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EXHIBIT 1
FORM OF
2,200,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
______________, 0000
X.X. Xxxxxxxxx + Co, LLC
Xxxxxxxxx & Company, Inc.
ThinkEquity Partners
As representatives of the several Underwriters
x/x X.X. Xxxxxxxxx + Co, LLC
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Beacon Education Management, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell up to an aggregate of 2,200,000 shares of
its authorized but unissued common stock, $0.01 par value per share (the "Common
Stock") to the Underwriters (as hereinafter defined), for whom you (the
"Representatives") are acting as representatives (said 2,200,000 shares of
Common Stock to be issued and sold by the Company being herein called the
"Underwritten Stock"). The Company has also granted the Underwriters an option
to purchase up to an aggregate of 330,000 additional shares of Common Stock (the
"Option Stock;" the Option Stock, together with the Underwritten Stock, being
hereinafter referred to as the "Shares"). The Common Stock is more fully
described in the Registration Statement and the Prospectus hereinafter
mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Shares by the underwriters, for whom you are acting as
representatives, named in Schedule 1 hereto (herein collectively called the
"Underwriters," which term shall also include any underwriter purchasing Shares
pursuant to Section 3(b) hereof). You represent and warrant that you have been
authorized by each of the other Underwriters to enter into this Underwriting
Agreement (this "Agreement") on its behalf and to act for it in the manner
herein provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities
and Exchange Commission (the "Commission") a registration statement on Form S-1
(No. 333-60450), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of the Shares. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the
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(1) Plus an option to purchase from the Company up to an aggregate of
330,000 additional shares to cover over-allotments.
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requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
(a) The term "Registration Statement" as used in this Agreement
shall mean such registration statement, including all exhibits and financial
statements, all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, in the form in which it became
effective, and any registration statement filed pursuant to Rule 462(b) of the
rules and regulations of the Commission with respect to the Shares (herein
called a Rule 462(b) registration statement), and, in the event of any amendment
thereto after the effective date of such registration statement (the "Effective
Date"), shall also mean (from and after the effectiveness of such amendment)
such registration statement as so amended (including any rule 462(b)
registration statement). The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment so such prospectus after the Effective Date, shall also mean (from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment) such prospectus as so supplemented or amended. The term
"Preliminary Prospectus" as used in this Agreement shall mean each preliminary
prospectus included in such registration statement prior to the time it becomes
effective.
(b) The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company hereby represents and warrants to the Underwriters
as follows:
(1) Neither the Commission nor any state securities commission
has issued any order preventing or suspending the use of any Preliminary
Prospectus or has instituted or, to the Company's knowledge, threatened to
institute any proceedings with respect to such an order. The Registration
Statement and the Prospectus comply, and on the Closing Date (as hereinafter
defined) and any later date on which the Option Stock is to be purchased, the
Prospectus will comply, in all material respects, with the provisions of the
Securities Act and the rules and regulations of the Commission thereunder (the
"Securities Act and Rules"). On the Effective Date, the Registration Statement
did not contain any untrue statement of a material fact and did not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and on the Effective Date the
Prospectus did not and, on the Closing Date and any later date on which the
Option Stock is to be purchased, will not contain any untrue statement of a
material fact and did not omit to state any material fact required to be stated
therein, or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties in this subparagraph (a)(1)
shall apply to statements in, or omissions from, the Registration Statement
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or the Prospectus made in reliance upon and in conformity with information
herein or otherwise furnished in writing to the Company by or on behalf of the
Underwriters expressly for use in the Registration Statement or Prospectus.
(2) Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, as the case may be, having full
power and corporate authority to own or lease its properties and to conduct its
business as described in the Registration Statement and the Prospectus; and (ii)
is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary (except where the failure to be so qualified would not have a material
adverse effect on the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole). The Company
and its subsidiaries, collectively, have employees located solely in
Massachusetts, Michigan, Missouri, New York, North Carolina, and Washington,
D.C., and in no other jurisdiction in the United States, and, notwithstanding
anything in (a)(2)(ii) to the contrary, each of the Company and its subsidiaries
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the Company and its subsidiaries are
required to be so qualified except where the failure to be so qualified would
not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole. The Company and its subsidiaries do not own any capital stock or other
equity securities in any other entity.
(3) The Company has the duly authorized and validly issued
outstanding capitalization set forth under the caption "Capitalization" in the
Prospectus and will have the adjusted capitalization set forth therein on the
Closing Date and any later date on which the Option Stock is to be purchased,
based on the assumptions set forth therein. The securities of the Company
conform to the descriptions thereof contained in the Prospectus. The form of
certificates for the Shares conforms to the requirements of the Delaware General
Corporation Law. The outstanding shares of Common Stock have been duly
authorized and validly issued by the Company and are fully paid and
nonassessable, and were issued in transactions that were exempt from the
registration requirements of the Securities Act, without violation of any
preemptive rights, rights of first refusal or similar rights. Except as created
hereby or referred to in the Prospectus, there are no outstanding options,
warrants, rights or other arrangements requiring the Company at any time to
issue any capital stock. No holders of outstanding shares of capital stock of
the Company are entitled as such to any preemptive or other rights to subscribe
for any of the Shares, and neither the filing of the Registration Statement nor
the offering or sale of the Shares as contemplated by this Agreement gives rise
to any rights, other than those that have lapsed or have been waived or
satisfied, for or relating to, the registration of any securities of the
Company. The Shares are duly authorized, and will be, when sold to the
Underwriters as provided herein, validly issued, fully paid and nonassessable
and conform to the description thereof contained in the Prospectus. No further
approval or authority of the shareholders or the Board of Directors of the
Company will be required for the issuance and sale of the Shares as contemplated
herein. The outstanding shares of capital stock or ownership interests of each
of its subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are solely owned by the Company free and clear of all
liens, encumbrances and equities and claims; and no options, warrants or other
rights to purchase,
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agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in such
subsidiary are outstanding.
