Document:

EX-10.1

Exhibit 10.1

STANDARD EXECUTIVE EMPLOYMENT AGREEMENT

BETWEEN

DSW INC.

AND

MICHAEL R. MACDONALD

This Standard Executive Employment Agreement (“Agreement”) by and between DSW Inc. (“Company”) and
Michael R. MacDonald (“Executive”), collectively, the “Parties,” is effective as of the date signed
(“Effective Date”) and supercedes and replaces any other oral or written employment-related
agreement between the Executive and the Company.

1.00 Duration

This Agreement will remain in effect from the Effective Date until it terminates as provided in
Section 5.00. Any notice of termination required to be given under this Agreement must be given as
provided in Section 6.00 and will be effective on the date prescribed in Section 5.00.

2.00 Executive’s Employment Function

2.01 Position. The Executive agrees to serve as the Company’s President and Chief Executive
Officer with the authority and duties customarily associated with this position and to discharge
any other duties and responsibilities assigned by the Chairman and Board of Directors. The
Executive will report directly to and be subject to the supervision, advice and direction of the
Chairman and Board of Directors, or their designates. The Executive agrees at all times to observe
and be bound by all Company rules, policies, practices, procedures and resolutions that generally
apply to Company employees of comparable status and which do not conflict with the specific terms
of this Agreement.

2.02 Place of Performance. The Executive’s duties will principally be performed in Columbus, Ohio,
except for required travel on the Company’s business, unless the Chairman and Board of Directors
require the Executive to perform duties at another location.

3.00 Compensation

The Company will pay the Executive the amounts described in Section 3.00 as compensation for the
services described in this Agreement and in exchange for the duties and responsibilities described
in Section 4.00.

3.01 Base Salary. The Company will pay to the Executive an annualized base salary of $950,000,
which may be adjusted at the Company’s discretion (“Base Salary”). The Executive’s Base Salary
will be paid in installments that correspond with the Company’s normal payroll practices.

 

 

3.02 Cash Incentive Bonus.

[1] The Executive will be eligible to receive a Cash Incentive Bonus under the terms of the
DSW Inc. 2005 Cash Incentive Compensation Plan (“Incentive Plan”), as modified by the
Company. The Chairman and Board of Directors intend to provide the Executive with a cash
bonus of 100 percent of Base Salary based on the Executive’s achievement of the incentive
goals established by the Chairman and Board of Directors (with the potential of a maximum
payout of 200% of Base Salary based upon exceeding achievement of incentive compensation
goals). Subsequent annual cash bonuses will be based, in the Chairman and Board of
Directors’ discretion, on Incentive Goals and percentages of Base Salary determined under
the Incentive Plan that is then in effect.

[2] Payment of Cash Bonus. Any Cash Incentive Bonus will be payable, in cash, consistent
with the Company’s normal bonus payment policy.

3.03 Equity Incentives. Subject to the Chairman and Board of Directors’ discretion, the Executive
will be eligible to receive discretionary grants of stock options and restricted stock units.

3.04 Benefit Plans. Subject to their terms, the Executive may participate in any Company sponsored
employee pension or welfare benefit plan at a level commensurate with the Executive’s title and
position.

3.05 Vacations. Subject to the terms of the Company’s vacation policy, the Executive is entitled
to four weeks of vacation each calendar year to be taken during periods approved by the Chairman
and Board of Directors.

3.06 Expenses. The Executive is entitled to receive prompt reimbursement for all normal and
reasonable expenses incurred while performing services under this Agreement, including all
reasonable travel expenses. Reimbursement for these expenses will be made as soon as
administratively feasible after the date the Executive submits appropriate evidence of the
expenditure and otherwise complies with the Company’s business expense reimbursement policy.
Reimbursement of expenses in one year will not affect the amount of expenses that may be reimbursed
in a later year.

3.07 Termination Benefits. The Company also will provide the Executive with the termination
benefits described in Section 5.00.

4.00 Executive’s Obligations

The amounts described in Sections 3.00 and 5.00 are provided by the Company in exchange for (and
have a value to the Company equivalent to) the Executive’s performance of the obligations described
in this Agreement, including performance of the duties and the covenants and releases made and
entered into by and between the Executive and the Company in this Agreement.

4.01 Scope of Duties. The Executive will:

Initials ______ Date ______

2

 

[1] Devote all available business time, best efforts and undivided attention to the
Company’s business and affairs; and

[2] Not engage in any other business activity, whether or not for gain, profit or other
pecuniary benefit.

[3] However, the restriction described in Section 4.01[1] and [2] will not preclude the
Executive from:

[a] Making or holding passive investments in outstanding shares in the securities of
publicly-owned companies or other businesses [other than organizations described in
Section 4.05], regardless of when and how that investment was made; or

[b] Serving on corporate, civic, religious, educational and/or charitable boards or
committees but only if this activity [i] does not interfere with the performance of
duties under this Agreement and [ii] is approved by the Chairman and Board of
Directors.

4.02 Confidential Information.

[1] Obligation to Protect Confidential Information. The Executive acknowledges that the
Company and its subsidiaries, parent corporation and affiliated entities (collectively,
“Group” and separately, “Group Member”) have a legitimate and continuing proprietary
interest in the protection of Confidential Information (as defined in Section 4.02[2]) and
have invested, and will continue to invest, substantial sums of money to develop, maintain
and protect Confidential Information. The Executive agrees [a] during and after employment
with all Group Members [i] that any Confidential Information will be held in confidence and
treated as proprietary to the Group, [ii] not to use or disclose any Confidential
Information except to promote and advance the Group’s business interests and [b] immediately
upon separation from employment with all Group Members, to return to the Company any
Confidential Information.

[2] Definition of Confidential Information. For purposes of this Agreement, Confidential
Information includes any confidential data, figures, projections, estimates, pricing data,
customer lists, buying manuals or procedures, distribution manuals or procedures, other
policy and procedure manuals or handbooks, supplier information, tax records, personnel
histories and records, information regarding sales, information regarding properties and any
other Confidential Information regarding the business, operations, properties or personnel
of the Group (or any Group Member) which are disclosed to or learned by the Executive as a
result of employment with any Group Member, but will not include [a] the Executive’s
personal personnel records or [b] any information that [i] the Executive possessed before
the date of initial employment (including periods before the Effective Date) with any Group
Member that was a matter of public knowledge, [ii] became or becomes a matter of public
knowledge through sources independent of the Executive, [iii] has been or is disclosed by
any Group Member without restriction on its use or [iv] has been or is required to be
disclosed by

 Initials ______ Date ______

3

 

law or governmental order or regulation. The Executive also agrees that, if there is any
reasonable doubt whether an item is public knowledge, to not regard the item as public
knowledge until and unless the Senior Vice President of Human Resources confirms to the
Executive that the information is public knowledge or an arbitrator, acting under Section
9.00, finally decides that the information is public knowledge.

[3] Intellectual Property. The Executive expressly acknowledges that all right, title and
interest to all inventions, designs, discoveries, works of authorship, and ideas conceived,
produced, created, discovered, authored, or reduced to practice during the Executive’s
performance of services under this Agreement, whether individually or jointly with any Group
Member (the “Intellectual Property”) shall be owned solely by the Group, and shall be
subject to the restrictions set forth in Section 4.02[1] above. All Intellectual Property
which constitutes copyrightable subject matter under the copyright laws of the United States
shall, from the inception of creation, be deemed to be a “work made for hire” under the
United States copyright laws and all right, title and interest in and to such copyrightable
works shall vest in the Group. All right, title and interest in and to all Intellectual
Property developed or produced under this Agreement by the Executive, whether constituting
patentable subject matter or copyrightable subject matter (to the extent deemed not to be a
“work made for hire”) or otherwise, shall be assigned and is hereby irrevocably assigned to
the Group by the Executive. The Executive shall, without any additional consideration,
execute all documents and take all other actions needed to convey the Executive’s complete
ownership interest in any Intellectual Property to the Group so that the Group may own and
protect such Intellectual Property and obtain patent, copyright and trademark registrations
for it. The Executive agrees that any Group Member may alter or modify the Intellectual
Property at the Group Member’s sole discretion, and the Executive waives all right to claim
or disclaim authorship.

