Exhibit 1
Erie Indemnity Company
Class A Common Stock
_____________
Underwriting Agreement
_____________, 2002
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
Credit Suisse First Boston Corporation,
Advest, Inc.,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Incorporated,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Securities LLC,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, ▇▇▇▇▇ & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Ladies and Gentlemen:
The shareholder named in Schedule II hereto (the "Selling Shareholder") of
Erie Indemnity Company, a Pennsylvania corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to sell to the Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of _________ shares
(the "Firm Shares") and, at the election of the Underwriters, up to __________
additional shares (the "Optional Shares") of Class A Common Stock ("Stock") of
the Company (the Firm Shares and the Optional Shares which the Underwriters
elect to purchase pursuant to Section 2 hereof are herein collectively called
the "Shares").
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-3 (File No. 333-99943) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto but
including all documents incorporated by reference in the prospectus
contained therein, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement or document incorporated by reference therein has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration Statement and the Rule 462(b) Registration Statement,
if any, including all exhibits thereto and including (i) the information
contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective and
(ii) the documents incorporated by reference in the prospectus contained in
the Initial Registration Statement at the time such part of the Initial
Registration Statement became effective, each as amended at the time such
part of the Initial Registration Statement became effective or such part of
the Rule 462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus"; any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; and any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of the
Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after
the effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statement;
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
you expressly for use therein or by the Selling Shareholder expressly for
use in the preparation of the answers therein to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the
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Exchange Act as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the Prospectus
or any further amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
you expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through you expressly for use therein or by the Selling
Shareholder expressly for use in the preparation of the answers therein to
Item 7 of Form S-3;
(v) Neither the Company nor any of its subsidiary nor the Erie
Insurance Exchange nor its subsidiary (collectively, the "Property and
Casualty Group") has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock or long-term debt of the Company nor any other member of the Property
and Casualty Group or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity,
results of operations, statutory surplus or reserves (including any such
change in the loss and loss adjustment expense reserves) of the Company,
its subsidiaries and the Property and Casualty Group, otherwise than as set
forth or contemplated in the Prospectus;
(vi) The Company and each other member of the Property and Casualty
Group owns or leases all properties as are necessary to the conduct of
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operations as presently conducted and (a) with respect to owned real and
personal property, has good and marketable title in fee simple to all real
property and good and marketable title to all personal property and (b)
with respect to leased real property and buildings, holds valid, subsisting
and enforceable leases, except, in the case of (a) and (b) for any
non-compliance with any term or condition of, or failure to obtain and
maintain in effect, any license, certificate, permit or other governmental
authorization required for the ownership or lease of any such property or
the conduct of any business, which violation, non-compliance or failure
would not individually or in the aggregate have a material adverse effect
on the current or future condition (financial or other), prospects,
earnings, business, shareholders' equity, results of operations, statutory
surplus or reserves (including any such change in loss and loss adjustment
expense reserves) or properties of any of the Company, each other member of
the Property and Casualty Group or the Property and Casualty Group as a
whole, whether or not arising from transactions in the ordinary course of
business (a "Material Adverse Effect"), and none of the Company or any
other member of the Property and Casualty Group has received notice of any
proceeding relating to the revocation or material modification of any such
license, certificate, permit or other authorization, which revocation or
material modification could reasonably be expected to have a Material
Adverse Effect;
(vii) Each member of the Property and Casualty Group and Erie Family
Life Insurance Company has been duly incorporated or organized and is
validly existing in good standing under the laws of the jurisdiction in
which it is chartered or organized with all requisite power to own or
lease, as the case may be, and to operate its properties and conduct its
business as described in the Prospectus, and is duly qualified or admitted
to do business as a foreign corporation or insurance company and is in good
standing under the laws of each jurisdiction that requires such
qualification or admission, except in each case as would not, singly or in
the aggregate, have a Material Adverse Effect;
(viii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description of the Stock contained in
the Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims, except such lien, encumbrance,
equity or claim as could not reasonably be expected to have a Material
Adverse Effect;
(ix) The execution, delivery and performance by the Company of all
of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which any member of the Property and
Casualty Group is a party or by which any member of the Property and
Casualty Group is bound or to which any of the property or assets of any
member of the Property and Casualty Group is subject, nor will such action
result in any violation of the provisions of the Articles of
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Incorporation or By-laws of any member of the Property and Casualty Group
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over any member of the
Property and Casualty Group or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Act of
the Shares and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Shares by the
Underwriters;
(x) The Company is not in violation of its Articles of
Incorporation or By-laws; none of the Company's subsidiaries is in
