Document:

Amended and Restated Credit Agreement

 
EXHIBIT 4.1

 
WAIVER AND THIRD AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT 
 
This Waiver and
Third 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, the
Borrower, 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 August
19, 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 financings
provided 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 guarantied
Indebtedness 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 Banks
on 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 date
of 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 agree
as follows: 
 
AGREEMENT: 
 
1. Capitalized terms used herein and not otherwise defined
shall have the meanings given to them under the Credit Agreement. 

 
2. The Banks
and 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 real
estate 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 financing
that 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 for
Borrowed 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 not
exceed $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 the
Borrower’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 Memo
and (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 Subsidiary
Guaranty 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 of
Argosy 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 Parties
are 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 Subsidiary
Guaranty 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 effect
on and after the date hereof except as provided herein. 

 
5. The
Borrower 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 with
the 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 hereby
modified 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 Borrower
represents, 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 against
the 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 of
creditors 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 the
Borrower 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 in
the 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 parties
hereto 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) it
has 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 of
the day and year first above written. 
 

	 EDUCATION MANAGEMENT CORPORATION

	
	 By
	 	 /s/    KRISTEN
GRIBBLE        

	 Name
	 	 Kristen Gribble

	 Title
	 	 Treasurer

 

	 NATIONAL CITY BANK OF
PENNSYLVANIA,
 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/    EDWARD
MCKENNEY        

	 Name
	 	 Edward McKenney

	 Title
	 	 Senior Vice President

 

	 J.P. MORGAN CHASE BANK,
 individually and as Documentation Agent

	
	 By
	 	 /s/    JOHN
MALONE        

	 Name
	 	 John Malone

	 Title
	 	 Vice President

 

	 BANK ONE, NA.
  
 Successor by Merger to BANK ONE,
MICHIGAN

	
	 By
	 	 /s/    MAHUA
THAKURTA        

	 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 Presidentexv10w1

 

Exhibit 10.1

Employment Term Sheet – Carl J. Grivner

	 	 	 
	Position:	 	
President and Chief Executive Officer
	 
	Employer:	 	
XO Communications, Inc. (“XO”)
	 
	Base Salary:	 	
$700,000 per year
	 
	Cash Bonus:	 	
Target bonus equal to 100% of base salary (adjusted in
accordance with table below) with “target” to be defined as a
function of revenue, EBITDA and cash on hand, as mutually
agreed upon

	 	 	 	 	 
	

	% of Target Threshold	 	Bonus as a % of Base Salary
	

	Less than 80%
	 	0%
	

	At least 80% but less than 100%
	 	50%
	

	At least 100% but less than 120%
	 	100%
	

	At least 120%
	 	125%
	

	 	 	 
	XO Stock Options	 	
You shall receive 2,000,000 options to purchase common stock of XO (the “XO Stock Options”) vesting 25% upon
commencement of employment and 25% upon each of the first, second and third anniversary of the date of
commencement of employment, with a strike price approximating market on the date of grant, with other terms
and conditions determined pursuant to the XO stock incentive plan and as determined by XO in its sole
discretion.
	 
	Vacations:	 	
You shall be entitled to vacations, holidays, sick leave and personal time off in accordance with XO’s
policies for senior level management.
	 
	Benefits:	 	
You will be entitled to participate in all group health, major medical, pension and profit sharing, 401(k)
and other benefit plans maintained by XO and provided generally to XO’s executive officers at a level
commensurate with other senior executives of XO.
	 
	Employment

Start Date:	 	

You will start your employment with XO no later than May 1, 2003.
	 
	Change in Control:	 	
XO agrees to enter into a Change in Control Agreement with a one (1) year payment of base salary and bonus
at target.
	 
	Annual Performance

Reviews:	 	

In conjunction with the annual performance review process, you will be eligible for salary increases, cash
bonus awards and additional stock option awards. The salary increases, cash bonus awards and stock option
awards will be determined based on overall company performance and individual performance at the discretion
of the compensation committee of

 

 

	 	 	 
	 	 	
the board of directors of XO. The annual review process currently takes place
during the first quarter of each calendar year and shall be conducted in the
same manner and utilizing the same standards as with other senior executive
officers of XO.
	 
	Relocation Costs:	 	
XO will reimburse your actual costs of relocation in
an amount not to exceed $100,000 (grossed up to
account for any actual tax liability associated with
such reimbursement).
	 
	Employment

Term:	 	

Your employment at XO will be for a one-year term,
renewing each year unless either party notifies the
other in writing of its intention not to renew and
such notice is given in the January prior to the
termination date.
	 
	Withholdings:	 	
All payments set forth herein which are subject to
withholdings, shall be made less any required
withholdings.

By signing this Term Sheet, you hereby represent and warrant to XO that the
execution and delivery of this Agreement, and the performance of your duties
hereunder, will not violate the terms of any agreement or other understanding
between you and any other entity, including your present and former employers.
If not fully executed on or before April 9, 2003, this Term Sheet shall be
void.

	 	 	 
	XO COMMUNICATIONS, INC.

A Delaware corporation	 	
/s/ Carl J. Grivner

Carl J. Grivner

By: /s/ Nathaniel A. Davis

Name: Nathaniel A. Davis

Title: Chief Operating Officer

 

 

[XO Letterhead]

April 30, 2003

Mr. Carl J. Grivner

Dear Mr. Grivner:

     This letter will confirm that, notwithstanding anything contained in the
employment term sheet between you and XO Communications, Inc. (the “Company”),
it is hereby agreed that you will become employed by the Company on May 1,
2003, in the Office of the Chairman and, effective May 15, 2003, will become
President and Chief Executive Officer of the Company.

     If you are in agreement with the foregoing, please execute a copy of this
letter and return it to the undersigned.

	 	 	 
	 	XO Communications, Inc.
	 
	 	By	
/s/ Gary D. Begeman

Name: Gary D. Begeman

Title: Senior Vice President, General Counsel and Secretary

Agreed and acknowledged:

	 
	/s/ Carl J. Grivner

Carl J. Grivner

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