EXHIBIT 10.10
FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT
WITH XXXXXX X. XXXXXXX
August 5, 2003
The parties to this Fourth Amended and Restated Employment Agreement (this
"Agreement") are Education Management Corporation, a Pennsylvania corporation
(the "Company"), and Xxxxxx X. Xxxxxxx (the "Executive"). The Company and the
Executive currently are parties to the Third Amended and Restated Employment
Agreement of Xxxxxx X. Xxxxxxx dated September 8, 1999 (the "Existing Employment
Agreement"). The Executive is presently the Chairman and Chief Executive Officer
of the Company and the parties wish to provide for the continued employment of
the Executive, subject to the terms provided herein. From and after the date of
this Agreement (the "Effective Date") and for the remainder of the Employment
Term (as defined below), the Executive shall continue as Chairman of the
Company.
Accordingly, the parties, intending to be legally bound, agree that the
Existing Employment Agreement is amended and restated in its entirety as
follows:
1. Position and Duties. During the Employment Term, the Company shall employ the
Executive, and the Executive shall serve the Company, for the period from the
Effective Date through August 31, 2003 as its Chairman and Chief Executive
Officer, and from and after September 1, 2003 and for the remainder of the
Employment Term as its Chairman. He shall report to and otherwise shall be
subject to the direction and control of the Board of Directors of the Company.
The Executive's duties, titles and responsibilities shall not be changed
materially at any time without his consent (which consent shall not be
unreasonably withheld). Except during vacation periods, periods of illness, and
the like, the Executive shall use his best efforts to promote the Company's
interests and he shall perform his duties and responsibilities faithfully,
diligently and to the best of his ability, consistent with sound business
practices. The Executive shall devote at least one-half of his working time to
the business and affairs of the Company, but
may engage in such activities that do not, in the reasonable opinion of the
Board of Directors of the Company, either singly or in the aggregate violate
Section 8 or materially interfere with the performance of his obligations to the
Company under this Agreement, including (i) making and managing personal
investments and (ii) engaging in community and/or charitable activities. Subject
to the provisions of Section 8, nothing in this Agreement shall preclude the
Executive from serving, with prior approval of the Board of Directors, as a
director of other organizations. The Executive shall perform his duties under
this Agreement in Pittsburgh, Pennsylvania.
2. Term of Employment. The term of the Executive's employment by the Company as
Chairman under this Agreement shall be for a period of five (5) years commencing
on the Effective Date (the "Employment Term"). The Executive's employment as
Chairman under this Agreement shall be subject to earlier termination under
Section 5 or Section 6. The Executive shall continue to be maintained as an
employee after the expiration of the Employment Term for purposes of and subject
to the terms of Section 7.5.
3. Compensation.
3.1. Base Salary. In consideration of the performance of his duties
hereunder, during the Employment Term, the Executive shall be entitled to
receive a base salary ("Base Salary") at the annual rate of not less than
$500,000 for services rendered to the Company or any of its direct or indirect
subsidiaries, payable in substantially equal biweekly installments. The
Executive's Base Salary under this Section 3.1 shall be increased on each July 1
during the Employment Term, beginning on July 1, 2004, by the percentage
increase, if any, in the United States Bureau of Labor Statistics Consumer Price
Index for Urban Wage Earners and Clerical Workers - all items, for the
Pittsburgh Metropolitan Area during the immediately preceding twelve (12)
months. The Executive's Base Salary shall be subject to further increases, if
any, as may be approved at any time by the Board of Directors of the Company in
its discretion, on the recommendation of the Compensation Committee of the Board
of Directors.
3.2. Incentive and Equity Compensation.
(a) Bonus Plan. During the Employment Term, the Executive shall be
entitled to receive incentive compensation (a "Bonus") in such amounts and at
such times as the Board of
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Directors of the Company (or a duly authorized Compensation Committee of the
Board, if applicable) may determine in its discretion to award to him under any
incentive compensation or other bonus plan or plans for senior executives of the
Company as may be established by the Company from time to time (collectively,
the "Executive Bonus Plan"). The amount of any Bonus payable to the Executive
under the Executive Bonus Plan shall be paid to the Executive in accordance with
the terms of the Executive Bonus Plan. The Executive shall have an annual target
bonus opportunity (a "Bonus Opportunity"). For the Company's fiscal year ending
June 30, 2004, the Executive's Bonus Opportunity shall be not less than 130% of
the Executive's Base Salary, but the actual bonus amount earned and payable
shall be contingent on the Executive meeting or exceeding performance standards
and goals to be established by the Board of Directors of the Company (or the
Compensation Committee, if applicable) in accordance with the terms of the
Executive Bonus Plan. For fiscal years beginning after June 30, 2004, the
Executive's Bonus Opportunity shall be determined by the Board of Directors of
the Company (or a duly authorized Compensation Committee of the Board, if
applicable) in its discretion. To the extent that the Executive is entitled to
any bonus that accrued for the fiscal year ending June 30, 2003, but which has
not been fully paid to the Executive as of the Effective Date, this Agreement
shall have no effect on the payment of such bonus and the Executive shall be
entitled to payment of such accrued bonus in accordance with the terms of the
Existing Employment Agreement.
(b) Special Bonus. In recognition of the Executive's service to the
Company prior to the Effective Date, the Company shall pay the Executive a
special cash bonus of $50,000 within thirty (30) days of the Effective Date.
(c) Stock Options. The Executive shall receive an award of options to
purchase 50,000 shares of the Company's common stock at the closing market price
of the common stock as of the Effective Date, which shall be awarded under the
terms of the Education Management Corporation's 1996 Stock Incentive Plan or any
successor plan, as it may be in effect from time to time (the "Incentive Plan"),
and subject to the provisions of the Company's standard option agreements. In
addition, these options will consist of incentive stock options to
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the maximum extent permitted under Section 422 of the Internal Revenue Code of
1986, as amended; the remainder will be nonqualified options.
(d) Future Awards. In addition, the Executive shall be eligible to
receive awards of options to purchase shares of the Company's common stock or
restricted common stock during the Employment Term, under the terms of the
Incentive Plan and subject to the approval of the Company's Board of Directors.
