor, to the knowledge of the
\n Company, any school district or charter school board responsible for
\n supervising any school operated by the Company, has been refused any
\n insurance coverage sought or applied for; and the Company does not have
\n any reason to believe that it or any of the schools operated by it or
\n any school district or charter school board responsible for supervising
\n any school operated by the Company, will not be able to renew its
\n existing insurance coverage as and when such coverage expires or to
\n obtain similar coverage from similar insurers as may be necessary to
\n continue its operations except where the failure to renew or maintain
\n such coverage could not reasonably be expected to result in a Material
\n Adverse Effect. The officers and directors of the Company are insured
\n by insurers of recognized financial responsibility against such losses
\n and risks and in<\/p>\n
11
\n 17
\n such amounts as the Company believes are prudent and customary for
\n officers’ and directors’ liability insurance of a public company and as
\n the Company believes could cover claims which could reasonably be
\n expected to be made in connection with the issuance of the Securities;
\n and the Company has no reason to believe that it will not be able to
\n renew its existing directors’ and officers’ liability insurance
\n coverage as and when such coverage expires or to obtain similar
\n coverage from similar insurers as may be necessary to cover its
\n officers and directors.<\/p>\n
(xxv) Tax Returns and Payment of Taxes. The Company has timely
\n filed all federal, state, local and foreign tax returns that are
\n required to be filed or has duly requested extensions thereof and all
\n such tax returns are true, correct and complete, except to the extent
\n that any failure to file or request an extension, or any incorrect ness
\n could not reasonably be expected to result in a Material Adverse
\n Effect. The Company has timely paid all taxes shown as due on such
\n filed tax returns (including any related assessments, fines or
\n penalties), except to the extent that any such taxes are being
\n contested in good faith and by appropriate proceedings, or to the
\n extent that any failure to pay could not reasonably be expected to
\n result in a Material Adverse Effect; and adequate charges, accruals and
\n reserves have been provided for in the financial statements referred to
\n in Section 1(a)(iii) above in accordance with GAAP in respect of all
\n Federal, state, local and foreign taxes for all periods as to which the
\n tax liability of the Company has not been finally determined or remains
\n open to examination by applicable taxing authorities. The Company is
\n not a “United States real property holding corporation” within the
\n meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as
\n amended (the “Code”).<\/p>\n
(xxvi) No Stabilization or Manipulation. Neither the Company
\n nor, to the best of its knowledge, any of its directors, officers or
\n affiliates has taken or will take, directly or indirectly, any action
\n designed to, or that might be reasonably expected to, cause or result
\n in stabilization or manipulation of the price of the Securities in
\n violation of Regulation M under the Securities Exchange Act of 1934, as
\n amended (the “1934 Act”).<\/p>\n
(xxvii) Certain Transactions. Except as disclosed in the
\n Prospectus, there are no outstanding loans, advances, or guarantees of
\n indebtedness by the Company to or for the benefit of any of the
\n executive officers or directors of the Company or any of the members of
\n the families of any of them that would be required to be so disclosed
\n under the 1933 Act, the 1933 Act Regulations or Form S-1.<\/p>\n
(xxviii) Statistical and Market Data. The statistical and
\n market-related data included in the Prospectus are derived from sources
\n which the Company reasonably<\/p>\n
12
\n 18
\n and in good faith believes to be accurate, reasonable and reliable and
\n agrees with the sources from which it was derived.<\/p>\n
(xxix) Accounting and other Controls. The Company has
\n established a system of internal accounting controls sufficient to
\n provide reasonable assurances that (i) transactions were, are and will
\n be executed in accordance with management’s general or specific
\n authorization; (ii) transactions were, are and will be recorded as
\n necessary to permit preparation of financial statements in conformity
\n with generally accepted accounting principles and to maintain
\n accountability for assets; (iii) access to assets was, is and will be
\n permitted only in accordance with a management’s general or specific
\n authorizations; and (iv) the recorded accountability for assets was, is
\n and will be compared with existing assets at reasonable intervals and
\n appropriate action was, is and will be taken with respect to any
\n differences.<\/p>\n
(b) Representations and Warranties by the Selling Shareholders. Each
\nSelling Shareholder severally represents and warrants to each Underwriter as of
\nthe date hereof, as of the Closing Time, and, if the Selling Shareholder is
\nselling Option Securities on a Date of Delivery, as of each such Date of
\nDelivery, and agrees with each Underwriter, as follows:<\/p>\n
(i) Accurate Disclosure. Such Selling Shareholder has reviewed
\n and is familiar with the Registration Statement and the Prospectus and,
\n to the best knowledge of such Selling Shareholder, neither the
\n Prospectus nor any amendments or supplements thereto (including any
\n prospectus wrapper) includes any untrue statement of a material fact or
\n omits to state a material fact necessary in order to make the
\n statements therein, in the light of the circumstances under which they
\n were made, not misleading; such Selling Shareholder is not prompted to
\n sell the Securities to be sold by such Selling Shareholder under this
\n Agreement by any information concerning the Company or any subsidiary
\n of the Company which is not set forth in the Prospectus.<\/p>\n
(ii) Authorization of Agreements. Such Selling Shareholder has
\n the full right, power and authority to enter into this Agreement, and a
\n Power of Attorney (the “Power of Attorney”) and a Custody Agreement
\n (the “Custody Agreement”) and to sell, transfer and deliver the
\n Securities to be sold by such Selling Shareholder under this Agreement.
\n The execution and delivery of this Agreement, the Power of Attorney and
\n the Custody Agreement, the sale and delivery of the Securities to be
\n sold by such Selling Shareholder, the consummation by such Selling
\n Shareholder of the transactions contemplated under this Agreement and
\n compliance by such Selling Shareholder with its obligations under this
\n Agreement have been duly authorized by such Selling Shareholder and do
\n not and will not, whether with or without the giving of notice or
\n passage of time or both, conflict with or constitute a breach of, or
\n default<\/p>\n
13
\n 19
\n under, or result in the creation or imposition of any tax, lien, charge
\n or encumbrance upon the Securities to be sold by such Selling
\n Shareholder or any property or assets of such Selling Shareholder
\n pursuant to any contract, indenture, mortgage, deed of trust, loan or
\n credit agreement, note, license, lease or other agreement or instrument
\n to which such Selling Shareholder is a party or by which such Selling
\n Shareholder may be bound, or to which any of the property or assets of
\n such Selling Shareholder is subject, nor will such action result in any
\n violation of the provisions of the charter or by-laws or other
\n organizational instrument of such Selling Shareholder, if applicable,
\n or any applicable treaty, law, statute, rule, regulation, judgment,
\n order, writ or decree of any government, government instrumentality or
\n court, domestic or foreign, having jurisdiction over such Selling
\n Shareholder or any of its properties.<\/p>\n
(iii) Valid and Marketable Title. Such Selling Shareholder (i)
\n has at the date hereof (excluding Richmont Capital Partners I, L.P.)
\n valid and marketable title to the Securities to be sold by such Selling
\n Shareholder under this Agreement or to the options or warrants that
\n will be exercised for such Securities prior to the Closing Time, in
\n each case free and clear of any security interest, mortgage, pledge,
\n lien, charge, claim, equity or encumbrance of any kind (collectively,
\n the “Lien”), other than pursuant to this Agreement, and (ii) will at
\n the Closing Time (including Richmont Capital Partners I, L.P.) and, if
\n any Option Securities are purchased, on the Date of Delivery, have
\n valid and marketable title to the Securities to be sold by such Selling
\n Shareholder under this Agreement, including any Securities received as
\n result of exercises of options or warrants, free and clear of any Lien,
\n other than pursuant to this Agreement; and upon delivery of such
\n Securities and payment of the purchase price therefor as contemplated
\n in this Agreement (assuming each such Underwriter has no notice of any
\n adverse claim, as defined in Uniform Commercial Code as adopted in the
\n State of New York (the “UCC”)), each of the Underwriters will receive
\n valid and marketable title to the Securities purchased by it from such
\n Selling Shareholder, free and clear of any Lien.<\/p>\n
(iv) Due Execution of Power of Attorney and Custody Agreement.
\n Such Selling Shareholder has duly executed and delivered, in the form
\n heretofore furnished to the Representatives, the Power of Attorney with
\n David A. Graff, Laura K. Eshbaugh and James L. Starr, or any of them,
\n as attorneys-in-fact (the “Attorneys-in-Fact”) and the Custody
\n Agreement with the Company, as custodian (the “Custodian”); the
\n Custodian is authorized to deliver the Securities to be sold by such
\n Selling Shareholder under this Agreement and to accept payment
\n therefor; and each Attorney-in-Fact is authorized to execute and
\n deliver this Agreement and the certificate referred to in Section 5(f)
\n or that may be required pursuant to Sections 5(m) and 5(n) of this
\n Agreement on behalf of such Selling Shareholder, to sell, assign and
\n transfer to the Underwriters the Securities to be sold by such Selling
\n Shareholder<\/p>\n
14
\n 20
\n under this Agreement, to determine the purchase price to be paid by the
\n Underwriters and to such Selling Shareholder, as provided in Section
\n 2(a) of this Agreement, to authorize the delivery of the Securities to
\n be sold by such Selling Shareholder under this Agreement, to accept
\n payment therefor, and otherwise to act on behalf of such Selling
\n Shareholder in connection with this Agreement.<\/p>\n
(v) Absence of Manipulation. Such Selling Shareholder has not
\n taken, and will not take, directly or indirectly, any action designed
\n to, or that might reasonably be expected to cause or result in
\n stabilization or manipulation of the price of the Securities in
\n violation of Regulation M under the 1934 Act.<\/p>\n
(vi) Absence of Further Requirements. No filing with, or
\n authorization, approval, consent, license, order, registration,
\n qualification or decree of, any court or governmental authority or
\n agency is necessary or required for the performance by such Selling
\n Shareholder of its obligations under this Agreement or in the Power of
\n Attorney or the Custody Agreement, or in connection with the offer,
\n sale and delivery by such Selling Shareholder of the Securities under
\n this Agreement or the consummation by such Selling Shareholder of the
\n transactions contemplated by this Agreement, except such as have been
\n already obtained or as may be required under the 1933 Act or the 1933
\n Act Regulations and state securities laws.<\/p>\n
(vii) Restriction on Sale of Securities. During a period of 90
\n days from the date of the Prospectus, such Selling Shareholder will
\n not, without the prior written consent of Merrill Lynch, (i) offer,
\n pledge, sell, contract to sell, sell any option or contract to
\n purchase, purchase any option or contract to sell, grant any option,
\n right or warrant to purchase or otherwise lend, transfer or dispose of,
\n directly or indirectly, any share of Common Stock, class B common stock
\n or any securities convertible into, exercisable or exchangeable for or
\n repayable with Common Stock or class B common stock, whether now owned
\n or hereafter acquired by such Selling Shareholder or with respect to
\n which such Selling Shareholder has or hereafter acquires the power of
\n disposition, or file, or request or demand that the Company file, any
\n registration statement under the 1933 Act with respect to any of the
\n foregoing or (ii) enter into any swap or any other agreement or any
\n transaction that transfers, in whole or in part, directly or
\n indirectly, the economic consequence of ownership of the Common Stock
\n or class B common stock, whether any such swap or transaction described
\n in clause (i) or (ii) above is to be settled by delivery of Common
\n Stock, class B common stock or such other securities, in cash or
\n otherwise. The foregoing sentence shall not apply to the Securities to
\n be sold under this Agreement.<\/p>\n
(viii) Certificates Suitable for Transfer. Certificates for
\n all of the Securities to be sold by such Selling Shareholder pursuant
\n to this Agreement, in suitable form<\/p>\n
15
\n 21
\n for transfer by delivery or accompanied by duly executed instruments of
\n transfer or assignment in blank with signatures guaranteed, have been
\n placed in custody with the Custodian with irrevocable conditional
\n instructions to deliver such Securities to the Underwriters pursuant to
\n this Agreement.<\/p>\n
(ix) No Association with NASD. Neither such Selling
\n Shareholder, nor any of its affiliates directly, or indirectly through
\n one or more intermediaries, controls, or is controlled by, or is under
\n common control with, or has any other association with (within the
\n meaning of Article I, Section (ee) of the By-laws of the National
\n Association of Securities Dealers, Inc. (the “NASD”) any member firm of
\n the NASD.<\/p>\n
(c) Officer’s Certificates. Any certificate signed by any officer of
\nthe Company delivered to Merrill Lynch, the Representatives or to counsel for
\nthe Underwriters shall be deemed a representation and warranty by the Company to
\neach Underwriter as to the matters covered thereby; and any certificate signed
\nby or on behalf of the Selling Shareholders as such and delivered to Merrill
\nLynch, the Representatives or to counsel for the Underwriters shall be deemed a
\nrepresentation and warranty by such Selling Shareholder to the Underwriters as
\nto the matters covered thereby.<\/p>\n
SECTION 2. Sale and Delivery to Underwriters; Closing.<\/p>\n
