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Exhibit 1.01
[2,932,766] SHARES
EDUCATION MANAGEMENT CORPORATION
COMMON STOCK ($.01 PAR VALUE)
UNDERWRITING AGREEMENT
___________, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXX XXXXXX INC.
ABN AMRO CHICAGO CORPORATION
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000-0000
Dear Sirs:
1. Introductory. The shareholders listed in Schedule A hereto
(collectively, the "Selling Shareholders") propose severally to sell an
aggregate of [2,932,766] outstanding shares ("Firm Securities") of the common
stock, $.01 par value ("Securities") of Education Management Corporation, a
Pennsylvania corporation ("Company"), and certain of the Selling Shareholders
also propose to sell to the Underwriters, at the option of the Underwriters, an
aggregate of not more than [293,277] additional outstanding shares ("Optional
Securities") of the Company's Securities as set forth below. The Firm Securities
and the Optional Securities are herein collectively referred to as the "Offered
Securities". The Company and the Selling Shareholders hereby agree with the
several Underwriters named in Schedule B hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling Shareholders.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-37389) relating to the
Offered Securities, including a form of prospectus, has been
filed with the Securities and Exchange Commission ("Commission")
and either (A) has been declared effective under the Securities
Act of 1933, as amended ("Act"), and is not
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proposed to be amended or (B) is proposed to be amended by
amendment or post-effective amendment. If such registration
statement (the "initial registration statement") has been
declared effective, either (A) an additional registration
statement (the "additional registration statement") relating to
the Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so
filed, has become effective upon filing pursuant to such Rule and
the Offered Securities all have been duly registered under the
Act pursuant to the initial registration statement and, if
applicable, the additional registration statement or (B) such an
additional registration statement is proposed to be filed with
the Commission pursuant to Rule 462(b) and will become effective
upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the
Act pursuant to the initial registration statement and such
additional registration statement. If the Company does not
propose to amend the initial registration statement or if an
additional registration statement has been filed and the Company
does not propose to amend it, and if any post-effective amendment
to either such registration statement has been filed with the
Commission prior to the execution and delivery of this Agreement,
the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this
Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement
means (A) if the Company has advised the Representatives that it
does not propose to amend such registration statement, the date
and time as of which such registration statement, or the most
recent post-effective amendment thereto (if any) filed prior to
the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representatives that it proposes to file an amendment or
post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by
such amendment or post-effective amendment, as the case may be,
is declared effective by the Commission. If an additional
registration statement has not been filed prior to the execution
and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time"
with respect to such additional registration statement means the
date and time as of which such registration statement is filed
and becomes effective pursuant to Rule 462(b). "Effective Date"
with respect to the initial registration statement or the
additional registration statement (if any) means the date of the
Effective Time
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thereof. The initial registration statement, as amended at its
Effective Time, including all information contained in the
additional registration statement (if any) and deemed to be a
part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the
General Instructions of the Form on which it is filed and
including all information (if any) deemed to be a part of the
initial registration statement as of its Effective Time pursuant
to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter
referred to as the "Initial Registration Statement". The
additional registration statement, as amended at its Effective
Time, including the contents of the initial registration
statement incorporated by reference therein and including all
information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional
Registration Statement". The Initial Registration Statement and
the Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually as
a "Registration Statement". The form of prospectus relating to
the Offered Securities, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Act or (if no such filing is required) as included in a
Registration Statement, is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Act. No stop order
suspending the effectiveness of a Registration Statement or any
part thereof has been issued and no proceeding for that purpose
has been instituted or, to the best knowledge of the Company,
threatened by the Commission.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this
Agreement: (A) on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement conformed in all
respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did
not include 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, (B) on
the Effective Date of the Additional Registration Statement (if
any), each Registration Statement conformed, or will conform, in
all respects to the requirements of the Act and the Rules and
Regulations and did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit,
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C)
on the date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this
Agreement, the Additional Registration
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Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is
required) on the Effective Date of the Registration Statement in
which the Prospectus is included, each Registration Statement and
the Prospectus will conform in all respects to the requirements
of the Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and
the Prospectus will conform in all respects to the requirements
of the Act and the Rules and Regulations, neither of such
documents will include any untrue statement of a material fact or
will omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and no Additional Registration Statement has been or
will be filed. The two preceding sentences do not apply to
statements in or omissions from a Registration Statement or the
Prospectus based upon written information furnished to the
Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that
the only such information is that described as such in Section
7(c).
(iii) The Company has been duly incorporated and is a
validly subsisting corporation in good standing under the laws of
the Commonwealth of Pennsylvania, with corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership,
leasing or operation of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified or in good standing would not, individually or in the
aggregate, have a material adverse effect on the financial
condition, business or results of operations of the Company and
its subsidiaries taken as a whole ("Material Adverse Effect").
(iv) Exhibit 1 hereto sets forth all subsidiaries of the
Company which are, individually or on a consolidated basis,
material to the operations of the Company and its subsidiaries
and the conduct of their respective businesses (collectively,
"Material Subsidiaries"). Each such subsidiary of the Company has
been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own, lease
and operate its properties and conduct its
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business as described in the Prospectus; and each such subsidiary
of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which
its ownership, leasing or operation of property or the conduct of
its business requires such qualification, except where the
failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect;
all of the issued and outstanding capital stock of each such
subsidiary of the Company has been duly authorized and validly
issued and is fully paid and nonassessable; and the capital stock
of each such subsidiary is owned by the Company, directly or
through one or more of the Company's other subsidiaries, free and
clear of any mortgage, pledge, lien, security interest, claim,
encumbrance or defect of any kind, except for shares of the
capital stock of certain of the Company's subsidiaries which have
been pledged as collateral pursuant to the Company's Amended and
Restated Credit Agreement dated March 16, 1995, as amended (the
"Revolving Credit Agreement"); and there are no rights granted to
or in favor of any third party (whether acting in an individual,
fiduciary or other capacity) other than the Company to acquire
such capital stock, any additional capital stock or any other
equity securities of any such subsidiary.
(v) The Offered Securities have been duly authorized,
validly issued, fully paid and nonassessable and no further
approval or authorization of the shareholders or the Board of
Directors of the Company is or will be required for the sale of
the Offered Securities as contemplated by this Agreement; on each
Closing Date (as defined below), all other outstanding shares of
capital stock of the Company will be duly authorized, validly
issued, fully paid and nonassessable and will have been issued in
compliance with applicable federal and state securities laws; the
authorized and outstanding capital stock of the Company on each
Closing Date will conform to the descriptions thereof contained
in the Prospectus under the captions "Capitalization" and
"Description of Capital Stock"; and on each Closing Date the
shareholders of the Company will have no preemptive or similar
rights with respect to the Offered Securities or any other
securities of the Company.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and
any third party that would give rise to a valid claim against the
Company or any Underwriter for a brokerage commission, finder's
fee or other like payment in connection with the transactions
contemplated by this Agreement.
(vii) Except as disclosed in the Prospectus, on each Closing
Date there will be no contracts, agreements or understandings
between the Company and any third party (whether acting in an
individual, fiduciary or other
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capacity) granting such third party the right to require the
Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by
such third party or to require the Company to include such
securities in the Offered Securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Act.
(viii) The Securities are listed on the Nasdaq Stock
Market's National Market.
(ix) Except as disclosed in the Prospectus, no consent,
approval, authorization, order, registration or qualification of,
or filing with, any third party (whether acting in an individual,
fiduciary or other capacity) or any governmental, regulatory or
accrediting agency or body or any court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with
the sale of the Offered Securities, except such as have been
obtained and made under the Act and such as may be required under
state securities laws.