4.03 Solicitation of Employees. The Executive agrees that during employment, and for the longer of
any period of salary continuation or for two years after terminating employment with all Group
Members [1] not, directly or indirectly, to solicit any employee of any Group Member to leave
employment with the Group, [2] not, directly or indirectly, to employ or seek to employ any
employee of any Group Member and [3] not to cause or induce any of the Group’s (or Group Member’s)
competitors to solicit or employ any employee of any Group Member.

4.04 Solicitation of Third Parties. The Executive agrees that during employment, and for the
longer of any period of salary continuation or for two years after terminating employment with all
Group Members not, directly or indirectly, to recruit, solicit or otherwise induce or influence any
customer, supplier, sales representative, lender, lessor, lessee or any other person having a
business relationship with the Group (or any Group Member) to discontinue or reduce the extent of
that relationship except in the course of discharging the duties described in this Agreement and
with the good faith objective of advancing the Group’s (or any Group Member’s) business interests.

4.05 Non-Competition. The Executive agrees that for the longer of any period of salary
continuation or for one year after terminating employment with all Group Members not, directly or
indirectly, to accept employment with, act as a consultant to, or otherwise perform services that
are substantially the same or similar to those for which the Executive was compensated by

Initials ______ Date ______

4

 

any Group Member (this comparison will be based on job-related functions and responsibilities and
not on job title) for any business that directly competes with the Group’s (or any Group Member’s)
business, which is understood by the Parties to be the sale of significant branded or discount and
off-price shoes at department stores, specialty retail stores or online footwear retailers.
Illustrations of businesses that compete with the Group’s business include, but are not limited to,
The TJX Companies, Inc. (T.J. Maxx; Marshall’s; The Maxx; Marmaxx); MJM Designer Shoes; The Shoe
Dept; Payless ShoeSource; Off-Broadway Shoes; Famous Footwear; Footstar; Nordstrom’s (Non-apparel);
Zappos; Piperlime; and Endless. This restriction applies to any parent, division, affiliate, newly
formed or purchased business(es) and/or successor of a business that competes with the Group’s (or
any Group Member’s) business.

4.06 Post-Termination Cooperation. As is required of the Executive during employment, the
Executive agrees that during and after employment with any Group Members and without additional
compensation (other than reimbursement for reasonable associated expenses), to cooperate with the
Group (and with each Group Member) in the following areas:

[1] Cooperation With the Company. The Executive agrees [a] to be reasonably available to
answer questions for the Group’s (and any Group Member’s) officers regarding any matter,
project, initiative or effort for which the Executive was responsible while employed by any
Group Member and [b] to cooperate with the Group (and with each Group Member) during the
course of all third-party proceedings arising out of the Group’s (and any Group Member’s)
business about which the Executive has knowledge or information. For purposes of this
Agreement, [c] “proceedings” includes internal investigations, administrative investigations
or proceedings and lawsuits (including pre-trial discovery and trial testimony) and [d]
“cooperation” includes [i] the Executive’s being reasonably available for interviews,
meetings, depositions, hearings and/or trials without the need for subpoena or assurances by
the Group (or any Group Member), [ii] providing any and all documents in the Executive’s
possession that relate to the proceeding, and [iii] providing assistance in locating any and
all relevant notes and/or documents.

[2] Cooperation With Third Parties. Unless compelled to do so by lawfully-served subpoena
or court order, the Executive agrees not to communicate with, or give statements or
testimony to, any opposing attorney, opposing attorney’s representative (including private
investigator) or current or former employee relating to any matter (including pending or
threatened lawsuits or administrative investigations) about which the Executive has
knowledge or information (other than knowledge or information that is not Confidential
Information as defined in Section 4.02[2]) as a result of employment with the Group (or any
Group Member) except in cooperation with the Company. The Executive also agrees to notify
the Senior Vice President of Human Resources immediately after being contacted by a third
party or receiving a subpoena or court order to appear and testify with respect to any
matter affected by this section.

[3] Cooperation With Media. The Executive agrees not to communicate with, or give
statements to, any member of the media (including print, television or radio media) relating
to any matter (including pending or threatened lawsuits or administrative investigations)
about which the Executive has knowledge or information (other than

Initials ______ Date ______

5

 

knowledge or information that is not Confidential Information as defined in Section 4.02[2])
as a result of employment with the Group (or any Group Member). The Executive also agrees
to notify the Senior Vice President of Human Resources immediately after being contacted by
any member of the media with respect to any matter affected by this section.

4.07 Non-Disparagement. The Executive and the Company (on its behalf and on behalf of the Group
and each Group Member) agree that neither will make any disparaging remarks about the other and the
Executive will not make any disparaging remarks about the Company’s Chairman or any of the Group’s
senior executives. However, this section will not preclude [1] any remarks that may be made by the
Executive under the terms of Section 4.06[2] or that are required to discharge the duties described
in this Agreement or [2] the Company from making (or eliciting from any person) disparaging remarks
about the Executive concerning any conduct that may lead to a termination for Cause, as defined in
Section 5.04[5] (including initiating an inquiry or investigation that may result in a termination
for Cause), but only to the extent reasonably necessary to investigate the Executive’s conduct and
to protect the Group’s (or any Group Member’s) interests.

4.08 Notice of Subsequent Employment. The Executive agrees to immediately notify the Company of
any subsequent employment during the period of salary continuation after employment terminates.

4.09 Nondisclosure. The Executive agrees not to disclose the terms of this Agreement in any manner
to any person other than the Board of Directors, one of the Company’s Vice Presidents of Human
Resources (or any Company representative they expressly approve for such disclosure), the
Executive’s personal attorney, accountant and financial advisor, and the Executive’s immediate
family or as otherwise required by law.

4.10 Remedies. The Executive acknowledges that money will not adequately compensate the Group for
the substantial damages that will arise upon the breach of any provision of Section 4.00. For this
reason, any disputes arising under Section 4.00 will not be subject to arbitration under Section
9.00. Instead, if the Executive breaches or threatens to breach any provision of Section 4.00, the
Company will be entitled, in addition to other rights and remedies, to specific performance,
injunctive relief and other equitable relief to prevent or restrain any breach or threatened breach
of Section 4.00.

4.11 Return of Company Property. Upon termination of employment, the Executive agrees to promptly
return to the Company all property belonging to the Group or any Group Member.

5.00 Termination and Related Benefits

This Agreement will terminate upon the occurrence of any of the events described in this section.

5.01 Rules of General Application. The following rules apply generally to the implementation of
Section 5.00:

[1] Method of Payment. If the amount of any installment payments is or becomes less than or
equal to the applicable dollar amount under Section 402(g)(1)(B) of the

Initials ______ Date ______

6

 

Internal Revenue Code of 1986, the Company may elect to pay such remaining installments as a
lump sum.

[2] Application of Pro Rata. Any pro rata share required to be paid under Section 5.00 will
be based on the number of days between the first day of the fiscal year during which the
Executive terminates employment and the date that the Executive terminates employment
divided by the number of days in the fiscal year during which the Executive terminates
employment.

5.02 Termination Due to Executive’s Death. This Agreement will terminate automatically on the date
the Executive dies. As of that date, and subject to Section 5.04[6], the Company will make the
following payments to the person the Executive designates on the attached Beneficiary designation
form or, with respect to any equity incentives, the beneficiary the Executive designates under the
Equity Incentive Plan (“Beneficiary”):

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.

[2] Cash Incentive Bonus. The pro rata share of any Cash Incentive Bonus that would have
been paid to the Executive had the Executive not died based on the extent to which
performance standards are met on the last day of the year in which the Executive dies.

