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Exhibit 99
AGREEMENT
April 30, 1997
The parties to this Agreement (this "Agreement") are Xxxxxxx X. Xxxxxxx,
XX ("Xx. Xxxxxxx") and Education Management Corporation, a Pennsylvania
corporation (the "Company"). The parties, intending to be legally bound
hereby, agree as follows:
1. Resignation from Employment. Effective as of the end of business on
April 30, 1997 (the "Separation Date"), Xx. Xxxxxxx resigns from his employment
with the Company and its direct and indirect subsidiaries.
2. Benefits Upon Separation. In connection with the termination of his
employment, Xx. Xxxxxxx shall be entitled to the following:
(a) Xx. Xxxxxxx shall be entitled to receive payment in full promptly
after the Separation Date of his base salary accrued as of the
Separation Date but not theretofore paid, together with
reimbursement for any previously unreimbursed Company expenses
(subject to presentation of adequate supporting documentation
therefor and compliance with other Company policies regarding
expense reimbursement).
(b) All of Xx. Xxxxxxx'x benefits, to the extent accrued and vested
through but not after the Separation Date, under the Company's
401(k) Plan and Employee Stock Ownership Plan (ESOP) shall be paid
to Xx. Xxxxxxx in accordance with the terms of such plans.
(c) Xx. Xxxxxxx shall be entitled to continuation of medical benefits
at his expense to the extent required under COBRA.
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(d) Xx. Xxxxxxx shall be entitled to participate in the Company's
Employee Stock Purchase Plan through the Separation Date, in
accordance with the terms of that plan.
(e) Xx. Xxxxxxx shall be entitled to the stock option rights set forth
in Section 3 hereof.
(f) Xx. Xxxxxxx shall continue to be entitled to the benefits of the
indemnification provisions applicable to officers of the Company
under the Company's By-laws.
(g) The Company shall pay Xx. Xxxxxxx a non-accountable expense
reimbursement of $20,000 for relocation expenses that Xx. Xxxxxxx
expects to incur in connection with the sale of his residence in
Pittsburgh, such expense reimbursement to be paid within 30 days of
the date of this Agreement.
Except as expressly provided above, Xx. Xxxxxxx waives any compensation,
benefits or rights that may have accrued in his capacity as an employee or
otherwise prior to the date of this Agreement and shall not be entitled to
receive any salary or benefits or participate in any compensation plans,
programs or arrangements of the Company after the Separation Date (other than
for the consulting fees and expense reimbursement set forth in Section 4).
3. Certain Stock Option Rights. Xx. Xxxxxxx and the Company are parties to
a Nonqualified Stock Option Agreement, dated as of May 2, 1996 (the "Option
Agreement"), under which Xx. Xxxxxxx was granted stock options in respect of an
aggregate of 75,000 shares of the Company's Common Stock at an exercise price
of $11.00 per share, which stock options (i) were vested as of the date of
grant in respect of 18,750 shares of Common Stock (the "1996 Vested Options"),
(ii) were scheduled to vest as of May 1, 1997 in respect of 14,063 shares of
Common Stock (the "1997 Vesting Options") and (iii) were scheduled to vest as
of May 1 of 1998, 1999 and 2000 in respect of an aggregate of 42,187 shares of
Common Stock (the "Later Vesting Options"). The share numbers and exercise
prices in the foregoing sentence reflect the
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adjustments in the Option Agreement to take account of a reclassification and
reverse split of the Company's common stock in November 1996.
Under the terms of the Option Agreement, if Xx. Xxxxxxx'x employment with
the Company were to terminate before May 1, 1997 as a result of his
resignation, the 1997 Vesting Options and the Later Vesting Options would be
forfeited by him. In the event of Xx. Xxxxxxx'x resignation, the 1996 Vested
Options would remain exercisable for 90 days following his date of termination.
The Option Agreement is hereby amended to provide for the vesting as of
the date of this Agreement of the 1997 Vesting Options, subject only to the
forfeiture conditions set forth below, and for the 1997 Vesting Options to be
exercisable (in accordance with and subject to the terms of the Option
Agreement (as amended by this Section 4)), in whole or in part, by the holder
thereof only during the ninety (90)-day period beginning on the first
anniversary of the Separation Date. The 1997 Vesting Options shall be forfeited
immediately if, prior to his exercise thereof, (1) Xx. Xxxxxxx breaches this
Agreement, (2) directly or indirectly, becomes employed by, serves as a
consultant or director to, acquires an ownership interest (other than a 1% or
less ownership interest in a publicly traded company) in, or otherwise enters
into a business relationship with, any publicly-held company engaged in the
proprietary education business (other than any company identified in Schedule
3(a) to this Agreement), or any of the companies identified in Schedule 3(b) to
this Agreement, or (3) becomes personally engaged, whether as a principal,
advisor or otherwise, in an attempt to acquire, sell or engage in a business
combination with any of the companies identified on Schedule 3(c) to this
Agreement. As a condition to his exercise of the 1997 Vesting Options, Xx.
