Education Management Corporation – ‘SC 13D’ on 10/9/01 re: Argosy Education Group Inc

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General Statement of Beneficial Ownership   —   Schedule 13D
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Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D      General Statement of Beneficial Ownership            124    508K 

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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

SCHEDULE 13D  
Under the Securities Exchange Act of 1934 

Argosy Education Group, Inc.  
--------------------------------------------------------------------------------
(Name of Issuer)  

Class A Common Stock, $.01 Par Value  
--------------------------------------------------------------------------------
(Title of Class of Securities)  

040222 10 1 
--------------------------------------------------------------------------------
(CUSIP Number)  

Robert B. Knutson 
Education Management Corporation  
300 Sixth Avenue, Suite 800 
Pittsburgh, Pennsylvania 15222  
412-562-0900  
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person 
Authorized to Receive Notices and Communications) 

September 26, 2001  
--------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement) 

  If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing  
this schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check   
the following box. [_]                                                          

   Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7 for other   
parties to whom copies are to be sent.                                          

The remainder of this cover page shall be filled out for a reporting  
person's initial filing on this form with respect to the subject class of       
securities, and for any subsequent amendment containing information which would 
alter disclosures provided in a prior cover page.                               

   The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange   
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of  
the Act but shall be subject to all other provisions of the Act (however, see   
the Notes).                                                                     

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1.   NAMES OF REPORTING PERSONS                                               
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).        

Education Management Corporation                                    
------------------------------------------------------------------------------  
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP                         
(SEE INSTRUCTIONS)                                        (a) [_]   
                                                       (b) [_]
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3.   SEC USE ONLY                                                             

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4.   SOURCE OF FUNDS                                                          

BK                                                                  
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5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO         
ITEMS 2(d) or 2(e)                                            [_]   

------------------------------------------------------------------------------  
6.   CITIZENSHIP OR PLACE OF ORGANIZATION                                     

Pennsylvania                                                        
------------------------------------------------------------------------------  
7.   SOLE VOTING POWER                

NUMBER OF                                                             
4,900,000                   
    SHARES       -----------------------------------------------------------
8.   SHARED VOTING POWER              
BENEFICIALLY                                                              

OWNED BY             0                                                
                 -----------------------------------------------------------
EACH          9.   SOLE DISPOSITIVE POWER                         

REPORTING                                                               
4,900,000                   
    PERSON       -----------------------------------------------------------
10.  SHARED DISPOSITIVE POWER         
WITH                                                              
0                           
------------------------------------------------------------------------------  
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON              

4,900,000                                                           

------------------------------------------------------------------------------  
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES         

                                                           [_]
------------------------------------------------------------------------------  
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)                        

75.4%                                                               
------------------------------------------------------------------------------  
14.   TYPE OF REPORTING PERSON                                                  

CO                                                                  
------------------------------------------------------------------------------  

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Item 1.   Security and Issuer                                                   

  This statement on Schedule 13D relates to the Class A common stock, $.01
par value per share ("Common Stock"), of Argosy Education Group, Inc., an       
Illinois corporation ("Argosy"). The principal executive offices of Argosy are  
located at Two First National Plaza, 20 South Clark Street, 3rd Floor, Chicago, 
Illinois 60603.                                                                 

Item 2.   Identity and Background                                               

(a) - (c). This statement on Schedule 13D is being filed by Education 
Management Corporation, a Pennsylvania corporation ("EDMC"). The address of the 
principal office and business of EDMC is 300 Sixth Avenue, Suite 800,           
Pittsburgh, Pennsylvania 15222. EDMC is a provider of proprietary post-secondary
education in the United States. Information with respect to the persons         
specified in Instruction C of Schedule 13D is set forth on Schedule A hereto and
is incorporated by reference.                                                   

     (d) - (e). During the last five years, neither EDMC nor, to the best of its
knowledge, any of the persons listed on Schedule A hereto have been (i)         
convicted in a criminal proceeding, (excluding traffic violations and similar   
misdemeanors) or (ii) a party to any civil proceeding of a judicial or          
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future         
violations of, or prohibiting or mandating activities subject to, federal or    
state securities laws or finding any violation with respect to such laws.       

  (f) The citizenship of each of the persons specified in Instruction C of
Schedule 13D is set forth on Schedule A hereto and is incorporated herein by    
reference.                                                                      

Item 3.   Source and Amount of Funds or Other Consideration                     

  EDMC funded the closing in escrow of the purchase of 4,900,000 shares of
Common Stock (the "Shares") of Argosy through an Irrevocable Standby Letter of  
Credit, dated September 27, 2001 issued by National City Bank of Pennsylvania   
(the "Letter of Credit"), pursuant to EDMC's Amended and Restated Credit        
Agreement with National City Bank of Pennsylvania, as agent for a syndicate of  
lenders (the "Credit Agreement"). The Letter of Credit and the Credit Agreement 
are attached hereto as Exhibits 1 and 2, respectively, and are incorporated     
herein by reference. EDMC expects to finance the Purchase Price (as defined     
herein) through borrowings under the Credit Agreement, the proceeds from which  
will be provided to the Escrow Agent by EDMC in exchange for the Letter of      
Credit at the time of the Escrow Release. EDMC expects that it will also finance
the related merger consideration in the amount of approximately $19.2 million   
through additional borrowings under the Credit Agreement.                       

Item 4.   Purpose of Transaction                                                

  On July 9, 2001, EDMC entered into an Agreement and Plan of Merger dated
July 9, 2001 (the "Merger Agreement") among EDMC, Argosy and HAC Inc. ("Merger  
Sub"), a wholly owned subsidiary of EDMC, pursuant to which EDMC would acquire  
Argosy by means of the merger (the "Merger") of Merger Sub with and into Argosy.
EDMC and Michael C. Markovitz ("Dr. Markovitz"), Chairman and CEO of Argosy,    
concurrently entered into a Stock Purchase Agreement dated July 9, 2001 by and  

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between EDMC and Dr. Markovitz (the "Stock Purchase Agreement"), which provided 
for the purchase by EDMC of the Shares which were then beneficially owned by Dr.
Markovitz pursuant to the terms and conditions thereunder. EDMC, Dr. Markovitz  
and certain trust entities that held legal title to the Shares later entered    
into a Joinder Agreement dated September 26, 2001, a copy of which has been     
filed as Exhibit 5 hereto and is incorporated herein by reference.              

The structure of the transactions contemplated by the Stock Purchase  
Agreement and Merger Agreement was necessary, in part, to facilitate the U.S.   
Department of Education regulatory approval process. As a result of the purchase
and sale of the Shares in escrow, as described herein, a change in control of   
Argosy occurred. As described further herein, the consummation of the Merger is 
conditioned upon receipt of final approval from the U.S. Department of          
Education, as well as certain state licensing and private accrediting agencies, 
of the change in control effected pursuant to the Merger Agreement and the Stock
Purchase Agreement.                                                             

Stock Purchase Agreement                                              

   Purchase of the Shares. Pursuant to the terms and conditions of the Stock
Purchase Agreement, on September 26, 2001, Dr. Markovitz deposited into escrow  
the Shares and EDMC deposited into escrow the Letter of Credit in the amount of 
$58.8 million (such amount being the "Purchase Price" for the Shares), at which 
time the title to the Shares passed to EDMC.                                    

     Escrow Release. The escrowed Shares and the Purchase Price will be released
to the respective parties upon the satisfaction or waiver of certain conditions,
including receipt of final Department of Education approval of Argosy schools'  
applications for recertification to participate in the Title IV programs after  
the closing, approvals and agreements of various regulatory and accrediting     
bodies, and the closing of the Merger pursuant to the Merger Agreement.         

     Rescission of Stock Purchase. If the Purchase Price and the Shares have not
been released from escrow for any reason by December 31, 2001, the transactions 
contemplated by the Stock Purchase Agreement will be automatically rescinded.   
The Purchase Price and the Shares will be returned to EDMC and Dr. Markovitz,   
respectively. The Merger Agreement will not, however, terminate, and, subject to
final Department of Education approval, it is expected the Merger would still   
take place.                                                                     

   Agreement to Vote. Dr. Markovitz has already voted in favor of the Merger
and the Merger Agreement and has delivered a proxy to EDMC pursuant to which, if
the Stock Purchase Agreement is rescinded as described above, he has agreed to, 
among other things, appear at any Argosy stockholders' meeting and vote in favor
of the Merger and the Merger Agreement and against any action or agreement that 
would impede, interfere with, delay, postpone or discourage the Merger,         
including any other acquisition proposal, and has agreed not to take any other  
action which could adversely affect the Stock Purchase Agreement or the Merger  
Agreement.                                                                      

The proxy from Dr. Markovitz to EDMC is included as Exhibit 6 and     
incorporated herein by reference.                                               

 Pursuant to the terms of the Stock Purchase Agreement, EDMC has agreed,
after the closing date and until the earlier of the effective time of the Merger
or the escrow release under the Stock Purchase Agreement, to appear at any      
stockholders' meeting and vote (1) for the re-election of Argosy's current      
directors on the date of the Stock Purchase Agreement and, except in limited    
circumstances, any persons nominated by such directors to fill any vacancies    
that may be created on the board, (2) in favor of the Merger between Argosy and 
EDMC, and (3) against any other acquisition proposal. EDMC has also agreed not  
to take any other action which could adversely affect the Stock Purchase        
Agreement or the Merger Agreement.                                              

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  Each of Dr. Markovitz and EDMC have agreed that in the event that either
party fails to comply with the voting provisions described above, such failure  
shall result in an irrevocable appointment of the other as his or its attorney  
and proxy, with full power of substitution and resubstitution, to vote the      
Shares in accordance with the provisions described above.                       

  Change of Control of Argosy Board of Directors. Under the Stock Purchase
Agreement, EDMC required that all of the Argosy's current directors, other than 
Dr. Markovitz, tender their conditional, irrevocable resignations from the      
Argosy board. Each such resignation cannot be revoked and will only become      
effective upon the occurrence of the escrow release described above. Each of the
resigning directors has also agreed that, to the extent any of them would retain
under law any residual rights inconsistent with his or her irrevocable          
resignation, such director has waived such rights, agreed not to exercise such  
rights and agreed not to claim, as a complaint or a defense, or otherwise assert
that such resignation is not valid or enforceable.                              

    In the event the escrow release occurs prior to the closing of the Merger,
thereby causing the resignations to be effective, Dr. Markovitz has agreed to   
appoint three nominees of EDMC to the board of Argosy. At such point in time,   
the directors nominated by EDMC will consist of the majority of the board.      

In the event the closing of the Merger occurs simultaneously with the 
escrow release, then the board of directors of the Merger Sub will become the   
board of directors of the surviving corporation in the Merger following the     
closing.                                                                        

   Sale of Certain Businesses. Argosy currently owns the operating assets of
John Marshall Law School in Atlanta, Georgia and the stock of PrimeTech Canada, 
Inc. Pursuant to the terms of the Merger Agreement, Argosy provided EDMC with   
the ability to cause Argosy to dispose of either or both of these companies     
prior to the effective time of the Merger. To support this effort, Dr. Markovitz
agreed under the terms of the Stock Purchase Agreement, to purchase the stock of
one or both of these companies, at the request of Argosy, for a purchase price  
of $1.00. Any such purchase by Dr. Markovitz will be without recourse to Argosy 
and Argosy will not have to make any representations, warranties or other       
undertaking to Dr. Markovitz in connection therewith.                           

    Except as described above in this Item 4, to the best of EDMC's knowledge,
no other plan or proposal exists that would relate or result in a sale or       
transfer of a material amount of assets of Argosy.                              

   The foregoing summary of the Stock Purchase Agreement does not purport to
be complete and is qualified in its entirety by the full text of the Stock      
Purchase Agreement, which is incorporated herein by reference.                  

Merger Agreement                                                      

 Completion of the Merger. The Merger Agreement provides that the Merger
will become effective at such time as a certificate of merger is duly filed with
the Secretary of State of the State of Illinois or at such later time as is     
agreed to by the parties and as is specified in the certificate of merger. Upon 
consummation of the Merger, the certificate of incorporation and the bylaws of  
the surviving corporation in the Merger shall be the certificate of             
incorporation and the bylaws of Argosy as in effect immediately prior to the    
Merger until thereafter amended in accordance with their terms and Illinois     
corporate law. If the Merger Agreement and Merger are approved at the special   
meeting by the requisite stockholder vote, it is currently anticipated that the 
Merger will become effective as soon as practicable after the special meeting,  
subject to satisfaction or waiver of the closing conditions in the Merger       
Agreement other than stockholder approval.                                      

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    Merger Consideration. At the effective time of the Merger, Merger Sub will
be merged with and into Argosy, the separate corporate existence of Merger Sub  
will cease and Argosy will continue as the surviving corporation and a wholly   
owned subsidiary of EDMC. In the Merger, each share of Common Stock (other than 
Common Stock held (1) in the treasury of Argosy, (2) by dissenting stockholders,
or (3) by EDMC or the Merger Sub) will, by virtue of the Merger and without any 
action on the part of the holder thereof, be converted into the right to receive
$12.00 per share in cash, without interest. Each share of Common Stock held in  
the treasury of Argosy or owned at the effective time by EDMC or the Merger Sub,
including the Shares acquired from Dr. Markovitz for $12.00 per share prior to  
the Merger, will automatically be canceled and extinguished and no payment will 
be made with respect thereto.                                                   

Certain Regulatory Approvals. Under the Merger Agreement, Argosy must 
obtain all approvals and consents from governmental, educational and accrediting
entities to the extent necessary and appropriate to complete the Merger. Argosy 
and EDMC have obtained the approvals required for Dr. Markovitz's sale of the   
Shares to EDMC pursuant to the Stock Purchase Agreement and are currently in the
process of obtaining approvals necessary for completion of the Merger from the  
federal, state and accrediting entities to which Argosy's schools are subject.  
The consummation of the Merger is conditioned upon receipt of final approval    
from the U.S. Department of Education, as well as certain approvals by state    
licensing and private accrediting agencies, of the change in control effected   
pursuant to the Merger Agreement and the Stock Purchase Agreement.              

     On July 27, 2001, the Federal Trade Commission granted early termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of    
1976, as amended ("HSR Act").                                                   

 No Solicitation of Acquisition Proposals. The Merger Agreement provides
that Argosy will not, directly or indirectly, (1) solicit, initiate or encourage
any proposal that constitutes an acquisition proposal or proposals that could   
lead to any acquisition proposal, (2) engage in negotiations or discussions     
concerning, or provide any non-public information to any person or entity in    
connection with, any acquisition proposal or (3) agree to approve, recommend or 
otherwise endorse or support any acquisition proposal.                          

     Conditions to the Merger. The obligations of Argosy, EDMC and Merger Sub to
complete the Merger are subject to the satisfaction or waiver of the following  
conditions:                                                                     

. The expiration of the applicable waiting period under the HSR Act in
       connection with the transactions contemplated by the Merger Agreement and
by the Stock Purchase Agreement.                                  

   . All consents, approvals, orders or authorizations of, or registrations,
      declarations or ?lings with, any governmental entity or accrediting body
    required by or with respect to Argosy, EDMC or any of their respective
      subsidiaries in connection with the execution and delivery of the Merger
Agreement or the consummation of the Merger and other transactions
      contemplated thereby and by the Stock Purchase Agreement shall have been
obtained or made except for such consents, approvals, orders,     
   authorizations, registrations, declarations or ?lings, the failure of
    which to be obtained or made could not reasonably be expected to have,
    individually or in the aggregate, material adverse effect on Argosy or
    EDMC or materially impair Argosy's, EDMC 's or Merger Sub's ability to
consummate the Merger.                                            

     . The Merger Agreement, the Merger and the transactions contemplated by the
Merger Agreement shall have received the requisite approval and   
     authorization of the stockholders in accordance with applicable law and
the articles of incorporation and bylaws of Argosy.               

    . No law shall have been enacted or promulgated by any governmental entity
which prohibits the consummation of the Merger or the transactions
contemplated by the Stock Purchase                                

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       Agreement and there shall be no order or injunction of court of competent
jurisdiction in effect precluding consummation of the Merger.     

   . No proceeding preventing distribution of the proxy statement filed with
   the SEC and delivered to Argosy's stockholders in connection with the
  special meeting of stockholders to approve the Merger and the Merger
     Agreement, or any part thereof ,shall have been initiated or threatened
       in writing by the SEC, and all requests for additional information on the
part of the SEC shall have been complied with to the reasonable   
satisfaction of Argosy and EDMC.                                  

  . No action, suit or proceeding shall be pending before any governmental
     entity which is reasonably likely to result in judgment, order, decree,
     stipulation or injunction that would (1) prevent consummation of any of
the transactions contemplated by the Merger Agreement or the Stock
       Purchase Agreement, (2) cause any of the transactions contemplated by the
Merger Agreement or the Stock Purchase Agreement to be rescinded  
      following consummation or (3) affect adversely the right of EDMC to own,
     operate or control any material portion of the assets and operations of
  the surviving corporation and each of its subsidiaries following the
transactions contemplated in the Merger Agreement or in the Stock 
     Purchase Agreement, and no such judgment, order, decree, stipulation or
injunction shall be in effect.                                    

The obligations of Argosy to consummate the Merger and the other      
transactions are subject to satisfaction or waiver of the following additional  
conditions:                                                                     

  . The representations and warranties of EDMC and Merger Sub contained in
      the Merger Agreement shall be true and correct in all respects as of the
     closing date with the same effect as though made as of the closing date
  except (1) for changes specifically contemplated by the terms of the
   Merger Agreement and (2) where the failure of the representations and
warranties to be true and correct in all respects could not in the
       aggregate reasonably be expected to have material adverse effect on EDMC.

  . EDMC shall have in all material respects performed all obligations and
complied with all covenants required by the Merger Agreement to be
performed or complied with by it at or prior to the closing date. 

     . If the closing under the Stock Purchase Agreement shall have occurred and
       not been rescinded, EDMC shall have irrevocably directed the escrow agent
to release the escrowed funds upon consummation of the Merger in  
    accordance with the Stock Purchase Agreement and the Escrow Agreement.

   . EDMC shall have delivered to Argosy an officers' certificate certifying
the satisfaction of certain closing conditions.                   

 . Argosy shall be reasonably satisfied with all of the actions taken by
      EDMC in connection with the proposed transactions, and all certificates,
       opinions, instruments and other documents required to effect the proposed
transactions shall have been reasonably satisfactory in form and  
substance to Argosy and its counsel.                              

     The obligations of EDMC and Merger Sub to complete the Merger is subject to
satisfaction or waiver of the following additional conditions:                  

. The representations and warranties of Argosy contained in the Merger
   Agreement shall be true and correct in all respects as of the closing
    date with the same effect as though made as of the closing date except
  (1) for changes specifically contemplated by the terms of the Merger

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        Agreement and (2) where the failure of the representations and
            warranties to be true and correct in all respects could not in the
             aggregate reasonably be expected to have material adverse effect on
Argosy.                                               

.  Argosy shall have in all material respects performed all 
            obligations and complied with all covenants required by the Merger
             Agreement to be performed or complied with by it at or prior to the
closing date.                                         

   .  Argosy shall have delivered to EDMC an officers' certificate
    certifying the satisfaction of certain closing conditions.

         .  From the date of the Merger Agreement to the effective time, there
       shall not have been any event or development which results in
material adverse effect on Argosy.                    

  .  EDMC shall have received all written consents, assignments,
            waivers, authorizations or other certificates necessary to provide
       for the continuation in full force and effect of the material
          contracts of Argosy, except where the failure to so obtain could
          not reasonably be expected, individually or in the aggregate, to
have material adverse effect on Argosy.               

  .  EDMC shall have received all written consents, assignments,
            waivers, authorizations or other certificates from state education
             regulatory bodies and any other applicable governmental entities to
     the extent necessary to consummate the Merger and the other
            transactions contemplated by the Merger Agreement and by the Stock
Purchase Agreement.                                   

        .  All conditions precedent to the escrow release set forth in Stock
      Purchase Agreement, including receipt of final Department of
Education approval of Argosy schools 'applications for
            recertification to participate in Title IV programs after closing,
shall have been satisfied or waived by EDMC.          

   .  Argosy shall have, if requested by EDMC, completed the sale,
    divestiture, donation or other disposition of the excluded
operations as contemplated by the Merger Agreement.   

          .  EDMC shall be reasonably satisfied with all of the actions taken by
      Argosy in connection with the proposed transactions, and all
             certificates, opinions, instruments and other documents required to
     effect the proposed transactions shall have been reasonably
     satisfactory in form and substance to EDMC and its counsel.

         Termination. Argosy and EDMC may mutually agree, at any time prior to
the completion of the Merger, to terminate the Merger Agreement. In addition,   
either Argosy or EDMC may terminate the Merger Agreement if:                    

(1)  the stockholders do not approve the Merger;            

      (2)  any governmental entity shall have issued an order, decree or
ruling or taken any other action which permanently restrains, enjoins or        
otherwise prohibits consummation of the Merger or the transactions set forth in 
the stock purchase agreement and such order, decree, ruling or other action     
shall be final and non-appealable;                                              

        (3)  the consummation of the Merger or the transactions set forth in
the Stock Purchase Agreement would be illegal; or                               

        (4)  the Merger shall not have been consummated by January 31, 2002;
          provided that the right to terminate the Merger Agreement shall not be
  available to any party whose failure to fulfill any obligation

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under the Merger Agreement has been the cause of, or resulted in, the failure of
the Merger to be consummated.                                                   

Argosy may terminate the Merger Agreement:                  

          (5)  if EDMC or Merger Sub shall have breached in any material respect
any of their respective representations, warranties, covenants or other         
agreements contained in the Merger Agreement, which breach (A) cannot be or has 
not been cured, in all material respects, within 20 business days after the     
giving of written notice to EDMC or Merger Sub, as applicable, and (B) will     
result in the failure to satisfy a condition to the closing of the Merger; or   

(6)  as result of its board of directors determining that an
alternative acquisition proposal is more favorable to Argosy stockholders than  
the transaction with EDMC; provided that such termination shall not be effective
until (A) the fee described below has been paid to EDMC, and (B) if EDMC waives 
certain conditions set forth in of the stock purchase agreement, the board of   
directors of Argosy shall have been reconstituted so that majority of its       
members are persons designated by EDMC, and provided further that Argosy may not
terminate the Merger Agreement under this paragraph after recission has occurred
under the Stock Purchase Agreement.                                             

EDMC may terminate the Merger Agreement if:                 

(7)  Argosy shall have breached in any material respect any 
representation, warranty, covenant or other agreement contained in the Merger   
Agreement, which breach (A) cannot be or has not been cured, in all material    
respects, within 20 business days after the giving of written notice to Argosy  
and (B) will result in the failure to satisfy a condition to the closing of the 
Merger;                                                                         

        (8)  the board of directors of Argosy (A) withholds or withdraws its
recommendation of the Merger or, (B) modifies its recommendation of the Merger  
in a manner materially adverse to EDMC;                                         

(9)  a tender offer or exchange offer for 20% or more of the
outstanding shares of Argosy common stock shall have been commenced or a        
registration statement with respect thereto shall have been filed (other than by
EDMC or an affiliate thereof) and the board of directors of Argosy shall have   
(A) recommended that the stockholders tender their shares in such tender or     
exchange offer or (B) publicly announced its intention to take no position with 
respect to such tender offer;                                                   

 (10)  Argosy is in material breach of the no solicitation and
stockholder recommendation provisions of the Merger Agreement;                  

          (11)  an alternative acquisition proposal shall have been announced or
otherwise become publicly known and the board of directors of Argosy shall have 
(A) failed to recommend against acceptance of such by the stockholders          
(including by taking no position, or indicating its inability to take position, 
with respect to the acceptance by the stockholders of an acquisition proposal   
involving tender offer or exchange offer) or (B) failed to reconfirm its        
approval and recommendation of the Merger Agreement and the transactions        
contemplated thereby, in each case within 10 business days thereafter; or       

       (12)  more than 10% of shares of Argosy common stock are dissenting
shares.                                                                         

          If the Merger Agreement is validly terminated, it will become void and
have no effect, without any liability of any party or its officers or directors 
to the other party. However, certain provisions thereof relating to, among other
things, the termination fee described in the next section below will continue in
effect. In addition, the Stock Purchase Agreement does not by its terms         
terminate if the Merger                                                         

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Agreement is terminated and, therefore, EDMC may still proceed with the purchase
of Dr. Markovitz 's shares and remain the controlling stockholder of Argosy.    

       Termination Fee. All costs and expenses incurred in connection with
the Merger Agreement and related transactions will be paid by the party         
incurring such costs or expenses, subject to certain exceptions. Argosy,        
however, has agreed to pay EDMC a $2.0 million termination fee if the Merger    
Agreement is terminated for the reasons described in paragraphs 6, 8, 9, 10, or 
11 of the immediately preceding section. Except as noted above, any termination 
fee payable by Argosy must be paid to EDMC concurrently with the termination of 
the Merger Agreement.                                                           

      Certain Other Effects of the Merger. The Common Stock is currently
listed for quotation on the Nasdaq National Market. Following consummation of   
the Merger, the Common Stock will not be quoted for trading thereon nor will the
Common Stock trade on any other national securities exchange. Following the     
consummation of the Merger and pursuant to Section 12(g)(4) of the Exchange Act 
of 1934, as amended, EDMC will file for termination of the registration of the  
Common Stock under the Exchange Act.                                            

      Except as set forth in this Item 4, EDMC has no plans or proposals
that relate to or would result in any of the matters set forth in clauses (a)   
through (j) of Item 4 of Schedule 13D.                                          

        The foregoing summary of the Merger Agreement does not purport to be
complete and is qualified in its entirety by the full text of the Merger        
Agreement, which is incorporated herein by reference.                           

Item 5.  Interest in Securities of Argosy                                       

(a) - (b). As a result of the purchase of the Shares pursuant to the  
Stock Purchase Agreement, EDMC may be deemed to be the beneficial owner of      
4,900,000 shares of Common Stock, which constitutes approximately 75.4% of the  
outstanding Common Stock, based upon 6,497,296 Shares of Common Stock issued and
outstanding on September 17, 2001, as reported in Argosy's proxy statement as   
filed with the Commission on September 28, 2001. To the knowledge of EDMC, none 
of the persons identified on Schedule A hereto are, or may be deemed to be, the 
beneficial owners of any shares of Common Stock.                                

  As set forth herein, EDMC has sole voting and dispositive power over the
Shares that it may be deemed to beneficially own. EDMC does not share any voting
or dispositive power over any shares of Common Stock.                           

   (c) Except as described herein, there have been no transactions in shares
of the Common Stock by EDMC, or, to the best of its knowledge, by any of the    
persons listed on Schedule A hereto, during the past sixty (60) days.           

(d) - (e). Not applicable.                                            

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect  
to Securities of Argosy                                   

        Other than the matters set forth herein in response to Items 3 and 4
above, EDMC is not, and, to the best of EDMC's knowledge, none of the persons   
listed in Schedule A hereto are, a party to any contracts, arrangements,        
understandings or relationships (legal or otherwise) with respect to any        
securities of Argosy, including, but not limited to, the transfer of voting of  
any of the securities, finder's fees, joint                                     

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ventures, loan or option agreements, puts or calls, guarantees of profits,      
division of profits or loss, or the giving or withholding of proxies.           

Item 7.  Material to Be Filed as Exhibits                                       

Exhibit No.    Description                                                      
-----------    -----------                                                      

  1         Irrevocable Standby Letter of Credit dated September 27, 2001,
            issued by National City Bank of Pennsylvania (filed herewith).

   2         Amended and Restated Credit Agreement dated September 20, 2001,
               by and among Education Management Corporation as the Borrower and
           National City Bank of Pennsylvania as the Agent for the other
lenders identified therein (filed herewith).      

 3         Agreement and Plan of Merger dated July 9, 2001, among Argosy
             Education Group, Inc., Education Management Corporation and HAC
      Inc. (incorporated herein by reference to Exhibit 2.1 of
          Argosy Education Group, Inc.'s Quarterly Report on Form 10-Q
 filed for the quarterly period ended May 31, 2001).

4         Stock Purchase Agreement dated July 9, 2001, by and between 
       Education Management Corporation and Michael C. Markovitz
        (incorporated herein by reference to Exhibit 2.2 to Argosy
             Education Group, Inc.'s Quarterly Report on Form 10-Q filed for
the quarterly period ended May 31, 2001).         

5         Joinder Agreement dated September 26, 2001, by and among    
             Education Management Corporation, Michael C. Markovitz, The MCM
             Trust and the Michael C. Markovitz Dynastic Trust (incorporated
           herein by reference to Exhibit 2.2 of Argosy Education Group,
             Inc.'s Current Report on Form 8-K filed on September 27, 2001).

     6         Irrevocable Proxy and Power of Attorney given by Dr. Markovitz to
Education Management Corporation (filed herewith).

__________________________                        

               * The reporting person hereby agrees to furnish supplementally to
                 the Commission, upon request, a copy of any omitted schedule to
any exhibit hereto.                           

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SCHEDULE A  
Information Concerning Executive Officers and Directors 
of Education Management Corporation 

Set forth below is the name, business address, principal occupation or
employment and citizenship of each director and executive officer of Education  
Management Corporation ("EDMC"). The business address of each person listed     
below is the address of EDMC, 300 Sixth Avenue, Suite 800, Pittsburgh, PA 15222.
Each of such directors and executive officers is a citizen of the United States.

Name                        Principal Occupation or Employment    
----                        ----------------------------------    
Robert H. Atwell           Retired senior consultant with A.T. Kearney, Inc., a 
                         global consulting firm and a director of EDMC

James J. Burke, Jr.        Partner and director of Stonington Partners, Inc., a 
                            private investment firm, partner and director of
                         Stonington Partners II and a director of EDMC

William M. Campbell, III   President of Miramax Television and a director of    
EDMC                

Robert P. Gioella          President and Chief Operating Officer and a director 
of EDMC             

Albert Greenstone          President emeritus of The National Center for        
                          Professional Development, a unit of EDMC and a
director of EDMC    

Miryam L. Knutson          Consultant for Stonington Partners, Inc. and Arena   
                           Capital Partners, L.L.C. and a director of EDMC

Robert B. Knutson          Chairman and Chief Executive Officer and a director  
of EDMC             

Robert T. McDowell         Executive Vice President and Chief Financial Officer 
of EDMC             

John R. McKernan, Jr.      Vice Chairman and a director of EDMC                 

James S. Pasman, Jr.       Retired President and Chief Operating Officer of     
                            National Intergroup, Inc. and a director of EDMC

David J. Pauldine          President, the Art Institutes, EDMC's main operating 
unit                

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SIGNATURE 

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and  
correct.                                                                        

October 5, 2001                               EDUCATION MANAGEMENT CORPORATION  

                                          By: /s/ Robert T. McDowell
                                                    ----------------------------
                                          Robert T. McDowell
                                                    Executive Vice President and
                                               Chief Financial Officer

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INDEX TO EXHIBITS 

Exhibit No.        Description                                                  
-----------        -----------                                                  

1             Irrevocable Standby Letter of Credit dated September 27,
               2001, issued by National City Bank of Pennsylvania (filed
herewith).                                

 2             Amended and Restated Credit Agreement dated September 20,
                2001, by and among Education Management Corporation as the
                  Borrower and National City Bank of Pennsylvania as the Agent
                for the other lenders identified therein (filed herewith).

     3             Agreement and Plan of Merger dated July 9, 2001, among Argosy
                 Education Group, Inc., Education Management Corporation and
                  HAC Inc. (incorporated herein by reference to Exhibit 2.1 of
                  Argosy Education Group, Inc.'s Quarterly Report on Form 10-Q
         filed for the quarterly period ended May 31, 2001).

   4             Stock Purchase Agreement dated July 9, 2001, by and between
               Education Management Corporation and Michael C. Markovitz
                (incorporated herein by reference to Exhibit 2.2 to Argosy
                 Education Group, Inc.'s Quarterly Report on Form 10-Q filed
   for the quarterly period ended May 31, 2001).

5             Joinder Agreement dated September 26, 2001, by and among
                 Education Management Corporation, Michael C. Markovitz, The
           MCM Trust and the Michael C. Markovitz Dynastic Trust
                (incorporated herein by reference to Exhibit 2.2 of Argosy
                 Education Group, Inc.'s Current Report on Form 8-K filed on
September 27, 2001).                      

6             Irrevocable Proxy and Power of Attorney given by Dr.    
          Markovitz to Education Management Corporation (filed
herewith).                                

_____________________                     

     * The reporting person hereby agrees to furnish
                   supplementally to the Commission, upon request, a copy of
     any omitted schedule to any exhibit hereto.

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                                                                       Exhibit 1

                                                        [Enlarge/Download Table]
                                                                                        
National City     INTERNATIONAL DIVISION        TELEX:  212537                          
                  LETTER OF CREDIT DEPT.        ANSWER BACK                             
                      P.O. BOX 5101             NCB UR                                  
               CLEVELAND, OH  44101-0101 U.S.A. CABLE ADDRESS:  NATCITY INT             
                  TELEPHONE:  (216)-488-7642    CODES:  PETERSON'S 3/RD/ & 4/TH/ EDITION
                      FAX:  (216)-488-7550      SWIFT:  NATCUS33                        

                        STREET ADDRESS:                                                 
                      23000 MILLCREEK BLVD.                                             
                   HIGHLAND HILLS, OH  44122                                            

IRREVOCABLE STANDBY LETTER OF CREDIT

Date: September 27, 2001                                                        

BENEFICIARY                                   APPLICANT                         
First Union National Bank, as Escrow          Education Management Corporation  
Agent under Escrow Agreement dated as         300 Sixth Avenue, Suite 800       
of September 26, 2001 by and among            Pittsburgh, PA 15222              
Michael C. Markovitz, MCM Trust, dated                                          
July 20, 1992, Michael C. Markovitz                                             
Dynastic Trust, dated December 29, 1998,                                        
Education Management Corporation and First                                      
Union National Bank, as Escrow Agent                                            

123 South Broad Street                                                          
Corporate Trust Administration, PA 1249                                         
Philadelphia, PA 19109                                                          
Attention: Alan Finn                                                            

We hereby issue our Irrevocable Standby Letter of Credit No. SCL007018 in your  
favor and for the account of  Education Management Corporation for the sum not  
exceeding Fifty Eight Million Eight Hundred Thousand Dollars and 00/100 Cents   
(US $58,800,000) available by your sight draft(s) drawn on National City Bank of
Pennsylvania, and accompanied by your statement purportedly signed by an        
authorized official of First Union National Bank, as Escrow Agent under Escrow  
Agreement dated as of September 26, 2001 by and among Michael C. Markovitz, MCM 
Trust, dated July 20, 1992, Michael C. Markovitz Dynastic Trust, dated December 
29, 1998, Education Management Corporation and First Union National Bank, as    
Escrow Agent, as follows:                                                       

"We hereby certify that First Union National Bank, as Escrow Agent under Escrow 
Agreement dated as of September 26, 2001 (the "Escrow Agreement") by and among  
Michael C. Markovitz, MCM Trust, dated July 20, 1992, Michael C. Markovitz      
Dynastic Trust, dated December 29,                                              

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                                                        [Enlarge/Download Table]
                                                                                        
National City     INTERNATIONAL DIVISION        TELEX:  212537                          
                  LETTER OF CREDIT DEPT.        ANSWER BACK                             
                      P.O. BOX 5101             NCB UR                                  
               CLEVELAND, OH  44101-0101 U.S.A. CABLE ADDRESS:  NATCITY INT             
                  TELEPHONE:  (216)-488-7642    CODES:  PETERSON'S 3/RD/ & 4/TH/ EDITION
                      FAX:  (216)-488-7550      SWIFT:  NATCUS33                        

                        STREET ADDRESS:                                                 
                      23000 MILLCREEK BLVD.                                             
                   HIGHLAND HILLS, OH  44122                                            

Page 2 of 2                                                                     
L/C NO.                                                                         

1998, Education Management Corporation and First Union National Bank, as Escrow 
Agent, is required to draw $______ dollars under the attached Letter of Credit  
No. SCL007018 under terms of the Escrow Agreement."                             

A partial drawing is permitted.                                                 

Only one draw is permitted. Draft drawn under this letter of credit must be     
presented with original letter of credit and all the amendments, if any, for    
cancellation of the available balance on the letter of credit.                  

This credit expires at 1:00 P.M., Eastern time on December  31, 2001.           