(x) The execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the
transactions herein contemplated have been duly authorized by all
necessary corporate action on the part of the Company and, to the
extent required, its shareholders and do not and will not
conflict with or result in a breach or violation of any of the
terms and provisions of, and do not and will not constitute a
default (or an event which with the giving of notice or the lapse
of time or both could reasonably be likely to constitute a
default) under, and do not and will not result in the creation or
imposition of any lien, charge or encumbrance upon any assets or
properties of the Company or any of its Material Subsidiaries
(including any individual institution within such entity) under,
(A) the charter, by-laws or other organizational documents of the
Company or any such subsidiary, (B) any statute, any rule,
regulation, requirement, order or decree of any governmental,
regulatory or accrediting agency or body or any court having
jurisdiction over the Company or any such subsidiary or any of
their properties, assets or operations, including, without
limitation, The Higher Education Act of 1965, as amended, and the
regulations promulgated thereunder (the "HEA"), or (C) any
indenture, mortgage, loan or credit agreement, note, lease,
permit, license or other agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company
or any such subsidiary is bound or to which any of the
properties, assets or operations of the Company or any such
subsidiary is subject, except for such conflicts, breaches,
violations, defaults, liens, charges and encumbrances which
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would not, individually or in the aggregate, have a Material
Adverse Effect. The consummation of the transactions contemplated
by this Agreement in connection with the sale of the Offered
Securities will not constitute a change in ownership resulting in
a "change of control" of the Company as defined in the HEA.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and
binding obligations of the Company enforceable against the
Company in accordance with its terms, except to the extent that
(A) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors' rights generally and by general principles of equity
and (B) rights to indemnity and contribution may be limited by
federal and state securities laws or policies underlying such
laws.
(xii) The Company and its Material Subsidiaries have good
and marketable title to all real properties and all other
material properties and assets owned by them, in each case free
and clear of any mortgage, pledge, lien, security interest, claim
or other encumbrance or defect that would, individually or in the
aggregate, materially interfere with the use made or to be made
thereof by them or have a Material Adverse Effect; the Company
and its Material Subsidiaries hold all their material leased real
or personal properties under valid, subsisting and enforceable
leases or subleases with no exceptions that would materially
interfere with the use made or to be made thereof by them;
neither the Company nor any Material Subsidiary is in default
under any such lease or sublease, except for any such defaults
which would not, individually or in the aggregate, have a
Material Adverse Effect; and, except as described in the
Prospectus, no claim of any sort has been asserted by anyone
adverse to the rights of the Company or any such subsidiary under
any such lease or sublease or affecting or questioning the right
of such entity to the continued possession of the leased or
subleased properties under any such lease or sublease, except for
any such claims which would not, individually or in the
aggregate, have a Material Adverse Effect.
(xiii) Except as disclosed in the Prospectus, the Company
and its Material Subsidiaries (including any individual
institution within such entity) possess all accreditations,
approvals, authorizations, certificates, permits and licenses
(collectively, "Licenses") issued by appropriate governmental,
regulatory or accrediting agencies or bodies, including, without
limitation, all authorizations required for participation in
federal aid programs under Title IV of the HEA ("Title IV
Programs"), as are necessary to own, lease or operate their
properties and to conduct the business now operated by them and
all such
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Licenses are in full force and effect, except where the failure
to possess such Licenses or the failure of such Licenses to be in
full force and effect would not, individually or in the
aggregate, have a Material Adverse Effect; the Company and its
Material Subsidiaries are in substantial compliance with their
respective obligations under such Licenses, subject to such
qualifications as are described in the Prospectus; and neither
the Company nor any of its Material Subsidiaries has received
notice of any proceedings, investigations or inquiries or, to the
knowledge of the Company, are any proceedings, investigations or
inquiries threatened, relating to the revocation, modification,
termination or suspension of any such License, except where any
such noncompliance, revocation, modification, termination or
suspension would not, individually or in the aggregate, have a
Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or
any Material Subsidiary exists or, to the knowledge of the
Company, is imminent that would, individually or in the
aggregate, have a Material Adverse Effect.
(xv) The Company and its Material Subsidiaries own or have
obtained valid licenses for all trademarks, trademark
registrations, service marks, service xxxx registrations, trade
names, copyrights, copyright registrations, confidential
information and any other intellectual property described in the
Prospectus as being owned, licensed or used by the Company or any
of its Material Subsidiaries or that are necessary for the
conduct of their businesses (collectively, "Intellectual
Property"), except where the failure to own or obtain any such
Intellectual Property would not, individually or in the
aggregate, have a Material Adverse Effect, and the Company has no
knowledge of any written claim to the contrary or any challenge
in writing by any third party with respect to the rights of the
Company or any such subsidiaries in any such Intellectual
Property or to the validity or scope of any such Intellectual
Property and neither the Company nor any of its subsidiaries has
any written claim against a third party with respect to the
infringement by such third party of any such Intellectual
Property that, if determined adversely to the Company or any of
its subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect.
(xvi) The Company and its Material Subsidiaries are in
compliance with all applicable federal, state and local
environmental laws, rules and regulations, orders, decrees,
judgments, permits and licenses relating to public and worker
health and safety, and to the protection and clean-up of the
natural environment, including, without limitation, those
relating to the production, generation, handling, disposal,
transportation or release of hazardous materials (collectively,
"Environmental Laws"), except where noncompliance would not,
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individually or in the aggregate, have a Material Adverse Effect.
To the knowledge of the Company, neither the Company nor any of
its Material Subsidiaries is the subject of any federal, state or
local investigation, and neither the Company nor any such
subsidiaries has received any notice or claim of or entered into
any negotiations or agreements with any third party relating to
any liability or potential liability or remedial action or
potential remedial action under Environmental Laws, nor are there
any pending or, to the knowledge of the Company, threatened
actions, suits or proceedings against or affecting the Company,
any of its Material Subsidiaries or their properties, assets or
operations in connection with any such Environmental Laws. The
term "hazardous materials" shall mean those substances that are
regulated by or form the basis for liability under any applicable
Environmental Laws.
(xvii) Except as disclosed in the Prospectus, there are no
pending actions, suits, proceedings or investigations against the
Company or any of its Material Subsidiaries (including any
individual institution within such entity) or any of their
respective properties, assets or operations, or as to which the
Company or any such subsidiary or any of their properties, assets
or operations is a subject or a target, that, if determined
adversely to the Company or any of its Material Subsidiaries,
would, individually or in the aggregate, have a Material Adverse
Effect or could materially and adversely affect the ability of
the Company to perform its obligations under this Agreement or
which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits, proceedings or
investigations are, to the knowledge of the Company, threatened.
(xviii) The audited financial statements and related
schedules and notes included in each Registration Statement and
the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods
shown, have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a
consistent basis, and, to the knowledge of the Company, comply
with the requirements of the Act and the Rules and Regulations.
The financial information and statistical data set forth in the
Prospectus under the captions "Summary Consolidated Financial and
Other Data", "Capitalization" and "Selected Consolidated
Financial and Other Data" present fairly the information shown
therein and, with the exception of any pro forma information,
have been compiled on a basis consistent with that of the audited
consolidated financial statements included in the Registration
Statements.
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(xix) Since the dates as of which information is given in
each Registration Statement and the Prospectus, (A) neither the
Company nor any of its Material Subsidiaries has incurred any
material liability or obligation (indirect, direct or contingent)
or entered into any material verbal or written agreement or other
transaction that is not in the ordinary course of business; (B)
except as described in the Prospectus, there has been no material
change in the indebtedness of the Company, no change in the
capital stock of the Company and no dividend or distribution of
any kind declared, paid or made by the Company on any class of
its capital stock; and (C) there has been no material adverse
change, nor any development or event involving a prospective
material adverse change, in the financial condition, business or
results of operations of the Company and its subsidiaries taken
as a whole.
(xx) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application
of the proceeds therefrom as described in the Prospectus, will
not be an "investment company" as defined in the Investment
Company Act of 1940, as amended.
(xxi) Except as described in the Prospectus, there are no
outstanding (A) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the
Company, (B) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations or (C)
obligations of the Company to issue any such capital stock,
convertible or exchangeable securities or obligations, or
warrants, rights or obligations.
