Exhibit 10.01
American Public Education, Inc.
4,687,500 Shares of Common Stock1
Underwriting Agreement
November 8, 2007
William Blair & Company, L.L.C.
     As Representative of the Several
      Underwriters Named in Schedule A
c/o William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
           Section 1. Introductory. American Public Education, Inc. (the
“Company”), a Delaware corporation, will have, upon the filing of an Amended and
Restated Certificate of Incorporation (the “Amended and Restated Charter”), an
authorized capital stock consisting of 10,000,000 shares, $0.01 par value, of
Preferred Stock, of which no shares will be outstanding as of the First Closing
Date hereinafter defined, and 100,000,000 shares, $0.01 par value, of Common
Stock (“Common Stock”), of which 17,048,772 shares will be outstanding as of the
First Closing Date hereinafter defined, excluding shares of Common Stock issued
upon the exercise after the date of this Agreement of stock options outstanding
as of the date of this Agreement. The Company proposes to issue and sell
4,687,500 shares of its authorized but unissued Common Stock (“Firm Shares”) to
the several underwriters named in Schedule A as it may be amended by the Pricing
Agreement hereinafter defined (“Underwriters”), who are acting severally and not
jointly. In addition, the Company proposes to grant to the Underwriters an
option to purchase up to 703,125 additional shares of Common Stock (“Option
Shares”) as provided in Section 4 hereof. The Firm Shares and, to the extent
such option is exercised, the Option Shares, are hereinafter collectively
referred to as the “Shares.”
          You have advised the Company that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon as you deem
advisable after the registration statement hereinafter referred to becomes
effective, if it has not yet become effective, and the Pricing Agreement
hereinafter defined has been executed and delivered.
           The Company and the Underwriters agree that up to 243,375 of the
Shares to be purchased by the Underwriters (the “Reserved Shares”) shall be
reserved for sale by the Underwriters to certain eligible employees of the
Company and certain other individuals identified by the officers and directors
of the Company (the “Invitees”), as part of the distribution of the Shares by
the Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. (“NASD”) and all other applicable laws, rules and regulations. To
the extent that any such Reserved Shares are not orally confirmed for purchase
by Invitees by the end of
 

1   Plus an option to acquire up to 703,125 additional shares to cover
overallotments.

 

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the first business day after the date of this Agreement, such Reserved Shares
may be offered to the public by the Underwriters as part of the public offering
contemplated hereby.
          Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company and the Representative, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form of
Exhibit A hereto (the “Pricing Agreement”). The Pricing Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Company and the Representative and shall specify such applicable information
as is indicated in Exhibit A hereto. The offering of the Shares will be governed
by this Agreement, as supplemented by the Pricing Agreement. From and after the
date of the execution and delivery of the Pricing Agreement, this Agreement
shall be deemed to incorporate the Pricing Agreement.
          The Company hereby confirms its agreement with the Underwriters as
follows:
          Section 2. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that:
     (a) A registration statement on Form S-1 (File No. 333-145185) and a
related preliminary prospectus with respect to the Shares have been prepared and
filed with the Securities and Exchange Commission (“Commission”) by the Company
in conformity with the requirements of the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder (collectively, the
“1933 Act;” unless otherwise indicated all references herein to specific rules
are rules promulgated under the 1933 Act); and the Company has so prepared and
has filed such amendments thereto, if any, and such amended preliminary
prospectuses as may have been required to the date hereof and will file such
additional amendments thereto and such amended prospectuses as may hereafter be
required. The Company will prepare and file a prospectus pursuant to Rule 424(b)
that discloses the information previously omitted from the preliminary
prospectus in reliance upon Rule 430A. To the extent that the Representative
requests, there have been or will promptly be delivered to you one signed copy
of such registration statement and amendments, one copy of each exhibit filed
therewith, and conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus or prospectuses
and final forms of prospectus for each of the Underwriters.
     Such registration statement (as amended, if applicable) at the time it
becomes effective and the prospectus constituting a part thereof (including the
information, if any, deemed to be part thereof pursuant to Rule 430A(b)), as
from time to time amended or supplemented, are hereinafter referred to as the
“Registration Statement” and the “Prospectus,” respectively, except that if any
revised prospectus shall be provided to the Underwriters by the Company for use
in connection with the offering of the Shares which differs from the Prospectus
on file at the Commission at the time the Registration Statement became or
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b)), the term Prospectus shall refer
to such revised prospectus from and after the time it was provided to the
Underwriters for such use. Any registration statement (including any amendment
or supplement thereto or information which is deemed part thereof) filed by the
Company under Rule 462(b) (“Rule 462(b) Registration Statement”) shall be deemed
to be part of the “Registration Statement” as defined herein, and any prospectus
(including any amendment or supplement thereto or information which is deemed
part thereof) included in such registration statement shall be deemed to be part
of the “Prospectus” as defined herein, as appropriate. The Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder are hereinafter collectively referred to as the “Exchange Act.”

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          (b) The Commission has not issued any order preventing or suspending
the use of any preliminary prospectus, and each preliminary prospectus has
conformed in all material respects with the requirements of the 1933 Act and, as
of its date, has not included any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and when the
Registration Statement became or becomes effective, and at all times subsequent
thereto, up to the First Closing Date or the Second Closing Date hereinafter
defined, as the case may be, the Registration Statement, including the
information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b), if applicable, and the Prospectus and
any amendments or supplements thereto, in all material respects conformed or
will in all material respects conform to the requirements of the 1933 Act, and
neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, included or will include any untrue statement of a material
fact or omitted or will omit to state a material fact, in the case of the
Registration Statement or any amendment or supplement thereto, required to be
stated therein or necessary to make the statements therein not misleading and,
in the case of the Prospectus, or any amendment or supplement thereto, necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
          As of the Applicable Time hereinafter defined, neither (x) the Issuer
General Use Free Writing Prospectus(es) hereinafter defined issued at or prior
to the Applicable Time, the Statutory Prospectus hereinafter defined as of the
Applicable Time and the information in Schedule A to the Pricing Agreement, all
being considered together (collectively, the “Disclosure Package”) nor (y) any
individual Issuer Limited Use Free Writing Prospectus hereinafter defined issued
at or prior to the Applicable Time, when considered together with the Disclosure
Package, included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not misleading.
          As used in this Section 2(b) and elsewhere in this Agreement:
          “Applicable Time” means 4:00 P.M., Chicago Time, on November 8, 2007
or such other time as agreed by the Company and the Representative.
          “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433, relating to the Shares that (i) is required
to be filed with the Commission by the Company, (ii) is a “road show for an
offering that is a written communication” within the meaning of
Rule 433(d)(8)(i) whether or not required to be filed with the Commission or
(iii) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a
description of the Shares or of the offering thereof that does not reflect the
final terms, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form required to be retained
in the Company’s records pursuant to Rule 433(g).
          “Issuer General Use Free Writing Prospectus” means any Issuer Free
Writing Prospectus specified in Schedule B hereto.
          “Issuer Limited Use Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.
          “Statutory Prospectus” as of any time means the prospectus relating to
the Shares that is included in the Registration Statement immediately prior to
that time.

