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EXHIBIT 10.19
COMMON STOCK
REGISTRATION RIGHTS AGREEMENT
as of August 15, 1996
The parties to this Common Stock Registration Rights
Agreement ("Agreement") are Education Management Corporation, a Pennsylvania
corporation (the "Company"); Marine Midland Bank, not in its corporate
capacity, but solely as trustee (the "ESOP Trustee") of the Education
Management Corporation Employee Stock Ownership Trust; The Northwestern Mutual
Life Insurance Company ("Northwestern Mutual"); National Union Fire Insurance
Company of Pittsburgh, PA ("National Union"); ML Employees LBO Partnership No.
I, L.P., ML IBK Positions, Inc., Xxxxxxx Xxxxx KECALP L.P. 1986, ML Offshore
LBO Partnership No. IV, Xxxxxxx Xxxxx Capital Corporation and Xxxxxxx Xxxxx
Capital Appreciation Partnership IV, L.P. (collectively, the "ML Holders");
Xxxxxx X. Xxxxxxx, as trustee ("Xxxxxxx"); and those other persons who are
signatories to this Agreement.
This Agreement shall become effective when duly executed and
delivered by the Company, the ESOP Trustee, Northwestern Mutual, National
Union, the ML Holders and Xxxxxx X. Xxxxxxx and subject to and automatically
upon the occurrence of the date (the "Effective Date") on which the Company
first becomes subject to the periodic reporting requirements of Section 13 of
the Exchange Act by virtue of its registration under Section 12 of the Exchange
Act of Common Stock.
The parties to this Agreement, intending to be legally bound
hereby, agree as follows:
I. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"affiliate" has the meaning ascribed to that term in Rule
1-02 of Regulation S-X promulgated under the Securities Act.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Demand" has the meaning ascribed to that term in Section
3.1.
"Effective Date" has the meaning ascribed to that term in the
recitals to this Agreement.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Incidental Registration" has the meaning ascribed to that
term in Section 3.2.
"Initiating Holder" means any of (i) the ESOP Trustee, (ii)
Northwestern Mutual, (iii) National Union, (iv) any of the ML Holders, and (v)
Xxxxxxx.
"person" means an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" means the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement
and by all other amendments, and supplements to such prospectus, including
post-effective amendments, and all information incorporated by reference in
such prospectus.
"Registrable Securities" means any shares of Common Stock (i)
owned as of the Effective Date by a party to this Agreement (other than any
shares that are sold by any parties hereto in the initial public offering by
the Company), (ii) underlying the option held on the Effective Date by one such
party identified as an "Option Holder" in the signature page to this Agreement,
or (iii) acquired after the Effective Date by a party to this Agreement by
virtue of any stock split or combination, stock dividend or similar event in
respect of any of the shares referred to in clause (i) or clause (ii) of this
definition; provided, however, that shares of Common Stock that are Registrable
Securities shall cease to be Registrable Securities upon the sale thereof
pursuant to an effective Registration Statement or pursuant to Rule 144 (or
successor rule) under the Securities Act or upon, in the case of any holder
thereof, shares of Common Stock that have become saleable pursuant to Rule 144
without volume or other restrictions; and provided further that shares of
Common Stock that are Registrable Securities shall continue to be Registrable
Securities upon their transfer in a private transaction exempt from the
registration requirements of the Securities Act to a person who is already a
party to this Agreement (or an affiliate of any party to this Agreement) or who
becomes a party to this Agreement by agreeing in writing to be bound by the
terms of this Agreement, such agreement to be in form and substance reasonably
satisfactory to the Company.
