Exhibit 10.2

EXECUTION COPY

This AMENDMENT AGREEMENT, dated as of September 5, 2014 (this “Amendment
Agreement”), among EDUCATION MANAGEMENT CORPORATION, a Pennsylvania corporation
(“Parent”), EDUCATION MANAGEMENT LLC, a Delaware limited liability company
(“Company”), EDUCATION MANAGEMENT HOLDINGS LLC, a Delaware limited liability
company (“Holdings”), CERTAIN SUBSIDIARIES OF HOLDINGS party hereto (together
with Parent, Company and Holdings, the “Credit Parties”), the LENDERS party
hereto (the “Consenting Lenders” and any other Lenders, the “Non-Consenting
Lenders”) and U.S. BANK NATIONAL ASSOCIATION, as administrative agent (in such
capacity, as successor to BNP Paribas, “Administrative Agent”) and as collateral
agent (in such capacity, as successor to BNP Paribas, “Collateral Agent” and
together with Administrative Agent, collectively, “Agents”).

W I T N E S S E T H:

WHEREAS, Company, Holdings, certain subsidiaries of Holdings, the Lenders and
Agents are parties to that certain Second Amended and Restated Credit and
Guaranty Agreement, dated as of February 13, 2007 and amended and restated as of
December 7, 2010 (as further amended, restated, supplemented or otherwise
modified from time to time prior to the date hereof, the “Existing Credit
Agreement”);

WHEREAS, Company, Holdings, certain subsidiaries of Holdings and Collateral
Agent are also parties to that certain Pledge and Security Agreement, dated as
of June 1, 2006 (as further amended, restated, supplemented or otherwise
modified from time to time prior to the date hereof, the “Existing Security
Agreement” and as further amended by the Security Agreement Amendment (as
defined below), the “Amended Security Agreement”);

WHEREAS, Company and the other Credit Parties have requested amendments to the
Existing Credit Agreement (the “Credit Agreement Amendments”) pursuant to which,
inter alia, (i) certain existing Revolving Lenders shall (A) extend the maturity
date of their existing Revolving Commitments to July 2, 2015 and (B) convert
their existing Revolving Loans to Extended Revolving Loans (as defined below),
interest on which shall be payable in kind, (ii) certain existing Term Loan
Lenders shall convert their existing Term Loans to PIK Term Loans (as defined
below), interest on which shall be payable in kind, (iii) the Total Leverage
Ratio and Interest Coverage Ratio covenants shall not apply to fiscal quarters
up to and including the fiscal quarter ending June 30, 2015, (iv) Company’s
breach of the RSA (as defined below) shall be an Event of Default and (v) Parent
shall become a Guarantor under the Amended Credit Agreement (as defined below)
and Grantor under the Amended Security Agreement;

WHEREAS, Company and the other Credit Parties have additionally requested an
amendment to the Existing Security Agreement (the “Security Agreement Amendment”
and together with the Credit Agreement Amendments, the “Amendments”) pursuant to
which the payment “waterfall” set forth therein shall provide that Obligations
owing to any Non-Consenting Lenders shall be paid only after satisfaction in
full of Obligations owing to the Consenting Lenders;

 

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WHEREAS, the Consenting Lenders, constituting the Requisite Lenders under and as
defined in the Existing Credit Agreement, have agreed to grant Company and the
other Credit Parties’ request for the Amendments on the terms and subject to the
conditions set forth herein;

WHEREAS, in order to effectuate the Credit Agreement Amendments, on the
Amendment Agreement Effective Date (as defined below), inter alia, (i) the
Existing Credit Agreement shall be amended and restated in the form attached
hereto as Annex A, and (ii) the Revolving Commitments, Revolving Loans and Term
Loans, as applicable, of the Consenting Lenders shall be converted as set forth
in Section 3 and Section 4 hereof; and

WHEREAS, in order to effectuate the Security Agreement Amendment, the Existing
Security Agreement shall be amended as set forth in Section 5 hereof.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

1. Defined Terms. Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Existing Credit Agreement.

2. Amendment and Restatement of the Existing Credit Agreement. Effective as of
the Amendment Agreement Effective Date:

(a) The Existing Credit Agreement is hereby amended and restated in its entirety
in the form of the Third Amended and Restated Credit and Guaranty Agreement set
forth in Annex A hereto (such agreement, together with all appendices, schedules
and exhibits thereto pursuant to Section 2(b) hereof, the “Amended Credit
Agreement”). From and after the effectiveness of such amendment and restatement,
the terms “Agreement”, “this Agreement”, “herein”, “hereinafter”, “hereto”,
“hereof” and words of similar import, as used in the Amended Credit Agreement,
shall, unless the context otherwise requires, refer to the Amended Credit
Agreement, and the term “Credit Agreement”, as used in the other Credit
Documents, shall mean the Amended Credit Agreement, as may be further amended,
supplemented or otherwise modified from time to time. This Amendment Agreement
shall constitute a “Credit Document” under the Amended Credit Agreement.

(b) Except as set forth herein, all of the appendices, schedules and exhibits of
the Existing Credit Agreement hereby constitute all of the appendices, schedules
and exhibits of the Amended Credit Agreement mutatis mutandis; provided,
however, that (i) Appendices A-1, A-2 and B and Schedule 4.1 (Jurisdictions of
Organization) are hereby amended and restated for the Amended Credit Agreement,
as set forth in Annex B hereto, (ii) Schedule 4.6 (Litigation) and Exhibits B-6,
B-7, B-8 and B-9 are hereby added to the Amended Credit Agreement as set forth
in Annex C hereto and (iii) Exhibits B-1, B-2 and B-3 are hereby deleted from
the Amended Credit Agreement.

 

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3. Conversion of Revolving Commitments, Loans and Letters of Credit of
Consenting Lenders. On the Amendment Agreement Effective Date:

(a) Each Consenting Lender’s Revolving Commitment, if any, shall be converted
into an “Extended Revolving Commitment” in an amount equal to such Consenting
Lender’s Revolving Commitment immediately prior to such conversion (which such
amount, if any, is set forth in such Consenting Lender’s signature page to this
Amendment Agreement), and any Revolving Commitment not so converted shall remain
outstanding and shall be re-designated as a “Non-Extended Revolving Commitment”.
For the avoidance of doubt, an Extended Revolving Commitment shall include the
obligation to acquire participations in Letters of Credit during the Extended
Revolving Commitment Period (as defined in the Amended Credit Agreement).

(b) Each Consenting Lender’s outstanding Revolving Loans, if any, shall be
converted into “Extended Revolving Loans” in a principal amount (by Type of
Loan) equal to such Consenting Lender’s outstanding Revolving Loans immediately
prior to such conversion, and any Revolving Loans not so converted shall remain
outstanding and shall be re-designated as “Non-Extended Revolving Loans”. The
initial Interest Period applicable to each Extended Revolving Loan that is a
Eurodollar Rate Loan shall be the then-current Interest Period applicable to the
Revolving Loan from which it is converted with no conversion into a different
Interest Period, payment or prepayment of such Revolving Loan being deemed to
have occurred solely due to this Amendment Agreement or the transactions
described herein.

(c) Any Consenting Lender’s deemed purchase of a participation in or other
obligations with respect to Letters of Credit outstanding immediately prior to
the Amendment Agreement Effective Date and thereafter shall on the Amendment
Agreement Effective Date and thereafter be attributable to such Consenting
Lender’s Extended Revolving Commitment. For the avoidance of doubt, the
obligation of Non-Consenting Lenders to purchase participations in or other
obligations with respect to Letters of Credit and all other obligations of such
Non-Consenting Lenders under the Existing Credit Agreement and each other Credit
Document (as defined in the Existing Credit Agreement) as in effect immediately
prior to the Amendment Agreement Effective Date shall remain in full force and
effect on and after the Amendment Agreement Effective Date.

4. Conversion of Term Loans of Consenting Lenders. On the Amendment Agreement
Effective Date:

(a) Each Consenting Lender’s Tranche C-2 Term Loans, if any, shall be converted
into “Tranche C-2 PIK Term Loans” in a principal amount (by Type of Loan) equal
to such Consenting Lender’s Tranche C-2 Term Loans immediately prior to such
conversion (which such amount, if any, is set forth in such Consenting Lender’s
signature page to this Amendment Agreement), and any Tranche C-2 Term Loans not
so converted shall be re-designated as “Tranche C-2 Cash Pay Term Loans”. The
initial Interest Period applicable to each Tranche C-2 PIK Term Loan that is a
Eurodollar Rate Loan shall be the then-current Interest Period applicable to the
Tranche C-2 Term Loan from which it is converted with no conversion into a
different Interest Period, payment or prepayment of such Tranche C-2 Term Loan
being deemed to have occurred solely due to the Amendment Agreement or the
transactions described herein.

 

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(b) Each Consenting Lender’s Tranche C-3 Term Loans (as defined in that certain
Joinder Agreement, dated as of March 30, 2012), if any, shall be converted into
“Tranche C-3 PIK Term Loans” (and together with the Tranche C-2 PIK Term Loans,
the “PIK Term Loans”) in a principal amount (by Type of Loan) equal to such
Consenting Lender’s Tranche C-3 Term Loans immediately prior to such conversion
(which such amount, if any, is set forth in such Consenting Lender’s signature
page to this Amendment Agreement), and any Tranche C-3 Term Loans not so
converted shall be re-designated as “Tranche C-3 Cash Pay Term Loans”. The
initial Interest Period applicable to each Tranche C-3 PIK Term Loan that is a
Eurodollar Rate Loan shall be the then-current Interest Period applicable to the
Tranche C-3 Term Loan from which it is converted with no conversion into a
different Interest Period, payment or prepayment of such Tranche C-3 Term Loan
being deemed to have occurred solely due to the Amendment Agreement or the
transactions described herein.

5. Security Agreement Amendment. Effective as of the Amendment Agreement
Effective Date, Section 7.2 of the Existing Security Agreement is hereby amended
and restated as follows:

“Except as expressly provided elsewhere in this Agreement, all proceeds received
by the Collateral Agent in respect of any sale, any collection from, or other
realization upon all or any part of the Collateral, in each case pursuant to its
exercise of remedies under Section 7.1 hereof, shall be applied in full or in
part by the Collateral Agent against, the Secured Obligations in the following
order of priority: first, to the payment of all reasonable costs and expenses of
such sale, collection or other realization, including reasonable fees and
out-of-pocket expenses to the Collateral Agent and its agents and counsel, and
all other reasonable out-of-pocket expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith, and all amounts for
which the Collateral Agent is entitled to indemnification hereunder (in its
capacity as the Collateral Agent and not as a Lender) and all advances made by
the Collateral Agent hereunder for the account of the applicable Grantor, and to
the payment of all reasonable costs and expenses paid or incurred by the
Collateral Agent in connection with the exercise of any right or remedy
hereunder or under the Credit Agreement, all in accordance with the terms hereof
or thereof; second, to the extent of any excess of such proceeds and without
duplication, to the payment of all Priority Obligations for the ratable benefit
of the Priority Lenders and Priority Lender Counterparties; third, to the extent
of any excess of such proceeds and without duplication, to the payment of all
Non-Priority Obligations for the ratable benefit of the Non-Priority Lenders and
Non-Priority Lender Counterparties; and fourth, to the extent of any excess of
such proceeds, to the payment to or upon the order of such Grantor or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct. For the avoidance of doubt, any non-cash
proceeds received by the Collateral Agent will, for purposes of determining the
application of proceeds hereunder and the satisfaction of Secured Obligations,
be valued at their fair market value as of the time of application (and not, in
the case of loans, notes or other securities, their face value, liquidation
preference or other nominal value).”

 

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6. Covenants. In order to induce the Consenting Lenders to enter into this
Amendment Agreement:

(a) Parent agrees to execute, as promptly as practicable and in any event within
ten Business Days of the Amendment Agreement Effective Date, control agreements
(the “Parent Control Agreements”) in form and substance reasonably satisfactory
to Collateral Agent (in consultation with the Consenting Lenders), with respect
to all Applicable Accounts set forth on Schedule 2 of the Accounts Officer’s
Certificate (as defined below) that are held or owned by Parent (such accounts,
the “Parent Applicable Accounts”). For the avoidance of doubt, Parent shall,
subject to the terms of the Credit Documents (as defined in the Amended Credit
Agreement), be permitted to direct the application of funds contained in the
Parent Applicable Accounts for so long as no Event of Default (as defined in the
Amended Credit Agreement) shall have occurred and be continuing, and
notwithstanding anything to the contrary set forth in this Amendment Agreement
or the Credit Documents (as defined in the Amended Credit Agreement), the Parent
Control Agreements may be modified or terminated with the consent of the
Requisite Lenders (as defined in the Amended Credit Agreement).

(b) From and after the Amendment Agreement Effective Date, each Credit Party
(i) shall not establish any new bank or securities account other than
(A) accounts solely for the purpose of holding deposits constituting permitted
Liens pursuant to Section 6.1 of the Amended Credit Agreement and (B) accounts
set forth on Schedule 1 of the Accounts Officer’s Certificate, except on not
fewer than three Business Days’ written notice to Administrative Agent and
(ii) unless consented to in writing by Administrative Agent (at the direction of
the Requisite Lenders) or such account is a Permitted Account (as defined
below), shall not maintain a balance (other than intra-day) in excess of
$250,000 in the aggregate in any such account prior to entry into an appropriate
control agreement with Collateral Agent and the applicable depositary bank in
respect of such account; provided that, solely with respect to the account at
the Royal Bank of Canada identified on Schedule 2 of the Accounts Officer’s
Certificate (the “RBC Account”), no such control agreement shall be required for
so long as Company does not maintain a balance (other than intra-day) in excess
of $1,900,000 Canadian dollars in the aggregate in the RBC Account.

(c) From and after the Amendment Agreement Effective Date, Parent, Holdings and
Company shall, and shall cause each Subsidiary to, carry out their cash
management operations consistent with past practice and in the ordinary course
of their businesses, including the concentration of cash and cash-equivalent
securities in the Applicable Accounts set forth on Schedule 2 of the Accounts
Officer’s Certificate; provided, however, that the foregoing shall not be deemed
to prevent Parent, Holdings, Company or any Subsidiary from conducting cash
management operations, and holding cash at Subsidiaries, so as to comply with
applicable law or regulatory requirements or otherwise satisfy financial
strength or like tests applicable to the Subsidiaries, the failure of which
could lead to adverse action by regulatory authorities and/or accreditation
agencies.

(d) The Credit Parties shall appoint as promptly as practicable a special
consultant (in consultation with and reasonably acceptable to a majority of the
Consenting Lenders) to advise the officers and the board of directors of Parent
concerning cost-savings and related matters.

 

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The foregoing covenants shall constitute covenants for all purposes of the
Amended Credit Agreement and the failure to comply with any such covenant shall
constitute an immediate Event of Default under the Amended Credit Agreement.

7. Conditions Precedent; Effectiveness. This Amendment Agreement shall become
effective as of the first date (the “Amendment Agreement Effective Date”) on
which each of the following conditions has been satisfied in accordance with the
terms hereof:

(a) Administrative Agent shall have received counterparts of this Amendment
Agreement executed by or on behalf of (i) the Credit Parties and (ii) Lenders
holding (A) 66-2/3% of the existing Revolving Commitments and (B) a majority of
the Term Loans.

(b) The RSA, in the form attached hereto as Annex D, shall have been executed by
(i) the Credit Parties and (ii) Lenders holding (A) 66-2/3% of the existing
Revolving Commitments and (B) a majority of the Term Loans.

(c) The Exchange Agreement, in the form attached hereto as Annex E (capitalized
terms used in this Section 7(c) but not otherwise defined in this Amendment
Agreement having the meanings set forth in the Exchange Agreement), shall have
been executed by Holders holding at least 75% of the aggregate face value of
Senior Notes and such Holders shall have agreed to consent to the amendments to
the Senior Notes Indenture contemplated by the consent solicitation of the
Company dated August 27, 2014.

(d) Parent shall have executed a Counterpart Agreement, or other comparable
agreement, the effect of which is to make Parent a Grantor under the Amended
Security Agreement (it being agreed that by virtue of Section 2(a) hereof,
Parent shall be a Guarantor under the Amended Credit Agreement as of the
Amendment Agreement Effective Date).

(e) The Credit Parties shall have paid fees and other amounts due and payable to
Administrative Agent and to the advisors of any ad hoc Lender group with whom
the Credit Parties, or any of them, have entered into separate reimbursement
arrangements, in each case invoiced at least three Business Days prior to the
Amendment Agreement Effective Date, including, to the extent invoiced,
reimbursement or payment of all reasonable and documented out-of-pocket costs
and expenses of Administrative Agent required to be reimbursed or paid by
Borrowers under Section 10.2 of the Existing Credit Agreement.

(f) The representations and warranties set forth in Section 8 of this Amendment
Agreement are true and correct in all material respects as of the Amendment
Agreement Effective Date, after giving effect to this Amendment Agreement, and,
after giving effect to the Amendment Agreement, no event has occurred and is
continuing or will result from the consummation of the transactions contemplated
by this Amendment Agreement that would constitute a Default or an Event of
Default under the Amended Credit Agreement.

(g) The Administrative Agent shall have received a certificate dated as of the
Amendment Agreement Effective Date, and signed by the President, a Vice
President or a Financial Officer of the Company, certifying that the condition
set forth in clause (f) above has been satisfied.

 

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(h) The Administrative Agent shall have received the favorable legal opinions of
(i) Wachtell, Lipton, Rosen & Katz, special counsel to the Credit Parties and
(ii) J. Devitt Kramer, general counsel of the Company, in each case addressed to
the Consenting Lenders, the Administrative Agent, the Collateral Agent and each
Issuing Bank dated the Amendment Agreement Effective Date, which opinions shall
be reasonably satisfactory to the Administrative Agent (in consultation with the
Consenting Lenders).

(i) The Administrative Agent shall have received (and shall promptly deliver to
the Consenting Lenders) (i) copies of each Organization Document executed and
delivered by each Credit Party, as applicable, and certified as of the Amendment
Agreement Effective Date by its secretary or an assistant secretary as being in
full force and effect without modification or amendment; (ii) signature and
incumbency certificates of the officers of such Person executing this Amendment
Agreement; (iii) resolutions of the Board of Directors or similar governing body
of each Credit Party approving and authorizing the execution, delivery and
performance of this Amendment Agreement, certified as of the Amendment Agreement
Effective Date by its secretary or an assistant secretary as being in full force
and effect without modification or amendment; and (iv) a good standing
certificate from the applicable Governmental Authority of each Credit Party’s
jurisdiction of incorporation, organization or formation dated a recent date
prior to the Amendment Agreement Effective Date.

(j) Parent shall have delivered an officer’s certificate (the “Accounts
Officer’s Certificate”) to Collateral Agent, certifying that (i) the accounts
listed on Schedule 1 thereto are the only bank or securities accounts held or
owned by Parent or any of its direct or indirect Subsidiaries as of the date
thereof and (ii) the accounts listed on Schedule 2 thereto are the “Applicable
Accounts,” which shall be all of the bank and securities accounts listed on
Schedule 1 that maintain a balance (other than intra-day) of in excess of
$250,000, other than (A) accounts solely for the purpose of holding deposits
constituting permitted Liens under Section 6.1 of the Amended Credit Agreement,
(B) the account of Company with PNC Bank, National Association previously
identified to Collateral Agent and (C) the RBC Account (the foregoing accounts
described in sub-clauses (A) through (C), the “Permitted Accounts”).

8. Representations and Warranties. To induce the Agents and Consenting Lenders
to execute this Amendment Agreement, each Credit Party, to the extent
applicable, represents and warrants, as of the Amendment Agreement Effective
Date, that:

(a) This Amendment Agreement has been duly authorized, executed and delivered by
such Credit Party.

(b) This Amendment Agreement constitutes a legal, valid and binding obligation,
enforceable against such Credit Party in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

(c) The representations and warranties of such Credit Party set forth in
Section 4 of the Amended Credit Agreement and in the other Credit Documents that
are qualified by materiality are true and correct in all respects, and the
representations and warranties that are not so qualified are true and correct in
all material respects, in each case, as of the Amendment Agreement Effective
Date.

 

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(d) Subject to Section 9 hereof, no event has occurred and is continuing that
constitutes a Default or an Event of Default, and after giving effect to this
Amendment Agreement, no event has occurred and is continuing or will result
from, the consummation of the transactions contemplated by this Amendment
Agreement, that would constitute a Default or an Event of Default under the
Amended Credit Agreement.

9. Waiver. Effective as of the Amendment Agreement Effective Date, that certain
Waiver to Second Amended and Restated Credit and Guaranty Agreement, dated as of
June 23, 2014, shall be terminated and, for the avoidance of doubt, the
Designated Potential Defaults set forth therein shall be deemed permanently
waived.

10. Effect of Amendment Agreement. (a) Except as expressly set forth herein or
in the Amended Credit Agreement, this Amendment Agreement shall not by
implication or otherwise limit, impair, constitute a waiver of or otherwise
affect the rights and remedies of the Lenders or the Agents under the Amended
Credit Agreement or any Credit Document (as defined in the Amended Credit
Agreement), and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the
Existing Credit Agreement or any other provision of the Existing Credit
Agreement or of any other Credit Document (as defined in the Existing Credit
Agreement), all of which are ratified and affirmed in all respects and shall
continue in full force and effect. Nothing herein shall be deemed to entitle the
Credit Parties to a consent to, or a waiver, amendment, modification or other
change of, any of the terms, conditions, obligations, covenants or agreements
contained in the Existing Credit Agreement, the Amended Credit Agreement or any
other Credit Document (as defined in both the Amended Credit Agreement and the
Existing Credit Agreement) in similar or different circumstances.

(b) It is the intention of each of the parties hereto that the Existing Credit
Agreement be amended and restated so as to preserve the perfection and priority
of all security interests securing indebtedness and obligations under the
Existing Credit and that this Amendment Agreement does not constitute a novation
of the obligations and liabilities existing under the Existing Credit Agreement.

11. Further Assurances. The Consenting Lenders hereby authorize and direct the
Agents to enter into this Amendment Agreement and such further documents and do
such other acts and things as the Credit Parties and the Consenting Lenders may
reasonably request in order to fully effect the purposes hereof.

12. Release.

(a) In consideration of the agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as of the Amendment Agreement Effective Date, each Credit Party,
on behalf of itself and its successors, assigns and other legal representatives,
hereby absolutely, unconditionally and irrevocably releases, remises and forever
discharges, to the fullest extent permitted by law, each

 

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Agent, each Consenting Lender (in its capacity as a Lender and as an Issuing
Bank), their respective successors and assigns and each of their respective
affiliates, subsidiaries, predecessors, directors, officers, partners,
attorneys, employees, agents and other representatives (each Agent, each
Consenting Lender (in its capacity as a Lender and as an Issuing Bank) and all
such other Persons being hereinafter referred to collectively as the
“Releasees”, and individually as a “Releasee”) of and from all demands, actions,
causes of action, suits, controversies, claims, defenses, rights of offset
(other than any offset arising from a claim not subject to the release contained
herein), damages and liabilities whatsoever, including, without limitation, any
so-called “lender liability”, equitable subordination claims or defenses, any
claims arising under 11 U.S.C. §§ 541-550 or any claims for avoidance or
recovery under any other federal, state or foreign law equivalent (individually,
a “Claim” and, collectively, “Claims”) of every name and nature, known or
unknown, in contract or in tort, foreseen or unforeseen (regardless of by whom
raised), suspected or unsuspected, liquidated or unliquidated, joint and/or
several, both at law and in equity, which any Credit Party or any of its
successors, assigns or other legal representatives may now or hereafter have
against the Releasees or any of them which arises at any time on or prior to the
Amendment Agreement Effective Date on account of, or in relation to, any of the
Existing Credit Agreement or the Amended Credit Agreement, the other Credit
Documents (as defined in the Existing Credit Agreement and the Amended Credit
Agreement) or this Amendment Agreement or transactions thereunder or related
thereto, other than, in each case, any Claim in respect of the gross negligence
or willful misconduct of any Releasee, as determined in a final, non-appealable
judgment by a court of competent jurisdiction.

(b) Each Credit Party understands, acknowledges and agrees that the release set
forth above may be pleaded as a full and complete defense and may be used as a
basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release.

(c) Each Credit Party, on behalf of itself and its respective successors,
assigns and other legal representatives, further stipulates and agrees with
respect to all Claims, that it hereby waives any and all provisions, rights, and
benefits conferred by Cal. Civ. Code 1542 or any law of any state of the United
States, or any principle of common law, which is similar, comparable, or
equivalent to Cal. Civ. Code 1542, which provides: “a general release does not
extend to claims which the creditor does not know or suspect to exist in his or
her favor at the time of executing the release, which if known by him or her
must have materially affected his or her settlement with the debtor”.

(d) The agreements of each Credit Party set forth in this Section 12 shall
survive the termination of this Amendment Agreement.

13. Counterparts. This Amendment Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.

14. Governing Law. THIS AMENDMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

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15. Severability. If any provision contained in this Amendment Agreement shall
be held to be invalid, illegal or unenforceable in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability, and the remaining provisions of this
Amendment Agreement shall not in any way be affected or impaired. The
invalidity, illegality or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

16. Headings. Section headings herein are included for convenience of reference
only and shall not affect the interpretation of this Amendment Agreement.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

 

EDUCATION MANAGEMENT CORPORATION By:  

 

  Name:   Title: EDUCATION MANAGEMENT LLC By:  

 

  Name:   Title: EDUCATION MANAGEMENT HOLDINGS LLC By:  

 

  Name:   Title: EDUCATION MANAGEMENT FINANCE CORP. By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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ARGOSY UNIVERSITY FAMILY CENTER, INC. EDMC MARKETING AND ADVERTISING, INC.
HIGHER EDUCATION SERVICES, INC. MCM UNIVERSITY PLAZA, INC. THE CONNECTING LINK,
INC. AID RESTAURANT, INC. AIH RESTAURANT, INC. AIIM RESTAURANT, INC. BROWN
MACKIE EDUCATION CORPORATION EDUCATION FINANCE II LLC SOUTH UNIVERSITY RESEARCH
CORPORATION THE ART INSTITUTES INTERNATIONAL LLC AICA-IE RESTAURANT, INC. AIIN
RESTAURANT LLC AIT RESTAURANT, INC. AITN RESTAURANT, INC. By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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U.S. BANK NATIONAL ASSOCIATION, as Administrative Agent and as Collateral Agent
By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

COA Caerus CLO Ltd., as Lender

By:   3i Debt Management US, LLC as Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Fraser Sullivan CLO I, Ltd., as Lender

By:   3i Debt Management US, LLC as Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Fraser Sullivan CLO II, Ltd., as Lender

By:   3i Debt Management US, LLC as Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Jamestown CLO II, Ltd.

By:   3i Debt Management US, LLC as Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

ABBEY FUNDING ULC

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

One Wall Street CLO II LTD

By:   Alcentra NY, LLC, as investment advisor By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Pacifica CDO VI LTD

By:   Alcentra NY, LLC, as investment advisor By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Prospero CLO I B.V.

By:   Alcentra NY, LLC, as investment advisor By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Prospero CLO II B.V.

By:   Alcentra NY, LLC, as investment advisor By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Veritas CLO II, LTD

By:   Alcentra NY, LLC, as investment advisor By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Westwood CDO I LTD

By:   Alcentra NY, LLC, as investment advisor By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Westwood CDO II LTD

By:   Alcentra NY, LLC, as investment advisor By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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ABCLO 2007-1, LTD. By:   AllianceBernstein L.P., as Collateral Manager By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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AllianceBernstein Institutional Investments – High Yield Loan Portfolio By:  
AllianceBernstein L.P., as Investment Advisor By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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AllianceBernstein High Income Fund, Inc. By:   AllianceBernstein L.P., as
Investment Advisor By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

AllianceBernstein Global High Income Fund, Inc. By:   AllianceBernstein L.P., as
Investment Advisor By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution: ANCHORAGE CAPITAL MASTER OFFSHORE, LTD. By: ANCHORAGE
CAPITAL GROUP, L.L.C ITS INVESTMENT MANAGER By:  

 

  Name:   Title:  

 

 

[Signature Page to Amendment Agreement]

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Name of Institution:

ASF1 Loan Funding LLC

By:   Citibank, N.A., By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution: BANK OF AMERICA, N.A. By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

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Name of Institution: MERRILL LYNCH CAPITAL CORPORATION By:  

 

  Name:     Title:   For Lenders requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: BARCLAYS BANK PLC By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

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Name of Institution:

GSC Group CDO Fund VIII, Limited

By: GSC Group CDO Fund VIII, Limited By: GSC Acquisition Holdings, L.L.C.,
as its Collateral Manager By: GSC MANAGER, LLC, in its capacity as Manager By:
BLACK DIAMOND CAPITAL By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

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Name of Institution:

GSC Partners CDO Fund VII, Limited

By: GSC Acquisition Holdings, L.L.C.,
as its Collateral Manager By: GSC MANAGER, LLC, in its capacity as Manager By:
BLACK DIAMOND CAPITAL MANAGEMENT, L.L.C.
in its capacity as Member By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

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Name of Institution:

BMI CLO I

By: BlackRock Financial Management, Inc.,
its Investment Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: BlackRock Funds II,

BlackRock Floating Rate Income Portfolio

By: BlackRock Financial Management, Inc.,
its Sub-Advisor By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BlackRock Senior Income Series IV

By: BlackRock Financial Management, Inc.,
its Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BlackRock Senior Income Series V Limited

By: BlackRock Financial Management, Inc.,
its Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

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Name of Institution:

Cooper River LLC

By: FS Investment Corporation, as Sole Member

By: GSO / Blackstone Debt Funds Management LLC,

as Sub-Advisor

By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

FM Leveraged Capital Fund I

By: GSO / Blackstone Debt Funds Management LLC,
as Sub-Advisor to FriedbergMilstein LLC By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Gale Force 2 CLO, Ltd.

By: GSO / Blackstone Debt Funds Management LLC,
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Gale Force 2 CLO, Ltd.

By: GSO / Blackstone Debt Funds Management LLC,
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Gale Force 3 CLO, Ltd.

By: GSO / Blackstone Debt Funds Management LLC,
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Inwood Park CDO, LTD.

By: Blackstone Debt Advisors LP
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Locust Street Funding LLC

By: FS Investment Corporation, as Sole Member
By: GSO / Blackstone Debt Funds Management LLC,
as Sub-Advisor By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Maps CLO Fund II, Ltd.

By: GSO / Blackstone Debt Funds Management LLC,
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Prospect Park CDO Ltd.

By: Blackstone Debt Advisors L.P.,
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Riverside Park CLO Ltd.

By: GSO / Blackstone Debt Funds Management LLC,
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BLT 15 LLC

By: GSO / Blackstone Debt Funds Management LLC,
as Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BLT 15 LLC

By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BlueMountain CLO II, LTD

By: BLUEMOUNTAIN CAPITAL MANAGEMENT, LLC,
Its Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BlueMountain CLO III, LTD

By: BLUEMOUNTAIN CAPITAL MANAGEMENT, LLC,
Its Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BlueMountain CLO Ltd

By: BLUEMOUNTAIN CAPITAL MANAGEMENT, LLC,
Its Collateral Manager By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: BNP Paribas By:  

 

  Name:     Title:   For Lenders requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: BNP PARIBAS By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Del Mar CLO I, LTD.

By: Allianz Global Investors U.S. LLC-CS Credit Group By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Cedarview Opportunities Master Fund, LP By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

CCP CREDIT ACQUISITION HOLDINGS, L.L.C. By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

CENTERBRIDGE SPECIAL CREDIT PARTNERS II, L.P. By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: The Distressed Debt Trading Desk of Citibank, N.A. By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: The Distressed Debt Trading Desk of Citigroup Financial
Products, Inc. By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Shinnecock CLO 2006-1

By:  

 

  Name:     Title:   For parties requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

CREDIT SUISSE AG, Cayman Islands Branch

By:  

 

  Name:     Title:   By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

CREDIT SUISSE LOAN FUNDING LLC

By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Credit Suisse AG, Caymans Islands Branch

By:  

 

  Name:     Title:   For Lenders requiring a second signature line: By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: ACA CLO 2006-1, LTD
By Its Investment Advisor CVC Credit Partners, LLC By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: ACA CLO 2006-2, LTD
By Its Investment Advisor CVC Credit Partners, LLC By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: ACA CLO 2007-1, LTD
By Its Investment Advisor CVC Credit Partners, LLC By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Apidos CDO I
By Its Investment Advisor CVC Credit Partners, LLC By:  

 

  Name:     Title:  

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Apidos CDO III By Its Investment Advisor CVC Credit
Partners, LLC

By:

 

 

 

Name:

 

Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Apidos CDO IV By Its Investment Advisor CVC Credit
Partners, LLC By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Apidos CDO V By Its Investment Advisor CVC Credit Partners,
LLC By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Apidos Cinco CDO By Its Investment Advisor CVC Credit
Partners, LLC By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Apidos Quattro CDO

By Its Investment Advisor CVC Credit

Partners, LLC

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: San Gabriel CLO I LTD

By Its Investment Advisor CVC Credit Partners, LLC

On Behalf of Resource Capital Asset Management (RCAM)

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Shasta CLO I LTD

By Its Investment Advisor CVC Credit Partners, LLC

On Behalf of Resource Capital Asset Management (RCAM)

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

DWS Floating Rate Fund

By: Deutsche Investment Management Americas Inc.

Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Flagship CLO V

By: Deutsche Investment Management Americas Inc.

(as successor in interest to Deutsche Asset Management, Inc.),

as Collateral Manager

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Flagship CLO VI

By: Deutsche Investment Management Americas Inc.

as Collateral Manager

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Deutsche Bank AG New York Branch   By: DB Services New
Jersey, Inc. By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Deutsche Bank AG Cayman Islands Branch By: DB Services New
Jersey, Inc. By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: AGF FLOATING RATE INCOME FUND

BY: EATON VANCE MANAGEMENT

AS PORTFOLIO MANAGER

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Bond Portfolio

By: Boston Management and Research

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Eaton Vance CDO VII PLC

By: Eaton Vance Management

as Interim Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Eaton Vance CDO VIII, Ltd.

By: Eaton Vance Management

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Eaton Vance CDO IX, Ltd.

By: Eaton Vance Management

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Eaton Vance CDO X PLC

By: Eaton Vance Management

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Eaton Vance Floating-Rate Income Plus Fund

By: Eaton Vance Management

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: EATON VANCE SENIOR FLOATING-RATE TRUST

BY: EATON VANCE MANAGEMENT

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: EATON VANCE FLOATING-RATE INCOME TRUST

BY: EATON VANCE MANAGEMENT

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Eaton Vance International (Cayman Islands) Floating-Rate
Income Portfolio

By: Eaton Vance Management

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: EATON VANCE SENIOR INCOME TRUST

BY: EATON VANCE MANAGEMENT

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: EATON VANCE SHORT DURATION DIVERSIFIED INCOME FUND

BY: EATON VANCE MANAGEMENT

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: EATON VANCE INSTITUTIONAL SENIOR LOAN FUND

BY: EATON VANCE MANAGEMENT

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: EATON VANCE LIMITED DURATION INCOME FUND

BY: EATON VANCE MANAGEMENT

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: GRAYSON & CO

BY: BOSTON MANAGEMENT AND RESEARCH

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: KP Fixed Income Fund

By: Eaton Vance Management

as Investment Sub-Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: MET INVESTORS SERIES TRUST-MET/EATON VANCE FLOATING RATE
PORTFOLIO

BY: EATON VANCE MANAGEMENT

AS INVESTMENT SUB-ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: PACIFIC SELECT FUND FLOATING RATE LOAN PORTFOLIO

BY: EATON VANCE MANAGEMENT

AS INVESTMENT SUB-ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Columbia Funds Variable Series Trust II - Variable
Portfolio–Eaton Vance Floating-Rate Income Fund

By: Eaton Vance Management

As Investment Sub-Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: SENIOR DEBT PORTFOLIO

By: Boston Management and Research

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Eaton Vance Corp

By: Eaton Vance Management

as Investment Advisor

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: EATON VANCE VT FLOATING-RATE INCOME FUND

BY: EATON VANCE MANAGEMENT

AS INVESTMENT ADVISOR

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: FIFTH THIRD BANK By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: GOLDMAN SACHS LENDING PARTNERS LLC By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

HG VORA CAPITAL MANAGEMENT, LLC By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

HG VORA SPECIAL OPPORTUNITIES MASTER FUND, LTD.,

as Lender

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Highland/iBoxx Senior Loan ETF By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

HillMark Funding, Ltd.

By: HillMark Capital Management, L.P., as Collateral Manager, as Lender By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Stoney Lane Funding I, Ltd.

By: HillMark Capital Management, L.P., as Collateral Manager, as Lender By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: HOLSTON RIVER TRADING, LLC By: SunTrust Bank, its Manager
By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: JPMORGAN CHASE BANK, N.A. By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: KATONAH IX CLO LTD. By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: KATONAH X CLO LTD. By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: KATONAH 2007-I CLO LTD. By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Oregon Public Employees Retirement Fund

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Maryland State Retirement and Pension System

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

BCBSM, Inc.

By: KKR its Collateral Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR CORPORATE CREDIT PARTNERS L.P.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR Credit Relative Value Master Fund LP

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR DEBT INVESTORS II (2006)(IRELAND) L.P.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR FINANCIAL CLO 2005-1, LTD.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR FINANCIAL CLO 2005-2, LTD.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR FINANCIAL CLO 2006-1, LTD.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR FINANCIAL CLO 2007-1, LTD.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR FINANCIAL CLO 2011-1, LTD.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR FLOATING RATE FUND L.P.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR Income Opportunities Fund

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR Lending Partners LP

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

KKR-PBPR CAPITAL PARTNERS L.P.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

US Income Strategy Fund of Nikko AM InvestmentTrust (Cayman)

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: LANDMARK IX CDO LTD By Landmark Funds LLC, as Manager By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: JERSEY STREET CLO, LTD.,

By its Collateral Manager, Massachusetts Financial Services Company

 

By:  

/s/ [                    ]

 

As authorized representative and not individually

For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: MARLBOROUGH STREET CLO, LTD.,

By its Collateral Manager, Massachusetts Financial Services Company

 

By:  

/s/ [                    ]

 

As authorized representative and not individually

For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: MIZUHO BANK, LTD. By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Venture IX CDO, Limited

By: its investment advisor,

MJX Asset Management, LLC

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Venture VIII CDO, Limited

By: its investment advisor,

MJX Asset Management, LLC

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Venture V CDO, Limited

By: its investment advisor,

MJX Asset Management, LLC

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Venture VII CDO, Limited

By: its investment advisor,

MJX Asset Management, LLC

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Venture X CLO, Limited

By: its investment advisor,

MJX Asset Management, LLC

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Blackwell Partners LLC

By:   Its Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Mudrick Distressed Opportunity Fund Global, LP

By:   Its Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

New Mountain Finance SPV Funding, L.L.C.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

New Mountain Finance Corporation

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Nob Hill CLO Limited

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

OAK HILL ADVISORS, L.P., on behalf of certain private funds and separate
accounts that it manages, each of which is a Lender By:  

OAK HILL ADVISORS GENPAR, L.P.,

its General Partner

By:  

OAK HILL ADVISORS MGP, INC.,

its Managing General Partner

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

CSAA Insurance Exchange

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

ACE Tempest Reinsurance Ltd.

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Arch Investment Holdings IV Ltd.

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Missouri Education Pension Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Oaktree Senior Loan Fund, L.P.

By:   Oaktree Senior Loan Fund GP, L.P. Its:   General Partner, By:   Oaktree
Fund GP IIA, LLC Its:   General Partner, By:   Oaktree Fund GP II, L.P. Its:  
Managing Member By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

UniSuper Limited, as Trustee for UniSuper

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

WM Pool - High Yield Fixed Interest Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

New York City Employees’ Retirement System

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

New York City Police Pension Fund

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Teachers’ Retirement System of the City of New York

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Arch Reinsurance Ltd.

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Automobile Club of Southern California Pension Plan

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Central States, Southeast and Southwest Areas Pension Funds

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Chrysler Group LLC Master Retirement Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Employees’ Retirement Fund of the City of Dallas

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Fonds Voor Gemene Rekening Beroepsvervoer - HY

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

IBM Personal Pension Plan Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

International Paper Company Commingled

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Iowa Public Employees Retirement System

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Lucent Technologies Inc. Master Pension Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Microsoft Global Finance

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

OCM High Yield Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Oaktree Global High Yield Bond Fund LP

By:   Oaktree Fund GP IIA, LLC Its:   General Partner By:   Oaktree Fund GP II,
L.P. Its:   Managing Member By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Oaktree High Yield Fund II, L.P.

By:   Oaktree Fund GP II, L.P. Its:   General Partner By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Oaktree High Yield Fund, L.P.

By:   Oaktree Fund GP II, L.P. Its:   General Partner By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

PG&E Corporation Retirement Master Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Pacific Gas & Electric Co. Post Retirement Medical Plan Trust for Non-Management
Employees and Retirees

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Russell Investment Company Russell Global Credit Strategies Fund

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Sears Holdings Pension Trust

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

State Teachers Retirement System of Ohio

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

State of Connecticut Retirement Plans and Trust Funds

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

TMCT II, LLC

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

TMCT, LLC

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Texas County & District Retirement System

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

UMC Benefit Board, Inc.

By:   Oaktree Capital Management, L.P. Its:   Investment Manager By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Omega Advisors, Inc., solely in its capacity of investment
manager for certain funds and accounts* it manages, and not in its individual
corporate capacity

 

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

ProAssurance Casualty Inc.

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

JLP Credit Opportunity Master Fund Ltd.

By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

JLP Stressed Credit Fund LP

By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: THE ROYAL BANK OF SCOTLAND PLC By:   RBS Securities Inc.,
its agent By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

XL RE LTD., as Lender By Regiment Capital Management LLC,
In its capacity as Investment Advisor By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

VALHOLL, LTD., as Lender By Regiment Capital Management LLC,
In its capacity as Investment Advisor By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

REGIMENT CAPITAL, LTD., as Lender

By Regiment Capital Management LLC,

In its capacity as Investment Advisor

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

CAVALRY CLO III, LTD., as Lender

By Regiment Capital Management LLC,

In its capacity as Investment Advisor

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

BLUE FALCON LIMITED, as Lender

By Regiment Capital Management LLC,

In its capacity as Investment Advisor

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Saratoga Investment Corp CLO 2013-1, Ltd.

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Brookside Mill CLO Ltd.

By:  

SHENKMAN CAPITAL MANAGEMENT, INC.,

as Collateral Manager

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Slater Mill Loan Fund, LP

By:  

SHENKMAN CAPITAL MANAGEMENT, INC.,

as Collateral Manager

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Westbrook CLO Ltd.

By:  

SHENKMAN CAPITAL MANAGEMENT, INC.,

as Investment Manager

By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: SPCP GROUP, LLC By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Symphony CLO VII, LTD.

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Symphony CLO III, LTD.

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Nuveen Floating Rate Income Opportunity Fund

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Nuveen Floating Rate Income Fund

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Symphony Credit Opportunities Fund, LTD.

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Nuveen Symphony Credit Opportunities Fund

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Symphony CLO XII, LTD.

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Nuveen Symphony Floating Rate Income Fund

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Nuveen Senior Income Fund

By:   Symphony Asset Management, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Telos CLO 2006-1, LTD

Telos CLO 2007-2, LTD

Telos CLO 2013-3, LTD

Managed by: Telos Asset Management, LLC

By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: Third Avenue Trust, on Behalf of Third Avenue Focused
Credit Fund By:   Third Avenue Management LLC, its investment advisor

 

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: 1776 CLO I, Ltd. By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution:

Wells Fargo Bank, National Association

By:  

 

  Name:   Title: For parties requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Name of Institution: York Global Finance BDH, LLC By:  

 

  Name:   Title: For Lenders requiring a second signature line: By:  

 

  Name:   Title:

 

[Signature Page to Amendment Agreement]

--------------------------------------------------------------------------------

Annex A

Form of Third Amended and Restated Credit and Guaranty Agreement

[See following page]

--------------------------------------------------------------------------------

THIRD AMENDED AND RESTATED

CREDIT AND GUARANTY AGREEMENT

dated as of February 13, 2007,

as amended and restated as of December 7, 2010

and as further amended and restated as of September 5, 2014,

among

EDUCATION MANAGEMENT LLC,

EDUCATION MANAGEMENT CORPORATION,

EDUCATION MANAGEMENT HOLDINGS LLC,

CERTAIN SUBSIDIARIES OF EDUCATION MANAGEMENT HOLDINGS LLC,

as Guarantors,

THE DESIGNATED SUBSIDIARY BORROWERS

REFERRED TO HEREIN,

VARIOUS LENDERS,

CREDIT SUISSE SECURITIES (USA) LLC,

as Syndication Agent,

and

U.S. BANK NATIONAL ASSOCIATION,

as Administrative Agent and Collateral Agent

 

 

$1,554,514,900 Senior Secured Credit Facilities

 

 

BARCLAYS CAPITAL,

as Lead Arranger

BARCLAYS CAPITAL,

GOLDMAN SACHS LENDING PARTNERS LLC,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

and BNP PARIBAS SECURITIES CORP.,

as Joint Bookrunners

 

ccxiv

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

     Page  

SECTION 1. DEFINITIONS AND INTERPRETATION

     2   

1.1. Definitions

     2   

1.2. Accounting Terms

     46   

1.3. Interpretation, etc.

     46   

SECTION 2. LOANS AND LETTERS OF CREDIT

     46   

2.1. Term Loans

     46   

2.2. Revolving Loans

     47   

2.3. Reserved

     49   

2.4. Issuance of Letters of Credit and Purchase of Participations Therein

     49   

2.5. Pro Rata Shares; Availability of Funds

     55   

2.6. Use of Proceeds

     55   

2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes

     55   

2.8. Interest on Loans

     57   

2.9. Conversion/Continuation

     59   

2.10. Default Interest

     60   

2.11. Fees

     60   

2.12. Scheduled Amortization of Term Loans

     61   

2.13. Voluntary Prepayments/Commitment Reductions

     62   

2.14. Mandatory Prepayments/Commitment Reductions

     63   

2.15. Application of Prepayments/Reductions

     65   

2.16. General Provisions Regarding Payments

     66   

2.17. Ratable Sharing

     67   

2.18. Making or Maintaining Eurodollar Rate Loans

     68   

2.19. Increased Costs; Capital Adequacy

     70   

2.20. Taxes; Withholding, etc.

     71   

2.21. Obligation to Mitigate

     73   

2.22. Defaulting Lenders

     74   

2.23. Removal or Replacement of a Lender

     75   

2.24. Incremental Facilities

     76   

2.25. Designated Subsidiary Borrowers

     78   

2.26. Joint and Several Liability

     79   

SECTION 3. CONDITIONS PRECEDENT

     80   

3.1. Effective Date

     80   

3.2. Conditions to Each Credit Extension

     81   

3.3. Conditions to Effectiveness of this Agreement

  

 

ccxv

--------------------------------------------------------------------------------

SECTION 4. REPRESENTATIONS AND WARRANTIES

     82   

4.1. Existence, Qualification and Power; Compliance with Laws

     82   

4.2. Authorization; No Contravention

     83   

4.3. Governmental Authorization; Other Consents

     83   

4.4. Binding Effect

     84   

4.5. Financial Statements; No Material Adverse Effect

     84   

4.6. Litigation

     85   

4.7. No Default

     85   

4.8. Ownership of Property; Liens

     85   

4.9. Environmental Compliance

     85   

4.10. Taxes

     86   

4.11. ERISA Compliance

     87   

4.12. Subsidiaries; Equity Interests

     87   

4.13. Margin Regulations; Investment Company Act

     87   

4.14. Disclosure

     88   

4.15. Intellectual Property; Licenses, Etc.

     88   

4.16. [Reserved]

     88   

4.17. Subordination of Junior Financing

     88   

4.18. Labor Matters

     88   

4.19. Collateral Documents

     89   

4.20. Patriot Act

     89   

SECTION 5. AFFIRMATIVE COVENANTS

     89   

5.1. Financial Statements

     89   

5.2. Certificates; Other Information

     91   

5.3. Notices

     92   

5.4. Payment of Obligations

     93   

5.5. Preservation of Existence, Etc.

     93   

5.6. Maintenance of Properties

     93   

5.7. Maintenance of Insurance

     93   

5.8. Compliance with Laws

     94   

5.9. Books and Records

     94   

5.10. Inspection Rights

     94   

5.11. Compliance with Environmental Laws

     95   

5.12. Subsidiaries

     95   

5.13. Additional Material Real Estate Assets

     95   

5.14. Further Assurances

     96   

5.15. Survey of Closing Date Mortgaged Property

     96   

5.16. Restructuring

     96   

SECTION 6. NEGATIVE COVENANTS

     97   

6.1. Liens

     97   

6.2. Investments

     100   

 

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6.3. Indebtedness

     102   

6.4. Fundamental Changes

     106   

6.5. Dispositions

     107   

6.6. Restricted Payments

     109   

6.7. Change in Nature of Business

     111   

6.8. Transactions with Affiliates

     111   

6.9. Burdensome Agreements

     112   

6.10. Financial Covenants

     113   

6.11. Accounting Changes

     114   

6.12. Prepayments, Etc. of Indebtedness; Amendment of Agreements

     114   

6.13. Equity Interests of Company and Subsidiaries

     115   

6.14. Holding Company

     115   

6.15. Capital Expenditures

     116   

6.16. Interest Rate Protection

     116   

SECTION 7. GUARANTY

     116   

7.1. Guaranty of the Obligations

     116   

7.2. Contribution by Guarantors

     117   

7.3. Payment by Guarantors

     118   

7.4. Liability of Guarantors Absolute

     118   

7.5. Waivers by Guarantors

     120   

7.6. Guarantors’ Rights of Subrogation, Contribution, etc.

     121   

7.7. Subordination of Other Obligations

     121   

7.8. Continuing Guaranty

     122   

7.9. Authority of Guarantors or Borrowers

     122   

7.10. Financial Condition of Borrowers

     122   

7.11. Bankruptcy, etc.

     122   

7.12. Discharge of Guaranty Upon Sale of Guarantor

     123   

SECTION 8. EVENTS OF DEFAULT AND REMEDIES

     123   

8.1. Events of Default

     123   

8.2. Remedies Upon Event of Default

     126   

8.3. Company’s Right to Cure

     127   

SECTION 9. AGENTS

     127   

9.1. Appointment of Agents

     127   

9.2. Powers and Duties

     128   

9.3. General Immunity

     128   

9.4. Agents Entitled to Act as Lender

     130   

9.5. Lenders’ Representations, Warranties and Acknowledgment

     130   

9.6. Right to Indemnity

     131   

9.7. Successor Administrative Agent and Collateral Agent

     131   

9.8. Collateral Documents and Guaranty

     132   

 

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SECTION 10. MISCELLANEOUS

     133   

10.1. Notices

     133   

10.2. Expenses

     134   

10.3. Indemnity

     135   

10.4. Set-Off

     136   

10.5. Amendments and Waivers

     136   

10.6. Successors and Assigns; Participations

     138   

10.7. Independence of Covenants

     141   

10.8. Survival of Representations, Warranties and Agreements

     141   

10.9. No Waiver; Remedies Cumulative

     142   

10.10. Marshalling; Payments Set Aside

     142   

10.11. Severability

     142   

10.12. Obligations Several; Independent Nature of Lenders’ Rights

     142   

10.13. Headings

     143   

10.14. APPLICABLE LAW

     143   

10.15. CONSENT TO JURISDICTION

     143   

10.16. WAIVER OF JURY TRIAL

     143   

10.17. Confidentiality

     144   

10.18. Usury Savings Clause

     145   

10.19. Counterparts

     145   

10.20. Effectiveness

     145   

10.21. Patriot Act

     145   

10.22. Electronic Execution of Assignments

     146   

10.23. Public-Side Lenders

     146   

10.24. Amendment and Restatement

     146   

10.25. Reaffirmation and Grant of Security Interests

     147   

 

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APPENDICES:    A-1    Term Loan Commitments    A-2    Revolving Commitments    B
   Notice Addresses    C    Original Sections 3.1(g) and 3.1(h) SCHEDULES:   
3.1(g)    Closing Date Mortgaged Properties    4.1    Jurisdictions of
Organization    4.6    Litigation    4.9    Environmental Matters    4.10   
Taxes    4.11    ERISA Compliance    4.12    Subsidiaries and Other Equity
Investments    6.1(b)    Existing Liens    6.2(f)    Existing Investments   
6.3(b)    Existing Indebtedness    6.5(l)    Dispositions    6.8    Transactions
with Affiliates    6.9    Existing Restrictions EXHIBITS:    A-1    Funding
Notice    A-2    Conversion/Continuation Notice    A-3    Issuance Notice    B-1
   [Reserved]    B-2    [Reserved]    B-3    [Reserved]    B-4    Tranche C-2
Term Loan Note    B-5    Non-Extended Revolving Loan Note    B-6    Tranche C-2
PIK Term Loan Note    B-7    Tranche C-3 PIK Term Loan Note    B-8    Extended
Revolving Loan Note    B-9    Tranche C-3 Term Loan Note    C    Compliance
Certificate    D    Effective Date Opinions of Counsel    E    Assignment
Agreement    F    Certificate Re Non-bank Status    G-1    Effective Date
Certificate    G-2    Effective Date Solvency Certificate    H    [Reserved]   
I    Mortgage    J    Counterpart Agreement    K    Intercompany Note    L   
Joinder Agreement    M    Election to Participate    N    Election to Terminate

 

 

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THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT

This THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT, dated as of
February 13, 2007, amended and restated as of December 7, 2010 and further
amended and restated as of September 5, 2014, is entered into by and among
EDUCATION MANAGEMENT LLC, a Delaware limited liability company (“Company”),
EDUCATION MANAGEMENT CORPORATION, a Pennsylvania corporation (“Education
Management”), EDUCATION MANAGEMENT HOLDINGS LLC, a Delaware limited liability
company (“Holdings”), CERTAIN SUBSIDIARIES OF HOLDINGS, as Guarantors, the
Designated Subsidiary Borrowers party hereto from time to time (together with
Company, “Borrowers”), the Lenders party hereto from time to time, CREDIT SUISSE
SECURITIES (USA) LLC (“Credit Suisse”), as Syndication Agent (in such capacity,
“Syndication Agent”), and U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”), as
Administrative Agent (as successor to BNP PARIBAS (“BNPP”) in such capacity and
together with its permitted successors in such capacity, “Administrative Agent”)
and as Collateral Agent (as successor to BNPP in such capacity and together with
its permitted successors in such capacity, “Collateral Agent”).