Draft drawn under this letter of credit must be endorsed hereon and must bear   
the clause:  Drawn under National City Bank of Pennsylvania, Letter of Credit   
No. SCL007018, dated September 27, 2001 and must be presented at 23000 Millcreek
Blvd., Highland Hills, Ohio 44122 on or before 1:00 P.M. Eastern time on        
December 31, 2001."                                                             

We hereby agree with you that draft drawn under and in compliance with the terms
of this letter of credit will be fully honored upon presentation, as specified  
herein.                                                                         

Except as otherwise expressly stated herein, this Letter of Credit is subject to
the Uniform Customs and Practice for Documentary Credits (1993 revision),       
International Chamber of Commerce Publication No. 500 ("Uniform Customs").  This
Letter of Credit shall be deemed to be made under the laws of the Commonwealth  
of Pennsylvania, including Article 5 of the Uniform Commercial Code, and shall, 
as to matters not governed by the Uniform Customs, be governed by and construed 
in accordance with the laws of the Commonwealth of Pennsylvania without regard  
to its conflict of laws principles.                                             

Very truly yours,                                                               

                             /s/ Santosh Podar
                             -----------------
                                Authorized Signature
/s/ Nicole Marko                              National City Bank of Pennsylvania
----------------                                                                
Authorized Signature                                                            
National City Bank of Pennsylvania                                              

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                                                                       EXHIBIT 2

AMENDED AND RESTATED CREDIT AGREEMENT 

by and among  

EDUCATION MANAGEMENT CORPORATION  

as the Borrower 

THE BANKS PARTY HERETO  

as the Banks

and 

NATIONAL CITY BANK OF PENNSYLVANIA, 

as the Agent  

and 

FIRST UNION NATIONAL BANK, as Syndication Agent 

SUNTRUST BANK, as Syndication Agent 

FLEET NATIONAL BANK, as Documentation Agent 

and 

THE CHASE MANHATTAN BANK, as Documentation Agent  

September 20, 2001  

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TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                                                   Page 
                                                                                                                        
INDEX OF EXHIBITS.................................................................................................    v 

INDEX OF SCHEDULES................................................................................................   vi 

ARTICLE I. DEFINITIONS............................................................................................    1 
     1.1    Defined Terms.........................................................................................    1 
     ---    -------------                                                                                               
     1.2    GAAP Definitions......................................................................................    19
     ---    ----------------                                                                                            
     1.3    Other Definitional Conventions........................................................................    19
     ---    ------------------------------                                                                              
     1.4    Headings..............................................................................................    20
     ---    --------                                                                                                    

ARTICLE II. THE CREDIT............................................................................................    20
     2.1    Revolving Credit Loans................................................................................    20
     ---    ----------------------                                                                                      
     2.2    Swing Loans; Supplemental Swing Loans.................................................................    23
     ---    -------------------------------------                                                                       
     2.3    Letters of Credit.....................................................................................    27
     ---    -----------------                                                                                           
     2.4    Term Loans............................................................................................    34
     ---    ----------                                                                                                  
     2.5    Certain Provisions Relating to Interest Rates.........................................................    36
     ---    ---------------------------------------------                                                               
     2.6    Yield Protection and Reimbursement....................................................................    41
     ---    ----------------------------------                                                                          
     2.7    Capital Adequacy......................................................................................    43
     ---    ----------------                                                                                            
     2.8    [Intentionally Omitted.]..............................................................................    44
     ---    ------------------------                                                                                    
     2.9    Lending Offices.......................................................................................    44
     ---    ---------------                                                                                             
     2.10   Time, Place and Manner of Payments....................................................................    44
     ----   ----------------------------------                                                                          
     2.11   Payment From Accounts Maintained by the Borrower......................................................    44
     ----   ------------------------------------------------                                                            
     2.12   Swing Loan Settlement Date Procedures.................................................................    44
     ----   -------------------------------------                                                                       
     2.13   Substitution of a Bank................................................................................    45
     ----   ----------------------                                                                                      

ARTICLE III. SECURITY; SET-OFF....................................................................................    45
     3.1    Security Interests; Mortgages.........................................................................    45
     ---    -----------------------------                                                                               
     3.2    Set-Off...............................................................................................    46
     ---    -------                                                                                                     

ARTICLE IV. REPRESENTATIONS AND WARRANTIES........................................................................    46
     4.1    Existence.............................................................................................    46
     ---    ---------                                                                                                   
     4.2    Authority.............................................................................................    47
     ---    ---------                                                                                                   
     4.3    Capitalization of Subsidiaries........................................................................    47
     ---    ------------------------------                                                                              
     4.4    Validity and Enforceability...........................................................................    47
     ---    ---------------------------                                                                                 
     4.5    No Conflict...........................................................................................    47
     ---    -----------                                                                                                 
     4.6    Consents..............................................................................................    47
     ---    --------                                                                                                    
     4.7    Litigation............................................................................................    48
     ---    ----------                                                                                                  
     4.8    Compliance With Applicable Laws, etc..................................................................    48
     ---    ------------------------------------                                                                        

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      4.9      Financial Statements................................................................................. 48 
      ---      --------------------                                                                                     
      4.10     Environmental Matters................................................................................ 48 
      ----     ---------------------                                                                                    
      4.11     Deferred Compensation Plans.......................................................................... 49 
      ----     ---------------------------                                                                              
      4.12     Title to Properties.................................................................................. 50 
      ----     -------------------                                                                                      
      4.13     Intellectual Property................................................................................ 50 
      ----     ---------------------                                                                                    
      4.14     Tax Returns and Payments............................................................................. 51 
      ----     ------------------------                                                                                 
      4.15     Material Adverse Change.............................................................................. 51 
      ----     -----------------------                                                                                  
      4.16     Solvency............................................................................................. 51 
      ----     --------                                                                                                 
      4.17     Investment Company Act............................................................................... 51 
      ----     ----------------------                                                                                   
      4.18     Public Utility Holding Company Act................................................................... 51 
      ----     ----------------------------------                                                                       
      4.19     Liens and Security Interests......................................................................... 52 
      ----     ----------------------------                                                                             
      4.20     Margin Stock......................................................................................... 52 
      ----     ------------                                                                                             
      4.21     Updates to Schedules................................................................................. 52 
      ----     --------------------                                                                                     
      4.22     Disclosure........................................................................................... 52 
      ----     ----------                                                                                               
      4.23     Use of Proceeds...................................................................................... 53 
      ----     ---------------                                                                                          
      4.24     Insurance............................................................................................ 53 
      ----     ---------                                                                                                
      4.25     Material Contracts; Burdensome Restrictions.......................................................... 53 
      ----     -------------------------------------------                                                              
      4.26     Employment Matters................................................................................... 53 
      ----     ------------------                                                                                       
      4.27     Senior Debt Status................................................................................... 53 
      ----     ------------------                                                                                       

ARTICLE V. AFFIRMATIVE COVENANTS.................................................................................... 54 
     5.1       Use of Proceeds...................................................................................... 54 
     ---       ---------------                                                                                          
     5.2       Furnishing Information............................................................................... 54 
     ---       ----------------------                                                                                   
     5.3       Preservation of Existence............................................................................ 58 
     ---       -------------------------                                                                                
     5.4       Payment of Taxes and Fees............................................................................ 58 
     ---       -------------------------                                                                                
     5.5       Notice of Change of Business......................................................................... 58 
     ---       ----------------------------                                                                             
     5.6       Hazard and Casualty Insurance........................................................................ 58 
     ---       -----------------------------                                                                            
     5.7       Good Repair.......................................................................................... 59 
     ---       -----------                                                                                              
     5.8       Corporate Records.................................................................................... 59 
     ---       -----------------                                                                                        
     5.9       Inspection of Records and Properties................................................................. 59 
     ---       ------------------------------------                                                                     
     5.10      Continued Ownership of Active Subsidiaries........................................................... 59 
     ----      ------------------------------------------                                                               
     5.11      Compliance With Laws................................................................................. 59 
     ----      --------------------                                                                                     
     5.12      Further Assurances................................................................................... 60 
     ----      ------------------                                                                                       

ARTICLE VI. NEGATIVE COVENANTS...................................................................................... 60 
     6.1       Maintenance of Ratio of Total Funded Debt to EBITDA.................................................. 60 
     ---       ---------------------------------------------------                                                      
     6.2       Limitation on Total Funded Debt to Total Capitalization.............................................. 60 
     ---       -------------------------------------------------------                                                  
     6.3       [Intentionally Omitted].............................................................................. 61 
     ---       -----------------------                                                                                  
     6.4       Fixed Charge Coverage Ratio.......................................................................... 61 
     ---       ---------------------------                                                                              
     6.5       Disposal of Assets................................................................................... 61 
     ---       ------------------                                                                                       
     6.6       Permitted Indebtedness............................................................................... 61 
     ---       ----------------------                                                                                   
     6.7       Prohibition on Encumbrances.......................................................................... 62 
     ---       ---------------------------                                                                              
     6.8       Advance of Funds and Investments..................................................................... 64 
     ---       --------------------------------                                                                         
     6.9       Dividend and Redemption Restrictions................................................................. 65 
     ---       ------------------------------------                                                                     
     6.10      Merger............................................................................................... 65 
     ----      ------                                                                                                   
     6.11      Regulations X, T and U Compliance.................................................................... 65 
     ----      ---------------------------------                                                                        

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      6.12     Cohort Default Rates............................................................................... 66 
      ----     --------------------                                                                                   
      6.13     Permitted Acquisitions............................................................................. 66 
      ----     ----------------------                                                                                 
      6.14     Change Fiscal Year................................................................................. 68 
      ----     -----------------                                                                                      
      6.15     Change of Business................................................................................. 68 
      ----     ------------------                                                                                     
      6.16     Amendment to Acquisition Agreements................................................................ 68 
      ----     -----------------------------------                                                                    

ARTICLE VII. CONDITIONS PRECEDENT................................................................................. 69 
     7.1       All Revolving Credit Loan, Term Loans, Swing Loan and Supplemental Swing Loan Disbursements            
     ---       -------------------------------------------------------------------------------------------            
               and All Letters of Credit.......................................................................... 69 
               -------------------------                                                                              
     7.2       Conditions Precedent to the Initial Revolving Credit Disbursement, Term Loan and the Issuance          
     ---       ---------------------------------------------------------------------------------------------          
               of the Initial Letter of Credit.................................................................... 69 
               -------------------------------                                                                        

ARTICLE VIII. EVENTS OF DEFAULT................................................................................... 72 
     8.1       Payment Default.................................................................................... 72 
     ---       ---------------                                                                                        
     8.2       Cross Defaults..................................................................................... 73 
     ---       --------------                                                                                         
     8.3       Insolvency......................................................................................... 73 
     ---       ----------                                                                                             
     8.4       Dissolution........................................................................................ 73 
     ---       -----------                                                                                            
     8.5       Adverse Judgments.................................................................................. 73 
     ---       -----------------                                                                                      
     8.6       Failure to Comply With Certain Covenants........................................................... 74 
     ---       ----------------------------------------                                                               
     8.7       Failure to Comply With Other Covenants............................................................. 74 
     ---       --------------------------------------                                                                 
     8.8       Material Adverse Change............................................................................ 74 
     ---       -----------------------                                                                                
     8.9       Misrepresentation.................................................................................. 74 
     ---       -----------------                                                                                      
     8.10      Change of Control.................................................................................. 74 
     ----      -----------------                                                                                      
     8.11      Consequences of an Event of Default................................................................ 74 
     ----      -----------------------------------                                                                    

ARTICLE IX. AGREEMENT AMONG BANKS................................................................................. 75 
     9.1       Appointment and Grant of Authority................................................................. 75 
     ---       ----------------------------------                                                                     
     9.2       Non-Reliance on Agent.............................................................................. 76 
     ---       ---------------------                                                                                  
     9.3       Responsibility of Agent and Other Matters.......................................................... 76 
     ---       -----------------------------------------                                                              
     9.4       Action on Instructions............................................................................. 77 
     ---       ----------------------                                                                                 
     9.5       Action in Event of Default......................................................................... 77 
     ---       --------------------------                                                                             
     9.6       Indemnification.................................................................................... 77 
     ---       ---------------                                                                                        
     9.7       Agent's Rights as a Bank........................................................................... 78 
     ---       ------------------------                                                                               
     9.8       Advances by Agent.................................................................................. 78 
     ---       -----------------                                                                                      
     9.9       Payment to Banks................................................................................... 79 
     ---       ----------------                                                                                       
     9.10      Pro Rata Sharing................................................................................... 79 
     ----      ----------------                                                                                       
     9.11      Successor Agent.................................................................................... 79 
               ---------------                                                                                        

ARTICLE X. MISCELLANEOUS.......................................................................................... 80 
     10.1      Amendments and Waivers............................................................................. 80 
     ----      ----------------------                                                                                 
     10.2      Notices............................................................................................ 81 
     ----      -------                                                                                                
     10.3      Holiday Payments................................................................................... 82 
     ----      ----------------                                                                                       
     10.4      Tax Withholding.................................................................................... 82 
     ----      ---------------                                                                                        
     10.5      Survival........................................................................................... 84 
     ----      --------                                                                                               
     10.6      Costs.............................................................................................. 84 
     ----      -----                                                                                                  

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10.7   Certain Taxes.................................................................................... 84
----   -------------                                                                                       
10.8   Successors, Assigns and Participations........................................................... 85
----   --------------------------------------                                                              
10.9   Confidentiality.................................................................................. 87
----   ---------------                                                                                     
10.10  Indemnification.................................................................................. 87
-----  ---------------                                                                                     
10.11  Integration...................................................................................... 88
-----  -----------                                                                                         
10.12  Severability..................................................................................... 88
-----  ------------                                                                                        
10.13  APPLICABLE LAW................................................................................... 88
-----  --------------                                                                                      
10.14  CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.................................................... 88
-----  ---------------------------------------------                                                       
10.15  Counterparts..................................................................................... 89
-----  ------------                                                                                        

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INDEX OF EXHIBITS                                                               

Exhibit Designation           Exhibit Name                                      
-------------------           ------------                                      

Exhibit "A"              Form of Revolving Credit Note                          

Exhibit "B"              Form of Swing Loan Note                                

Exhibit "C"              Form of Request for Revolving Credit                   
Loan/Advance of Term Loan     

Exhibit "D"              Form of Request for Swing Loan/Supplemental Swing Loan 

Exhibit "E"              Form of Supplemental Swing Loan Note                   

Exhibit "F"              Form of Term Note                                      

Exhibit "G"              Form of Borrower Security Agreement                    

Exhibit "H"              Form of Pledge Agreement                               

Exhibit "I"              Form of Borrower Patent, Trademark and                 
Copyright Security Agreement  

Exhibit "J"              Form of Mortgage and Security Agreement                

Exhibit "K"              Form of Compliance Certificate                         

Exhibit "L"              Form of Opinion of Counsel to                          
Borrower                      

Exhibit "M"              Form of Assignment and Assumption                      
Agreement                     

Exhibit "N"              Form of Borrower Agreement of Guaranty and Suretyship  

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INDEX OF SCHEDULES  
------------------  

1.1            Commitments of Banks                                   

4.1            Active Subsidiaries                                    

4.3            Ownership of Stock; Rights or Options                  

4.7            Litigation                                             

4.10           Environmental Matters                                  

4.11           Deferred Compensation Plans                            

4.12           Owned Real Property                                    

4.13           Intellectual Property                                  

6.6            Permitted Existing Indebtedness of the Borrower        

6.7            Permitted Existing Encumbrances                        

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AMENDED AND RESTATED CREDIT AGREEMENT 

       This Amended and Restated Credit Agreement is dated as of September
20, 2001 by and among EDUCATION MANAGEMENT CORPORATION, a Pennsylvania          
corporation (the "Borrower"), the FINANCIAL INSTITUTIONS listed on Schedule 1.1 
                                                                  ------------
hereto and each other financial institution which, from time to time, becomes a 
party hereto in accordance with Section 10.8 (individually, a "Bank" and        
collectively the "Banks"), NATIONAL CITY BANK OF PENNSYLVANIA, as the Issuing   
Bank (the "Issuing Bank") and NATIONAL CITY BANK OF PENNSYLVANIA, as the Agent  
for the Banks and the Issuing Bank (the "Agent") FIRST UNION NATIONAL BANK, as  
Syndication Agent, SUNTRUST BANK, as Syndication Agent, FLEET NATIONAL BANK, as 
Documentation Agent, and THE CHASE MANHATTAN BANK, as Documentation Agent.      

WITNESSETH: 

      WHEREAS, the Borrower and certain of the Banks are parties to that
certain Credit Agreement dated as of February 18, 2000, as amended (the         
"Existing Credit Agreement") pursuant to which the Banks made available to the  
Borrower a revolving credit facility in the aggregate principal amount of       
$100,000,000;                                                                   

         WHEREAS, the Borrower has entered into certain acquisition agreements
pursuant to which the Borrower contemplates the acquisition of certain other    
Persons in businesses similar to the Subsidiaries of the Borrower by acquiring  
the stock of such other Persons, acquiring the assets of such Person, or merging
such other Persons with and into a wholly owned Subsidiary of the Borrower;     

 WHEREAS, the Borrower has requested the Banks to increase the
revolving credit facility to $150,000,000, with such revolving credit facility  
to contain sub-facilities for (i) the issuance of standby letters of credit in  
an aggregate amount not to exceed $75,000,000, (ii) a swing line of credit of up
to $10,000,000 in the aggregate at any one time outstanding and (ii) a          
supplemental swing line of credit of up to $30,000,000 in the aggregate at any  
one time outstanding.  The Borrower has also requested the Banks to make a term 
loan to the Borrower in the amount of $50,000,000; and                          

        WHEREAS, the Banks are willing to provide such credit upon the terms
and conditions hereinafter set forth.                                           

        NOW, THEREFORE, in consideration of mutual promises contained herein
and other valuable consideration and intending to be legally bound hereby, the  
parties hereto agree as follows:                                                

ARTICLE I. DEFINITIONS  
----------------------  

1.1  Defined Terms.                                                   
-------------                                               

     As used herein, the following terms shall have the meaning specified unless
the context otherwise requires:                                                 

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"Accredited Subsidiary" means each Subsidiary which is accredited or  
---------------------                                               
approved, as applicable, by accrediting agencies, including but not limited to  
the Accrediting Commission of Career Schools and Colleges of Technology, the    
National Association of Trade and Technical Schools, the American Bar           
Association, the Southern Association of Colleges and Schools, the North Central
Association of Colleges and Schools or any other similar Person which accredits,
certifies, or otherwise approves proprietary post-secondary vocational or career
training schools or schools offering associate, bachelor, masters or doctorate  
degrees.                                                                        

    "Acquiring Person" means any Person or group of two or more Persons acting
----------------                                                    
as a partnership, limited partnership, syndicate, or other group for the purpose
of acquiring, holding or disposing of voting stock of the Borrower, together    
with all affiliates and associates (as defined in Rule 12b-2 under the          
Securities and Exchange Act of 1934, as amended) of such Person or Persons.     

 "Active Subsidiary" means individually, and "Active Subsidiaries" shall
-----------------                           --------------------    
mean collectively, (i) each Subsidiary of the Borrower shown on Schedule 4.1    
hereof as being an Active Subsidiary as of the Closing Date and (ii) each other 
Subsidiary of the Borrower which at any time in the future (A) becomes an       
Accredited Subsidiary or (B) has  revenues (on a consolidated basis) of $300,000
or more in any Fiscal Year.                                                     

   "Affiliate" means, as to any Person, any second Person which, directly or
---------                                                           
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person.  For purposes of this definition, the   
terms "control", "controlled by", and "under common control with" shall mean the
possession of the power to direct or cause the direction of the management and  
policies of any Person, whether through the ownership of shares, by contract or 
otherwise.                                                                      

   "Agent" means National City Bank of Pennsylvania, or any successor agent,
-----                                                               
in its capacity as the administrative agent for the Banks and the Issuing Bank  
under this Credit Agreement and the other Loan Documents.                       

 "Agent's Fee" means fees payable to the Agent, for its own account, for
-----------                                                         
arranging and administering the Credit Facility as described in the Fee Letter  
(i.e. all fees payable under such letter, except for the Closing Fee).          

"Applicable Base Rate Margin" shall have the meaning ascribed to it in
---------------------------                                         
Subsection 2.5(b) hereof.                                                       

   "Applicable Eurodollar Rate Margin" shall have the meaning ascribed to it
---------------------------------                                   
in Subsection 2.5(b) hereof.                                                    

     "Applicable Money Market Rate Margin" shall have the meaning ascribed to it
-----------------------------------                                 
in Subsection 2.5(b) hereof.                                                    

"Argosy" means Argosy Education Group, Inc., an Illinois corporation. 
------                                                              

 "Argosy Purchase Agreement" means that certain Stock Purchase Agreement
-------------------------                                           
dated as of July 9, 2001, by and between Michael C. Markovitz and the Borrower. 

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   "Argosy Merger Agreement" means that certain Agreement and Plan of Merger
-----------------------                                             
dated as of July 9, 2001, among the Borrower, Argosy and HAC.                   

     "Article" means an article of this Credit Agreement unless another document
-------                                                             
is specifically referenced.                                                     

  "Assignment and Assumption Agreement" means an Assignment and Assumption
-----------------------------------                                 
Agreement substantially in the form of Exhibit "M" hereto by and among a        
         -----------
Purchasing Bank, a Transferor Bank and the Agent, on behalf of itself and the   
remaining Banks, and consented to by the Borrower to the extent required by     
Section 10.8.                                                                   

   "Authorized Officer"  means Chairman, Chief Executive Officer, President,
------------------                                                  
Vice President, Chief Financial Officer, Treasurer, Controller or Assistant     
Treasurer of any Person.  The Agent, the Banks and the Issuing Bank shall be    
entitled to rely on the incumbency certificates delivered pursuant to Section   
7.2 for the initial designation of each Authorized Officer of the Borrower.     
Additions or deletions to the list of Authorized Officers may be made by the    
Borrower, at any time, by delivering to the Agent, for redelivery to the Banks  
and the Issuing Bank, a revised fully-executed incumbency certificate for the   
Borrower.                                                                       

    "Availability Period" shall mean the period from and including the Closing
-------------------                                                 
Date to but excluding the Repayment Date.                                       

"Banks" shall mean collectively, and "Bank" shall mean separately, the
-----                                ----                           
financial institutions named on Schedule 1.1, National City Bank and, unless the
------------    
context clearly requires otherwise, the Issuing Bank, together with their       
respective successors and assigns.                                              

    "Bank Indebtedness" means the liability of the Borrower, as of any date of
-----------------                                                   
determination, without duplication, to pay the Commitment Fee, the Agent's Fee, 
the Letter of Credit Fees, the Issuance Fee, the outstanding principal amount of
the Revolving Credit Loans, the Swing Loans, the Supplemental Swing Loans, the  
Term Loan and any draws upon any Letter of Credit, interest thereon, any other  
amounts due pursuant to Article II hereof, all obligations under the Guaranty   
Agreement, all obligations to Banks and Affiliates of Banks under interest rate 
agreements permitted under Section 6.6(xi) and all reasonable out-of-pocket     
expenses incurred by the Banks or the Agent in connection with the preparation, 
negotiation, administration, enforcement of this Credit Agreement, the Revolving
Credit Notes, the Swing Loan Note, the Supplemental Swing Loan Notes, the Term  
Notes, the other Loan Documents, the transactions contemplated thereby, or the  
protection of the Agent's, the Banks' or the Issuing Bank's rights under any of 
the foregoing described instruments (including but not limited to the reasonable
fees and expenses of counsel) to the extent such expenses are the responsibility
of the Borrower pursuant to this Credit Agreement.                              

    "Base Rate" means, as of any date of determination, a rate of interest per
---------                                                           
annum equal to the higher of (i) the Agent's Prime Rate, as of such date of     
determination, or (ii) the sum of (A) the Federal Funds Rate plus (B) one-half  
--                                                
of one percent (0.5%) per annum, as of such date of determination.  Such        
interest rate shall change automatically from time to time, effective as of the 
effective date of each change in the Prime Rate or the Federal Funds Rate.      

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    "Base Rate Loan" means any Loan which bears, or is to bear, interest under
--------------                                                      
the Base Rate Option.                                                           

    "Base Rate Option" means the interest rate option described in item (i) of
----------------                                                    
Subsection 2.5(b) hereof.                                                       

   "Benefit Arrangement" means an "employee benefit plan" within the meaning
-------------------                                                 
of Section 3(3) of ERISA, which is not a Plan or a Multiemployer Plan and which 
is maintained, or otherwise contributed to, by any Person for the benefit of    
employees of such Person or an ERISA Affiliate thereof.                         

    "Borrower" means Education Management Corporation, a corporation organized
--------                                                            
and existing under the laws of the Commonwealth of Pennsylvania and having its  
principal office at 300 Sixth Avenue, Suite 800, Pittsburgh, Pennsylvania 15222.

"Business Day" means (i) with respect to any borrowing or payment on, 
------------                                                        
renewal of or conversion to a Eurodollar Rate Loan, any day other than (a) a    
Saturday or Sunday, (b) a day on which commercial banks in Pittsburgh,          
Pennsylvania are required or authorized by law to close and (c) a day on which  
dealings are not carried on in the London interbank market and (ii) for all     
other purposes, any day other than (a) a Saturday or Sunday or (b) a day on     
which commercial banks in Pittsburgh, Pennsylvania are required or authorized by
law to close.                                                                   

     "Capital Expenditures" means the total capital expenditures of the Borrower
--------------------                                                
and its Subsidiaries excluding: (i) capital expenditures of the Borrower and its
Subsidiaries which are classified as leasehold improvements on the books and    
records of the Borrower,  (ii) capital expenditures of the Borrower and its     
Subsidiaries related to expansion projects or new programs, and (iii) capital   
expenditures related to Subsidiaries of the Borrower that were recently acquired
or incorporated (and have commenced operations) by the Borrower as of the time  
at which the Fixed Charges are calculated, as follows:                          

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------
dates upon which Fixed Charges                    capital expenditures of Subsidiaries         
are calculated                                    acquired or incorporated after following     
                                                  dates are excluded                           
-----------------------------------------------------------------------------------------------
                                                                                               
September 30, 2001 through June 30 2002           June 30, 2000                                

-----------------------------------------------------------------------------------------------
September 30, 2002 through June 30, 2003          June 30, 2001                                

-----------------------------------------------------------------------------------------------
September 30, 2003 through June 30, 2004          June 30, 2002                                

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

"Capitalized Lease" means, as to any Person, any lease of tangible or 
-----------------                                                   
intangible property (whether real, personal or mixed) by such Person as the     
lessee under which the obligations of the                                       

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lessee would be included in determining total liabilities as shown on the       
liability side of a balance sheet of such Person in accordance with GAAP.       

    "Capitalized Lease Obligations" means, as to any Person and as of any date
-----------------------------                                       
of determination, the principal amount of liability of such Person reflecting   
the aggregate discounted value of all future payments due under all Capitalized 
Leases calculated in accordance with GAAP including, but not limited to         
Statement of Financial Accounting Standards No. 13.                             

   "Change of Control" means (i) An Acquiring Person shall have acquired, or
-----------------                                                   
obtained the right to acquire, legal or beneficial ownership of 50% or more of  
the outstanding shares of the voting stock of the Borrower; or (ii) the         
replacement or resignation (other than by reason of death, illness or           
incapacity) within any period of twelve (12) consecutive calendar months, of a  
majority of the members of the board of directors of the Borrower (the "Board"),
which results in members of the Board who were in office at the beginning of    
such period constituting less than a majority of the members of the Board       
(unless such replacement or resignation shall have been effected or initiated by
a majority of the members of the board in office at the beginning of such period
or who became members of the board without effectuating a Change of Control).   

     "Closing Date" shall mean the Business Day on which the first Loan shall be
------------                                                        
made, which shall be September 20, 2001, or, if all the conditions specified in 
Section 7.2 have not been satisfied or waived by such date, not later than      
October 15, 2001, as designated by the Borrower by at least two (2) Business    
Days' advance notice to the Agent, or such other date as the parties agree. The 
closing shall take place at 11 a m., Pittsburgh time, on the Closing Date at the
Pittsburgh, Pennsylvania offices of Buchanan Ingersoll Professional Corporation,
or at such other time and place as the parties agree.                           

    "Closing Fee" means the fees paid to the Agent under the Fee Letter (other
-----------                                                         
than the Agent's underwriting/arrangement fees and administrative fees) which   
are allocated to the Banks in accordance with their pro rata share of the       
aggregate Commitment Amount.                                                    

    "Code" means the Internal Revenue Code of 1986, as the same may be amended
----                                                                
from time to time and the regulations and rulings promulgated thereunder,       
together with any successor legislation thereto.                                

     "Cohort Default Rate" shall have the meaning ascribed thereto by the DOE in
-------------------                                                 
Title 34, Chapter VI, Part 668, Subpart B, Section 17 of the Code of Federal    
Regulations (34 C.F.R. (S) 668.17), as the same may be amended from time to     
time.                                                                           

 "Collateral" shall mean the Pledged Collateral, the UCC Collateral, the
----------                                                          
Intellectual Property Collateral and the Real Property.                         

    "Commitment Amount" means, with respect to each Bank, the aggregate dollar
-----------------                                                   
amount of its Revolving Credit Commitment, Swing Loan Commitment, Supplemental  
Swing Loan Commitment and Term Loan Commitment.                                 

"Commitment Fee" means the fee described in Subsection 2.1(g) of this 
--------------                                                      
Credit Agreement.                                                               

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  "Commitment Percentage" means, with respect to each Bank, the percentage
---------------------                                               
amount set forth for such Bank under the caption "Percentage Amount" on Schedule
1.1 or in any Assignment and Assumption Agreement executed by such Bank, whether
in the capacity as a Purchasing Bank or a Transferor Bank, as such percentage   
amount may be amended from time to time.                                        

  "Compliance Certificate" means a compliance certificate substantially in
----------------------                                              
the form of Exhibit "K" hereto which shall be delivered by the Borrower to the  
-----------                                             
Agent and to each Bank in accordance with Subsection 5.2(d) hereof.             

"Consideration" means with respect to any Permitted Acquisition, the  
-------------                                                       
aggregate of (i) the cash paid by any of the Borrower and the Subsidiaries of   
the Borrower, directly or indirectly, to the seller in connection therewith,    
exclusive of any earn-out payments made to the seller based upon the performance
of the Person or business acquired after the effective date of the Permitted    
Acquisition, (ii) the value of the capital stock or warrants for the issuance of
capital stock of the Borrower or any Subsidiary issued to the seller in         
connection therewith (valued on the date that a definitive agreement is executed
in connection with any Permitted Acquisition), (iii) the Indebtedness for       
Borrowed Money incurred or assumed by any of the Borrower and its Subsidiaries, 
whether in favor of the seller or otherwise and whether fixed or contingent,    
(iv) any Guarantee given or incurred by the Borrower or any Subsidiary in       
connection therewith, and (v) any other consideration given or obligation       
incurred by the Borrower or any Subsidiary in connection therewith.             

   "Consolidated" means the consolidation of the accounts of any two or more
------------                                                        
Persons in accordance with GAAP.                                                

     "Contamination" means the presence in soil, groundwater or surface water of
-------------                                                       
Hazardous Substances in sufficient quantity or concentration to require material
investigation, corrective action or remediation under any Environmental Law.    

"Controlled Group" means, as to any Person, (i) a controlled group of 
----------------                                                    
corporations as defined in Section 1563 of the Code or (ii) a group of trades or
businesses under common control as defined in Section 414(c) of the Code of     
which such Person is a part or may become a part.                               

   "Credit Agreement" means this Credit Agreement together with the exhibits
----------------                                                    
and schedules hereto and hereof and all extensions, renewals, amendments,       
modifications, restatements and replacements hereof and hereto.                 

     "Credit Facility" means (i) the revolving credit facility consisting of the
---------------                                                     
Revolving Credit Commitment in the aggregate amount of $150,000,000 with a      
standby letter of credit sub-facility in the aggregate amount of $75,000,000 and
a Swing Loan sub-facility in an amount of $10,000,000 and a Supplemental Swing  
Loan sub-facility in an amount of $30,000,000, and (ii) the Term Loan Commitment
in the aggregate amount of $50,000,000.                                         

"Default" means an event, condition, act or omission to act which     
-------                                                             
constitutes a default in the performance or observance of any covenant,         
agreement or provision of any Loan Document, which event, condition, act or     
omission to act would become or constitute an Event of Default                  

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with the passage of time, the giving of notice or both, and without subsequent  
cure within any applicable period of time.                                      

   "Disbursement" means the one or more advances of proceeds to the Borrower
------------                                                        
made pursuant to Sections 2.1 and 2.2.                                          

   "Document" means any document, as that term is defined in the UCC, of any
--------                                                            
Person, whether now owned or hereafter acquired or created.                     

     "DOE" means the United States Department of Education or as the context may
---                                                                 
require, the United States Secretary of Education, or any successor thereto.    

 "DOL" means the United States Department of Labor or as the context may
---                                                                 
require, the United States Secretary of Labor, or any successor thereto.        

  "Dollars" or "$" means the legal tender of the United States of America.
--------------                                                      

 "EBITDA" means, for any period, on a Consolidated basis, the sum of net
------                                                              
income, depreciation and amortization, other non-cash charges to net income,    
interest expense, and income tax expense, minus non-cash credits to net income, 
in each case of the Borrower and its Subsidiaries for such period determined and
consolidated in accordance with GAAP.                                           

   "Encumbrance" means any encumbrance, mortgage, lien (statutory or other),
-----------                                                         
charge, pledge, hypothecation, security interest, assignment, preference,       
priority or other security agreement or preferential arrangement of any kind or 
nature whatsoever (including, without limitation, any conditional sale or other 
title retention agreement and any Capitalized Lease having substantially the    
same economic effect as any of the foregoing) in, upon or against any asset of  
any Person, whether or not voluntarily given.                                   

     "Environmental Claim" means any claim, suit, notice, order, demand or other
-------------------                                                 
communication made by any Person, including the Borrower, with respect to the   
Borrower, any of its Subsidiaries or any of their respective properties, whether
owned or leased, that:  (i) asserts a violation of any Environmental Law; (ii)  
asserts a liability under any Environmental Law; (iii) orders an investigation, 
corrective action, remediation or other response under any Environmental Law;   
(iv) alleges personal injury or property damage resulting from Hazardous        
Substances; or (v) alleges that there is or may be Contamination.               

"Environmental Law" means any and all statutes, laws, regulations,    
-----------------                                                   
ordinances, rules, judgments, orders, decrees, permits, grants, franchises,     
licenses, agreements or other governmental restrictions issued, promulgated or  
granted by any Governmental Person relating to the environment or the release of
any materials into the environment.                                             

   "ERISA" means the Employee Retirement Income Security Act of 1974, as the
-----                                                               
same may be amended, from time to time, and the rulings and regulations         
promulgated thereunder, together with any successor legislation thereto.        

"ERISA Affiliate" means, as of any date of determination and as to any
---------------                                                     
Person, any member of a Controlled Group of which such Person is a member, and  
any trade or business                                                           

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(whether or not incorporated) under common control with such Person, and all    
other entities which, together with such Person, are or were treated as a single
employer under Section 414 of the Code (which shall include any Subsidiary of   
such Person).                                                                   

  "Escrow Agreement" means that certain Escrow Agreement dated on or about
----------------                                                    
September 20, 2001, among Michael C. Markovitz, Argosy and the Borrower.        

 "Eurodollar Rate" means, with respect to each Eurodollar Rate Loan, the
---------------                                                     
rate of interest per annum with respect to any Interest Period obtained by the  
Agent by dividing (the resulting quotient rounded upward to the nearest 1/100th 
of 1% per annum) (i) the rate of interest determined by the Agent in accordance 
with its usual procedures (which determination shall be conclusive, absent      
manifest error) to be the average of the London interbank offered rates listed  
on the "LIBO" page of the Reuters Monitor Money Rate Service (or an appropriate 
successor thereto or, if Reuters or its successor ceases to provide such quotes,
a comparable replacement as determined by the Agent) at 11:00 A.M. (London,     
England time) one (1) Business Day prior to the first day of each Interest      
Period for an amount comparable to the Eurodollar Rate Loan for such Interest   
Period and having a borrowing date and a maturity comparable to such Interest   
Period by (ii) a number (expressed as a decimal) equal to (A) 1.00 minus (B) the
                                                           -----
Eurodollar Reserve Percentage, if any.  The Eurodollar Rate described above may 
also be expressed by the following formula:                                     

                           Average of London interbank offered rates listed on
  Eurodollar Rate  =     "LIBO" page of Reuters Monitor Money Rate Service
                           -------------------------------------------------
                             [1.00 - Eurodollar Reserve Percentage ]

   "Eurodollar Rate Loans" means any of the Loans bearing interest at a rate
---------------------                                               
determined on the basis of the Eurodollar Rate.                                 

   "Eurodollar Rate Option" means the interest rate option described in item
----------------------                                              
(ii) of Subsection 2.5(b) hereof.                                               

"Eurodollar Reserve Percentage" means, for any Interest Period, that  
-----------------------------                                       
percentage (expressed as a decimal), as calculated by the Agent, which is in    
effect on the first day of such Interest Period, as prescribed by the Board of  
Governors of the Federal Reserve System (or any successor) for determining the  
maximum reserve requirements (including without limitation supplemental,        
marginal or emergency reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities") of a member bank in such  
system in an amount comparable to the Eurodollar Rate Loan for such Interest    
Period and for a duration comparable to such Interest Period.                   

     "Event of Default" means any event described in Article VIII of this Credit
----------------                                                    
Agreement.                                                                      

 "Existing Debt" shall mean the indebtedness of the Borrower owed to the
-------------                                                       
Banks pursuant to the terms of  the Existing Credit Agreement, including all    
loans, interest accrued thereon,  outstanding letters of credit and fees        
reimbursable in accordance with the terms of the Existing Credit Agreement.     

"Expiration Date" shall have the same meaning as "Repayment Date."    
---------------                                                     

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"FDIC" means the Federal Deposit Insurance Corporation or any Person  
----                                                                
succeeding to its functions.                                                    

  "Federal Funds Rate" means, for any day, a fluctuating interest rate per
------------------                                                  
annum equal to the weighted average of the rates on overnight Federal funds     
transactions with members of the Federal Reserve System arranged by Federal     
funds brokers, as published for such day (or, if such day is not a Business Day,
for the preceding Business Day) by the Federal Reserve Bank of New York, or, if 
such rate is not so published for any day which is a Business Day, the average  
of the quotations at approximately 10:00 A.M.  (Pittsburgh, Pennsylvania time)  
on such day on such transactions received by the Agent from three (3) Federal   
funds brokers of recognized standing selected by the Agent in its sole          
discretion.                                                                     

    "Fee Letter" means that certain fee letter dated July 9, 2001, between the
----------                                                          
Borrower and the Agent.                                                         

    "Fiscal Quarter" shall mean each three-month fiscal period of the Borrower
--------------                                                      
beginning respectively on each successive January 1, April 1, July 1 and October
1 during the term hereof and ending on the immediately succeeding March 31, June
30, September 30 and December 31.                                               

"Fiscal Year" shall mean each annual fiscal period of the Borrower    
-----------                                                         
beginning July 1 and ending on the immediately succeeding June 30.              

"Fixed Charge Coverage Ratio" shall mean the ratio of EBITDA to       
---------------------------                                         
consolidated Fixed Charges.                                                     

"Fixed Charges" means for any period of determination the sum of net  
-------------                                                       
interest expense, income taxes, scheduled principal installments on Indebtedness
for Borrowed Money, dividends, Capital Expenditures and payments under          
Capitalized Lease Obligations, in each case of the Borrower and its Subsidiaries
determined and consolidated in accordance with GAAP.                            

  "GAAP" shall mean generally accepted United States accounting principles
----                                                                
which shall include, but not be limited to, the official interpretations thereof
as defined by the Financial Accounting Standards Board, its predecessors and its
successors.                                                                     

"Government Acts" shall have the meaning ascribed to it in Subsection 
---------------                                                     
2.3(g) hereof.                                                                  

"Governmental Person" means the government of the United States or the
-------------------                                                 
government of any state or locality therein, any political subdivision or any   
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity, or other regulatory bureau, authority, body or entity
of the United States or any state or locality therein, including the FDIC, the  
Comptroller of the Currency or the Board of Governors of the Federal Reserve    
System, any central bank or any comparable authority.                           

  "Governmental Rule" means any law, statute, rule, regulation, ordinance,
-----------------                                                   
order, judgment, guideline or decision of any Governmental Person (including,   
without limitation, Governmental Acts).                                         

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     "Guarantee" means, as to any Person, any obligation, direct or indirect, by
---------                                                           
which such Person undertakes to guaranty, assume or remain liable for the       
payment or performance of another Person's obligations, including but not       
limited to (i) endorsements of negotiable instruments, (ii) discounts with      
recourse, (iii) agreements to pay or perform upon a second Person's failure to  
pay or perform, (iv) remaining liable on obligations assumed by a second Person,
(v) agreements to maintain the capital, working capital, solvency or general    
financial condition of a second Person and (vi) agreements for the purchase or  
other acquisition of products, materials, supplies or services, if in any case  
payment therefor is to be made regardless of the non-delivery of such products, 
materials or supplies or the non-furnishing of such services.                   

     "Guaranty Agreement" shall mean the Agreement of Guaranty and Suretyship in
------------------                                                  
substantially the form of Exhibit N executed and delivered by the Borrower to   
---------                   
the Agent for the benefit of the Banks.                                         

   "HAC" means HAC Inc., an Illinois corporation and wholly owned Subsidiary
---                                                                 
of the Borrower.                                                                

"Hazardous Substances" means any (i) hazardous, toxic or polluting    
--------------------                                                
substances or wastes as defined by any Environmental Law; (ii) petroleum        
products; or (iii) other substances determined to be hazardous in any law       
currently in effect or hereafter enacted.                                       

    "IFAC" means International Fine Arts College, Inc., a Florida corporation.
----                                                                

   "IFAC Acquisition" means IFAC Acquisition Company, a Florida corporation.
----------------                                                    

     "IFAC Purchase Agreement" means that certain Asset Purchase Agreement dated
-----------------------                                             
as of July 25, 2001, by and among IFAC, Sir Edward Porter, IFAC Acquisition and 
the Borrower.                                                                   

  "Indebtedness for Borrowed Money" as applied to any Person means (i) the
-------------------------------                                     
direct liabilities of such Person for money borrowed or credit received (other  
than trade accounts payable incurred in the ordinary course of business),       
whether evidenced by a bond, note, debenture, Capitalized Lease Obligation,     
deferred purchase price arrangement, title retention device, reimbursement      
agreement or otherwise, including but not limited to any liabilities calculated 
in accordance with GAAP with respect to any currency swap agreement, interest   
rate swap, cap, collar or floor agreement or other interest rate management     
device, and (ii) the contingent liabilities of such Person under any Guarantee  
(including the amount of any guarantee obligations arising under any student    
loan programs) of the liabilities described in clause (i) above.                

    "Indemnified Party" shall have the meaning ascribed to it in Section 10.10
-----------------                                                   
hereof.                                                                         

     "Intellectual Property Collateral" shall mean all of the property described
--------------------------------                                    
in the Patent, Trademark and Copyright Assignment.                              

     "Interest Period" means any individual Interest Period of one (1), two (2),
---------------                                                     
three (3) or six (6) months (if available) selected by the Borrower pursuant to 
the terms and conditions of Subsection 2.5(c) hereof, commencing on the         
borrowing date, conversion date or renewal date of a Eurodollar Rate Loan to    
which such period shall apply.                                                  

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   "IRS" means the United States Internal Revenue Service or, as the context
---                                                                 
may require, the United States Department of Treasury, or any successor thereto.

  "Issuance Fee" means the fee described in item (ii) of Subsection 2.3(e)
------------                                                        
hereof.                                                                         

   "Issuing Bank" means National City Bank, in its capacity as the issuer of
------------                                                        
the Letters of Credit hereunder for the account of the Borrower.                