violation of its charter, by-laws or other governing documents; neither the
Company nor any other member of the Property and Casualty Group is in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound;
(xi) The statements set forth in the Prospectus under the caption
"Description of Capital Stock" insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair summaries or
descriptions thereof;
(xii) Other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which any member of the Property and
Casualty Group is a party or of which any property of any member of the
Property and Casualty Group is the subject which, if determined adversely
to any member of the Property and Casualty Group, would individually or in
the aggregate have a Material Adverse Effect; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xiii) No member of the Property and Casualty Group has received any
notification from any insurance authority, commission or other insurance
regulatory body to the effect that any license from such authority,
commission or body is needed to be obtained by any member of the Property
and Casualty Group or that any member of the Property and Casualty Group is
not in compliance with any applicable insurance laws (including laws that
relate to companies that control insurance companies) and the rules,
regulations and interpretations of the insurance regulatory authorities
thereunder, except as could not reasonably be expected to have a Material
Adverse Effect;
(xiv) Erie Family Life Insurance Company has not sustained since the
date of the latest audited financial statements filed with the Pennsylvania
Department of Insurance any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree,
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otherwise than as set forth in such audited financial statements; and,
since the date of such audited financial statements, there has not been any
change in the capital stock or long-term debt of Erie Family Life Insurance
Company or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, shareholders' equity, results of
operations, statutory surplus or reserves (including any such change in the
loss and loss adjustment expense reserves) of Erie Family Life Insurance
Company, otherwise than as set forth in such audited financial statements;
(xv) The Company is not an "investment company", as such term is
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(xvi) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(xvii) Malin, ▇▇▇▇▇▇▇▇▇ & Company, LLP, who have certified certain
financial statements of the Company and its subsidiaries, are independent
public accountants as required by the Act and the rules and regulations of
the Commission thereunder.
(b) The Selling Shareholder represents and warrants to, and agrees with,
each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Shareholder of this Agreement
and the Custody Agreement hereinafter referred to, and for the sale and
delivery of the Shares to be sold by such Selling Shareholder hereunder,
have been obtained; and such Selling Shareholder has full right, power and
authority to enter into this Agreement and the Custody Agreement and to
sell, assign, transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Shareholder
hereunder and the compliance by such Selling Shareholder with all of the
provisions of this Agreement and the Custody Agreement and the consummation
of the transactions herein and therein contemplated will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is
bound or to which any of the property or assets of such Selling Shareholder
is subject, nor will such action result in any violation of the provisions
of the Partnership Agreement of the Selling Shareholder or any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Selling Shareholder or the property of such
Selling Shareholder;
(iii) The Selling Shareholder has, and immediately prior to each Time
of Delivery (as defined in Section 4 hereof) the Selling Shareholder will
have,
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good and valid title to the Shares to be sold by the Selling Shareholder
hereunder, free and clear of all liens (including all estate tax liens
under the Internal Revenue Code of 1986, as amended), encumbrances,
equities or claims; and, upon delivery of such Shares and payment therefor
pursuant hereto, good and valid title to such Shares, free and clear of all
liens (including all estate tax liens under the Internal Revenue Code of
1986, as amended), encumbrances, equities or claims, will pass to the
several Underwriters;
(iv) The Selling Shareholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
(v) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by the Selling
Shareholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments
or supplements to the Registration Statement and the Prospectus, when they
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and will not contain any
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
not misleading;
(vi) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly completed
and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof);
(vii) Certificates in negotiable form representing all of the Shares
to be sold by such Selling Shareholder hereunder have been placed in
custody under a Custody Agreement, in the form heretofore furnished to you
(the "Custody Agreement"), duly executed and delivered by such Selling
Shareholder to [PNC Bank], as custodian (the "Custodian"); and
(viii) The Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder; the arrangements made by such
Selling Shareholder for such custody, are to that extent irrevocable; the
obligations of the Selling Shareholder hereunder shall not be terminated by
operation of law, or if the Selling Shareholder should be dissolved, or if
any other such event should occur, before the delivery of the Shares
hereunder, certificates representing the Shares shall be delivered by or on
behalf of the Selling Shareholder in accordance with the terms and
conditions of this Agreement and of the Custody Agreement; and actions
taken by a person acting on behalf of the Selling
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Shareholder shall be as valid as if such dissolution or other event had not
occurred, regardless of whether or not the Custodian, the person acting on
behalf of the Selling Shareholder, or any of them, shall have received
notice of such dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the Selling
Shareholder agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Selling
Shareholder, at a purchase price per share of $_____________ , the aggregate
number of Firm Shares to be purchased by such Underwriter as set forth opposite
the name of such Underwriter in Schedule I hereto and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Selling Shareholder agrees to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Selling Shareholder, at the purchase price per
share set forth in clause (a) of this Section 2, that portion of the number of
Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to purchase
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Shares that all of the
Underwriters are entitled to purchase hereunder.