"Registration Expenses" means all registration and filing
fees, fees with respect to filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD"), the fees and expenses of
any "qualified independent underwriter" (and its counsel), if any, that is
required to be retained by any holder of Registrable Securities in accordance
with the rules and regulations of the NASD, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements
of one counsel for the underwriters or sellers of Registrable Securities in
connection with blue sky qualifications of the Registrable Securities and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or holders of a majority of the
Registrable Securities being sold may designate), printing expenses, messenger,
telephone and distribution expenses associated with the preparation and
distribution of any Registration Statement, any Prospectus, and amendments or
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supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, all fees and expenses associated with the listing of any Registrable
Securities on any securities exchange or exchanges, and fees and disbursements
of counsel for the Company and its independent certified public accountants,
any fees and expenses of underwriters customarily paid by issuers (but
specifically excluding any Selling Expenses), the fees and expenses of other
persons retained by the Company, and the reasonable fees and disbursements of
one counsel to the holders of the Registrable Securities that are being sold,
which counsel shall be reasonably satisfactory to the Company.
"Registration Statement" means any registration statement of
the Company filed under the Securities Act, including the Prospectus forming a
part thereof, amendments and supplements to such Registration Statement,
including post-effective amendments, and all exhibits to and all information
incorporated by reference in such Registration Statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Selling Expenses" means, with respect to any holder of
Registrable Securities, all underwriting discounts, selling commissions and
stock transfer or documentary stamp taxes, if any, applicable to any
Registrable Securities registered and sold by such holder, and all fees and
disbursements of any counsel for such holder (other than any counsel fees
expressly constituting a Registration Expense as defined in this Agreement).
"Selling Holders" has the meaning ascribed to that term in
Section 3.1.
"underwritten offering" means an offering registered under
the Securities Act in which securities are sold to an underwriter, whether on a
"firm commitment", "best efforts" or other basis, for reoffering to the public.
2. Securities Subject to this Agreement. The only securities
entitled to the benefits of this Agreement are the Registrable Securities.
3. Registration of Registrable Securities.
3.1 Demand Registration.
(a) Demand. At any time after the first anniversary
of the Effective Date and subject to the other provisions of this Agreement,
any Initiating Holder or Holders shall have the right, exercisable by making a
written request to the Company (with each such request being referred to
hereinafter as a "Demand"), to require that the Company effect the registration
in accordance with the provisions of the Securities Act of the offering and
sale of any of the Registrable Securities held by such Initiating Holder or
Holders, but in no event fewer than 500,000 shares per Initiating Holder (with
such number to be adjusted, as appropriate, by the
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Company to reflect any stock splits, reverse stock splits, stock combinations
or the like occurring after the Effective Date). Upon receipt of one or more
Demands, the Company shall promptly give written notice of the Demand to all
other holders of Registrable Securities, and the Company shall use all
reasonable efforts to effect, at the earliest practicable date, the
registration under the Securities Act on Form S-3 (or a successor form
thereto), including by means of a shelf registration on Form S-3 (or a
successor form thereto) pursuant to Rule 415 under the Securities Act if so
requested in such Demand (in any case only if Form S-3 (or such successor form)
is then available to the Company and only if the Company is then eligible to
use such a shelf registration), of (i) the offering and sale of the Registrable
Securities that the Company has been so required to register by such Initiating
Holder or Holders, and (ii) the offering and sale of all other Registrable
Securities that the Company has been requested to register by the holders
thereof (such holders together with the Initiating Holders being hereinafter
referred to as the "Selling Holders") by written request given to the Company
within 20 days after the giving of such written notice by the Company.
(b) Effective Registration Statement. A registration
requested pursuant to this Section 3.1 shall not be deemed to have been
effected (i) unless a Registration Statement with respect thereto has become
effective and remained effective in compliance with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the Selling Holders thereof set forth in such
registration statement, unless the failure to so dispose of such Registrable
Securities shall be caused solely by reason of a failure on the part of the
Selling Holders); provided, that with respect to any registration statement
filed pursuant to Rule 415 under the Securities Act, such period need not
exceed 180 days, and that with respect to any other such registration
statement, such period need not exceed 135 days, (ii) if, after it has become
effective, such registration is interfered with by any stop order, injunction
or other order or requirement of the SEC or other governmental agency or court
for any reason not attributable to the Selling Holders and has not thereafter
become effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Selling Holders.
(c) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Selling Holders of more than 50% of the
Registrable Securities to be included in such registration and shall be
reasonably acceptable to the Company.
