Education Management Corporation – ‘PRE 14A’ for 11/20/03

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Preliminary Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Education Management Corporation | PRE 14A            51    283K 

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SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT 
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES 
EXCHANGE ACT OF 1934
Filed by the Registrant [X]                                                     
Filed by a Party other than the Registrant [ ]                                  
Check the appropriate box:                                                      

                                                                [Download Table]
                                                                                    
[X]  Preliminary Proxy Statement                                                    
[ ]  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ]  Definitive Proxy Statement                                                     
[ ]  Definitive Additional Materials                                                
[ ]  Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12      

EDUCATION MANAGEMENT CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):                              

[X]  No fee required.                                                           

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.   

(1)  Title of each class of securities to which transaction applies:  

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

(2)  Aggregate number of securities to which transaction applies:     

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

(3)  Per unit price or other underlying value of transaction computed 
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):  

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

(4)  Proposed maximum aggregate value of transaction:                 

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

(5)  Total fee paid:                                                  

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

[ ]  Fee paid previously with preliminary materials.                            

[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
  0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.                   

(1)  Amount Previously Paid:                                          

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

(2)  Form, Schedule or Registration Statement No.:                    

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

(3)  Filing Party:                                                    

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(4)  Date Filed:                                                      

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                                                                PRELIMINARY COPY

EDUCATION MANAGEMENT CORPORATION
210 SIXTH AVENUE, 33RD FLOOR
PITTSBURGH, PENNSYLVANIA 15222

October 21, 2003                                                                

Dear Shareholder:                                                               

   You are cordially invited to attend the Annual Meeting of Shareholders to
be held at 10:00 a.m. on Thursday, November 20, 2003, at the Omni William Penn  
Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania.                        

Regardless of whether you plan to attend, we urge you to vote on the  
matters to be considered and either sign, date and return your proxy in the     
enclosed envelope, or submit your proxy by Internet or by telephone as promptly 
as possible.                                                                    

The accompanying Notice of Annual Meeting and Proxy Statement provide 
information about the matters to be acted upon by the shareholders. The Proxy   
Statement also contains information about the roles and responsibilities of the 
Board of Directors and the committees of the Board and provides important       
information about each nominee for election as a director.                      

          Sincerely,

                     /s/ ROBERT B. KNUTSON

                 Robert B. Knutson
                     Chairman of the Board

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                                                                PRELIMINARY COPY

EDUCATION MANAGEMENT CORPORATION

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 20, 2003 

     The 2003 Annual Meeting of Shareholders of Education Management Corporation
will be held on Thursday, November 20, 2003, commencing at 10:00 a.m. Eastern   
Time, at the Omni William Penn Hotel, 530 William Penn Place, Pittsburgh,       
Pennsylvania for the following purposes:                                        

         1. To elect three Class I Directors to serve until the Annual Meeting
of Shareholders to be held in the year 2006.          

         2. To approve the proposed amendment and restatement of the Company's
        Articles of Incorporation to increase the number of authorized
        shares of common stock, par value $0.01 per share (the "Common
          Stock") from 60,000,000 shares to 120,000,000 authorized shares.

3. To approve the 2003 Incentive Plan.                      

    4. To ratify the appointment of Ernst & Young LLP as independent
public auditors for fiscal year 2004.                 

      5. To transact such other business as may properly come before the
meeting or any adjournment thereof.                   

    The accompanying proxy statement sets forth a description of matters to be
considered at the meeting. All shareholders of record at the close of business  
on September 23, 2003 of the Company's Common Stock are entitled to notice of   
and to vote at the meeting. A list of the shareholders entitled to vote at the  
meeting will be available for inspection at the meeting and for the ten days    
prior to the meeting for purposes relating to the meeting.                      

    It is important that your shares be represented at the meeting. Whether or
not you expect to be present, please fill in, date and sign the enclosed proxy  
and return it in the accompanying addressed, postage-prepaid envelope.          
Alternatively, you may choose to vote your shares using the Internet or         
telephone voting options explained on the proxy card. If you attend the meeting,
you may revoke your proxy and vote in person.                                   

                                   By order of the Board of Directors,

                          /s/ FREDERICK W. STEINBERG
                      Frederick W. Steinberg
         Secretary

October 21, 2003                                                                

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EDUCATION MANAGEMENT CORPORATION
210 SIXTH AVENUE, 33RD FLOOR
PITTSBURGH, PA 15222

PROXY STATEMENT 

FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, NOVEMBER 20, 2003 

This Proxy Statement and the accompanying proxy are being furnished to
shareholders on or about October 21, 2003 in connection with the solicitation by
the Board of Directors (the "Board") of Education Management Corporation (the   
"Company") of proxies for voting at the Annual Meeting of Shareholders to be    
held at 10:00 a.m., local time, on Thursday, November 20, 2003 at the Omni      
William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania, and at any
adjournments of that meeting (the "Annual Meeting"). Each proxy will be voted in
accordance with the shareholder's instructions set forth therein, although, to  
the extent no choice is specified, a proxy will be voted in favor of the matters
set forth in the accompanying Notice of Annual Meeting. Any proxy may be revoked
by a shareholder at any time before its exercise by delivery of a written       
revocation or a subsequently dated proxy to the Secretary of the Company or by  
voting in person at the Annual Meeting.                                         

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JUNE 30, 2003 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC")
WILL BE FURNISHED, WITHOUT EXHIBITS, AT NO CHARGE TO A SHAREHOLDER UPON WRITTEN 
REQUEST ADDRESSED TO THE INVESTOR RELATIONS DEPARTMENT, EDUCATION MANAGEMENT    
CORPORATION, 210 SIXTH AVENUE, 33RD FLOOR, PITTSBURGH, PA 15222. EXHIBITS WILL  
BE PROVIDED UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.  
COPIES MAY ALSO BE ACCESSED ELECTRONICALLY BY MEANS OF THE SEC'S HOME PAGE ON   
THE INTERNET AT WWW.SEC.GOV. NEITHER THE ANNUAL REPORT ON FORM 10-K NOR THE 2003
ANNUAL REPORT TO SHAREHOLDERS IS PART OF THE PROXY SOLICITATION MATERIALS.      

At the close of business on September 23, 2003, the record date for   
determining the shareholders entitled to vote at the Annual Meeting, there were 
outstanding and entitled to be voted an aggregate of 36,274,574 shares of Common
Stock. Shareholders are entitled to one vote per share; shareholders do not have
cumulative voting rights. The presence in person or by proxy of shareholders    
holding a majority of the shares of Common Stock outstanding as of the record   
date will constitute a quorum for the transaction of business at the Annual     
Meeting. Shares of Common Stock present in person or by proxy (including shares 
that are present but are not voted with respect to any of the proposals         
presented for shareholder approval) will be counted for purposes of determining 
whether a quorum is present.                                                    

   The election of directors, the amendment and restatement of the Company's
articles of incorporation, the approval of the 2003 Incentive Plan and the      
ratification of the appointment of the independent public auditors require the  
affirmative vote of the holders of a majority of the shares of Common Stock     
voting thereon at the Annual Meeting. Shares whose holders abstain from voting  
with respect to a specific proposal and shares held in "street name" by brokers 
or nominees who indicate on their proxies that they do not have discretionary   
authority to vote such shares as to a particular proposal will not be counted as
having been voted with respect to such proposal. Accordingly, neither broker    
non-votes nor abstentions will have any effect on whether either of the three   
proposals is approved, since each proposal merely requires the affirmative vote 
of the holders of a majority of the shares voting on that proposal.             

    The Board knows of no matters other than those set forth below that are to
be brought before the Annual Meeting. If other matters properly come before the 
Annual Meeting, it is the intention of the persons named in the enclosed proxy  
to vote the shares represented by such proxy in accordance with their judgment  
on such matters. Under the applicable rules of the SEC, those persons would have
that discretionary authority with respect to any proposal brought before the    
Annual Meeting if the Company did not have notice of the proposal by August 23, 
2002.                                                                           

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   All expenses of the solicitation of proxies will be borne by the Company.
The Company has retained Mellon Investor Services LLC, at a cost of $8,500 plus 
reimbursement of out-of-pocket expenses, to assist in its solicitation of       
proxies. Present and former directors and officers and other employees of the   
Company may also solicit proxies by telephone, facsimile, telegram or mail, or  
by meeting with shareholders or their representatives. The Company will         
reimburse brokers, banks and other custodians, nominees and fiduciaries for     
their charges and expenses in forwarding proxy materials to beneficial owners.  

PROPOSAL ONE: ELECTION OF DIRECTORS                                             

    The Board of Directors of the Company currently consists of nine directors
divided into three classes. The Board is comprised of three Class I Directors,  
three Class II Directors and three Class III Directors, with all directors      
holding office for staggered terms. Each director will serve (subject to his or 
her earlier death, resignation or removal) until the Annual Meeting of          
Shareholders held in the year in which his or her term is scheduled to expire or
thereafter until such director's successor is elected and qualified.            

     At the Annual Meeting, three directors are to be elected to hold office for
three-year terms scheduled to expire at the Annual Meeting of Shareholders to be
held in the year 2006 (the "2006 Annual Meeting of Shareholders"). Unless there 
is a contrary indication, the persons named in the accompanying proxy intend to 
vote the shares represented by such proxy for the election to the Board of      
Robert H. Atwell, William M. Campbell, III and Friedrich Teroerde. Messrs.      
Atwell and Campbell are current Class I Directors whose terms expire this year; 
Mr. Teroerde is a new nominee to the board of directors.                        

Each of the nominees has consented to serve as a director. If for any 
reason a nominee should become unable or unwilling to accept nomination or      
election, the persons named in the accompanying proxy intend to vote the shares 
represented by such proxy for the election of such other person as the Board may
recommend. Alternatively, the Board may reduce the number of directors to       
eliminate the vacancy.                                                          

A brief summary of each director's principal occupation and business  
affiliations and certain other information follows.                             