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     The Company has made available a “bona fide electronic road show,” as
defined in Rule 433, in compliance with Rule 433(d)(8)(ii) (the “Bona Fide
Electronic Road Show”) such that no filing of any “road show” (as defined in
Rule 433(h)) is required in connection with the offering of the Shares.
     Each Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Shares or until any earlier date that the Company notified or notifies the
Representative as described in Section 5(d), did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, and any
preliminary or other prospectus deemed to be a part thereof that has not been
superseded or modified.
     Notwithstanding the foregoing, the representations and warranties of the
Company set forth in this Section 2(b) shall not apply to information contained
in or omitted from any preliminary prospectus, the Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representative
specifically for use in the preparation thereof.
     At the time of filing the Registration Statement, any 462(b) Registration
Statement and any post-effective amendments thereto and at the date of this
Agreement, the Company was not and is not an “ineligible issuer” as defined in
Rule 405.
     (c) The Company and its subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
respective places of incorporation, with corporate power and authority to own
their properties and conduct their business as described in the Prospectus; the
Company and each of its subsidiaries are duly qualified to do business as
foreign corporations under the corporation law of, and are in good standing as
such in, each jurisdiction in which they own or lease substantial properties,
have an office, or in which substantial business is conducted and such
qualification is required except in any such case where the failure to so
qualify or be in good standing would not reasonably be expected to have a
material adverse effect upon the Company and its subsidiaries taken as a whole;
and no proceeding of which the Company has knowledge has been instituted in any
such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification. The State of West
Virginia and the Commonwealth of Virginia are the only jurisdictions in which
the Company or any of its subsidiaries maintains an office or leases property.
     (d) Except as disclosed in the Registration Statement, the Company owns
directly or indirectly 100 percent of the issued and outstanding capital stock
of each of its subsidiaries, free and clear of any claims, liens, encumbrances
or security interests and all of such capital stock has been duly authorized and
validly issued and is fully paid and nonassessable.
     (e) The issued and outstanding shares of capital stock of the Company as
set forth in the Prospectus have been duly authorized and validly issued, are
fully paid and nonassessable, and will, after giving effect to the filing and
effectiveness of the Amended and Restated Charter, conform to the description
thereof contained in the Prospectus.
     (f) The Shares have been duly authorized and when issued, delivered and
paid for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus.

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     (g) The making and performance by the Company of this Agreement and the
Pricing Agreement have been duly authorized by all necessary corporate action
and will not (i) violate the Company’s charter or bylaws, after giving effect to
the filing and effectiveness of the Amended and Restated Charter pursuant to
Section 5(q), (ii) result, except as would not reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a whole, in
a breach or violation of any of the terms and provisions of, or constitute a
default or change of control under (A) any agreement, franchise, license,
indenture, mortgage, deed of trust, or other instrument to which the Company or
any subsidiary is a party or by which the Company, any subsidiary or the
property of any of them may be bound or affected, or (B) any statute, rule,
regulation or order applicable to the Company or any of its subsidiaries of any
court, regulatory body, accrediting agency, administrative agency or other
governmental body having jurisdiction over the Company or any subsidiary or any
of their respective properties, including, without limitation, the Higher
Education Act of 1965, as amended (the “HEA”), or any order of any court,
regulatory body, accrediting agency, administrative agency or other governmental
body entered in any proceeding to which the Company or any subsidiary was or is
now a party or by which it is bound. No consent, approval, authorization or
other order of any court, regulatory body, accrediting agency, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the Pricing Agreement or the consummation of the transactions
contemplated herein or therein, except for compliance with the 1933 Act and blue
sky laws applicable to the public offering of the Shares by the several
Underwriters and clearance of such offering with the Financial Industry
Regulatory Authority (“FINRA”). This Agreement has been duly executed and
delivered by the Company.
     (h) The accountants who have expressed their opinions with respect to
certain of the financial statements and schedules included in the Registration
Statement are an independent registered public accounting firm as required by
the 1933 Act and such accountants are not in violation of the auditor
independence requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”).
     (i) The consolidated financial statements of the Company included in the
Registration Statement, the Disclosure Package and the Prospectus present fairly
in all material respects the consolidated financial position of the Company as
of the respective dates of such financial statements, and the consolidated
statements of operations and cash flows of the Company for the respective
periods covered thereby, all in conformity with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein.
     The financial information set forth in the Prospectus under “Summary
Consolidated Financial and Operating Data” and “Selected Consolidated Financial
and Operating Data” presents fairly in all material respects on the basis stated
in the Prospectus, the information set forth therein.
     The pro forma financial statements and other pro forma information included
in the Registration Statement, the Disclosure Package and the Prospectus present
fairly the information shown therein, have been prepared in accordance with
generally accepted accounting principles and the Commission’s rules and
guidelines with respect to pro forma financial statements and other pro forma
information, have been properly compiled on the pro forma basis described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate under the circumstances.

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     All disclosures contained in the Registration Statement, the Disclosure
Package and the Prospectus regarding “non-GAAP financial measures” (as such term
is defined by the Commission’s rules and regulations) comply with Regulation G
of the Exchange Act and Item 10 of Regulation S-K under the 1933 Act, to the
extent applicable.
     (j) Neither the Company nor any subsidiary is in violation of its charter
or in default under any consent decree, or in default with respect to any
material provision of any lease, loan agreement, franchise, license, permit or
other contract obligation to which it is a party; and, to the Company’s
knowledge, there does not exist any state of facts which constitutes an event of
default as defined in such documents or which, with notice or lapse of time or
both, would constitute such an event of default, in each case, except for
defaults that neither singly nor in the aggregate are material to the Company
and its subsidiaries taken as a whole.
     (k) There are no material legal, governmental or accrediting agency
proceedings pending, or to the Company’s knowledge, threatened to which the
Company or any subsidiary is or may be a party or of which material property
owned or leased by the Company or any subsidiary is or may be the subject, or
related to environmental or discrimination matters that are not disclosed in the
Prospectus, or that question the validity of this Agreement or the Pricing
Agreement or any action taken or to be taken pursuant hereto or thereto.
     (l) There are no holders of securities of the Company having rights to
registration thereof or preemptive rights to purchase Common Stock except as
disclosed in the Prospectus. All holders of registration rights have waived such
rights with respect to the offering being made by the Prospectus.
     (m) The Company and each of its subsidiaries have good and marketable title
to all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), except to the extent
that such properties and assets were disposed of in the ordinary course of
business after the date of such financial statements, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those, if any,
reflected in such financial statements (or elsewhere in the Prospectus) or that
are not material to the Company and its subsidiaries taken as a whole. The
Company and each of its subsidiaries hold their respective leased properties
that are material to the Company and its subsidiaries taken as a whole under
valid and binding leases.
     (n) The Company has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
     (o) Subsequent to the respective dates as of which information is given in
the Registration Statement, the Disclosure Package and the Prospectus, and
except as contemplated by the Prospectus, the Company and its subsidiaries,
taken as a whole, have not incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions not in the
ordinary course of business and there has not been any material adverse change
in their condition (financial or otherwise) or results of operations nor any
material change in their capital stock, short-term debt or long-term debt.
     (p) There is no material document of a character required to be described
in the Registration Statement, the Disclosure Package or the Prospectus or to be
filed as an exhibit to the Registration Statement which is not described or
filed as required.