(a) Initial Securities. On the basis of the representations and
\nwarranties herein contained and subject to the terms and conditions herein set
\nforth, the Company and each Selling Shareholder, severally and not jointly,
\nagree to sell to each Underwriter, severally and not jointly, and each
\nUnderwriter, severally and not jointly, agrees to purchase from the Company and
\neach Selling Shareholder, at the price per share set forth in Schedule C, that
\nproportion of the number of Initial Securities set forth in Schedule B opposite
\nthe name of the Company or such Selling Shareholder, as the case may be, which
\nthe number of Initial Securities set forth in Schedule A opposite the name of
\nsuch Underwriter, plus any additional number of Initial Securities which such
\nUnderwriter may become obligated to purchase pursuant to the provisions of
\nSection 10 hereof, bears to the total number of Initial Securities, subject, in
\neach case, to such adjustments among the Underwriters as the Representatives in
\ntheir sole discretion shall make to eliminate any sales or purchases of
\nfractional securities.<\/p>\n
(b) Option Securities. In addition, on the basis of the representations
\nand warranties herein contained and subject to the terms and conditions herein
\nset forth, the Company and the Selling Shareholders, acting severally and not
\njointly, hereby grant an option to the Underwriters, severally and not jointly,
\nto purchase up to an additional 750,000 shares of Common Stock, as set forth in
\nSchedule B, at the price per share set forth in Schedule C, less an amount per
\nshare equal to any dividends or distributions declared by the<\/p>\n
16
\n 22
\nCompany and payable on the Initial Securities but not payable on the Option
\nSecurities. The option hereby granted will expire 30 days after the date hereof
\nand may be exercised in whole or in part from time to time only for the purpose
\nof covering over-allotments which may be made in connection with the offering
\nand distribution of the Initial Securities upon notice by the Representatives to
\nthe Company and the Selling Shareholders setting forth the number of Option
\nSecurities as to which the several Underwriters are then exercising the option
\nand the time and date of payment and delivery for such Option Securities. Any
\nsuch time and date of delivery for the Option Securities (a “Date of Delivery”)
\nshall be determined by the Representatives, but shall not be later than seven
\nfull business days after the exercise of said option, nor in any event prior to
\nthe Closing Time, as hereinafter defined. If the option is exercised as to all
\nor any portion of the Option Securities, the purchase of Option Securities shall
\nbe made initially among the Selling Shareholders in proportion to the maximum
\nnumber of Option Securities to be sold by each Selling Shareholder as set forth
\nin Schedule B until the Selling Shareholders have sold the maximum number of
\nOption Securities to be sold by the Selling Shareholders as set forth in
\nSchedule B and then from the Company, and each of the Underwriters, acting
\nseverally and not jointly, will purchase that proportion of the total number of
\nOption Securities then being purchased which the number of Initial Securities
\nset forth in Schedule A opposite the name of such Underwriter bears to the total
\nnumber of Initial Securities, subject in each case to such adjustments as the
\nRepresentatives in their discretion shall make to eliminate any sales or
\npurchases of fractional shares.<\/p>\n
(c) Payment. Payment of the purchase price for, and delivery of
\ncertificates for, the Initial Securities shall be made at the offices of
\nDebevoise & Plimpton, 875 Third Avenue, New York, NY 10022, or at such other
\nplace as shall be agreed upon by the Representatives and the Company and the
\nSelling Shareholders, at 9:00 A.M. (New York city time) on the third (fourth, if
\nthe pricing occurs after 4:30 P.M. (New York city time) on any given day)
\nbusiness day after the date hereof (unless postponed in accordance with the
\nprovisions of Section 10), or such other time not later than ten business days
\nafter such date as shall be agreed upon by the Representatives and the Company
\nand the Selling Shareholders (such time and date of payment and delivery being
\nherein called “Closing Time”).<\/p>\n
In addition, in the event that any or all of the Option Securities are
\npurchased by the Underwriters, payment of the purchase price for, and delivery
\nof certificates for, such Option Securities shall be made at the above-mentioned
\noffices, or at such other place as shall be agreed upon by the Representatives
\nand the Company and the Selling Shareholders, on each Date of Delivery as
\nspecified in the notice from the Representatives to the Company and the Selling
\nShareholders.<\/p>\n
Payment shall be made to the Company and the Selling Shareholders by
\nwire transfer of immediately available funds to bank accounts designated by the
\nCompany and the Custodian pursuant to each Selling Shareholder’s Power of
\nAttorney and Custody Agreement,<\/p>\n
17
\n 23
\nas the case may be, against delivery to the Representatives for the respective
\naccounts of the Underwriters of certificates for the Securities to be purchased
\nby them. It is understood that each Underwriter has authorized the
\nRepresentatives, for its account, to accept delivery of, receipt for, and make
\npayment of the purchase price for, the Initial Securities and the Option
\nSecurities, if any, which it has agreed to purchase. Merrill Lynch, individually
\nand not as representative of the Underwriters, may (but shall not be obligated
\nto) make payment of the purchase price for the Initial Securities or the Option
\nSecurities, if any, to be purchased by any Underwriter whose funds have not been
\nreceived by the Closing Time or the relevant Date of Delivery, as the case may
\nbe, but such payment shall not relieve such Underwriter from its obligations
\nhereunder.<\/p>\n
(d) Denominations; Registration. Certificates for the Initial
\nSecurities and the Option Securities, if any, shall be in such denominations and
\nregistered in such names as the Representatives may request in writing at least
\none full business day before the Closing Time or the relevant Date of Delivery,
\nas the case may be. The certificates for the Initial Securities and the Option
\nSecurities, if any, will be made available for examination and packaging by the
\nRepresentatives in The City of New York not later than 10:00 A.M. (Eastern time)
\non the business day prior to the Closing Time or the relevant Date of Delivery,
\nas the case may be.<\/p>\n
SECTION 3. Covenants of the Company. The Company covenants with each
\nUnderwriter as follows:<\/p>\n
(a) Compliance with Securities Regulations and Commission
\n Requests. The Company, subject to Section 3(b), will comply with the
\n requirements of Rule 430A or Rule 434, as applicable, and will notify
\n the Representatives immediately, and confirm the notice in writing, (i)
\n when any post-effective amendment to the Registra tion Statement shall
\n become effective, or any supplement to the Prospectus or any amended
\n Prospectus shall have been filed, (ii) of the receipt of any comments
\n from the Commission, (iii) of any request by the Commission for any
\n amendment to the Registration Statement or any amendment or supplement
\n to the Prospectus or for additional information, and (iv) of the
\n issuance by the Commission of any stop order suspending the
\n effectiveness of the Registration Statement or of any order preventing
\n or suspending the use of any preliminary prospectus, or of the
\n suspension of the qualification of the Securities for offering or sale
\n in any jurisdiction, or of the initiation or threatening of any
\n proceedings for any of such purposes. The Company will promptly effect
\n the filings necessary pursuant to Rule 424(b) and will take such steps
\n as it deems necessary to ascertain promptly whether the form of
\n prospectus transmitted for filing under Rule 424(b) was received for
\n filing by the Commission and, in the event that it was not, it will
\n promptly file such prospectus. The Company<\/p>\n
18
\n 24
\n will make every reasonable effort to prevent the issuance of any stop
\n order and, if any stop order is issued, to obtain the lifting thereof
\n at the earliest possible moment.<\/p>\n
(b) Filing of Amendments. The Company will give the
\n Representatives notice of its intention to file or prepare any
\n amendment to the Registration Statement (including any filing under
\n Rule 462(b)), any Term Sheet or any amendment, supplement or revision
\n to either the prospectus included in the Registration Statement at the
\n time it became effective or to the Prospectus, will furnish the
\n Representatives with copies of any such documents a reasonable amount
\n of time prior to such proposed filing or use, as the case may be, and
\n will not file or use any such document to which the Representatives or
\n counsel for the Underwriters shall reasonably object.<\/p>\n
(c) Delivery of Registration Statements. The Company has
\n furnished or will deliver to the Representatives and counsel for the
\n Underwriters, without charge, signed copies of the Registration
\n Statement as originally filed and of each amendment thereto (including
\n exhibits filed therewith or incorporated by reference therein) and
\n signed copies of all consents and certificates of experts, and will
\n also deliver to the Representatives, without charge, a conformed copy
\n of the Registration Statement as originally filed and of each amendment
\n thereto (without exhibits) for each of the Underwriters. The copies of
\n the Registration Statement and each amendment thereto furnished to the
\n Underwriters will be identical to the electronically transmitted copies
\n thereof filed with the Commission pursuant to EDGAR, except to the
\n extent permitted by Regulation S-T.<\/p>\n
(d) Delivery of Prospectus. The Company has delivered to each
\n Underwriter, without charge, as many copies of each preliminary
\n prospectus as such Underwriter reasonably requested, and the Company
\n hereby consents to the use of such copies for purposes permitted by the
\n 1933 Act. The Company will furnish to each Underwriter, without charge,
\n during the period when the Prospectus is required to be delivered under
\n the 1933 Act or the 1934 Act, such number of copies of the Prospectus
\n (as amended or supplemented) as such Underwriter may reasonably
\n request. The Prospectus and any amendments or supplements thereto
\n furnished to the Underwriters will be identical to the electronically
\n transmitted copies thereof filed with the Commission pursuant to EDGAR,
\n except to the extent permitted by Regulation S-T.<\/p>\n
(e) Continued Compliance with Securities Laws. The Company
\n will comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act
\n and the 1934 Act Regulations so as to permit the completion of the
\n distribution of the Securities as contemplated in this Agreement, and
\n in the Prospectus. If at any time when a prospectus is required by the
\n 1933 Act or the 1934 Act to be delivered in connection<\/p>\n
19
\n 25
\n with sales of the Securities, any event shall occur or condition shall
\n exist as a result of which it is necessary, in the opinion of counsel
\n for the Underwriters or for the Company, to amend the Registration
\n Statement or amend or supplement the Prospectus in order that the
\n Prospectus will not include any untrue statements of a material fact or
\n omit to state a material fact necessary in order to make the statements
\n therein not misleading in the light of the circumstances existing at
\n the time it is delivered to a purchaser, or if it shall be necessary,
\n in the opinion of such counsel, at any such time to amend the
\n Registration Statement or amend or supplement the Prospectus in order
\n to comply with the requirements of the 1933 Act, the 1933 Act
\n Regulations, the 1934 Act or the 1934 Act Regulations, the Company will
\n promptly prepare and file with the Commission, subject to Section 3(b),
\n such amendment or supplement as may be necessary to correct such
\n statement or omission or to make the Registration Statement or the
\n Prospectus comply with such requirements, and the Company will furnish
\n to the Underwriters such number of copies of such amendment or
\n supplement as the Underwriters may reasonably request.<\/p>\n
(f) Blue Sky Qualifications. The Company will use its best
\n efforts, in cooperation with the Underwriters, to qualify the
\n Securities for offering and sale under the applicable securities laws
\n of such states and other jurisdictions (domestic or foreign) as the
\n Representatives may designate and to maintain such qualifications in
\n effect for a period of not less than one year from the later of the
\n effective date of the Registration Statement and any Rule 462(b)
\n Registration Statement; provided, however, that the Company shall not
\n be obligated to file any general consent to service of process or to
\n qualify as a foreign corporation or as a dealer in securities in any
\n jurisdiction in which it is not so qualified or to subject itself to
\n taxation in respect of doing business in any jurisdiction in which it
\n is not otherwise so subject. In each jurisdiction in which the
\n Securities have been so qualified, the Company will file such
\n statements and reports as may be required by the laws of such
\n jurisdiction to continue such qualification in effect for a period of
\n not less than one year from the effective date of the Registration
\n Statement and any Rule 462(b) Registration Statement.<\/p>\n
(g) Rule 158. The Company will timely file such reports
\n pursuant to the 1934 Act as are necessary in order to make generally
\n available to its securityholders as soon as practicable an earnings
\n statement for the purposes of, and to provide the benefits contemplated
\n by, the last paragraph of Section 11(a) of the 1933 Act.<\/p>\n
(h) Use of Proceeds. The Company will use the net proceeds
\n received by it from the sale of the Securities in the manner specified
\n in the Prospectus under “Use of Proceeds”.<\/p>\n
20
\n 26
\n (i) Listing. The Company will use its best efforts to effect
\n and maintain the quotation of the Securities on the Nasdaq National
\n Market and will file with the Nasdaq National Market all documents and
\n notices required by the Nasdaq National Market of companies that have
\n securities that are traded in the over-the-counter market and
\n quotations for which are reported by the Nasdaq National Market.<\/p>\n
(j) Restriction on Sale of Securities. During a period of 90
\n days from the date of the Prospectus, the Company will not, without the
