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EXHIBIT 10.5
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of May
3, 2001 between Beacon Education Management, Inc., a Delaware corporation (the
"Company"), and the investors named on SCHEDULE A hereto (each, an "Investor").
RECITAL
WHEREAS, the Investors wish to purchase and the Company desires to
issue and sell to the Investors, in accordance with the terms and provisions
hereof, 517,242 shares of the common stock, $0.01 par value per share, of the
Company (the "Common Stock") at a purchase price of $5.80 per share.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
SECTION 1.1 PURCHASE AND SALE OF COMMON STOCK. Upon the terms and
subject to the conditions of and in reliance on the representations and
warranties contained in this Agreement, at the Closing, as hereinafter defined,
the Company will issue and sell to the Investors, and the Investors, severally
and not jointly, will purchase from the Company the number of shares of Common
Stock set forth opposite each Investor's name on SCHEDULE A hereto at a purchase
price of $5.80 per share.
SECTION 1.2 THE CLOSING. Upon the terms and subject to
satisfaction of the conditions contained in this Agreement, the closing (the
"Closing") under this Agreement shall take place at the offices of Bass, Xxxxx &
Xxxx PLC, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000, at 10:00
a.m. on May 3, 2001 (the "Closing Date") or at such other time and place as are
mutually agreeable to the Investors and the Company. At the Closing, the Company
shall deliver to each Investor a certificate representing the shares of Common
Stock that such Investor is purchasing against payment of the purchase price
therefor by check, wire transfer or such other form of payment as shall mutually
be agreed upon by such Investor and the Company.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to the specific exceptions set forth in the Schedules
referenced in this ARTICLE 2, the Company hereby represents and warrants to each
Investor that as of the date of this Agreement:
SECTION 2.1 CORPORATE EXISTENCE. The Company and each of its
subsidiaries is a company duly organized and validly existing under the laws of
the state of its incorporation or organization and has the corporate power and
authority to own, lease and operate its properties and assets and to conduct its
business as now being conducted and as proposed to be conducted. Except as set
forth on SCHEDULE 2.1, the Company is duly qualified and in good standing as a
foreign company in each jurisdiction in which the property owned, leased or
operated by it or the nature or conduct of its business makes such qualification
necessary and where the failure to so qualify would have a Material Adverse
Effect. For purposes of this Agreement, "Material Adverse Effect" means a
material adverse effect on the business, operations, assets, liabilities or
condition (financial or otherwise) of the Company and its Subsidiaries (as
defined below), taken as a whole and a "Material Adverse Change" shall mean any
event or condition which has had or is reasonably likely to have a Material
Adverse Effect, including, without limitation, the loss of key management
personnel. The Company has not received any written notice or assertion within
the last three years from any governmental official of any jurisdiction to the
effect that the Company is required to be qualified or otherwise authorized to
do business therein, other than jurisdictions in which the Company has qualified
or obtained such authorization.
SECTION 2.2 CAPITALIZATION. The capitalization of the Company
consists of 10,000,000 authorized shares of Common Stock and 1,000,000
authorized shares of preferred stock. Immediately prior to the execution of this
Agreement, there are no shares of preferred stock outstanding or reserved for
issuance, there are 4,215,257 shares of Common Stock outstanding and there are
441,950 shares of Common Stock reserved for issuance pursuant to outstanding
options (all of which are listed on SCHEDULE 2.2). All outstanding shares of
capital stock ("Shares") of the Company are fully paid and nonassessable. The
Shares to be issued pursuant to this Agreement have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement against
payment therefor, will be validly issued, fully paid and nonassessable and free
of preemptive rights (except for the rights set forth in the Shareholders Rights
Agreement, dated as of February 17, 2000 (the "Shareholders Rights Agreement")).
No Shares have been issued in violation of or are subject to any preemptive or
similar rights granted to former or existing shareholders of the Company
pursuant to law, the Company's Certificate of Incorporation or otherwise. Other
than pursuant to this Agreement or except as disclosed in SCHEDULE 2.2, there is
no subscription, option, warrant, call, right, agreement or commitment granted
or issued by or binding upon the Company or, to the knowledge of the Company,
any shareholder of the Company relating
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to the issuance, sale, delivery, or transfer by the Company of the Company's
Shares or any other securities convertible into, exchangeable for, or evidencing
the right to subscribe for Shares or any other equity interest in the Company or
relating to the payment of amounts measured by changes in the value or price of
capital stock of the Company; and the Company has no obligation of any kind to
issue any additional securities other than pursuant to this Agreement. Other
than pursuant to this Agreement, or except as disclosed in SCHEDULE 2.2, there
are no outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any of its Shares or other securities. The list of shareholders attached
hereto as SCHEDULE 2.2 sets forth a complete and accurate list of the
shareholders of the Company as of the date hereof indicating the number of
Shares held by shareholder, including all options to purchase Shares, and the
percentage of outstanding Shares so held.
SECTION 2.3 SUBSIDIARIES; INVESTMENTS. SCHEDULE 2.3 contains a
full and complete list of all entities (collectively, the "Subsidiaries") in
which the Company owns, directly or indirectly, any outstanding capital stock or
other ownership interest (or securities, rights or other interests convertible
into capital stock or other ownership interest), and also discloses, as to each
Subsidiary, the business activities thereof, the number of authorized and
outstanding shares of capital stock or other ownership interest thereof, the
percentage of outstanding shares or interests thereof owned beneficially and of
record by the Company, and the jurisdiction in which each Subsidiary is
incorporated or organized.
SECTION 2.4 AUTHORITY. The Company has the legal power and legal
authority to enter into this Agreement and carry out its terms. This Agreement
has been duly executed and delivered on behalf of the Company. The Company has
taken all action necessary to authorize the execution, delivery and performance
by it of this Agreement. This Agreement has been duly and validly executed and
delivered on behalf of the Company and is binding upon and enforceable against
the Company in accordance with its terms, except as enforceability may be
limited or affected by applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the rights of
creditors and except as enforceability may be limited by rules of law governing
specific performance, injunctive relief or other equitable remedies.