The Selling Shareholder, as and to the extent indicated in Schedule II
hereto, hereby grants to the Underwriters the right to purchase at their
election up to __________ Optional Shares, at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering sales of shares
in excess of the number of Firm Shares. Any such election to purchase Optional
Shares may be exercised only by written notice from you to the Selling
Shareholder, within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Selling Shareholder
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
As compensation to the Underwriters for their commitments hereunder, the
Selling Shareholder at each Time of Delivery (as defined in Section 4 hereof)
will pay to ▇▇▇▇▇▇▇, Sachs & Co., for the accounts of the several Underwriters,
an amount equal to $_______________ per share for the Shares to be delivered by
the Selling Shareholder hereunder at such Time of Delivery.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least forty-eight hours' prior
notice to the Selling Shareholder shall be delivered by or on behalf of the
Selling Shareholder to ▇▇▇▇▇▇▇, Sachs & Co., through the facilities of the
Depository Trust Company ("DTC"),
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for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefore by wire transfer of Federal
(same-day) funds to the account specified by the Selling Shareholder to ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. at least forty-eight hours in advance. The Selling Shareholder will
cause the certificates representing the Shares to be made available for checking
and packaging at least twenty-four hours prior to the Time of Delivery (as
defined below) with respect thereto at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on
________, 2002 or such other time and date as ▇▇▇▇▇▇▇, Sachs & Co. and the
Selling Shareholder may agree upon in writing, and, with respect to the Optional
Shares, 9:30 a.m., New York time, on the date specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
in the written notice given by ▇▇▇▇▇▇▇, Sachs & Co. of the Underwriters'
election to purchase such Optional Shares, or such other time and date as
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and the Selling Shareholder may agree upon in writing. Such
time and date for delivery of the Firm Shares is herein called the "First Time
of Delivery", such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery", and each
such time and date for delivery is herein called a "Time of Delivery".
At each Time of Delivery, the Selling Shareholder will pay, or cause to be
paid, the commission payable at Time of Delivery to the Underwriters under
Section 2 hereof by wire transfer of Federal (same-day) funds to the account
specified by ▇▇▇▇▇▇▇, Sachs & Co.