[3] Equity Incentives. Subject to the terms of any applicable award agreement, the
Executive’s Beneficiary may exercise any outstanding stock options that are then vested upon
the Executive’s death (including any options that become vested as a result of the
Executive’s death) for a period ending on the earlier of [a] the normal expiration date of
the award or [b] one year after the Executive’s death.

[4] Other. Any rights accruing to the Executive under any employee benefit plan, fund or
program maintained by any Group Member will be distributed or made available as required by
the terms of the plan fund or program or as required by law.

5.03 Termination Due to Executive’s Disability. The Company may terminate this Agreement after
ascertaining that the Executive is Disabled (as defined below — “Disability”) by delivering to the
Executive a written notice of termination for Disability that includes the date termination for
Disability is to be effective. Subject to Section 5.04[6], if that notice is given and if all
requirements of this Agreement are met (including those imposed under Section 7.00), the Company
will make the following payments to the Executive:

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.

[2] Cash Incentive Bonus. The pro rata share of any Cash Incentive Bonus that would have
been paid to the Executive had the Executive not become Disabled based on the extent to
which performance standards are met on the last day of the year in which the Executive
becomes Disabled.

Initials ______ Date ______

7

 

[3] Equity Incentives. Subject to the terms of any applicable award agreement, the
Executive may exercise any outstanding stock options that are then vested upon the
Executive’s termination because of Disability (including any options that become vested as a
result of the Executive’s termination because of Disability), as such term is defined in the
Equity Incentive Plan, for a period ending on the earlier of [a] the normal expiration date
of the award or [b] one year after the Executive terminates because of Disability.

[4] Other. Any rights accruing to the Executive under any employee benefit plan, fund or
program maintained by any Group Member will be distributed or made available as required by
the terms of the plan fund or program or as required by law.

[5] Definition of Disability. For these purposes, Disability means that, for more than six
consecutive months, the Executive is unable, with a reasonable accommodation, to perform the
duties described in Section 4.01 on a full-time basis due to a physical or mental disability
or infirmity.

5.04 Termination for Cause. The Company may terminate the Executive’s employment for Cause (as
defined below — “Cause”) by delivering to the Executive a written notice describing the basis for
this termination and the date the termination for Cause is to be effective. If the Executive is
terminated for Cause and if all requirements of this Agreement are met (including those imposed
under Section 7.00), the Company will make the following payments to the Executive:

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.

[2] Cash Incentive Bonus. Any unpaid Cash Incentive Bonus earned for the fiscal year that
ends before the fiscal year during which the Executive is terminated for Cause (but no Cash
Incentive Bonus will be given with respect to the fiscal year during which the Executive is
terminated for Cause).

[3] Equity Incentives. The Executive’s entitlement to any benefits will be limited to those
specifically described in the Equity Incentive Plan and any applicable award agreements.

[4] Other. Any rights accruing to the Executive under any employee benefit plan, fund or
program maintained by any Group Member will be distributed or made available as required by
the terms of the plan fund or program or as required by law.

[5] Definition of Cause. For these purposes, Cause means the Executive’s [a] breach of
Section 4.00 of this Agreement; [b] willful, illegal or grossly negligent conduct that is
materially injurious to the Company or any Group Member monetarily or otherwise; [c] a
material violation of laws or regulations governing the Company or to any Group Member; [d]
breach of any fiduciary duty owed to the Company or any Group Member; [e] misrepresentation
or dishonesty which the Company determines has had or is likely to have a material adverse
effect upon the Company’s or any Group Member’s operations or financial condition; [f]
involvement in any act of moral turpitude that has a materially

Initials ______ Date ______

8

 

injurious effect on the Company (or any Group Member) or its reputation; or [g] willful
material breach of the terms of any non-solicitation or confidentiality clauses contained in
an Standard Executive Employment Agreement(s) with a former employer. The Company’s
dissatisfaction with the Executive’s performance, or the business results achieved, shall
not, in and of itself, constitute Cause under this Section.

[6] Subsequent Information. The terms of Section 5.04 will apply if, after the Executive
terminates under any other provision of Section 5.00, the Company learns of an event that,
had it been known before the Executive terminated employment, would have justified a
termination for Cause. In this case, the Company will be entitled to recover (and the
Executive agrees to repay) any amounts (other than legally protected benefits) that the
Executive received under any other provision of Section 5.00 reduced by the amount the
Executive is entitled to receive under Section 5.04.

5.05 Voluntary Termination by Executive. The Executive may voluntarily terminate employment with
the Company at any time by delivering to the Company a written notice specifying the date
termination is to be effective, in which case the Company will make the following payments to the
Executive if all requirements of this Agreement are met:

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.

[2] Cash Incentive Bonus. Any unpaid Cash Incentive Bonus earned for the fiscal year that
ends before the fiscal year during which the Executive voluntarily terminates (but no Cash
Incentive Bonus will be given with respect to the fiscal year during which the Executive
voluntarily terminates).

[3] Equity Incentives. The Executive’s entitlement to any benefits will be limited to those
specifically described in the Equity Incentive Plan and any applicable award agreements.

[4] Other. Any rights accruing to the Executive under any employee benefit plan, fund or
program maintained by any Group Member will be distributed or made available as required by
the terms of the plan fund or program or as required by law.

5.06 Involuntary Termination Without Cause. The Company may terminate the Executive’s employment
at any time Without Cause (as defined below) by delivering to the Executive a written notice
specifying the date termination is to be effective. Subject to Section 5.04[6] and Section 10.09,
if this notice is given and if all requirements of this Agreement are met (including those imposed
under Section 7.00), the Company will make the following payments to the Executive as of the
effective date of Involuntary Termination Without Cause:

[1] Base Salary. For 12 months beginning on the date of Involuntary Termination Without
Cause, the Company will continue to pay the Executive’s Base Salary at the rate in effect on
the effective date of Involuntary Termination Without Cause. If such amount exceeds two
times the annual compensation limit prescribed by Section 401(a)(17) of the Internal Revenue
Code of 1986 (the “Involuntary Termination Limit”), then the Company will pay the severance
obligation described in this Section 5.06[1] in two payment

Initials ______ Date ______

9

 

streams. The first payment stream will be equal to the Involuntary Termination Limit, and
the Company will pay this amount in 12 monthly installments, beginning on the date of
Involuntary Termination Without Cause. The amount of the second payment stream will equal
the amount in excess of the Involuntary Termination Limit. The Company will pay this amount
in six monthly installments beginning on the date that is six months after the date of the
Executive’s Involuntary Termination Without Cause. The Executive agrees to immediately
notify the Company of any subsequent employment or consulting work during the period of
salary continuation.

[2] Health Care. The Company will reimburse the Executive for the cost of maintaining
continuing health coverage under COBRA for a period of no more than 12 months following the
effective date of Involuntary Termination Without Cause, less the amount the Executive is
expected to pay as a regular employee premium for such coverage. Such reimbursements will
cease if the Executive becomes eligible for similar coverage under another benefit plan.

[3] Cash Incentive Bonus. The Company will pay to the Executive the pro rata share of any
Cash Incentive Bonus that would have been paid to the Executive had the Executive not been
involuntarily terminated Without Cause. The pro-rated bonus will be calculated based on the
extent to which performance standards are met on the last day of the year in which the
Executive is involuntarily terminated Without Cause and will be paid at the same time as all
other participants.

[4] Equity Incentives. Subject to the terms of the Equity Incentive Plan and any applicable
award agreements, the Executive may exercise any outstanding stock options that are vested
on the effective date of Involuntary Termination Without Cause, and those that would have
vested during the one year following the effective date of Involuntary Termination Without
Cause, during the three-month period following the effective date of Involuntary Termination
Without Cause. All outstanding restricted stock units that would have vested during the one
year following the effective date of Involuntary Termination Without Cause shall become
vested as of the effective date of Involuntary Termination Without Cause.