(xxii) Each "employee benefit plan" within the meaning of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), in which employees of the Company or any subsidiary of
the Company participate or as to which the Company or any such
subsidiary has any liability (the "ERISA Plans") is in
substantial compliance with the applicable provisions of ERISA
and the Internal Revenue Code of 1986, as amended (the "Code").
Neither the Company nor any subsidiary of the Company has any
liability, whether or not contingent, with respect to the ERISA
Plans or otherwise under Title IV of ERISA. Neither the Company
nor any subsidiary of the Company has any liability, whether or
not contingent, with respect to any ERISA Plan that provides
post-retirement welfare benefits. The descriptions of the
Company's stock arrangements set forth in the Prospectus are
accurate and complete in all material respects.
(xxiii) The Company's Employee Stock Ownership Plan and
Trust (the "ESOP") constitutes an "employee stock ownership plan"
as defined in Section
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4957(e)(7) of the Code and Section 407(d)(6) of ERISA. All loans
to the trust created pursuant to the ESOP (the "ESOP Trust") and
each pledge of shares of securities of the Company by the ESOP
Trust in connection with the ESOP has satisfied the requirements
of Section 4975(d)(3) of the Code and Section 408(b)(3) of ERISA,
and has not and will not subject the Company or any subsidiary to
a tax imposed under Section 4975 of the Code or a civil penalty
assessed under Section 502(i) of ERISA. The Securities satisfy
the definition of a "qualifying employer security" within the
meaning of Section 4975(e)(8) of the Code and Section 407(d)(5)
of ERISA. Sales of shares of securities of the Company to the
ESOP Trust have satisfied and continue to satisfy the
requirements of Section 4975(d)(13) of the Code and Section
408(e) of ERISA, and such sales have not and will not subject the
Company nor any subsidiary to a tax imposed under Section 4975 of
the Code or a civil penalty assessed under Section 502(i) of
ERISA.
(xxiv) The Company and its subsidiaries have filed on a
timely basis all federal, state and local tax returns required to
be filed, such returns are complete and correct in all material
respects, and all taxes shown by such returns or otherwise
assessed that are due and payable have been paid, except such
taxes as are being contested in good faith and as to which
adequate reserves have been provided. The accruals and reserves
on the books of the Company and its subsidiaries in respect of
any tax liability for any year not finally determined are
adequate to meet any assessments or reassessments for additional
taxes; and there has been no tax deficiency asserted against the
Company or any of its subsidiaries that would, individually or in
the aggregate, have a Material Adverse Effect.
(xxv) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient in all material respects
for purposes of the prevention or detection of errors or
irregularities in amounts that could be expected to be material
to the Company's consolidated financial statements and the
recording of transactions so as to permit the preparation of such
consolidated financial statements in conformity with generally
accepted accounting principles.
(xxvi) Neither the Company nor any of its Material
Subsidiaries (including any individual institution within such
entity) is in violation of (A) its charter, by-laws or other
organizational documents or (B) any statute, any rule,
regulation, requirement, order, decree or judgment of any
governmental, regulatory or accrediting agency or body or any
court having jurisdiction over the Company or any such
subsidiary, except for any such violations which would not,
individually or in the aggregate, have a Material Adverse Effect;
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and no event of default or event which with the giving of notice
or the lapse of time or both, could constitute an event of
default exists under any indenture, mortgage, loan or credit
agreement, note, lease, permit, license or other agreement or
instrument to which the Company or any such subsidiary is a party
or by which the Company or any such subsidiary is bound or to
which any of the properties, assets or operations of the Company
or any such subsidiary is subject, except for any such defaults
which would not, individually or in the aggregate, have a
Material Adverse Effect. There are no statutes, regulations,
contracts or other documents that are required to be described in
the Registration Statements or the Prospectus or to be filed as
an exhibit to the Registration Statements that are not described
or filed as required.
(xxvii) The Company has not taken and will not take any
action designed to or that could cause or result in the
stabilization or manipulation of the price of the Offered
Securities to facilitate the sale or resale of the Offered
Securities.
(xxviii) The Company is subject to Section 13 or 15(d) of
the Exchange Act.
(b) Each Selling Shareholder severally represents and warrants
to, and agrees with, the several Underwriters that:
(i) Such Selling Shareholder has, and on each Closing Date will
have, valid and unencumbered title to the Offered Securities to be
delivered by such Selling Shareholder on such Closing Date and has
full right, power and authority to enter into this Agreement and the
Custody Agreement (the "Custody Agreement") and the Irrevocable Power
of Attorney (the "Power of Attorney") entered into by such Selling
Shareholder in connection with the transactions contemplated hereby
and will have full right, power and authority to sell, assign,
transfer and deliver the Offered Securities to be delivered by such
Selling Shareholder on such Closing Date hereunder; and upon the
delivery of and payment for the Offered Securities on each Closing
Date hereunder the several Underwriters will acquire valid and
unencumbered title to the Offered Securities to be delivered by such
Selling Shareholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement did not include any untrue statement of a
material
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fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, (B) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement did not include, or will not include, any
untrue statement of a material fact and did not omit, or will not
omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on
the date of this Agreement, the Initial Registration Statement and, if
the Effective Time of the Additional Registration Statement is prior
to the execution and delivery of this Agreement, the Additional
Registration Statement, and at the time of filing of the Prospectus
pursuant to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Registration Statement in which the Prospectus
is included, each Registration Statement and the Prospectus does not
include, or will not include, any untrue statement of a material fact
or does not omit, or will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement: on the Effective Date of the Initial Registration
Statement, neither the Initial Registration Statement nor the
Prospectus will include any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The two
preceding sentences apply to each Selling Shareholder only to the
extent that any statements in or omissions from a Registration
Statement or the Prospectus are based upon written information
furnished to the Company or its representatives by or on behalf of
such Selling Shareholder specifically for use therein.
(iii) This Agreement, the Custody Agreement and the Power of
Attorney have each been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder and constitute the legal, valid
and binding obligations of such Selling Shareholder enforceable
against such Selling Shareholder in accordance with their respective
terms, except to the extent that (A) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and by general principles
of equity and (B) rights to indemnity and contribution may be limited
by federal and state securities laws or policies underlying such laws.
(iv) No consent, approval, authorization, order, registration or
qualification of, or filing with, any third party (whether acting in
an individual, fiduciary or other capacity) or any governmental or
regulatory agency or body or any court is required to be obtained or
made by such Selling Shareholder for the consummation of the
transactions contemplated by this Agreement, the
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Custody Agreement and the Power of Attorney by such Selling
Shareholder in connection with the sale of the Offered Securities by
such Selling Shareholder or for the consummation of the other
transactions contemplated by this Agreement or the Prospectus, except
such as have been obtained and made or are required under the Act and
such as may be required under state securities laws.
(v) The execution, delivery and performance by such Selling
Shareholder of this Agreement, the Custody Agreement and the Power of
Attorney and the consummation by such Selling Shareholder of the
transactions herein or therein contemplated in connection with the
sale of the Offered Securities being sold by such Selling Shareholder
do not and will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute or will
constitute a default (or an event which with the giving of notice or
the lapse of time or both could reasonably be likely to constitute a
default) under, or result in the creation or imposition of any lien,
charge or encumbrance upon the Offered Securities to be sold by such
Selling Shareholder under (A) the charter, by-laws or other
organizational documents of such Selling Shareholder, (B) any statute,
any rule, regulation, or any requirement, order or decree of any
governmental or regulatory agency or body, or any court, which
requirement, order or decree is binding on such Selling Shareholder or
any of its properties, assets or operations or (C) any indenture,
mortgage, loan or credit agreement, note, lease, permit, license 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 properties, assets or operations of such Selling Shareholder is
subject, except, in the case of clauses (B) and (C), for such
conflicts, breaches, violations, defaults, liens, charges and
encumbrances which could not, individually or in the aggregate, have a
material adverse effect on the ability of such Selling Shareholder to
consummate the transactions contemplated by this Agreement, the
Custody Agreement and the Power of Attorney or perform such Selling
Shareholder's obligations hereunder or thereunder.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Shareholder and any third party that would give rise to a valid claim
against such Selling Shareholder or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated by this Agreement, the Custody Agreement and
the Power of Attorney.