4. Expenses and Other Benefits.
4.1. Reimbursement of Expenses. During the Employment Term, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him (in accordance with the policies and practices presently
followed by the Company or as may be established by the Board of Directors of
the Company for its senior executives) in performing services under this
Agreement, provided that the Executive properly accounts for such expenses in
accordance with the Company's policies. In addition to the foregoing, and not by
way of limitation, the Executive shall be entitled to reimbursement for
reasonable, direct operating costs and reasonable, related air travel expenses
incurred in connection with the Company business use, on or after August 5,
2003, of an aircraft owned directly or indirectly by the Executive. The direct
operating costs include the cost of fuel, pilots, engine reserves, maintenance
reserves, pilot training and the like when the Executive or other Company
personnel use the aircraft. The reasonable related air travel expenses include
landing fees, crew expense, flight phone, catering and the like. The Company
shall reimburse the Executive for direct operating costs at the estimated rate
of Fourteen Hundred Seventy-Five Dollars ($1,475.00) per flight hour on a
monthly basis and the Company and the Executive shall reconcile actual direct
operating costs with reimbursements annually and adjust to cause the amount
reimbursed to equal the Executive's actual expense.
4.2. Employee Benefits. During the Employment Term, the Executive shall be
entitled to participate in and to receive benefits applicable to senior
executive officers of the Company under all of the Company's employee benefit
plans, programs and arrangements, as they may be duly amended, approved or
adopted by the Board of Directors of the Company as of the Effective
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Date and from time to time thereafter, including any retirement plan, profit
sharing plan, savings plan, life insurance plan, health insurance plan,
stock-based compensation or incentive plan, accident or disability insurance
plan, vacation policy and any perquisites.
4.3. Key Person Life Insurance. The Company maintains and is the
beneficiary of a key man life insurance policy on the Executive. Upon the
Executive retiring as Chairman at the end of the Employment Term or ceasing to
be Chairman prior to the end of the Employment Term (other than as a result of
death, resignation other than for Good Reason (as defined in Section 7), or
termination for Cause (as defined in Section 7)), the Executive's estate shall
thereafter be entitled to receive, on his death occurring after he is no longer
Chairman, the Net Death Benefit from such policy, subject to the provisions of
this Section. The "Net Death Benefit" means the amount, if any, by which the
death benefit exceeds the cash surrender amount under that policy at the time of
the Executive's death. The payment of this benefit shall be in a manner
determined in good faith by the Company and shall be subject to the Company's
good faith determination that it will not result in any significant compensation
expense or other accounting charge or any violation or risk of violation of any
applicable law.
5. Termination of Employment.
5.1. Death. The Executive's employment under this Agreement shall terminate
upon his death.
5.2. Termination by the Company.
(a) With or Without Cause. Subject to the provisions of Section
5.2(b), the Company may terminate the Executive's employment under this
Agreement with or without Cause (as defined below) at any time during the
Employment Term. Upon any termination of the Executive's employment under this
Section 5.2, the Company's sole compensation obligation (solely for purposes of
and with respect to this Agreement and the Executive's employment with the
Company or any of its direct or indirect subsidiaries), if any, shall be as
provided under Section 7.2 (if the termination is with Cause), or Section 7.3
(if the termination is without Cause). For purposes of this Agreement, the
Company shall have "Cause" to terminate the Executive's employment under this
Agreement if (i) the Executive willfully, or as a result of
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gross negligence on his part, fails substantially to perform and to discharge
his duties and responsibilities under this Agreement for any reason other than
the Executive's Disability (as defined in Section 6) or death, or (ii) the
Executive engages in an action or course of conduct which is both (A) unlawful
or materially in violation of his obligations to the Company under this
Agreement and (B) demonstrably and substantially injurious to the Company, or
(iii) the Executive deliberately and intentionally violates the provisions of
Sections 8.1, 8.2, 8.3 or 8.4.
(b) Right to Cure. The Executive shall not be deemed to have been
terminated for Cause unless and until the occurrence of the following two
events:
(i) The Executive is given a notice from the Board of Directors
of the Company that identifies with reasonable specificity the grounds for the
proposed termination of the Executive's employment and notifies the Executive
that he shall have an opportunity, with his counsel present, to address the
Board of Directors with respect to the alleged grounds for termination at a
meeting of the Board called and held for the purpose of determining whether the
Executive engaged in conduct described in Section 5.2. The notice shall, except
as is otherwise provided in the last sentence of this Subsection (i), provide
the Executive with thirty (30) days from the day such notice is given to cure
the alleged grounds of termination contained in this Agreement. The Board of
Directors shall determine, reasonably and in good faith, whether the Executive
has effectively cured the alleged grounds of termination. If the grounds for
termination are limited to acts or conduct described in Subsections (ii) or
(iii) of Section 5.2(a), and in the reasonable good faith opinion of the Board
of Directors those grounds may not reasonably be cured by the Executive, then
the notice required by this Section 5.2(b)(i) need not provide for any cure
period; and
(ii) The Executive is given a copy of certified resolutions, duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Board of Directors (excluding the Executive, if applicable) at
a meeting of the Board of Directors called and held for the purpose of finding
that, in the reasonable good faith opinion of a majority of the Board of
Directors, the Executive was guilty of conduct set forth in Section 5.2, which
specify in
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detail the grounds for termination and indicate that the grounds for termination
have not been cured within the time limits, if any, specified in the notice
referred to in Section 5.2(b)(i).