(d) Priority in Requested Registration. If the
managing underwriter of any underwritten offering of Registrable Securities
shall advise the Company in writing (and the Company shall so advise each
Selling Holder of Registrable Securities requesting registration of such
advice) that, in its opinion, the number of Registrable Securities requested to
be included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Selling Holders of 66_% of the
Registrable Securities requested to be included in such registration, the
Company, except as provided in the following sentence, shall include in such
registration, to the extent of the number which the Company is so advised can
be sold in
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such offering, Registrable Securities requested to be included in such
registration allocated first to the Registrable Securities requested to be
included in such registration by the Initiating Holder or the Initiating
Holders exercising one or more Demands, and then, to the extent of the
remainder of the number which the Company is so advised can be sold in the
offering, pro rata among the other Selling Holders requesting such registration
on the basis of the estimated gross proceeds from the sale thereof. If the
total number of Registrable Securities requested by a Selling Holder to be
included in such registration cannot be included as provided in the preceding
sentence, a Selling Holder shall have the right to withdraw such Selling
Holder's request for registration by giving written notice to the Company
within 10 days after receipt of such notice by the Company and, in the event of
such withdrawal, such request shall not be counted for purposes of the number
of Demands an Initiating Holder is entitled pursuant to Section 3.1(e).
(e) Limitations on Demand Registrations. No
Initiating Holder may exercise more than two Demands during the term of this
Agreement; provided, however, that for purposes of this sentence only the ML
Holders shall be considered as a single group and accordingly the ML Holders
may not exercise more than two Demands in the aggregate regardless of which XX
Xxxxxx exercises a Demand. Following a registration pursuant to this Section
3.1, the Company shall not be required to effect another registration pursuant
to this Section 3.1 for the six-month period immediately subsequent to the
effectiveness (within the meaning of Section 3.1(b)) of the Registration
Statement filed with respect to such first registration. In addition, the
Company may delay the filing of any Registration Statement pursuant to this
Section 3.1 for a reasonable period of time if, in the good faith judgment of
the Board of Directors of the Company, the Company would be required to include
in such registration statement material information which at that time could
not be publicly disclosed without materially interfering with any financing,
acquisition, corporate reorganization or other material development or
transaction then pending or in progress and without other material adverse
consequences; provided, however, that the duration of any such delay shall not
exceed 90 days from the date the Company's Board of Directors actually becomes
aware of such material development or transaction; and, provided, further, that
the Company shall make such filing no later than the earlier of (i) the date on
which the conditions that permitted it to delay such filing no longer pertain
and (ii) the end of such 90-day period. In the event of any such delay, any
Selling Holder shall have the right to withdraw his or its request for
registration, and any such withdrawn request that would otherwise have been
considered a Demand shall not be considered for purposes of the determining the
maximum number of Demands provided for in the first sentence of this Section
3.1(e).
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3.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the
Company at any time proposes to register the offering and sale of shares of
Common Stock under the Securities Act by registration on any form other than
forms S-4 or S-8 (or any successors thereto) whether or not for sale for its
own account, it shall each such time give prompt written notice to all holders
of Registrable Securities of its intention to do so and of such holders' rights
under this Section 3.2. Upon the written request of any such holder (a
"Requesting Holder") made as promptly as practicable and in any event within 20
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Requesting Holder and
the intended methods of such disposition), the Company shall use all reasonable
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the
Requesting Holders thereof to the extent requisite to permit the disposition
(in accordance with such intended methods thereof) of the Registrable
Securities so to be registered; provided that (i) if such registration involves
an underwritten public offering, all holders of Registrable Securities
requesting to be included in the Company's registration must sell their
Registrable Securities to the underwriters selected by the Company on the same
terms and conditions as apply to the Company; and (ii) if, at any time after
giving notice of its intention to register any securities pursuant to this
Section 3.2(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such securities, the Company shall give written notice
to all holders of Registrable Securities and, thereupon, shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration (but not from any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however, to
the rights of holders under Section 3.1. If a registration pursuant to this
Section 3.2(a) involves an underwritten public offering, any holder of
Registrable Securities requesting to be included in such registration may
elect, in writing prior to the effective date of the registration statement
filed in connection with such registration, not to register such securities in
connection with such registration. No registration effected under this Section
3.2 shall relieve the Company of its obligations to effect registrations upon
request under Section 3.1.