Xxxxxxx shall execute and deliver to the Company a written statement signed by
him, representing that he has not engaged in any of the activities identified
in the preceding sentence that would result in forfeiture of the 1997 Vesting
Options.
Except as expressly amended hereby, the Option Agreement shall remain
unchanged and in full force and effect. Accordingly, as provided in the Option
Agreement, the 1996 Vested Options are fully vested and may be exercised (in
accordance with and subject to
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the terms of the Option Agreement), in whole or in part, only during the 90-day
period beginning on the Separation Date, and the Later Vesting Options shall be
forfeited in their entirety as of the Separation Date.
Xx. Xxxxxxx acknowledges that, effective upon the Separation Date, the
stock options granted to him by the Company on or about October 30, 1996 under
the Education Management Corporation 1996 Stock Incentive Plan shall be
forfeited in accordance with the terms of the agreement pursuant to which those
options were granted.
4. Consulting and Cooperation. During the period commencing on May 1, 1997
and continuing for a period of six months thereafter, Xx. Xxxxxxx shall, if
requested by the Company from time to time, consult and cooperate with the
Company and its representatives and otherwise assist the Company with regard to
governmental affairs; provided, however, that the Company shall take reasonable
measures to ensure that such obligations of Xx. Xxxxxxx do not interfere with
any employment opportunities or responsibilities of Xx. Xxxxxxx during such
period. As full compensation for the services to be provided by Xx. Xxxxxxx
pursuant to this Section 4, Xx. Xxxxxxx shall, subject to the other provisions
of this Section 4, be entitled to receive (i) six consecutive monthly payments
of $16,667 each, payable on the first business day of each month, commencing in
May, 1997 (except that the payment for May 1997 may be made not later than May
15, 1997), and (ii) reimbursement for any reasonable out-of-pocket expenses
incurred by Xx. Xxxxxxx at the request of the Company in performing his
obligations under this Section 4. In the performance of services pursuant to
this Section 4, Xx. Xxxxxxx shall be serving as independent contractor to the
Company and not as its employee. Accordingly, the Company shall not withhold
any payments for taxes from Xx. Xxxxxxx'x consulting fee; instead, Xx. Xxxxxxx
shall be responsible for all applicable taxes in respect of such income. Xx.
Xxxxxxx shall not be empowered to execute any agreement on behalf of the
Company or otherwise bind the Company. The Company shall have the right, but
not the obligation, to terminate, at any time upon notice to Xx. Xxxxxxx, the
consulting arrangement set forth in this Section 4 if at any time during the
six-month consulting period Xx. Xxxxxxx (1) engages in any activity that would
result in the forfeiture of the 1997 Vesting Options pursuant to Section 3
hereof, or (2) becomes
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an employee, consultant, advisor or director of or to any company, whether
private or public, engaged in the proprietary education business (including any
of the companies identified on Schedules 3(a), (b) or (c) to this Agreement).
Xx. Xxxxxxx shall give notice to the Company within three days following his
first engaging in any such actions that would give the Company the right to
terminate the consulting arrangement as provided in the preceding sentence.
Upon termination of the consulting arrangement, the Company shall be released
from the obligation to make any further payments (other than expense
reimbursement) under this Section 4; provided, however, that if Xx. Xxxxxxx
fails to give timely notice as required in the preceding sentence, the Company
shall not be required to make any such payments after the date such notice was
due and Xx. Xxxxxxx shall promptly repay any such payments, if any, received
by him from the Company after such date.
5. Non-Solicitation. For a period of two (2) years following the date of
this Agreement, Xx. Xxxxxxx shall not, directly or indirectly, solicit or in
any manner induce or attempt to induce any employee or consultant of the
Company or its direct and indirect subsidiaries to terminate his or her
employment or engagement with the Company or such direct or indirect
subsidiary.
6. Confidential Information. Except for an act on behalf of the Company
with the express prior written consent of the Chief Executive Officer of the
Company or as may be required by law, Xx. Xxxxxxx shall keep confidential and
shall not directly or indirectly divulge to any other person or entity at any
time, or use for any purpose detrimental to the Company or for his personal
gain, any of the business secrets or other information regarding the Company,
its subsidiaries and their respective affiliates (including without limitation
any historical or projected financial information and any corporate development
plans such as the identity of any potential acquisition targets) that has not
otherwise become public knowledge through no fault of Xx. Xxxxxxx. Xx. Xxxxxxx
acknowledges that all papers, books and records of every kind and description
relating to the business and affairs of the Company and its affiliates, whether
or not prepared by Xx. Xxxxxxx, other than his personal notes, shall remain the
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sole and exclusive property of the Company, and Xx. Xxxxxxx shall return them
to the Company promptly following the Separation Date.