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(m) hereof will be delivered at the offices of [▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇] (the "Closing Location"),
and the Shares will be delivered at the Designated Office, all at such Time of
Delivery. A meeting will be held at the Closing Location at ________p.m., New
York City time, on the New York Business Day next preceding such Time of
Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus prior to the last Time of
Delivery which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish you with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by the
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Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Shares; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish the
Underwriters with written and electronic copies of the Prospectus in New York
City in such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act or
the Exchange Act, to notify you and upon your request to file such document and
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many written and electronic copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a prospectus in connection with
sales of any of the Shares at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many written and
electronic copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule 158
under the Act);
10
(e) During the period beginning from the date hereof and continuing to and
including the date 90 days after the date of the Prospectus, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder, any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement), without
your prior written consent;
(f) To furnish to its shareholders promptly after the end of each fiscal
year an annual report (including a balance sheet and statements of income,
shareholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, promptly after
the end of each of the first three quarters of each fiscal year (beginning with
the first such fiscal quarter ending after the effective date of the
Registration Statement), to make available to its shareholders consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
shareholders generally or to the Commission);
(h) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act; and
(i) Upon request of any Underwriter, to furnish, or cause to be furnished,
to such Underwriter an electronic version of the Company's trademarks,
servicemarks and corporate logo for use on the website, if any, operated by such
Underwriter for the purpose of facilitating the on-line offering of the Shares
(the "License"); provided, however, that the License shall be used solely for
the purpose described above, is granted without any fee and may not be assigned
or transferred.
6. The Company and the Selling Shareholder covenant and agree with one
another and with the several Underwriters that (a) such Selling Shareholder will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Company's counsel and accountants in connection with the registration of
the Shares under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof
11
to the Underwriters and dealers; (ii) the cost of printing or producing any
Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky survey; (iv) filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (v) the cost of
preparing stock certificates; (vi) the cost and charges of any transfer agent or
registrar; and (vii) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section; and (b) such Selling Shareholder will pay or cause to be paid all
costs and expenses incident to the performance of such Selling Shareholder's
obligations hereunder which are not otherwise specifically provided for in this
Section, including (i) any fees and expenses of counsel for such Selling
Shareholder, (ii) the fees and expenses of the Custodian; and (iii) all expenses
and taxes incident to the sale and delivery of the Shares to be sold by such
Selling Shareholder to the Underwriters hereunder. In connection with clause (c)
of the preceding sentence, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. agrees to pay New York State
stock transfer tax, and the Selling Shareholder agrees to reimburse ▇▇▇▇▇▇▇,
Sachs & Co. for associated carrying costs if such tax payment is not rebated on
the day of payment and for any portion of such tax payment not rebated. It is
understood, however, that except as provided in this Section, and Sections 8 and
11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Shares by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Shareholder herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Selling
Shareholder shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, shall have furnished
to you such written opinion or opinions, dated such Time of Delivery, with
respect to the matters covered in paragraphs (i), (ii), (vii), (xi), and (xiii)
and (xiv) of subsection (c) below as well as such other related matters as you
may reasonably request, and such
12
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) ▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel for the Company, shall have furnished to you
their written opinion dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the Commonwealth of
Pennsylvania, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the Shares being delivered at such Time of Delivery) have been
duly and validly authorized and issued and are fully paid and
non-assessable; and the Shares conform to the description of the Stock
contained in the Prospectus;
(iii) The Company has been duly qualified as a foreign corporation for
the transaction of business and is [in good standing] under the laws of
each other jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so qualified in
any such jurisdiction (such counsel being entitled to rely in respect of
the opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company, provided that
such counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates);
(iv) The Erie Insurance Exchange is an unincorporated association
validly existing as a legal entity in good standing under the laws of