(4) The Company has full legal right, power and authority to
enter into this Agreement and to consummate the transactions provided for
herein. This Agreement has been duly authorized, executed and delivered by the
Company and, assuming it is a binding agreement of the Underwriters, constitutes
a legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws), and none of the Company's execution or delivery of this Agreement,
its performance hereunder, its consummation of the transactions contemplated
herein, its application of the net proceeds of the offering in the manner set
forth under the caption "Use of Proceeds" or the conduct of its business as
described in the Prospectus, conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, causes or will cause (or permits
or will permit) the maturation or acceleration of any liability or obligation or
the termination of any right under, or result in the creation or imposition of
any lien, charge or encumbrance upon, any property or assets of the Company or
any of its subsidiaries pursuant to the terms of (i) the articles of
incorporation or bylaws of the Company or any of its subsidiaries; (ii) any
indenture, mortgage, deed of trust, voting trust agreement, shareholders'
agreement, note agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which it is bound or to which its
respective property is subject; or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company or any of its subsidiaries of any
government, arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries, or their activities or properties, which
would materially and adversely affect the business or properties of the Company
and its subsidiaries, taken as a whole.
(5) The Common Stock is approved for quotation on The Nasdaq
National Market and, prior to the Closing Date, (i) the Common Stock shall be
listed and duly admitted to trading on The Nasdaq National Market and (ii) the
Shares will be authorized for inclusion in The Nasdaq National Market.
(6) The financial statements of the Company and its subsidiaries
and the related notes and schedules thereto included in the Registration
Statement and the Prospectus fairly present the financial position, results of
operations, shareholders' equity and cash flows of the Company and its
subsidiaries at the dates and for the periods specified therein. Such financial
statements and the related notes and schedules thereto have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein) and all
adjustments necessary for a fair presentation of results for such periods have
been made; provided, however, that the unaudited financial statements are
subject to normal year-end audit adjustments (which are not expected to be
material) and do not contain all footnotes required under generally accepted
accounting principles. The summary and selected financial and statistical data
included
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in the Registration Statement and the Prospectus present fairly the information
shown therein and such data have been prepared on a basis consistent with the
financial statements contained therein and in the books and records of the
Company.
(7) Deloitte & Touche LLP, who have certified the financial
statements and schedule as of June 30, 1999 and 2000, and for the years then
ended, filed with the Commission as part of the Registration Statement, have
represented to the Company that they are independent public accountants as
required by the Securities Act and the rules and regulations promulgated
thereunder.
(8) Each of the Company and its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(9) Subject to applicable law, none of the Company's
subsidiaries is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on the subsidiary's
capital stock, from repaying to the Company any loans or advances to the
subsidiary from the Company or from transferring any of such subsidiary's
property or assets to the Company.
(10) The Company and its subsidiaries have filed all necessary
federal, state and local income, franchise and other material tax returns and
has paid all taxes shown as due thereunder, and the Company and its subsidiaries
have no tax deficiency that has been or, to their knowledge, that might be
assessed against the Company and its subsidiaries that, if so assessed, would
materially and adversely affect the business or properties of the Company and
its subsidiaries, taken as a whole. All tax liabilities accrued through the date
hereof have been adequately provided for on the books of the Company and its
subsidiaries.
(11) The Company and its subsidiaries maintain insurance
underwritten by insurers of recognized financial responsibility of the types and
in amounts and with such deductibles as customary for companies in the same or
similar business, all of which insurance is in full force and effect.
(12) Except as disclosed in the Prospectus, there is no action,
suit, claim, proceeding or investigation pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries before or by any
court, regulatory body or administrative agency or any other governmental agency
or body, domestic or foreign, that (i) questions the validity of the capital
stock of the Company or this Agreement or of any action taken or to be taken by
the Company pursuant to or in connection with this Agreement; (ii) is required
to be disclosed in the Registration Statement, which is not so disclosed (and
such proceedings, if any, as are summarized in the Registration Statement are
accurately summarized
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in all material respects); or (iii) may have a material adverse affect upon the
business operations, financial conditions or income of the Company and its
subsidiaries, taken as a whole.
(13) All executed agreements or copies of executed agreements
filed or incorporated by reference as exhibits to the Registration Statement
have been duly and validly authorized, executed and delivered by the Company or
such subsidiary and constitute the legal, valid and binding agreements of the
Company or such subsidiary enforceable by and against it in accordance with
their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to enforcement of creditors' rights generally, and general equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws). The descriptions in the Registration Statement of
contracts and other documents are accurate and fairly present the information
required to be shown with respect thereto by the Securities Act and Rules, and
there are no contracts or other documents that are required by the Securities
Act or Rules to be described in the Registration Statement or filed as exhibits
to the Registration Statement that are not described or filed as required and
the exhibits that have been filed are complete and correct copies of the
documents of which they purport to be copies. Except for such rights as
described in the Registration Statement and the Prospectus, no party has any
right to require the Company to register any securities for sale under the
Securities Act.
(14) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as expressly
contemplated therein, neither the Company nor any of its subsidiaries has
incurred, other than in the ordinary course of its business, any material
liabilities or obligations, direct or contingent, purchased any of its
outstanding capital stock, paid or declared any dividends or other distributions
on its capital stock or entered into any material transactions, and there has
been no material change in capital stock or debt or any material adverse change
in the business, properties, assets, net worth, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course of
business.