NOMINEES AS DIRECTORS FOR TERMS EXPIRING AT THE 2006 ANNUAL MEETING OF          
SHAREHOLDERS                                                                    

     Robert H. Atwell, age 72, has been a director of the Company since 1996. He
is a graduate of the College of Wooster (B.A. Political Science, 1953) and of   
the University of Minnesota (M.A. Public Administration, 1957). From 1984 until 
1996, Mr. Atwell was the president of the American Council on Education. He is  
also the former president of Pitzer College and the former vice chancellor of   
the University of Wisconsin-Madison. From 1996 to 2000, he was a consultant with
A.T. Kearney, Inc., a global consulting firm. From 1996 to the present, he has  
been a consultant to The National Center for Public Policy and Higher Education.
Mr. Atwell is also a consultant with Witt/Kieffer, an executive search firm, and
is a director of Collegis, Inc., Argosy University and Western State University 
College of Law and a trustee of Eckerd College.                                 

    William M. Campbell, III, age 43, has been a director of the Company since
1996. He is a graduate of Harvard College (B.A. Economics, 1982) and Harvard    
University Graduate School of Business Administration (M.B.A., 1987). From 1994 
to 1998, he was the executive vice president of CBS Television. From 1998 to May
2002, he was the president of Miramax Television. Since May 2002, Mr. Campbell  
has been President of Discovery Networks, U.S., the television division of      
Discovery Communications Inc.                                                   

Friedrich Teroerde, age 58, is being newly nominated to the Board of  
Directors. Since 1987, he has been Chairman of ELG Haniel GmbH, a supplier of   
raw material for the global stainless steel industry that is headquartered in   
Duisberg, Germany. He is also a member of the board of directors of Hernic      
Ferrochrome and is a council member and Chairman of the International Chrome    
Development Association, Paris. He is a trustee of the Westmoreland Museum of   
American Art.                                                                   

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED ABOVE. 

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DIRECTORS CONTINUING IN OFFICE                                                  

     TERMS EXPIRING AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN THE YEAR
2004                                                                            

     James J. Burke, Jr., age 51, has been a director of the Company since 1986.
He is a graduate of Brown University (B.A. Psychology, 1973) and Harvard        
University Graduate School of Business Administration (M.B.A., 1979). He is a   
partner and director of Stonington Partners, Inc., a private investment firm, a 
position that he has held since 1993, and has been a partner and director of    
Stonington Partners, Inc. II since 1994. Mr. Burke also served as a consultant  
to Merrill Lynch Capital Partners, Inc., a private investment firm associated   
with Merrill Lynch & Co., Inc., from 1994 through 2000. Mr. Burke was formerly a
director of Pathmark Stores, Inc., and its parent, SMG Holdings Corporation,    
which was reorganized under Chapter 11 of the U.S. Bankruptcy Code (the         
"Bankruptcy Code") in 2000 and was also formerly Chairman of Eerie World        
Entertainment, L.L.C., a restaurant company that was reorganized under Chapter  
11 of the Bankruptcy Code in 2001. Mr. Burke also serves on the board of        
directors of AnnTaylor Stores Corporation.                                      

  Martin L. Garcia, age 47, has been a director of the Company since April
2003. Mr. Garcia has been the Managing Director of Pinehill Capital Partners, an
investment company, since 2002. In addition, Mr. Garcia has been the president  
of Garcia Enterprises, a real estate holding company, since 1986 and of counsel 
to the law firm Hill, Ward & Henderson, P.A. in Tampa, Florida since 1997. He   
also serves on the board of Parkway Properties, Inc., a real estate investment  
trust, and is a member of the board of trustees of the Kaul Foundation. Mr.     
Garcia is a graduate of the University of South Florida (B.A. Accounting, 1978) 
and of Wake Forest University Law School (J.D. 1981), where he also serves as a 
trustee.                                                                        

   Miryam L. Knutson, age 58, has been a director of the Company since 1990.
She is a graduate of the Universidad del Zulia, Venezuela (B.A. Journalism,     
1965). Ms. Knutson joined the Company in 1984 and held a variety of management  
positions. From 1989 to 1996, she was the Company's President and Chief         
Operating Officer. From 1996 to 1998, she was the Vice Chairman of the Company. 
From November 1998 to January 2000, she worked as a part-time                   
consultant-employee for the Company, and from January 1999 to February 2002, she
acted as a consultant on education companies for Stonington Partners, Inc. and  
Arena Capital Partners, L.L.C., private investment firms. Ms. Knutson is the    
wife of Robert B. Knutson, the Chairman of the Company.                         

     TERMS EXPIRING AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN THE YEAR
2005                                                                            

Robert B. Knutson, age 69, has been the Chairman of the Company since 
September 1, 2003 and has been a director of the Company since 1969. From 1986  
through August 2003 he was the Chairman and Chief Executive Officer of the      
Company. He is a graduate of the University of Michigan (B.A. Economics, 1956)  
and was a fighter pilot with the U.S. Air Force from 1957 to 1962. Mr. Knutson  
joined the Company as a director in 1969 and became its President in 1971 and   
the Chairman, President and Chief Executive Officer in 1986. He is a member of  
the board of directors of the Western Pennsylvania Conservancy and              
WQED-Pittsburgh. Mr. Knutson is the husband of Miryam L. Knutson, a director of 
the Company.                                                                    

  John R. McKernan, Jr., age 55, became the Chief Executive Officer of the
Company on September 1, 2003. Mr. McKernan joined the Company as its Vice       
Chairman and a member of the Board of Directors in June 1999 and continues to   
serve as Vice Chairman. In March 2003 he became the Company's President and     
served in that office until September 11, 2003, when J. William Brooks was      
appointed President. Mr. McKernan served as Governor of the State of Maine from 
1987 to 1995. He is a graduate of Dartmouth College (B.A. Government, 1970) and 
the University of Maine Law School (J.D., 1974).                                

James S. Pasman, Jr., age 72, has been a director of the Company since
1997. He is a graduate of Upsala College (B.B.A., 1956) and the Stern School of 
Business at New York University (M.B.A., 1962). From 1989 to 1991, he was the   
president and chief operating officer of National Intergroup, Inc. and chairman 
of the board of Permian Oil Corp. Since then, Mr. Pasman has been retired. Mr.  
Pasman serves on the boards of directors of Credit Suisse Asset Management      
open-end mutual funds, Credit Suisse Income Fund Inc. and Credit Suisse Asset   
High Yield Bond Fund Inc and is also a director of The Children's Institute.    

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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS                               

The standing committees of the Board are the Audit Committee, the     
Compensation Committee and the Nominating and Governance Committee. All of the  
committees have adopted formal written committee charters.                      

  The Audit Committee selects and engages the Company's independent public
auditors and determines the fees to be paid to such auditors, and reviews and   
makes recommendations to the Board with respect to the adequacy of the audit and
accounting procedures of the Company. The Committee confers with the independent
auditors on numerous matters, including but not limited to discussions of the   
Company's annual report on Form 10-K and the quarterly reports on Form 10-Q     
prior to their filing. The Committee held six meetings during fiscal 2003. The  
members of the Audit Committee are Messrs. Burke (Chair), Garcia, Greenstone and
Pasman.                                                                         

The Compensation Committee recommends to the Board the management     
remuneration policies of the Company, including but not limited to increases in 
salary rates and fringe benefits of elected officers, other remuneration plans  
such as incentive compensation and deferred compensation, and directors'        
compensation and benefits. The Compensation Committee also administers the      
Company's stock-based compensation plans, except that the full Board administers
those stock-based compensation plans with respect to their applicability to     
directors of the Company. The Compensation Committee held three meetings during 
fiscal 2003. The members of the Compensation Committee are Messrs. Campbell     
(Chair), Burke and Garcia.                                                      

 The Nominating and Governance Committee is responsible for creating and
maintaining the overall corporate governance policies for the Company and for   
identifying, screening, recruiting and presenting director candidates to the    
Board of Directors. This Committee also nominates directors for membership on   
the various Board committees. The Nominating Committee held four meetings during
fiscal 2003. The members of the Nominating Committee are Messrs. Pasman (Chair),
Atwell, Burke and Campbell. In considering persons to nominate for election as  
directors, the Nominating and Governance Committee will consider recommendations
from shareholders that are submitted in accordance with the following           
procedures. Any such recommendation must be received by the Secretary of the    
Company on behalf of the Nominating Committee not less than 60 nor more than 90 
days in advance of the first anniversary of the previous year's annual meeting; 
provided, however, that in the event that the date of the annual meeting is     
changed by more than 30 days from such anniversary date, the shareholder must   
deliver such recommendation no later than the close of business on the fifth day
following the date on which public announcement of the date of such meeting is  
first made. The letter setting forth a shareholder's recommendation for         
nomination must include the name and address of that shareholder, a description 
of any arrangement or understanding between that shareholder and each person    
being recommended as a nominee with respect to the Company or such              
recommendation, and such other information regarding each person being          
recommended as a nominee as would be required to be included in a proxy         
statement filed pursuant to the proxy rules of the SEC concerning such person as
a nominee. In addition, any such letter must be accompanied by a consent from   
each person being recommended to serve as a director if elected. No such        
nominations were received with respect to the election of directors at the 2003 
Annual Meeting of Shareholders.                                                 

During fiscal 2003, there were four meetings of the Board. Each of the
directors named above attended 75% or more of the aggregate number of meetings  
of the Board of Directors of the Company and the committees on which such       
director served during fiscal 2003.                                             

SECURITY OWNERSHIP                                                              

 The following table sets forth, as of September 23, 2003, the number of
shares of Common Stock beneficially owned by (i) any person (including any      
group) known by management to own beneficially more than 5% of the outstanding  
shares of Common Stock, (ii) each director and nominee for election as a        
director of the Company, (iii) each of the executive officers of the Company    
named in the Summary Compensation Table, and (iv) all directors and executive   
officers as a group. Unless otherwise indicated in a footnote, each individual  
or group possesses sole voting and investment power with respect to the shares  
indicated as beneficially owned.                                                

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                                                        [Enlarge/Download Table]

                                                                           PERCENTAGE OF
                                                              NUMBER OF     OUTSTANDING 
NAME AND ADDRESS OF BENEFICIAL OWNER(1)                      SHARES OWNED  SHARES OWNED 
---------------------------------------                      ------------  -------------
                                                                                        