5.3. Termination by the Executive. The Executive may terminate his
employment under this Agreement with or without Good Reason (as defined below)
at any time during either the Employment Term. Upon any termination of the
Executive's employment under this Section 5.3, the Company's sole compensation
obligation (solely for purposes of and with respect to this Agreement and the
Executive's employment with the Company or any of its direct or indirect
subsidiaries), if any, shall be as provided under Section 7.2 (if the
termination is without Good Reason) or Section 7.3 (if the termination is with
Good Reason). If such termination is with Good Reason, the Executive shall give
the Company notice, which shall identify with reasonable specificity the grounds
for the Executive's resignation and provide the Company with thirty (30) days
from the day such notice is given to cure the alleged grounds for resignation
contained in the notice. In the event that the Executive fails, without good
cause, to give such notice and the Executive's employment under this Agreement
in fact terminates at the initiation of the Executive, such termination shall be
deemed a termination by the Executive without Good Reason. For purposes of this
Agreement, "Good Reason" shall mean any of the following to which the Executive
shall not consent in writing: (i) a reduction in the Executive's Base Salary,
(ii) a relocation of the Executive's primary place of employment to a location
more than fifty (50) miles from his place of employment as described in Section
1, (iii) any change or diminution in offices, titles, status or reporting
requirements in the Executive's specific executive officer position, other than
an insubstantial and inadvertent act that is remedied by the Company promptly
after receipt of notice given by the Executive, or (iv) on or after a Change in
Control (as defined in Section 7.3(d)), in addition to those events stated
above, a material reduction in the Executive's actual annual Bonus.
5.4. Date of Termination. "Date of Termination" shall mean the earlier of
(a) the expiration of the Employment Term (the "Expiration Date") and (b) if the
Executive's employment is terminated (i) by his death, the date of his death, or
(ii) pursuant to the provisions
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of Section 5.2 or Section 5.3, as the case may be, the date on which the
Executive's employment with the Company and any subsidiary actually terminates.
6. Disability. The Executive shall be determined to be "Disabled" (and the
provisions of this Section 6 shall be applicable) if the Executive has been
unable to perform the duties of his position under this Agreement on essentially
a full-time basis for six (6) consecutive months by reason of a physical or
mental condition (a "Disability") and, within thirty (30) days after the Company
gives notice to the Executive that it intends to replace him due to his
Disability, the Executive shall not have returned to the performance of his
duties on essentially a full-time basis. Upon a determination that the Executive
is Disabled, the Company may replace the Executive without breaching this
Agreement; provided, however, that this Agreement shall not terminate until the
Expiration Date next following the date that the Executive is determined to be
Disabled. For the period from the date the Executive is determined to be
Disabled through the earlier of the Date of Termination or the date of the
Executive's death (the "Disability Period"), the Company shall continue to
provide the Executive all compensation and benefits provided for in Sections 3
and 4, provided however, that the Company's obligation to pay the Executive's
Base Salary shall be reduced by the amounts paid to the Executive under any
long-term disability insurance plan sponsored or otherwise maintained by the
Company (if any) and that in no event shall the total annual obligation of the
Company under this Agreement to make Base Salary payments to the Executive
during the Disability Period be greater than an amount equal to two-thirds (2/3)
of the Executive's Base Salary, computed on a pro rata basis beginning with the
date that the Executive is replaced in accordance with this Section 6, and
continuing until the expiration of the Disability Period.
7. Compensation Upon Termination.
7.1. Death. If the Executive's employment under this Agreement is
terminated by reason of his death, the Company shall continue to pay the
Executive's Base Salary at the rate in effect at the time of his death to such
person or persons as the Executive shall have designated for that purpose in a
notice filed with the Company, or, if no such person shall have been so
designated, to his estate, for a period of six (6) months after the Executive's
date of death. The
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Company also shall pay to such person(s) or estate, (a) the amount of the
Executive's Accrued Obligations (as defined below), and (b) an amount equal to
one-twelfth (1/12) of the Executive's average annual Bonus paid or payable under
Section 3.2 with respect to the most recent three (3) full fiscal years or, if
greater, the most recent twelve (12)-month period (in each case, determined by
annualizing the bonus paid or payable with respect to any partial fiscal year)
(the "Average Bonus"), that amount being payable in each of the six (6) months
following the Date of Termination. Any amounts payable under this Section 7.1
shall be exclusive of and in addition to any payments which the Executive's
widow, beneficiaries or estate may be entitled to receive pursuant to any
pension plan, profit sharing plan, employee benefit plan, or life insurance
policy maintained by the Company. For purposes of this Agreement, the
Executive's "Accrued Obligations" means, as of the Date of Termination, any
accrued but unpaid Base Salary, accrued Bonus (including (1) any accrued but
unpaid Bonus (if any) with respect to the fiscal year prior to the year in which
the Date of Termination occurs, and (2) the amount of the Executive's Average
Bonus multiplied by a fraction, the numerator of which is the number of days
from the first day of the fiscal year of the Company in which such termination
occurs through and including the Date of Termination and the denominator of
which is 365 (the "Pro Rata Bonus")), any accrued but unpaid cash entitlements
(including accrued but unused vacation) and reimbursement of business expenses
per Section 4.1.
7.2. By the Company for Cause or the Executive Without Good Reason. If the
Executive's employment is terminated by the Company for Cause, or if the
Executive terminates his employment other than for Good Reason, the Company
shall pay to the Executive the amount of any Accrued Obligations within 30 days
of the Date of Termination and the Company thereafter shall have no further
obligation to the Executive under this Agreement (solely for purposes of and
with respect to this Agreement and the Executive's employment with the Company
or any of its direct or indirect subsidiaries), other than for payment of any
amounts accrued and vested under any employee benefit plans or programs of the
Company.
7.3. By the Executive for Good Reason or the Company other than for Cause.
(a) Termination Prior to a Change in Control.