(b) Priority in Incidental Registrations. If the
managing underwriter of the underwritten offering shall inform the Company by
letter of its opinion that the number of Registrable Securities requested to be
included in such registration would, in its opinion, materially adversely
affect such offering, including the price at which such securities can be sold,
and the Company has so advised the Requesting Holders in writing, then the
Company shall include in such registration, to the extent of the number which
the Company is so advised can be sold in (or during the time of) such offering,
first, all securities proposed by the Company as so advised can be sold for its
own account, second, to the extent that the number of shares of Common Stock
which the Company proposes to sell for its own account pursuant to Section
3.2(a) is less than the number of shares of Common Stock which the Company has
been advised can be sold in such offering without having the material adverse
effect referred to above, such Registrable Securities requested to be included
in such registration pursuant to this Section 3.2, allocated pro rata among
such Requesting Holders on the basis of the estimated gross proceeds from the
sale thereof.
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4. Hold-Back Agreements. Each holder of Registrable Securities
whose Registrable Securities are covered by a Registration Statement filed
pursuant to Section 3 shall, if requested by the managing underwriter or
underwriters in an underwritten offering, agree not to effect any public sale
or distribution of securities of the Company of the same class as the
securities included in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act, except as part of such underwritten
registration, during the 15-day period prior to, and during a period of up to
120 days beginning on, the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the Company or the managing underwriter or underwriters.
5. Registration Procedures.
In connection with the Company's obligations under Section 3,
the Company shall use all reasonable efforts to effect such registration to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of distribution thereof, and pursuant thereto the Company
shall as expeditiously as practicable:
(a) prepare and file with the SEC, as soon as practicable, a
Registration Statement on an appropriate registration form, which Registration
Statement shall comply as to form in all material respects with the
requirements of the applicable form and include or incorporate by reference all
financial statements required by the SEC to be filed therewith or incorporated
by reference therein, and in either case use all reasonable efforts to cause
such Registration Statement to become effective and remain effective in
accordance with Section 3.1(b); provided, however, that before filing a
Registration Statement or Prospectus or any amendment or supplement thereto,
including information incorporated by reference after the initial filing of the
Registration Statement, the Company shall furnish to the holders of the
Registrable Securities covered by such Registration Statement and the managing
underwriter or underwriters, if any, copies of all such documents proposed to
be filed (including, upon request, any and all exhibits thereto), which
documents shall be subject to the reasonable and prompt review of such holders
and underwriters, and the Company shall not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which the
holders of at least 50% of the Registrable Securities covered by such
Registration Statement, or the managing underwriter or underwriters, if any,
shall reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to such Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period, or such
shorter period which shall terminate when all Registrable Securities covered by
such Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the Selling Holders set forth in
such Registration Statement or supplement to the Prospectus;
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(c) notify the Selling Holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly, and (if requested by
any such person) confirm such advice in writing promptly, (1) when the
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement has been filed, and, with respect to such Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (2) of any comments of the SEC or any state securities authority
with regard to the Registration Statement and of any request by the SEC or any
state securities authority for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (3) of the issuance
by the SEC or any state securities authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, (4) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (5) in the case of any shelf
Registration Statement, if between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company contained in any
underwriting agreement, securities sale agreement or other similar agreement,
relating to the offering cease to be true and correct in all material respects
and (6) of the happening of any event or the discovery of any facts that makes
any statement made in the Registration Statement, the Prospectus or any
document incorporated therein by reference untrue in any material respect or
which requires the making of any changes in the Registration Statement, the
Prospectus or any document incorporated therein by reference in order to make
the statements therein not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the
earliest possible time;
(e) if requested by the managing underwriter or underwriters or
a Holder of Registrable Securities being offered for sale in connection with an
underwritten offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters or such holder of Registrable Securities being offered for sale
consider should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
for sale, the purchase price being paid therefor and with respect to any other
terms of the offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement, any amendment (including any post-effective amendment)
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
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(g) deliver to each selling holder of Registrable Securities and
the underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such persons may reasonably request;
(h) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of Registrable
Securities, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable
Securities for offer and sale under the state securities or blue sky laws of
such jurisdictions as any seller or underwriter reasonably requests in writing
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling holders of Registrable Securities
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold without any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the managing
underwriter or underwriters may request at least two business days prior to any
sale of Registrable Securities to underwriters;
(j) upon the occurrence of any event contemplated by clause (6)
of paragraph (c) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities, the Prospectus shall not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(k) use all reasonable efforts to cause all Registrable
Securities covered by the Registration Statement to be listed on each
securities exchange or on the Nasdaq National Market, if any, on which the
Common Stock is then listed;
(l) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of Registrable Securities covered by a
Registration Statement and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration (1) make such representations and warranties to the
holders of such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings; (2) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriter or underwriters,
if any, and the holders of at least 50% of the Registrable Securities being
sold, addressed to each selling holder and the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such holders and
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underwriters; and (3) obtain "comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the selling
holders of Registrable Securities and the underwriters, if any, such letters to
be in customary form and covering matters of the type customarily covered in
"comfort" letters by underwriters in connection with primary underwritten
offerings;
(m) make available for inspection by a representative of the
holders of at least a majority of the Registrable Securities, any underwriter
participating in any disposition pursuant to Registration Statement and any
attorney or accountant retained by any selling holder or holders of Registrable
Securities or any underwriter, all financial and other records and all
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to be available for discussions
with and to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
Registration Statement; provided, that any records, information or documents
that are designated by the Company in writing as confidential shall be kept
confidential by such persons unless disclosure of such records, information or
documents is required by court or administrative order or becomes publicly
available;
(n) use all reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
security holders, as provided in Rule 158 or otherwise, earnings statements
satisfying the provisions of Section 11(a) of the Securities Act;
(o) promptly prior to the filing of any document which is to be
incorporated by reference into Registration Statement or Prospectus (after
initial filing of the Registration Statement), provide copies of such document
to counsel to the selling holders of Registrable Securities and to the managing
underwriter or underwriters, if any, make the Company's representatives
available for discussion of such document and make such changes in such
document prior to the filing thereof as counsel for such selling holders or
underwriters may reasonably request; and
(p) otherwise reasonably cooperate with the Selling Holders to
carry out the intent of this Agreement.
The Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing; provided, however, that such
information shall be used by the Company only to the extent necessary for and
in connection with, such registration.
Each holder of Registrable Securities agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(6) hereof, such holder shall forthwith discontinue
disposition of such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(j),
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be
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resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus, and, if so directed by
the Company, such holder shall deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event the Company shall give any
such notice, the time periods regarding the maintenance of the Registration
Statement in Section 3 shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 5(c)(6) to and including the date when each seller of Registrable
Securities covered by such Registration Statement shall have received the
copies of the supplemented or amended prospectus contemplated by Section 5(j)
or the Advice.
6. Expenses of Registration. All Registration Expenses incurred in
connection with any registration commenced in accordance with Section 3 or 4
(even if subsequently terminated or withdrawn) shall be borne by the Company.
All Selling Expenses relating to Registrable Shares registered on behalf of any
person shall be borne by such person.
7. Indemnification.
(a) Indemnification by Company. The Company shall indemnify
and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors and employees and each person
who controls such holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses arising out of any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement (or amendment (including any post-effective amendment) or supplement
thereto), Prospectus or preliminary Prospectus) or any amendment or supplement
thereto, including all documents incorporated therein by reference, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein or
by such holder's failure to deliver a copy of the Registration Statement or
Prospectus after the Company has furnished such holder with a sufficient number
of copies of the same; provided, however, that in the event of an underwritten
offering, no holder shall be deemed to have failed to make any such delivery.