(15) Neither the Company nor any of its subsidiaries is, or with
the giving of notice or lapse of time or both, will be, in violation of or in
default under, any term or provision of (i) its articles of incorporation or
bylaws; (ii) any indenture, mortgage, deed of trust, voting trust agreement,
shareholders' agreement, note agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property is
subject, or any indebtedness, the effect of which breach or default singly or in
the aggregate may have a material adverse effect on the business, management,
properties, assets, rights, operations, or condition (financial or otherwise) of
the Company and its subsidiaries, taken as a whole; or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company or such
subsidiary or of any arbitrator, court, regulatory body, administrative agency
or any other governmental agency or body, domestic or foreign, having
jurisdiction over the Company or such subsidiary or its activities or properties
and the effect of which violation or default singly or in the aggregate may have
a material adverse effect on the business, management, properties, assets,
rights, operations or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole.
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(16) The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby.
(17) No labor disturbance by the employees of the Company or any
of its subsidiaries or principal suppliers or customers exists or, to the
Company's knowledge, is imminent.
(18) Except as disclosed in the Prospectus, each of the Company
and its subsidiaries owns, is licensed or otherwise possesses all rights to use,
all patents, patent rights, inventions, know-how (including trade secrets and
other unpatented or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names, copyrights and
other intellectual property rights (collectively, the "Rights") necessary for
the conduct of its business as described in the Prospectus. Except as disclosed
in the Prospectus, to the Company's knowledge, no claims have been asserted
against the Company or any of its subsidiaries by any person with respect to the
use of any such Rights or challenging or questioning the validity or
effectiveness of any such Rights. The continued use of the Rights in connection
with the business and operations of the Company and its subsidiaries does not,
to the knowledge of the Company and its subsidiaries, infringe on the rights of
any person, which, if the subject of an unfavorable decision, ruling or filing,
would have a material adverse effect on the financial condition, business or
properties of the Company and its subsidiaries, taken as a whole.
(19) The Company and its subsidiaries are conducting their
businesses in compliance with all applicable laws, ordinances or governmental
rules or regulations of the jurisdictions in which they are conducting business,
except where the failure to be so in compliance would not materially and
adversely affect the business or properties of the Company and its subsidiaries,
taken as a whole. Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD"), the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or to qualify
or exempt the Shares for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.
(20) Neither the Company, nor, to the Company's knowledge, any
of its officers, directors or affiliates (within the meaning of the rules and
regulations promulgated under the Securities Act), has taken or may take,
directly or indirectly, any action designed to cause or result in, or that has
constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock of the
Company, to facilitate the sale or resale of the Shares or otherwise.
(21) Neither the Company nor any of its subsidiaries is, or
after giving effect to the issuance and sale of the Shares by the Company will
be, an "investment
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company" within the meaning of such term under the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
(22) There are no transfer taxes or similar fees or charges
under federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance and sale by the Company of the Shares.
(23) The Company and its subsidiaries have good and marketable
title to all properties and assets described in the Prospectus as owned by them,
free and clear of all liens, encumbrances, security interests, equities, claims
and defects, except such as are described in the Registration Statement and
Prospectus, or such as are not materially important in relation to the business
of the Company and its subsidiaries, taken as a whole. The Company has valid and
enforceable leases for the properties described in the Prospectus as leased by
it, free and clear of all liens, encumbrances, security interests, equities,
claims and defects, except such as are not material and do not interfere with
the use made by the Company and its subsidiaries thereof. The Company and its
subsidiaries own or lease all such properties as are necessary to their
operations as now conducted, as set forth in the Registration Statement and the
Prospectus and the properties and business of the Company and its subsidiaries
conform in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(24) Each of the Company and its subsidiaries holds all
franchises, licenses, permits, approvals, certificates and other authorizations
from federal, state and other governmental or regulatory authorities necessary
to the ownership, leasing and operation of its properties or required for the
present conduct of its business, and such franchises, licenses, permits,
approvals, certificates and other governmental authorizations are in full force
and effect and the Company and its subsidiaries are in compliance therewith in
all material respects, except where the failure so to obtain, maintain or comply
with would not have a materially adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
(25) The Company and its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (herein called "ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or any of its subsidiaries would have
any liability; the Company and its subsidiaries have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan"; or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "Pension Plan"
for which the Company and its subsidiaries would have liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
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(26) No relationship, direct or indirect, exists between or
among the Company or its subsidiaries, on the one hand, and the current or prior
directors, officers, shareholders, customers or suppliers of the Company or its
subsidiaries, on the other hand, which is required to be described in the
Prospectus that is not so described.
(27) Neither the Company nor any of its subsidiaries, nor to the
Company's knowledge any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its subsidiaries,
has used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provisions of
the Foreign Corrupt Practices Act of 1972; or made any bribe, rebate, payoff,
influence, payment, kickback or other unlawful payment.
(28) The business, operations and facilities of the Company and
each of its subsidiaries have been and are being conducted or operated in
compliance with all applicable laws, ordinances, rules, regulations, licenses,
permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, pollution, protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, release or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) or otherwise
relating to remediating real property in which the Company or any of its
subsidiaries has or has had any interest, whether owned or leased, of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States, any state or political subdivision thereof and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto, except for such failures to so comply as would not,
individually or in the aggregate, have a material adverse effect on the business
of the Company and its subsidiaries taken as a whole, and neither the Company
nor any of its subsidiaries has received any notice from a governmental
instrumentality or any third party alleging any violation thereof or liability
thereunder (including, without limitation, liability for costs of investigating
or remediating sites containing hazardous substances or damage to natural
resources).