RECITALS:

WHEREAS, capitalized terms used in these Recitals shall have the respective
meanings set forth for such terms in Section 1.1 hereof;

WHEREAS, simultaneously with the consummation of the Transaction, Company,
Holdings and certain subsidiaries of Holdings entered into that certain Credit
and Guaranty Agreement, dated as of June 1, 2006 (as amended, supplemented or
otherwise modified from time to time prior to the Effective Date, the “Original
Credit Agreement”), with the lenders party thereto from time to time (the
“Original Lenders”), Credit Suisse, as syndication agent, BNPP, as
administrative agent and collateral agent, and Merrill Lynch Capital Corporation
and Bank of America, N.A., as documentation agents, pursuant to which the
Original Lenders extended or committed to extend certain credit facilities to
the Borrowers;

WHEREAS, the Original Credit Agreement was amended and restated in the form of
the Amended and Restated Credit and Guaranty Agreement, dated as of February 13,
2007 and further amended and restated in the form of the Second Amended and
Restated Credit and Guaranty Agreement, dated as of December 7, 2010 (as further
amended, restated, supplemented or otherwise modified from time to time prior to
the date hereof, the “Existing ARCA”);

WHEREAS, pursuant to the Amendment Agreement (as defined below), and upon
satisfaction of the conditions set forth therein, the Existing ARCA is being
further amended and restated in the form of this Agreement;

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WHEREAS, Company has agreed to secure all of its Obligations by granting to
Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on
substantially all of its assets, including a pledge of all of the Equity
Interests in each of its Included Domestic Subsidiaries and 66% of all the
Equity Interests in each of its Foreign Subsidiaries; and

WHEREAS, Guarantors have agreed to guarantee the obligations of Borrowers
hereunder and to secure their respective Obligations by granting to Collateral
Agent, for the benefit of Secured Parties, a First Priority Lien on
substantially all of their respective assets, including a pledge of all of the
Equity Interests in each of their respective Included Domestic Subsidiaries
(including each Borrower) and 66% of all the Equity Interests in each of their
respective Foreign Subsidiaries;

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, the parties hereto agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

1.1. Definitions.

The following terms used herein, including in the preamble, recitals, exhibits
and schedules hereto, shall have the following meanings:

“Additional Margin” means, with respect to PIK Loans, 1.0% per annum.

“Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with
respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum
obtained by dividing (and rounding upward to the next whole multiple of 1/16 of
1%) (a) (i) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the
rate determined by Administrative Agent to be the offered rate which appears on
the page of the Telerate Screen which displays an average British Bankers
Association Interest Settlement Rate (such page currently being page number 3740
or 3750, as applicable) for deposits (for delivery on the first day of such
period) with a term equivalent to such period in Dollars, determined as of
approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, or (ii) in the event the rate referenced in the preceding
clause (i) does not appear on such page or service or if such page or service
shall cease to be available, the rate per annum (rounded to the nearest 1/100 of
1%) equal to the rate determined by Administrative Agent to be the offered rate
on such other page or other service which displays an average British Bankers
Association Interest Settlement Rate for deposits (for delivery on the first day
of such period) with a term equivalent to such period in Dollars, determined as
of approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, or (iii) in the event the rates referenced in the preceding
clauses (i) and (ii) are not available, the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in
the London interbank market by BNPP for deposits (for delivery on the first day
of the relevant period) in Dollars of amounts in same day funds

 

2

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comparable to the principal amount of the applicable Loan of Administrative
Agent, in its capacity as a Lender, for which the Adjusted Eurodollar Rate is
then being determined with maturities comparable to such period as of
approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, by (b) an amount equal to (i) one minus (ii) the Applicable
Reserve Requirement. Notwithstanding the foregoing, with respect to any
determination of the Adjusted Eurodollar Rate with respect to Tranche C-3 Term
Loans, the Adjusted Eurodollar Rate shall not be less than 1.25% per annum.

“Administrative Agent” as defined in the preamble hereto.

“Affected Lender” as defined in Section 2.18(b).

“Affected Loans” as defined in Section 2.18(b).

“Affiliate” means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or
indirectly, of the power (i) to vote 10% or more of the Securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.

“Agency Assignment Agreement” means that certain Agency Assignment Agreement,
dated as of June 30, 2014.

“Agent” means each of Administrative Agent, Syndication Agent, Arrangers and
Collateral Agent.

“Aggregate Amounts Due” as defined in Section 2.17.

“Aggregate Payments” as defined in Section 7.2.

“Agreement” means this Third Amended and Restated Credit and Guaranty Agreement,
dated as of September 5, 2014, as it may be amended, amended and restated,
supplemented or otherwise modified from time to time.

“Amendment Agreement” means the Amendment Agreement, dated as of September 5,
2014, among the parties thereto.

“Amendment Agreement Effective Date” has the meaning assigned to that term in
the Amendment Agreement.

“Applicable Margin” means (a) with respect to Tranche C-2 Cash Pay Term Loans
that are Eurodollar Rate Loans, 4.00% per annum, which shall be reduced to
3.50% per annum if Company obtains a public corporate family rating of at least
Ba3 (stable) from Moody’s and a public corporate credit rating of at least BB
(stable) from S&P; (b) with respect

 

3

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to Tranche C-2 Cash Pay Term Loans that are Base Rate Loans, an amount equal to
(i) the Applicable Margin for Eurodollar Rate Loans as set forth in clause
(a) above, as applicable, minus (ii) 1.00% per annum; (c) with respect to
Tranche C-2 PIK Term Loans that are Eurodollar Rate Loans, an amount equal to
(i) 4.00% per annum, which shall be reduced to 3.50% per annum if Company
obtains a public corporate family rating of at least Ba3 (stable) from Moody’s
and a public corporate credit rating of at least BB (stable) from S&P, plus
(ii) the Additional Margin; (d) with respect to Tranche C-2 PIK Term Loans that
are Base Rate Loans, an amount equal to (i) the Applicable Margin for Eurodollar
Rate Loans as set forth in clause (c) above, as applicable, minus (ii) 1.00% per
annum; (e) with respect to Tranche C-3 Cash Pay Term Loans that are Eurodollar
Rate Loans, 7.00% per annum; (f) with respect to Tranche C-3 Cash Pay Term Loans
that are Base Rate Loans, 6.00% per annum; (g) with respect to Tranche C-3 PIK
Term Loans that are Eurodollar Rate Loans, an amount equal to (i) 7.00% per
annum, plus (ii) the Additional Margin; (h) with respect to Tranche C-3 PIK Term
Loans that are Base Rate Loans, an amount equal to (i) 6.00% per annum, plus
(ii) the Additional Margin; (i) with respect to Non-Extended Revolving Loans
that are Eurodollar Rate Loans, 4.00% per annum, which shall be reduced to
3.50% per annum if Company obtains a public corporate family rating of at least
Ba3 (stable) from Moody’s and a public corporate credit rating of at least BB
(stable) from S&P; (j) with respect to Non-Extended Revolving Loans that are
Base Rate Loans, an amount equal to (i) the Applicable Margin for Eurodollar
Rate Loans as set forth in clause (i) above, as applicable, minus (ii) 1.00% per
annum; (k) with respect to Extended Revolving Loans that are Eurodollar Rate
Loans, an amount equal to (i) 4.00% per annum, which shall be reduced to
3.50% per annum if Company obtains a public corporate family rating of at least
Ba3 (stable) from Moody’s and a public corporate credit rating of at least BB
(stable) from S&P, plus (ii) the Additional Margin; and (l) with respect to
Extended Revolving Loans that are Base Rate Loans, an amount equal to (i) the
Applicable Margin for Eurodollar Rate Loans as set forth in clause (k) above, as
applicable, minus (ii) 1.00% per annum.

“Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate
Loan, the maximum rate, expressed as a decimal, at which reserves (including,
without limitation, any basic marginal, special, supplemental, emergency or
other reserves) are required to be maintained with respect thereto against
“Eurocurrency liabilities” (as such term is defined in Regulation D) under
regulations issued from time to time by the Board of Governors or other
applicable banking regulator. Without limiting the effect of the foregoing, the
Applicable Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of liabilities
which includes deposits by reference to which the applicable Adjusted Eurodollar
Rate or any other interest rate of a Loan is to be determined, or (ii) any
category of extensions of credit or other assets which include Eurodollar Rate
Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credit for proration, exceptions or offsets that may be available
from time to time to the applicable Lender. The rate of interest on Eurodollar
Rate Loans shall be adjusted automatically on and as of the effective date of
any change in the Applicable Reserve Requirement.

 

4

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“Applicable Revolving Commitment Fee Percentage” means with respect to Extended
Revolving Commitments and Non-Extended Revolving Commitments, a percentage per
annum, determined by reference to the Total Leverage Ratio in effect from time
to time as set forth in the table below:

 

Total Leverage Ratio

   Applicable Revolving Commitment
Fee Percentage  

³ 6.00:1.00

     0.50 % 

< 6.00:1.00

³ 5.00:1.00

     0.50 % 

< 5.00:1.00

³ 4.00:1.00

     0.375 % 

< 4.00:1.00

     0.375 % 

No change in the Applicable Revolving Commitment Fee Percentage shall be
effective until three Business Days after the date on which Administrative Agent
shall have received the applicable financial statements and a Compliance
Certificate pursuant to Section 5.2(b) calculating the Total Leverage Ratio. At
any time Company has not submitted to Administrative Agent the applicable
information as and when required under Section 5.2(b), the Applicable Revolving
Commitment Fee Percentage shall be determined, where applicable, as if the Total
Leverage Ratio were in excess of 6.00:1.00. Within one Business Day of receipt
of the applicable information under Section 5.2(b), Administrative Agent shall
give each Lender telefacsimile or telephonic notice (confirmed in writing) or
electronic communication (including e-mail and Internet or intranet websites) of
the Applicable Revolving Commitment Fee Percentage in effect for the applicable
Class from such date.

“Arrangers” means, (a) in respect of the Existing ARCA, collectively, Credit
Suisse and GSCP in their capacities as joint lead arrangers and bookrunners and
(b) in respect of this Agreement, collectively, Barclays in its capacity as lead
arranger and a joint bookrunner and GSLP, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and BNPP SC in their capacities as joint bookrunners.

“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and
leaseback, assignment, conveyance, transfer or other disposition to, or any
exchange of property with, any Person (other than a Credit Party), in one
transaction or a series of transactions, of all or any part of Holdings’ or any
of its Subsidiaries’ businesses, assets or properties of any kind, whether real,
personal, or mixed and whether tangible or intangible, whether now owned or
hereafter acquired, including, without limitation, the Equity Interests in any
of Holdings’ Subsidiaries, other than (i) inventory (or other assets) sold or
leased in the ordinary course of business (excluding any such sales by
operations or divisions discontinued or to be discontinued), (ii) sales of
assets in one transaction or a series of related transactions for consideration
of less than $1,000,000, and (iii) sales of other assets for aggregate
consideration of less than $5,000,000 in the aggregate during any Fiscal Year.

 

5

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“Assignment Agreement” means an Assignment and Assumption Agreement
substantially in the form of Exhibit E, with such amendments or modifications as
may be approved by Administrative Agent.

“Assignment Effective Date” as defined in Section 10.6(b).

“Attributable Indebtedness” means, on any date, in respect of any Capitalized
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP.

“Bank of America” means Bank of America, N.A.

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Barclays” means Barclays Capital, the investment banking division of Barclays
Bank PLC.

“Base Rate” means, for any day, a rate per annum equal to the highest of (i) the
Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in
effect on such day plus  1⁄2 of 1% and (iii) the Adjusted Eurodollar Rate for an
interest period of one month plus 1.00%. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
on the effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.

“Base Rate Loan” means a Loan bearing interest at a rate determined by reference
to the Base Rate.

“Beneficiary” means each Agent, Issuing Bank, Lender and Lender Counterparty.

“Bilateral LC Facilities” means (i) the cash collateralized Letter of Credit
Facility Agreement, dated as of November 30, 2011 (as amended through the date
hereof and as further amended, modified or amended and restated from time to
time), among the Company, the guarantors party thereto and Bank of America, N.A.
and (ii) the cash collateralized Letter of Credit Facility Agreement, dated as
of March 9, 2012 (as amended through the date hereof and as further amended,
modified or amended and restated from time to time), among the Company, the
guarantors party thereto and BNP Paribas.

“BNPP” as defined in the preamble hereto.

“BNPP SC” means BNP Paribas Securities Corp.

“Board of Governors” means the Board of Governors of the Federal Reserve System
of the United States, or any successor thereto.

 

6

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“Borrowers” as defined in the preamble hereto.

“Business Day” means (i) any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted Eurodollar
Rate or any Eurodollar Rate Loans, the term “Business Day” shall mean any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the London interbank market.

“Capital Expenditures” means, for any period, the aggregate of all expenditures
of Holdings and its Subsidiaries during such period determined on a consolidated
basis that, in accordance with GAAP, are or should be included in “purchase of
property, plant and equipment” or similar items reflected in the consolidated
statement of cash flows of Holdings and its Subsidiaries; provided that the term
“Capital Expenditures” shall not include (i) expenditures made in connection
with the replacement, substitution, restoration or repair of assets to the
extent financed with (x) insurance proceeds paid on account of the loss of or
damage to the assets being replaced, restored or repaired or (y) awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced, (ii) the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment to the extent that the
gross amount of such purchase price is reduced by the credit granted by the
seller of such equipment for the equipment being traded in at such time,
(iii) expenditures that constitute any part of Consolidated Lease Expense,
(iv) expenditures that are accounted for as capital expenditures by Holdings or
any Subsidiary and that actually are paid for by a Person other than Holdings or
any Subsidiary and for which neither Holdings nor any Subsidiary has provided or
is required to provide or incur, directly or indirectly, any consideration or
obligation to such Person or any other Person (whether before, during or after
such period), (v) the book value of any asset owned by Holdings or any
Subsidiary prior to or during such period to the extent that such book value is
included as a capital expenditure during such period as a result of such Person
reusing or beginning to reuse such asset during such period without a
corresponding expenditure actually having been made in such period, provided
that (A) any expenditure necessary in order to permit such asset to be reused
shall be included as a Capital Expenditure during the period in which such
expenditure actually is made and (B) such book value shall have been included in
Capital Expenditures when such asset was originally acquired, (vi) expenditures
that constitute Permitted Acquisitions or (vii) the purchase of plant, property
or equipment to the extent financed with the proceeds of Dispositions that are
not required to be applied to prepay Term Loans pursuant to Section 2.14.

“Capitalized Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases; provided that for all purposes
hereunder the amount of obligations under any Capitalized Lease shall be the
amount thereof accounted for as a liability in accordance with GAAP as in effect
on the Second ARCA Effective Date.

“Cash Equivalents” means, as at any date of determination, (a) marketable
securities (i) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or any member nation of the
European Union or (ii) issued by any

 

7

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agency of the United States or any member nation of the European Union, the
obligations of which are backed by the full faith and credit of the United
States or such member nation of the European Union, in each case maturing within
one year after such date; (b) marketable direct obligations issued by any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof or by any foreign government having an
investment grade rating from either S&P or Moody’s, in each case maturing within
one year after such date and having, at the time of the acquisition thereof, a
rating of at least A-2 from S&P or at least P-2 from Moody’s; (c) commercial
paper maturing no more than one year from the date of creation thereof and
having, at the time of the acquisition thereof, a rating of at least A-2 from
S&P or at least P-2 from Moody’s; (d) certificates of deposit or bankers’
acceptances maturing within one year after such date and issued or accepted by
any Lender or by any commercial bank organized under the laws of the United
States of America, any state thereof, the District of Columbia or any member
nation of the Organization for Economic Cooperation and Development that (i) is
at least “adequately capitalized” (as defined in the regulations of its primary
Federal banking regulator) and (ii) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; and (e) shares of any money market
mutual fund that (i) has substantially all of its assets invested continuously
in the types of investments referred to in clauses (a) and (b) above, (ii) has
net assets of not less than $500,000,000, and (iii) has the highest rating
obtainable from either S&P or Moody’s.

“Cash Management Obligations” means obligations owed by Holdings, Company or any
of its Subsidiaries to any Lender or any Affiliate of a Lender in respect of any
overdraft and related liabilities arising from treasury, depository and cash
management services or any automated clearing house transfers of funds.

“Casualty Event” means any event that gives rise to the receipt by Holdings,
Company or any of its Subsidiaries of any insurance proceeds or condemnation
awards in respect of any equipment, fixed assets or real property (including any
improvements thereon) to replace or repair such equipment, fixed assets or real
property.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as subsequently amended.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

“Certificate re Non-Bank Status” means a certificate substantially in the form
of Exhibit F.

“Change of Control” means, at any time, (a) (i) prior to the consummation of a
Qualifying IPO of Holdings or any direct or indirect parent of Holdings,
including without limitation, Education Management (each of Holdings and any
such parent, a “Parent”), the Sponsors shall cease to beneficially own and
control at least 51% on a fully diluted basis of the voting interests in the
Equity Interests of each such Parent and (ii) after the consummation of a
Qualifying IPO of any Parent, the Sponsors shall cease to beneficially own and
control on a fully diluted basis at least 35% of the voting interests in the
Equity Interests of such Parent; (b) any

 

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“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act) other than the Sponsors (i) shall have acquired beneficial
ownership of 35% or more on a fully diluted basis of the voting interest in the
Equity Interests of such Parent, and the percentage of the voting interest in
the Equity Interests of such Parent acquired by such person or group exceeds, in
the aggregate, the percentage held by the Sponsors taken as a whole or
(ii) shall have obtained the power (whether or not exercised) to elect a
majority of the members of the board of directors (or similar governing body) of
such Parent; (c) the majority of the seats (other than vacant seats) on the
board of directors (or similar governing body) of any Parent shall cease to be
occupied by Persons who either (i) were members of the board of directors of
such Parent on the Closing Date (after giving effect to the Transaction) or
(ii) were nominated for election by the board of directors of such Parent, a
majority of whom were directors on the Closing Date (after giving effect to the
Transaction) or whose election or nomination for election was previously
approved by a majority of such directors; (d) Holdings shall cease to
beneficially own and control 100% on a fully diluted basis of the voting
interests in the Equity Interests of Company; or (e) any “change of control” (or
any comparable term) in the Existing Senior Notes Indenture or New Senior Notes
Indenture.

“Class” means (a) with respect to Lenders, each of the following classes of
Lenders: (i) Lenders having Tranche C-2 Cash Pay Term Loan Exposure,
(ii) Lenders having Tranche C-2 PIK Term Loan Exposure, (iii) Lenders having
Tranche C-3 Cash Pay Term Loan Exposure, (iv) Lenders having Tranche C-3 PIK
Term Loan Exposure, (v) Lenders having Non-Extended Revolving Exposure,
(vi) Lenders having Extended Revolving Exposure and (vii) Lenders having Other
New Term Loan Exposure of each applicable Series, (b) with respect to Loans,
each of the following classes of Loans: (i) Tranche C-2 Cash Pay Term Loans,
(ii) Tranche C-2 PIK Term Loans, (iii) Tranche C-3 Cash Pay Term Loans,
(iv) Tranche C-3 PIK Term Loans, (v) Non-Extended Revolving Loans, (vi) Extended
Revolving Loans and (vii) each Series of Other New Term Loans and (c) with
respect to Revolving Commitments, each of the following classes of Revolving
Commitments: (i) Non-Extended Revolving Commitments and (ii) Extended Revolving
Commitments.

“Closing Date” means the date of the initial Credit Extension under the Original
Credit Agreement, which occurred on June 1, 2006.

“Closing Date Mortgaged Property” as defined in Original Section 3.1(g).

“Collateral” means, collectively, all of the real, personal and mixed property
(including Equity Interests) in which Liens are purported to be granted pursuant
to the Collateral Documents as security for the Obligations.

“Collateral Agent” as defined in the preamble hereto.

“Collateral Documents” means the Pledge and Security Agreement, the Mortgages,
and all other instruments, documents and agreements delivered by any Credit
Party pursuant to this Agreement or any of the other Credit Documents in order
to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any
real, personal or mixed property of that Credit Party as security for the
Obligations.

 

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“Commitment” means any Revolving Commitment or Term Loan Commitment.

“Company” as defined in the preamble hereto.

“Compliance Certificate” means a Compliance Certificate substantially in the
form of Exhibit C.

“Consolidated EBITDA” means, for any period, the Consolidated Net Income for
such period, plus:

(a) without duplication and to the extent already deducted (and not added back)
in arriving at such Consolidated Net Income, the sum of the following amounts
for such period:

(i) total interest expense and, to the extent not reflected in such total
interest expense, any losses on hedging obligations or other derivative
instruments entered into for the purpose of hedging interest rate risk, net of
interest income and gains on such hedging obligations, and costs of surety bonds
in connection with financing activities,

(ii) provision for taxes based on income, profits or capital of Holdings and its
Subsidiaries, including state, franchise and similar taxes (such as the
Pennsylvania capital tax) and foreign withholding taxes paid or accrued during
such period,

(iii) depreciation and amortization,

(iv) other non-cash charges, including non-cash asset impairment charges and
write-offs (but excluding any non-cash charge to the extent that it represents
an accrual or reserve for potential cash items in any future period or
amortization of a prepaid cash item that was paid in a prior period),

(v) severance, relocation costs and curtailments or modifications to pension and
post-retirement employee benefit plans,

(vi) restructuring charges or reserves (including restructuring costs related to
acquisitions after the Closing Date and to closure or consolidation of
facilities),

(vii) other unusual or non-recurring charges during such period identified in
reasonable detail in the applicable Compliance Certificate,

(viii) any losses attributable to minority interests,

(ix) the amount of management, monitoring, consulting and advisory fees and
related expenses paid to the Sponsors,

(x) any costs or expenses incurred by Holdings or any of its Subsidiaries
pursuant to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement or any stock subscription or
shareholder agreement, to the extent that such costs or expenses are funded with
cash proceeds contributed to the capital of Holdings or net cash proceeds of an
issuance of Equity Interests of Holdings (other than Disqualified Equity
Interests),

 

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(xi) cash fees and expenses incurred in connection with the Transaction,

(xii) any non-cash purchase accounting adjustment and any step-ups with respect
to re-valuing assets and liabilities in connection with the Transaction or any
Investment permitted under Section 6.2, and

(xiii) any non-cash compensation costs or expenses under Statement of Financial
Accounting Standards No 123(R), “Share Based payment”, pursuant to any
management equity plan or stock option plan or any other employee benefit plan
or agreement or any stock or shareholder agreement, less

(b) without duplication and to the extent included in arriving at such
Consolidated Net Income, the sum of the following amounts for such period:

(i) unusual or non-recurring gains,

(ii) non-cash gains (excluding any non-cash gain to the extent it represents the
reversal of an accrual or reserve for a potential cash item that reduced
Consolidated EBITDA in any prior period),

(iii) gains on asset sales (other than asset sales in the ordinary course of
business),

(iv) any net after-tax income from the early extinguishment of Indebtedness or
hedging obligations or other derivative instruments, and

(v) all gains attributable to minority interests.

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive)
equal to: (a) the sum, without duplication, of the amounts for such period of
(i) Consolidated EBITDA, plus (ii) the Consolidated Working Capital Adjustment,
plus (iii) the IPO Net Cash Proceeds to the extent applied to prepay
Indebtedness for borrowed money and any premium, make-whole or penalty payments
actually paid in cash in connection with such prepayment, minus (b) the sum,
without duplication, of the amounts for such period of (i) repayments of
Indebtedness for borrowed money (including (A) the principal component of
payments in respect of Capitalized Leases and (B) the amount of any mandatory
prepayment of Term Loans pursuant to Section 2.14(a) to the extent required due
to a Disposition that resulted in an increase to Consolidated Net Income and not
in excess of the amount of such increase, but excluding (1) all other
prepayments of Term Loans and (2) all repayments of Revolving Loans except to
the extent the Revolving Commitments are permanently reduced in connection with
such repayments), (ii) Capital Expenditures (net of any proceeds of any related
financings with respect to such expenditures), other than Capital Expenditures
financed with Cumulative Excess Cash Flow that is Not Otherwise Applied pursuant
to Section 6.15(a)(y), (iii) Consolidated Interest Expense, (iv) provisions for
current taxes based on income of Holdings and its Subsidiaries and

 

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payable in cash with respect to such period, (v) the amount of Investments and
acquisitions made during such period pursuant to Section 6.2 (other than
Section 6.2(a)) to the extent that such Investments and acquisitions were
financed with internally generated cash flow of Holdings and its Subsidiaries,
(vi) cash payments by Holdings and its Subsidiaries during such period in
respect of long-term liabilities of Holdings and its Subsidiaries other than
Indebtedness, and (vii) the aggregate amount of any premium, make-whole or
penalty payments actually paid in cash by Holdings and its Subsidiaries during
such period that are required to be made in connection with any prepayment of
Indebtedness.

“Consolidated Interest Expense” means, for any period, total interest expense
(including that portion attributable to Capitalized Leases in accordance with
GAAP and capitalized interest), net of cash interest income, of Holdings and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Holdings and its Subsidiaries (but excluding the effects of any
discounting of Indebtedness resulting from the application of purchase
accounting in connection with the Transaction or any Permitted Acquisition),
including all commissions, discounts and other fees and charges owed with
respect to letters of credit and net costs under Swap Agreements, but excluding,
however, (i) any amount not payable in cash and (ii) any amounts referred to in
Section 2.11(d) payable on or before the Closing Date.

“Consolidated Lease Expense” means, for any period, all rental expenses of
Holdings and its Subsidiaries during such period under operating leases for real
or personal property, excluding real estate taxes, insurance costs and common
area maintenance charges and net of sublease income, other than (a) obligations
under vehicle leases entered into in the ordinary course of business, (b) all
such rental expenses associated with assets acquired pursuant to a Permitted
Acquisition to the extent such rental expenses relate to operating leases in
effect at the time of (and immediately prior to) such acquisition and related to
periods prior to such acquisition and (c) all obligations under Capitalized
Leases, all as determined on a consolidated basis in accordance with GAAP.

“Consolidated Net Income” means, for any period, (a) the net income (or loss) of
Holdings and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP, minus (b) (i) the
income (or loss) of any entity (other than a Subsidiary of Holdings) in which
any other Person (other than Holdings or any of its Subsidiaries) has a joint
interest to the extent that the declaration or payment of dividends or similar
distributions by such entity of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule, governmental regulation or Education Law
applicable to such entity, (ii) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary of Holdings or is merged into or
consolidated with Holdings or any of its Subsidiaries or that Person’s assets
are acquired by Holdings or any of its Subsidiaries, (iii) the income of any
Subsidiary of Holdings to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, governmental regulation or
Education Law applicable to that Subsidiary, and (iv) (to the extent not
included in clauses (i) through (iii) above) any net extraordinary gains or net
extraordinary losses.

 

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“Consolidated Total Debt” means, as of any date of determination, (a) the
aggregate principal amount of Indebtedness of Holdings and its Subsidiaries
outstanding on such date, determined on a consolidated basis in accordance with
GAAP (but excluding the effects of any discounting of Indebtedness resulting
from the application of purchase accounting in connection with the Transaction
or any Permitted Acquisition), consisting of Indebtedness for borrowed money,
obligations in respect of Capitalized Leases and debt obligations evidenced by
promissory notes or similar instruments, minus (b) the aggregate amount of cash
and Cash Equivalents (in each case, free and clear of all Liens, other than
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)) that are included in
the consolidated balance sheet of Holdings and its Subsidiaries as of such date.

“Consolidated Working Capital” means, at any date, the excess of (a) the sum of
all amounts (other than cash and Cash Equivalents) that would, in conformity
with GAAP, be set forth opposite the caption “total current assets” (or any like
caption) on a consolidated balance sheet of Holdings and its Subsidiaries at
such date over (b) the sum of all amounts that would, in conformity with GAAP,
be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of Holdings and its Subsidiaries on
such date, including deferred revenue but excluding, without duplication,
(i) the current portion of any Funded Debt, (ii) all Indebtedness consisting of
Loans and Letter of Credit Usage to the extent otherwise included therein,
(iii) the current portion of interest and (iv) the current portion of current
and deferred income taxes.

“Consolidated Working Capital Adjustment” means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.

“Continuing Lender” means each Original Lender that has delivered a Lender
Consent Letter agreeing to convert all of the Original Term Loans made by such
Original Lender to Tranche C Term Loans.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

“Contributing Guarantors” as defined in Section 7.2.

“Control” as set forth in the definition of “Affiliate.”

“Conversion/Continuation Date” means the effective date of a continuation or
conversion, as the case may be, as set forth in the applicable
Conversion/Continuation Notice.

“Conversion/Continuation Notice” means a Conversion/Continuation Notice
substantially in the form of Exhibit A-2.

 

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“Counterpart Agreement” means a Counterpart Agreement substantially in the form
of Exhibit J delivered by a Credit Party pursuant to Section 5.12.

“Credit Date” means the date of a Credit Extension.

“Credit Document” means any of this Agreement, the Notes, if any, the Collateral
Documents, any documents or certificates executed by Borrower in favor of
Issuing Bank relating to Letters of Credit, and all other documents, instruments
or agreements executed and delivered by a Credit Party for the benefit of any
Agent, Issuing Bank or any Lender in connection herewith.

“Credit Extension” means the making of a Loan or the issuing of a Letter of
Credit.

“Credit Party” means each Person (other than any Agent, Issuing Bank or any
Lender or any other representative thereof) from time to time party to a Credit
Document.

“Credit Suisse” as defined in the preamble hereto.

“Cumulative Excess Cash Flow” as defined in Section 6.6(i).

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time specified therein, or
both, would be an Event of Default.

“Defaulting Lender” means any Lender that has (a) failed to fund any portion of
Loans or participations in any Letter of Credit within one (1) Business Day of
the date required to be funded by it hereunder, (b) notified the Borrower, the
Administrative Agent or any Issuing Bank in writing that it does not intend to
comply with any of its obligations to fund any portion of Loans or
participations in any Letter of Credit under this Agreement or has made a public
statement to the effect that it does not intend to comply with such funding
obligations under this Agreement or under any other agreement in which it
commits to extend credit, (c) failed, within five (5) Business Days after a
request by the Administrative Agent or any Issuing Bank (with a copy to the
Company) to confirm that it will comply with the terms of this Agreement
relating to its obligations to fund prospective Loans and participations in then
outstanding Letters of Credit (provided that such request may not be sent unless
the Administrative Agent or the relevant Issuing Bank are aware that such Lender
has recently failed to comply with its funding obligations under another
syndicated loan facility or otherwise has a reasonable, good faith belief that
such Lender will not comply with its funding obligations under this Agreement),
(d) otherwise failed to pay over to the Administrative Agent, any Issuing Bank
or any other Lender any other amount required to be paid by it hereunder within
one (1) Business Day of the date

 

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when due, or (e) become or is insolvent or has a parent company that has become
or is insolvent or become the subject of a bankruptcy or insolvency proceeding,
or has had a receiver, conservator, trustee or custodian appointed for it, or
has taken any action in furtherance of, or has indicated its consent to,
approval of or acquiescence in any such proceeding or appointment or has a
parent company that has become the subject of a bankruptcy or insolvency
proceeding or has had a receiver, conservator, trustee or custodian appointed
for it, or has taken any action in furtherance of, or has indicated its consent
to, approval of or acquiescence in any such proceeding or appointment.

“Deposit Account” means a demand, time, savings, passbook or like account with a
bank, savings and loan association, credit union or like organization, other
than an account evidenced by a negotiable certificate of deposit.

“Designated Non-Cash Consideration” means the fair market value of non-cash
consideration received by Company or a Subsidiary in connection with a
Disposition pursuant to Section 6.5(k) that is designated as Designated Non-Cash
Consideration pursuant to a certificate of a Responsible Officer, setting forth
the basis of such valuation (which amount will be reduced by the fair market
value of the portion of the non-cash consideration converted to cash within 180
days following the consummation of the applicable Disposition).

“Designated Subsidiary Borrower” means any Qualified Subsidiary as to which an
Election to Participate shall have been delivered to Administrative Agent in
accordance with Section 2.25; provided that the status of any of the foregoing
as a Designated Subsidiary Borrower shall terminate if and when an Election to
Terminate is delivered to Administrative Agent in accordance with Section 2.25.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction and any sale of Equity
Interests) of any property by any Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith; provided that
“Disposition” and “Dispose” shall not be deemed to include any issuance by
Holdings of any of its Equity Interests to another Person.

“Disqualified Equity Interests” means any Equity Interest which, by its terms
(or by the terms of any security or other Equity Interests into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition (a) matures or is mandatorily redeemable (other than solely for
Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise
(except as a result of a change of control or asset sale so long as any rights
of the holders thereof upon the occurrence of a change of control or asset sale
event shall be subject to the prior repayment in full of the Loans and all other
Obligations that are accrued and payable and the termination of the
Commitments), (b) is redeemable at the option of the holder thereof (other than
solely for Qualified Equity Interests), in whole or in part, (c) provides for
the scheduled payments of dividends in cash, or (d) is or becomes convertible
into or exchangeable for Indebtedness or any other Equity Interests that would
constitute Disqualified Equity Interests, in each case, prior to the date that
is 180 days after the Tranche C-2 Term Loan Maturity Date or, if later, the
latest New Term Loan Maturity Date.

 

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“Dollars” and the sign “$” mean the lawful money of the United States of
America.

“Domestic Subsidiary” means any Subsidiary organized under the laws of the
United States of America, any State thereof or the District of Columbia.

“Education Laws” as defined in Section 5.8.

“Education Management” as defined in the preamble hereto.

“Effective Date” means February 13, 2007.

“Effective Date Certificate” means an Effective Date Certificate substantially
in the form of Exhibit G-1.

“Election to Participate” means an Election to Participate substantially in the
form of Exhibit M hereto.

“Election to Terminate” means an Election to Terminate substantially in the form
of Exhibit N hereto.

“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) and (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; provided, that no Affiliate of (x) Holdings or
(y) any Sponsor shall be an Eligible Assignee.

“Environmental Claim” means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any Governmental Authority or any other
Person, arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law; (ii) in connection with any Hazardous
Material or any actual or alleged Hazardous Materials Activity; or (iii) in
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution, the protection of the environment, natural
resources, or, to the extent relating to exposure to Hazardous Materials, human
health or to the release of any materials into the environment, including those
related to hazardous substances or wastes, air emissions and discharges to waste
or public systems.

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

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“Equity Contributions” means, collectively, (a) the contribution by the Equity
Investors on or prior to the Closing Date of an aggregate amount of cash of not
less than 27.5% of the total capitalization of Holdings and its Subsidiaries on
a consolidated basis (excluding for the avoidance of doubt any Letters of Credit
issued on the Closing Date) to EM Acquisition Corporation, Holdings or one or
more direct or indirect holding company parents of Holdings, and (b) the further
contribution to Company of any portion of such cash contribution proceeds not
directly received by Company or used by Holdings to pay Transaction Expenses.

“Equity Interests” means, with respect to any Person, all of the shares,
interests, rights, participations or other equivalents (however designated) of
capital stock of (or other ownership or profit interests or units in) such
Person and all of the warrants, options or other rights for the purchase,
acquisition or exchange from such Person of any of the foregoing (including
through convertible securities).

“Equity Investors” means the Sponsors and the Management Stockholders.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is under common control with any Credit Party within the meaning of Section 414
of the Internal Revenue Code or Section 4001 of ERISA.

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Credit Party or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Credit Party or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Credit
Party or any ERISA Affiliate.

“Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by
reference to the Adjusted Eurodollar Rate.

“Event of Default” means each of the conditions or events set forth in
Section 8.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and any successor statute.

 

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“Excluded Subsidiary” means (a) any Subsidiary that directly owns or operates a
school and as such is restricted by applicable Law or applicable accreditation
requirements or other Education Laws from guaranteeing the Obligations, (b) any
Domestic Subsidiary that is a Subsidiary of a Foreign Subsidiary and (c) any
inactive Subsidiary having less than $100,000 of assets.

“Existing ARCA” has the meaning provided in the recitals to this Agreement.

“Existing Senior Notes” means the Company’s Senior Cash Pay/PIK Notes due 2018.

“Existing Senior Notes Indenture” means the Indenture for the Existing Senior
Notes, dated as of March 5, 2013.

“Extended Revolving Commitment” means the commitment of an Extended Revolving
Lender to make or otherwise fund any Extended Revolving Loan and to acquire
participations in Letters of Credit hereunder, and “Extended Revolving
Commitments” means such commitments of all Extended Revolving Lenders in the
aggregate. The amount of each Extended Revolving Lender’s Extended Revolving
Commitment is set forth on Appendix A-2 under the caption “Extended Revolving
Commitment” or in the applicable Assignment Agreement or Joinder Agreement, as
applicable, subject to any adjustment or reduction pursuant to the terms and
conditions hereof, including the deemed increase of each Extended Revolving
Lender’s Extended Revolving Commitment on a ratable basis in respect of PIK
Interest paid on the Extended Revolving Loans pursuant to the terms and
conditions hereof (it being understood that if any Borrower elects to repay any
such PIK Interest prior to the Extended Revolving Commitment Termination Date
the amount of PIK Interest so repaid shall not be available to be reborrowed
hereunder).

“Extended Revolving Commitment Period” means the period from the Closing Date to
but excluding the Extended Revolving Commitment Termination Date.

“Extended Revolving Commitment Termination Date” means the earliest to occur of
(i) July 2, 2015, (ii) the date the Extended Revolving Commitments are
permanently reduced to zero pursuant to Section 2.13(b), and (iii) the date of
the termination of the Extended Revolving Commitments pursuant to Section 8.1.

“Extended Revolving Exposure” means, with respect to any Extended Revolving
Lender as of any date of determination, (i) prior to the termination of the
Extended Revolving Commitments, that Lender’s Extended Revolving Commitment; and
(ii) after the termination of the Extended Revolving Commitments, the sum of
(a) the aggregate outstanding principal amount of the Extended Revolving Loans
of that Lender and (b) the aggregate amount of all participations by that
Extended Revolving Lender in any outstanding Letters of Credit or any
unreimbursed drawing under any Letter of Credit.

 

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“Extended Revolving Lender” means a Lender with an Extended Revolving Commitment
or, if the Extended Revolving Commitments have terminated or expired, a Lender
with Extended Revolving Exposure.

“Extended Revolving Loan Note” means a promissory note in the form of Exhibit
B-8, as it may be amended, supplemented or otherwise modified from time to time.

“Extended Revolving Loans” means a Loan made by an Extended Revolving Lender
pursuant to its Extended Revolving Commitment (which, for the avoidance of
doubt, shall include all PIK Interest that has been added thereto as provided in
Section 2.8(h)).

“Fair Share Contribution Amount” as defined in Section 7.2.

“Fair Share” as defined in Section 7.2.

“Federal Funds Effective Rate” means for any day, the rate per annum (expressed,
as a decimal, rounded upwards, if necessary, to a whole multiple of 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided, (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to Administrative Agent, in its capacity as a Lender, on
such day on such transactions as determined by Administrative Agent.

“Financial Covenant Holiday” means the period beginning with the Test Period
ending on June 30, 2014 through and including the Test Period ending on June 30,
2015.

“First Priority” means, with respect to any Lien purported to be created in any
Collateral pursuant to any Collateral Document, that such Lien is the only Lien
to which such Collateral is subject, other than any Lien permitted pursuant to
Section 6.1.

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of Holdings and its Subsidiaries ending on
June 30 of each calendar year, subject to Section 6.11.

“Forecasts” as defined in Section 4.5(c).

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“Funded Debt” means all Indebtedness of Holdings and its Subsidiaries on a
consolidated basis for borrowed money that matures more than one year from the
date of its creation or matures within one year from such date that is renewable
or extendable, at the option of such Person, to a date more than one year from
such date or arises under a revolving credit or similar agreement that obligates
the lender or lenders to extend credit during a period of more than one year
from such date, including Indebtedness in respect of the Loans.

 

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“Funding Default” as defined in Section 2.22.

“Funding Guarantors” as defined in Section 7.2.

“Funding Notice” means a notice substantially in the form of Exhibit A-1.

“GAAP” means, subject to the limitations on the application thereof set forth in
Section 1.2, United States generally accepted accounting principles in effect as
of the date of determination thereof.

“Governmental Acts” means any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or Governmental Authority.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Governmental Authorization” means any permit, license, authorization, plan,
directive, consent order or consent decree of or from any Governmental
Authority.

“Grantor” as defined in the Pledge and Security Agreement.

“GSCP” as defined in the preamble hereto.

“GSLP” means Goldman Sachs Lending Partners LLC.

“Guarantee” means, as to any Person, without duplication, (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other monetary obligation, (ii) to purchase or
lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or monetary other obligation of the payment or
performance of such Indebtedness or other monetary obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or other monetary obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other monetary obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other monetary obligation of any other Person, whether or not
such Indebtedness or monetary other obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien);

 

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provided that the term “Guarantee” shall not include endorsements for collection
or deposit, in either case in the ordinary course of business, or customary and
reasonable indemnity obligations in effect on the Closing Date or entered into
in connection with any acquisition or disposition of assets permitted under this
Agreement (other than such obligations with respect to Indebtedness). The amount
of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

“Guaranteed Obligations” as defined in Section 7.1.

“Guarantor Subsidiary” means each Guarantor other than Holdings and Education
Management.

“Guarantors” means each of Education Management, Holdings, Company (in the case
of Obligations of the Designated Subsidiary Borrowers) and each other Domestic
Subsidiary of Holdings (other than Excluded Subsidiaries and the relevant
Designated Subsidiary Borrower in the case of its Obligations).

“Guaranty” means the guaranty of each Guarantor set forth in Section 7.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or pollutants, including petroleum
or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hazardous Materials Activity” means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective action or
response action with respect to any of the foregoing.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at
any time or from time to time may be contracted for, charged, or received under
the laws applicable to any Lender which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.

“Historical Financial Statements” means as of the Closing Date, (i) the audited
financial statements of Holdings and its Subsidiaries, for the immediately
preceding three Fiscal Years, consisting of a consolidated balance sheet and the
related consolidated statements of income, stockholders’ equity and cash flows
for such Fiscal Years, and (ii) the unaudited financial statements of Holdings
and its Subsidiaries as at the most recently ended Fiscal

 

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Quarter, consisting of a consolidated balance sheet and the related consolidated
statements of income, stockholders’ equity and cash flows for the three-, six-
or nine-month period, as applicable, ending on such date, and, in the case of
clauses (i) and (ii), certified by the chief financial officer or treasurer of
Company that they fairly present, in all material respects, the financial
condition of Holdings and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments.

“Holdings” as defined in the preamble hereto.

“Holdings Restricted Payments Election” as defined in Section 6.6(c).

“Incentive Fee” as defined in Section 2.11(a).

“Included Domestic Subsidiary” means a Domestic Subsidiary that is not an
Excluded Subsidiary.

“Increased Amount Date” as defined in Section 2.24.

“Increased-Cost Lenders” as defined in Section 2.23.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) the maximum amount (after giving effect to any prior drawings or reductions
which may have been reimbursed) of all letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds, performance
bonds and similar instruments issued or created by or for the account of such
Person;

(c) net obligations of such Person under any Swap Agreement;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than (i) trade accounts payable in the ordinary
course of business and (ii) any earn-out obligation until such obligation
becomes a liability on the balance sheet of such Person in accordance with
GAAP);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements and mortgage,
industrial revenue bond, industrial development bond and similar financings),
whether or not such indebtedness shall have been assumed by such Person or is
limited in recourse;

(f) all Attributable Indebtedness;

 

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(g) all obligations of such Person in respect of Disqualified Equity Interests;
and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall (A) include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Person’s
liability for such Indebtedness is otherwise limited and only to the extent such
Indebtedness would be included in the calculation of Consolidated Total Debt and
(B) in the case of Holdings and its Subsidiaries, exclude all Indebtedness of a
Credit Party having a term not exceeding 364 days (inclusive of any roll-over or
extensions of terms) and made in the ordinary of business consistent with past
practice. The amount of any net obligation under any Swap Agreement on any date
shall be deemed to be the Swap Termination Value thereof as of such date. The
amount of Indebtedness of any Person for purposes of clause (e) shall be deemed
to be equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness and (ii) the fair market value of the property encumbered thereby
as determined by such Person in good faith.

“Indemnified Liabilities” means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
claims (including Environmental Claims), actions, judgments, suits, costs
(including the costs of any investigation, study, sampling, testing, abatement,
cleanup, removal, remediation or other response action necessary to remove,
remediate, clean up or abate any Hazardous Materials Activity), expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted against any such
Indemnitee, in any manner relating to or arising out of (i) this Agreement or
the other Credit Documents or the transactions contemplated hereby or thereby
(including the Lenders’ agreement to make Credit Extensions or the use or
intended use of the proceeds thereof, or any enforcement of any of the Credit
Documents (including any sale of, collection from, or other realization upon any
of the Collateral or the enforcement of the Guaranty)); or (ii) any
Environmental Claim or any Hazardous Materials Activity relating to or arising
from, directly or indirectly, any past or present activity, operation, land
ownership, or practice of Holdings or any of its Subsidiaries.

“Indemnitee” as defined in Section 10.3.

“IPO Net Cash Proceeds” means the Net Cash Proceeds of the initial public
offering of the common stock of Education Management consummated on October 7,
2009 which have been contributed to Holdings or Company.

“Installment” as defined in Section 2.12.

 

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“Intercompany Note” means a global promissory note substantially in the form of
Exhibit K evidencing Indebtedness owed among the Credit Parties.

“Interest Coverage Ratio” means, with respect to Holdings and its Subsidiaries
on a consolidated basis, as of the end of any fiscal quarter of Holdings for the
Test Period ending on such date, the ratio of (a) Consolidated EBITDA to
(b) Consolidated Interest Expense.

“Interest Payment Date” means with respect to (i) any Base Rate Loan, each
March 31, June 30, September 30 and December 31 of each year, commencing on the
first such date to occur after the Closing Date, and the final maturity date of
such Loan; and (ii) any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan; provided, in the case of each Interest Period of
longer than three months “Interest Payment Date” shall also include each date
that is three months, or an integral multiple thereof, after the commencement of
such Interest Period.

“Interest Period” means, in connection with a Eurodollar Rate Loan, an interest
period of one-, two-, three- or six-months (or nine- or twelve-months if
available to all Lenders), as selected by a Borrower in the applicable Funding
Notice or Conversion/Continuation Notice, (i) initially, commencing on the
Credit Date or Conversion/Continuation Date thereof, as the case may be; and
(ii) thereafter, commencing on the day on which the immediately preceding
Interest Period expires; provided, (a) if an Interest Period would otherwise
expire on a day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day unless no further Business Day occurs in such
month, in which case such Interest Period shall expire on the immediately
preceding Business Day; (b) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clauses (c) and (d), of this definition, end on the last
Business Day of a calendar month; (c) no Interest Period with respect to any
portion of any Class of Term Loans shall extend beyond such Class’s Term Loan
Maturity Date; and (d) no Interest Period with respect to any portion of any
Class of Revolving Loans shall extend beyond such Class’s Revolving Commitment
Termination Date.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement, interest rate hedging agreement
or other similar agreement or arrangement, each of which is for the purpose of
hedging the interest rate exposure associated with Holdings’ and its
Subsidiaries’ operations and not for speculative purposes.

“Interest Rate Determination Date” means, with respect to any Interest Period,
the date that is two Business Days prior to the first day of such Interest
Period.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to
the date hereof and from time to time hereafter, and any successor statute.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests or debt or other securities of another Person,
(b) a loan, advance or capital contribution to, Guarantee or assumption of
Indebtedness of, or purchase or other acquisition of any other

 

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debt or equity participation or interest in, another Person, including any
partnership or joint venture interest in such other Person (excluding, in the
case of Holdings and its Subsidiaries, loans, advances, or Indebtedness having a
term not exceeding 364 days (inclusive of any roll-over or extensions of terms)
and made to a Credit Party in the ordinary course of business consistent with
past practice) or (c) the purchase or other acquisition (in one transaction or a
series of transactions) of all or substantially all of the property and assets
or business of another Person or assets constituting a business unit, line of
business or division of such Person. For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

“Issuance Notice” means an Issuance Notice substantially in the form of
Exhibit A-3.

“Issuing Bank” shall mean, as the context may require, any or each of (a) BNPP
as Issuing Bank hereunder, together with its permitted successors and assigns in
such capacity, with respect to Letters of Credit issued by BNPP, (b) Bank of
America as Issuing Bank hereunder, together with its permitted successors and
assigns in such capacity, with respect to Letters of Credit issued by Bank of
America, (c) JPMorgan Chase as Issuing Bank hereunder, together with its
permitted successors and assigns in such capacity, with respect to Letters of
Credit issued by JPMorgan Chase, (d) PNC as Issuing Bank hereunder, together
with its permitted successors and assigns in such capacity, with respect to
Letters of Credit issued by PNC and (e) any other financial institution that has
or may become an Issuing Bank pursuant to Section 2.4(h), with respect to
Letters of Credit issued by such financial institution and its successors and
assigns in such capacity.

“Joinder Agreement” means an agreement substantially in the form of Exhibit L.

“JPMorgan” means J.P. Morgan Securities Inc.

“JPMorgan Chase” means JPMorgan Chase Bank, N.A.

“Junior Financing” as defined in Section 6.12.

“Junior Financing Documentation” means any documentation governing any Junior
Financing.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

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“Lender” means each financial institution with a Term Loan, Revolving Commitment
or a Term Loan Commitment on the Amendment Agreement Effective Date, and any
other Person that becomes a party hereto pursuant to an Assignment Agreement or
a Joinder Agreement.

“Lender Consent Letters” means the lender consent letters authorizing the
amendment and restatement of the Original Credit Agreement and, in the case of
any Continuing Lender, the conversion of all of the Original Term Loans held by
such Lender to a Tranche C Term Loan.

“Lender Counterparty” means each Lender or any Affiliate of a Lender
counterparty to a Swap Agreement (including any Person who is a Lender (and any
Affiliate thereof) as of the Closing Date but subsequently, whether before or
after entering into a Swap Agreement, ceases to be a Lender).

“Letter of Credit” means any letter of credit issued hereunder. A Letter of
Credit may be a commercial letter of credit or a standby letter of credit.

“Letter of Credit Sublimit” means the aggregate unused amount of the Revolving
Commitments then in effect.

“Letter of Credit Usage” means, as at any date of determination, the sum of
(i) the maximum aggregate amount which is, or at any time thereafter may become,
available for drawing under all Letters of Credit then outstanding, and (ii) the
aggregate amount of all drawings under Letters of Credit honored by an Issuing
Bank and not theretofore reimbursed by or on behalf of Borrowers.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing).

“Loan” means a Tranche C-2 Cash Pay Term Loan, a Tranche C-2 PIK Term Loan, a
Tranche C-3 Cash Pay Term Loan, a Tranche C-3 PIK Term Loan, a Non-Extended
Revolving Loan, an Extended Revolving Loan and an Other New Term Loan.

“Management Stockholders” means the members of management of Company or its
Subsidiaries who are investors in Holdings or any direct or indirect parent
thereof.