Education Management Corporation Employee Stock Ownership                               
  Trust(2)..................................................  3,544,879         9.8%    
Capital Research and Management Company(3)..................  2,585,400         7.1%    
T. Rowe Price Associates(4).................................  2,399,400         6.6%    
Robert B. Knutson(5) (6)....................................  1,669,691         4.6%    
Miryam L. Knutson(5) (7)....................................     32,500           *     
Robert H. Atwell(8).........................................      5,974           *     
James J. Burke, Jr.(9)......................................    105,140           *     
William M. Campbell, III(10)................................     44,500           *     
Martin L. Garcia(11)........................................    108,300           *     
Robert P. Gioella(12).......................................     32,984           *     
Albert Greenstone(13).......................................      8,088           *     
Michael C. Markovitz........................................          0           *     
Robert T. McDowell(14)......................................    258,518           *     
John R. McKernan, Jr.(15)...................................    128,476           *     
James S. Pasman, Jr.(16)....................................     41,500           *     
David J. Pauldine(17).......................................    148,012           *     
Friedrich Teroerde..........................................          0           *     
All executive officers and directors as a group (13                                     
  persons)(18)..............................................  2,600,699         7.2%    

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

* Less than 1%                                                              

(1) The address of each listed shareholder, unless otherwise noted, is c/o    
     Education Management Corporation, 210 Sixth Avenue, 33rd Floor, Pittsburgh,
Pennsylvania 15222.                                                   

 (2) These shares are held by the trustee, Fidelity Management Trust Company, 82
Devonshire Street, Boston, Massachusetts 02109, for the benefit of    
participants in the Education Management Corporation Employee Stock   
     Ownership Trust (the "ESOP"). The ESOP is administered by the Company. ESOP
participants are entitled to direct the voting of the shares of Common
  Stock allocated to their respective accounts. Allocated shares of Common
  Stock for which voting instructions are not given and unallocated shares
   held by the ESOP are voted by the trustee in the manner determined by the
Company as administrator of the ESOP.                                 

(3) The address of Capital Research and Management Company is 333 South Hope  
     Street, 55th Floor, Los Angeles, California 90071. The information provided
for Capital Research and Management Company is based on information   
provided in a filing with the SEC.                                    

(4) The address of T. Rowe Price Associates is P.O. Box 17218, Baltimore,     
Maryland 21297. These securities are owned by various individual and  
institutional investors that T. Rowe Price Associates, Inc. ("Price   
    Associates") serves as investment adviser with power to direct investments
 and/or sole power to vote the securities. For purposes of the reporting
  requirements of the Securities Exchange Act of 1934, Price Associates is
     deemed to be beneficial owner of such securities; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of such 
    securities. The information provided for T. Rowe Price Associates is based
on information provided in a filing with the SEC.                     

(5) Mr. Knutson and Ms. Knutson, who are husband and wife, disclaim beneficial
ownership of each other's shares.                                     

(6) Includes 18,750 shares receivable upon the exercise of options that are   
 exercisable within 60 days of the date of the table set forth above and
21,368 shares allocated to Mr. Knutson under the ESOP.                

(7) Includes 22,500 shares of Common Stock receivable upon the exercise of    
  options that are exercisable within 60 days of the date of the table set
forth above.                                                          

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(8) Includes 5,000 shares of Common Stock receivable upon the exercise of     
  options that are exercisable within 60 days of the date of the table set
forth above.                                                          

(9) Includes 42,500 shares of Common Stock receivable upon the exercise of    
  options that are exercisable within 60 days of the date of the table set
forth above and 6,000 shares held by trusts of which Mr. Burke is a   
trustee.                                                              

(10) Includes 42,500 shares of Common Stock receivable upon the exercise of     
  options that are exercisable within 60 days of the date of the table set
forth above.                                                          

(11) Includes 46,800 shares owned jointly with Mr. Garcia's spouse and 61,500   
shares held by trusts of which Mr. Garcia is the trustee.             

(12) Mr. Gioella served as President and Chief Operating Officer of the Company 
    through March 31, 2003. This number includes 16,250 shares receivable upon
    the exercise of options that are exercisable within 60 days of the date of
the table set forth above.                                            

(13) Includes 5,000 shares of Common Stock receivable upon the exercise of      
  options that are exercisable within 60 days of the date of the table set
forth above.                                                          

(14) Includes 108,784 shares of Common Stock receivable upon the exercise of    
  options that are exercisable within 60 days of the date of the table set
 forth above 29,892 shares allocated to Mr. McDowell under the ESOP, and
1,500 shares held by Mr. McDowell's spouse.                           

(15) Includes 120,500 shares of Common Stock receivable upon the exercise of    
  options that are exercisable within 60 days of the date of the table set
forth above and 608 shares held through the Company's Employee Stock  
Purchase Plan (the "ESPP").                                           

(16) Includes 37,500 shares of Common Stock receivable upon the exercise of     
  options that are exercisable within 60 days of the date of the table set
forth above.                                                          

(17) Includes 105,369 shares of Common Stock receivable upon the exercise of    
  options that are exercisable within 60 days of the date of the table set
     forth above, 19,063 shares allocated to Mr. Pauldine under the ESOP and 775
shares held through the ESPP.                                         

(18) Includes 508,403 shares of Common Stock receivable upon the exercise of    
  options that are exercisable within 60 days of the date of the table set
    forth above, 70,323 shares allocated to the accounts of officers under the
     ESOP and 1,383 shares allocated to the accounts of officers under the ESPP.

PROPOSAL TWO: TO APPROVE AN AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED     
          ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
        SHARES OF COMMON STOCK FROM 60,000,000 SHARES TO 120,000,000
SHARES                                              

   At the Annual Meeting, shareholders will be asked to approve an amendment
to the Company's Amended and Restated Articles of Incorporation, as amended (the
"Articles of Incorporation"). The Company's Articles of Incorporation currently 
authorize the issuance of 60,000,000 shares of Common Stock, par value $.01 per 
share, and 10,000,000 shares of preferred stock, par value $.01 per share       
("Preferred Stock"), of which 250,000 shares have been designated as Series A   
Junior Participating Preferred Stock (the "Series A Preferred Stock"). The Board
of Directors has adopted a resolution proposing that the Articles of            
Incorporation be amended to increase the aggregate number of shares of Common   
Stock that the Company is authorized to issue from 60,000,000 shares to         
120,000,000 shares (the "Amendment").                                           

As of September 23, 2003, there were 36,274,574 shares of Common Stock
issued and outstanding, and as of September 30, 2003, 4,445,139 shares of Common
Stock in the aggregate were reserved for issuance under the Company's stock     
compensation plans (including options to acquire 2,868,745 shares of Common     
Stock that were granted but had not been exercised as of such date). The Company
also is seeking shareholder approval for adoption of the 2003 Incentive Plan, as
more fully described in Proposal Three in this Proxy Statement. The Company has 
reserved an aggregate of 2,700,000 shares of Common Stock for issuance under the
2003 Incentive Plan, subject to the receipt of such shareholder approval.       

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 The additional shares of Common Stock for which authorization is sought
would be part of the existing class of Common Stock, and, if and when issued,   
would have the same rights and privileges as the shares of Common Stock         
presently outstanding. Such additional shares would not (and the shares of      
Common Stock presently do not) entitle the holders thereof to preemptive or     
cumulative voting rights.                                                       

PROPOSED AMENDMENT                                                              

   If approved by the shareholders, the Amendment will become effective upon
the filing of Articles of Amendment to the Articles of Incorporation with the   
Department of State of the Commonwealth of Pennsylvania. The Amendment would    
change Article FIFTH, subparagraph A, of the Articles of Incorporation to read  
in its entirety as follows:                                                     

"FIFTH: A. Authorized Shares                                                    

   The aggregate number of shares which the Corporation shall have authority
to issue is One Hundred Thirty Million (130,000,000) shares, as follows:        

       1. One Hundred Twenty Million (120,000,000) shares of Common Stock,
with a par value of one cent ($.01) per share.                        

         Except for and subject to those rights as may be expressly granted to
  the holders of Preferred Stock pursuant to the authority vested by these
    Articles of Incorporation in the Board of Directors of the Corporation, or
    except as may be provided by the laws of the Commonwealth of Pennsylvania,
the holders of Common Stock shall have exclusively all rights of      
shareholders.                                                         

     2. Ten Million (10,000,000) shares of Preferred Stock, with a par
value of one cent ($.01) per share."                                  

PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT                                    

The Board of Directors believes that the availability of additional   
authorized but unissued shares of Common Stock will provide the Company with the
flexibility to issue Common Stock for a variety of corporate purposes, such as  
to effect future stock splits in the form of stock dividends, to make           
acquisitions through the use of Common Stock, to raise equity capital, to       
reserve additional shares for issuance under employee benefit plans and for     
other general corporate purposes.                                               

     The Board of Directors believes that the proposed increase in the number of
shares of authorized Common Stock would facilitate the Company's ability to take
any of the foregoing actions in the future without the necessity of delaying    
such activities for further shareholder approval, except as may be required in  
particular cases by the Company's charter documents, applicable law or rules of 
The NASDAQ Stock Market, Inc. ("NASDAQ"). Other than as permitted or required   
under the Company's employee benefit plans and under outstanding options, the   
Board of Directors has no immediate plans, understandings, agreements or        
commitments to issue additional shares of Common Stock for any purpose. If the  
Amendment is approved, the Board of Directors will not solicit shareholder      
approval to issue additional shares of Common Stock, except to the extent that  
such approval may be required by law or by the applicable rules of NASDAQ or any
other exchange on which the Company's Common Stock may in the future be listed. 
Under existing NASDAQ rules, shareholder approval must generally be obtained    
prior to the issuance of shares for certain purposes, including the issuance of 
more than 20% of the then-outstanding shares in connection with an acquisition  
and where the issuance or potential issuance of shares will result in a change  
in control of the issuer.                                                       