   "Lending Office" means, as to any Bank, its office located at the address
--------------                                                      
set forth in its administrative questionnaire as its "Lending Office" or such   
other office as such Bank may thereafter designate as its "Lending Office" by   
notice to the Borrower and the Agent.                                           

     "Letter of Credit" means any stand-by or commercial letter of credit issued
----------------                                                    
by the Issuing Bank pursuant to Section 2.3 hereof and the other terms and      
provisions hereof, for the account of the Borrower or for the account of any of 
the Borrower's Subsidiaries, provided that the Borrower is a guarantor and      
surety thereof, as any such letter of credit may from time to time be amended,  
modified, renewed, extended, supplemented or replaced.                          

"Letter of Credit Exposure" means, at any date of determination, with 
-------------------------                                           
respect to each Bank with a Revolving Credit Commitment, such Bank's pro rata   
share of the Stated Amount of any Letter of Credit then in effect.              

    "Letter of Credit Fees" means the fees described in item (i) of Subsection
---------------------                                               
2.3(e) hereof.                                                                  

"Loan" means any and, "Loans" mean collectively, the Revolving Credit 
----                  -----                                         
Loans, the Swing Loans, the Supplemental Swing Loans and the Term Loans.        

"Loan Documents" means this Credit Agreement, the Notes, the Security 
--------------                                                      
Agreement, the Pledge Agreement, the Patent, Trademark and Copyright Security   
Agreement, the Mortgages, the Guaranty Agreement, the Fee Letter, each          
Compliance Certificate, each Request for Revolving Credit Loans, each Swing Loan
Request, each Supplemental Swing Loan Request, any application or agreement for 
a Letter of Credit and any interest rate protection agreement entered into      
between the Borrower and its Subsidiaries and any Bank or any Affiliate of any  
Bank as permitted under Section 6.6(xi).                                        

   "Loan Parties" means the Borrower and each of its Subsidiaries which is a
------------                                                        
signatory of any of the Loan Documents.                                         

"Margin Stock" means "margin stock" as defined in Regulation U.       
------------                                                        

     "Material Adverse Change" means any circumstance or event which (i) has, or
-----------------------                                             
is substantially likely to have, a material adverse effect upon the validity or 
enforceability of this Credit Agreement or any of the other Loan Documents, (ii)
is, or is substantially likely to be, adverse to the business, properties,      
assets, financial condition or results of operations of the Borrower and its    
Subsidiaries, taken as a whole, and which impairs materially, or could          
reasonably be expected to impair materially, the ability of the Borrower to duly
and punctually pay or perform its obligations under the Loan Documents,         
including without limitation, the loss of any Title IV funding(s) that is       
substantially likely to result in the foregoing or (iii) impairs                

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materially, or is substantially likely to impair materially, the ability of the 
Agent or the Banks, to the extent permitted, to enforce the Agent's or the      
Banks' legal remedies pursuant to this Credit Agreement and the other Loan      
Documents.                                                                      

    "Material Adverse Effect" means an effect that results in or causes or has
-----------------------                                             
a reasonable likelihood of resulting in or causing a Material Adverse Change.   

     "Material Subsidiary" means individually, and "Material Subsidiaries" shall
-------------------                           ----------------------
mean collectively (i) any Subsidiary of the Borrower which had annual revenues  
equal to or greater than $3,000,000 for the Fiscal Year ended June 30, 2001,    
(ii) any Subsidiary of the Borrower not included in the preceding item (i) which
hereafter has annual revenues equal to or greater than $3,000,000 in any Fiscal 
Year of the Borrower, (iii) any Person acquired by the Borrower or any          
Subsidiary of the Borrower after the Closing Date which at the time of the      
acquisition had annual revenues equal to or greater than $3,000,000 in its most 
recent fiscal year or at any time thereafter, and (iv) IFAC Acquisition.        

     "Money" means all money, as that term is defined in the UCC, of any Person,
-----                                                               
whether now owned or hereafter acquired.                                        

"Money Market Rate" shall be an interest rate as from time to time    
-----------------                                                   
determined by the Agent as being the sum of the Federal Funds Rate plus 50 basis
points.                                                                         

"Money Market Rate Loan" means any Loan which bears, or is to bear,   
----------------------                                              
interest under the Money Market Rate Option.                                    

     "Money Market Rate Option" means the interest rate option described in item
------------------------                                            
(iii) of Subsection 2.5(b) hereof.                                              

    "Mortgage" shall mean the Mortgage and Security Agreement in substantially
--------                                                            
the form of Exhibit "J" with respect to the Real Property executed and delivered
-----------                                             
by the Borrower and any Subsidiary which owns Real Property to the Agent for the
benefit of the Banks.                                                           

 "Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------                                                  
4001(a)(3) of ERISA to which any Person is making or accruing an obligation to  
make contributions or has within any of the preceding five (5) plan years made  
or accrued an obligation to make contributions.                                 

 "National City Bank" means National City Bank of Pennsylvania, together
------------------                                                  
with its successors and assigns.                                                

"Net Proceeds" means, with respect to the sale, assignment, lease,    
------------                                                        
sublease, transfer or other disposition of any of the assets of the Borrower or 
its Subsidiaries, in any transaction or series of coordinated transactions, the 
net after-tax proceeds of any such transaction after (i) taking into account any
adjustments for basis, gain or other adjustment recognized under the Code and   
(ii) deducting therefrom any reasonable closing costs paid by the Borrower or   
such Subsidiary in connection therewith.                                        

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     "Note" means any and, "Notes" shall mean collectively, all of the Revolving
----                  -----                                         
Credit Notes, the Swing Loan Note, the Supplemental Swing Loan Notes and the    
Term Notes.                                                                     

     "Option" means either the Base Rate Option, Money Market Rate Option or the
------                                                              
Eurodollar Rate Option.                                                         

  "Participant" shall mean any financial institution or other Person which
-----------                                                         
purchases an individual interest in all or any part of the Revolving Credit     
Loans, the Term Loans or any particular segment of any Portion thereof.         

   "Participation" means any sale, made in accordance with the provisions of
-------------                                                       
Subsection 10.8(d), by any Bank to any Participant of an undivided interest in  
all or a part of, such Bank's Revolving Credit Commitment, Term Loan Commitment,
Revolving Credit Loans and Term Loan, if any.                                   

     "Patent, Trademark and Copyright Security Agreement" shall mean the Patent,
--------------------------------------------------                  
Trademark and Copyright Security Agreement in substantially the form of Exhibit 
                                                                       -------
I executed and delivered by the Borrower to the Agent for the benefit of the    
-                                                                               
Banks.                                                                          

"PBGC" means the Pension Benefit Guaranty Corporation or any entity   
----                                                                
succeeding to any or all of its functions.                                      

   "Permitted Acquisition" shall have the meaning set forth in Section 6.13.
---------------------                                               

    "Permitted Encumbrances" shall mean those Encumbrances allowed pursuant to
----------------------                                              
Section 6.7(a) hereof.                                                          

"Person" means any individual, partnership, corporation, trust, joint 
------                                                              
venture or unincorporated organization and any government or any agency,        
political subdivision or department thereof.                                    

    "Plan" shall mean any "single employer plan" within the meaning of Section
----                                                                
4001(a)(15) of ERISA established and maintained by the Borrower or any ERISA    
Affiliate.                                                                      

 "Pledge Agreement" shall mean the Pledge Agreement in substantially the
----------------                                                    
form of Exhibit "H" executed and delivered by the Borrower and any Subsidiary   
-----------                                                     
owning capital stock, partnership interests or limited liability company        
interests in any of the Material Subsidiaries, to the Agent for the benefit of  
the Banks.                                                                      

"Pledged Collateral" shall mean the property of the Borrower and the  
------------------                                                  
Subsidiaries in which security interests are to be granted under the Pledge     
Agreement                                                                       

"Portion" means, at any time, the aggregate principal amount of the   
-------                                                             
Revolving Credit Loans and Term Loans outstanding hereunder which bears interest
at a specific interest rate for a specific Interest Period pursuant to a request
for borrowing or a notice of interest rate election.                            

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     "Prime Rate" means the interest rate per annum publicly announced from time
----------                                                          
to time by the Agent as its prime rate, which rate may not be the lowest        
interest rate then being charged commercial borrowers by the Agent.             

"Prior Security Interest" shall mean a valid and enforceable perfected
-----------------------                                             
first-priority security interest under the Uniform Commercial Code in the UCC   
Collateral and the Pledged Collateral which is junior in its lien priority only 
to (i) Encumbrances described in Section 6.7(ii) to the extent such prospective 
tax payments are given priority by statute, or (ii) Encumbrances described in   
Sections 6.7(a)(vii) and(viii).                                                 

"Prohibited Transaction" shall mean any one or more of the prohibited 
----------------------                                              
transactions defined under Section 406 of ERISA or Section 4975 of the Code and 
which is not exempt as a statutory, individual or class exemption under Section 
408 of ERISA or Section 4975 of the Code.                                       

"Proprietary Information" means all non-public information about the  
-----------------------                                             
Borrower or any of its Subsidiaries which has been furnished by the Borrower or 
any of its Subsidiaries, whether furnished before or after the Closing Date, and
regardless of the manner in which it is furnished.                              

"Purchasing Bank" means a Bank which becomes a party to this Credit   
---------------                                                     
Agreement by executing an Assignment and Assumption Agreement.                  

  "Real Property" shall mean the real estate owned by the Borrower and the
-------------                                                       
Subsidiaries set forth on Schedule 4.12, which shall be encumbered by the       
-------------               
Mortgages.                                                                      

"Register" shall have the meaning ascribed to it in Subsection 10.8(c)
--------                                                            
hereof.                                                                         

    "Regulation D" means Regulation D promulgated by the Board of Governors of
------------                                                        
the Federal Reserve System (12 C.F.R. Part 204 et seq.), from time to time in   
effect and as may hereafter be amended and shall include any successor or other 
regulation or official interpretation thereof issued by said Board of Governors.

    "Regulation T" means Regulation T promulgated by the Board of Governors of
------------                                                        
the Federal Reserve System (12 C.F.R. Part 220 et seq.), from time to time in   
effect and as may hereafter be amended and shall include any successor or other 
regulation or official interpretation thereof issued by said Board of Governors.

    "Regulation U" means Regulation U promulgated by the Board of Governors of
------------                                                        
the Federal Reserve System (12 C.F.R. Part 221 et seq.), from time to time in   
effect and as may hereafter be amended and shall include any successor or other 
regulation or official interpretation thereof issued by said Board of Governors.

    "Regulation X" means Regulation X promulgated by the Board of Governors of
------------                                                        
the Federal Reserve System (12 C.F.R. Part 224 et seq.), from time to time in   
effect and as may hereafter be amended and shall include any successor or other 
regulation or official interpretation thereof issued by said Board of Governors.

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     "Release" means any material spilling, leaking, pumping, pouring, emitting,
-------                                                             
emptying, discharging, injecting, escaping, leaching, dumping or disposing of   
Hazardous Substances into the environment.                                      

"Repayment Date" means September 20, 2004.                            
--------------                                                      

    "Reportable Event" means any one or more events defined in Section 4043(b)
----------------                                                    
of ERISA for which the thirty (30) day notice period has not been waived by the 
PBGC.                                                                           

"Request for Revolving Credit Loan" means any written request for a   
---------------------------------                                   
revolving credit loan executed by the Borrower and delivered to the Agent       
substantially in the form of Exhibit "C" to this Credit Agreement.              
-----------           

"Required Banks" means, as of any date of determination:              
--------------                                                      

                    (i)    if there are no Loans, Letters of Credit or Letter of
Credit reimbursement obligations, Banks whose Revolving Credit Commitments and  
Term Loan Commitments aggregate at least 51% of the Revolving Credit Commitments
and Term Loan Commitments of all of the Banks, or                               

                 (ii)   if there are Loans, Letters of Credit or Letter of
Credit reimbursement obligations outstanding, any Bank or group of Banks if the 
sum of the Loans, Letter of Credit Exposure and Letter of Credit reimbursement  
obligations of such Banks then outstanding aggregates at least 51% of the total 
principal amount of all of the Loans, Letter of Credit Exposure and Letter of   
Credit reimbursement obligations then outstanding. The Revolving Credit Loans   
and Letter of Credit reimbursement obligations shall be deemed, for purposes of 
this definition, to be in favor of the Agent and not a participating Bank if the
Agent has made the advance and such Bank has not made its pro rata advance in   
respect thereof and shall be deemed to be in favor of such Bank to the extent of
its advance if it has made its pro rata advance in respect thereof.             

    "Revolving Credit Bank" means any financial institution listed on Schedule
     ---------------------                                            --------
1.1 as having a Commitment Amount with respect to Revolving Credit Loans and    
---                                                                             
each other financial institution which, from time to time, becomes a party to   
this Credit Agreement in accordance with Subsection 10.8(b) hereof and purchases
a Commitment Amount with respect to Revolving Credit Loans.                     

   "Revolving Credit Commitment" shall mean, as to any Bank at any time, the
---------------------------                                         
amount initially set forth opposite its name on Schedule 1.1 in the column      
                            ------------
labeled "Amount of Commitment for Revolving Credit Loans" (as the same may be   
reduced in accordance with Section 2.1(f)), and thereafter in the most recent   
Assignment and Assumption Agreement executed by such Bank, whether in the       
capacity as a Purchasing Bank or a Transferor Bank.                             

  "Revolving Credit Disbursement" means the several Revolving Credit Loans
-----------------------------                                       
made simultaneously by each Revolving Credit Bank under the Revolving Credit    
Commitment.                                                                     

     "Revolving Credit Loan" means each loan of funds by a Revolving Credit Bank
---------------------                                               
of its Commitment Percentage for the revolving credit loans as described in     
Section 2.1 hereof.                                                             

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   "Revolving Credit Loan Account" means the bookkeeping account established
-----------------------------                                       
by each Revolving Credit Bank in the name of the Borrower pursuant to Subsection
2.1(i) hereof.                                                                  

   "Revolving Credit Note" and "Revolving Credit Notes" means any one or all
---------------------                                               
of the promissory notes of the Borrower evidencing Bank Indebtedness of the     
Borrower hereunder with respect to the Revolving Credit Loans, which Revolving  
Credit Notes shall be substantially in the form of Exhibit "A" to this Credit   
                                 -----------
Agreement, and all extensions, renewals, amendments, modifications, restatements
or replacements thereto or thereof.                                             

     "Security Agreement" shall mean the Security Agreement in substantially the
------------------                                                  
form of Exhibit G executed and delivered by the Borrower to the Agent for the   
---------                                                       
benefit of the Banks.                                                           

     "Stated Amount" means the amount available to the beneficiary of any Letter
-------------                                                       
of Credit for drawing thereunder as such amount is reduced in accordance with   
the provisions of such Letter of Credit.                                        

   "Subsection" means a numbered subsection of this Credit Agreement, unless
----------                                                          
another document is specifically referenced.                                    

"Subsidiary" means any corporation of which at least a majority of the
----------                                                          
outstanding stock having by the terms thereof ordinary voting power to elect a  
majority of the Board of Directors of such corporation is at the time directly  
or indirectly owned or controlled by the Borrower or by one or more of its      
Subsidiaries.                                                                   

    "Subsidiary Guarantee" shall mean a Guarantee, in a form acceptable to the
--------------------                                                
Agent, to be executed and delivered by a Subsidiary in accordance with the      
provisions of Subsection 6.6(ix) herein which shall provide that such Subsidiary
shall unconditionally guarantee and become surety for a portion of the Bank     
Indebtedness that is limited in amount to the principal amount of the           
Indebtedness for Borrowed Money incurred by such Subsidiary in accordance with  
Subsection 6.6(ix) and reduced as the principal amount of such Indebtedness for 
Borrowed Money is repaid by such Subsidiary in the ordinary course of business  
(including without limitation, any prepayments of principal made by the         
Subsidiary in the ordinary course of its business so long as such prepayments   
are not made with a direct or indirect purpose of reducing or eliminating the   
obligations of such Subsidiary under the Subsidiary Guarantee).                 

   "Supplemental Swing Loan Banks" means any financial institution listed on
-----------------------------                                       
Schedule 1.1 to this Credit Agreement as having a Commitment Amount with respect
------------                                                                    
to Supplemental Swing Loans and each other financial institution which, from    
time to time, becomes a party to this Credit Agreement in accordance with       
Subsection 10.8(b) hereof and purchases a Commitment Amount with respect to     
Supplemental Swing Loans.                                                       

     "Supplemental Swing Loan Commitment" shall mean the dollar amount set forth
----------------------------------                                  
for each Supplemental Swing Loan Bank under the caption "Supplemental Swing Loan
Commitment" on Schedule 1.1 to this Credit Agreement signed by such Bank or in  
------------                                      
any Assignment and Assumption Agreement executed by such Bank, whether in the   
capacity as a Purchasing Bank or a Transferor Bank.  The aggregate Supplemental 
Swing Loan Commitments of all of the Supplemental Swing Loan Banks shall not    
exceed $30,000,000 in the aggregate.  Notwithstanding anything contained in this
Agreement or any of the other Loan Documents to                                 

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the contrary, the foregoing commitment is a sub-facility of such Bank's         
Revolving Credit Commitment and as such shall mature, expire, be proportionally 
reduced or terminate upon the occurrence of a like event affecting such Bank's  
Revolving Credit Commitment.                                                    

  "Supplemental Swing Loan Note" and "Supplemental Swing Loan Notes" shall
----------------------------                                        
mean any one or all of the Supplemental Swing Loan Note of the Borrower in the  
form of Exhibit "E" evidencing the Supplemental Swing Loans, together with all  
----------                                                      
amendments, extensions, renewals, replacements, refinancings or refundings      
thereof in whole or in part.                                                    

 "Supplemental Swing Loan Request" shall mean a request for Supplemental
-------------------------------                                     
Swing Loans made in accordance with Section 2.2B(c) hereof.                     

   "Supplemental Swing Loans" shall mean collectively and Supplemental Swing
    ------------------------                              ------------------
Loan shall mean separately all Supplemental Swing Loans or any Supplemental     
----                                                                            
Swing Loan made by Supplemental Swing Loan Banks to the Borrower pursuant to    
Section 2.2B hereof.                                                            

    "Swing Loan Commitment" shall mean National City Bank's commitment to make
---------------------                                               
Swing Loans to the Borrower pursuant to Section 2.2A hereof in an aggregate     
principal amount of up to $10,000,000 outstanding at any time.  Notwithstanding 
anything contained in this Agreement or any of the other Loan Documents to the  
contrary, the foregoing commitment is a sub-facility of National City Bank's    
Revolving Credit Commitment, and as such shall mature, expire, be proportionally
reduced or terminate upon the occurrence of a like event affecting National     
City's Revolving Credit Commitment.                                             

 "Swing Loan Note" shall mean the Swing Loan Note of the Borrower in the
---------------                                                     
form of Exhibit "B" evidencing the Swing Loans, together with all amendments,   
-----------                                                     
extensions, renewals, replacements, refinancings or refundings thereof in whole 
or in part.                                                                     

"Swing Loan Request" shall mean a request for Swing Loans made in     
------------------                                                  
accordance with Section 2.2A(b) hereof.                                         

    "Swing Loans" shall mean collectively and Swing Loan shall mean separately
-----------                              ----------                 
all Swing Loans or any Swing Loan made by National City Bank to the Borrower    
pursuant to Section 2.2A hereof.                                                

   "Swing Loan Settlement Date" shall mean the Tuesday of each week (if such
--------------------------                                          
day is a Business Day and if not, the next succeeding Business Day) and any     
other Business Day on which the Agent elects to effect settlement pursuant to   
Section 2.12.                                                                   

     "Teach-Out Obligations" means those certain obligations of any Person under
---------------------                                               
various state laws to provide for the completion of any enrolled student's      
education in the event of the closing of a school.                              

    "Termination Event" means (i) a Reportable Event with respect to a Plan or
-----------------                                                   
an event described in Section 4062(e) of ERISA with respect to a Plan, (ii) the 
withdrawal of the Borrower or any ERISA Affiliate from a Plan during a plan year
in which the Borrower or any such ERISA Affiliate was a "substantial employer"  
as such term is defined in Section 4001(a)(2) of ERISA and the incurrence of    
liability to the PBGC under Section 4063 of ERISA, (iii) the                    

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incurrence of liability by the Borrower or any such ERISA Affiliate under       
Section 4064 of ERISA upon the termination of a Plan, (iv) the distribution of a
notice of intent to terminate a Plan pursuant to Section 4041(a)(2) of ERISA or 
the treatment of a Plan amendment as a termination under Section 4041 of ERISA, 
or (v) the institution of proceedings to terminate a Plan by the PBGC under     
Section 4042 of ERISA.                                                          

   "Termination Proceeding" means, with respect to any Plan, any termination
----------------------                                              
proceeding under Section 4042 of ERISA or any successor section of ERISA.       

   "Term Loans" means the term loan of each Bank with a Term Loan Commitment
----------                                                          
made to the Borrower as described in Section 2.4 hereof.                        

   "Term Loan Commitment" shall mean, as to any Bank at any time, the amount
--------------------                                                
initially set forth opposite its name on Schedule 1.1 in the column labeled     
              ------------
"Amount of Commitment for Term Loans," and thereafter in the most recent        
Assignment and Assumption Agreement executed by such Bank, whether in the       
capacity as a Purchasing Bank or a Transferor Bank.                             

   "Term Note" and "Term Notes" means any one or all of the promissory notes
---------                                                           
of the Borrower evidencing Bank Indebtedness of the Borrower hereunder with     
respect to the Term Loans, which Term Notes shall be substantially in the form  
of Exhibit "F" to this Credit Agreement, and all extensions, renewals,          
-----------                                                               
amendments, modifications, restatements or replacements thereto or thereof.     

"Total Capitalization" shall mean the sum of consolidated total       
--------------------                                                
shareholders' equity in the Borrower and all Subsidiaries plus Total Funded     
Debt, all as determined in accordance with GAAP.                                

"Total Funded Debt" means, as of the end of any Fiscal Quarter, on a  
-----------------                                                   
Consolidated basis without duplication (including but not limited to any        
duplication reflecting Guarantees of the Borrower or any Subsidiary permitted by
Subsection 6.5(iii) hereof), the difference between (a) Indebtedness for        
Borrowed Money of the Borrower and its Subsidiaries, as of such date, and (b)   
all unrestricted cash and cash equivalents in excess of $5,000,000 held by the  
Borrower and its Subsidiaries including without limitation the cash balance as  
at the end of such Fiscal Quarter held by the Agent or any Bank in cash         
collateral, escrow, direct loan, reserve, electronic funds transfer, trust or   
other restricted accounts (exclusive of any such accounts which do not appear on
the Borrower's or such Subsidiary's balance sheet) on behalf of the Borrower or 
any of its Subsidiaries.                                                        

"Transfer Effective Date" means for each Assignment and Assumption    
-----------------------                                             
Agreement, the date upon which such Assignment and Assumption Agreement is      
effective.                                                                      

"Transferor Bank" means a selling Bank pursuant to an Assignment and  
---------------                                                     
Assumption Agreement.                                                           

 "UCC" means the Uniform Commercial Code as now adopted and from time to
---                                                                 
time amended in the Commonwealth of Pennsylvania or any other jurisdiction which
controls the perfection of a security interest.                                 

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"UCC Collateral" shall mean the property of the Loan Parties in which 
--------------                                                      
security interests are to be granted under the Security Agreement.              

    "Unfunded Benefit Liabilities" means with respect to any Plan, the amounts
----------------------------                                        
described in Section 4001(a)(18) of ERISA.                                      

   "Unreimbursed Amount" shall have the meaning assigned to it in Subsection
-------------------                                                 
2.3(c) hereof.                                                                  

"Withdrawal Liability" means "withdrawal liability" as defined by the 
--------------------                                                
provisions of Part 1 of Subtitle E to Title IV of ERISA.                        

1.2  GAAP Definitions.                                                
----------------                                            

     Accounting terms used in this Credit Agreement but not defined herein shall
have the meanings ascribed to them under GAAP as in effect from time to  time;  
provided, however, that all accounting terms used in Sections 6.1, 6.2. and 6.4 
--------  -------                                                               
shall have the meaning given to such terms under GAAP as in effect on the date  
hereof applied on a basis consistent with those used in preparing the Borrower's
historical financial statements.  In the event of any change after the date     
hereof in GAAP, and if such change would result in the inability to determine   
compliance with the financial covenants set forth in Sections 6.1, 6.2 and 6.4  
based upon the Borrower's regularly prepared financial statements by reason of  
the preceding sentence, then the parties hereto agree to endeavor, in good      
faith, to agree upon an amendment to this Credit Agreement that would adjust    
such financial covenants in a manner that would not affect the substance        
thereof, but would allow compliance therewith to be determined in accordance    
with the Borrower's financial statements at that time; until this Credit        
Agreement is so amended, the covenants shall remain as set forth in this        
Agreement.                                                                      

1.3  Other Definitional Conventions.                                  
------------------------------                              

              (i)    All terms defined in this Credit Agreement shall have the
above-defined meanings when used in this Credit Agreement, the other Loan       
Documents, exhibits, schedules, appendices or any other document or certificate 
executed or delivered in connection with this Credit Agreement, unless the      
context thereof shall otherwise clearly require.                                

              (ii)   The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Credit Agreement shall refer to this Credit    
Agreement as a whole and not to any particular provision of this Credit         
Agreement, and Section and Subsection references are to this Credit Agreement   
unless otherwise specified.                                                     

               (iii)  All terms defined in this Credit Agreement in the singular
shall have comparable meanings when used in plural, and vice versa, unless      
otherwise specified.                                                            

             (iv)   The word "or" as used herein shall mean and connote non-
exclusive alternative, unless expressly stated or the context clearly requires  
otherwise.                                                                      

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1.4  Headings.                                                        
--------                                                    

   The headings of the Sections and Subsections of this Credit Agreement are
inserted for convenience only and shall not be deemed to constitute a part      
hereof.                                                                         

ARTICLE II. THE CREDIT  
----------------------  

2.1  Revolving Credit Loans.                                          
----------------------                                      

          (a)  Revolving Credit Commitment. The Revolving Credit Banks
---------------------------             
severally agree, subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, that the Borrower shall have   
the right to borrow, repay and reborrow during the Availability Period an       
aggregate principal amount not to exceed ONE HUNDRED FIFTY MILLION AND NO/100   
DOLLARS ($150,000,000) at any one time outstanding (the "Revolving Credit       
Commitment"); provided, however, the amount otherwise available for borrowing   
--------  -------                                   
under the Revolving Credit Commitments as of any time of determination shall be 
reduced by the sum of (i) the aggregate Stated Amounts of all Letters of Credit 
issued and outstanding, as of such date of determination plus (ii) the aggregate
                                      ----
unreimbursed draws of any Letter of Credit plus (iii) the outstanding principal 
          ----
balance of all Swing Loans plus (iv) the outstanding principal balance of all   
----                      
Supplemental Swing Loans.                                                       

            (b)  Individual Bank Commitment Amount.  Each of the Revolving
---------------------------------       
Credit Banks shall be severally liable for advancing its respective Commitment  
Percentage of the Revolving Credit Loans set forth on Schedule 1.1 (as the same 
                                        ------------
may be reduced in accordance with Section 2.1(f)), or on the most recent        
Assignment and Assumption Agreement to which such Bank is a party; provided,    
                                                              --------
however, that no such Revolving Credit Bank shall be required to make a         
Revolving Credit Loan if such loan would cause that Revolving Credit Bank's     
Revolving Credit Loans to exceed the Commitment Amount for Revolving Credit     
Loans set forth on Schedule 1.1 or on the most recent Assignment and Assumption 
------------                              
Agreement to which such Bank is a party, minus such Bank's outstanding Swing    
Loans, Supplemental Swing Loans, Letter of Credit Exposure and pro rata share of
unreimbursed draws of any Letter of Credit.                                     

(c)  Revolving Credit Disbursements.              
------------------------------          

               (i)    Each Revolving Credit Disbursement under Subsection 2.1(a)
shall be in the aggregate amount of $1,000,000 or more, provided that each      
increment in excess of $1,000,000 shall be $100,000 or an integral multiple     
thereof. The obligation of the Borrower to repay, on or before the Repayment    
Date, the aggregate unpaid principal amount of all Revolving Credit             
Disbursements made by the Revolving Credit Banks shall be evidenced by Revolving
Credit Notes substantially in the form of Exhibit "A" hereto, one made by the   
              ----------
Borrower to the order of each Revolving Credit Bank in the Commitment Amount for
Revolving Credit Loans of such Revolving Credit Bank and delivered to each such 
Revolving Credit Bank. The principal amount actually due and owing each         
Revolving Credit Bank under the Revolving Credit Loans shall be the aggregate   
unpaid principal amount of all Revolving Credit Loans made by such Revolving    
Credit Bank, all as shown on the Revolving Credit Loan Accounts established     
pursuant to Subsection 2.1(i) hereof.                                           

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          (ii) Each request for a Revolving Credit Disbursement under Subsection
2.1(a) shall be made by 1:00 P.M. (Pittsburgh, Pennsylvania time) to the Agent  
orally or in writing, by an Authorized Officer, (A) in the case of Base Rate    
Loans, on or before the same Business Day of the proposed Revolving Credit      
Disbursement and (B) in the case of Eurodollar Rate Loans, at least three (3)   
Business Days prior to the proposed Revolving Credit Disbursement, in each case 
specifying the date on which such Revolving Credit Disbursement is to be made,  
the amount thereof, selecting the interest rate therefor pursuant to Subsection 
2.5(b) hereof and, if appropriate, selecting the Interest Period therefor. Each 
written request for a Revolving Credit Disbursement shall be evidenced by, and  
each oral request for a Revolving Credit Disbursement hereunder shall be        
followed by, a Request for Revolving Credit Loan substantially in the form of   
Exhibit "C" hereto, duly executed by an Authorized Officer of the Borrower.     
----------                                                                      
Promptly upon receipt of such notice, the Agent shall notify each Revolving     
Credit Bank of the Borrower's request and the amount of such requested Revolving
Credit Disbursement which is to be advanced by such Revolving Credit Bank. Each 
such Revolving Credit Bank shall make its pro rata share of such Revolving      
Credit Disbursement available at the Agent's principal office in immediately    
available funds no later than 4:00 P.M. (Pittsburgh, Pennsylvania time) on the  
date of the requested Revolving Credit Disbursement. Each Revolving Credit      
Disbursement shall be credited by the Agent to a demand deposit account of the  
Borrower at the Agent's principal office no later than 4:30 P.M. (Pittsburgh,   
Pennsylvania time) on the date of such Revolving Credit Disbursement.           

         (d)  Interest.  The Revolving Credit Notes shall bear interest on the
--------                                          
actual unpaid principal amount thereof from time to time outstanding from the   
date thereof until payment in full as set forth in Section 2.5 hereof.          

       (e) Voluntary Prepayments. The Borrower shall have the right at its
---------------------                               
option to prepay any Portion of the Revolving Credit Loans, in whole or in part,
at any time, subject to Borrower's obligation to pay a premium in accordance    
with Section 2.6(ii)(A) if a Eurodollar Rate Loan (or part thereof) is prepaid  
on a date other than the last day of the applicable Interest Period. Each such  
prepayment shall be applied first to the principal balance of the Revolving     
Credit Loans and then to any accrued and unpaid interest. Each partial          
prepayment shall be in the aggregate amount of $500,000 or more, provided that  
each increment in excess of $500,000 shall be $100,000 or an integral multiple  
thereof. The Borrower shall give the Agent prior written notice of each         
voluntary prepayment specifying the aggregate principal amount to be prepaid,   
the date of prepayment and, if one or more Eurodollar Rate Options are in       
effect, the Portion(s) of the Revolving Credit Loans being prepaid. Notice of   
prepayment having been given as aforesaid, the principal amount specified in    
such notice shall become due and payable on the prepayment date.                

         (f) Voluntary Permanent Reduction of the Revolving Credit Commitment.
            ----------------------------------------------------------------
The Borrower, upon three (3) Business Days' written notice to the Agent, may    
permanently reduce the Revolving Credit Commitment by a minimum reduction of at 
least $5,000,000; provided, however, that if such reduction would require       
--------                                    
repayment of then outstanding amounts of the Revolving Credit Loans or any Swing
Loans or Supplemental Swing Loans, such repayment must occur on or before the   
date on which the voluntary permanent reduction becomes effective.              

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        (g) Commitment Fee. The Borrower agrees to pay to the Agent, for the
--------------                                      
benefit of the Revolving Credit Banks, on October 1, 2001, and quarterly in     
arrears thereafter on the first day of each succeeding January, April, July and 
October during the term of the Revolving Credit Commitment and on the Repayment 
Date, a commitment fee equal to the average daily difference between the        
Revolving Credit Commitments of the Banks minus the sum of the Banks' Revolving 
Credit Loans outstanding (including Supplemental Swing Loans outstanding but    
excluding any outstanding Swing Loans of National City) and Letter of Credit    
Exposure during the immediately preceding Fiscal Quarter. The commitment fee    
shall be calculated at a rate per annum set forth in the chart below based upon 
the Ratio of the Borrower's Total Funded Debt to EBITDA:                        

                                                                [Download Table]

========================================================================
 Ratio of Total Funded Debt to EBITDA        Commitment Fee (per annum) 
------------------------------------------------------------------------
                                                                        
 Greater than 2.0 to 1.0                          37.5 basis points     
------------------------------------------------------------------------
 Greater than 1.5 to 1.0 but less than or         25.0 basis points     
  equal to 2.0 to 1.0                                                   
------------------------------------------------------------------------
 Greater than 1.0 to 1.0 but less than or         25.0 basis points     
  equal to 1.5 to 1.0                                                   
------------------------------------------------------------------------
 Less than or equal to 1.0 to 1.0                 22.5 basis points     
========================================================================

The Commitment Fee due hereunder shall be calculated on the basis of a 365-366  
day year and the actual number of days elapsed.  Upon receipt by the Agent of   
the quarterly financial statements delivered pursuant to Subsection 5.2(a)      
hereof, the applicable percentage shall be adjusted, if necessary, effective on 
the first day of the calendar month following delivery of such quarterly        
financial statements.  In calculating the above ratio, Total Funded Debt shall  
be determined as of the end of such Fiscal Quarter and EBITDA shall be measured,
on a rolling four quarter basis, for the immediately preceding four Fiscal      
Quarters then ended, taking into account the pro forma adjustments to EBITDA, if
any, made in accordance with the description in Section 6.1.  Notwithstanding   
the table of applicable percentages set forth above and the adjustment to the   
Commitment Fee in accordance with the terms of this subsection 2.1(g), during   
the period from the Closing Date through the six month anniversary of the       
Closing Date, the Commitment Fee (per annum) shall not be less than 25 basis    
points.                                                                         

          (h) Repayment. On the Repayment Date, the Borrower shall repay in full
---------                                           
all of the then unpaid and outstanding Revolving Credit Loans, together with all
interest thereon to the date of such repayment and all other fees and costs due 
hereunder.                                                                      

       (i) Revolving Credit Loan Account. Each Revolving Credit Bank shall
-----------------------------                       
open and maintain on its books a Revolving Credit Loan Account in the name of   
the Borrower with respect to such Revolving Credit Bank's Revolving Credit      
Loans, repayments, prepayments, the computation and payment of interest and the 
computation of other amounts due and sums paid to the Agent, on behalf of such  
Revolving Credit Bank, pursuant to this Section 2.1. Except in the case of      
manifest error in computation, such Revolving Credit Loan Account shall be      
conclusive                                                                      

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and binding on the Borrower as to the amount at any time due to such Revolving  
Credit Bank from the Borrower pursuant to this Section 2.1.                     

2.2  Swing Loans; Supplemental Swing Loans.                                 
-------------------------------------                             

A.  Swing Loans.                                            
-----------                                         

         (a) Swing Loan Commitment. Subject to the terms and conditions hereof
---------------------                               
and relying upon the representations and warranties herein set forth, and in    
order to facilitate loans and repayments between Settlement Dates, National City
Bank may, at its option, cancelable at any time for any reason whatsoever, make 
swing loans (the "Swing Loans") to the Borrower at any time or from time to time
after the date hereof to, but not including, the Expiration Date, in an         
aggregate principal amount up to but not in excess of $10,000,000 (the "Swing   
Loan Commitment"), provided that the sum of (i) the aggregate Stated Amounts of 
all Letters of Credit issued and outstanding, as of such date of determination  
plus (ii) the aggregate unreimbursed draws of any Letter of Credit plus (iii)   
----                                                               ----         
the outstanding principal balance of all Swing Loans plus (iv) the outstanding  
                              ----
principal balance of all Supplemental Swing Loans plus (v) the outstanding      
                        ----
principal balance of all Revolving Credit Loans, shall not exceed the Revolving 
Credit Commitments of all the Banks.  Within such limits of time and amount and 
subject to the other provisions of this Agreement, the Borrower may borrow,     
repay and reborrow pursuant to this Section 2.2A.  It is acknowledged by        
National City Bank that a cancellation of the Swing Loan Commitment shall not in
and of itself reduce National City Bank's Revolving Credit Commitment.          

     (b) Swing Loan Requests. Except as otherwise provided herein, the
-------------------                                 
Borrower may from time to time prior to the Expiration Date request National    
City Bank to make Swing Loans by delivery to National City Bank not later than  
1:00 P.M. (Pittsburgh, Pennsylvania time) on the proposed Borrowing Date of a   
duly completed request therefor substantially in the form requested by National 
City Bank or by telephone immediately confirmed in writing by letter, facsimile 
or telex (each, a "Swing Loan Request"), it being understood that the Agent may 
rely on the authority of any individual making such a telephonic request without
the necessity of receipt of such written confirmation. Each Swing Loan Request  
shall be irrevocable and shall specify the proposed Borrowing Date, the interest
rate Option and the principal amount of such Swing Loan, which shall be not less
than $100,000.                                                                  

        (c) Making Swing Loans. So long as National City Bank elects to make
------------------                                  
Swing Loans, National City Bank shall, after receipt by it of a Swing Loan      
Request pursuant to Section 2.2, fund such Swing Loan to the Borrower in U.S.   
Dollars and immediately available funds at the Principal Office prior to 3:00   
P.M. (Pittsburgh, Pennsylvania time) on the Borrowing Date.                     

    (d) Swing Loan Note. The obligation of the Borrower to repay the
---------------                                     
unpaid principal amount of the Swing Loans made to it by National City Bank,    
together with interest thereon shall be evidenced by a demand promissory note of
the Borrower dated the Closing Date in substantially the form attached hereto as
Exhibit "B" payable to the order of National City Bank in a face amount equal to
----------                                                                      
the Swing Loan Commitment.                                                      

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       (e) Borrowings to Repay Swing Loans. National City Bank may, at its
-------------------------------                     
option, exercisable at any time for any reason whatsoever, demand repayment of  
the Swing Loans from the Revolving Credit Banks, and each Bank shall make a     
Revolving Credit Loan in an amount equal to such Bank's Ratable Share of the    
aggregate principal amount of the outstanding Swing Loans, plus, if National    
City Bank so requests, accrued interest thereon, provided that no Bank shall be 
                          --------
obligated in any event to make Revolving Credit Loans in excess of its Revolving
Credit Commitment minus such Bank's outstanding Revolving Credit Loans,         
Supplemental Swing Loans, Letter of Credit Exposure and pro rata share of       
unreimbursed draws of any Letter of Credit.  Revolving Credit Loans made        
pursuant to the preceding sentence shall bear interest at the Base Rate Option  
and shall be deemed to have been properly requested in accordance with Section  
2.1 without regard to any of the requirements of that provision pertaining to   
Loan Requests.  National City Bank shall provide notice to the Banks (which may 
be telephonic or written notice by letter, facsimile or telex) that such        
Revolving Credit Loans are to be made under this Section 2.2A and of the        
apportionment among the Banks, and the Banks shall be unconditionally obligated 
to fund such Revolving Credit Loans (whether or not the conditions specified in 
Section 2.1 are then satisfied) by the time National City Bank so requests,     
which shall not be earlier than 3:00 P.M. (Pittsburgh, Pennsylvania time) on the
Business Day next after the date the Banks receive such notice from National    
City Bank.                                                                      

       (f) Voluntary Prepayments. The Borrower shall have the right at its
---------------------                               
option to prepay any Portion of the Swing Loans, in whole or in part, at any    
time. Each such prepayment shall be applied first to the principal balance of   
the Swing Loans and then to any accrued and unpaid interest. Each partial       
prepayment shall be in the aggregate amount of $100,000 or more, provided that  
each increment in excess of $100,000 shall be $10,000 or an integral multiple   
thereof unless the Borrower is prepaying the entire outstanding principal       
balance of the Swing Loans. The Borrower shall give the Agent prior written     
notice of each voluntary prepayment specifying the aggregate principal amount to
be prepaid and the date of prepayment. Notice of prepayment having been given as
aforesaid, the principal amount specified in such notice shall become due and   
payable on the prepayment date.                                                 

(g) Permanent Reduction of the Swing Loan Commitment.       
------------------------------------------------    

         (A) Voluntary Reduction.  The Borrower, upon three (3) Business Days'
-------------------                                 
written notice to the Agent, may permanently reduce the Swing Loan Commitment by
a minimum reduction of at least $1,000,000; provided, however, that if such     
                --------
reduction would require repayment of then outstanding amounts of the Swing      
Loans, such repayment must occur on or before the date on which the voluntary   
permanent reduction becomes effective.                                          

      (B) Mandatory Reduction. In the event that the Borrower shall have
-------------------                                 
reduced the Revolving Credit Commitment of the Banks and National City Bank's   
Swing Loan Commitment is greater than its Revolving Credit Commitment as so     
reduced, then the Swing Loan Commitment shall be automatically reduced to       
National City Bank's Revolving Credit Commitment. In the event that National    
City Bank's Swing Loans exceed the Swing Loan Commitment, the Borrower shall    
contemporaneously with the reduction in the commitment prepay the Swing Loans to
an amount less than the Swing Loan Commitment, as so reduced.                   