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect
from time to time.

“Material Adverse Effect” means (a) a material adverse effect on the business,
operations, assets, liabilities (actual or contingent) or financial condition of
Education Management and its Subsidiaries, taken as a whole, (b) a material
adverse effect on the ability of

 

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any Borrower or the Credit Parties (taken as a whole) to perform their
respective payment obligations under any Credit Document to which any Borrower
or any of the Credit Parties is a party or (c) a material adverse effect on the
rights and remedies of the Lenders under any Credit Document.

“Material Real Estate Asset’’ means any fee interest owned by any Credit Party
in any real property having a fair market value in excess of $2,500,000 as of
the date of the acquisition thereof.

“Merger” means the merger of EM Corporation Acquisition with and into Education
Management pursuant to the Merger Agreement.

“Merger Agreement” means the Agreement and Plan of Merger dated as of March 3,
2006 between Education Management and EM Acquisition Corporation.

“Moody’s” means Moody’s Investor Services, Inc.

“Mortgage” means, collectively, the deeds of trust, trust deeds, hypothecs and
mortgages made by the Credit Parties in favor or for the benefit of
Administrative Agent on behalf of the Lenders substantially in the form of
Exhibit I (with such changes as may be customary to account for local Law
matters), and any other mortgages executed and delivered pursuant to
Section 5.13.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

“NAIC” means The National Association of Insurance Commissioners, and any
successor thereto.

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal
to: (a) cash payments (including any cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) received by Holdings or any of its Subsidiaries from such
Asset Sale, minus (b) any bona fide direct costs incurred in connection with
such Asset Sale, including (i) income or gains taxes payable by the seller (or a
direct or indirect parent of such seller) as a result of any gain recognized in
connection with such Asset Sale, (ii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) that is secured by a Lien on the stock or assets in question and
that is required to be repaid under the terms thereof as a result of such Asset
Sale and (iii) a reasonable reserve for any indemnification payments (fixed or
contingent) attributable to seller’s indemnities and representations and
warranties to purchaser in respect of such Asset Sale undertaken by Holdings or
any of its Subsidiaries in connection with such Asset Sale.

 

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“Net Cash Proceeds” means, (a) with respect to any Asset Sale, the Net Asset
Sale Proceeds, (b) with respect to any Casualty Event, the Net
Insurance/Condemnation Proceeds, and (c) with respect to any issuance of Equity
Interests or any incurrence of Indebtedness, the cash proceeds from such
issuance or incurrence, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses.

“Net Insurance/Condemnation Proceeds” means an amount equal to: (a) any cash
payments or proceeds received by Holdings or any of its Subsidiaries (i) under
any casualty insurance policy in respect of a covered loss thereunder or (ii) as
a result of the taking of any assets of Holdings or any of its Subsidiaries by
any Person pursuant to the power of eminent domain, condemnation or otherwise,
or pursuant to a sale of any such assets to a purchaser with such power under
threat of such a taking, minus (b) (i) any actual and reasonable costs incurred
by Holdings or any of its Subsidiaries in connection with the adjustment or
settlement of any claims of Holdings or such Subsidiary in respect thereof, and
(ii) any bona fide direct costs incurred in connection with any sale of such
assets as referred to in clause (a)(ii) of this definition, including income
taxes payable as a result of any gain recognized in connection therewith.

“New Revolving Loan Commitments” as defined in Section 2.24.

“New Revolving Loan Lender” as defined in Section 2.24.

“New Revolving Loans” as defined in Section 2.24.

“New Senior Notes” means Company’s Senior PIK Toggle Notes due 2018.

“New Senior Notes Indenture” means the Indenture for the New Senior Notes, dated
as of September 5, 2014.

“New Term Loan Commitments” as defined in Section 2.24.

“New Term Loan Exposure” means, with respect to any Lender, as of any date of
determination, the outstanding principal amount of the New Term Loans of such
Lender.

“New Term Loan Lender” as defined in Section 2.24.

“New Term Loan Maturity Date” means the date that Other New Term Loans of a
Series shall become due and payable in full hereunder, as specified in the
applicable Joinder Agreement, including by acceleration or otherwise.

“New Term Loans” as defined in Section 2.24; for the avoidance of doubt, New
Term Loans include the Tranche C-3 Term Loans.

“Non-Extended Revolving Commitment” means the commitment of a Non-Extended
Revolving Lender to make or otherwise fund any Non-Extended Revolving Loan and
to acquire participations in Letters of Credit, and “Non-Extended Revolving
Commitments”

 

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means such commitments of all Non-Extended Revolving Lenders in the aggregate.
The amount of each Non-Extended Revolving Lender’s Non-Extended Revolving
Commitment is set forth on Appendix A-2 under the caption “Non-Extended
Revolving Commitment” or in the applicable Assignment Agreement or Joinder
Agreement, as applicable, subject to any adjustment or reduction pursuant to the
terms and conditions hereof.

“Non-Extended Revolving Commitment Period” means the period from the Closing
Date to but excluding the Non-Extended Revolving Commitment Termination Date.

“Non-Extended Revolving Commitment Termination Date” means the earliest to occur
of (i) the ninth anniversary of the Closing Date, (ii) the date the Non-Extended
Revolving Commitments are permanently reduced to zero pursuant to
Section 2.13(b), and (iii) the date of the termination of the Non-Extended
Revolving Commitments pursuant to Section 8.1; provided, however, that such date
shall become March 1, 2014 if all the Senior Notes are not repaid in full or
extended, renewed or refinanced with a Permitted Refinancing pursuant to
Section 6.3(r) on or prior to March 1, 2014, which Permitted Refinancing will
not mature or require any scheduled amortization or payments of principal prior
to the date that is ninety-one (91) days after the tenth anniversary of the
Closing Date.

“Non-Extended Revolving Exposure” means, with respect to any Non-Extended
Revolving Lender as of any date of determination, (i) prior to the termination
of the Non-Extended Revolving Commitments, that Lender’s Non-Extended Revolving
Commitment; and (ii) after the termination of the Non-Extended Revolving
Commitments, the sum of (a) the aggregate outstanding principal amount of the
Non-Extended Revolving Loans of that Lender and (b) the aggregate amount of all
participations by that Non-Extended Revolving Lender in any outstanding Letters
of Credit or any unreimbursed drawing under any Letter of Credit.

“Non-Extended Revolving Lender” means a Lender with a Non-Extended Revolving
Commitment or, if the Non-Extended Revolving Commitments have terminated or
expired, a Lender with Non-Extended Revolving Exposure.

“Non-Extended Revolving Loan Note” means a promissory note in the form of
Exhibit B-5, as it may be amended, supplemented or otherwise modified from time
to time.

“Non-Extended Revolving Loans” means a Loan made by a Non-Extended Revolving
Lender pursuant to its Non-Extended Revolving Commitment.

“Non-Priority Lender” means each Lender to the extent of the Non-Priority
Obligations owing to such Lender.

“Non-Priority Lender Counterparty” means each Lender Counterparty that, at the
time of determination, has not become a party to the RSA.

“Non-Priority Letter of Credit Obligations” means all debts, liabilities,
obligations, covenants and duties of any Credit Party and its Subsidiaries
arising under any Credit Document or otherwise, with respect to any Letter of
Credit and owing to a Non-Extended Revolving Lender.

 

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“Non-Priority Loan” means a Loan that is not a Priority Loan.

“Non-Priority Obligations” means (a) all advances to, and debts, liabilities,
obligations, covenants and duties of, any Credit Party and its Subsidiaries
arising under any Credit Document or otherwise, with respect to any Non-Priority
Loan and all Non-Priority Letter of Credit Obligations, in each case whether
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or against
any Credit Party or Subsidiary of any proceeding under any Debtor Relief Laws
naming such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding and (b) obligations of
any Credit Party and its Subsidiaries arising under any Swap Agreement with a
Non-Priority Lender Counterparty. Without limiting the generality of the
foregoing, the Non-Priority Obligations of the Credit Parties under the Credit
Documents (and of their Subsidiaries to the extent they have obligations under
the Credit Documents) include (i) the obligation (including guarantee
obligations) to pay principal, interest, Letter of Credit commissions,
reimbursement obligations, charges, expenses, fees, indemnities and other
amounts payable by any Credit Party or its Subsidiaries under any Credit
Document, but solely in the case of this clause (i), to the extent such
obligation relates to or arise from Non-Priority Loans, Non-Priority Letter of
Credit Obligations or obligations of any Credit Party and its Subsidiaries
arising under any Swap Agreement with a Non-Priority Lender Counterparty and
(ii) the obligation of any Credit Party or any of its Subsidiaries to reimburse
any amount in respect of any of the foregoing that any Non-Priority Lender, in
its sole discretion, may elect to pay or advance on behalf of such Credit Party
or such Subsidiary.

“Nonpublic Information” means information which has not been disseminated in a
manner making it available to investors generally, within the meaning of
Regulation FD.

“Non-US Lender” as defined in Section 2.20(c).

“Note” means a Tranche C-2 Term Loan Note, a Tranche C-2 PIK Term Loan Note, a
Tranche C-3 Term Loan Note, a Tranche C-3 PIK Term Loan Note, a Non-Extended
Revolving Loan Note or an Extended Revolving Loan Note.

“Notice” means a Funding Notice, an Issuance Notice or a Conversion/Continuation
Notice.

“Not Otherwise Applied” means, with reference to any amount of Net Cash Proceeds
of any transaction or event or of Consolidated Excess Cash Flow, that such
amount (a) was not required to be applied to prepay the Loans pursuant to
Section 2.14, and (b) was not previously applied in determining the
permissibility of a transaction under the Credit Documents where such
permissibility was (or may have been) contingent on receipt of such amount or
utilization of such amount for a specified purpose (including without
limitation, (i) Investments pursuant to Section 6.2, (ii) Restricted Payments to
Holdings pursuant to Section 6.6 (or loans or advances to Holdings in lieu
thereof pursuant to Section 6.2(m)), (iii) prepayments, repurchases or
redemptions of any Junior Financing pursuant to Section 6.12) and (iv) Capital
Expenditures pursuant to Section 6.15). Company shall promptly notify
Administrative Agent of any application of such amount as contemplated by
(b) above.

 

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“NPL” means the National Priorities List under CERCLA.

“Obligations” means the Priority Obligations and the Non-Priority Obligations.

“Obligee Guarantor” as defined in Section 7.7.

“Old Notes” means the Old Senior Notes and the Old Senior Subordinated Notes.

“Old Senior Notes” means the $375,000,000 in aggregate principal amount of
Company’s 8.75% senior unsecured notes due 2014 issued pursuant to the
Indenture, dated as of June 1, 2006.

“Old Senior Subordinated Notes” means the $385,000,000 in aggregate principal
amount of Company’s 10.25% senior subordinated notes due 2016 issued pursuant to
the Old Senior Subordinated Notes Indenture.

“Old Senior Subordinated Notes Indenture” means the Indenture for the Old Senior
Subordinated Notes, dated as of June 1, 2006.

“Original Credit Agreement” has the meaning provided in the recitals to this
Agreement.

“Original Lenders” has the meaning provided in the recitals to this Agreement.

“Original Sections 3.1(g) and 3.1(h)” mean Sections 3.1(g) and 3.1(h) of the
Original Credit Agreement, which Sections are set forth in Annex C hereto.

“Original Term Loans” has the meaning provided in the Existing ARCA.

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other New Term Loan Commitments” means New Term Loan Commitments other than the
Tranche C-3 Term Loan Commitments.

 

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“Other New Term Loan Exposure” means, with respect to any Lender, as of any date
of determination, the outstanding principal amount of the Other New Term Loans
of such Lender.

“Other New Term Loans” means New Term Loans other than the Tranche C-3 Term
Loans.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Credit Party
or any ERISA Affiliate or to which any Credit Party or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding five (5) plan years.

“Perfection Certificate” means a certificate in form satisfactory to Collateral
Agent that provides information relating to UCC filings of each Credit Party.

“Permitted Acquisition” means any acquisition by Company or any of its wholly
owned Subsidiaries, whether by purchase, merger or otherwise, of all or
substantially all of the assets of, 90% or more of the Equity Interests in or a
business line or unit or a division of, any Person; provided,

(i) immediately prior to, and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing or would result therefrom;

(ii) all transactions in connection therewith shall be consummated, in all
material respects, in accordance with all applicable laws and in conformity with
all applicable Governmental Authorizations;

(iii) in the case of the acquisition of Equity Interests, 90% or more of the
Equity Interests (except for any such Securities in the nature of directors’
qualifying shares required pursuant to applicable law not to exceed 5% of the
outstanding Equity Interests) acquired or otherwise issued by such Person or any
newly formed Subsidiary of Company in connection with such acquisition shall be
owned by Company or a Guarantor Subsidiary thereof (any such Person or newly
formed Subsidiary that is not Wholly Owned by Company after such acquisition is
referred to as an “Acquired Non-Wholly-Owned Subsidiary”), and Company shall
have taken, or caused to be taken, as of the date such Person becomes a
Subsidiary of Company, each of the actions set forth in Sections 5.12 and/or
5.13, as applicable;

(iv) Holdings and its Subsidiaries shall be in compliance with the financial
covenants set forth in Section 6.10 on a pro forma basis after giving effect to
such acquisition as of the last day of the Fiscal Quarter most recently ended,
(as determined in accordance with Section 6.10(c));

 

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(v) Company shall have delivered to Administrative Agent (A) on or prior to the
date such proposed acquisition is consummated, (1) a Compliance Certificate
evidencing compliance with Section 6.10 as required under clause (iv) above and
(2) with respect to any acquisition with consideration exceeding $15,000,000,
all other relevant financial information with respect to such acquired assets to
the extent available to the Credit Parties, including, without limitation, the
aggregate consideration for such acquisition and any other information required
to demonstrate compliance with Section 6.10 and (B) promptly upon request by
Administrative Agent, a copy of the purchase agreement related to the proposed
Permitted Acquisition (and any related documents reasonably requested by
Administrative Agent); and

(vi) any Person or assets or division as acquired in accordance herewith shall
be in same business or lines of business in which Company and/or its
Subsidiaries are engaged as of the Closing Date.

“Permitted Equity Issuance” means any sale or issuance of any Qualified Equity
Interests of Holdings to the extent permitted hereunder.

“Permitted Holdings Debt” as defined in Section 6.3(p).

“Permitted Refinancing” means, with respect to any Person, any modification,
refinancing, refunding, renewal or extension of any Indebtedness of such Person;
provided that (a) the principal amount (or accreted value, if applicable)
thereof does not exceed the principal amount (or accreted value, if applicable)
of the Indebtedness so modified, refinanced, refunded, renewed or extended
except by an amount equal to unpaid accrued interest and premium thereon plus
other reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such modification, refinancing, refunding, renewal or extension
and by an amount equal to any existing commitments unutilized thereunder,
(b) other than with respect to a Permitted Refinancing in respect of
Indebtedness permitted pursuant to Section 6.3(e), such modification,
refinancing, refunding, renewal or extension has a final maturity date equal to
or later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being modified, refinanced, refunded, renewed or extended,
(c) other than with respect to a Permitted Refinancing in respect of
Indebtedness permitted pursuant to Section 6.3(e), at the time thereof, no Event
of Default shall have occurred and be continuing, and (d) if such Indebtedness
being modified, refinanced, refunded, renewed or extended is Indebtedness
permitted pursuant to Section 6.3(b), 6.3(r) or 6.12(a), (i) to the extent such
Indebtedness being modified, refinanced, refunded, renewed or extended is
subordinated in right of payment to the Obligations, such modification,
refinancing, refunding, renewal or extension is subordinated in right of payment
to the Obligations on terms at least as favorable to the Lenders as those
contained in the documentation governing the Indebtedness being modified,
refinanced, refunded, renewed or extended, (ii) the terms and conditions
(including, if applicable, as to collateral but excluding as to subordination,
interest rate and redemption premium) of any such modified, refinanced,
refunded, renewed or extended Indebtedness, taken as a whole, are not materially
less favorable to the Credit Parties or the Lenders than the terms and
conditions of the Indebtedness being modified, refinanced, refunded, renewed or
extended; provided that a certificate of a Responsible Officer delivered to
Administrative Agent at least five Business Days prior to the incurrence of such
Indebtedness,

 

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together with a reasonably detailed description of the material terms and
conditions of such Indebtedness or drafts of the documentation relating thereto,
stating that Company has determined in good faith that such terms and conditions
satisfy the foregoing requirement shall be conclusive evidence that such terms
and conditions satisfy the foregoing requirement unless Administrative Agent
notifies Company within such five Business Day period that it disagrees with
such determination (including a reasonable description of the basis upon which
it disagrees) and (iii) such modification, refinancing, refunding, renewal or
extension is incurred by the Person who is the obligor of the Indebtedness being
modified, refinanced, refunded, renewed or extended.

“Person” means and includes natural persons, corporations, limited partnerships,
general partnerships, limited liability companies, limited liability
partnerships, joint stock companies, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether or
not legal entities, and Governmental Authorities.

“PIK Interest” as defined in Section 2.8(h).

“PIK Loans” means (a) Extended Revolving Loans and (b) PIK Term Loans.

“PIK Period” means (x) with respect to PIK Term Loans, the period beginning on
the Amendment Agreement Effective Date up to and including the earlier of
(1) the occurrence of any Event of Default (other than pursuant to
Section 8.1(b) hereof in respect of a breach of the affirmative covenant in
Section 5.16 hereof) and notice from the Administrative Agent or the applicable
Lenders that Lenders holding in excess of 66-2/3% of the aggregate Tranche C-2
PIK Term Loans and Tranche C-2 PIK Term Loan have elected to terminate the PIK
Period and (2) June 30, 2015 and (y) with respect to Extended Revolving Loans,
the period beginning on October 1, 2014 up to and including the earlier of
(1) the occurrence of an Event of Default (other than pursuant to Section 8.1(b)
hereof in respect of a breach of the affirmative covenant in Section 5.16
hereof) and notice from the Administrative Agent or the applicable Lenders that
Lenders holding in excess of 66-2/3% of the Extended Revolving Commitments have
elected to terminate the PIK Period and (2) June 30, 2015.

“PIK Term Loans” means (a) Tranche C-2 PIK Term Loans and (b) Tranche C-3 PIK
Term Loans.

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by any Credit Party or, with respect to any
such plan that is subject to Section 412 of the Code or Title IV of ERISA, any
ERISA Affiliate.

“Pledge and Security Agreement” means the Pledge and Security Agreement dated as
of June 1, 2006 among the Grantors party thereto and the Collateral Agent, as it
may be amended, supplemented or otherwise modified from time to time.

“PNC” means PNC Bank, National Association.

 

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“Prime Rate” means the rate of interest quoted in The Wall Street Journal, Money
Rates Section as the Prime Rate (currently defined as the base rate on corporate
loans posted by at least 75% of the nation’s thirty (30) largest banks), as in
effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
Agent or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.

“Principal Office” means, for each of Administrative Agent and Issuing Bank,
such Person’s “Principal Office” as set forth on Appendix B, or such other
office or office of a third party or sub-agent, as appropriate, as such Person
may from time to time designate in writing to Company, Administrative Agent and
each Lender.

“Priority Lender” means each Lender to the extent of the Priority Obligations
owing to such Lender.

“Priority Lender Counterparty” means each Lender Counterparty that, at the time
of determination, has become a party to the RSA.

“Priority Letter of Credit Obligations” means all debts, liabilities,
obligations, covenants and duties of any Credit Party and its Subsidiaries
arising under any Credit Document or otherwise, with respect to any Letter of
Credit and owing to an Extended Revolving Lender.

“Priority Loan” means (a) any Tranche C-2 PIK Term Loan, (b) any Tranche C-3 PIK
Term Loan, (c) any Other New Term Loan, (d) any Extended Revolving Loan and
(e) any New Revolving Loan.

“Priority Obligations” means all (a) advances to, and debts, liabilities,
obligations, covenants and duties of, any Credit Party and its Subsidiaries
arising under any Credit Document or otherwise, with respect to any Priority
Loan and all Priority Letter of Credit Obligations, in each case whether
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or against
any Credit Party or Subsidiary of any proceeding under any Debtor Relief Laws
naming such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding, (b) obligations of any
Credit Party and its Subsidiaries arising under any Swap Agreement with a
Priority Lender Counterparty and (c) Cash Management Obligations. Without
limiting the generality of the foregoing, the Priority Obligations of the Credit
Parties under the Credit Documents (and of their Subsidiaries to the extent they
have obligations under the Credit Documents) include (i) the obligation
(including guarantee obligations) to pay principal, interest, Letter of Credit
commissions, reimbursement obligations, charges, expenses, fees, indemnities and
other amounts payable by any Credit Party or its Subsidiaries under any Credit
Document, but solely in the case of this clause (i), to the extent such
obligation relates to or arises from Priority Loans, Priority Letter of Credit
Obligations, obligations of any Credit Party and its Subsidiaries arising under
any Swap Agreement with a Priority Lender Counterparty or Cash Management
Obligations, and (ii) the obligation of any Credit Party or any of its
Subsidiaries to reimburse any amount in respect of any of the foregoing that any
Priority Lender, in its sole discretion, may elect to pay or advance on behalf
of such Credit Party or such Subsidiary.

 

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“Pro Forma Balance Sheet” as defined in Section 4.5(a)(ii).

“Pro Forma Financial Statements” as defined in Section 4.5(a)(ii).

“Projections” as defined in Section 5.1(c).

“Pro Rata Share” means: (a) with respect to all payments, computations and other
matters relating to the Tranche C-2 Cash Pay Term Loan of any Lender, the
percentage obtained by dividing (i) the Tranche C-2 Cash Pay Term Loan Exposure
of that Lender by (ii) the aggregate Tranche C-2 Cash Pay Term Loan Exposure of
all Lenders; (b) with respect to all payments, computations and other matters
relating to the Tranche C-2 PIK Term Loan of any Lender, the percentage obtained
by dividing (i) the Tranche C-2 PIK Term Loan Exposure of that Lender by
(ii) the aggregate Tranche C-2 PIK Term Loan Exposure of all Lenders; (c) with
respect to all payments, computations and other matters relating to the
Tranche C-3 Cash Pay Term Loan of any Lender, the percentage obtained by
dividing (i) the Tranche C-3 Cash Pay Term Loan Exposure of that Lender by
(ii) the aggregate Tranche C-3 Cash Pay Term Loan Exposure of all Lenders;
(d) with respect to all payments, computations and other matters relating to the
Tranche C-3 PIK Term Loan of any Lender, the percentage obtained by dividing
(i) the Tranche C-3 PIK Term Loan Exposure of that Lender by (ii) the aggregate
Tranche C-3 PIK Term Loan Exposure of all Lenders; (e) subject to clause
(f) below, with respect to all payments, computations and other matters
(including the matters in Section 2.5 and Section 9.6) relating to the Revolving
Commitment or Revolving Loans of any Lender or any Letters of Credit issued or
participations purchased therein by any Revolving Lender, the percentage
obtained by dividing (i) the Revolving Exposure of that Lender by (ii) the
aggregate Revolving Exposure of all Lenders; (f) with respect to matters in
Section 2.11, Section 2.16 and Section 2.22 relating to a Class of Revolving
Commitments or Revolving Loans of any Lender or any Letters of Credit issued or
participations purchased therein by any Revolving Lender on account of such
Class, (i) in the case of the Non-Extended Revolving Commitment or Non-Extended
Revolving Loans of any Lender or any Letters of Credit issued or participations
purchased therein by any Non-Extended Revolving Lender, the percentage obtained
by dividing (A) the Non-Extended Revolving Exposure of that Lender by (B) the
aggregate Non-Extended Revolving Exposure of all Lenders and (ii) in the case of
the Extended Revolving Commitment or Extended Revolving Loans of any Lender or
any Letters of Credit issued or participations purchased therein by any Extended
Revolving Lender, the percentage obtained by dividing (A) the Extended Revolving
Exposure of that Lender by (B) the aggregate Extended Revolving Exposure of all
Lenders; and (g) with respect to all payments, computations, and other matters
relating to Other New Term Loan Commitments or Other New Term Loans of a
particular Series, the percentage obtained by dividing (i) the Other New Term
Loan Exposure of that Lender with respect to that Series by (ii) the aggregate
Other New Term Loan Exposure of all Lenders with respect to that Series. For all
other purposes with respect to each Lender, “Pro Rata Share” means the
percentage obtained by dividing (A) an amount equal to the sum of the Tranche
C-2 Term Loan Exposure, the Tranche C-3 Term Loan Exposure, the Revolving
Exposure and the Other New Term Loan Exposure of that Lender, by (B) an amount
equal to the sum of the aggregate Tranche C-2 Term Loan Exposure, the aggregate
Tranche C-3 Term Loan Exposure, the aggregate Revolving Exposure and the
aggregate Other New Term Loan Exposure of all Lenders.

 

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“Qualified Equity Interests” means any Equity Interests that are not
Disqualified Equity Interests.

“Qualified Non-Wholly-Owned Subsidiary” means (a) any Acquired Non-Wholly-Owned
Subsidiary (as defined in clause (iii) of the definition of “Permitted
Acquisitions”), provided that (i) such Subsidiary is acquired after the Closing
Date in accordance with Section 6.2(i) and (ii) Company and its Wholly Owned
Subsidiaries own no less than the percentage of the outstanding Equity Interests
of such Subsidiary owned by them on the date such Subsidiary is acquired
pursuant to Section 6.2(i) and (b) any Subsidiary that is formed by Company or
any of its Subsidiaries after the Closing Date, provided that (i) Company and
its Wholly Owned Subsidiaries own at least 90% of the outstanding Equity
Interests of such Subsidiary (except for any such Securities in the nature of
directors’ qualifying shares required pursuant to applicable law not to exceed
5% of the outstanding Equity Interests of such Subsidiary) and (ii) such
Subsidiary is not formed in connection with, or used in, the acquisition
(whether by purchase, merger or otherwise) of all or substantially all of the
assets of, 90% or more of the Equity Interests in or a business line or unit or
a division of, any Person.

“Qualified Subsidiary” means any Subsidiary of Company (other than any Excluded
Subsidiary) that satisfies the following criteria: (a) the jurisdiction of
organization or incorporation of such Subsidiary is the United States of America
(or any State thereof or the District of Columbia) and (b) such Subsidiary is a
wholly owned Subsidiary of Company.

“Qualifying IPO” means the issuance by Holdings or any direct or indirect parent
of Holdings of its common Equity Interests in an underwritten primary public
offering (other than a public offering pursuant to a registration statement on
Form S-8) pursuant to an effective registration statement filed with the SEC in
accordance with the Securities Act (whether alone or in connection with a
secondary public offering).

“Register” as defined in Section 2.7(b).

“Regulation D” means Regulation D of the Board of Governors, as in effect from
time to time.

“Regulation FD” means Regulation FD as promulgated by the US Securities and
Exchange Commission under the Securities Act and Exchange Act as in effect from
time to time.

“Reimbursement Date” as defined in Section 2.4(d).

“Related Fund” means, with respect to any Lender that is an investment fund, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

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“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of any Hazardous Material into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Material), including the movement of
any Hazardous Material through the air, soil, surface water or groundwater.

“Replacement Lender” as defined in Section 2.23.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
or the regulations issued thereunder, other than events for which the thirty
(30) day notice period has been waived.

“Required Prepayment Date” as defined in Section 2.15(c).

“Requisite Lenders” means one or more Lenders having or holding Tranche C-2 Term
Loan Exposure, Tranche C-3 Term Loan Exposure, Other New Term Loan Exposure
and/or Revolving Exposure and representing more than 50% of the sum of (i) the
aggregate Tranche C-2 Term Loan Exposure of all Lenders, (ii) the aggregate
Tranche C-3 Term Loan Exposure of all Lenders, (iii) the aggregate Revolving
Exposure of all Lenders and (iv) the aggregate Other New Term Loan Exposure of
all Lenders; provided that the Tranche C-2 Term Loan Exposure, Tranche C-3 Term
Loan Exposure, Other New Term Loan Exposure and Revolving Exposure of, and the
portion of the aggregate Tranche C-2 Term Loan Exposure, aggregate Tranche C-3
Term Loan Exposure, aggregate Other New Term Loan Exposure and aggregate
Revolving Exposure held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Requisite Lenders.

“Responsible Officer” means the chief executive officer, president, vice
president, chief financial officer, treasurer or assistant treasurer or other
similar officer of a Credit Party. Any document delivered hereunder that is
signed by a Responsible Officer of a Credit Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Credit Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Credit Party.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interest in Holdings,
Company or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, defeasance, acquisition, cancellation or
termination of any such Equity Interest, or on account of any return of capital
to Holdings or Company’s stockholders, partners or members (or the equivalent
Persons thereof).

“Revolving Commitment” means (a) prior to the Amendment Agreement Effective
Date, the Revolving Commitment as defined in the Existing ARCA and (b) on or
after the Amendment Agreement Effective Date, the commitment of a Lender to make
or otherwise fund a Non-Extended Revolving Loan or an Extended Revolving Loan
and to acquire participations in Letters of Credit and “Revolving Commitments”
means such commitments of all Lenders in the aggregate. The aggregate amount of
the Revolving Commitments as of the Amendment Agreement Effective Date is
$328,312,500.

 

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“Revolving Commitment Period” means the Non-Extended Revolving Commitment Period
or the Extended Revolving Commitment Period.

“Revolving Commitment Termination Date” means the Non-Extended Revolving
Commitment Termination Date and the Extended Revolving Commitment Termination
Date.

“Revolving Exposure” means, with respect to any Non-Extended Revolving Lender,
the Non-Extended Revolving Exposure, and with respect to any Extended Revolving
Lender, the Extended Revolving Exposure.

“Revolving Lender” means any Non-Extended Revolving Lender or Extended Revolving
Lender.

“Revolving Loan” means (a) prior to the Amendment Agreement Effective Date, a
Revolving Loan as defined in the Existing ARCA and (b) on or after the Amendment
Agreement Effective Date, a Non-Extended Revolving Loan and an Extended
Revolving Loan.

“Revolving Percentage” means, with respect to any Lender, the percentage of the
total Revolving Commitments represented by such Lender’s Revolving Commitment.

“Rollover Amount” as defined in Section 6.15(b).

“RSA” means that certain Restructuring Support Agreement, dated on or about the
Amendment Agreement Effective Date.

“Sarasota Property” means the real property owned by MCM University Plaza, Inc.
in Sarasota County, Florida.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc., and any successor thereto.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Second ARCA Effective Date” has the meaning assigned to that term in that
certain Amendment and Restatement Agreement, dated as of December 7, 2010.

“Secured Parties” has the meaning assigned to that term in the Pledge and
Security Agreement.

 

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“Securities” means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as “securities” or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Senior Notes” means the Existing Senior Notes and New Senior Notes.

“Senior Notes Documentation” means the Senior Notes, and all documents executed
and delivered with respect to the Senior Notes, including the Existing Senior
Notes Indenture and the New Senior Notes Indenture.

“Series” as defined in Section 2.24.

“Settlement Service” as defined in Section 10.6(d).

“Solvency Certificate” means a Solvency Certificate of the chief financial
officer or treasurer of Holdings substantially in the form of Exhibit G-2.

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

“Sponsors” means Goldman Sachs Capital Partners, Providence Equity Partners
Inc., Leeds Equity Partners, and their respective Affiliates, but not including,
however, any portfolio companies of any of the foregoing or any Affiliates that
are not managed by the Merchant Banking Division of Goldman, Sachs & Co.

“Sponsor Management Agreement” means the Management Agreement between certain of
the management companies associated with the Sponsors and Company.

“Sponsor Termination Fees” means the one-time payment under the Sponsor
Management Agreement of a termination fee to one or more of the Sponsors and
their Affiliates in the event of either a Change of Control or the completion of
a Qualifying IPO.

 

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“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, association, joint venture or other business entity
of which more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; provided, in determining the percentage of ownership interests of any
Person controlled by another Person, no ownership interest in the nature of a
“qualifying share” of the former Person shall be deemed to be outstanding.
Unless otherwise expressly provided, all references herein to a “Subsidiary”
shall mean a Subsidiary of Holdings.

“Successor Company” as defined in Section 6.4(d).

“Swap Agreement” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Agreements, (a) for any date on or after the
date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Agreements, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Agreements (which may include a Lender or any
Affiliate of a Lender).

“Syndication Agent” as defined in the preamble hereto.

“Tax” means any present or future tax, levy, impost, duty, assessment, charge,
fee, deduction or withholding imposed by any Governmental Authority; provided,
“Tax on the overall net income” of a Person shall mean a tax imposed by the
jurisdiction in which that Person is organized or in which that Person’s
applicable principal office (and/or, in the case of a Lender,

 

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its lending office) is located or in which that Person (and/or, in the case of a
Lender, its lending office) is deemed to be doing business on all or part of the
net income, profits or gains (whether worldwide, or only insofar as such income,
profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its
applicable lending office).

“Term Loan” means a Tranche C-2 Cash Pay Term Loan, a Tranche C-2 PIK Term Loan,
a Tranche C-3 Cash Pay Term Loan, a Tranche C-3 PIK Term Loan and an Other New
Term Loan.

“Term Loan Commitment” means the Tranche C-2 PIK Term Loan Commitment, the
Tranche C-3 PIK Term Loan Commitment or the New Term Loan Commitment of a
Lender, and “Term Loan Commitments” means such commitments of all Lenders.

“Term Loan Maturity Date” means the Tranche C-2 Term Loan Maturity Date, the
Tranche C-3 Term Loan Maturity Date and the New Term Loan Maturity Date of any
Series of Other New Term Loans.

“Terminated Lender” as defined in Section 2.23.

“Test Period” means, for any determination under this Agreement, the four
consecutive fiscal quarters of Company then last ended.

“Threshold Amount” means $50,000,000.

“Title Company” as defined in Original Section 3.1(g).

“Title Policy” as defined in Original Section 3.1(g).

“Total Assets” means the total assets of Company and its Subsidiaries on a
consolidated basis, as shown on the most recent balance sheet of Company or such
other Person as may be expressly stated.

“Total Leverage Ratio” means, with respect to any Test Period, the ratio of
(a) Consolidated Total Debt as of the last day of such Test Period to
(b) Consolidated EBITDA for such Test Period.

“Total Utilization of Revolving Commitments” means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans (other than Revolving Loans made for the purpose of reimbursing
an Issuing Bank for any amount drawn under any Letter of Credit, but not yet so
applied) and (ii) the Letter of Credit Usage.

“Tranche C Term Loans” as defined in the Existing ARCA.

 

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“Tranche C-2 Cash Pay Term Loan” means a Loan made pursuant to
Section 2.1(b)(ii).

“Tranche C-2 Cash Pay Term Loan Exposure” means, with respect to any Lender, as
of any date of determination, the outstanding principal amount of the Tranche
C-2 Cash Pay Term Loans of such Lender.

“Tranche C-2 PIK Term Loan” means a Loan made pursuant to Section 2.1(b)(i),
together with all PIK Interest that has been added thereto as provided in
Section 2.8(h).

“Tranche C-2 PIK Term Loan Commitment” means, with respect to any Lender party
to the Amendment Agreement that, as of the Amendment Agreement Effective Date,
holds Tranche C-2 Term Loans, the commitment of such Lender to convert its
Tranche C-2 Term Loans to Tranche C-2 PIK Term Loans on the Amendment Agreement
Effective Date pursuant to the terms of the Amendment Agreement.

“Tranche C-2 PIK Term Loan Exposure” means, with respect to any Lender, as of
any date of determination, the outstanding principal amount of the Tranche C-2
PIK Term Loans of such Lender.

“Tranche C-2 Term Loan” means (a) prior to the Amendment Agreement Effective
Date, Tranche C-2 Term Loan as defined in the Existing ARCA and (b) on or after
the Amendment Agreement Effective Date, a Tranche C-2 Cash Pay Term Loan and a
Tranche C-2 PIK Term Loan.

“Tranche C-2 Term Loan Exposure” means, with respect to any Lender, as of any
date of determination, the outstanding principal amount of the Tranche C-2 Term
Loans of such Lender.

“Tranche C-2 Term Loan Maturity Date” means the earlier of (i) the tenth
anniversary of the Closing Date, and (ii) the date that all Tranche C-2 Term
Loans shall become due and payable in full hereunder, whether by acceleration or
otherwise; provided, however, that such date shall become March 1, 2014 if all
the Senior Notes are not repaid in full or extended, renewed or refinanced with
a Permitted Refinancing pursuant to Section 6.3(r) on or prior to March 1, 2014,
which Permitted Refinancing will not mature or require any scheduled
amortization or payments of principal prior to the date that is ninety-one
(91) days after the tenth anniversary of the Closing Date.

“Tranche C-2 Term Loan Note” means (a) with respect to a Tranche C-2 Cash Pay
Term Loan, a promissory note in the form of Exhibit B-4, as it may be amended,
supplemented or otherwise modified from time to time and (b) with respect to a
Tranche C-2 PIK Term Loan, a promissory note in the form of Exhibit B-6, as it
may be amended, supplemented or otherwise modified from time to time.

“Tranche C-3 Cash Pay Term Loan” means a Loan made pursuant to
Section 2.1(c)(ii).

 

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“Tranche C-3 Cash Pay Term Loan Exposure” means, with respect to any Lender, as
of any date of determination, the outstanding principal amount of the Tranche
C-3 Cash Pay Term Loans of such Lender.

“Tranche C-3 PIK Term Loan” means a Loan made pursuant to Section 2.1(c)(i),
together with all PIK Interest that has been added thereto as provided in
Section 2.8(h).

“Tranche C-3 PIK Term Loan Commitment” means, with respect to any Lender party
to the Amendment Agreement that, as of the Amendment Agreement Effective Date,
holds Tranche C-3 Term Loans, the commitment of such Lender to convert its
Tranche C-3 Term Loans to Tranche C-3 PIK Term Loans on the Amendment Agreement
Effective Date pursuant to the terms of the Amendment Agreement.

“Tranche C-3 PIK Term Loan Exposure” means, with respect to any Lender, as of
any date of determination, the outstanding principal amount of the Tranche C-3
PIK Term Loans of such Lender.

“Tranche C-3 Term Loan” means (a) prior to the Amendment Agreement Effective
Date, the New Term Loans issued pursuant to the Tranche C-3 Term Loan Joinder
Agreement and (b) on or after the Amendment Agreement Effective Date, a Tranche
C-3 Cash Pay Term Loan and a Tranche C-3 PIK Term Loan (it being understood, for
the avoidance of doubt, that on or after the Amendment Agreement Effective Date,
Tranche C-3 Cash Pay Term Loans and Tranche C-3 PIK Term Loans shall each
constitute New Term Loans).

“Tranche C-3 Term Loan Commitment” means the commitment of each Tranche C-3 Term
Loan Lender, as defined in and pursuant to the Tranche C-3 Term Loan Joinder
Agreement.

“Tranche C-3 Term Loan Exposure” means, with respect to any Lender, as of any
date of determination, the outstanding principal amount of the Tranche C-3 Term
Loans of such Lender.

“Tranche C-3 Term Loan Joinder Agreement” means that certain Joinder Agreement,
dated as of March 30, 2012, providing for the issuance of the Tranche C-3 Term
Loans.

“Tranche C-3 Term Loan Maturity Date” means the earlier of (a) the sixth
anniversary of the Effective Date (as defined in the Tranche C-3 Term Loan
Joinder Agreement), and (b) the date that all Tranche C-3 Term Loans shall
become due and payable in full hereunder, whether by acceleration or otherwise.

“Tranche C-3 Term Loan Note” means (a) with respect to a Tranche C-3 Cash Pay
Term Loan, a promissory note in the form of Exhibit B-9, as it may be amended,
supplemented or otherwise modified from time to time and (b) with respect to a
Tranche C-3 PIK Term Loan, a promissory note in the form of Exhibit B-7, as it
may be amended, supplemented or otherwise modified from time to time.

 

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“Transaction” means, collectively, (a) the Equity Contributions, (b) the Merger,
(c) the issuance of the Old Notes, (d) the funding of the Original Term Loans on
the Closing Date, (e) the consummation of any other transactions in connection
with the foregoing, and (f) the payment of the fees and expenses incurred in
connection with any of the foregoing.

“Transaction Documents” means the Merger Agreement and all other material
documents, instruments and certificates contemplated by the Merger Agreement.

“Transaction Expenses” means any fees or expenses incurred or paid by Holdings,
Company or any of its Subsidiaries in connection with the Transaction, this
Agreement and the other Credit Documents and the transactions contemplated
hereby and thereby.

“Type of Loan” means with respect to either Term Loans or Revolving Loans, a
Base Rate Loan or a Eurodollar Rate Loan.

“UCC” means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.

“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)).

“U.S. Bank” as defined in the preamble hereto.

“Waivable Mandatory Prepayment” as defined in Section 2.15(c).

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing: (i) the sum of the products
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by (ii) the then outstanding principal amount of
such Indebtedness.

“Wholly Owned” means, with respect to a Subsidiary of a Person, a Subsidiary of
such Person all of the outstanding Equity Interests of which (other than
(x) director’s qualifying shares and (y) shares issued to foreign nationals to
the extent required by applicable Law) are owned by such Person and/or by one or
more wholly owned Subsidiaries of such Person.

 

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1.2. Accounting Terms.

Except as otherwise expressly provided herein, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP. Financial statements and other information required to be delivered
by Holdings to Lenders pursuant to Section 5.1(a) and 5.1(b) shall be prepared
in accordance with GAAP as in effect at the time of such preparation, except as
otherwise specifically prescribed herein. If at any time any change in GAAP
would affect the computation of any financial ratio or requirement set forth in
any Credit Document, and either Company or the Requisite Lenders shall so
request, the Lenders, Administrative Agent and Company shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of the Requisite
Lenders); provided that, until so amended, such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein.
Subject to the foregoing, calculations in connection with the definitions,
covenants and other provisions hereof shall utilize accounting principles and
policies in conformity with those used to prepare the Historical Financial
Statements.

1.3. Interpretation, etc.

Any of the terms defined herein may, unless the context otherwise requires, be
used in the singular or the plural, depending on the reference. References
herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an
Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise
specifically provided. The use herein of the word “include” or “including”, when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.

SECTION 2. LOANS AND LETTERS OF CREDIT

2.1. Term Loans.

(a) [Reserved].

(b) Tranche C-2 Term Loans.

(i) Subject to the terms and conditions set forth herein and in the Amendment
Agreement, each Lender party to the Amendment Agreement has severally agreed to
convert all of its existing Tranche C-2 Term Loans, if any, into, and such
Indebtedness shall remain outstanding hereunder as, a Tranche C-2 PIK Term Loan
on and after the Amendment Agreement Effective Date in a principal amount (by
Type of Loan) equal to such Lender’s Tranche C-2 Term Loans.

 

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(ii) Any outstanding Tranche C-2 Term Loans not converted in accordance with
clause (i) above shall remain outstanding as Tranche C-2 Cash Pay Term Loans on
and after the Amendment Agreement Effective Date.

(c) Tranche C-3 Term Loans.

(i) Subject to the terms and conditions set forth herein and in the Amendment
Agreement, each Lender party to the Amendment Agreement has severally agreed to
convert all of its existing Tranche C-3 Term Loans, if any, into, and such
Indebtedness shall remain outstanding hereunder as, a Tranche C-3 PIK Term Loan
on the Amendment Agreement Effective Date in a principal amount (by Type of
Loan) equal to such Lender’s Tranche C-3 Term Loans.

(ii) Any outstanding Tranche C-3 Term Loans not converted in accordance with
clause (i) above shall remain outstanding as Tranche C-3 Cash Pay Term Loans on
and after the Amendment Agreement Effective Date.

Any Term Loans prepaid may not be reborrowed. Subject to Sections 2.13(a) and
2.14, all amounts owed hereunder with respect to (x) the Tranche C-2 Term Loans
shall be paid in full no later than the Tranche C-2 Term Loan Maturity Date and
(y) the Tranche C-3 Term Loans shall be paid in full no later than the Tranche
C-3 Term Loan Maturity Date. The Tranche C-2 PIK Term Loan Commitment shall
terminate immediately after the conversion of Tranche C-2 Term Loans into
Tranche C-2 PIK Term Loans on the Amendment Agreement Effective Date. The
Tranche C-3 PIK Term Loan Commitment shall terminate immediately after the
conversion of Tranche C-3 Term Loans into Tranche C-3 PIK Term Loans on the
Amendment Agreement Effective Date.

2.2. Revolving Loans.

(a) Revolving Commitments. During the Revolving Commitment Period applicable to
any Lender’s Revolving Commitment, subject to the terms and conditions hereof,
such Lender severally agrees to make Revolving Loans to Borrowers in an
aggregate amount up to but not exceeding such Lender’s Revolving Commitment;
provided, that after giving effect to the making of any Revolving Loans in no
event shall the Total Utilization of Revolving Commitments exceed the Revolving
Commitments then in effect. Amounts borrowed pursuant to this Section 2.2(a) may
be repaid and reborrowed during the Revolving Commitment Period. All Revolving
Loans will be made by all Revolving Lenders (including both Non-Extended
Revolving Lenders and Extended Revolving Lenders) in accordance with their
Revolving Percentages until the Non-Extended Revolving Commitment Termination
Date; thereafter, all Revolving Loans will be made by the Extended Revolving
Lenders in accordance with their Revolving Percentages until the Extended
Revolving Commitment Termination Date. Each Lender’s Non-Extended Revolving
Commitment shall expire on the Non-Extended Revolving Commitment Termination
Date and all Non-Extended Revolving Loans and all other amounts owed hereunder
with respect to the Non-Extended Revolving Loans and the Non-Extended Revolving
Commitments shall be paid in full no later than such date. Each Lender’s
Extended Revolving Commitment shall expire on the Extended Revolving Commitment
Termination Date and all Extended Revolving Loans and all other amounts owed
hereunder with respect to the Extended Revolving Loans and the Extended
Revolving Commitments shall be paid in full no later than such date.

 

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(b) Borrowing Mechanics for Revolving Loans.

(i) Except pursuant to Section 2.4(d), Revolving Loans that are Base Rate Loans
shall be made in an aggregate minimum amount of $1,000,000 and integral
multiples of $500,000 in excess of that amount, and Revolving Loans that are
Eurodollar Rate Loans shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount.

(ii) Whenever a Borrower desires that Lenders make Revolving Loans, such
Borrower shall give notice to Administrative Agent, which may be given by
telephone, no later than 12:00 p.m. (New York City time) at least three Business
Days in advance of the proposed Credit Date in the case of a Eurodollar Rate
Loan, and at least one Business Day in advance of the proposed Credit Date in
the case of a Revolving Loan that is a Base Rate Loan. Except as otherwise
provided herein, a notice for a Revolving Loan that is a Eurodollar Rate Loan
shall be irrevocable on and after the related Interest Rate Determination Date,
and the relevant Borrower shall be bound to make a borrowing in accordance
therewith. Each telephonic notice by a Borrower pursuant to this Section 2.2(b)
must be confirmed promptly by delivery to Administrative Agent of a fully
executed Funding Notice. Neither Administrative Agent nor any Lender shall incur
any liability to any Borrower in acting upon any telephonic notice referred to
above that Administrative Agent believes in good faith to have been given by a
Responsible Officer or other person authorized to borrow on behalf of such
Borrower or for otherwise acting in good faith under this Section 2.2(b), and
upon funding of Loans by Lenders in accordance with this Agreement pursuant to
any such telephonic notice a Borrower shall have effected Loans hereunder.

(iii) Notice of receipt of each Funding Notice in respect of Revolving Loans,
together with the amount of each Lender’s Revolving Percentage thereof, if any,
together with the applicable interest rate, shall be provided by Administrative
Agent to each applicable Lender by telefacsimile with reasonable promptness.

(iv) Each Lender shall make the amount of its Revolving Loan available to
Administrative Agent not later than 12:00 p.m. (New York City time) on the
applicable Credit Date by wire transfer of same day funds in Dollars, at the
Principal Office designated by Administrative Agent. Except as provided herein,
upon satisfaction or waiver of the conditions precedent specified herein,
Administrative Agent shall make the proceeds of such Revolving Loans available
to the relevant Borrower on the applicable Credit Date by causing an amount of
same day funds in Dollars equal to the proceeds of all such Revolving Loans
received by Administrative Agent from Lenders to be credited to the account of
such Borrower at the Principal Office designated by Administrative Agent or such
other account as may be designated in writing to Administrative Agent by such
Borrower.

 

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(c) Outstanding Revolving Loans. All Revolving Loans outstanding immediately
prior to the Amendment Agreement Effective Date shall remain outstanding
hereunder on the terms set forth herein, provided, however, that:

(i) subject to the terms and conditions set forth herein and in the Amendment
Agreement, each Revolving Lender party to the Amendment Agreement has severally
agreed to convert all of its outstanding Revolving Loans, if any, into, and such
Indebtedness shall remain outstanding hereunder as, Extended Revolving Loans on
the Amendment Agreement Effective Date in a principal amount (by Type of Loan)
equal to such Lender’s outstanding Revolving Loans.

(ii) any outstanding Revolving Loans not converted in accordance with clause
(i) above shall remain outstanding as Non-Extended Revolving Loans on the
Amendment Agreement Effective Date.

2.3. [Reserved].

2.4. Issuance of Letters of Credit and Purchase of Participations Therein.

(a) Letters of Credit. During the Revolving Commitment Period, subject to the
terms and conditions hereof, Issuing Bank agrees to issue Letters of Credit for
the account of a Borrower and its Subsidiaries in the aggregate amount for all
Borrowers and their Subsidiaries up to but not exceeding the Letter of Credit
Sublimit; provided that (A) BNPP as Issuing Bank (or its permitted successors
and assigns in such capacity) 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 BNPP as Issuing Bank (or its permitted successors and assigns in
such capacity) 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 BNPP as Issuing Bank (or its permitted successors and assigns in
such capacity), (B) Bank of America as Issuing Bank (or its permitted successors
and assigns in such capacity) 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 $100,000,000 and
only at a time when Letter of Credit Usage with respect to Letters of Credit
issued by BNPP (or its permitted successors and assigns in such capacity) is
equal to or greater than $175,000,000, and the issuance by Bank of America as
Issuing Bank (or its permitted successors and assigns in such capacity) of any
additional Letters of Credit at any time when Letter of Credit Usage with
respect to Letters of Credit issued by Bank of America as Issuing Bank (or its
permitted successors and assigns in such capacity) is equal to or greater than
$100,000,000 or at any time when Letter of Credit Usage with respect to Letters
of Credit issued by BNPP as Issuing Bank (or its permitted successors and
assigns in such capacity) is less than $175,000,000 shall be at the sole
discretion of Bank of America as Issuing Bank (or its permitted successors and
assigns in such capacity), (C) JPMorgan Chase as Issuing Bank (or its permitted
successors and assigns in such capacity) 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
$100,000,000 and only at a time when (1) Letter of Credit Usage with respect to
Letters of Credit issued by BNPP as Issuing Bank (or its permitted

 

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successors and assigns in such capacity) is equal to or greater than
$175,000,000 and (2) Letter of Credit Usage with respect to Letters of Credit
Issued by Bank of America as Issuing Bank (or its permitted successors and
assigns in such capacity) is equal to or greater than $100,000,000, and the
issuance by JPMorgan Chase as Issuing Bank (or its permitted successors and
assigns in such capacity) of any additional Letters of Credit at any time when
Letter of Credit Usage with respect to Letters of Credit issued by JPMorgan
Chase as Issuing Bank (or its permitted successors and assigns in such capacity)
is equal to or greater than $100,000,000 or at any time when Letter of Credit
Usage with respect to Letters of Credit issued by BNPP as Issuing Bank (or its
permitted successors and assigns in such capacity) is less than $175,000,000 or
at any time when Letter of Credit Usage with respect to Letters of Credit issued
by Bank of America as Issuing Bank (or its permitted successors and assigns in
such capacity) is less than $100,000,000 shall be at the sole discretion of
JPMorgan Chase as Issuing Bank (or its permitted successors and assigns in such
capacity) and (D) PNC as Issuing Bank (or its permitted successors and assigns
in such capacity) 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 $50,000,000 and only at
a time when Letter of Credit Usage with respect to Letters of Credit issued by
BNPP as Issuing Bank (or its permitted successors and assigns in such capacity)
is equal to or greater than $175,000,000, and the issuance by PNC as Issuing
Bank (or its permitted successors and assigns in such capacity) of any
additional Letters of Credit at any time when Letter of Credit Usage with
respect to Letters of Credit issued by PNC as Issuing Bank (or its permitted
successors and assigns in such capacity) is equal to or greater than $50,000,000
or at any time when Letter of Credit Usage with respect to Letters of Credit
issued by BNPP as Issuing Bank (or its permitted successors and assigns in such
capacity) is less than $175,000,000 shall be at the sole discretion of PNC as
Issuing Bank (or its permitted successors and assigns in such capacity);
provided, further, (i) each Letter of Credit shall be denominated in Dollars;
(ii) the stated amount of each Letter of Credit shall not be less than $25,000
or such lesser amount as is acceptable to Issuing Bank; (iii) after giving
effect to such issuance, in no event shall the Total Utilization of Revolving
Commitments exceed the Revolving Commitments then in effect; (iv) after giving
effect to such issuance, in no event shall the Letter of Credit Usage exceed the
Letter of Credit Sublimit then in effect; and (v) in no event shall any Letter
of Credit have an expiration date later than the earlier of (1) five
(5) Business Days prior to the Extended Revolving Commitment Termination Date
and (2) unless otherwise agreed by the Issuing Bank, the date which is one year
from the date of issuance of such Letter of Credit. Subject to the foregoing,
Issuing Bank may agree that a standby Letter of Credit will automatically be
extended for one or more successive periods not to exceed one year each, unless
Issuing Bank elects not to extend for any such additional period; provided,
Issuing Bank shall not extend any such Letter of Credit if it has received
written notice that an Event of Default has occurred and is continuing at the
time Issuing Bank must elect to allow such extension.