\n prior written consent of Merrill Lynch, (i) directly or indirectly,
\n offer, pledge, sell, contract to sell, sell any option or contract to
\n purchase, purchase any option or contract to sell, grant any option,
\n right or warrant to purchase or otherwise transfer or dispose of any
\n share of Common Stock or class B common stock or any securities
\n convertible into or exercisable or exchangeable for Common Stock or
\n class B common stock or file any registration statement under the 1933
\n Act with respect to any of the foregoing or (ii) enter into any swap or
\n any other agreement or any transaction that transfers, in whole or in
\n part, directly or indirectly, the economic consequence of ownership of
\n the Common Stock or the class B common stock, whether any such swap or
\n the transaction described in clause (i) or (ii) above is to be settled
\n by delivery of Common Stock, class B common stock or such other
\n securities, in cash or otherwise. The foregoing sentence shall not
\n apply to (A) the Securities to be sold hereunder, (B) any shares of
\n Common Stock or class B common stock issued by the Company upon the
\n exercise of an option or warrant or the conversion of a security
\n outstanding on the date hereof and referred to in the Prospectus, or
\n (C) any shares of Common Stock or class B common stock issued or
\n options to purchase shares of Common Stock or class B common stock
\n granted pursuant to existing employee benefit plans of the Company
\n referred to in the Prospectus or (D) any shares of Common Stock that
\n may be issued by the Company from time to time upon the conversion of
\n shares of class B common stock into shares of Common Stock pursuant to
\n its sixth amended and restated certificate of incorporation.<\/p>\n
(k) Reporting Requirements. The Company, during the period
\n when the Prospectus are required to be delivered under the 1933 Act or
\n the 1934 Act, will file all documents required to be filed with the
\n Commission pursuant to the 1934 Act within the time periods required by
\n the 1934 Act and the rules and regulations of the Commission
\n thereunder.<\/p>\n
21<\/p>\n
27
\n SECTION 4. Payment of Expenses.<\/p>\n
(a) Expenses. The Company will pay all expenses incident to the
\nperformance of its obligations under this Agreement, including (i) the
\npreparation, printing and filing of the Registration Statement (including
\nfinancial statements and exhibits) as originally filed and of each amendment
\nthereto, (ii) the preparation, printing and delivery to the Underwriters of this
\nAgreement, any Agreement among Underwriters and such other documents as may be
\nrequired in connection with the offering, purchase, sale, issuance or delivery
\nof the Securities, (iii) the preparation, issuance and delivery of the
\ncertificates for the Securities to the Underwriters, including any stock or
\nother transfer taxes and any stamp or other duties payable upon the sale,
\nissuance or delivery of the Securities to the Underwriters, (iv) the fees and
\ndisbursements of the Company’s counsel, accountants and other advisors, (v) the
\nqualification of the Securities under securities laws in accordance with the
\nprovisions of Section 3(f) hereof, including filing fees and the reasonable fees
\nand disbursements of counsel for the Underwriters in connection therewith and in
\nconnection with the preparation of the Blue Sky Survey and any supplement
\nthereto, (vi) the printing and delivery to the Underwriters of copies of each
\npreliminary prospectus, any Term Sheets and of the Prospectus and any amendments
\nor supplements thereto, (vii) the preparation, printing and delivery to the
\nUnderwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
\nthe fees and expenses of any transfer agent or registrar for the Securities,
\n(ix) the filing fees incident to, and the reasonable fees and disbursements of
\ncounsel to the Underwriters in connection with, the review by the NASD of the
\nterms of the sale of the Securities and (x) the fees and expenses incurred in
\nconnection with the inclusion of the Securities in the Nasdaq National Market.<\/p>\n
(b) Expenses of the Selling Shareholders. The Selling Shareholders,
\njointly and severally, will pay all expenses incident to the performance of
\ntheir respective obligations under, and the consummation of the transactions
\ncontemplated by the Agreement, including (i) any stamp duties, capital duties
\nand stock transfer taxes, if any, payable upon the sale of the Securities to the
\nUnderwriters, and their transfer between the Underwriters pursuant to an
\nagreement between such Underwriters and (ii) the fees and disbursements of their
\nrespective counsel and accountants.<\/p>\n
(c) Termination of Agreement. If this Agreement is terminated by the
\nRepresentatives in accordance with the provisions of Section 5 or Section
\n9(a)(i) hereof, the Company and the Selling Shareholders shall reimburse the
\nUnderwriters for all of their out-of-pocket expenses, including the reasonable
\nfees and disbursements of counsel for the Underwriters.<\/p>\n
(d) Allocation of Expenses. The provisions of this Section shall not
\naffect any agreement that the Company and the Selling Shareholders may make for
\nthe sharing of such costs and expenses.<\/p>\n
22
\n 28
\n SECTION 5. Conditions of Underwriters’ Obligations. The obligations of
\nthe several Underwriters hereunder are subject to the accuracy of the
\nrepresentations and warranties of the Company and the Selling Shareholders
\ncontained in Section 1 hereof or in certificates of any officer of the Company
\nor on behalf of any Selling Shareholder delivered pursuant to the provisions
\nhereof, to the performance by the Company of its covenants and other obligations
\nhereunder, and to the following further conditions:<\/p>\n
(a) Effectiveness of Registration Statement. The Registration
\n Statement, including any Rule 462(b) Registration Statement, has become
\n effective and at Closing Time no stop order suspending the
\n effectiveness of the Registration Statement shall have been issued
\n under the 1933 Act or proceedings therefor initiated or threatened by
\n the Commission, and any request on the part of the Commission for
\n additional information shall have been complied with to the reasonable
\n satisfaction of counsel to the Underwriters. A prospectus containing
\n the Rule 430A Information shall have been filed with the Commission in
\n accordance with Rule 424(b) (or a post-effective amendment providing
\n such information shall have been filed and declared effective in
\n accordance with the requirements of Rule 430A) or, if the Company has
\n elected to rely upon Rule 434, a Term Sheet shall have been filed with
\n the Commission in accordance with Rule 424(b).<\/p>\n
(b) Opinion of Counsel for Company. At Closing Time, the
\n Representatives shall have received the favorable opinions, dated as of
\n Closing Time, of:<\/p>\n
(i) Hale and Dorr LLP, counsel for the Company, in
\n form and substance satisfactory to counsel for the Underwriters,
\n together with signed or reproduced copies of such letter for each of
\n the other Underwriters to the effect set forth in Exhibit A-1 hereto
\n and to such further effect as counsel to the Underwriters may
\n reasonably request; and<\/p>\n
(ii) David A. Graff, general counsel for the Company,
\n in form and substance satisfactory to counsel for the Underwriters,
\n together with signed or reproduced copies of such letter for each of
\n the other Underwriters to the effect set forth in Exhibit A-2 hereto
\n and to such further effect as counsel to the Underwriters may
\n reasonably request.<\/p>\n
(c) Opinion of Counsel for the Selling Shareholders. At
\n Closing Time, the Representatives shall have received the favorable
\n opinion, dated as of Closing Time, of Hale and Dorr LLP, counsel for
\n certain of the Selling Shareholders, together with the favorable
\n opinion of each counsel for the other Selling Shareholders (which<\/p>\n
23
\n 29
\n counsel shall be satisfactory to the Representatives), each in form and
\n substance satisfactory to counsel for the Underwriters, together with
\n signed or reproduced copies of such letters for each of the other
\n Underwriters to the effect set forth in Exhibit A-3 hereto and to such
\n other effect as counsel for the Underwriters may reasonably request.<\/p>\n
(d) Opinion of Counsel for Underwriters. At Closing Time, the
\n Representatives shall have received the favorable opinion, dated as of
\n Closing Time, of Debevoise & Plimpton, counsel for the Underwriters,
\n together with signed or reproduced copies of such letter for each of
\n the other Underwriters, in form and substance reasonably satisfactory
\n to the Underwriters. In giving such opinion such counsel may rely,
\n insofar as such opinion involves factual matters, to the extent they
\n deem proper, upon certificates of officers of the Company and
\n certificates of public officials.<\/p>\n
(e) Officers’ Certificate. At Closing Time, there shall not
\n have been, since the date hereof or since the respective dates as of
\n which information is given in the Prospectus, any material adverse
\n change in the condition, financial or otherwise, or in the earnings,
\n business affairs or business prospects of the Company, whether or not
\n arising in the ordinary course of business, and the Representatives
\n shall have received a certificate of the Chief Executive Officer, Chief
\n Financial Officer and Chief Operating Officer of the Company, dated as
\n of Closing Time, to the effect that (i) there has been no such material
\n adverse change, (ii) the representations and warranties in Section 1(a)
\n hereof are true and correct with the same force and effect as though
\n expressly made at and as of Closing Time, (iii) the Company has
\n complied with all agreements and satisfied all conditions on its part
\n to be performed or satisfied at or prior to Closing Time, and (iv) no
\n stop order suspending the effectiveness of the Registration Statement
\n has been issued and no proceedings for that purpose have been
\n instituted or are pending or are contemplated by the Commission.<\/p>\n
(f) Certificate of the Selling Shareholder. At Closing Time,
\n the Representatives shall have received a certificate of an
\n Attorney-in-Fact on behalf of each Selling Shareholder, dated as of the
\n Closing Time, to the effect that (i) the representations and warranties
\n of each Selling Shareholder contained in Section 1(b) hereof are true
\n and correct in all respects with the same force and effect as though
\n expressly made at and as of Closing Time and (ii) each Selling
\n Shareholder has complied in all material respects with all agreements
\n and all conditions on its part to be performed under the Agreement at
\n or prior to Closing Time.<\/p>\n
(g) Accountant’s Comfort Letter. At the time of the execution
\n of this Agreement, the Representatives shall have received from
\n PricewaterhouseCoopers a<\/p>\n
24
\n 30
\n letter dated such date, in form and substance satisfactory to the
\n Representatives, together with signed or reproduced copies of such
\n letter for each of the other Underwriters containing statements and
\n information of the type ordinarily included in accountants’ “comfort
\n letters” to underwriters with respect to the financial statements and
\n certain financial information contained in the Registration Statement
\n and the Prospectus.<\/p>\n
(h) Bring-down Comfort Letter. At Closing Time, the
\n Representatives shall have received from PricewaterhouseCoopers a
\n letter, dated as of Closing Time, to the effect that they reaffirm the
\n statements made in the letter furnished pursuant to subsection (g) of
\n this Section, except that the specified date referred to shall be a
\n date not more than three business days prior to Closing Time.<\/p>\n
(i) Approval of Listing. At Closing Time, the Securities shall
\n have been approved for inclusion in the Nasdaq National Market, subject
\n only to official notice of issuance.<\/p>\n
(j) No Objection. The NASD has confirmed that it has not
\n raised any objection with respect to the fairness and reasonableness of
\n the underwriting terms and arrangements.<\/p>\n
(k) Lock-up Agreements. At the date of this Agreement, the
\n Representatives shall have received an agreement substantially in the
\n form of Exhibit B hereto signed by the persons listed on Schedule D
\n hereto.<\/p>\n
(l) Form W-8 or W-9. At the date of this Agreement, the
\n Representatives shall have received form W-8 or W-9, as required,
\n signed by each Selling Shareholder.<\/p>\n
(m) Release of Liens. At Closing Time, the Representatives
\n shall have received a duly executed copy of the release, in form and
\n substance satisfactory to counsel for the Underwriters, dated Closing
\n Time, by The CIT Group\/Commercial Services, Inc. with respect to
\n Initial Securities to be sold by Richmont Capital Partners I, L.P. and
\n all necessary UCC-3 statements in respect of such Initial Securities,
\n each in form and substance satisfactory to counsel for the
\n Underwriters.<\/p>\n
(n) Conditions to Purchase of Option Securities. In the event
\n that the Underwriters exercise their option provided in Section 2(b)
\n hereof to purchase all or any portion of the Option Securities, the
\n representations and warranties of the Company and the Selling
\n Shareholders contained herein and the statements in any certificates
\n furnished by the Company and the Selling Shareholders hereunder shall<\/p>\n
25
\n 31
\n be true and correct as of each Date of Delivery and, at the relevant
\n Date of Delivery, the Representatives shall have received:<\/p>\n
(i) Officers’ Certificate. A certificate, dated such Date of
\n Delivery, of the Chief Executive Officer, Chief Financial
\n Officer and Chief Operating Officer of the Company confirming
\n that the certificate delivered at the Closing Time pursuant to
\n Section 5(e) hereof remains true and correct as of such Date
\n of Delivery.<\/p>\n
(ii) Certificate of Selling Shareholders. A certificate, dated
\n such Date of Delivery, of an Attorney-in-Fact on behalf of
\n each Selling Shareholder confirming that the certificate
\n delivered at Closing Time pursuant to Section 5(f) remains
\n true and correct as of such Date of Delivery.<\/p>\n
(iii) Opinion of Counsel for Company. The favorable opinion of
\n Hale and Dorr LLP, counsel for the Company, together with the
\n favorable opinion of David A. Graff, general counsel for the
\n Company, each in form and substance satisfactory to counsel
\n for the Underwriters, dated such Date of Delivery, relating to
\n the Option Securities to be purchased on such Date of Delivery
\n and otherwise to the same effect as the opinion required by
\n Section 5(b) hereof.<\/p>\n