(vii) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or that could cause or
result in the
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stabilization or manipulation of the price of the Offered Securities
to facilitate the sale or resale of the Offered Securities.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, each Selling Shareholder agrees,
severally and not jointly, to sell to the Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from each Selling Shareholder, at
a purchase price of $_________ per share, that number of Firm Securities
(rounded up or down, as determined by Credit Suisse First Boston Corporation
("CSFBC") in its discretion, in order to avoid fractions) obtained by
multiplying the number of Firm Securities set forth opposite the name of such
Selling Shareholder in Schedule A hereto by a fraction the numerator of which is
the number of Firm Securities set forth opposite the name of such Underwriter in
Schedule B hereto and the denominator of which is the total number of Firm
Securities.
Certificates in negotiable form for the Offered Securities have been placed
in custody, for delivery under this Agreement, under Custody Agreements made
with ChaseMellon Shareholder Services, L.L.C., as custodian ("Custodian"). Each
Selling Shareholder agrees that the shares represented by the certificates held
in custody for the Selling Shareholders under such Custody Agreements are
subject to the interests of the Underwriters hereunder, that the arrangements
made by the Selling Shareholders for such custody are to that extent
irrevocable, and that the obligations of the Selling Shareholders hereunder
shall not be terminated by operation of law, whether by the death of any
individual Selling Shareholder or the occurrence of any other event, or in the
case of a trust, by the death of any trustee or trustees or the termination of
such trust. If any individual Selling Shareholder or any such trustee or
trustees should die, or if any other such event should occur, or if any of such
trusts should terminate, before the delivery of the Offered Securities
hereunder, certificates for the Offered Securities shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death or other event or termination had not occurred, regardless of whether
or not the Custodian shall have received notice of such death or other event or
termination.
The Custodian will deliver the Firm Securities to the Representatives for
the accounts of the Underwriters, against payment of the purchase price in
Federal (same day) funds by wire transfer to an account at a bank acceptable to
CSFBC drawn to the order of the Custodian, at the office of Xxxxx Xxxxxxxxxx,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M., New York
time, on __________, 1997, or at such other time not later than seven full
business days thereafter as CSFBC and the Custodian determine, such time being
herein referred to as the "First Closing Date". The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as CSFBC requests and will be made available for
checking and packaging at
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the office of CSFBC, Eleven Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 at
least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Shareholders from time to time not more than 30 days subsequent to the
date of the Prospectus, the Underwriters may purchase all or less than all of
the Optional Securities at the purchase price per Security to be paid for the
Firm Securities. The Selling Shareholders agree, severally and not jointly, to
sell to the Underwriters the respective numbers of Optional Securities obtained
by multiplying the number of Optional Securities specified in such notice by a
fraction the numerator of which is the number of shares set forth opposite the
names of such Selling Shareholders in Schedule A hereto under the caption
"Number of Optional Securities to be Sold" and the denominator of which is the
total number of Optional Securities (subject to adjustment by CSFBC to eliminate
fractions). Such Optional Securities shall be purchased from each Selling
Shareholder for the account of each Underwriter in the same proportion as the
number of Firm Securities set forth opposite such Underwriter's name bears to
the total number of Firm Securities (subject to adjustment by CSFBC to eliminate
fractions) and may be purchased by the Underwriters only for the purpose of
covering over allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the Selling
Shareholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Custodian will deliver
the Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price in Federal (same day) funds by wire transfer to an account at
a bank acceptable to CSFBC drawn to the order of the Custodian, at the office of
Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
certificates for the Optional Securities being purchased on each Optional
Closing Date will be in definitive form, in such denominations and registered in
such names as CSFBC requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the above
office of CSFBC, Eleven Madison Avenue, New York, New York 10010-3629 at a
reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
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5. Certain Agreements of the Company and the Selling Shareholders. The
Company agrees with the several Underwriters and the Selling Shareholders and,
with respect to clauses (j), (k) and (l) below, the Selling Shareholders agree
with the Company and the several Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC,
subparagraph(4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement. The Company will advise CSFBC promptly of any such
filing pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement and an additional registration statement is necessary to register
a portion of the Offered Securities under the Act but the Effective Time
thereof has not occurred as of such execution and delivery, the Company
will file the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on
the date of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or will make such
filing at such later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend or
supplement the initial registration statement or any additional
registration statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if any) or
the Prospectus and will not effect such amendment or supplementation
without CSFBC's prior consent; and the Company will also advise CSFBC
promptly of the effectiveness of each Registration Statement (if its
Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration
Statement or the Prospectus and of the institution by the Commission of any
stop order proceedings in respect of a Registration Statement and will use
its reasonable best efforts to prevent the issuance of any such stop order
and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs or a condition exists
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 to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will promptly
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notify CSFBC of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither CSFBC's consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (three of which will be signed and will include all
exhibits and a signed accountant's report of Xxxxxx Xxxxxxxx LLP), each
related preliminary prospectus, and, so long as a prospectus relating to
the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such
quantities as CSFBC reasonably requests. The Prospectus shall be so
furnished at or prior to 3:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other such
documents shall be furnished as soon as available. The Selling Shareholders
will pay the expenses of printing and distributing to the Underwriters all
such documents.
(f) The Company will, in cooperation with CSFBC and counsel for the
Underwriters, arrange for the qualification of the Offered Securities for
sale under the laws of such jurisdictions as CSFBC designates and will
continue such qualifications in effect so long as required for the
distribution; provided, that the Company shall not be required to file a
general consent to service of process or qualify to do business in any
jurisdiction in which it is not so qualified.
(g) During the period ending on the fifth anniversary hereof, the
Company will furnish to the Representatives and, upon request, to each of
the other Underwriters, (i) as soon as practicable after the end of each of
its fiscal years, a copy of its annual report to shareholders for such
year, (ii) as soon as available, a copy of each report and definitive proxy
statement of the Company filed with the Commission under the
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Securities Exchange Act of 1934, as amended, or mailed to shareholders and
(iii) from time to time, such other information concerning the Company as
CSFBC may reasonably request.
(h) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file or cause to be filed with the Commission a registration statement
under the Act relating to, any shares of Securities or securities or other
rights convertible into or exchangeable or exercisable for any shares of
Securities, or publicly disclose the intention to make any such offer,
sale, pledge, disposal or filing, without the prior written consent of
CSFBC.
(i) The Company will use its reasonable best efforts to cause its
officers, directors and shareholders (other than the Selling Shareholders)
of the Company who or which, immediately following consummation of the
initial public offering of the Offered Securities, will beneficially own an
aggregate of __________ shares (or approximately ______%) of the
outstanding Securities and vested and exercisable options to purchase an
additional __________ shares of the Securities to agree that each such
holder will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or cause to be filed with the Commission a
registration statement under the Act relating to, any shares of the
Securities or securities or other rights convertible into or exchangeable
or exercisable for any shares of Securities, or publicly disclose the
intention to make any such offer, sale, pledge or disposal, without the
prior written consent of CSFBC, for a period of 90 days after the date of
the initial public offering of the Offered Securities.