(b) Notice of Issuance. Whenever a Borrower desires the issuance of a Letter of
Credit, it shall deliver to Administrative Agent an Issuance Notice no later
than 12:00 p.m. (New York City time) at least two Business Days, or in each case
such shorter period as may be agreed to by Issuing Bank in any particular
instance, in advance of the proposed date of issuance. Upon satisfaction or
waiver of the conditions set forth in Section 3.2, Issuing Bank shall issue the
requested Letter of Credit only in accordance with Issuing Bank’s standard
operating procedures.

 

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Upon the issuance of any Letter of Credit or amendment or modification to a
Letter of Credit, Issuing Bank shall promptly notify each Lender with a
Revolving Commitment of such issuance, which notice shall be accompanied by a
copy of such Letter of Credit or amendment or modification to a Letter of Credit
and the amount of such Lender’s respective participation in such Letter of
Credit pursuant to Section 2.4(e).

(c) Responsibility of Issuing Bank With Respect to Requests for Drawings and
Payments. In determining whether to honor any drawing under any Letter of Credit
by the beneficiary thereof, Issuing Bank shall be responsible only to examine
the documents delivered under such Letter of Credit with reasonable care so as
to ascertain whether they appear on their face to be in accordance with the
terms and conditions of such Letter of Credit. As between Borrowers and Issuing
Bank, Borrowers assume all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by Issuing Bank, by the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the foregoing,
Issuing Bank shall not be responsible for: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of any such Letter of Credit to
comply fully with any conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of Issuing Bank, including
any Governmental Acts; none of the above shall affect or impair, or prevent the
vesting of, any of Issuing Bank’s rights or powers hereunder. Without limiting
the foregoing and in furtherance thereof, any action taken or omitted by Issuing
Bank under or in connection with the Letters of Credit or any documents and
certificates delivered thereunder, if taken or omitted in good faith, shall not
give rise to any liability on the part of Issuing Bank to Borrowers.
Notwithstanding anything to the contrary contained in this Section 2.4(c),
Borrowers shall retain any and all rights they may have against Issuing Bank for
any liability arising solely out of the gross negligence or willful misconduct
of Issuing Bank.

(d) Reimbursement by Borrowers of Amounts Drawn or Paid Under Letters of Credit.
In the event Issuing Bank has determined to honor a drawing under a Letter of
Credit, it shall immediately notify the relevant Borrower and Administrative
Agent, and such Borrower shall reimburse Issuing Bank on or before the Business
Day immediately following the date on which such drawing is honored (the
“Reimbursement Date”) in an amount in Dollars and in same day funds equal to the
amount of such honored drawing; provided, anything contained herein to the
contrary notwithstanding, (i) unless such Borrower shall have notified
Administrative Agent and Issuing Bank prior to 10:00 a.m. (New York City time)
on the date such drawing is honored that such Borrower intends to reimburse
Issuing Bank for the amount of

 

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such honored drawing with funds other than the proceeds of Revolving Loans, such
Borrower shall be deemed to have given a timely Funding Notice to Administrative
Agent requesting Revolving Lenders to make Revolving Loans that are Base Rate
Loans on the Reimbursement Date in an amount in Dollars equal to the amount of
such honored drawing, and (ii) subject to satisfaction or waiver of the
conditions specified in Section 3.2, Revolving Lenders shall, on the
Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount
of such honored drawing, the proceeds of which shall be applied directly by
Administrative Agent to reimburse Issuing Bank for the amount of such honored
drawing; and provided further, if for any reason proceeds of Revolving Loans are
not received by Issuing Bank on the Reimbursement Date in an amount equal to the
amount of such honored drawing, such Borrower shall reimburse Issuing Bank, on
demand, in an amount in same day funds equal to the excess of the amount of such
honored drawing over the aggregate amount of such Revolving Loans, if any, which
are so received. Nothing in this Section 2.4(d) shall be deemed to relieve any
Revolving Lenders from its obligation to make Revolving Loans on the terms and
conditions set forth herein, and Borrowers shall retain any and all rights they
may have against any such Revolving Lender resulting from the failure of such
Revolving Lender to make such Revolving Loans under this Section 2.4(d).

(e) Lenders’ Purchase of Participations in Letters of Credit. Immediately upon
the issuance of each Letter of Credit, each Revolving Lender shall be deemed to
have purchased, and hereby agrees to irrevocably purchase, from Issuing Bank a
participation in such Letter of Credit and any drawings honored thereunder in an
amount equal to such Lender’s Revolving Percentage of the maximum amount which
is or at any time may become available to be drawn thereunder (it being
understood, for the avoidance of doubt, that any Extended Revolving Lender’s
purchase of such a participation shall be attributable to such Lender’s Extended
Revolving Commitment). In the event that Borrowers shall fail for any reason to
reimburse Issuing Bank as provided in Section 2.4(d), Issuing Bank shall
promptly notify each Revolving Lender of the unreimbursed amount of such honored
drawing and of such Lender’s respective participation therein based on such
Lender’s Revolving Percentage. Each Revolving Lender shall make available to
Issuing Bank an amount equal to its respective participation, in Dollars and in
same day funds, at the office of Issuing Bank specified in such notice, not
later than 12:00 p.m. (New York City time) on the first business day (under the
laws of the jurisdiction in which such office of Issuing Bank is located) after
the date notified by Issuing Bank. In the event that any Revolving Lender fails
to make available to Issuing Bank on such business day the amount of such
Lender’s participation in such Letter of Credit as provided in this
Section 2.4(e), Issuing Bank shall be entitled to recover such amount on demand
from such Lender together with interest thereon for three Business Days at the
rate customarily used by Issuing Bank for the correction of errors among banks
and thereafter at the Base Rate. Nothing in this Section 2.4(e) shall be deemed
to prejudice the right of any Revolving Lender to recover from Issuing Bank any
amounts made available by such Lender to Issuing Bank pursuant to this Section
in the event that it is determined that the payment with respect to a Letter of
Credit in respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of Issuing Bank. In the event
Issuing Bank shall have been reimbursed by other Lenders pursuant to this
Section 2.4(e) for all or any portion of any drawing honored by Issuing Bank
under a Letter of Credit, such Issuing Bank shall distribute to each Lender
which has paid all amounts

 

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payable by it under this Section 2.4(e) with respect to such honored drawing
such Lender’s Revolving Percentage of all payments subsequently received by
Issuing Bank from Borrowers in reimbursement of such honored drawing when such
payments are received. Any such distribution shall be made to a Lender at its
primary address set forth below its name on Appendix B or at such other address
as such Lender may request.

(f) Obligations Absolute. The obligation of a Borrower to reimburse Issuing Bank
for drawings honored under the Letters of Credit issued by it and to repay any
Revolving Loans made by Lenders pursuant to Section 2.4(d) and the obligations
of Lenders under Section 2.4(e) shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms hereof under all circumstances
including any of the following circumstances: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim,
set-off, defense or other right which such Borrower or any Lender may have at
any time against a beneficiary or any transferee of any Letter of Credit (or any
Persons for whom any such transferee may be acting), Issuing Bank, Lender or any
other Person or, in the case of a Lender, against such Borrower, whether in
connection herewith, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between such Borrower or one
of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured); (iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; (iv) payment
by Issuing Bank under any Letter of Credit against presentation of a draft or
other document which does not substantially comply with the terms of such Letter
of Credit; (v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Holdings or any of
its Subsidiaries; (vi) any breach hereof or any other Credit Document by any
party thereto; (vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing; or (viii) the fact that an Event of Default
or a Default shall have occurred and be continuing; provided, in each case, that
payment by Issuing Bank under the applicable Letter of Credit shall not have
constituted gross negligence or willful misconduct of Issuing Bank under the
circumstances in question.

(g) Indemnification. Without duplication of any obligation of Borrowers under
Section 10.2 or 10.3, in addition to amounts payable as provided herein, each
Borrower hereby agrees to protect, indemnify, pay and save harmless Issuing Bank
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which Issuing
Bank may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit to such Borrower by Issuing Bank, other than as
a result of (1) the gross negligence or willful misconduct of Issuing Bank or
(2) the wrongful dishonor by Issuing Bank of a proper demand for payment made
under any Letter of Credit issued by it, or (ii) the failure of Issuing Bank to
honor a drawing under any such Letter of Credit as a result of any Governmental
Act.

(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

 

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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.

(i) Mitigating Arrangements. Company agrees that, with respect to any Issuing
Bank (other than BNPP), 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 BNPP’s
risk, as Issuing Bank, on terms that are no less favorable to BNPP in respect of
its fronting risk than the Mitigating Arrangements are in respect of such
Issuing Bank’s fronting risk.

(j) [Reserved].

(k) Replacement of Issuing Bank. Any Issuing Bank may be replaced at any time by
written agreement among Company, the Administrative Agent, the replaced Issuing
Bank and the successor Issuing Bank. The Administrative Agent shall notify the
Lenders of any such replacement of such Issuing Bank. At the time any such
replacement shall become effective, Company shall pay all unpaid fees accrued
for the account of the replaced Issuing Bank pursuant to Section 2.11(b). From
and after the effective date of any such replacement, (i) the successor Issuing
Bank shall have all the rights and obligations of such Issuing Bank under this
Agreement with respect to Letters of Credit to be issued thereafter and
(ii) references herein to the term “Issuing Bank” shall be deemed to refer to
such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the replacement of
an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

(l) Outstanding Letters of Credit. All Letters of Credit outstanding immediately
prior to the Amendment Agreement Effective Date shall remain outstanding
hereunder on the terms set forth herein; provided, however, that pursuant to the
terms of the Amendment Agreement, any Extended Revolving Lender’s purchase of a
participation in or other obligations with respect to Letters of Credit
outstanding immediately prior to the Amendment Agreement Effective Date and
thereafter shall on the Amendment Agreement Effective Date and thereafter be
attributable to such Lender’s Extended Revolving Commitment. Accordingly, with
respect to any Extended Revolving Lender, obligations in respect of outstanding
Letters of Credit shall be deemed Priority Letter of Credit Obligations.

 

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2.5. Pro Rata Shares; Availability of Funds.

(a) Pro Rata Shares. All Loans shall be made, and all participations purchased,
by Lenders simultaneously and proportionately to their respective Pro Rata
Shares, it being understood that no Lender shall be responsible for any default
by any other Lender in such other Lender’s obligation to make a Loan requested
hereunder or purchase a participation required hereby nor shall any Term Loan
Commitment or any Revolving Commitment of any Lender be increased or decreased
as a result of a default by any other Lender in such other Lender’s obligation
to make a Loan requested hereunder or purchase a participation required hereby.

(b) Availability of Funds. Unless Administrative Agent shall have been notified
by any Lender prior to the applicable Credit Date that such Lender does not
intend to make available to Administrative Agent the amount of such Lender’s
Loan requested on such Credit Date, Administrative Agent may assume that such
Lender has made such amount available to Administrative Agent on such Credit
Date and Administrative Agent may, in its sole discretion, but shall not be
obligated to, make available to the relevant Borrower a corresponding amount on
such Credit Date. If such corresponding amount is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Credit Date until the date such amount
is paid to Administrative Agent, at the customary rate set by Administrative
Agent for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Administrative Agent’s demand therefor, Administrative
Agent shall promptly notify the relevant Borrower and such Borrower shall
immediately pay such corresponding amount to Administrative Agent together with
interest thereon, for each day from such Credit Date until the date such amount
is paid to Administrative Agent, at the rate payable hereunder for Base Rate
Loans for such Class of Loans. Nothing in this Section 2.5(b) shall be deemed to
relieve any Lender from its obligation to fulfill its Term Loan Commitments and
Revolving Commitments hereunder or to prejudice any rights that a Borrower may
have against any Lender as a result of any default by such Lender hereunder.

2.6. Use of Proceeds.

The proceeds of the Revolving Loans and Letters of Credit made after the Closing
Date shall be applied by Borrowers for working capital and other general
corporate purposes (including Permitted Acquisitions) of Holdings and its
Subsidiaries. No portion of the proceeds of any Credit Extension shall be used
in any manner that causes or might cause such Credit Extension or the
application of such proceeds to violate Regulation T, Regulation U or
Regulation X of the Board of Governors or any other regulation thereof or to
violate the Exchange Act.

2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.

(a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal
records an account or accounts evidencing the Obligations of each Borrower to
such Lender, including the amounts of the Loans made by it and each repayment
and prepayment in respect

 

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thereof. Any such recordation shall be conclusive and binding on each Borrower,
absent manifest error; provided, that the failure to make any such recordation,
or any error in such recordation, shall not affect any Lender’s Revolving
Commitments or any Borrower’s Obligations in respect of any applicable Loans;
and provided further, in the event of any inconsistency between the Register and
any Lender’s records, the recordations in the Register shall govern.

(b) Register. Administrative Agent (or its agent or sub-agent appointed by it)
on behalf of the Borrowers shall maintain at the Principal Office a register for
the recordation of the names and addresses of Lenders and the Non-Extended
Revolving Commitments, Extended Revolving Commitments and Loans of each Lender
from time to time (the “Register”). The Register shall be available for
inspection by any Borrower or any Lender (with respect to any entry relating to
such Lender’s Loans) at any reasonable time and from time to time upon
reasonable prior notice. Administrative Agent shall record, or shall cause to be
recorded, in the Register the Revolving Commitments and the Loans in accordance
with the provisions of Section 10.6, and each repayment or prepayment in respect
of the principal amount of the Loans, and any such recordation shall be
conclusive and binding on each Borrower and each Lender, absent manifest error;
provided, failure to make any such recordation, or any error in such
recordation, shall not affect any Lender’s Revolving Commitments or any
Borrower’s Obligations in respect of any Loan. Each Borrower hereby designates
U.S. Bank to serve as such Borrower’s agent solely for purposes of maintaining
the Register as provided in this Section 2.7, and each Borrower hereby agrees
that, to the extent U.S. Bank serves in such capacity, U.S. Bank and its
officers, directors, employees, agents, sub-agents and affiliates shall
constitute “Indemnitees.”

(c) Notes. If so requested by any Lender by written notice to Company (with a
copy to Administrative Agent) at least two Business Days prior to the Amendment
Agreement Effective Date, or at any time thereafter, each relevant Borrower
shall execute and deliver to such Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of such Lender
pursuant to Section 10.6) on the Amendment Agreement Effective Date (or, if such
notice is delivered after the Amendment Agreement Effective Date, promptly after
Borrower’s receipt of such notice) a Note or Notes to evidence such Lender’s
Tranche C-2 Cash Pay Term Loan, Tranche C-2 PIK Term Loan, Tranche C-3 Cash Pay
Term Loan, Tranche C-3 PIK Term Loan, Other New Term Loan, Non-Extended
Revolving Loan or Extended Revolving Loan, as the case may be.

Any promissory note evidencing a Tranche C-2 Term Loan prior to the Amendment
Agreement Effective Date may be exchanged, upon the request of the relevant
Lender made through Administrative Agent and surrender of such promissory note
to the relevant Borrower through Administrative Agent, for promissory notes
evidencing the Tranche C-2 PIK Term Loans into which such Lender’s Tranche C-2
Term Loans were converted on the Amendment Agreement Effective Date. Any
promissory note evidencing a Tranche C-3 Term Loan prior to the Amendment
Agreement Effective Date may be exchanged, upon the request of the relevant
Lender made through Administrative Agent and surrender of such promissory note
to the relevant Borrower through Administrative Agent, for promissory notes
evidencing the Tranche C-3 PIK Term Loans into which such Lender’s Tranche C-3
Term Loans were

 

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converted on the Amendment Agreement Effective Date. Any promissory note
evidencing a Revolving Loan prior to the Amendment Agreement Effective Date may
be exchanged, upon the request of the relevant Lender made through the
Administrative Agent and surrender of such promissory note to the relevant
Borrower through the Administrative Agent, for promissory notes evidencing the
Extended Revolving Loans into which such Lender’s Revolving Loans were converted
on the Amendment Agreement Effective Date.

2.8. Interest on Loans.

(a) Except as otherwise set forth herein, each Class of Loan shall bear interest
on the unpaid principal amount thereof from the date made through repayment
(whether by acceleration or otherwise) thereof, (i) if a Base Rate Loan, at the
Base Rate plus the Applicable Margin applicable to such Class of Loans, or
(ii) if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the
Applicable Margin applicable to such Class of Loan.

(b) The basis for determining the rate of interest with respect to any Loan, and
the Interest Period with respect to any Eurodollar Rate Loan, shall be selected
by the relevant Borrower and notified to Administrative Agent and Lenders
pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as
the case may be. If on any day a Loan is outstanding with respect to which a
Funding Notice or Conversion/Continuation Notice has not been delivered to
Administrative Agent in accordance with the terms hereof specifying the
applicable basis for determining the rate of interest, then for that day such
Loan shall be a Base Rate Loan.

(c) In connection with Eurodollar Rate Loans there shall be no more than ten
(10) Interest Periods outstanding at any time. In the event a Borrower fails to
specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable
Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a
Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on
the last day of the then-current Interest Period for such Loan (or if
outstanding as a Base Rate Loan will remain as, or (if not then outstanding)
will be made as, a Base Rate Loan). In the event a Borrower fails to specify an
Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or
Conversion/Continuation Notice, such Borrower shall be deemed to have selected
an Interest Period of one month. As soon as practicable after 10:00 a.m. (New
York City time) on each Interest Rate Determination Date, Administrative Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to each Borrower and each Lender.

(d) Interest payable pursuant to Section 2.8(a) shall be computed (i) in the
case of Base Rate Loans on the basis of a 365-day or 366-day year, as the case
may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day
year, in each case for the actual number of days elapsed in the period during
which it accrues. In computing interest on any Loan, the date of the making of
such Loan or the first day of an Interest Period applicable to such Loan or,
with respect to a Term Loan, the last Interest Payment Date with respect to such
Term Loan or,

 

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with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan,
the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as
the case may be, shall be included, and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan or, with respect
to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of
conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may
be, shall be excluded; provided, if a Loan is repaid on the same day on which it
is made, one day’s interest shall be paid on that Loan.

(e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue
on a daily basis and shall be payable in arrears on each Interest Payment Date
with respect to interest accrued on and to each such payment date; (ii) shall
accrue on a daily basis and shall be payable in arrears upon any prepayment of
that Loan, whether voluntary or mandatory, to the extent accrued on the amount
being prepaid; and (iii) shall accrue on a daily basis and shall be payable in
arrears at maturity of the Loans, including final maturity of the Loans;
provided, however, with respect to any voluntary prepayment of a Base Rate Loan,
accrued interest shall instead be payable on the applicable Interest Payment
Date. Notwithstanding anything to the contrary contained herein, solely with
respect to Extended Revolving Loans, the payment of interest accrued from the
last Interest Payment Date prior to the Amendment Agreement Effective Date
through, and payable on, September 30, 2014, is hereby waived by the Extended
Revolving Lenders.

(f) Each Borrower agrees to pay to Issuing Bank, with respect to drawings
honored under any Letter of Credit, interest on the amount paid by Issuing Bank
in respect of each such honored drawing from the date such drawing is honored to
but excluding the date such amount is reimbursed by or on behalf of such
Borrower at a rate equal to (i) for the period from the date such drawing is
honored to but excluding the applicable Reimbursement Date, (A) if Issuing Bank
is a Priority Lender, the rate of interest otherwise payable hereunder with
respect to Extended Revolving Loans that are Base Rate Loans and (B) if Issuing
Bank is a Non-Priority Lender, the rate of interest otherwise payable hereunder
with respect to Non-Extended Revolving Loans that are Base Rate Loans, and
(ii) thereafter, in each case, a rate which is 2% per annum in excess of the
rate of interest otherwise payable under the immediately preceding clause (f)(i)
of this Section.

(g) Interest payable pursuant to Section 2.8(f) shall be computed on the basis
of a 365/366-day year for the actual number of days elapsed in the period during
which it accrues, and shall be payable on demand or, if no demand is made, on
the date on which the related drawing under a Letter of Credit is reimbursed in
full. Promptly upon receipt by Issuing Bank of any payment of interest pursuant
to Section 2.8(f), Issuing Bank shall distribute to each Lender, out of the
interest received by Issuing Bank in respect of the period from the date such
drawing is honored to but excluding the date on which Issuing Bank is reimbursed
for the amount of such drawing (including any such reimbursement out of the
proceeds of any Revolving Loans), the amount that such Lender would have been
entitled to receive in respect of the letter of credit fee that would have been
payable in respect of such Letter of Credit for such period if no drawing had
been honored under such Letter of Credit. In the event Issuing Bank shall have
been reimbursed by Lenders for all or any portion of such honored drawing,
Issuing Bank shall distribute to each Lender which has paid all amounts payable
by it under Section 2.4(e) with

 

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respect to such honored drawing such Lender’s Revolving Percentage of any
interest received by Issuing Bank in respect of that portion of such honored
drawing so reimbursed by Lenders for the period from the date on which Issuing
Bank was so reimbursed by Lenders to but excluding the date on which such
portion of such honored drawing is reimbursed by Borrowers.

(h) Notwithstanding anything to the contrary contained herein, interest payable
in respect of PIK Loans during the PIK Period (and solely with respect to PIK
Term Loans, irrespective of whether such interest accrues prior to or after the
Amendment Agreement Effective Date) shall be payable “in kind” by capitalizing
such interest in its entirety and thereby increasing the outstanding principal
amount of the applicable PIK Loan on the applicable Interest Payment Date;
provided that, in the case of any voluntary or mandatory prepayment of any Loan
or payment on maturity, including final maturity, of any PIK Loan, any accrued
but not yet capitalized interest thereon will be deemed to have been so
capitalized immediately prior to the prepayment or maturity of such PIK Loan.
Such paid-in-kind interest (“PIK Interest”) shall be deemed paid, and the
principal amount of the PIK Loans as so increased shall be deemed “Loans”
hereunder and under the other Credit Documents for all purposes and shall
thereafter accrue interest in accordance with the terms of this Agreement.
Notwithstanding anything to the contrary contained herein, no PIK Interest shall
be paid in respect of any interest accrued from the last Interest Payment Date
prior to the Amendment Agreement Effective Date through September 30, 2014 with
respect to the Extended Revolving Loans.

2.9. Conversion/Continuation.

(a) Subject to Section 2.18 and so long as no Default or Event of Default shall
have occurred and then be continuing, Borrowers shall have the option:

(i) to convert at any time all or any part of any Term Loan or Revolving Loan
equal to $1,000,000 and integral multiples of $500,000 in excess of that amount
from one Type of Loan to another Type of Loan; provided, a Eurodollar Rate Loan
may only be converted on the expiration of the Interest Period applicable to
such Eurodollar Rate Loan unless Borrowers shall pay all amounts due under
Section 2.18 in connection with any such conversion; or

(ii) upon the expiration of any Interest Period applicable to any Eurodollar
Rate Loan, to continue all or any portion of such Loan equal to $1,000,000 and
integral multiples of $500,000 in excess of that amount as a Eurodollar Rate
Loan.

(b) The relevant Borrower shall deliver a Conversion/Continuation Notice to
Administrative Agent no later than 10:00 a.m. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a
Conversion/Continuation Notice for conversion to, or continuation of, any
Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and the
related Borrower shall be bound to effect a conversion or continuation in
accordance therewith.

 

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2.10. Default Interest.

If any principal of or interest on any Loan or any fee or other amount payable
by Borrowers hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment (and including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand
(x) in the case of overdue principal of any Loan, at a rate that is 2% per annum
in excess of the interest rate otherwise payable hereunder with respect to such
Loan and (y) in the case of any such fees and other amounts, at a rate which is
2% per annum in excess of the interest rate otherwise payable hereunder for Base
Rate Loans that are Revolving Loans; provided, however, that upon an Event of
Default pursuant to Section 8.1(n) and solely with respect to PIK Loans, the
default rate of interest shall be equal to the sum of (i) the otherwise
applicable rate determined in accordance with this Section 2.10 and
(ii) 5.00% per annum. Payment or acceptance of the increased rates of interest
provided for in this Section 2.10 is not a permitted alternative to timely
payment and shall not constitute a waiver of any Default or Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.

2.11. Fees.

(a) Borrowers agree to pay:

(i) to the Lenders having Non-Extended Revolving Exposure, commitment fees equal
to (A) the average daily difference between (1) the Non-Extended Revolving
Commitments and (2) the aggregate principal amount of (x) all outstanding
Non-Extended Revolving Loans plus (y) the Letter of Credit Usage attributable to
the Non-Extended Revolving Commitments, times (B) the Applicable Revolving
Commitment Fee Percentage applicable to the Non-Extended Revolving Loans;

(ii) to the Lenders having Extended Revolving Exposure, commitment fees equal to
(A) the average daily difference between (1) the Extended Revolving Commitments
and (2) the aggregate principal amount of (x) all outstanding Extended Revolving
Loans plus (y) the Letter of Credit Usage attributable to the Extended Revolving
Commitments, times (B) the Applicable Revolving Commitment Fee Percentage
applicable to the Extended Revolving Loans;

(iii) to Lenders having Non-Extended Revolving Exposure, letter of credit fees
equal to (A) the Applicable Margin for Non-Extended Revolving Loans that are
Eurodollar Rate Loans, times (B) the average aggregate daily maximum amount
available to be drawn under all such Letters of Credit attributable to the
Non-Extended Revolving Commitments (regardless of whether any conditions for
drawing could then be met and determined as of the close of business on any date
of determination);

(iv) to the Lenders having Extended Revolving Exposure, letter of credit fees
equal to (A) the Applicable Margin for Extended Revolving Loans that are
Eurodollar Rate Loans, times (B) the average aggregate daily maximum amount
available to be drawn under all such Letters of Credit attributable to the
Extended Revolving Commitments (regardless of whether any conditions for drawing
could then be met and determined as of the close of business on any date of
determination); and

 

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(v) on September 30, 2014, to the Extended Revolving Lenders, an incentive fee
equal to $2.4 million (the “Incentive Fee”), which fee shall be paid to each
such Extended Revolving Lender based on its pro rata share of the aggregate
Revolving Commitments of all Revolving Lenders; provided, however, that any
portion of the Incentive Fee not allocable to the Extended Revolving Lenders
based on their respective pro rata share of the aggregate Revolving Commitments
of all Revolving Lenders shall be retained by the Company.

All fees referred to in this Section 2.11(a) shall be paid to Administrative
Agent at its Principal Office and upon receipt, Administrative Agent shall
promptly distribute to each Lender its Pro Rata Share of the applicable fees
payable to each Class of Lenders.

(b) Borrowers agree to pay directly to Issuing Bank, for its own account, the
following fees:

(i) a fronting fee equal to 0.125% per annum, times the average aggregate daily
maximum amount available to be drawn under all Letters of Credit (determined as
of the close of business on any date of determination); and

(ii) such documentary and processing charges for any issuance, amendment,
transfer or payment of a Letter of Credit as are in accordance with Issuing
Bank’s standard schedule for such charges and as in effect at the time of such
issuance, amendment, transfer or payment, as the case may be.

(c) All fees referred to in Section 2.11(a) and 2.11(b)(i) shall be calculated
on the basis of a 360-day year and the actual number of days elapsed and shall
be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year during the Revolving Commitment Period, commencing on
the first such date to occur after the Closing Date, and on each Revolving
Commitment Termination Date.

(d) In addition to any of the foregoing fees, Borrowers agree to pay to Agents
such other fees in the amounts and at the times separately agreed upon.

2.12. Scheduled Amortization of Term Loans.

(a) The principal amounts of the Tranche C-2 Term Loans and Tranche C-3 Term
Loans shall be repaid in consecutive quarterly installments (each, an
“Installment”) on each March 31, June 30, September 30 and December 31 of each
year (each, an “Installment Date”), commencing, in respect of the Tranche C-2
Term Loans, on December 31, 2010, and, in respect of the Tranche C-3 Term Loans,
on June 30, 2012, in an aggregate amount of 0.25% of the aggregate principal
amount of Term Loans that would have been outstanding on the Closing Date
(assuming for this Section 2.12 only that Tranche C Term Loans, Tranche C-2 Term

 

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Loans and Tranche C-3 Term Loans were issued on June 1, 2006 in an amount equal
to the Original Term Loans issued under the Original Credit Agreement and that
all scheduled amortization payments prior to the Effective Date had been made),
with the remaining balance due on the maturity date for such Term Loans;
provided, in the event any Other New Term Loans are made, such Other New Term
Loans shall be repaid on each Installment Date occurring on or after the
applicable Increased Amount Date in an amount equal to (i) the aggregate
principal amount of Other New Term Loans of the applicable Series of Other New
Term Loans, times (ii) the ratio (expressed as a percentage) of (A) the amount
of all other Term Loans being repaid on such Installment Date and (B) the total
aggregate principal amount of all other Term Loans outstanding on such Increased
Amount Date.

(b) Notwithstanding the foregoing, (w) during the PIK Period, such Installments
shall not be payable with respect to PIK Term Loans; (x) such Installments shall
be reduced in connection with any voluntary or mandatory prepayments of the
Tranche C-2 Term Loans or the Tranche C-3 Term Loans, as applicable, in
accordance with Sections 2.13, 2.14 and 2.15, as applicable; (y) the Tranche C-2
Term Loans, together with all other amounts owed hereunder with respect thereto,
shall, in any event, be paid in full no later than the Tranche C-2 Term Loan
Maturity Date; and (z) the Tranche C-3 Term Loans, together with all other
amounts owed hereunder with respect thereto, shall, in any event, be paid in
full no later than the Tranche C-3 Term Loan Maturity Date.

2.13. Voluntary Prepayments/Commitment Reductions.

(a) Voluntary Prepayments.

(i) Any time and from time to time:

(A) with respect to Base Rate Loans, Borrowers may prepay any such Loans on any
Business Day in whole or in part, in an aggregate minimum amount of $1,000,000
and integral multiples of $500,000 in excess of that amount; and

(B) with respect to Eurodollar Rate Loans, Borrowers may prepay any such Loans
on any Business Day in whole or in part in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of that amount.

(ii) All such prepayments shall be made:

(A) upon not less than one Business Day’s prior written or telephonic notice in
the case of Base Rate Loans; and

(B) upon not less than three Business Days’ prior written or telephonic notice
in the case of Eurodollar Rate Loans,

 

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in each case given to Administrative Agent by 12:00 p.m. (New York City time) on
the date required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (and Administrative Agent will promptly transmit such
telephonic or original notice for Term Loans or Revolving Loans, as the case may
be, by telefacsimile or telephone to each Lender). Upon the giving of any such
notice, the principal amount of the Loans specified in such notice shall become
due and payable on the prepayment date specified therein. Any such voluntary
prepayment shall be applied as specified in Section 2.15(a). Notwithstanding the
foregoing, during the PIK Period, none of the Credit Parties shall make a
voluntary payment pursuant to this Section 2.13(a).

(b) Voluntary Commitment Reductions.

(i) Company may, upon not less than three Business Days’ prior written or
telephonic notice confirmed in writing to Administrative Agent (which original
written or telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each applicable Lender), at any time and from time
to time terminate in whole or permanently reduce in part, without premium or
penalty, the Revolving Commitments in an amount up to the amount by which the
Revolving Commitments exceed the Total Utilization of Revolving Commitments at
the time of such proposed termination or reduction; provided, any such partial
reduction of the Revolving Commitments shall be in an aggregate minimum amount
of $1,000,000 and integral multiples of $500,000 in excess of that amount.

(ii) Company’s notice to Administrative Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving
Commitments shall be effective on the date specified in Company’s notice and
shall reduce the Revolving Commitment of each Lender proportionately to its
Revolving Percentage thereof.

2.14. Mandatory Prepayments/Commitment Reductions.

(a) Asset Sales. No later than three Business Days following the date of receipt
by Holdings or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrowers
shall prepay the Term Loans in an aggregate amount equal to such Net Asset Sale
Proceeds; provided that so long as no Default or Event of Default shall have
occurred and be continuing, Borrowers shall have the option, directly or through
one or more of its Subsidiaries, to invest Net Asset Sale Proceeds (x) within
365 days following receipt of such Net Asset Sale Proceeds or (y) if a Credit
Party enters into a legally binding commitment to reinvest such Net Asset Sale
Proceeds within 365 days following receipt thereof (and such commitment remains
in effect), within 180 days of the date of such legally binding commitment, in
assets useful to the business of Holdings and its Subsidiaries (such Net Asset
Sale Proceeds so reinvested or committed to be reinvested, “Asset Sale
Reinvestment Deferred Amount”).

 

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(b) Insurance/Condemnation Proceeds. No later than three Business Days following
the date of receipt by Holdings or any of its Subsidiaries, or Administrative
Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrowers shall
prepay the Term Loans in an aggregate amount equal to such Net
Insurance/Condemnation Proceeds; provided that so long as no Default or Event of
Default shall have occurred and be continuing, Borrowers shall have the option,
directly or through one or more of its Subsidiaries to invest such Net
Insurance/Condemnation Proceeds (x) within 365 days following receipt of such
Net Insurance/Condemnation Proceeds or (y) if a Credit Party enters into a
legally binding commitment to reinvest such Net Insurance/Condemnation Proceeds
within 365 days following receipt thereof (and such commitment remains in
effect), within 180 days of the date of such legally binding commitment, in
assets useful to the business of Holdings and its Subsidiaries, which investment
may include the repair, restoration or replacement of the applicable assets
thereof (such Net Insurance/Condemnation Proceeds so reinvested or committed to
be reinvested, “Insurance/Condemnation Reinvestment Deferred Amount”).

(c) Issuance of Debt. No later than three Business Days following the date of
receipt by Holdings or any of its Subsidiaries of any Net Cash Proceeds from the
incurrence of any Indebtedness of Holdings or any of its Subsidiaries (other
than with respect to any Indebtedness permitted to be incurred pursuant to
Section 6.3), Borrowers shall prepay the Term Loans in an aggregate amount equal
to 100% of such Net Cash Proceeds.

(d) Consolidated Excess Cash Flow. In the event that (x) there shall be
Consolidated Excess Cash Flow for any Fiscal Year (commencing with the Fiscal
Year ending June 30, 2007 but excluding the Fiscal Year ending June 30, 2014)
and (y) the Total Leverage Ratio as of the last day of such Fiscal Year
(determined for any such period by reference to the Compliance Certificate
delivered pursuant to Section 5.2(b) calculating the Total Leverage Ratio as of
the last day of such Fiscal Year) shall be greater than 5:00:1, Borrowers shall,
no later than ninety days after the end of such Fiscal Year, prepay the Term
Loans in an aggregate amount equal to (i) 50% of such Consolidated Excess Cash
Flow minus (ii) voluntary repayments of the Loans during such Fiscal Year
(including repayments of Revolving Loans to the extent the Revolving Commitments
are permanently reduced in connection with such repayments).

(e) Revolving Loans. Borrowers shall from time to time prepay the Revolving
Loans to the extent necessary so that the Total Utilization of Revolving
Commitments shall not at any time exceed the Revolving Commitments then in
effect.

(f) Letter of Credit Usage Exceeds Revolving Commitments. If for any reason at
any time during the five Business Day period immediately preceding the
Non-Extended Revolving Commitment Termination Date, the aggregate Revolving
Exposure exceeds the aggregate Revolving Commitments of the Extended Revolving
Lenders at such time, then the Borrowers shall promptly prepay or cause to be
promptly prepaid Revolving Loans and/or cash collateralize Letters of Credit to
the satisfaction of the applicable Issuing Bank in an aggregate amount necessary
to eliminate such excess.

 

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(g) Prepayment Certificate. Concurrently with any prepayment of the Loans
pursuant to Sections 2.14(a) through 2.14(d), Company shall deliver to
Administrative Agent a certificate of a Responsible Officer demonstrating the
calculation of the amount of the applicable net proceeds or Consolidated Excess
Cash Flow, as the case may be. In the event that Company shall subsequently
determine that the actual amount received exceeded (an “excess”) or was less
than (a “deficit”) the amount set forth in such certificate, (x) in the case of
an excess, Company shall promptly make an additional prepayment of the Term
Loans and (y) in the case of a deficit which resulted in an overpayment of the
Term Loans, the amount of such overpayment shall be credited against the next
Installment or Installments payable under Section 2.12, and in each case Company
shall deliver to Administrative Agent a certificate of its Responsible Officer
demonstrating the derivation of such excess or deficit, as the case may be.

2.15. Application of Prepayments/Reductions.

(a) Application of Voluntary Prepayments by Type of Loans. Any prepayment of any
Loan pursuant to Section 2.13(a) shall be applied as specified by Borrowers in
the applicable notice of prepayment; provided that, in the event Borrowers fail
to specify the Loans to which any such prepayment shall be applied, such
prepayment shall be applied as follows: first, to repay outstanding Revolving
Loans on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof) to the full extent thereof; and second, to prepay the
Term Loans on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof) and further applied on a pro rata basis to the
remaining Installments of principal.

(b) Application of Mandatory Prepayments. Any amount required to be paid
pursuant to Sections 2.14(a) through 2.14(e), shall be applied to prepay the
scheduled Installments of principal of Term Loans or Revolving Loans, as
applicable, as directed by Company.

(c) Waivable Mandatory Prepayment. Anything contained herein to the contrary
notwithstanding, in the event Company is required to make any mandatory
prepayment (a “Waivable Mandatory Prepayment”) of the Term Loans, not less than
three Business Days prior to the date (the “Required Prepayment Date”) on which
Company is required to make such Waivable Mandatory Prepayment, Company shall
notify Administrative Agent of the amount of such prepayment, the Classes of
Term Loans to be repaid and Administrative Agent will promptly thereafter notify
each Lender holding an outstanding Tranche C-2 Term Loan and/or Tranche C-3 Term
Loan of the amount of such Lender’s Pro Rata Share of such Waivable Mandatory
Prepayment with respect to such Class and such Lender’s option to refuse such
amount. Each such Lender may exercise such option by giving written notice to
Company and Administrative Agent of its election to do so on or before the first
Business Day prior to the Required Prepayment Date (it being understood that any
Lender which does not notify Company and Administrative Agent of its election to
exercise such option on or before the first Business Day prior to the Required
Prepayment Date shall be deemed to have elected, as of such date, not to
exercise such option). On the Required Prepayment Date, Company shall pay to
Administrative Agent an amount equal to that portion of the Waivable Mandatory
Prepayment payable to those Lenders that have elected not to exercise such
option, which shall be applied to prepay the Tranche C-2 Term Loans and Tranche
C-3 Term Loans, as applicable, of such Lenders. Company shall be entitled to
retain an amount equal to that portion of the Waivable Mandatory Prepayment
otherwise payable to those Lenders that have elected to exercise such option, to
be used for general business purposes.

 

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(d) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate
Loans. Considering each Class of Loans being prepaid separately, any prepayment
thereof shall be applied first to Base Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Borrowers pursuant
to Section 2.18(c).

2.16. General Provisions Regarding Payments.

(a) Subject to Section 2.8(h), all payments by Borrowers of principal, interest,
fees and other Obligations shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 1:00 p.m. (New York City time)
on the date due at the Principal Office designated by Administrative Agent for
the account of Lenders; for purposes of computing interest and fees, funds
received by Administrative Agent after that time on such due date shall be
deemed to have been paid by Borrowers on the next succeeding Business Day.

(b) All payments in respect of the principal amount of any Loan (other than
voluntary prepayments of Revolving Loans) shall be accompanied by payment of
accrued interest on the principal amount being repaid or prepaid, and all such
payments (and, in any event, any payments in respect of any Loan on a date when
interest is due and payable with respect to such Loan) shall be applied to the
payment of interest then due and payable before application to principal.

(c) Administrative Agent (or its agent or sub-agent appointed by it) shall
promptly distribute to each Lender at such address as such Lender shall indicate
in writing, such Lender’s applicable Pro Rata Share of all payments and
prepayments of principal and interest due hereunder, together with all other
amounts due thereto, including, without limitation, all fees payable with
respect thereto, to the extent received by Administrative Agent.

(d) Notwithstanding the foregoing provisions hereof, if any Conversion/
Continuation Notice is withdrawn as to any Affected Lender or if any Affected
Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar
Rate Loans, Administrative Agent shall give effect thereto in apportioning
payments received thereafter.

(e) Subject to the provisos set forth in the definition of “Interest Period” as
they may apply to Revolving Loans, whenever any payment to be made hereunder
with respect to any Loan shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, with respect to Revolving Loans only, such extension of time shall be
included in the computation of the payment of interest hereunder or of the
Revolving Commitment fees hereunder.

 

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(f) Administrative Agent shall deem any payment by or on behalf of Borrowers
hereunder that is not made in same day funds prior to 1:00 p.m. (New York City
time) to be a non-conforming payment (it being understood, for the avoidance of
doubt, that a payment shall not be deemed non-conforming because it is payable
in kind pursuant to Section 2.8(h)). Any such payment shall not be deemed to
have been received by Administrative Agent until the later of (i) the time such
funds become available funds, and (ii) the applicable next Business Day.
Administrative Agent shall give prompt telephonic notice to the relevant
Borrower and each applicable Lender (confirmed in writing) if any payment is
non-conforming. Any non-conforming payment may constitute or become a Default or
Event of Default in accordance with the terms of Section 8.1(a). Interest shall
continue to accrue on any principal as to which a non-conforming payment is made
until such funds become available funds (but in no event less than the period
from the date of such payment to the next succeeding applicable Business Day) at
the rate determined pursuant to Section 2.10 from the date such amount was due
and payable until the date such amount is paid in full.

(g) If an Event of Default shall have occurred and not otherwise been waived,
and the maturity of the Obligations shall have been accelerated pursuant to
Section 8.1, all payments or proceeds received by Agents hereunder in respect of
any of the Obligations, shall be applied in accordance with the application
arrangements described in Section 7.2 of the Pledge and Security Agreement.

2.17. Ratable Sharing.

Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied
in accordance with the terms hereof), through the exercise of any right of
set-off or banker’s lien, by counterclaim or cross action or by the enforcement
of any right under the Credit Documents or otherwise, or as adequate protection
of a deposit treated as cash collateral under the Bankruptcy Code, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to such Lender hereunder or under the other Credit
Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, in each case other than as
explicitly set forth in this Agreement or any other Credit Document (including
without limitation Section 7.2 of the Pledge and Security Agreement) and
excluding the proceeds of any assignment or participation of any Obligations
owing to such Lender, then the Lender receiving such proportionately greater
payment shall (a) notify Administrative Agent and each other Lender of the
receipt of such payment and (b) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each seller of a
participation simultaneously upon the receipt by such seller of its portion of
such payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided, if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of a Borrower
or otherwise, those purchases shall be rescinded and the purchase prices paid
for such participations shall be returned to such purchasing Lender ratably to
the extent of such recovery, but without interest. Each Borrower expressly
consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker’s lien,
set-off or

 

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counterclaim with respect to any and all monies owing by such Borrower to that
holder with respect thereto as fully as if that holder were owed the amount of
the participation held by that holder. Notwithstanding anything to the contrary
contained herein, the provisions of this Section 2.17 shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to non-Defaulting Lenders as opposed to Defaulting Lenders.

2.18. Making or Maintaining Eurodollar Rate Loans.

(a) Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon so long
as such circumstance is continuing (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist,
and (ii) any Funding Notice or Conversion/Continuation Notice given by a
Borrower with respect to the Loans in respect of which such determination was
made shall be deemed to be rescinded by such Borrower.

(b) Illegality or Impracticability of Eurodollar Rate Loans. In the event that
on any date any Lender shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto but shall be made only after
consultation with Company and Administrative Agent) that the making, maintaining
or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result
of compliance by such Lender in good faith with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful), or (ii) has
become impracticable, as a result of contingencies occurring after the Closing
Date which materially and adversely affect the London interbank market or the
position of such Lender in that market, then, and in any such event, such Lender
shall be an “Affected Lender” and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (A) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (B) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by a Borrower pursuant to a Funding
Notice or a Conversion/Continuation Notice, the Affected Lender shall make such
Loan as (or continue such Loan as or convert such Loan to, as the case may be) a
Base Rate Loan, (C) the Affected Lender’s obligation to maintain its outstanding
Eurodollar Rate Loans (the “Affected Loans”) shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (D) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a

 

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Eurodollar Rate Loan then being requested by a Borrower pursuant to a Funding
Notice or a Conversion/Continuation Notice, such Borrower shall have the option,
subject to the provisions of Section 2.18(c), to rescind such Funding Notice or
Conversion/Continuation Notice as to all Lenders by giving notice (by
telefacsimile or by telephone confirmed in writing) to Administrative Agent of
such rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Administrative
Agent shall promptly transmit to each other Lender). Except as provided in the
immediately preceding sentence, nothing in this Section 2.18(b) shall affect the
obligation of any Lender other than an Affected Lender to make or maintain Loans
as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms
hereof.

(c) Compensation for Breakage or Non-Commencement of Interest Periods. Borrowers
shall compensate each Lender, upon written request by such Lender (which request
shall set forth the basis for requesting such amounts), for all reasonable
losses, expenses and liabilities (including any interest paid by such Lender to
Lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and
any loss, expense or liability sustained by such Lender in connection with the
liquidation or re-employment of such funds but excluding loss of anticipated
profits) which such Lender may sustain: (i) if for any reason (other than a
default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur
on a date specified therefor in a Funding Notice or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Conversion/Continuation Notice or a
telephonic request for conversion or continuation; (ii) if any prepayment or
other principal payment of, or any conversion of, any of its Eurodollar Rate
Loans occurs on a date prior to the last day of an Interest Period applicable to
that Loan; or (iii) if any prepayment of any of its Eurodollar Rate Loans is not
made on any date specified in a notice of prepayment given by any Borrower.

(d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of such Lender.

(e) Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all
amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall
be made as though such Lender had actually funded each of its relevant
Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (a) of the definition of
Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of such
Lender to a domestic office of such Lender in the United States of America;
provided, however, each Lender may fund each of its Eurodollar Rate Loans in any
manner it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this Section 2.18 and under
Section 2.19.

 

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2.19. Increased Costs; Capital Adequacy.

(a) Compensation For Increased Costs and Taxes. Subject to the provisions of
Section 2.20 (which shall be controlling with respect to the matters covered
thereby), in the event that any Lender (which term shall include Issuing Bank
for purposes of this Section 2.19(a)) shall determine (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the Closing Date, or compliance by
such Lender with any guideline, request or directive issued or made after the
Closing Date by any central bank or other governmental or quasi-governmental
authority (whether or not having the force of law): (i) imposes, modifies or
holds applicable any reserve (including any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of such Lender (other than any
such reserve or other requirements with respect to Eurodollar Rate Loans that
are reflected in the definition of Adjusted Eurodollar Rate); or (ii) imposes
any other condition (other than with respect to a Tax matter) on or affecting
such Lender (or its applicable lending office) or its obligations hereunder or
the London interbank market; and the result of either of the foregoing is to
increase the cost to such Lender of agreeing to make, making or maintaining
Loans hereunder or to reduce any amount received or receivable by such Lender
(or its applicable lending office) with respect thereto; then, in any such case,
Borrowers shall promptly pay to such Lender, upon receipt of the statement
referred to in the next sentence, such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in
amounts received or receivable hereunder. Such Lender shall deliver to Company
(with a copy to Administrative Agent) a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to such
Lender under this Section 2.19(a), which statement shall be conclusive and
binding upon all parties hereto absent manifest error.

(b) Capital Adequacy Adjustment. In the event that any Lender (which term shall
include Issuing Bank for purposes of this Section 2.19(b)) shall have determined
that the adoption, effectiveness, phase-in or applicability after the Closing
Date of any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender’s Loans or Revolving Commitments or Letters of Credit, or
participations therein or other obligations hereunder with respect to the Loans,
Revolving Commitments or the Letters of Credit to a level below that which such
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controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation with
regard to capital adequacy), then from time to time, within five Business Days
after receipt by Company from such Lender of the statement referred to in the
next sentence, Borrowers shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Company (with a
copy to Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to Lender under
this Section 2.19(b), which statement shall be conclusive and binding upon all
parties hereto absent manifest error.

2.20. Taxes; Withholding, etc.

(a) Payments to Be Free and Clear. All sums payable by any Credit Party
hereunder and under the other Credit Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net income
of any Lender or franchise taxes imposed in lieu of tax on the overall net
income) imposed, levied, collected, withheld or assessed by or within the United
States of America or any political subdivision in or of the United States of
America or any other jurisdiction from or to which a payment is made by or on
behalf of any Credit Party or by any federation or organization of which the
United States of America or any such jurisdiction is a member at the time of
payment.

(b) Withholding of Taxes. If any Credit Party or any other Person is required by
law to make any deduction or withholding on account of any such Tax from any sum
paid or payable by any Credit Party to Administrative Agent or any Lender (which
term shall include Issuing Bank for purposes of this Section 2.20(b)) under any
of the Credit Documents: (i) Company shall notify Administrative Agent of any
such requirement or any change in any such requirement as soon as Company
becomes aware of it; (ii) Borrowers shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the liability to pay
is imposed on any Credit Party) for their own account or (if that liability is
imposed on Administrative Agent or such Lender, as the case may be) on behalf of
and in the name of Administrative Agent or such Lender; (iii) the sum payable by
such Credit Party in respect of which the relevant deduction, withholding or
payment is required shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment, Administrative Agent
or such Lender, as the case may be, receives on the due date a net sum equal to
what it would have received had no such deduction, withholding or payment been
required or made; and (iv) within thirty days after paying any sum from which it
is required by law to make any deduction or withholding, and within thirty days
after the due date of payment of any Tax which it is required by clause
(ii) above to pay, Borrowers shall deliver to Administrative Agent evidence
satisfactory to the other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing or other authority;
provided, no such additional amount shall be required to be paid to any Lender
under clause (iii) above except to the extent that any change after the Closing
Date (in the case of each Lender listed on the signature pages of the Original
Credit Agreement on the Closing Date) or after the effective date of the
Assignment Agreement pursuant to which such Lender became a Lender (in

 

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the case of each other Lender) in any such requirement for a deduction,
withholding or payment as is mentioned therein shall result in an increase in
the rate of such deduction, withholding or payment from that in effect at the
Closing Date or at the date of such Assignment Agreement, as the case may be, in
respect of payments to such Lender, provided, however, that Borrowers shall not
be required to increase any such amounts payable to any Lender pursuant to
clause (iii) of this Section 2.20(b), that are (A) attributable to such Lender’s
failure to comply with the requirements of paragraph (c) of this Section 2.20 or
(B) United States withholding taxes imposed on amounts payable to such Lender at
the time such Lender becomes a party to this Agreement, except to the extent
that such Lender’s assignor (if any) was entitled, at the time of assignment, to
receive additional amounts from Borrowers with respect to such amounts pursuant
to clause (iii) of this Section 2.20(b).