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         (h) Interest.  The Swing Loan Notes shall bear interest on the actual
--------                                            
unpaid principal amount thereof from time to time outstanding from the date     
thereof until payment in full as set forth in Section 2.5 hereof.               

B.  Supplemental Swing Loans.                               
------------------------                            

        (a) Supplemental Swing Loan Commitment.  The Supplemental Swing Loan
----------------------------------                  
Banks severally agree, subject to the terms and conditions hereof and relying   
upon the representations and warranties herein set forth, that the Borrower     
shall have the right to borrow, repay and reborrow during the Availability      
Period an aggregate principal amount not to exceed THIRTY MILLION AND NO/100    
DOLLARS ($30,000,000) at any one time outstanding (the "Supplemental Swing Loan 
Commitments"); provided, however, the sum of (i) the aggregate Stated Amounts of
--------  -------                                 
all Letters of Credit issued and outstanding, as of such date of determination  

plus (ii) the aggregate unreimbursed draws of any Letter of Credit plus (iii)   
----                                                               ----         
the outstanding principal balance of all Swing Loans plus (iv) the outstanding  
                              ----
principal balance of all Supplemental Swing Loans plus (v) the outstanding      
                        ----
principal balance of all Revolving Credit Loans, shall not exceed the Revolving 
Credit Commitments of all the Banks.                                            

       (b) Individual Bank Supplemental Swing Loan Commitment Amount.  The
     ---------------------------------------------------------
Commitment Percentage with respect to Supplemental Swing Loans for each         
Supplemental Swing Loan Bank shall be the same Commitment Percentage as such    
Bank's Commitment Percentage for Revolving Credit Loans hereunder.  Each        
Supplemental Swing Loan to be advanced in accordance with Section 2.2B(a) shall 
be advanced pro rata among the Supplemental Swing Loan Banks in an amount       
corresponding to its pro rata share of the Revolving Credit Commitments.  Each  
of the Supplemental Swing Loan Banks shall be severally liable for advancing its
respective Commitment Percentage for Revolving Credit Loans set forth opposite  
such Supplemental Swing Loan Bank's name on Schedule 1.1; provided, however,    
                              ------------  --------
that no such Supplemental Swing Loan Bank shall be required to make a           
Supplemental Swing Loan to the extent such loan would cause that Bank's         
Revolving Credit Loans, Supplemental Swing Loans, Swing Loans and pro rata share
of the Letters of Credit outstanding plus unreimbursed draws of any Letter of   
----- 
Credit in the aggregate, to exceed the Revolving Credit Commitment Amount set   
forth on Schedule 1.1 or on the most recent Assignment and Assumption Agreement 
------------                                                  
to which such Bank is a party.                                                  

       (c) Supplemental Swing Loan Requests.  Except as otherwise provided
--------------------------------                    
herein, the Borrower may from time to time prior to the Expiration Date request 
the Supplemental Swing Loan Banks to make Supplemental Swing Loans by delivery  
to Agent not later than 1:00 P.M. (Pittsburgh, Pennsylvania time) on the        
Business Day of the proposed Borrowing Date of a duly completed request therefor
substantially in the form requested by Agent or by telephone immediately        
confirmed in writing by letter, facsimile or telex (each, a "Supplemental Swing 
Loan Request"), it being understood that the Agent may rely on the authority of 
any individual making such a telephonic request without the necessity of receipt
of such written confirmation.  Each Supplemental Swing Loan Request shall be    
irrevocable, shall specify the proposed Borrowing Date and the principal amount 
of such Supplemental Swing Loan, which shall be not less than $500,000, and     
shall elect an interest rate option, as permitted herein, to be applicable to   
such borrowing.                                                                 

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         (d) Making Supplemental Swing Loans.  Promptly upon receipt of notice
-------------------------------                     
from the Borrower of its election to borrow Supplemental Swing Loans, the Agent 
shall notify each Supplemental Swing Loan Bank of the Borrower's request and the
amount of such requested Supplemental Swing Loan which is to be advanced by such
Supplemental Swing Loan Bank.  Each such Supplemental Swing Loan Bank shall make
its pro rata share of such Supplemental Swing Loan disbursement available at the
Agent's principal office in immediately available funds no later than 4:00 P.M. 
(Pittsburgh, Pennsylvania time) on the date of the requested Supplemental Swing 
Loan.  Each Supplemental Swing Loan shall be credited by the Agent to a demand  
deposit account of the Borrower at the Agent's principal office no later than   
4:30 P.M. (Pittsburgh, Pennsylvania time) on the date of such Supplemental Swing
Loan.                                                                           

        (e) Supplemental Swing Loan Note.  The obligation of the Borrower to
----------------------------                        
repay the unpaid principal amount of the Supplemental Swing Loans made to it by 
the Supplemental Swing Loan Banks, together with interest thereon shall be      
evidenced by a demand promissory note of the Borrower dated the Closing Date in 
substantially the form attached hereto as Exhibit "E" payable to the order of   
               -----------
each Supplemental Swing Loan Bank in a face amount equal to such Bank's         
Supplemental Swing Loan Commitment.                                             

        (f) Borrowings to Repay Supplemental Swing Loans.  Each Supplemental
--------------------------------------------        
Swing Loan Bank may, at its option, exercisable at any time for any reason      
whatsoever, demand that the Supplemental Swing Loans of such Bank be converted  
to Revolving Credit Loans by providing Agent with written instructions to such  
effect.  Upon receipt of a demand by any Supplemental Swing Loan Bank to convert
its Supplemental Swing Loans to Revolving Credit Loans, each Bank shall make a  
Revolving Credit Loan in an amount equal to such Bank's Commitment Percentage of
Revolving Credit Loans of the aggregate principal amount of the Supplemental    
Swing Loans being converted, plus, if Supplemental Swing Loan Bank so requests, 
accrued interest thereon, provided that no Bank shall be obligated in any event 
--------                    
to make Revolving Credit Loans in excess of its Revolving Credit Commitment     
minus such Bank's outstanding Supplemental Swing Loans, Letter of Credit        
Exposure and pro rata share of unreimbursed draws for any Letter of Credit.     
Revolving Credit Loans made pursuant to the preceding sentence shall bear       
interest at the Base Rate Option and shall be deemed to have been properly      
requested in accordance with Section 2.1 without regard to any of the           
requirements of that provision pertaining to Loan Requests.  The Agent shall    
provide notice to the Banks (which may be telephonic or written notice by       
letter, facsimile or telex) that such Revolving Credit Loans are to be made     
under this Section 2.2 and of the apportionment among the Banks, and the Banks  
shall be unconditionally obligated to fund such Revolving Credit Loans (whether 
or not the conditions specified in Section 2.1 are then satisfied) by the time  
Agent so requests, which shall not be earlier than 3:00 P.M. (Pittsburgh,       
Pennsylvania time) on the Business Day next after the date the Banks receive    
such notice from Agent.                                                         

       (g) Mandatory Conversion of Supplemental Swing Loans.  In the event
------------------------------------------------    
that the Borrower has Supplemental Swing Loans outstanding for more than seven  
(7) calendar days, the Borrower shall borrow Revolving Credit Loans in an amount
necessary to repay such Supplemental Swing Loans.  In the event that the        
Borrower fails to promptly comply with the preceding sentence, the Agent shall  
in its own discretion be permitted to issue a demand on the Banks for Revolving 
Credit Loans under the preceding sentence, all as if the Supplemental Swing Loan
Banks had demanded conversion.                                                  

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        (h) Voluntary Prepayments.  The Borrower shall have the right at its
---------------------                               
option to prepay any Portion of the Supplemental Swing Loans, in whole or in    
part, at any time.  Each such prepayment shall be applied first to the principal
balance of the Supplemental Swing Loans and then to any accrued and unpaid      
interest.  Each partial prepayment shall be in the aggregate amount of $500,000 
or more, provided that each increment in excess of $500,000 shall be $100,000 or
an integral multiple thereof unless the Borrower is prepaying the entire        
outstanding principal balance of the Supplemental Swing Loans.  The Borrower    
shall give the Agent prior written notice of each voluntary prepayment          
specifying the aggregate principal amount to be prepaid and the date of         
prepayment.  Notice of prepayment having been given as aforesaid, the principal 
amount specified in such notice shall become due and payable on the prepayment  
date.                                                                           

      (i) Permanent Reduction of the Supplemental Swing Loan Commitment.
         -------------------------------------------------------------

         (A) Voluntary Reduction.  The Borrower, upon three (3) Business Days'
-------------------                                 
written notice to the Agent, may permanently reduce the Supplemental Swing Loan 
Commitment by a minimum reduction of at least $5,000,000; provided, however,    
                                            --------
that if such reduction would require repayment of then outstanding amounts of   
the Supplemental Swing Loans, such repayment must occur on or before the date on
which the voluntary permanent reduction becomes effective.                      

      (B) Mandatory Reduction. In the event that the Borrower shall have
-------------------                                 
reduced the Revolving Credit Commitments with the effect that the Supplemental  
Swing Loan Commitment of any Supplemental Swing Loan Bank is greater than such  
Bank's Revolving Credit Commitment as so reduced, then such Bank's Supplemental 
Swing Loan Commitment shall be automatically reduced to such Bank's Revolving   
Credit Commitment. In the event that such Bank's Supplemental Swing Loans exceed
such Bank's Supplemental Swing Loan Commitment, the Borrower shall              
contemporaneously with the reduction in the commitment prepay the Supplemental  
Swing Loans to an amount less than the Supplemental Swing Loan Commitment, as so
reduced.                                                                        

        (j) Interest.  The Supplemental Swing Loan Notes shall bear interest
--------                                            
on the actual unpaid principal amount thereof from time to time outstanding from
the date thereof until payment in full as set forth in Section 2.5 hereof.      

2.3  Letters of Credit.                                               
-----------------                                           

         (a) Issuance of Letter of Credit. Subject to the terms and conditions
----------------------------                        
of this Credit Agreement and in reliance upon the representations and warranties
of the Borrower set forth herein, the Issuing Bank agrees to issue Letters of   
Credit, upon the request of the Borrower during the Availability Period, for the
account of the Borrower and its Subsidiaries in an aggregate Stated Amount not  
to exceed SEVENTY-FIVE MILLION AND NO/100 DOLLARS ($75,000,000) minus any       
unreimbursed draws of any Letter of Credit; provided, however, the sum of the   
outstanding principal balance of Revolving Credit Loans, the Swing Loans, the   
Supplemental Swing Loans, the Stated Amount of issued Letters of Credit and the 
aggregate unreimbursed draws of any Letter of Credit shall at no time exceed the
Revolving Credit Commitment as the same may be reduced from time to time;       
provided further, that exclusive of the Letter of Credit (if any) issued to fund
----------------                                                                
the Escrow Fund under the Escrow Agreement, the                                 

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aggregate Stated Amount of all Letters of Credit shall not exceed TWENTY-FIVE   
MILLION AND NO/100 DOLLARS ($25,000,000) minus any unreimbursed draw of any     
Letter of Credit. The issuance of any Letter of Credit in accordance with the   
provisions of this Subsection 2.3(a) shall be in accordance with the Issuing    
Bank's then current practices relating to the issuance by the Issuing Bank of   
stand-by and commercial letters of credit, as the case may be, including without
limitation, the execution of appropriate application and reimbursement          
agreements, as well as subject to the satisfaction of each condition set forth  
in Section 7.1 hereof. No Letter of Credit shall be issued with an expiration   
date beyond the earlier of the Repayment Date or one year from the date of      
issuance. Letters of Credit may be issued for the account of the Borrower or for
the account of a Subsidiary of the Borrower (upon receipt by the Issuing Bank   
from the account party of an application for a Letter of Credit and related     
documents required by the Issuing Bank); provided however, the aggregate amount 
of all Letters of Credit issued for the account of the Subsidiaries of the      
Borrower (which shall be included in the $25,000,000 aggregate maximum dollar   
amount of Letters of Credit set forth above) shall not exceed Five Million and  
00/100 Dollars ($5,000,000) at any one time outstanding, and all reimbursement  
obligations of such Subsidiaries with respect to Letters of Credit issued for   
the account of such Subsidiaries shall be guarantied by the Borrower pursuant to
the Guaranty Agreement.                                                         

(b) Risk Participations.                                    

        (i)   Participations. Immediately upon the issuance of any Letter of
--------------                                  
Credit, and thereafter, immediately upon each increase or decrease in the Stated
Amount thereof, each Revolving Credit Bank hereby agrees to irrevocably purchase
and shall be deemed to have irrevocably purchased from the Issuing Bank an      
undivided, full risk, non-recourse participation in each such Letter of Credit  
(including any such increase or decrease in the Stated Amount of each such      
Letter of Credit) and in draws thereunder in an amount equal to such Revolving  
Credit Bank's Commitment Percentage of Revolving Credit Loans of the maximum    
Stated Amount thereof which is or at any time may become available to be drawn  
thereunder.                                                                     

          (ii)  Restrictions. In the event that the Issuing Bank is required for
------------                                    
any reason to refund or repay to the Borrower, any guarantor or any other Person
(other than a Revolving Credit Bank hereunder) all or any portion of any amount 
remitted to the Issuing Bank pursuant to this Credit Agreement, the Revolving   
Credit Banks shall promptly remit to the Issuing Bank, within three (3) Business
Days following demand therefor, their respective Commitment Percentages for     
Revolving Credit Loans of the amount which is so refunded or repaid. In the     
event any restrictions are imposed upon the Issuing Bank or any of the Revolving
Credit Banks by any Governmental Rule of any Governmental Person having         
jurisdiction over the banking activities of the Issuing Bank or any other       
Revolving Credit Bank, which would prevent the Issuing Bank from issuing the    
Letter of Credit or amending the Letter of Credit or would prevent any Revolving
Credit Bank from honoring its obligations under this Section 2.3, the commitment
of the Issuing Bank to issue the Letter of Credit or enter into any amendment   
with respect thereto shall be immediately suspended.                            

       (iii) Notice of Restrictions. If any Revolving Credit Bank believes
----------------------                          
any such restriction would prevent such Revolving Credit Bank from honoring its 
obligations under this Section 2.3, it shall promptly notify the Agent. The     
Agent shall promptly notify the Borrower, the Issuing Bank and the other        
Revolving Credit Banks of the existence and nature of (A) any                   

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restriction which would cause the suspension of the commitment of the Issuing   
Bank to issue the Letter of Credit or to enter into amendments with respect     
thereto and (B) any restriction which would prevent any Revolving Credit Bank   
from honoring its obligations under this Section 2.3.                           

       (iv) Effect of Restrictions. Upon receipt of any notice pursuant to
----------------------                            
item (iii) above, the Borrower will thereupon undertake reasonable efforts to   
obtain the cancellation of each Letter of Credit; provided, however, that the   
                            --------
refusal of any beneficiary of any Letter of Credit to surrender such Letter of  
Credit will not be an Event of Default hereunder and the Borrower shall         
undertake good faith efforts to obtain a substitute letter of credit for such   
Letter of Credit. Nothing contained in this Subsection 2.3(b) shall be deemed a 
termination of the Revolving Credit Commitment and, in the event of a suspension
of the commitment of the Issuing Bank to issue Letters of Credit or to enter    
into amendments with respect thereto as set forth above, the Borrower may       
continue to borrow under the Revolving Credit Commitment provided the           
requirements of Section 7.1 hereof are complied with.                           

   (c) Payment of Amounts Drawn Under Letters of Credit. Upon each
------------------------------------------------    
request for a draw under any Letter of Credit by the beneficiary thereof, the   
Issuing Bank shall immediately notify the Borrower and the Agent, and the       
Borrower shall reimburse, or cause the reimbursement of, the Issuing Bank on    
demand in an amount in same day funds equal to the amount of such draw;         
provided, however, unless the Borrower shall have notified the Agent and the    
--------  -------                                                               
Issuing Bank prior to such time that the Borrower intends to reimburse the      
Issuing Bank for all or a portion of the amount of such draw with funds other   
than the proceeds of Revolving Credit Loans, the Borrower shall conclusively be 
deemed to have given a request for a Disbursement under Subsection 2.1(c) hereof
to the Agent requesting the Revolving Credit Banks to make Revolving Credit     
Loans at the Base Rate Option on the first Business Day immediately following   
the date on which such draw is honored in an aggregate amount equal to the      
excess of the amount of such drawing over the amount theretofore received by the
Issuing Bank in reimbursement thereof (the "Unreimbursed Amount"), plus accrued 
                                                          ----
interest on such amount at the rate set forth in Subsection 2.3(e)(iii) hereof. 
If the Borrower shall be deemed to have given a request for a Disbursement under
Subsection 2.1(c) hereof to the Agent pursuant to this Subsection 2.3(c), then, 
(notwithstanding the satisfaction or waiver of the conditions specified in      
Section 7.1 hereof), the Revolving Credit Banks shall, on the first Business Day
immediately following the date of such draw, make Revolving Credit Loans at the 
Base Rate Option in the aggregate amount of the Unreimbursed Amount plus accrued
                                                            ----
interest on such amount at the rate set forth in Subsection 2.3(e)(iii) hereof. 
The proceeds of any such Revolving Credit Loans shall be applied directly by the
Agent, upon receipt thereof from the Banks, to reimburse the Issuing Bank for   
the Unreimbursed Amount plus accrued interest on such amount.  The foregoing    
----                            
shall not limit or impair the obligation of the Borrower to reimburse the       
Issuing Bank on demand.                                                         

          (d) Payment by the Banks. In the event that the Borrower shall fail to
--------------------                                
reimburse the Issuing Bank on demand as provided in Subsection 2.3(c) above in  
an amount equal to the amount of any draw honored by the Issuing Bank under any 
Letter of Credit, the Issuing Bank shall promptly notify the Agent and each     
Revolving Credit Bank of the Unreimbursed Amount plus the accrued interest on   
                      ----
such amount and of such Bank's respective participation therein.  Each Revolving
Credit Bank shall make available to the Issuing Bank an amount equal to its     
respective participation in same day funds, at the office of the Issuing Bank   
specified in such                                                               

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notice, not later than 12:00 Noon (Pittsburgh, Pennsylvania time) on the        
Business Day specified in such notice by the Issuing Bank. In the event that any
Revolving Credit Bank fails to make available to the Issuing Bank the amount of 
such Revolving Credit Bank's participation in such Letter of Credit as provided 
in this Subsection 2.3(d), the Issuing Bank shall be entitled to recover such   
amount on demand from such Revolving Credit Bank together with interest at the  
Federal Funds Rate for a period of three (3) Business Days after demand and     
thereafter, at the Base Rate. Nothing in this Subsection 2.3(d) shall be deemed 
to prejudice the right of any Revolving Credit Bank to recover from the Issuing 
Bank any amounts made available by such Revolving Credit Bank to the Issuing    
Bank pursuant to this Subsection 2.3(d) in the event that it is determined by a 
court of competent jurisdiction that payment of such amounts with respect to any
Letter of Credit by the Issuing Bank constituted gross negligence or willful    
misconduct on the part of the Issuing Bank. The Issuing Bank shall distribute to
each other Revolving Credit Bank which has paid all amounts payable by it under 
this Subsection 2.3(d) with respect to such Letter of Credit, such other        
Revolving Credit Bank's pro rata share of all payments received by the Issuing  
Bank from the Borrower in reimbursement of a draw honored by the Issuing Bank   
under such Letter of Credit when such payments are received.                    

(e) Compensation.                                           
------------                                        

          (i) Letter of Credit Fees. (A) Standby Letters of Credit. On the first
---------------------      -------------------------
day of each October, January, April and July hereafter and on the Repayment     
Date, the Borrower agrees to pay to the Agent, on behalf of each Revolving      
Credit Bank, to be shared by the Revolving Credit Banks on a pro rata basis in  
accordance with each Revolving Credit Bank's risk participation in such Letter  
of Credit pursuant to Subsection 2.3(b) hereof, a nonrefundable fee, payable in 
arrears, equal to the product of (A) the average Stated Amount of each standby  
Letter of Credit outstanding over the preceding Fiscal Quarter (or such shorter 
period, if less than a quarter) times (B) the applicable percentage per annum as
-----           
determined below:                                                               

                                                                [Download Table]

 ===============================================================
                                         Applicable Letter      
 Ratio of Total Funded Debt to                  of              
             EBITDA                      Credit Percentage      
                                            (per annum)         
 ===============================================================
                                                                
 Greater than 2.0 to 1.0                  225 basis points      
 ---------------------------------------------------------------
 Greater than 1.5 to 1.0, but less than   175 basis points      
  or equal to 2.0 to 1.0                                        
 ---------------------------------------------------------------
 Greater than 1.0 to 1.0, but less than   150 basis points      
  or equal to 1.5 to 1.0                                        
 ---------------------------------------------------------------
 Less than or equal to 1.0 to 1.0         100 basis points      
================================================================

Upon receipt by the Agent of the quarterly financial statements delivered       
pursuant to Subsection 5.2(a) hereof, the applicable percentage shall be        
adjusted, if necessary, effective on                                            

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the first day of the calendar month following delivery of such quarterly        
financial statements. In calculating the above ratio, Total Funded Debt shall be
determined as of the end of such Fiscal Quarter and EBITDA shall be measured, on
a rolling four quarter basis, for the immediately preceding four Fiscal Quarters
then ended, taking into account the pro forma adjustments to EBITDA, if any,    
made in accordance with the description in Section 6.1. Notwithstanding the     
Table of Applicable Percentages set forth above and the adjustments to the      
applicable Letter of Credit Percentage in accordance with the terms of this     
Section 2.3(e)(i), during the period from the Closing Date through the six month
anniversary of the Closing Date, the applicable Letter of Credit Percentage     
shall not be less than 175 basis points.                                        

        (B) Commercial Letters of Credit. In connection with the
----------------------------            
issuance of each commercial Letter of Credit, the Borrower agrees to pay to the 
Agent, on behalf of each Revolving Credit Bank, to be shared by the Revolving   
Credit Banks on a pro rata basis in accordance with each Revolving Credit Bank's
risk participation in such Letter of Credit pursuant to Subsection 2.3(b)       
hereof, a nonrefundable fee computed at a rate and payable as from time to time 
established by the Agent in writing with the approval of all of the Banks.      

          (ii)  Issuance Fee. In addition to the Letter of Credit Fees set forth
------------                                    
in Subsection 2.3(e)(i) above, the Borrower shall pay to the Issuing Bank, for  
its sole account, an Issuance Fee equal to one-eighth of one percent (1/8%) of  
the Stated Amount of each Letter of Credit, payable quarterly in arrears on the 
first day of each October, January, April and July hereafter and on the         
Repayment Date.                                                                 

(iii) Interest and Other Fees.                              
-----------------------                         

     (A) With respect to any draw made under any Letter of Credit, the
Borrower shall pay interest, payable on demand, on the amount paid by the       
Issuing Bank in respect of such draw from the Business Day of the draw through  
the date such amount is reimbursed by the Borrower (including any such          
reimbursement out of the proceeds of Revolving Credit Loans pursuant to         
Subsection 2.3(c) hereof) at a rate which is at all times equal to (A) if no    
Event of Default shall have occurred and be continuing, the Base Rate or (B) if 
any Event of Default shall have occurred and be continuing, two percent (2.00%) 
per annum in excess of the Base Rate; and                                       

         (B) With respect to the issuance, amendment or transfer of any Letter
of Credit and a draw made thereunder, the Borrower shall pay documentary and    
processing charges in accordance with the Issuing Bank's standard schedule for  
such charges in effect at the time of such issuance, amendment, transfer or     
draw, as the case may be.                                                       

          (f) Duty to Review Demands; Obligation Absolute. The obligation of the
-------------------------------------------         
Borrower to reimburse the Issuing Bank for draws made under any Letter of Credit
and the obligations of the Revolving Credit Banks under Subsection 2.3(d) hereof
shall be absolute, unconditional and irrevocable and shall be paid directly in  
accordance with the terms of this Credit Agreement under all circumstances,     
including, without limitation, the following circumstances:                     

          (i)   any lack of validity or enforceability of such Letter of Credit;

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      (ii)   the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary or any transferee 
of such Letter of Credit (or any Persons for whom any such transferee may be    
acting), the Issuing Bank, any Revolving Credit Bank or any other Person,       
whether in connection with this Credit Agreement, the transactions contemplated 
herein or any unrelated transaction (including any underlying transaction       
between the Borrower or one of its Subsidiaries and the beneficiary of such     
Letter of Credit);                                                              

         (iii)  any draft, demand, certificate or any other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or        
insufficient in any respect or any statement therein being untrue or inaccurate 
in any respect provided that any act or failure to act on the part of the       
Issuing Bank does not constitute gross negligence or willful misconduct on the  
part of the Issuing Bank;                                                       

          (iv)   payment by the Issuing Bank under such Letter of Credit against
presentation of a demand, draft or certificate or other document which does not 
comply with the terms of such Letter of Credit; provided that such payment does 
not constitute gross negligence or willful misconduct on the part of the Issuing
Bank;                                                                           

   (v)    any other circumstance or happening whatsoever, which is
substantially similar to any of the foregoing; and                              

       (vi)   the fact that an Event of Default shall have occurred and be
continuing.                                                                     

         (g) Indemnification; Nature of the Issuing Bank's Duties. In addition
----------------------------------------------------
to amounts payable as elsewhere provided in this Section 2.3, the Borrower      
hereby agrees to protect, indemnify, pay and save each Revolving Credit Bank    
(including, without limitation, the Issuing Bank) harmless from and against any 
and all claims, demands, liabilities, damages, losses, costs, charges and       
expenses (including reasonable attorneys' fees) which such Revolving Credit Bank
may incur or be subject to as a consequence, direct or indirect, of (i) the     
issuance of the Letter of Credit or any amendment thereto, other than as a      
result of the gross negligence or willful misconduct of the Issuing Bank as     
determined by a court of competent jurisdiction, (ii) the failure of the Issuing
Bank to honor a draw under any Letter of Credit if the Issuing Bank in good     
faith and upon advice of counsel believes that it is prohibited from making such
payment as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto Governmental Person (all such acts or     
omissions herein called "Government Acts"), or (iii) any material breach by the 
Borrower of any representation, warranty, covenant, term or condition in, or the
occurrence of any default under, any document related to the issuance or any    
amendment of any Letter of Credit.                                              

          As between the Borrower and the Issuing Bank, the Borrower assumes all
risks of the acts and omissions of, or misuse of any Letter of Credit by, the   
beneficiary of any Letter of Credit.  In furtherance and not in limitation of   
the foregoing, the Issuing Bank shall not be responsible:  (i) for the form,    
validity, sufficiency, accuracy, genuineness or legal effect of any document    
submitted by any party in connection with the application for or the issuance or
amendment of any Letter of Credit, even if it should in fact prove to be in any 
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)   
for the validity or sufficiency of any                                          

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instrument transferring or assigning or purporting to transfer or assign any    
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in   
whole or in part, which may prove to be invalid or ineffective for any reason;  
(iii) for failure of a beneficiary of any Letter of Credit to comply fully with 
conditions required in order to draw upon any Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of any messages, 
by mail, cable, telegraph, telecopy, telex or otherwise, whether or not they be 
in cipher; (v) for errors in interpretation of technical terms; (vi) for any    
loss or delay in the transmission or otherwise of any document required in order
to make a draw under any Letter of Credit or of the proceeds thereof; (vii) for 
the misapplication by a beneficiary of any Letter of Credit of the Proceeds of  
any drawing under any Letter of Credit; (viii) for any consequences arising from
causes beyond the control of the Issuing Bank, including, without limitation,   
any Government Acts; and (ix) for any other circumstances whatsoever in making  
or failing to make payment under any Letter of Credit; except that the Borrower 
shall have a claim against the Issuing Bank, and the Issuing Bank shall be      
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential, damages suffered by the Borrower, as determined by a  
court of competent jurisdiction to be the result of (i) the Issuing Bank's      
willful misconduct or gross negligence in determining whether documents         
presented under any Letter of Credit comply with the terms of any Letter of     
Credit, (ii) the Issuing Bank's payment on a draw under any Letter of Credit to 
any Person other than the beneficiary of any Letter of Credit or its lawful     
successor, representative or assign or (iii) the Issuing Bank's willful failure 
to pay under any Letter of Credit after the presentation to it by the           
beneficiary of any Letter of Credit or its lawful successor, representative or  
assign of a sight draft and certificate or other documents strictly complying   
with the terms and conditions of any Letter of Credit, unless the Issuing Bank  
in good faith and upon advice of counsel believes that it is prohibited by law  
or other legal authority from making such payment. None of the above shall      
affect, impair, or prevent the vesting of any of the Issuing Bank's rights or   
powers hereunder.                                                               

         Except for the Issuing Bank's obligations under any Letter of Credit,
the Issuing Bank shall have no liability to the Borrower or to any other Person 
resulting from a reduction of the credit rating of the Issuing Bank or any      
deterioration in the Issuing Bank's financial condition.                        

      In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing    
Bank under or in connection with the Letter of Credit or the related sight      
drafts or certificates or documents, if taken or omitted in good faith, shall   
not put the Issuing Bank under any resulting liability to the Borrower.         

       (h) Construction of Application and Agreement for Letter of Credit.
          --------------------------------------------------------------
This Credit Agreement is intended to supplement any application or agreement    
executed and delivered in connection with the issuance of any Letter of Credit  
hereunder. Whenever possible, this Credit Agreement is to be construed as       
consistent with any such application or agreement and, to the extent that the   
provisions of this Credit Agreement and such application or agreement conflict, 
the terms of this Credit Agreement shall control.                               

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2.4  Term Loans.                                                      
----------                                                  

    (a)  Term Loans. Subject to the terms and conditions hereof, and
----------                                        
relying upon the representations and warranties herein set forth, each Bank with
a Term Loan Commitment severally agrees to make a term loan, which term loan can
be requested by the Borrower during the period from the Closing Date through    
December 28, 2001, provided however, that the term loan of each Bank to the     
Borrower shall not exceed the amount of such Bank's Term Loan Commitment.       

        (i)  The request by the Borrower for the advance with respect to the
Term Loans under this Section 2.4 shall be made by 1:00 P.M. (Pittsburgh,       
Pennsylvania time) to the Agent in writing, by an Authorized Officer, (A) in the
case of Base Rate Loans, at least one (1) Business Day prior to the proposed    
advance of the Term Loans and (B) in the case of Eurodollar Rate Loans, at least
three (3) Business Days prior to the proposed advance of the Term Loans, in each
case specifying the date on which such advance of the Term Loans is to be made, 
selecting the interest rate therefor pursuant to Subsection 2.5(b) hereof and,  
if appropriate, selecting the Interest Period therefor. The Borrower's written  
request for the advance of the Term Loans shall be a request for the advance of 
the entire amount of the Term Loans and shall be evidenced by a Request for Term
Loans substantially in the form of Exhibit "C" hereto, duly executed by an      
 -----------
Authorized Officer of the Borrower.  Promptly upon receipt of such notice, the  
Agent shall notify each Bank of the Borrower's request, and each such Bank shall
make its pro rata share of such advance under the Term Loans available at the   
Agent's principal office in immediately available funds no later than 4:00 P.M. 
(Pittsburgh, Pennsylvania time) on the date of the requested advance of Term    
Loans.                                                                          

        (ii) In the event that the Borrower or any of its Subsidiaries makes
an equity offering prior to December 31, 2001 (other than in connection with    
Permitted Acquisitions or in connection with capital stock purchased by         
officers, directors and employees of the Borrower and its Subsidiaries) and the 
Term Loans have not yet been funded, the Term Loan Commitment of each Bank shall
be reduced pro rata in an amount equal to the greater of (i) $25,000,000 (or the
total net proceeds of such equity interests, if less than $25,000,000), or (ii) 
an amount equal to fifty percent (50%) of the net proceeds of such equity       
issuance.                                                                       

         (b)  Nature of Term Loan Commitments. The obligations of each Bank to
-------------------------------                   
make the Term Loans to the Borrower shall be in the proportion that such Bank's 
Term Loan Commitment bears to the Term Loan Commitments of all Banks to the     
Borrower, but each Bank's Term Loan to the Borrower shall never exceed its Term 
Loan Commitment.  The failure of any Bank to make a Term Loan shall not relieve 
any other Bank of its obligations to make a Term Loan nor shall it impose any   
additional liability on any other Bank hereunder.  The Banks shall have no      
obligation to make available to the Borrower the proceeds of the Term Loans     
after December 28, 2001.  The Term Loan Commitments are not revolving credit    
commitments, and the Borrower shall not have the right to borrow, repay and     
reborrow under Section 2.4.                                                     

       (c)  Term Loan Notes; Amortization of Term Loans. The obligation of
-------------------------------------------       
the Borrower to repay the aggregate unpaid principal amount of all Term Loans   
made by the Banks shall be evidenced by Term Notes substantially in the form of 
Exhibit "F" hereto, one made by the Borrower to the order of each Bank with a   
-----------                                                                     
Term Loan Commitment and delivered to each                                      

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such Bank. The principal amount as provided therein of the Term Notes shall be  
payable in ten (10) consecutive quarterly installments, each in the amount of   
$2,500,000, commencing April 1, 2002, and on the first day of each July,        
October, January and April thereafter through and including July 1, 2004, with a
final payment of the remaining principal balance and accrued and unpaid interest
due on the Repayment Date.                                                      

          (d) Interest.  The Term Notes shall bear interest on the actual unpaid
--------                                            
principal amount thereof from time to time outstanding from the date thereof    
until payment in full as set forth in Section 2.5 hereof.                       

       (e) Voluntary Prepayments. The Borrower shall have the right at its
---------------------                               
option to prepay any Portion of the Term Loans, in whole or in part, at any     
time, subject to Borrower's obligation to pay a premium in accordance with      
Section 2.6(ii)(A) if a Eurodollar Rate Loan (or part thereof) is prepaid on a  
date other than the last day of the applicable Interest Period. Each such       
prepayment shall be applied first to the principal balance of the Term Loans and
then to any accrued and unpaid interest. Each partial prepayment shall be in the
aggregate amount of $500,000 or more, provided that each increment in excess of 
$500,000 shall be $100,000 or an integral multiple thereof. The Borrower shall  
give the Agent prior written notice of each voluntary prepayment specifying the 
aggregate principal amount to be prepaid, the date of prepayment and, if one or 
more Eurodollar Rate Options are in effect, the Portion(s) of the Term Loans    
being prepaid. Notice of prepayment having been given as aforesaid, the         
principal amount specified in such notice shall become due and payable on the   
prepayment date.                                                                

         (f) Mandatory Prepayments. Within ten (10) days of any sale of assets
---------------------                               
by the Borrower or any Subsidiary authorized by Section 6.5 when the fair market
value of the assets subject to such sale plus the fair market value of all such 
sales in any Fiscal Year of the Borrower exceeds $5,000,000 in the aggregate,   
the Borrower shall make a mandatory prepayment of principal on the Term Loans   
equal to the Net Proceeds of such sale (as estimated in good faith by the       
Borrower and acceptable to the Agent), together with accrued interest on such   
principal amount.  Within five (5) days of any receipt by the Borrower or any   
Subsidiary of insurance or condemnation proceeds in excess of $5,000,000 other  
than insurance and condemnation proceeds relating to the Collateral which are   
addressed in the Loan Documents, the Borrower shall make a mandatory prepayment 
of principal on the Term Loans equal to the amount of insurance and condemnation
proceeds received by the Borrower or any Subsidiary. Exclusive of the proceeds  
of Indebtedness permitted under Section 6.6, upon any receipt by the Borrower or
any Subsidiary of proceeds of loans or other Indebtedness for Borrowed Money,   
the Borrower shall make a mandatory prepayment of principal on the Loans equal  
to the amount of proceeds of such loans or other Indebtedness for Borrowed      
Money.  Within five (5) days of the receipt by the Borrower or any Subsidiary of
funds resulting from additional capital stock or other ownership interests being
issued in the Borrower or any of its Subsidiaries, other than in connection with
Permitted Acquisitions or in connection with capital stock purchased by         
officers, directors and employees of the Borrower and its Subsidiaries, the     
Borrower shall make a mandatory prepayment of principal on the Term Loans equal 
to the greater of (i) $25,000,000 (or the total net proceeds of such equity     
interests, if less than $25,000,000), or (ii) an amount equal to fifty percent  
(50%) of the net proceeds of such equity issuance.  All prepayments pursuant to 
this Section 2.4(f) shall be applied first to payment of the principal amount of
the Term Loans pro rata to the remaining scheduled amortization payments        
--------                                          
thereunder.                                                                     

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          (g) Repayment. On the Repayment Date, the Borrower shall repay in full
---------                                           
all of the then unpaid and outstanding Term Loans, together with all interest   
thereon to the date of such repayment and all other fees and costs due          
hereunder.                                                                      

2.5 Certain Provisions Relating to Interest Rates.                    
---------------------------------------------                 

The Notes shall bear interest, on the actual unpaid principal amount  
thereof from time to time outstanding, from the date thereof until payment in   
full, at one or more of the rates of interest set forth in this Section 2.5.    

         (a) Interest Payments. The Borrower shall pay accrued interest on the
-----------------                                   
unpaid aggregate principal balance of the Notes in arrears (A) with respect to  
each Base Rate Loan and Money Market Rate Loan (i) on the first day of each     
October, January, April and July of each year during the term hereof, (ii) at   
maturity, whether by acceleration or otherwise, of the Notes, and (iii)         
thereafter on demand until all amounts outstanding under the Notes are paid in  
full; and (B) with respect to each Eurodollar Rate Loan (i) on the last day of  
each Interest Period (provided, however, if the Interest Period chosen for any  
Eurodollar Rate Loan exceeds three (3) months, interest on that Eurodollar Rate 
Loan shall be due and payable on the last day of every three (3) month period   
during such Interest Period and on the last day of such Interest Period), (ii)  
at maturity, whether by acceleration or otherwise, of the Notes, and (iii)      
thereafter on demand until all amounts outstanding under the Notes are paid in  
full.                                                                           

      (b) Interest Rates. The unpaid principal amount of the Loans shall
--------------                                      
bear interest for each day until due at one or more rates selected by the       
Borrower from among the Options set forth below (subject to the permitted       
interest rates that may be selected for each type of Loan as described below);  
it being understood that, subject to the provisions of this Credit Agreement,   
the Borrower may select different Options to apply simultaneously to different  
Portions of the Loans but may select no more than eight (8) different Interest  
Periods to apply to Eurodollar Rate Loans. In the event that any Swing Loan or  
Supplemental Swing Loan is bearing interest at the Money Market Rate Option, no 
additional Swing Loans or Supplemental Swing Loans, as the case may be, may be  
borrowed at, or converted to, the Money Market Rate Option with respect to such 
type of Loans. The Revolving Credit Loans shall bear interest at either the Base
Rate Option or the Eurodollar Rate Option. The Swing Loans shall bear interest  
at the Base Rate Option or the Money Market Rate Option. The Supplemental Swing 
Loans shall bear interest at either the Money Market Rate Option or the Base    
Rate Option. The Term Loans shall bear interest at any of the Money Market Rate 
Option, the Base Rate Option or the Eurodollar Rate Option.                     