[5] Other. Any rights accruing to the Executive under any employee benefit plan, fund or
program maintained by any Group Member will be distributed or made available as required by
the terms of the plan fund or program or as required by law.

[6] Definition of Without Cause. For purposes of this Agreement, Without Cause means
termination of the Executive’s employment by the Company for any reason other than those set
forth in Section 5.02, 5.03 or 5.04.

5.07 Termination for Good Reason: Executive may terminate his employment for Good Reason (as
defined in this section). If Executive terminates his employment for Good Reason he shall be
entitled to all of the payments described in Section 5.06 pertaining to an Involuntary Termination
Without Cause. “Good Reason” means without the Executive’s express prior written agreement, the
occurrence of any one or more of the following events during the term of this Agreement and which
is not corrected to the Executive’s reasonable satisfaction within 60 days

Initials ______ Date ______

10

 

after he gives notice to the Chairman and Board of Directors of the circumstance that he believes
does or may constitute Good Reason:

[1] A material reduction in the Executive’s duties, responsibilities or status with respect
to the Company, as compared to those in effect on the effective date of this Agreement (but
will not include any changes resulting directly from implementation of a plan that
restructures the business organization of the Company and its affiliates, including, without
limitation, by way of disaffiliation or liquidation of a subsidiary or division), it being
understood that the mere occurrence of a sale of the Company or of a controlling interest
therein to a third party shall not constitute such a material reduction as a result of the
Company ceasing to be publicly traded or because the Company becomes a subsidiary of another
entity;

[2] Deprivation of the Executive of the title of Chief Executive Officer of the Company
without a simultaneous grant of a more senior title;

[3] The permanent assignment to the Executive of job duties materially inconsistent with
those contemplated by this Agreement;

[4] The failure of the Company to maintain the Executive’s relative level of coverage under
the employee benefit or retirement plans, policies, practices, or arrangements as in effect
on the effective date of this Agreement, both in terms of the amount of benefits provided
and the relative level of the Executive’s participation. However, Good Reason will not
arise under this subsection if the Company eliminates and/or modifies any of these programs
if required by law to do so, to the extent needed to preserve the tax-character of the plan
policy, practice or arrangement, or if such elimination and/or modification applies
uniformly to other Company employees similarly situated to the Executive;

[5] Any material breach of this Agreement including failure to make any payment or
grant provided under this Agreement when due by or on or in behalf of the Company.

6.00 Notice

6.01 How Given. Any notice permitted or required to be given under this Agreement must be given in
writing and delivered in person or by registered, U.S. mail, return receipt requested, postage
prepaid, or through Federal Express, UPS, DHL or any other reputable professional delivery service
that maintains a confirmation of delivery system. Any delivery must be addressed to the Company’s
Senior Vice President of Human Resources at the Company’s then-current corporate offices or to the
Executive at the Executive’s address as contained in the Executive’s personnel file.

6.02 Effective Date. Any notice permitted or required to be given under this Agreement will be
effective on the date it is delivered, in the event of personal delivery, or on the date its
receipt is acknowledged, in the event of delivery by registered mail or through a professional
delivery service described in Section 6.01.

Initials ______ Date ______

11

 

7.00 Release

In exchange for the payments and benefits described in sections 5.02, 5.03, 5.06 and 5.07 of this
Agreement, upon termination the Executive and the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, legatees and assigns
(together, the “Executive Representatives”) agree to execute a release forever discharging the
Company, the Group and each Group Member and their executives, officers, directors, agents,
attorneys, successors and assigns, from any and all claims, suits and/or causes of action that grow
out of or are in any way related to the Executive’s recruitment to or employment with the Company
and all Group Members, other than any claim that the Company has breached this Agreement. This
release includes, but is not limited to, any claims that the Company, the Group or any Group Member
violated the Employee Retirement and Income Security Act of 1974; the Age Discrimination in
Employment Act; the Older Worker’s Benefit Protection Act; the Americans with Disabilities Act;
Title VII of the Civil Rights Act of 1964 (as amended); the Family and Medical Leave Act; any law
prohibiting discrimination, harassment or retaliation in employment; any claim of promissory
estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or the
public policy of any state, or any federal, state or local law. If the Executive or the Executive
Representatives fails to execute this release, the Executive or the Executive Representatives
agrees to forego any payment from the Company as if the Executive had terminated employment
voluntarily under Section 5.05. Specifically, the Executive and Executive Representatives agree
that a necessary condition for the payment of any of the amounts described in Section 5.00 in the
event of termination (except termination under Section 5.02) is the Executive’s or the Executive
Representatives’ execution of this release upon termination of employment. The Executive
acknowledges that the Executive is an experienced senior executive knowledgeable about the claims
that might arise in the course of employment with the Company and knowingly agrees that the
payments upon termination (except those payable upon the Executive’s death) provided for in this
Agreement are satisfactory consideration for the release of all possible claims. The Executive is
advised to consult with an attorney prior to executing this Agreement. Upon termination, the
Executive or the Executive Representatives will receive 21 days to consider this release. The
Executive or the Executive Representatives may revoke consent to the release by delivering a
written notice of such revocation to the Company within seven days of signing the release. If the
Executive or Executive Representatives revokes consent to the release, the release will become null
and void and the Executive or the Executive Representatives must return any compensation received
under Sections 5.02, 5.03, 5.06 or 5.07 of this Agreement, except salary the Executive earned for
actual work.

8.00 Insurance

To the extent permitted by law and its organizational documents, the Company will include the
Executive under any liability insurance policy the Company maintains for employees of comparable
status. The level of coverage will be at least as favorable to the Executive (in amount and each
other material respect) as the coverage of other employees of comparable status. This obligation
to provide insurance for the Executive will survive termination of this Agreement with respect to
proceedings or threatened proceedings based on acts or omissions occurring during the Executive’s
employment with the Company or with any Group Member.

Initials ______ Date ______

12

 

9.00 Arbitration

9.01 Acknowledgement of Arbitration. Unless stated otherwise in this Agreement, the Parties agree
that arbitration is the sole and exclusive remedy for each of them to resolve and redress any
dispute, claim or controversy involving the interpretation of this Agreement or the terms,
conditions or termination of this Agreement or the terms, conditions or termination of Executive’s
employment with the Group and with each Group Member, including any claims for any tort, breach of
contract, violation of public policy or discrimination, whether such claim arises under federal or
state law.

9.02 Scope of Arbitration. The Executive expressly understands and agrees that claims subject to
arbitration under this section include asserted violations of the Employee Retirement and Income
Security Act of 1974; the Age Discrimination in Employment Act; the Older Worker’s Benefit
Protection Act; the Americans with Disabilities Act; Title VII of the Civil Rights Act of 1964 (as
amended); the Family and Medical Leave Act; any law prohibiting discrimination, harassment or
retaliation in employment; any claim of promissory estoppel or detrimental reliance, defamation,
intentional infliction of emotional distress; or the public policy of any state, or any federal,
state or local law.

9.03 Effect of Arbitration. The Parties intend that any arbitration award relating to any matter
described in Section 9.00 will be final and binding on them and that a judgment on the award may be
entered in any court of competent jurisdiction, and enforcement may be had according to the terms
of that award. This section will survive the termination or expiration of this Agreement.

9.04 Location of Arbitration. Arbitration will be held in Columbus, Ohio, and will be conducted by
a retired federal judge or other qualified arbitrator. The arbitrator will be mutually agreed upon
by the Parties and the arbitration will be conducted in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association. The Parties will have
the right to conduct discovery pursuant to the Federal Rules of Civil Procedure; provided, however,
that the arbitrator will have the authority to establish an expedited discovery schedule and cutoff
and to resolve any discovery disputes. The arbitrator will have no jurisdiction or authority to
change any provision of this Agreement by alterations of, additions to or subtractions from the
terms of this Agreement. The arbitrator’s sole authority will be to interpret or apply any
provision(s) of this Agreement or any public law alleged to have been violated. The arbitrator
will be limited to awarding compensatory damages, including unpaid wages or benefits, but, to the
extent allowed by law, will have no authority to award punitive, exemplary or similar-type damages.