SECTION 2.5 NO ADVERSE CONSEQUENCES. Except as disclosed on
SCHEDULE 2.5, neither the execution and delivery of this Agreement by the
Company nor the consummation of the transactions contemplated by this Agreement
will (a) result in the creation or imposition of any lien, charge, encumbrance
or restriction on the Shares being purchased pursuant to this Agreement, any
other Shares, or on any of the Company's assets or properties, (b) violate any
provision of the Company's Certificate of Incorporation or Bylaws, (c) violate
any statute, judgment, order, injunction, decree, rule, regulation or ruling of
any governmental authority applicable to the Company, or (d) either alone or
with the giving of notice or the passage of time or both, conflict with,
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constitute grounds for termination of, accelerate the performance required by,
accelerate the maturity of any indebtedness or obligation under, result in the
breach of the terms, conditions or provisions of or constitute a default under,
any mortgage, deed of trust, indenture, note, bond, lease, license, contract,
permit or other agreement, instrument or obligation to which the Company is a
party or by which it is bound, except where such action would not result in a
Material Adverse Effect.
SECTION 2.6 BROKERS AND FINDERS. Except as disclosed in SCHEDULE
2.6, the Company has not employed any broker, finder or agent or dealt with
anyone purporting to act in such capacity or agreed to pay any brokerage fee,
finder's fee or commission with respect to the transactions contemplated by this
Agreement.
SECTION 2.7 LITIGATION. Except as disclosed in SCHEDULE 2.7,
there is no claim, litigation, proceeding or formal investigation of any kind
(or, to the knowledge of the Company, any other investigation of any kind)
pending by or against the Company or any Subsidiary, or any of the assets or
properties of the Company or any Subsidiary, and, to the knowledge of the
Company, no claim, litigation, proceeding or investigation has been threatened
and there is no basis for any such claim, litigation, proceeding or
investigation. There are no actions, proceedings, suits, investigations, or
inquiries pending, or to the knowledge of the Company, threatened, that question
the validity of this Agreement or any actions taken or to be taken pursuant
hereto.
SECTION 2.8 COMPLIANCE WITH LAWS. Except as disclosed on SCHEDULE
2.8, the Company and its Subsidiaries have at all relevant times conducted their
businesses in compliance with the provisions of their charter documents and all
applicable laws and regulations except where such failure to comply would not
result in a Material Adverse Effect. Except as disclosed on SCHEDULE 2.8,
neither the Company nor any Subsidiary is in violation of any applicable laws or
regulations except where such failure to comply would not result in a Material
Adverse Effect. Except as disclosed in SCHEDULE 2.8, neither the Company nor any
Subsidiary is subject to any outstanding judgment, order, writ, injunction or
decree, and neither the Company nor any Subsidiary has been charged with, or, to
the knowledge of the Company, threatened with a charge of, a violation of any
provision of any applicable law or regulation.
SECTION 2.9 EMPLOYMENT MATTERS.
2.9.1. LABOR MATTERS. Neither the Company nor any Subsidiary
is a party or otherwise subject to any collective bargaining or other agreement
governing the wages, hours or terms of employment of its employees. The Company
and its Subsidiaries are and have been in compliance with all applicable laws
regarding employment and employment practices, terms and conditions of
employment, wages and hours and are not and have not been engaged in any unfair
labor practice except where
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such failure to comply would not result in a Material Adverse Effect. Neither
the Company nor any Subsidiary has experienced any primary work stoppage or
other organized work stoppage involving its employees in the past two years, and
to the knowledge of the Company, no work stoppage has been threatened against
the Company.
2.9.2. EMPLOYEE BENEFITS. SCHEDULE 2.9.2 lists all pension,
retirement, profit sharing, deferred compensation, bonus, commission, incentive
compensation (including cash, stock and option plans or arrangements), life
insurance, health and disability insurance, hospitalization and all other
employee benefit plans or arrangements (including, without limitation, any
contracts or agreements with trustees, insurance companies or others relating to
any such employee benefit plans or arrangements) established or maintained by
the Company or any Subsidiary. The employee pension benefit plans (within the
meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") established and maintained by the Company or any Subsidiary
that are subject to ERISA (the "ERISA Plans") are listed separately as ERISA
Plans on SCHEDULE 2.9.2. The ERISA Plans comply in all material respects with
the applicable requirements of ERISA. The Company and each Subsidiary, as
applicable, have received from the Internal Revenue Service a favorable
determination for each of the ERISA Plans and their related trusts that each of
the ERISA Plans is qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code") and the related trust is tax-exempt under
Section 501(a) of the Code. Except as disclosed on SCHEDULE 2.9.2, there has
been no event subsequent to that determination that has adversely affected the
tax qualified status of the ERISA Plans or the exemption of the related trusts
other than changes in the Code that are not effective as of the Closing Date. No
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412(a) of the Code exists, or has existed, with respect to any of the
ERISA Plans. The Company and any controlled group of companies of which it is a
member have no "potential withdrawal liability," as defined in Section 4201 of
ERISA. To the knowledge of the Company, none of the ERISA Plans, its related
trusts or any trustee, investment manager or administrator thereof has engaged
in a nonexempt "prohibited transaction," as such term is defined in Section 406
of ERISA and Section 4975 of the Code. There are not and have not been any
excess deferrals or excess contributions under any ERISA Plan. Each ERISA Plan
is and has been operated and administered in material conformity with the
requirements of all applicable laws and regulations, whether or not the ERISA
Plan documents have been amended to reflect such requirements.
2.9.3. EMPLOYMENT AGREEMENTS; OTHER AGREEMENTS. Except for
employment contracts with teachers and other school staff providing for
compensation (in each such instance) of less than Eighty Thousand Dollars
($80,000) entered into in the ordinary course of business of the Company or any
Subsidiary and except as disclosed on SCHEDULE 2.9.3, there are no material
employment, commission or compensation agreements between the Company or any
Subsidiary and any of their employees. Neither the Company nor any Subsidiary
has any agreements or understandings with its employees, shareholders or
affiliates, including without limitation any agreements or understandings
regarding compensation of any nature, severance payments or retirement
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benefits in excess of Eighty Thousand Dollars ($80,000) annually except as
reflected in the items listed in SCHEDULES 2.9.2 and 2.9.3.