Pennsylvania; each subsidiary of the Company has been duly incorporated or
organized as an insurance company and is validly existing as such in good
standing under the laws of its jurisdiction of incorporation or
organization; and all of the issued shares of capital stock of each such
subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable, and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the Company or
its subsidiaries, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such opinions and
certificates);
(v) To such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which
any member of the Property and Casualty Group is a party or of which any
property of any member of the Property and Casualty Group is the subject
that, if determined adversely to any member of the Property and Casualty
Group, would individually or in the aggregate have a Material Adverse
Effect or would reasonably be expected to materially and adversely affect
the offer and sale of the Shares or would affect the validity of this
Agreement; and, to the best of such
13
counsel's knowledge, no such proceedings are threatened by governmental
authorities that would reasonably be expected to materially and adversely
affect the sale of the Shares or would affect the validity of this
Agreement;
(vi) This Agreement has been duly authorized, executed and delivered
by the Company;
(vii) The compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions herein contemplated
(a) to such counsel's knowledge, will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which any member of
the Property and Casualty Group is a party or by which any member of the
Property and Casualty Group is bound or to which any of the property or
assets of any member of the Property and Casualty Group is subject, (b)
will not result in any violation of the provisions of the applicable
Articles of Incorporation or By-laws of the Company, the charter, By-laws
and any other formation documents of any other member of the Property and
Casualty Group or (c) will not, to such counsel's knowledge, result in the
violation of any Pennsylvania or United States statute, rule or regulation
(other than state securities or Blue Sky laws as to which such counsel need
express no opinion) or order of any Pennsylvania or United States court or
governmental agency or body having jurisdiction over any member of the
Property and Casualty Group or any of their properties known by such
counsel to be applicable to any member of the Property and Casualty Group,
except, in the case of (a) above, any conflicts, breaches, defaults or
violations that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect or impair the ability of the
Company to perform its obligations under, or consummate the transactions
contemplated by, this Agreement;
(viii) To such counsel's knowledge, no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the consummation by
the Company of the transactions contemplated by this Agreement, except the
registration under the Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(ix) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair summaries or
descriptions thereof;
(x) The Company is not an "investment company", as such term is
defined in the Investment Company Act;
(xi) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
notes and
14
schedules therein, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable and the rules and regulations of
the Commission thereunder; and they have no reason to believe that any of
such documents, when such documents were so filed, contained an untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading; and
(xii) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder; in addition, such counsel shall state
that it has participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, representatives of the Underwriters and
representatives of counsel for the Underwriters at which conferences the
contents of the Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to the Time of
Delivery were discussed and conducted other relevant investigations, and
although such counsel assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, except to the extent specified in subsection
(ix) of this Section 7(c), no facts have come to such counsel's attention
which leads such counsel to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the Company
prior to such Time of Delivery (other than the financial statements,
related notes and schedules and other financial data included or
incorporated by reference therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the financial statements,
related notes and schedules and other financial data included or
incorporated by reference therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
that, as of the Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the financial statements,
related notes and schedules and other financial data included or
incorporated by reference therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or
15
required to be described in the Registration Statement or the Prospectus
which are not filed or incorporated by reference or described as required;
In furnishing such opinion, ▇▇▇▇▇ ▇▇▇▇▇▇ LLP may rely, in respect to
matters of fact, upon certificates of officers of the Company, provided that
such counsel shall state that it believes that both you and it are justified in
relying upon such certificates;
(d) ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, Esq., Senior Executive Vice President, General
Counsel and Secretary of the Company, shall have furnished to you his written
opinion dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) Each member of the Property and Casualty Group has good and
marketable title in fee simple to all real property owned by it, in each
case free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and proposed
to be made of such property by any member of the Property and Casualty
Group; and any real property and buildings held under lease by any member