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(i) Severance Benefits. Subject to the provisions of Section
7.3(a)(ii) and Section 7.3(c), if, prior to (and not "in anticipation of", as
defined in Section 7.4 hereof) or more than two (2) years after a Change in
Control (as defined in Section 7.3(d)), the Company terminates the Executive's
employment without Cause, or the Executive terminates his employment for Good
Reason, then the Executive shall be entitled to the following benefits (the
"Severance Benefits"):
(A) the amount of his Accrued Obligations, that amount being
payable in a single lump sum cash payment within thirty (30) days of the Date of
Termination;
(B) a cash amount equal to the sum of (1) one-twelfth (1/12)
of the Executive's Base Salary at the highest rate in effect at any time during
the twelve (12)-month period prior to the Date of Termination, and (2)
one-twelfth (1/12) of the Executive's Average Bonus, that total amount being
payable in each month following the Date of Termination through and until the
later of (I) the month in which the Employment Term expires (i.e., the fifth
anniversary of the Effective Date), and (II) eighteen (18) months following the
month in which the Date of Termination occurs;
(C) all welfare benefits, including (to the extent
applicable) medical, dental, vision, life and disability benefits pursuant to
plans maintained by the Company under which the Executive and/or the Executive's
family is eligible to receive benefits and/or coverage, shall be continued for
each month following the Date of Termination through and until the later of (I)
the month in which the Employment Term expires, and (II) eighteen (18) months
following the month in which the Date of Termination occurs, with such benefits
provided to the Executive at no less than the same coverage level as in effect
as of the Date of Termination and the Executive shall pay any portion of such
cost as was required to be borne by key executives of the Company generally on
the Date of Termination; provided, however, that, notwithstanding the foregoing,
the benefits described in this Section 7.3(a)(i)(C) may be discontinued prior to
the end of the period provided in this Subsection (C) to the extent, but only to
the extent, that the Executive receives substantially similar benefits from a
subsequent employer;
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(D) key executive outplacement services, in accordance with
Company policies for senior executives as in effect on the Date of Termination
(or, at the request of the Executive, a lump sum payment in lieu thereof, in an
amount determined by the Company to be equal to the estimated cost of those
services);
(E) notwithstanding any provisions of any applicable stock
option plan and agreement(s) to the contrary, any outstanding nonvested stock
options and restricted stock granted by the Company to the Executive and held by
the Executive as of the Date of Termination shall become vested and immediately
exercisable by the Executive as of the Date of Termination;
(F) the benefits set forth under Section 7.5; and
(G) any accrued and vested benefits under any employee
benefit plans or programs.
(ii) Conditions to Receipt of Severance Benefits under Section
7.3(a). As a condition to receiving any Severance Benefits (other than any
Accrued Obligations or vested employee benefits) to which the Executive may
otherwise be entitled under this Section 7.3(a) only, the Executive shall
execute a release (the "Release"), in a form and substance reasonably
satisfactory to the Company, of any claims, whether arising under Federal, state
or local statute, common law or otherwise, against the Company and its direct or
indirect subsidiaries which arise or may have arisen on or before the date of
the Release, other than any claims under this Agreement or any rights to
indemnification from the Company and its direct or indirect subsidiaries
pursuant to any provisions of the Company's (or any of its subsidiaries')
articles of incorporation or by-laws or any directors and officers liability
insurance policies maintained by the Company. If the Executive fails or
otherwise refuses to execute a Release within a reasonable time after the
Company's request to do so, the Executive will not be entitled to any Severance
Benefits or any other benefits provided under this Agreement (other than any
Accrued Obligations and vested employee benefits) and the Company shall have no
further obligations with respect to the payment of such Severance Benefits. In
addition, if, following a termination of employment that gives the Executive a
right to the payment of Severance Benefits
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under Section 7.3(a), the Executive engages in any activities that would have
violated any of the covenants in Section 8.3 (had those covenants been
applicable), the Executive shall have no further right or claim to any Severance
Benefits (other than any Accrued Obligations and vested employee benefits) to
which the Executive may otherwise be entitled under this Section 7.3(a) from and
after the date on which the Executive engages in such activities and the Company
shall have no further obligations with respect to the payment of such Severance
Benefits.
(b) Termination In Anticipation of or After a Change in Control.
(i) Change in Control Severance Benefits. Subject to the
provisions of Section 7.3(c), if, in anticipation of (as defined below) or
within a two (2) year period following the occurrence of a Change in Control,
the Company terminates the Executive's employment without Cause, or the
Executive terminates his employment for Good Reason, then the Executive shall be
entitled to the following benefits (the "Change in Control Severance Benefits"):
(A) the sum of his Accrued Obligations, that amount being
payable in a single lump sum cash payment within thirty (30) days of the Date of
Termination;
(B) a cash amount equal to 2.99 times the sum of (1) the
Executive's annual Base Salary at the highest rate in effect at any time during
the twelve (12)-month period prior to the Date of Termination, and (2) the
Executive's Average Bonus, that total amount being payable in a single lump sum
cash payment within thirty (30) days of the Date of Termination;
(C) all welfare benefits, including (to the extent
applicable) medical, dental, vision, life and disability benefits pursuant to
plans maintained by the Company under which the Executive and/or the Executive's
family is eligible to receive benefits and/or coverage, shall be continued for
the thirty-six (36) month period following the Date of Termination, with such
benefits provided to the Executive at no less than the same coverage level as in
effect as of the Date of Termination and the Executive shall pay any portion of
such cost as was required to be borne by key executives of the Company generally
on the Date of Termination; provided, however, that, notwithstanding the
foregoing, the benefits described in
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this Section 7.3(b)(i)(C) may be discontinued prior to the end of the period
provided in this Subsection (C) to the extent, but only to the extent, that the
Executive receives substantially similar benefits from a subsequent employer;
(D) key executive outplacement services in accordance with
Company policies for senior executives as in effect on the Date of Termination
(or, at the request of the Executive, a lump sum payment in lieu thereof, in an
amount determined by the Company to be equal to the estimated cost of those
services);
(E) notwithstanding any provisions of any applicable stock
option plan and agreement(s) to the contrary, all outstanding unexercised stock
options and restricted stock held by the Executive as of the Date of Termination
shall become fully vested and shall be immediately exercisable by the Executive
pursuant to the provisions of the applicable plan and agreement(s);
(F) notwithstanding any provisions of the Supplemental
Executive Retirement Plan ("SERP") in which the Executive is or may be a
participant to the contrary, the Executive shall be deemed fully vested and
entitled to an immediate lump sum distribution of his benefit under the SERP,
calculated as if the Executive had been employed during the thirty-six (36)
month period following the Date of Termination and had received compensation as
provided under Section 3 for that period;
(G) the benefits set forth under Section 7.5; and
(H) any accrued and vested benefits under any employee
benefits plans or programs.