(j) The Selling Shareholders will pay all expenses incident to the
performance of the obligations of the Company and each Selling Shareholder
under this Agreement and will reimburse the Underwriters (if and to the
extent incurred by them) for any filing fees and other expenses (including
fees and disbursements of counsel) incurred by them in connection with the
qualification of the Offered Securities for sale under the laws of such
jurisdictions as CSFBC designates in accordance with clause (f) and the
printing of memoranda relating thereto, for the filing fee of the National
Association of Securities Dealers, Inc. relating to the Offered Securities,
for any travel expenses of the Company's officers and employees and any
other expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities and for
expenses incurred in printing and distributing preliminary prospectuses and
the Prospectus (including any amendments and supplements thereto) or
related documents. Each Selling Shareholder will reimburse the Underwriters
(if and to the extent incurred by them) for any transfer taxes on the sale
by the Selling Shareholders of Offered Securities to the Underwriters.
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(k) Each Selling Shareholder agrees to deliver to CSFBC (Attention:
Transactions Advisory Group) on or prior to the First Closing Date 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).
(l) Each Selling Shareholder agrees, for a period of 90 days after the
date of the initial public offering of the Offered Securities, not to
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or cause to be filed with the Commission a registration
statement under the Act relating to any shares of the Securities of the
Company or securities or other rights convertible into or exchangeable or
exercisable for any shares of Securities, or publicly disclose the
intention to make any such offer, sale, pledge or disposal, without the
prior written consent of CSFBC.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Shareholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Shareholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to be filed shortly prior to such
Effective Time), of Xxxxxx Xxxxxxxx LLP confirming that they are
independent public accountants within the meaning of the Act and the
applicable Rules and Regulations and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
Xx. 00, Xxxxxxx
00
00
Financial Information, on the unaudited financial statements included
in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, a reading of the minutes of all meetings of the
shareholders and directors (including each committee thereof) of the
Company and its subsidiaries, inquiries of officials of the Company
who have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements included in the
Registration Statements and the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations or any material modifications should be made to such
unaudited financial statements for them to be in conformity with
generally accepted accounting principles;
(B) the information set forth in the Prospectus under the
captions "Summary Consolidated Financial and Other Data" and
"Selected Consolidated Financial and Other Data" does not agree
with the amounts set forth in the unaudited consolidated
financial statements or the audited consolidated financial
statements, as the case may be, from which it was derived or were
not determined on a basis substantially consistent with that of
the corresponding amounts in the audited statements included in
the Registration Statements and the Prospectus;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three days prior to the date of this Agreement, there was
any decrease in shareholders' equity or change in the capital
stock or any increase in short-term indebtedness or long-term
debt of the Company and its consolidated subsidiaries or, at the
date of the latest available balance sheet read by such
accountants, there was any decrease in consolidated net current
assets or net assets, as compared with amounts shown on the
latest balance sheet included in the Registration Statements and
the Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Registration Statements and the
Prospectus to
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the closing date of the latest available income statement
read by such accountants there were any decreases, as compared
with the corresponding period of the previous year and with the
period of corresponding length ended the date of the latest
income statement included in the Registration Statements and the
Prospectus, in consolidated net revenues or consolidated net
income, or in the total or per share amounts of consolidated net
income or income from continuing operations before extraordinary
item, or any increases or decreases, as the case may be, in other
items specified by the Representatives;
except in all cases set forth in clauses (C) and (D) above for changes,
increases or decreases which the Prospectus discloses have occurred;
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained
in the Registration Statements and the Prospectus (in each case to the
extent that such dollar amounts, percentages, numerical data and other
financial information are derived from the general accounting records of
the Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures specified
in such letter and have found such dollar amounts, percentages, numerical
data and other financial information to be in agreement with such results.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statements is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time; (ii) if the Effective Time of
the Initial Registration Statements is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
is subsequent to such execution and delivery, "Registration Statements" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective Time; and
(iii) "Prospectus" shall mean the prospectus included in the Registration
Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or such later date as shall have been consented to by CSFBC. If the
Effective Time of the Additional
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Registration Statement (if any) is not prior to the execution and delivery of
this Agreement, such Effective Time shall have occurred not later than 10:00
P.M., New York time, on the date of this Agreement or, if earlier, the time the
Prospectus is printed and distributed to any Underwriter or such later date as
shall have been consented to by CSFBC. If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Shareholder, the Company or the
Representatives, shall be threatened by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, prospects,
results of operations or general affairs of the Company and its subsidiaries
taken as a whole which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public offering or
the sale of and payment for the Offered Securities; (ii) any downgrading in the
rating of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company (other
than an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by U.S. Federal or
New York authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters including the
Representatives, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the Offered
Securities.
(d) The Representatives shall have received an opinion, dated such Closing
Date, of Xxxxxxxxxxx & Xxxxxxxx LLP, counsel for the Company, to the effect
that:
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(i) The Company has been duly incorporated and is a validly subsisting
corporation in good standing under the laws of the Commonwealth of
Pennsylvania, with corporate power and authority to own, lease and operate
its properties and conduct its business as described in the Prospectus.
(ii) The Offered Securities delivered on such Closing Date by the
Selling Shareholders have been duly authorized, validly issued, fully paid
and nonassessable; and, to the knowledge of such counsel, the shareholders
of the Company have no preemptive or similar rights with respect to the
Offered Securities.
(iii) All outstanding shares of the capital stock of the Company have
been duly authorized, are validly issued, fully paid and non-assessable;
the authorized and outstanding shares of capital stock of the Company are
as set forth in the Prospectus under the captions "Capitalization" and
"Description of Capital Stock" and conform to the descriptions thereof
contained in the Prospectus; and the shareholders of the Company have no
preemptive or similar rights with respect to any securities of the Company.
(iv) Except as disclosed in the Prospectus, to the knowledge of such
counsel, no consent, approval, authorization, order, registration or
qualification of, or filing with, any third party (whether acting in an
individual, fiduciary or other capacity) or any governmental or regulatory
agency or body or any court is required to be obtained or made by the
Company for the consummation of the transactions contemplated by this
Agreement in connection with the sale of the Offered Securities, except
such as have been obtained and made under the Act, such as may be required
under state securities laws and such as may be required under the HEA or
any similar state statute.
(v) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions herein
contemplated have been duly authorized by all necessary corporate action on
the part of the Company and, to the extent required, its shareholders and
do not and will not conflict with or result in a breach or violation of any
of the terms and provisions of, and do not and will not constitute a
default (or an event which with the giving of notice or the lapse of time
or both could reasonably be likely to constitute a default) under, and do
not and will not result in the creation or imposition of any lien, charge
or encumbrance upon any assets or properties of the Company or any of its
Material Subsidiaries (including any individual institution within such
entity) under, (A) the charter, by-laws or other organizational documents
of the Company or any such subsidiary, (B) except as to the HEA or any
similar state statute and any rules,
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regulations, requirements, orders or decrees related thereto as to which
such counsel need express no opinion, to the knowledge of such counsel, any
statute, any rule, regulation, requirement, order or decree of any
governmental or regulatory agency or body or any court having jurisdiction
over the Company or any such subsidiary or any of their properties, assets
or operations, or (C) to the knowledge of such counsel, any indenture,
mortgage, loan or credit agreement, note, lease, permit, license or other
agreement or instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound or to which
any of the properties, assets or operations of the Company or any such
subsidiary is subject, except for such conflicts, breaches, violations,
defaults, liens, charges and encumbrances which would not, individually or
in the aggregate, have a Material Adverse Effect.
(vi) This Agreement has been duly authorized, executed and delivered
by the Company.
(vii) Except as disclosed in the Prospectus, there are no pending or,
to the knowledge of such counsel, threatened actions, suits, proceedings or
investigations against or affecting the Company or any of its Material
Subsidiaries (including any individual institution within such entity) or
any of their respective properties, assets or operations that, if
determined adversely to the Company or any of its Material Subsidiaries,
would, individually or in the aggregate, have a Material Adverse Effect or
could materially and adversely affect the ability of the Company to perform
its obligations under this Agreement.