The Company shall also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the
distribution, their officers and directors and each person who controls such
persons (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of
Registrable Securities, if requested.
(b) Indemnification by Holder of Registrable Securities. In
connection with a Registration Statement, each holder of Registrable Securities
covered thereby shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any Registration
Statement (or amendment (including any post-effective amendment) or supplement
thereto) or Prospectus (or any amendment or supplement thereto) and shall
indemnify and hold harmless, to the full extent permitted by law, the Company,
its directors and officers and each person who controls the Company (within the
meaning of the Securities Act) against any
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losses, claims, damages, liabilities and expenses arising out of any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the Registration Statement (or
amendment (including any post-effective amendment) or supplement thereto) or
Prospectus or preliminary Prospectus (or any amendment or supplement thereto),
including all documents incorporated therein by reference or necessary to make
the statements therein not misleading, to the extent, but only to the extent,
that such untrue statement is contained or omission is required to be in any
information so furnished in writing by such holder to the Company specifically
for inclusion in such Registration Statement (or amendment (including any
post-effective amendment) or supplement thereto) or Prospectus (or any
amendment or supplement thereto). The liability of any selling holder of
Registrable Securities hereunder shall not exceed the dollar amount of the
proceeds received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. The Company shall be entitled
to receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above with respect to information so furnished in
writing by such persons specifically for inclusion in any Prospectus or
Registration Statement (or amendment (including any post-effective amendment)
or supplement thereto).
(c) Conduct of Indemnification Proceedings. Any person
entitled to indemnification hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party, provided,
however, that any person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of
such person unless (a) the indemnifying party has agreed to pay such fees or
expenses, or (b) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person, or (c)
in the reasonable judgment of any such person, based upon advice of its
counsel, a conflict of interest may exist between such person and the
indemnifying party with respect to such claims or there may exist legal
defenses for such person that are materially different from or in addition to
those available to the indemnifying party (in which case, if the person
notifies the indemnifying party in writing that such person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such person). If such defense is not assumed by the indemnifying party, the
indemnifying party shall not be subject to any liability for any settlement or
consent to judgment made without its consent (but if such consent is requested,
such consent shall not be unreasonably withheld). No indemnifying party shall
be required to consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in
the reasonable judgment of any indemnified party, after consultation with
counsel, a conflict of interest may exist between such indemnified party and
any other of such indemnified parties or there may exist legal defenses for
such indemnified party that are materially different from or in addition to
those
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available to the other indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels.
(d) Contribution. If for any reason the indemnification
provided for in the preceding clauses (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by the
preceding clauses (a) and (b), then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability (i) in such proportion as is appropriate to reflect
the relative fault of the indemnified party and the indemnifying party, or (ii)
if the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect the relative benefits received by
the indemnified party and the indemnifying party as well as their relative
fault, as well as any other relevant equitable considerations. The relative
fault of the indemnified party and the indemnifying party shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the indemnified party or the
indemnifying party and each party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
provided that no holder of Registrable Securities shall be required to
contribute in an amount greater than the dollar amount of the proceeds received
by such holder with respect to the sale of any Registrable Securities. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. Current Public Information. For so long as the Company is
subject to the reporting requirements of Section 13 or 15 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Company covenants
that it will file the reports required to be filed by it under the Securities
Act and Section 13(a) or 15 (d) of the Exchange Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to be so required
to file such reports, it will upon the request of any holder of Registrable
Securities (a) make publicly available such information as is necessary to
permit sales pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant
to Rule 144A under the Securities Act and it will take such further action as
any holder of Registrable Securities may reasonably request, and (c) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to time to enable such holder to sell its Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, (ii) Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or
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consents to departures from the provisions hereof may not be given unless the
Company has obtained the written consent of holders of at least 80% of the
Registrable Securities; provided, however, that with respect to a particular
Registration Statement filed pursuant to Section 3, a waiver or consent to
departure from the provisions of this Agreement regarding only such
Registration Statement and the offering covered thereby may be given by the
holders of not less than 66-2/3% of the Registrable Securities covered by such
Registration Statement, except that no such waiver or consent shall operate to
affect adversely the rights hereunder of any other holder of Registrable
Securities.