(ii) Definition of "In Anticipation Of". For purposes of this
Section 7.3, the termination of the Executive's employment shall be deemed to
have been "in anticipation of" a Change in Control if such termination (A) was
at the request of an unrelated third party who has taken steps reasonably
calculated to effect a Change in Control, or (B) otherwise arose in connection
with a Change in Control.
(c) Superseding Termination. If, subsequent to the giving by either
party of a notice of termination under this Agreement and prior to the actual
Date of Termination pursuant
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to such notice, the Executive's employment is properly terminated pursuant to
any other provision of this Agreement, the Executive shall be entitled only to
those benefits, if any, arising out of such subsequent and superseding
termination.
(d) Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean, and shall be deemed to have occurred upon the
occurrence of, any one of the following events:
(i) The acquisition in one or more transactions by any
individual, entity (including any employee benefit plan or any trust for an
employee benefit plan) or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of shares or other securities (as defined in
Section 3(a)(10) of the Exchange Act) representing 50% or more of either (1) the
shares of common stock of the Company (the "Company Common Stock") or (2) the
combined voting power of the securities of the Company entitled to vote
generally in the election of directors (the "Company Voting Securities"), in
each case calculated on a fully-diluted basis in accordance with generally
accepted accounting principles after giving effect to the acquisition; provided,
however, that none of the following acquisitions shall constitute a Change in
Control as defined in this clause (i): (A) any acquisition by any shareholder or
group consisting solely of shareholders of the Company immediately prior to the
date of this Agreement or (B) any acquisition by the Company so long as such
acquisition does not result in any Person (other than any shareholder or
shareholders of the Company immediately prior to the date of this Agreement),
beneficially owning shares or securities representing 50% or more of either the
Company Common Stock or Company Voting Securities; or
(ii) Any election has occurred of persons to the Board that
causes two-thirds of the Board to consist of persons other than (A) persons who
were members of the Board on the date of this Agreement and (B) persons who were
nominated for elections as members of the Board at a time when two-thirds of the
Board consisted of persons who were members of the Board on the date of this
Agreement; provided, however, that any person nominated for election
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by a Board at least two-thirds of whom constituted persons described in clauses
(A) and/or (B) or by persons who were themselves nominated by such Board shall,
for this purpose, be deemed to have been nominated by a Board composed of
persons described in clause (A);
(iii) The shareholder rights plan of the Company is triggered and
the Board fails to redeem the rights within the time provided for in the rights
agreement;
(iv) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or similar transaction (a "Reorganization
Transaction"), in each case, unless, immediately following such Reorganization
Transaction, more than 50% of, respectively, the outstanding shares of common
stock (or similar equity security) of the corporation or other entity resulting
from or surviving such Reorganization Transaction and the combined voting power
of the securities of such corporation or other entity entitled to vote generally
in the election of directors, in each case calculated on a fully-diluted basis
in accordance with generally accepted accounting principles after giving effect
to such Reorganization Transaction, is then beneficially owned, directly or
indirectly, by the shareholders of the Company immediately prior to such
approval; or
(v) Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation or other entity, with respect to which immediately following such
sale or other disposition more than 50% of, respectively, the shares of common
stock (or similar equity security) of such corporation or other entity and the
combined voting power of the securities of such corporation or other entity
entitled to vote generally in the election of directors, in each case calculated
on a fully-diluted basis in accordance with generally accepted accounting
principles after giving effect to such sale or other disposition, is then
beneficially owned, directly or indirectly, by the shareholders of the Company
immediately prior to such approval.
7.4. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment or benefit provided for in this Section 7 by seeking other
employment or otherwise, and, except as otherwise expressly provided in Sections
7.3(a)(i)(C) and 7.3(b)(i)(C), the amounts of
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compensation or benefits payable or otherwise due to the Executive under this
Section 7 or other provisions of this Agreement shall not be reduced by
compensation or benefits received by the Executive from any other employment he
shall choose to undertake following termination of his employment under this
Agreement; provided, however, that the Executive's entitlement to Severance
Benefits or Change in Control Severance Benefits, as the case may be, shall be
subject to his compliance with the covenants set forth in Section 8.
7.5. Employee For Life Status. Following the Executive's ceasing to be
Chairman of the Company for any reason other than death, termination by the
Company for Cause or termination by the Executive other than for Good Reason,
then, in addition to any other rights or benefits under this Agreement, the
Executive shall be entitled for the remainder of his life to continue as an
employee of the Company. In such capacity, the Executive shall have no duties,
obligations or time commitment (other than those, if any, to which he
specifically agrees from time to time), except for the obligation to answer very
occasional questions about major strategic matters. The Executive shall be
entitled to receive a minimum annual salary of not less than Twenty-Five
Thousand Dollars ($25,000.00) in such capacity, and shall also be entitled to
the following additional benefits:
(a) office space and secretarial assistance in the Company's executive
offices in Pittsburgh, or suitable office space and secretarial assistance in
Pittsburgh if the executive offices are not located in Pittsburgh, plus an
annual cash payment in an amount to cover the Executive's federal, state and
local tax liability, if any, with respect to such office space, secretarial
assistance and cash payment;
(b) reimbursement of the Executive's fees and dues associated with his
Duquesne Club membership plus an annual cash payment in an amount to cover the
Executive's federal, state and local tax liability, if any, with respect to such
reimbursements and such cash payment;
(c) health insurance coverage for the Executive and his spouse and
dependents equivalent to the coverage then being made available to full time
senior executives of
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the Company; provided, that the Executive shall bear any portion of the cost of
such coverage as is then required to be borne by senior officers of the Company;
(d) the change in status of the Executive from Chairman to "employee
for life" under this Section 7.5 shall not itself result in the early
termination of the exercise period of any stock options granted to the Executive
on or after the date of this Agreement and prior to the expiration of the
Employment Term, and any provision to the contrary set forth in any stock option
agreement with the Executive shall be superceded by this Section 7.5(d); and
(e) the Executive shall have the election to change his employment
status from "employee for life" to "consultant for life", in which event the
benefits set-forth in this Section 7.5 shall continue at the cost of the
Company. The Executive shall give thirty (30) days written notice of his
election to change.
