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Exhibit 10.06
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 7, 2006 (the "
Employment Agreement "), by and between Education Management
LLC, a Delaware limited liability company (together with its
successors and assigns, the " Company "), and Stephen J.
Weiss (the " Executive ") (each of the Executive and the
Company, a " Party ," and collectively, the " Parties
").
WHEREAS, the Company desires to employ the Executive and utilize
his management services as indicated herein, and the Executive
desires to be employed by the Company, all on the terms and
conditions set forth in this Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other valid consideration the sufficiency of
which is acknowledged, the Parties agree as follows:
Section 1. Employment .
1.1. Term . The Company agrees to employ the Executive,
and the Executive agrees to be employed by the Company, in each
case pursuant to this Employment Agreement, for a period commencing
on the date hereof (the " Effective Date ") and ending on
the third (3rd) anniversary of the Effective Date (the "
Initial Term "); provided, however, that the term of this
Employment Agreement and the Executive’s employment hereunder
shall renew automatically for successive one (1) year periods
(each, a " Renewal Term "), unless at least one hundred
eighty (180) days prior to the end of the Initial Term or any
subsequent anniversary of the Effective Date, either party shall
have given notice to the other party that this Employment Agreement
shall terminate on that anniversary date (the Initial Term,
together with any Renewal Terms, the " Term ").
Notwithstanding the foregoing, the Executive’s employment
shall be subject to earlier termination in accordance with
Section 3 hereof.
1.2. Duties . During the Term, the Executive shall serve
as the Company’s President, EDMC Online Higher Education, and
such other positions as officer or director of the Company and its
affiliates as the Executive and the Board of Directors of the
Parent (the " Parent Board ") shall mutually agree from time
to time. In such positions, the Executive shall perform such
duties, functions and responsibilities during the Term commensurate
with the Executive’s positions. The Executive shall have all
authorities, duties and responsibilities customarily exercised by
an individual serving in the foregoing positions at an entity of
the size and nature of the Company; shall be assigned no duties or
responsibilities that are materially inconsistent with, or that
materially impair his ability to discharge, the foregoing duties
and responsibilities; shall have such additional duties and
responsibilities, consistent with the foregoing, as may be from
time to time assigned to him; and in his capacity as President,
EDMC Online Higher Education shall report to the Chief Executive
Officer of the Company or any other officer determined from time to
time by the Chief Executive Officer.
1.3. Exclusivity . During the Term, the Executive shall
devote his full business time and attention to the business and
affairs of the Company, shall faithfully serve the Company, and
shall in all material respects conform to and comply with such
lawful and reasonable directions and instructions given to him as
are consistent with Sections 1.2 and 1.3
hereof. During the Term, the Executive shall use
his reasonable best efforts to promote and serve the interests of
the Company and shall not engage in any other business activity,
whether or not such activity shall be engaged in for pecuniary
profit. Notwithstanding the foregoing provisions of this
Section 1.3, but subject to the other provisions of this
Employment Agreement, the Executive may (i) engage in
charitable activities and community affairs, (ii) serve, with
the prior approval of the Company’s Chief Executive Officer,
on the boards of a reasonable number of business entities, trade
associations and charitable organization, (iii) accept and
fulfill a reasonable number of speaking engagements, and
(iv) manage his personal investments and affairs; provided
that such activities do not either individually or in the aggregate
materially interfere with the performance of his duties
hereunder.
Section 2. Compensation .
2.1. Salary . As compensation for the performance of the
Executive’s services hereunder, during the Term, the Company
shall pay to the Executive a salary at an annual rate of Three
Hundred Thousand dollars ($300,000), payable in accordance with the
Company’s standard payroll policies (the " Base Salary
"), with such salary effective as of September 1, 2006. The
Base Salary will be reviewed annually and may be adjusted upward by
the Board of Directors of the Company (the " Board ") (or a
committee thereof) in its discretion.
2.2. Annual Bonus . The Executive will be eligible for an
annual incentive bonus (the " Annual Bonus ") for each
complete fiscal year occurring during the Term. The
Executive’s target bonus will be one hundred percent
(100%) of the Base Salary. The actual Annual Bonus paid for
any year will depend on meeting Company and individual performance
standards established by the Board. The Annual Bonus will be paid
in cash within seventy-five (75) days of the end of the fiscal
year.
2.3. Equity . The Executive will be eligible for grants
of stock options pursuant to the Company’s 2006 Stock Option
Plan as determined by the Parent Board or a committee thereof.
2.4. Employee Benefits . During the Term, the Executive
shall be eligible to participate in such health and other group
insurance, retirement and other employee benefit plans and programs
of the Company as in effect from time to time on the same basis as
similarly situated executives of the Company.