of the Property and Casualty Group are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the members of the Property and Casualty Group (in giving the
opinion in this clause, such counsel may state that no examination of
record titles for the purpose of such opinion has been made, and that he is
relying upon a general review of the titles of the members of the Property
and Casualty Group, upon opinions of local counsel and abstracts, reports
and policies of title companies rendered or issued at or subsequent to the
time of acquisition of such property by members of the Property and
Casualty Group, upon opinions of counsel to the lessors of such property
and, in respect of matters of fact, upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall state that he
believes that both you and he are justified in relying upon such opinions,
abstracts, reports, policies and certificates;
(ii) To the best of such counsel's knowledge, no member of the
Property and Casualty Group has received any notification from any
insurance authority, commission or other insurance regulatory body to the
effect that any license from such authority, commission or body is needed
to be obtained by any member of the Property and Casualty Group or that any
member of the Property and Casualty Group is not in compliance with any
applicable insurance laws (including laws that relate to companies that
control insurance companies) and the rules, regulations and interpretations
of the insurance regulatory authorities thereunder, except as could not be
reasonably expected to have a Material Adverse Effect; and
(iii) The Company is not in violation of its Articles of Incorporation
or By-laws; no other member of the Property and Casualty Group is in
violation of its charter, By-laws or any other formation documents; neither
the Company nor any other member of the Property and Casualty Group is in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, or
16
lease or agreement or other instrument to which it is a party or by which
it or any of its properties may be bound;
(e) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, counsel for the Selling
Shareholder, shall have furnished to you its written opinion, dated the First
Time of Delivery, in form and substance satisfactory to you, to the effect that:
(i) A Custody Agreement has been duly executed and delivered by such
Selling Shareholder and constitutes a valid and binding agreement of such
Selling Shareholder in accordance with its terms;
(ii) This Agreement has been duly executed and delivered by or on
behalf of such Selling Shareholder; and the sale of the Shares to be sold
by such Selling Shareholder hereunder and the compliance by such Selling
Shareholder with all of the provisions of this Agreement and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which such Selling Shareholder is a
party or by which such Selling Shareholder is bound or to which any of the
property or assets of such Selling Shareholder is subject, nor will such
action result in any violation of the provisions of the Partnership
Agreement of such Selling Shareholder or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
jurisdiction over such Selling Shareholder or the property of such Selling
Shareholder;
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the Shares
to be sold by such Selling Shareholder hereunder, except such as have been
obtained under the Act and such as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of such
Shares by the Underwriters;
(iv) Immediately prior to such Time of Delivery, such Selling
Shareholder had good and valid title to the Shares to be sold at such Time
of Delivery by such Selling Shareholder under this Agreement, free and
clear of all liens (including all estate tax liens under the Internal
Revenue Code of 1986, as amended), encumbrances, equities or claims, and
full right, power and authority to sell, assign, transfer and deliver the
Shares to be sold by such Selling Shareholder hereunder; and
(v) Good and valid title to such Shares, free and clear of all liens
(including all estate tax liens under the Internal Revenue Code of 1986, as
amended), encumbrances, equities or claims, has been transferred to each of
the several Underwriters who have purchased such Shares in good faith and
without notice of any such lien, encumbrance, equity or claim or any other
adverse claim within the meaning of the Uniform Commercial Code;
17
In rendering the opinion in paragraph (iv), such counsel may rely upon a
certificate of such Selling Shareholder in respect of matters of fact as to
ownership of, and liens (except with respect to any estate tax liens under the
Internal Revenue Code of 1986, as amended), encumbrances, equities or claims on,
the Shares sold by such Selling Shareholder, provided that such counsel shall
state that they believe that both you and they are justified in relying upon
such certificate;
(f) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Malin, ▇▇▇▇▇▇▇▇▇ &
Company, LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to you,
to the effect set forth in Annex I hereto;
(g) (i) None of the members of the Property and Casualty Group shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of any member of the Property and Casualty Group or any change,
or any development involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity, results of
operations, statutory surplus or reserves (including any such change in the loss
and loss adjustment expense reserves) of any member of the Property and Casualty
Group, otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in clause (i) or (ii), is in the judgment
of the Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(h) On or after the date hereof (i) no member of the Property and Casualty
Group, except Erie Family Life Insurance Company, shall have had its ratings of
financial strength or claims paying ability downgraded below "A+" by A.M. Best
Company, Inc. ("A.M. Best") or below "AA-" by Standard & Poor's Rating's Group
("S&P"); provided, however, that if the ratings of any such member of the
Property and Casualty Group shall have been downgraded to "A+" or "AA-" by A.M.