9.05 Time for Initiating Arbitration. Any claim or controversy not sought to be submitted to
arbitration, in writing, within 120 days of the date the Party asserting the claim knew, or through
reasonable diligence should have known, of the facts giving rise to that Party’s claim, will be
deemed waived and the Party asserting the claim will have no further right to seek arbitration or
recovery with respect to that claim or controversy. Both Parties agree to strictly comply with the
time limitation specified in Section 9.00. For purposes of this section, a claim or controversy is
sought to be submitted to arbitration on the date the complaining Party gives written notice to the
other that [1] an issue has arisen or is likely to arise that, unless resolved

Initials ______ Date ______

13

 

otherwise, may be resolved through arbitration under Section 9.00 and [2] unless the issue is
resolved otherwise, the complaining Party intends to submit the matter to arbitration under the
terms of Section 9.00.

9.06 Costs of Arbitration. The Company will bear the arbitrator’s fee and other costs associated
with any arbitration, unless the arbitrator, acting under Federal Rule of Civil Procedure 54(b),
elects to award these fees to the Company.

9.07 Arbitration Exclusive Remedy. The Parties acknowledge that, because arbitration is the
exclusive remedy for resolving issues arising under this Agreement, neither Party may resort to any
federal, state or local court or administrative agency concerning breaches of this Agreement or any
other matter subject to arbitration under Section 9.00, except as otherwise provided in this
Agreement, and that the decision of the arbitrator will be a complete defense to any suit, action
or proceeding instituted in any federal, state or local court before any administrative agency with
respect to any arbitrable claim or controversy.

9.08 Waiver of Jury. The Executive and the Company each waive the right to have a claim or dispute
with one another decided in a judicial forum or by a jury, except as otherwise provided in this
Agreement.

10.00 General Provisions

10.01 Representation of Executive. The Executive represents and warrants that the Executive is not
under any contractual or legal restraint that prevents or prohibits the Executive from entering
into this Agreement or performing the duties and obligations described in this Agreement.

10.02 Modification or Waiver; Entire Agreement. No provision of this Agreement may be modified or
waived except in a document signed by the Executive and the Company’s Chairman and Board of
Directors or other person designated by the Company’s Chairman and Board of Directors. This
Agreement, and any attachments referenced in the Agreement, constitute the entire agreement between
the Parties regarding the employment relationship described in this Agreement, and any other
agreements are terminated and of no further force or legal effect. No agreements or
representations, oral or otherwise, with respect to the Executive’s employment relationship with
the Company have been made or relied upon by either Party which are not set forth expressly in this
Agreement.

10.03 Governing Law; Severability. This Agreement is intended to be performed in accordance with,
and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If
any provision of this Agreement, or the application of any provision of this Agreement to any
person or circumstance, is, for any reason and to any extent, held invalid or unenforceable, such
invalidity and unenforceability will not affect the remaining provisions of this Agreement of its
application to other persons or circumstances, all of which will be enforced to the greatest extent
permitted by law and the Executive and the Company agree that the arbitrator (or judge) is
authorized to reform the invalid or enforceable provision [1] to the extent needed to avoid the
invalidity or unenforceability and [2] in a manner that is as similar as possible to the intent (as
described in this Agreement). The validity, construction and

Initials ______ Date ______

14

 

interpretation of this Agreement and the rights and duties of the Parties will be governed by the
laws of the State of Ohio, without reference to the Ohio choice of law rules.

10.04 No Waiver. Except as otherwise provided in Section 9.05, failure to insist upon strict
compliance with any term of this Agreement will not be considered a waiver of any such term.

10.05 Withholding. All payments made to the Executive under this Agreement will be reduced by any
amount:

[1] That the Company is required to withhold in advance payment of the Executive’s federal,
state and local income, wage and employment tax liability; and

[2] To the extent allowed by law, that the Executive owes (or, after employment is deemed to
owe) to the Company.

However, application of Section 10.05[2] will not extinguish the Company’s right to seek additional
amounts from the Executive (or to pursue other appropriate remedies) to the extent that the amount
that may be recovered by application of Section 10.05[2] does not fully discharge the amount the
Executive owes to the Company and does not preclude the Company from proceeding directly against
the Executive without first exhausting its right of recovery under Section 10.05[2].

10.06 Survival. Subject to the terms of the Executive’s Beneficiary designation form, the Parties
agree that the covenants and promises set forth in this Agreement will survive the termination of
this Agreement and continue in full force and effect.

10.07 Miscellaneous.

[1] The Executive may not assign any right or interest to, or in, any payments payable under
this Agreement; provided, however, that this prohibition does not preclude the Executive
from designating in writing one or more beneficiaries to receive any amount that may be
payable after the Executive’s death and does not preclude the legal representative of the
Executive’s estate from assigning any right under this Agreement to the person or persons
entitled to it.

[2] This Agreement will be binding upon and will inure to the benefit of the Executive, the
Executive’s heirs and legal representatives and the Company and its successors.

[3] The headings in this Agreement are inserted for convenience of reference only and will
not be a part of or control or affect the meaning of any provision of the Agreement.

10.08 Successors to Company. This Agreement may and will be assigned or transferred to, and will
be binding upon and will inure to the benefit of, any successor of the Company, and any successor
will be substituted for the Company under the terms of this Agreement. As used in this Agreement,
the term “successor” means any person, firm, corporation or business entity which at any time,
whether by merger, purchase or otherwise, acquires all or essentially all of the

Initials ______ Date ______

15

 

assets of the business of the Company. Notwithstanding any assignment, the Company will remain,
with any successor, jointly and severally liable for all its obligations under this Agreement.

10.09 IRC Section 409A Compliance. The parties will administer this Agreement in a good faith
attempt to avoid imposition on Executive of penalties under Section 409A of the Internal Revenue
Code of 1986 and the guidance promulgated thereunder. If Executive is a “specified employee” as
defined under Section 409A, and to the extent any payments under this Agreement are otherwise
payable in the period beginning with the termination date and ending six months after the
termination date and would subject Executive to penalties under Section 409A, such payments will be
delayed, aggregated, and paid as soon as practicable after the date that is six months after the
date of termination.

     IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement, which
includes an arbitration provision, and consists of 16 pages.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Michael MacDonald
 	 
	 	 	 
	 	Dated:  March 25, 2009 	 
	 	 	 
	 	DSW INC.

 	 
	 	By:  	/s/Jay L. Schottenstein
 	 
	 	 	 	 
	 	Dated:  March 25, 2009 	 

Initials ______ Date ______

16EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO

AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT

     THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT (this “Amendment”)
is dated as of March 23, 2009 and is entered into by and among EDUCATION MANAGEMENT LLC, a Delaware
limited liability company (“Company”), EDUCATION MANAGEMENT HOLDINGS LLC, a Delaware limited
liability company (“Holdings”), GOLDMAN SACHS LENDING PARTNERS LLC (“GSLP”), J.P. MORGAN SECURITIES
INC. (“JPMorgan”) and BNP PARIBAS SECURITIES CORP. (“BNPP SC”), as auction managers (in such
capacity, “Auction Managers”), BNP PARIBAS (“BNP”), as Administrative Agent and Issuing Bank and,
for purposes of Section V hereof, the GUARANTORS listed on the signature papers hereto, and the
LENDERS listed on the signature papers hereto, and is made with reference to that certain AMENDED
AND RESTATED CREDIT AND GUARANTY AGREEMENT dated as of February 13, 2007 (as amended through the
date hereof, the “Credit Agreement”) by and among Company, Holdings, the Guarantors, the Designated
Subsidiary Borrowers party thereto from time to time, the Lenders, Administrative Agent and the
other agents party thereto. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement after giving effect to this Amendment.