2.5. Vacation . During the Term, the Executive shall be
entitled to paid vacation in accordance with the Company’s
vacation policy as in effect from time to time.
2.6. Business Expenses . The Company shall pay or
reimburse the Executive for all commercially reasonable business
out-of-pocket expenses that the Executive incurs during the Term in
performing his duties under this Employment Agreement upon
presentation of documentation and in accordance with the expense
reimbursement policy of the Company as approved by the Board (or a
committee thereof) and in effect from time to time.
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Section 3. Employment
Termination .
3.1. Termination of Employment . The Company may
terminate the Executive’s employment hereunder for any reason
during the Term, and the Executive may voluntarily terminate his
employment hereunder for any reason during the Term, in each case
(other than a termination by the Company for Cause) at any time
upon not less than thirty (30) days’ notice to the other
Party. Upon any termination of the Executive’s employment
hereunder for any reason during the Term, the Executive shall be
entitled to (i) any Base Salary earned but unpaid through the
date of termination; (ii) any other payment or benefit to
which he is entitled under the applicable terms of any applicable
plan, program, agreement or arrangement of the Company or its
affiliates (each, a " Company Arrangement "), including the
plans, programs, agreements and arrangements referred to in
Sections 2.2 through 2.6 and 8.1 ((i) and (ii) being,
collectively, the " Accrued Amounts "); provided ,
however, that if the Executive’s employment hereunder is
terminated (x) by the Company for Cause, or (y) by the
Executive voluntarily without Good Reason and not for death or
Disability, then any Annual Bonus earned pursuant to
Section 2.2 in respect of a prior fiscal year, but not yet
paid or due to be paid, shall be forfeited.
3.2. Certain Terminations .
(a) Termination by the Company Other than for Cause;
Termination by the Executive for Good Reason . If the
Executive’s employment hereunder is terminated by the Company
during the Term other than for Cause, or by the Executive with Good
Reason, in addition to the Accrued Amounts the Executive shall be
entitled to:
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(i)
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a cash payment in each of the eighteen
(18) months following the Executive’s termination of
employment equal to one-twelfth (1/12) of the sum of the
Executive’s Base Salary and target Annual Bonus; provided,
however, that if the Executive’s termination of employment
pursuant to this Section 3.2(a) occurs within two
(2) years following a "Change in Control" (as defined in the
Company’s 2006 Stock Option Plan)) or the Executive
reasonably demonstrates that the termination was In Anticipation Of
a Change in Control, the Executive shall be entitled to a lump sum
equal to two (2) times the sum of his Base Salary and target
Annual Bonus (amounts paid pursuant to this clause (i) herein
referred to as the " Severance Payment ");
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(ii)
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the Accrued Amounts and a pro-rata Annual Bonus
(determined by multiplying the target Annual Bonus for the year of
termination by a fraction, the numerator of which is the number of
days he was employed by the Company during such fiscal year and the
denominator of which is the number of days in such fiscal year)
(the " Pro-Rata Annual Bonus Payment ");
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(iii)
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the continuation of 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, for the eighteen
(18)-month period following the date of the Executive’s
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 this
sentence may be discontinued prior to the end of the eighteen
(18)-month period to the extent, but only to the extent, that the
Executive receives substantially similar benefits from a subsequent
employer; and
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(iv)
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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).
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The Company’s obligations to make the
Payments and provide the benefits described in this
Section 3.2(a) shall be conditioned upon the Executive’s
execution, delivery and non-revocation of a valid and enforceable
general release of claims substantially in the form attached hereto
as Exhibit A (the " Release ").
(b) Termination Due to Disability . Upon a determination
that the Executive is Disabled, the Company may give notice to the
Executive that it intends to replace him. If the Executive does not
return to the performance of his duties on essentially a full-time
basis within thirty (30) days after receiving such notice, the
Company may replace the Executive without breaching this Agreement;
provided, however, that this Agreement shall not terminate until
the anniversary date of this Agreement 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 such anniversary date 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
Section 2; 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 3.2(b) and continuing until the
expiration of the Disability Period.
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(c) Termination Due to Death . If the
Executive’s employment hereunder 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
Company also shall pay to such person(s) or estate (i) the
amount of the Accrued Amounts and a Pro Rata Annual Bonus Payment
for the year of termination and (ii) an amount equal to
one-twelfth (1/12) of the Executive’s average annual
Bonus paid or payable to the Executive 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) that amount being payable in each of the six
(6) months following the date of termination. Any amounts
payable under this Section 3.2(c) 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.