If the Company were to issue additional shares of Common Stock, such  
issuance could have a dilutive effect on the earnings per share, book value per 
share and voting power of current shareholders. The proposal could also, under  
certain circumstances, have an anti-takeover effect, although this is not the   
intention of the Amendment. The increased number of authorized shares of Common 
Stock could discourage, or be used to impede, an unsolicited attempt to acquire 
or otherwise change control of the Company. The Board of Directors is not aware 
of any attempt, or contemplated attempt, to acquire control of the Company, and 
the Amendment is not being presented with the intent that it be utilized as an  
anti-takeover device. Furthermore, under the Company's Preferred Stock purchase 
rights plan, each outstanding share of the Company's Common Stock is accompanied

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by one Preferred Share purchase right entitling the registered holder to        
purchase from the Company one one-hundredth of a share of Series A Preferred    
Stock, at an exercise price of $50, subject to adjustment. The rights plan could
discourage potential acquisition proposals and could delay or prevent a change  
in control. The rights plan is intended to enhance the likelihood of continuity 
and stability in the composition of the Company's Board of Directors and in the 
policies formulated by the Board of Directors and to discourage certain types of
transactions that may involve an actual or threatened change in control. The    
terms of the rights plan are set forth in a rights agreement, as amended,       
between the Company and Mellon Investor Services LLC, as rights agent. The      
rights plan and the rights generally will expire in 2006, unless extended. The  
rights agreement is incorporated by reference as an exhibit to the Company's    
2003 Annual Report on Form 10-K.                                                

In addition to the Company's Common Stock, the Company's Articles of  
Incorporation provide authority to the Board of Directors to issue one or more  
series of Preferred Stock without shareholder approval. No shares of Preferred  
Stock are outstanding. No change in the number of authorized shares of the      
Company's Preferred Stock is proposed.                                          

VOTE REQUIRED                                                                   

    Approval of this proposal will require the affirmative vote of the holders
of a majority of the shares of Common Stock voting thereon at the Annual        
Meeting. If the shareholders do not approve this proposal, the Company's        
Articles of Incorporation will not be amended as described herein, and the      
number of shares of Common Stock that the Company is authorized to issue will   
remain at 60,000,000 shares. Proxies solicited by the Board of Directors will be
voted in favor of this proposal unless shareholders specify otherwise in their  
proxies.                                                                        

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE AN 
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 60,000,000 SHARES TO 120,000,000 SHARES. 

PROPOSAL THREE: ADOPTION OF 2003 INCENTIVE PLAN                                 

 The Company's current 1996 Stock Incentive Plan, as amended, (the "1996
Incentive Plan") originally became effective following its approval by the      
shareholders of the Company at their 1996 annual meeting. The Board believes    
that the 1996 Incentive Plan, and its predecessor plans, the 1993 and 1990      
Management Incentive Stock Option Plans, have been effective in attracting      
executives, key employees and non-employee directors to the Company and its     
subsidiaries and in providing long-term incentives and rewards to those         
executives, key employees and non-employee directors responsible for the        
continued growth of the Company. The Board further believes that the awards     
granted under the 1996 Incentive Plan have provided an incentive that aligns the
economic interests of executives, key employees and non-employee directors with 
those of the Company's shareholders. The Board continues to believe that it is  
in the Company's best interest to utilize these types of awards as an integral  
part of its compensation programs, and considers these programs to be key       
contributors to the ongoing success of the Company. For further information     
about the Company's existing equity compensation plans, see the table provided  
under the caption "Equity Compensation Plan Information" in this Proxy          
Statement.                                                                      

The 1996 Incentive Plan is scheduled to expire in 2006. The Board of  
Directors believes that the adoption and approval of a new incentive plan with a
new ten-year term will facilitate the continued use of long-term equity-based   
and other incentives and rewards for the foreseeable future and is in the best  
interests of the Company. Accordingly, the Board of Directors has approved,     
subject to the approval of the Company's shareholders, the 2003 Incentive Plan  
with a new ten-year term. In addition, shareholder approval of the 2003         
Incentive Plan is desired, among other reasons, to ensure the tax deductibility 
by the Company of awards under the 2003 Incentive Plan for purposes of Section  
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and to    
meet the listing requirements of the NASDAQ National Market System.             

    The material features of the 2003 Incentive Plan are summarized below. The
summary is qualified in its entirety by reference to the specific provisions of 
the 2003 Incentive Plan, as it is proposed to be adopted, the full text of which
is set forth as Appendix B to this proxy statement.                             

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ADMINISTRATION                                                                  

  The 2003 Incentive Plan is administered by the Compensation Committee of
the Board of Directors of the Company (the "Committee"), except that the full   
Board administers the 2003 Incentive Plan with respect to its applicability to  
non-employee directors of the Company. All members of the Committee are         
non-employee directors of the Company. The Committee has the authority to       
determine, within the limits of the express provisions of the 2003 Incentive    
Plan, the individuals to whom awards will be granted, the nature, amount and    
terms of such awards and the objectives and conditions for earning such awards. 
With respect to employees who are not subject to Section 16 of the Securities   
Exchange Act of 1934, as amended (the "Exchange Act"), the Committee may        
delegate its authority under the 2003 Incentive Plan to one or more officers or 
employees of the Company. To the extent not otherwise provided for under the    
Company's Articles and By-laws, members of the Committee are entitled to be     
indemnified by the Company with respect to claims relating to their actions in  
the administration of the 2003 Incentive Plan, except in the case of willful    
misconduct.                                                                     

TYPES OF AWARDS                                                                 

Awards under the 2003 Incentive Plan may include nonqualified stock   
options, incentive stock options, stock appreciation rights ("SARs"), limited   
stock appreciation rights ("Limited SARS"), restricted shares of Common Stock,  
restricted units, performance awards and short-term cash incentive awards.      

  Stock Options.  The Committee may grant to a participant incentive stock
options, options that do not qualify as incentive stock options ("non-qualified 
stock options") or a combination thereof. The terms and conditions of stock     
option grants, including the quantity, price, vesting periods, and other        
conditions on exercise will be determined by the Committee. Incentive stock     
option grants shall be made in accordance with Section 422 of the Internal      
Revenue Code of 1986, as amended (the "Code").                                  

     The exercise price for stock options will be determined by the Committee in
its discretion, provided that the exercise price per share for each stock option
shall be at least equal to 100% of the fair market value of one share of Common 
Stock on the date when the stock option is granted. Additionally, in the case of
incentive stock options granted to a holder of more than 10% of the total       
combined voting power of all classes of stock of the Company on the date of     
grant, the exercise price may not be less than 110% of the fair market value of 
one share of Common Stock on the date the stock option is granted. On September 
23, 2003, the market price per share of Common Stock was $60.75 based on the    
closing price of the Common Stock on the NASDAQ National Market System on such  
date.                                                                           

     Stock options must be exercised within a period fixed by the Committee that
may not exceed ten years from the date of grant, except that in the case of     
incentive stock options granted to a holder of more than 10% of the total       
combined voting power of all classes of stock of the Company on the date of     
grant, the exercise period may not exceed five years. The 2003 Incentive Plan   
provides for earlier termination of stock options upon the participant's        
termination of employment, unless extended by the Committee, but in no event may
the options be exercised after the scheduled expiration date of the options.    

  At the Committee's discretion, payment for shares of Common Stock on the
exercise of stock options may be made in cash, shares of Common Stock held by   
the participant for at least six months (or such other shares of Common Stock as
the Committee may permit), a combination of cash and shares of Common Stock or  
in any other form of consideration acceptable to the Committee (including one or
more "cashless" exercise forms).                                                

  The 2003 Incentive Plan contains a reload option feature. Reload options
are intended to encourage employees to exercise options at an earlier date and  
to retain the shares so acquired, in furtherance of the Company's desire to     
encourage increased employee stock ownership. Under the reload feature,         
participants who tender previously owned shares or have shares withheld to pay  
all or a portion of the exercise price of vested stock options or to cover the  
associated tax liability may be eligible, in the discretion of the Committee, to
receive a reload option covering the same number of shares as are tendered or   
withheld for such purposes. The market value on the date of grant of a reload   
option establishes the exercise price of such option, and such option will have 
a term equal to the remaining term of the original option.                      

   Further, a participant has the ability to exercise his or her option, but
defer delivery of the actual stock until a later date. This deferral may have   
certain tax advantages to the participant. Upon deferral, the participant's     

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exercised stock will be credited in the form of Stock Units to a book account   
maintained by the Company in the participant's name. The Stock Units represent  
the Company's unfunded, unsecured promise to deliver the deferred stock to the  
participant at a later date. In addition, if the Company grants dividends on its
stock during the deferral period, the Committee has discretion to either credit 
additional Stock Units to the participant's account reflecting the value of     
those dividends or pay the applicable dividends to the participant in cash.     

Stock Appreciation Rights.  SARs may be granted by the Committee to a 
participant either separate from or in tandem with non-qualified stock options  
or incentive stock options. SARs may be granted at the time of the stock option 
grant or, with respect to non-qualified stock options, at any time prior to the 
exercise of the stock option. A SAR entitles the participant to receive, upon   
its exercise, a payment equal to (i) the excess of the fair market value of a   
share of Common Stock on the exercise date over the SAR exercise price, times   
(ii) the number of shares of Common Stock with respect to which the SAR is      
exercised.                                                                      

     The exercise price of a SAR is determined by the Committee, but in the case
of SARs granted in tandem with stock options may not be less than the exercise  
price of the related stock option. Upon exercise of a SAR, payment will be made 
in cash or shares of Common Stock, or a combination thereof, as determined by   
the Committee.                                                                  

     Limited SARs.  Limited SARs may be granted independent of or in tandem with
stock options and shall be exercisable by the participant for a period of sixty 
(60) days following the occurrence of a change in control (as defined in the    
2003 Incentive Plan). Upon the exercise of a Limited SAR, the participant will  
be entitled to receive from the Company in exchange therefor cash in an amount  
equal to the excess of the value on the date of exercise of the number of shares
of Common Stock subject to the Limited SARs being exercised over the exercise   
price of such Limited SAR. For this purpose, the value of Common Stock will be  
the highest fair market value of the Common Stock during the period beginning on
the 90th day prior to the date on which the Limited SARs are exercised and      
ending on such date.                                                            

Restricted Shares and Restricted Units.  The Committee may award to a 
participant shares of Common Stock subject to specified restrictions            
("restricted shares"). Restricted shares are subject to forfeiture if the       
participant does not meet certain conditions such as continued employment over a
specified forfeiture period and/or the attainment of specified performance      
targets over the forfeiture period.                                             

    The Committee also may award to a participant units representing the right
to receive shares of Common Stock in the future subject to the achievement of   
one or more goals relating to the completion of service by the participant      
and/or the achievement of performance or other objectives ("restricted units"). 
The terms and conditions of restricted share and restricted unit awards are     
determined by the Committee.                                                    

For participants who are subject to Section 162(m) of the Code, the   
performance targets described in the preceding two paragraphs may be established
by the Committee, in its discretion, based on one or more of the following      
measures: economic value added (EVA(R)), operating income, return on            
shareholders' equity, stock price appreciation, earnings before interest, taxes,
depreciation and amortization, cash flow, sales growth, margin improvement,     
income before taxes (IBT), IBT margin, return on investment, return on invested 
assets, working capital performance, earnings per share, growth in earnings per 
share, expense targets, productivity targets or ratios, student placement rates,
average starting salary for graduates and new student enrollment goals for new  
programs and new concentrations (the "Performance Goals").                      