(c) Evidence of Exemption From U.S. Withholding Tax. Each Lender that is not a
United States Person (as such term is defined in Section 7701(a)(30) of the
Internal Revenue Code) for U.S. federal income tax purposes (a “Non-US Lender”)
shall deliver to Administrative Agent for transmission to Company, on or prior
to the Closing Date (in the case of each Lender listed on the signature pages
hereof on the Closing Date) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), and at such other times as may be necessary in the determination of
Company or Administrative Agent (each in the reasonable exercise of its
discretion), (i) two original copies of Internal Revenue Service Form W-8BEN or
W-8ECI (or any successor forms), properly completed and duly executed by such
Lender, and such other documentation required under the Internal Revenue Code
and reasonably requested by Company to establish that such Lender is not subject
to deduction or withholding of United States federal income tax with respect to
any payments to such Lender of principal, interest, fees or other amounts
payable under any of the Credit Documents, or (ii) if such Lender is not a
“bank” or other Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form W-8ECI pursuant to
clause (i) above, a Certificate re Non-Bank Status together with two original
copies of Internal Revenue Service Form W-8BEN (or any successor form), properly
completed and duly executed by such Lender, and such other documentation
required under the Internal Revenue Code and reasonably requested by Company to
establish that such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Lender of
interest payable under any of the Credit Documents. Each Lender required to
deliver any forms, certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to this Section 2.20(c) hereby
agrees, from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, that such Lender shall promptly deliver to
Administrative Agent for transmission to Company two new original copies of
Internal Revenue Service Form W-8BEN or W-8ECI , or a Certificate re Non-Bank
Status and two original copies of Internal Revenue Service Form W-8BEN (or any
successor form), as the case may be, properly completed and duly executed by
such Lender, and such other documentation required under the Internal Revenue
Code and reasonably requested by Company to confirm or establish that such
Lender is not subject to deduction or withholding of United States federal
income tax with respect to payments to such Lender under the Credit Documents,
or notify

 

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Administrative Agent and Company of its inability to deliver any such forms,
certificates or other evidence. Borrowers shall not be required to pay any
additional amount to any Non-US Lender under Section 2.20(b)(iii) if such Lender
shall have failed (A) to deliver the forms, certificates or other evidence
referred to in this Section 2.20(c), or (B) to notify Administrative Agent and
Company of its inability to deliver any such forms, certificates or other
evidence, as the case may be; provided, if such Lender shall have satisfied the
requirements of the first sentence of this Section 2.20(c) on the Closing Date
or on the date of the Assignment Agreement pursuant to which it became a Lender,
as applicable, nothing in this last sentence of Section 2.20(c) shall relieve
any Borrower of its obligation to pay any additional amounts pursuant this
Section 2.20 in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not subject to
withholding as described herein.

(d) Treatment of Certain Refunds. If Administrative Agent or Lender determines,
in its reasonable discretion, that it has received a refund of any Tax as to
which it has been indemnified by Company or other applicable Credit Party or
with respect to which Company or such other applicable Credit Party has paid
additional amounts pursuant to this Section 2.20, it shall pay to Company or
such other applicable Credit Party an amount equal to such refund (but only to
the extent of indemnity payments made, or additional amounts paid, by Company or
such other applicable Credit Party under this Section 2.20 with respect to any
Tax giving rise to such refund), net of all out-of-pocket expenses of
Administrative Agent, or such Lender, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund).

2.21. Obligation to Mitigate.

Each Lender (which term shall include Issuing Bank for purposes of this
Section 2.21) agrees that, as promptly as practicable after the officer of such
Lender responsible for administering its Revolving Commitments, Loans or Letters
of Credit, as the case may be, becomes aware of the occurrence of an event or
the existence of a condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender to receive payments under Section 2.18,
2.19 or 2.20, it will, to the extent not inconsistent with the internal policies
of such Lender and any applicable legal or regulatory restrictions, use
reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions,
including any Affected Loans, through another office of such Lender, or (b) take
such other measures as such Lender may deem reasonable, if as a result thereof
the circumstances which would cause such Lender to be an Affected Lender would
cease to exist or the additional amounts which would otherwise be required to be
paid to such Lender pursuant to Section 2.18, 2.19 or 2.20 would be materially
reduced and if, as determined by such Lender in its sole discretion, the making,
issuing, funding or maintaining of such Revolving Commitments, Loans or Letters
of Credit through such other office or in accordance with such other measures,
as the case may be, would not otherwise adversely affect such Revolving
Commitments, Loans or Letters of Credit or the interests of such Lender;
provided, such Lender will not be obligated to utilize such other office
pursuant to this Section 2.21 unless Borrowers agree to pay all incremental
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a result of utilizing such other office as described above. A certificate as to
the amount of any such expenses payable by Borrowers pursuant to this
Section 2.21 (setting forth in reasonable detail the basis for requesting such
amount) submitted by such Lender to Company (with a copy to Administrative
Agent) shall be conclusive absent manifest error.

2.22. Defaulting Lenders.

Anything contained herein to the contrary notwithstanding, in the event that any
Lender becomes a Defaulting Lender hereunder, then, so long as such Lender is a
Defaulting Lender, (a) such Defaulting Lender shall be deemed not to be a
“Lender” for purposes of voting on any matters (including the granting of any
consents or waivers) with respect to any of the Credit Documents; provided that
any waiver, amendment or modification requiring the consent of all Lenders or
each affected Lender which adversely affects such Defaulting Lender differently
than other affected Lenders shall require the consent of such Defaulting Lender;
(b) to the extent permitted by applicable law, any amount payable to such
Defaulting Lender hereunder (whether on account of principal, interest, fees or
otherwise) shall, in lieu of being distributed to such Defaulting Lender, be
retained by the Administrative Agent in a segregated account and subject to any
applicable requirements of law, be applied (i) first, to the payment of any
amounts owing by such Defaulting Lender to the Administrative Agent hereunder,
(ii) second, to the payment of any amounts owing by such Defaulting Lender to
the Issuing Banks hereunder (pro rata in accordance with such amounts),
(iii) third, to the funding of cash collateralization of any participating
interest in any Letter of Credit in respect of which such Defaulting Lender has
failed to fund its portion thereof as required by this Agreement, as determined
by the Administrative Agent or the applicable Issuing Bank, (iv) fourth, if so
determined by the Administrative Agent, the Issuing Banks and the Borrower, held
in such account as cash collateral for future funding obligations of any
Defaulting Lender under this Agreement, (v) fifth, pro rata, to the payment of
any amounts owing to the Borrower or the Lenders as a result of any judgment of
a court of competent jurisdiction obtained by the Borrower or any Lender against
such Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement and (vi) sixth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that, to the
extent permitted by applicable law, if such payment is a payment of the
principal amount of any Revolving Loan and the Borrower so directs, such payment
shall be applied solely to Revolving Loans of the other Lenders of the same
Class as if such Defaulting Lender had no Revolving Loans outstanding and the
Revolving Exposure of such Defaulting Lender were zero prior to being applied
pursuant to the foregoing waterfall; (c) fees under Section 2.11 shall cease to
accrue on that portion of such Defaulting Lender’s Commitment that remains
unfunded or which has not been included in any determination of Letter of Credit
Usage pursuant to this Section 2.22; (d) if any Letter of Credit Usage exists at
the time a Lender becomes a Defaulting Lender then: (i) such Letter of Credit
Usage shall be reallocated among the non-Defaulting Lenders of the applicable
Class in accordance with their respective Pro Rata Share but only to the extent
the sum of the Revolving Exposure of all non-Defaulting Lenders of such Class
plus such Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage does
not exceed the total of all Commitments of all non-Defaulting Lenders of such
Class, (ii) if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the Borrowers shall, promptly following a request
by the Administrative Agent or any Issuing Bank having issued outstanding
Letters of Credit, cash

 

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collateralize such Defaulting Lender’s Pro Rata Share of the Letter of Credit
Usage (after giving effect to any partial reallocation pursuant to clause
(i) above and only to the extent not covered by any cash collateral provided
pursuant to clause (b) of this Section) in a manner and amount reasonably
acceptable to the Administrative Agent and any applicable Issuing Bank, (iii) if
the Borrowers cash collateralize any portion of such Defaulting Lender’s Pro
Rata Share of the Letter of Credit Usage pursuant to this Section, the Borrowers
shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 2.11 with respect to such cash collateralized portion of the Defaulting
Lender’s Pro Rata Share of the Letter of Credit Usage during the period such
Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage is cash
collateralized, (iv) if that portion of the Letter of Credit Usage attributable
to all non-Defaulting Lenders is reallocated pursuant to this Section 2.22, then
the fees payable to the Lenders pursuant to Section 2.11 shall be adjusted in
accordance with such non-Defaulting Lenders’ Revolving Percentages determined in
accordance with such reallocation, and (v) if any Defaulting Lender’s Pro Rata
Share of the Letter of Credit Usage is neither cash collateralized nor
reallocated pursuant to this Section 2.22, then, without prejudice to any rights
or remedies of the Administrative Agent, any Issuing Bank or any Lender
hereunder, all fees payable to the Lenders pursuant to Section 2.11 with respect
to such Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage that is
neither cash collateralized nor reallocated shall be payable to the applicable
Issuing Bank until such portion of the Letter of Credit Usage is fully cash
collateralized and/or reallocated; and (e) so long as any Lender is a Defaulting
Lender no Issuing Bank shall be required to issue, amend renew or extend any
Letter of Credit unless it is satisfied, it its sole discretion, that the
related exposure will be 100% covered by the Commitments of the non-Defaulting
Lenders and/or cash collateralized. No Revolving Commitment of any Lender shall
be increased or otherwise affected, and, except as otherwise expressly provided
in this Section 2.22, performance by Borrowers of their obligations hereunder
and the other Credit Documents shall not be excused or otherwise modified as a
result of any Lender becoming a Defaulting Lender or the operation of this
Section 2.22. The rights and remedies against a Defaulting Lender under this
Section 2.22 are in addition to other rights and remedies which the Borrowers,
the Administrative Agent and the Issuing Banks and the Lenders may have against
such Defaulting Lender. In the event that each of the Administrative Agent, the
Borrowers, and the Issuing Banks agrees that a Defaulting Lender has adequately
remedied all matters that caused such Lender to be a Defaulting Lender, then
such Lender shall cease to be a Defaulting Lender hereunder and the Letter of
Credit Usage shall be readjusted to reflect the inclusion of such Lender’s
Commitment. On such date such Lender shall purchase at par such of the Loans of
the other Lenders as the Administrative Agent shall determine may be necessary
in order for such Lender to hold such Loans in accordance with its Revolving
Percentage.

2.23. Removal or Replacement of a Lender.

Anything contained herein to the contrary notwithstanding, in the event that:
(a) (i) any Lender (an “Increased-Cost Lender”) shall give notice to Company
that such Lender is an Affected Lender or that such Lender is entitled to
receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which
have caused such Lender to be an Affected Lender or which entitle such Lender to
receive such payments shall remain in effect, and (iii) such Lender shall fail
to withdraw such notice within five Business Days after Company’s request for
such withdrawal; or (b) (i) any Lender shall be a Defaulting Lender and
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shall fail to cure the default as a result of which it has become a Defaulting
Lender within five Business Days after Company’s request that it cure such
default; or (c) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions hereof as
contemplated by Section 10.5(b), the consent of Requisite Lenders shall have
been obtained but the consent of one or more of such other Lenders (each a
“Non-Consenting Lender”) whose consent is required shall not have been obtained;
then, with respect to each such Increased-Cost Lender, Defaulting Lender or
Non-Consenting Lender (the “Terminated Lender”), Company may, by giving written
notice to Administrative Agent and any Terminated Lender of its election to do
so, elect to cause such Terminated Lender (and such Terminated Lender hereby
irrevocably agrees) to assign its outstanding Loans and its Revolving
Commitments, if any, in full to one or more Eligible Assignees (each a
“Replacement Lender”) in accordance with the provisions of Section 10.6 and
Borrowers shall pay the fees, if any, payable thereunder in connection with any
such assignment from an Increased Cost Lender or a Non-Consenting Lender and the
Defaulting Lender shall pay the fees, if any, payable thereunder in connection
with any such assignment from such Defaulting Lender; provided, (A) on the date
of such assignment, the Replacement Lender shall pay to Terminated Lender an
amount equal to the sum of (1) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Terminated Lender, (2) an
amount equal to all unreimbursed drawings that have been funded by such
Terminated Lender, together with all then unpaid interest with respect thereto
at such time and (3) an amount equal to all accrued, but theretofore unpaid fees
owing to such Terminated Lender pursuant to Section 2.11; (B) on the date of
such assignment, Borrowers shall pay any amounts payable to such Terminated
Lender pursuant to Section 2.18(c), 2.19 or 2.20; or otherwise as if it were a
prepayment and (C) in the event such Terminated Lender is a Non-Consenting
Lender, each Replacement Lender shall consent, at the time of such assignment,
to each matter in respect of which such Terminated Lender was a Non-Consenting
Lender; provided, Company may not make such election with respect to any
Terminated Lender that is also an Issuing Bank unless, prior to the
effectiveness of such election, Borrowers shall have caused each outstanding
Letter of Credit issued thereby to be cancelled. Upon the prepayment of all
amounts owing to any Terminated Lender and the termination of such Terminated
Lender’s Revolving Commitments, if any, such Terminated Lender shall no longer
constitute a “Lender” for purposes hereof; provided, any rights of such
Terminated Lender to indemnification hereunder shall survive as to such
Terminated Lender.

2.24. Incremental Facilities.

(a) Company may by written notice to Administrative Agent elect to request
(i) from and after the Amendment Agreement Effective Date and prior to the
Extended Revolving Commitment Termination Date, an increase to the Extended
Revolving Commitments (any such increase, the “New Revolving Loan Commitments”)
and/or (ii) the establishment of one or more new term loan commitments (the “New
Term Loan Commitments”), by an amount not in excess of $0 (it being acknowledged
that Tranche C-3 Term Loans in the amount of the Tranche C-3 Term Loan
Commitment were extended as New Term Loan Commitments pursuant to the Existing
ARCA) in the aggregate for all such New Revolving Loan Commitments and New Term
Loan Commitments. Each such notice shall specify (A) the date (each, an
“Increased Amount Date”) on which Company proposes that the New Revolving Loan
Commitments or New Term Loan Commitments, as applicable, shall be effective,
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than 10 Business Days after the date on which such notice is delivered to
Administrative Agent and (B) the identity of each Lender or other Person that is
an Eligible Assignee (each, a “New Revolving Loan Lender” or “New Term Loan
Lender”, as applicable) to whom Company proposes any portion of such New
Revolving Loan Commitments or New Term Loan Commitments, as applicable, be
allocated and the amounts of such allocations; provided that any Lender
approached to provide all or a portion of the New Revolving Loan Commitments or
New Term Loan Commitments may elect or decline, in its sole discretion, to
provide a New Revolving Loan Commitment or a New Term Loan Commitment. Such New
Revolving Loan Commitments or New Term Loan Commitments shall become effective,
as of such Increased Amount Date; provided that (1) no Default or Event of
Default shall exist on such Increased Amount Date before or after giving effect
to such New Revolving Loan Commitments or New Term Loan Commitments, as
applicable; (2) both before and after giving effect to the making of any Series
of New Term Loans, each of the conditions set forth in Section 3.2 shall be
satisfied; (3) Borrower and its Subsidiaries shall be in pro forma compliance
with each of the covenants set forth in Section 6.10 as of the last day of the
most recently ended Fiscal Quarter after giving effect to such New Revolving
Loan Commitments or New Term Loan Commitments, as applicable; (4) the New
Revolving Loan Commitments or New Term Loan Commitments, as applicable, shall be
effected pursuant to one or more Joinder Agreements executed and delivered by
Borrowers, the New Revolving Loan Lender or New Term Loan Lender, as applicable,
and Administrative Agent, and each of which shall be recorded in the Register
and each New Revolving Loan Lender and New Term Loan Lender shall be subject to
the requirements set forth in Section 2.20(c); (5) Borrowers shall make any
payments required pursuant to Section 2.18(c) in connection with the New
Revolving Loan Commitments or New Term Loan Commitments, as applicable; and
(6) Borrowers shall deliver or cause to be delivered any legal opinions or other
documents reasonably requested by Administrative Agent in connection with any
such transaction. Any New Term Loans made on an Increased Amount Date shall be
designated a separate series (a “Series”) of New Term Loans for all purposes of
this Agreement.

(b) On any Increased Amount Date on which New Revolving Loan Commitments are
effected, subject to the satisfaction of the foregoing terms and conditions,
(i) each of the Revolving Lenders shall assign to each of the New Revolving Loan
Lenders, and each of the New Revolving Loan Lenders shall purchase from each of
the Revolving Lenders, at the principal amount thereof (together with accrued
interest), such interests in the Revolving Loans outstanding on such Increased
Amount Date as shall be necessary in order that, after giving effect to all such
assignments and purchases, such Revolving Loans will be held by existing
Revolving Loan Lenders and New Revolving Loan Lenders ratably in accordance with
their Revolving Loan Commitments after giving effect to the addition of such New
Revolving Loan Commitments to the Revolving Loan Commitments, (ii) each New
Revolving Loan Commitment shall be deemed for all purposes an Extended Revolving
Commitment and each Loan made thereunder (a “New Revolving Loan”) shall be
deemed, for all purposes, an Extended Revolving Loan and (iii) each New
Revolving Loan Lender shall become an Extended Revolving Lender with respect to
the New Revolving Loan Commitment and all matters relating thereto.

 

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(c) On any Increased Amount Date on which any New Term Loan Commitments of any
Series are effective, subject to the satisfaction of the foregoing terms and
conditions, (i) each New Term Loan Lender of any Series shall make a Loan to
Company (a “New Term Loan”) in an amount equal to its New Term Loan Commitment
of such Series, and (ii) each New Term Loan Lender of any Series shall become a
Lender hereunder with respect to the New Term Loan Commitment of such Series and
the New Term Loans of such Series made pursuant thereto.

(d) Administrative Agent shall notify Lenders promptly upon receipt of Company’s
notice of each Increased Amount Date and in respect thereof (y) the New
Revolving Loan Commitments and the New Revolving Loan Lenders or the Series of
New Term Loan Commitments and the New Term Loan Lenders of such Series, as
applicable, and (z) in the case of each notice to any Revolving Lender, the
respective interests in such Revolving Lender’s Revolving Loans, in each case
subject to the assignments contemplated by this Section.

(e) The terms and provisions of the New Term Loans and New Term Loan Commitments
of any Series shall be, except as otherwise set forth herein or in the Joinder
Agreement, identical to the Tranche C-2 PIK Term Loans. The terms and provisions
of the New Revolving Loans shall be, except as otherwise set forth herein or in
the Joinder Agreement, identical to the Extended Revolving Loans. In any event
(i) the applicable New Term Loan Maturity Date of each Series shall be no
shorter than the final maturity of the Tranche C-2 Term Loans, and (ii) the rate
of interest applicable to the New Term Loans of each Series shall be determined
by Company and the applicable new Lenders and shall be set forth in each
applicable Joinder Agreement. Each Joinder Agreement may, without the consent of
any other Lenders, effect such amendments to this Agreement and the other Credit
Documents as may be necessary or appropriate, in the opinion of the
Administrative Agent to effect the provision of this Section 2.24.

2.25. Designated Subsidiary Borrowers.

(a) Company may from time to time designate any Qualified Subsidiary as an
additional Designated Subsidiary Borrower for purposes of this Agreement by
delivering to Administrative Agent an Election to Participate duly executed on
behalf of such Subsidiary and Company in such number of copies as Administrative
Agent may request. Administrative Agent shall promptly notify Lenders of its
receipt of any such Election to Participate.

(b) Company may at any time terminate the status of any Subsidiary as a
Designated Subsidiary Borrower for purposes of this Agreement by delivering to
Administrative Agent an Election to Terminate duly executed on behalf of such
Subsidiary and Company in such number of copies as Administrative Agent may
request. The delivery of such an Election to Terminate shall not affect any
obligation of such Subsidiary theretofore incurred under this Agreement or any
other Credit Document or any rights of Lenders and Agents against such
Subsidiary or against Company in its capacity as guarantor of the obligations of
such Subsidiary. Administrative Agent shall promptly notify Lenders of its
receipt of any such Election to Terminate.

 

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2.26. Joint and Several Liability.

(a) Joint and Several Liability. All Obligations of Borrowers under this
Agreement and the other Credit Documents shall be joint and several Obligations
of each Borrower. Anything contained in this Agreement and the other Credit
Documents to the contrary notwithstanding, the Obligations of each Borrower
hereunder shall be limited to a maximum aggregate amount equal to the largest
amount that would not render its Obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under §548 of the Bankruptcy Code, 11 U.S.C.
§548, or any applicable provisions of comparable state law (collectively, the
“Fraudulent Transfer Laws”), in each case after giving effect to all other
liabilities of such Borrower, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of such Borrower in respect of intercompany Indebtedness to any other Credit
Party or Affiliates of any other Credit Party to the extent that such
Indebtedness would be discharged in an amount equal to the amount paid by such
Credit Party hereunder) and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws) of
any rights to subrogation or contribution of such Borrower pursuant to
(i) applicable law or (ii) any agreement providing for an equitable allocation
among such Borrower and other Affiliates of any Credit Party of Obligations
arising under Guaranties by such parties.

(b) Subrogation. Until the Obligations shall have been paid in full in Cash,
each Borrower shall withhold exercise of any right of subrogation, contribution
or any other right to enforce any remedy which it now has or may hereafter have
against any other Borrower or any other guarantor of the Obligations. Each
Borrower further agrees that, to the extent the waiver of its rights of
subrogation, contribution and remedies as set forth herein is found by a court
of competent jurisdiction to be void or voidable for any reason, any such rights
such Borrower may have against any other Borrower, any collateral or security or
any such other guarantor, shall be junior and subordinate to any rights
Collateral Agent may have against any such other Borrower, any such collateral
or security, and any such other guarantor. Borrowers under this Agreement and
the other Credit Documents together desire to allocate among themselves, in a
fair and equitable manner, their Obligations arising under this Agreement and
the other Credit Documents. Accordingly, in the event any payment or
distribution is made on any date by any Borrower under this Agreement and the
other Credit Documents (a “Funding Borrower”) that exceeds its Obligation Fair
Share (as defined below) as of such date, that Funding Borrower shall be
entitled to a contribution from each of the other Borrowers in the amount of
such other Borrowers’ Obligation Fair Share Shortfall (as defined below) as of
such date, with the result that all such contributions will cause each
Borrowers’ Obligation Aggregate Payments (as defined below) to equal its
Obligation Fair Share as of such date. “Obligation Fair Share” means, with
respect to a Borrower as of any date of determination, an amount equal to
(i) the ratio of (x) the Obligation Fair Share Contribution Amount (as defined
below) with respect to such Borrower to (y) the aggregate of the Obligation
Share Contribution Amounts with respect to all Borrowers, multiplied by (ii) the
aggregate amount paid or distributed on or before such date by all Funding
Borrowers under this Agreement and the other Credit Documents in respect of the
Obligations guarantied. “Obligation Fair Share Shortfall” means, with respect to
a Borrower as of any date of determination, the excess, if any, of the
Obligation Fair Share of such Borrower over the Obligation Aggregate Payments of
such Borrower. “Obligation Fair Share

 

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Contribution Amount” means, with respect to a Borrower as of any date of
determination, the maximum aggregate amount of the Obligations of such Borrower
under this Agreement and the other Credit Documents that would not render its
Obligations hereunder or thereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any comparable applicable provisions of state law; provided that, solely for
purposes of calculating the “Obligation Fair Share Contribution Amount” with
respect to any Borrower for purposes of this Section 2.26, any assets or
liabilities of such Credit Party arising by virtue of any rights to subrogation,
reimbursement or indemnification or any rights to or Obligations of contribution
hereunder shall not be considered as assets or liabilities of such Borrower.
“Obligation Aggregate Payments” means, with respect to a Borrower as of any date
of determination, an amount equal to (A) the aggregate amount of all payments
and distributions made on or before such date by such Borrower in respect of
this Agreement and the other Credit Documents (including in respect of this
Section 2.26 minus (B) the aggregate amount of all payments received on or
before such date by such Borrower from the other Borrowers as contributions
under this Section 2.26. The amounts payable as contributions hereunder shall be
determined as of the date on which the related payment or distribution is made
by the applicable Funding Borrower. The allocation among Borrowers of their
Obligations as set forth in this Section 2.26 shall not be construed in any way
to limit the liability of any Borrower hereunder or under any Credit Document.

SECTION 3. CONDITIONS PRECEDENT

3.1. Effective Date.

The obligation of each Lender to make a Credit Extension on the Effective Date
was subject to the satisfaction, or waiver in accordance with Section 10.5, of
the following conditions on or before the Effective Date (such conditions having
been satisfied or waived on the Effective Date):

(a) Credit Documents. Administrative Agent shall have received this Agreement,
executed and delivered by a duly authorized officer of each Borrower, Holdings
and each other Guarantor as of the Effective Date.

(b) Organization Documents; Incumbency. Administrative Agent shall have received
(i) copies of each Organization Document executed and delivered by Company;
(ii) signature and incumbency certificates of the officers of each Credit Party
executing the Credit Documents to which it is a party; (iii) resolutions of the
Board of Directors or similar governing body of Company approving and
authorizing the execution, delivery and performance of this Agreement and the
other Credit Documents to which it is a party or by which it or its assets may
be bound as of the Effective Date, certified as of the Effective Date by its
secretary or an assistant secretary as being in full force and effect without
modification or amendment; and (iv) a good standing certificate from the
applicable Governmental Authority of Company’s jurisdiction of incorporation,
organization or formation dated a recent date prior to the Effective Date;
provided that, in lieu of delivery of each of the documents or resolutions set
forth in this

 

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Section 3.1(b), Company may deliver a certificate executed by the President or
any Vice President of Company certifying that there have been no material
amendments to those documents or resolutions previously delivered to the
Administrative Agent on the Closing Date pursuant to Section 3.1(c) of the
Original Credit Agreement.

(c) Consent. Administrative Agent shall have received:

(i) written consents from the Lenders (as defined in the Original Credit
Agreement) which constitute Requisite Lenders (as defined in the Original Credit
Agreement) under the Original Credit Agreement to the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby (it
being agreed that the entering into this Agreement or a Lender Consent Letter by
a Lender shall constitute such written consent); and

(ii) reasonably satisfactory evidence that the outstanding principal amount of
all Original Term Loans shall have been paid in full with the proceeds of the
Tranche C Term Loans or by Company;

(d) Payment of Fees and Expenses. Company shall have paid all accrued reasonable
fees and expenses of Administrative Agent, Arrangers and Lenders for which
invoices have been presented (including the fees and expenses of counsel for
Administrative Agent and the local counsel for Lenders and those fees payable on
the Effective Date referred to in Section 2.11(d)).

(e) Opinions of Counsel to Credit Parties. Lenders and their respective counsel
shall have received originally executed copies of the favorable written opinions
of (i) Simpson Thacher & Bartlett LLP, special counsel for Credit Parties and
(ii) J. Devitt Kramer, in-house counsel for Company, each in the form of Exhibit
D and as to such other matters as Administrative Agent may reasonably request,
dated as of the Effective Date and otherwise in form and substance reasonably
satisfactory to Administrative Agent (and each Credit Party hereby instructs
each such counsel to deliver such opinions to Agents and Lenders).

(f) Effective Date Certificate. Holdings and Company shall have delivered to
Administrative Agent an originally executed Effective Date Certificate, together
with all attachments thereto.

The Effective Date occurred on February 13, 2007.

3.2. Conditions to Each Credit Extension.

(a) Conditions Precedent. The obligation of each Lender to make any Loan, or
Issuing Bank to issue any Letter of Credit, on any Credit Date, including the
Effective Date, is subject to the satisfaction, or waiver in accordance with
Section 10.5, of the following conditions precedent:

(i) Administrative Agent shall have received a fully executed and delivered
Funding Notice or Issuance Notice, as the case may be;

 

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(ii) after making the Credit Extensions requested on such Credit Date, the Total
Utilization of Revolving Commitments shall not exceed the Revolving Commitments
then in effect;

(iii) as of such Credit Date, the representations and warranties contained
herein and in the other Credit Documents shall be true and correct in all
material respects on and as of that Credit Date to the same extent as though
made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such earlier date;

(iv) as of such Credit Date, no event shall have occurred and be continuing or
would result from the consummation of the applicable Credit Extension that would
constitute an Event of Default or a Default; and

(v) on or before the date of issuance of any Letter of Credit, Administrative
Agent shall have received all other information required by the applicable
Issuance Notice, and such other documents or information as Issuing Bank may
reasonably require in connection with the issuance of such Letter of Credit.

(b) Notices. Any Notice shall be executed by a Responsible Officer in a writing
delivered to Administrative Agent. In lieu of delivering a Notice, a Borrower
may give Administrative Agent telephonic notice by the required time of any
proposed borrowing, conversion/continuation or issuance of a Letter of Credit,
as the case may be; provided each such notice shall be promptly confirmed in
writing by delivery of the applicable Notice to Administrative Agent on or
before the applicable date of borrowing, continuation/conversion or issuance.
Neither Administrative Agent nor any Lender shall incur any liability to a
Borrower in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized on behalf of such Borrower or for
otherwise acting in good faith.

SECTION 4. REPRESENTATIONS AND WARRANTIES

Education Management, Holdings and Company represent and warrant to Agents and
Lenders that:

4.1. Existence, Qualification and Power; Compliance with Laws.

Each Credit Party and each of its Subsidiaries (a) is a Person duly organized or
formed, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization as identified in Schedule 4.1, (b) has all
requisite power and

 

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authority to (i) own or lease its assets and carry on its business and
(ii) execute, deliver and perform its obligations under the Credit Documents to
which it is a party, (c) is duly qualified and in good standing under the Laws
of each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification, (d) is in compliance
with all Laws, orders, writs, injunctions and orders and (e) has all requisite
governmental licenses, authorizations, consents and approvals to operate its
business as currently conducted; except in each case referred to in clause (c),
(d) or (e), to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.

4.2. Authorization; No Contravention.

The execution, delivery and performance by each Credit Party of each Credit
Document to which such Person is a party, and the consummation of the
Transaction, are within such Credit Party’s corporate or other powers, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person’s
Organization Documents, (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under (other than as permitted by
Section 6.1), or require any payment to be made under (i) any Contractual
Obligation to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (ii) any material order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject or (c) violate any material Law;
except with respect to any conflict, breach or contravention or payment (but not
creation of Liens) referred to in clause (b)(i), to the extent that such
conflict, breach, contravention or payment could not reasonably be expected to
have a Material Adverse Effect.

4.3. Governmental Authorization; Other Consents.

No material approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with (a) the execution, delivery or
performance by, or enforcement against, any Credit Party of this Agreement or
any other Credit Document, or for the consummation of the Transaction, (b) the
grant by any Credit Party of the Liens granted by it pursuant to the Collateral
Documents, (c) the perfection or maintenance of the Liens created under the
Collateral Documents (including the priority thereof) or (d) the exercise by the
Administrative Agent or any Lender of its rights under the Credit Documents or
the remedies in respect of the Collateral pursuant to the Collateral Documents,
except for (i) filings necessary to perfect the Liens on the Collateral granted
by the Credit Parties in favor of the Secured Parties, (ii) the approvals,
consents, exemptions, authorizations, actions, notices and filings which have
been duly obtained, taken, given or made and are in full force and effect and
(iii) those approvals, consents, exemptions, authorizations or other actions,
notices or filings, the failure of which to obtain or make could not reasonably
be expected to have a Material Adverse Effect.

 

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4.4. Binding Effect.

This Agreement and each other Credit Document has been duly executed and
delivered by each Credit Party that is party thereto. This Agreement and each
other Credit Document constitutes, a legal, valid and binding obligation of such
Credit Party, enforceable against each Credit Party that is party thereto in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws and by general principles of equity.

4.5. Financial Statements; No Material Adverse Effect.

(a) (i) The Historical Financial Statements fairly present in all material
respects the financial condition of Education Management and its Subsidiaries as
of the dates thereof and their results of operations for the period covered
thereby in accordance with GAAP consistently applied throughout the periods
covered thereby, except as otherwise expressly noted therein. During the period
from June 30, 2005 to and including the Closing Date (but prior to giving effect
to the Transaction), there has been (i) no sale, transfer or other disposition
by Education Management or any of its Subsidiaries of any material part of the
business or property of Education Management or any of its Subsidiaries, taken
as a whole and (ii) no purchase or other acquisition by Education Management or
any of its Subsidiaries of any business or property (including any Equity
Interests of any other Person) material in relation to the consolidated
financial condition of Education Management and its Subsidiaries, in each case,
which is not reflected in the foregoing financial statements or in the notes
thereto or has not otherwise been disclosed in writing to the Lenders prior to
the Closing Date.

(ii) The unaudited pro forma consolidated balance sheet of Company and its
Subsidiaries as at March 31, 2006 (including the notes thereto) (the “Pro Forma
Balance Sheet”) and the unaudited pro forma consolidated statement of operations
of Holdings and its Subsidiaries for the most recent fiscal year, the 9-month
period ending on March 31, 2006 and the 12-month period ending on March 31, 2006
(together with the Pro Forma Balance Sheet, the “Pro Forma Financial
Statements”), copies of which have heretofore been furnished to each Lender
prior to the Closing Date, have been prepared giving effect (as if such events
had occurred on such date or at the beginning of such periods, as the case may
be) to the Transaction, each material acquisition by Education Management or any
of its Subsidiaries consummated after March 31, 2006 and prior to the Closing
Date and all other transactions that would be required to be given pro forma
effect by Regulation S-X promulgated under the Exchange Act (including other
adjustments as otherwise agreed between Company and Arrangers). The Pro Forma
Financial Statements have been prepared in good faith, based on assumptions
believed by Company to be reasonable as of the date of delivery thereof, and
present fairly in all material respects on a pro forma basis and in accordance
with GAAP the estimated financial position of Holdings and its Subsidiaries as
at March 31, 2006 and their estimated results of operations for the periods
covered thereby, assuming that the events specified in the preceding sentence
had actually occurred at such date or at the beginning of the periods covered
thereby.

(b) [Reserved].

 

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(c) The forecasts of consolidated balance sheets, income statements and cash
flow statements of Holdings and its Subsidiaries for each fiscal year ending
after the Closing Date until the seventh anniversary of the Closing Date (the
“Forecasts”), copies of which have been furnished to Administrative Agent prior
to the Closing Date in a form reasonably satisfactory to it, have been prepared
in good faith on the basis of the assumptions stated therein, which assumptions
were believed to be reasonable at the time of preparation of such forecasts, it
being understood that actual results may vary from such forecasts and that such
variations may be material.

4.6. Litigation.

Except as specifically disclosed in Schedule 4.6, there are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of Education
Management, Holdings or any Borrower, threatened in writing or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, by or
against Education Management or any of its Subsidiaries or against any of their
properties or revenues that either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

4.7. No Default.

Neither Education Management nor any of its Subsidiaries is in default under or
with respect to, or a party to, any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

4.8. Ownership of Property; Liens.

Each Credit Party and each of its Subsidiaries has good and legal title in fee
simple to, or valid leasehold interests in, or easements or other limited
property interests in, all real property necessary in the ordinary conduct of
its business, free and clear of all Liens except for minor defects in title that
do not materially interfere with its ability to conduct its business or to
utilize such assets for their intended purposes and Liens permitted by
Section 6.1 and except where the failure to have such title could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

4.9. Environmental Compliance.

(a) There are no claims, actions, suits, or proceedings alleging potential
liability or responsibility for violation of, or otherwise relating to, any
Environmental Law that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(b) Except as specifically disclosed in Schedule 4.9(b) or except as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (i) none of the properties currently or formerly owned, leased
or operated by any Credit Party or any of its Subsidiaries is listed or proposed
for listing on the NPL or on the CERCLIS or any analogous foreign, state or
local list or is adjacent to any such property; (ii) there are no and never have
been any underground or aboveground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or
have been treated, stored or disposed on any property currently owned, leased or
operated by any Credit Party or any of its Subsidiaries or, to its knowledge, on
any property formerly owned or operated by any

 

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Credit Party or any of its Subsidiaries; (iii) there is no asbestos or
asbestos-containing material on any property currently owned or operated by any
Credit Party or any of its Subsidiaries; and (iv) Hazardous Materials have not
been released, discharged or disposed of by any Person on any property currently
or formerly owned, leased or operated by any Credit Party or any of its
Subsidiaries and Hazardous Materials have not otherwise been released,
discharged or disposed of by any of the Credit Parties and their Subsidiaries at
any other location.

(c) The properties owned, leased or operated by Education Management and its
Subsidiaries do not contain any Hazardous Materials in amounts or concentrations
which (i) constitute, or constituted a violation of, (ii) require remedial
action under, or (iii) could give rise to liability under, Environmental Laws,
which violations, remedial actions and liabilities, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

(d) Except as specifically disclosed in Schedule 4.9(d), neither Education
Management nor any of its Subsidiaries is undertaking, and has not completed,
either individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any
actual or threatened release, discharge or disposal of Hazardous Materials at
any site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law except
for such investigation or assessment or remedial or response action that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

(e) All Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
any Credit Party or any of its Subsidiaries have been disposed of in a manner
not reasonably expected to result, individually or in the aggregate, in a
Material Adverse Effect.

(f) Except as would not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, none of the Credit Parties and their
Subsidiaries has contractually assumed any liability or obligation under or
relating to any Environmental Law.

4.10. Taxes.

Except as set forth in Schedule 4.10, Holdings and its Subsidiaries have filed
all material Federal, state and other tax returns and reports required to be
filed, and have paid all material Federal, state and other taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those (a) which
are not overdue by more than thirty (30) days or (b) which are being contested
in good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP.

 

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4.11. ERISA Compliance.

(a) Except as set forth in Schedule 4.11(a) or as could not, either individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, each Plan is in compliance in with the applicable provisions of ERISA,
the Internal Revenue Code and other Federal or state Laws.

(b) (i) No ERISA Event has occurred during the five year period prior to the
date on which this representation is made or deemed made with respect to any
Pension Plan; (ii) no Pension Plan has an “accumulated funding deficiency” (as
defined in Section 412 of the Internal Revenue Code), whether or not waived;
(iii) neither any Credit Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither any Credit Party nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither any Credit Party nor any ERISA Affiliate has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA, except, with respect to each of the foregoing clauses of this
Section 4.11(b), as could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.

4.12. Subsidiaries; Equity Interests.

As of the Effective Date, no Credit Party has any Subsidiaries other than those
specifically disclosed in Schedule 4.12, and all of the outstanding Equity
Interests in material Subsidiaries have been validly issued, are fully paid and
nonassessable and all Equity Interests owned by a Credit Party are owned free
and clear of all Liens except (i) those created under the Collateral Documents
and (ii) any nonconsensual Lien that is permitted under Section 6.1. As of the
Second ARCA Effective Date, Schedule 4.12(a) sets forth the name and
jurisdiction of each Subsidiary, (b) sets forth the ownership interest of
Holdings, Company and any other Subsidiary thereof in each Subsidiary, including
the percentage of such ownership and (c) identifies each Subsidiary that is a
Subsidiary the Equity Interests of which are required to be pledged on the
Effective Date pursuant to Original Section 3.1(h).

4.13. Margin Regulations; Investment Company Act.

(a) No Borrower is engaged nor will it engage, principally or as one of its
important activities, in the business of purchasing or carrying Margin Stock, or
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Loans or drawings under any Letter of Credit will be used for
any purpose that violates Regulation U of the Board of Governors.

(b) None of Holdings, any Person Controlling Holdings, or any Subsidiary
Holdings is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.

 

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4.14. Disclosure.

No report, financial statement, certificate or other written information
furnished by or on behalf of any Credit Party to any Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder or any other Credit Document (as modified or
supplemented by other information so furnished) when taken as a whole contains
any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not materially misleading; provided that, with respect to
projected financial information and pro forma financial information, Education
Management, Holdings and Company represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time of preparation; it being understood that such projections may vary from
actual results and that such variances may be material.

4.15. Intellectual Property; Licenses, Etc.

Each of the Credit Parties and their Subsidiaries own, license or possess the
right to use, all of the trademarks, service marks, trade names, domain names,
copyrights, patents, licenses, technology, software, know-how database rights,
design rights and other intellectual property rights (collectively, “IP Rights”)
that are reasonably necessary for the operation of their respective businesses
as currently conducted, and, without conflict with the rights of any Person,
except to the extent such conflicts, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. To the
knowledge of any Borrower, no IP Rights used by any Credit Party or any
Subsidiary thereof in the operation of their respective businesses as currently
conducted infringes upon any intellectual property rights held by any Person
except for such infringements, individually or in the aggregate, which could not
reasonably be expected to have a Material Adverse Effect. No claim or litigation
regarding any of the IP Rights, is pending or, to the knowledge of any Borrower,
threatened against any Credit Party or Subsidiary thereof, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

4.16. [Reserved].

4.17. Subordination of Junior Financing.

The Obligations are “Senior Debt,” “Senior Indebtedness,” “Guarantor Senior
Debt” or “Senior Secured Financing” (or any comparable term) under, and as
defined in, any Junior Financing Documentation.

4.18. Labor Matters.

Except as, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect: (a) there are no strikes or other labor disputes against any of
Education Management, Holdings, Company or its Subsidiaries pending or, to the
knowledge of Education Management, Holdings or Company, threatened; (b) hours
worked by and payment made to employees of each of Education Management,
Holdings, Company or its Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable Laws dealing with such matters; and
(c) all payments due from any of Education Management, Holdings, Company or its
Subsidiaries on account of employee health and welfare insurance have been paid
or accrued as a liability on the books of the relevant party.

 

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4.19. Collateral Documents.

The provisions of the Collateral Documents are effective to create in favor of
Collateral Agent for the benefit of the Secured Parties a legal, valid and
enforceable first priority Lien (subject to Liens permitted by Section 6.01) on
all right, title and interest of the respective Credit Parties in the Collateral
described therein. Except for filings completed prior to the Effective Date and
as contemplated hereby and by the Collateral Documents, no filing or other
action will be necessary to perfect or protect such Liens.

4.20. Patriot Act.

To the extent applicable, each Credit Party is in compliance, in all material
respects, with the (i) Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (ii) Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot Act of 2001). No part of the proceeds of the Loans will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

SECTION 5. AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, each of Education
Management, Holdings and Company shall, and shall (except in the case of the
covenants set forth in Sections 5.1, 5.2 and 5.3) cause each Subsidiary to:

5.1. Financial Statements.

Deliver to the Administrative Agent for prompt further distribution to each
Lender:

(a) as soon as available, but in any event within ninety (90) days after the end
of each Fiscal Year (beginning with the Fiscal Year ending on June 30, 2007),
(i) a consolidated balance sheet of Education Management and its Subsidiaries as
at the end of such fiscal year, and the related consolidated statements of
income or operations, stockholders’ equity and cash flows for such fiscal year
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and prepared in accordance with GAAP; and
(ii) with respect to such consolidated financial statements, audited and
accompanied by a report and opinion of Ernst & Young LLP or any other
independent registered public accounting firm of nationally recognized standing,
which report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to a “going concern” emphasis
paragraph or

 

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a qualification or disclaimer related to generally accepted accounting
principles or generally accepted auditing standards or other material
qualification or exception (provided that a paragraph in the audit report
emphasizing a change in accounting as the result of new accounting rules
promulgated by regulatory bodies such as the Financial Accounting Standards
Board, the SEC or the American Institute of Certified Public Accountants shall
be permitted);

(b) as soon as available, but in any event within forty-five (45) days after the
end of each of the first three (3) Fiscal Quarters of each Fiscal Year
(beginning with the Fiscal Quarter ending on December 31, 2006), a consolidated
balance sheet of Education Management and its Subsidiaries as at the end of such
fiscal quarter, and the related (i) consolidated statements of income or
operations for such fiscal quarter and for the portion of the fiscal year then
ended and (ii) consolidated statements of cash flows for the portion of the
fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year, all in
reasonable detail and certified by a Responsible Officer of Company as fairly
presenting in all material respects the financial condition, results of
operations, stockholders’ equity and cash flows of Education Management and its
Subsidiaries in accordance with GAAP, subject only to audit and normal year-end
adjustments and the absence of footnotes;

(c) as soon as available, and in any event no later than sixty (60) days after
the end of each Fiscal Year, a detailed consolidated budget for the following
fiscal year (including a projected consolidated balance sheet of Education
Management and its Subsidiaries as of the end of the following fiscal year, the
related consolidated statements of projected cash flow and projected income and
a summary of the material underlying assumptions applicable thereto), and, as
soon as available, significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the “Projections”), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no reason to
believe that such Projections are incorrect or misleading in any material
respect; and

(d) simultaneously with the delivery of each set of consolidated financial
statements referred to in Sections 5.1(a) and 5.1(b) above, the related
consolidating financial statements reflecting the adjustments necessary to
eliminate the accounts of Subsidiaries (if any) from such consolidated financial
statements.

Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this
Section 5.1 may be satisfied by furnishing Education Management’s Form 10-K or
10-Q, as applicable, filed with the SEC; provided that, to the extent such
information is in lieu of information required to be provided under
Section 5.1(a), such materials are accompanied by a report and opinion of
Ernst & Young LLP or any other independent registered public accounting firm of
nationally recognized standing, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be subject
to a “going concern” emphasis paragraph or a qualification or disclaimer related
to generally accepted accounting principles or generally accepted auditing
standards or other material qualification or exception (provided that a
paragraph in the audit report emphasizing a change in accounting as the result
of new accounting rules promulgated by regulatory bodies such as the Financial
Accounting Standards Board, the SEC or the American Institute of Certified
Public Accountants shall be permitted).

 

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5.2. Certificates; Other Information.

Deliver to the Administrative Agent for prompt further distribution to each
Lender:

(a) no later than five (5) days after the delivery of the financial statements
referred to in Section 5.1(a), a certificate of its independent registered
public accounting firm certifying such financial statements and stating that in
making the examination necessary therefor no knowledge was obtained of any Event
of Default under Section 6.10 or, if any such Event of Default shall exist,
stating the nature and status of such event;

(b) no later than five (5) days after the delivery of the financial statements
referred to in Section 5.1(a) and (b), a duly completed Compliance Certificate
signed by a Responsible Officer of Company and, if such Compliance Certificate
demonstrates an Event of Default of any covenant under Section 6.10, any of the
Equity Investors may deliver, together with such Compliance Certificate, notice
of their intent to cure (a “Notice of Intent to Cure”) such Event of Default
pursuant to Section 8.3; provided that the delivery of a Notice of Intent to
Cure shall in no way affect or alter the occurrence, existence or continuation
of any such Event of Default or the rights, benefits, powers and remedies of
Administrative Agent and the Lenders under any Credit Document;

(c) promptly after the same are publicly available, copies of all annual,
regular, periodic and special reports and registration statements which
Education Management, Holdings or Company files with the SEC or with any
Governmental Authority that may be substituted therefor (other than amendments
to any registration statement (to the extent such registration statement, in the
form it became effective, is delivered), exhibits to any registration statement
and, if applicable, any registration statement on Form S-8) and in any case not
otherwise required to be delivered to Administrative Agent pursuant hereto;

(d) promptly after the furnishing thereof, copies of any material requests or
material notices received by any Credit Party (other than in the ordinary course
of business) or material statements or material reports furnished to any holder
of debt securities of any Credit Party or of any of its Subsidiaries pursuant to
the terms of any Senior Notes Documentation or Junior Financing Documentation in
a principal amount greater than the Threshold Amount and not otherwise required
to be furnished to Lenders pursuant to any other clause of this Section 5.2;

(e) together with the delivery of each Compliance Certificate pursuant to
Section 5.2(b), (i) a certificate of a Responsible Officer of Company either
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Closing Date or the date of the most
recent certificate delivered pursuant to this Section and/or identifying such
changes and (ii) a description of each event, condition or circumstance during
the last fiscal quarter covered by such Compliance Certificate requiring a
mandatory prepayment under Section 2.14;

 

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(f) promptly furnish to Collateral Agent written notice of any change (i) in any
Credit Party’s corporate name or (ii) in any Credit Party’s jurisdiction of
organization. Company agrees not to effect or permit any change referred to in
the preceding sentence unless all filings have been made under the UCC or
otherwise that are required in order for Collateral Agent to continue at all
times following such change to have a valid, legal and perfected security
interest in all the Collateral as contemplated in the Collateral Documents; and

(g) promptly, such additional information regarding the business, legal,
financial or corporate affairs of any Credit Party or any Subsidiary, or
compliance with the terms of the Credit Documents, as the Administrative Agent
or any Lender through the Administrative Agent may from time to time reasonably
request.

Documents required to be delivered pursuant to Section 5.1(a) or (b) or
Section 5.2(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (A) on which
Company posts such documents, or provides a link thereto on Company’s website on
the Internet at the website address listed on Appendix B; or (B) on which such
documents are posted on Company’s behalf on IntraLinks/IntraAgency or another
relevant website, if any, to which each Lender and Administrative Agent have
access (whether a commercial, third-party website or whether sponsored by
Administrative Agent); provided that: (1) upon written request by Administrative
Agent, Company shall deliver paper copies of such documents to Administrative
Agent for further distribution to each Lender until a written request to cease
delivering paper copies is given by Administrative Agent and (2) Company shall
notify (which may be by facsimile or electronic mail) Administrative Agent of
the posting of any such documents and provide to Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance Company shall be
required to provide paper copies of the Compliance Certificates required by
Section 5.2(b) to Administrative Agent. Each Lender shall be solely responsible
for timely accessing posted documents or requesting delivery of paper copies of
such documents from Administrative Agent and maintaining its copies of such
documents.

5.3. Notices.

Promptly after obtaining knowledge thereof, notify Administrative Agent:

(a) of the occurrence of any Default; and

(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including arising out of or resulting from (i) breach
or non-performance of, or any default or event of default under, a Contractual
Obligation of any Credit Party or any Subsidiary, (ii) any dispute, litigation,
investigation, proceeding or suspension between any Credit Party or any
Subsidiary and any Governmental Authority, (iii) the commencement of, or any
material development in, any litigation or proceeding affecting any Credit Party
or any

 

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Subsidiary, including pursuant to any applicable Environmental Laws or Education
Laws or the assertion or occurrence of any noncompliance by any Credit Party or
as any of its Subsidiaries with, or liability under, any Environmental Law or
Environmental Permit or any Education Law, or (iv) the occurrence of any ERISA
Event.

Each notice pursuant to this Section shall be accompanied by a written statement
of a Responsible Officer of Company (x) that such notice is being delivered
pursuant to Section 5.3(a) or (b) (as applicable) and (y) setting forth details
of the occurrence referred to therein and stating what action Company has taken
and proposes to take with respect thereto.

5.4. Payment of Obligations.

Pay, discharge or otherwise satisfy as the same shall become due and payable,
all its material obligations and liabilities in respect of taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits
or in respect of its property.

5.5. Preservation of Existence, Etc.

Preserve, renew and maintain in full force and effect its legal existence under
the Laws of the jurisdiction of its organization except in a transaction
permitted by Section 6.4 or 6.5 and (b) take all reasonable action to maintain
all rights, privileges (including its good standing), permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
(i) to the extent that failure to do so could not reasonably be expected to have
a Material Adverse Effect or (ii) pursuant to a transaction permitted by
Section 6.4 or 6.5.

5.6. Maintenance of Properties.

(a) Maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order, repair and
condition, ordinary wear and tear excepted and casualty or condemnation
excepted, and (b) make in all material respects necessary renewals,
replacements, modifications, improvements, upgrades, extensions and additions
thereof or thereto in accordance with prudent industry practice.

5.7. Maintenance of Insurance.

(a) Maintain with financially sound and reputable insurance companies, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts (after giving effect to any self-insurance
reasonable and customary for similarly situated Persons engaged in the same or
similar businesses as Company and its Subsidiaries) as are customarily carried
under similar circumstances by such other Persons; and (b) if requested by the
Administrative Agent or any Lender through the Administrative Agent, deliver a
certificate from Company’s insurance broker(s) in form and substance
satisfactory to Administrative Agent outlining all material insurance coverage
maintained as of the date of such certificate by Education Management and its
Subsidiaries to the extent not unduly burdensome for Company. Each such policy
of insurance shall (i) name Collateral Agent, on behalf of

 

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Secured Parties as an additional insured thereunder as its interests may appear
and (ii) in the case of each casualty insurance policy, contain a loss payable
clause or endorsement, satisfactory in form and substance to Collateral Agent,
that names Collateral Agent, on behalf of Lenders as the loss payee thereunder.

5.8. Compliance with Laws.

Comply in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its business or
property, except if the failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, Education Management will, and will cause each Subsidiary to,
comply with (i) all applicable Laws, the violation of which would terminate or
materially impair the eligibility of Education Management or any Subsidiary for
participation, if applicable, in student financial assistance programs under
Title IV of the Higher Education Act of 1965, as amended, 20 U.S.C.A. § 1070 et
seq., where such termination or material impairment would have a Material
Adverse Effect, (ii) the federal Truth-in-Lending Act, 15 U.S.C. § 1601 et seq.,
and all other consumer credit laws applicable to Education Management or any
Subsidiary in connection with the advancing of student loans, except for such
laws and regulations the violation of which, in the aggregate, will not result
in the assessment of penalties and damages claims against Education Management
or any Subsidiary where such penalties and damage claims would have a Material
Adverse Effect, (iii) all statutory and regulatory requirements for
authorization to provide post-secondary education in the jurisdictions in which
its educational facilities are located, except for such requirements the
violation of which will not have a Material Adverse Effect, and (iv) if
applicable, all requirements for continuing its accreditations, except for such
requirements the violation of which would not have a Material Adverse Effect
(including cases where the governing board of the institution in good faith
elected to seek or permit the termination of such accreditation which would not
have a Material Adverse Effect) (the laws, regulations and requirements referred
to in this sentence prior to giving effect to any materiality carve-outs are
collectively referred to as the “Education Laws”).