     (i)   Base Rate Option. Interest under the Base Rate Option shall
accrue at a rate per annum (computed upon the basis of a year of 365 or 366     
days, as the case may be, and the actual number of days elapsed) for each day   
equal to the sum of (A) the Base Rate plus (B) the Applicable Base Rate Margin  
determined below.                                                               

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==================================================================  
                                       Applicable Base
Ratio of Total Funded Debt to                 Rate Margin       
    EBITDA                             (per annum)
------------------------------------------------------------------  
Greater than 2.0 to 1.0                       75 basis points       
------------------------------------------------------------------  
Greater than 1.5 to 1.0, but less than or     25 basis points       
equal to 2.0 to 1.0                                                 
------------------------------------------------------------------  
Greater than 1.0 to 1.0, but less than or      0 basis points       
equal to 1.5 to 1.0                                                 
------------------------------------------------------------------  
Less than or equal to 1.0 to 1.0               0 basis points       
==================================================================  

Upon receipt by the Agent of the quarterly financial statements delivered       
pursuant to Subsection 5.2(a) hereof, the Applicable Base Rate Margin shall be  
adjusted, if necessary, effective on the first day of the calendar month        
following delivery of such quarterly financial statements. In calculating the   
above ratio, Total Funded Debt shall be determined as of the end of such Fiscal 
Quarter and EBITDA shall be measured, on a rolling four quarter basis, for the  
immediately preceding four Fiscal Quarters then ended, taking into account the  
pro forma adjustments to EBITDA, if any, made in accordance with the description
in Section 6.1. Notwithstanding the table of applicable percentages set forth   
above and the adjustment to the Applicable Base Rate Margin in accordance with  
the terms of this subsection 2.5(b)(i), during the period from the Closing Date 
through the six month anniversary of the Closing Date, the Applicable Base Rate 
Margin (per annum) shall not be less than 25 basis points.                      

(ii) Eurodollar Rate Option. Interest under the Eurodollar Rate Option
----------------------                                      
shall accrue at a rate per annum (computed upon the basis of a year of 360 days 
and the actual number of days elapsed) for each day equal to the sum of (A) the 
Eurodollar Rate for each Interest Period plus (B) the Applicable Eurodollar Rate
      ----
Margin as determined below.                                                     

==================================================================  
                                       Applicable Base
Ratio of Total Funded Debt to                 Eurodollar        
    EBITDA                             Rate Margin
                                       (per annum)
------------------------------------------------------------------  
Greater than 2.0 to 1.0                      225 basis points       
------------------------------------------------------------------  
Greater than 1.5 to 1.0, but less than or    175 basis points       
equal to 2.0 to 1.0                                                 
------------------------------------------------------------------  
Greater than 1.0 to 1.0, but less than or    150 basis points       
equal to 1.5 to 1.0                                                 
------------------------------------------------------------------  
Less than or equal to 1.0 to 1.0             100 basis points       
==================================================================  

Upon receipt by the Agent of the quarterly financial statements delivered       
pursuant to Subsection 5.2(a) hereof, the Applicable Eurodollar Rate Margin     
shall be adjusted, if necessary, effective on the first day of the calendar     
month following delivery of such quarterly financial statements. In calculating 
the above ratio, Total Funded Debt shall be determined as of the end of such    
Fiscal Quarter and EBITDA shall be measured, on a rolling four quarter basis,   
for the immediately preceding four Fiscal Quarters then ended, taking into      
account the pro forma adjustments to EBITDA, if any, made in accordance with the
description in Section 6.1. Notwithstanding the table of applicable percentages 
set forth above and the adjustment to the                                       

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Applicable Eurodollar Rate Margin in accordance with the terms of this          
subsection 2.5(b)(ii), during the period from the Closing Date through the six  
month anniversary of the Closing Date, the Applicable Eurodollar Rate Margin    
(per annum) shall not be less than 175 basis points.                            

        (iii) Money Market Rate Option. Interest under the Money Market Rate
------------------------                        
Option shall accrue at a rate per annum (computed upon the basis of a year of   
360 days and the actual number of days elapsed) for each day equal to the sum of
(A) the Money Market Rate in effect on each given day plus (B) the Applicable   
                                ----
Money Market Rate Margin as determined below.                                   

==================================================================  
                                        Applicable Money
Ratio of Total Funded Debt to                    Market         
    EBITDA                             Rate Margin
                                       (per annum)
------------------------------------------------------------------  
Greater than 2.0 to 1.0                      225 basis points       
------------------------------------------------------------------  
Greater than 1.5 to 1.0, but less than or    175 basis points       
equal to 2.0 to 1.0                                                 
------------------------------------------------------------------  
Greater than 1.0 to 1.0, but less than or    150 basis points       
equal to 1.5 to 1.0                                                 
------------------------------------------------------------------  
Less than or equal to 1.0 to 1.0             100 basis points       
==================================================================  

Upon receipt by the Agent of the quarterly financial statements delivered       
pursuant to Subsection 5.2(a) hereof, the Applicable Money Market Rate Margin   
shall be adjusted, if necessary, effective on the first day of the calendar     
month following delivery of such quarterly financial statements. In calculating 
the above ratio, Total Funded Debt shall be determined as of the end of such    
Fiscal Quarter and EBITDA shall be measured, on a rolling four quarter basis,   
for the immediately preceding four Fiscal Quarters then ended, taking into      
account the pro forma adjustments to EBITDA, if any, made in accordance with the
description in Section 6.1. Notwithstanding the table of applicable percentages 
set forth above and the adjustment to the Applicable Money Market Rate Margin in
accordance with the terms of this subsection 2.5(b)(iii), during the period from
the Closing Date through the six month anniversary of the Closing Date, the     
Applicable Money Market Rate Margin (per annum) shall not be less than 175 basis
points.                                                                         

     (iv) Payment Default Rate. Upon the expiration of any cure period
--------------------                              
relating to an Event of Default pursuant to Section 8.1 hereof, and during the  
period in which such Event of Default continues, (A) the principal amount of the
Base Rate Loans and Money Market Rate Loans, whether or not the same have become
due and payable by maturity, acceleration, declaration or otherwise shall bear  
interest at a rate per annum which shall be two hundred (200) basis points above
the rate otherwise in effect for the Base Rate Loans and Money Market Rate      
Loans, respectively, and (B) the principal amount of all of the Eurodollar Rate 
Loans, whether or not the same have become due and payable by maturity,         
acceleration, declaration or otherwise, shall bear interest, until the end of   
the current Interest Period, at a rate per annum which shall be two hundred     
(200) basis points (2%) above the rate otherwise in effect for the Eurodollar   
Rate Loans. At the end of each then current Interest Period, such Eurodollar    
Rate Loans shall                                                                

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automatically be converted to Base Rate Loans, and thereafter the interest rate 
shall be calculated in accordance with item (A) of this Subsection 2.5(iv).     

         (c) Interest Periods; Limitations on Elections. In the event that the
------------------------------------------          
Borrower shall at any time fail to elect an interest rate to be applicable to a 
Portion of the Loan, such Portion shall bear interest at the Base Rate Option,  
until a different interest rate is elected by the Borrower in accordance with   
the provisions of this Agreement. At any time when the Borrower shall select,   
convert to or renew the Eurodollar Rate Option to apply to all or any Portion of
the outstanding Revolving Credit Loans, it may fix one or more Interest Periods 
to apply to Eurodollar Rate Loans. All the foregoing, however, is subject to the
following:                                                                      

          (i)    any Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next Business Day unless such       
Business Day falls in the succeeding calendar month in which case such Interest 
Period shall end on the next preceding Business Day;                            

         (ii)   any Interest Period which begins on the last day of a calendar
month or on a day for which there is no numerically corresponding day in the    
subsequent calendar month during which such Interest Period is to end shall end 
on the last Business Day of such subsequent month;                              

        (iii)  the Eurodollar Rate Loan for each Interest Period shall be in
an aggregate principal amount of $1,000,000 or more; provided, however, that    
                                  --------
each incremental unit in excess of $1,000,000 shall be $100,000 or an integral  
multiple thereof; and                                                           

      (iv)   no Interest Period may be elected which would end after the
Repayment Date.                                                                 

    (d) Elections, Conversions or Renewals of Interest Rate Options.
       -----------------------------------------------------------
Elections of or conversions to the Base Rate Option shall continue in effect    
until converted as hereinafter provided. Elections of, conversions to or        
renewals of the Eurodollar Rate Option shall expire as to each Eurodollar Rate  
Loan at the expiration of the applicable Interest Period.                       

          At any time with respect to any Base Rate Loan or at the expiration of
the applicable Interest Period with respect to any Eurodollar Rate Loan, the    
Borrower (subject to Subsection 2.5(e)) may cause all or any part of the        
principal amount of such Loan to be converted to and/or (in the case of         
Eurodollar Rate Loans) to be renewed under the Eurodollar Rate Option by notice 
to the Agent as hereinafter provided. Such notice (i) may be oral or in writing 
and if oral immediately confirmed in writing to the Agent, (ii) shall be        
irrevocable, (iii) shall be given not later than 1:00 P.M. (Pittsburgh,         
Pennsylvania time) not less than three (3) Business Days prior to the proposed  
effective date for conversion to or renewal of, either in whole or in part, the 
Eurodollar Rate Option and (iv) shall set forth:                                

(A) the effective date, which shall be a Business Day;      

 (B) the new Interest Period or Interest Periods selected; and

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          (C) with respect to each such Interest Period, the aggregate principal
amount of the corresponding Eurodollar Rate Loan.                               

      At the expiration of each Interest Period, any part (including the
whole) of the principal amount of the corresponding Eurodollar Rate Loan, as to 
which no notice of conversion or renewal has been received as provided above,   
shall automatically be converted to a Base Rate Loan. The Agent shall notify the
Borrower of any such automatic conversion.                                      

          (e) Eurodollar Rate Unascertainable. In the event that, on any date on
-------------------------------                     
which the Eurodollar Rate would otherwise be set, the Agent shall have          
determined (which determination shall be prima facie evidence of the            
unascertainability of the Eurodollar Rate) that, by reason of circumstances     
affecting the eurodollar market, adequate and reasonable means do not exist for 
ascertaining the Eurodollar Rate, the Agent shall give prompt notice of such    
determination to the Borrower, and, until the Agent notifies the Borrower that  
the circumstances giving rise to such determination no longer exist, the right  
of the Borrower to borrow under, convert to or renew the Eurodollar Rate Option 
shall be suspended. Any notice of borrowing under, conversion to or renewal of a
Eurodollar Rate Loan which was to become effective during the period of such    
suspension shall be treated as a request to borrow under, convert to or renew a 
Base Rate Loan with respect to the principal amount therein specified.          

    (f) Illegality. If any Bank shall determine in good faith (which
----------                                          
determination shall be final and conclusive) that compliance by such Bank or its
Lending Office with any applicable law, treaty or governmental rule, regulation,
guideline, order, request or directive (whether or not having the force of law),
or the interpretation or application thereof by any governmental authority, has 
made it unlawful or commercially impractical for any such Bank to make or       
maintain Eurodollar Rate Loans (including but not limited to acquiring          
eurodollar liabilities to fund Eurodollar Rate Loans), such Bank shall give     
notice of such determination to the Agent and the Borrower; provided, however,  
                                                 ---------
that before the giving of such notice pursuant to this Subsection 2.5(f), such  
Bank shall designate a different Lending Office, if such designation will avoid 
the need for such notice and will not in the judgment of such Bank be otherwise 
disadvantageous to such Bank (in determining the issue of "disadvantageous," no 
Bank shall be permitted to rely solely upon the basis that it would be          
disadvantageous to continue to have Loans subject to the Eurodollar Rate Option 
because it is more profitable to compute interest at the Base Rate Option).     
Notwithstanding any provision of this Credit Agreement to the contrary, unless  
and until such Bank shall have given notice that the circumstances giving rise  
to such determination no longer apply:                                          

   (A) with respect to any Interest Periods thereafter commencing,
interest on any Eurodollar Rate Loan shall be computed and payable under the    
Base Rate Option; and                                                           

         (B) on such date, if any, as shall be required by law, any Eurodollar
Rate Loans then outstanding shall be automatically converted to Base Rate Loans 
and the Borrower shall pay to the Agent, for the account of the Banks, the      
accrued and unpaid interest on such Eurodollar Rate Loans to (but not including)
the date of such conversion.                                                    

          Such Bank shall furnish to the Agent and the Borrower a certificate as
to the amount necessary to compensate such Bank for the costs associated with   
any prepayment                                                                  

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pursuant to Subsection 2.5(f)(B) above (which certificate shall be prima facie  
evidence of the amount owed by the Borrower to such Bank), and the Borrower     
shall pay such amount to the Agent for the account of such Bank, as additional  
consideration hereunder, within fifteen (15) days of the Borrower's receipt of  
such certificate.                                                               

2.6  Yield Protection and Reimbursement.                              
----------------------------------                          

    (i) Yield Protection. Except for changes addressed in Subsection
----------------                                    
2.5(f), if any Governmental Rule issued after the Closing Date or if any change 
on or after the Closing Date in any Governmental Rule (including, without       
limitation, Regulation D) or the interpretation or application thereof by any   
Governmental Person charged with the administration thereof (whether or not     
having the force of law):                                                       

        (A) subjects any Bank, its Lending Office or the Issuing Bank to any
tax, duty, levy, impost, charge, fee, deduction or withholding of any kind      
hereunder (other than (x) a tax, including, without limitation, a branch tax,   
imposed or based upon the income of such Bank, its Lending Office or the Issuing
Bank and (y) any franchise tax imposed on such Bank, its Lending Office or the  
Issuing Bank by the laws of the jurisdiction under which such Bank, such Lending
Office or the Issuing Bank is organized or any political subdivision thereof) or
changes the basis of taxation of any Bank, its Lending Office or the Issuing    
Bank with respect to the payments by the Borrower of principal or interest due  
hereunder (other than any change which affects, and to the extent that it       
affects, the taxation by the United States or any state thereof of the total net
income of such Bank or the Issuing Bank);                                       

          (B) imposes, modifies or deems applicable any reserve, special deposit
or similar requirements against assets of, deposits with or for the account of, 
or credit extended, commitments to lend or any Letters of Credit issued or      
participations purchased therein by any Bank, its Lending Office, the Issuing   
Bank or any corporation controlling such Bank or the Issuing Bank (other than   
such requirements which are included in determining the applicable rate or rates
of interest hereunder); or                                                      

         (C) imposes upon any Bank, its Lending Office or the Issuing Bank any
other obligation or condition with respect to this Credit Agreement, and the    
result of all of the foregoing is to increase the cost to such Bank, its Lending
Office, the Issuing Bank or any corporation controlling such Bank or the Issuing
Bank, of making the Loans, extending the Revolving Credit Commitment, issuing   
any Letter of Credit or making or maintaining any participation in any Letter of
Credit, reduce the net after-tax income receivable by such Bank, its Lending    
Office or the Issuing Bank from payments under this Credit Agreement or impose  
any expense upon any Bank, its Lending Office, the Issuing Bank or any          
corporation controlling such Bank, reduce the rate of return on the capital of  
such Bank, its Lending Office, the Issuing Bank or any corporation controlling  
such Bank by an amount which such Bank or the Issuing Bank in good faith deems  
material,                                                                       

          (A)  the Bank or the Issuing Bank so affected shall promptly
notify the Borrower and the Agent of the happening of such event; and of the    
amount determined by such Bank, its Lending Office or the Issuing Bank (which   
determination shall be prima facie evidence                                     

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of the amount owed by the Borrower to such Bank) to be necessary to compensate  
such Bank or the Issuing Bank for such increase in cost, reduction in net after 
tax-income or additional expense;                                               

             (B)  the Borrower shall pay to the affected Bank or the Issuing
Bank, on demand, as additional interest on the Loans or draws under any Letter  
of Credit, such amount as will compensate such Bank or the Issuing Bank for such
additional cost or expense or reduced amount, calculated from the date of the   
notification by such Bank or the Issuing Bank; and                              

            (C)  the Borrower may pay to such affected Bank or the Issuing
Bank the affected Loan or draw under any Letter of Credit in full without the   
payment of any additional amount other than on account of such Bank's or the    
Issuing Bank's out-of-pocket losses (including funding losses, if any, as       
provided in paragraph (ii) below) not otherwise provided for in subparagraph (B)
immediately above.                                                              

A certificate as to the increased cost or reduced amount as a result of any of  
the foregoing events shall be promptly submitted by such Bank or the Issuing    
Bank to the Borrower and the Agent in accordance with the provisions of Section 
10.2 hereof. Such certificate shall, in the absence of manifest error, be       
conclusive and binding as to the amount thereof. Notwithstanding anything       
contained in this Section 2.6 to the contrary, each Bank agrees that it will not
make a request for compensation unless at such time the Bank is making a similar
claim for compensation from certain of its other borrowers which are similarly  
situated.                                                                       

(ii) Reimbursement of Costs and Losses.                     
---------------------------------                 

        (A) Voluntary Breakage. The Borrower hereby agrees to indemnify each
------------------                                  
Bank against any loss or expense which such Bank may sustain or incur as a      
consequence of the Borrower (x) failing to make any borrowing, conversion or    
renewal of a Eurodollar Rate Loan on the scheduled date, (y) failing to make    
when due (whether by declaration, acceleration or otherwise); any payment or    
prepayment of any amount due hereunder or in voluntarily making any payment or  
prepayment of any Eurodollar Rate Loan or any part thereof on any day other than
the last day of its Interest Period.                                            

          (B) Involuntary Breakage. The Borrower hereby agrees to indemnify each
-------------------                               
Bank against any loss or expense which such Bank may sustain or incur as a      
consequence of the Borrower (x) failing, through no fault of its own, including,
without limitation, the circumstances specified in Subsection 2.5(f), to make   
any borrowing, conversion or renewal of a Eurodollar Rate Loan on the scheduled 
date, (y) failing to make when due (whether by declaration, acceleration or     
otherwise) any payment or prepayment of any amount due hereunder or (z) making  
any payment or prepayment of any Eurodollar Rate Loans or any part thereof on   
any day other than the last day of its Interest Period, including, but not      
limited to, any premium or penalty incurred by such Bank in respect of funds    
borrowed by it for the purpose of making or maintaining any Eurodollar Rate Loan
or any part thereof as determined by such Bank in the exercise of its sole but  
reasonable discretion.                                                          

          (iii)   Notice of Costs and Losses. Each Bank will promptly notify the
--------------------------                  
Borrower and the Agent of any event of which it has knowledge which will entitle
such Bank to                                                                    

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compensation pursuant to this Section 2.6 and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,    
such compensation and will not, in the judgment of such Bank, be otherwise      
disadvantageous to such Bank. Any Bank incurring such loss or expense pursuant  
to this Section 2.6 shall furnish to the Borrower (through the Agent) a         
certificate signed by an appropriate officer of such Bank as to the amount of   
any such loss or expense showing the related calculations in reasonable detail  
(which certificate shall be prima facie evidence of the amount owed by the      
Borrower to such Bank), and the Borrower shall pay such amount to such Bank     
within thirty (30) days of the Borrower's receipt of such certificate).         
Notwithstanding the foregoing provisions of this Section 2.6, the Borrower shall
only be obligated to compensate any Bank for any amount arising or accruing     
during (x) any time or period commencing not more than ninety (90) days prior to
the date on which such Bank notifies the Agent and the Borrower that it proposes
to demand such compensation and identifies to the Agent and the Borrower the    
statute, regulation or other basis upon which the claimed compensation is or    
will be based and (y) any time or period during which, because of the           
retroactive application of such statute, regulation or other basis, such Bank   
did not know that such amount would arise or accrue.                            

The Borrower's obligations under this Section 2.6 shall survive the   
termination of this Credit Agreement and repayment of the Bank Indebtedness.    

2.7  Capital Adequacy.                                                
----------------                                            

     If, after the Closing Date, any adoption of, any change to or any change in
the interpretation of any Governmental Rule by any Governmental Person          
exercising control over banks or financial institutions generally or any court  
(whether or not having the force of law) affects or would affect the amount of  
capital required or expected to be maintained by any Bank or any corporation    
controlling such Bank (a "Capital Adequacy Event"), and the result of such      
Capital Adequacy Event is to reduce the rate of return on capital of such Bank  
or the capital of any corporation controlling such Bank as a consequence thereof
to a level below that which such Bank could have achieved but for such Capital  
Adequacy Event (taking into consideration such Bank's policies with respect to  
capital adequacy) by an amount which such Bank deems to be material, such Bank  
shall promptly deliver to the Borrower and the Agent a statement of the amount  
necessary to compensate such Bank for the reduction in the rate of return on its
capital attributable to its Loans and the commitments under this Credit         
Agreement (the "Capital Compensation Amount"). Each Bank shall determine the    
Capital Compensation Amount in good faith, using reasonable attribution and     
averaging methods. Each Bank shall, from time to time, furnish to the Borrower  
and the Agent a certificate as to the amount so determined. Such certificate    
shall, in the absence of manifest error, be conclusive and binding as to the    
amount thereof. Such amount shall be due and payable by the Borrower to such    
Bank ten (10) days after such notice is given. As soon as practicable after any 
Capital Adequacy Event, such Bank shall submit to the Borrower and the Agent    
estimates of the Capital Compensation Amounts that would be payable as a        
function of such Bank's commitments hereunder.                                  

The Borrower's obligations under this Section 2.7 shall survive the   
termination of this Credit Agreement and repayment of the Bank Indebtedness.    

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2.8 [Intentionally Omitted.]                                          
------------------------                                      

2.9 Lending Offices.                                                  
---------------                                               

  Each Bank may book its Loans at any Lending Office selected by such Bank
and may change its Lending Office from time to time. All terms of this Credit   
Agreement shall apply to any such Lending Office and the Notes shall be deemed  
held by each Bank for the benefit of such Lending Office. Each Bank may, by     
written notice to the Agent and the Borrower, designate a Lending Office through
which its Loans will be made by it and for whose account payments are to be     
made.                                                                           

2.10 Time, Place and Manner of Payments.                              
----------------------------------                          

   All payments to be made by the Borrower under the Notes or of the Agent's
Fee, the Commitment Fee and all other amounts due the Agent, whether for its own
account or for the benefit of the Banks, hereunder shall be made at the         
principal office of the Agent set forth in Article X. All payments to be made by
the Borrower under this Credit Agreement shall be paid in Dollars in immediately
available funds no later than 1:30 P.M. (Pittsburgh, Pennsylvania time) on the  
date such payment is due. Except as specified elsewhere, if the date on which   
any payment is due is not a Business Day such payment shall be due and payable  
on the next succeeding day which is a Business Day. Such extension of time shall
not be included in computing any interest in respect of such payment but shall  
be included in the next subsequent payment.                                     

2.11 Payment From Accounts Maintained by the Borrower.                
------------------------------------------------            

In the event that any payment of principal, interest, Agent's Fee, the
Closing Fee, the Commitment Fee, the Letter of Credit Fees or any other amount  
due the Agent, whether for its own account or for the benefit of the Banks,     
under the Loan Documents is not paid when due, the Agent is hereby authorized to
effect such payment by debiting any demand deposit account of the Borrower      
maintained with the Agent. This right of debiting accounts of the Borrower is in
addition to any right of set-off accorded the Agent hereunder or by operation of
law.                                                                            

2.12 Swing Loan Settlement Date Procedures.                           
-------------------------------------                       

   In order to minimize the transfer of funds between the Banks and National
City Bank, the Borrower may borrow, repay and reborrow Swing Loans and National 
City Bank may make Swing Loans as provided herein during the period between     
Settlement Dates. On each Settlement Date, not later than 2:00 P.M. (Pittsburgh,
Pennsylvania time), the Agent shall notify each Bank of its Commitment          
Percentage for Revolving Credit Loans of the total of the Revolving Credit Loans
to be made on such date to repay the Swing Loans. Prior to 4:00 P.M.            
(Pittsburgh, Pennsylvania time) on such Settlement Date, each Bank with         
Revolving Credit Commitments shall pay to the Agent the amount of its Revolving 
Credit Loan to repay the outstanding Swing Loans. These settlement procedures   
are established solely as a matter of administrative convenience, and nothing   
contained in this Section 2.12 shall relieve the Banks of their obligations to  
fund Revolving Credit Loans on dates other than a Settlement Date pursuant to   
Section 2.1 or 2.2(e).                                                          

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2.13 Substitution of a Bank.                                          
----------------------                                      

     If (i) the obligation of any Bank to fulfill its obligations in relation to
the issuance of any Letter of Credit or the purchase of any risk participations 
therein under Section 2.3 has been suspended pursuant to Subsection 2.3(b)(ii)  
hereof, (ii) the obligation of any Bank to make Eurodollar Rate Loans has been  
suspended pursuant to Subsection 2.5(f) hereof, (iii) any Bank has demanded     
compensation under Section 2.5 or Section 2.6 hereof or (iv) any Bank has failed
to fund any Loan properly requested hereunder, the Agent shall, at the request  
of the Borrower and with the assistance of the Borrower, undertake in good faith
to obtain a mutually satisfactory substitute lending institution or lending     
institutions (which may be one or more of the Banks) to purchase the Revolving  
Credit Note and the Supplemental Swing Loan Note, as the case may be, and assume
the Revolving Credit Loans, the Supplemental Swing Loans, the Revolving Credit  
Commitment and the Supplemental Swing Loan Commitment of such Bank, as the case 
may be, provided, however, in no way shall the Agent's efforts in trying to     
obtain a substitute lending institution imply that the Agent or National City   
Bank has any obligation to acquire such interest for its own account.           

ARTICLE III. SECURITY; SET-OFF  
------------------------------  

3.1  Security Interests; Mortgages.                                   
-----------------------------                               

  The Borrower hereby grants to the Agent for the benefit of the Agent and
the Banks, as security for the Bank Indebtedness, a security interest in all the
personal property and fixtures of the Borrower in which a security interest is  
granted under the Security Agreement and the Patent, Trademark and Copyright    
Security Agreement. The Borrower hereby grants, and shall cause the Subsidiaries
to grant (i) a security interest in all the capital stock and related property  
of the Subsidiaries described in the Pledge Agreement, and (ii) a mortgage lien 
and security interest in the Real Property and related property described in the
Mortgages.                                                                      

     In the event that the quarterly financial statements delivered to the Agent
and the Banks pursuant to Subsection 5.2(a) hereof evidence that the ratio of   
Total Funded Debt to EBITDA is 1.0 to 1.0 or less for two consecutive Fiscal    
Quarters of the Borrower (as calculated in accordance with Section 6.1) and no  
Event of Default has occurred and is continuing, the Agent shall release the    
liens and security interests granted by the Borrower and the Subsidiaries       
pursuant to the Security Agreement, the Patent, Trademark and Copyright Security
Agreement, the Pledge Agreement and the Mortgages. In the event that the        
Collateral granted under the Pledge Agreement has been released pursuant to the 
terms of the preceding sentence and the ratio of Total Funded Debt to EBITDA (as
calculated in accordance with Section 6.1) thereafter exceeds 1.75 to 1.00 for  
two consecutive Fiscal Quarters of the Borrower (as evidenced by the quarterly  
financial statements delivered to the Agent and the Banks pursuant to Subsection
5.2(a)), then upon request of the Agent as directed by the Required Banks, the  
Borrower and the Subsidiaries shall promptly enter into a pledge agreement and  
re-deliver such stock certificates and stock powers pursuant to which the Agent 
shall receive a security interest in the capital stock and related property of  
the Subsidiaries on terms similar to the Pledge Agreement. In calculating the   
above ratio, Total Funded Debt shall be determined as of the end of such Fiscal 
Quarter and EBITDA shall be measured, on a rolling four quarter basis, for the  
immediately preceding four Fiscal Quarters then ended, taking into account the  
pro forma adjustments to EBITDA, if any,                                        

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made in accordance with the description in Section 6.1. The two consecutive     
quarterly financial statements evidencing a ratio of Total Funded Debt to EBITDA
of less than 1.0 to 1.0 which are required to cause a release of the Collateral 
shall be quarterly financial statements delivered by the Borrower for Fiscal    
Quarters ended after the consummation of any Permitted Acquisition for which pro
forma adjustments to EBITDA are made by the Borrower and shall not be a         
restatement of quarterly financial statements for Fiscal Quarters which ended   
prior to the consummation of the Permitted Acquisition.                         

3.2  Set-Off.                                                         
-------                                                     

     The Borrower hereby gives to the Banks a lien and security interest for the
amount of any Bank Indebtedness upon and in any property, credits, securities or
Monies (whether matured or unmatured) of the Borrower which may at any time be  
delivered to, or be in the possession of, or owed by any Bank or any affiliate  
of any Bank in any capacity whatever, including the balance of any deposit      
account but excluding any trust, fiduciary, reserve, electronic funds transfer  
or direct loan accounts, in each case maintained by the Borrower with such Bank.
The Borrower hereby authorizes each Bank in case of an Event of Default, at such
Bank's option, at any time and from time to time, to apply, at the discretion of
such Bank, to the payment of Bank Indebtedness, any and all such property,      
credits, securities or Monies now or hereafter in the hands of such Bank        
belonging or owed to the Borrower.                                              

ARTICLE IV. REPRESENTATIONS AND WARRANTIES  
------------------------------------------  

          To induce the Banks, the Issuing Bank and the Agent to enter into this
Credit Agreement, to induce the Banks to make the Revolving Credit Loans, the   
Term Loans, the Swing Loans and the Supplemental Swing Loans herein provided    
for, and to induce the Issuing Bank to issue the Letters of Credit herein       
provided for, the Borrower represents and warrants to the Agent, the Banks and  
the Issuing Bank that:                                                          

4.1  Existence.                                                       
----------                                                  

(a) Borrower's Existence. The Borrower is a corporation duly
--------------------                                
organized, validly existing and in good standing under the laws of the          
Commonwealth of Pennsylvania and is duly qualified and in good standing as a    
foreign corporation, authorized to do business in each jurisdiction where,      
because of the nature of its activities or properties, such qualification is    
required, except for those foreign jurisdictions where the Borrower's non-      
qualification would not have a Material Adverse Effect.                         

        (b) Active Subsidiary's Existence. Schedule 4.1 attached hereto sets
-----------------------------  ------------         
forth each Active Subsidiary of the Borrower in existence as of the Closing     
Date. Except for Active Subsidiaries that have entered into a merger as         
permitted by Section 6.10 herein and are not the surviving corporation, each of 
the Borrower's Active Subsidiaries is duly organized, validly existing and in   
good standing under the laws of the state of its incorporation and is duly      
qualified and in good standing as a foreign corporation, authorized to do       
business in each jurisdiction where, because of the nature of its activities or 
properties, such qualification is required, except for those foreign            
jurisdictions where such Active Subsidiary's non-qualification would not have a 
Material Adverse Effect.                                                        

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4.2  Authority.                                                       
---------                                                   

 The Borrower has full power, authority and legal right to engage in the
activities conducted or proposed to be conducted by it and, with respect to the 
Loans and Letters of Credit, to execute, deliver and perform its obligations    
under the Loan Documents. The Borrower has taken all corporate actions necessary
or appropriate to authorize the execution, delivery and performance of the Loan 
Documents.                                                                      

4.3  Capitalization of Subsidiaries.                                  
------------------------------                              

    Schedule 4.3 lists all of the Subsidiaries of the Borrower, the issued and
------------                                                          
outstanding stock of each Subsidiary and the owner thereof.  All capital stock  
of the Subsidiaries identified on Schedule 4.3 has been duly authorized and     
validly issued and is fully paid and nonassessable. There is no stock or        
securities convertible or exchangeable for any shares of such Subsidiary's      
common stock.  Except as set forth on Schedule 4.3, there are no outstanding    
        ------------
rights or options to subscribe for or to purchase any of such Subsidiary's      
capital stock or any stock or securities convertible into or exchangeable for   
any Subsidiary's common stock.                                                  

4.4  Validity and Enforceability.                                     
---------------------------                                 

    This Credit Agreement constitutes a legal, valid and binding obligation of
the Borrower, enforceable in accordance with its terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar    
laws affecting the enforcement of creditors' rights generally and to general    
principles of equity (regardless of whether considered in a proceeding in equity
or at law). The Notes, and each other Loan Documents, when duly executed by the 
Borrower and delivered in accordance with this Credit Agreement, will constitute
legal, valid and binding obligations of the Borrower and the Active Subsidiaries
(as the case may be), enforceable in accordance with their respective terms,    
subject to the effect of any applicable bankruptcy, insolvency, reorganization, 
moratorium or similar laws affecting the enforcement of creditors' rights       
generally and to general principles of equity (regardless of whether considered 
in a proceeding in equity or at law).                                           

4.5  No Conflict.                                                     
-----------                                                 

 The execution and delivery of this Credit Agreement, the Notes, and the
other Loan Documents by the Borrower and the other Loan Parties does not        
conflict with or constitute on the part of the Borrower a violation of, breach  
of, or default under (i) its respective Certificate/Articles of Incorporation or
By-Laws, (ii) any indenture, mortgage, deed of trust, lease, note agreement or  
other agreement or instrument to which the Borrower or any other Loan Party is a
party or by which the Borrower or any other Loan Party is bound, or (iii) any   
Governmental Rule of any Governmental Person having jurisdiction over the       
Borrower or any other Loan Party or any of their respective activities or       
property.                                                                       

4.6  Consents.                                                        
--------                                                    

All consents, approvals, authorizations and orders of governmental or 
regulatory authorities which are required for the consummation of the           
transactions contemplated by this Credit Agreement, the Notes and the other Loan
Documents, or which, in any way, would                                          

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materially adversely affect the validity or enforceability of any such Loan     
Document, if not obtained, have been obtained.                                  

4.7   Litigation.                                                     
----------                                                

Except as set forth on Schedule 4.7, there are no actions, suits,     
------------            
investigations, litigation or governmental proceedings pending, or to the       
knowledge of the Borrower threatened, against it or any Active Subsidiary with  
respect to the Borrower or such Active Subsidiary, the results of which would   
individually or in the aggregate constitute a Material Adverse Change.          

4.8   Compliance With Applicable Laws, etc.                           
------------------------------------                      

    Neither the Borrower nor any of its Active Subsidiaries is in default with
respect to any order, writ, injunction or decree (i) of any court or (ii) of any
Governmental Person and the Borrower and its Active Subsidiaries are each       
complying with all applicable statutes and regulations of each Governmental     
Person having jurisdiction over their respective activities; provided, however, 
                                                    ----------
the Borrower shall not be deemed in violation of this Section 4.8 as a result of
any non-compliance if (A) such order, writ, injunction or decree is being       
contested by the Borrower or any Active Subsidiary in good faith and by proper  
proceedings appropriately conducted or (B) the non-compliance with such order,  
writ, injunction, decree statute or regulation would not constitute a Material  
Adverse Change.                                                                 

4.9   Financial Statements.                                           
--------------------                                      

    Copies of the Borrower's (i) audited Consolidated financial statements for
the Fiscal Year ended June 30, 2000 and (ii) unaudited Consolidated financial   
statements for the Fiscal Year ended June 30, 2001, each prepared on a basis not
inconsistent with that of the preceding Fiscal Year, have been furnished to the 
Agent, and each such statement presents fairly the Consolidated financial       
condition of the Borrower as of such date and the results of its operations.    

4.10  Environmental Matters.                                          
---------------------                                     

         (i) Except as set forth on Schedule 4.10 hereto, to the best of the
     -------------
Borrower's knowledge:                                                           

           (A) the Borrower and each of its Active Subsidiaries is in compliance
with all applicable Environmental Laws except where noncompliance with any such 
Environmental Law has not, or could not reasonably be expected to, result in a  
Material Adverse Effect;                                                        

      (B) other than materials used or produced, held, transported and
disposed of in accordance with all Environmental Laws, neither the Borrower nor 
any Active Subsidiary has used in its operations, and the property of the       
Borrower or such Active Subsidiary is not now and has never been used by the    
Borrower or such Active Subsidiary (or, to the best knowledge of the Borrower   
after due inquiry, by any predecessor in possession or other Person) for        
treatment, generation, storage, recycling, or disposal of Hazardous Substances  
in violation of any Environmental Laws, except where noncompliance with any such
Environmental Law has not, or could not reasonably be expected to, result in a  
Material Adverse Effect;                                                        

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     (C)  no Hazardous Substances are present at any property owned or
leased by the Borrower or any Active Subsidiary, nor will any Hazardous         
Substances be present upon any such property or in the operation thereof by the 
Borrower or any Active Subsidiary, except which are handled in accordance with  
all Environmental Laws, in proper storage containers or where such Hazardous    
Substances have not been brought to or stored on the property by the Borrower or
its Active Subsidiaries and have not, or could not reasonably be expected to,   
result in a Material Adverse Effect; and                                        

        (D)  the Borrower and its Active Subsidiaries have all necessary and
appropriate environmental permits, including but not limited to those for air   
emissions, water discharges, and treatment, storage and disposal of the         
Hazardous Substances, except where noncompliance with any the foregoing has not,
or could not reasonably be expected to, result in a Material Adverse Effect.    

     (ii) There are no past, pending or, to the best of the Borrower's
knowledge, threatened Environmental Claims by or against the Borrower or any    
Active Subsidiary or with respect to any property of the Borrower or such Active
Subsidiary that, individually or in the aggregate, could have a Material Adverse
Effect on the Borrower and its Active Subsidiaries, taken as a whole.           

4.11 Deferred Compensation Plans.                                     
---------------------------                                 

     Except as listed on Schedule 4.11 attached hereto, neither the Borrower nor
-------------                 
any of its Active Subsidiaries has any employee pension benefit plan (as that   
term is defined in Section 3(2)(A) of ERISA) other than an employee stock       
ownership plan.                                                                 

Except as set forth on Schedule 4.11:                                 

      (A)  The Borrower and each ERISA Affiliate is in compliance in all
material respects with any applicable provisions of ERISA with respect to all   
Benefit Arrangements, Plans and Multiemployer Plans. There has been no          
Prohibited Transaction with respect to any Benefit Arrangement or any Plan or,  
to the best knowledge of the Borrower, with respect to any Multiemployer Plan or
Multiple Employer Plan, which could result in any material liability of the     
Borrower or any ERISA Affiliates. The Borrower and all ERISA Affiliates have    
made when due any and all payments required to be made under any agreement      
relating to a Multiemployer Plan or a Multiple Employer Plan or any Law         
pertaining thereto. With respect to each Plan and Multiemployer Plan, the       
Borrower and all ERISA Affiliates (i) have fulfilled in all material respects   
their obligations under the minimum funding standards of ERISA, (ii) have not   
incurred any liability to the PBGC, and (iii) have not had asserted against them
any penalty for failure to fulfill the minimum funding requirements of ERISA.   

         (B)  To the best of the Borrower's knowledge, each Multiemployer Plan
and Multiple Employer Plan is able to pay benefits thereunder when due.         

       (C)  Neither the Borrower nor any ERISA Affiliate has instituted or
intends to institute proceedings to terminate any Plan.                         

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         (D)  No event requiring notice to the PBGC under Section 302(f)(4)(A)
of ERISA has occurred or is reasonably expected to occur with respect to any    
Plan, and no amendment with respect to which security is required under Section 
307 of ERISA has been made or is reasonably expected to be made to any Plan.    

         (E)  The aggregate actuarial present value of all benefit liabilities
(whether or not vested) under each Plan, determined on a plan termination basis,
as disclosed in, and as of the date of, the most recent actuarial report for    
such Plan, does not exceed the aggregate fair market value of the assets of such
Plan.                                                                           

     (F)  Neither the Borrower nor any ERISA Affiliate has incurred or
reasonably expects to incur any material withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any ERISA
Affiliate has been notified by any Multiemployer Plan or Multiple Employer Plan 
that such Multiemployer Plan or Multiple Employer Plan has been terminated      
within the meaning of Title IV of ERISA and, to the best knowledge of the       
Borrower, no Multiemployer Plan or Multiple Employer Plan is reasonably expected
to be reorganized or terminated, within the meaning of Title IV of ERISA.       