(iv) Opinion of Counsel for the Selling Shareholders. The
\n favorable opinion of Hale and Dorr LLP, counsel for certain of
\n the Selling Shareholders, together with the favorable opinion
\n of each counsel for the other Selling Shareholders (which
\n counsel shall be satisfactory to the Representatives), each in
\n form and substance satisfactory to counsel for the
\n Underwriters, dated such Date of Delivery, relating to the
\n Option Securities to be purchased on such Date of Delivery and
\n otherwise to the same effect as the opinion required by
\n Section 5(c) hereof.<\/p>\n
(v) Opinion of Counsel for Underwriters. The favorable opinion
\n of Debevoise & Plimpton, counsel for the Underwriters, dated
\n such Date of Delivery, relating to the Option Securities to be
\n purchased on such Date of Delivery and otherwise to the same
\n effect as the opinion required by Section 5(d) hereof.<\/p>\n
(vi) Bring-down Comfort Letter. A letter from
\n PricewaterhouseCoopers, in form and substance satisfactory to
\n the Representatives and dated such Date of Delivery,
\n substantially in the same form and substance as the letter
\n furnished to the Representatives pursuant to Section 5(g)
\n hereof, except that<\/p>\n
26
\n 32
\n the “specified date” in the letter furnished pursuant to this
\n paragraph shall be a date not more than two days prior to such
\n Date of Delivery.<\/p>\n
(vii) Release of Liens. At Closing Time, the Representatives
\n shall have received a duly executed copy of the release, in
\n form and substance satisfactory to counsel for the
\n Underwriters, dated Closing Time, by The CIT Group\/Commercial
\n Services, Inc. with respect to Option Securities to be sold by
\n Richmont Capital Partners I, L.P. and all necessary UCC-3
\n statements in respect of such Option Securities, each in form
\n and substance satisfactory to counsel for the Underwriters.<\/p>\n
(o) Additional Documents. At Closing Time and at each Date of
\n Delivery, counsel for the Underwriters shall have been furnished with
\n such documents, certificates and opinions as they may require for the
\n purpose of enabling them to pass upon the issuance and sale of the
\n Securities as herein contemplated, or in order to evidence the accuracy
\n of any of the representations or warranties, or the fulfillment of any
\n of the conditions, herein contained; and all proceedings taken by the
\n Company and the Selling Shareholders in connection with the issuance
\n and sale of the Securities as herein contemplated shall be satisfactory
\n in form and substance to the Representatives and counsel for the
\n Underwriters.<\/p>\n
(p) Termination of Agreement. If any condition specified in
\n this Section shall not have been fulfilled when and as required to be
\n fulfilled, this Agreement, or, in the case of any condition to the
\n purchase of Option Securities on a Date of Delivery which is after the
\n Closing Time, the obligations of the several Underwriters to purchase
\n the relevant Option Securities, may be terminated by the
\n Representatives by notice to the Company at any time at or prior to
\n Closing Time or such Date of Delivery, as the case may be, and such
\n termination shall be without liability of any party to any other party
\n except as provided in Section 4 and except that Sections 1, 6, 7 and 8
\n shall survive any such termination and remain in full force and effect.<\/p>\n
SECTION 6. Indemnification.<\/p>\n
(a) Indemnification of Underwriters. (1) The Company and the Selling
\nShareholders severally agree to indemnify and hold harmless each Underwriter and
\neach person, if any, who controls any Underwriter within the meaning of Section
\n15 of the 1933 Act or Section 20 of the 1934 Act as follows:<\/p>\n
27
\n 33
\n (i) against any and all loss, liability, claim, damage and
\n expense whatsoever, as incurred, arising out of any untrue statement or
\n alleged untrue statement of a material fact contained in the
\n Registration Statement (or any amendment thereto), including the Rule
\n 430A Information and the Rule 434 Information, if applicable, or the
\n omission or alleged omission therefrom of a material fact required to
\n be stated therein or necessary to make the statements therein not
\n misleading or arising out of any untrue statement or alleged untrue
\n statement of a material fact included in any preliminary prospectus or
\n the Prospectus (or any amendment or supplement thereto), or the
\n omission or alleged omission therefrom of a material fact necessary in
\n order to make the statements therein, in the light of the circumstances
\n under which they were made, not misleading;<\/p>\n
(ii) against any and all loss, liability, claim, damage and
\n expense what soever, as incurred, to the extent of the aggregate amount
\n paid in settlement of any litigation, or any investigation or
\n proceeding by any governmental agency or body, commenced or threatened,
\n or of any claim whatsoever based upon any such untrue statement or
\n omission, or any such alleged untrue statement or omission; provided
\n that (subject to Section 6(d) below) any such settlement is effected
\n with the written consent of the Company; and<\/p>\n
(iii) against any and all expense whatsoever, as incurred
\n (including the fees and disbursements of counsel chosen by Merrill
\n Lynch), reasonably incurred in investigating, preparing or defending
\n against any litigation, or any investigation or proceeding by any
\n governmental agency or body, commenced or threatened, or any claim
\n whatsoever based upon any such untrue statement or omission, or any
\n such alleged untrue statement or omission, to the extent that any such
\n expense is not paid under (i) or (ii) above;<\/p>\n
provided, however, that (x) this indemnity agreement shall not apply to any
\nloss, liability, claim, damage or expense (a) to the extent arising out of any
\nuntrue statement or omission or alleged untrue statement or omission made in
\nreliance upon and in conformity with written information furnished to the
\nCompany by any Underwriter through the Representatives expressly for use in the
\nRegistration Statement (or any amendment thereto), including the Rule 430A
\nInformation and the Rule 434 Information, if applicable, or any preliminary
\nprospectus or the Prospectus (or any amendment or supplement thereto), (b) with
\nrespect to any preliminary prospectus, to the extent that the Company shall
\nsustain the burden of proving (i) that any such loss, claim, expense, damage or
\nliability of such Underwriter results from the fact that such Underwriter sold
\nSecurities to a person as to whom there was not sent or given, at or prior to
\nthe written confirmation of such sale, a copy of the Prospectus (as then amended
\nor supplemented) in any case where such delivery is required by the 1933 Act,
\n(ii) that the Company had previously furnished copies thereof in sufficient
\nquantities to such Underwriter<\/p>\n
28
\n 34
\nand the loss, claim, expense, damage or liability of such Underwriter results
\nfrom an untrue statement or omission of a material fact contained in the
\npreliminary prospectus that was corrected in the Prospectus and (iii) that
\nsending such Prospectus by the Closing Time to the person or persons asserting
\nsuch loss, liability, claim, damage or expense would have constituted a defense
\nto the claim asserted by such person or persons, and (y) that with respect to
\neach Selling Shareholder other than John E. Chubb and Manuel J. Rivera, the
\nindemnification provision in this Section 6(a)(1) shall be only with respect to
\ninformation furnished in writing by or on behalf of such Selling Shareholder
\nexpressly for use in the Registration Statement (or any amendment thereto),
\nincluding Rule 430A Information and the Rule 434 Information, if applicable, or
\nany preliminary prospectus or Prospectus (or any amendment or supplement
\nthereto); and provided, further, that the aggregate liability of any Selling
\nShareholder pursuant to this Section 6(a)(1) shall be limited to the net
\nproceeds received by such Selling Shareholder from the Securities purchased by
\nthe Underwriters from such Selling Shareholder pursuant to this Agreement; and
\nprovided further, that no Selling Shareholder shall be liable for any untrue
\nstatement, omission or alleged omission of any other Selling Shareholder.<\/p>\n
(2) Insofar as this indemnity agreement may permit indemnification for
\nliabilities under the 1933 Act of any person who is a partner of an Underwriter
\nor who controls an Underwriter within the meaning of Section 15 of the 1933 Act
\nor Section 20 of the 1934 Act and who, at the date of this Agreement, is a
\ndirector or officer of the Company or controls the Company within the meaning of
\nSection 15 of the 1933 Act or Section 20 of the 1934 Act, such indemnity
\nagreement is subject to the undertaking of the Company in the Registration
\nStatement under Item 12.<\/p>\n
(b) Indemnification of Company, Directors and Officers and Selling
\nShareholders. Each Underwriter severally agrees to indemnify and hold harmless
\nthe Company, its directors, each of its officers who signed the Registration
\nStatement, and each person, if any, who controls the Company within the meaning
\nof Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Selling
\nShareholder and each person, if any, who controls the Selling Shareholder within
\nthe meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
\nany and all loss, liability, claim, damage and expense described in the
\nindemnity contained in subsection (a)(1) of this Section, as incurred, but only
\nwith respect to untrue statements or omissions, or alleged untrue statements or
\nomissions, made in the Registration Statement (or any amendment thereto),
\nincluding the Rule 430A Information and the Rule 434 Information, if applicable,
\nor any preliminary prospectus or the Prospectus (or any amendment or supplement
\nthereto) in reliance upon and in conformity with written information furnished
\nto the Company by such Underwriter through the Representatives expressly for use
\nin the Registration Statement (or any amendment thereto) or such preliminary
\nprospectus or the Prospectus (or any amendment or supplement thereto).<\/p>\n
29
\n 35
\n (c) Actions against Parties; Notification. Each indemnified party shall
\ngive notice as promptly as reasonably practicable to each indemnifying party of
\nany action commenced against it in respect of which indemnity may be sought
\nhereunder, but failure to so notify an indemnifying party, and any delay in such
\nnotification, shall not relieve such indemnifying party from any liability
\nhereunder to the extent it is not materially prejudiced as a result thereof and
\nin any event shall not relieve it from any liability which it may have otherwise
\nthan on account of this indemnity agreement. In the case of parties indemnified
\npursuant to Section 6(a)(1) above, counsel to the indemnified parties shall be
\nselected by Merrill Lynch, and, in the case of parties indemnified pursuant to
\nSection 6(b) above, counsel to the indemnified parties shall be selected by the
\nCompany. An indemnifying party may participate at its own expense in the defense
\nof any such action; provided, however, that counsel to the indemnifying party
\nshall not (except with the consent of the indemnified party) also be counsel to
\nthe indemnified party. In no event shall the indemnifying parties be liable for
\nfees and expenses of more than one counsel (in addition to any local counsel)
\nseparate from their own counsel for all indemnified parties in connection with
\nany one action or separate but similar or related actions in the same
\njurisdiction arising out of the same general allegations or circumstances. No
\nindemnifying party shall, without the prior written consent of the indemnified
\nparties, settle or compromise or consent to the entry of any judgment with
\nrespect to any litigation, or any investigation or proceeding by any
\ngovernmental agency or body, commenced or threatened, or any claim whatsoever in
\nrespect of which indemnification or contribution could be sought under this
\nSection 6 or Section 7 hereof (whether or not the indemnified parties are actual
\nor potential parties thereto), unless such settlement, compromise or consent (i)
\nincludes an unconditional release of each indemnified party from all liability
\narising out of such litigation, investigation, proceeding or claim and (ii) does
\nnot include a statement as to or an admission of fault, culpability or a failure
\nto act by or on behalf of any indemnified party.<\/p>\n
(d) Settlement without Consent if Failure to Reimburse. If at any time
\nan indemnified party shall have requested an indemnifying party to reimburse the
\nindemnified party for fees and expenses of counsel, such indemnifying party
\nagrees that it shall be liable for any settlement of the nature contemplated by
\nSection 6(a)(1)(ii) effected without its written consent if (i) such settlement
\nis entered into more than 45 days after receipt by such indemnifying party of
\nthe aforesaid request, (ii) such indemnifying party shall have received notice
\nof the terms of such settlement at least 30 days prior to such settlement being
\nentered into and (iii) such indemnifying party shall not have reimbursed such
\nindemnified party in accordance with such request prior to the date of such
\nsettlement.<\/p>\n
(e) Other Agreements with Respect to Indemnification. The provisions of
\nthis Section shall not affect any agreement among the Company and the Selling
\nShareholders with respect to indemnification.<\/p>\n
30
\n 36
\n SECTION 7. Contribution. If the indemnification provided for in Section
\n6 hereof is for any reason unavailable to or insufficient to hold harmless an
\nindemnified party in respect of any losses, liabilities, claims, damages or
\nexpenses referred to therein, then each indemnifying party shall contribute to
\nthe aggregate amount of such losses, liabilities, claims, damages and expenses
\nincurred by such indemnified party, as incurred, (i) in such proportion as is
\nappropriate to reflect the relative benefits received by the Company and the
\nSelling Shareholders on the one hand and the Underwriters on the other hand from
\nthe offering of the Securities pursuant to this Agreement or (ii) if the
\nallocation provided by clause (i) is not permitted by applicable law, in such
\nproportion as is appropriate to reflect not only the relative benefits referred
\nto in clause (i) above but also the relative fault of the Company and the
\nSelling Shareholders on the one hand and of the Underwriters on the other hand
\nin connection with the statements or omissions, which resulted in such losses,
\nliabilities, claims, damages or expenses, as well as any other relevant