Performance Awards.  The Committee may grant performance awards to    
participants under such terms and conditions as the Committee deems appropriate.
A performance award entitles a participant to receive a payment from the        
Company, the amount of which is based upon the attainment of predetermined      
performance targets over a specified award period. Performance awards may be    
paid in cash, shares of Common Stock or a combination thereof, as determined by 
the Committee.                                                                  

   Award periods will be established at the discretion of the Committee. The
performance targets will also be determined by the Committee. With respect to   
participants subject to Section 162(m) of the Code, the applicable performance  
targets shall be established, in the Committee's discretion, based on one or    
more of the Performance Goals described above under the section titled          
"Restricted Shares and Restricted Units." To the extent that a participant is   
not subject to Section 162(m) of the Code, when circumstances occur that cause  
predetermined                                                                   
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performance targets to be an inappropriate measure of achievement, the          
Committee, at its discretion, may adjust the performance targets.               

Short-Term Cash Awards.  The 2003 Incentive Plan authorizes           
performance-based annual cash incentive compensation to be paid to covered      
employees subject to Section 162(m) of the Code. The material terms of the      
annual incentive compensation feature of the 2003 Incentive Plan are as follows:

   - The class of persons covered consists of those senior executives of the
 Company who are from time to time determined by the Committee to be
subject to Section 162(m) of the Code.                            

- The targets for annual incentive payments to "covered employees" (as
     defined in Section 162(m) of the Code) will consist only of one or more
     of the Performance Goals discussed under the section titled "Restricted
      Shares and Restricted Units" above. Use of any other target will require
       ratification by the shareholders if failure to obtain such approval would
jeopardize tax deductibility of future incentive payments. Such   
  performance targets will be established by the Committee on a timely
  basis to ensure that the targets are considered "preestablished" for
purposes of Section 162(m) of the Code.                           

    - In administering the incentive program and determining incentive awards,
    the Committee will not have the flexibility to pay a covered executive
      more than the incentive amount indicated by his or her attainment of the
     performance target under the applicable payment schedule. The Committee
       will have the flexibility, based on its business judgment, to reduce this
amount.                                                           

   - The cash incentive compensation feature of the 2003 Incentive Plan does
    not preclude the Board or the Committee from approving other incentive
compensation arrangements for covered employees.                  

  Non-Employee Director Grants.  The 2003 Incentive Plan also provides for
annual, non-discretionary stock option grants to be made to members of the Board
of Directors who are not employees of the Company. Each person who is a         
non-employee director receives an option to purchase 15,000 shares of Common    
Stock on the date that he or she is first elected to the Board. If a Board      
member who is an employee of the Company or a Subsidiary retires as an employee 
but continues to serve on the Board after such retirement, such person may      
receive an initial option grant for service as a Non-Employee Director on such  
terms and conditions as the Board shall determine. Each non-employee director   
also receives an annual non-discretionary grant of an option to purchase 5,000  
shares of Common Stock on the date of each annual meeting of the Company's      
shareholders while such director remains a director. Both the initial and the   
annual non-employee director options vest 50% on the first and 50% on the second
anniversary of the date of grant and have a ten-year term. The exercise price of
each such non-employee director stock option is the fair market value on the    
date of grant of the shares subject to the option.                              

   Change in Control.  If a change in control occurs (as defined in the 2003
Incentive Plan), all outstanding options and other awards will become fully     
exercisable and all restrictions on outstanding options and awards will lapse.  

ELIGIBILITY                                                                     

   The Committee may grant awards to any officer, key employee or consultant
of the Company or any of its direct or indirect subsidiaries and to directors or
trustees of such subsidiaries. Non-employee directors of the Company receive    
awards in accordance with automatic, non-discretionary provisions of the 2003   
Incentive Plan. It is presently contemplated that approximately 350 persons will
be eligible to receive awards. Such number is likely to increase with           
acquisitions by the Company. In any calendar year, no participant may receive   
awards for more than 500,000 shares of Common Stock and $2 million in cash.     

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AWARDS GRANTED UNDER THE 1996 INCENTIVE PLAN                                    

    Options were granted during fiscal 2003 to 53 employees, none of whom were
executive officers. The dates of those grants, the total number of shares of    
Common Stock subject to the options granted, and the exercise price per share,  
were as follows:                                                                

                                                                [Download Table]

                                                              NUMBER     OPTION
                                                             OF SHARES   PRICE 
                      DATE OF GRANT                          ---------   ------
                                                                               
July 1, 2002..............................................     12,048    $40.52
October 1, 2002...........................................     12,235    $46.06
November 14, 2002.........................................    204,000    $38.88
January 2, 2003...........................................      4,000    $38.45
January 31, 2003..........................................      5,000    $36.75
April 1, 2003.............................................     32,500    $41.00

In addition, each of the six non-employee directors of the Company was
granted an option to purchase 5,000 shares of Common Stock, with an exercise    
price of $38.88, on November 14, 2002, and a new non-employee director received 
an initial option grant to acquire 15,000 shares of Common Stock, with an       
exercise price of $43.22, on April 14, 2003. For information on awards granted  
subsequent to June 30, 2003, see note (3) to the table in the section entitled  
"Equity Compensation Plan Information" below.                                   

AWARDS UNDER THE 2003 INCENTIVE PLAN                                            

 No specific awards have been granted or are contemplated under the 2003
Incentive Plan. In addition, the exact types and amounts of any future awards to
be made to any eligible participants pursuant to the 2003 Incentive Plan are not
presently determinable. As a result of the discretionary nature of the 2003     
Incentive Plan, it is not possible to state who the participants in the 2003    
Incentive Plan will be in the future or the number of options or other awards to
be received by a person or group.                                               

SHARES SUBJECT TO THE 2003 INCENTIVE PLAN                                       

   An aggregate of 2,700,000 shares of Common Stock is reserved for issuance
and available for awards under the 2003 Incentive Plan. No more than 20% of the 
total shares of Common Stock available for issuance under the 2003 Incentive    
Plan may be granted in the form of restricted shares, restricted units or       
performance awards. Shares of Common Stock not actually issued (as a result, for
example, of the lapse of an option) are available for additional grants. Shares 
surrendered to or withheld by the Company in payment or satisfaction of the     
exercise price of a stock option or tax withholding obligations with respect to 
an award may be the subject of a new award under the 2003 Incentive Plan. Shares
of Common Stock to be delivered or purchased under the 2003 Incentive Plan may  
be either authorized but unissued Common Stock or treasury shares. Shares issued
with respect to awards assumed by the Company in connection with acquisitions do
not count against the total number of shares available under the Plan.          

ANTI-DILUTION PROTECTION                                                        

In the event of any changes in the capital structure of the Company,  
including a change resulting from a stock dividend or stock split, or           
combination or reclassification of shares, the Board of Directors is empowered  
to make such equitable adjustments with respect to awards or any provisions of  
the 2003 Incentive Plan as it deems necessary and appropriate, including, if    
necessary, any adjustments in the maximum number of shares of Common Stock      
subject to the Plan, the number of shares of Common Stock subject to and the    
exercise price of an outstanding award, or the maximum number of shares that may
be subject to one or more awards granted to any one recipient during a calendar 
year.                                                                           

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AMENDMENT AND TERMINATION                                                       

The Board of Directors may at any time amend or terminate the 2003    
Incentive Plan, provided that no such action may be taken that adversely affects
any rights or obligations with respect to any awards theretofore made under the 
Plan without the consent of the recipient. No awards may be made under the 2003 
Incentive Plan after the tenth anniversary of its effective date. Certain       
provisions of the 2003 Incentive Plan relating to performance-based awards under
Section 162(m) of the Code will expire on the fifth anniversary of the effective
date.                                                                           

FEDERAL INCOME TAX CONSEQUENCES                                                 

The federal income tax consequences of the issuance and/or exercise of
awards under the 2003 Incentive Plan are as described below. The following      
information is only a summary of the tax consequences of the awards, and        
recipients should consult with their own tax advisors with respect to the tax   
consequences inherent in the ownership and/or exercise of the awards, and the   
ownership and disposition of any underlying securities.                         

     Incentive Stock Options.  The 2003 Incentive Plan qualifies as an incentive
stock option plan within the meaning of Section 422 of the Code. A recipient who
is granted an ISO will not recognize any taxable income for federal income tax  
purposes either on the grant or exercise of the ISO. If the recipient disposes  
of the shares purchased pursuant to the ISO more than two years after the date  
of grant and more than one year after the transfer of the shares to the         
recipient (the required statutory "holding period"), (a) the recipient will     
recognize long-term capital gain or loss, as the case may be, equal to the      
difference between the selling price and the option price; and (b) the Company  
will not be entitled to a deduction with respect to the shares of stock so      
issued. If the holding period requirements are not met, any gain realized upon  
disposition will be taxed as ordinary income to the extent of the excess of the 
lesser of (i) the excess of the fair market value of the shares at the time of  
exercise over the option price, and (ii) the gain on the sale. The Company will 
be entitled to a deduction in the year of disposition in an amount equal to the 
ordinary income recognized by the recipient. Any additional gain will be taxed  
as short-term or long-term capital gain depending upon the holding period for   
the stock. A sale for less than the option price results in a capital loss.     