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     (q) Except as disclosed in the Prospectus, the Company together with its
subsidiaries owns and possesses all right, title and interest in and to, or has
duly licensed from third parties, all patents, patent rights, trade secrets,
inventions, know-how, trademarks, trade names, copyrights, service marks and
other proprietary rights (“Trade Rights”) material to the business of the
Company and each of its subsidiaries taken as a whole. Neither the Company nor
any of its subsidiaries has received any notice of infringement,
misappropriation or conflict from any third party as to such material Trade
Rights which has not been resolved or disposed of and neither the Company nor
any of its subsidiaries has infringed, misappropriated or otherwise conflicted
with material Trade Rights of any third parties, which infringement,
misappropriation or conflict would reasonably be expected to have a material
adverse effect upon the condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a whole.
     (r) The conduct of the business of the Company and each of its subsidiaries
is in compliance in all respects with applicable federal, state, local and
foreign laws and regulations and with applicable accrediting agency rules,
except where the failure to be in compliance would not reasonably be expected to
have a material adverse effect upon the condition (financial or otherwise) or
results of operations of the Company and its subsidiaries taken as a whole.
     (s) The Company and its subsidiaries possess certificates, authorizations,
accreditations or permits issued by appropriate governmental agencies or bodies
or accrediting agencies necessary to conduct the business now operated by them
(except where the failure to do so, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole), including, without limitation, all
authorizations required to participate in federal financial aid programs under
Title IV of the HEA, and have not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization,
accreditation or permit that, if determined adversely to the Company or its
subsidiaries, would, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
     (t) All offers and sales of the Company’s capital stock prior to the date
hereof were at all relevant times exempt from the registration requirements of
the 1933 Act and all such offers and sales during the twelve months prior to the
date hereof were duly registered with or the subject of an available exemption
from the registration requirements of the applicable state and local securities
or blue sky laws.
     (u) The Company has filed all necessary federal, state and local income and
franchise tax returns that were required to be filed prior to the date hereof,
after taking into account all applicable extensions obtained, except where the
failure to file would not reasonably be expected to have a material adverse
effect upon the condition (financial or otherwise) or results of operations of
the Company and its subsidiaries taken as a whole, and has paid all taxes shown
as due thereon, and there is no tax deficiency that has been, or to the
knowledge of the Company might be, asserted against the Company or any of its
properties or assets that would reasonably be expected to have a material
adverse effect upon the condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a whole.
     (v) The Company has filed a registration statement pursuant to Section
12(b) of the Exchange Act to register the Common Stock thereunder, has filed an
application to list the Shares on The NASDAQ Global Market, and has received
notification that the listing has been approved, subject to notice of issuance
or sale of the Shares, as the case may be.

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     (w) The Company has established and maintains disclosure controls and
procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) and
such controls and procedures are effective in ensuring that material information
relating to the Company, including its subsidiaries, is made known to the
principal executive officer and the principal financial officer.
     (x) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance 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 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) amounts
reflected on the Company’s consolidated balance sheet for assets are compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
     (y) The Company is not, and does not intend to conduct its business in a
manner in which it would become, an “investment company” as defined in
Section 3(a) of the Investment Company Act of 1940, as amended (“Investment
Company Act”).
     (z) No transaction has occurred between or among the Company and any of its
officers or directors, stockholders or any affiliate or affiliates of any such
officer or director or stockholder that is required to be described in and is
not described in the Registration Statement and the Prospectus.
     (aa) The Company’s board of directors has validly appointed an audit
committee whose composition satisfies the requirements of Rule 4350(d)(2) of the
Rules of NASD (the “NASD Rules”), and the board of directors or the audit
committee has adopted a charter that satisfies the requirements of
Rule 4350(d)(1) of the NASD Rules.
     (bb) The Company and its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are customary in the businesses in which they are engaged or propose to engage
after giving effect to the transactions described in the Prospectus. To the
knowledge of the Company, all policies of insurance and fidelity or surety bonds
insuring the Company, its subsidiaries and their respective businesses, assets,
employees, officers and directors are in full force and effect; and the Company
and its subsidiaries are in compliance with the terms of such policies and
instruments in all material respects.
     (cc) The Company has taken all necessary actions to ensure that, upon the
effectiveness of the Registration Statement, it will be in compliance in all
material respects with all provisions of the Sarbanes-Oxley Act and all rules
and regulations promulgated thereunder or implementing the provisions thereof
that are then in effect and which the Company is required to comply with as of
the effectiveness of the Registration Statement, and is actively taking steps to
ensure that it will be in compliance in all material respects with other
provisions of the Sarbanes-Oxley Act not currently in effect, upon the
effectiveness of such provisions, or which will become applicable to the Company
at all times after the effectiveness of the Registration Statement.
     (dd) None of the Company and its subsidiaries is involved in any labor
dispute nor, to the knowledge of the Company, is any such dispute threatened.
The Company is not aware of any threatened or pending litigation between the
Company and any of its executive officers and,