\nequitable considerations.<\/p>\n
The relative benefits received by the Company and the Selling
\nShareholders on the one hand and the Underwriters on the other hand in
\nconnection with the offering of the Securities pursuant to this Agreement shall
\nbe deemed to be in the same respective proportions as the total net proceeds
\nfrom the offering of the Securities pursuant to this Agreement (before deducting
\nexpenses) received by the Company and the Selling Shareholders and the total
\nunderwriting discount received by the Underwriters, in each case as set forth on
\nthe cover of the Prospectus, or, if Rule 434 is used, the corresponding location
\non the Term Sheet, bear to the aggregate initial public offering price of the
\nSecurities as set forth on such cover.<\/p>\n
The relative fault of the Company, the Selling Shareholders and the
\nUnderwriters shall be determined by reference to, among other things, whether
\nany such untrue or alleged untrue statement of a material fact or omission or
\nalleged omission to state a material fact relates to information supplied by the
\nCompany, the Selling Shareholders or the Underwriters and the parties’ relative
\nintent, knowledge, access to information and opportunity to correct or prevent
\nsuch statement or omission.<\/p>\n
The Company, the Selling Shareholders and the Underwriters agree that
\nit would not be just and equitable if contribution pursuant to this Section 7
\nwere determined by pro rata allocation (even if the Underwriters were treated as
\none entity for such purpose) or by any other method of allocation which does not
\ntake account of the equitable considerations referred to above in this Section
\n7. The aggregate amount of losses, liabilities, claims, damages and expenses
\nincurred by an indemnified party and referred to above in this Section 7 shall
\nbe deemed to include any legal or other expenses reasonably incurred by such
\nindemnified party in investigating, preparing or defending against any
\nlitigation, or any investigation or proceeding by any governmental agency or
\nbody, commenced or threatened, or any claim whatsoever based upon any such
\nuntrue or alleged untrue statement or omission or alleged omission.<\/p>\n
31
\n 37
\n Notwithstanding the provisions of this Section 7, (i) no Underwriter
\nshall be required to contribute any amount in excess of the amount by which the
\ntotal price at which the Securities underwritten by it and distributed to the
\npublic were offered to the public exceeds the amount of any damages which such
\nUnderwriter has otherwise been required to pay by reason of any such untrue or
\nalleged untrue statement or omission or alleged omission and (ii) no Selling
\nShareholder shall be required to contribute any amount in excess of the amount
\nof the total net proceeds received by such Selling Shareholder from the sale of
\nSecurities pursuant to this Agreement or on a basis other than as specified in
\nSection 6(a).<\/p>\n
No person guilty of fraudulent misrepresentation (within the meaning of
\nSection 11(f) of the 1933 Act) shall be entitled to contribution from any person
\nwho was not guilty of such fraudulent misrepresentation.<\/p>\n
For purposes of this Section 7, each person, if any, who controls an
\nUnderwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
\nthe 1934 Act shall have the same rights to contribution as such Underwriter, and
\neach director of the Company, each officer of the Company who signed the
\nRegistration Statement, and each person, if any, who controls the Company or any
\nSelling Shareholder within the meaning of Section 15 of the 1933 Act or Section
\n20 of the 1934 Act shall have the same rights to contribution as the Company or
\nsuch Selling Shareholder, as the case may be. The Underwriters’ respective
\nobligations to contribute pursuant to this Section 7 are several in proportion
\nto the number of Initial Securities set forth opposite their respective names in
\nSchedule A hereto and not joint.<\/p>\n
The provisions of this Section shall not affect any agreement among the
\nCompany and the Selling Shareholders with respect to contribution.<\/p>\n
SECTION 8. Representations, Warranties and Agreements to Survive
\nDelivery. All representations, warranties and agreements contained in this
\nAgreement or in certificates of officers of the Company submitted pursuant
\nhereto, shall remain operative and in full force and effect, regardless of any
\ninvestigation made by or on behalf of any Underwriter or controlling person, or
\nby or on behalf of the Company, and shall survive delivery of the Securities to
\nthe Underwriters.<\/p>\n
SECTION 9. Termination of Agreement.<\/p>\n
(a) Termination; General. The Representatives may terminate this
\nAgreement, by notice to the Company and the Selling Shareholders, at any time at
\nor prior to Closing Time (i) if there has been, since the time of execution of
\nthis Agreement or since the<\/p>\n
32
\n 38
\nrespective dates as of which information is given in the Prospectus, any
\nmaterial adverse change in the condition, financial or otherwise, or in the
\nearnings, business affairs or business prospects of the Company, whether or not
\narising in the ordinary course of business, or (ii) if there has occurred any
\nmaterial adverse change in the financial markets in the United States or the
\ninternational financial markets, any outbreak of hostilities or escalation
\nthereof or other calamity or crisis or any change or development involving a
\nprospective change in national or international political, financial or economic
\nconditions, in each case the effect of which is such as to make it, in the
\njudgment of the Representatives, impracticable to market the Securities or to
\nenforce contracts for the sale of the Securities, or (iii) if trading in any
\nsecurities of the Company has been suspended or materially limited by the
\nCommission or the Nasdaq National Market, or if trading generally on the
\nAmerican Stock Exchange or the New York Stock Exchange or in the Nasdaq National
\nMarket has been suspended or materially limited, or minimum or maximum prices
\nfor trading have been fixed, or maximum ranges for prices have been required, by
\nany of said exchanges or by such system or by order of the Commission, the NASD
\nor any other governmental authority, or (iv) if a banking moratorium has been
\ndeclared by either Federal or New York authorities.<\/p>\n
(b) Liabilities. If this Agreement is terminated pursuant to this
\nSection, such termination shall be without liability of any party to any other
\nparty except as provided in Section 4 hereof, and provided further that Sections
\n1, 6, 7 and 8 shall survive such termination and remain in full force and
\neffect.<\/p>\n
SECTION 10. Default by One or More of the Underwriters. If one or more
\nof the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
\nthe Securities which it or they are obligated to purchase under this Agreement
\n(the “Defaulted Securities”), the Representatives shall have the right, within
\n24 hours thereafter, to make arrangements for one or more of the non-defaulting
\nUnderwriters, or any other underwriters, to purchase all, but not less than all,
\nof the Defaulted Securities in such amounts as may be agreed upon and upon the
\nterms herein set forth; if, however, the Representatives shall not have
\ncompleted such arrangements within such 24-hour period, then:<\/p>\n
(a) if the number of Defaulted Securities does not exceed 10%
\n of the number of Securities to be purchased on such date, each of the
\n non-defaulting Underwriters shall be obligated, severally and not
\n jointly, to purchase the full amount thereof in the proportions that
\n their respective underwriting obligations hereunder bear to the
\n underwriting obligations of all non-defaulting Underwriters, or<\/p>\n
(b) if the number of Defaulted Securities exceeds 10% of the
\n number of Securities to be purchased on such date, this Agreement or,
\n with respect to any Date of Delivery which occurs after the Closing
\n Time, the obligation of the Underwriters<\/p>\n
33
\n 39
\n to purchase and of the Company to sell the Option Securities to be
\n purchased and sold on such Date of Delivery shall terminate without
\n liability on the part of any non-defaulting Underwriter.<\/p>\n
No action taken pursuant to this Section shall relieve any defaulting
\nUnderwriter from liability in respect of its default.<\/p>\n
In the event of any such default which does not result in a termination
\nof this Agreement or, in the case of a Date of Delivery which is after the
\nClosing Time, which does not result in a termination of the obligation of the
\nUnderwriters to purchase and the Company to sell the relevant Option Securities,
\nas the case may be, either (i) the Representatives or (ii) the Company and any
\nSelling Shareholder shall have the right to postpone Closing Time or the
\nrelevant Date of Delivery, as the case may be, for a period not exceeding seven
\ndays in order to effect any required changes in the Registration Statement or
\nProspectus or in any other documents or arrangements. As used herein, the term
\n“Underwriter” includes any person substituted for an Underwriter under this
\nSection 10.<\/p>\n
SECTION 11. Default by One or More of the Selling Shareholders or the
\nCompany.<\/p>\n
(a) If a Selling Shareholder shall fail at Closing Time or at a Date of
\nDelivery to sell and deliver the number of Securities which such Selling
\nShareholder or Selling Shareholders are obligated to sell hereunder, and the
\nremaining Selling Shareholders do not exercise the right hereby granted to
\nincrease, pro rata or otherwise, the number of Securities to be sold by them
\nhereunder to the total number to be sold by all Selling Shareholders as set
\nforth in Schedule B hereto, then the Underwriters may, at option of the
\nRepresentatives, by notice from the Representatives to the Company and the
\nnon-defaulting Selling Shareholders, either (a) terminate this Agreement without
\nany liability on the fault of any non-defaulting party except that the
\nprovisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or
\n(b) elect to purchase the Securities which the non-defaulting Selling
\nShareholders and the Company have agreed to sell hereunder. No action taken
\npursuant to this Section 11 shall relieve any Selling Shareholder so defaulting
\nfrom liability, if any, in respect of such default.<\/p>\n
In the event of a default by any Selling Shareholder as referred to in
\nthis Section 11, each of the Representatives, the Company and the non-defaulting
\nSelling Shareholders shall have the right to postpone Closing Time or Date of
\nDelivery for a period not exceeding seven days in order to effect any required
\nchange in the Registration Statement or Prospectus or in any other documents or
\narrangements.<\/p>\n
34
\n 40
\n (b) If the Company shall fail at Closing Time or at the Date of
\nDelivery to sell the number of Securities that it is obligated to sell
\nhereunder, then this Agreement shall terminate without any liability on the part
\nof any nondefaulting party; provided, however, that the provisions of Sections
\n1, 4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant
\nto this Section shall relieve the Company from liability, if any, in respect of
\nsuch default.<\/p>\n
SECTION 12. Notices. All notices and other communications hereunder
\nshall be in writing and shall be deemed to have been duly given if mailed or
\ntransmitted by any standard form of telecommunication. Notices to the
\nUnderwriters shall be directed to the Representatives at North Tower, World
\nFinancial Center, New York, New York 10281-1201, attention of Syndicate
\nOperations, with a copy to Debevoise & Plimpton, 875 Third Avenue, New York, New
\nYork, attention of Michael W. Blair; notices to the Company shall be directed to
\nit at 515 Fifth Avenue, 15th Floor, New York, NY 10175, attention of James L.
\nStarr, Executive Vice President and Chief Financial Officer, with a copy to Hale
\n& Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004, attention of
\nDavid Sylvester and Brent B. Siler; and notices to the Selling Shareholders
\nshall be directed to the Selling Shareholders, attention of David A. Graff,
\nLaura K. Eshbaugh and James L. Starr, c\/o the Company at the foregoing address.<\/p>\n
SECTION 13. Parties. This Agreement shall each inure to the benefit of
\nand be binding upon the Underwriters, the Company and the Selling Shareholders
\nand their respective successors. Nothing expressed or mentioned in this
\nAgreement is intended or shall be construed to give any person, firm or
\ncorporation, other than the Underwriters, the Company and the Selling
\nShareholders and their respective successors and the controlling persons and
\nofficers and directors referred to in Sections 6 and 7 and their heirs and legal
\nrepresentatives, any legal or equitable right, remedy or claim under or in
\nrespect of this Agreement or any provision herein contained. This Agreement and
\nall conditions and provisions hereof are intended to be for the sole and
\nexclusive benefit of the Underwriters, the Company and the Selling Shareholders
\nand their respective successors, and said controlling persons and officers and
\ndirectors and their heirs and legal representatives, and for the benefit of no
\nother person, firm or corporation. No purchaser of Securities from any
\nUnderwriter shall be deemed to be a successor by reason merely of such purchase.<\/p>\n
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE CONSTRUED
\nAND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
\nYORK (WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO
\nTHE EXTENT SUCH<\/p>\n
35
\n 41
\nPRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF
\nANOTHER JURISDICTION). SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.<\/p>\n
SECTION 15. Effect of Headings. The Article and Section headings herein
\nand the Table of Contents are for convenience only and shall not affect the
\nconstruction hereof.<\/p>\n
36
\n 42
\n If the foregoing is in accordance with your understanding of our
\nagreement, please sign and return to the Company and the Attorney-in Fact for
\nthe Selling Shareholders a counterpart hereof, whereupon this instrument, along
\nwith all counterparts, will become a binding agreement between the Underwriters,
\nthe Company and the Selling Shareholders in accordance with its terms.<\/p>\n
Very truly yours,<\/p>\n
EDISON SCHOOLS INC.<\/p>\n
By:
\n ————————————-
\n Name:
\n Title:<\/p>\n
SELLING SHAREHOLDERS<\/p>\n
By:
\n ————————————-
\n Name:
\n As Attorney-In-Fact acting on behalf
\n of the Selling Shareholders named in
\n Schedule B hereto<\/p>\n
37
\n 43
\nCONFIRMED AND ACCEPTED,
\n as of the date first above written:<\/p>\n
MERRILL LYNCH & CO.