7.6. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any economic benefit, payment or distribution
by the Company to or for the benefit of the Employee, whether paid, payable,
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties with respect to such excise tax (such excise tax and any
applicable interest and penalties, collectively referred to in this Agreement as
the "Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up-Payment") in an amount such that after payment by the
Executive of all applicable taxes (including any interest or penalties imposed
with respect to such taxes), the Executive retains an amount equal to the amount
he would have retained had no Excise Tax been imposed upon the Payment.
(b) Subject to the provisions of Section 7.6(c), all determinations
required to be made under this Section 7.6, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by the
Company's regular outside independent public accounting firm (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the Date of
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Termination, if applicable, or such earlier time as is requested by the Company.
The initial Gross-Up Payment, if any, as determined pursuant to this Section
7.6, shall be paid to the Executive within 5 business days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with an
opinion that he has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm, it is possible that Gross-Up Payments that
have not been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made under this Section 7.6(b).
In the event that the Company exhausts its remedies pursuant to Section 7.6(c)
and the Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.
(c) The Executive shall notify the Company of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment under the terms of this Section 7.6. This notice
shall be given as soon as practicable but no later than ten business days after
the later of either (i) the date the Executive has actual knowledge of the
claim, or (ii) ten days after the Internal Revenue Service issues to the
Executive either a written report proposing imposition of the Excise Tax or a
statutory notice of deficiency with respect to the Excise Tax, and shall apprise
the Company of the nature of the claim and the date on which the claim is
requested to be paid. The Executive shall not pay the claim prior to the
expiration of the thirty-day period following the date on which he gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to the claim is due). If the Company notifies the
Executive prior to the expiration of the above period that it desires to contest
the claim, the Executive shall: (A) give the Company any information reasonably
requested by the Company relating to the claim, (B) take such action in
connection with contesting the claim as the Company shall reasonably request in
writing from time to time,
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including accepting legal representation with respect to the claim by an
attorney reasonably selected by the Company, (C) cooperate with the Company in
good faith in order to effectively contest the claim, (D) permit the Company to
participate in any proceedings relating to the claim; provided, however, that
the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and expenses.
Without limitation of the foregoing provisions of this Section 7.6(c), the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
the claim and may, at its sole option, either direct the Executive to request or
accede to a request for an extension of the statute of limitations with respect
only to the tax claimed, or pay the tax claimed and xxx for a refund or contest
the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
the claim and xxx for a refund, the Company shall advance the amount of the
required payment to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with respect thereto, imposed with
respect to any advance or with respect to any imputed income in relation to any
advance; and further provided that any extension of the statute of limitations
requested or acceded to by the Executive at the Company's request and relating
to payment of taxes for the taxable year of the Executive with respect to which
the contested amount is claimed to be due is limited solely to the contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable under the
Agreement and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
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(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 7.6(c), the Executive becomes entitled to
receive any refund with respect to the claim, the Executive shall (subject to
the Company's complying with the requirements of Section 7.6(c)) promptly pay to
the Company the amount of that refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 7.6(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to the claim and the Company does not notify the Executive of its
intent to contest such denial of refund prior to the expiration of thirty days
after the determination, then the advance shall be forgiven and shall not be
required to be repaid and the amount of the advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
(e) In the event that any state or municipality or subdivision thereof
shall subject any Payment to any special tax which shall be in addition to the
generally applicable income tax imposed by the state, municipality, or
subdivision with respect to receipt of the Payment, the foregoing provisions of
this Section 7.6 shall apply, mutatis mutandis, with respect to such special
tax.
7.7. Severance Benefits Not Includable for Employee Benefits Purposes.
Subject to all applicable federal and state laws and regulations, income
recognized by the Executive pursuant to the provisions of this Section 7 (other
than income accrued but unpaid as of the Date of Termination) shall not be
included in the determination of benefits under any employee benefit plan (as
that term is defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended) or any other benefit plans, policies or programs
applicable to the Executive that are maintained by the Company or any of its
direct or indirect subsidiaries and the Company shall be under no obligation to
continue to offer or provide such benefits to the Executive after the Date of
Termination other than as provided under this Section 7 or to the extent to
which any benefit under a pertinent plan has accrued as of the Date of
Termination.
7.8. Exclusive Benefits. The Severance Benefits payable under Section
7.3(a) and the Change in Control Severance Benefits payable under Section
7.3(b), if either benefits become
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applicable under the terms of this Agreement, shall be mutually exclusive and
shall be in lieu of any other severance or similar benefits that would otherwise
be payable under any other agreement, plan, program or policy of the Company. In
addition, the Company and the Executive agree that, in the event of a
termination of the Executive's employment under any provision of Section 5, the
Executive shall be entitled solely to the payments and other benefits provided
under the applicable provisions of this Section 7 with respect to such
termination, and the Company, upon satisfaction of such payments and other
benefits, thereafter shall have no further obligation to the Executive under
this Agreement or with respect to the Executive's employment with the Company or
any direct or indirect subsidiaries of the Company, other than for payment of
any amounts accrued and vested under any employee benefit plans or programs of
the Company.