(d) Termination at Expiration of the Term at the
Company’s Request . If the Executive’s employment
hereunder is terminated solely as a result of the Company’s
electing under Section 1.1 not to renew the Employment
Agreement at the expiration of the then current Term by giving
notice thereof to the Executive, and the Executive terminates his
employment within thirty (30) days after the end of the Term,
then such termination of employment shall be considered a
termination without Cause hereunder.
(e) Definitions . For purposes of this Section 3.2,
the following terms shall have the following meanings:
(1) " Good Reason " shall mean the occurrence of any of
the following events without either the Executive’s prior
written consent or full cure within thirty (30) days after he
gives written notice to the Company describing the event and
requesting cure: (i) the reassignment of the Executive to a
position that is not a corporate officer level position or the
assignment to the Executive of duties that are not consistent with
such corporate officer level position; (ii) any relocation of
the Executive’s principal place of employment to a location
more than fifty (50) miles from his current principal place of
employment; (iii) any material breach by the Company or any of
its affiliates of any material obligation to the Executive; or
(iv) any failure of the Company to obtain the assumption in
writing of its obligation to perform this Employment Agreement by
any successor to all or substantially all of the assets of the
Company within fifteen (15) days after any merger,
consolidation, sale or similar transaction, except where such
assumption occurs by operation of law. If the Company fails to cure
a Good Reason event during the thirty (30) day cure period,
the Executive must terminate his employment within sixty
(60) days after the expiration of such thirty (30) day
period if such termination is to be treated as for Good Reason
based on such uncured Good Reason event.
(2) " Cause " shall mean (i) the Executive’s
willful and continued failure to use his best efforts to perform
his reasonably assigned duties (other than on
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account of Disability); (ii) the Executive
is indicted for, convicted of, or enters a plea of guilty or nolo
contendere to, (x) a felony or (y) a misdemeanor
involving moral turpitude; (iii) the Executive engages in
(x) gross negligence causing material harm to the Parent, the
Company, or its or their business or reputation, (y) willful
and material misconduct, or (z) willful and material breach of
fiduciary duty; or (iv) the Executive willfully and materially
breaches (x) the restrictive covenants described in
Section 4 of this Employment Agreement or (y) any of the
material written policies listed on Exhibit B , as in
effect on the Effective Date.
(3) " Disability " shall mean the Executive is entitled
to receive long-term disability benefits under the long-term
disability plan of the Company in which Executive participates, or,
if there is no such plan, the Executive’s inability, due to
physical or mental incapacity, to substantially perform his duties
and responsibilities under this Employment Agreement for one
hundred eighty (180) days out of any consecutive 365 day
period.
(4) " In Anticipation Of " shall mean that the
termination (i) was at the request of a third party that has
taken steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with a Change in Control
that has been proposed, so long as in either case such Change in
Control shall actually have occurred.
(f) Section 409A . If the Executive is a "specified
employee" for purposes of Section 409A of the United States
Internal Revenue Code of 1986, as amended, and the regulations
thereunder (" Section 409A "), any Severance Payment
required to be made pursuant to Section 3.2 which is subject
to Section 409A shall not be paid until one day after the date
which is six (6) months from the date of termination.
3.3. Exclusive Remedy . The foregoing payments upon
termination of the Executive’s employment shall constitute
the exclusive severance payments due the Executive upon a
termination of his employment under this Employment Agreement.
3.4. Resignation from All Positions . Upon the
termination of the Executive’s employment with the Company
for any reason, the Executive shall be deemed to have resigned, as
of the date of such termination, from all positions he then holds
as an officer, director, employee and member of the board (and any
committee thereof) of the Company and any of its subsidiaries and
affiliates.
3.5. Cooperation . Following the termination of the
Executive’s employment with the Company for any reason, the
Executive agrees to reasonably cooperate with the Company upon
reasonable request of the Board and to be reasonably available to
the Company with respect to matters arising out of the
Executive’s services to the Company and its subsidiaries and
affiliates. The Company shall reimburse the Executive for expenses
reasonably incurred in connection with such matters as agreed by
the Executive and the Board and, to the extent the Executive is
required to spend substantial time on such matters, the Company
shall compensate the Executive at an hourly rate based on the
Executive’s most recent Base Salary.
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Section 4. Unauthorized
Disclosure; Non-Solicitation; Non-Competition; Proprietary Rights
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4.1. Unauthorized Disclosure . The Executive agrees and
understands that in the Executive’s position with the
Company, the Executive has been and will be exposed to and has and
will receive non-public information relating to the confidential
affairs of the Company and its affiliates, including, without
limitation, technical information, intellectual property, business
and marketing plans, strategies, customer information,
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