(b) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or courier guaranteeing
overnight delivery:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Company in accordance
with the provisions of this Section 9(b); and
(ii) if to the Company, initially at 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000, Telecopy: (000) 000-0000, Attention: Chief
Executive Officer and General Counsel, and thereafter at such other
address, notice of which is given in accordance with the provisions
of this Section 9(b).
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day
if timely delivered to a courier guaranteeing overnight delivery.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(d) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed in Pennsylvania without
regard to principles of conflicts of laws.
(f) Severability. Each provision of this Agreement shall be
considered severable, and if for any reason any provision that is not essential
to the effectuation of the basic purposes of the Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable under existing
or future applicable law, such invalidity shall not impair the operation of or
affect those provisions of this Agreement that are valid. In that case, this
Agreement shall be construed so as to limit any term or provision so as to make
it enforceable or
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valid within the requirements of any applicable law, and in the event such term
or provision cannot be so limited, this Agreement shall be construed to omit
such invalid or unenforceable provisions.
(g) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
representations, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted by
the Company hereby. Upon the Effective Date, this Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, and cannot be changed or terminated orally; provided, however,
that nothing contained in this Agreement shall be deemed to modify the
provisions a letter agreement dated as of August 9, 1996, between the Company
and the ESOP Trustee, with respect to the disposition of shares of the
Company's capital stock held by the ESOP Trustee.
(h) Term. This Agreement shall terminate and cease to be of
any further force or effect on the earlier of (i) the tenth anniversary of the
Effective Date and (i) the first date on which both (A) the total number of
shares of Registrable Securities subject to this Agreement is less than
1,750,000 and (B) no Initiating Holder (with the ML Holders being treated as a
single Initiating Holder) holds 500,000 or more shares (such numbers in clause
(A) and (B) to be adjusted, as appropriate, by the Company to reflect any stock
splits, reverse stock split, stock combinations or the like occurring after the
Effective Date); provided, however, that with respect to any particular party
to this Agreement, this Agreement shall terminate and cease to be of any
further force or effect on the first date which that party ceases to hold any
Registrable Securities.
(i) Construction. As used in this Agreement, unless the
context otherwise requires (i) references to "Sections" are to sections of this
Agreement, (ii) "hereof", "herein", "hereunder" and comparable terms refer to
this Agreement in its entirety and not to any particular part of this
Agreement, (iii) the singular includes the plural and the masculine, feminine
and neutral gender includes the other, (iv) "including" or "includes" shall be
deemed to be followed by the phrase "without limitation", and (v) headings of
the various Sections and subsections are for convenience of reference only and
shall not be given any effect for purposes of interpreting this Agreement.
(j) Termination of Stockholders Agreement. Subject to and
automatically upon the effectiveness of this Agreement, the Stockholders
Agreement dated as of October 26, 1989, as amended, among the Company, the
Initiating Holders and the other parties named therein shall terminate and be
of no further force or effect, except that the provisions of section 6.1.3
thereof [Demand Registration Expenses], insofar as they relate to the
registration of shares of Common Stock in the Company's initial public
offering, shall survive such termination.
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Witness the due execution hereof, as of this date first above
written, on behalf of the undersigned thereunto duly authorized.
EDUCATION MANAGEMENT XXXXXXX XXXXX CAPITAL
CORPORATION APPRECIATION PARTNERSHIP
IV, L.P.
By: /s/ XXXXXXXXX X. XXXXXXXXX By: Xxxxxxx Xxxxx LBO Partners,
-------------------------- No. I, L.P.,
General Partner
Title: Vice President, General
Counsel & Secretary By: Xxxxxxx Xxxxx Capital Partners,
Inc.,
General Partner
By: /s/ XXXXX X. XXXXXX
------------------------
Title: Vice President
--------------------
THE NORTHWESTERN MUTUAL ML EMPLOYEES
LIFE INSURANCE COMPANY LBO PARTNERSHIP NO. I, L.P.