RECITALS

     WHEREAS, the Credit Parties have requested that Requisite Lenders agree to amend certain
provisions of the Credit Agreement as provided for herein; and

     WHEREAS, subject to the conditions set forth herein, Requisite Lenders are willing to agree to
such amendment relating to the Credit Agreement.

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

SECTION I.   AMENDMENTS TO CREDIT AGREEMENT

     1.1 Amendments to Exhibits. The Credit Agreement is hereby amended by adding the
following new Exhibit thereto as set forth in Annex I attached hereto:

     Exhibit O      Form of Modified Dutch Auction Procedures.

     1.2 Amendments to Section 1: Definitions.

     A. Section 1.1 of the Credit Agreement is hereby amended by adding the following
definitions in proper alphabetical sequence:

     “Auction Managers” means GSLP, JPMorgan and BNPP SC.

     “Auction Procedures” means, collectively, the auction procedures, auction notice,
return bid and Company Assignment Agreement in substantially the form set forth as Exhibit O
hereto; provided, that Auction Managers, in consultation with Company,

 

 

may amend or modify the procedures, notices, bids and Company Assignment Agreement in
connection with any Company Loan Purchase (including economic terms to the extent no Lenders
have validly tendered Tranche C Term Loans requested in an offer but excluding economic
terms of an auction after any Lender has validly tendered Tranche C Term Loans requested in
an offer other than to increase the Auction Amount (as defined in the Auction Procedures) or
raise the Discount Range (as defined in the Auction Procedures)); and provided
further, that no such amendments or modifications may be implemented after 24 hours
prior to the date and time return bids are due.

     “BNPP SC” means BNP Paribas Securities Corp.

     “Company Assignment Agreement” means, with respect to any assignment to Company
pursuant to Section 10.6(i) hereof, an Assignment and Acceptance Agreement substantially in
the form of Annex C to the Auction Procedures (as may be modified from time to time as set
forth in the definition of Auction Procedures).

     “Company Assignment Effective Date” means, for any Company Loan Purchase, the date on
which such Company Loan Purchase is recorded in the Register.

     “Company Loan Purchase” means any purchase of Tranche C Term Loans by Company pursuant
to Section 10.6(i) hereof.

     “Excluded Information” as defined in Section 10.6(i)(ii).

     “First Amendment” means that certain First Amendment to Amended and Restated Credit and
Guaranty Agreement dated as of March 23, 2009 among Company, Holdings, Auction Managers,
the Guarantors and the Lenders listed on the signature pages thereto.

     “First Amendment Effective Date” means the date of satisfaction of the conditions
referred to in Section III of the First Amendment.

     “GSLP” means Goldman Sachs Lending Partners LLC.

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

     “Unrestricted Cash and Cash Equivalents” means the aggregate amount of cash and Cash
Equivalents held in accounts on the consolidated balance sheet of a Person to the extent
that the use of such cash or Cash Equivalents for application to payment of the Obligations
or other Indebtedness is not prohibited by law or any contract to which such Person is a
party and such cash and Cash Equivalents is free and clear of all Liens (other than Liens in
favor of the Collateral Agent, nonconsensual Liens permitted by Section 6.1 and Liens
permitted by Section 6.1(s) and clauses (i) and (ii) of Section 6.1(t)).

2

 

     B. Section 1.1 of the Credit Agreement is hereby further amended by:

     (a) inserting the text “Auction Managers, immediately following the text
“Syndication Agent,” contained in the definition of “Agent”;

     (b) deleting the definition of “Issuing Bank” in its entirety and replacing it
with the following new definition:

     “Issuing Bank” shall mean, as the context may require, (a) BNP as Issuing Bank
hereunder, together with its permitted successors and assigns in such capacity, with respect
to Letters of Credit issued by BNP and (b) any other financial institution that may become
an Issuing Bank pursuant to Section 2.4(h), with respect to Letters of Credit issued by such
financial institution.

     (c) deleting the text “the lesser of (i) $175,000,000 and (ii)” from the
definition of “Letter of Credit Sublimit”; and

     (d) deleting the definition of “Eligible Assignee” in its entirety and
replacing it with the following new definition:

     “Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any Related
Fund (any two or more Related Funds being treated as a single Eligible Assignee for all
purposes hereof), (ii) any commercial bank, insurance company, investment or mutual fund or
other entity that is an “accredited investor” (as defined in Regulation D under the
Securities Act) and which extends credit or buys loans, and (iii) solely for purposes of
Company Loan Purchases, Company; provided, that except as set forth in clause (iii)
of this definition, no Affiliate of (x) Holdings or (y) any Sponsor shall be an Eligible
Assignee.

     (e) inserting the text “or any Affiliates that are not managed by the Merchant
Banking Division of Goldman, Sachs & Co.” at the end of the definition of “Sponsor”.

     1.3 Amendment to Section 2.4 (Issuance of Letters of Credit and Purchase of Participations
Therein). Section 2.4 of the Credit Agreement is hereby amended by:

     A. deleting the word “provided” at the end of the first sentence of Section 2.4(a) and
replacing it with the following text:

“provided that BNP as Issuing Bank shall only be required to issue Letters of Credit for the
account of a Borrower and its Subsidiaries in an aggregate amount for all Borrowers and
their Subsidiaries up to but not exceeding $175,000,000, and the issuance by BNP as Issuing
Bank of any additional Letters of Credit at any time when Letter of Credit Usage is equal to
or greater than $175,000,000 shall be at the sole discretion of BNP; and provided, further”.

3

 

     B. inserting the following text as Section 2.4(h):

     “(h) Additional Issuing Banks. Company may, at any time and from time to time
with the consent of Administrative Agent (which consent shall not be unreasonably withheld
or delayed) and such financial institution, designate one or more additional financial
institutions to act as an issuing bank under the terms of this Agreement, subject to
reporting requirements reasonably satisfactory to the Administrative Agent with respect to
issuances, amendments, extensions and terminations of Letters of Credit by such additional
issuing bank, and with such other procedures and requirements with respect to the issuance
of Letters of Credit that such additional issuing bank may reasonably require with the
consent of the Administrative Agent (which consent shall not be unreasonably withheld or
delayed). Any Lender designated as an issuing bank pursuant to this paragraph (h) shall be
deemed to be an “Issuing Bank” (in addition to being a Lender) in respect of Letters of
Credit issued or to be issued by such Lender, and, with respect to such Letters of Credit,
such term shall thereafter apply to such Lender.”

     C. inserting the following text as Section 2.4(i):

     “(i) Company agrees that, with respect to any Issuing Bank (other than BNP), neither
Company nor any of its Subsidiaries shall mitigate such Issuing Bank’s fronting risk with
respect to any other Lender (the “Mitigating Arrangements”), unless Company shall have
offered to mitigate BNP’s risk, as Issuing Bank, on terms that are no less favorable to BNP
in respect of its fronting risk than the Mitigating Arrangements are in respect of such
Issuing Bank’s fronting risk.”

     1.4 Amendment to Section 9.1 (Appointment of Agents). Section 9.1 of the Credit Agreement
is hereby amended by adding the following new sentence between the second and third sentences
thereof:

“Each of GSLP, JPMorgan and BNPP SC is hereby appointed Auction Manager hereunder, and each
Lender hereby authorizes each Auction Manager to act as its agent in accordance with the
terms hereof. The Lenders agree that each Auction Manager shall have solely the obligations
in its capacity as Auction Manager as are specifically described in this Agreement and shall
be entitled to all the benefits of this Section 9, as applicable.”

     1.5 Amendments to Section 10.5 (Amendments and Waivers). Section 10.5 of the Credit
Agreement is hereby amended by inserting the text “, any other provision contained in Section 2.4
or any other provision hereof as the same applies to the rights or obligations of any Issuing Bank,
in each case” after the text “as provided in Section 2.4(e)” in Section 10.5(c)(iv).

     1.6 Amendments to Section 10.6 (Successors and Assigns; Participations). Section 10.6 of
the Credit Agreement is hereby amended by:

     A. deleting “and” at the end of Section 10.6(c)(i);

     B. replacing the period at the end of Section 10.6(c)(ii) with “; and”;

4

 

     C. inserting a new Section 10.6(c)(iii) immediately after Section 10.6(c)(ii) as
follows:

     “(iii) to any Person meeting the criteria of clause (iii) of the definition of the term
“Eligible Assignee” so long as such sales, assignments or transfers are in accordance with
the procedures set forth in Section 10.6(i) hereof.”

     D. inserting the following proviso at the end of Section 10.6(e):

“; provided that it is acknowledged and agreed that any Person meeting the
criteria of clause (iii) of the definition of the term “Eligible Assignee” shall not
be required to make the representation and warranty set forth in the foregoing
clause (ii)”; and

     E. inserting a new Section 10.6(i) immediately after the end of Section 10.6(h) as
follows:

“(i) Company Loan Purchases. Notwithstanding anything to the contrary
contained in this Section 10.6 or any other provision of this Agreement, so long as
(x) no Default or Event of Default has occurred and is continuing or would result
therefrom and (y) at the time of and after giving effect to such purchase and
cancellation (as described below), the sum of (1) the aggregate Unrestricted Cash
and Cash Equivalents of Company and (2) the aggregate unused amount of the
Revolving Commitments would not be less than $200,000,000, Company may consummate
Company Loan Purchases on the following basis:

     (i) At any time, and from time to time on or prior to June 30, 2010, Company shall have
the right to purchase, for cash, Tranche C Term Loans up to an amount to be specified by
Company at a purchase price to be determined, in each case in accordance with the Auction
Procedures established for each such purchase; provided, that (A) Company shall be
entitled to purchase Tranche C Term Loans pursuant to this Section 10.6(i) solely pursuant
to an auction managed by an Auction Manager and shall not be permitted to purchase Tranche C
Term Loans in any other manner (including pursuant to secondary market purchases), (B) the
Auction Amount (as defined in the Auction Procedures) in respect of each Company Loan
Purchase shall be for aggregate cash proceeds not less than $15,000,000, (C) Company shall
not purchase Tranche C Term Loans for aggregate cash consideration in excess of
$400,000,000, and (D) the proceeds of the Revolving Loans shall not be used to fund such
purchases of Tranche C Term Loans by Company.

     (ii) In connection with any assignment pursuant to this Section 10.6(i), each assigning
Lender, on the one hand, and Company, on the other hand, acknowledges and agrees that, as of
the Company Assignment Effective Date, (A) the other party to the Company Assignment
Agreement currently may have, and later may come into possession of, information regarding
Holdings, any of Holdings’ Subsidiaries, or any of Holdings’ Affiliates, their assets, their
ability to perform their Obligations or any other matter that is not known to it and that
may be material to a decision to participate in any

5

 

Auction or enter into the Company Assignment Agreement or any of the transactions
contemplated thereby (the “Excluded Information”), (B) it has independently and without
reliance on the other party to the Company Assignment Agreement or the Auction Managers made
its own analysis and determined to enter into the Company Assignment Agreement and to
consummate the transactions contemplated thereby notwithstanding its lack of knowledge of
the Excluded Information and (C) the other party shall have no liability to it and it hereby
(to the extent permitted by law) waives and releases any claims it may have against the
other party (under applicable laws or otherwise) with respect to the nondisclosure of the
Excluded Information; provided that the Excluded Information shall not and does not
affect the truth or accuracy of the representations or warranties of such other party
contained in the Standard Terms and Conditions set forth in the Company Assignment
Agreement. Each assigning Lender, on the one hand, and the Company, on the other hand,
further acknowledges that the Excluded Information has not been made available to
Administrative Agent, Auction Managers, the Agents or the Lenders.

     (iii) With respect to all purchases by Company and cancellation by Company of the
Tranche C Term Loans pursuant to this Section 10.6(i), such purchases and cancellation shall
not, for the avoidance of doubt, (A) change the scheduled amortization required by Section
2.12, except to reduce the amount outstanding and due and payable on the Tranche C Term Loan
Maturity Date (and such reduction, for the avoidance of doubt, shall only apply, on a
non-pro rata basis, to the Tranche C Term Loans so cancelled) or (B) constitute prepayments
of the Loans (including, without limitation, pursuant to Section 2.13, Section 2.14, Section
2.15, Section 2.16 or Section 2.17 hereof) for any purpose hereunder.

     (iv) Immediately following any Company Loan Purchase, no interest shall accrue from and
after the Company Assignment Effective Date on any Tranche C Term Loans purchased by
Company, such Tranche C Term Loans shall be cancelled for all purposes and no longer
outstanding (and may not be resold, assigned or participated out by Company) for all
purposes of this Agreement and all other Credit Documents and immediately upon and
simultaneously with the consummation of any Company Loan Purchase, such Tranche C Term Loans
shall be deemed immediately cancelled for all purposes and no longer outstanding for all
purposes of this Agreement (notwithstanding any provisions herein or therein to the
contrary), including, but not limited to (A) the making of, or the application of, any
payments to the Lenders under this Agreement or any other Credit Document, (B) the making of
any request, demand, authorization, direction, notice, consent or waiver under this
Agreement or any other Credit Document, (C) the providing of any rights to Company as a
Lender under this Agreement or any other Credit Document, (D) the calculation of financial
covenants, and (E) the determination of Requisite Lenders, or for any similar or related
purpose, under this Agreement or any other Credit Document.

     (vi) Company shall make payment of the purchase price for Tranche C Term Loans accepted
for purchase pursuant to the Auction Procedures by transmitting funds directly to the
assigning Lender. For the avoidance of doubt, Company shall pay all

6

 

accrued and unpaid interest, if any, on the applicable Tranche C Term Loans up to the
Company Assignment Effective Date.

     (vi) The provisions of this Section 10.6(i) shall not require Company to offer to
purchase any Tranche C Term Loans.

SECTION II.   CONSENT AND WAIVER

     Pursuant to Section 10.5 of the Credit Agreement, Requisite Lenders hereby consent to the
transactions described in this Amendment and waive the requirements of any provision of the Credit
Agreement or any other Credit Document that might otherwise result in a breach of the Credit
Agreement or such other Credit Documents or a Default or an Event of Default as a result of the
consummation of such transactions.

SECTION III.   CONDITIONS TO EFFECTIVENESS

     This Amendment shall become effective as of the date hereof only upon the satisfaction of all
of the following conditions precedent (the date of satisfaction of such conditions being referred
to herein as the “First Amendment Effective Date”):

     A. Execution. Auction Managers shall have received a counterpart signature page of
this Amendment duly executed by each of the Credit Parties, each of the Requisite Lenders,
Administrative Agent and Issuing Bank.

     B. Fees. Auction Managers shall have received all fees and other amounts due and
payable on or prior to the First Amendment Effective Date, including, without limitation,
(i) in immediately available funds, for the account of each consenting Requisite Lender that
has delivered its signature page hereto to Auction Managers by no later than 4:30 p.m. (New
York City time) on March 23, 2009, a non-refundable consent fee in an amount equal to 0.10%
of the sum of the Revolving Exposure and Tranche C Term Loan Exposure of such consenting
Requisite Lender outstanding as of the date hereof and (ii) to the extent invoiced,
reimbursement or other payment of all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of Davis Polk & Wardwell, special counsel to Auction Managers)
required to be reimbursed or paid by Company hereunder or any other Credit Document or
agreement entered into in connection therewith.

     C. Necessary Consents. Each Credit Party shall have obtained all material consents
necessary or advisable in connection with the transactions contemplated by this Amendment.

     D. Notice of Effectiveness. Auction Managers shall have provided written notice of the
effectiveness of this Amendment to Administrative Agent.