SECTION 2.10 TITLE TO AND CONDITION OF REAL PROPERTY. Neither the
Company nor any Subsidiary owns any real property. SCHEDULE 2.10 contains a list
of all real property leased by the Company or any Subsidiary (the "Real
Property"), including the dates of and parties to all leases and any amendments
thereof. To the knowledge of the Company, all Real Property (including
improvements thereon) is in satisfactory condition and repair consistent with
its present use, and is available for immediate use in the conduct of the
Company's business. Neither the operations of the Company or any Subsidiary on
any Real Property, nor any improvements on the Real Property, violates in any
material respect any applicable building or zoning code or regulation of any
governmental authority having jurisdiction. The Real Property includes all such
property necessary to conduct the business of the Company or any Subsidiary, as
applicable.
SECTION 2.11 TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY.
Except as provided in SCHEDULE 2.11, the Company and each Subsidiary have good
and marketable title to all of the tangible personal property ("Tangible
Personal Property") reflected in the Company's consolidated financial statements
free and clear of all liens, mortgages, pledges, leases, restrictions and other
claims and encumbrances of any nature whatsoever. The Tangible Personal Property
is in good operating condition and repair (ordinary wear and tear excepted), is
performing satisfactorily, and is adequate for the conduct of the Company's
business, except where the failure of such Tangible Personal Property to be in
good operating condition (ordinary wear and tear excepted) would not result in a
Material Adverse Effect. All Tangible Personal Property and the state of
maintenance thereof are in compliance with all applicable laws and regulations
except where such failure to comply would not result in a Material Adverse
Effect. The Tangible Personal Property includes all such property necessary to
conduct the business of the Company or any Subsidiary, as applicable, as
currently conducted.
SECTION 2.12 INTELLECTUAL PROPERTY. The Company and each
Subsidiary own, or have a valid license to use, all patents, trademarks, service
marks, trade names, copyrights, trade secrets, technology, know-how and other
intellectual property (the "Intellectual Property") necessary to or used in the
conduct of their business as now conducted and as currently proposed to be
conducted. SCHEDULE 2.12 contains a complete and accurate list of all patents,
patent applications, trademarks and service marks and related applications,
trade names and copyrights owned by or licensed to the Company or any
Subsidiary, including a description of any agreements relating to the
acquisition by or license to the Company or any Subsidiary of such Intellectual
Property. SCHEDULE 2.12 also describes all licenses or other agreements under
which the Company or any Subsidiary has sold or granted a right to use any
Intellectual Property. All Intellectual Property owned by the Company or any
Subsidiary is owned by it free and clear of all liens, claims, encumbrances or
adverse claims of any third party. The conduct of the business of the Company
and its Subsidiaries does not conflict with or infringe
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upon any Intellectual Property rights of any other person and no claims of
conflict or infringement are pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary.
SECTION 2.13 CERTAIN CONTRACTS AND ARRANGEMENTS. SCHEDULE 2.13,
which is organized by type of agreement, contains a complete and accurate list
of each of the following types of agreements, including any amendments thereto,
to which the Company or any Subsidiary is a party or by which it is bound:
(a) any mortgage, note or other instrument or
agreement relating to the borrowing of money or the incurrence of
indebtedness in the principal amount of Fifty Thousand Dollars
($50,000) or more (provided that not more than Two Hundred Thousand
Dollars ($200,000) in the aggregate of such indebtedness is excluded
from disclosure on said Schedule pursuant to this exception) by the
Company or any Subsidiary or the guaranty by the Company or any
Subsidiary of indebtedness of such amount of any person or entity;
(b) contracts or agreements for the joint
performance of work or services, and all other joint venture
agreements;
(c) management contracts for the operation of
charter schools;
(d) limited service contracts with charter
schools; and
(e) any other contract, instrument, agreement or
obligation not described on any other Schedule (other than employment
contracts not required to be scheduled in SCHEDULE 2.9.3) to which the
Company or any Subsidiary is a party or by which it is bound, which is
material to the Company's business and which contains unfulfilled
obligations of the Company and is not terminable without payment of
premium or penalty upon 30 days' notice or less.
SECTION 2.14 STATUS OF CONTRACTS. Except as disclosed on SCHEDULE 2.14,
each of the contracts, agreements, commitments and instruments listed on
SCHEDULES 2.10, 2.11, 2.12 and 2.13 (collectively, the "Contracts") is valid,
binding and enforceable by the Company or the Subsidiary, as applicable, in
accordance with its terms and is in full force and effect. To the knowledge of
the Company and except as set forth on SCHEDULE 2.14, there is no existing
default or violation by the Company or any Subsidiary under any Contract and, to
the knowledge of the Company and except as set forth on SCHEDULE 2.14, no event
has occurred which (whether with or without notice, lapse of time or both) would
constitute a material default of the Company or any Subsidiary under any
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Contract. There is no pending or, to the knowledge of the Company, threatened
proceeding which would interfere with the quiet enjoyment of any leasehold of
which the Company or any Subsidiary is lessee or sublessee. All other parties to
the Contracts have consented or prior to the Closing will have consented (where
such consent is necessary) to the consummation of the transactions contemplated
by this Agreement without modification of the Company's rights or obligations
under any Contract. The Company is not aware of any default by any other party
to any Contract or of any event which (whether with or without notice, lapse of
time or both) would constitute a default by any other party with respect to
obligations of that party under any Contract, and, to the knowledge of the
Company and except as set forth on SCHEDULE 2.14, there are no facts that exist
indicating that any of the Contracts may be totally or partially terminated or
suspended by the other parties. Neither the Company nor any Subsidiary has
granted any waiver or forbearance with respect to any of the Contracts.