(viii) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds
therefrom as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(ix) To the knowledge of such counsel, the descriptions in the
Registration Statements and the Prospectus of statutes, legal and
governmental proceedings and contracts and other documents are accurate in
all material respects and fairly present the information required to be
shown and such counsel do not know of any legal or governmental proceedings
required to be described in a Registration Statement or the Prospectus or
of any contracts or documents of a character required to be described or to
be filed as exhibits to a Registration Statement or the Prospectus which,
in each case, are not described and filed as required (it being understood
that such counsel need express no opinion as to the portions of the
Registration Statements and the Prospectus as
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to which Dow, Xxxxxx & Xxxxxxxxx is providing an opinion to the
Underwriters).
(x) The Initial Registration Statement was declared effective under
the Act as of the date specified in such opinion, the Additional
Registration Statement (if any) was filed and became effective under the
Act as of the date and time (if determinable) specified in such opinion,
the Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date specified
therein or was included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and, to the
knowledge of such counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all material
respects with the requirements of the Act and the Rules and Regulations.
Such counsel have participated in the preparation of the Registration
Statements and the Prospectus and have no reason to believe that any part
of a Registration Statement or any amendment thereto, as of its effective
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Prospectus or any amendment or supplement thereto, as of its issue date
or as of such Closing Date, contained any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion as to the financial statements and schedules or other financial
data contained in the Registration Statements or the Prospectus or the
portions of the Registration Statements and the Prospectus as to which Dow,
Xxxxxx & Xxxxxxxxx is providing an opinion to the Underwriters).
In rendering such opinion, such counsel may rely as to matters governed by
the laws of jurisdictions other than the laws of jurisdictions in which such
counsel are admitted to practice and the federal laws of the United States upon
the opinions of counsel reasonably satisfactory to the Representatives and
counsel to the Underwriters.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxxxx X. Xxxxxxxxx, Vice President, General Counsel
and Secretary of the Company, to the effect that:
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(i) Each of the Company's Material Subsidiaries has been duly
incorporated and is a validly existing corporation in good standing
under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own, lease and operate its properties
and conduct its business as described in the Prospectus.
(ii) Each of the Company and its Material Subsidiaries is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership, leasing or operation
of property or the conduct of its business requires such
qualification, other than where the failure to be so qualified or in
good standing would not, individually or in the aggregate, have a
Material Adverse Effect.
(iii) All of the issued and outstanding capital stock of each of
the Company's Material Subsidiaries has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through one or more of its other subsidiaries,
free and clear of any mortgage, pledge, lien, security interest,
claim, encumbrance or defect of any kind, except for shares of the
capital stock of certain of the Company's subsidiaries which have been
pledged as collateral pursuant to the Revolving Credit Agreement; and
there are no rights granted to or in favor of any third party (whether
acting in an individual, fiduciary or other capacity) other than the
Company to acquire such capital stock, any additional capital stock or
any other equity securities of any such subsidiary.
(iv) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
third party (whether acting in an individual, fiduciary or other
capacity) granting such third party the right to require the Company
to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such third party or
to require the Company to include such securities in the Offered
Securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(v) Except as disclosed in the Prospectus, there are no pending
or, to the knowledge of such counsel, threatened actions, suits,
proceedings or investigations against the Company or any of its
Material Subsidiaries (including any individual institution within
such entity) or any of their respective properties, assets or
operations, or as to which the Company or any such subsidiary or any
of their properties, assets or operations is a subject or a target,
that, if determined adversely to the Company or any of its Material
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Subsidiaries, would, individually or in the aggregate, have a Material
Adverse Effect or could materially and adversely affect the ability of
the Company to perform its obligations under this Agreement.
(vi) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company convertible
into or exchangeable for any capital stock of the Company, (B)
warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or exchangeable
securities or obligations or (C) obligations of the Company to issue
any capital stock, convertible or exchangeable securities or
obligations, or any warrants, rights or obligations.
(vii) Neither the Company nor any of its Material Subsidiaries
(including any individual institution within such entity) is in
violation of (A) its charter, by-laws or other organizational
documents or (B) any statute, any rule, regulation, requirement, order
or decree of any governmental, regulatory or accrediting agency or
body or any court having jurisdiction over the Company or any of its
Material Subsidiaries, except for any such violations which would not,
individually or in the aggregate, have a Material Adverse Effect; and
no event of default or event which with the giving of notice or the
lapse of time or both, could reasonably be expected to constitute an
event of default exists under any indenture, mortgage, loan or credit
agreement, note, lease, permit, license or other agreement or
instrument to which the Company or any Material Subsidiary is a party
or by which the Company or any such subsidiary is bound or to which
any of the properties, assets or operations of the Company or any such
subsidiary is subject, except for any such defaults which would not,
individually or in the aggregate, have a Material Adverse Effect.
(viii) Such counsel has participated in the preparation of the
Registration Statements and the Prospectus and has no reason to
believe that any part of a Registration Statement or any amendment
thereto, as of its effective date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto, as of its issue date or as of such
Closing Date, contained any 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, not misleading (it being understood that such counsel need
express no opinion as to the financial statements and schedules or
other financial data contained in the Registration Statements and the
Prospectus or the portions of the
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Registration Statements and the Prospectus as to which Dow, Xxxxxx &
Xxxxxxxxx is providing an opinion to the Underwriters).
In rendering such opinion, such counsel may rely as to matters governed by
the laws of jurisdictions other than the laws of jurisdictions in which such
counsel is admitted to practice and the federal laws of the United States upon
the opinions of counsel reasonably satisfactory to the Representatives and
counsel for the Underwriters.
(f) The Representatives shall have received an opinion, dated such
Closing Date, of counsel for each of the Selling Shareholders, to the
effect that:
(i) Assuming the several Underwriters acquire the Offered
Securities delivered by such Selling Shareholder in good faith and
without notice of any adverse claim, as such term is used in Section
8-302 of the Uniform Commercial Code as in effect in the State of New
York, upon delivery of certificates representing such Offered
Securities against payment therefor on such Closing Date in accordance
with the terms of this Agreement, the several Underwriters will
acquire valid title to such Offered Securities free of adverse claims
on such Closing Date.
(ii) This Agreement, the Custody Agreement and the Power of
Attorney constitute the legal, valid and binding obligations of each
Selling Shareholder enforceable against such Selling Shareholder in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws relating to or affecting creditors' rights generally and
general principles of equity (regardless of whether considered in a
proceeding in equity or at law) and except that rights to indemnity
and contribution may be limited by federal and state securities laws
or policies underlying such laws.
(iii) To the best knowledge of such counsel, no consent,
approval, authorization, order, registration or qualification of, or
filing with, any governmental or regulatory agency or body or any
court of the United States of America or the State of New York is
required to be obtained or made by the Selling Shareholders for the
consummation of the sale of the Offered Securities by the Selling
Shareholders, except registration of the Offered Securities under the
Act, the filing of the Registration Statement with and the declaration
of the effectiveness thereof by the Commission and the filing of the
Prospectus and any other information required pursuant to Rule 424(b)
under the Act, and such as may be required under state securities laws
in connection with the sale or distribution of the Offered Securities.
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(g) The Representatives shall have received opinions, which may be
included in the opinions delivered pursuant to paragraph(f) above, dated
such Closing Date, of counsel for each Selling Shareholder, to the effect
that:
(i) Such Selling Shareholder has, as the case may be, corporate
power or partnership power and authority to enter into this Agreement,
the Custody Agreement and the Power of Attorney and to sell, assign,
transfer and deliver the Offered Securities delivered by such Selling
Shareholder on such Closing Date.
(ii) This Agreement, the Custody Agreement and the Power of
Attorney have each been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder.
(iii) To the best knowledge of such counsel, no consent,
approval, authorization, order, registration or qualification of, or
filing with, any third party or any governmental or regulatory agency
or body or any court of, in each case as applicable, the State of
Delaware, the State of New York, the Commonwealth of Pennsylvania or
the State of Wisconsin, is required to be obtained or made by such
Selling Shareholder for the consummation of the sale of the Offered
Securities by such Selling Shareholder, except such as have been
obtained or required under the Act and such as may be required under
state securities laws in connection with the sale and distribution of
the Offered Securities.