   The excess of the fair market value of the shares on the date of exercise
over the option price is, however, includable in the option holder's income for 
alternative minimum tax purposes.                                               

   Nonqualified Stock Options.  The recipient of a nonqualified stock option
under the 2003 Incentive Plan will not recognize any income for federal income  
tax purposes on the grant of the option. Generally, on the exercise of the      
option, the recipient will recognize taxable ordinary income equal to the excess
of the fair market value of the shares on the exercise date over the option     
price for the shares. The Company generally will be entitled to a deduction on  
the date of exercise in an amount equal to the ordinary income recognized by the
recipient. Upon disposition of the shares purchased pursuant to the stock       
option, the recipient will recognize long-term or short-term capital gain or    
loss, as the case may be, equal to the difference between the amount realized on
such disposition and the basis for such shares, which basis includes the amount 
previously recognized by the recipient as ordinary income.                      

   Stock Appreciation Rights.  A recipient who is granted stock appreciation
rights will not recognize any taxable income on the receipt of the SARs. Upon   
the exercise of a SAR, (a) the recipient will recognize ordinary income equal to
the amount received (the increase in the fair market value of one share of the  
Company's Common Stock from the date of grant of the SAR to the date of         
exercise); and (b) the Company will be entitled to a deduction on the date of   
exercise in an amount equal to the ordinary income recognized by the recipient. 

   Restricted Shares.  A recipient will not be taxed at the date of an award
of restricted shares, but will be taxed at ordinary income rates on the fair    
market value of any restricted shares as of the date that the restrictions      
lapse, unless the recipient, within 30 days after transfer of such restricted   
shares to the recipient, elects under Section 83(b) of the Code to include in   
income the fair market value of the restricted shares as of the date of such    
transfer. The Company will be entitled to a corresponding deduction. Any        
disposition of shares after restrictions lapse will be subject to the regular   
rules governing long-term and short-term capital gains and losses, with the     
basis for this purpose equal to the fair market value of the shares at the end  
of the restricted period (or on the date of the transfer of the restricted      
shares, if the employee elects to be taxed on the fair market value upon such   

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transfer). Dividends received by a recipient during the restricted period will  
be taxable to the recipient at ordinary income tax rates and will be deductible 
by the Company unless the recipient has elected to be taxed on the fair market  
value of the restricted shares upon transfer, in which case they will thereafter
be taxable to the employee as dividends and will not be deductible by the       
Company.                                                                        

     Restricted Units.  A participant will normally not recognize taxable income
upon an award of restricted units, and the Company will not be entitled to a    
deduction until the lapse of the applicable restrictions. Upon the lapse of the 
restrictions and the issuance of the earned shares, the participant will        
recognize ordinary taxable income in an amount equal to the fair market value of
the Common Stock received and the Company will be entitled to a deduction in the
same amount.                                                                    

 Performance Awards and Short-Term Cash Awards.  Normally, a participant
will not recognize taxable income upon the grant of performance awards and      
short-term cash awards. Subsequently, when the conditions and requirements for  
the grants have been satisfied and the payment determined, any cash received and
the fair market value of any Common Stock received will constitute ordinary     
income to the participant. The Company also will then be entitled to a deduction
in the same amount.                                                             

EFFECTIVE DATE                                                                  

   The 2003 Incentive Plan shall be effective immediately on the date of its
approval by the shareholders of the Company. If not approved by the             
shareholders, no awards will be made under the 2003 Incentive Plan. If and when 
the 2003 Incentive Plan becomes effective, the Company's 1996 Incentive Plan    
will be frozen such that no further awards will be made under the 1996 Incentive
Plan, and any shares of Common Stock then remaining available for grant under   
the 1996 Incentive Plan will be canceled. However, shares of Common Stock       
subject to outstanding awards granted under the 1996 Incentive Plan prior to the
effective date of the 2003 Incentive Plan will remain available for issuance    
under the 1996 Incentive Plan, and the 1996 Incentive Plan will remain in effect
after the effective date of the 2003 Incentive Plan to the extent necessary to  
administer such previously granted awards.                                      

VOTE REQUIRED                                                                   

  Approval of the 2003 Incentive Plan will require the affirmative vote of
the holders of a majority of the shares of Common Stock voting thereon at the   
Annual Meeting. If the shareholders do not approve the 2003 Incentive Plan, it  
will not be implemented, but the Company reserves the right to adopt such other 
compensation plans and programs as it deems appropriate and in the best         
interests of the Company and its shareholders.                                  

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. 

PROPOSAL FOUR: RATIFY THE SELECTION BY THE AUDIT COMMITTEE OF THE BOARD OF      
               DIRECTORS OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC AUDITORS FOR
THE CURRENT FISCAL YEAR                           

   The Audit Committee of the Board of Directors has appointed Ernst & Young
LLP as independent public auditors of the Company for fiscal 2004. Although     
ratification of this reappointment is not legally required, the Board believes  
it is appropriate for the shareholders to ratify such action. In the event that 
the shareholders do not ratify the selection of Ernst & Young LLP as the        
Company's independent public auditors, the Audit Committee will reconsider such 
appointment. A representative of Ernst & Young LLP will attend the Annual       
Meeting, will have the opportunity to make a statement if he or she desires to  
do so, and will be available to respond to appropriate questions. The Audit     
Committee reserves the right to replace the Company's independent public        
auditors at any time.                                                           

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. 

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EXECUTIVE OFFICERS OF THE COMPANY                                               

     Set forth below is information concerning the Company's executive officers.
Additional information with respect to Messrs. Knutson and McKernan is set forth
above on page 3.                                                                

                                                        [Enlarge/Download Table]

NAME                                     AGE                        POSITION                      
----                                     ---                        --------                      
                                                                                                  
Robert B. Knutson....................... 69   Chairman and Director                               
John R. McKernan, Jr.................... 55   Vice Chairman, Chief Executive Officer, and Director
J. William Brooks....................... 44   President and Chief Operating Officer               
Michael C. Markovitz.................... 53   Chairman, Argosy Education Group, Inc. and Argosy   
                                              University; Senior Vice President -- International  
                                              Initiatives                                         
Robert T. McDowell...................... 49   Executive Vice President and Chief Financial Officer
David J. Pauldine....................... 46   Executive Vice President and Chief Marketing Officer

J. William Brooks became an Executive Vice President of the Company on
September 2, 2003, when the Company completed its acquisition of American       
Education Centers and its affiliated schools. He was appointed President and    
Chief Operating Officer of the Company on September 11, 2003. He has served as  
President and Chief Executive Officer of American Education Centers and its     
related companies since January 1998. He is a graduate of Phillips University   
(B.S. Business Administration, 1995).                                           

     Michael C. Markovitz is Chairman of Argosy Education Group, Inc. ("AEG"), a
wholly-owned subsidiary of the Company. He has served in this capacity since his
founding of AEG in 1976. When the Company acquired AEG in December 2001, he     
became Chairman of Argosy University, which is operated by AEG. In May 2003, he 
was appointed Senior Vice President -- International Initiatives. He is a       
graduate of the City College of the City University of New York (B.S.           
Psychology, 1971) and The University of Chicago (M.A. Psychology, 1973; Ph.D.   
Psychology, 1975).                                                              

    Robert T. McDowell is Executive Vice President and Chief Financial Officer
of the Company. From 1994 to September 1999, he was Senior Vice President and   
Chief Financial Officer of the Company. He is a graduate of the University of   
Pittsburgh (M.B.A., 1978; B.A. Economics, 1977). Mr. McDowell joined the Company
in 1988.                                                                        

     David J. Pauldine has been an Executive Vice President of the Company since
March 2003 and was named Chief Marketing Officer on September 11, 2003. He is a 
graduate of The University of Dayton (B.A. Marketing, 1979) and Antioch         
University (M.A. Leadership, 1997). From 1990 to 1993 Mr. Pauldine was the      
president of The Art Institute of Seattle, from 1994 to 1998 he was the         
president of The Art Institute of Fort Lauderdale, from 1998 to March 1999 he   
was Senior Vice President, Marketing of the Company, from March 1999 to November
2000 he was Executive Vice President of the Company, and from November 2000     
until March 2003 he was President of The Art Institutes.                        

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                         

Section 16(a) of the Exchange Act, as amended, requires the Company's 
directors and executive officers and persons who own more than 10% of the       
outstanding Common Stock to file reports of ownership and changes in ownership  
with the SEC.                                                                   

   Based on a review of the forms it has received, the Company believes that
during the fiscal year ended June 30, 2003 all Section 16(a) filing requirements
were complied with by such persons, except for one report that was filed late by
Ms. Knutson.                                                                    

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CERTAIN TRANSACTIONS                                                            

  Mr. Knutson is a limited partner, with no managerial authority, in Ocean
World Associates Ltd. The Art Institute of Fort Lauderdale leases one of its    
buildings from Ocean World Associates Ltd. for approximately $1.7 million       
annually.                                                                       

 Mr. Knutson and Mr. Greenstone are limited partners, with no managerial
authority, in AIPH Limited Partnership, which is a general partner of The Art   
Institute of Philadelphia Limited Partnership. The Art Institute of Philadelphia
leases one of its buildings from The Art Institute of Philadelphia Limited      
Partnership for approximately $720,000 annually.                                