SECTION 2.15 INSURANCE. SCHEDULE 2.15 contains a complete and
accurate list of all policies of property, liability, worker's compensation and
other forms of insurance insuring the Company, any Subsidiary, their officers or
directors, their assets or their operations (the "Policies"). Except as set
forth on SCHEDULE 2.15, all the Policies, as each relates to the Company, are
valid, enforceable and in full force and effect, all premiums with respect to
the Policies covering all periods up to and including the date as of which this
representation is being made have been paid and no notice of cancellation or
termination has been received with respect to any Policy. To the knowledge of
the Company, the Policies are sufficient for compliance with all requirements of
law and of agreements to which the Company or any Subsidiary is a party and
provide insurance for the risks and in the amounts and types of coverage usually
obtained by persons using or holding similar properties in similar businesses
(including without limitation coverage for claims of alleged sexual or other
abuse of children). Except as disclosed on SCHEDULE 2.15 and except for covered
claims relating to employee health insurance, there have been no claims made for
insurance payment under any of the Policies involving amounts in excess of Ten
Thousand Dollars ($10,000) (provided that not more than Two Hundred Thousand
Dollars ($200,000) in aggregate claims is excluded from disclosure on said
Schedule pursuant to that exception). Neither the Company nor any Subsidiary has
been refused any insurance coverage and no insurance coverage has been canceled
during the three years preceding the date of this Agreement.
SECTION 2.16 PERMITS AND LICENSES. SCHEDULE 2.16 contains a
complete and accurate list of all material governmental licenses, permits,
franchises, certificates of occupancy, easements and authorizations
(collectively, "Permits") held by the Company or any Subsidiary. The Company and
each Subsidiary hold all Permits necessary for the lawful conduct of their
business pursuant to all applicable statutes, laws, ordinances, rules and
regulations of all governmental bodies, agencies and other authorities having
jurisdiction over them or any part of their operations, except where the failure
to hold such a Permit would not have a Material Adverse Effect. The Company and
each Subsidiary are in compliance with each of the terms of each of their
Permits in all material respects, and there are no claims of violation by the
Company or any Subsidiary
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of any of their Permits which could have a Material Adverse Effect. All
governmental entities and agencies that have issued any Permits to or with
respect to the Company or its business have consented or prior to the Closing
will have consented (where such consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification of
the Company's rights or obligations under any of such Permits.
SECTION 2.17 TAXES.
2.17.1. RETURNS. The Company and each Subsidiary have filed
on a timely basis all federal, state and other returns, reports, forms,
declarations and information returns required to be filed by them with respect
to Taxes (as defined below) which relate to the business, results of operations,
financial condition, properties or assets of the Company (collectively, the
"Returns") and have paid on a timely basis all Taxes shown to be due on the
Returns. No extensions of time have been requested for Returns which have not
been filed. Except as set forth on SCHEDULE 2.17, neither the Company nor any
Subsidiary has received any notice of audit with respect to any period for which
the applicable statutory period of limitation has not expired and there are no
outstanding agreements or waivers extending the applicable statutory periods of
limitation for such Taxes for any period. All Returns filed are complete and
accurate in all respects and no additional Taxes are owed by the Company or any
Subsidiary with respect to the periods covered by the Returns.
2.17.2. TAXES PAID OR RESERVed. The reserves for Taxes
reflected in the Current Balance Sheet (as defined in SECTION 2.20), are
adequate for payment of Taxes in respect of periods ending on or before the date
of the Current Balance Sheet. All reserves for Taxes have been determined in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved and with prior periods. All Taxes which the
Company has been required to collect or withhold have been withheld or collected
and, to the extent required, have been paid to the proper taxing authority.
2.17.3. DEFINITION. The term "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, premium, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
estimated severance, stamp, occupation, property or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties (including penalties for failure to file in accordance with
applicable information reporting requirements), and additions to tax by any
authority (domestic or foreign).
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SECTION 2.18 CERTAIN INTERESTS. Except as disclosed on SCHEDULE
2.18, neither any shareholder nor any director or officer of the Company (or any
entity owned or controlled by one or more of such parties) (a) has any interest
in any property, real or personal, tangible or intangible, used in or pertaining
to the business of the Company or any Subsidiary, (b) is indebted to the Company
or any Subsidiary, or (c) has any material financial interest, direct or
indirect, in any supplier or customer of, or other outside business which has
significant transactions with, the Company or any Subsidiary. Neither the
Company nor any Subsidiary is indebted to any shareholder, director or officer
(or any entity owned or controlled by one or more of such parties) except for
(i) amounts due under normal salary arrangements, (ii) reimbursement of ordinary
business expenses and (iii) indebtedness or obligations to Xxxxxxx X. Xxxxxxxxx
and/or affiliates thereof, KinderCare Learning Centers, Inc. or its affiliates,
and Xxxxxxx X. XxXxxxxx, Xx., as described in SCHEDULE 2.13. The consummation of
the transactions contemplated by this Agreement will not (either alone or upon
the occurrence of any act or event, or with the lapse of time, or both) result
in any payment (severance or other) becoming due from the Company or any
Subsidiary to any of its shareholders, officers, directors or employees (or any
entity owned or controlled by one or more of such parties).
SECTION 2.19 NO POWERS OF ATTORNEY OR RESTRICTIONS. Except as
disclosed in SCHEDULE 2.19, (a) no power of attorney or similar authorization
given by the Company or any Subsidiary is presently in effect or outstanding;
(b) no contract or agreement to which the Company or any Subsidiary is a party
or is bound or to which any of its properties or assets is subject limits the
freedom of the Company or any Subsidiary to compete in any line of business or
with any person; and (c) to the knowledge of the Company, none of the employees
of the Company or any Subsidiary is obligated under any contract (including
licenses, covenants or commitments of any nature), or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her reasonable efforts to promote the interests of the Company
or any Subsidiary or that would conflict with the business of the Company or the
Subsidiary as now conducted or proposed to be conducted.