(29) Neither the Company nor any of its subsidiaries, nor to the
Company's knowledge any officer or employee of the Company or any of its
subsidiaries, is a party to any contract or commitment that restricts in any
material respect the ability of the Company, any of its subsidiaries or such
individual to engage in the business of the Company or such subsidiary as
described in the Registration Statement and the Prospectus.
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Company shall sell the
Underwritten Stock to the Underwriters, and the Underwriters agree to purchase
from the Company the Underwritten
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Stock. The price at which such shares of Underwritten Stock shall be sold by the
Company and purchased by the Underwriters shall be $____ per share (the
"Purchase Price"). In making this Agreement, each Underwriter is contracting
severally and not jointly; except as provided in paragraphs (b) and (c) of this
Section 3, the agreement of each Underwriter is to purchase only the respective
number of shares of the Underwritten Stock specified in Schedule 2.
(b) If for any reason one of the Underwriters shall fail or refuse
(other than for a reason sufficient to justify the termination of this Agreement
under the provisions of Section 7 or 12 hereof) to purchase and pay for the
number of Shares agreed to be purchased by such Underwriter, the non-defaulting
Underwriters shall have the right within 24 hours after the receipt by you of
notice of such failure or refusal to so purchase to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter and upon the terms herein set forth,
all or any part of the Shares that such defaulting Underwriter agreed to
purchase. If a non-defaulting Underwriter fails so to make such arrangements
with respect to all such Shares and portion, the number of Shares that such
non-defaulting Underwriter is otherwise obligated to purchase under this
Agreement shall be automatically increased on a pro rata basis to absorb the
remaining Shares and portion that the defaulting Underwriter agreed to purchase;
provided, however, that such non-defaulting Underwriter shall not be obligated
to purchase the Shares and portion that such defaulting Underwriter agreed to
purchase if the aggregate number of such Shares exceeds 10% of the total number
of Shares that the Underwriters agreed to purchase under this Agreement. If the
total number of Shares that the defaulting Underwriter agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
referred to above, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such Shares and portion on the terms herein
set forth. In any such case, either you or the Company shall have the right to
postpone the Closing Date determined as provided in Section 5 hereof for not
more than seven business days after the date originally fixed as the Closing
Date pursuant to said Section 5 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If such non-defaulting Underwriter does not make arrangements
within the 24-hour periods stated above for the purchase of all the Shares that
such defaulting Underwriter agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company or on the part of the non-defaulting Underwriter. Nothing in this
paragraph (b), and no action taken hereunder, shall relieve a defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the Underwriters to purchase, severally and not
jointly, the Option Stock at the Purchase Price. Said option may be exercised
only to cover over-allotments in the sale of the Underwritten Stock by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of this agreement upon
written or electronic notice by the Underwriters to the Company setting forth
the aggregate number of shares of Option Stock as to which the Underwriters are
exercising the option. Delivery of the certificates for the shares of Option
Stock, and payment therefor shall be made as provided in Section 5 hereof. The
number of shares of the Option Stock to be purchased by each
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Underwriter shall be in such amounts as the Underwriters shall agree upon prior
to the exercise of the option set forth hereunder.
4. OFFERING BY THE UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of
the Shares to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the paragraph describing the
"OpenIPO" process on the front cover page, in the last paragraph on page three
under the caption "The Offering" and under the caption "Plan of Distribution" in
the Registration Statement, any Preliminary Prospectus and the Prospectus
relating to the Shares filed by the Company (insofar as such information relates
to the Underwriters or related persons) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus and the Prospectus, and you on behalf of
the Underwriters represent and warrant to the Company that the statements made
therein (insofar as they relate to the Underwriters or related persons) are
correct and do not omit any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) Delivery of certificates for the shares of the Underwritten
Stock and the Option Stock (if the option granted by Section 3(c) hereof shall
have been exercised not later than 7:00 A.M., San Francisco time, on the date
two business days preceding the Closing Date), and payment therefor, shall be
made at the office of Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxxx 00000, on the third business day after the date of this
Agreement, or at such time on such other day, not later than seven full business
days after such third business day, as shall be agreed upon in writing by the
Company and you. The date and hour of such delivery and payment are herein
called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 A.M., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Bass, Xxxxx & Xxxx PLC, 000
Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000, at 7:00 A.M., San
Francisco time, on the third business day after the exercise of such Option, or
at such time on such other day, not later than seven full business days after
such third business day, as shall be agreed upon in writing by the Company and
you.
(c) Payment for the Shares purchased from the Company shall be made
to the Company or its order by wire transfer or one or more certified or
official bank check or checks in same day funds. Such payment shall be made upon
delivery of certificates for the Shares to you against receipt therefor signed
by you. Certificates for the Shares to be delivered to you shall be registered
in the name or names and shall be in such denominations as you may request at
least one business day before the Closing Date, in the case of Underwritten
Stock, and
12
at least one business day prior to the purchase thereof, in the case of Option
Stock. Such certificates will be made available to the Underwriters for
inspection, checking and packaging on the business day preceding the Closing
Date or, in the case of Option Stock, by 12:00 P.M., San Francisco time, on the
business day preceding the date of purchase.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees as
follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A;
and (ii) not file with the Commission any amendment to the Registration
Statement or supplement to the Prospectus (A) of which the Underwriters shall
not previously have been advised and furnished with a copy a reasonable period
of time prior to the proposed filing and as to which filing the Underwriters
shall not have given their consent or (B) of which is not in compliance with the
Securities Act or the rules and regulations of the Commission thereunder.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Underwriters (i) of any request made by the
Commission for amendment of the Registration Statement, for supplement to the
Prospectus or for additional information; (ii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement, or
the institution or threat of any action, investigation or proceeding for that
purpose; or (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any jurisdiction,
or the receipt by it of notice of the initiation or threatening of any
proceeding for that purpose. The Company will use its best efforts to prevent
the issuance of any such order and, if issued, to obtain the lifting or
withdrawal thereof as soon as possible.