\nMERRILL LYNCH, PIERCE, FENNER & SMITH
\n INCORPORATED
\nBANC OF AMERICA SECURITIES LLC,
\nCREDIT SUISSE FIRST BOSTON CORPORATION,
\nDONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
\nJ.P. MORGAN SECURITIES INC.<\/p>\n
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
\n INCORPORATED<\/p>\n
By:
\n ——————————————
\n Name:
\n Title: Authorized Signatory<\/p>\n
For themselves and as Representatives of the
\nother Underwriters named in Schedule A hereto.<\/p>\n
38
\n 44
\n SCHEDULE A<\/p>\n
\n\n Number of
\n Name of Underwriter Initial Securities
\n ——————- ——————
\n
\nMerrill Lynch, Pierce, Fenner & Smith
\n Incorporated –<\/p>\nBanc of America Securities LLC –<\/p>\n
Credit Suisse First Boston Corporation –<\/p>\n
Donaldson, Lufkin & Jenrette Securities
\n Corporation –<\/p>\n
J.P. Morgan Securities Inc. –<\/p>\n
———
\nTotal 5,000,000
\n =========
\n<\/c><\/s><\/caption>\n<\/table>\n
Sch A-1
\n 45
\n SCHEDULE B<\/p>\n
\n\n Number of Initial Maximum Number of Option
\n Securities to be Sold Securities to Be Sold
\n —————————————————<\/p>\n
\nEdison Schools Inc. 2,500,000 375,000<\/p>\nManuel J. Rivera 50,000 – 0 –<\/p>\n
John E. Chubb 25,000 – 0 –<\/p>\n
D2F2 Foundation 600,000 – 0 –<\/p>\n
Nazca Limited Partnership 128,500 – 0 –<\/p>\n
Progressive Investment
\nCompany, Inc. 887,740 375,000<\/p>\n
Richmont Capital Partners I,
\nL.P. 200,000 – 0 –<\/p>\n
RWJ Education Company I,
\nLLC 500,000 – 0 –<\/p>\n
Trustees of Amherst College 40,584 – 0 –<\/p>\n
Brearly School Endowment Fund 13,796 – 0 –<\/p>\n
Elizabeth H. Mandell Trust for
\nthe benefit of Peter Mandell 6,898 – 0 –<\/p>\n
Elizabeth H. Mandell Trust for
\nthe benefit of Olivia Mandell 6,898 – 0 –<\/p>\n
Tab Products Company Pension
\nPlan 40,584 – 0 –
\n ——— ——-
\n Total 5,000,000 750,000
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
Sch B-1
\n 46
\n SCHEDULE C<\/p>\n
EDISON SCHOOLS INC.<\/p>\n
5,000,000 Shares of Common Stock<\/p>\n
(Par Value $.01 Per Share)<\/p>\n
I. The public offering price per share for the Securities,
\n determined as provided in said Section 2, shall be $-.<\/p>\n
II. The purchase price per share for the Securities to be paid
\n by the several Underwriters shall be $-, being an amount equal to the
\n public offering price set forth above less $- per share; provided that
\n the purchase price per share for any Option Securities purchased upon
\n the exercise of the over-allotment option described in Section 2(b)
\n shall be reduced by an amount per share equal to any dividends or
\n distributions declared by the Company and payable on the Initial
\n Securities but not payable on the Option Securities.<\/p>\n
Sch C-1
\n 47
\n SCHEDULE D<\/p>\n
List of persons and entities
\n subject to lock-up<\/p>\n
H. Christopher Whittle
\nBenno C. Schmidt, Jr.
\nChristopher D. Cerf
\nJames L. Starr
\nJohn Chubb, Ph.D
\nLaura Eshbaugh
\nReverend Floyd H. Flake
\nDavid A. Graff
\nKathleen M. Hamel
\nTonya G. Hinch
\nDeborah M. McGriff
\nManuel J. Rivera
\nDonald N. Sunderland
\nVirginia G. Bonker
\nJohn W. Childs
\nCharles J. Delaney
\nRobert Finzi
\nJohn B. Fullerton
\nJanet A. Hickey
\nKlas Hillstrom
\nJeffrey T. Leeds
\nWilliam F. Weld<\/p>\n
[All other holders of 1% or more of any class
\nthe Company’s common stock.]<\/p>\n
Sch D-1
\n 48
\n SCHEDULE E<\/p>\n
List of Management Agreements<\/p>\n
1. Feaster-Edison Charter School Agreement between the Company and the
\n Chula Vista Elementary School District, California.<\/p>\n
2. Charter School Management Agreement between the Company and the Board
\n of Education of the Ravenswood City School District, East Palo Alto,
\n California.<\/p>\n
3. Charter School Agreement between the Company and the Board of Education
\n of the Fresno Unified School District, California.<\/p>\n
4. Charter School Management Agreement between the Company and the Board
\n of Education of the Napa Valley Unified School District, California.<\/p>\n
5. Charter School Management Agreement between the Company and the Board
\n of Education of the San Francisco Unified School District, California.<\/p>\n
6. Charter School Management Agreement between the Company and the Board
\n of Education of the West Covina Unified School District, California.<\/p>\n
7. Agreement between the Company and the Long Beach Unified School
\n District, Long Beach, California.<\/p>\n
8. Agreement between the Company and the Board of Education of the Academy
\n School District, Colorado Springs, Colorado.<\/p>\n
9. Modification Agreement between the Company and the Board of Education
\n of the Academy School District, Colorado.<\/p>\n
10. Colorado Springs Charter School Management Agreement between the
\n Company and Colorado Springs School District No. 11, Colorado.<\/p>\n
11. Third Amendment of the Colorado Springs Charter School Management
\n Agreement between the Company and Colorado Springs School District No.
\n 11, Colorado.<\/p>\n
12. Denver-Edison Charter School Management Agreement between the Company
\n and the Denver-Edison Charter School, Colorado.<\/p>\n
Sch E-1
\n 49
\n13. Agreement between the Company and the Governing Board of Area
\n Cooperative Educational Services, Hamden, Connecticut.<\/p>\n
14. Agreement between the Company and the Thomas A. Edison Charter School
\n of Wilmington, Inc., Wilmington, Delaware.<\/p>\n
15. Agreement between the Company and the Friendship Public Charter School,
\n Inc., Washington, D.C.<\/p>\n
16. Agreement among the Company, the Dade County Public Schools and the
\n United Teachers of Dade County, Florida.<\/p>\n
17. Agreement between the Company and the Bibb County School District,
\n Macon, Georgia.<\/p>\n
18. Agreement between the Company and the Drew Charter School, Inc.,
\n Atlanta, Georgia.<\/p>\n
19. Agreement between the Company and the Board of Education of the Peoria
\n Public Schools, Peoria, Illinois.<\/p>\n
20. Agreement between the Company and the Board of Education of the
\n Springfield Public Schools, Springfield, Illinois.<\/p>\n
21. Agreement between Company and the Chicago Charter School Foundation,
\n Chicago, Illinois.<\/p>\n
22. Agreement between the Company and the Davenport Community School
\n District, Davenport, Iowa.<\/p>\n
23. Agreement between the Company and Wichita School District No. 259,
\n Wichita, Kansas.<\/p>\n
24. Addendum #2 to the Agreement between the Company and Wichita School
\n District No. 259, Wichita, Kansas.<\/p>\n
25. Agreement between the Company and the Baltimore City Board of
\n Education, Baltimore, Maryland.<\/p>\n
26. Management Agreement between the Company and the Boston Renaissance
\n Charter School, Boston, Massachusetts.<\/p>\n
Sch E-2
\n 50
\n27. Agreement between the Company and Seven Hills Charter School,
\n Worcester, Massachusetts.<\/p>\n
28. Agreement between the Company and the Battle Creek Public School
\n District, Battle Creek, Michigan.<\/p>\n
29. Management Agreement between the Company and the Edison Public School
\n Academy, Detroit, Michigan.<\/p>\n
30. Agreement between the Company and the Detroit Academy of Arts and
\n Sciences, Detroit, Michigan.<\/p>\n
31. Agreement between the Company and the YMCA Service Learning Academy,
\n Detroit, Michigan.<\/p>\n
32. Agreement between the Company and the Edison Oakland Public School
\n Academy, Fernald, Michigan.<\/p>\n
33. Management Agreement between the Company and the Flint School District,
\n Flint, Michigan.<\/p>\n
34. First Amended Management Agreement between the Company and the
\n Mid-Michigan Public School Academy, Lansing, Michigan.<\/p>\n
35. Management Agreement between the Company and the Board of Education of
\n the Mount Clemens Community School District, Mt. Clemens, Michigan.<\/p>\n
36. Agreement between the Company and the Board of Education of the School
\n District of the City of Pontiac, Pontiac, Michigan.<\/p>\n
37. Management Agreement between the Company and the Inkster School
\n District Board, Inkster, Michigan.<\/p>\n
38. Management Agreement between the Company and the Board of Directors of
\n the Duluth Public Schools Academy, Duluth, Minnesota.<\/p>\n
39. Agreement among the Company, Special School District No. 1 (Minneapolis
\n Public Schools) and Project for Pride in Living, Inc.<\/p>\n
40. Agreement between the Company and the Westport Community Secondary
\n Schools, Kansas City, Missouri.<\/p>\n
Sch E-3
\n 51
\n41. Agreement between the Company and the Westport Allen-Edison Village
\n Educational School, Kansas City, Missouri.<\/p>\n
42. Management Agreement between the Company and the Granville Charter
\n School, Trenton, New Jersey.<\/p>\n
43. Management Agreement between the Company and the Schomburg Charter
\n School, Inc., Jersey City, New Jersey.<\/p>\n
44. Agreement between the Company and the Charter School of Science & Technology, Rochester, New York.<\/p>\n
45. Agreement between the Company and the Board of Education of the Wayne
\n County Public Schools, Goldsboro, North Carolina.<\/p>\n
46. Agreement between the Company and the Board of Education of the
\n Nash-Rocky Mount Public Schools, Whitaker, North Carolina.<\/p>\n
47. Management Agreement between the Company and the Alliance Community
\n Schools, Inc., Dayton, Ohio.<\/p>\n
48. Agreement between the Company and the Renaissance Academy-Edison
\n Charter School, Phoenixville, Pennsylvania.<\/p>\n
49. Agreement between the Company and the Southwest Independent School
\n District, San Antonio, Texas.<\/p>\n
50. Stipulation of Agreement between the Company and the Sherman School
\n District, Sherman, Texas.<\/p>\n
51. Agreement between the Company and the Board of Education of the Tyler
\n Independent School District, Tyler, Texas.<\/p>\n
52. Agreement between the Company and the Dallas Independent School
\n District, Dallas, Texas.<\/p>\n
53. Agreement between the Company and the Milwaukee Urban League Academy of
\n Business and Economics Inc., Milwaukee, Wisconsin.<\/p>\n
54. Agreement between the Company and Milwaukee Science Education
\n Consortium, Milwaukee, Wisconsin.<\/p>\n
Sch E-4
\n 52
\n Exhibit A-1<\/p>\n
FORM OF OPINION OF COMPANY’S COUNSEL
\n TO BE DELIVERED PURSUANT TO
\n SECTION 5(b)(i)<\/p>\n
(i) The Company has been duly incorporated and is validly
\n existing as a corporation in good standing under the laws of the State
\n of Delaware.<\/p>\n
(ii) The Company has corporate power and authority to own,
\n lease and operate its properties and to conduct its business as
\n described in the Prospectus and to enter into and perform its
\n obligations under the Purchase Agreement.<\/p>\n
(iii) The Company is duly qualified as a foreign corporation
\n to transact business and is in good standing in each jurisdiction
\n listed on Schedule A to this opinion.<\/p>\n
(iv) The authorized, issued and outstanding capital stock of
\n record of the Company (a) was, as of March 31, 2000, as set forth in
\n the Prospectus in the column entitled “Actual” under the caption
\n “Capitalization” and (b) after giving effect to the transactions
\n contemplated by this Agreement and the Registration Statement, will be
\n as set forth in the Prospectus in the column entitled “As Adjusted”
\n under the caption “Capitalization” (except for issuances subsequent to
\n March 31, 2000, if any, pursuant to reservations, agreements or
\n employee benefit plans referred to in the Prospectus or pursuant to the
\n exercise of convertible securities, options or warrants referred to in
\n the Prospectus); the shares of issued and outstanding capital stock of
\n the Company, including the Securities to be purchased by the
\n Underwriters from the Selling Shareholders, have been duly authorized
\n and validly issued and are fully paid and non-assessable; and none of
\n the outstanding shares of capital stock of record of the Company was
\n issued in violation of any preemptive or other similar rights of any
\n securityholder of the Company arising under (a) the Company’s
\n certificate of incorporation or by-laws (as in effect from time to
\n time), (b) any contract, indenture, mortgage, loan agreement, note,
\n lease or other agreement or instrument filed as an exhibit to the
\n Registration Statement, (c) the Delaware General Corporation Law or (d)
\n to our knowledge, arising otherwise.<\/p>\n
(v) The Securities to be purchased by the Underwriters from
\n the Company have been duly authorized for issuance and sale to the
\n Underwriters pursuant to the Purchase Agreement and, when issued and
\n delivered by the Company pursuant to the Purchase Agreement against
\n payment of the consideration<\/p>\n
A-1-1
\n 53
\n set forth in the Purchase Agreement, will be validly issued and fully
\n paid and non-assessable and no holder of the Securities is or will be
\n subject to personal liability by reason of being such a holder.<\/p>\n
(vi) The issuance of the Securities by the Company and the
\n sale of the Securities by the Selling Shareholders is not subject to
\n any preemptive or other similar rights of any securityholder of the
\n Company arising under (a) the Company’s certificate of incorporation or
\n by-laws (as in effect on the date hereof), (b) any contract, indenture,
\n mortgage, loan agreement, note, lease or other agreement or instrument
\n filed as an exhibit to the Registration Statement, (c) the Delaware
\n General Corporation Law or (d) to our knowledge, arising otherwise.<\/p>\n
(vii) To our knowledge, the Company does not have any
\n subsidiaries, and, to our knowledge, the Company does not have any
\n equity investments in other companies, except the Company’s interest in
\n APEX.<\/p>\n
(viii) The Purchase Agreement has been duly authorized,