8. Restrictive Covenants.
8.1. Confidentiality. The Executive recognizes that the services to be
performed by him under this Agreement are special, unique and extraordinary in
that, by reason of his employment with the Company and any Affiliate (as defined
below), he may acquire confidential information and trade secrets concerning the
operation of the Company or an Affiliate, the use or disclosure of which could
cause the Company or an Affiliate substantial loss and damages which could not
be readily calculated and for which no remedy at law would be adequate. For
purposes of this Section 8, the term "Affiliate" means any direct or indirect
subsidiary of the Company, including any individual, partnership, firm,
corporation or other business organization or entity that controls, is
controlled by, or is under common control with, the Company. Accordingly, during
the Employment Term and at all times thereafter, the Executive covenants and
agrees with the Company that he shall not at any time, except in the performance
of his obligations to the Company under this Agreement or with the prior written
consent of the Board of Directors of the Company, directly or indirectly,
disclose any secret or confidential information that he may learn or has learned
by reason of his association with the Company, or any predecessors to their
business, or use any such information to the detriment of the Company or an
Affiliate. The term "confidential information" includes information not
previously disclosed to the public or to the
-21-
trade by the Company's management or otherwise known by the public or the trade
with respect to the Company's products, facilities and methods, research and
development, trade secrets and other intellectual property, systems, patents and
patent applications, procedures, manuals, confidential reports, product price
lists, customer lists, financial information (including the revenues, costs or
profits associated with any of the Company's products), business plans,
prospects or opportunities; provided, however, that the term "confidential
information" shall not include, and the Executive shall have no obligation under
this Agreement with respect to, any information that (a) becomes generally
available to the public other than as a result of a disclosure by the Executive
or his agent or other representative or (b) becomes available to the Executive
on a non-confidential basis from a source other than the Company or any
Affiliate. The Executive shall have no obligation under this Agreement to keep
confidential any of the confidential information to the extent that a disclosure
of it is required by law or is consented to by the Company; provided, however,
that if and when such a disclosure is required by law, the Executive promptly
shall provide the Company with notice of such requirement, so that the Company
may seek an appropriate protective order.
8.2. Exclusive Property. The Executive confirms that all confidential
information is the exclusive property of the Company. All business records,
papers and documents kept or made by the Executive relating to the business of
the Company or its direct or indirect subsidiaries shall be and remain the
property of the Company or the applicable subsidiary during the Employment Term
and at all times thereafter. Upon the termination of his employment with the
Company or upon the request of the Company at any time, the Executive shall
promptly deliver to the Company, and shall retain no copies of, any written
materials, records and documents made by the Executive or coming into his
possession concerning the business or affairs of the Company or its direct or
indirect subsidiaries; provided, however, that the Executive shall be permitted
to retain copies of any documents or materials of a personal nature or otherwise
related to the Executive's rights under this Agreement.
8.3. Non Competition. During the Employment Term and, except as provided in
the last sentence of this Section 8.3, from and after the Date of Termination
until the later of the fifth
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(5th) anniversary of the Effective Date and eighteen (18) months after the Date
of Termination, the Executive shall not, unless he receives the prior written
consent of the Company, directly or indirectly, own an interest in, manage,
operate, join, control, lend money or render financial or other assistance to,
participate in or be connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, or engage in any activity or capacity
(collectively, the "Competitive Activities") with respect to any individual,
partnership, limited liability company, firm, corporation or other business
organization or entity (each, a "Person"), that (a) is engaged directly or
indirectly in the ownership or operation of proprietary post-secondary schools
(whether or not degree-granting) or (b) is in competition with any of the
business activities of the Company or its direct or indirect subsidiaries either
(i) anywhere in the United States or (ii) in any other country in which the
Company or its direct or indirect subsidiaries conduct, or actively intend to
conduct, business as of the Date of Termination; provided, however, that (1)
subsection (b) of this Section 8.3 shall not apply with respect to any
line-of-business in which the Company or its direct or indirect subsidiaries was
not engaged on or before the Expiration Date or the Date of Termination, as the
case may be, and (2) this Section 8.3 shall not prohibit the Executive from (i)
lecturing or teaching, whether paid or unpaid, and whether for a competitor of
the Company or otherwise; (ii) writing or publishing academic materials for a
Person that is not a competitor of the Company, or (iii) owning, or otherwise
having an interest in, less than one percent (1%) of any publicly-owned entity
or three percent (3%) or less of any private equity fund or similar investment
fund that invests in education companies, provided the Executive has no active
role with respect to any investment by such fund in any Person referred to in
this Section 8.3. The Executive shall not be subject to the covenants contained
in this Section 8.3 and such covenants shall not be enforceable against the
Executive from and after the date that the Executive's employment is terminated
(i) by the Company without Cause, (ii) by the Executive for Good Reason or (iii)
in anticipation of or within two (2) years after a Change in Control.
8.4. Non-Solicitation. During the Term of the Executive's Employment and
until the later of the fifth (5th) anniversary of the Effective Date and
eighteen (18) months after the Date of Termination, the Executive shall not,
whether for his own account or for the account of any other
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Person (other than the Company or its direct or indirect subsidiaries),
intentionally solicit, endeavor to entice away from the Company or its direct or
indirect subsidiaries, or otherwise interfere with the relationship of the
Company or its direct or indirect subsidiaries with, any person who is employed
by the Company or its direct or indirect subsidiaries (including, but not
limited to, any independent sales representatives or organizations).
8.5. Injunctive Relief. Subject to the exceptions contained in Section 8.3,
the Executive acknowledges that a breach of any of the covenants contained in
this Section 8 may result in material, irreparable injury to the Company for
which there is no adequate remedy at law, that it shall not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach or threat of breach, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this Section 8 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 8. The Executive agrees and consents that injunctive relief may be
sought in any state or federal court of record in the Commonwealth of
Pennsylvania, or in the state and county in which a violation may occur or in
any other court having jurisdiction, at the election of the Company; to the
extent that the Company seeks a temporary restraining order (but not a
preliminary or permanent injunction), the Executive agrees that a temporary
restraining order may be obtained ex parte. The Executive agrees and submits to
personal jurisdiction before each and every court designated above for that
purpose.
8.6. Blue-Pencilling. The parties consider the covenants and restrictions
contained in this Section 8 to be reasonable. However, if and when any such
covenant or restriction is found to be void or unenforceable and would have been
valid had some part of it been deleted or had its scope of application been
modified, such covenant or restriction shall be deemed to have been applied with
such modification as would be necessary and consistent with the intent of the
parties to have made it valid, enforceable and effective.