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except as disclosed in the Prospectus, has not received notice from any of its
executive officers that such officer does not intend to remain in the employment
of the Company.
     (ee) No consent, approval, authorization or order of, or qualification
with, any accrediting agency or governmental body or agency, other than those
obtained, is required in connection with the offering of the Reserved Shares in
any jurisdiction where the Reserved Shares are being offered. The Company has
not offered, or caused the Underwriters to offer, any Reserved Shares with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company or any of its subsidiaries to alter the customer’s or supplier’s level
or type of business with the Company or any of its subsidiaries or (ii) a trade
journalist or publication to write or publish favorable information about the
Company or its products.
     (ff) The Company has taken all action necessary to declare the Special
Distribution as described in the Prospectus and has obtained elections from each
of the holders of shares of its Class A Common Stock to convert all of such
shares into shares of Common Stock prior to the delivery of the Firm Shares
described in Section 4.
          Section 3. Representations and Warranties of the Underwriters. The
Representative, on behalf of the several Underwriters, represents and warrants
to the Company that the information set forth (a) on the cover page of the
Prospectus with respect to price, underwriting discount and terms of the
offering and (b) in paragraphs 3, 5, 13 and 14 under “Underwriting” in the
Prospectus was furnished to the Company by and on behalf of the Underwriters for
use in connection with the preparation of the Registration Statement and is
correct and complete in all material respects.
          Section 4. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters named in Schedule A hereto, and the Underwriters agree, severally
and not jointly, to purchase the Firm Shares from the Company at the price per
share set forth in the Pricing Agreement. The obligation of each Underwriter to
the Company shall be to purchase that number of full shares set forth opposite
the name of such Underwriter in Schedule A hereto. The initial public offering
price and the purchase price shall be set forth in the Pricing Agreement.
          At 9:00 A.M., Chicago Time, on the fourth business day, if permitted
under Rule 15c6-1 under the Exchange Act, (or the third business day if required
under Rule 15c6-1 under the Exchange Act or unless postponed in accordance with
the provisions of Section 12) following the date the Registration Statement
becomes effective (or, if the Company has elected to rely upon Rule 430A, the
fourth business day, if permitted under Rule 15c6-1 under the Exchange Act, (or
the third business day if required under Rule 15c6-1 under the Exchange Act)
after execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Representative and
the Company, the Company will deliver to you at the offices of counsel for the
Underwriters or through the facilities of The Depository Trust Company for the
accounts of the several Underwriters, certificates representing the Firm Shares
to be sold by it, against payment of the purchase price therefor by delivery of
federal or other immediately available funds, by wire transfer or otherwise, to
the Company. Such time of delivery and payment is herein referred to as the
“First Closing Date.” The certificates for the Firm Shares so to be delivered
will be in such denominations and registered in such names as you request by
notice to the Company prior to 10:00 A.M., Chicago Time, on the second business
day preceding the First Closing Date, and will be made available at the
Company’s expense for checking and packaging by the Representative at
10:00 A.M., Chicago Time, on the business day preceding the First Closing Date.
Payment for the Firm Shares so to be delivered shall be made at the time and in
the manner described above at the offices of counsel for the Underwriters.
          In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option

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to the several Underwriters to purchase, severally and not jointly, up to an
aggregate of 703,125 Option Shares, at the same purchase price per share to be
paid for the Firm Shares, for use solely in covering any overallotments made by
the Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the date of the Prospectus first filed by the Company pursuant to
Rule 424(b) under the 1933 Act (the “Rule 424 Prospectus”) upon notice by you to
the Company setting forth the aggregate number of Option Shares as to which the
Underwriters are exercising the option, the names and denominations in which the
certificates for such shares are to be registered and the time and place at
which such certificates will be delivered. Such time of delivery (which may not
be earlier than the First Closing Date), being herein referred to as the “Second
Closing Date,” shall be determined by you, but if at any time other than the
First Closing Date, shall not be earlier than three nor later than 10 full
business days after delivery of such notice of exercise. The number of Option
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Option Shares to be sold by a fraction, the numerator of which is
the number of Firm Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is the total number
of Firm Shares (subject to such adjustments to eliminate any fractional share
purchases as you in your absolute discretion may make). Certificates for the
Option Shares will be made available at the Company’s expense for checking and
packaging at 10:00 A.M., Chicago Time, on the first full business day preceding
the Second Closing Date. The manner of payment for and delivery of the Option
Shares shall be the same as for the Firm Shares as specified in the preceding
paragraph.
          You have advised the Company that each Underwriter has authorized you
to accept delivery of its Shares, to make payment and to receipt therefor. You,
individually and not as the Representative of the Underwriters, may make payment
for any Shares to be purchased by any Underwriter whose funds shall not have
been received by you by the First Closing Date or the Second Closing Date, as
the case may be, for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from any obligation hereunder.
          Section 5. Covenants of the Company. The Company covenants and agrees
that:
     (a) The Company will advise you promptly of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
of the institution of any proceedings for that purpose, or of any notification
of the suspension of qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceedings for that purpose or of any
examination pursuant to Section 8(e) of the 1933 Act concerning the Registration
Statement and if the Company becomes the subject of a proceeding under
Section 8A of the 1933 Act in connection with the offering of the Shares, and
will also advise you promptly of any request of the Commission for amendment or
supplement of the Registration Statement, of any preliminary prospectus or of
the Prospectus, or for additional information.
     (b) The Company will give you notice of its intention to file or prepare
any amendment to the Registration Statement (including any post-effective
amendment) or any Rule 462(b) Registration Statement or any amendment or
supplement to the Prospectus (including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of the
Shares which differs from the prospectus on file at the Commission at the time
the Registration Statement became or becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b)) and will
furnish you with copies of any such amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such amendment or supplement or use any such prospectus to which you or
counsel for the Underwriters shall reasonably object.

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     (c) If at any time when a prospectus relating to the Shares is required to
be delivered under the 1933 Act any event occurs as a result of which the
Prospectus, including any amendments or supplements, would include an untrue
statement of a material fact, or omit to state 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, or if it is necessary
at any time to amend the Prospectus, including any amendments or supplements
thereto and including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Shares which differs
from the prospectus on file with the Commission at the time of effectiveness of
the Registration Statement, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) to comply with the 1933 Act, the Company
promptly will advise you thereof and will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance; and, in case any
Underwriter is required to deliver a prospectus nine months or more after the
effective date of the Registration Statement, the Company upon request, but at
the expense of such Underwriter, will prepare promptly such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the 1933 Act.
     (d) If at any time following the issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of which
such Issuer Free Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement or included or would include
an untrue statement of a material fact or omitted or would omit to state a
material fact necessary to make the statements therein, in light of the
circumstances prevailing at that subsequent time, not misleading, the Company
will promptly notify the Representative and will promptly amend or supplement,
at its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission.
     (e) Neither the Company nor any of its subsidiaries will acquire any
capital stock of the Company prior to the earlier of the Second Closing Date or
termination or expiration of the related option nor will the Company declare or
pay any dividend or make any other distribution upon the Common Stock payable to
stockholders of record on a date prior to the earlier of the Second Closing Date
or termination or expiration of the related option, except in either case as
contemplated by the Prospectus.
     (f) Not later than March 16, 2009 the Company will make generally available
to its security holders an earnings statement (which need not be audited)
covering a period of at least 12 months beginning after the effective date of
the Registration Statement, which will satisfy the provisions of the last
paragraph of Section 11(a) of the 1933 Act.
     (g) During such period as a prospectus is required by law to be delivered
in connection with offers and sales of the Shares by an Underwriter or dealer,
upon your request, the Company will furnish to you at its expense, subject to
the provisions of subsection (d) hereof, copies of the Registration Statement,
the Prospectus, any Permitted Free Writing Prospectus hereinafter defined, each
preliminary prospectus and all amendments and supplements to any such documents
in each case as soon as available and in such quantities as you may reasonably
request, for the purposes contemplated by the 1933 Act.
     (h) The Company will cooperate with the Underwriters in qualifying or
registering the Shares for sale under the blue sky laws of such jurisdictions as
you designate, and will continue such qualifications in effect so long as
reasonably required for the distribution of the Shares. The Company shall not be
required to qualify as a foreign corporation or to file a general