(iv) The execution, delivery and performance by such Selling
Shareholder of this Agreement, the Custody Agreement, the Power of
Attorney and the sale of the Offered Securities being sold by such
Selling Shareholder do not and will not conflict with or result in a
breach or violation of any of the terms and provisions of, and do not
and will not constitute a default (or an event which with the giving
of notice or the lapse of time or both could reasonably be likely to
constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon the Offered Securities to be
sold by such Selling Shareholder under (A) the charter, by-laws or
other organizational documents of such Selling Shareholder, (B) to the
best knowledge of such counsel, any statute, rule or regulation
applicable to such Selling Shareholder of, in each case as applicable
the State of Delaware, the State of New York, the Commonwealth of
Pennsylvania or the State of Wisconsin, except that no opinion shall
be given as to the Act and the Rules and Regulations thereunder, the
antifraud provisions of the United States federal securities laws and
state securities laws in connection with the sale and distribution of
the Offered Securities, or (C) to the best knowledge of such
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counsel, any requirement, order or decree of any governmental or
regulatory agency or body of the United States of America or, as the
case may be, the State of Delaware, the State of New York, the
Commonwealth of Pennsylvania or the State of Wisconsin, or any federal
court or court of, as the case may be, the State of Delaware, the
State of New York, the Commonwealth of Pennsylvania or the State of
Wisconsin, which requirement, order or decree is binding on such
Selling Shareholder or any of its properties, assets or operations, or
any 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 properties, assets or operations of such Selling Shareholder is
subject, except in the case of clauses (B) and (C), for such
conflicts, breaches, violations, defaults, liens, charges and
encumbrances which would not, individually or in the aggregate, have a
material adverse effect on the ability of such Selling Shareholder to
consummate the sale of the Offered Securities by such Selling
Shareholder or perform such Selling Shareholder's obligations under
this Agreement, the Custody Agreement and the Power of Attorney.
(h) The Representatives shall have received from Dow, Xxxxxx &
Xxxxxxxxx, PLLC, special regulatory counsel to the Company, such opinion or
opinions, dated as of such Closing Date, to the effect that:
(i) The statements contained in the Prospectus under the captions
"Risk Factors -- Potential Adverse Effects of Regulation; Impairment
of Federal Funding -- General"; "Risk Factors -- Potential Adverse
Effects of Regulation; Impairment of Federal Funding -- Risk of
Legislative Action"; "Risk Factors -- Potential Adverse Effects of
Regulation; Impairment of Federal Funding -- Student Loan Defaults";
"Risk Factors -- Potential Adverse Effects of Regulation; Impairment
of Federal Funding -- Financial Responsibility Standards"; "Risk
Factors -- Potential Adverse Effects of Regulation; Impairment of
Federal Funding -- State Authorization"; "Risk Factors -- Potential
Adverse Effects of Regulation; Impairment of Federal Funding --
Accreditation"; "Risk Factors -- Potential Adverse Effects of
Regulation; Impairment of Federal Funding -- Regulatory Consequences
of a Change of Ownership or Control"; "Management's Discussion and
Analysis of Financial Condition and Results of Operations --
Regulation"; "Business -- Accreditation"; "Business -- Student
Financial Assistance"; "Business -- Student Financial Assistance --
Nature of Federal Support for Postsecondary Education"; "Business --
Student Financial Assistance -- Availability of Lenders"; "Business --
Student Financial Assistance -- Other Financial Assistance Sources";
"Business -- Student Financial Assistance -- Federal Oversight of
Title IV Programs" and "Business -- State Authorization"
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(collectively, "Regulatory Matters"), insofar as such statements
constitute a summary of legal matters, documents or proceedings with
respect to the operation of post-secondary educational institutions
and the offering of programs of postsecondary education, are accurate
and complete in all material respects.
(ii) Such counsel have participated in the preparation of those
portions of the Registration Statements and the Prospectus relating to
Regulatory Matters and have no reason to believe that the information
relating to Regulatory Matters contained in any Registration Statement
or any amendment thereto, as of its effective date or as of such
Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that any
such information contained in the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(iii) Except as disclosed in the Prospectus, no consent,
approval, authorization, order, registration or qualification of, or
filing with, the U.S. Department of Education under Title IV of the
HEA, any state agency under any state statute pertaining to the
authorization to operate postsecondary educational institutions, or
any accrediting agency that presently accredits any of the Company's
schools is required for the consummation by the Company of the
transactions contemplated by this Agreement in connection with the
sale of the Offered Securities.
(iv) To the best knowledge of such counsel, the execution,
delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions herein contemplated,
do not and will not conflict with or result in a violation of (A)
Title IV of the HEA, (B) any rule, regulation or requirement of the
U.S. Department of Education promulgated under Title IV of the HEA,
(C) any state statute pertaining to the authorization to operate
postsecondary educational institutions, or (D) the standards of
accreditation of any accrediting agency that presently accredits any
of the Company's schools, except for such conflicts or violations
which would not be reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect.
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(v) The consummation of the transactions contemplated by this
Agreement in connection with the sale of the Offered Securities will
not constitute a change in ownership resulting in a "change in
control" as defined in the HEA.
(vi) To the best knowledge of such counsel, except as disclosed
in the Prospectus, the Company and its subsidiaries possess all
necessary Licenses required for the Company and such subsidiaries
pertaining to (A) participation in Title IV Programs, (B) state
authorization to operate postsecondary educational institutions and
(C) accrediting agency approvals, as are required for participation in
Title IV Programs as described in the Registration Statements and the
Prospectus, and all such Licenses are in full force and effect, except
where the failure to possess such Licenses or the failure of such
Licenses to be in full force and effect would not be reasonably likely
to, individually or in the aggregate, have a Material Adverse Effect.
Except as disclosed in the Prospectus, to the knowledge of such
counsel, neither the Company nor any of its Material Subsidiaries has
received notice of any proceedings, investigations or inquiries, nor
are any such proceedings, investigations or inquiries threatened,
relating to the revocation, modification, termination or suspension of
any such License, except where any such revocation, modification,
termination or suspension would not be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
(i) The Representatives shall have received from Xxxxx Xxxxxxxxxx,
counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the validity of the Offered Securities delivered on
such Closing Date, the Registration Statements, the Prospectus and other
related matters as the Representatives may require, and the Selling
Shareholders and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(j) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice-President and the principal
financial and accounting officer of the Company in which such officers, to
their knowledge after reasonable investigation, shall state that: (A) the
representations and warranties of the Company in this Agreement are true
and correct; (B) the Company has complied in all material respects with all
agreements and satisfied in all material respects all conditions on its
part to be performed or satisfied hereunder at or prior to such Closing
Date; (C) no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are threatened by the Commission; (D) the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule
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462(b), including payment of the applicable filing fee in accordance with
Rule 111(a) or (b) under the Act, prior to the time the Prospectus was
printed and distributed to any Underwriter; and (E) subsequent to the dates
as of which information is given in the Registration Statements and the
Prospectus, there has been no material adverse change, nor any development
or event involving a prospective material adverse change, in the financial
condition, business or results of operations of the Company and its
subsidiaries taken as a whole.
(k) The Representatives shall have received a letter, dated such
Closing Date, of Xxxxxx Xxxxxxxx LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.
(l) The Representatives shall have received written undertakings of
shareholders of the Company (other than the Selling Shareholders) who or
which, immediately following consummation of the initial public offering of
the Offered Securities, will beneficially own an aggregate of _________
shares (or approximately ____%) of the outstanding Securities and vested
options to purchase an additional _________ shares of the Securities
immediately following the Offering to the effect contemplated in subsection
(i) of Section 5 hereof unless otherwise waived or agreed to by the
Representatives.
