FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT
THIS FIRST
AMENDMENT TO AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT
(this “ Amendment ”) is dated as of
March 23, 2009 and is entered into by and among EDUCATION
MANAGEMENT LLC , a Delaware limited liability company (“
Company ”), EDUCATION MANAGEMENT HOLDINGS LLC ,
a Delaware limited liability company (“ Holdings
”), GOLDMAN SACHS LENDING PARTNERS LLC (“
GSLP ”), J.P. MORGAN SECURITIES INC. (“
JPMorgan ”) and BNP PARIBAS SECURITIES CORP.
(“ BNPP SC ”), as auction managers (in such
capacity, “ Auction Managers ”), BNP
PARIBAS (“ BNP ”), as Administrative Agent
and Issuing Bank and, for purposes of Section V hereof, the
GUARANTORS listed on the signature papers hereto, and the
LENDERS listed on the signature papers hereto, and is made
with reference to that certain AMENDED AND RESTATED CREDIT AND
GUARANTY AGREEMENT dated as of February 13, 2007 (as
amended through the date hereof, the “ Credit
Agreement ”) by and among Company, Holdings, the
Guarantors, the Designated Subsidiary Borrowers party thereto from
time to time, the Lenders, Administrative Agent and the other
agents party thereto. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the
Credit Agreement after giving effect to this Amendment.
WHEREAS,
the Credit Parties have requested that Requisite Lenders agree to
amend certain provisions of the Credit Agreement as provided for
herein; and
WHEREAS,
subject to the conditions set forth herein, Requisite Lenders are
willing to agree to such amendment relating to the Credit
Agreement.
NOW,
THEREFORE , in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereto agree as follows:
SECTION I. AMENDMENTS
TO CREDIT AGREEMENT
1.1
Amendments to Exhibits . The Credit Agreement is hereby
amended by adding the following new Exhibit thereto as set forth in
Annex I attached hereto:
Exhibit O
Form of Modified Dutch Auction Procedures.
1.2
Amendments to Section 1: Definitions .
A.
Section 1.1 of the Credit Agreement is hereby amended by
adding the following definitions in proper alphabetical
sequence:
“ Auction
Managers ” means GSLP, JPMorgan and BNPP SC.
“ Auction
Procedures ” means, collectively, the auction procedures,
auction notice, return bid and Company Assignment Agreement in
substantially the form set forth as Exhibit O hereto;
provided , that Auction Managers, in consultation with
Company,
may amend or
modify the procedures, notices, bids and Company Assignment
Agreement in connection with any Company Loan Purchase (including
economic terms to the extent no Lenders have validly tendered
Tranche C Term Loans requested in an offer but excluding economic
terms of an auction after any Lender has validly tendered Tranche C
Term Loans requested in an offer other than to increase the Auction
Amount (as defined in the Auction Procedures) or raise the Discount
Range (as defined in the Auction Procedures)); and provided
further , that no such amendments or modifications may be
implemented after 24 hours prior to the date and time return bids
are due.
“ BNPP
SC ” means BNP Paribas Securities Corp.
“ Company
Assignment Agreement ” means, with respect to any
assignment to Company pursuant to Section 10.6(i) hereof, an
Assignment and Acceptance Agreement substantially in the form of
Annex C to the Auction Procedures (as may be modified from time to
time as set forth in the definition of Auction
Procedures).
“ Company
Assignment Effective Date ” means, for any Company Loan
Purchase, the date on which such Company Loan Purchase is recorded
in the Register.
“ Company
Loan Purchase ” means any purchase of Tranche C Term
Loans by Company pursuant to Section 10.6(i)
hereof.
“
Excluded Information ” as defined in
Section 10.6(i)(ii).
“ First
Amendment ” means that certain First Amendment to Amended
and Restated Credit and Guaranty Agreement dated as of March 23,
2009 among Company, Holdings, Auction Managers, the Guarantors and
the Lenders listed on the signature pages thereto.
“ First
Amendment Effective Date ” means the date of satisfaction
of the conditions referred to in Section III of the First
Amendment.
“
GSLP ” means Goldman Sachs Lending Partners
LLC.
“
JPMorgan ” means J.P. Morgan Securities
Inc.
“
Unrestricted Cash and Cash Equivalents ” means the
aggregate amount of cash and Cash Equivalents held in accounts on
the consolidated balance sheet of a Person to the extent that the
use of such cash or Cash Equivalents for application to payment of
the Obligations or other Indebtedness is not prohibited by law or
any contract to which such Person is a party and such cash and Cash
Equivalents is free and clear of all Liens (other than Liens in
favor of the Collateral Agent, nonconsensual Liens permitted by
Section 6.1 and Liens permitted by Section 6.1(s) and
clauses (i) and (ii) of Section 6.1(t)).
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B.
Section 1.1 of the Credit Agreement is hereby further amended
by:
(a) inserting the
text “Auction Managers, immediately following the text
“Syndication Agent,” contained in the definition of
“ Agent ”;
(b) deleting the
definition of “ Issuing Bank ” in its entirety
and replacing it with the following new definition:
“ Issuing
Bank ” shall mean, as the context may require,
(a) BNP as Issuing Bank hereunder, together with its permitted
successors and assigns in such capacity, with respect to Letters of
Credit issued by BNP and (b) any other financial institution
that may become an Issuing Bank pursuant to Section 2.4(h),
with respect to Letters of Credit issued by such financial
institution.