Best or S&P, respectively, then such downgraded ratings shall not also be under
publicly announced surveillance or review, with possible negative implications,
(ii) Erie Family Life Insurance Company's ratings of financial strength or
claims paying ability shall not have been downgraded below "A" by A.M. Best or
below "A-" by S&P; provided, however, that if such ratings of Erie Family Life
Insurance Company shall have been downgraded to "A" or "A-" by A.M. Best or S&P,
respectively, then such downgraded ratings shall not also be under publicly
announced surveillance or review with possible negative implications, (iii) no
downgrading shall have occurred in any rating accorded any member of the
Property and Casualty Group by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act, other than S&P, and (iv) no such "nationally recognized
statistical rating organization," other than S&P, shall have publicly announced
that it has under
18
surveillance or review, with possible negative implications, its rating accorded
to any member of the Property and Casualty Group;
(i) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on NASDAQ; (iii) a
general moratorium on commercial banking activities declared by either Federal,
New York or Pennsylvania State authorities or a material disruption in
commercial banking or securities settlement or clearance services in the United
States; (iv) the outbreak or escalation of hostilities involving the United
States or the declaration by the United States of a national emergency or war or
(v) the occurrence of any other calamity or crisis or any change in financial,
political or economic conditions in the United States or elsewhere, if the
effect of any such event specified in clause (iv) or (v) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of Delivery
on the terms and in the manner contemplated in the Prospectus;
(j) The Company has obtained and delivered to the Underwriters executed
copies of an agreement from each of the individuals and entities listed in
Schedule III hereto, substantially to the effect set forth in Section 5(e)
hereof in form and substance satisfactory to you;
(k) The Selling Shareholder shall have executed and delivered executed
copies of an agreement substantially to the effect set forth in Section 5(e)
hereof in form and substance satisfactory to you;
(l) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement; and
(m) The Company and the Selling Shareholder shall have furnished or caused
to be furnished to you at such Time of Delivery certificates of officers of the
Company and of the Selling Shareholder, respectively, satisfactory to you as to
the accuracy of the representations and warranties of the Company and the
Selling Shareholder, respectively, herein at and as of such Time of Delivery, as
to the performance by the Company and the Selling Shareholder of all of their
respective obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request, and the
Company shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section.
8. (a) The Company and the Selling Shareholder, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities to which such Underwriter may become subject, under the
Act or otherwise, whether such losses, claims, damages or liabilities are joint
or several, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or 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 required to be stated therein or
19
necessary to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and the
Selling Shareholder shall 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
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through you expressly
for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company and the
Selling Shareholder against any losses, claims, damages or liabilities to which
the Company or such Selling Shareholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or 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 required to be stated therein or necessary to make
the statements therein 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 any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein; and will reimburse the
Company and each Selling Shareholder for any legal or other expenses reasonably
incurred by the Company or such Selling Shareholder in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), provided, however, that the indemnifying party shall not, in connection
with any one such action or proceeding or separate but substantially similar
actions or proceedings in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all indemnified parties except to the extent that
local counsel, in addition to its regular counsel, is reasonably necessary in
order to effectively defend against such action or proceeding, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof
20
other than reasonable costs of investigation. No indemnifying party shall,
without the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party. An indemnifying party shall not
be required to indemnify an indemnified party under Sections 8(a) or 8(b) above
for any amounts paid or payable by an indemnified party in the settlement of an
action, proceeding or investigation without the consent of the indemnifying
party, which consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Shareholder on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Shareholder on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Shareholder taken together on
the one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholder bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Selling Shareholder on the one hand or the Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, each of the
Selling Shareholder and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
21
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 untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company and the Selling Shareholder under this
Section 8 shall be in addition to any liability which the Company and the
respective Selling Shareholder may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company or any Selling Shareholder within the meaning of
the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Selling Shareholder shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Selling Shareholder that you have so arranged
for the purchase of such Shares, or the Selling Shareholder notify you that they
have so arranged for the purchase of such Shares, you or the Selling Shareholder
shall have the right to postpone (a) Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Selling
Shareholder as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Selling Shareholder shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
22
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Selling
Shareholder as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate number of
all of the Shares to be purchased at such Time of Delivery, or if the Selling
Shareholder shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Selling Shareholder to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company
or the Selling Shareholder, except for the expenses to be borne by the Company
and the Selling Shareholder and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Shareholder and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Shareholder, or any officer
or director or controlling person of the Company, or any controlling person of
the Selling Shareholder, and shall survive delivery of and payment for the
Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Shareholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Selling Shareholder as provided herein, the Selling Shareholder will reimburse
the Underwriters through you for all out-of-pocket expenses approved in writing
by you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company and the Selling Shareholder shall then
be under no further liability to any Underwriter in respect of the Shares not so
delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the
representatives; and in all dealings with any Selling Shareholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Shareholder made or given by
▇▇▇▇▇▇ ▇. Black, III or any other person duly authorized to act for such Selling
Shareholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration
Department; if to any Selling Shareholder shall be delivered or sent by mail,
telex or facsimile transmission to counsel for such Selling Shareholder at its
address set forth in Schedule II hereto; and if to the
23
Company shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address will be
supplied to the Company or the Selling Shareholder by you on request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Shareholder and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person who controls the Company, any Selling Shareholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. The Company and the Selling Shareholder are authorized, subject to
applicable law, to disclose any and all aspects of this potential transaction
that are necessary to support any U.S. federal income tax benefits expected to
be claimed with respect to such transaction, and all materials of any kind
(including tax opinions and other tax analyses) related to those benefits,
without the Underwriters imposing any limitation of any kind.