   (G)  To the extent that any Benefit Arrangement is insured, the
Borrower and all ERISA Affiliates have paid when due all premiums required to be
paid for all periods through the Closing Date. To the extent that any Benefit   
Arrangement is funded other than with insurance, the Borrower and all ERISA     
Affiliates have made when due all contributions required to be paid for all     
periods through the Closing Date.                                               

          (H)  All Plans, Benefit Arrangements and Multiemployer Plans have been
administered in accordance with their terms and applicable Law.                 

4.12 Title to Properties.                                             
-------------------                                         

The Borrower and each Active Subsidiary has good title to all of its  
properties and assets except for (i) defects in title which, taken as a whole,  
are not material to the Borrower or such Active Subsidiary and (ii) other       
Permitted Encumbrances. All of the Borrower's and each Active Subsidiary's Real 
Property is listed on Schedule 4.12 hereto.                                     
-------------                       

4.13 Intellectual Property.                                           
---------------------                                       

The Borrower and each Active Subsidiary owns or licenses all patents, 
patent applications, trademarks, trademark applications, permits, service marks,
trade names, copyrights, copyright applications, licenses, franchises,          
authorizations and other intellectual property rights that are necessary for the
operations of its business, without infringement upon or conflict with the      
rights of any other Person with respect thereto, except where the consequences  
in the aggregate would not be reasonably expected to have a Material Adverse    
Effect. To the best knowledge of the Borrower, (i) no device, product, process, 
method, substance, part or component or other material now employed, or now     
contemplated to be employed, by the Borrower or any Active Subsidiary infringes 
upon or conflicts with any rights owned by any other Person and (ii) no claim or
litigation regarding any of the foregoing is pending or threatened. No patent,  
invention, device, application, principle and no Governmental Rule, standard or 
code involving the Borrower's or any Active Subsidiary's intellectual property  
is                                                                              

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pending or, to the knowledge of the Borrower, proposed, except where the        
consequences in the aggregate would not be reasonably expected to have a        
Material Adverse Effect. All of the Borrower's and each Active Subsidiary's     
material patents, trademarks, permits, service marks, trade names, copyrights,  
licenses, franchises and authorizations are listed on Schedule 4.13 hereto.     
                                         -------------

4.14 Tax Returns and Payments.                                        
------------------------                                    

The Borrower and each of its Active Subsidiaries have filed all United
States Federal tax returns and the Borrower and each Active Subsidiary has filed
all other material tax returns, or extensions for the filing of such tax returns
within the time parameters permitted by law, which, to the knowledge of the     
Borrower, are required by law to be filed by them (except where the failure to  
file such tax returns would not materially adversely affect the business,       
Consolidated financial conditions or the Consolidated results of operations of  
the Borrower and its Subsidiaries as a whole) and have paid all taxes due       
pursuant to such returns or pursuant to any assessments levied upon the         
Borrower, the Active Subsidiaries or any of their respective properties, assets 
or income which are due and payable, (other than those assessments, taxes, fees 
or other charges, the amount or validity of which is currently being contested  
in good faith by appropriate proceedings and with respect to which reserves in  
conformity with GAAP have been provided on the books of the Borrower or such    
Active Subsidiary). The charges, accruals and reserves on the books of the      
Borrower and its Active Subsidiaries, in respect of federal and state income    
taxes for all fiscal periods to date, are adequate in accordance with GAAP.     

4.15 Material Adverse Change.                                         
-----------------------                                     

Since June 30, 2000, there has been no Material Adverse Change in     
operations or financial condition of the Borrower, individually, or the Borrower
and its Subsidiaries taken as a whole.                                          

4.16 Solvency.                                                        
--------                                                    

    The Borrower and each Active Subsidiary is, and after giving effect to the
transactions contemplated pursuant to this Credit Agreement and the other Loan  
Documents will be, solvent.                                                     

4.17 Investment Company Act.                                          
----------------------                                      

  The Borrower is not an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended from time to    
time, or a company under the "control" of an "investment company," as those     
terms are defined in such Act, and shall not become such an "investment company"
or under such "control."                                                        

4.18 Public Utility Holding Company Act.                              
----------------------------------                          

 The Borrower is not a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or an "affiliate" of
a "subsidiary company" of a "holding company" within the meaning of the Public  
Utility Holding Company Act of 1935, as amended from time to time.              

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4.19 Liens and Security Interests.                                    
----------------------------                                

     Except for Permitted Encumbrances, there are no liens or security interests
on any of the real or personal property of the Borrower or any Active           
Subsidiary.                                                                     

4.20 Margin Stock.                                                    
------------                                                

    The Borrower does not engage or intend to engage principally, or as one of
its important activities, in the business of extending credit for the purpose,  
immediately, incidentally or ultimately, of purchasing or carrying margin stock 
(within the meaning of Regulation U). No part of the proceeds of any Loan has   
been or will be used, immediately, incidentally or ultimately, to purchase or   
carry any margin stock or to extend credit to others for the purpose of         
purchasing or carrying any margin stock or to refund Indebtedness originally    
incurred for such purpose, or for any purpose which entails a violation of or   
which is inconsistent with the provisions of the regulations of the Board of    
Governors of the Federal Reserve System. Neither the Borrower nor any Active    
Subsidiary of the Borrower holds or intends to hold margin stock in such amounts
that more than 25% of the reasonable value of the assets of the Borrower or     
Active Subsidiary of the Borrower are or will be represented by margin stock.   

4.21 Updates to Schedules.                                            
--------------------                                        

Should any of the information or disclosures provided on any of the   
Schedules attached hereto become outdated or incorrect in any material respect, 
the Borrower shall promptly provide the Agent in writing with such revisions or 
updates to such Schedule as may be necessary or appropriate to update or correct
same; provided, however, that no Schedule shall be deemed to have been amended, 
--------                                                            
modified or superseded by any such correction or update, nor shall any breach of
warranty or representation resulting from the inaccuracy or incompleteness of   
any such Schedule be deemed to have been cured thereby, unless and until the    
Required Banks, in their sole and absolute discretion, shall have accepted in   
writing such revisions or updates to such Schedule.                             

4.22 Disclosure.                                                      
----------                                                  

Neither this Credit Agreement nor any other document, statement,      
certificate or other instrument delivered to the Agent or the Banks by or on    
behalf of the Borrower pursuant to this Credit Agreement or any other Loan      
Document contains any untrue statement of a material fact or omits to state a   
material fact necessary in order to make the statements contained herein and    
therein, in light of the circumstances under which they were made, not          
misleading. There is no fact known to the Borrower which materially and         
adversely affects or, so far as the Borrower now foresees, will in the future   
materially and adversely affect the business, operations, affairs, condition,   
properties, assets, financial condition or results of operations of the Borrower
and its Active Subsidiaries which has not been set forth in this Credit         
Agreement or in the other documents, instruments, certificates or statements    
(financial or otherwise) furnished to the Agent or the Banks by or on behalf of 
the Borrower prior to or on the Closing Date.                                   

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4.23 Use of Proceeds.                                                 
---------------                                             

   The Borrower and its Subsidiaries intend to use the proceeds of the Loans
in accordance with Section 5.1.                                                 

4.24 Insurance.                                                       
---------                                                   

All insurance policies and other bonds to which Borrower or any of its
Subsidiaries is a party are valid and in full force and effect. No notice has   
been given or claim made and no grounds exist to cancel or avoid any of such    
policies or bonds or to reduce the coverage provided thereby. Such policies and 
bonds provide adequate coverage from reputable and financially sound insurers,  
or an insurance captive Subsidiary of the Borrower which is adequately          
capitalized and is conformity with the standards of the insurance industry, all 
as in the judgment of the Agent, insuring risks required to be covered          
hereunder, in amounts sufficient to insure the assets and risks of Borrower and 
each of its Subsidiaries in accordance with prudent business practice in the    
industry of the Borrower and its Subsidiaries.                                  

4.25 Material Contracts; Burdensome Restrictions.                     
-------------------------------------------                 

    All material contracts relating to the business operations of Borrower and
each of its Subsidiaries, including all material employee benefit plans and     
material labor contracts, are valid, binding and enforceable upon the Borrower  
or its Subsidiary and each of the other parties thereto in accordance with their
respective terms, and there is no material default thereunder, to the Borrower's
knowledge, with respect to parties other than the Borrower or its Subsidiary.   
Neither the Borrower nor any of its Subsidiaries is bound by any contractual    
obligation, or subject to any restriction in any organization document, or any  
requirement of Law which could reasonably be expected to result in a Material   
Adverse Change.                                                                 

4.26 Employment Matters.                                              
------------------                                          

  The Borrower and its Subsidiaries conduct their businesses in compliance
with employment Laws, except where the failure to do so could not reasonably be 
expected to result in a Material Adverse Change. There are no outstanding       
grievances, arbitration awards or appeals therefrom arising out of any labor    
contracts or current or threatened strikes, picketing, handbilling or other work
stoppages or slowdowns at facilities of any of the Borrower or any of its       
Subsidiaries which in any case could reasonably result in a Material Adverse    
Change.                                                                         

4.27 Senior Debt Status.                                              
------------------                                          

              The obligations of Borrower under this Credit Agreement and each
of the other Loan Documents to which it is a party do rank and will rank at     
least pari passu in priority of payment with all other Indebtedness for Borrowed
---- -----                                                          
Money of Borrower. There is no lien upon or with respect to any of the          
properties or income of Borrower or Subsidiary of Borrower which secures        
indebtedness or other obligations of any Person except for Permitted            
Encumbrances.                                                                   

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ARTICLE V. AFFIRMATIVE COVENANTS  
--------------------------------  

 From the date hereof and for so much longer thereafter as the
Revolving Credit Commitment is in effect or any of the Bank Indebtedness remains
unpaid, the Borrower agrees, for the benefit of the Banks, the Issuing Bank and 
the Agent, that:                                                                

5.1 Use of Proceeds.                                                  
---------------                                               

     Proceeds of the Revolving Credit Loans shall be used by the Borrower (a) to
refinance the revolving credit loans, if any, outstanding under the Borrower's  
Existing Credit Agreement, (b) for the payment of the purchase price and related
expenses in connection with the acquisitions by the Borrower or its Subsidiaries
of the ownership interests of Argosy, and (c) for general working capital       
purposes of the Borrower and its Active Subsidiaries, including but not limited 
to capital expenditures, the acquisition and development of additional schools, 
draws to meet DOE regulatory requirements and Permitted Acquisitions. Proceeds  
of the Term Loans shall be used by the Borrower for the payment of the purchase 
price and related expenses in connection with the acquisitions by the Borrower  
or its Subsidiaries of the ownership interests of Argosy. Proceeds of the Swing 
Loans shall be used by the Borrower to finance its general working capital      
purposes on a day-to-day basis. Proceeds of the Supplemental Swing Loans shall  
be used by the Borrower to finance its short term borrowing needs for general   
corporate purposes. The Letters of Credit may be issued in the aggregate stated 
principal amount not in excess of $25,000,000 at any one time outstanding for   
general corporate purposes; a letter of credit may be issued in the stated      
principal amount not in excess of $60,000,000 for the sole purpose of providing 
the "Escrow Fund" under the Escrow Agreement.                                   

5.2 Furnishing Information.                                           
-----------------------                                       

The Borrower will maintain a system of accounting established and     
administered in accordance with GAAP consistently applied, and will maintain its
books in a manner so as to enable it to produce GAAP statements. Further, the   
Borrower will:                                                                  

         (a)  Quarterly Reports of Borrower. Beginning with the Fiscal Quarter
-----------------------------                     
ending September 30, 2001, furnish to the Agent, for redelivery to each Bank, as
soon as practicable but in any event within forty-five (45) days after the end  
of each of the first, second and third Fiscal Quarters of the Borrower, copies  
of (i) internally prepared Consolidated balance sheets of the Borrower, and with
respect to Argosy for the Fiscal Quarters ended prior to the first anniversary  
of the Closing Date, the consolidating balance sheets, as at the close of each  
such Fiscal Quarter and (ii) internally prepared Consolidated statements of     
profit and loss, of retained earnings and cash flows of the Borrower, and with  
respect to Argosy for the Fiscal Quarters ended prior to the first anniversary  
of the Closing Date, the consolidating statements of profit and loss, of        
retained earnings and cash flows, for the quarter then ended and for the period 
from the beginning of the Fiscal Year to the date of such balance sheet,        
together with figures in comparative form for the corresponding date or period, 
as the case may be, one year prior thereto, all prepared in accordance with     
GAAP, consistently applied, except for the absence of notes thereon and subject 
to year-end adjustments, and in such reasonable detail as the Agent may request;
provided, however, the Borrower shall be deemed in compliance with the timing   
requirements of this                                                            

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Section if the Borrower shall file its 10Q statement with the Securities        
Exchange Commission in a timely fashion and shall promptly send a copy of the   
financial statements to the Agent.                                              

          (b)  Annual Reports of Borrower. Furnish to the Agent after the end of
--------------------------                        
each Fiscal Year, for redelivery to each Bank, as soon as practicable but in any
event within one hundred twenty (120) days after the end of each Fiscal year    
beginning on or after July 1, 2000, copies of the annual audited Consolidated   
financial statements of the Borrower which shall include, among other things,   
(A) the Consolidated balance sheet and Consolidated statements of income of the 
Borrower, and with respect to Argosy for the fiscal year ended June 30, 2002,   
the consolidating balance sheets and consolidating statements of income, as at  
the end of such Fiscal Year, (B) a Consolidated statement of profit and loss,   
and with respect to Argosy for the fiscal year ended June 30, 2002, the         
consolidating statement of income and loss, and (C) a summary of transactions in
the stockholders' equity account of the Borrower, all in reasonable detail, all 
prepared in accordance with GAAP and all certified without qualification by an  
independent public accountant selected by the Borrower and satisfactory to the  
Agent; provided, however, the Borrower shall be deemed in compliance with the   
timing requirements of this Section if the Borrower shall file its 10K statement
with the Securities Exchange Commission in a timely fashion and shall promptly  
send a copy of the financial statements to the Agent.                           

          (c)  Budgets; Forecasts.. Furnish to the Agent, for redelivery to each
------------------                                
Bank, as soon as practicable but in any event within thirty (30) days after the 
commencement of each Fiscal Year beginning with the fiscal year commencing July 
1, 2002, a copy of the Borrower's budget and forecast for such year, in form and
content acceptable to the Agent.                                                

         (d)  Compliance Certificate. Together with each delivery of financial
----------------------                            
statements pursuant to Subsections 5.2(a) and 5.2(b), a Compliance Certificate  
substantially in the form of Exhibit "K" attached hereto, signed by the Chief   
-----------           
Financial Officer, or in his absence, the Treasurer of the Borrower, stating    
that he has caused the terms of this Credit Agreement and of the Notes to be    
reviewed and has made, or caused to be made under his supervision, a review of  
the transactions and condition of the Borrower and its Active Subsidiaries      
during the accounting period covered by such financial statements and that      
nothing has come to his attention to lead him to believe that any Event of      
Default hereunder or any condition or event which, after notice or lapse of time
or both, would constitute an Event of Default exists. If any such Event of      
Default, condition or event existed or exists, such certificate shall specify   
the nature and period of existence thereof and what action the Borrower or such 
Active Subsidiary has taken or is taking or proposes to take with respect       
thereto. Each such certificate shall also contain, for the period to which the  
same relates, calculations in reasonable detail manifesting compliance as of the
close of such accounting period with the covenants contained in Sections 6.1    
through 6.6 inclusive and Section 6.12 hereof. Such certificate shall in all    
respects be in form and substance satisfactory to Agent.                        

          (e)  Notification of Defaults. Furnish to the Agent, for redelivery to
------------------------                          
each Bank, prompt notice upon the occurrence of any event of default or of any  
event which, with the giving of notice or the lapse of time, or both, would     
constitute an event of default under any Indebtedness for Borrowed Money        
involving liabilities in excess of $500,000 in the aggregate.                   

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   (f)   Other Reports, Information and Notices. The Borrower will
--------------------------------------          
deliver or cause to be delivered to the Agent, for redelivery to each Bank,     
within the time periods set forth below, the following other reports,           
information and notices:                                                        

   (i)   Notice of Events of Default and Material Adverse Changes.
        --------------------------------------------------------
Promptly after any Authorized Officer of the Borrower has learned of the        
occurrence or existence of an Event of Default or a Material Adverse Change,    
telephonic notice thereof specifying the details thereof, the anticipated effect
thereof and the action which the Borrower has taken, is taking or proposes to   
take with respect thereto, which notice shall be promptly confirmed in writing  
within five (5) days by an Authorized Officer of the Borrower.                  

   (ii)  Notice of Breach of Material Contract. Promptly after any
-------------------------------------           
Authorized Officer of the Borrower has learned of the occurrence or existence of
a default by any party to any material contract to which the Borrower or any    
Active Subsidiary is a party which default has had or which may reasonably be   
expected to have a Material Adverse Effect, telephonic notice thereof specifying
the details thereof, the anticipated effect thereof and the action which the    
Borrower is taking or proposes to take with respect thereto, which notice shall 
be promptly confirmed in writing within five (5) days by an Authorized Officer  
of the Borrower.                                                                

(iii) Notice of Litigation.                                 
--------------------                            

 (A) Promptly after any Authorized Officer of the Borrower has
knowledge thereof, written notice of any action, suit, proceeding or            
investigation before any Governmental Person affecting the Borrower or any      
Active Subsidiary, except for actions, suits, proceedings and investigations    
which, if adversely determined, would not and could not, individually or in the 
aggregate, reasonably be expected to result in a Material Adverse Change; and   

 (B) promptly after any Authorized Officer of the Borrower has
knowledge thereof, written notice of any decision, ruling, judgment which has   
had or which could reasonably be expected to have a Material Adverse Effect and 
any appeal, reversal or other significant action in connection with any such    
action, suit, proceeding or investigation before any Governmental Person        
affecting the Borrower or any Active Subsidiary.                                

    (iv)  Orders, Etc. Promptly after receipt thereof, a copy of any
------------                                    
order, writ, decree, judgment, decision or injunction issued by any Governmental
Person in any proceeding, action, suit or investigation to which the Borrower or
any Active Subsidiary is a party which would or could reasonably be expected to 
result in a Material Adverse Change.                                            

(v)   ERISA Reports.                                        
-------------                                   

     (A) As soon as possible, and in any event not later than the date
notice is sent to the PBGC, notice of any Reportable Event regarding any Plan or
Benefit Arrangement of the Borrower, any Active Subsidiary of the Borrower or   
any ERISA Affiliate and an explanation of any action which has been or which is 
proposed to be taken with respect thereto;                                      

        (B) concurrent with the filing thereof, a copy of any request to the
United States Secretary of the Treasury for a waiver or variance of the minimum 
funding standards of                                                            

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Section 302 of ERISA and Section 412 of the Code with respect to any Plan or    
Benefit Arrangement of the Borrower, any Active Subsidiary of the Borrower or   
any ERISA Affiliate;                                                            

       (C) as soon as possible, but in no event later than sixty (60) days
after an officer of the Borrower becomes aware of unfunded accumulated benefit  
obligations for any Plan of the Borrower or any ERISA Affiliate, as determined  
in accordance with the Financial Accounting Standards Board Statement of        
Financial Accounting Standards No. 87, Employer's Accounting for Pensions (or   
                                ----------------------------------
any superseding statement thereto), written notice of the occurrence of such    
event;                                                                          

         (D) upon the request of the Agent, copies of each annual report (Form
5500 Series) with accompanying schedules filed with respect to any Plan or      
Benefit Arrangement of the Borrower or any ERISA Affiliate;                     

      (E) promptly after receipt thereof, a copy of any notice which the
Borrower or any ERISA Affiliate may receive from the PBGC relating to the       
intention of the PBGC to terminate any Plan or Benefit Arrangement, or to       
appoint a trustee to administer any Plan or Benefit Arrangement, or to assert   
any liability under Title IV of ERISA against the Borrower or any ERISA         
Affiliate;                                                                      

  (F) a copy of any notice of assessment of Withdrawal Liability
received by the Borrower or any ERISA Affiliate in relation to any Multiemployer
Plan;                                                                           

(G) as soon as possible, and in no event later than the date
notification is sent to the PBGC, notice of the failure by the Borrower or any  
ERISA Affiliate to make a required installment or other payment under Section   
302 of ERISA and Section 412 of the Code;                                       

          (H) concurrent with the filing thereof, a copy of any Notice of Intent
to Terminate any Plan of the Borrower or any ERISA Affiliate filed under Section
4041(c) of ERISA; and                                                           

     (I) promptly after receipt thereof, but without any obligation or
responsibility to secure the same, copies of any calculations of estimated      
Unfunded Benefit Liabilities (or, if applicable, the portions of any estimated  
Unfunded Benefit Liabilities that would be allocated to the Borrower or any     
ERISA Affiliate under Sections 4063 and 4064 or Section 4062(e) of ERISA) for   
any Plans of the Borrower, any Active Subsidiary of the Borrower or any ERISA   
Affiliate.                                                                      

          (vi)   Notice of Environmental Claims. Promptly after receipt thereof,
------------------------------                
the Borrower shall deliver to the Agent, for redelivery to the Banks, notice of 
any material Environmental Claim.                                               

    (vii)  Tax Returns. The Borrower shall deliver to the Agent, for
-----------                                   
redelivery to the Banks, promptly upon request, copies of all Federal tax       
returns and reports filed by the Borrower or any Active Subsidiary in respect of
taxes measured by income (excluding sales, use and like taxes).                 

       (viii) Notices of Tax Audits. Promptly, and in any event within ten
---------------------                         
(10) days after receipt thereof by the Borrower or any Active Subsidiary, the   
Borrower shall furnish to the                                                   

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Agent, for redelivery to the Banks, a copy of each notice from any Governmental 
Person received by the Borrower or any Active Subsidiary of a threatened        
material adverse adjustment to any Federal tax return of the Borrower or any    
Active Subsidiary and a copy of each subsequent notice with respect thereto from
any such Governmental Person.                                                   

 (g)  Updates to Schedules. Together with each delivery of the
--------------------                              
Borrower's annual financial statements pursuant to Subsection 5.2(b) hereof, the
Borrower shall provide the Agent, for redelivery to the Banks, with written     
revisions or updates to Schedule 4.1, 4.3, 4.7, 4.10, 4.11, 4.12 and 4.13;      
provided, however, that no schedule shall be deemed to have been amended,       
--------                                                                        
modified or superseded by any such correction or update, nor shall any breach of
warranty or representation resulting from the inaccuracy or incompleteness of   
any such schedule be deemed to have been cured thereby, unless and until the    
Required Banks, in their sole and absolute discretion, shall have accepted in   
writing such revisions or updates to such schedule.                             

5.3 Preservation of Existence.                                        
-------------------------                                     

    Except as otherwise permitted pursuant to Section 6.9, at its own cost and
expense, the Borrower will, and will cause each Active Subsidiary to, do all    
things necessary to preserve and keep in full force and effect its corporate    
existence and its qualification under the laws of the state of its              
incorporation. Further, the Borrower will, and will cause each Active           
Subsidiary, other than Active Subsidiaries which no longer exist as a result of 
a transaction permitted pursuant to Section 6.9, to maintain, preserve and renew
all rights, powers and privileges which are material to the Consolidated        
operation of the Borrower's business, including the accreditation of its        
Accredited Subsidiaries (the loss of which accreditation shall be deemed for    
purposes of this Credit Agreement to be material).                              

5.4 Payment of Taxes and Fees.                                        
-------------------------                                     

The Borrower will, and will cause each of its Active Subsidiaries to, 
promptly pay and discharge all taxes, assessments, and governmental charges and 
levies upon it or upon its income, profits or property except for taxes,        
assessments and governmental charges or levies (a) the payment of which is being
contested in good faith by appropriate proceedings, or (b) the non-payment of   
which would not reasonably be expected to have a Material Adverse Effect on the 
Borrower and its Subsidiaries taken as a whole, and as to which it shall have   
set aside on its books reserves for such claims as are determined to be adequate
by the application of GAAP consistently applied.                                

5.5 Notice of Change of Business.                                     
----------------------------                                  

     The Borrower will promptly give written notice to the Agent, for redelivery
to the Banks, if the Borrower or any of its Active Subsidiaries which is a      
Person primarily engaged in proprietary education or other related fields ceases
to be so primarily engaged.                                                     

5.6 Hazard and Casualty Insurance.                                    
-----------------------------                                 

The Borrower will, and will cause each Active Subsidiary to, keep and 
maintain hazard and casualty insurance with responsible insurance companies on  
such of the properties of the Borrower and its Active Subsidiaries, in such     
amounts and against such risks as is customarily                                

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maintained by similar businesses similarly situated and owning, leasing or      
operating similar properties.                                                   

5.7  Good Repair.                                                     
-----------                                                 

    The Borrower will, and will cause each Active Subsidiary to, do all things
necessary to maintain, preserve, protect and keep its respective property in    
good repair, working order and condition, ordinary wear and tear excepted, and  
make all necessary and proper repairs, renewals and replacements so that its    
respective business carried on in connection therewith may be conducted at all  
times as presently conducted.                                                   

5.8  Corporate Records.                                               
-----------------                                           

The Borrower will, and will cause each Active Subsidiary to, maintain 
proper books of record and account in accordance with sound accounting practice 
in which full, true and correct entries shall be made of all its respective     
property and assets and its respective dealings and business affairs.           

5.9  Inspection of Records and Properties.                            
------------------------------------                        

 The Borrower will, and will cause each Active Subsidiary to, permit, on
reasonable prior notice from the Agent or any Bank or their respective agents or
representatives (but upon the occurrence and during the continuation of an Event
of Default, without the requirement of reasonable prior notice), to visit during
regular office hours any of their respective properties, to examine their       
respective physical assets, books of account and other records, and to discuss  
their respective affairs and accounts with, and be advised about them by the    
management of the Borrower, or any Active Subsidiary, and as often as the Agent 
or such Bank may reasonably request.                                            

5.10 Continued Ownership of Active Subsidiaries.                      
------------------------------------------                  

   Except as permitted by Section 6.5, without the written consent of all of
the Banks, the Borrower shall not sell, transfer or otherwise dispose of any of 
its capital stock of an Active Subsidiary.                                      

5.11 Compliance With Laws.                                            
--------------------                                        

  The Borrower will, and will cause each Active Subsidiary to, perform and
promptly comply in all material respects, and cause all property of the Borrower
and each Active Subsidiary to be maintained, used and operated in all material  
respects in accordance with all Governmental Rules (including, without          
limitation, zoning ordinances, building codes and Environmental Laws) of every  
duly constituted Governmental Person applicable to the Borrower, each Active    
Subsidiary or any of their respective properties) except for those alleged      
violations which are being contested in good faith and by appropriate           
proceedings promptly initiated and diligently conducted and if an appropriate   
provision, as shall be required by GAAP, shall have been made therefor. The     
foregoing notwithstanding, the Borrower shall not be deemed to be in violation  
of this Section 5.11 as the result of any failure to comply with such           
Governmental Rule if (A) the applicability of such Governmental Rule is being   
contested by the                                                                

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Borrower or any Active Subsidiary in good faith and by proper proceedings       
appropriately conducted or (B) the non-compliance with such Governmental Rule   
would not reasonably be expected to materially and adversely affect the business
operations or financial condition of the Borrower or its Active Subsidiaries or 
the ability of the Borrower and its Active Subsidiaries, taken as a whole, to   
perform their respective obligations under the Loan Documents.                  

5.12 Further Assurances.                                              
------------------                                          

   At any time and from time to time, upon the Agent's request, the Borrower
shall, and shall cause each Active Subsidiary to, make, execute and deliver, or 
cause to be made, executed and delivered, to the Agent and where appropriate    
shall cause to be recorded or filed, and from time to time thereafter to be re- 
recorded and refiled at such time and in such offices and places as shall be    
deemed reasonably desirable by the Banks, any and all such further certificates 
and other documents as the Banks may consider necessary or desirable in order to
continue and preserve the obligations of the Borrower under the Notes and other 
Loan Documents.                                                                 

ARTICLE VI. NEGATIVE COVENANTS  
------------------------------  

 From the date hereof and for so much longer thereafter as the
Revolving Credit Commitment is in effect or any of the Bank Indebtedness remains
unpaid, the Borrower agrees, for the benefit of the Banks, the Issuing Bank and 
the Agent, that:                                                                

6.1  Maintenance of Ratio of Total Funded Debt to EBITDA.             
---------------------------------------------------         

The Borrower will not permit or suffer to exist, as of the end of each
Fiscal Quarter ending hereafter, its ratio of Total Funded Debt, as determined  
as of the end of such Fiscal Quarter, to EBITDA, as determined for immediately  
preceding four (4) Fiscal Quarters then ended to be greater than 2.5 to 1.0.    

  For purposes of calculating compliance with the foregoing ratio of Total
Funded Debt to EBITDA, as well as for purposes of (a) calculating compliance    
with the covenants required to be measured under Section 6.13(v), (b)           
calculating the applicable interest rates on the Loans pursuant to Sections     
2.5(b)(i) through (iii), and (c) calculating the applicable Commitment Fees and 
Letter of Credit Fees under Section 2.1(g) and 2.3(e) respectively, EBITDA shall
be calculated on a pro forma basis using the historical financial statements of 
the Borrower and its Subsidiaries, and the other Persons and businesses acquired
pursuant to Permitted Acquisitions.                                             

6.2  Limitation on Total Funded Debt to Total Capitalization.         
-------------------------------------------------------     

The Borrower will not permit or suffer to exist, at any time, its     
percentage of Total Funded Debt to Total Capitalization to be greater than 60%. 

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6.3  [Intentionally Omitted].                                         
-----------------------                                     

6.4  Fixed Charge Coverage Ratio.                                     
---------------------------                                 

The Borrower will not permit or suffer to exist, as determined on each
Fiscal Quarter ending hereafter for the immediately preceding four Fiscal       
Quarters then ended (i.e. a rolling four Fiscal Quarter basis), its Fixed Charge
Coverage Ratio to be less than 1.1 to 1.0.                                      

For purposes of calculating compliance with the foregoing Fixed Charge
Coverage Ratio, EBITDA for Subsidiaries owned by the Borrower less than four    
Fiscal Quarters at the time of the calculation of the Fixed Charge Coverage     
Ratio shall not be subject to the pro forma adjustments provided for in Section 
6.1.                                                                            

6.5  Disposal of Assets.                                              
------------------                                          

     The Borrower will not, nor will it permit any of its Subsidiaries to, sell,
lease or otherwise dispose of, in any one Fiscal Year during the term hereof,   
assets having an aggregate fair market value in excess of $5,000,000 or directly
or indirectly enter into an agreement or arrangement whereby the Borrower or any
of its Subsidiaries shall sell or transfer assets having an aggregate fair      
market value in excess of $5,000,000; provided, however, that with the consent  
    --------
of the Required Banks, the Borrower and its Subsidiaries shall be permitted to  
make such agreements, arrangements and dispositions of assets having an         
aggregate fair market value in excess of $5,000,000 in any one Fiscal Year so   
long as the net proceeds of such dispositions in excess of $5,000,000 are paid  
to the Agent as a mandatory prepayment of the Loans in accordance with Section  
2.4(f). Provided no Event of Default has occurred and is continuing, the Agent  
shall release any Encumbrance of the Agent and the Banks in the assets of the   
Borrower and its Subsidiaries disposed of in accordance with the foregoing      
permitted dispositions. In addition to the dispositions permitted above, the    
Borrower and its Subsidiaries may make the dispositions of assets which consist 
of (i) the sale of inventory in the ordinary course of business, (ii) a merger  
or consolidation otherwise permitted pursuant to Section 6.10, and (iii) prior  
to the occurrence and during the continuation of a Default or Event of Default, 
the sale and lease-back of owned real estate and improvements which are not     
subject to the lien of any of the Mortgages.                                    

6.6  Permitted Indebtedness.                                          
----------------------                                      

    The Borrower will not, and will not permit any Subsidiary to, guarantee or
incur or suffer to exist any Indebtedness for Borrowed Money except:            

      (i)   the Bank Indebtedness and reimbursement obligations of the
Borrower's Subsidiaries related to Letters of Credit;                           

(ii)  Indebtedness for Borrowed Money secured by Permitted
Encumbrances;                                                                   

       (iii) Guarantees of Indebtedness for Borrowed Money to the extent
such Indebtedness for Borrowed Money is permitted by this Section 6.6;          

          (iv)  Indebtedness for Borrowed Money incurred by any Subsidiary and
due to the Borrower;                                                            

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     (v)    Indebtedness for Borrowed Money not specifically
enumerated in items (i) through (iv) above outstanding on the Closing Date as   
more fully set forth on Schedule 6.6, as the same may be extended or renewed but
------------                    
not increased.                                                                  

             (vi)   Guarantees of Teach-Out Obligations and other education-
related obligations of the Borrower or its Active Subsidiaries;                 

         (vii)  Indebtedness incurred in connection with a Permitted
Acquisition;                                                                    

               (viii) Guarantees of any student loan programs of the Borrower or
its Active Subsidiaries in an aggregate amount of up to $5,000,000;             

             (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 and, further provided that, if such       
                           ---------------------
Indebtedness for Borrowed Money is incurred by a Subsidiary, the Subsidiary     
shall execute a Subsidiary Guarantee;                                           

             (x)    In addition to the other Indebtedness for Borrowed Money
permitted by this Section 6.6, Indebtedness for Borrowed Money whether now      
outstanding or hereafter incurred by the Borrower or any Subsidiary that when   
aggregated with other Indebtedness for Borrowed Money of the type permitted by  
this Subsection (x) of the Borrower and all of the Subsidiaries (excluding Bank 
Indebtedness) is less than $10,000,000 at any time; and                         

             (xi)   Indebtedness for Borrowed Money incurred by the Borrower
or its Subsidiaries with respect to any currency swap agreement, interest rate  
swap, cap, collar or floor agreement or other interest rate management device,  
provided that (w) such agreements or devices are not entered into for           
speculative purposes (x) the other party to such agreement shall be a Bank or a 
financial institution acceptable to the Agent in its reasonable discretion, (y) 
such Bank or financial institution shall calculate its credit exposure in a     
reasonable and customary manner utilizing standards and contracts on forms      
promulgated by the International Swap Dealers Association, and (z) except for   
agreements with Banks and Affiliates of Banks which are secured by the Loan     
Documents, the obligations of the Borrower and its Subsidiaries shall be        
unsecured.                                                                      

6.7  Prohibition on Encumbrances.                                     
---------------------------                                 

           (a)  Lien Prohibition.  The Borrower will not create, assume,
----------------                        
incur or suffer to exist, or allow any Subsidiary to create, assume, incur or   
suffer to exist, any Encumbrance upon any of its assets, whether now owned or   
hereafter acquired, nor acquire nor agree to acquire any asset subject to an    
Encumbrance, except:                                                            

              (i)  Encumbrances in favor of the Agent and/or the Banks granted
hereunder or under the other Loan Documents;                                    

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          (ii)   Encumbrances for taxes or assessments or governmental
charges or levies which are not due or remain payable, without penalty, or which
are being contested in good faith by appropriate proceedings and with respect to
which the Borrower or the affected Subsidiary has created reserves which are    
determined by the Borrower to be adequate by the application of GAAP            
consistently applied;                                                           

              (iii)  Encumbrances to secure the obligations of the Borrower or
any Subsidiary under workmen's compensation laws, unemployment insurance laws,  
social security laws or other similar legislation;                              

              (iv)   Encumbrances to secure the obligations of the Borrower or
any Active Subsidiary directly associated with state licensing or accreditation 
requirements;                                                                   

               (v)    Encumbrances in connection with bids, tenders, performance
bonds, contracts or leases (including, without limitation, the posting of       
collateral for any operating lease) to which the Borrower or any Subsidiary is a
party, or to secure public or statutory obligations in an amount of up to       
$1,000,000 in the aggregate;                                                    

        (vi)   Encumbrances for landlords', mechanics', carriers',
workmen's, warehousemen's, materialmen's or repairmen's liens or other like     
Encumbrances in the ordinary course of business;                                

          (vii)  Encumbrances upon tangible personal property securing
loans and capital leases to any Subsidiary or Borrower or deferred payments by  
the Borrower or any Subsidiary for the purchase or lease under a Capitalized    
Lease of such tangible personal property, provided that the amount of the       
Indebtedness for Borrowed Money secured by the Encumbrance does not exceed the  
purchase price of such tangible personal property and the Encumbrances do not   
extend to any other property of such Subsidiary or the Borrower;                

         (viii) Encumbrances on particular parcels of real estate or
buildings that are given in connection with typical mortgage-type financings to 
secure Indebtedness for Borrowed Money that is permitted under Section 6.6(ix); 
provided however, in the event that the liens of the Mortgages have not been    
released in accordance with Section 3.1, such Encumbrances shall not encumber   
any of the Collateral; and Encumbrances on particular parcels of real estate and
buildings at The Medical Institute of Minnesota campus that are acquired by HAC 
pursuant to the Argosy Merger Agreement, provided that such Encumbrances do not 
secure Indebtedness for Borrowed Money in excess of $15,000,000;                

           (ix)   Encumbrances to secure surety, replevin, attachment or
appeal bonds relating to legal proceedings to which the Borrower or any         
Subsidiary is a party;                                                          

            (x)    Encumbrances arising out of judgments or awards against
the Borrower or any Subsidiary with respect to which the Borrower is currently  
engaged in proceedings for review or appeal and with respect to which the       
Borrower shall have secured a stay of execution pending such proceedings for    
review or appeal, provided, that the aggregate amount of the foregoing shall at 
no time exceed $5,000,000;                                                      

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              (xi)   minor survey exceptions, minor Encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other    
restrictions as to the use of real properties or Encumbrances incidental to the 
conduct of the business of the Borrower or its Subsidiaries or to the ownership 
of their properties which were not incurred in connection with Indebtedness for 
Borrowed Money or other extensions of credit and which do not in the aggregate  
materially adversely affect the value of said properties or materially impair   
their use in the operation of the business of the Borrower or such Subsidiaries;

     (xii)  Encumbrances to secure any extension, renewal or
replacement (or successive extensions, renewals or replacements) as a whole, or 
in part, of any obligations secured by any Encumbrances referred to in the      
foregoing clauses (i) through (xi) and clause (xiii), provided that (y) such    
                                    --------
extended, renewed or replaced Encumbrances shall be limited to all or a part of 
the same property that secured the Encumbrances extended, renewed or replaced   
(plus improvements on such property) and (z) the obligations secured by such    
Encumbrances at such time are not increased except in accordance with the terms 
thereof; and                                                                    

          (xiii) Encumbrances not specifically enumerated in items (i)
through (xi) above which were in existence on the date hereof and described on  
Schedule 6.7 hereto;                                                            
------------                                                                    

              (b)  Agreements Restricting Encumbrances.  Except for agreements
-----------------------------------     
related to secured financing permitted under Section 6.7(vii) and (viii),       
neither the Borrower, nor any Subsidiary, shall enter into any agreement, with  
any Person conditioning, restricting or in any way prohibiting the creation of a
security interest, pledge, lien or other Encumbrance on or against or with      
respect to any of its now owned or hereafter acquired right, title or interest  
real or personal property in favor of the Agent and the Banks.                  