SECTION 2.20 FINANCIAL STATEMENTS. The Company has furnished to
the Investors the unaudited (in audited draft form) consolidated balance sheet
of the Company and its Subsidiaries as of June 30, 2000, and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for the period then ended (collectively, the "Unaudited Financial
Statements"), and the unaudited balance sheet of the Company and its
Subsidiaries as of December 31, 2000 (the "Current Balance Sheet") and the
related statements of operations, changes in shareholders' equity and cash flows
for the six months then ended (collectively, with the Current Balance Sheet, the
"Current Financial Statements"). The Unaudited Financial Statements and the
Current Financial Statements are complete and accurate in all material respects
and present fairly the financial position and operating results of the Company
and its Subsidiaries as of the dates and for the periods indicated therein. The
Unaudited Financial Statements and the Current Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied
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throughout the periods involved and with prior periods, except as otherwise
disclosed therein.
SECTION 2.21 UNDISCLOSED LIABILITIES. Except as disclosed on
SCHEDULE 2.21 and except for current liabilities which were incurred after the
date of the Current Balance Sheet in the ordinary course of business and of a
type and in an amount consistent with past practices, neither the Company nor
any Subsidiary has any liability or obligation (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) which is not accrued,
reserved against, or disclosed in the Current Balance Sheet.
SECTION 2.22 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed on SCHEDULE 2.22, since the date of the Current Balance Sheet there
has not been:
(a) Any direct or indirect declaration, setting
aside or payment of any dividend or other distribution (whether in
cash, Shares, property or any combination thereof) in respect of the
equity interests of the Company or any Subsidiary, or any direct or
indirect repurchase, redemption or other acquisition by the Company or
any Subsidiary of any of its equity interests, or any other payment by
the Company or any Subsidiary to or for the account of shareholders;
(b) Except for increases, changes, payments or
contracts in the ordinary course of business and consistent with past
practices, any increase in the rate or terms of compensation payable or
to become payable by the Company to its shareholders, officers or key
employees; any change in the rate or terms of any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to,
for or with any employees of the Company or any Subsidiary; any special
bonus or remuneration paid; any written employment contract executed or
amended except for employment contracts entered into in the ordinary
course of business with school staff, none of which provide for
compensation in excess of Eighty Thousand Dollars ($80,000) annually;
or any change in personnel policies of the Company or any Subsidiary;
(c) Any entry into any agreement, commitment or
transaction (including, without limitation, any borrowing, capital
expenditure or capital financing, any purchase, acquisition, sale or
other disposition of assets, any lease or sublease, any guaranty,
assumption or endorsement of payment or performance of any loan or
obligation of another, or any amendment, modification or termination of
any existing agreement, commitment or transaction) by the Company or
any Subsidiary, except agreements, commitments or transactions in the
ordinary course of business or as contemplated in this Agreement;
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(d) Any material change by the Company or any
Subsidiary in accounting methods, principles or practices;
(e) Except as disclosed in the Current Financial
Statements or an any Schedule hereto, any issuance or sale of any
equity interest in the Company or any Subsidiary or any issuance or
granting of any option, warrant or right to purchase any equity
interest in the Company or any Subsidiary or any commitment to do any
of the foregoing other than pursuant to this Agreement;
(f) Any amendment to the charter documents of
the Company or any Subsidiary;
(g) Any conduct of business which is outside the
ordinary course of business or not substantially in the manner that the
Company or any Subsidiary previously conducted its business;
(h) Any incurrence of any liability, except in
the ordinary course of business and liabilities not exceeding $50,000
individually or $200,000 in the aggregate;
(i) Any encumbrance or consent to encumbrance of
any property or assets except in the ordinary course of business;
(j) Any pending or, to the knowledge of the
Company, threatened labor disputes, organizational activities or
disturbances affecting in a material adverse manner the business,
results of operations, financial condition, properties, assets or
prospects of the Company or any Subsidiary;
(k) Any written or oral notice (such oral notice
delivered directly or indirectly to an officer of the Company or any
subsidiary) from a charter school managed by the Company or any
Subsidiary that such charter school intends to, is desirous of, or is
actively considering terminating its relationship with or reducing the
services provided by the Company or the Subsidiary for any reason;
(l) Any default or, to the knowledge of the
Company, threatened default under any material contract or agreement to
which the
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Company or any Subsidiary is a party, including without limitation any
contract or agreement of the Company or any Subsidiary with a charter
school managed by the Company or any Subsidiary; or
(m) Any change in the assets, liabilities,
licenses, permits or franchises of the Company or any Subsidiary, or in
any agreement to which the Company or any Subsidiary is a party or is
bound, which, either individually or in the aggregate, has had or
reasonably could be expected to have a Material Adverse Effect.
SECTION 2.23 CERTAIN PAYMENTS. Neither the Company, nor any
shareholder, director or officer has, directly or indirectly, on behalf of or
with respect to the business or operations of the Company or any Subsidiary (i)
made or received any payment that was not legal to make or receive under any
applicable law or regulation of the United States or any other country or
territory; or (ii) engaged in any transaction, maintained any bank account, or
used any company funds or assets except for transactions, bank accounts, funds,
and assets which have been and are reflected in the normally maintained books
and records of the Company or the Subsidiaries.
SECTION 2.24 ENVIRONMENTAL CONDITIONS.
2.24.1. COMPLIANCE. The business and assets of the Company
and each Subsidiary, including without limitation the Real Property, are in
material compliance with all Environmental Laws and all Permits required under
any Environmental Law are listed separately in SCHEDULE 2.16.
2.24.2. HAZARDOUS SUBSTANCES. To the knowledge of the
Company, no Hazardous Substance has been disposed of, spilled, leaked or
otherwise released on, in, under or from the Real Property or has otherwise come
to be located in the soil or water (including surface and ground water) on or
under the Real Property. To the knowledge of the Company, none of the assets of
the Company or any Subsidiary or the improvements on the Real Property have
incorporated into them any asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls (including in any electrical transformer or capacitor
located on the Real Property), or any other Hazardous Substance which is
prohibited or restricted when present in buildings, structures, fixtures or
equipment. No Hazardous Substance is or has been generated, manufactured,
treated, stored, transported, used or otherwise handled on the Real Property or
in connection with the business of the Company or any Subsidiary except in
compliance with Environmental Laws. To the knowledge of the Company, there are
no underground storage tanks on the Real Property (whether or not regulated and
whether or not out of service, closed or decommissioned).