(m) The Representatives shall have received such other opinions,
certificates, letters and other documents from or on behalf of the Company
or the Selling Shareholders as the Representatives shall reasonably
request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof, only if they are reasonably satisfactory
in form and substance to CSFBC and counsel for the Underwriters. The Company and
the Selling Shareholders will furnish the Representatives with such conformed
copies of such opinions, certificates, letters and documents as the
Representatives reasonably requests. CSFBC may in its sole discretion waive on
behalf of the Underwriters compliance with any conditions to the obligations of
the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter 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 any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, 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
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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 loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(c) below; and provided further, however, that as to any preliminary prospectus
this subsection shall not inure to the benefit of any Underwriter on account of
any loss, claim, damage, liability or action arising from the sale of Offered
Securities to any person by that Underwriter if that Underwriter failed to send
or give a copy of a Prospectus, as the same may be amended or supplemented, to
that person within the time required by law or under the Act, and the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such preliminary prospectus was corrected
in such Prospectus unless such failure resulted from non-compliance by the
Company with Section 5(b), 5(c) or 5(e) hereof.
(b) The Selling Shareholders, severally and not jointly, will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter 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 any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, 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 reliance
upon and in conformity with written information furnished to the Company or its
representatives by or on behalf of such Selling Shareholder specifically for use
therein, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the liability of each Selling Shareholder
pursuant to this Section 7(b) is limited to the proceeds received (less
underwriting discounts and commissions) by such Selling Shareholder from the
sale of the Offered Securities; provided further, however, that the Selling
Shareholders will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representatives specifically for use
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therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(c) below.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each 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 any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the 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 reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and each Selling Shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: (i) the legend concerning
over-allotments and stabilizing on the inside front cover page and (ii) the
information appearing under the caption "Underwriting" with respect to (A) the
list of names of the Underwriters and the number of Offered Securities to be
purchased by each Underwriter, (B) concession and discount figures and (C)
discretionary sales.
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may 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), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the relevant
indemnified party,
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effect any settlement of any pending or threatened action in respect of which
such indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Shareholders 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 as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders 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 Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters. 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, the Selling Shareholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (e). Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities 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, and no
Selling Shareholder shall be required to contribute any amount in excess of the
amount by which the proceeds received (less underwriting discounts and
commissions) by such Selling Shareholder from the sale of the Offered Securities
exceeds the amount of any damages which such Selling Shareholder 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
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Underwriters' obligations in this subsection (e) to contribute are several in
proportion to their respective underwriting obligations and not joint. The
Selling Shareholders' obligations in this subsection (e) to contribute are
several and not joint.
(f) The obligations of the Company and the Selling Shareholders under this
Section shall be in addition to any liability which the Company and the Selling
Shareholders 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
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
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
Closing Date or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date,
CSFBC may make arrangements satisfactory to the Company and the Selling
Shareholders for the purchase of such Offered Securities by other persons,
including any of the Underwriters, and if no such arrangements are made by such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of shares of Offered Securities with respect to which such
default or defaults occur exceed 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to CSFBC, the Company and the Selling Shareholders
for the purchase of such Offered Securities by other persons are not made within
36 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Shareholders, except as provided in Section 9 (provided that if such default
occurs with respect to Optional Securities after the First Closing Date, this
Agreement will not terminate as to the Firm Securities or any Optional
Securities purchased prior to such termination). As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Shareholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or
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39
statement as to the results thereof, made by or on behalf of any Underwriter,
any Selling Shareholder, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Selling Shareholders shall remain
responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Shareholders, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 6(c), the Selling Shareholders will
jointly and severally reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives, c/o Credit Suisse First Boston Corporation, 00 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Investment Banking Department
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Education Management
Corporation, 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention:
Xxxxxxxxx X. Xxxxxxxxx; or, if sent to Xxxxxxx Xxxxx Capital Appreciation
Partnership No. IV, L.P., ML Offshore LBO Partnership No. IV, ML IBK Positions,
Inc., Xxxxxxx Xxxxx Capital Corporation, or any of them, will be mailed,
delivered or telegraphed and confirmed to Xxxxx X. Xxxxxx at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; or, if sent to National Union Fire Insurance Company
of Pittsburgh, PA, will be mailed, delivered or telegraphed and confirmed to
Xxxxx X. Xxxxxxxxx at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or, if sent
to The Northwestern Mutual Life Insurance Company, will be mailed, delivered or
telegraphed and confirmed to J. Xxxxxx Xxxxxxxxxxxxxx at 000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000; or, if sent to any other Selling
Shareholder, will be mailed, delivered or telegraphed and confirmed to the
Attorneys-in-Fact at Education Management Corporation, 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
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40
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action taken under this Agreement by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters. The Custodian will act for the
Selling Shareholders in connection with such transactions, and any action taken
under or in respect of this Agreement by the Custodian will be binding upon all
the Selling Shareholders.
13. Counterparts. This Agreement may be executed 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 Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
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If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Shareholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
EDUCATION MANAGEMENT CORPORATION
By
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief
Executive Officer
SELLING SHAREHOLDERS:
XXXXXXX XXXXX CAPITAL APPRECIATION
PARTNERSHIP NO. IV, L.P.
ML OFFSHORE LBO PARTNERSHIP NO. IV
ML IBK POSITIONS, INC.
XXXXXXX XXXXX CAPITAL CORPORATION
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
XXXXXX X. XXXXXXX
XXXXXX X. XXXXXXX
XXXXXX XXXXXXXXXX
[other Selling Shareholders]
By
------------------------
Name:
Title: Attorney-in-Fact
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The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXX XXXXXX INC.
ABN AMRO CHICAGO CORPORATION
Acting on behalf of themselves and as the
Representatives of the several
Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By
-----------------------------
Name:
Title:
43
DBB2-365131.7
SCHEDULE A
Number of Number of
Firm Optional
Securities Securities
Selling Shareholder to be Sold to be Sold
------------------- ---------- ----------
Xxxxxxx Xxxxx Capital Appreciation Partnership No. IV, L.P. -- --
ML Offshore LBO Partnership No. IV ........................ -- --
ML IBK Positions, Inc. .................................... -- --
Xxxxxxx Xxxxx Capital Corporation ......................... -- --
National Union Fire Insurance Company of Pittsburgh, PA ... 639,168 63,917
The Northwestern Mutual Life Insurance Company ............ 1,065,282 106,528
Xxxxxx X. Xxxxxxx ......................................... 318,182 --
Xxxxxx X. Xxxxxxx ......................................... 51,818 --
Xxxxxx Xxxxxxxxxx ......................................... 5,000 --
[OTHER SELLING SHAREHOLDERS] .............................. -- --
--------- -------
Total .................................................... [2,932,766] [293,277]
========= =======
44
SCHEDULE B
UNDERWRITER NUMBER OF
FIRM SECURITIES
TO BE PURCHASED
----------------------
Credit Suisse First Boston Corporation................
Xxxxx Xxxxxx Inc......................................
ABN AMRO Chicago Corporation..........................
------------------
Total........................................ [2,932,766]
45
[TO BE UPDATED BY K&L]
EXHIBIT 1
SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
---------------------------------------------------- ----------------------------
Art Institutes International Inc. Pennsylvania
Art Institute of Atlanta, Inc. Georgia
Art Institute of Dallas, Inc. Texas
Art Institute of Fort Lauderdale, Inc. Florida
Art Institute of Houston, Inc. Texas
Illinois Institute of Art, Inc. Illinois
Illinois Institute of Art at Schaumburg, Inc. Illinois
Art Institute of Philadelphia, Inc. Pennsylvania
Art Institute of Phoenix, Inc. Arizona
Art Institute of Seattle, Inc. Washington
Colorado Institute of Art, Inc. Colorado
The National Center for Professional Development, Inc. Georgia
NCPT, Inc. Georgia
NYRS Acquisition Corp. New York