9. Miscellaneous.
9.1. Assignment; Successors; Binding Agreement. This Agreement may not be
assigned by either party, whether by operation of law or otherwise, without the
prior written
-24-
consent of the other party, except that any right, title or interest of the
Company arising out of this Agreement may be assigned to any corporation or
entity controlling, controlled by, or under common control with the Company, or
to any successor of the Company or any entity acquiring all or substantially all
of the assets of the Company; provided, however, that as a precondition thereto,
the assignee shall first deliver to the Executive, an express written assumption
of this Agreement and the Company's obligations hereunder. No such assignment
shall relieve the Company of its obligations hereunder without the express
written consent of the Executive. Subject to the foregoing, this Agreement shall
be binding upon and shall inure to the benefit of the parties and their
respective heirs, legatees, devisees, personal representatives, successors and
assigns.
9.2. Modification and Waiver. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification or discharge is
duly approved by the Board of Directors of the Company and is agreed to in
writing by the Executive and such officer(s) as may be specifically authorized
by the Board of Directors of the Company to effect it. No waiver by any party of
any breach by any other party of, or of compliance with, any term or condition
of this Agreement to be performed by any other party, at any time, shall
constitute a waiver of similar or dissimilar terms or conditions at that time or
at any prior or subsequent time.
9.3. Entire Agreement. No agreement or representation, oral or otherwise,
express or implied, with respect to the subject matter of this Agreement, has
been made by either party which is not set forth expressly in this Agreement.
Further, this Agreement shall amend and supersede any and all previously
existing employment or consulting agreements between the Executive and the
Company or any of its direct or indirect subsidiaries or affiliates.
9.4. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania other than the conflict of laws provision thereof.
9.5. Arbitration. In the event of any dispute, controversy or claim between
the Company and the Executive arising out of or relating to the interpretation,
application or enforcement of any provision of this Agreement (other than with
respect to provisions under
-25-
Section 8 of this Agreement), either the Company or the Executive may, by
written notice to the other, require such dispute or difference to be submitted
to arbitration. The arbitrator or arbitrators shall be selected by agreement of
the parties or, if they do not agree on an arbitrator or arbitrators within 30
days after one party has notified the other of his or its desire to have the
question settled by arbitration, then the arbitrator or arbitrators shall be
selected by the American Arbitration Association (the "AAA") in Pittsburgh,
Pennsylvania. The determination reached in such arbitration shall be final and
binding on all parties without any right of appeal or further dispute. Execution
of the determination by such arbitrator may be sought in any court of competent
jurisdiction. The arbitrators shall not be bound by judicial formalities and may
abstain from following the strict rules of evidence and shall interpret this
Agreement as an honorable engagement and not merely as a legal obligation.
Unless otherwise agreed by the parties, any such arbitration shall take place in
Pittsburgh, Pennsylvania, and shall be conducted in accordance with the
Commercial Arbitration Rules of the AAA.
9.6. Consent to Jurisdiction and Service of Process. In the event of any
dispute, controversy or claim between the Company and the Executive arising out
of or relating to the interpretation, application or enforcement of the
provisions of Section 8 or Section 9.5, the Company and the Executive agree and
consent to the personal jurisdiction of the Court of Common Pleas for Allegheny
County, Pennsylvania and/or the United States District Court for the Western
District of Pennsylvania for resolution of the dispute, controversy or claim,
and that those courts, and only those courts, shall have exclusive jurisdiction
to determine any dispute, controversy or claim related to, arising under or in
connection with Section 8 of this Agreement. The Company and the Executive also
agree that those courts are convenient forums for the parties to any such
dispute, controversy or claim and for any potential witnesses and that process
issued out of any such court or in accordance with the rules of practice of that
court may be served by mail or other forms of substituted service to the Company
at the address of its principal executive offices and to the Executive at his or
her last known address as reflected in the Company's records.
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9.7. Withholding of Taxes. The Company shall withhold from any amounts
payable under the Agreement all Federal, state, local or other taxes as legally
shall be required to be withheld.
9.8. Notice. For the purposes of this Agreement, notices and all other
communications to either party provided for in this Agreement shall be furnished
in writing and shall be deemed to have been duly given when delivered or when
mailed if such mailing is by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to such party (notices to the
Company being addressed to the Secretary of the Company) at the Company's
principal executive office, or at other address as either party shall have
designated by giving written notice of such change to the other party at anytime
hereafter.
9.9. Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
9.10. Indemnification. The Executive shall be entitled to the same
indemnification rights as other executive officers of the Company pursuant to
the Company's Articles of Incorporation and By-laws, as in effect from time to
time, and shall be covered under any directors and officers insurance coverage
maintained by the Company with respect to its executive officers. Without
limiting any other provision of this Agreement, this Section 9.10 shall survive
the termination or expiration of this Agreement for any reason whatsoever.
9.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
9.12. Headings. The headings used in this Agreement are for convenience
only, do not constitute a part of the Agreement, and shall not be deemed to
limit, characterize, or affect in any way the provisions of the Agreement, and
all provisions of the Agreement shall be construed as if no headings had been
used in the Agreement.
9.13. Construction. As used in this Agreement, unless the context otherwise
requires: (a) the terms defined herein shall have the meanings set forth herein
for all purposes; (b)
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references to "Section" are to a section hereof; (c) all "Schedules" referred to
herein are incorporated herein by reference and made a part hereof; (d)
"include," "includes" and "including" are deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import; (e) "writing," "written" and comparable terms refer to printing,
typing, lithography and other means of reproducing words in a visible form; (f)
"hereof," "herein," "hereunder" and comparable terms refer to the entirety of
this Agreement and not to any particular section or other subdivision hereof or
attachment hereto; (g) references to any gender include references to all
genders; (h) references to any agreement or other instrument or statute or
regulation are referred to as amended or supplemented from time to time (and, in
the case of a statute or regulation, to any successor provision); and (i) the
word "or" shall be deemed to mean "and/or" unless the context clearly indicates
otherwise.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date and year first above written.
EDUCATION MANAGEMENT CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX, III
-----------------------------------------
Xxxxxxx X. Xxxxxxxx, III
Chairman of the Compensation Committee
EXECUTIVE
/s/ XXXXXX X. XXXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxxx
