**EXHIBIT 4.1**

 

**WAIVER AND THIRD AMENDMENT TO AMENDED ANDRESTATED CREDIT AGREEMENT**

 

This Waiver andThird Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) is dated as of April 30, 2003, and is made by and among EDUCATION MANAGEMENT CORPORATION, (the “Borrower”), the BANKS under the Credit Agreement(as hereafter defined), NATIONAL CITY BANK OF PENNSYLVANIA (the “Agent”), as the Agent for the Banks and Issuing Bank, WACHOVIA BANK, as Syndication Agent, SUNTRUST BANK, as Syndication Agent, FLEET NATIONAL BANK, as Documentation Agent,and J.P. MORGAN CHASE BANK, as Documentation Agent. 

 

**RECITALS:**

 

WHEREAS, theBorrower, the Banks and the Agent entered into that certain Amended and Restated Credit Agreement dated as of September 20, 2001, as amended by a First Amendment thereto dated as of February 15, 2002 and a Second Amendment thereto dated as of August19, 2002 (as amended, modified, extended or restated from time to time, the “Credit Agreement”); 

 

WHEREAS, Section 6.6(ix) of the Credit Agreement permits indebtedness for Borrowed Money in connection with real estate financingsprovided that neither the Borrower nor any Subsidiary of Borrower shall Guarantee any such Indebtedness for Borrowed Money. In connection with Borrower’s acquisition of Argosy, Borrower has acquired a Subsidiary, Argosy, who has guarantiedIndebtedness for Borrowed Money of its Subsidiary, Western State University College of Law (“WSU”), in connection with real estate financings, as more fully described in that certain memorandum delivered by Borrower to Agent and the Bankson April 30, 2003 (collectively, the “Guarantee Memo”) and the Borrower has requested that the Banks waive the requirement that Borrower comply with the covenant set forth in Section 6.6(ix) for the period beginning on the effective dateof the Borrower’s acquisition of Argosy to date hereof and amend such covenant to permit such Guarantee for periods after the date hereof, subject to the terms and conditions hereof; 

 

NOW, THEREFORE, in consideration of the foregoing and intending to be legally bound, the parties hereto agreeas follows: 

 

**AGREEMENT:**

 

1. Capitalized terms used herein and not otherwise definedshall have the meanings given to them under the Credit Agreement. 

 

2. The Banksand the Loan Parties hereby amend and restate subsection (ix) of Section 6.6 in its entirety to read as follows: 

 

“(ix) Indebtedness for Borrowed Money in a principal amount of up to $25,000,000 in the aggregate outstanding in connection with realestate financings and sale and lease-back real estate transactions (other than sale and lease-back transactions prohibited by Section 6.5 above), including, without limitation, any reimbursement obligations incurred with respect to a bond financingthat is secured by real estate, provided that, neither the Borrower nor any Subsidiary of the Borrower shall Guarantee any Indebtedness for Borrowed Money permitted under this Subsection (other than the Guarantee by Argosy of the Indebtedness forBorrowed Money of WSU in favor of Union Bank of California in connection with a real estate financing of real property owned by WSU, solely to the extent that the aggregate principal amount of such Indebtedness subject to such Guarantee does notexceed $3,450,000) and, further provided that, if such Indebtedness for Borrowed Money is incurred by a Subsidiary, the Subsidiary shall execute a Subsidiary Guarantee.” 

 

The remainder of Section 6.6 is unchanged hereby. 

 

3. The Banks hereby waive non-compliance with Section 6.6(ix) of the Credit Agreement from the date of theBorrower’s acquisition of Argosy to the date hereof, to the extent that such non-compliance was created solely by (a) the Guarantee by Argosy of the Indebtedness for Borrowed Money in favor of WSU as more fully described in the Guarantee Memoand (b) the failure of WSU to execute and deliver to the Agent for the benefit of the Banks a Subsidiary Guaranty as required by Section 6.6(ix) of the Credit Agreement, provided that the Borrower hereby represents, warrants and covenants that: (i)Borrower’s non-compliance with Section 6.6(ix) was created solely by the Guarantee described in clause (a) above (the circumstances giving rise to such Guarantee are as described in the Guarantee Memo), and the failure to provide a SubsidiaryGuaranty described in clause (b) above, and (ii) the aggregate principal amount of Indebtedness for Borrowed Money Guaranteed thereunder does not and will not exceed $3,450,000. Any breach of the warranties and covenants contained in clauses (i) or(ii) of the preceding sentence shall constitute an Event of Default under the Credit Agreement. The Banks do not amend, modify or waive the covenant contained in Section 6.6(ix) for periods prior to the date of the Borrower’s acquisition ofArgosy or after the date hereof except as expressly set forth herein. 