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consent to service of process in any such jurisdiction where it is not currently
qualified or where it would be subject to taxation as a foreign corporation.
     (i) Upon the request of the Representative and to the extent not publicly
available on the Commission’s EDGAR database, during the period of five years
hereafter, the Company will furnish you and each of the other Underwriters with
a copy (i) as soon as practicable after the filing thereof, of each report filed
by the Company with the Commission, any securities exchange or FINRA; (ii) as
soon as practicable after the release thereof, of each material press release in
respect of the Company that is not disseminated via the Company’s website or a
national news service; and (iii) as soon as available, of each report of the
Company mailed to stockholders.
     (j) The Company will use the proceeds received by it from the sale of the
Shares being sold by it in the manner specified in the Prospectus.
     (k) If, at the time of effectiveness of the Registration Statement, any
information shall have been omitted therefrom in reliance upon Rule 430A, then
promptly following the execution of the Pricing Agreement, the Company will
prepare, and file or transmit for filing with the Commission in accordance with
such Rule 430A and Rule 424(b), copies of an amended Prospectus, or, if required
by such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted. If
required, the Company will prepare and file, or transmit for filing, a Rule
462(b) Registration Statement not later than the date of the execution of the
Pricing Agreement. If a Rule 462(b) Registration Statement is filed, the Company
shall make payment of, or arrange for payment of, the additional registration
fee owing to the Commission required by Rule 111.
     (l) For so long as the Company is subject to the Exchange Act, the Company
will comply with all registration, filing and reporting requirements of the
Exchange Act and The NASDAQ Global Market; and the Company will comply in all
material respects with all applicable provisions of the Sarbanes-Oxley Act.
     (m) For so long as the Company is subject to the Exchange Act, the Company
will maintain such controls and other procedures, including without limitation
those required by the Sarbanes-Oxley Act and the applicable regulations
thereunder, that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
     (n) For so long as the Company is subject to the Exchange Act, the Company
will maintain a system of internal accounting controls designed to provide
reasonable assurance 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
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) amounts reflected on the Company’s
consolidated balance sheet for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

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     (o) The Company agrees not to, directly or indirectly, (i) offer, sell
(including “short” selling), assign, transfer, contract to sell, grant an option
to purchase, establish an open “put equivalent position” within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of any shares of
Common Stock or securities convertible or exchangeable into, or exercisable for,
Common Stock; or (ii) enter any swap or other arrangement that transfers all or
a portion of the economic consequences associated with the ownership of any
Common Stock (except, in each case, Common Stock sold pursuant to this Agreement
or issued pursuant to options, warrants or convertible securities currently
outstanding and except for options and restricted stock to be granted under
existing equity compensation plans) without the prior written consent of the
Representative for a period of 180 days (the “Lock-Up Period”) after the date of
the Rule 424 Prospectus; provided, however, that if (1) during the last 17 days
of the initial Lock-Up Period, the Company releases earnings results or material
news or a material event relating to the Company occurs or (2) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the initial Lock-Up Period, then in either case the Lock-Up Period will be
extended until the expiration of the 18-day period beginning on the date of
release of the earnings results or the occurrence of the material news or
material event, as applicable, unless the Representative waives, in writing,
such extension.
     (p) The Company hereby agrees that it will ensure that the Reserved Shares
will be restricted as required by FINRA or the NASD Rules from sale, transfer,
assignment, pledge or hypothecation for a period of three months following the
date of this Agreement. The Underwriters will notify the Company as to which
persons will need to be so restricted and the Company’s obligations under this
Section 5(p) will extend only to such persons. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Shares, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
     (q) The Company will file and cause to become effective the Amended and
Restated Charter prior to the First Closing Date.
          Section 6. Covenants of the Company and the Underwriters. The Company
represents and agrees that, unless it obtains the prior consent of the
Representative, and each Underwriter, severally and not jointly, represents and
agrees that, unless it obtains the prior consent of the Company and the
Representative, it has not made and will not make any offer relating to the
Shares that would constitute an “issuer free writing prospectus,” as defined in
Rule 433, or that would otherwise constitute a “free writing prospectus,” as
defined in Rule 405, required to be filed with the Commission. Any such free
writing prospectus consented to by the Representative or by the Company and the
Representative, as the case may be, is hereinafter referred to as a “Permitted
Free Writing Prospectus.” The Company represents that it has treated and agrees
that it will treat each Permitted Free Writing Prospectus as an “issuer free
writing prospectus,” as defined in Rule 433, and has complied and will comply
with the requirements of Rule 433 applicable to any Permitted Free Writing
Prospectus, including timely filing with the Commission where required,
legending and record-keeping.
          Section 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters) incurred in
connection with the performance of the Company’s obligations hereunder,
including without limiting the