SECTION IV.   REPRESENTATIONS AND WARRANTIES

     In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in
the manner provided herein, each Credit Party which is a party hereto represents
and warrants to each Lender that the following statements are true and correct in all material
respects:

7

 

     A. Corporate Power and Authority. Each Credit Party that is party hereto has all
requisite power and authority to execute and deliver this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit Agreement as
amended by this Amendment (the “Amended Agreement”) and the other Credit Documents.

     B. Authorization of Agreements. The execution and delivery of this Amendment and the
performance of the Amended Agreement and the other Credit Documents have been duly
authorized by all necessary corporate or other organizational action on the part of each
Credit Party.

     C. No Conflict. The execution and delivery by each Credit Party of this Amendment and
the performance by each Credit Party of the Amended Agreement and the other Credit Documents
do not and will not (i) contravene the terms of any of such Person’s Organization Documents,
(ii) 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 of the Credit Agreement), or require any
payment to be made under (A) 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 (B) 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 (iii) violate any material Law;
except with respect to any conflict, breach or contravention or payment (but not creation of
Liens) referred to in clause (ii)(A), to the extent that such conflict, breach,
contravention or payment could not reasonably be expected to have a Material Adverse Effect.

     D. Governmental 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 the execution and delivery by each Credit
Party of this Amendment and the performance by Company and Holdings of the Amended Agreement
and the other Credit Documents, except for (i) 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 (ii) 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.

     E. Binding Obligation. This Amendment and the Amended Agreement have been duly
executed and delivered by each Credit Party that is party thereto and each 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.

     F. Incorporation of Representations and Warranties from Credit Agreement. The
representations and warranties contained in Section 4 of the Amended

8

 

Agreement are and will be true and correct in all material respects on and as of the
First Amendment 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 and correct in all material respects on and as of such
earlier date.

     G. Absence of Default. No event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Amendment that would constitute an
Event of Default or a Default.

SECTION V.   ACKNOWLEDGMENT AND CONSENT

     Each Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Credit
Agreement and this Amendment and consents to the amendment of the Credit Agreement effected
pursuant to this Amendment. Each Guarantor hereby confirms that each Credit Document to which it
is a party or 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 all “Obligations” under each of the Credit Documents to which is a
party (in each case as such terms are defined in the applicable Credit Document).

     Each Guarantor 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 this Amendment. Each Guarantor represents and warrants that all representations
and warranties contained in the Amended Agreement and the Credit Documents to which it is a party
or otherwise bound are true and correct in all material respects on and as of the First Amendment
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
and correct in all material respects on and as of such earlier date.

     Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to
effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the
Credit Agreement or any other Credit Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any
other Credit Document shall be deemed to require the consent of such Guarantor to any future
amendments to the Credit Agreement.

SECTION VI.   MISCELLANEOUS

     A. Reference to and Effect on the Credit Agreement and the Other Credit
Documents.

     (i) On and after the First Amendment Effective Date, each reference in the
Credit Agreement to “this Amendment”, “hereunder”, “hereof”, “herein” or words of
like import referring to the Credit Agreement, and each reference in the other
Credit Documents to the “Credit Agreement”, “thereunder”, “thereof” or

9

 

words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended by this Amendment.

     (ii) Except as specifically amended by this Amendment, the Credit Agreement and
the other Credit Documents shall remain in full force and effect and are hereby
ratified and confirmed.

     (iii) The execution, delivery and performance of this Amendment shall not
constitute a waiver of any provision of, or operate as a waiver of any right, power
or remedy of any Agent or Lender under, the Credit Agreement or any of the other
Credit Documents.

     B. Headings. Section and Subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this Amendment
for any other purpose or be given any substantive effect.

     C. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
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 CONFLICTS OF LAWS PRINCIPLES
THEREOF.

     D. Counterparts. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate 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; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages are physically
attached to the same document.

[Remainder of this page intentionally left blank.]

10

 

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

	 	 	 	 	 
	COMPANY:	 	EDUCATION MANAGEMENT LLC
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dorinda A. Pannozzo
	 

	 	 	 	 
	 

	 	 	 	Name: Dorinda A. Pannozzo
	 

	 	 	 	Title: VP Finance/Treasurer
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	HOLDINGS:	 	EDUCATION MANAGEMENT HOLDINGS LLC
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dorinda A. Pannozzo
	 

	 	 	 	 
	 

	 	 	 	Name: Dorinda A. Pannozzo
	 

	 	 	 	Title: VP Finance/Treasurer

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

 

 

	 	 	 	 	 
	AUCTION MANAGERS:	 	GOLDMAN SACHS LENDING PARTNERS LLC
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Denis P. Coleman III
	 

	 	 	 	 
	 

	 	 	 	Name: Denis P. Coleman III
	 

	 	 	 	Title: Authorized Signatory
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	J.P. MORGAN SECURITIES INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ James R. Gray
	 

	 	 	 	 
	 

	 	 	 	Name: James R. Gray
	 

	 	 	 	Title: Managing Director
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	BNP PARIBAS SECURITIES CORP.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ R. Park
	 

	 	 	 	 
	 

	 	 	 	Name: R. Park
	 

	 	 	 	Title: M.D.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John D. Emery
	 

	 	 	 	 
	 

	 	 	 	Name: John D. Emery
	 

	 	 	 	Title: Director

Loan and High Yield Capital Markets

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

 

 

	 	 	 	 	 
	ADMINISTRATIVE AGENT 

AND ISSUING BANK:	 	BNP PARIBAS
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Cecile Scherer
	 

	 	 	 	 
	 

	 	 	 	Name: Cecile Scherer
	 

	 	 	 	Title: Director
	 

	 	 	 	Merchant Banking Group
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul Corona
	 

	 	 	 	 
	 

	 	 	 	Name: Paul Corona
	 

	 	 	 	Title: Director

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

 

 

	 	 	 	 	 
	GUARANTORS:	 	EDUCATION MANAGEMENT FINANCE CORP.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dorinda A. Pannozzo
	 

	 	 	 	 
	 

	 	 	 	Name: Dorinda A. Pannozzo
	 

	 	 	 	Title: VP Finance/Treasurer
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	ARGOSY UNIVERSITY FAMILY CENTER, INC.
	 
	 	 	 	 
	 	 	BROWN MACKIE HOLDING COMPANY
	 
	 	 	 	 
	 	 	THE CONNECTING LINK, INC.
	 
	 	 	 	 
	 	 	EDMC MARKETING AND ADVERTISING, INC.
	 
	 	 	 	 
	 	 	HIGHER EDUCATION SERVICES, INC.
	 
	 	 	 	 
	 	 	MCM UNIVERSITY PLAZA, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dorinda A. Pannozzo
	 

	 	 	 	 
	 

	 	 	 	Name: Dorinda A. Pannozzo
	 

	 	 	 	Title: VP Finance/Treasurer

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

 

 

	 	 	 	 	 
	 	 	AID RESTAURANT, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward H. West
	 

	 	 	 	 
	 

	 	 	 	Name: Edward H. West
	 

	 	 	 	Title: Principal Financial Officer

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

 

 

	 	 	 	 	 
	 	 	AIH RESTAURANT, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward H. West
	 

	 	 	 	 
	 

	 	 	 	Name: Edward H. West
	 

	 	 	 	Title: Principal Financial Officer

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

 

 

	 	 	 	 	 
	 	 	AIIM RESTAURANT, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward H. West
	 

	 	 	 	 
	 

	 	 	 	Name: Edward H. West
	 

	 	 	 	Title: Principal Financial Officer

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

 

 

	 	 	 	 	 
	 	 	EDUCATION FINANCE I LLC
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward H. West
	 

	 	 	 	 
	 

	 	 	 	Name: Edward H. West
	 

	 	 	 	Title: Principal Financial Officer

[Signature Page to First Amendment to Education Management LLC

Amended and Restated Credit and Guaranty Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]