 

4. The Borrower represents and warrants that (after giving effect to the waiver set forth in paragraph 3 above and the delivery by WSU to the Agent of a Subsidiary Guaranty as required by paragraph 12 below) the Loan Partiesare in full compliance with each of the provisions of the Credit Agreement and that no Default or Event of Default exists (after giving effect to the waiver set forth in Paragraphs 3 above and the delivery by WSU to the Agent of a SubsidiaryGuaranty as required by paragraph 12 below). The Banks do not waive any provisions of the Credit Agreement, except as expressly set forth herein. All terms of the Credit Agreement and each of the other Loan Documents remain in full force and effecton and after the date hereof except as provided herein. 

 

5. TheBorrower warrants that the Guarantee Memo is true and correct in all material respects. 

 

6. By its execution below, the Borrower acknowledges and agrees that except as set forth in this Third Amendment and the documents executed and delivered in connection herewith or in connection withthe Credit Agreement, the Credit Agreement and the other Loan Documents and all obligations thereunder remain in full force and effect with respect to the Bank Indebtedness. 

 

7. The Credit Agreement, the Loan Documents and all prior amendments and modifications thereto are herebymodified solely to the extent that any of the terms or provisions thereof are irreconcilably inconsistent with the terms and provisions of this Third Amendment. 

 

8. The Recitals set forth above are incorporated herein by reference and made a part hereof, and the Borrowerrepresents, warrants and attests to the veracity thereof as well as to the veracity of the representations set forth in the Credit Agreement as of the date hereof (except representations which expressly relate solely to an earlier date or time,which representations shall be true as of the specific dates or times referred to therein). 

 

9. The Borrower represents that this Third Amendment has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligations of the Borrower, enforceable againstthe Borrower in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforceability ofcreditors rights generally or by general equitable principles. 

 

10. Neither this Third Amendment nor the consummation of the transactions contemplated herein nor the performance by the Borrower of its obligations hereunder will (i) violate any law, rule or regulation or court order to which theBorrower is subject; (ii) conflict with or result in a breach of the Borrower’s articles of incorporation or bylaws or any material agreement or instrument to which any Borrower is subject or by which its properties are bound or (iii) result inthe creation or imposition of any lien, security interest or encumbrance on the property of any Borrower, whether now owned or hereafter acquired, other than liens in favor of Agent for the benefit of the Lenders. 

 

11. This Third Amendment may be executed by different partieshereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. 

 

12. This Third Amendment shall become effective when (i) ithas been executed and delivered by the Borrower, the Required Banks and the Agent and (ii) a Subsidiary Guaranty in form and substance acceptable to the Agent has been executed and delivered by WSU to the Agent. 

 

Executed as ofthe day and year first above written. 

 

EDUCATION MANAGEMENT CORPORATION

By
 
/s/    KRISTENGRIBBLE        

Name
 
Kristen Gribble

Title
 
Treasurer

 

NATIONAL CITY BANK OFPENNSYLVANIA,

individually and as Agent

By
 
/s/    JOHN L. HAYES,IV        

Name
 
John L. Hayes

Title
 
Vice President

 

WACHOVIA BANK,

individually and as Syndication Agent

By
 
/s/    PATRICK J.KAUFMANN        

Name
 
Patrick J. Kaufmann

Title
 
Vice President

 

SUNTRUST BANK,

individually and as Syndication Agent

By
 
/s/    WILLIAM H.CRAWFORD        

Name
 
William H. Crawford

Title
 
Vice President

 

FLEET NATIONAL BANK,

individually and as Documentation Agent

By
 
/s/    EDWARDMCKENNEY        

Name
 
Edward McKenney

Title
 
Senior Vice President

 

J.P. MORGAN CHASE BANK,

individually and as Documentation Agent

By
 
/s/    JOHNMALONE        

Name
 
John Malone

Title
 
Vice President

 

BANK ONE, NA.

 

Successor by Merger to BANK ONE,MICHIGAN

By
 
/s/    MAHUATHAKURTA        

Name
 
Mahua Thakurta

Title
 
Associate Director

 

FIFTH THIRD BANK

By
 
/s/    CHRISTOPHER S.HELMECI        

Name
 
Christopher S. Helmeci

Title
 
Vice President

 

AMERISERV FINANCIAL BANK

By
 
/s/    MITCHELL D.EDWARDS        

Name
 
Mitchell D. Edwards

Title
 
Vice President