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generality of the foregoing, all fees and expenses of legal counsel for the
Company and of the Company’s independent accountants, all costs and expenses
incurred in connection with the preparation, printing, filing and distribution
(including electronic delivery) of the Registration Statement, each preliminary
prospectus, any Permitted Free Writing Prospectus and the Prospectus (including
all exhibits and financial statements) and all amendments and supplements
provided for herein, this Agreement, the Pricing Agreement and a blue sky
memorandum, (ii) all reasonable third-party costs, fees and expenses (including
reasonable legal fees and disbursements of outside counsel for the Underwriters)
incurred by the Underwriters in connection with qualifying or registering all or
any part of the Shares for offer and sale under blue sky laws, including
clearance of such offering with FINRA; (iii) all fees and expenses of the
Company’s transfer agent, printing of the certificates for the Shares and all
transfer taxes, if any, with respect to the sale and delivery of the Shares to
the several Underwriters; (iv) all reasonable third-party costs, fees and
expenses (including reasonable legal fees of outside counsel for the
Underwriters) incurred by the Underwriters related to the offering of the
Reserved Shares which are designated by the Company for sale to Invitees; and
(v) all third-party costs, fees and expenses (including without limitation any
damages or other amounts payable in connection with legal or contractual
liability) associated with the reforming of any contracts for sale of the Shares
made by the Underwriters caused by a breach of the representation contained in
the second paragraph of Section 2(b); provided, however, that, except as
provided in this Section 7, Section 9, Section 11 and Section 14 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel (except as set forth above), stock transfer taxes on the resale of
any Shares by them and any expenses relating to the publishing of “tombstone”
advertisements.
          Section 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company herein set forth as of the date hereof and as of the First Closing
Date or the Second Closing Date, as the case may be, to the accuracy of the
statements of officers of the Company made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder, and to the
following additional conditions:
     (a) The Registration Statement shall have become effective either prior to
the execution of this Agreement or not later than 1:00 P.M., Chicago Time, on
the first full business day after the date of this Agreement, or such later time
as shall have been consented to by you but in no event later than 1:00 P.M.,
Chicago Time, on the third full business day following the date hereof; and
prior to the First Closing Date or the Second Closing Date, as the case may be,
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 shall be pending or, to the knowledge of the Company or you, shall be
contemplated by the Commission. If the Company has elected to rely upon
Rule 430A, the information concerning the initial public offering price of the
Shares and price-related information shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) in the manner and within the
prescribed time period (without reliance on Rule 424(b)(8)) and the Company will
provide evidence satisfactory to the Representative of such timely filing (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rules 430A and
424(b)). If a Rule 462(b) Registration Statement is required, such Registration
Statement shall have been transmitted to the Commission for filing and become
effective within the prescribed time period and, prior to the First Closing
Date, the Company shall have provided evidence of such filing and effectiveness
in accordance with Rule 462(b).
     (b) The Shares shall have been qualified for sale under the blue sky laws
of such states as shall have been specified by the Representative.

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          (c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder, the validity and form of the
certificates representing the Shares, the execution and delivery of this
Agreement and the Pricing Agreement, and all corporate proceedings and other
legal matters incident thereto, and the form of the Registration Statement, the
Disclosure Package, any Issuer Limited Use Free Writing Prospectus and the
Prospectus (except financial statements) shall have been approved by counsel for
the Underwriters exercising reasonable judgment.
          (d) You shall not have advised the Company that the Registration
Statement, the Disclosure Package, any Issuer Limited Use Free Writing
Prospectus, when considered together with the Disclosure Package, or the
Prospectus or any amendment or supplement thereto, contains an untrue statement
of fact, which, in the opinion of counsel for the Underwriters, is material or
omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
          (e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any material adverse change, or any development
involving a prospective material adverse change, in or affecting particularly
the business or properties of the Company or its subsidiaries, taken as a whole,
whether or not arising in the ordinary course of business, which, in the
judgment of the Representative, makes it impractical or inadvisable to proceed
with the public offering of the Shares as contemplated hereby.
          (f) There shall have been furnished to you, as Representative of the
Underwriters, on the First Closing Date or the Second Closing Date, as the case
may be, except as otherwise expressly provided below:
          (i) An opinion of Hogan & Hartson L.L.P., counsel for the Company,
addressed to the Underwriters and dated the First Closing Date or the Second
Closing Date, as the case may be, in form and substance reasonably satisfactory
to the Underwriters.
          (ii) A letter from Hogan & Hartson L.L.P., counsel for the Company,
addressed to the Underwriters and dated the First Closing Date or the Second
Closing Date, as the case may be, in form and substance reasonably satisfactory
to the Underwriters.
          (iii) Such opinion or opinions of Sidley Austin LLP, counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as the
case may be, with respect to the incorporation of the Company, the validity of
the Shares, the Registration Statement, the Disclosure Package and the
Prospectus and other related matters as you may reasonably require, and the
Company shall have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they reasonably request for the
purpose of enabling them to pass upon such matters.
          (iv) A certificate of the chief executive officer and the principal
financial officer of the Company, dated the First Closing Date or the Second
Closing Date, as the case may be, to the effect that:
               (1) the representations and warranties of the Company set forth
in Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as the
case may be,

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and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such Closing
Date;
          (2) the Commission has not issued an order preventing or suspending
the use of the Prospectus or any preliminary prospectus filed as a part of the
Registration Statement or any amendment thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to the best
knowledge of the respective signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act; and
          (3) subsequent to the date of the most recent financial statements
included in the Registration Statement and Prospectuses, and except as set forth
or contemplated in the Prospectuses, (A) none of the Company and its
consolidated subsidiaries has incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions not in the
ordinary course of business, and (B) there has not been any change that has had
or would reasonably be expected to have a material adverse effect upon the
Company and its subsidiaries taken as a whole or any material change in their
short-term debt or long-term debt.
The delivery of the certificate provided for in this subparagraph shall be and
constitute a representation and warranty of the Company as to the facts required
in the immediately foregoing clauses (1), (2) and (3) to be set forth in said
certificate.
     (v) At the time the Pricing Agreement is executed and also on the First
Closing Date or the Second Closing Date, as the case may be, there shall be
delivered to you a letter addressed to you, as Representative of the
Underwriters, from McGladrey & Pullen, LLP, an independent registered public
accountant firm, the first one to be dated the date of the Pricing Agreement,
the second one to be dated the First Closing Date and the third one (in the
event of a second closing) to be dated the Second Closing Date, in form and
substance reasonably satisfactory to the Underwriters. There shall not have been
any change or decrease specified in the letters referred to in this subparagraph
which makes it impractical or inadvisable in the judgment of the Representative
to proceed with the public offering or purchase of the Shares as contemplated
hereby.
     (vi) A certificate of the chief executive officer and the principal
financial officer of the Company, dated the First Closing Date or the Second
Closing Date, as the case may be, regarding certain statistical or financial
figures included in the Prospectus which you may reasonably request and which
have not been otherwise verified by the letters referred to in clause (v) above,
such verification to include the provision of documentary evidence supporting
any such statistical or financial figure.
     (vii) Such further certificates and documents as you may reasonably
request.
          All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Sidley Austin LLP, counsel for the Underwriters, which approval shall not be
unreasonably withheld. The Company shall furnish you with such manually signed
or conformed copies of such opinions, certificates, letters and documents as you
request.