(c) The Company will (i) on or before the Closing Date, deliver to
the Underwriters a signed copy of the Registration Statement as originally filed
and of each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any to the Registration Statement (together with,
in each case, all exhibits thereto unless previously delivered to the
Underwriter); (ii) as promptly as possible deliver to the Underwriters, at such
office as the Underwriters may designate, as many copies of the Prospectus as
the Underwriters may reasonably request; and (iii) thereafter from time to time
during the period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event relating
to or affecting the Company, or of which the Company shall be advised in writing
by the Underwriters, shall occur as a result of which it is necessary, in the
opinion of counsel for the Company or of counsel for the Underwriters, to
supplement or amend the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser of
13
the Shares, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the Prospectus as
so supplemented or amended will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the initial
public offering of the Shares by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of the offering thereof by reason
of changes in general market conditions or otherwise, you will advise the
Company in writing of the proposed variation, and, if in the opinion either of
counsel for the Company or of counsel for the Underwriters such proposed
variation requires that the Prospectus be supplemented or amended, the Company
will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Shares may be
sold by the Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Shares in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company
will submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Shares for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or a dealer,
in keeping such qualifications in good standing under said securities or blue
sky laws; provided, however, that the Company shall not be required to qualify
as a foreign corporation or file any general consent to service of process in
any jurisdiction in which it is not so qualified. The Company will from time to
time prepare and file such statements, reports and other documents as are or may
be required to continue such qualifications in effect for so long a period as
you may reasonably request for distribution of the Shares.
(g) The Company agrees to pay the costs and expenses relating to the
following matters: (A) the preparation, printing or reproduction and filing with
the Commission of the Registration Statement (including financial statements and
exhibits thereto), each Preliminary Prospectus, the Prospectus, and each
amendment or supplement to any of them; (B) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and all amendments or supplements to any of them, as
may, in each case, be reasonably requested for use in connection with the
offering and sale of the Shares; (C) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp or
transfer taxes in connection with the original issuance and sale of the Shares;
(D) the printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Shares; (E) the registration of
the Shares under the Exchange Act and the listing of the Shares on the Nasdaq
National Market; (F) any registration or qualification of the Shares for offer
and sale under the securities or blue sky laws of the several
14
states (including filing fees and the reasonable fees and expenses of counsel
for the Underwriters relating to such registration and qualification); (G) any
filings required to be made with the National Association of Securities Dealers,
Inc. (including filing fees and the reasonable fees and expenses of counsel for
the Underwriters relating to such filings); (H) the transportation and other
expenses incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; (I) the fees and expenses
of the Company's accountants and the fees and expenses of counsel (including
local and special counsel) for the Company; and (J) all other costs and expenses
incident to the performance by the Company of their obligations hereunder.
(h) As soon as practicable, but in any event not later than 45 days
after the end of the first fiscal quarter first occurring after the first
anniversary of the Effective Date, the Company will make generally available to
its security holders, in the manner specified in Rule 158(b) of the rules and
regulations promulgated under the Securities Act, an earnings statement that
will be in the detail required by, and will otherwise comply with, the
provisions of Section 11(a) of the Securities Act and Rule 158(a) of the rules
and regulations promulgated thereunder.
(i) During a period of three years after the date hereof, the
Company will furnish or make available to you, and to each Underwriter who may
so request in writing, copies of all periodic and special reports furnished to
shareholders of the Company and of all information, documents and reports filed
with the Commission.
(j) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.
(k) The Company will not, directly or indirectly, without the prior
written consent of X.X. Xxxxxxxxx + Co, LLC on behalf of the Underwriters,
issue, offer, sell, grant any option to purchase or otherwise dispose (or
announce any issuance, offer, sale, grant of any option to purchase or other
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock for a period of 180
days following the commencement of the public offering of the Shares by the
Underwriters, except pursuant to this Agreement and except for issuances
pursuant to the exercise of stock options outstanding on or granted subsequent
to the date hereof, pursuant to a stock option or other employee benefit plan in
existence on the date hereof and except as contemplated by the Prospectus.
(l) The Company will cause the Shares to be duly included for
quotation on the Nasdaq National Market prior to the Closing Date.
(m) The Company will not take, directly or indirectly, and will use
its best efforts to cause its officers, directors or affiliates not to take,
directly or indirectly, any action designed to, or that might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company.
15
(n) The Company will apply the net proceeds of the offering received
by it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(o) The Company will timely file all such reports, forms or other
documents as may be required from time to time, under the Securities Act, the
rules and regulations promulgated thereunder, the Exchange Act and the rules and
regulations promulgated thereunder, and all such reports, forms and documents
filed will comply as to form and substance with the applicable requirements
under the Securities Act, the rules and regulations promulgated thereunder, the
Exchange Act and the rules and regulations promulgated thereunder.