COMPENSATION OF EXECUTIVE OFFICERS                                              

 The Summary Compensation Table shows, for the fiscal years 2001 through
2003, the compensation paid or awarded to Mr. Knutson, the Company's Chairman   
and Chief Executive Officer during that period, to the Company's next four most 
highly compensated executive officers during fiscal 2003, and to one former     
executive officer.                                                              

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                            LONG-TERM                      
                                                                           COMPENSATION                    
                                            ANNUAL COMPENSATION            ------------                    
                                   --------------------------------------   SECURITIES                     
                                                           OTHER ANNUAL     UNDERLYING       ALL OTHER     
NAME AND PRINCIPAL POSITION  YEAR  SALARY($)   BONUS($)   COMPENSATION($)   OPTIONS(#)   COMPENSATION($)(1)
---------------------------  ----  ---------   --------   ---------------  ------------  ------------------
                                                                                                           
Robert B. Knutson........... 2003   500,664    735,080          --                 0           12,810      
  Chairman(2)                2002   469,113    644,000          --            70,000            8,788      
                             2001   415,161    525,000          --                 0           61,515      
John R. McKernan, Jr. ...... 2003   279,888    308,000          --                 0           11,246      
  Vice Chairman and          2002   248,567    263,000          --            45,000            5,414      
  Chief Executive Officer    2001   226,783    225,000          --                 0              411      
David J. Pauldine........... 2003   265,595    221,333          --                 0            6,075      
  Executive Vice President   2002   228,242    186,000          --            35,000            5,571      
  and Chief Marketing                                                                                      
     Officer                 2001   206,167    175,000          --                 0           29,740      
Robert T. McDowell.......... 2003   243,591    200,254          --                 0            9,381      
  Executive Vice President   2002   224,936    183,000          --            35,000            8,343      
  and Chief Financial                                                                                      
     Officer                 2001   212,183    170,000          --                 0           32,764      
Michael C. Markovitz........ 2003   231,358    165,715          --                 0            9,721      
  Chairman, Argosy           2002   112,500     88,747          --            30,000            4,846      
  Education Group                                                                                          
Robert P. Gioella(3)........ 2003   237,757    547,750          --                 0            8,651      
                             2002   297,421    296,652          --            45,000               --      
                             2001   270,177    250,000          --                --           23,509      

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

(1) Such amounts represent, to the extent applicable, the Company's             
    contributions to the Company's profit-sharing retirement plan and the dollar
 value of life insurance premiums paid by the Company with respect to term
    life insurance for the benefit of certain executive officers of the Company.
For fiscal 2003, the amounts paid are as follows:                       

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                                                                [Download Table]

                                                                         GROUP LIFE
                                                             RETIREMENT  INSURANCE 
                                                                PLAN      PREMIUMS 
                                                             ----------  ----------
                                                                                   
Robert B. Knutson...........................................  $ 9,000      $3,810  
John R. McKernan, Jr........................................   10,256         990  
David J. Pauldine...........................................    5,625         450  
Robert T. McDowell..........................................    8,931         450  
Michael C. Markovitz........................................    9,031         690  
Robert P. Gioella...........................................    8,325           0  

(2) Mr. Knutson also served as Chief Executive Officer through August 31, 2003. 

(3) Mr. Gioella served as President and Chief Operating Officer of the Company  
through March 31, 2003.                                                 

OPTION/SAR GRANTS IN FISCAL YEAR 2003                                           

     No options or stock appreciation rights were granted to any person named in
the Summary Compensation Table during fiscal 2003. For information on grants    
made subsequent to June 30, 2003, see note (3) to the table in the section      
entitled "Equity Compensation Plan Information" below.                          

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2003 
AND JUNE 30, 2003 OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                         NUMBER OF                              NUMBER OF    
                                                         SECURITIES          VALUE OF           SECURITIES   
                                                         UNDERLYING        UNEXERCISED,         UNDERLYING   
                                                       UNEXERCISED &        EXERCISABLE       UNEXERCISED &  
                             SHARES                     EXERCISABLE        IN-THE-MONEY       UNEXERCISABLE  
                           ACQUIRED ON      VALUE        OPTIONS AT         OPTIONS AT          OPTIONS AT   
NAME                       EXERCISE(#)   REALIZED($)  JUNE 30, 2003(#)  JUNE 30, 2003($)(1)  JUNE 30, 2003(#)
----                       -----------   -----------  ----------------  -------------------  ----------------
                                                                                                             
Robert B. Knutson.........   39,586      $1,135,920        17,500           $  501,200            71,250     
John R. McKernan, Jr......       --      $       --        95,250           $3,351,310            47,750     
David J. Pauldine.........   20,000      $  582,000        91,619           $3,673,647            39,250     
Robert T. McDowell........   27,388      $  858,396       101,034           $4,181,979            39,250     
Michael C. Markovitz......    7,500      $  179,700             0                   --            22,500     
Robert P. Gioella.........  130,592      $3,474,314             0                   --            50,000     



                                VALUE OF                                                                     
                              UNEXERCISED,                                                                   
                              UNEXERCISABLE                                                                  
                              IN-THE-MONEY                                                                   
                               OPTIONS AT                                                                    
NAME                       JUNE 30, 2003($)(1)                                                               
----                       -------------------                                                               
                                                                                                             
Robert B. Knutson.........     $2,302,320                                                                    
John R. McKernan, Jr......     $1,577,910                                                                    
David J. Pauldine.........     $1,319,445                                                                    
Robert T. McDowell........     $1,319,445                                                                    
Michael C. Markovitz......     $  366,525                                                                    
Robert P. Gioella.........     $1,676,156                                                                    

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

(1) Based on the closing price of the Common Stock on June 30, 2003 of $53.04   
per share.                                                              

EQUITY COMPENSATION PLAN INFORMATION                                            

The following table provides information as of June 30, 2003 about the
Company's Common Stock that may be issued upon the exercise of options, warrants
and rights under all of the Company's existing equity compensation plans:       

                                                        [Enlarge/Download Table]

                                                                                                  (C)         
                                                                                         NUMBER OF SECURITIES 
                                                     (A)                                  REMAINING AVAILABLE 
                                             NUMBER OF SECURITIES                         FOR FUTURE ISSUANCE 
                                              TO BE ISSUED UPON            (B)               UNDER EQUITY     
                                                 EXERCISE OF         WEIGHTED-AVERAGE     COMPENSATION PLANS  
                                                 OUTSTANDING        EXERCISE PRICE OF    (EXCLUDING SECURITIES
                                                   OPTIONS,        OUTSTANDING OPTIONS,      REFLECTED IN     
               PLAN CATEGORY                 WARRANTS AND RIGHTS   WARRANTS AND RIGHTS        COLUMN(A))      
               -------------                 --------------------  --------------------  ---------------------
                                                                                                              
Equity compensation plans approved by                                                                         
  security holders(1).......................      2,816,327(3)            $23.67               1,908,275(4)   
Equity compensation plans not approved by                                                                     
  security holders(2).......................              0                  N/A                     N/A      
                                                  ---------               ------               ---------      
Total.......................................      2,816,327(3)            $23.67               1,908,275(4)   
                                                  =========               ======               =========      

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

(1) These plans consist of: (i) the 1990 Management Incentive Stock Option Plan,
 (ii) the 1993 Management Incentive Stock Option Plan, (iii) the ESPP, and
(iv) the 1996 Incentive Plan. This table does not include any securities
 that may be reserved for issuance under the proposed 2003 Incentive Plan.

(2) The Company maintains no equity compensation plan (as defined in Item 201 of
 Regulation S-K) that has not been approved by the Company's shareholders.

(3) Subsequent to June 30, 2003, an option to acquire 50,000 shares was granted 
to Mr. Knutson, an option to acquire 100,000 shares was granted to Mr.  
    McKernan, an option to acquire 117,383 shares was granted to Mr. Brooks, and
  50,000 shares of restricted stock were issued to Mr. Brooks. Subsequent to
June 30, 2003, options to acquire 39,500 shares were granted to other   
   employees of the Company, options to acquire 216,715 shares were exercised,
 and options to acquire 37,750 shares were forfeited. As a result of these
transactions, the number in Column (A) would have been 2,868,745 at     
September 30, 2003 and the weighted-average exercise price in Column (B)
would have been $27.34 at September 30, 2003.                           

(4) Of this number, 1,246,386 were shares reserved for issuance under the ESPP  
    and 661,889 were shares reserved for issuance under the 1996 Incentive Plan.
 As a result of the post-June 30, 2003 transactions described in Note 3 to
   this table, the number in Column (C) would have been 1,576,394 at September
  30, 2003, of which 1,236,749 were reserved for issuance under the ESPP and
339,645 were reserved for issuance under the 1996 Incentive Plan.       

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPANTS                      

   The Company's Compensation Committee reviews and acts on matters relating
to compensation levels and benefit plans for key executives of the Company. The 
Compensation Committee during fiscal 2003 consisted of Messrs. Burke, Campbell, 
Garcia (for a portion of the year), Greenstone and Pasman (for a portion of the 
year), none of whom is employed by the Company. Mr. Greenstone was the president
and chief executive officer of The National Center for Paralegal Training, a    
unit of the Company, from 1972 to 1994. In addition, Mr. Greenstone is a limited
partner, with no managerial authority, in AIPH Limited Partnership, which is a  
general partner of The Art Institute of Philadelphia Limited Partnership. The   
Art Institute of Philadelphia leases one of its buildings from this partnership 
for approximately $700,000 annually.                                            

EMPLOYMENT AGREEMENTS                                                           

    The Company and Mr. Knutson entered into an employment agreement, dated as
of August 5, 2003 (the "Knutson Agreement"). The Knutson Agreement amends and   
restates Mr. Knutson's existing employment agreement, which was entered into in 
September 1999. The Knutson Agreement is for a five-year term ending in August  
2008. Under the terms of the Knutson Agreement, Mr. Knutson served as Chairman  
and Chief Executive Officer of the Company until September 1, 2003, at which    
time he stepped down as Chief Executive Officer, but will remain as Chairman.   
Mr. Knutson will devote at least one-half of his available time to his duties as
Chairman of the Company and any other positions or responsibilities assigned by 
the Board and may devote his remaining time to other interests which, in the    
reasonable opinion of the Board, do not compete with the Company or represent a 
conflict of interest. He receives a base salary at an annual rate of $500,000,  
subject to annual cost of living increases and discretionary increases by the   
Board, plus incentive compensation and other employee benefits under the various
benefit plans and programs maintained by the Company. In addition, he is        
entitled to reimbursement for the business use of his private plane in          
accordance with policies established by the Board. Further, upon Mr. Knutson's  
retirement at end of the employment term or in the event that he ceases to be   
Chairman for any reason prior to the end of the term (other than as a result of 
death, resignation other than for good reason (as defined), or termination for  
cause (as defined)), Mr. Knutson's estate will receive, on his death occurring  
after he is no longer Chairman, the death benefit payable under the key man life
insurance policy maintained by the Company on Mr. Knutson. However, the death   
benefit payable will be reduced by the cash surrender value under the policy at 
the time of Mr. Knutson's death. This payment is subject to the Company's good  
faith determination that it will not result in any significant compensation     
expense or other accounting charge or any violation or risk of violation of any 
applicable law.                                                                 