5.9. Books and Records.

Maintain proper books of record and account, in which entries that are full,
true and correct in all material respects and are in conformity with GAAP
consistently applied shall be made of all material financial transactions and
matters involving the assets and business of Education Management, Holdings,
Company or such Subsidiary, as the case may be.

5.10. Inspection Rights.

Permit representatives and independent contractors of Administrative Agent and
each Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, and independent public accountants, all at the reasonable expense of
Company and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to Company;
provided that, excluding any such visits and inspections during the continuation
of an Event of Default,

 

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only Administrative Agent on behalf of Lenders may exercise rights of
Administrative Agent and Lenders under this Section 5.10 and Administrative
Agent shall not exercise such rights more often than two (2) times during any
calendar year absent the existence of an Event of Default and only one (1) such
time shall be at Company’s expense; provided further that when an Event of
Default exists, Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of Company at any time during normal business hours and upon reasonable
advance notice. Administrative Agent and Lenders shall give Company the
opportunity to participate in any discussions with Company’s independent public
accountants.

5.11. Compliance with Environmental Laws.

Except, in each case, to the extent that the failure to do so could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, comply, and take all reasonable actions to cause all lessees and
other Persons operating or occupying its properties to comply with all
applicable Environmental Laws and Environmental Permits; obtain and renew all
Environmental Permits necessary for its operations and properties; and, in each
case to the extent required by Environmental Laws, conduct any investigation,
study, sampling and testing, and undertake any cleanup, removal, remedial or
other action necessary to remove and clean up all Hazardous Materials from any
of its properties, in accordance with the requirements of all Environmental
Laws.

5.12. Subsidiaries.

In the event that any Person becomes an Included Domestic Subsidiary of
Education Management, (a) promptly cause such Included Domestic Subsidiary to
become a Guarantor hereunder and a Grantor under the Pledge and Security
Agreement by executing and delivering to Administrative Agent and Collateral
Agent a Counterpart Agreement, and (b) take all such actions and execute and
deliver, or cause to be executed and delivered, all such documents, instruments,
agreements, and certificates as are similar to those described in Sections
3.1(b) and 3.1(e) hereof and Original Sections 3.1(g) and 3.1(h). In the event
that any Person becomes a Foreign Subsidiary of Education Management, and the
ownership interests of such Foreign Subsidiary are owned by Education Management
or by any Included Domestic Subsidiary thereof, Company shall, or shall cause
such Included Domestic Subsidiary to, deliver, all such documents, instruments,
agreements, and certificates as are similar to those described in
Section 3.1(a), and Company shall take, or shall cause such Included Domestic
Subsidiary to take, all of the actions referred to in Original Section 3.1(h)(i)
necessary to grant and to perfect a First Priority Lien in favor of Collateral
Agent, for the benefit of Secured Parties, under the Pledge and Security
Agreement in 66% of such ownership interests.

5.13. Additional Material Real Estate Assets.

In the event that any Credit Party acquires a Material Real Estate Asset and
such interest has not otherwise been made subject to the Lien of the Collateral
Documents in favor of Collateral Agent, for the benefit of Secured Parties, then
such Credit Party shall promptly take all such actions and execute and deliver,
or cause to be executed and delivered, all such mortgages,

 

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documents, instruments, agreements, opinions and certificates similar to those
described in Section 5.15 hereof and Original Sections 3.1(g) and 3.1(h) hereto
with respect to each such Material Real Estate Asset that Collateral Agent shall
reasonably request to create in favor of Collateral Agent, for the benefit of
Secured Parties, a valid and, subject to any filing and/or recording referred to
herein, perfected First Priority security interest in such Material Real Estate
Assets.

5.14. Further Assurances.

At any time or from time to time upon the request of Administrative Agent, at
its expense, promptly execute, acknowledge and deliver such further documents
and do such other acts and things as Administrative Agent or Collateral Agent
may reasonably request in order to effect fully the purposes of the Credit
Documents. In furtherance and not in limitation of the foregoing, each Credit
Party shall take such actions as Administrative Agent or Collateral Agent may
reasonably request from time to time to ensure that the Obligations are
guarantied by the Guarantors and are secured by substantially all of the assets
of Education Management and its Subsidiaries and all of the outstanding Equity
Interests in Company and its Subsidiaries (subject to limitations contained in
the Credit Documents with respect to Excluded Subsidiaries).

5.15. Survey of Closing Date Mortgaged Property.

Within thirty (30) days after the Closing Date, (i) deliver to Collateral Agent
an ALTA survey with respect to any Closing Date Mortgaged Property, dated not
earlier than April 10, 1997, certified to Collateral Agent and the relevant
Title Company, accompanied by an “affidavit of no change” executed by the
surveyor issuing such ALTA survey or the Credit Party owning such Closing Date
Mortgaged Property and dated not more than thirty (30) days prior to the Closing
Date in form and substance reasonably satisfactory to Collateral Agent and such
Title Company, and disclose only such state of facts as shall be reasonably
satisfactory to Collateral Agent, and (ii) cause such Title Company to add any
endorsements to the Title Policy as Collateral Agent may reasonably request.

5.16. Restructuring.

The Credit Parties shall, and shall cause their affiliates, and each of their
respective representatives, agents and employees to, take such steps as are
reasonably necessary or desirable to consummate the Exchange (as defined in the
RSA) on or before the later of (i) October 29, 2014 and (ii) the receipt of all
required regulatory approvals and/or third-party approvals for the Restructuring
(including the Threshold Approvals (as defined in the RSA)) in the reasonable
good faith determination of the Company in consultation with the Lenders.

 

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SECTION 6. NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, Education
Management, Holdings and Company shall not, nor shall they permit any of their
Subsidiaries to, directly or indirectly:

6.1. Liens.

Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the
following:

(a) Liens pursuant to any Credit Document;

(b) Liens existing on the Closing Date and listed on Schedule 6.1(b) and any
modifications, replacements, renewals or extensions thereof; provided that
(i) the Lien does not extend to any additional property other than
(A) after-acquired property that is affixed or incorporated into the property
covered by such Lien or financed by Indebtedness permitted under Section 6.3,
and (B) proceeds and products thereof, and (ii) the renewal, extension or
refinancing of the obligations secured or benefited by such Liens is permitted
by Section 6.3;

(c) Liens for taxes, assessments or governmental charges which are not overdue
for a period of more than thirty (30) days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

(d) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen, repairmen, construction contractors or other like Liens arising in
the ordinary course of business which secure amounts not overdue for a period of
more than thirty (30) days or if more than thirty (30) days overdue, are unfiled
and no other action has been taken to enforce such Lien or which are being
contested in good faith and by appropriate proceedings diligently conducted, if
adequate reserves with respect thereto are maintained on the books of the
applicable Person in accordance with GAAP;

(e) (i) pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation and (ii) pledges and deposits in the ordinary course of business
securing liability for reimbursement or indemnification obligations of
(including obligations in respect of letters of credit or bank guarantees for
the benefit of) insurance carriers providing property, casualty or liability
insurance to Holdings, Company or any Subsidiary;

(f) deposits to secure (i) the performance of bids, trade contracts,
governmental contracts and leases (other than Indebtedness for borrowed money),
statutory obligations, surety, stay, customs and appeal bonds, performance bonds
and other obligations of a like nature (including those to secure health, safety
and environmental obligations) or (ii) obligations in respect of letters or
credit, bank guarantees or similar instruments related thereto, in the case of
both (i) and (ii) to the extent incurred in the ordinary course of business;

(g) easements, rights-of-way, restrictions, encroachments, protrusions and other
similar encumbrances and minor title defects affecting real property which, in
the aggregate, do not in any case materially interfere with the ordinary conduct
of the business of Company or any material Subsidiary;

 

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(h) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.1(h);

(i) Liens securing Indebtedness permitted under Section 6.3(e); provided that
such Liens do not at any time extend to or cover any assets (except for
accessions to such assets) other than the assets subject to such Capitalized
Leases; and provided further that individual financings of equipment provided by
one lender may be cross collateralized to other financings of equipment provided
by such lender;

(j) leases, licenses, subleases or sublicenses granted to others in the ordinary
course of business which do not (i) interfere in any material respect with the
business of Company or any material Subsidiary or (ii) secure any Indebtedness;

(k) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods
in the ordinary course of business;

(l) Liens (i) of a collection bank arising under Section 4-210 of the UCC on
items in the course of collection, (ii) attaching to commodity trading accounts
or other commodities brokerage accounts incurred in the ordinary course of
business; and (iii) in favor of a banking institution arising as a matter of law
encumbering deposits (including the right of set-off) and which are within the
general parameters customary in the banking industry;

(m) Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Sections 6.2 (i) and (n) to be
applied against the purchase price for such Investment, and (ii) consisting of
an agreement to Dispose of any property in a Disposition permitted under
Section 6.5, in each case, solely to the extent such Investment or Disposition,
as the case may be, would have been permitted on the date of the creation of
such Lien;

(n) Liens in favor of Company or a Subsidiary securing Indebtedness permitted
under Section 6.3(d);

(o) Liens existing on property at the time of its acquisition or existing on the
property of any Person at the time such Person becomes a Subsidiary, in each
case after the Closing Date (other than Liens on the Equity Interests of any
Person that becomes a Subsidiary); provided that (i) such Lien was not created
in contemplation of such acquisition or such Person becoming a Subsidiary,
(ii) such Lien does not extend to or cover any other assets or property (other
than the proceeds or products thereof and other than after-acquired property
subjected to a Lien securing Indebtedness and other obligations incurred prior
to such time and which Indebtedness and other obligations are permitted
hereunder that require, pursuant to their terms at such time, a pledge of
after-acquired property, it being understood that such requirement shall not be
permitted to apply to any property to which such requirement would not have
applied but for such acquisition), and (iii) the Indebtedness secured thereby is
permitted under Section 6.3(e), (g) or (h);

 

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(p) any interest or title of a lessor under leases entered into by Company or
any of its Subsidiaries in the ordinary course of business;

(q) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by Company or any of its
Subsidiaries in the ordinary course of business permitted by this Agreement;

(r) Liens deemed to exist in connection with Investments in repurchase
agreements under Section 6.2;

(s) Liens encumbering reasonable customary initial deposits and margin deposits
and similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative
purposes;

(t) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts
of Education Management, Holdings, Company or any Subsidiary to permit
satisfaction of overdraft or similar obligations incurred in the ordinary course
of business of Education Management, Holdings, Company and its Subsidiaries or
(iii) relating to purchase orders and other agreements entered into with
customers of Education Management, Holdings, Company or any Subsidiary in the
ordinary course of business;

(u) Liens solely on any cash earnest money deposits made by Education
Management, Holdings, Company or any of its Subsidiaries in connection with any
letter of intent or purchase agreement permitted hereunder;

(v) (i) Liens placed upon the Equity Interests of any Subsidiary acquired
pursuant to a Permitted Acquisition to secure Indebtedness incurred pursuant to
Section 6.3(h) in connection with such Permitted Acquisition and (ii) Liens
placed upon the assets of such Subsidiary and any of its Subsidiaries to secure
a Guarantee by such Subsidiary and its Subsidiaries of any such Indebtedness
incurred pursuant to Section 6.3(h);

(w) ground leases in respect of real property on which facilities owned or
leased by Company or any of its Subsidiaries are located;

(x) Liens securing Indebtedness of Qualified Non-Wholly-Owned Subsidiaries and
Wholly-Owned Subsidiaries of Company permitted under Section 6.3(t);

(y) other Liens securing Indebtedness of Company outstanding in an aggregate
principal amount not to exceed $35,000,000 and incurred prior to the Amendment
Agreement Effective Date; and

 

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(z) Liens securing the Bilateral LC Facilities existing as of the Amendment
Agreement Effective Date or contemplated by the Bilateral LC Facilities as in
effect on such date.

6.2. Investments.

Make or hold any Investments, except:

(a) Investments by Company or a Subsidiary in assets that were Cash Equivalents
when such Investment was made;

(b) loans or advances to officers, directors and employees of Education
Management, Holdings, Company and its Subsidiaries (i) for reasonable and
customary business-related travel, entertainment, relocation and analogous
ordinary business purposes, (ii) in connection with such Person’s purchase of
Equity Interests of Holdings (or any direct or indirect parent thereof)
(provided that the amount of such loans and advances shall be contributed to
Company in cash as common equity) and (iii) for purposes not described in the
foregoing clauses (i) and (ii), in an aggregate principal amount outstanding not
to exceed $5,000,000;

(c) Investments (i) by Education Management, Holdings, Company or any Subsidiary
in any Credit Party (excluding any new Subsidiary which becomes a Credit Party),
(ii) by any Subsidiary that is not a Credit Party in any other such Subsidiary
that is also not a Credit Party, and (iii) by Company or any Subsidiary in
(A) any Wholly Owned Subsidiary that is not a Credit Party or (B) any Qualified
Non-Wholly-Owned Subsidiary that is not a Credit Party;

(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and other credits
to suppliers in the ordinary course of business;

(e) Investments consisting of Liens, Indebtedness, fundamental changes,
Dispositions and Restricted Payments permitted under Sections 6.1, 6.3, 6.4, 6.5
and 6.6, respectively;

(f) Investments existing or contemplated on the Closing Date and set forth on
Schedule 6.2(f) and any modification, replacement, renewal, reinvestment or
extension thereof; provided that the amount of the original Investment is not
increased except by the terms of such Investment (to the extent such increase is
noted on Schedule 6.2(f)) or as otherwise permitted by this Section 6.2;

(g) Investments in Swap Agreements permitted under Section 6.3;

(h) promissory notes and other noncash consideration received in connection with
Dispositions permitted by Section 6.5;

 

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(i) any Permitted Acquisition consummated prior to the Amendment Agreement
Effective Date, so long as Holdings and its Subsidiaries shall be in compliance
with the financial covenant set forth in Section 6.10(a) on a pro forma basis
after giving to such acquisition as of the last day of the Fiscal Quarter most
recently ended (as determined in accordance with Section 6.10(c)); provided that
for purposes of this Section 6.2(i), the applicable maximum Total Leverage Ratio
required by Section 6.10(a) shall be reduced by an amount equal to 0.50:1;

(j) the Transaction;

(k) Investments in the ordinary course of business consisting of endorsements
for collection or deposit and customary trade arrangements with customers
consistent with past practices;

(l) Investments (including debt obligations and Equity Interests) received in
connection with the bankruptcy or reorganization of suppliers and customers or
in settlement of delinquent obligations of, or other disputes with, customers
and suppliers arising in the ordinary course of business or upon the foreclosure
with respect to any secured Investment or other transfer of title with respect
to any secured Investment;

(m) loans and advances to Holdings (or any direct or indirect parent thereof) in
lieu of, and not in excess of the amount of (after giving effect to any other
loans, advances or Restricted Payments in respect thereof), Restricted Payments
to the extent permitted to be made to Holdings (or such parent) in accordance
with Sections 6.6(h) or (i);

(n) so long as immediately after giving effect to any such Investment, no
Default has occurred and is continuing and Holdings and its Subsidiaries will be
in pro forma compliance with the covenants set forth in Section 6.10, other
Investments after the Closing Date and prior to the Amendment Agreement
Effective Date that do not exceed (x) if, as of the last day of the immediately
preceding Test Period (after giving pro forma effect to such Investment) the
Total Leverage Ratio is 4.50:1 or less, $100,000,000 in the aggregate and
(y) if, as of the last day of the immediately preceding Test Period (after
giving pro forma effect to such Investment) the Total Leverage Ratio is greater
than 4.50:1, $50,000,000 in the aggregate, in each case net of any return
representing return of capital in respect of any such investment and valued at
the time of the making thereof; provided that, such amount shall be increased by
(i) the Net Cash Proceeds of Permitted Equity Issuances (other than Permitted
Equity Issuances made pursuant to Section 8.3) that are Not Otherwise Applied
and (ii) if, as of the last day of the immediately preceding Test Period (after
giving pro forma effect to such Investments) the Total Leverage Ratio is 5.50:1
or less, the amount of Cumulative Excess Cash Flow that is Not Otherwise
Applied;

(o) advances of payroll payments to employees in the ordinary course
of business;

(p) Investments to the extent that payment for such Investments is made solely
with capital stock of Holdings;

 

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(q) Investments of a Subsidiary acquired after the Closing Date or of a
corporation merged into Company or merged or consolidated with a Subsidiary in
accordance with Section 6.4 after the Closing Date to the extent that such
Investments were not made in contemplation of or in connection with such
acquisition, merger or consolidation and were in existence on the date of such
acquisition, merger or consolidation;

(r) Guarantees by Holdings, Company or any Subsidiary of leases (other than
Capitalized Leases) or of other obligations that do not constitute Indebtedness,
in each case entered into in the ordinary course of business; and

(s) Investments in assets useful to the business of Education Management and its
Subsidiaries made with any Asset Sale Reinvestment Deferred Amount and
Insurance/Condemnation Reinvestment Deferred Amount (each as defined in
Section 2.14).

6.3. Indebtedness.

Create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness of Education Management, Holdings, Company and any of its
Subsidiaries under the Credit Documents (including, without limitation, the
payment of PIK Interest);

(b) Indebtedness (including intercompany Indebtedness) outstanding on the
Closing Date and listed on Schedule 6.3(b) and any Permitted Refinancing
thereof;

(c) Guarantees by Education Management, Holdings, Company and its Subsidiaries
in respect of Indebtedness of Company or any Subsidiary otherwise permitted
hereunder; provided that (A) no Guarantee by any Credit Party of any Senior Note
or Junior Financing shall be permitted unless such Credit Party shall have also
provided a Guarantee of the Obligations substantially on the terms set forth in
the Guaranty and (B) if the Indebtedness being Guaranteed is subordinated to the
Obligations, such Guarantee shall be subordinated to the Guarantee of the
Obligations on terms at least as favorable to the Lenders as those contained in
the subordination of such Indebtedness;

(d) Indebtedness of Education Management or any Subsidiary owing to Education
Management or any other Subsidiary to the extent constituting an Investment
permitted by Section 6.2; provided that (i) all such Indebtedness of any Credit
Party owed to any Person that is not a Credit Party shall be subject to the
subordination terms set forth in Section 4.4.3 of the Pledge and Security
Agreement and (ii) all such Indebtedness of any Credit Party owed to another
Credit Party (A) shall be evidenced by the Intercompany Note, which shall be
subject to a First Priority Lien pursuant to the Pledge and Security Agreement
and (B) shall be unsecured and subordinated in right of payment to the payment
in full of the Obligations pursuant to the terms of the Intercompany Note;

 

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(e) Indebtedness with respect to Capitalized Leases in an aggregate amount,
together with the aggregate amount of Indebtedness incurred pursuant to
Section 6.3(g), not to exceed at any time an amount equal to the greater of
$160,000,000 and 4% of Total Assets;

(f) Indebtedness in respect of Swap Agreements designed to hedge against
interest rates, foreign exchange rates or commodities pricing risks incurred in
the ordinary course of business and not for speculative purposes;

(g) purchase money Indebtedness in an aggregate amount, together with the
aggregate amount of Indebtedness incurred pursuant to Section 6.3(e), not to
exceed at any time an amount equal to the greater of $160,000,000 and 4% of
Total Assets; provided, any such Indebtedness (i) shall be secured only by the
asset acquired in connection with the incurrence of such Indebtedness, and
(ii) shall constitute not less than 85% of the aggregate consideration paid with
respect to such asset;

(h) (i) the following Indebtedness assumed in connection with Permitted
Acquisitions (provided that such Indebtedness is not incurred in contemplation
of any such Permitted Acquisition): (x) Indebtedness assumed by Holdings,
(y) Indebtedness assumed by Company, provided that such Indebtedness is
unsecured and is subordinated to the Obligations on terms no less favorable to
the Lenders than the subordination terms set forth in the Old Senior
Subordinated Notes Indenture as of the Closing Date and (z) other Indebtedness
assumed by Company and its Subsidiaries in an aggregate amount not to exceed
$125,000,000 at any one time outstanding, (ii) Indebtedness incurred by Holdings
or Company to finance a Permitted Acquisition, provided that such Indebtedness
is unsecured and is subordinated to the Obligations on terms no less favorable
to the Lenders than the subordination terms set forth in the Old Senior
Subordinated Notes Indenture as of the Closing Date and (iii) any Permitted
Refinancing of the foregoing, provided that with respect to any unsecured and/or
subordinated Indebtedness, the Permitted Refinancing thereof shall be similarly
unsecured and/or subordinated; provided that, in each case of the foregoing
clauses (i), (ii) and (iii), such Indebtedness and all Indebtedness resulting
from any Permitted Refinancing thereof (A) both immediately prior and after
giving effect thereto, (1) no Default shall exist or result therefrom and
(2) Holdings and its Subsidiaries will be in pro forma compliance with the
covenants set forth in Section 6.10, (B) matures after, and does not require any
scheduled amortization (other than nominal amortization) or other scheduled
payments of principal prior to, the date that is 91 days after the Tranche C-2
Term Loan Maturity Date (it being understood that such Indebtedness may have
mandatory prepayment, repurchase or redemptions provisions satisfying the
requirement of clause (C) hereof) and (C) has terms and conditions (other than
interest rate, redemption premiums and subordination terms), taken as a whole,
that are not materially less favorable to Company as the terms and conditions of
the Old Notes as of the Closing Date; provided that a certificate of a
Responsible Officer delivered to Administrative Agent at least five Business
Days prior to the assumption or incurrence of such Indebtedness, together with a
reasonably detailed description of the material terms and conditions of such
Indebtedness or drafts of the documentation relating thereto, stating that
Company has determined in good faith that such terms and conditions satisfy the
foregoing requirement shall be conclusive evidence that such terms and
conditions satisfy the foregoing requirement unless the Administrative Agent
notifies Company within such five Business Day period that it disagrees with
such determination (including a reasonable description of the basis upon which
it disagrees).

 

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(i) Indebtedness representing deferred compensation to employees of Company and
its Subsidiaries incurred in the ordinary course of business;

(j) Indebtedness in an aggregate amount not to exceed $15,000,000 at any time
consisting of promissory notes issued by any Credit Party to current or former
officers, directors and employees, their respective estates, spouses or former
spouses to finance the purchase or redemption of Equity Interests of Holdings
permitted by Section 6.6;

(k) Indebtedness incurred by Holdings, Company or its Subsidiaries in any
Disposition constituting indemnification obligations or obligations in respect
of purchase price or other similar adjustments;

(l) Indebtedness consisting of obligations of Holdings, Company or its
Subsidiaries under deferred compensation or other similar arrangements incurred
by such Person in connection with the Transaction and Permitted Acquisitions or
any other Investment expressly permitted hereunder;

(m) Cash Management Obligations and other Indebtedness in respect of netting
services, overdraft protections and similar arrangements in each case in
connection with deposit accounts;

(n) Indebtedness incurred by Company or any of its Subsidiaries in respect of
letters of credit, bank guarantees, bankers’ acceptances or similar instruments
issued or created in the ordinary course of business, including in respect of
workers compensation claims, health, disability or other employee benefits or
property, casualty or liability insurance or self-insurance or other
Indebtedness with respect to reimbursement-type obligations regarding workers
compensation claims and including Indebtedness under the Bilateral LC
Facilities; provided that any reimbursement obligations in respect thereof are
reimbursed within 30 days following the incurrence thereof;

(o) obligations in respect of performance, bid, appeal and surety bonds and
performance and completion guarantees and similar obligations provided by
Company or any of its Subsidiaries or obligations in respect of letters of
credit, bank guarantees or similar instruments related thereto, in each case in
the ordinary course of business or consistent with past practice;

(p) unsecured Indebtedness of Holdings (“Permitted Holdings Debt”) (i) that is
not subject to any Guarantee by Company or any Subsidiary, (ii) that will not
mature prior to the date that is 91 days after the Tranche C-2 Term Loan
Maturity Date, (iii) that has no scheduled amortization or payments of principal
(it being understood that such Indebtedness may have mandatory prepayment,
repurchase or redemption provisions satisfying the requirements of clause
(v) hereof), (iv) that does not require any payments in cash of interest or
other amounts in respect of the principal thereof prior to the earlier to occur
of (A) the date that is five (5) years

 

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from the date of the issuance or incurrence thereof and (B) the date that is 91
days after the Tranche C-2 Term Loan Maturity Date, and (v) that has mandatory
prepayment, repurchase or redemption, covenant, default and remedy provisions
customary for senior discount notes of an issuer that is the parent of a
borrower under senior secured credit facilities, and in any event, with respect
to covenant, default and remedy provisions, no more restrictive than those set
forth in the Old Senior Subordinated Notes Indenture as of the Closing Date,
taken as a whole (other than provisions customary for senior discount notes of a
holding company); provided that a certificate of a Responsible Officer delivered
to Administrative Agent at least five Business Days prior to the incurrence of
such Indebtedness, together with a reasonably detailed description of the
material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto, stating that Company has determined in good
faith that such terms and conditions satisfy the foregoing requirement shall be
conclusive evidence that such terms and conditions satisfy the foregoing
requirement unless Administrative Agent notifies Company within such five
Business Day period that it disagrees with such determination (including a
reasonable description of the basis upon which it disagrees); provided, further,
that any such Indebtedness shall constitute Permitted Holdings Debt only if
(1) both before and after giving effect to the issuance or incurrence thereof,
no Default shall have occurred and be continuing and (2) Education Management
and its Subsidiaries will be in pro forma compliance with the covenants set
forth in Section 6.10 (it being understood that any capitalized or paid-in-kind
or accreted principal on such Indebtedness is not subject to this proviso);

(q) Indebtedness supported by a Letter of Credit, in a principal amount not to
exceed the face amount of such Letter of Credit;

(r) Indebtedness in respect of the Senior Notes and any Permitted Refinancing
thereof;

(s) Indebtedness consisting of the financing of insurance premiums in the
ordinary course of business;

(t) Indebtedness of Qualified Non-Wholly-Owned Subsidiaries and Wholly Owned
Subsidiaries of Company in an aggregate amount not to exceed at any time (x) if,
as of the last day of the immediately preceding Test Period (after giving pro
forma effect to such Indebtedness) the Total Leverage Ratio is less than 4.50:1,
$50,000,000 and (y) otherwise, $25,000,000;

(u) other Indebtedness of Company in an aggregate amount not to exceed at any
time $200,000,000 to the extent incurred prior to the Amendment Agreement
Effective Date; and

(v) all premiums (if any), interest (including post-petition interest), fees,
expenses, charges and additional or contingent interest on obligations described
in clauses (a) through (u) above.

 

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6.4. Fundamental Changes.

Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that:

(a) any Subsidiary may merge with (i) any Borrower (including a merger, the
purpose of which is to reorganize such Borrower into a new jurisdiction);
provided that such Borrower shall be the continuing or surviving Person and
(y) such merger does not result in any Borrower ceasing to be incorporated under
the Laws of the United States, any state thereof or the District of Columbia, or
(ii) any one or more other Subsidiaries; provided that when any Subsidiary that
is a Credit Party is merging with another Subsidiary, a Credit Party shall be
the continuing or surviving Person;

(b) (i) any Subsidiary that is not a Credit Party may merge or consolidate with
or into any other Subsidiary that is not a Credit Party and (ii) any Subsidiary
(other than a Borrower) may liquidate or dissolve or change its legal form if
Education Management determines in good faith that such action is in the best
interests of Education Management and its Subsidiaries and if not materially
disadvantageous to the Lenders;

(c) any Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to Company or to another Subsidiary;
provided that if the transferor in such a transaction is a Guarantor or a
Borrower, then (i) the transferee must either be a Borrower or a Guarantor or
(ii) to the extent constituting an Investment, such Investment must be permitted
under Sections 6.2 and 6.3;

(d) so long as no Default exists or would result therefrom, Company may merge
with any other Person prior to the Amendment Agreement Effective Date; provided
that (i) Company shall be the continuing or surviving corporation or (ii) if the
Person formed by or surviving any such merger or consolidation is not Company
(any such Person, the “Successor Company”), (A) the Successor Company and its
Subsidiaries shall be in compliance with the financial covenants set forth in
Section 6.10 on a pro forma basis after giving effect to such merger or
consolidation as of the last day of the Fiscal Quarter most recently ended,
(B) the Successor Company shall be an entity organized or existing under the
laws of the United States, any state thereof, the District of Columbia or any
territory thereof, (C) the Successor Company shall expressly assume all the
obligations of Company under this Agreement and the other Credit Documents to
which Company is a party pursuant to a supplement hereto or thereto in form
reasonably satisfactory to the Administrative Agent, (D) each Guarantor, unless
it is the other party to such merger or consolidation, shall have by a
supplement to the Guaranty confirmed that its Guarantee shall apply to the
Successor Company’s obligations under this Agreement, (E) each Guarantor, unless
it is the other party to such merger or consolidation, shall have by a
supplement to the Pledge and Security Agreement confirmed that its obligations
thereunder shall apply to the Successor Company’s obligations under this
Agreement, (F) each mortgagor of a Closing Date Mortgaged Property, unless it is
the other party to such merger or consolidation, shall have by an amendment to
or restatement of the applicable Mortgage confirmed that its obligations
thereunder shall apply to the Successor Company’s obligations under this
Agreement, and (G) Company shall have delivered to Administrative Agent an
officer’s certificate and an opinion of counsel, each stating that such merger
or consolidation and such supplement to this Agreement or any Collateral
Document comply with this Agreement; provided, further, that if the foregoing
are satisfied, the Successor Company will succeed to, and be substituted for,
Company under this Agreement;

 

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(e) so long as no Default exists or would result therefrom, any Subsidiary may
merge with any other Person prior to the Amendment Agreement Effective Date in
order to effect an Investment permitted pursuant to Section 6.2; provided that
the continuing or surviving Person shall be a Subsidiary, which together with
each of its Subsidiaries, shall have complied with the requirements of
Section 5.11;

(f) Holdings and its Subsidiaries may consummate the Merger; and

(g) so long as no Default exists or would result therefrom, a Disposition, the
purpose of which is to effect a Disposition permitted pursuant to Section 6.5.

6.5. Dispositions.

Make any Disposition or enter into any agreement to make any Disposition,
except:

(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business and Dispositions of
property no longer used or useful in the conduct of the business of Company and
its Subsidiaries;

(b) Dispositions of assets that do not constitute Asset Sales, but excluding
Dispositions that do not constitute Asset Sales solely by operation of clause
(iii) of the definition thereof;

(c) Dispositions of property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or
(ii) the proceeds of such Disposition are promptly applied to the purchase price
of such replacement property;

(d) Dispositions of property to Company or to a Subsidiary; provided that if the
transferor of such property is a Guarantor or a Borrower (i) the transferee
thereof must either be a Borrower or a Guarantor or (ii) to the extent such
transaction constitutes an Investment, such transaction is permitted under
Section 6.2;

(e) Dispositions permitted by Sections 6.4 and 6.6 and Liens permitted by
Section 6.1;

(f) Dispositions of property pursuant to sale-leaseback transactions; provided
that the fair market value of all property so Disposed of after the Closing Date
(taken together with the aggregate book value of all property Disposed of
pursuant to Section 6.5(k)) shall not exceed $125,000,000; provided, further,
however, that Dispositions pursuant to this Section 6.5(f) (other than with
respect to the Sarasota Property) shall not be permitted following the Amendment
Agreement Effective Date;

 

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(g) Dispositions of Cash Equivalents;

(h) Dispositions of accounts receivable in connection with the collection or
compromise thereof;

(i) leases, subleases, licenses or sublicenses, in each case in the ordinary
course of business and which do not materially interfere with the business of
Holdings, Company and its Subsidiaries;

(j) transfers of property subject to Casualty Events upon receipt of the Net
Cash Proceeds of such Casualty Event;

(k) Dispositions after the Closing Date of property not otherwise permitted
under this Section 6.5; provided that (i) at the time of such Disposition (other
than any such Disposition made pursuant to a legally binding commitment entered
into at a time when no Default exists), no Default shall exist or would result
from such Disposition, (ii) the aggregate book value of all property Disposed of
in reliance on this clause (k) (taken together with the aggregate fair market
value of all property Disposed of pursuant to Section 6.5(f)) shall not exceed
$125,000,000 and (iii) with respect to any Disposition pursuant to this clause
(k) for a purchase price in excess of $3,500,000, Company or a Subsidiary shall
receive not less than 75% of such consideration in the form of cash or Cash
Equivalents (in each case, free and clear of all Liens at the time received,
other than 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)); provided, however,
that for the purposes of this clause (iii), (A) any liabilities (as shown on
Company’s or such Subsidiary’s most recent balance sheet provided hereunder or
in the footnotes thereto) of Company or such Subsidiary, other than liabilities
that are by their terms subordinated to the payment in cash of the Obligations,
that are assumed by the transferee with respect to the applicable Disposition
and for which Company and all of its Subsidiaries shall have been validly
released by all applicable creditors in writing, (B) any securities received by
Company or such Subsidiary from such transferee that are converted by Company or
such Subsidiary into cash (to the extent of the cash received) within 180 days
following the closing of the applicable Disposition and (C) any Designated
Non-Cash Consideration received by Company or such Subsidiary in respect of such
Disposition having an aggregate fair market value, taken together with all other
Designated Non-Cash Consideration received pursuant to this clause (C) that is
at that time outstanding, not in excess of 1.5% of Total Assets at the time of
the receipt of such Designated Non-Cash Consideration, with the fair market
value of each item of Designated Non-Cash Consideration being measured at the
time received and without giving effect to subsequent changes in value, shall be
deemed to be cash; provided, further, however, that Dispositions pursuant to
this Section 6.5(k) (other than with respect to the Sarasota Property) shall not
be permitted following the Amendment Agreement Effective Date;

(l) Dispositions listed on Schedule 6.5(l); and

(m) Dispositions of Investments in joint ventures to the extent required by, or
made pursuant to customary buy/sell arrangements between, the joint venture
parties set forth in joint venture arrangements and similar binding
arrangements;

 

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provided that any Disposition of any property pursuant to this Section 6.5
(except pursuant to Sections 6.5(e) and except for Dispositions from a Credit
Party to another Credit Party), shall be for no less than the fair market value
of such property at the time of such Disposition. To the extent any Collateral
is Disposed of as expressly permitted by this Section 6.5 to any Person other
than Holdings, Company or any Subsidiary, such Collateral shall be sold free and
clear of the Liens created by the Credit Documents, and Administrative Agent or
Collateral Agent, as applicable, shall be authorized to take any actions deemed
appropriate in order to effect the foregoing.

6.6. Restricted Payments.

Declare or make, directly or indirectly, any Restricted Payment, except:

(a) each Subsidiary may make Restricted Payments to Company and to other
Subsidiaries (and, in the case of a Restricted Payment by a non-wholly owned
Subsidiary, to Company and any other Subsidiary and to each other owner of
Equity Interests of such Subsidiary based on their relative ownership interests
of the relevant class of Equity Interests);

(b) Holdings, Company and each Subsidiary may declare and make dividend payments
or other distributions payable solely in the Equity Interests (other than
Disqualified Equity Interests not otherwise permitted by Section 6.3) of such
Person;

(c) so long as no Default shall have occurred and be continuing or would result
therefrom, from and after the date Company delivers an irrevocable written
notice to the Administrative Agent stating that Company will make Restricted
Payments to Holdings that are used by Holdings solely to fund cash interest
payments required to be made by Holdings and permitted to be made by Holdings
under this Agreement (the “Holdings Restricted Payments Election”), Company may
make such Restricted Payments to Holdings;

(d) Restricted Payments made on the Closing Date to consummate the Transaction;

(e) to the extent constituting Restricted Payments, Holdings, Company and its
Subsidiaries may enter into and consummate transactions expressly permitted by
any provision of Section 6.4 or 6.8 other than Section 6.8(f);

(f) repurchases of Equity Interests in Education Management, Holdings, Company
or any Subsidiary deemed to occur upon exercise of stock options or warrants if
such Equity Interests represent a portion of the exercise price of such options
or warrants;

(g) Holdings may pay (or make Restricted Payments to allow any direct or
indirect parent thereof to pay) for the repurchase, retirement or other
acquisition or retirement for value of Equity Interests of Holdings (or of any
such parent of Holdings) by any future, present or former employee or director
of Holdings (or any direct or indirect parent of Holdings) or any of its
Subsidiaries in connection with the termination of employment, death or
disability of such individual pursuant to any employee or director equity plan,
employee or director stock option plan or any other employee or director benefit
plan or any agreement (including any stock subscription or shareholder
agreement) with any employee or director of Holdings or any of its Subsidiaries;

 

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(h) Company and its Subsidiaries may make Restricted Payments to Holdings:

(i) the proceeds of which will be used to pay (or to make Restricted Payments to
allow any direct or indirect parent of Holdings to pay) the tax liability to
each relevant jurisdiction in respect of any tax returns for the relevant
jurisdiction of Holdings (or such parent) attributable to Holdings, Company or
its Subsidiaries;

(ii) the proceeds of which shall be used by Holdings to pay (or to make
Restricted Payments to allow any direct or indirect parent of Holdings to pay)
its operating expenses incurred in the ordinary course of business and other
corporate overhead costs and expenses (including administrative, legal,
accounting and similar expenses provided by third parties), which are reasonable
and customary and incurred in the ordinary course of business, in an aggregate
amount, together with loans and advances to Holdings made pursuant to
Section 6.2(m) in lieu of Restricted Payments permitted by this sub-clause (ii),
not to exceed $1,000,000 in any fiscal year plus any reasonable and customary
indemnification claims made by directors or officers of Holdings (or any parent
thereof) attributable to the ownership or operations of Company and its
Subsidiaries;

(iii) the proceeds of which shall be used by Holdings to pay franchise taxes and
other fees, taxes and expenses required to maintain its (or any of its direct or
indirect parents’) corporate existence;

(iv) the proceeds of which shall be used by Holdings to make Restricted Payments
permitted by Section 6.6(g);

(v) to finance any Investment permitted to be made pursuant to Section 6.2;
provided that (A) such Restricted Payment shall be made substantially
concurrently with the closing of such Investment and (B) Holdings shall,
immediately following the closing thereof, cause (1) all property acquired
(whether assets or Equity Interests) to be contributed to Company or its
Subsidiaries or (2) the merger (to the extent permitted in Section 6.4) of the
Person formed or acquired into Company or its Subsidiaries in order to
consummate such Permitted Acquisition, in each case, in accordance with the
requirements of Sections 5.12 and 5.13; and

(vi) the proceeds of which shall be used by Holdings to pay (or to make
Restricted Payments to allow any direct or indirect parent thereof to pay) fees
and expenses (other than to Affiliates) related to any unsuccessful equity or
debt offering permitted by this Agreement; and

 

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(i) in addition to the foregoing Restricted Payments and so long as no Default
shall have occurred and be continuing or would result therefrom, Company may
make additional Restricted Payments to Holdings after the Closing Date the
proceeds of which may be utilized by Holdings to make additional Restricted
Payments, in an aggregate amount, together with the aggregate amount of
(1) prepayments, redemptions, purchases, defeasances and other payments in
respect of Junior Financings made pursuant to Section 6.12(a)(iv) and (2) loans
and advances to Holdings made pursuant to Section 6.2(m) in lieu of Restricted
Payments permitted by this clause (i), not to exceed the sum of (A) $60,000,000,
(B) the aggregate amount of the Net Cash Proceeds of Permitted Equity Issuances
(other than Permitted Equity Issuances made pursuant to Section 8.3) that are
Not Otherwise Applied and (C) if the Total Leverage Ratio as of the last day of
the immediately preceding Test Period (after giving pro forma effect to such
additional Restricted Payments) is 5.50:1 or less, the amount of Cumulative
Excess Cash Flow that is Not Otherwise Applied. For the purpose of this
Agreement, “Cumulative Excess Cash Flow” means the sum of Consolidated Excess
Cash Flow (but not less than zero in any period) for the fiscal year ending on
June 30, 2007 and Consolidated Excess Cash Flow for each succeeding and
completed fiscal year; provided that in connection with (x) any dividend or
other distribution made or to be made to the equity holders of Education
Management or (y) any other Restricted Payment made or to be made to a Sponsor,
in each case pursuant to clause (C) of this Section 6.6(i), Consolidated Excess
Cash Flow for the 2010 fiscal year shall be determined without giving effect to
clause (a)(iii) of the definition thereof; provided, further, however, that
Restricted Payments pursuant to this clause Section 6.6(i) shall not be
permitted following the Amendment Agreement Effective Date.

6.7. Change in Nature of Business.

Engage in any material line of business substantially different from those lines
of business conducted by Company and its Subsidiaries on the Closing Date or any
business reasonably related or ancillary thereto.

6.8. Transactions with Affiliates.

Enter into any transaction of any kind with any Affiliate of Company, whether or
not in the ordinary course of business, other than (a) transactions among Credit
Parties or any Subsidiary or any entity that becomes a Subsidiary as a result of
such transaction, (b) on terms substantially as favorable to Education
Management, Holdings, Company or such Subsidiary as would be obtainable by
Education Management, Holdings, Company or such Subsidiary at the time in a
comparable arm’s-length transaction with a Person other than an Affiliate,
(c) the payment of fees and expenses related to the Transaction, (d) the
issuance of Equity Interests to the management of Company or any of its
Subsidiaries in connection with the Transaction, (e) the payment of management
and monitoring fees to the Sponsors in an aggregate amount in any fiscal year
not to exceed the amount permitted to be paid pursuant to the Sponsor Management
Agreement as in effect on the Closing Date and any Sponsor Termination Fees not
to exceed the amount set forth in the Sponsor Management Agreement as in effect
on the Closing Date and related indemnities and reasonable expenses, (f) equity
issuances, repurchases, retirements or other acquisitions or retirements of
Equity Interests by Holdings permitted under Section 6.6, (g) loans and other
transactions by Education Management, Holdings, Company and its Subsidiaries to
the extent permitted under this Section 6, (h) employment and severance
arrangements between Education Management, Holdings, Company and its
Subsidiaries and

 

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their respective officers and employees in the ordinary course of business,
(i) without limiting Section 6.6(h), payments by Holdings (and any direct or
indirect parent thereof), Company and its Subsidiaries pursuant to the tax
sharing agreements among Holdings (and any such parent thereof), Company and its
Subsidiaries on customary terms to the extent attributable to the ownership or
operation of Company and its Subsidiaries, (j) the payment of customary fees and
reasonable out of pocket costs to, and indemnities provided on behalf of,
directors, officers and employees of Education Management, Holdings, Company and
its Subsidiaries in the ordinary course of business to the extent attributable
to the ownership or operation of Education Management, Holdings, Company and its
Subsidiaries, (k) transactions pursuant to permitted agreements in existence on
the Closing Date and set forth on Schedule 6.8 or any amendment thereto to the
extent such an amendment is not adverse to the Lenders in any material respect,
(l) dividends, redemptions and repurchases permitted under Section 6.6, and
(m) customary payments by Education Management, Holdings, Company and any of its
Subsidiaries to the Sponsors made for any financial advisory, financing,
underwriting or placement services or in respect of other investment banking
activities (including in connection with acquisitions or divestitures), which
payments are approved by the majority of the members of the board of directors
or a majority of the disinterested members of the board of directors of Holdings
or Company, in good faith.

6.9. Burdensome Agreements.

Enter into or permit to exist any Contractual Obligation (other than this
Agreement or any other Credit Document) that limits the ability of (a) any
Subsidiary of Company that is not a Guarantor to make Restricted Payments to
Company or any Guarantor or (b) Company or any other Credit Party to create,
incur, assume or suffer to exist Liens on property of such Person for the
benefit of Lenders with respect to the Obligations or under the Credit
Documents; provided that the foregoing clauses (a) and (b) shall not apply to
Contractual Obligations which (i) (x) exist on the Closing Date and (to the
extent not otherwise permitted by this Section 6.9) are listed on Schedule 6.9
hereto and (y) to the extent Contractual Obligations permitted by clause (x) are
set forth in an agreement evidencing Indebtedness, are set forth in any
agreement evidencing any permitted renewal, extension or refinancing of such
Indebtedness so long as such renewal, extension or refinancing does not expand
the scope of such Contractual Obligation, (ii) are binding on a Subsidiary at
the time such Subsidiary first becomes a Subsidiary of Company, so long as such
Contractual Obligations were not entered into solely in contemplation of such
Person becoming a Subsidiary of Company, (iii) arise in connection with any
Disposition permitted by Section 6.5 to the extent such Contractual Obligations
are in effect prior to the consummation of such Disposition; (iv) are customary
provisions in joint venture agreements and other similar agreements applicable
to joint ventures permitted under Section 6.2 and applicable solely to such
joint venture entered into in the ordinary course of business, (v) are negative
pledges and restrictions on Liens in favor of any holder of Indebtedness
permitted under Section 6.3 but solely to the extent any negative pledge relates
to the property financed by or the subject of such Indebtedness (and excluding
in any event any Indebtedness constituting any Junior Financing), (vi) are
customary restrictions on leases, subleases, licenses or asset sale agreements
otherwise permitted hereby so long as such restrictions relate to the assets
subject thereto, (vii) comprise restrictions imposed by any agreement relating
to secured Indebtedness permitted pursuant to Section 6.3(e) or 6.3(g) to the
extent that such restrictions apply only to the

 

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property or assets securing such Indebtedness or, in the case of Indebtedness
incurred pursuant to Section 6.3(g) only, to the Subsidiaries incurring or
guaranteeing such Indebtedness, (viii) are customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of Company
or any Subsidiary, (ix) are customary provisions restricting assignment of any
agreement entered into in the ordinary course of business, (x) are restrictions
on cash or other deposits imposed by customers under contracts entered into in
the ordinary course of business, (xi) are required by any applicable Education
Laws or any other applicable laws and (xii) comprise restrictions imposed by any
Senior Notes Documentation.

6.10. Financial Covenants.

(a) Total Leverage Ratio. Permit the Total Leverage Ratio as of the last day of
any Test Period (beginning with the Test Period ending on December 31, 2006) to
be greater than the ratio set forth below opposite the last day of such Test
Period (it being understood, for the avoidance of doubt, that the covenant in
this Section 6.10(a) shall not apply during the Financial Covenant Holiday):

 

Year

   March 31    June 30    September 30    December 31

2006

   —      —      —      8.25:1

2007

   8.00:1    8.00:1    7.75:1    7.75:1

2008

   7.25:1    7.25:1    7.00:1    7.00:1

2009

   6.75:1    6.75:1    6.25:1    6.25:1

2010

   5.75:1    5.75:1    5.25:1    4.50:1

2011

   4.50:1    4.50:1    4.25:1    4.25:1

2012

   4.00:1    4.00:1    3.50:1    3.50:1

2013

   3.50:1    3.50:1    3.50:1    3.50:1

2014

   3.50:1    —      —      —  

2015

   —      —      3.50:1    3.50:1

2016

   3.50:1    3.50:1    —      —  

(b) Interest Coverage Ratio. Permit the Interest Coverage Ratio for any Test
Period (beginning with the Test Period ending on December 31, 2006) to be less
than the ratio set forth below opposite the last day of such Test Period (it
being understood, for the avoidance of doubt, that the covenant in this
Section 6.10(b) shall not apply during the Financial Covenant Holiday):

 

Year

   March 31    June 30    September 30    December 31

2006

   —      —      —      1.40:1

2007

   1.40:1    1.40:1    1.40:1    1.50:1

2008

   1.50:1    1.55:1    1.60:1    1.65:1

2009

   1.70:1    1.70:1    1.80:1    1.90:1

2010

   2.00:1    2.00:1    2.10:1    2.20:1

2011

   2.30:1    2.30:1    2.50:1    2.50:1

2012

   2.50:1    2.50:1    2.75:1    2.75:1

 

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Year

   March 31    June 30    September 30    December 31

2013

   2.75:1    2.75:1    2.75:1    2.75:1

2014

   2.75:1    —      —      —  

2015

   —      —      2.75:1    2.75:1

2016

   2.75:1    2.75:1    —      —  

(c) Certain Calculations. With respect to any period during which a Permitted
Acquisition, an Asset Sale, an Investment or a merger or consolidation has
occurred or an Indebtedness is incurred (each, a “Subject Transaction”), for
purposes of determining compliance with the financial covenants set forth in
this Section 6.10, Consolidated EBITDA shall be calculated with respect to such
period on a pro forma basis (including pro forma adjustments arising out of
events which are directly attributable to a specific transaction, are factually
supportable and are expected to have a continuing impact, in each case
determined on a basis consistent with Article 11 of Regulation S-X promulgated
under the Securities Act and as interpreted by the staff of the Securities and
Exchange Commission, which would include cost savings resulting from head count
reduction, closure of facilities and similar restructuring charges, which pro
forma adjustments shall be certified by the chief financial officer or treasurer
of Holdings) using the historical financial statements of any business so
acquired or to be acquired or sold or to be sold and the consolidated financial
statements of Holdings and its Subsidiaries which shall be reformulated as if
such Subject Transaction, and any Indebtedness incurred or repaid in connection
therewith, had been consummated or incurred or repaid at the beginning of such
period (and assuming that such Indebtedness bears interest during any portion of
the applicable measurement period prior to the relevant acquisition at the
weighted average of the interest rates applicable to outstanding Loans incurred
during such period).

6.11. Accounting Changes.

Make any change in fiscal year; provided, however, that Company may, upon
written notice to the Administrative Agent, change its fiscal year to any other
fiscal year reasonably acceptable to the Administrative Agent, in which case,
Company and Administrative Agent will, and are hereby authorized by the Lenders
to, make any adjustments to this Agreement that are necessary to reflect such
change in fiscal year.

6.12. Prepayments, Etc. of Indebtedness; Amendment of Agreements.

(a) Prepay, redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof in any manner (it being understood that payments of
regularly scheduled interest shall be permitted) the Senior Notes or any
Indebtedness that is required to be subordinated to the Obligations pursuant to
the terms of the Credit Documents (collectively, “Junior Financing”) or make any
payment in violation of any subordination terms of any Junior Financing
Documentation, except (i) the refinancing thereof with the Net Cash Proceeds of
any Indebtedness (to the extent such Indebtedness constitutes a Permitted
Refinancing and, if applicable, is permitted pursuant to Section 6.3(h)), to the
extent not required to prepay any Loans pursuant to Section 2.14, or of any
Indebtedness of Holdings, (ii) the conversion of any Junior Financing to Equity
Interests (other than Disqualified Equity Interests) of Holdings or any

 

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of its direct or indirect parents, (iii) the prepayment of Indebtedness of
Company or any Subsidiary to Company or any Subsidiary to the extent permitted
by the Collateral Documents and (iv) prepayments, redemptions, purchases,
defeasances and other payments in respect of Junior Financings prior to their
scheduled maturity in an aggregate amount, together with the aggregate amount of
(1) Restricted Payments made pursuant to Section 6.6(i) and (2) loans and
advances to Holdings made pursuant to Section 6.2(m), not to exceed the sum of
(A) the amount of the Net Cash Proceeds of Permitted Equity Issuances (other
than Permitted Equity Issuances made pursuant to Section 8.3) that are Not
Otherwise Applied and (B) if, as of the last day of the immediately preceding
Test Period (after giving pro forma effect to such prepayments, redemptions,
purchases, defeasances and other payments) the Total Leverage Ratio is 5.50:1 or
less, the amount of Cumulative Excess Cash Flow that is Not Otherwise Applied;
provided, however, that notwithstanding the foregoing, no payments in respect of
Junior Financing shall be made following the Amendment Agreement Effective Date.

(b) Amend, modify or change in any manner materially adverse to the interests of
the Lenders any term or condition of any Junior Financing Documentation or any
Organization Document without the consent of the Arrangers.

(c) Prepay, redeem, purchase, defease or otherwise satisfy in any manner the
Loans prior to the scheduled maturity thereof (it being understood that payments
of regularly scheduled amortization and interest on the Term Loans and the
payment of interest on the Revolving Loans (other than, in each case, Term Loans
or Revolving Loans that are PIK Loans) shall be permitted).

6.13. Equity Interests of Company and Subsidiaries.

Permit any Domestic Subsidiary that is a Subsidiary to be a non-wholly owned
Subsidiary, except as a result of or in connection with a dissolution, merger,
consolidation or Disposition of a Subsidiary permitted by Section 6.4, 6.5 or an
Investment in any Person permitted under Section 6.2.

6.14. Holding Company.

In the case of each of Education Management and Holdings, conduct, transact or
otherwise engage in any business or operations other than those incidental to
(i) its ownership of the Equity Interests of Holdings and Company, respectively,
(ii) the maintenance of its legal existence, (iii) the performance of the Credit
Documents, the Merger Agreement and the other agreements contemplated by the
Merger Agreement to which it is a party, (iv) any public offering of its common
stock or any other issuance of its Equity Interests not prohibited by this
Section 6 and (v) any transaction that Education Management and Holdings is
permitted to enter into or consummate under this Section 6.

 

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6.15. Capital Expenditures.