By: ML Employees LBO Managers, Inc.,
General Partner
By: /s/ J. XXXXXX XXXXXXXXXXXXXX By: /s/ XXXXX X. XXXXXX
---------------------------- -----------------------
Title: Vice President Title: Vice President
------------------------- --------------------
NATIONAL UNION FIRE INSURANCE ML IBK POSITIONS, INC.
COMPANY OF PITTSBURGH, PA
By: /s/ XXXXX X. XXXXXXXXX By: /s/ XXXXX X. XXXXXX
---------------------------- -----------------------
Title: Vice President Title: Vice President
------------------------- --------------------
XXXXXXX XXXXX CAPITAL XXXXXXX XXXXX KECALP L.P. 1986
CORPORATION
By: KECALP Inc., General Partner
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXX
---------------------------- -----------------------
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Title: Senior Vice President Title: Vice President
------------------------- ----------------------
ML OFFSHORE LBO
PARTNERSHIP NO. IV
By: Xxxxxxx Xxxxx LBO Partners,
No. I, L.P. Investment,
General Partner
By: Xxxxxxx Xxxxx Capital Partners, Inc.
General Partners
By: /s/ XXXXX X. XXXXXX
----------------------------
Title: Vice President
--------------------------
MARINE MIDLAND BANK, not in
its corporate capacity, but solely
in its capacity as trustee, and on
behalf, of the Education Management
Corporation Employee Stock Ownership Trust
By: /s/ XXXXXXX XXXXXXX
---------------------------
Title: Senior Vice President
--------------------------
XXXXXX X. XXXXXXX, not in his
individual capacity, but solely
in his capacity as trustee of
the Revocable Trust Agreement
of Xxxxxx X. Xxxxxxx dated 3/4/93
By: /s/ XXXXXX X. XXXXXXX
----------------------------
Title: Vice President
--------------------------
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/s/ R. XXXXXXXX XXXXXX /s/ C. XXXXXX XXXXXXX
----------------------------- ----------------------------
R. Xxxxxxxx Xxxxxx C. Xxxxxx Xxxxxxx
/s/ XXXX X. XXXXXXX /s/ XXXXXXX X. XXXXXXXXX
----------------------------- ----------------------------
Xxxx X. Xxxxxxx Xxxxxxx X. XxXxxxxxx
/s/ XXXXXX X. XXXXX /s/ XXXXXX X. XXXXXXX
----------------------------- -----------------------------
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
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/s/ XXXXXX X. XXXXXXX /s/ XXXX X. XXXXXXXX
----------------------------- -----------------------------
Xxxxxx X. Xxxxxxx Xxxx X. Xxxxxxxx
/s/ XXXX X. XXXXXX /s/ XXXXX X. GRAFT
----------------------------- ----------------------------
Xxxx X. Xxxxxx Xxxxx X. Graft
/s/ XXXXXX XXXXXXXXXX /s/ XXXXX X. XXXXX, XX.
----------------------------- -----------------------------
Xxxxxx Xxxxxxxxxx Xxxxx X. Xxxxx, Xx.
/s/ XXXXXX X. XXXXXXXX /s/ XXXXXX X. XXXXXXXX
----------------------------- ----------------------------
Xxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
/S/ XXXXX XXXXXXX /s/ XXXXXX X. XXXXXXXXX, III
----------------------------- ----------------------------
Xxxxx Xxxxxxx Xxxxxx X. Xxxxxxxxx, III
/s/ XXXXXXX X. XXXXX /s/ XXXXXX X. XXX
---------------------------- ----------------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxx
/s/ XXXXXX X. XXXXXXXX /s/ XXXXXXX X. XXXXXXX
---------------------------- ----------------------------
Xxxxxx X. XxXxxxxx Xxxxxxx X. XxxXxxx
/s/ XXXXXX XXXXXXX
----------------------------
Xxxxxx Xxxxxxx
[Option Holder]
19