\n executed and delivered by the Company.<\/p>\n
(ix) The Registration Statement, including any Rule 462(b)
\n Registration Statement, has been declared effective under the 1933 Act;
\n any required filing of the Prospectus pursuant to Rule 424(b) has been
\n made in the manner and within the time period required by Rule 424(b);
\n and, to our knowledge, no stop order suspending the effectiveness of
\n the Registration Statement or any Rule 462(b) Registration Statement
\n has been issued under the 1933 Act and no proceedings for that purpose
\n have been instituted or are pending or threatened by the Commission.<\/p>\n
(x) The Registration Statement, including any Rule 462(b)
\n Registration Statement, the Rule 430A Information and the Rule 434
\n Information, as applicable, the Prospectus and each amendment or
\n supplement to the Registration Statement and the Prospectus as of their
\n respective effective or issue dates (other than the financial
\n statements and supporting schedules included therein or omitted
\n therefrom, as to which we need express no opinion) complied as to form
\n in all material respects with the requirements of the 1933 Act and the
\n 1933 Act Regulations.<\/p>\n
(xi) If Rule 434 has been relied upon, the Prospectus was not
\n “materially different,” as such term is used in Rule 434, from the
\n prospectus included in the Registration Statement at the time it became
\n effective.<\/p>\n
A-1-2
\n 54
\n (xii) The form of certificate used to evidence the Common
\n Stock complies in all material respects with all applicable statutory
\n requirements, with any applicable requirements of the charter and
\n by-laws of the Company and the requirements of the Nasdaq National
\n Market.<\/p>\n
(xiii) To our knowledge, there is not pending or threatened
\n any action, suit, proceeding, inquiry or investigation, to which the
\n Company or any school operated by the Company is a party, or to which
\n the property of the Company or any school operated by the Company is
\n subject, before or brought by any court or governmental agency or body,
\n domestic or foreign, which might reasonably be expected to result in a
\n Material Adverse Effect, or which might reasonably be expected to
\n materially and adversely affect the consummation of the transactions
\n contemplated in the Purchase Agreement or the performance by the
\n Company of its obligations thereunder.<\/p>\n
(xiv) The information in the Prospectus under “Summary –
\n Description of Capital Stock”, “Description of Capital Stock”, and in
\n the first paragraph and the first and third sentences in the second
\n paragraph under “Management-Election of Directors”, the last sentence
\n of “Management-Executive Officers and Directors”, and in the
\n Registration Statement in the first two paragraphs under Item 14, to
\n the extent that it constitutes matters of law, summaries of legal
\n matters, the Company’s charter and bylaws or legal proceedings, or
\n legal conclusions, has been reviewed by us and is correct in all
\n material respects.<\/p>\n
(xv) To our knowledge, there are no statutes or regulations
\n that are required to be described in the Prospectus that are not
\n described as required.<\/p>\n
(xvi) To our knowledge, there are no franchises, contracts,
\n indentures, mortgages, loan agreements, notes, leases or other
\n instruments required to be described or referred to in the Registration
\n Statement or to be filed as exhibits thereto other than those described
\n or referred to therein or filed or incorporated by reference as
\n exhibits thereto.<\/p>\n
(xvii) To our knowledge, the Company is not in violation of
\n its charter or by-laws.<\/p>\n
(xviii) No filing with, or authorization, approval, consent,
\n license, order, registration, qualification or decree of, any court or
\n governmental authority or agency, domestic or foreign (other than under
\n the 1933 Act and the 1933 Act Regulations, which have been obtained, or
\n as may be required under the securities or blue sky laws of the various
\n states, as to which we need express no opinion) is<\/p>\n
A-1-3
\n 55
\n necessary or required in connection with the due authorization,
\n execution and delivery of the Purchase Agreement or for the offering,
\n issuance, sale or delivery of the Securities.<\/p>\n
(xix) The execution, delivery and performance of the Purchase
\n Agreement and the consummation of the transactions contemplated in the
\n Purchase Agreement and in the Registration Statement (including the
\n issuance and sale of the Securities) and compliance by the Company with
\n its obligations under the Purchase Agreement do not and will not,
\n whether with or without the giving of notice or lapse of time or both,
\n conflict with or constitute a breach of, or default or Repayment Event
\n (as defined in Section 1(a)(x) of the Purchase Agreement) under or
\n result in the creation or imposition of any lien, charge or encumbrance
\n upon any property or assets of the Company pursuant to any contract,
\n indenture, mortgage, deed of trust, loan or credit agreement, note,
\n lease or any other agreement or instrument filed as an exhibit to the
\n Registration Statement (except for such conflicts, breaches or defaults
\n or liens, charges or encumbrances that could not reasonably be expected
\n to have a Material Adverse Effect), nor will such action result in any
\n violation of the provisions of the charter or by-laws of the Company,
\n applicable law, statute, rule or regulation or any judgment, order,
\n writ or decree specifically naming the Company, known to us, of any
\n government, government instrumentality or court, domestic or foreign,
\n having jurisdiction over the Company or any of its properties, assets
\n or operations.<\/p>\n
(xx) To our knowledge, except as described in the Prospectus
\n under the caption “Description of Capital Stock–Registration Rights”
\n there are no persons with registration rights or other similar rights
\n to have any securities registered pursuant to the Registration
\n Statement or otherwise registered by the Company under the 1933 Act.<\/p>\n
(xxi) To our knowledge, except as disclosed in the Prospectus,
\n there are no outstanding options to purchase, or any preemptive rights
\n or other rights to subscribe for or to purchase, any securities or
\n obligations convertible into, or any contracts or commitments to issue
\n or sell, shares of the Company’s capital stock or any such options,
\n rights, convertible securities or obligations.<\/p>\n
(xxii) The Company is not an “investment company” or an entity
\n “controlled” by an “investment company,” as such terms are defined in
\n the 1940 Act.<\/p>\n
In connection with the preparation of the Registration
\n Statement and the Prospectus, we have participated in conferences with
\n officers and representatives of<\/p>\n
A-1-4
\n 56
\n the Company, counsel for the Underwriters and independent accountants
\n of the Company, at which conferences we made inquiries of such persons
\n and others and discussed the contents of the Registration Statement and
\n the Prospectus. While the limitations inherent in the independent
\n verification of factual matters and the character of determinations
\n involved in the registration process are such that we are not passing
\n upon and do not assume any responsibility for the accuracy,
\n completeness or fairness of the statements contained in the
\n Registration Statement or the Prospectus, subject to the foregoing and
\n based on such participation, inquiries and discussions, nothing has
\n come to our attention that would lead us to believe that the
\n Registration Statement or any amendment thereto, including the Rule
\n 430A Information and Rule 434 Information (if applicable) (except for
\n financial statements and schedules and other financial data included
\n therein or omitted therefrom and percentages derived from financial
\n data included therein, as to which we need make no statement), at the
\n time such Registration Statement or any such amendment became
\n effective, contained an untrue statement of a material fact or omitted
\n to state a material fact required to be stated therein or necessary to
\n make the statements therein not misleading or that the Prospectus or
\n any amendment or supplement thereto (except for financial statements
\n and schedules and other financial data included therein or omitted
\n therefrom and percentages derived from financial data included therein,
\n as to which we need make no statement), as of their respective dates or
\n at the Closing Time, included or includes an untrue statement of a
\n material fact or omitted or omits to state a material fact necessary in
\n order to make the statements therein, in the light of the circumstances
\n under which they were made, not misleading.<\/p>\n
Such opinion shall not state that it is to be governed or
\n qualified by, or that it is otherwise subject to, any treatise, written
\n policy or other document relating to legal opinions, including, without
\n limitation, the Legal Opinion Accord of the ABA Section of Business Law
\n (1991).<\/p>\n
A-1-5
\n 57
\n Exhibit A-2<\/p>\n
FORM OF OPINION OF THE GENERAL COUNSEL
\n FOR THE COMPANY TO BE DELIVERED
\n PURSUANT TO SECTION 5(b)(ii)<\/p>\n
(i) All descriptions in the Prospectuses of and references in
\n the Prospectus to franchises, contracts, indentures, mortgages, loan
\n agreements, notes, leases or other instruments or documents or
\n transactions to which the Company is or was a party are accurate in all
\n material respects;<\/p>\n
(ii) To my knowledge, no default by the Company exists in the
\n due performance or observance of any material obligation, agreement,
\n covenant or condition contained in any Management Agreement or any
\n other contract, indenture, mortgage, loan agreement, note, lease or
\n other agreement or instrument that is described or referred to in the
\n Registration Statement or the Prospectus or filed or incorporated by
\n reference as an exhibit to the Registration Statement.<\/p>\n
(iii) The execution, delivery and performance of the Purchase
\n Agreement and the consummation of the transactions contemplated in the
\n Purchase Agreement and in the Registration Statement (including the
\n issuance and sale of the Securities, and compliance by the Company with
\n its obligations under the Purchase Agreement do not and will not,
\n whether with or without the giving of notice or lapse of time or both,
\n conflict with or constitute a breach of, or default or Repayment Event
\n (as defined in Section 1(a)(x) of the Purchase Agreement) under or
\n result in the creation or imposition of any lien, charge or encumbrance
\n upon any property or assets of the Company pursuant to any Management
\n Agreement or other contract, indenture, mortgage, deed of trust, loan
\n or credit agreement, note, lease or any other agreement or instrument
\n filed as an exhibit to the Registration Statement or otherwise known to
\n me (except for such conflicts, breaches or defaults or liens, charges
\n or encumbrances that could not reasonably be expected to have a
\n Material Adverse Effect), nor will such action result in any violation
\n of the provisions of the charter or by-laws of the Company, applicable
\n law, statute, rule, regulation, judgment, order, writ or decree, known
\n to me, of any government, government instrumentality or court, domestic
\n or foreign, having jurisdiction over the Company or any of its
\n properties, assets or operations.<\/p>\n
(iv) The execution, delivery and performance of the Purchase
\n Agreement and the consummation of the transactions contemplated in the
\n Purchase Agreement and in the Registration Statement (including the
\n issuance and sale of the Securities, and compliance by the Company with
\n its obligations under the Purchase Agreement do not and will not result
\n in any violation of the ESEA, the IDEA, including any<\/p>\n
A-2-1
\n 58
\n rules or regulations promulgated pursuant to such laws, or any other
\n federal, state or local statute pertaining to the authorization to
\n operate public schools or eligibility for funding under federal, state
\n or local programs.<\/p>\n
(v) No filing with, or authorization, approval, consent,
\n license, order, registration, qualification or decree of, the USDE or,
\n to my knowledge, any state agency under any state statute pertaining to
\n authorization to operate public schools or eligibility for funding
\n under federal or state programs is necessary or required in connection
\n with the due authorization, execution and delivery of the Purchase
\n Agreement or for the offering, issuance, sale or delivery of the
\n Securities.<\/p>\n
(vi) To my knowledge, the Company and each of the schools
\n operated by it possess all permits, licenses, approvals, consents and
\n other authorizations required, including without limitation
\n authorizations required (i) to participate in federal funding programs
\n under the ESEA and the IDEA to the extent the Company or such school
\n currently receives material funding thereunder, (ii) to operate charter
\n schools under state charter statutes, and (iii) to receive funding
\n under federal, state or local education laws, statutes, rules,
\n regulations, standards, guides and orders to the extent the Company or
\n such school currently receives material funding thereunder
\n (collectively, “Governmental Licenses”), issued by the appropriate
\n federal, state or local regulatory agencies or bodies necessary to
