Education Management Buyout

Education Management Corporation (EDMC)
$3.4B Buyout

Summary

Buyout of for-profit education company

$43.00 per EDMC share; $3.4B total

Announced 3.06.06

Closed 6.01.06

Form 15

Developments

Debt finance information package 5.08.06

Club Deal

Consortium buyout by

Providence Equity Partners
Goldman Sachs Capital Partners

Principal stockholders

Agreements

Advisors

Financial

EMDC: Merrill Lynch / Lazard
Sponsors: Goldman Sachs / Leeds Equity Partners

Legal

EMDC: Kirkpatrick & Lockhart
Sponsors: Simpson Thacher / Fried Frank / Weil Gotshal

Merger Agreement

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article 1 The Merger

1.01 The Merger
1.02 Closing
1.03 Effective Time
1.04 Effect of the Merger
1.05 Articles of Incorporation; Bylaws
1.06 Directors

Article 2 Conversion of Securities; Exchange of Certificates

2.01 Conversion of Securities
2.02 Exchange of Certificates
2.03 Stock Transfer Books
2.04 Company Stock Options
2.05 No Dissenters' Rights

Article 3 Company Reps

3.01 Organization and Qualification; Subsidiaries
3.02 Articles of Incorporation and Bylaws
3.03 Capitalization
3.04 Authority Relative to this Agreement
3.05 No Conflict; Required Filings and Consents
3.06 Compliance with Law and Permits; Education
Department Compliance
3.07 Sarbanes-Oxley Compliance; Internal Controls
3.08 Governmental Entity or Accrediting Body Approval
3.09 SEC Filings; Financial Statements; Undisclosed
Liabilities
3.10 Information Supplied
3.11 Absence of Certain Changes or Events
3.12 Absence of Litigation
3.13 Employee Benefit Plans
3.14 Labor and Employment Matters
3.15 Real Property
3.16 Intellectual Property
3.17 Taxes
3.18 Environmental Matters
3.19 Specified Contracts
3.20 Insurance
3.21 Board Approval; Vote Required
3.22 Company Rights Agreement
3.23 Interested Party Transactions
3.24 Opinions of Financial Advisors
3.25 Brokers
3.26 State Takeover Statutes

Article 4 Merger Co Reps

4.01 Corporate Organization
4.02 Articles of Incorporation and Bylaws
4.03 Authority Relative to this Agreement
4.04 No Conflict; Required Filings and Consents
4.05 Information Supplied
4.06 Absence of Litigation
4.07 Operations of Merger Co
4.08 Financing
4.09 Guaranty
4.10 Brokers
4.11 Solvency
4.12 Governmental Entity or Accrediting Body Approval
4.13 Status of Investors and Borrowers

Article 5 Conduct of Business Pending the Merger

5.01 By the Company
5.02 Merger Co

Article 6 Additional Agreements

6.01 Proxy Statement; Other Filings
6.02 Company Shareholders' Meeting
6.03 Access to Information; Confidentiality
6.04 No Solicitation of Transactions
6.05 Directors' and Officers' Indemnification and Insurance
6.06 Employee Benefits Matters
6.07 Notification of Certain Matters
6.08 Financing
6.09 Further Action; Reasonable Best Efforts
6.10 Public Announcements
6.11 Resignations
6.12 State Takeover Statutes
6.13 Permits
6.14 Credit Agreement
6.15 Section 16 Matters
6.16 Restructuring
6.17 Intellectual Property

Article 7 Conditions to the Merger

7.01 Each Party
7.02 Merger Co
7.03 Company

Article 8 Termination, Amendment, and Waiver

8.01 Termination
8.02 Effect of Termination
8.03 Fees and Expenses
8.04 Amendment
8.05 Waiver

Article 9 General Provisions

9.01 Non-survival of Representations, Warranties, and
Agreements
9.02 Notices
9.03 Certain Definitions
9.04 Severability
9.05 Disclaimer of Other Representations and Warranties;
Disclosure
9.06 Entire Agreement; Assignment
9.07 Remedies; Specific Performance
9.08 Parties in Interest
9.09 Governing Law
9.10 Waiver of Jury Trial
9.11 Headings
9.12 Counterparts

High Yield Financing

A/B Exchange Offer

$375 mm 8 3/4% 8-year senior notes
$385 mm 10 1/4% 10-year senior subordinated notes

SEC filings for exchange offer

Prospectus 12.04.06
S-4 Amendment #2 11.24.06
S-4 Amendment #1 11.08.06

Exhibits Includes finance documents

Form S-4 9.27.06

Exhibits

Resale prospectus

Prospectus 1.30.07
Form S-1 1.17.07

Employment Agreements

SEC filings

Management incentive stock option plan

Other Agreements

Rights agreement amendment

Form 8-A

Employment agreement

Proxy Solicitation

Shareholder meeting

Scheduled for 5.25.06 4.27.06

Definitive proxy statement 4.26.06

Table of contents

Preliminary proxy statement 3.20.06

Table of contents

Deal Protection

No shop covenant

Merger agreement §6.4
Proxy statement disclosure

Break-up fee

$84mm, plus out-of-pocket expenses
Agreement §8.3
Proxy statement disclosure

Regulatory Approvals

HSR Act

Merger agreement §7.1(b)
Proxy statement disclosure

Fairness Opinion

Merrill Lynch fairness opinion

Proxy statement disclosure

Tax Matters

Disclosure

Proxy statement disclosure

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