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Exhibit 4.09
AMENDMENT NO. 1
TO
EXCHANGE AND REPURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO EXCHANGE AND REPURCHASE AGREEMENT ("Amendment") is
made and entered into as of ____________ by and between EDUCATION MANAGEMENT
CORPORATION, a Pennsylvania corporation ("EMC"), and _____________________ (the
"Management Stockholder").
WITNESSETH:
WHEREAS, EMC Holdings, Inc. (as predecessor-by-merger to EMC) and the
Management Stockholder entered into that certain Exchange and Repurchase
Agreement dated as of __________________ (the "Agreement"); and
WHEREAS, EMC and the Management Stockholder desire to amend the Agreement in
order to modify the put and call prices if the Management Stockholder's
employment is terminated by EMC without Cause (as defined in the Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. Definition of Senior Credit Agreement. The definition of "Senior Credit
Agreement" in Section 1 of the Agreement is hereby amended and restated in its
entirety as follows:
"'Senior Credit Agreement' means the Amended and Restated Credit Agreement
dated as of March 16, 1995 among EMC, PNC Bank, National Association, and
the other banks party thereto."
2. Amendment of Section 10(d)(i). Section 10(d)(i) of the Agreement is
hereby amended and restated in its entirety as follows:
"(i) EMC's Call. Upon termination, prior to a Public Distribution, of
your employment with EMC or any subsidiary thereof for any reason other than
as a result of (A) your death, (B) Incapacity, (C) retirement having
attained Normal Retirement Age, (D) your resignation or (E) a termination
for Cause, then, in such event, EMC shall have the right, upon delivery of
notice
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to you, for a period of 90 calendar days after the Date of Termination, to
repurchase any or all Shares owned by you. If EMC so notifies you in
accordance with Section 11 hereof of its determination to exercise such
right, you shall have the obligation to sell the relevant number of Shares on
the terms and conditions set forth in Section 12 hereof to EMC at a price
equal to:
(x) in the case of Shares acquired by you within the three-year period
immediately preceding the Date of Termination, the product of (i) the
lesser of (A) the Fair Market Value of each such Share as of the Date of
Termination or (B) the Compound Adjusted Purchase Price and (ii) the
number of such Shares so purchased; and
(y) in the case of all other Shares owned by you, the product of (i)
the Fair Market Value of each such Share as of the Date of Termination and
(ii) the number of such Shares so purchased."
3. Amendment of Section 12. Section 12 of the Agreement is hereby amended
by adding, at the end thereof, new subsections (f) and (g) as follows:
"(f) Notwithstanding anything herein contained to the contrary, in
connection with the purchase of your Shares pursuant to Section 10(d)(ii) at
the price specified in clause (y) of Section 10(d)(i), if the Fair Market
Value of each such Share as of the Date of Termination exceeds the Compound
Adjusted Purchase Price, then EMC may issue a Junior Subordinated Note (as
defined below), in lieu of the cash consideration required by subsection (a)
of this Section 12, for the portion of the purchase price for such Shares
equal to the product of (i) the difference between (A) the Fair Market Value
of each such Share as of the Date of Termination and (B) the Compound
Adjusted Purchase Price and (ii) the number of Shares so purchased. As used
in this subsection (f), "Junior Subordinated Note" means the junior
subordinated promissory note issued by EMC for payment of a portion of the
purchase price for Shares pursuant to this subsection (f), in the principal
amount specified above, bearing interest on the unpaid principal amount from
the date of issue of such note until such note is paid in full, payable
quarterly on the first Business Day of each calendar quarter, at a
fluctuating interest rate per annum (based on a year of 365 or 366 calendar
days, as the case may be) equal to 1% per annum above the Prime Rate in
effect from time to time (each change, if any, in such fluctuating interest
rate to take effect simultaneously with the corresponding change in the
Prime Rate; provided, that such fluctuating interest rate shall at no time
exceed 12% per annum), and the principal amount of which is payable on the
date occurring three months following the latest of payment in full of all
notes or other evidences of indebtedness issued pursuant to the existing
Senior Credit Agreement or the existing Subordinated Credit Agreement (but
not refinancings or extensions thereof).
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(g) EMC and each holder of a Junior Subordinated Note, by acceptance of
such Junior Subordinated Note, covenant and agree that each such Junior
Subordinated Note is and shall be subordinated in right of payment to the
prior payment in full of all notes or other evidences of indebtedness issued
pursuant to the existing Senior Credit Agreement and the existing
Subordinated Credit Agreement (but not refinancings or extensions thereof)."
4. References to Holdings. The parties hereby confirm that, unless the
context clearly requires otherwise, all references to "Holdings" in the
Agreement shall, by operation of law pursuant to the merger of EMC Holdings,
Inc. with and into EMC on April 30, 1991, be deemed to be references to "EMC."
5. No Other Amendments. Except as expressly amended by this Amendment, the
Agreement, and each and every representation, warranty, covenant, term and
condition therein, are hereby specifically ratified and confirmed.
6. Counterparts. This Amendment may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
7. Governing Law. This Amendment shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as
of the date first above written.
EDUCATION MANAGEMENT CORPORATION
By: _________________________________
Senior Vice President &
Chief Financial Officer
WITNESS: Management Stockholder:
________________________________ _____________________________________
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