(p) The Company is familiar with the Investment Company Act of 1940,
as amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a "company" controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(q) The Company either has caused to be delivered to you or will
cause to be delivered to you prior to the effective date of the Registration
Statement a letter (the "Lock-Up Agreement") from (i) each of the Company's
directors, officers and holders of 5% or more of the outstanding capital stock
of the Company stating that such person agrees that he or she will not, without
the prior written consent of X.X. Xxxxxxxxx + Co, LLC directly or indirectly,
sell, offer, contract or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Exchange Act or otherwise dispose
of (or enter into any transaction that is designed to, or could be expected to,
result in the disposition by any person of) any shares of Common Stock, options
or warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (within the meaning of Rule
13d-3 under the Exchange Act) by him or her, or publicly announce his or her
intention to do any of the foregoing, prior to the date of the Prospectus for a
period of 180 days after the first date any Underwritten Stock is released by
the Underwriters for sale to the public and (ii) certain of the Company's other
shareholders containing identical restrictions to the Lock-Up Agreements
referred to in (i) above.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters under this Agreement are subject to the performance by the
Company on and as of the Closing Date or any later date on which Option Stock is
to be purchased, as the case may be, of its covenants and agreements hereunder,
and the following additional conditions:
(a) The Registration Statement shall have become effective, and no
stop order suspending the effectiveness of the Registration Statement shall have
been issued, and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company or the Underwriter, shall be
contemplated by the Commission.
(b) The Underwriters shall be satisfied that (i) as of the Effective
Date, the statements made in the Registration Statement and the Prospectus were
true and correct and neither the Registration Statement nor the Prospectus
omitted to state a fact required to be stated
16
therein or is necessary to make the statements therein not misleading; (ii)
since the Effective Date, no event has occurred that should have been set forth
in a supplement or amendment to the Prospectus that has not been set forth in an
effective supplement or amendment; (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in the business, properties, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business, and
since such dates, except in the ordinary course of business, neither the Company
nor any of its subsidiaries has entered into any material transaction not
referred to in the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein; (iv) neither the Company
nor any of its subsidiaries has any material contingent obligations that are not
disclosed in the Registration Statement and the Prospectus; (v) there are no
pending or, to the Company's knowledge, threatened legal proceedings to which
the Company or any of its subsidiaries is a party or of which property of the
Company or any of its subsidiaries is subject that are material and that are not
disclosed in the Registration Statement and the Prospectus; (vi) there are not
any franchises, contracts, leases or other documents that are required to be
filed as exhibits to the Registration Statement that have not been filed as
required; and (vii) the representations and warranties of the Company herein are
true and correct in all material respects as of the Closing Date or any later
date on which Option Stock is to be purchased, as the case may be.
(c) On or prior to the Closing Date, the legality and sufficiency of
the sale of the Shares hereunder and the validity and form of the certificates
representing the Shares, all corporate proceedings and other legal matters
incident to the foregoing, and the form of the Registration Statement and of the
Prospectus (except as to the financial statements contained therein), shall have
been approved at or prior to the Closing Date by Xxxxxxxx & Xxxxxxxx LLP,
counsel for the Underwriters. The Underwriters shall have received from counsel
to the Underwriters such opinion or opinions with respect to the issuance and
sale of the Shares, the Registration Statement and the Prospectus and such other
related matters as the Underwriters reasonably may request and such counsel
shall have received such documents and other information as they request to
enable them to pass upon such matters.
(d) On the Closing Date, and if Option Stock is purchased at any
date after the Closing Date, on such later date, the Underwriters shall have
received an opinion addressed to the Underwriters, dated the Closing Date or, if
related to the later sale of Option Stock, such later date, of Bass, Xxxxx &
Xxxx PLC, counsel to the Company, to the effect set forth in Exhibit A hereto.
In rendering any such opinion, such counsel may rely, as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company and public officials. References to the Registration Statement and
the Prospectus in this paragraph (d) shall include any amendment or supplement
thereto at the date of such opinion.
(e) You shall have received from Deloitte & Touche LLP a letter
addressed to the Underwriters and dated the Closing Date and any later date on
which Option Stock is purchased, confirming that Deloitte & Touche LLP are
independent public accountants with respect to the Company within the meaning of
the Securities Act and the applicable
17
published rules and regulations thereunder and based upon the procedures
described in their letter delivered to the Underwriters concurrently with the
execution of this Agreement (the "Original Letter"), but carried out to a date
not more than three business days prior to the Closing Date or such later date
on which Option Stock is purchased (i) confirming, to the extent true, that the
statements and conclusions set forth in the Original Letter are accurate as of
the Closing Date or such later date, as the case may be; and (ii) setting forth
any revisions and additions to the statements and conclusions set forth in the
Original Letter that are necessary to reflect any changes in the facts described
in the Original Letter since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or information. The
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the Company or
any of its subsidiaries, which in your sole judgment, makes it impractical or
inadvisable to proceed with the public offering of the Shares or the purchase of
the Option Stock as contemplated by the Prospectus.
(f) You shall have received from Deloitte & Touche LLP a letter
stating that their review of the Company's internal accounting controls, to the
extent they deemed necessary in establishing the scope of their examination of
the Company's financial statements as of June 30, 1999 and 2000, did not
disclose any weakness in internal controls that they considered to be material
weaknesses.
(g) On the Closing Date, and on any later date on which Option Stock
is purchased, you shall have received a certificate, dated the Closing Date or
such later date, as the case may be, signed by the Chief Executive Officer and
Chief Financial Officer of the Company stating that the respective signers of
said certificate have carefully examined the Registration Statement in the form
in which it originally became effective and the Prospectus contained therein and
any amendments or supplements thereto and this Agreement, and that the
statements included in paragraph (b) of this Section 7 are true and correct.
(h) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(i) You shall have been furnished evidence in usual written or
electronic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(j) Prior to the Closing Date, the Shares shall have been duly
authorized for inclusion on the Nasdaq National Market upon official notice of
issuance.