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2.24.3. DEFINITIONS. As used in this Agreement, (a)
"Environmental Law" means any federal, state or local statute, ordinance or
regulation pertaining to the protection of human health or the environment and
any applicable orders, judgments, decrees, permits, licenses or other
authorizations or mandates under such statutes, ordinances or regulations, and
(b) "Hazardous Substance" means any hazardous, toxic, radioactive or infectious
substance, material or waste as defined, listed or regulated under any
Environmental Law, and includes without limitation petroleum oil and its
fractions.
SECTION 2.25 CONSENTS AND APPROVALS. Other than such post-closing
filings as may be required under applicable federal and state securities laws,
which will be timely filed within the applicable periods therefor, no consent,
approval, or authorization of, or filing or registration with, any court,
regulatory authority, governmental body, or any other entity or person not a
party to this Agreement is required for the consummation of the transactions
described in this Agreement by the Company.
SECTION 2.26 RECORDS. Except as set forth on SCHEDULE 2.26, the
books of account, minutes of meeting and shareholder records of the Company and
each Subsidiary are complete and accurate in all material respects, and there
has been no material transaction involving the business or equity ownership of
the Company or any Subsidiary, or action of the Company's or any Subsidiary's
board of directors or shareholders, which properly should have been set forth
therein and which has not been accurately so set forth.
SECTION 2.27 ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls it believes to be
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP 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.
SECTION 2.28 NOT AN INVESTMENT COMPANY. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 2.29 NOT A HOLDING COMPANY. The Company is not a holding
company, or a subsidiary or affiliate of a holding company, within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
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SECTION 2.30 RELIANCE. Except as to matters concerning which the
Investors have actual knowledge to the contrary, the Company recognizes and
agrees that, notwithstanding any investigation by the Investors, the Investors
are relying upon the representations and warranties made by the Company in this
Agreement.
SECTION 2.31 ACCURACY OF REPRESENTATIONS AND WARRANTIES. None of
the representations or warranties of the Company contained in this Agreement or
any certificate or schedule delivered pursuant to this Agreement by or on behalf
of the Company contain or will contain any untrue statement of any fact or omit
or misstate a fact necessary to make such information, taken as a whole, not
misleading.
SECTION 2.32 NO MATERIAL ADVERSE CHANGE. Except as set forth in
the schedules hereto, the officers of the Company do not know of any fact that
has resulted in any Material Adverse Change since the dated of the Current
Balance Sheet.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors hereby severally represents and warrants to the
Company that as of the date of this Agreement:
SECTION 3.1 AUTHORIZATION. The Investor has full power and
authority to enter into this Agreement, and that this Agreement, when executed
and delivered, will constitute a valid and legally binding obligation of the
Investor enforceable in accordance with its terms.
SECTION 3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is
made with the Investor in reliance upon the Investor's representation to the
Company, which by the Investor's execution of his Agreement the Investor hereby
confirms, that the Common Stock purchased by such Investor hereunder will be
acquired for investment for the Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that the Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, the Investor further represents that such Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Common Stock.
SECTION 3.3 RELIANCE UPON INVESTORS' REPRESENTATIONS. The
Investor understands that the Common Stock is not registered under the
Securities Act of 1933, as
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amended (the "Securities Act"), on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and that the
Company's reliance on such exemption is predicated on the Investors'
representations set forth herein.
SECTION 3.4 RECEIPT OF INFORMATION. The Investor believes the
Investor has received all the information the Investor considers necessary or
appropriate for deciding whether to purchase the Common Stock. The Investor
further represents that the Investor has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Common Stock and the business, properties, and financial
condition of the Company and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify the accuracy of any information furnished
to the Investor or to which the Investor had access. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
ARTICLE 2 of this Agreement or the right of the Investors to rely thereon.
SECTION 3.5 INVESTMENT EXPERIENCE. The Investor represents that
the Investor is an "accredited investor" (as defined in Rule 501 promulgated
under the Securities Act) and experienced in evaluating and investing in private
placement transactions of securities of companies in a similar stage of
development and acknowledges that the Investor is able to fend for himself,
herself or itself, can bear the economic risk of such Investor's investment, and
has such knowledge and experience in financial and business matters that such
Investor is capable of evaluating the merits and risks of the investment in the
Common Stock. If other than an individual, Investor also represents that each
record or beneficial owner of any equity interest in Investor meets the
requirements of the preceding sentence.
SECTION 3.6 RESTRICTED SECURITIES. Each Investor understands that
the Common Stock may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Common Stock or an
available exemption from registration under the Securities Act, the Common Stock
must be held indefinitely. In particular, the Investor is aware that the Common
Stock may not be sold pursuant to Rule 144 promulgated under the Securities Act
unless all of the conditions of that Rule are met. Among the conditions for use
of Rule 144 may be the availability of current information to the public about
the Company. Such information is not now available and the Company has no
present plans to make such information available.
SECTION 3.7 LEGENDS. To the extent applicable, each certificate
or other document evidencing any of the Common Stock shall be endorsed with the
legends substantially in the form set forth below:
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(a) The following legend under the Securities Act:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR
OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED."
(b) Any legend imposed or required by applicable state
securities laws.
(c) The legend required by the Amended Shareholders
Rights Agreement (as defined below).