6.8  Advance of Funds and Investments.                                
--------------------------------                            

        (a)  Advance of Funds.  The Borrower will not, nor will it
----------------                        
permit any Subsidiary to, make any advance, loan or extension of credit to any  
Person, except: (a) extension of trade credit and student loans in the ordinary 
course of business; (b) Indebtedness for Borrowed Money permitted by Subsection 
6.5 hereof; (c) advances to employees made by the Borrower or any Subsidiary in 
the ordinary course of its business, and (d) other loans and advances made in   
the ordinary course of business not to exceed $5,000,000 in the aggregate at any
one time outstanding.                                                           

              (b)  Investments.  The Borrower will not, nor will it permit any
-----------                             
Subsidiary to, make any capital contribution to, purchase any stocks, bonds,    
notes, debentures or other securities of, or make any other investment in any   
other Person, except (a) existing Subsidiaries; (b) investments in prime        
commercial paper and certificates of deposit in United States commercial banks  
(having capital resources in excess of $500,000,000), in each case due within   
one (1) year from the date of purchase and payable in the United States in      
Dollars; obligations issued or unconditionally guaranteed by the United States  
Government or any agency thereof, and repurchase agreements of such banks for   
terms of less than one year in respect of the foregoing certificates and        
obligations; (c) acquisitions permitted by Section 6.13 hereof and (d) up to    
$10,000,000 of monies invested (or liabilities incurred) subsequent to the      
Closing Date in                                                                 

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joint ventures and strategic investments in the same line of business as the    
Borrower and its Subsidiaries.                                                  

6.9       Dividend and Redemption Restrictions.                       
------------------------------------              

          (a)  Dividend Restrictions.  The Borrower shall not pay cash
---------------------                   
dividends or distributions on its capital stock while the Credit Facility is    
outstanding except, that so long as no Event of Default is in existence or will 
result therefrom, the Borrower may pay cash dividends or distributions during   
any period of four consecutive Fiscal Quarters in an aggregate amount of up to  
20% of the Borrower's consolidated after tax net income (if positive), as       
determined in accordance with GAAP, for such period of four consecutive Fiscal  
Quarters, provided that, in the event that Borrower does not make the           
-------------                                               
distributions or pay the dividends permitted above, such distributions shall not
be accrued and paid or distributed at a later time.                             

              (b)  Redemption Restrictions.  The Borrower shall not, nor shall
-------------------                     
it permit any Subsidiary to, purchase the Borrower's capital stock while the    
Credit Facility is outstanding, except, that so long as no Event of Default is  
in existence or will result therefrom, the Borrower may repurchase subsequent to
the Closing Date its publicly traded securities in an aggregate amount of up to 
$20,000,000, plus fifty percent (50%) of the net proceeds of any capital stock  
or other ownership interest issued by the Borrower after the Closing Date (other
than in connection with Permitted Acquisitions or in connection with capital    
stock purchased by officers, directors and employees of the Borrower and its    
Subsidiaries), provided however, that the aggregate amount of all such          
securities repurchases does not exceed $50,000,000.                             

            (c)  Subsidiary Dividends.  No Subsidiary shall enter into any
--------------------                    
agreement or covenant that prohibits, conditions or limits such Subsidiary from 
paying or declaring dividends or paying any inter-company obligations whether   
now outstanding or hereafter arising.                                           

6.10      Merger.                                                     
------                                            

             (a)  The Borrower shall not merge or consolidate with any other
Person unless (i) the Borrower is the surviving corporation, and (ii) no Event  
of Default occurs or is reasonably likely to occur as a result of such a merger 
or consolidation.                                                               

           (b)  The Borrower shall not permit any Subsidiary to merge or
consolidate with any Person (other than the Borrower or another Subsidiary)     
unless (i) such Subsidiary is the surviving corporation or, if such Subsidiary  
is not the surviving corporation, the surviving corporation's stock is owned,   
directly or indirectly, by the Borrower and, in the event such Subsidiary is a  
Material Subsidiary, such capital stock is subject to the Pledge Agreement      
(unless the lien of the Pledge Agreement has terminated in accordance with      
Section 3.1), and (ii) no Event of Default occurs or is reasonably likely to    
occur as a result of such merger or consolidation.                              

6.11      Regulations X, T and U Compliance.                          
---------------------------------                 

     The Borrower will not, nor shall it permit any of its Subsidiaries to, use,
or permit the use of, the proceeds of any borrowings hereunder to purchase or   
carry Margin Stock or otherwise act                                             

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so as to cause the Banks, in extending credit hereunder, to be in contravention 
of Regulations X, T and U.                                                      

6.12   Cohort Default Rates.                                          
--------------------                                    

   The Borrower will not permit any Active Subsidiary whose operating income
for the most recently completed Fiscal Year equals or exceeds seven and one-half
percent (7-1/2%) of the aggregate operating income of all Active Subsidiaries   
for the same fiscal period to have a Cohort Default Rate in excess of twenty-   
five percent (25%) per year for the two (2) previous years.                     

6.13   Permitted Acquisitions.                                        
----------------------                                  

           (a)   Except for the merger of Subsidiaries permitted under Section
6.10, the Borrower will not, nor will it permit any Subsidiary to acquire all or
substantially all of the assets of any second Person or acquire the stock of any
second Person or make any other investment in any second Person, provided that  
                                                               -------------
the Borrower or any Subsidiary of the Borrower may acquire all the ownership    
interests of or substantially all the assets of a second Person (a "Permitted   
                                                                 ---------
Acquisition") if each of the following requirements are met:                    
-----------                                                                     

       (i)   if the liens in favor of the Agent pursuant to the Pledge
Agreement and the Mortgages remain in effect pursuant to Section 3.1, the       
Borrower or the Subsidiary acquiring ownership interests in such Person shall,  
in the case of any Person which constitutes a Material Subsidiary, cause such   
ownership interests to be pledged to the Agent for the benefit of the Banks     
pursuant to the Pledge Agreement and, subject to Section 6.13(b), shall cause   
the Agent to receive a lien pursuant to a Mortgage on any Real Property acquired
in connection with the Permitted Acquisition; if the liens in favor of the Agent
pursuant to the Pledge Agreement and the Mortgages have been released in        
accordance with Section 3.1, and the liens on the capital stock of the          
Borrower's Subsidiaries are subsequently reinstated pursuant to Section 3.1, the
Borrower or the Subsidiary acquiring ownership interests in such Person shall,  
in the case of any Person which constitutes a Material Subsidiary, cause such   
ownership interests to be pledged to the Agent for the benefit of the Banks     
pursuant to the Pledge Agreement.  In the case of any ownership interest        
acquired in a Person that is not organized under the laws of the United States  
or any state or territory thereof, the Borrower or the Subsidiary acquiring such
Person shall pledge 65% of the ownership interests in accordance with the Pledge
Agreement;                                                                      

          (ii)  the board of directors or other equivalent governing body of
such Person shall have approved such Permitted Acquisition;                     

            (iii) the business acquired, or the business conducted by the Person
whose ownership interests are being acquired, as applicable, shall be           
substantially the same as one or more line or lines of business conducted by the
Borrower and its Subsidiaries or a reasonable extension of such line or lines of
business and shall comply with Section 6.15;                                    

  (iv)  no Potential Default or Event of Default shall exist
immediately prior to and after giving effect to such Permitted Acquisition;     

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    (v)    after giving effect to the Permitted Acquisition, the
Borrower shall be in compliance with Sections 6.1 through 6.4 on a pro forma    
basis for the twelve month period ended immediately prior to and after giving   
effect to the closing of the Permitted Acquisition, with any pro forma          
adjustments relating to the Permitted Acquisition to be acceptable to the Agent.
The Borrower shall demonstrate that it shall be in pro forma compliance with the
covenants set forth in Sections 6.1 through 6.4 (including in such computation  
Indebtedness for Borrowed Money or other liabilities assumed or incurred in     
connection with such Permitted Acquisition and giving pro forma effect to net   
Consolidated EBITDA of the Person or assets so acquired) by delivering at least 
five (5) Business Days prior to such Permitted Acquisition a certificate in the 
form of Exhibit "K" evidencing such compliance;                                 
-----------                                                     

     (vi)   in connection with the closing of any single Permitted
Acquisition, the Consideration for such Permitted Acquisition other than capital
stock of the Borrower, when aggregated with the Permitted Acquisitions          
(exclusive of the acquisition of Argosy and IFAC) previously consummated in such
Fiscal Year of the Borrower, shall not cause the aggregate Consideration (other 
than capital stock of the Borrower) in such fiscal year to exceed the following 
amounts for the following years:                                                

Fiscal Year ended June 30, 2002       $25,000,000;      
Fiscal Year ended June 30, 2003       $32,500,000; and  
Fiscal Year ended June 30, 2004                         
and each Fiscal Year thereafter       $40,000,000.      

In connection with the closing of any Permitted Acquisition when the            
Consideration given by the Borrower is the capital stock of the Borrower, the   
Consideration, when aggregated with the Permitted Acquisitions previously       
consummated in such Fiscal Year of the Borrower in which the Consideration was  
capital stock of the Borrower, shall not cause the aggregate Consideration of   
such Permitted Acquisitions to exceed $75,000,000.                              

            The Consideration in connection with the acquisition of Argosy shall
not exceed $100,000,000.                                                        

     (vii)  in connection with the closing of any single Permitted
Acquisition when the Consideration exceeds $5,000,000, or when the Consideration
for such Permitted Acquisition plus the Consideration for all Permitted         
Acquisitions previously consummated in the same Fiscal Year of the Borrower     
exceeds $10,000,000, the Borrower shall deliver to the Agent, for redelivery to 
the Banks (a) consolidating financial projections of the Borrower and its       
Subsidiaries incorporating the pending Permitted Acquisition for a one year     
period after the acquisition, including the year of acquisition; and (b)        
consolidated financial projections of the Borrower and its Subsidiaries         
incorporating the pending Permitted Acquisition for a three year period after   
the acquisition, including the year of acquisition                              

            (viii) the Borrower shall deliver to the Agent for redelivery to the
Banks (a) copies of a description and financial statements of the entity or     
assets to be acquired and upon the request of the Agent, related due diligence  
information obtained by the Borrower, and (b)copies of any agreements entered   
into or proposed to be entered into by the Borrower or any Subsidiary in        
connection with such Permitted Acquisition and shall deliver to the Agent such  

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other information about such Person or its assets as the Agent or any Bank may  
reasonably require;                                                             

           (b)   with respect to the acquisition of Argosy, the Borrower shall
provide to the Agent for redelivery to the Banks a certificate of the Borrower  
that all the conditions precedent set forth in Section 6.1 of the Argosy        
Purchase Agreement have been met (or a certificate which details the conditions 
precedent that the Borrower has agreed to waive in whole or in part, which      
waivers shall be acceptable to the Agent).  On the effective date of the Argosy 
Merger Agreement, the Borrower shall deliver to the Agent for redelivery to the 
Banks a statement of sources and uses acceptable to the Agent that evidences    
that after giving effect to the payment of balance of the Consideration under   
the Argosy Merger Agreement and the fees and expenses in connection therewith,  
the Borrower shall have at least $20,000,000 of undrawn availability with       
respect to the Revolving Credit Commitments.  Upon receipt by the Agent for     
redelivery to the Banks of (i) a certificate of the Borrower that all the       
conditions set forth in Section 7.1 and 7.3 of the Argosy Merger Agreement have 
been met (or a certificate which details the conditions that the Borrower or HAC
have agreed to waive in whole or in part, which waivers shall be acceptable to  
the Agent), (ii) a certificate evidencing that the Ratio of Total Funded Debt to
EBITDA as calculated on a proforma basis for the prior 12 months after giving   
effect to the Borrower's acquisition of Argosy, does not exceed 2.25 to 1.00    
during the period from the Closing date through the effective date of the Argosy
Merger Agreement, and (iii) the statement of the sources and uses provided for  
above, HAC may effect the purchase of the remaining shares of Argosy not        
acquired by the Borrower under the Purchase Agreement.  Upon HAC's acquisition  
of title to the shares of Argosy pursuant to the Argosy Merger Agreement, the   
Borrower shall promptly cause such ownership interests of Argosy and any other  
new Material Subsidiary to be subject to the security interest granted under the
Pledge Agreement to the Agent for the benefit of the Banks.  Other than the     
owned property of Argosy which is subject to the Encumbrance permitted under    
Section 6.7(viii), the Borrower shall cause a lien to be granted to the Agent   
for the benefit of the Banks upon all owned property of Argosy and its          
subsidiaries pursuant to a Mortgage.                                            

6.14   Change Fiscal Year.                                            
------------------                                      

The Borrower will not, nor shall it permit any of its Subsidiaries to,
change its Fiscal Year.                                                         

6.15   Change of Business.                                            
------------------                                      

     The Borrower shall not engage, and shall cause each Subsidiaries to refrain
from engaging, in any business other than its primary presently conducted       
businesses and other related ancillary businesses.                              

6.16   Amendment to Acquisition Agreements.                           
-----------------------------------                     

The Borrower will not, nor shall it permit any of its Subsidiaries to,
amend the Argosy Purchase Agreement, the Argosy Merger Agreement, or the Escrow 
Agreement without the prior written consent of the Agent.                       

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ARTICLE VII. CONDITIONS PRECEDENT 
--------------------------------- 

 7.1  All Revolving Credit Loan, Term Loans, Swing Loan and Supplemental
      ------------------------------------------------------------------
Swing Loan Disbursements and All Letters of Credit.                             
--------------------------------------------------                              

The obligation to make each Revolving Credit Loan, the Term Loan, each
Swing Loan and each Supplemental Swing Loan and to issue each Letter of Credit  
is subject to the performance by the Borrower of its obligations under this     
Credit Agreement and to the satisfaction of the following further conditions:   

             (a)  Request for Revolving Credit Loan or Issuance of Letter of
                  ----------------------------------------------------------
Credit. (i) Except for a Revolving Credit Disbursement made simultaneously with 
------                                                                          
the execution of this Credit Agreement, receipt by the Agent, on behalf of the  
Banks, of a Request for Revolving Credit Loan, Request for Term Loan, Swing Loan
Request or Supplemental Swing Loan Request satisfying the requirements of this  
Agreement or (ii) receipt by the Agent, on behalf of the Issuing Bank, of a     
fully-executed and completed application and agreement for Letter of Credit.    

              (b)  No Default or Event of Default.  The fact that, at the time
------------------------------          
of each Revolving Credit Disbursement, the Term Loan, Swing Loan or Supplemental
Swing Loan or issuance of each Letter of Credit, no Default or Event of Default,
shall have occurred and be continuing.                                          

             (c)  No Material Adverse Change.  There shall not have occurred
--------------------------              
and be continuing (i) any Material Adverse Change or (ii) any event which has   
had, or could reasonably be expected to have, a Material Adverse Effect.        

            (d)  Compliance With Covenants.  The fact that, at the time of
-------------------------               
each Revolving Credit Loan, the Term Loan, Swing Loan or Supplemental Swing Loan
or issuance of each Letter of Credit (after giving effect to such Loan or Letter
of Credit), the Borrower shall be in compliance with the covenants contained in 
Sections 5 and 6 hereof.                                                        

              (e)  Representations Correct.  The fact that the representations
-----------------------                 
and warranties contained in this Credit Agreement and the other Loan Documents  
are true and correct on and as of the date of borrowing, except to the extent   
that such representations and warranties relate solely to an earlier date (in   
which case, such representations and warranties shall have been true and correct
on and as of such earlier date).                                                

Each request for a Revolving Credit Disbursement, the Term Loan, a Swing Loan or
Supplemental Swing Loan and each request for the issuance of a Letter of Credit,
whether made orally or in writing, by the Borrower shall be deemed to be, as of 
the date of such request, a representation and warranty by the Borrower as to   
the facts specified in Subsections 7.l(b), 7.l(c), 7.l(d) and 7.l(e).           

   7.2    Conditions Precedent to the Initial Revolving Credit Disbursement,
          ------------------------------------------------------------------
Term Loan and the Issuance of the Initial Letter of Credit.                     
----------------------------------------------------------                      

The obligation of the Banks to make the initial Revolving Credit      
Disbursement and the Term Loan, and of the Issuing Bank to issue the initial    
Letters of Credit are subject to the                                            

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satisfaction of each of the following conditions precedent in addition to the   
applicable conditions precedent set forth in Section 7.1 above:                 

          (a)  Credit Agreement.  Receipt by the Agent of a counterpart original
----------------                                  
of this Credit Agreement duly executed by each Bank, the Issuing Bank, the      
Borrower and the Agent.                                                         

         (b)  Revolving Credit Notes.  Receipt by the Agent, for redelivery to
----------------------                            
each Revolving Credit Bank, of a duly executed Revolving Credit Note made       
payable to such Revolving Credit Bank in an amount equal to its respective      
Commitment Amount for Revolving Credit Loans.                                   

      (c)  Swing Note.  Receipt by the Agent, for redelivery to National
----------                                        
City Bank, of a duly executed Swing Note made payable to National City Bank in  
an amount equal to its Swing Loan Commitment.                                   

  (d)  Supplemental Swing Loan Notes.  Receipt by the Agent, for
-----------------------------                     
redelivery to each Supplemental Swing Loan Bank, of a duly executed Supplemental
Swing Loan Note made payable to such Supplemental Swing Loan Bank in an amount  
equal to its respective Supplemental Swing Loan Commitment.                     

       (e)  Term Notes.  Receipt by the Agent, for redelivery to each Bank
----------                                        
with a Term Loan Commitment, of a duly executed Term Note made payable to such  
Bank in an amount equal to its respective Term Loan Commitment.                 

       (f)  Liens and Security Interests.  Receipt by the Agent, on behalf
----------------------------                      
of the Banks, of the Security Agreement, Patent, Trademark and Copyright        
Security Agreement, Pledge Agreement and Mortgages, duly executed and delivered 
by the Borrower and the Subsidiaries, as the case may be, accompanied by such   
financing statements, stock certificates, stock powers, acknowledgements and    
other related documents as shall be necessary to perfect the security interest  
of the Agent for the benefit of the Banks.                                      

          (g)  Insurance.  The Borrower shall have delivered evidence acceptable
---------                                         
to the Agent that adequate insurance in compliance with Section 4.24 is in full 
force and effect and that all premiums then due thereon have been paid.  With   
respect to the property of the Borrower and the Subsidiaries in which a lien    
and/or security interest is granted to the Agent pursuant to the Security       
Agreement or the Mortgages, the Borrower shall provide such insurance policies  
or certificates of insurance as reasonably required by the Agent, with          
additional insured, mortgagee and lender loss payable special endorsements      
attached thereto in form and substance satisfactory to the Agent naming the     
Agent on behalf of the Banks as additional insured, mortgagee and lender loss   
payee.                                                                          

     (h)  Corporate Documents.  Receipt by the Agent, on behalf of the
-------------------                               
Banks, of a copy, duly certified as of the Closing Date by the secretary or     
assistant secretary of the Borrower and the Subsidiaries executing and          
delivering the Pledge Agreement and the Mortgages of (i) the charter documents  
of such corporation, (ii) the By-Laws of such corporation, (iii) the resolutions
of the applicable board of directors authorizing the borrowings hereunder and   
the execution and delivery of the Loan Documents to be executed by it, (iv) all 
documents evidencing all other                                                  

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necessary corporate action and (v) all approvals or consents, if any, with      
respect to this Credit Agreement and the other Loan Documents to be executed by 
it.                                                                             

         (i)  Incumbency Certificates.  Receipt by the Agent, on behalf of the
-----------------------                           
Banks, of a certificate of the secretary or assistant secretary of the Borrower 
and the Subsidiaries executing and delivering the Pledge Agreement and the      
Mortgages, certifying the names and offices of the officers of each such        
corporation authorized to sign this Credit Agreement and the other Loan         
Documents, and all other documents or certificates to be delivered hereunder,   
together with the true signatures of such officers.                             

        (j)  Good Standing Certificates.  Receipt by the Agent, on behalf of
--------------------------                        
the Banks, of a certificate of good standing (i) for the Borrower issued by the 
Secretary of State of its state of incorporation and (ii) for the Borrower      
issued by the Secretary of State for each state in which the Borrower is        
authorized to do business, in each case issued no more than thirty (30) days    
prior to the Closing Date.                                                      

        (k)  Certificates of Incorporation.  Receipt by the Agent, on behalf
-----------------------------                     
of the Banks, of a copy, duly certified by the appropriate governmental         
official, of the Articles of Incorporation of the Borrower.                     

     (l)  Closing Certificate.  Receipt by the Agent, on behalf of the
-------------------                               
Banks, of a certificate duly executed by an Authorized Officer of the Borrower  
certifying that the conditions precedent set forth in Subsection 7.l(b), 7.l(c),
7.l(d) and 7.l(e) above have been satisfied as of the Closing Date.             

        (m)  Closing Fees.  Receipt by the Agent, on behalf of the Banks, of
------------                                      
the Closing Fees and all other fees and expenses to be paid by the Borrower     
under the Loan Documents.                                                       

        (n)  Opinion of Borrower's Counsel.  Receipt by the Agent, on behalf
-----------------------------                     
of the Banks, of an opinion of Kirkpatrick & Lockhart LLP, counsel to the       
Borrower and its Subsidiaries, substantially in the form of Exhibit "L" attached
                                                   -----------
hereto, and such other opinions of counsel as required by the Agent.            

          (o)  Argosy Acquisition.  Receipt by the Agent of a certificate of the
------------------                                
Borrower that the Ratio of Total Funded Debt to EBITDA as calculated on a       
proforma basis for the prior 12 months after giving effect to the Borrower's    
acquisition of Argosy, does not exceed 2.25 to 1.00.  Upon the delivery of such 
certificate and the other conditions precedent set forth in this Section 7.2,   
the Borrower may borrow not more than $60,000,000 in the aggregate of Revolving 
Credit Loans and Term Loans or request the issuance of a letter of credit not in
excess of $60,000,000 to fund the Escrow Fund pursuant to the Escrow Agreement  

        (p)  Certificate for EBITDA.  A certificate of the Borrower dated as
----------------------                            
of the Closing Date and acceptable to the Agent which includes a calculation    
evidencing that the EBITDA of the Borrower on a pro forma basis after giving    
effect to the acquisition of the capital stock of Argosy and the assets of IFAC 
for the twelve month period ended immediately prior to the Closing Date is equal
to or greater than $80,000,000.                                                 

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              (q)  Availability.  On the Closing Date, the Borrower shall have
------------                            
at least $40,000,000 of undrawn availability with respect to the Revolving      
Credit Commitments after giving effect to the payment of the indebtedness under 
the Existing Credit Agreement, the funding of the Escrow Fund under the Escrow  
Agreement, the payment of all accrued fees and expenses in connection with the  
Argosy Acquisition, the IFAC Acquisition and this Credit Agreement and assuming 
the receipt of the Term Loan proceeds and application of such proceeds to the   
Revolving Credit Loans.                                                         

         (r)  Lien Searches.  Receipt of the Agent, on behalf of the
-------------                           
Banks, of satisfactory evidence that there are no liens or security interests in
property of the Borrower and the Subsidiaries other than Permitted Encumbrances,
and that the liens and security interest granted to the Agent for the benefit of
the Banks under the Security Agreement, the Patent, Trademark and Copyright     
Security Agreement, the Pledge Agreement and the Mortgages constitutes a Prior  
Security Interest.                                                              

          (s)  IFAC Acquisition.  IFAC Acquisition and IFAC shall have
----------------                        
executed and delivered the IFAC Purchase Agreement and the documents related    
thereto pursuant to which IFAC Acquisition shall purchase substantially all the 
assets of IFAC for a purchase price not in excess of $30,000,000.               

             (t)  Proceedings Satisfactory.  Receipt by the Agent, on behalf
------------------------                
of the Banks, of evidence that all proceedings taken in connection herewith and 
the consummation of the transactions contemplated hereby and all documents and  
papers relating hereto have been completed or duly executed, and receipt by the 
Agent, on behalf of the Banks, of such documents and papers, all in form and    
substance reasonably satisfactory to the Agent and the Agent's special counsel, 
as the Agent or its special counsel may reasonably request in connection        
therewith.                                                                      

           (u)  Allocation of Existing Debt.  Upon the Closing Date, the
---------------------------             
Existing Debt shall be deemed to be outstanding under this Credit Agreement and 
shall be reallocated to the Banks under this Credit Agreement in accordance with
the respective Commitment Amount of each Bank, and all letters of credit issued 
and outstanding under the Existing Credit Agreement shall from and after the    
Closing Date be deemed to be Letters of Credit outstanding under Section 2.3 of 
this Credit Agreement, and the Letter of Credit Exposure shall be reallocated to
the Banks under this Credit Agreement in accordance with the respective         
Commitment Amount of each Bank.                                                 

ARTICLE VIII. EVENTS OF DEFAULT 
------------------------------- 

8.1  Payment Default.                                                 
---------------                                             

             (i)  Default in the payment of principal of any of the Notes or
reimbursement obligations with respect to any Letter of Credit.                 

              (ii) Default in the payment of any interest on or the payment of
the Commitment Fee or the Agent's Fee or any other amount due under the Bank    
Indebtedness and continuance of any such nonpayment for ten (10) days after due 
date.                                                                           

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8.2  Cross Defaults.                                                  
--------------                                              

Failure of the Borrower or any of its Subsidiaries to pay when due any
Indebtedness for Borrowed Money aggregating in excess of $5,000,000 ("Material  
Indebtedness"); or the default by the Borrower or any of its Subsidiaries in the
performance (beyond the applicable grace period with respect thereto, if any) of
any term, provision or condition contained in any agreement under which any such
Material Indebtedness was created or is governed, or any other event shall occur
or condition exist, the effect of which default or event is to cause, or to     
permit the holder or holders of such Material Indebtedness to cause, such       
Material Indebtedness to become due prior to its stated maturity; or any        
Material Indebtedness of the Borrower or any of its Subsidiaries shall be       
declared to be due and payable or required to be prepaid or repurchased (other  
than by a regularly scheduled payment) prior to the stated maturity thereof.    

8.3  Insolvency.                                                      
----------                                                  

         (a)  Involuntary Proceedings.  A proceeding shall have been
-----------------------                 
instituted in a court having jurisdiction seeking a decree or order for relief  
in respect of the Borrower or any Subsidiary in an involuntary case under the   
Federal bankruptcy laws, or any other similar applicable Federal or state law,  
now or hereafter in effect, or for the appointment of a receiver, liquidator,   
trustee, sequestrator or similar official for the Borrower or any Subsidiary or 
for a substantial part of its property, or for the winding up or liquidation of 
its affairs, and such shall remain undismissed or unstayed and in effect for a  
period of sixty (60) days.                                                      

               (b)  Voluntary Proceedings.  The Borrower or any Subsidiary shall
---------------------                   
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent  
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under the Federal bankruptcy laws, or  
any other similar applicable Federal or state law now or hereinafter in effect, 
or shall consent or acquiesce in or to the filing of any such petition or shall 
consent to or acquiesce in the appointment of a receiver, liquidator, trustee,  
sequestrator or similar official for the Borrower or any Subsidiary or for a    
substantial part of its property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, or action shall be taken by the Borrower or any Subsidiary in  
furtherance of any of the aforesaid purposes.                                   

8.4  Dissolution.                                                     
-----------                                                 

The existence of the Borrower or any Active Subsidiary is terminated, 
unless permitted in accordance with Section 6.10.                               

8.5  Adverse Judgments.                                               
-----------------                                           

   Any court shall render a final judgment or judgments against the Borrower
or any Subsidiary in an aggregate amount of $5,000,000 or more in excess of any 
insurance protecting against such liability and such judgment or judgments shall
not be satisfactorily appealed, stayed, discharged, vacated or set aside within 
thirty (30) days after entry; or any property of the Borrower or any Subsidiary 
shall be attached under a claim or claims in an aggregate amount of $5,000,000  
or more in excess of any insurance protecting against the liabilities on which  
such                                                                            

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attachments are based and such attachments shall not be released or provided for
to the satisfaction of the Banks within thirty (30) days.                       

8.6  Failure to Comply With Certain Covenants.                        
----------------------------------------                    

 Default by the Borrower in the performance of any of the agreements and
covenants set forth in Section 5.9 or in Article VI hereof or default by any of 
the Subsidiaries in the performance of the material agreements and material     
covenants set forth in the other Loan Documents to which it is a party.         

8.7  Failure to Comply With Other Covenants.                          
--------------------------------------                      

 Default by the Borrower in the performance of any of the agreements and
covenants set forth in Article V hereof (other than Section 5.9) or in any of   
the Loan Documents (other than material agreements and material covenants       
constituting an Event of Default under Section 8.6) and continuance thereof for 
thirty (30) days after notice thereof to the Borrower from the Agent as directed
by the Required Banks.                                                          

8.8  Material Adverse Change.                                         
-----------------------                                     

 The occurrence of any Material Adverse Change subsequent to the Closing
Date or subsequent to the delivery of the information provided by the Borrower  
to the Agent and the Banks prior to the Closing Date.                           

8.9  Misrepresentation.                                               
-----------------                                           

Any representation or warranty made by the Borrower in (i) this Credit
Agreement or (ii) any of the other Loan Documents is untrue in any material     
respect, or any schedule, statement, report, notice or writing furnished by the 
Borrower or on behalf of the Borrower to the Agent or the Banks is untrue in any
material respect on the date as of which the facts set forth are stated or      
certified.                                                                      

8.10 Change of Control.                                               
-----------------                                           

A Change of Control shall occur.                                      

8.11 Consequences of an Event of Default.                             
-----------------------------------                         

         (a)  Consequence of an Event of Default Set Forth in Sections 8.3 and
              ----------------------------------------------------------------
8.4. Upon the occurrence of an Event of Default set forth in Section 8.3 or 8.4 
---                                                                             
hereof, the Revolving Credit Commitment, the Swing Loan Commitment, the Term    
Commitment and the Supplemental Swing Loan Commitment shall automatically       
terminate and the amounts outstanding under the Notes shall become immediately  
due and payable, without necessity of demand, presentation, protest, notice of  
dishonor or notice of default.  Thereafter, the Banks shall have no further     
obligation to make any additional Loans or issue any additional Letters of      
Credit hereunder.  Upon the occurrence of an Event of Default set forth in      
Section 8.3 or Section 8.4, the Banks shall have the full panoply of rights and 
remedies granted to them under this Credit Agreement                            

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and the other Loan Documents and all those rights and remedies granted by law to
creditors. No exercise of one right or remedy shall be deemed a waiver of other 
rights or remedies.                                                             

(b) Consequences of Remaining Events of Default. During the 
-------------------------------------------         
continuance of any Event of Default set forth in Sections 8.1, 8.2, 8.5, 8.6,   
8.7, 8.8, 8.9 or 8.10 hereof (unless remedied, waived or cured to the           
satisfaction of the Banks required pursuant to Section 10.1), the Banks shall   
have no further obligation to make any additional Loans or issue any additional 
Letters of Credit hereunder; and the Agent may, and at the request of the       
Required Banks shall, by written or telegraphic notice to the Borrower, declare 
the Revolving Credit Commitment, the Swing Loan Commitment, the Term Loan       
Commitment, and the Supplemental Swing Loan Commitment terminated and the Notes 
then outstanding and interest accrued thereon and all other liabilities of the  
Borrower hereunder to the Banks to be forthwith due and payable. Thereupon the  
Revolving Credit Commitment, the Swing Loan Commitment, the Term Loan Commitment
and the Supplemental Swing Loan Commitment shall be terminated and all amounts  
due hereunder and under any Notes outstanding shall be due and payable without  
presentment, demand, protest or other notice of any kind to the Borrower, all of
which are hereby expressly waived. Upon the occurrence of an Event of Default   
set forth in Sections 8.1, 8.2, 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 hereof, the     
Banks shall have the full panoply of rights and remedies granted to them under  
this Credit Agreement and the other Loan Documents and all those rights and     
remedies granted by law to creditors. No exercise of one right or remedy shall  
be deemed a waiver of other rights or remedies.                                 

ARTICLE IX. AGREEMENT AMONG BANKS 
--------------------------------- 

9.1  Appointment and Grant of Authority.                              
----------------------------------                          

  Each of the Banks hereby appoints and designates National City Bank, and
National City Bank hereby agrees to act as, the initial Agent under this Credit 
Agreement and the other Loan Documents.  As such Agent, National City Bank shall
have and may exercise such powers under this Credit Agreement and the other Loan
Documents as are specifically delegated to the Agent, by the terms hereof or    
thereof, together with such other powers as are incidental thereto.  Without    
limiting the foregoing, each Bank, and each holder of a Note by its acceptance  
of such Note, hereby authorizes the Agent, on behalf of the Banks, to execute   
all of the Loan Documents (other than this Credit Agreement) and to accept all  
of the Loan Documents and all other agreements, documents or instruments        
reasonably required to carry out the intent of the parties to this Credit       
Agreement.  The Agent may perform any of its duties hereunder or under the Loan 
Documents by and through its officers, directors, agents, employees or          
affiliates.                                                                     

     Each of the Banks hereby appoints and designates First Union National Bank,
as Syndication Agent, SunTrust Bank, as Syndication Agent, Fleet National Bank, 
as Documentation Agent, and Chase Manhattan Bank ,as Documentation Agent, and   
each such Bank hereby agrees to act in such capacity under this Credit Agreement
and the other Loan Documents.  As either Syndication Agent or Documentation     
Agent, each such Bank shall have and may exercise only such powers as are       
specifically delegated to it by the Agent from time to time and which it agrees 
to exercise.  Such Banks shall not be deemed to have assumed any duties or      
responsibilities under this Credit Agreement and the other Loan Documents by    
reason of its designation as Syndication Agent or Documentation Agent.          

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9.2  Non-Reliance on Agent.                                           
---------------------                                       

 Each Bank agrees that it has, independently and without reliance on the
Agent, based on such documents and information as it has deemed appropriate,    
made its own credit analysis and evaluation (including but not limited to an    
environmental review) of the Borrower and its operations, and decision to enter 
into this Credit Agreement.  Further, each Bank agrees that it will,            
independently and without reliance upon the Agent, and based on such documents  
and information as it shall deem reasonable and appropriate at the time,        
continue to make its own analysis and decisions in taking or not taking action  
under this Credit Agreement and the other Loan Documents.  Each Bank            
acknowledges that a copy of this Credit Agreement and the exhibits and schedules
hereto have been made available to it and to its legal counsel for review and   
each Bank acknowledges that it is satisfied with the form and substance of this 
Credit Agreement and the exhibits and schedules hereto.  Except as otherwise    
provided in this Credit Agreement, the Agent shall have no duty or              
responsibility, either initially or on a continuing basis, to keep any Bank or  
any holder of a Note informed as to the performance or observance by the        
Borrower of this Credit Agreement or any other document or instrument referred  
to or provided for in this Credit Agreement or to inspect the properties or     
books of the Borrower.  The Agent, in the absence of gross negligence or willful
misconduct, shall not be liable to any Bank for its failure to relay or furnish 
to the Bank any information.                                                    

9.3  Responsibility of Agent and Other Matters.                       
-----------------------------------------                   

          (a) Ministerial Nature of Duties. As between the Banks and themselves,
----------------------------                        
the Agent shall have no duties or responsibilities except those expressly set   
forth in this Credit Agreement or in the other Loan Documents, and those duties 
and responsibilities shall be subject to the limitations and qualifications set 
forth in this Article IX. The duties of the Agent shall be ministerial and      
administrative in nature.                                                       

        (b) Limitation of Liability. As between the Banks and Agent, neither
-----------------------                             
the Agent nor any of its directors, officers, employees, agents or affiliates   
shall be liable for any action taken or omitted (whether or not such action     
taken or omitted is within or without the Agent's responsibilities and duties   
expressly set forth in this Credit Agreement) under or in connection with this  
Credit Agreement or any other instrument or document executed or delivered in   
connection herewith except for gross negligence or willful misconduct. Without  
limiting the foregoing, neither the Agent nor any of its directors, officers,   
employees, agents or affiliates shall be responsible for, or have any duty to   
examine (i) the genuineness, execution, validity, effectiveness, enforceability,
collectibility, value or sufficiency of (A) this Credit Agreement or any of the 
other Loan Documents or (B) any other document or instrument furnished pursuant 
to or in connection with this Credit Agreement, (ii) the collectibility of any  
amounts owed by the Borrower to the Banks, (iii) the truthfulness of any        
recitals, statements, representations or warranties made to the Agent or the    
Banks in connection with this Credit Agreement or any other Loan Documents, (iv)
any failure of any party to this Credit Agreement to receive any communication  
sent, including any telegram, telex, teletype, facsimile transmission or        
telephone message or any writing, application, notice, report, statement,       
certificate, resolution, request, order, consent letter or other instrument or  
paper or communication entrusted to the mails or to a delivery service, or (v)  
the assets, liabilities, financial condition, results of operations or business,
or creditworthiness of the Borrower.                                            

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         (c) Reliance.  The Agent shall be entitled to act, and shall be fully
--------                                            
protected in acting upon, any telegram, facsimile transmission or any writing,  
application, notice, report, statement, certificate, resolution, request, order,
consent, letter or other instrument, paper or communication believed by the     
Agent in good faith to be genuine and correct and to have been signed or sent or
made by a proper Person.  The Agent may consult counsel (including counsel of   
the Borrower), independent public accountants and other experts selected by it  
and shall be entitled to act, and shall be fully protected in any action taken  
in good faith, in accordance with advice given by such counsel, independent     
public accountants and other experts.  The Agent may employ agents and          
attorneys-in-fact and shall not be liable for the default or misconduct of any  
such agents or attorneys-in-fact selected by the Agent with reasonable care.    
The Agent shall not be bound to ascertain or inquire as to the performance or   
observance of any of the terms, provisions or conditions of this Credit         
Agreement or any of the other Loan Documents on the part of the Borrower, the   
other Loan Parties or any other party thereto.                                  

9.4  Action on Instructions.                                          
----------------------                                      

    As between the Agent and the Banks, the Agent shall be required to act and
shall be fully protected in so acting and shall be entitled to refrain from     
acting, and shall be fully protected in refraining from so acting, under this   
Credit Agreement, the other Loan Documents or any other instrument or document  
executed or delivered in connection herewith or therewith, in accordance with   
written instructions from the Required Banks or, in the case of the matters set 
forth in items (A) through (F) of Section 10.l, from all of the Banks.          

9.5  Action in Event of Default.                                      
--------------------------                                  

     As between the Agent and the Banks, if an Event of Default has occurred and
is continuing, the Banks shall promptly consult with one another in an attempt  
to agree upon a mutually acceptable course of conduct.  Failing unanimous       
agreement upon a course of conduct and if the Banks wish to exercise any of     
their rights and remedies under the Credit Agreement or under any other Loan    
Document, the Agent will exercise the rights of the Banks hereunder or          
thereunder as directed by the Required Banks.                                   

9.6  Indemnification.                                                 
---------------                                             

   To the extent the Borrower does not reimburse and save harmless the Agent
according to the terms of this Credit Agreement for and from all costs, expenses
and disbursements in connection herewith, such costs, expenses and disbursements
shall be borne by the Banks ratably.  Each Bank hereby severally agrees on such 
basis (i) to reimburse and indemnify the Agent for such Bank's pro rata share of
all such reasonable costs, expenses and disbursements on request and (ii) to the
extent of each such Bank's pro rata share, to indemnify and save harmless the   
Agent against and from any and all liabilities, losses, obligations, damages,   
penalties, claims, actions, judgments and suits and other costs, expenses and   
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, arising out of or in connection with this     
Credit Agreement, the other Loan Documents or any other agreement, instrument or
document executed or delivered in connection herewith or therewith, or any      
request of the Required Banks or all of the Banks, as the case may be, including
without limitation the reasonable costs, expenses and disbursements in          
connection with defending                                                       

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themselves against any claim or liability, or answering any subpoena or other   
process related to the exercise or performance of any of its powers or duties   
under this Credit Agreement, the other Loan Documents, or any of the other      
agreements, instruments or documents executed or delivered in connection        
herewith. The foregoing notwithstanding, no Bank shall be liable for any portion
of such losses, obligations, damages, penalties, claims, actions, judgments and 
suits, and other costs, expense and disbursements resulting from or as a        
consequence of (A) the Agent's gross negligence or willful misconduct, (B) a    
claim against the Agent or the Banks with respect to which each Bank was not    
given notice and the opportunity to participate (at its own expense) in the     
defense thereof or (C) a compromise and settlement agreement entered into       
without the consent of all of the Banks.                                        

9.7  Agent's Rights as a Bank.                                        
------------------------                                    

    With respect to the commitment of the Agent as a Bank hereunder, the other
Loan Documents and any other agreements, instruments and documents delivered    
pursuant hereto and any Loans of the Agent under this Credit Agreement, and any 
other amounts due to the Agent under this Credit Agreement or the other Loan    
Documents, the Agent shall have the same rights and powers, duties and          
obligations under this Credit Agreement, the other Loan Documents or other      
agreement, instrument or document as any Bank and may exercise such rights and  
powers and shall perform such duties and fulfill such obligations as though it  
were not the Agent.  The terms "Banks", "Required Banks", "holder" or any       
similar term shall, unless the context clearly indicates otherwise, include the 
Agent in its individual capacity.  The Agent may accept deposits from, lend     
money to, and generally engage, and continue to engage, in any kind of banking, 
trust or other business with the Borrower, any Subsidiary of the Borrower or any
Affiliate thereof as if it were not the Agent hereunder and may accept fees and 
other consideration from the Borrower, any Subsidiary of the Borrower or any    
Affiliate thereof for services in connection with the Credit Agreement or       
otherwise without having to account for the same to the Banks.                  