7. Remedies. The parties to this Agreement acknowledge that the remedy at
law for breach of the provisions of Sections 5 or 6 would be inadequate and
that, in addition to any other remedy the Company or its direct and indirect
subsidiaries may have for a breach of any of those sections, the Company or
such subsidiaries shall be entitled to an injunction restraining any such
breach or threatened breach, without any bond or other security being required.
8. Acknowledgment and Release. Xx. Xxxxxxx acknowledges that the benefits
he is to receive pursuant to this Agreement shall be in full satisfaction of
all claims (whether asserted or unasserted), if any, against or with respect to
the Company, its subsidiaries and other affiliates, and their respective
stockholders, directors, officers, employees and agents, past and present.
Except for the obligations of the respective parties under this Agreement, each
of Xx. Xxxxxxx, on the one hand, and the Company, on the other hand, does, for
himself or itself, and his or its heirs, personal representatives, successors
and assigns, hereby irrevocably release, promise, quitclaim and discharge the
Company, its subsidiaries and other affiliates, their respective stockholders,
directors, officers, employees and agents, past and present, and the Company's
predecessors, successors and attorneys, in the case of Xx. Xxxxxxx, and Xx.
Xxxxxxx and his heirs and personal representatives, in the case of the Company,
of and from any and all manner of actions, causes of action, claims, suits,
debts, dues, sums of money, controversies, agreements, promises and demands
whatsoever, both at law and in equity, which he now has or ever had or may in
the future have, for, upon, or by reason of any matter, cause or thing
whatsoever on or before the Separation Date for, on account of or arising out
of any transactions or events that have occurred prior to the Separation Date.
This release is for any relief no matter how called, including, but not limited
to, wages, back pay, front pay, stock or other equity compensation, debt
repayment, compensatory damages, liquidated damages, punitive damages, damages
for pain or suffering, costs, attorneys' fees and expenses and claims to be
reinstated to employment with the Company. Xx. Xxxxxxx represents that he has
carefully read the foregoing
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release, that he has had the opportunity to have an attorney explain to him the
terms of the foregoing release, that he accepts full responsibility and
consequences of his action or nonaction in this regard, that he knows and
understands the content of this Agreement, that he executes this Agreement
knowingly and voluntarily as his own free act and deed, that the terms of this
Agreement are totally satisfactory and thoroughly understood by him, and that
this Agreement was freely negotiated and entered into without fraud, duress or
coercion.
9. Securities Transactions. Xx. Xxxxxxx acknowledges that he has served in
a key position with the Company in which he has had access to sensitive,
non-public information about the Company and its operations. Xx. Xxxxxxx shall
conduct any and all transactions in the securities of the Company in strict
compliance with all applicable securities laws.
10. Notices. Any and all notices under this Agreement shall be in writing
and shall be deemed to have been duly given or made for all purposes if hand
delivered, sent by a nationally recognized overnight courier or sent by
telephone facsimile transmission (confirmation of receipt requested), as
follows:
If to the Company, to it at:
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
FAX: (000) 000-0000
If to Xx. Xxxxxxx, to him at:
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
FAX: (000) 000-0000
or at such other address or telecopy number as any party specifies by notice
given to the other party in accordance with this Section 10. The date of giving
of or making notice shall be deemed to be the date of hand delivery, the date
sent by telephone facsimile transmission, or the day after delivery to an
overnight courier service.
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11. Waiver. The failure of a party to this Agreement to insist on any
occasion upon strict adherence to any term of this Agreement shall not be
considered to be a waiver or to deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
Any waiver must be in writing.
12. Separability. If any provision of this Agreement shall be invalid or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
13. Complete Agreement. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter, supersedes all
prior agreements and understandings with respect to such subject matter, and
may be terminated or amended only by a writing signed by all of the parties to
this Agreement.
14. Governing Law. The provisions of this Agreement shall be governed by
and construed in accordance with the law of the Commonwealth of Pennsylvania
other than the conflict of law provisions of such laws.
15. Headings. The headings in this Agreement are for convenience of
reference only.
16. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
EDUCATION MANAGEMENT CORPORATION
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Chief Executive Officer
/s/ XXXXXXX X. XXXXXXX, XX
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Xxxxxxx X. Xxxxxxx, XX
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