(c) deleting the
text “the lesser of (i) $175,000,000 and (ii)” from the
definition of “ Letter of Credit Sublimit ”;
and
(d) deleting the
definition of “Eligible Assignee” in its entirety and
replacing it with the following new definition:
“
Eligible Assignee ” means (i) any Lender, any
Affiliate of any Lender and any Related Fund (any two or more
Related Funds being treated as a single Eligible Assignee for all
purposes hereof), (ii) any commercial bank, insurance company,
investment or mutual fund or other entity that is an
“accredited investor” (as defined in Regulation D
under the Securities Act) and which extends credit or buys loans,
and (iii) solely for purposes of Company Loan Purchases,
Company; provided , that except as set forth in clause (iii)
of this definition, no Affiliate of (x) Holdings or
(y) any Sponsor shall be an Eligible Assignee.
(e) inserting the
text “or any Affiliates that are not managed by the Merchant
Banking Division of Goldman, Sachs & Co.” at the end of
the definition of “ Sponsor ”.
1.3
Amendment to Section 2.4 (Issuance of Letters of Credit and
Purchase of Participations Therein) . Section 2.4 of
the Credit Agreement is hereby amended by:
A.
deleting the word “ provided ” at the end of the
first sentence of Section 2.4(a) and replacing it with the
following text:
“
provided that BNP as Issuing Bank shall only be required to
issue Letters of Credit for the account of a Borrower and its
Subsidiaries in an aggregate amount for all Borrowers and their
Subsidiaries up to but not exceeding $175,000,000, and the issuance
by BNP as Issuing Bank of any additional Letters of Credit at any
time when Letter of Credit Usage is equal to or greater than
$175,000,000 shall be at the sole discretion of BNP; and
provided, further ”.
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B.
inserting the following text as Section 2.4(h):
“(h)
Additional Issuing Banks . Company may, at any time and from
time to time with the consent of Administrative Agent (which
consent shall not be unreasonably withheld or delayed) and such
financial institution, designate one or more additional financial
institutions to act as an issuing bank under the terms of this
Agreement, subject to reporting requirements reasonably
satisfactory to the Administrative Agent with respect to issuances,
amendments, extensions and terminations of Letters of Credit by
such additional issuing bank, and with such other procedures and
requirements with respect to the issuance of Letters of Credit that
such additional issuing bank may reasonably require with the
consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed). Any Lender designated as an
issuing bank pursuant to this paragraph (h) shall be deemed to
be an “Issuing Bank” (in addition to being a Lender) in
respect of Letters of Credit issued or to be issued by such Lender,
and, with respect to such Letters of Credit, such term shall
thereafter apply to such Lender.”
C.
inserting the following text as Section 2.4(i):
“(i) Company
agrees that, with respect to any Issuing Bank (other than BNP),
neither Company nor any of its Subsidiaries shall mitigate such
Issuing Bank’s fronting risk with respect to any other Lender
(the “ Mitigating Arrangements ”), unless
Company shall have offered to mitigate BNP’s risk, as Issuing
Bank, on terms that are no less favorable to BNP in respect of its
fronting risk than the Mitigating Arrangements are in respect of
such Issuing Bank’s fronting risk.”
1.4
Amendment to Section 9.1 (Appointment of Agents) .
Section 9.1 of the Credit Agreement is hereby amended by
adding the following new sentence between the second and third
sentences thereof:
“Each of
GSLP, JPMorgan and BNPP SC is hereby appointed Auction Manager
hereunder, and each Lender hereby authorizes each Auction Manager
to act as its agent in accordance with the terms hereof. The
Lenders agree that each Auction Manager shall have solely the
obligations in its capacity as Auction Manager as are specifically
described in this Agreement and shall be entitled to all the
benefits of this Section 9, as applicable.”
1.5
Amendments to Section 10.5 (Amendments and Waivers)
. Section 10.5 of the Credit Agreement is hereby amended by
inserting the text “, any other provision contained in
Section 2.4 or any other provision hereof as the same applies
to the rights or obligations of any Issuing Bank, in each
case” after the text “as provided in
Section 2.4(e)” in Section 10.5(c)(iv).
1.6
Amendments to Section 10.6 (Successors and Assigns;
Participations) . Section 10.6 of the Credit Agreement
is hereby amended by:
A.
deleting “and” at the end of
Section 10.6(c)(i);
B.
replacing the period at the end of Section 10.6(c)(ii) with
“; and”;
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C.
inserting a new Section 10.6(c)(iii) immediately after
Section 10.6(c)(ii) as follows:
“(iii) to
any Person meeting the criteria of clause (iii) of the
definition of the term “ Eligible Assignee ” so
long as such sales, assignments or transfers are in accordance with
the procedures set forth in Section 10.6(i)
hereof.”
D.
inserting the following proviso at the end of
Section 10.6(e):
“;
provided that it is acknowledged and agreed that any Person
meeting the criteria of clause (iii) of the definition of the
term “ Eligible Assignee ” shall not be required
to make the representation and warranty set forth in the foregoing
clause (ii)”; and
E.
inserting a new Section 10.6(i) immediately after the end of
Section 10.6(h) as follows:
“(i)
Company Loan Purchases . Notwithstanding anything to the
contrary contained in this Section 10.6 or any other provision
of this Agreement, so long as (x) no Default or Event of
Default has occurred and is continuing or would result therefrom
and (y) at the time of and after giving effect to such
purchase and cancellation (as described below), the sum of
(1) the aggregate Unrestricted Cash and Cash Equivalents of
Company and (2) the aggregate unused amount of the
Revolving Commitments would not be less than $200,000,000, Company
may consummate Company Loan Purchases on the following
basis:
(i) At any time,
and from time to time on or prior to June 30, 2010, Company
shall have the right to purchase, for cash, Tranche C Term Loans up
to an amount to be specified by Company at a purchase price to be
determin
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