\n conduct the business now operated by them, except where the failure to
\n possess such Governmental Licenses could not reasonably be expected to
\n have a material Adverse Effect; the Company and, to my knowledge each
\n of the schools operated by it, is in compliance with the terms and
\n conditions of all such Governmental Licenses, except where the failure
\n so to comply could not, singly or in the aggregate, have a Material
\n Adverse Effect; all of the Governmental Licenses are valid and in full
\n force and effect, except when the invalidity of such Governmental
\n Licenses or the failure of such Governmental Licenses to be in full
\n force and effect could not have a Material Adverse Effect; and, to my
\n knowledge, the Company has not received any notice of proceedings
\n relating to the revocation or modification of any such Governmental
\n Licenses which, singly or in the aggregate, if the subject of an
\n unfavorable decision, ruling or finding, could result in a Material
\n Adverse Effect.<\/p>\n
(vii) To my knowledge, there is not pending or threatened any
\n action, suit, proceeding, inquiry or investigation, to which the
\n Company or any school operated by the Company is a party, or to which
\n the property of the Company or any school operated by the Company is
\n subject, before or brought by the USDE, the DOJ, the EEOC, state and
\n local educational agencies (including school boards and public school
\n districts) or charter school boards which might reasonably be expected
\n to result in a Material Adverse Effect, or which might reasonably be<\/p>\n
A-2-2
\n 59
\n expected to materially and adversely affect the consummation of the
\n transactions contemplated in the Purchase Agreement or the performance
\n by the Company of its obligations thereunder.<\/p>\n
(viii) To my knowledge, the Company and each of the schools
\n operated by the Company are in compliance with all applicable education
\n laws, statutes, rules, regulations, standards, guides or orders
\n administered, issued or implemented by any federal, state or local
\n government or any agency or subdivision of any of the foregoing,
\n including, without limitation, the USDE, the DOJ, the EEOC, state and
\n local education agencies (including school boards and public school
\n districts) or charter school boards, except where the failure to be in
\n compliance would not reasonably be expected to have a Material Adverse
\n Effect. To my knowledge, neither the Company nor any of the schools
\n operated by it has been advised that either the Company or any of the
\n schools operated by the Company is not conducting business in
\n compliance with all applicable federal, state and local education laws,
\n statutes, rules, regulations, standards, guides and orders, except
\n where failure to be so in compliance could not reasonably be expected
\n to have a Material Adverse Effect.<\/p>\n
(ix) The information in the Prospectus under “Risk
\n Factors–Risks Related to Governmental Funding and Regulation of the
\n Education Industry”, “Business–Government Laws and Regulations”, to
\n the extent that it constitutes matters of law, summaries of legal
\n matters, or legal conclusions (collectively, “Education Matters”), has
\n been reviewed by me and is correct in all material respects.<\/p>\n
(x) Neither the Company, nor any of the schools operated by
\n the Company is subject to any requirements of, or regulation under, the
\n Higher Education Act of 1965, as amended.<\/p>\n
Nothing has come to my attention that would lead me to believe
\n that the Registration Statement or any amendment thereto, including the
\n Rule 430A Information and Rule 434 Information (if applicable) (except
\n for financial statements and schedules and other financial data
\n included therein or omitted therefrom and percentages derived from
\n financial data included therein, as to which I need make no statement),
\n at the time such Registration Statement or any such amendment became
\n effective, contained an untrue statement of a material fact or omitted
\n to state a material fact required to be stated therein or necessary to
\n make the statements therein not misleading or that the Prospectus or
\n any amendment or supplement thereto (except for financial statements
\n and schedules and other financial data included therein or omitted
\n therefrom and percentages derived from<\/p>\n
A-2-3
\n 60
\n financial data included therein, as to which we need make no
\n statement), as of their respective dates or at the Closing Time,
\n included or includes an untrue statement of a material fact or omitted
\n or omits to state a material fact necessary in order to make the
\n statements therein, in the light of the circumstances under which they
\n were made, not misleading.<\/p>\n
Such opinion shall not state that it is to be governed or
\n qualified by, or that it is otherwise subject to, any treatise, written
\n policy or other document relating to legal opinions, including, without
\n limitation, the Legal Opinion Accord of the ABA Section of Business Law
\n (1991).<\/p>\n
A-2-4
\n 61
\n Exhibit A-3<\/p>\n
FORM OF OPINION OF COUNSEL FOR THE
\n SELLING SHAREHOLDER(S)
\n TO BE DELIVERED PURSUANT TO SECTION 5(c)<\/p>\n
(i) No filing with, or consent, approval, authorization, license,
\norder, registration, qualification or decree of, any court or governmental
\nauthority or agency, domestic or foreign, (other than the issuance of the order
\nof the Commission declaring the Registration Statement effective and such
\nauthorizations, approvals or consents as may be necessary under state securities
\nlaws, as to which [I][we] need express no opinion) is necessary or required to
\nbe obtained by the Selling Shareholder(s) for the performance by [each\/the]
\nSelling Shareholder of its obligations under the Purchase Agreement or in the
\nPower of Attorney and Custody Agreement, or in connection with the offer, sale
\nor delivery of the Securities.<\/p>\n
(ii) [Each\/The] Power of Attorney and Custody Agreement has been duly
\nexecuted and delivered by the [respective] Selling Shareholder(s) [named
\ntherein] and constitutes the legal, valid and binding agreement of [such\/the]
\nSelling Shareholder. The Purchase Agreement has been duly authorized, executed
\nand delivered by or on behalf of [each\/the] Selling Shareholder.<\/p>\n
(iii) [Each\/The] Attorney-in-Fact has been duly authorized by the
\nSelling Shareholder(s) to deliver the Securities on behalf of the Selling
\nShareholder(s) in accordance with the terms of the Purchase Agreement.<\/p>\n
(iv) The execution, delivery and performance of the Purchase Agreement
\nand the Power of Attorney and Custody Agreement and the sale and delivery of the
\nSecurities and the consummation of the transactions contemplated in the Purchase
\nAgreement and in the Registration Statement and compliance by the Selling
\nShareholder(s) with its obligations under the Purchase Agreement have been duly
\nauthorized by all necessary action on the part of the Selling Shareholder(s) and
\ndo not and will not, whether with or without the giving of notice or passage of
\ntime or both, conflict with or constitute a breach of, or default under or
\nresult in the creation or imposition of any tax, lien, charge or encumbrance
\nupon the Securities or any property or assets of the Selling Shareholder(s)
\npursuant to, any contract, indenture, mortgage, deed of trust, loan or credit
\nagreement, note, license, lease or other instrument or agreement to which
\n[any\/the] Selling Shareholder is a party or by which [his\/her\/it\/they] may be
\nbound, or to which any of the property or assets of the Selling Shareholder(s)
\nmay be subject nor will such action result in any violation of the provisions of
\nthe charter or by-laws of the Selling Shareholder(s), if applicable, or any law,
\nadministrative regulation, judgment or order of any governmental agency or body
\nor any administrative or court decree having jurisdiction over [such\/the]
\nSelling Shareholder or any of its properties.<\/p>\n
A-3-1
\n 62
\n (v) To the best of [our][my] knowledge, [each\/the] Selling Shareholder
\nhas valid and marketable title to the Securities to be sold by [such\/the]
\nSelling Shareholder pursuant to the Purchase Agreement, free and clear of any
\npledge, lien, security interest, charge, claim, equity or encumbrance of any
\nkind, and has full right, power and authority to sell, transfer and deliver such
\nSecurities pursuant to the Purchase Agreement. By delivery of a certificate or
\ncertificates therefor [such\/the] Selling Shareholder will transfer to the
\nUnderwriters who have purchased such Securities pursuant to the Purchase
\nAgreement (assuming each such Underwriter has no notice of any adverse claim, as
\ndefined in Uniform Commercial Code as adopted in the State of New York (the
\n“NYUCC”)), valid and marketable title to such Securities, free and clear of any
\nadverse claim (as defined in the NYUCC), pledge, lien, security interest,
\ncharge, claim, equity or encumbrance of any kind.<\/p>\n
Such opinion shall not state that it is to be governed or qualified by,
\nor that it is otherwise subject to, any treatise, written policy or other
\ndocument relating to legal opinions, including, without limitation, the Legal
\nOpinion Accord of the ABA Section of Business Law (1991).<\/p>\n
A-3-2
\n 63
\n Exhibit B<\/p>\n
[Form of lock-up from directors, officers or other stockholders]<\/p>\n
_________ __, 2000<\/p>\n
MERRILL LYNCH & CO.
\nMerrill Lynch, Pierce, Fenner & Smith
\n Incorporated,
\nBanc of America Securities LLC
\nCredit Suisse First Boston Corporation
\nDonaldson, Lufkin & Jenrette Securities Corporation
\nJ.P. Morgan Securities Inc.
\n as Representatives of the several
\n Underwriters to be named in the
\n within-mentioned Purchase Agreement
\nc\/o Merrill Lynch & Co.
\nMerrill Lynch, Pierce, Fenner & Smith
\n Incorporated
\nNorth Tower
\nWorld Financial Center
\nNew York, New York 10281-1209<\/p>\n
Re: Proposed Public Offering by Edison Schools Inc.<\/p>\n
Dear Sirs:<\/p>\n
The undersigned, a stockholder, officer or director of Edison Schools
\nInc., a Delaware corporation (the “Company”), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and
\nBanc of America Securities LLC, Credit Suisse First Boston Corporation,
\nDonaldson, Lufkin & Jenrette Securities Corporation, J.P. Morgan Securities Inc.
\npropose to enter into a Purchase Agreement (the “Purchase Agreement”) with the
\nCompany and the selling shareholders listed in the Purchase Agreement (the
\n“Selling Shareholders”) providing for the public offering of shares (the
\n“Securities”) of the Company’s Class A common stock, par value $.01 per share
\n(the “Common Stock”). In recognition of the benefit that such an offering will
\nconfer upon the undersigned as a stockholder, officer or director of the
\nCompany, and for other good and valuable consideration, the receipt and
\nsufficiency of which are hereby acknowledged, the undersigned agrees with each
\nunderwriter to be named in the Purchase Agreement that, during a period of 90
\ndays from the date of the Purchase Agreement, the undersigned will not, without
\nthe prior written consent of Merrill Lynch, directly or<\/p>\n
B-1
\n 64
\nindirectly, (i) offer, pledge, sell, contract to sell, sell any option or
\ncontract to purchase, purchase any option or contract to sell, grant any option,
\nright or warrant for the sale of, or otherwise dispose of or transfer any shares
\nof the Company’s Common Stock or any securities convertible into or exchangeable
\nor exercisable for Common Stock, whether now owned or hereafter acquired by the
\nundersigned or with respect to which the undersigned has or hereafter acquires
\nthe power of disposition, or file any registration statement under the
\nSecurities Act of 1933, as amended , with respect to any of the foregoing or
\n(ii) enter into any swap or any other agreement or any transaction that
\ntransfers, in whole or in part, directly or indirectly, the economic consequence
\nof ownership of the Common Stock, whether any such swap or transaction is to be
\nsettled by delivery of Common Stock or other securities, in cash or otherwise.
\n[The foregoing restriction will not apply to Securities to be sold by the
\nSelling Shareholders under the Purchase Agreement.](1)<\/p>\n
Notwithstanding the foregoing restrictions on transfer, the undersigned
\nshall be permitted to make the following transfers: (i) transfers made by gift,
\nwill or intestacy, provided the donee thereof agrees in writing to be bound by
\nthe terms hereof; (ii) transfers to the transferor’s affiliates, as such term is
\ndefined in Rule 405 promulgated under the Securities Act, provided that each
\ntransferee agrees in writing to be bound by the terms hereof; (iii) transfers
\nmade with prior written consent of Merrill Lynch; and (iv) in the event the
\nundersigned is an individual, transfers to his or her immediate family or to a
\ntrust the beneficiaries of which are exclusively the undersigned or a member or
\nmembers of his or her immediate family, provided that any transferee agrees in
\nwriting to be bound by the terms hereof.<\/p>\n
Very truly yours,<\/p>\n
[Name of company, corporation, partnership or trust](2)<\/p>\n
By:
\n ————————————————-
\n Name:<\/p>\n
[Title:]<\/p>\n
——————
\n(1) To be included in the lock-up agreements to be signed by the Selling
\n Shareholders.
\n(2) Does not apply to individual shareholders.<\/p>\n
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