(a) Make any Capital Expenditure except for Capital Expenditures not exceeding,
in the aggregate for Holdings and its Subsidiaries during each fiscal year set
forth below, the sum of (x) the amount set forth opposite such fiscal year and
(y) the amount of Cumulative Excess Cash Flow that is Not Otherwise Applied:

 

Fiscal Year

   Amount  

2007

   $ 125,000,000   

2008

   $ 135,000,000   

2009

   $ 145,000,000   

2010

   $ 155,000,000   

2011

   $ 165,000,000   

2012

   $ 175,000,000   

2013

   $ 185,000,000   

2014

   $ 200,000,000   

2015

   $ 100,000,000   

2016

   $ 100,000,000   

(b) Notwithstanding anything to the contrary contained in clause (a) above, to
the extent that the aggregate amount of Capital Expenditures made by Holdings
and its Subsidiaries in any fiscal year pursuant to Section 6.15(a) is less than
the maximum amount of Capital Expenditures permitted by Section 6.15(a) with
respect to such fiscal year, the amount of such difference (the “Rollover
Amount”) may be carried forward and used to make Capital Expenditures in the two
succeeding fiscal years; provided that Capital Expenditures in any fiscal year
shall be counted against the base amount set forth in Section 6.15(a) with
respect to such fiscal year prior to being counted against any Rollover Amount
available with respect to such fiscal year.

6.16. Interest Rate Protection.

No later than ninety (90) days following the Closing Date and at all times
thereafter until the second anniversary of the Closing Date, Company shall
obtain and cause to be maintained protection against fluctuations in interest
rates pursuant to one or more Interest Rate Agreements in form and substance
reasonably satisfactory to Administrative Agent and with parties reasonably
acceptable to Administrative Agent (which may include any Lender), in order to
ensure that no less than 50% of the aggregate principal amount of the total
Indebtedness of Holdings and its Subsidiaries then outstanding is either
(i) subject to such Interest Rate Agreements or (ii) Indebtedness that bears
interest at a fixed rate.

SECTION 7. GUARANTY

7.1. Guaranty of the Obligations.

Subject to the provisions of Section 7.2, Guarantors jointly and severally
hereby irrevocably and unconditionally guaranty to Administrative Agent for the
ratable benefit of the Beneficiaries the due and punctual payment in full of all
Obligations when the same shall

 

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become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

7.2. Contribution by Guarantors.

All Guarantors desire to allocate among themselves (collectively, the
“Contributing Guarantors”), in a fair and equitable manner, their obligations
arising under this Guaranty. Accordingly, in the event any payment or
distribution is made on any date by a Guarantor (a “Funding Guarantor”) under
this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such
date, such Funding Guarantor shall be entitled to a contribution from each of
the other Contributing Guarantors in an amount sufficient to cause each
Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such
date. “Fair Share” means, with respect to a Contributing Guarantor as of any
date of determination, an amount equal to (a) the ratio of (i) the Fair Share
Contribution Amount with respect to such Contributing Guarantor to (ii) the
aggregate of the Fair Share Contribution Amounts with respect to all
Contributing Guarantors multiplied by (b) the aggregate amount paid or
distributed on or before such date by all Funding Guarantors under this Guaranty
in respect of the obligations Guaranteed. “Fair Share Contribution Amount”
means, with respect to a Contributing Guarantor as of any date of determination,
the maximum aggregate amount of the obligations of such Contributing Guarantor
under this Guaranty that would not render its obligations hereunder or
thereunder subject to avoidance as a fraudulent transfer or conveyance under
Section 548 of Title 11 of the United States Code or any comparable applicable
provisions of state law; provided, solely for purposes of calculating the “Fair
Share Contribution Amount” with respect to any Contributing Guarantor for
purposes of this Section 7.2, any assets or liabilities of such Contributing
Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall
not be considered as assets or liabilities of such Contributing Guarantor.
“Aggregate Payments” means, with respect to a Contributing Guarantor as of any
date of determination, an amount equal to (A) the aggregate amount of all
payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty (including, without limitation, in respect
of this Section 7.2), minus (B) the aggregate amount of all payments received on
or before such date by such Contributing Guarantor from the other Contributing
Guarantors as contributions under this Section 7.2. The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The
allocation among Contributing Guarantors of their obligations as set forth in
this Section 7.2 shall not be construed in any way to limit the liability of any
Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to
the contribution agreement set forth in this Section 7.2.

 

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7.3. Payment by Guarantors.

Subject to Section 7.2, Guarantors hereby jointly and severally agree, in
furtherance of the foregoing and not in limitation of any other right which any
Beneficiary may have at law or in equity against any Guarantor by virtue hereof,
that upon the failure of a Borrower to pay any of the Guaranteed Obligations
when and as the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon
demand pay, or cause to be paid, in cash, to Administrative Agent for the
ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid
principal amount of all Guaranteed Obligations then due as aforesaid, accrued
and unpaid interest on such Guaranteed Obligations (including interest which,
but for a Borrower’s becoming the subject of a case under the Bankruptcy Code,
would have accrued on such Guaranteed Obligations, whether or not a claim is
allowed against such Borrower for such interest in the related bankruptcy case)
and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

7.4. Liability of Guarantors Absolute.

Each Guarantor agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other
than payment in full of the Guaranteed Obligations. In furtherance of the
foregoing and without limiting the generality thereof, each Guarantor agrees as
follows:

(a) this Guaranty is a guaranty of payment when due and not of collectability.
This Guaranty is a primary obligation of each Guarantor and not merely a
contract of surety;

(b) Administrative Agent may enforce this Guaranty upon the occurrence of an
Event of Default notwithstanding the existence of any dispute between any
Borrower and any Beneficiary with respect to the existence of such Event of
Default;

(c) the obligations of each Guarantor hereunder are independent of the
obligations of any Borrower and the obligations of any other guarantor
(including any other Guarantor) of the obligations of any Borrower, and a
separate action or actions may be brought and prosecuted against such Guarantor
whether or not any action is brought against any Borrower or any of such other
guarantors and whether or not any Borrower is joined in any such action or
actions;

(d) payment by any Guarantor of a portion, but not all, of the Guaranteed
Obligations shall in no way limit, affect, modify or abridge any Guarantor’s
liability for any portion of the Guaranteed Obligations which has not been paid.
Without limiting the generality of the foregoing, if Administrative Agent is
awarded a judgment in any suit brought to enforce any Guarantor’s covenant to
pay a portion of the Guaranteed Obligations, such judgment shall not be deemed
to release such Guarantor from its covenant to pay the portion of the Guaranteed
Obligations that is not the subject of such suit, and such judgment shall not,
except to the extent satisfied by such Guarantor, limit, affect, modify or
abridge any other Guarantor’s liability hereunder in respect of the Guaranteed
Obligations;

 

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(e) any Beneficiary, upon such terms as it deems appropriate, without notice or
demand and without affecting the validity or enforceability hereof or giving
rise to any reduction, limitation, impairment, discharge or termination of any
Guarantor’s liability hereunder, from time to time may (i) renew, extend,
accelerate, increase the rate of interest on, or otherwise change the time,
place, manner or terms of payment of the Guaranteed Obligations; (ii) settle,
compromise, release or discharge, or accept or refuse any offer of performance
with respect to, or substitutions for, the Guaranteed Obligations or any
agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other guaranties of
the Guaranteed Obligations and take and hold security for the payment hereof or
the Guaranteed Obligations; (iv) release, surrender, exchange, substitute,
compromise, settle, rescind, waive, alter, subordinate or modify, with or
without consideration, any security for payment of the Guaranteed Obligations,
any other guaranties of the Guaranteed Obligations, or any other obligation of
any Person (including any other Guarantor) with respect to the Guaranteed
Obligations; (v) enforce and apply any security now or hereafter held by or for
the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations
and direct the order or manner of sale thereof, or exercise any other right or
remedy that such Beneficiary may have against any such security, in each case as
such Beneficiary in its discretion may determine consistent herewith or the
applicable Swap Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and even though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of any Guarantor against
any Borrower or any security for the Guaranteed Obligations; and (vi) exercise
any other rights available to it under the Credit Documents or any Hedge
Agreements; and

(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and
enforceable and shall not be subject to any reduction, limitation, impairment,
discharge or termination for any reason (other than payment in full of the
Guaranteed Obligations), including the occurrence of any of the following,
whether or not any Guarantor shall have had notice or knowledge of any of them:
(i) any failure or omission to assert or enforce or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court, by operation of
law or otherwise, of the exercise or enforcement of, any claim or demand or any
right, power or remedy (whether arising under the Credit Documents or any Swap
Agreements, at law, in equity or otherwise) with respect to the Guaranteed
Obligations or any agreement relating thereto, or with respect to any other
guaranty of or security for the payment of the Guaranteed Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including provisions relating to events of
default) hereof, any of the other Credit Documents, any of the Swap Agreements
or any agreement or instrument executed pursuant thereto, or of any other
guaranty or security for the Guaranteed Obligations, in each case whether or not
in accordance with the terms hereof or such Credit Document, such Swap Agreement
or any agreement relating to such other guaranty or security; (iii) the
Guaranteed Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect; (iv) the
application of payments received from any source (other than payments received
pursuant to the other Credit Documents or any of the Swap Agreements or from the
proceeds of any security for the Guaranteed Obligations, except to the extent
such security also serves as collateral for indebtedness other than the
Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed
Obligations, even though any Beneficiary

 

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might have elected to apply such payment to any part or all of the Guaranteed
Obligations; (v) any Beneficiary’s consent to the change, reorganization or
termination of the corporate structure or existence of Holdings or any of its
Subsidiaries and to any corresponding restructuring of the Guaranteed
Obligations; (vi) any failure to perfect or continue perfection of a security
interest in any collateral which secures any of the Guaranteed Obligations;
(vii) any defenses, set-offs or counterclaims which any Borrower may allege or
assert against any Beneficiary in respect of the Guaranteed Obligations,
including failure of consideration, breach of warranty, payment, statute of
frauds, statute of limitations, accord and satisfaction and usury; and
(viii) any other act or thing or omission, or delay to do any other act or
thing, which may or might in any manner or to any extent vary the risk of any
Guarantor as an obligor in respect of the Guaranteed Obligations.

7.5. Waivers by Guarantors.

Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to
require any Beneficiary, as a condition of payment or performance by such
Guarantor, to (i) proceed against any Borrower, any other guarantor (including
any other Guarantor) of the Guaranteed Obligations or any other Person,
(ii) proceed against or exhaust any security held from any Borrower, any such
other guarantor or any other Person, (iii) proceed against or have resort to any
balance of any Deposit Account or credit on the books of any Beneficiary in
favor of any Borrower or any other Person, or (iv) pursue any other remedy in
the power of any Beneficiary whatsoever; (b) any defense arising by reason of
the incapacity, lack of authority or any disability or other defense of any
Borrower or any other Guarantor including any defense based on or arising out of
the lack of validity or the unenforceability of the Guaranteed Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of any Borrower or any other Guarantor from any cause other than
payment in full of the Guaranteed Obligations; (c) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon any Beneficiary’s errors or omissions in
the administration of the Guaranteed Obligations, except behavior which amounts
to bad faith; (e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms hereof and any legal
or equitable discharge of such Guarantor’s obligations hereunder, (ii) the
benefit of any statute of limitations affecting such Guarantor’s liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security interest or lien or
any property subject thereto; (f) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction,
including acceptance hereof, notices of default hereunder, the Swap Agreements
or any agreement or instrument related thereto, notices of any renewal,
extension or modification of the Guaranteed Obligations or any agreement related
thereto, notices of any extension of credit to any Borrower and notices of any
of the matters referred to in Section 7.4 and any right to consent to any
thereof; and (g) any defenses or benefits that may be derived from or afforded
by law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms hereof.

 

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7.6. Guarantors’ Rights of Subrogation, Contribution, etc.

Until the Guaranteed Obligations shall have been indefeasibly paid in full and
the Revolving Commitments shall have terminated and all Letters of Credit shall
have expired or been cancelled, each Guarantor hereby waives any claim, right or
remedy, direct or indirect, that such Guarantor now has or may hereafter have
against any Borrower or any other Guarantor or any of its assets in connection
with this Guaranty or the performance by such Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise and including without
limitation (a) any right of subrogation, reimbursement or indemnification that
such Guarantor now has or may hereafter have against any Borrower with respect
to the Guaranteed Obligations, (b) any right to enforce, or to participate in,
any claim, right or remedy that any Beneficiary now has or may hereafter have
against any Borrower, and (c) any benefit of, and any right to participate in,
any collateral or security now or hereafter held by any Beneficiary. In
addition, until the Guaranteed Obligations shall have been indefeasibly paid in
full and the Revolving Commitments shall have terminated and all Letters of
Credit shall have expired or been cancelled, each Guarantor shall withhold
exercise of any right of contribution such Guarantor may have against any other
guarantor (including any other Guarantor) of the Guaranteed Obligations,
including, without limitation, any such right of contribution as contemplated by
Section 7.2. Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
any Borrower or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against any
Borrower, to all right, title and interest any Beneficiary may have in any such
collateral or security, and to any right any Beneficiary may have against such
other guarantor. If any amount shall be paid to any Guarantor on account of any
such subrogation, reimbursement, indemnification or contribution rights at any
time when all Guaranteed Obligations shall not have been finally and
indefeasibly paid in full, such amount shall be held in trust for Administrative
Agent on behalf of Beneficiaries and shall forthwith be paid over to
Administrative Agent for the benefit of Beneficiaries to be credited and applied
against the Guaranteed Obligations, whether matured or unmatured, in accordance
with the terms hereof.

7.7. Subordination of Other Obligations.

Any Indebtedness of any Borrower or any Guarantor now or hereafter held by any
Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of payment
to the Guaranteed Obligations, and any such Indebtedness collected or received
by the Obligee Guarantor after an Event of Default has occurred and is
continuing shall be held in trust for Administrative Agent on behalf of
Beneficiaries and shall forthwith be paid over to Administrative Agent for the
benefit of Beneficiaries to be credited and applied against the Guaranteed
Obligations but without affecting, impairing or limiting in any manner the
liability of the Obligee Guarantor under any other provision hereof.

 

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7.8. Continuing Guaranty.

This Guaranty is a continuing guaranty and shall remain in effect until all of
the Guaranteed Obligations shall have been paid in full and the Revolving
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled. Each Guarantor hereby irrevocably waives any right to revoke
this Guaranty as to future transactions giving rise to any Guaranteed
Obligations.

7.9. Authority of Guarantors or Borrowers.

It is not necessary for any Beneficiary to inquire into the capacity or powers
of any Guarantor or Borrowers or the officers, directors or any agents acting or
purporting to act on behalf of any of them.

7.10. Financial Condition of Borrowers.

Any Credit Extension may be made to any Borrower or continued from time to time,
and any Swap Agreements may be entered into from time to time, in each case
without notice to or authorization from any Guarantor regardless of the
financial or other condition of such Borrower at the time of any such grant or
continuation or at the time such Swap Agreement is entered into, as the case may
be. No Beneficiary shall have any obligation to disclose or discuss with any
Guarantor its assessment, or any Guarantor’s assessment, of the financial
condition of any Borrower. Each Guarantor has adequate means to obtain
information from any Borrower on a continuing basis concerning the financial
condition of such Borrower and its ability to perform its obligations under the
Credit Documents and the Swap Agreements, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of any
Borrower and of all circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty
on the part of any Beneficiary to disclose any matter, fact or thing relating to
the business, operations or conditions of any Borrower now known or hereafter
known by any Beneficiary.

7.11. Bankruptcy, etc.

(a) So long as any Guaranteed Obligations remain outstanding, no Guarantor
shall, without the prior written consent of Administrative Agent acting pursuant
to the instructions of Requisite Lenders, commence or join with any other Person
in commencing any bankruptcy, reorganization or insolvency case or proceeding of
or against any Borrower or any other Guarantor. The obligations of Guarantors
hereunder shall not be reduced, limited, impaired, discharged, deferred,
suspended or terminated by any case or proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of Borrower or any other Guarantor or by any defense which
Borrower or any other Guarantor may have by reason of the order, decree or
decision of any court or administrative body resulting from any such proceeding.

(b) Each Guarantor acknowledges and agrees that any interest on any portion of
the Guaranteed Obligations which accrues after the commencement of any case or
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guaranteed Obligations ceases to accrue by operation of law by reason of the
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interest as would have accrued on such portion of the Guaranteed Obligations if
such case or proceeding had not been commenced) shall be included in the
Guaranteed Obligations because it is the intention of Guarantors and
Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors
pursuant hereto should be determined without regard to any rule of law or order
which may relieve any Borrower of any portion of such Guaranteed Obligations.
Guarantors will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar Person to pay
Administrative Agent, or allow the claim of Administrative Agent in respect of,
any such interest accruing after the date on which such case or proceeding is
commenced.

(c) In the event that all or any portion of the Guaranteed Obligations are paid
by any Borrower, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guaranteed Obligations for all purposes hereunder.

7.12. Discharge of Guaranty Upon Sale of Guarantor.

If all of the Equity Interests of any Guarantor (other than Education
Management) or any of its successors in interest hereunder shall be sold or
otherwise disposed of (including by merger or consolidation) in accordance with
the terms and conditions hereof, the Guaranty of such Guarantor or such
successor in interest, as the case may be, hereunder shall automatically be
discharged and released without any further action by any Beneficiary or any
other Person effective as of the time of such sale.

SECTION 8. EVENTS OF DEFAULT AND REMEDIES

8.1. Events of Default.

Any of the following shall constitute an Event of Default:

(a) Non-Payment. Any Borrower or any other Credit Party fails to pay (i) when
and as required to be paid herein, any amount of principal of any Loan or the
Incentive Fee, or (ii) within five (5) Business Days after the same becomes due,
any interest on any Loan or any other amount payable hereunder or with respect
to any other Credit Document; or

(b) Specific Covenants. Company fails to perform or observe any term, covenant
or agreement contained in any of Sections 2.6, 5.3(a), 5.5(a) (solely with
respect to Education Management, Holdings and Company), 5.16 or Section 6;
provided that any Event of Default under Section 6.10 is subject to cure as
contemplated by Section 8.3; or

(c) Other Defaults. Any Credit Party fails to perform or observe any other
covenant or agreement (not specified in Section 8.1(a) or (b) above) contained
in any Credit Document on its part to be performed or observed and such failure
continues for thirty (30) days after notice thereof by the Administrative Agent
to Company; or

 

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(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of Company or any other
Credit Party herein, in any other Credit Document, or in any document required
to be delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed made; or

(e) Cross-Default. Any Credit Party or any Subsidiary (i) fails to make any
payment beyond the applicable grace period with respect thereto, if any (whether
by scheduled maturity, required prepayment, acceleration, demand, or otherwise)
in respect of any Indebtedness (other than Indebtedness hereunder) having an
aggregate principal amount of not less than the Threshold Amount, or (ii) fails
to observe or perform any other agreement or condition relating to any such
Indebtedness, or any other event occurs, the effect of which default or other
event is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such Indebtedness to be made, prior to its stated maturity; provided that
this clause (e)(ii) shall not apply to secured Indebtedness that becomes due as
a result of the voluntary sale or transfer of the property or assets securing
such Indebtedness, if such sale or transfer is permitted hereunder and under the
documents providing for such Indebtedness; or

(f) Insolvency Proceedings, Etc. Any Credit Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator, administrator, administrative receiver or similar
officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator, administrator,
administrative receiver or similar officer is appointed without the application
or consent of such Person and the appointment continues undischarged or unstayed
for sixty (60) calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for sixty (60) calendar days, or an order for relief is entered in any
such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) Any Credit Party or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts in excess of the Threshold Amount as they become due, or (ii) any writ or
warrant of attachment or execution or similar process is issued or levied
against all or any material part of the property of the Credit Parties, taken as
a whole, and is not released, vacated or fully bonded within sixty (60) days
after its issue or levy; or

(h) Judgments. There is entered against any Credit Party or any Subsidiary a
final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer has been notified of such judgment
or order and has not denied coverage) and such judgment or order shall not have
been satisfied, vacated, discharged or stayed or bonded pending an appeal for a
period of sixty (60) consecutive days; or

 

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(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Credit Party under Title IV of ERISA in an aggregate amount
which could reasonably be expected to result in a Material Adverse Effect, or
(ii) any Credit Party or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount which could reasonably be expected to result in a
Material Adverse Effect; or

(j) Invalidity of Credit Documents. Any material provision of any Credit
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder (including as a result of a
transaction permitted under Section 6.4 or 6.5) or as a result of acts or
omissions by Administrative Agent or any Lender or the satisfaction in full of
all the Obligations, ceases to be in full force and effect; or any Credit Party
contests in writing the validity or enforceability of any provision of any
Credit Document; or any Credit Party denies in writing that it has any or
further liability or obligation under any Credit Document (other than as a
result of repayment in full of the Obligations and termination of all
Commitments), or purports in writing to revoke or rescind any Credit Document;
or

(k) Change of Control. There occurs any Change of Control; or

(l) Collateral Documents. (i) Any Collateral Document after delivery thereof
shall for any reason (other than pursuant to the terms thereof including as a
result of a transaction permitted under Section 6.4 or 6.5) cease to create a
valid and perfected lien, with the priority required by the Collateral
Documents, (or other security purported to be created on the applicable
Collateral) on and security interest in any material portion of the Collateral
purported to be covered thereby, subject to Liens permitted under Section 7.1,
except to the extent that any such loss of perfection or priority results from
the failure of Administrative Agent or the Collateral Agent to maintain
possession of certificates actually delivered to it representing securities
pledged under the Collateral Documents or to file UCC continuation statements
and except as to Collateral consisting of real property to the extent that such
losses are covered by a lender’s title insurance policy and such insurer has not
denied coverage, or (ii) any of the Equity Interests of Company ceasing to be
pledged pursuant to the Pledge and Security Agreement free of Liens other than
Liens created by the Pledge and Security Agreement or any nonconsensual Liens
arising solely by operation of Law; or

(m) Junior Financing Documentation. (i) Any of the Obligations of the Credit
Parties under the Credit Documents for any reason shall cease to be “Senior
Indebtedness” (or any comparable term) or “Senior Secured Financing” (or any
comparable term) under, and as defined in any Junior Financing Documentation or
(ii) the subordination provisions set forth in any Junior Financing
Documentation shall, in whole or in part, cease to be effective or cease to be
legally valid, binding and enforceable against the holders of any Junior
Financing, if applicable; or

 

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(n) Breach of RSA. Company shall have materially breached any of its obligations
under the RSA (it being understood, for the avoidance of doubt that Company’s
failure to consummate the debt exchanges contemplated by the RSA within the
time, and subject to the terms and conditions, set forth therein shall
constitute a material breach).

8.2. Remedies Upon Event of Default.

(a) If any Event of Default (other than an Event of Default pursuant to
Section 8.1(b) hereof in respect of a breach of the affirmative covenant in
Section 5.16 hereof) occurs and is continuing, THEN, (x) upon the occurrence of
any Event of Default described in Section 8.1(f), automatically, and (y) upon
the occurrence of any other Event of Default, at the request of (or with the
consent of) Requisite Lenders (or with respect to an Event of Default under
Section 8.1(a) resulting from the failure to pay the Incentive Fee, at the
request of (or with the consent of) Extended Revolving Lenders holding more than
66-2/3% of the aggregate Revolving Exposure of all Extended Revolving Lenders),
upon notice to Company by Administrative Agent, (a) the Revolving Commitments,
if any, of each Lender having such Revolving Commitments and the obligation of
Issuing Bank to issue any Letter of Credit shall immediately terminate; (b) each
of the following shall immediately become due and payable, in each case without
presentment, demand, protest or other requirements of any kind, all of which are
hereby expressly waived by each Credit Party: (i) the unpaid principal amount of
and accrued interest on the Loans, (ii) an amount equal to the maximum amount
that may at any time be drawn under all Letters of Credit then outstanding
(regardless of whether any beneficiary under any such Letter of Credit shall
have presented, or shall be entitled at such time to present, the drafts or
other documents or certificates required to draw under such Letters of Credit),
and (iii) all other Obligations; provided, the foregoing shall not affect in any
way the obligations of Lenders under Section 2.3(b)(v) or Section 2.4(e);
(c) Administrative Agent may cause Collateral Agent to enforce any and all Liens
and security interests created pursuant to Collateral Documents; and
(d) Administrative Agent shall direct Borrowers to pay (and each Borrower hereby
agrees upon receipt of such notice, or upon the occurrence of any Event of
Default specified in Sections 8.1(f) and (g) to pay) to Administrative Agent
such additional amounts of cash as reasonable requested by Issuing Bank, to be
held as security for such Borrower’s reimbursement Obligations in respect of
Letters of Credit then outstanding.

(b) Notwithstanding anything to the contrary contained herein, if an Event of
Default pursuant to Section 8.1(b) hereof in respect of a breach of the
affirmative covenant in Section 5.16 hereof occurs and is continuing, the
Agents’ and Lenders’ sole rights with respect to such Event of Default shall be
to effectuate the Restructuring through the Intercompany Sale (as defined in the
RSA and pursuant to the terms and conditions set forth in the RSA) by means of
the exercise of remedies under Article 9 of the UCC.

 

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8.3. Company’s Right to Cure.

(a) Notwithstanding anything to the contrary contained in Section 8.1, in the
event of any Event of Default under any covenant set forth in Section 6.10 and
until the expiration of the tenth (10th) day after the date on which financial
statements are required to be delivered with respect to the applicable fiscal
quarter hereunder, Holdings may engage in a Permitted Equity Issuance to any of
the Equity Investors and apply the amount of the Net Cash Proceeds thereof to
increase Consolidated EBITDA with respect to such applicable quarter; provided
that such Net Cash Proceeds (i) are actually received by Company (including
through capital contribution of such Net Cash Proceeds by Holdings to Company)
no later than ten (10) days after the date on which financial statements are
required to be delivered with respect to such fiscal quarter hereunder, (ii) are
Not Otherwise Applied and (iii) do not exceed the aggregate amount necessary to
cure such Event of Default under Section 6.10 for any applicable period. The
parties hereby acknowledge that this Section 8.3(a) may not be relied on for
purposes of calculating any financial ratios other than as applicable to
Section 6.10 and shall not result in any adjustment to any amounts other than
the amount of the Consolidated EBITDA referred to in the immediately preceding
sentence.

(b) In each period of four fiscal quarters, there shall be at least one
(1) fiscal quarter in which no cure set forth in Section 8.3(a) is made. In each
period of eight fiscal quarters, there shall be at least four (4) consecutive
fiscal quarters in which no cure set forth in Section 8.3(a) is made.

SECTION 9. AGENTS

9.1. Appointment of Agents.

Credit Suisse is hereby appointed Syndication Agent hereunder, and each Lender
hereby authorizes Credit Suisse to act as Syndication Agent in accordance with
the terms hereof and the other Credit Documents. Pursuant to the Agency
Assignment Agreement, U.S. Bank has been appointed Administrative Agent and
Collateral Agent hereunder (in each such capacity, as successor to BNPP) and
under the other Credit Documents and each Lender hereby affirms such appointment
and authorizes U.S. Bank to act as Administrative Agent and Collateral Agent in
accordance with the terms hereof and the other Credit Documents. Each Agent
hereby agrees to act in its capacity as such upon the express conditions
contained herein and the other Credit Documents, as applicable. The provisions
of this Section 9 are solely for the benefit of the Agents and no Lender or
Credit Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties hereunder, each Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Holdings or any of its Subsidiaries. It is understood and agreed
that the use of the term “agent” herein or in any other Credit Documents (or any
other similar term) with reference to the Agents is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead such term is used as a matter of market
custom, and is intended to create or reflect only an administrative relationship
between contracting parties. Syndication Agent, without consent of or notice to
any party hereto, may assign any and all of its rights or obligations hereunder
to any of its Affiliates. As of the Effective Date, Credit Suisse in its
capacity as Syndication Agent shall not have any obligations but shall be
entitled to all benefits of this Section 9.

 

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9.2. Powers and Duties.

Each Lender irrevocably authorizes each Agent to take such action on such
Lender’s behalf and to exercise such powers, rights and remedies hereunder and
under the other Credit Documents as are specifically delegated or granted to
such Agent by the terms hereof and thereof, together with such powers, rights
and remedies as are reasonably incidental thereto. Each Agent shall have only
those duties and responsibilities that are expressly specified herein and the
other Credit Documents. Each Agent may exercise such powers, rights and remedies
and perform such duties by or through its officers, directors, agents,
sub-agents, employees or affiliates. For the avoidance of doubt, in performing
its functions and duties hereunder, no Agent assumes and nor shall any Agent be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Holdings or any of its Subsidiaries. Without limiting the generality
of the foregoing, no Agent: (i) shall be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing;
(ii) shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Credit Documents that such Agent is required
to exercise as directed in writing by the Requisite Lenders (or such other
number or percentage of the Lenders as shall be expressly provided for herein or
in the other Credit Documents); provided that no Agent shall be required to take
any action that, in its opinion or the opinion of its counsel, may expose such
Agent to liability or that is contrary to any Credit Document or applicable law,
including for the avoidance of doubt any action that may be in violation of the
automatic stay under any Debtor Relief Law or that may effect a forfeiture,
modification or termination of property of a Defaulting Lender in violation of
any Debtor Relief Law; and (iii) shall, except as expressly set forth herein and
in the other Credit Documents, have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Affiliates that is communicated to or obtained by the Person serving
as the Administrative Agent or any of its Affiliates in any capacity.

9.3. General Immunity.

(a) No Responsibility for Certain Matters. No Agent nor any of its officers,
partners, directors, employees, advisors, attorneys or agents shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectability or sufficiency hereof or any other
Credit Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any Agent to Lenders or by or on behalf of any
Credit Party, any Lender or any person providing the Settlement Service to any
Agent or any Lender in connection with the Credit Documents and the transactions
contemplated hereby or thereby or for the financial condition or business
affairs of any Credit Party or any other Person liable for the payment of any
Obligations, nor shall any Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Credit Documents or as

 

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to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Default or to make any disclosures with
respect to the foregoing. No Agent nor any of its officers, partners, directors,
employees, advisors, attorneys or agents shall be deemed to have knowledge of
any Default or Event of Default unless and until written notice thereof is given
to such Agent by a Borrower or a Lender. Anything contained herein to the
contrary notwithstanding, the duties of the Administrative Agent shall be
administrative in nature and the Administrative Agent shall not have any
liability arising from confirmations of the amount of outstanding Loans or the
Letter of Credit Usage or the component amounts thereof.

(b) Exculpatory Provisions. No Agent nor any of its officers, partners,
directors, employees, advisors, attorneys or agents shall be liable to any
Lender for any action taken or omitted by any Agent under or in connection with
any of the Credit Documents except to the extent caused by its or their gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision). Each Agent shall be
entitled to refrain from any act or the taking of any action (including the
failure to take an action) in connection herewith or any of the other Credit
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until such Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under Section 10.5) and, upon receipt
of such instructions from Requisite Lenders (or such other Lenders, as the case
may be), such Agent shall be entitled to act or refrain from acting, or to
exercise such power, discretion or authority, in accordance with such
instructions. Without prejudice to the generality of the foregoing, (i) each
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons,
including any settlement confirmation or other communication issues by any
Settlement Service, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys (who may be attorneys for
Holdings and its Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against any Agent as a result of such Agent acting or refraining from
acting hereunder or any of the other Credit Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under Section 10.5).

(c) Delegation of Duties. Administrative Agent may perform any and all of its
duties and exercise its rights and powers under this Agreement or under any
other Credit Document by or through any one or more sub-agents appointed by
Administrative Agent. Administrative Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through their
respective directors, officers, employees, agents or Affiliates. The
exculpatory, indemnification and other provisions of this Section 9.3 and of
Section 9.6 shall apply to any of the directors, officers, employees, agents,
advisors, attorneys and Affiliates of Administrative Agent and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
All of the rights, benefits, and privileges (including the exculpatory and
indemnification provisions) of this Section 9.3 and of Section 9.6 shall apply
to any such sub-agent and to the Affiliates of any such sub-agent, and shall
apply to their respective activities as sub-agent as if such sub-agent and
Affiliates were named herein. Notwithstanding anything herein to the contrary,
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such sub-agent shall be a third party beneficiary under this Agreement with
respect to all such rights, benefits and privileges (including exculpatory
rights and rights to indemnification) and shall have all of the rights and
benefits of a third party beneficiary, including an independent right of action
to enforce such rights, benefits and privileges (including exculpatory rights
and rights to indemnification) directly, without the consent or joinder of any
other Person, against any or all of the Credit Parties and the Lenders,
(ii) such rights, benefits and privileges (including exculpatory rights and
rights to indemnification) shall not be modified or amended without the consent
of such sub-agent, and (iii) such sub-agent shall only have obligations to
Administrative Agent and not to any Credit Party, Lender or any other Person and
no Credit Party, Lender or any other Person shall have any rights, directly or
indirectly, as a third party beneficiary or otherwise, against such sub-agent.

9.4. Agents Entitled to Act as Lender.

The agency hereby created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, any Agent in its individual
capacity as a Lender hereunder. With respect to its participation in the Loans
and the Letters of Credit, each Agent shall have the same rights and powers
hereunder as any other Lender and may exercise the same as if it were not
performing the duties and functions delegated to it hereunder, and the term
“Lender” shall, unless the context clearly otherwise indicates, include each
Agent in its individual capacity. Any Agent and its Affiliates may accept
deposits from, lend money to, own securities of, and generally engage in any
kind of banking, trust, financial advisory or other business with Holdings or
any of its Affiliates as if it were not performing the duties specified herein,
and may accept fees and other consideration from Borrowers for services in
connection herewith and otherwise without having to account for the same to
Lenders.

9.5. Lenders’ Representations, Warranties and Acknowledgment.

(a) Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Education Management and
its Subsidiaries in connection with Credit Extensions and conversions hereunder
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Education Management and its Subsidiaries. No Agent shall
have any duty or responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans or at any time
or times thereafter, and no Agent shall have any responsibility with respect to
the accuracy of or the completeness of any information provided to Lenders.

(b) Each Lender, by delivering its signature page to this Agreement, an
Assignment Agreement, the Amendment Agreement or a Joinder Agreement and funding
its Tranche C Term Loan and/or Revolving Loans on the Closing Date, or by
converting its Tranche C Term Loans into Tranche C-2 Term Loans, or by
converting its Revolving Loans (as defined in the Existing ARCA) into
Non-Extended Revolving Loans, or by converting its Revolving Loans into Extended
Revolving Loans on the Amendment Agreement Effective Date, or by converting its
Tranche C-2 Term Loans into Tranche C-2 PIK Term Loans on the Amendment

 

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Agreement Effective Date, or by converting its Tranche C-3 Term Loans into
Tranche C-3 PIK Term Loans on the Amendment Agreement Effective Date or by
funding of any New Term Loans or New Revolving Loans, as the case may be, shall
be deemed to have acknowledged receipt of, and consented to and approved, each
Credit Document and each other document required to be approved by any Agent,
Requisite Lenders or Lenders, as applicable on the Closing Date or as of the
date of conversion or as of the date of funding of such New Loans.

9.6. Right to Indemnity.

Each Lender, in proportion to its Pro Rata Share (determined as of the time such
indemnity is sought, it being understood and agreed that if any Revolving
Commitment Termination Date shall have occurred, with respect to the effected
Class of Revolving Loans or Revolving Commitments, such determination shall be
made immediately prior to giving effect thereto), severally agrees to indemnify
each Agent (and any affiliate thereof), to the extent that such Agent (or such
affiliate) shall not have been reimbursed by any Credit Party, for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against such Agent (or any affiliate thereof) in exercising its
powers, rights and remedies or performing its duties hereunder or under the
other Credit Documents or otherwise in its capacity as such Agent in any way
relating to or arising out of this Agreement or the other Credit Documents;
provided, no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent’s (or such affiliate’s)
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision). If any indemnity furnished
to any Agent for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, such Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished; provided, in no event shall this sentence
require any Lender to indemnify any Agent against any liability, obligation,
loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in
excess of such Lender’s Pro Rata Share thereof (determined as of the time such
indemnity is sought, it being understood and agreed that if any Revolving
Commitment Termination Date shall have occurred, with respect to the effected
Class of Revolving Loans or Revolving Commitments, such determination shall be
made immediately prior to giving effect thereto); and provided further, this
sentence shall not be deemed to require any Lender to indemnify any Agent
against any liability, obligation, loss, damage, penalty, action, judgment,
suit, cost, expense or disbursement described in the proviso in the immediately
preceding sentence.

9.7. Successor Administrative Agent and Collateral Agent.

Administrative Agent may resign at any time by giving thirty days’ prior written
notice thereof to Lenders and Company, and Administrative Agent may be removed
at any time with or without cause by an instrument or concurrent instruments in
writing delivered to Company and Administrative Agent and signed by Requisite
Lenders. Upon any such notice of resignation or any such removal, Requisite
Lenders shall have the right, upon five Business Days’ notice to Company, to
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any appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Administrative Agent and the retiring or removed Administrative Agent
shall promptly (a) transfer to such successor Administrative Agent all sums,
Securities and other items of Collateral held under the Collateral Documents,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Administrative
Agent under the Credit Documents, and (b) execute and deliver to such successor
Administrative Agent such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Administrative Agent of the security interests
created under the Collateral Documents (in the case of clauses (a) and (b), at
the sole cost and expense of the Borrowers), whereupon such retiring or removed
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring or removed Administrative Agent’s resignation or
removal hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent hereunder. Any resignation or removal of
Administrative Agent pursuant to this Section shall also constitute the
resignation or removal of Administrative Agent as Collateral Agent, and any
successor Administrative Agent appointed pursuant to this Section shall, upon
its acceptance of such appointment, become the successor Collateral Agent for
all purposes hereunder. If no successor Administrative Agent has been appointed
pursuant to the preceding sentences by the 45th day after the date of such
retiring Administrative Agent’s notice of resignation, the Administrative
Agent’s resignation shall become effective and the Requisite Lenders shall
thereafter perform all the duties of the Administrative Agent hereunder and/or
under any other Credit Document until such time, if any, as either (1) the
Requisite Lenders appoint a successor Administrative Agent (which appointment
shall be subject to the prior written approval of the Borrower (such approval
not to be unreasonably withheld) unless an Event of Default has occurred and is
continuing) or (2) the Company appoints a successor Administrative Agent so long
(x) as the Lenders receive at least ten Business Days’ notice of such
appointment (which notice may be given at any time following the 30th day after
the retiring Administrative Agent’s notice of resignation) and (y) the Company
has not received a written notice from the Requisite Lenders stating that the
Requisite Lenders object to such appointment.

9.8. Collateral Documents and Guaranty.

(a) Agents under Collateral Documents and Guaranty. Each Lender and each other
Secured Party (by its acceptance of the benefits of the Guaranty, the Collateral
and the Collateral Documents) hereby further authorizes Administrative Agent or
Collateral Agent, as applicable, on behalf of and for the benefit of Secured
Parties, to be the agent for and representative of Lenders with respect to the
Guaranty, the Collateral and the Collateral Documents. Subject to Section 10.5,
without further written consent or authorization from Lenders or any other
Secured Party, Administrative Agent or Collateral Agent, as applicable may
execute any documents or instruments necessary to (i) in connection with a sale
or disposition of assets permitted by this Agreement, release any Lien
encumbering any item of Collateral that is the subject of such sale or other
disposition of assets or to which Requisite Lenders (or such other Lenders as
may be required to give such consent under Section 10.5) have otherwise
consented or (ii) release any Guarantor from the Guaranty pursuant to
Section 7.12 or with respect to which Requisite Lenders (or such other Lenders
as may be required to give such consent under Section 10.5) have otherwise
consented.

 

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(b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in
any of the Credit Documents to the contrary notwithstanding, each Borrower,
Administrative Agent, Collateral Agent, each Lender and each other Secured Party
(by its acceptance of the benefits of the Guaranty, the Collateral and the
Collateral Documents) hereby agree that (i) no Lender shall have any right
individually to realize upon any of the Collateral or to enforce the Guaranty,
it being understood and agreed that all powers, rights and remedies hereunder
may be exercised solely by Administrative Agent, on behalf of Lenders in
accordance with the terms hereof and all powers, rights and remedies under the
Collateral Documents may be exercised solely by Collateral Agent, and (ii) in
the event of a foreclosure by Collateral Agent on any of the Collateral pursuant
to a public or private sale, Collateral Agent or any Lender or other Secured
Party may be the purchaser of any or all of such Collateral at any such sale and
Collateral Agent, as agent for and representative of Secured Parties (but not
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Obligations as a credit on account of the purchase price for
any collateral payable by Collateral Agent at such sale.

SECTION 10. MISCELLANEOUS

10.1. Notices.

(a) Notices Generally. Any notice or other communication herein required or
permitted to be given to a Credit Party, Syndication Agent, Collateral Agent,
Administrative Agent or Issuing Bank, shall be sent to such Person’s address as
set forth on Appendix B or in the other relevant Credit Document, and in the
case of any Lender, the address as indicated on Appendix B or otherwise
indicated to Administrative Agent in writing. Except as otherwise set forth in
paragraph (b) below, each notice hereunder shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service and signed for against receipt thereof, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the United
States mail with postage prepaid and properly addressed; provided, no notice to
any Agent shall be effective until received by such Agent; provided further, any
such notice or other communication shall at the request of the Administrative
Agent be provided to any sub-agent appointed pursuant to Section 9.3(c) hereto
as designated by the Administrative Agent from time to time.

 

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(b) Electronic Communications. Notices and other communications to the Lenders
and the Issuing Bank hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by Administrative Agent, provided that the foregoing shall
not apply to notices to any Lender or the Issuing Bank pursuant to Section 2 if
such Lender or the Issuing Bank, as applicable, has notified Administrative
Agent that it is incapable of receiving notices under such Section by electronic
communication. Administrative Agent or any Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications. Unless
Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

10.2. Expenses.

Whether or not the transactions contemplated hereby shall be consummated,
Borrowers agree to pay promptly (a) all the actual and reasonable costs and
expenses of preparation of the Credit Documents and any consents, amendments,
waivers or other modifications thereto; (b) all the costs of furnishing all
opinions by counsel for Borrowers and the other Credit Parties; (c) the
reasonable fees, expenses and disbursements of counsel to Agents (in each case
including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Credit Documents
and any consents, amendments, waivers or other modifications thereto and any
other documents or matters requested by Company; (d) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Collateral
Agent, for the benefit of Lenders pursuant hereto, including filing and
recording fees, expenses and taxes, stamp or documentary taxes, search fees,
title insurance premiums and reasonable fees, expenses and disbursements of
counsel to each Agent and of counsel providing any opinions that any Agent or
Requisite Lenders may request in respect of the Collateral or the Liens created
pursuant to the Collateral Documents; (e) all the actual costs and reasonable
fees, expenses and disbursements of any auditors, accountants, consultants or
appraisers; (f) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any appraisers, consultants,
advisors and agents employed or retained by Collateral Agent and its counsel) in
connection with the custody or preservation of any of the Collateral; (g) all
other actual and reasonable costs and expenses incurred by each Agent in
connection with the syndication of the Loans and Commitments and the
negotiation, preparation and execution of the Credit Documents and any consents,
amendments, waivers or other modifications thereto and the transactions
contemplated thereby; and (h) after the occurrence of a Default or an Event of
Default, all costs and expenses, including reasonable attorneys’ fees (including
allocated costs of internal counsel) and costs of settlement, incurred by any
Agent and Lenders in enforcing any Obligations of or in collecting any payments
due from any Credit Party hereunder or under the other Credit Documents by
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such Default or Event of Default (including in connection with the sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of the Guaranty) or in connection with any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a
“work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.

10.3. Indemnity.

(a) In addition to the payment of expenses pursuant to Section 10.2, whether or
not the transactions contemplated hereby shall be consummated, each Credit Party
agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay
and hold harmless, each Agent and Lender and the officers, partners, members,
directors, trustees, advisors, employees, agents, sub-agents, attorneys and
Affiliates of each Agent and each Lender (each, an “Indemnitee”), from and
against any and all Indemnified Liabilities; provided, no Credit Party shall
have any obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise from the gross
negligence or willful misconduct of that Indemnitee (as determined by a court of
competent jurisdiction in a final and non-appealable decision). To the extent
that the undertakings to defend, indemnify, pay and hold harmless set forth in
this Section 10.3 may be unenforceable in whole or in part because they are
violative of any law or public policy, the applicable Credit Party shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.

(b) To the extent permitted by applicable law, no Credit Party shall assert, and
each Credit Party hereby waives, any claim against each Lender, each Agent and
their respective Affiliates, directors, employees, attorneys, agents or
sub-agents, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) (whether or not the
claim therefor is based on contract, tort or duty imposed by any applicable
legal requirement) arising out of, in connection with, arising out of, as a
result of, or in any way related to, this Agreement or any Credit Document or
any agreement or instrument contemplated hereby or thereby or referred to herein
or therein, the transactions contemplated hereby or thereby, any Loan or the use
of the proceeds thereof or any act or omission or event occurring in connection
therewith, and Holdings and each Borrower hereby waives, releases and agrees not
to sue upon any such claim or any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor. No Credit Party shall
have any liability for any special, punitive, indirect or consequential damages
relating to this Agreement or any other Credit Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date). If any amounts due under this Section 10.3 shall be have been
paid after demand therefor, the applicable Indemnitee shall promptly refund such
amount to the extent that there is a final and non-appealable judicial or
arbitral determination that such Indemnitee was not entitled to indemnification
or contribution rights with respect to such payment pursuant to the express
terms of this Section 10.3.

 

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10.4. Set-Off.

In addition to any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence of any Event of
Default each Lender is hereby authorized by each Credit Party at any time or
from time to time subject to the consent of Administrative Agent (such consent
not to be unreasonably withheld or delayed), without notice to any Credit Party
or to any other Person (other than Administrative Agent), any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by such Lender to or for the
credit or the account of any Credit Party against and on account of the
obligations and liabilities of any Credit Party to such Lender hereunder, the
Letters of Credit and participations therein and under the other Credit
Documents, including all claims of any nature or description arising out of or
connected hereto, the Letters of Credit and participations therein or with any
other Credit Document, irrespective of whether or not (a) such Lender shall have
made any demand hereunder or (b) the principal of or the interest on the Loans
or any amounts in respect of the Letters of Credit or any other amounts due
hereunder shall have become due and payable pursuant to Section 2 and although
such obligations and liabilities, or any of them, may be contingent or
unmatured.

10.5. Amendments and Waivers.

(a) Requisite Lenders’ Consent. Subject to the additional requirements of
Sections 10.5(b) and 10.5(c), no amendment, modification, termination or waiver
of any provision of the Credit Documents, or consent to any departure by any
Credit Party therefrom, shall in any event be effective without the written
concurrence of the Requisite Lenders.

(b) Affected Lenders’ Consent. Without the written consent of each Lender (other
than a Defaulting Lender) that would be affected thereby, no amendment,
modification, termination, or consent shall be effective if the effect thereof
would:

(i) extend the scheduled final maturity of any Loan or Note;

(ii) waive, reduce or postpone any scheduled repayment (but not prepayment);

(iii) extend the stated expiration date of any Letter of Credit beyond the
Revolving Commitment Termination Date;

(iv) reduce the rate of interest on any Loan (other than any waiver of any
increase in the interest rate applicable to any Loan pursuant to Section 2.10)
or any fee or any premium payable hereunder;

(v) extend the time for payment of any such interest or fees (including, for the
avoidance of doubt, the Incentive Fee);

(vi) reduce the principal amount of any Loan or any reimbursement obligation in
respect of any Letter of Credit;

 

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(vii) amend, modify, terminate or waive any provision of this Section 10.5(b),
Section 10.5(c) or any other provision of this Agreement that expressly provides
that the consent of all Lenders is required;

(viii) amend the definition of “Requisite Lenders” or “Pro Rata Share”;
provided, with the consent of Requisite Lenders, additional extensions of credit
pursuant hereto may be included in the determination of “Requisite Lenders” or
“Pro Rata Share” on substantially the same basis as the Term Loan Commitments,
the Term Loans, the Revolving Commitments and the Revolving Loans are included
on the Closing Date; or

(ix) release all or substantially all of the Collateral or all or substantially
all of the Guarantors from the Guaranty except as expressly provided in the
Credit Documents.

(c) Other Consents. No amendment, modification, termination or waiver of any
provision of the Credit Documents, or consent to any departure by any Credit
Party therefrom, shall:

(i) increase any Revolving Commitment of any Lender over the amount thereof then
in effect without the consent of such Lender; provided, no amendment,
modification or waiver of any condition precedent, covenant, Default or Event of
Default shall constitute an increase in any Revolving Commitment of any Lender;

(ii) [reserved];

(iii) alter the required application of any repayments or prepayments as between
Classes pursuant to Section 2.15 without the consent of Lenders holding more
than 50% of the aggregate Tranche C-2 Cash Pay Term Loan Exposure of all
Lenders, Tranche C-2 PIK Term Loan Exposure of all Lenders, Tranche C-3 Cash Pay
Term Loan Exposure of all Lenders, Tranche C-3 PIK Term Loan Exposure of all
Lenders, Revolving Exposure of all Lenders or Other New Term Loan Exposure of
all Lenders, as applicable, of each Class which is being allocated a lesser
repayment or prepayment as a result thereof; provided, Requisite Lenders may
waive, in whole or in part, any prepayment so long as the application, as
between Classes, of any portion of such prepayment which is still required to be
made is not altered;

(iv) amend, modify, terminate or waive any obligation of Lenders relating to the
purchase of participations in Letters of Credit as provided in Section 2.4(e),
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
without the written consent of Administrative Agent and of Issuing Bank; or

(v) amend, modify, terminate or waive any provision of Section 9 as the same
applies to any Agent, or any other provision hereof as the same applies to the
rights or obligations of any Agent, in each case without the consent of such
Agent.

 

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(d) Execution of Amendments, etc. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on any Credit Party in
any case shall entitle any Credit Party to any other or further notice or demand
in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 10.5 shall be binding
upon each Lender at the time outstanding, each future Lender and, if signed by a
Credit Party, on such Credit Party.

10.6. Successors and Assigns; Participations.

(a) Generally. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders. No Credit Party’s rights or
obligations hereunder nor any interest therein may be assigned or delegated by
any Credit Party without the prior written consent of all Lenders. Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, Affiliates of
each of the Agents and Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

(b) Register. Each Borrower, Administrative Agent and Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any such Commitment or Loan shall be effective,
in each case, unless and until recorded in the Register following receipt of an
Assignment Agreement effecting the assignment or transfer thereof as provided in
Section 10.6(d). Each assignment shall be recorded in the Register on the
“Effective Date” specified in the applicable Assignment Agreement, prompt notice
thereof shall be provided to Company and a copy of such Assignment Agreement
shall be maintained. The date of such recordation of a transfer shall be
referred to herein as the “Assignment Effective Date.” Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.

(c) Right to Assign. Each Lender shall have the right at any time to sell,
assign or transfer all or a portion of its rights and obligations under this
Agreement, including, without limitation, all or a portion of its Commitments or
Loans owing to it or other Obligations (provided, however, that each such
assignment shall be of a uniform, and not varying, percentage of all rights and
obligations under and in respect of any Loan and any related Commitments):

(i) to any Person meeting the criteria of clause (i) of the definition of the
term of “Eligible Assignee” upon the giving of notice to Company and
Administrative Agent; provided that in the case of any assignment of Revolving
Loans or Revolving Commitments to such Person (unless such Person is already a
Lender with a Revolving Commitment), such assignment shall require the consent
of the Issuing Bank, such consent not to be unreasonably withheld or delayed,
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(ii) to any Person meeting the criteria of clause (ii) of the definition of the
term of “Eligible Assignee” upon giving of notice to Company and Administrative
Agent and, in the case of assignments of Revolving Loans, Revolving Commitments
or Term Loans to any such Person (except in the case of assignments made by or
to BNPP), consented to by each of Company, Administrative Agent and, other than
in respect of Term Loans, Issuing Bank (each such consent not to be
(x) unreasonably withheld or delayed or, (y) in the case of Company, required at
any time an Event of Default under Section 8.1(a) or (f) shall have occurred and
then be continuing); provided, further, each such assignment pursuant to this
Section 10.6(c)(ii) shall be in an aggregate amount of not less than
(A) $5,000,000 (or such lesser amount as may be agreed to by Company and
Administrative Agent or as shall constitute the aggregate amount of the
Revolving Commitments and Revolving Loans of the assigning Lender) with respect
to the assignment of the Revolving Commitments and Revolving Loans and
(B) $1,000,000 (or such lesser amount as may be agreed to by Company and
Administrative Agent or as shall constitute the aggregate amount of the
applicable Class of Loans of the assigning Lender) with respect to the
assignment of Term Loans.