ARTICLE 4
COVENANTS OF THE COMPANY
SECTION 4.1 AFFIRMATIVE COVENANTS. Until the consummation of a
Qualified Public Offering (as such term is defined in the Amended Shareholders
Rights Agreement), the Company will:
A. Financial Statements and Reports. Furnish
each Investor:
(i) not later than one hundred (120)
days after the end of each fiscal year of the Company,
consolidated financial statements prepared by the Company in
accordance with GAAP and audited by independent certified
public accountants as of and for the fiscal year then ended,
certified by such independent certified public accountants in
a manner reasonably acceptable to the Investors and including
a balance sheet, a statement of operations, a statement of
cash flows and a statement of shareholders' equity;
(ii) not later than forty-five (45) days
after the end of each fiscal quarter of the Company (other
than the fiscal quarter which is the Company's fiscal year
end), consolidated financial statements prepared by the
Company in accordance with GAAP as of and for the quarter then
ended, to include a balance sheet, a statement of operations
and a statement of cash flows;
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(iii) promptly (in any event within five
(5) business days after such report is prepared), a copy of
any monthly financial reports prepared for management;
(iv) at such times and from time to time
as an Investor may request of the Company, such other reports
and information concerning the Company's and its Subsidiaries'
operations as an Investor may reasonably request;
(v) promptly upon receipt, copies of
all management letters, internal control evaluations and
reports and other material letters, memoranda or reports
submitted by the Company's independent certified public
accountants or consultants with respect to any matter
concerning the audits, financial statement presentation or
other accounting matters.
B. Accounting Records. Maintain adequate books
and accounts and permit any representative of an Investor, during normal
business hours and upon reasonable advance notice, to inspect, audit, copy and
examine such books and accounts and inspect the properties of the Company and
its Subsidiaries and to interview the Company's independent accountants
regarding operating results and financial condition.
C. Maintenance of Property. Keep all of the
Company's and its Subsidiaries' properties useful or necessary to the Company's
and its Subsidiaries' business in good repair and condition, reasonable wear and
tear excepted, and from time to time make necessary repairs, renewals and
replacements thereto so that such property shall be fully and efficiently
preserved and maintained, except to the extent it would not cause a Material
Adverse Change.
D. Maintenance of Business. Preserve and
maintain the Company's and each of its Subsidiaries' existence and all of its
licenses, permits, trade names, trade styles, governmental approvals, rights,
privileges and franchises reasonably necessary to conduct its business; conduct
its business in an orderly and regular manner; comply with the provisions of all
documents pursuant to which the Company and each of its Subsidiaries is
organized and/or which govern the Company's and its Subsidiaries' continued
existence; and comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority and requirements reasonably
necessary for the maintenance of the Company's and its Subsidiaries' insurance,
licenses, permits, trade names, trade styles, governmental approvals, rights,
privileges and franchises reasonably necessary for the continued business of the
Company and its
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Subsidiaries as currently constituted, except to the extent that any of the
foregoing would not cause a Material Adverse Change.
E. Taxes and Other Liabilities. Pay and
discharge prior to delinquency any and all debt, obligations, assessments and
taxes, real and personal, including federal and state income taxes, except such
as the Company may in good faith contest by appropriate proceedings promptly
instituted and diligently conducted and if such reserve or other appropriate
provisions, if any, as are proper in accordance with GAAP shall have been made
therefor and maintained.
F. Insurance. Obtain, maintain and keep in
force insurance of the types and in amounts customarily carried in lines of
business similar to the Company including fire, hazard insurance, extended
coverage, public liability, general liability (including an endorsement for
alleged sexual or other abuse), property damage, extra expense and business
interruption and worker's compensation, carried with companies, as required by
law.
ARTICLE 5
CONDITIONS TO CLOSING BY THE INVESTORS
The obligation of the Investors to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of each of the
following conditions on or prior to the Closing Date:
SECTION 5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES;
PERFORMANCE OF COVENANTS. The representations and warranties contained in
SECTION 2 hereof shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as if made on and as of such
date and the Company shall have performed and complied in all material respects
with the covenants and agreements contained in this Agreement required to be
performed or complied with on or before the Closing Date.
SECTION 5.2 OFFICER'S CERTIFICATE. The Investors shall have
received a certificate of an executive officer of the Company as to the matters
set forth in SECTION 5.1 of this Agreement, dated the Closing Date.
SECTION 5.3 SECRETARY'S CERTIFICATE. The Investors shall have
received true and complete copies, certified by an officer of the Company, of
the Company's Certificate of Incorporation, bylaws and resolutions of the board
of directors of the Company authorizing the Company's execution and delivery of
this Agreement and consummation of the transactions contemplated hereby.
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SECTION 5.4 CONSENTS AND APPROVALS. All consents and approvals,
including approval by the Company's Board of Directors, necessary for the
consummation of the transaction contemplated by this Agreement shall have been
obtained.
SECTION 5.5 QUALIFICATIONS. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Common Stock pursuant to this Agreement shall be duly obtained
and effective as of the Closing Date.
SECTION 5.6 OPINION OF COUNSEL. The Company shall have delivered
to the Investors the written opinion of Bass, Xxxxx & Xxxx PLC, counsel to the
Company, which opinion shall be in form and substance reasonably satisfactory to
the Investors, dated as of the Closing Date.
SECTION 5.7 SHAREHOLDERS RIGHTS AGREEMENT. The Investors shall
have become parties to the Shareholders Rights Agreement, subject to such
modifications as mutually agreed to by the parties thereto and the Investors, in
their individual capacity (the "Amended Shareholders Rights Agreement").
ARTICLE 6
CONDITIONS TO CLOSING BY THE COMPANY
The obligations of the Company to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of each of the
following conditions on or prior to the Closing Date:
SECTION 6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES;
PERFORMANCE OF COVENANTS. The representations and warranties contained in
SECTION 3 hereof shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as if made on and as of such
date and each of the Investors shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement required
to be performed or complied with on or before the Closing Date.
SECTION 6.2 QUALIFICATIONS. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Common Stock pursuant to this Agreement shall be duly obtained
and effective as of the Closing Date.
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SECTION 6.3 SHAREHOLDERS RIGHTS AGREEMENT. Each of the Investors
shall have entered into the Amended Shareholders Rights Agreement.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 NO IMPLIED WAIVER, CUMULATIVE REMEDIES. No failure on
the part of the Company or an Investor to exercise, and no delay in exercising,
any right, power, or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other such right, power, or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
SECTION 7.2 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the law (without regard to the choice of law
rules) of Delaware.