(k) On or prior to the Closing Date, the Underwriters shall have
received from all directors and executive officers agreements, reasonably
satisfactory to X.X. Xxxxxxxxx + Co, LLC, stating that such person or entity
will not, without the prior written consent of X.X. Xxxxxxxxx + Co, LLC, offer,
sell, contract to sell, pledge, or otherwise dispose of, (or enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition
due to cash settlement or otherwise) by such person or entity or any affiliate
of such person or entity or any person in privity with such person or entity or
any affiliate of such person or entity) directly or
18
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act, any other shares
of Common Stock or any securities convertible into, or exercisable, or
exchangeable for, shares of Common Stock; or publicly announce an intention to
effect any such transaction, for a period of 180 days after the Closing Date.
In case any of the conditions specified in this Section 7 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in paragraph (g) of Section 6
hereof; and (ii) if this Agreement is terminated by you because of any refusal
or failure on the part of the Company to perform any agreement herein, to
fulfill any of the conditions herein, or to comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the transactions contemplated hereby.
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
(a) The obligations of the Company to deliver the Shares shall be
subject to the conditions that (i) the Registration Statement shall have become
effective and (ii) no stop order suspending the effectiveness thereof shall be
in effect and no proceedings therefor shall be pending or threatened by the
Commission.
(b) In case either of the conditions specified in paragraph (a) of
this Section 8 shall not be fulfilled, this Agreement may be terminated by the
Company by giving notice to you. Any such termination shall be without liability
of the Company to the Underwriters and without liability of the Underwriters to
the Company; provided, however, that in the event of any such termination the
Company agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs (g)
and (h) of Section 6 hereof.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (d) of this Section 9,
the Company agrees to indemnify and hold harmless each Underwriter (and any
person participating in the distribution who is deemed to be an underwriter (as
defined in Section 2(11) of the Securities Act) and each person (including each
member or officer thereof), if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages or liabilities, joint or
several (and actions in respect thereof), to which such indemnified parties or
any of them may become subject, under the Securities Act, the Exchange Act or
other federal or state statutory law or
19
regulation, at common law or otherwise, and the Company agrees to reimburse each
such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities, or in connection with any investigation or inquiry of, or other
proceeding that may be brought against, the respective indemnified parties, in
each case arising out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
any material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under which they were
made, not misleading, (iii) any untrue statement or alleged untrue statement of
any material fact contained in any audio or visual materials provided by the
Company or based upon written information furnished by or on behalf of the
Company including, without limitation, slides, videos, films or tape recordings,
used in connection with the marketing of the Underwritten Stock, including
without limitation, untrue or alleged untrue statements communicated to
securities analysts employed by the Underwriters; provided, however, that (i)
the indemnity agreement of the Company contained in this paragraph (a) shall not
apply to any such loss, claim, damage, liability or action if such statement or
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing to the Company by or on
behalf of any Underwriter expressly for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and (ii) that the indemnity agreement contained in this
paragraph (a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or such persons) if the person asserting any such
loss, claim, damage, liability or action purchased Shares that are the subject
thereof to the extent that any such loss, claim, damage, liability or action (A)
results from the fact that such Underwriter failed to send or give a copy of the
Prospectus (as amended or supplemented) to such person at or prior to the
confirmation of the sale of such Shares to such person in any case where such
delivery is required by the Securities Act and (B) arises out of or is based
upon an untrue statement or omission of a material fact contained in such
Preliminary Prospectus that was corrected in the Prospectus (as amended and
supplemented), unless such failure resulted from non-compliance by the Company
with paragraph (c) of Section 6 hereof. The indemnity agreement of the Company
contained in this paragraph (a) and the representations and warranties of the
Company contained in Section 2 hereof shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery and payment for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who has signed the
Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and the other Underwriters against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or
20
any of them may become subject, under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise
and to reimburse each of them for any legal or other expenses (including, except
as otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding that may be brought
against, the respective indemnified parties, in each case arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading, in each case to the extent, but only to the extent, that such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing by or
on behalf of such indemnifying Underwriter to the Company expressly for use in
the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and will reimburse, as incurred, all legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. The indemnity agreement of each Underwriter
contained in this paragraph (b) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery and payment for the Shares.
(c) Each party indemnified under the provisions of paragraph (a) or
(b) of this Section 9 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against it, in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, such indemnified party will promptly notify any party or parties
from whom indemnification may be sought hereunder of the commencement thereof in
writing. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give such notice if the party to whom such
notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which such notice would have related and was prejudiced by the
failure to give the notice, but the omission so to notify such indemnifying
party or parties of any such service or notification shall not relieve such
indemnifying party or parties from any liability that it or they may have to the
indemnified party for contribution or otherwise than on account of such
indemnity agreement. Any indemnifying party or parties against which a claim is
to be made will be entitled, at its own expense, to participate in the defense
of such action, suit, investigation or inquiry of, an indemnified party. Any
indemnifying party shall be entitled, if it so elects within a reasonable time
after receipt of notice from the indemnified party or parties of an action,
suit, investigation or inquiry to which indemnity may be sought, to assume the
entire defense thereof (alone or in conjunction with any other indemnifying
party or parties), at its own expense, in which case such defense shall be
conducted by counsel reasonably satisfactory to the
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indemnified party or parties; provided, however, that (i) if the indemnified
party or parties has reasonably concluded that there may be a conflict between
the positions of the indemnifying party or parties and of the indemnified party
or parties in conducting the defense of such action, suit, investigation,
inquiry or proceeding or that there may be legal defenses available to such
indemnified party or parties different from or in addition to those available to
the indemnifying party or parties, then counsel for the indemnified party or
parties shall be entitled to conduct such defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of the
indemnified party or parties; and (ii) in any event, the indemnified party or
parties shall be entitled to have counsel chosen by such indemnified party or
parties participate in, but not conduct, the defense. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 9 for any legal or other expenses (other than the reasonable
costs of investigation) subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party has
employed such counsel in connection with the assumption of different or
additional legal defenses in accordance with the proviso to the immediately
preceding sentence; or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. If no such notice to assume the defense of such action has
been given within a reasonable time of the indemnified party's or parties'
notice to such indemnifying party or parties, the indemnifying party or parties
shall be responsible for any legal or other expenses incurred by the indemnified
party or parties in connection with the defense of the action, suit,
investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages, expenses
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
referred to in paragraphs (a) and (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties from the offering of the Shares; or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified, on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Shares (after deducting the
underwriting discount but before deducting expenses) and the total underwriting
discount received by the Underwriters, in each case as set forth in the table on
the cover page of the Prospectus, bear to the aggregate public offering price of
the Shares. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.