(d) Mechanics. Assignments of Term Loans, Revolving Loans and Revolving
Commitments by Lenders may be made via an electronic settlement system
acceptable to Administrative Agent as designated in writing from time to time to
the Lenders by Administrative Agent (the “Settlement Service”). Each such
assignment shall be effected by the assigning Lender and proposed assignee
pursuant to the procedures then in effect under the Settlement Service, which
procedures shall be consistent with the other provisions of this Section 10.6.
Each assignor Lender and proposed assignee shall comply with the requirements of
the Settlement Service in connection with effecting any transfer of Loans
pursuant to the Settlement Service. Assignments and assumptions of Term Loans,
Revolving Loans and Revolving Commitments (regardless of whether the Settlement
Service is utilized) shall require the execution and delivery to the
Administrative Agent of an Assignment Agreement. Assignments made pursuant to
the foregoing provision shall be effective as of the Assignment Effective Date.
In connection with all assignments there shall be delivered to Administrative
Agent such forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver pursuant to Section 2.20(c). A
processing fee of $3,500 will be required to be paid to Administrative Agent in
connection with any assignments (other than contemporaneous assignments by or to
two or more Related Funds).

(e) Representations and Warranties of Assignee. Each Lender, upon execution and
delivery hereof or upon succeeding to an interest in the Commitments and Loans,
as the case may be, represents and warrants as of the Closing Date or as of the
Assignment Effective Date that (i) it is an Eligible Assignee; (ii) it has
experience and expertise in the making of or investing in commitments or loans
such as the applicable Commitments or Loans, as the case may be; and (iii) it
will make or invest in, as the case may be, its Commitments or Loans for its own
account in the ordinary course and without a view to distribution of such
Commitments or

 

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Loans within the meaning of the Securities Act or the Exchange Act or other
federal securities laws (it being understood that, subject to the provisions of
this Section 10.6, the disposition of such Commitments or Loans or any interests
therein shall at all times remain within its exclusive control); 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).

(f) Effect of Assignment. Subject to the terms and conditions of this
Section 10.6, as of the “Assignment Effective Date” (i) the assignee thereunder
shall have the rights and obligations of a “Lender” hereunder to the extent of
its interest in the Loans and Commitments as reflected in the Register and shall
thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the
assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned to the assignee, relinquish its rights (other than
any rights which survive the termination hereof under Section 10.8) and be
released from its obligations hereunder (and, in the case of an assignment
covering all or the remaining portion of an assigning Lender’s rights and
obligations hereunder, such Lender shall cease to be a party hereto on the
Assignment Effective Date; provided, anything contained in any of the Credit
Documents to the contrary notwithstanding, (x) Issuing Bank shall continue to
have all rights and obligations thereof with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder and (y) such assigning Lender
shall continue to be entitled to the benefit of all indemnities hereunder as
specified herein with respect to matters arising out of the prior involvement of
such assigning Lender as a Lender hereunder); (iii) the Commitments shall be
modified to reflect any Commitment of such assignee and any Revolving Commitment
of such assigning Lender, if any; and (iv) if any such assignment occurs after
the issuance of any Note hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as practicable,
surrender its applicable Notes to Administrative Agent for cancellation, and
thereupon Borrowers shall issue and deliver new Notes, if so requested by the
assignee and/or assigning Lender, to such assignee and/or to such assigning
Lender, with appropriate insertions, to reflect the new Revolving Commitments
and/or outstanding Loans of the assignee and/or the assigning Lender.

(g) Participations. Each Lender shall have the right at any time to sell one or
more participations to any Person (other than Holdings, any of its Subsidiaries
or any of its Affiliates) in all or any part of its Commitments, Loans or in any
other Obligation. The holder of any such participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except with respect to any
amendment, modification or waiver that would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the applicable Revolving Commitment Termination Date) in
which such participant is participating, or reduce the rate or extend the time
of payment of interest or fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant’s
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Commitment shall not constitute a change in the terms of such participation, and
that an increase in any Commitment or Loan shall be permitted without the
consent of any participant if the participant’s participation is not increased
as a result

 

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thereof), (ii) consent to the assignment or transfer by any Credit Party of any
of its rights and obligations under this Agreement or (iii) release all or
substantially all of the Collateral under the Collateral Documents (except as
expressly provided in the Credit Documents) supporting the Loans hereunder in
which such participant is participating. Borrowers agree that each participant
shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (c) of this Section; provided, (i) a participant shall not
be entitled to receive any greater payment under Section 2.19 or 2.20 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such participant, unless the sale of the participation to
such participant is made with Company’s prior written consent and (ii) a
participant that would be a Non-US Lender if it were a Lender shall not be
entitled to the benefits of Section 2.20 unless Company is notified of the
participation sold to such participant and such participant agrees, for the
benefit of the applicable Borrower, to comply with Section 2.20 as though it
were a Lender. To the extent permitted by the applicable law, each participant
also shall be entitled to the benefits of Section 10.4 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.17 as though
it were a Lender.

(h) Certain Other Assignments. In addition to any other assignment permitted
pursuant to this Section 10.6, any Lender may assign and/or pledge all or any
portion of its Loans, the other Obligations owed by or to such Lender, and its
Notes, if any, to secure obligations of such Lender including, without
limitation, any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors and any operating circular issued by such
Federal Reserve Bank; provided, no Lender, as between any Borrower and such
Lender, shall be relieved of any of its obligations hereunder as a result of any
such assignment and pledge, and provided further, in no event shall the
applicable Federal Reserve Bank, pledgee or trustee be considered to be a
“Lender” or be entitled to require the assigning Lender to take or omit to take
any action hereunder.

10.7. Independence of Covenants.

All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or condition exists.

10.8. Survival of Representations, Warranties and Agreements.

All representations, warranties and agreements made herein shall survive the
execution and delivery hereof and the making of any Credit Extension.
Notwithstanding anything herein or implied by law to the contrary, the
agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17, 9.3(b)
and 9.6 shall survive the payment of the Loans, the cancellation or expiration
of the Letters of Credit and the reimbursement of any amounts drawn thereunder,
and the termination hereof.

 

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10.9. No Waiver; Remedies Cumulative.

No failure or delay on the part of any Agent or any Lender in the exercise of
any power, right or privilege hereunder or under any other Credit Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. The rights, powers and remedies given to
each Agent and each Lender hereby are cumulative and shall be in addition to and
independent of all rights, powers and remedies existing by virtue of any statute
or rule of law or in any of the other Credit Documents or any of the Swap
Agreements. Any forbearance or failure to exercise, and any delay in exercising,
any right, power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.

10.10. Marshalling; Payments Set Aside.

Neither any Agent nor any Lender shall be under any obligation to marshal any
assets in favor of any Credit Party or any other Person or against or in payment
of any or all of the Obligations. To the extent that any Credit Party makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent, on behalf of Lenders), or any Agent or Lenders enforce any security
interests or exercise their rights of setoff, and such payment or payments or
the proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.

10.11. Severability.

In case any provision in or obligation hereunder or under any other Credit
Document shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

10.12. Obligations Several; Independent Nature of Lenders’ Rights.

The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitment of any other Lender hereunder.
Nothing contained herein or in any other Credit Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out hereof and it shall not be necessary for any other Lender to
be joined as an additional party in any proceeding for such purpose.

 

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10.13. Headings.

Section headings herein are included herein for convenience of reference only
and shall not constitute a part hereof for any other purpose or be given any
substantive effect.

10.14. APPLICABLE LAW.

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

10.15. CONSENT TO JURISDICTION.

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR
RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE
OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT
PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT
SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY
IN THE COURTS OF ANY OTHER JURISDICTION.

10.16. WAIVER OF JURY TRIAL.

EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR
UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP
THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT

 

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CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO
RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

10.17. Confidentiality.

Each Lender shall hold all non-public information regarding Company and its
Subsidiaries and their businesses identified as such by Company and obtained by
such Lender pursuant to the requirements hereof in accordance with such Lender’s
customary procedures for handling confidential information of such nature, it
being understood and agreed by Company that, in any event, a Lender may make
(i) disclosures of such information to Affiliates of such Lender and to their
agents and advisors (and to other persons authorized by a Lender or Agent to
organize, present or disseminate such information in connection with disclosures
otherwise made in accordance with this Section 10.17), (ii) disclosures of such
information reasonably required by any pledgee referred to in Section 10.6(h) or
any bona fide or potential assignee, transferee or participant in connection
with the contemplated assignment, transfer or participation by such Lender of
any Loans or any participations therein or by any direct or indirect contractual
counterparties (or the professional advisors thereto) in Swap Agreements
(provided, such counterparties and advisors are advised of and agree to be bound
by the provisions of this Section 10.17), (iii) disclosure to any rating agency
when required by it, provided that, prior to any disclosure, such rating agency
shall undertake in writing to preserve the confidentiality of any confidential
information relating to the Credit Parties received by it from any Agent or any
Lender, and (iv) disclosures required or requested by any governmental agency or
representative thereof or by the NAIC or pursuant to legal or judicial process;
provided, unless specifically prohibited by applicable law or court order, each
Lender shall make reasonable efforts to notify Company of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition or other routine
examination of such Lender by such governmental agency) for disclosure of any
such non-public information prior to disclosure of such information.

 

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10.18. Usury Savings Clause.

Notwithstanding any other provision herein, the aggregate interest rate charged
with respect to any of the Obligations, including all charges or fees in
connection therewith deemed in the nature of interest under applicable law shall
not exceed the Highest Lawful Rate. If the rate of interest (determined without
regard to the preceding sentence) under this Agreement at any time exceeds the
Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall
bear interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if when the Loans made hereunder are repaid in full the
total interest due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, Borrowers shall pay
to Administrative Agent an amount equal to the difference between the amount of
interest paid and the amount of interest which would have been paid if the
Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of Lenders and Borrowers to conform strictly to
any applicable usury laws. Accordingly, if any Lender contracts for, charges, or
receives any consideration which constitutes interest in excess of the Highest
Lawful Rate, then any such excess shall be cancelled automatically and, if
previously paid, shall at such Lender’s option be applied to the outstanding
amount of the Loans made hereunder or be refunded to Borrowers.

10.19. Counterparts.

This Agreement may be executed in any number of counterparts, each of which when
so executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.

10.20. Effectiveness.

This Agreement shall become effective upon the execution of a counterpart hereof
by each of the parties hereto and receipt by Borrower and Administrative Agent
of written or telephonic notification of such execution and authorization of
delivery thereof.

10.21. Patriot Act.

Each Lender and Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies each Borrower that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies each Borrower, which information includes the name and address of
such Borrower and other information that will allow such Lender or
Administrative Agent, as applicable, to identify such Borrower in accordance
with the Act.

 

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10.22. Electronic Execution of Assignments.

The words “execution,” “signed,” “signature,” and words of like import in any
Assignment Agreement shall be deemed to include electronic signatures or the
keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.

10.23. Public-Side Lenders.

Company and each Lender acknowledge that certain of the Lenders may be
“public-side” Lenders (Lenders that do not wish to receive material non-public
information with respect to Holdings, its Subsidiaries or their securities) and,
if documents or notices required to be delivered pursuant to Section 5.1 or
Section 5.2 or otherwise are being distributed through IntraLinks/IntraAgency or
another relevant website (the “Platform”), any document or notice that Holdings
has indicated contains Nonpublic Information shall not be posted on that portion
of the Platform designated for such public-side Lenders. If Holdings has not
indicated whether a document or notice delivered pursuant to Section 5.1 or
Section 5.2 contains Nonpublic Information, Administrative Agent reserves the
right to post such document or notice solely on that portion of the Platform
designated for Lenders who wish to receive material nonpublic information with
respect to Holdings, its Subsidiaries and their securities.

10.24. Amendment and Restatement.

(a) It is the intention of each of the parties hereto that the Existing ARCA,
which is an amendment and restatement of the Original Credit Agreement, be
amended and restated so as to preserve the perfection and priority of all
security interests securing indebtedness and obligations under the Original
Credit Agreement and the Existing ARCA and that all Indebtedness and Obligations
of the Credit Parties hereunder shall be secured by the Collateral Documents and
that this Agreement does not constitute a novation of the obligations and
liabilities existing under the Original Credit Agreement or the Existing ARCA;
provided, that subject to the terms herein and the Amendment Agreement, all
Loans, Letters of Credit or other Credit Extensions outstanding under the
Existing ARCA shall continue as Loans, Letters of Credit or other Credit
Extensions, as applicable, under this Agreement with the same Interest Periods
as were applicable to such Loans immediately prior to the Amendment Agreement
Effective Date. Upon the effectiveness of this Agreement in accordance with the
Amendment Agreement, each Credit Document that was in effect immediately prior
to the Amendment Agreement Effective Date shall continue to be effective, unless
the context requires otherwise. The parties hereto further acknowledge and agree
that this Agreement constitutes an amendment of the Existing ARCA made under and
in accordance with the terms of Section 10.5 of the Existing ARCA. In addition,
unless specifically amended hereby or pursuant to the Amendment Agreement, each
of the Credit Documents, Appendixes, Exhibits and Schedules to the Existing ARCA
shall continue in full force and effect and, from and after the Amendment
Agreement Effective Date, all references to the “Credit Agreement” contained
therein shall be deemed to refer to this Agreement.

 

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(b) For the avoidance of doubt, each Lender that executes and delivers the
Amendment Agreement as a Consenting Lender (as defined in the Amendment
Agreement) shall be deemed to have committed pursuant to, and subject to the
terms and conditions of, this Agreement and the Amendment Agreement, to convert
(i) all of its Revolving Commitments, if any, to an equal amount of Extended
Revolving Commitments, (ii) all of its outstanding Revolving Loans, if any, to
an equal amount of Extended Revolving Loans, (iii) all of its Tranche C-2 Term
Loans, if any, to an equal amount of Tranche C-2 PIK Term Loans and (iv) all of
its Tranche C-3 Term Loans, if any, to an equal of Tranche C-3 PIK Term Loans.

10.25. Reaffirmation and Grant of Security Interests.

(a) Each Credit Party hereby acknowledges that it has reviewed the terms and
provisions of this Agreement and consents to the amendment and restatement of
the Existing ARCA, which is an amendment and restatement of the Original Credit
Agreement, effected pursuant to this Agreement. Each Credit Party hereby
(A) confirms that each Credit Document to which it is a party or is otherwise
bound and all Collateral encumbered thereby will continue to guarantee or
secure, as the case may be, to the fullest extent possible in accordance with
the Credit Documents, the payment and performance of the Obligations, as the
case may be, including without limitation the payment and performance of all
such Obligations which are joint and several obligations of each grantor now or
hereafter existing, and (B) grants to the Collateral Agent for the benefit of
the Lenders a continuing lien on and security interest in and to such Credit
Party’s right, title and interest in, to and under all Collateral as collateral
security for the prompt payment and performance in full when due of the
Obligations (whether at stated maturity, by acceleration or otherwise).

(b) Each Credit Party acknowledges and agrees that any of the Credit Documents
to which it is a party or otherwise bound shall continue in full force and
effect and that all of its obligations thereunder shall be valid and enforceable
and shall not be impaired or limited by the execution or effectiveness of the
amendment and restatement of the Existing ARCA. Each Credit Party represents and
warrants that all representations and warranties contained in the Credit
Documents to which it is a party or otherwise bound are true, correct and
complete in all material respects on and as of the Amendment Agreement Effective
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.

 

EDUCATION MANAGEMENT CORPORATION By:         Name:   Title:

 

EDUCATION MANAGEMENT LLC By:         Name:   Title:

 

EDUCATION MANAGEMENT HOLDINGS LLC By:         Name:   Title:

 

EDUCATION MANAGEMENT FINANCE CORP. By:         Name:   Title:

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  ARGOSY UNIVERSITY FAMILY CENTER, INC.   EDMC MARKETING AND ADVERTISING, INC.  
HIGHER EDUCATION SERVICES, INC.   MCM UNIVERSITY PLAZA, INC.   THE CONNECTING
LINK, INC.   AID RESTAURANT, INC.   AIH RESTAURANT, INC.   AIIM RESTAURANT, INC.
  BROWN MACKIE EDUCATION CORPORATION   EDUCATION FINANCE II LLC   SOUTH
UNIVERSITY RESEARCH CORPORATION   THE ART INSTITUTES INTERNATIONAL LLC   AICA-IE
RESTAURANT, INC.   AIIN RESTAURANT LLC   AIT RESTAURANT, INC.   AITN RESTAURANT,
INC.

 

By:         Name:   Title:

--------------------------------------------------------------------------------

U.S. BANK NATIONAL ASSOCIATION,

as Administrative Agent and as Collateral Agent

By:         Name:   Title:

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Annex B

Amendments and restatements of the following:

 

  •   Appendix A-1 [Term Loan Commitments]

 

  •   Appendix A-2 [Revolving Commitments]

 

  •   Appendix B [Notice Addresses]

 

  •   Schedule 4.1 [Jurisdictions of Organization]

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Annex B

Appendix A-1 to

Third Amended and Restated

Credit and Guaranty Agreement

Term Loan Commitments1

 

Class

  

Per Lender

   Aggregate   Tranche C-2 Cash Pay Term Loan    On file with Administrative
Agent    $ 2,994,465.16    Tranche C-2 PIK Term Loan    On file with
Administrative Agent    $ 725,374,955.44    Tranche C-3 Cash Pay Term Loan    On
file with Administrative Agent    $ 12,125,998.28    Tranche C-3 PIK Term Loan
   On file with Administrative Agent    $ 329,345,821.55   

 

 

1  As of the Amendment Agreement Effective Date, after giving effect to
conversions pursuant to the Amendment Agreement.

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Appendix A-2 to

Third Amended and Restated

Credit and Guaranty Agreement

Revolving Commitments2

 

Class

  

Per Lender

   Aggregate   Non-Extended Revolving Commitment    On file with Administrative
Agent    $ 0.00    Extended Revolving Commitment    On file with Administrative
Agent    $ 328,312,500.00   

 

 

2  As of the Amendment Agreement Effective Date, after giving effect to
conversions pursuant to the Amendment Agreement.

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Appendix B to

Third Amended and Restated

Credit and Guaranty Agreement

Notice Addresses

CREDIT PARTIES

EDUCATION MANAGEMENT CORPORATION

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Vice President and Treasurer

Telephone:

Facsimile:

Email:

EDUCATION MANAGEMENT LLC

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Vice President and Treasurer

Telephone:

Facsimile:

Email:

EDUCATION MANAGEMENT HOLDINGS LLC

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

EDUCATION MANAGEMENT FINANCE CORP.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

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AICA-IE RESTAURANT, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

AID RESTAURANT, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

AIH RESTAURANT, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

AIIM RESTAURANT, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

AIIN RESTAURANT LLC

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

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AIT RESTAURANT, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

AITN RESTAURANT, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

ARGOSY UNIVERSITY FAMILY CENTER, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

BROWN MACKIE EDUCATION CORPORATION

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

EDMC MARKETING AND ADVERTISING, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

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EDUCATION FINANCE II LLC

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

HIGHER EDUCATION SERVICES, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

MCM UNIVERSITY PLAZA, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

SOUTH UNIVERSITY RESEARCH CORPORATION

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

THE ART INSTITUTES INTERNATIONAL LLC

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

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THE CONNECTING LINK, INC.

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: James Terrell, Treasurer

Telephone:

Facsimile:

Email:

in each case, with a copy to:

General Counsel

c/o EDMC

210 Sixth Avenue, 33rd Floor

Pittsburgh, Pennsylvania 15222

Attention: Devitt Kramer, Senior Vice President,

      General Counsel and Corporate Secretary

Telephone:

Facsimile:

Email:

and

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: Josh Feltman

Telephone:

Facsimile:

Email:

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ADMINISTRATIVE AGENT AND COLLATERAL AGENT

U.S. BANK NATIONAL ASSOCIATION,

as Administrative Agent and Collateral Agent

214 N. Tryon Street, 26th Floor

Charlotte, NC 28202

Attention: CDO Trust Services / James Hanley

Facsimile:

Email:

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ISSUING BANK

BNP PARIBAS,

as Issuing Bank

525 Washington Boulevard

Jersey City, NJ 07310

Attention: David Perez

Facsimile:

Email:

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LENDERS

On file with the Administrative Agent

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Schedule 4.1 to

Third Amended and Restated

Credit and Guaranty Agreement

Jurisdiction of Organization

 

Full Legal Name

  

Jurisdiction of Organization

AICA-IE Restaurant, Inc.    California AID Restaurant, Inc.    Texas AIH
Restaurant, Inc.    Texas AIIM Restaurant, Inc.    Minnesota AIIN Restaurant LLC
   Indiana AIT Restaurant, Inc.    Florida AITN Restaurant, Inc.    Tennessee
American Education Centers, Inc.    Delaware Argosy Education Group, Inc.   
Illinois Argosy University Family Center, Inc.    Minnesota Argosy University of
California LLC    California Argosy University of Florida, Inc.    Florida
(inactive) Art Institute of Honolulu, Inc.    Hawaii (inactive) Art Institute of
Orlando, Inc.    Florida (inactive) Brown Mackie College—Albuquerque LLC    New
Mexico Brown Mackie College—Birmingham LLC    Alabama Brown Mackie
College—Boise, Inc.    Idaho Brown Mackie College—Dallas/ Ft. Worth LLC    Texas
Brown Mackie College—Greenville, Inc.    South Carolina Brown Mackie
College—Indianapolis, Inc.    Indiana Brown Mackie College—Kansas City LLC   
Kansas Brown Mackie College—Miami North LLC    Florida Brown Mackie
College—Miami, Inc.    Florida Brown Mackie College—Oklahoma City LLC   
Oklahoma Brown Mackie College—Phoenix, Inc.    Arizona Brown Mackie
College—Salina LLC    Kansas Brown Mackie College—San Antonio LLC    Texas Brown
Mackie College—St. Louis, Inc.    Missouri Brown Mackie College—Tucson, Inc.   
Arizona Brown Mackie College—Tulsa, Inc.    Oklahoma Brown Mackie Education
Corporation    Delaware EDMC Management Holdings Limited    British Columbia
EDMC Marketing and Advertising, Inc.    Georgia Education Finance II LLC   
Delaware Education Management Corporation    Pennsylvania Education Management
Finance Corp.    Delaware Education Management Holdings LLC    Delaware
Education Management LLC    Delaware EITA Holdings, Inc.    Delaware Higher
Education Services, Inc.    Georgia MCM University Plaza, Inc.    Illinois Miami
International University of Art & Design, Inc.    Florida

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Full Legal Name

  

Jurisdiction of Organization

Michiana College Education Corporation    Delaware New York Institute of Art,
Inc.    New York (inactive) South Education—Texas LLC    Texas South Education
Corporation    Kansas South University of Alabama, Inc.    Alabama South
University of Arizona LLC    Arizona South University of Arkansas LLC   
Arkansas South University of Carolina, Inc.    South Carolina South University
of Florida, Inc.    Florida South University of Michigan, LLC    Michigan South
University of Missouri, Inc.    Missouri South University of North Carolina LLC
   North Carolina South University of Ohio LLC    Ohio South University of
Tennessee, Inc.    Tennessee (inactive) South University of Virginia, Inc.   
Virginia South University Research Corporation    Georgia South University, LLC
   Georgia Southern Ohio College, LLC    Delaware Stautzenberger College
Education Corporation    Delaware TAIC—San Diego, Inc. (The Art Institute of
California—San Diego)    California TAIC—San Francisco, Inc. (The Art Institute
of California—San Francisco)    California The Art Institute of Atlanta, LLC   
Georgia The Art Institute of Austin, Inc.    Texas The Art Institute of
California—Hollywood, Inc.    California The Art Institute of California—Inland
Empire, Inc.    California The Art Institute of California—Los Angeles, Inc.   
California The Art Institute of California—Orange County, Inc.    California The
Art Institute of California—Sacramento, Inc.    California The Art Institute of
California—Silicon Valley, Inc.    California The Art Institute of Charleston,
Inc.    South Carolina The Art Institute of Charlotte, LLC    North Carolina The
Art Institute of Colorado Springs LLC    Colorado The Art Institute of Colorado,
Inc.    Colorado The Art Institute of Connecticut LLC    Connecticut The Art
Institute of Dallas, Inc.    Texas The Art Institute of Fort Lauderdale, Inc.   
Florida The Art Institute of Fort Worth, Inc.    Texas The Art Institute of
Houston, Inc.    Texas The Art Institute of Indianapolis, LLC    Indiana The Art
Institute of Jacksonville, Inc.    Florida The Art Institute of Las Vegas, Inc.
   Nevada The Art Institute of Michigan, Inc.    Michigan The Art Institute of
New Jersey LLC    New Jersey The Art Institute of New York City, Inc.    New
York The Art Institute of Ohio—Cincinnati, Inc.    Ohio The Art Institute of
Philadelphia LLC    Pennsylvania The Art Institute of Pittsburgh LLC   
Pennsylvania The Art Institute of Portland, Inc.    Oregon The Art Institute of
Raleigh—Durham, Inc.    North Carolina The Art Institute of Salt Lake City, Inc.
   Utah

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Full Legal Name

  

Jurisdiction of Organization

The Art Institute of San Antonio, Inc.    Texas The Art Institute of Seattle,
Inc.    Washington The Art Institute of St. Louis, Inc.    Missouri The Art
Institute of Tampa, Inc.    Florida The Art Institute of Tennessee—Nashville,
Inc.    Tennessee The Art Institute of Tucson, Inc.    Arizona The Art Institute
of Vancouver, Inc.    British Columbia The Art Institute of Virginia Beach LLC
   Virginia The Art Institute of Washington—Dulles LLC    Virginia The Art
Institute of Washington, Inc.    District of Columbia The Art Institute of
Wisconsin LLC    Wisconsin The Art Institute of York—Pennsylvania LLC   
Pennsylvania The Art Institutes International—Kansas City, Inc.    Kansas The
Art Institutes International LLC    Pennsylvania The Art Institutes
International Minnesota, Inc.    Minnesota The Asher School of Business
Education Corporation    Delaware The Connecting Link, Inc.    Georgia The
Illinois Institute of Art—Tinley Park LLC    Illinois The Illinois Institute of
Art at Schaumburg, Inc.    Illinois The Illinois Institute of Art, Inc.   
Illinois The Institute of Post-Secondary Education, Inc.    Arizona The New
England Institute of Art, LLC    Massachusetts The University of Sarasota, Inc.
   Florida Western State University of Southern California    California

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Annex C

Addition of the following:

 

  •   Schedule 4.6 [Litigation]

 

  •   Exhibit B-6 [Tranche C-2 PIK Term Loan Note]

 

  •   Exhibit B-7 [Tranche C-3 PIK Term Loan Note]

 

  •   Exhibit B-8 [Extended Revolving Loan Note]

 

  •   Exhibit B-9 [Tranche C-3 Cash Pay Term Loan Note]

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Annex C

Schedule 4.6 to

Third Amended and Restated

Credit and Guaranty Agreement

Litigation

As of the Amendment Agreement Effective Date, Education Management and its
Subsidiaries (collectively, “we,” “us” or the “Company”) are the subject of the
following actions, suits, proceedings, claims or disputes pending or threatened
in writing or contemplated at law, in equity, in arbitration or before any
Governmental Authority that either individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.

Qui Tam Actions

Washington v. Education Management Corporation

On May 3, 2011, a qui tam action captioned United States of America, and the
States of California, Florida, Illinois, Indiana, Massachusetts, Minnesota,
Montana, New Jersey, New Mexico, New York and Tennessee, and the District of
Columbia, each ex rel. Lynntoya Washington and Michael T. Mahoney v. Education
Management Corporation, et al. (“Washington”) filed under the federal False
Claims Act in April 2007 was unsealed due to the U.S. Department of Justice’s
decision to intervene in the case. Five of the states listed on the case caption
joined the case based on qui tam actions filed under their respective False
Claims Acts. The Court granted the Company’s motion to dismiss the District of
Columbia from the case and denied the Commonwealth of Kentucky’s motion to
intervene in the case under its consumer protection laws. The case, which is
pending in federal district court in the Western District of Pennsylvania,
relates to whether the Company’s compensation plans for admission
representatives violated the Higher Education Act of 1965, as amended (“HEA”),
and U.S. Department of Education regulations prohibiting an institution
participating in Title IV programs from providing any commission, bonus or other
incentive payment based directly or indirectly on success in securing
enrollments to any person or entity engaged in any student recruitment or
admissions activity during the period of July 1, 2003 through June 30, 2011. The
complaint was initially filed by a former admissions representative at The Art
Institute of Pittsburgh Online Division and a former director of training at
EDMC Online Higher Education and asserts the relators are entitled to recover
treble the amount of actual damages allegedly sustained by the federal
government as a result of the alleged activity, plus civil monetary penalties.
The complaint does not specify the amount of damages sought but claims that the
Company and/or students attending the Company’s schools received over $11
billion in funds from participation in Title IV programs and state financial aid
programs during the period of alleged wrongdoing.

On May 11, 2012, the Court ruled on the Company’s motion to dismiss case for
failure to state a claim upon which relief can be granted, dismissing the claims
that the design of the Company’s compensation plan for admissions
representatives violated the incentive compensation rule and allowing common law
claims and the allegations that the plan as implemented violated the rule to
continue to discovery. The Company believes the case to be without merit and
intends to vigorously defend itself. From time to time, the Company engages in
settlement discussions with respect to this case.

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There can be no assurance that these conversations will lead to a settlement
acceptable to all parties and approved by all parties. There can also be no
assurance that any settlement will be within amounts currently accrued or be
covered by insurance or not be material to the Company.

Sobek v. Education Management Corporation

On March 13, 2012, a qui tam action captioned United States of America, ex rel.
Jason Sobek v. Education Management Corporation, et al. filed under the federal
False Claims Act on January 28, 2010 was unsealed after the U.S. Department of
Justice declined to intervene in the case. The case, which is pending in the
federal district court in the Western District of Pennsylvania, alleges that the
defendants violated the U.S. Department of Education’s regulation prohibiting
institutions from making substantial misrepresentations to prospective students,
did not adequately track student academic progress and violated the U.S.
Department of Education’s prohibition on the payment of incentive compensation
to admissions representatives. The complaint was filed by a former project
associate director of admissions at EDMC Online Higher Education who worked for
South University and asserts the relator is entitled to recover treble the
amount of actual damages allegedly sustained by the federal government as a
result of the alleged activity, plus civil monetary penalties. The complaint
does not specify the amount of damages sought but claims that the Company’s
institutions were ineligible to participate in Title IV programs during the
period of alleged wrongdoing.

In August 2013, the parties to the action, along with the U.S. Department of
Justice, participated in a private mediation in which the relator and defendants
reached an agreement in principle regarding the financial terms of a potential
settlement. The agreement between the parties remains subject to approval by the
U.S. Department of Justice. Significant terms remain to be negotiated, and there
is no certainty that a final agreement will be reached. The settlement amount
agreed to by the parties under the terms of the agreement in principle would be
paid by the Company’s insurer and the Company would pay an immaterial amount of
attorneys’ fees incurred by the relator. The ultimate dismissal of the action,
should a final settlement be reached, is subject to the Court’s approval.

Additional Actions

In the course of settlement discussions regarding the Sobek matter, the U.S.
Department of Justice informed the Company that it is the subject of an
investigation related to a claim under the federal false claims act by the U. S.
Attorney’s Office for the Middle District of Tennessee. Additionally, in March
2014 the U.S. Department of Justice informed the Company that it is the subject
of an investigation related to a claim under the federal false claims act by the
U.S. Attorney’s Office for the Western District of Pennsylvania. The Company
plans to cooperate with the U.S. Department of Justice with regard to these
matters. However, the Company cannot predict the eventual scope, duration or
outcome of the investigations at this time.

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Shareholder Derivative Lawsuits

Oklahoma Law Enforcement Retirement System v. Nelson

On May 21, 2012, a shareholder derivative class action captioned Oklahoma Law
Enforcement Retirement System v. Todd S. Nelson, et al. was filed against the
directors of the Company in state court located in Pittsburgh, PA. The Company
is named as a nominal defendant in the case. The complaint alleges that the
defendants violated their fiduciary obligations to the Company’s shareholders
due to the Company’s violation of the U.S. Department of Education’s prohibition
on paying incentive compensation to admissions representatives, engaging in
improper recruiting tactics in violation of Title IV of the HEA and accrediting
agency standards, improper classification of job placement data for graduates of
its schools and failure to satisfy the U.S. Department of Education’s financial
responsibility standards. The Company previously received two demand letters
from the plaintiff which were investigated by a Special Litigation Committee of
the Board of Directors and found to be without merit.

The Company and the director defendants filed a motion to dismiss the case with
prejudice on August 13, 2012. In response, the plaintiffs filed an amended
complaint making substantially the same allegations as the initial complaint on
September 27, 2012. The Company and the director defendants filed a motion to
dismiss the amended complaint on October 17, 2012. On July 16, 2013, the Court
dismissed the claims that the Company engaged in improper recruiting tactics and
mismanaged the Company’s financial well-being with prejudice and found that the
Special Litigation Committee could conduct a supplemental investigation of the
plaintiff’s claims related to incentive compensation paid to admissions
representatives and graduate placement statistics. The Special Litigation
Committee filed supplemental reports on October 15, 2013, January 9, 2014 and
February 28, 2014, finding no support for the incentive compensation and
graduate placement statistic claims. The Court held a hearing on the defendants’
supplemental motion to dismiss the case on January 29, 2014.

Bushansky v. Nelson

On August 3, 2012, a shareholder derivative class action captioned Stephen
Bushansky v. Todd S. Nelson, et al. was filed against certain of the directors
of the Company in federal district court in the Western District of
Pennsylvania. The Company is named as a nominal defendant in the case.

The complaint alleges that the defendants violated their fiduciary obligations
to the Company’s shareholders due to the Company’s use of improper recruiting,
enrollment admission and financial aid practices and violation of the U.S.
Department of Education’s prohibition on the payment of incentive compensation
to admissions representatives. The Company previously received a demand letter
from the plaintiff which was investigated by a Special Litigation Committee of
the Board of Directors and found to be without merit. The Company believes that
the claims set forth in the complaint are without merit and intends to
vigorously defend itself. The Company and the named director defendants filed a
motion to stay the litigation pending the resolution of the Oklahoma Law
Enforcement Retirement System shareholder derivative case or, alternatively,
dismiss the case on October 19, 2012. On August 5, 2013, the Court granted the
Company’s motion to stay the case in light of the ruling on the defendants’
motion to dismiss the Oklahoma Law Enforcement Retirement System case.

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OIG Subpoena

On May 24, 2013, the Company received a subpoena from the Office of Inspector
General of the U.S. Department of Education requesting policies and procedures
related to Argosy University’s attendance, withdrawal and return to Title IV
policies during the period of July 1, 2010 through December 31, 2011 and
detailed information on a number of students who enrolled in Argosy University’s
Bachelor’s of Psychology degree program. The Company plans to cooperate with the
Office of Inspector General in connection with its investigation. However, the
Company cannot predict the eventual scope, duration or outcome of the
investigation at this time.

State Attorneys General Investigations

The Company received inquiries from 13 states in January 2014 and an additional
state in March 2014 regarding the Company’s business practices. The Attorney
General of the Commonwealth of Pennsylvania informed the Company that it will
serve as the point of contact for the inquiries related to the Company. The
inquiries focus on the Company’s practices relating to the recruitment of
students, graduate placement statistics, graduate certification and licensing
results, and student lending activities, among other matters. Several other
companies in the proprietary education industry have disclosed that they
received similar inquiries. The Company intends to cooperate with the states
involved and cannot predict the eventual scope, duration or outcome of the
investigation at this time.

Massachusetts

In January 2013, The New England Institute of Art received a civil investigative
demand from the Commonwealth of Massachusetts Attorney General requesting
information for the period from January 1, 2010 to the present pursuant to an
investigation of practices by the school in connection with marketing and
advertising job placement and student outcomes, the recruitment of students and
the financing of education. The Company previously responded to a similar
request that The New England Institute of Art received in June 2007 and intends
to cooperate with the Attorney General in connection with its investigation.
However, the Company cannot predict the eventual scope, duration or outcome of
the investigation at this time.

New York

In August 2011, the Company received a subpoena from the Attorney General of the
State of New York requesting documents and detailed information for the time
period of January 1, 2000 through the present. The Art Institute of New York
City is the Company’s only school located in New York though the subpoena also
addresses fully-online students who reside in the State. The subpoena is
primarily related to the Company’s compensation of admissions representatives
and recruiting activities. The relators in the Washington qui tam case filed the
complaint under the State of New York’s False Claims Act though the state has
not announced an intention to intervene in the matter. The Company intends to
cooperate with the investigation. However, the Company cannot predict the
eventual scope, duration or outcome of the investigation at this time.

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Kentucky

In December 2010, the Company received a subpoena from the Office of Consumer
Protection of the Attorney General of the Commonwealth of Kentucky requesting
documents and detailed information for the time period of January 1, 2008
through December 31, 2010. The Company has three Brown Mackie College locations
in Kentucky. The Kentucky Attorney General announced an investigation of the
business practices of proprietary post-secondary schools and that subpoenas were
issued to six proprietary colleges that do business in Kentucky in connection
with the investigation. The Company intends to continue to cooperate with the
investigation. However, the Company cannot predict the eventual scope, duration
or outcome of the investigation at this time.

Florida

In October 2010, Argosy University received a subpoena from the Florida Attorney
General’s office seeking a wide range of documents related to the Company’s
institutions, including the nine institutions located in Florida, from
January 2, 2006 to the present. The Florida Attorney General has announced that
it is investigating potential misrepresentations in recruitment, financial aid
and other areas. The Company is cooperating with the investigation, but has also
filed a suit to quash or limit the subpoena and to protect information sought
that constitutes proprietary or trade secret information. The Company cannot
predict the eventual scope, duration or outcome of the investigation at this
time.

Argosy University, Seattle APA Program Accreditation Lawsuits

In August 2013, a petition was filed in the Superior Court of the State of
Washington (King County) in the case of Winters, et al. v. Argosy Education
Group, et al. by 20 former students in the Clinical Psychology program offered
by the Seattle campus of Argosy University. In December 2013, a similar petition
was filed in the same court in the case of McMath, et al. v. Argosy Education
Group, et al. by nine former students in the Clinical Psychology program offered
by the Seattle campus of Argosy University. Both cases allege negligent
misrepresentation due to the failure of the Clinical Psychology program to
obtain accreditation from the American Psychology Association (“APA”), breach of
contract, violation of the Washington State Consumer Protection Act, negligent
infliction of emotional distress, negligence and lack of institutional control,
negligent misrepresentation, breach of fiduciary duty, negligent failure to
disclose and fraud. The Seattle campus of Argosy University announced that it
was teaching-out (i.e., not accepting new students into the program) the
Clinical Psychology program in November 2011 due to the inability to obtain APA
accreditation. The Company believes the claims in the lawsuits to be without
merit and intends to vigorously defend itself.

New England Institute of Art Show Cause Order

On May 7, 2014, The New England Institute of Art (“NEIA”) received a “show
cause” order from its institutional accreditor, the New England Association of
Schools and Colleges (“NEASC”). Under the show cause order, NEIA must
demonstrate to NEASC why its institutional accreditation should not be
withdrawn. The NEASC Commission on Institutions of Higher Education (the
“Commission”), in response to a five year progress report submitted by NEIA,
issued the show cause order to NEIA due to significant concerns about NEIA’s
ability to

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meet NEASC’s Standards for Accreditation related to financial resources,
organization and governance, faculty, students, and library and other
information resources. NEIA will respond to the issues identified by the
Commission at a meeting of the Commission to be held in September 2014. In the
event that NEIA demonstrates that it has a viable plan to come into compliance
with NEASC’s Standards for Accreditation, NEIA would be placed on probation for
a two year period. In the event that NEIA’s request for probation is denied by
the Commission, NEIA could appeal to an appeals panel established by NEASC of
individuals who were not involved in the initial decision but who are familiar
with the Standards for Accreditation and the related policies. As of March 31,
2014, approximately 600 students attended NEIA, which is one of fifty Art
Institute schools.

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Exhibit B-6 to

Third Amended and Restated

Credit and Guaranty Agreement

Tranche C-2 PIK Term Loan Note

$[1][     ,        ,     ]

September [ ], 2014

FOR VALUE RECEIVED, EDUCATION MANAGEMENT LLC, a Delaware limited liability
company (“Company”), promises to pay [NAME OF LENDER] (“Payee”) or its
registered assigns the principal amount of [1][DOLLARS] ($[1][     ,     _,    
]) in the installments referred to below.

Company also promises to pay interest on the unpaid principal amount hereof,
from the date hereof until paid in full, at the rates and at the times which
shall be determined in accordance with the provisions of that certain Third
Amended and Restated Credit and Guaranty Agreement, dated as of September [    
], 2014 (as it may be amended, supplemented or otherwise modified, the “Credit
Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Company, EDUCATION MANAGEMENT
CORPORATION, a Pennsylvania corporation, EDUCATION MANAGEMENT HOLDINGS LLC, a
Delaware limited liability company (“Holdings”), CERTAIN SUBSIDIARIES OF
HOLDINGS, as Guarantors, the Designated Subsidiary Borrowers party thereto from
time to time, the Lenders party thereto from time to time, CREDIT SUISSE
SECURITIES (USA) LLC, as Syndication Agent and U.S. BANK NATIONAL ASSOCIATION,
as Administrative Agent (as successor to BNP Paribas in such capacity) and as
Collateral Agent (as successor to BNP Paribas in such capacity).

Company shall make principal payments on this Note as set forth in Section 2.12
of the Credit Agreement.

This Note is one of the “Tranche C-2 PIK Term Loan Notes” in the aggregate
principal amount of $[     _,     ,        ] and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Term Loan evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in same day funds at the Principal
Office of Administrative Agent or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
the obligations evidenced hereby shall have been accepted by Administrative
Agent and recorded in the Register, Company, each Agent and Lenders shall be
entitled to deem and treat Payee as the owner and holder of this Note and the
obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof,
that before disposing of this

 

 

[1] Lender’s Tranche C-2 PIK Term Loan Commitment

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Note or any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligations of Company hereunder with
respect to payments of principal of or interest on this Note.

This Note amends and restates an existing Note or Notes under the Existing ARCA
and does not constitute a novation, payment and reborrowing or termination of
such existing Note or Notes or of other obligations under such existing Note or
Notes, and all such obligations are in all respects continued and outstanding as
obligations under this Note except to the extent that such obligations are
modified from and after the date of this Note as provided in the Credit
Agreement and the other Credit Documents.

This Note is subject to mandatory prepayment and to prepayment at the option of
Company, each as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note, together with all accrued and unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in
the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the
Credit Agreement shall alter or impair the obligations of Company, which are
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.

Company promises to pay all costs and expenses, including reasonable attorneys’
fees, all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Note. Company and any endorsers of this Note hereby consent
to renewals and extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand notice of every
kind and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.

[Signature Page Follows]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.

 

EDUCATION MANAGEMENT LLC By:       Name:   Title:

--------------------------------------------------------------------------------

Exhibit B-7 to

Third Amended and Restated

Credit and Guaranty Agreement

Tranche C-3 PIK Term Loan Note

$[1][     ,        ,     ]

September [     ], 2014

FOR VALUE RECEIVED, EDUCATION MANAGEMENT LLC, a Delaware limited liability
company (“Company”), promises to pay [NAME OF LENDER] (“Payee”) or its
registered assigns the principal amount of [1][DOLLARS] ($[1][     ,     _,    
]) in the installments referred to below.

Company also promises to pay interest on the unpaid principal amount hereof,
from the date hereof until paid in full, at the rates and at the times which
shall be determined in accordance with the provisions of that certain Third
Amended and Restated Credit and Guaranty Agreement, dated as of September [    
], 2014 (as it may be amended, supplemented or otherwise modified, the “Credit
Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Company, EDUCATION MANAGEMENT
CORPORATION, a Pennsylvania corporation, EDUCATION MANAGEMENT HOLDINGS LLC, a
Delaware limited liability company (“Holdings”), CERTAIN SUBSIDIARIES OF
HOLDINGS, as Guarantors, the Designated Subsidiary Borrowers party thereto from
time to time, the Lenders party thereto from time to time, CREDIT SUISSE
SECURITIES (USA) LLC, as Syndication Agent and U.S. BANK NATIONAL ASSOCIATION,
as Administrative Agent (as successor to BNP Paribas in such capacity) and as
Collateral Agent (as successor to BNP Paribas in such capacity).

Company shall make principal payments on this Note as set forth in Section 2.12
of the Credit Agreement.

This Note is one of the “Tranche C-3 PIK Term Loan Notes” in the aggregate
principal amount of $[     _,     ,        ] and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Term Loan evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in same day funds at the Principal
Office of Administrative Agent or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
the obligations evidenced hereby shall have been accepted by Administrative
Agent and recorded in the Register, Company, each Agent and Lenders shall be
entitled to deem and treat Payee as the owner and holder of this Note and the
obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof,
that before disposing of this

 

 

[1] Lender’s Tranche C-3 PIK Term Loan Commitment

--------------------------------------------------------------------------------

Note or any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligations of Company hereunder with
respect to payments of principal of or interest on this Note.

This Note amends and restates an existing Note or Notes under the Existing ARCA
and does not constitute a novation, payment and reborrowing or termination of
such existing Note or Notes or of other obligations under such existing Note or
Notes, and all such obligations are in all respects continued and outstanding as
obligations under this Note except to the extent that such obligations are
modified from and after the date of this Note as provided in the Credit
Agreement and the other Credit Documents.

This Note is subject to mandatory prepayment and to prepayment at the option of
Company, each as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note, together with all accrued and unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in
the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the
Credit Agreement shall alter or impair the obligations of Company, which are
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.

Company promises to pay all costs and expenses, including reasonable attorneys’
fees, all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Note. Company and any endorsers of this Note hereby consent
to renewals and extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand notice of every
kind and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.

[Signature Page Follows]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.

 

EDUCATION MANAGEMENT LLC

By:  

      Name:   Title:

--------------------------------------------------------------------------------

Exhibit B-8 to

Third Amended and Restated

Credit and Guaranty Agreement

Extended Revolving Loan Note

$[1][     ,        ,     ]

September [     ], 2014

FOR VALUE RECEIVED, EDUCATION MANAGEMENT LLC, a Delaware limited liability
company (“Company”), promises to pay [NAME OF LENDER] (“Payee”) or its
registered assigns, on or before July 2, 2015, the lesser of (a) [1][DOLLARS]
($[1][     ,     _,     ]) and (b) the unpaid principal amount of all advances
made by Payee to Company as Extended Revolving Loans under the Credit Agreement
referred to below.

Company also promises to pay interest on the unpaid principal amount hereof,
from the date hereof until paid in full, at the rates and at the times which
shall be determined in accordance with the provisions of that certain Third
Amended and Restated Credit and Guaranty Agreement, dated as of September [ ],
2014 (as it may be amended, supplemented or otherwise modified, the “Credit
Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Company, EDUCATION MANAGEMENT
CORPORATION, a Pennsylvania corporation, EDUCATION MANAGEMENT HOLDINGS LLC, a
Delaware limited liability company (“Holdings”), CERTAIN SUBSIDIARIES OF
HOLDINGS, as Guarantors, the Designated Subsidiary Borrowers party thereto from
time to time, the Lenders party thereto from time to time, CREDIT SUISSE
SECURITIES (USA) LLC, as Syndication Agent and U.S. BANK NATIONAL ASSOCIATION,
as Administrative Agent (as successor to BNP Paribas in such capacity) and as
Collateral Agent (as successor to BNP Paribas in such capacity).

This Note is one of the “Extended Revolving Loan Notes” in the aggregate
principal amount of $[     _,     ,        ] and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Loans evidenced hereby were made and are to be repaid.

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in same day funds at the Principal
Office of Administrative Agent or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
the obligations evidenced hereby shall have been accepted by Administrative
Agent and recorded in the Register, Company, each Agent and Lenders shall be
entitled to deem and treat Payee as the owner and holder of this Note and the
obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof,
that before disposing of this Note or any part hereof it will make a notation
hereon of all principal payments previously made hereunder and of the date to
which interest hereon has been paid; provided, the failure to make a notation of
any payment made on this Note shall not limit or otherwise affect the
obligations of Company hereunder with respect to payments of principal of or
interest on this Note.

 

 

[1] Lender’s Extended Revolving Commitment

--------------------------------------------------------------------------------

This Note amends and restates an existing Note or Notes under the Existing ARCA
and does not constitute a novation, payment and reborrowing or termination of
such existing Note or Notes or of other obligations under such existing Note or
Notes, and all such obligations are in all respects continued and outstanding as
obligations under this Note except to the extent that such obligations are
modified from and after the date of this Note as provided in the Credit
Agreement and the other Credit Documents.

This Note is subject to mandatory prepayment and to prepayment at the option of
Company, each as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note, together with all accrued and unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in
the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the
Credit Agreement shall alter or impair the obligations of Company, which are
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.

Company promises to pay all costs and expenses, including reasonable attorneys’
fees, all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Note. Company and any endorsers of this Note hereby consent
to renewals and extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand notice of every
kind and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.

[Signature Page Follows]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.

 

EDUCATION MANAGEMENT LLC

By:  

      Name:   Title:

--------------------------------------------------------------------------------

TRANSACTIONS ON

EXTENDED REVOLVING LOAN NOTE

 

Date

  

Amount of Loan

Made This Date

  

Amount of Principal

Paid This Date

  

Outstanding Principal

Balance This Date

  

Notation

Made By

--------------------------------------------------------------------------------

Exhibit B-9 to

Third Amended and Restated

Credit and Guaranty Agreement

Tranche C-3 Cash Pay Term Loan Note

$[1][     ,        ,     ]

September [     ], 2014

FOR VALUE RECEIVED, EDUCATION MANAGEMENT LLC, a Delaware limited liability
company (“Company”), promises to pay [NAME OF LENDER] (“Payee”) or its
registered assigns the principal amount of [1][DOLLARS] ($[1][     ,     _,    
]) in the installments referred to below.

Company also promises to pay interest on the unpaid principal amount hereof,
from the date hereof until paid in full, at the rates and at the times which
shall be determined in accordance with the provisions of that certain Third
Amended and Restated Credit and Guaranty Agreement, dated as of September [ ],
2014 (as it may be amended, supplemented or otherwise modified, the “Credit
Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Company, EDUCATION MANAGEMENT
CORPORATION, a Pennsylvania corporation, EDUCATION MANAGEMENT HOLDINGS LLC, a
Delaware limited liability company (“Holdings”), CERTAIN SUBSIDIARIES OF
HOLDINGS, as Guarantors, the Designated Subsidiary Borrowers party thereto from
time to time, the Lenders party thereto from time to time, CREDIT SUISSE
SECURITIES (USA) LLC, as Syndication Agent and U.S. BANK NATIONAL ASSOCIATION,
as Administrative Agent (as successor to BNP Paribas in such capacity) and as
Collateral Agent (as successor to BNP Paribas in such capacity).

Company shall make principal payments on this Note as set forth in Section 2.12
of the Credit Agreement.

This Note is one of the “Tranche C-3 Cash Pay Term Loan Notes” in the aggregate
principal amount of $[     _,     ,         ] and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Term Loan evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in same day funds at the Principal
Office of Administrative Agent or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
the obligations evidenced hereby shall have been accepted by Administrative
Agent and recorded in the Register, Company, each Agent and Lenders shall

 

 

[1] Lender’s Tranche C-3 Cash Pay Term Loan Exposure as of the Amendment
Agreement Effective Date.

--------------------------------------------------------------------------------

be entitled to deem and treat Payee as the owner and holder of this Note and the
obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof,
that before disposing of this Note or any part hereof it will make a notation
hereon of all principal payments previously made hereunder and of the date to
which interest hereon has been paid; provided, the failure to make a notation of
any payment made on this Note shall not limit or otherwise affect the
obligations of Company hereunder with respect to payments of principal of or
interest on this Note.

This Note amends and restates an existing Note or Notes under the Existing ARCA
and does not constitute a novation, payment and reborrowing or termination of
such existing Note or Notes or of other obligations under such existing Note or
Notes, and all such obligations are in all respects continued and outstanding as
obligations under this Note except to the extent that such obligations are
modified from and after the date of this Note as provided in the Credit
Agreement and the other Credit Documents.

This Note is subject to mandatory prepayment and to prepayment at the option of
Company, each as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note, together with all accrued and unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in
the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the
Credit Agreement shall alter or impair the obligations of Company, which are
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.

Company promises to pay all costs and expenses, including reasonable attorneys’
fees, all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Note. Company and any endorsers of this Note hereby consent
to renewals and extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand notice of every
kind and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.

[Signature Page Follows]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.

 

EDUCATION MANAGEMENT LLC

By:  

      Name:   Title:

--------------------------------------------------------------------------------

Annex D

Form of Restructuring Support Agreement

[See Exhibit 10.1]

 

--------------------------------------------------------------------------------

Annex E

Form of Exchange Agreement

[On File with the Administrative Agent]