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     If any condition to the Underwriters’ obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company without liability
on the part of any Underwriter or the Company, except for the expenses to be
paid or reimbursed by the Company pursuant to Sections 7 and 9 hereof and except
to the extent provided in Section 11 hereof.
     Section 9. Reimbursement of Underwriters’ Expenses. If the sale to the
Underwriters of the Firm Shares on the First Closing Date is not consummated
because any condition of the Underwriters’ obligations hereunder is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
unless such failure to satisfy such condition or to comply with any provision
hereof is due to the default or omission of any Underwriter, the Company agrees
to reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been reasonably incurred by you and them in connection with the proposed
purchase and the sale of the Shares. Any such termination shall be without
liability of any party to any other party except that the provisions of this
Section 9, Section 7 and Section 11 shall at all times be effective and shall
apply.
     Section 10. Effectiveness of Registration Statement. You and the Company
will use your and its best efforts to cause the Registration Statement to become
effective, if it has not yet become effective, and to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement and,
if such stop order be issued, to obtain as soon as possible the lifting thereof.
     Section 11. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the 1933 Act or the Exchange Act against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter or
such controlling person may become subject under the 1933 Act, the Exchange Act
or other federal or state statutory law or regulation, at common law or
otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, including the information deemed
to be part of the Registration Statement at the time of effectiveness pursuant
to Rule 430A, any preliminary prospectus, any Issuer Free Writing Prospectus,
the Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact, in
the case of the Registration Statement or any amendment or supplement thereto,
required to be stated therein or necessary to make the statements therein not
misleading and, in the case of any preliminary prospectus, any Issuer Free
Writing Prospectus, the Prospectus, or any amendment or supplement thereto,
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and will reimburse each Underwriter and
each such controlling person for any legal or other expenses reasonably incurred
by such Underwriter or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any preliminary prospectus, any Issuer Free
Writing Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representative,
specifically for use therein. In addition to its other obligations under this
Section 11(a), the Company agrees that, as an interim measure during the
pendency of 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 this Section 11(a), it will reimburse the Underwriters
on a monthly basis for all reasonable legal and other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other

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proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company’s obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
     (b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the 1933 Act or the Exchange Act, against any losses, claims, damages or
liabilities to which the Company, or any such director, officer or controlling
person may become subject under the 1933 Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any preliminary prospectus, any Issuer Free Writing
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact , in the case of the Registration Statement or any amendment or
supplement thereto, required to be stated therein or necessary to make the
statements therein not misleading and, in the case of any preliminary
prospectus, any Issuer Free Writing Prospectus, the Prospectus, or any amendment
or supplement thereto, necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, any Issuer Free Writing Prospectus, the
Prospectus, or any amendment or supplement thereto in reliance upon and in
conformity with Section 3 of this Agreement or any other written information
furnished to the Company by such Underwriter through the Representative
specifically for use in the preparation thereof; and will reimburse any 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. In addition to their other obligations
under this Section 11(b), the Underwriters agree that, as an interim measure
during the pendency of 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 this Section 11(b), they will
reimburse the Company on a monthly basis for all reasonable legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters’ obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.
     (c) Promptly after receipt by an indemnified party under this Section 11 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 11, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded based on the advice of outside counsel that there may
be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, or
the indemnified and indemnifying parties

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may have conflicting interests which would make it inappropriate for the same
counsel to represent both of them, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defense and otherwise
to participate in the defense of such action on behalf of such indemnified party
or parties. 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 11 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defense in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representative in the case of paragraph
(a) representing all indemnified parties not having different or additional
defenses or potential conflicting interest among themselves who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
     (d) If the indemnification provided for in this Section 11 is unavailable
to an indemnified party under paragraphs (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
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 (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters 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 the Company and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion, in the case of the
Company, as the total price paid to the Company for the Shares by the
Underwriters (net of underwriting discount but before deducting expenses) bears
to, and in the case of the Underwriters, as the underwriting discount received
by them bears to, the total of such amounts paid to the Company and received by
the Underwriters as underwriting discount, in each case as contemplated by the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or by the Underwriters and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
     The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 11(d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged

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untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations to contribute pursuant to this
Section 11(d) are several in proportion to their respective underwriting
commitments and not joint.
     (e) In connection with the offer and sale of the Reserved Shares, the
Company agrees to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of the 1933 Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company) (i) arising out of any untrue statement or alleged untrue statement of
a material fact contained in any prospectus wrapper or other material prepared
by or with the consent of the Company for distribution to Invitees in connection
with the offering of the Reserved Shares or arising out of or based upon any
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) arising out of or based upon the failure of any Invitee to pay for and
accept delivery of Reserved Shares which have been orally confirmed for purchase
by any Invitee by the end of the first business day after the date of this
Agreement, other than losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to have resulted from
the bad faith, willful misconduct or gross negligence of any such Underwriter.
     (f) The provisions of this Section 11 shall survive any termination of this
Agreement.
     Section 12. Default of Underwriters. It shall be a condition to the
agreement and obligation of the Company to sell and deliver the Shares
hereunder, and of each Underwriter to purchase the Shares hereunder, that,
except as hereinafter in this paragraph provided, each of the Underwriters shall
purchase and pay for all Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representative of all such Shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Shares hereunder on the First Closing Date and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representative may make arrangements satisfactory to the Company for
the purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such date the nondefaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Shares which such defaulting Underwriters agreed but
failed to purchase on such date. If any Underwriter or Underwriters so default
and the aggregate number of Shares with respect to which such default or
defaults occur is more than the above percentage and arrangements satisfactory
to the Representative and the Company for the purchase of such Shares by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any nondefaulting Underwriter or the
Company, except for the expenses to be paid by the Company pursuant to Section 7
hereof and except to the extent provided in Section 11 hereof.
     In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representative or the Company shall have the right to postpone the First Closing
Date for not more than seven business days in order that the necessary changes
in the Registration Statement, Prospectus and any other documents, as well as
any other arrangements, may be effected. As used in this Agreement, the term
“Underwriter” includes any