9.8  Advances by Agent.                                               
-----------------                                           

    Unless the officers of the Agent responsible for administering this Credit
Agreement shall have been notified in writing by a Bank prior to the date of any
Disbursement that such Bank will not make the amount which would constitute its 
pro rata share of such Disbursement available to the Agent on the date of such  
Loan, the Agent may (but shall not be required to) assume that such Bank has    
made such amount available to the Agent on the date of such Loan and the Agent, 
in reliance upon such assumption, may make available to the Borrower a          
corresponding amount.  If such pro rata share is made available to the Agent on 
a date after the date of such Disbursement, such Bank shall pay to the Agent on 
demand an amount equal to the product of (i) during each day included in the    
period referred to in (iii) below, the Federal Funds Rate during each day       
included in such period, multiplied by (ii) the amount of such Bank's pro rata  
share of such Disbursement, multiplied by (iii) a fraction, the numerator of    
which is the number of days that elapse from and including the date of such Loan
to the date on which such pro rata share of such Disbursement shall become      
immediately available to the Agent and the denominator of which is 360.  A      
statement of the Agent submitted to such Bank with respect to any amounts owing 
under this Section 9.8 shall be prima facie evidence as to the amount owed by   
such Bank to the Agent.  If such Bank's pro rata share is not in fact made      
available to the Agent by such Bank within three (3) Business Days of such      
borrowing date, the Agent shall be                                              

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entitled to recover such amount with interest thereon at the rate per annum     
equal to the Base Rate during such period, on demand, from such Bank.           

9.9  Payment to Banks.                                                
----------------                                            

Promptly after receipt by the Agent from the Borrower of any principal
repayment of the Loans, interest due on the Loans, any fees or other amounts due
under any Loan Document (except for such amounts which are payable for the sole 
account of any Bank or the Agent), the Agent shall distribute to each Bank that 
Bank's pro rata share of the funds so received; provided that in the event      
payments are received by 1:30 P.M., (Pittsburgh, Pennsylvania time) by the Agent
with respect to the Loans and such payments are not distributed to the Banks on 
the same day received by the Agent, the Agent shall pay the Banks the Federal   
Funds Rate, with respect to the amount of such payments for each day held by the
Agent and not distributed to the Banks.                                         

9.10 Pro Rata Sharing.                                                
----------------                                            

    All interest and principal payments on the Loans, all Commitment Fees, the
Closing Fee and any other Fees (specifically excluding the Agent's Fee and the  
Fee payable to the Issuing Bank in connection with the issuance of any Letter of
Credit) are to be divided pro rata among the Banks.  Any sums obtained from the 
Borrower by any Bank by reason of the exercise of its rights of setoff, banker's
lien or in collection shall be shared (net of costs) pro rata among the Banks.  
Nothing in this Section 9.10 shall be deemed to require the sharing among the   
Banks of collections specifically relating to, or of the proceeds of any        
collateral securing, any other Indebtedness of the Borrower to any Bank.        

9.11 Successor Agent.                                                 
---------------                                             

    (a) Resignation of the Agent. Subject to a successor Agent being
------------------------                            
appointed and such Person accepting the duties and obligations of the Agent     
hereunder and under the Loan Documents, the Agent may resign from the           
performance of its functions and duties hereunder and under the other Loan      
Documents at any time by giving at least sixty (60) days prior written notice to
the Banks and the Borrower. In the event that the Agent gives notice of its     
desire to resign from the performance of its functions and duties hereunder and 
under the Loan Documents, then the Borrower and the Agent shall use all         
reasonable commercial efforts to identify, and the Required Banks shall appoint,
a successor who shall be reasonably satisfactory to the Required Banks and the  
Borrower (provided that such approval of the Borrower shall not be unreasonably 
withheld and that no such approval of the Borrower shall be required after the  
occurrence and during the continuance of an Event of Default). If a successor   
Agent shall not have been appointed within said sixty (60) day period, the      
Required Banks shall, after consultation with the Borrower, appoint a successor 
Agent from among the Banks. Any such successor agent shall succeed to the       
rights, powers and duties of the Agent.                                         

          (b) Rights of the Former Agent. Upon the appointment of such successor
--------------------------                          
agent, the former Agent's rights, powers and duties as Agent shall be           
terminated, without any other or further act or deed on the part of such former 
Agent or any of the parties to this Credit Agreement. After any retiring Agent's
resignation hereunder as administrative agent for the Banks hereunder, the      
provisions of this Article IX shall inure to the benefit of such retiring       

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Agent as to any actions taken or omitted to be taken by it while it was Agent   
under this Credit Agreement.                                                    

ARTICLE X. MISCELLANEOUS  
------------------------  

10.1 Amendments and Waivers.                                          
----------------------                                      

       (a) Amendments to Credit Agreement or Any Loan Document. Subject to
--------------------------------------------------- 
the remaining provisions of this Section 10.1, the Agent, the Banks, the Issuing
Bank, the Borrower and the other Loan Parties may, from time to time, enter into
amendments, modifications, extensions, supplements and replacements to and of   
this Credit Agreement or any other Loan Document and the Banks or the Required  
Banks, as the case may be, may, from time to time, waive compliance with a      
provision hereof or thereof. No amendment or waiver of any provision of this    
Credit Agreement, the Notes or any other Loan Document (other than amendments or
waivers to any interest rate protection agreement with a Bank or an Affiliate of
a Bank entered into in accordance with Section 6.6(xi), which amendment or      
waiver shall comply with Section 6.6(xi) and require consent of such Bank or    
Affiliate), nor any consent to any departure therefrom by the Borrower shall be 
effective unless the same shall be in writing and signed by the Borrower or     
other Person, whichever is the obligor of the document to be amended or the     
provisions of which are being waived, and the Agent and the Required Banks, and 
then such amendment, waiver or consent shall be effective only in the specific  
instance and for the specific purpose for which given.                          

     The foregoing notwithstanding, no amendment, waiver or consent shall do any
of the following unless in writing and signed by all of the Banks (or the Agent 
with the consent of all of the Banks):                                          

(A) increase the Revolving Credit Commitment, the Term Loan 
Commitment, the Commitment Amount of any Bank, the Commitment Percentage of any 
Bank, the Swing Loan Commitment, the Supplemental Swing Loan Commitment or the  
maximum aggregate principal amount of any of the Notes,                         

   (B) except as contemplated in this Credit Agreement, reduce the
interest rate on the Loans or Letters of Credit or any fees in connection       
therewith,                                                                      

         (C) postpone the Repayment Date or the date any payment of principal,
interest or fees are due in connection with the Loans, or any reimbursement     
obligations are due in connection with the Letters of Credit.                   

        (D) release any collateral securing the Bank Indebtedness other than
pursuant to the terms of this Credit Agreement or release the Borrower of its   
obligations under the Guaranty Agreement;                                       

(E) amend this Section 10.1; or                             

(F) amend the definition of "Required Banks".               

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In the case of any waiver or consent relating to any provision of this Credit   
Agreement, the parties shall be restored to their former positions and rights   
hereunder, and the Event of Default so waived or consented to shall be deemed to
be cured and not continuing; but no such waiver or consent shall extend to any  
subsequent or other Event of Default or impair any right consequent thereon.    

Any such supplemental agreement shall apply equally to the Borrower, the        
affected party, if any, and each of the Banks and shall be binding upon the     
Borrower, the Banks, the Agent and all future holders of the Notes.             

          (b) Waivers.  No delay on the part of the Banks in the exercise of any
-------                                             
power or right shall operate as a waiver thereof, nor shall any single or       
partial exercise of any power or right preclude other or further exercise       
thereof, or the exercise of any other power or right.  In the case of any       
waiver, the Borrower, the Banks and the Agent shall be restored to their former 
positions and rights, and any Event of Default waived shall be deemed to be     
cured and not continuing, but no such waiver shall extend to any subsequent or  
other Event of Default, or impair any right consequent thereon.                 

10.2 Notices.                                                         
-------                                                     

       (a) Notice to the Borrower.  All notices required to be sent to the
----------------------                              
Borrower shall be sent to the following address, by hand delivery, by recognized
national overnight courier service, by facsimile transmission or other means of 
electronic data communication, or by the United States Mail, first class,       
postage prepaid:                                                                

If by United States Mail:                  If by other means:                   

Education Management Corporation           Education Management Corporation     
300 Sixth Avenue                           300 Sixth Avenue                     
Suite 800                                  Suite 800                            
Pittsburgh, Pennsylvania 15222             Pittsburgh, Pennsylvania 15222       
Attention: Chief Financial Officer         Attention: Chief Financial Officer   
                                Telecopier: (412) 562-0598
                               Telephone: (412) 562-0900

          (b) Notice to the Agent.  All notices required to be sent to the Agent
-------------------                                 
shall be sent to the following address, by hand delivery, by recognized national
overnight courier service, by facsimile transmission or other means of          
electronic data communication, or by the United States Mail, first class,       
postage prepaid:                                                                

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If by United States Mail:                If by other means:                     

National City Bank of Pennsylvania       National City Bank of Pennsylvania     
National City Center                     National City Center                   
629 Euclid Avenue                        629 Euclid Avenue                      
Location Number 3028                     Location Number 3028                   
Cleveland, OH 44114                      Cleveland, OH 44114                    
Attention: Jamie Chioda, Agent Services  Attention: Jamie Chioda, Agent Services
Telephone: (216) 222-3263                Telephone: (216) 222-3263              
Telecopier: (216) 222-0103               Telecopier: (216) 222-0103             
Telecopier (Lending): (216) 222-0012     Telecopier (Lending): (216) 222-0012   

        (c) Notice to the Banks. All notices required to be delivered to the
-------------------                                 
Banks pursuant to this Credit Agreement and the other Loan Documents shall be in
writing and shall be sent to the address set forth on Schedule 1.1, by hand     
delivery, by recognized national overnight courier service, by facsimile        
transmission or other means of electronic data communication, or by the United  
States mail, first class, postage prepaid.                                      

         (d) Receipt of Notices. All such notices shall be effective three (3)
------------------                                  
days after mailing, one (1) day after deposit with the courier service, the date
of electronic transmission (receipt confirmed) or when received, whichever is   
earlier. The Borrower, the Banks and the Agent may each change the address for  
service of notice upon it by a notice in writing to the other parties hereto.   

10.3 Holiday Payments.                                                
----------------                                            

    If any payments to be made by the Borrower hereunder shall become due on a
date not a Business Day, such payments shall be made on the next succeeding     
Business Day.                                                                   

10.4 Tax Withholding.                                                 
---------------                                             

Each Bank or assignee or participant of a Bank that is not  
incorporated under the Laws of the United States of America or a state thereof  
(and, upon the written request of the Agent, each other Bank or assignee or     
participant of a Bank) agrees that it will deliver to each of the Borrower and  
the Agent two (2) duly completed appropriate valid Withholding Certificates (as 
defined under (S) 1.1441-1(c)(16) of the Income Tax Regulations (the            
"Regulations")) certifying its status (i.e. U.S. or foreign person) and, if     
appropriate, making a claim of reduced, or exemption from, U.S. withholding tax 
on the basis of an income tax treaty or an exemption provided by the Internal   
Revenue Code.  The term "Withholding Certificate" means a Form W-9; a Form W-   
8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications
as required under (S) 1.1441-1(e)(2) and/or (3) of the Regulations; a statement 
described in (S) 1.871-14(c)(2)(v) of the Regulations; or any other certificates
under the Internal Revenue Code or Regulations that certify or establish the    
status of a payee or beneficial owner as a U.S. or foreign person.  Each Bank,  
assignee or participant required to deliver to the Borrower and the Agent a     
Withholding Certificate pursuant to the preceding sentence shall deliver such   
valid Withholding Certificate as follows:  (A) each Bank which is a party hereto
on the Closing Date shall deliver such valid Withholding Certificate at least   
five (5) Business Days prior to the                                             

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first date on which any interest or fees are payable by the Borrower hereunder  
for the account of such Bank; (B) each assignee or participant shall deliver    
such valid Withholding Certificate at least five (5) Business Days before the   
effective date of such assignment or participation (unless the Agent in its sole
discretion shall permit such assignee or participant to deliver such valid      
Withholding Certificate less than five (5) Business Days before such date in    
which case it shall be due on the date specified by the Agent). Each Bank,      
assignee or participant which so delivers a valid Withholding Certificate       
further undertakes to deliver to each of the Borrower and the Agent two (2)     
additional copies of such Withholding Certificate (or a successor form) on or   
before the date that such Withholding Certificate expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent         
Withholding Certificate so delivered by it, and such amendments thereto or      
extensions or renewals thereof as may be reasonably requested by the Borrower or
the Agent. Notwithstanding the submission of a Withholding Certificate claiming 
a reduced rate of or exemption from U.S. withholding tax, the Agent shall be    
entitled to withhold United States federal income taxes at the full 30%         
withholding rate if in its reasonable judgment it is required to do so under the
due diligence requirements imposed upon a withholding agent under (S) 1.1441-   
7(b) of the Regulations. Further, the Agent is indemnified under (S) 1.1461-1(e)
of the Regulations against any claims and demands of any Bank or assignee or    
participant of a Bank for the amount of any tax it deducts and withholds in     
accordance with regulations under (S) 1441 of the Internal Revenue Code.        

   At least five (5) Business Days prior to the first date on which interest
or fees are payable hereunder for the account of each Bank, each Bank that is   
not incorporated under the laws of the United States of America or a state      
thereof agrees that it will deliver to the Agent and the Borrower two (2) duly  
completed copies of either (i) IRS Form W-9, 1001 or 4224 or such other         
applicable form prescribed by the IRS, certifying in each case that such Bank is
entitled to receive payments under this Credit Agreement or its Note(s), as the 
case may be, without deduction or withholding of United States federal income   
taxes, or is subject to such tax at a reduced rate under an applicable tax      
treaty or (ii) IRS Form W-8 or such other applicable form prescribed by the IRS 
or a certificate of such Bank indicating that no such exemption or reduced rate 
of taxation is allowable with respect to such payments.  Each Bank which        
delivers an IRS Form W-8, W-9, 4224 or 1001 further undertakes to deliver to the
Agent and the Borrower two (2) additional copies of any such form (or any       
successor form) on or before the date on which that form expires or becomes     
obsolete or after the occurrence of any event requiring a change in the most    
recent form so delivered by it, and such amendments thereto or extensions or    
renewals thereof as may be reasonably requested by the Borrower or the Agent,   
either certifying that such Bank is entitled to receive payments under this     
Credit Agreement or its Note(s), as the case may be, without deduction or       
withholding of any United States federal income taxes or is subject to such tax 
at a reduced rate under an applicable tax treaty or stating the date on which   
that no such exemption or reduced rate is allowable.  The Agent shall be        
entitled to withhold, from each payment made to such Bank hereunder or under the
Note(s) payable to it, United States federal income taxes at the full           
withholding rate unless each Bank referred to in the first sentence of this     
Section 10.4 establishes an exemption or at the applicable reduced rate         
established pursuant to the above provisions.                                   

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10.5 Survival.                                                        
--------                                                    

Until payment in full of the Bank Indebtedness and expiration of all  
outstanding Letters of Credit, and the termination of the Revolving Credit      
Commitment, the Term Loan Commitment, the Swing Loan Commitment and the         
Supplemental Swing Loan Commitment, all covenants, agreements, warranties and   
representations made herein and in all certificates or other documents delivered
in connection with this Credit Agreement by or on behalf of the Borrower, shall 
survive the advances of money made by the Banks to the Borrower hereunder and   
the delivery of the Notes, and all such covenants, agreements, warranties and   
representations shall inure to the benefit of the successors and assigns of the 
Banks and the Agent whether or not so expressed.                                

10.6 Costs.                                                           
-----                                                       

The Borrower shall pay:                                               

    (i)    All reasonable costs and expenses of the Agent (including
without limitation the reasonable fees and disbursements of the Agent's         
counsel), incurred in connection with the preparation, negotiation, execution   
and delivery of this Credit Agreement and the other Loan Documents and any and  
all other documents and instruments prepared in connection herewith, including  
but not limited to all amendments, extensions, modifications, waivers, consents 
and other documents and instruments prepared or entered into from time to time, 
including after the Closing Date;                                               

       (ii)   All reasonable costs and expenses of the Agent and the Banks
(including without limitation the reasonable fees and disbursements of the      
Agent's and each of the Bank's counsel) in connection with (A) the enforcement  
of this Credit Agreement and the other Loan Documents (whether through          
negotiations, legal proceedings or otherwise) arising pursuant to a breach by   
the Borrower of any of the terms, conditions, representations, warranties or    
covenants of any Loan Document to which it is a party, and (B) defending or     
prosecuting any actions, suits or proceedings relating to any of the Loan       
Documents.                                                                      

All of such costs and expenses shall be payable by the Borrower to the Banks or 
the Agent, as the case may be, upon demand or as otherwise agreed upon by the   
Banks or the Agent and the Borrower, and shall constitute Bank Indebtedness     
under this Credit Agreement.  The Borrower's obligation to pay such costs and   
expenses shall survive the termination of this Credit Agreement and the         
satisfaction of all of the Borrower's obligations hereunder.                    

10.7 Certain Taxes.                                                   
-------------                                               

     The Borrower agrees to pay, and save the Banks harmless from, all liability
for any stamp or other taxes which may be payable with respect to the execution 
or delivery of this Credit Agreement or the Loan Documents or the issuance of   
the Notes, which obligation of the Borrower shall survive the termination of    
this Credit Agreement.                                                          

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10.8 Successors, Assigns and Participations.                          
--------------------------------------                      

          (a) Benefit of Agreement.  Subject to the remaining provisions of this
--------------------                                
Section 10.8, this Credit Agreement shall be binding upon the Borrower, the     
Agent and the Banks and their respective successors and assigns, and shall inure
to the benefit of the Borrower, the Agent and the Banks and the successors and  
assigns of the Agent and the Banks; provided, however that the Borrower may not 
--------
assign its rights or duties hereunder or under any other Loan Document without  
the prior written consent of the Banks and the Agent.                           

(b) Assignments. Subject to the remaining provisions of this
-----------                                         
Subsection 10.8(b), any Bank, at any time, in the ordinary course of its        
commercial banking business and in accordance with applicable law, may sell to  
one or more Purchasing Banks (which Purchasing Banks may be Affiliates of the   
Transferor Bank), a portion or all of its rights and obligations under this     
Credit Agreement and the Note(s) then held by it pursuant to an Assignment and  
Assumption Agreement substantially in the form of Exhibit "M" and executed by   
                               -----------
the Transferor Bank and such Purchasing Bank and consented to by the Agent and  
the Borrower which consent shall not be withheld without a good faith reason;   

subject, however to the following requirements:                                 
-------                                                                         

          (i)    The Borrower and the Agent must give their prior consent to any
such assignment (other than an assignment made by a Bank to an Affiliate of such
Bank) which consent shall not be unreasonably withheld;                         

         (ii)   Each such assignment must be in a minimum amount of $5,000,000
or the remaining amount of the Transferor Bank's Commitment if less, or, if in  
excess thereof, in integral multiples of $1,000,000, unless otherwise agreed by 
the Borrower and the Agent, and each such assignment of a Revolving Credit      
Commitment shall include the same percentage of the Supplemental Swing Loan     
Commitment of the Transferor Bank as the percentage of the Revolving Credit     
Commitment being transferred by the Transferor Bank;                            

(iii)  [Intentionally omitted]                              

          (iv)   No Purchasing Bank may make assignments unless otherwise agreed
by the Borrower, such consent to not be unreasonably withheld by the Borrower;  
and                                                                             

         (v)    On the date such assignment is made, the Transferor Bank shall
pay to the Agent a $3,500 service fee for each assignment;                      

provided, however the restrictions set forth in Subsection 10.8(a)(i), (ii),    
--------                                                                        
(iii) and (iv) above shall not apply in the case of any assignment by any       
Transferor Bank upon the occurrence and during the continuation of an Event of  
Default.                                                                        

      Upon the execution, delivery, acceptance and recording of any such
Assignment and Assumption Agreement, from and after the Transfer Effective Date 
set forth in such Assignment and Assumption Agreement, (a) the Purchasing Bank  
thereunder shall be a party hereto as a Bank and, to the extent provided in such
Assignment and Assumption Agreement, shall have the rights and obligations of a 
Bank hereunder with a Commitment Amount and Commitment Percentage, and (b) the  
Transferor Bank thereunder shall be released from its                           

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obligations as a Bank under this Credit Agreement to the extent provided in such
Assignment and Assumption Agreement. Such Assignment and Assumption Agreement   
shall be deemed to amend this Credit Agreement to the extent, and only to the   
extent, necessary to reflect the addition of such Purchasing Bank as a Bank and 
the resulting adjustment of Commitment Percentages arising from the purchase by 
such Purchasing Bank of all or a portion of the rights and obligations of such  
Transferor Bank under this Credit Agreement and its Note(s), as the case may be.
On or prior to the Transfer Effective Date, the Borrower shall execute and      
deliver to the Agent, in exchange for the surrendered Note(s) held by the       
Transferor Bank, a new Note(s) to the order of such Purchasing Bank in an amount
equal to the Commitment Amount assumed by it and purchased by it pursuant to    
such Assignment and Assumption Agreement, and new Note(s) to the order of the   
Transferor Bank in an amount equal to the Commitment Amount retained by it      
hereunder, if any.                                                              

     (c) Assignment Register. The Agent shall maintain, at its address
-------------------                                 
referred to in Subsection 10.2(b) hereof, a copy of each Assignment and         
Assumption Agreement delivered to it and a register (the "Register") for the    
recordation of the names and addresses of the Banks, and the amount of the      
Commitment Amount of each Bank, if any, then in effect, and the amount of the   
Loans owing to each Bank, from time to time. The entries in the Register shall  
be conclusive, in the absence of manifest error, and the Borrower, the Agent and
the Banks may treat each Person whose name is recorded in the Register as the   
owner of the Loans for all purposes of this Credit Agreement. The Register shall
be available at the office of the Agent set forth in Subsection 10.2(b) hereof  
for inspection by the Borrower or any Bank at any reasonable time and from time 
to time upon reasonable prior notice.                                           

          (d) Participations. Any Bank, in the ordinary course of its commercial
--------------                                      
banking business and in accordance with applicable law, may sell to one or more 
Participants a Participation in any Loan owing to such Bank, the interest of    
such Bank in (i) any Revolving Credit Note or Term Note or (ii) the Commitment  
Amount of such Bank. In the event of any such sale by a Bank of a Participation 
to a Participant, such Bank's obligations under this Credit Agreement to the    
other parties to this Credit Agreement shall remain unchanged, such Bank shall  
remain solely responsible for the performance thereof, such Bank shall remain   
the holder of its Note(s) for all purposes under this Credit Agreement          
(including voting rights hereunder), and the Borrower, the other Banks and the  
Agent shall continue to deal solely and directly with such Bank in connection   
with such Bank's rights and obligations under this Credit Agreement or the other
Loan Documents; provided, however, that no Bank shall transfer or grant any     
--------                                        
Participation under which the Participant shall have rights to approve any      
amendment, modification or waiver of this Credit Agreement or any other Loan    
Document except to the extent such amendment, modification or waiver would (i)  
reduce or increase the principal amount of such Participant's Participation over
the amount then in effect, (ii) decrease the interest rate relating to the      
Loans, (iii) reduce the Commitment Fee or any other Fee payable to the          
Participant, (iv) postpone any date fixed for any payment of principal of or    
interest on the Loans, reimbursement obligations, the Commitment Fee or any     
other Fees or obligations of the Borrower set forth in Article II or (v) release
any collateral granted to the Agent, on behalf of the Bank, to secure the Bank  
Indebtedness.                                                                   

      (e) Other Assignments. Notwithstanding the foregoing provisions of
-----------------                                   
this Section 10.8, any Bank may, at any time and from time to time, assign all  
or any portion of its                                                           

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rights under this Credit Agreement and its Note(s) to a Federal Reserve Bank in 
support of borrowings made by such Bank from such Federal Reserve Bank. No such 
assignment shall release any assigning Bank from its obligations hereunder.     

         (f) Disclosure.  The Borrower authorizes each Bank to disclose to any
----------                                          
Participant or Purchasing Bank and any prospective Participant or Purchasing    
Bank any and all financial information in such Bank's possession concerning the 
Borrower and its Subsidiaries which has been delivered to such Bank by or on    
behalf of the Borrower pursuant to this Credit Agreement or in connection with  
such Bank's credit evaluation of the Borrower prior to becoming a party to this 
Credit Agreement.                                                               

10.9 Confidentiality.                                                 
---------------                                             

  Unless otherwise agreed to in writing by the Borrower, the Agent and the
Banks hereby agree to keep all Proprietary Information confidential and not to  
disclose or reveal any Proprietary Information to any Person other than the     
Agent's or the Banks' directors, officers, employees, Affiliates and agents and 
to actual or potential Purchasing Banks and Participants, and then only on a    
confidential basis; provided, however, that the Agent or the Banks may disclose 
--------                                
Proprietary Information (i) as required by any Governmental Rule, (ii) to their 
respective attorneys and accountants, (iii) as requested or required by any     
state, federal or foreign authority or examiner regulating banks or banking; or 
(iv) in connection with any litigation or enforcement proceedings; and further, 
provided, that the Agent or the Banks may not disclose any confidential         
--------                                                                        
information concerning identified students before giving the Borrower notice of 
such proposed disclosure and affording it a reasonable opportunity to obtain a  
judicial protective order from a court of competent jurisdiction.               

10.10 Indemnification.                                                
---------------                                           

    The Borrower will indemnify and hold harmless the Agent and the Banks, any
of their respective directors, officers or employees and each Person, if any,   
who controls the Agent or the Banks within the meaning of the Securities Act of 
1933 or the Securities and Exchange Act of 1934 (any and all of whom are        
referred to as an "Indemnified Party") from and against any and all losses,     
claims, damages and liabilities (including but not limited to any Environmental 
Claim or the liability of any Bank thereon), joint or several (including but not
limited to all legal fees or other expenses reasonably incurred by any          
Indemnified Party in connection with the preparation for or defense of any      
pending or threatened claim, action or proceeding, whether or not resulting in  
any liability), to which such Indemnified Party may become subject (whether or  
not such Indemnified Party is a party thereto) under any applicable federal or  
state law or otherwise caused by or arising out of, or allegedly caused by or   
arising out of, this Credit Agreement or any transaction contemplated hereby,   
other than losses, claims, damages or liabilities resulting from the transfer of
any of the Notes in violation of any applicable law or regulation; provided, the
                                                              --------
Borrower shall not be liable where any action or failure to act was due to the  
gross negligence or willful misconduct of the Indemnified Party.                

Promptly after receipt by an Indemnified Party of notice of any claim, action or
proceeding with respect to which an Indemnified Party is entitled to indemnity  
hereunder, such Indemnified Party will notify the Borrower of such claim or the 
commencement of such action or proceeding,                                      

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provided that the failure of an Indemnified Party to give notice as provided    
--------                                                                        
herein shall not relieve the Borrower of its obligations under this Section     
10.10 with respect to such Indemnified Party, except to the extent that the     
Borrower is actually prejudiced by such failure. The Borrower will assume the   
defense of such claim, action or proceeding and will employ counsel satisfactory
to the Indemnified Party and will pay the fees and expenses of such counsel.    
Notwithstanding the preceding sentence, the Indemnified Party will be entitled, 
at the expense of the Borrower, to employ counsel separate from counsel for the 
Borrower and for any other party in such action if the Indemnified Party        
reasonably determines that a conflict of interest or other reasonable basis     
exists which makes representation by counsel chosen by the Borrower not         
advisable, provided that the Borrower shall not be obligated to pay for the fees
--------                                                  
and expenses of more than one counsel for all Indemnified Parties. In the event 
an Indemnified Party appears as a witness in any action or proceeding brought   
against the Borrower (or any of its officers, directors or employees) in which  
an Indemnified Party is not named as a defendant, the Borrower agrees to        
reimburse such Indemnified Party for all necessary, out-of-pocket expenses      
incurred by it (including fees and expenses of counsel) in connection with its  
appearing as a witness.                                                         

The Borrower's obligations under this Section 10.10 shall survive the           
termination of this Credit Agreement and repayment of the Bank Indebtedness.    

10.11 Integration.                                                    
-----------                                               

  This Credit Agreement together with the other Loan Documents constitutes
the entire agreement between the parties relating to this financing transaction 
and its supersedes all prior understandings and agreements, whether written or  
oral between the parties hereto concerning the transactions provided for herein.

10.12 Severability.                                                   
------------                                              

     Any provision of this Credit Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining      
provisions hereof or affecting the validity or enforceability of such provision 
in any other jurisdiction.                                                      

10.13 APPLICABLE LAW.                                                 
--------------                                            

THIS CREDIT AGREEMENT AND THE NOTES, SHALL BE CONTRACTS MADE UNDER AND
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REFERENCE TO   
THE PROVISIONS THEREOF REGARDING CONFLICTS OF LAW.                              

10.14 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.                  
---------------------------------------------             

  THE PARTIES HERETO AGREE THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS SHALL  
BE COMMENCED IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA OR  
IN THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF          
PENNSYLVANIA AND EACH PARTY AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN   
ACTION                                                                          

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OR PROCEEDING IN EITHER OF SUCH COURTS SHALL BE PROPERLY SERVED AND SHALL CONFER
PERSONAL JURISDICTION IF SERVED PERSONALLY OR BY CERTIFIED MAIL TO THE PARTY IN 
RESPECT OF THE BORROWER OR THE AGENT, AT ITS ADDRESS SET FORTH IN SECTION 10.2  
HEREOF AND IN RESPECT OF ANY BANK, AT ITS ADDRESS SET FORTH ON SCHEDULE 1.1 OR  
ON THE ASSIGNMENT AND ASSUMPTION AGREEMENT TO WHICH SUCH BANK IS A PARTY, OR AS 
OTHERWISE PROVIDED UNDER THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. FURTHER, 
THE BORROWER, THE AGENT AND THE BANKS HEREBY SPECIFICALLY CONSENT TO THE        
PERSONAL JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY,         
PENNSYLVANIA AND THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN        
DISTRICT OF PENNSYLVANIA AND WAIVE AND HEREBY ACKNOWLEDGE THAT THE BORROWER, THE
AGENT AND THE BANKS ARE ESTOPPED FROM RAISING ANY CLAIM THAT EITHER SUCH COURT  
LACKS PERSONAL JURISDICTION OVER THE BORROWER, THE AGENT OR THE BANKS SO AS TO  
PROHIBIT EITHER SUCH COURT FROM ADJUDICATING ANY ISSUES RAISED IN A COMPLAINT   
FILED WITH EITHER SUCH COURT CONCERNING THIS CREDIT AGREEMENT OR THE NOTES. THE 
BORROWER, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,     
SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS  
CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT  
PERMITTED BY LAW.                                                               

10.15  Counterparts.                                                  
------------                                            

    This Credit Agreement may be executed in as many identical counterparts as
may be convenient and by the different parties hereto on separate counterparts. 
This Credit Agreement shall become binding when the Agent, the Banks and the    
Borrower have executed at least one counterpart.  Immediately after the         
execution of counterparts and solely for the convenience of the parties hereto, 
the Borrower and the Banks will execute sufficient counterparts so that Borrower
shall have counterparts executed by it, and the Banks shall have counterparts   
executed by it and the Borrower.  All counterparts shall constitute but one and 
the same instrument.                                                            

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]  

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[SIGNATURE PAGE 1 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]

Executed as of the day and year first above Written.                  

                                          EDUCATION MANAGEMENT CORPORATION

                                          By______________________________
                                          Name____________________________
                                          Title___________________________

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[SIGNATURE PAGE 2 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                                           NATIONAL CITY BANK OF PENNSYLVANIA,
                                 individually and as Agent

                                            By__________________________________
                                            Name________________________________
                                            Title_______________________________

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[SIGNATURE PAGE 3 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                                       FIRST UNION NATIONAL BANK, individually
                        and as Syndication Agent

                                        By______________________________________
                                        Name____________________________________
                                        Title___________________________________

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[SIGNATURE PAGE 4 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                                  SUNTRUST BANK, individually and as
                 Syndication Agent

                                        By______________________________________
                                        Name____________________________________
                                        Title___________________________________

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[SIGNATURE PAGE 5 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                                      FLEET NATIONAL BANK, individually and as
                 Documentation Agent

                                       By_______________________________________
                                       Name_____________________________________
                                       Title____________________________________

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[SIGNATURE PAGE 6 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                                      THE CHASE MANHATTAN BANK, individually
                          and as Documentation Agent

                                        By______________________________________
                                        Name____________________________________
                                        Title___________________________________

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[SIGNATURE PAGE 7 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                  BANK ONE, MICHIGAN

                                        By______________________________________
                                        Name____________________________________
                                        Title___________________________________

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[SIGNATURE PAGE 8 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                FIFTH THIRD BANK

                                        By______________________________________
                                        Name____________________________________
                                        Title___________________________________

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[SIGNATURE PAGE 9 OF 9 TO AMENDED AND RESTATED CREDIT AGREEMENT]  

                        AMERISERV FINANCIAL BANK

                                        By______________________________________
                                        Name____________________________________
                                        Title___________________________________

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                                                                       Exhibit 6

IRREVOCABLE PROXY AND POWER OF ATTORNEY 

This Proxy and Power of Attorney is being executed and entered into in
connection with (a) that certain Agreement and Plan of Merger, dated as of July 
9, 2001, among Argosy Education Group, Inc., an Illinois corporation (the       
"Company"), Education Management Corporation, a Pennsylvania corporation        
("EDMC"), and HAC Inc., an Illinois corporation (the "Merger Agreement"), and   
(b) that certain Stock Purchase Agreement, dated as of July 9, 2001, between    
Michael C. Markovitz and EDMC (the "Stock Purchase Agreement") to which each of 
the undersigned has joined as a Seller party thereto pursuant to that certain   
Joinder Agreement dated September 26, 2001.                                     

Unless otherwise indicated, capitalized terms shall have the meaning  
ascribed to such terms in the Stock Purchase Agreement.                         

   The undersigned are, in the aggregate, the record owners of all 4,900,000
shares of Company Common Stock to be purchased and sold pursuant to the Stock   
Purchase Agreement.                                                             

 The undersigned hereby irrevocably appoint Frederick W. Steinberg their
true and lawful attorney, agent and proxy, with full power of substitution and  
resubstitution for the undersigned to (x) appear at any meeting of the          
stockholders of the Company, however called, and at every adjournment or        
postponement thereof to cause the shares to be counted at present thereat for   
purposes of establishing a quorum and (y) to vote or cause to be voted all of   
the shares of the Company which the undersigned may be entitled to vote (the    
"Shares") or, if applicable, to give written consent with respect to such       
Shares, in each manner, as such attorney, agent and proxy or his substitute     
shall in his sole discretion deem proper to record such vote (or consent) on any
motion, proposal or other request for action or consent relating to the         
following:                                                                      

   (i)   to vote the Shares in favor of the Merger and approval and adoption
of the Merger Agreement, and any action required in furtherance thereof;        

    (ii)  to vote the Shares against any action or agreement that would result
in a breach in any material respect of any representation, warranty or covenant 
of the Company in the Merger Agreement; and                                     

  (iii) to vote the Shares against any action or agreement (other than the
Merger Agreement or the transactions contemplated thereby) that would impede,   
interfere with, delay, postpone or attempt to discourage the Merger, including  
any other extraordinary corporate transaction, such as a merger, reorganization 
or liquidation involving the Company and a third party or any other proposal of 
a third party to acquire the Company.                                           

This Proxy and Power of Attorney is being given in connection with the
transactions contemplated by the Stock Purchase Agreement and the Merger        
Agreement. The holder of this Proxy and Power of Attorney agrees not to vote or 
consent to any motion, proposal or other request for action or consent to reduce
the Merger Consideration (as defined in the Merger Agreement) or otherwise      
modify or amend the Merger Agreement in any respect. In addition,               

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the proxy granted hereto shall irrevocably cease and shall be of no further     
force or effect upon the termination of the Stock Purchase Agreement in         
accordance with its terms.                                                      

   This Proxy and Power of Attorney is valid and binding and coupled with an
interest, and this Proxy and Power of Attorney shall not be revocable or        
revoked, and shall be binding on any successor in interest of the undersigned   
and shall not be terminated by operation of law upon the occurrence of any      
event, including, without limitation, dissolution or bankruptcy of the          
undersigned or for any other reason. This Proxy and Power of Attorney shall     
operate to revoke any prior proxy as to the Shares heretofore granted by the    
undersigned.                                                                    

The undersigned represent and warrant that they have full power and   
authority to grant, and have duly authorized this Proxy and Power of Attorney.  
The undersigned further represent and warrant that the MCM Trust is the record  
owner of 4,213,388 shares of Company Class A Common Stock, to which Michael C.  
Markovitz is the sole voting trustee, and the Michael C. Markovitz Dynastic     
Trust is the record owner of 686,612 shares of Company Class A Common Stock, to 
which Ling Z. Markovitz is the sole voting trustee.                             

     This Proxy and Power of Attorney shall be governed by the laws of the State
of Illinois. To the extent (if any) the undersigned would retain under law,     
regardless of the foregoing authorization and appointment, any residual rights  
inconsistent with the foregoing irrevocable authorization and appointment, the  
undersigned hereby specifically and expressly (i) waive such rights, (ii) agree 
never to exercise such rights and (iii) agree never to claim, as a complaint or 
a defense, or otherwise assert that such authorization and appointment are not  
valid or enforceable. The invalidity or unenforceability of any provision of    
this Proxy and Power of Attorney shall not effect the validity or enforceability
of any other provision. To the extent (if any) any provision hereof is deemed   
invalid or unenforceable by its scope but may be made valid or enforceable by   
limitations thereon, the undersigned agree that this Proxy and Power of Attorney
shall be valid and enforceable to the fullest extent permitted by law.          

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     IN WITNESS WHEREOF, the undersigned have duly executed this Proxy and Power
of Attorney on the date indicated below.                                        

Dated: September 26, 2001                                                       

 MCM TRUST

                    /s/ Michael C. Markovitz
                             -------------------------------------
                     Michael C. Markovitz, trustee

                           MICHAEL C. MARKOVITZ DYNASTIC TRUST

                 /s/ Ling Z. Markovitz
                             -------------------------------------
                  Ling Z. Markovitz, trustee

Accepted and Agreed to as of this                                               
26th day of September, 2001                                                     

EDUCATION MANAGEMENT CORPORATION                                                

By: /s/ Robert Knutson                                                          
-----------------------------                                             
Name:   Robert Knutson                                                          

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SC 13D’ Filing		Date		First		Last			Other Filings
		9/20/04		38
		7/1/04		58
		6/30/04		27		90			10-K,  5
		9/30/03		27					10-Q
		6/30/03		27		90			10-K
		9/30/02		27					10-Q
		7/1/02		78
		6/30/02		27		90			10-K
		4/1/02		58
		1/31/02		8
		12/31/01		4		57			10-Q
		12/28/01		57					S-8
		10/15/01		28
Filed on:		10/9/01
		10/5/01		13					DEF 14A
		10/1/01		45
		9/30/01		27		77			10-Q
		9/28/01		10					10-K,  DEFM14A
		9/27/01		3		16			8-K
		9/26/01		1		124			8-K,  8-K/A
		9/20/01		11		31
		9/17/01		10
		7/27/01		6
		7/25/01		33
		7/9/01		3		122
		6/30/01		27		71			10-K,  4
		5/31/01		11		14			10-Q,  4
		7/1/00		78
		6/30/00		27		74			10-K
		2/18/00		24
		12/29/98		15
		7/20/92		15
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