SECTION 7.3 NOTICES. Except as otherwise specified herein, all
notices, requests, demands, and other communications to or upon the parties
hereto shall be in writing or by tested or otherwise authenticated telecopier,
telex, telegram, or cable and shall be deemed to have been duly given or made
two business days after deposit in the mails, certified and postage prepaid, or
transmitted by telecopier or telex or delivered to the telegraph office,
addressed to the party to which such notice, request, demand, or other
communication is requested or permitted to be given or made hereunder at the
addresses set forth below (or to any telecopier or telex number published as
belonging to such party at such address) or at such other address of which such
party shall have notified in writing the other parties hereto.
If to an Investor: At the address set forth on SCHEDULE A hereto.
If to the Company: Beacon Education Management LLC
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. XxXxxxxx, Xx.
Facsimile No. (000) 000-0000
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With a copy to: Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx III
Facsimile No. (000) 000-0000
SECTION 7.4 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
SECTION 7.5 ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors,
heirs and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other party (other than to an affiliate of
Investor, in which event the term "Investor" herein shall be deemed where
appropriate to refer to such affiliate), nor is this Agreement intended to
confer upon any other person except the parties hereto any rights or remedies
hereunder.
SECTION 7.6 AMENDMENTS. This Agreement may not be amended or
modified, nor may any of its provisions be waived, except by an instrument in
writing signed by the Company and Investors holding 75% or more of the Common
Stock issued pursuant to this Agreement.
SECTION 7.7 CONFIDENTIALITY. Each of the Investors will maintain
the confidentiality of nonpublic information regarding the Company and/or its
affiliates received by such Investor from the Company, subject to (i) the
obligation to disclose such information pursuant to applicable laws and
regulations and subpoenas and other applicable legal process, (ii) the right to
disclose such information to the Investor's auditors, counsel, and other
professional advisors (provided that any such auditors, counsel, and advisors
are requested to maintain the confidentiality of such information to the extent
set forth in this SECTION 7.7), (iii) the right to disclose such information in
connection with litigation involving the Company or an affiliate of the Company,
or (iv) the right to disclose such information in connection with any transfers
by the Investor permitted under this Agreement or the Amended Shareholders
Rights Agreement. The Company will maintain the confidentiality of nonpublic
information regarding each of the Investors received by the Company pursuant to
this Agreement, subject to (i) the obligation to disclose such information
pursuant to applicable laws and regulations and subpoenas and other applicable
legal process, and (ii) the right to disclose such information to the Company's
auditors, counsel, and other professional advisors (provided that any such
auditors, counsel, and advisors are requested to maintain the confidentiality of
such information to the extent set forth in this SECTION 7.7).
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SECTION 7.8 TITLES AND SUBTITLES. The titles and subtitles in
this Agreement are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
SECTION 7.9 SEVERABILITY. If any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
SECTION 7.10 LEGAL EXPENSES. The Company and the Investors shall
each be responsible for their own legal expenses incurred in connection with
negotiating and reviewing this Agreement and consummating the transactions
contemplated hereby.
SECTION 7.11 ATTORNEYS' FEES. If suit or action is filed by any
party to enforce the provisions of this Agreement or otherwise with respect to
the subject matter of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees as fixed by the trial court and, if any
appeal is taken from the decision of the trial court, reasonable attorneys' fees
as fixed by the appellate court. For purposes of this Agreement, the term
"prevailing party" shall be deemed to include a party that successfully opposes
a petition for review filed with an appellate court.
SECTION 7.12 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and shall supersede any prior written or oral agreements, statements or
understandings of the parties with respect to the subject matter of this
Agreement. Any waiver or consent, if made, shall be effective only in the
specific instance and for the specific purpose given.
SECTION 7.13 BINDING EFFECT. This Agreement shall be binding and
deemed effective when executed by the parties hereto.
SECTION 7.14 FURTHER ASSURANCES. At any time on or after the
Closing Date, each party hereto shall upon reasonable request of the other party
perform such acts, execute and deliver such instruments, assignments,
endorsements and other documents and do all such other things consistent with
the terms of this Agreement as may be reasonably necessary to accomplish the
transaction contemplated in this Agreement or otherwise carry out the purpose of
this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BEACON EDUCATION MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Title: President and CEO
------------------------------------------
INVESTORS:
X. X. Xxxx Co., Inc.
as nominee 2001-20
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------------
Title: Secretary
------------------------------------------
ASHFORD CAPITAL MANAGEMENT, INC.
with discretion f/b/o
Anvil Investment Associates, L.P.
By: /s/ Xxxxxxxx X. Xxxxxxx for Anvil Management
---------------------------------------------
Co., LLC
---------------------------------------------
Title: General Partner
------------------------------------------
XX Xxxxxxxxx + Co, LLC
By: /s/ Xxxx-Xxxxx Xxxxxxxxx
---------------------------------------------
Title: Treasurer
------------------------------------------
HAMCO Capital Corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------------
Title: President
------------------------------------------
/s/ Xxxxxxx X. XxXxxxxx, Xx.
-------------------------------------------------
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------------
/s/ Xxxx Xxxxxx
-------------------------------------------------
/s/ Xxxxxx Abu-Suneima
-------------------------------------------------
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/s/ Xx. Xxxx XxXxxxxx Xxxxxxxx
-------------------------------------------------
/s/ Xxx. Xxxx XxXxxxxx Xxxxxxxx
-------------------------------------------------
/s/ Xxxxx X. Xxxxxx
-------------------------------------------------
/s/ Xxxxx Xxxxxx
-------------------------------------------------
/s/ Xxxx Xxxxxxx
-------------------------------------------------
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------------
/s/ Xxxx Xxxxxx
-------------------------------------------------
/s/ Xxxxx X. Xxxxxx
-------------------------------------------------
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------------------
25