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The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable consideration referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph (d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discount applicable to the Shares purchased by the Underwriter hereunder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect to which a claim for contribution may be made against another
party or parties under this paragraph (d), it will promptly notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any other obligation it may have hereunder or otherwise
(except as specifically provided in paragraph (c) of this Section 9). The
contribution agreement set forth above shall be in addition to any liabilities
that any indemnifying party may have at common law or otherwise.
(e) No indemnifying party will, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any person who controls such Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act is a party
to such claim, action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of such indemnified party and each
such controlling person from all liability arising out of such claim, action,
suit or proceeding.
10. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 9 of this Agreement, the Company agrees to reimburse
on a quarterly basis the Underwriters for all reasonable legal and other
expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 9 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 10 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent that any such payment
is ultimately held to be improper, the Underwriters shall promptly refund it;
and (ii) the Underwriters shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
11. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf
23
of, the Company and its officers and the Underwriters, respectively, set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters, and
will survive delivery of and payment for the Shares. Any successors to the
Underwriters shall be entitled to the indemnity, contribution and reimbursement
agreements contained in this Agreement.
12. TERMINATION.
(a) This Agreement (except for the provisions of Section 9 hereof)
may be terminated by you by notice to the Company at any time prior to the
Closing Date if: (i) the Company shall have sustained a loss by strike, fire,
flood, accident or other calamity of such a character as to interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss was insured; (ii) trading in the Common Stock shall
have been suspended or trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or limitations on such trading shall have been imposed or
limitations on prices shall have been established on any such exchange or market
system; (iii) the engagement in hostilities or an escalation of major
hostilities by the United States or the declaration of war or a national
emergency by the United States on or after the date hereof shall have occurred;
(iv) any outbreak of hostilities or other national or international calamity or
crisis or material adverse change in economic or political conditions shall have
occurred if the effect of such outbreak, calamity, crisis or change in economic
or political conditions in the financial markets of the United States would, in
your reasonable judgment, make the offering or delivery of the Shares
impracticable; (v) the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of, or commencement of
any proceeding or investigation by, any court, legislative body, agency or other
governmental authority shall have occurred that in the Underwriter's reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company; (vi) a banking moratorium shall have
been declared by New York or United States authorities; or (vii) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs shall have occurred that in your reasonable judgment
has a material adverse effect on the securities markets in the United States.
(b) If this Agreement is terminated pursuant to this Section 12,
there shall be no liability of the Company to the Underwriters and no liability
of the Underwriters to the Company; provided, however, that in the event of any
such termination, the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (g) and (h) of Section 6. Notwithstanding any
termination of this agreement, the provisions of Section 9 hereof shall survive
and remain in full force and effect.
13. NOTICES. All communications hereunder shall be in writing and if
sent to the Underwriters shall be mailed or delivered or emailed and confirmed
by letter or telecopied and confirmed by letter to X.X. Xxxxxxxxx + Co, LLC at
000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx
Xxxxxxxx, with copies to Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxxx X. Xxxxxxxx, Esq., or, if
24
sent to the Company, shall be mailed or delivered or emailed and confirmed to
the Company at 000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, XX 00000, Attn: Xxxx
X. Xxxxxx, with copies to Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxx, Xxxxxxxxx 00000, Attn: Xxxxxx X. Xxxxx, Esq.
14. SUCCESSORS. This agreement shall be to the benefit of and be
binding upon the Company and the Underwriters and, with respect to the
provisions of Section 9 hereof, the several parties (in addition to the Company
and the Underwriters) indemnified under the provisions of said Section 9, and
their respective personal representatives, successors and assigns. Nothing in
this agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this agreement,
or any provisions herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the Shares
from the Underwriters.
15. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
16. GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the laws of the State of California. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in the federal courts of the United States
of America located in the City and County of San Francisco or the courts of the
State of California in each case located in the City and County of San Francisco
(collectively, the "Specified Courts"), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court, as to which such jurisdiction is
non-exclusive) of such courts in any such suit, action or proceeding. Service of
any process, summons, notice or document by mail to such party's address set
forth above shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum.
If the foregoing correctly sets forth our understanding, please
indicate the Underwriters' acceptance thereof in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
BEACON EDUCATION MANAGEMENT, INC.
By:
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Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
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Accepted as of the date first above written:
X.X. XXXXXXXXX + CO, LLC
XXXXXXXXX & COMPANY, INC.
THINKEQUITY PARTNERS
as representatives of the
several Underwriters
By: X.X. Xxxxxxxxx + Co, LLC
By:
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Name:
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Title:
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