If the foregoing is in accordance with your understanding, please sign and
return to us one counterpart hereof for the Company, the Selling Shareholder and
each of the Representatives plus one for each counsel and the Custodian,
counterparts hereof, and upon the acceptance hereof by you, on behalf of each of
the Underwriters, this letter and such acceptance hereof shall constitute a
binding agreement among each of the Underwriters, the Company and the Selling
Shareholder. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company and the Selling Shareholder for examination, upon request, but without
warranty on your part as to the authority of the signers thereof.
24
Any person executing and delivering this Agreement on behalf of the Selling
Shareholder represents by so doing that he is duly authorized to take such
action.
Very truly yours,
Erie Indemnity Company
By ____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Black Interests Limited Partnership
By ____________________________
Name: ▇▇▇▇▇▇ ▇. Black, III
Title: General Partner
Accepted as of the date hereof
▇▇▇▇▇▇▇, Sachs & Co.
Credit Suisse First Boston Corporation
Advest, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Incorporated
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Securities LLC
as Representatives of the several Underwriters
By:____________________________________________
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
On behalf of each of the Underwriters
25
SCHEDULE I
Total Number of
Number Optional Shares
of to be
Firm Shares Purchased if
to be Maximum Option
Underwriter Purchased Exercise
----------- --------- --------
▇▇▇▇▇▇▇, Sachs & Co. ..........................
Credit Suisse First Boston Corporation ........
Advest, Inc. ..................................
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Incorporated ..........
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Securities LLC ...............
Total .........................................
SCHEDULE II
Number of
Total Number Optional Shares to
of be
Firm Shares Purchased if
to be Maximum Option
Purchased Exercise
--------- --------
Selling Shareholder:
Black Interests Limited Partnership .............
c/o MacDonald ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
SCHEDULE III
Directors:
▇▇▇▇▇▇ ▇. Black, III
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇
[▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇]
F. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. Nassau
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Officers:*
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Shareholders:**
▇▇▇▇▇▇ ▇. Black & Associates, Inc.
[▇▇▇▇▇ Family Limited Partnership]
[▇▇▇▇▇▇ ▇▇▇▇▇]
[▇▇▇▇▇▇▇▇ ▇▇▇▇▇]
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________
* Excluding officers who are also directors.
** Excluding shareholders who are also directors.
▇.▇. ▇▇▇▇ Revocable Trust
[▇▇▇▇▇▇ ▇. ▇▇▇▇ Revocable Trust]
▇.▇. ▇▇▇▇ Irrevocable Trust dated 12/31/1987
[▇▇▇▇▇▇ ▇. ▇▇▇▇ Income Trust dated 11/30/1989 f/b/o ▇▇▇▇▇▇ ▇. ▇▇▇▇]
[▇▇▇▇▇▇ ▇. ▇▇▇▇ Income Trust dated 11/30/1989 f/b/o ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇]
▇.▇. ▇▇▇▇ 1989 Income Trust dated 11/30/1989 f/b/o ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇.▇. ▇▇▇▇ 1989 Income Trust dated 11/30/1989 f/b/o ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
2
[To be updated]
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the representatives of the Underwriters (the
"Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus and/or
included in the Company's quarterly report on Form 10-Q incorporated by
reference into the Prospectus as indicated in their reports thereon copies
of which are attached hereto; and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or incorporated
by reference in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations, or (ii) any material modifications
should be made to the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the
Prospectus, for them to be in conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
2
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Representatives,
or any increases in any items specified by the Representatives, in
each case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except in
each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference) or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives
or in documents incorporated by reference in the Prospectus specified by
the Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
3