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person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
          Section 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11 and 14 and as to all other provisions at
10:00 A.M., Chicago Time, on the day following the date upon which the Pricing
Agreement is executed and delivered, unless such a day is a Saturday, Sunday or
holiday (and in that event this Agreement shall become effective at such hour on
the business day next succeeding such Saturday, Sunday or holiday); but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company or by release of any Shares for sale to the public. For
the purposes of this Section, the Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Shares or upon the release by you of written communications
(i) advising Underwriters that the Shares are released for public offering, or
(ii) offering the Shares for sale to securities dealers, whichever may occur
first.
          Section 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
     (a) This Agreement may be terminated by the Company by notice to you or by
you by notice to the Company at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall be
without liability on the part of the Company to any Underwriter (except for the
expenses to be paid or reimbursed pursuant to Section 7 hereof and except to the
extent provided in Section 11 hereof) or of any Underwriter to the Company.
     (b) This Agreement may also be terminated by you prior to the First Closing
Date, and the option referred to in Section 4, if exercised, may be cancelled at
any time prior to the Second Closing Date, if (i) trading in securities on the
New York Stock Exchange or The Nasdaq Stock Market shall have been suspended or
minimum prices shall have been established on such exchange or market, or (ii) a
banking moratorium shall have been declared by Illinois, New York, or United
States authorities, or (iii) there shall have been any material adverse change
in financial markets or any material adverse change in political, economic or
financial conditions which, in the opinion of the Representative, either renders
it impracticable or inadvisable to proceed with the offering and sale of the
Shares on the terms set forth in the Prospectus or materially and adversely
affects the market for the Shares, or (iv) there shall have been an outbreak of
major armed hostilities between the United States and any foreign power or
terrorist organization which in the opinion of the Representative makes it
impractical or inadvisable to offer or sell the Shares. Any termination pursuant
to this paragraph (b) shall be without liability on the part of any Underwriter
to the Company or on the part of the Company to any Underwriter (except for
expenses to be paid or reimbursed pursuant to Section 7 hereof and except to the
extent provided in Section 11 hereof).
          Section 15. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters 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 any Underwriter
or the Company or any of its or their partners, principals, members, officers or
directors or any controlling person, and will survive delivery of and payment
for the Shares sold hereunder.
          Section 16. Notices. All communications hereunder will be in writing
and, if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o William Blair &

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Company, L.L.C., 222 West Adams Street, Chicago, Illinois 60606, with a copy to
Robert L. Verigan, c/o Sidley Austin LLP, One South Dearborn Street, Chicago,
Illinois 60603; if sent to the Company will be mailed, delivered or telegraphed
and confirmed to the Company at its corporate headquarters with a copy to
Michael J. Silver, c/o Hogan & Hartson L.L.P., 111 South Calvert Street,
Suite 1600, Baltimore, MD 21202.
     Section 17. No Advisory or Fiduciary Relationship. The Company acknowledges
and agrees that (a) the purchase and sale of the Shares pursuant to this
Agreement, including the determination of the initial public offering price of
the Shares and any related discounts and commissions, is an arm’s-length
commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, (b) in connection with the offering of the
Shares contemplated by this Agreement and the process leading to such
transaction each Underwriter is and has been acting solely as a principal and is
not the agent or fiduciary of the Company or its stockholders, creditors,
employees or any other party, (c) no Underwriter has assumed or will assume an
advisory or fiduciary responsibility in favor of the Company with respect to the
offering of the Shares contemplated by this Agreement or the process leading
thereto (irrespective of whether such Underwriter has advised or is currently
advising the Company on other matters) and no Underwriter has any obligation to
the Company with respect to the offering of the Shares contemplated by this
Agreement except the obligations expressly set forth in this Agreement, (d) the
Underwriters and their respective affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Company and
(e) the Underwriters have not provided any legal, accounting, regulatory or tax
advice with respect to the offering of the Shares contemplated by this Agreement
and the Company has consulted its own legal, accounting, regulatory and tax
advisors to the extent it deemed appropriate.
     Section 18. Successors. This Agreement and the Pricing Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
successors, personal representatives and assigns, and to the benefit of the
officers and directors and controlling persons referred to in Section 11, and no
other person will have any right or obligation hereunder. The term “successors”
shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.
     Section 19. Representation of Underwriters. You will act as Representative
for the several Underwriters in connection with this financing, and any action
under or in respect of this Agreement taken by you will be binding upon all the
Underwriters.
     Section 20. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
     Section 21. Applicable Law. This Agreement and the Pricing Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois.

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     If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the several Underwriters
including you, all in accordance with its terms.

            Very truly yours,

American Public Education, Inc.
      By:   /s/ Wallace E. Boston, Jr.         Name:  Wallace E. Boston, Jr.    
  Title:  President and Chief Executive Officer  

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The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
William Blair & Company, L.L.C.
Acting as Representative of the
several Underwriters named in
Schedule A.
By: William Blair & Company, L.L.C.
By: /s/ Brandon Lower                            
               Principal

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Schedule A

              Number of       Firm Shares   Underwriter   to be Purchased  
William Blair & Company, L.L.C.
    1,875,000  
 
       
Piper Jaffray & Co.
    1,171,875  
 
       
Stifel, Nicolaus & Company
    703,125  
 
       
ThinkEquity Partners LLC
    468,750  
 
       
BMO Capital Markets Corp.
    328,125  
 
       
Signal Hill Capital Group LLC
    140,625  
 
       
Total
    4,687,500  
 
     

 A-1

 

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Schedule B
Issuer General Use Free Writing Prospectuses
[None]

B-1

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Exhibit A
American Public Education, Inc.
4,687,500 Shares Common Stock2
Pricing Agreement
November 8, 2007
William Blair & Company, L.L.C.
      As Representative of the Several
      Underwriters
c/o William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
          Reference is made to the Underwriting Agreement dated November 8, 2007
(the “Underwriting Agreement”) relating to the sale by the Company and the
purchase by the several Underwriters for whom William Blair & Company, L.L.C. is
acting as representative (the “Representative”), of the above Shares. All terms
herein shall have the definitions contained in the Underwriting Agreement except
as otherwise defined herein.
          Pursuant to Section 4 of the Underwriting Agreement, the Company
agrees with the Representative as follows:
          1. The initial public offering price per share for the Shares shall be
$20.00.
          2. The purchase price per share for the Shares to be paid by the
several Underwriters shall be $18.60, being an amount equal to the initial
public offering price set forth above less $1.40 per share.
 

2   Plus an option to acquire up to 703,125 additional shares to cover
overallotments

 

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          If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, including you, all in accordance with its terms.

            Very truly yours,

American Public Education, Inc.
      By:   /s/ Wallace E. Boston, Jr.       Name:   Wallace E. Boston, Jr.    
  Title:   President and Chief Executive Officer    

The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
William Blair & Company, L.L.C.
Acting as Representative of the
several Underwriters named in
Schedule A to the Underwriting
Agreement.
By: William Blair & Company, L.L.C.
By: /s/ Brandon Lower                                        
                Principal

 

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Schedule A to Pricing Agreement
Pricing Information

•   Total Shares Offered: 4,687,500 (with overallotment option: 5,390,625)   •  
Price to Public: $20.00   •   Underwriting Discount: $1.40   •   Expected
Settlement Date: November 14, 2007