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   The Company may terminate the Knutson Agreement with or without cause and
Mr. Knutson may resign upon 30 days' advance written notice to the Company. If  
Mr. Knutson is discharged from his employment by the Company without cause or if
he resigns with good reason (each referred to as an "eligible termination"), and
the termination is not in anticipation of or two years following a change in    
control of the Company (as defined), he will continue to receive payment of his 
base salary and average incentive compensation through the later of the end of  
the employment term (i.e., fifth anniversary of the effective date) and eighteen
months following the date of termination. During this severance period, Mr.     
Knutson will be eligible to receive certain other fringe benefits, such as      
health and life insurance. In addition, the Company will provide outplacement   
services to Mr. Knutson (or, at Mr. Knutson's election, payment of the value of 
such services) and all of Mr. Knutson's outstanding stock awards will become    
vested and exercisable (in the case of stock options) immediately upon the      
termination.                                                                    

Following Mr. Knutson's ceasing to be Chairman of the Company for any 
reason other than death, termination by the Company for cause or termination by 
Mr. Knutson other than for good reason, Mr. Knutson also will be entitled to the
following lifetime benefits: (i) office space and secretarial assistance in     
Pittsburgh, (ii) payment of certain club membership fees and dues, (iii)        
maintenance of health insurance for Mr. Knutson and his dependents, and (iv)    
gross-up for tax liabilities associated with the benefits payable under (i) and 
(ii).                                                                           

 The Company and Mr. McKernan have entered into an employment agreement,
dated as of August 5, 2003 (the "McKernan Agreement"). The McKernan Agreement   
amends and restates Mr. McKernan's employment agreement entered into in June    
1999. The McKernan Agreement is for an initial five-year term ending in August  
2008 and is subject at the end of that initial term to successive, automatic    
one-year extensions unless either party gives written notice of non-extension to
the other party at least 180 days prior to any renewal date. Under the terms of 
the McKernan Agreement, Mr. McKernan continues to serve as Vice Chairman and,   
effective September 1, 2003, also serves as Chief Executive Officer of the      
Company. He is to receive a base salary at an annual rate of $400,000, subject  
to annual cost of living increases and discretionary increases by the Board,    
plus incentive compensation and other employee benefits under the various       
benefit plans and programs maintained by the Company.                           

    The Company may terminate the McKernan Agreement with or without cause and
Mr. McKernan may resign upon 30 days' advance written notice to the Company.    
Upon an eligible termination that is not in anticipation of or two years        
following a change in control of the Company, Mr. McKernan will continue to     
receive payment of his base salary and average incentive compensation for a     
period of eighteen months following the date of termination. During this        
severance period, Mr. McKernan will be eligible to receive certain other fringe 
benefits, such as health and life insurance. In addition, the Company will      
provide outplacement services to Mr. McKernan (or, at Mr. McKernan's election,  
payment of the value of such services) and all of Mr. McKernan's outstanding    
stock awards will become vested and exercisable (in the case of stock options)  
immediately upon the termination.                                               

    Under both the Knutson and McKernan Agreements, if an eligible termination
occurs in anticipation of or within a two-year period following a change in     
control of the Company, the officer will instead receive an amount equal to 2.99
times his annual base salary and average incentive compensation, which will be  
payable in a lump sum within 30 days of the date of termination, as well as     
certain other fringe benefits for a period of three years following the date of 
termination and immediate vesting and accelerated distribution of certain       
supplemental retirement benefits.                                               

  In addition, the Knutson and McKernan Agreements will terminate prior to
their scheduled expiration date in the event of death or disability. In the     
event of the officer's death during the employment term, the Company will       
continue to pay an amount equal to his monthly base salary and his average      
incentive compensation to his designated beneficiary or, if no designation is   
made, to his estate for a period of six months. Upon a termination of the       
officer's employment due to his disability, the Company will continue to pay his
compensation and maintain his fringe benefits through the earlier of his death  
or the end of the employment term, with any payments of base salary reduced by  
payments received by the officer under any long-term disability plan or         
arrangement maintained by the Company, subject to a maximum annual obligation   
equal to two-thirds of the officer's base salary in effect at the time the      
disability occurs. Both the Knutson and McKernan Agreements contain             
non-competition, non-solicitation and confidentiality covenants on the part of  
each officer. In                                                                

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Mr. Knutson's case, the non-solicitation and non-competition provisions continue
through the later of the end of the term of employment (i.e., the fifth         
anniversary of the effective date) or 18 months after termination. In Mr.       
McKernan's case, the non-solicitation and non-competition provisions continue   
for a period of eighteen months following termination of employment. However,   
under both the Knutson and McKernan Agreements, the non-competition covenant    
will cease to be applicable in the event of an eligible termination or a        
termination in anticipation of or within two years after a change in control. In
addition, the Knutson and McKernan Agreements entitle each officer to receive a 
tax gross-up bonus to cover, on an after-tax basis, any change in control excise
taxes payable by him as a result of any payments made under the terms of the    
officer's employment agreement.                                                 

The Company has also entered into employment agreements with its other
executive officers. The agreements for Messrs. McDowell and Pauldine are dated  
as of September 8, 1999. The agreement for Dr. Markovitz is dated July 9, 2001  
and became effective upon the completion of the Company's acquisition of Argosy 
Education Group, Inc. on December 21, 2001. The agreement for Mr. Brooks is     
dated June 12, 2003 and became effective upon the completion of the Company's   
acquisition of American Education Centers, Inc. on September 2, 2003. Those     
agreements are on substantially the same terms as the McKernan Agreement, except
that such agreements provide for (i) an initial three-year term, with successive
automatic one year extensions under terms similar to the McKernan Agreement,    
(ii) each such officer's individual position and current compensation, (iii) 12 
months of severance and continued fringe benefits (rather than 18 months)       
following an eligible termination, (iv) continued vesting of outstanding stock  
awards for a period of 12 months (rather than immediate vesting), (v) payment of
two times the officer's salary and average incentive compensation upon an       
eligible termination in anticipation of or within a two-year period following a 
change in control of the Company, and (vi) continuation of the non-solicitation 
and non-competition provisions for a period of twelve months (rather than 18    
months) following termination of employment.                                    

On March 19, 2003, the Company entered into an agreement (the "Gioella
Agreement") with Robert P. Gioella regarding Mr. Gioella's resignation as an    
officer and director of the Company, which became effective March 31, 2003. The 
Gioella Agreement supersedes and replaces the termination and severance         
provisions of Mr. Gioella's employment agreement with the Company. Under the    
Gioella Agreement, Mr. Gioella will continue receive monthly payments through   
March 2004 equal to the sum of his monthly base salary and average bonus        
compensation, in addition to a lump sum payment of any salary, bonus or other   
compensation that was accrued but unpaid as of March 31, 2003. During this      
payment period, Mr. Gioella will be eligible to receive certain other fringe    
benefits, such as health and life insurance and home office expenses. In lieu of
providing outplacement services, the Company paid Mr. Gioella $9,500 for the    
value of such services. In addition, Mr. Gioella's outstanding Company stock    
awards will continue to vest through March 2004. Mr. Gioella will serve as a    
part-time consultant to the Company through November 2003, but will not receive 
any additional compensation for such services other than as described above. For
more information regarding Mr. Gioella's compensation in the last fiscal year   
and following his resignation from the Company, please see the Summary          
Compensation Table in this Proxy Statement.                                     

DIRECTORS' COMPENSATION                                                         

The Company provides each non-employee director with the following    
compensation: (i) a $12,000 annual retainer and reimbursement for out-of-pocket 
expenses, (ii) a $1,000 fee for each Board meeting attended, (iii) a $500 fee   
for each committee meeting attended that is not held on the same day as a Board 
meeting, (iv) pursuant to the Company's 1996 Incentive Plan, a non-discretionary
grant of an option to purchase 15,000 shares of Common Stock, such grant to be  
made on the date that a non-employee director is first elected to the Board,    
which option vests 50% on the first anniversary and 50% on the second           
anniversary of such grant, and (v) pursuant to the 1996 Incentive Plan, an      
annual non-discretionary grant of an option to purchase 5,000 shares of Common  
Stock, such grant to be made on the date of each annual meeting of the Company's
shareholders while such director remains a director, which option will vest 50% 
on the first anniversary and 50% on the second anniversary of that meeting. The 
exercise price for each such non-employee director stock option will be the fair
market value on the date of grant of the shares subject to the option. All such 
options will have a ten-year term. The 2003 Incentive Plan, for which approval  
is being sought at the 2003 Annual Meeting, contains the same                   

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provisions for the initial and annual non-discretionary grants. Directors who   
are employees of the Company receive no additional compensation for serving on  
the Board.                                                                      

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION                         

COMPENSATION PHILOSOPHY AND PROGRAMS                                            

  The Compensation Committee of the Board (the "Committee") is responsible
for, among other things, reviewing and administering the Company's policies     
governing compensation, employee benefits and incentive plans for its executive 
officers. The members of the Committee are William M. Campbell, III, Chairman,  
James J. Burke, Jr., Martin L. Garcia and Albert Greenstone. The Committee met  
three times during fiscal 2003.                                                 

     The key objectives of the Committee's policies on compensation and benefits
are to enhance the Company's ability to attract and retain highly qualified     
executives, to establish and maintain compensation and benefit programs that are
fair and competitive with those of comparable organizations, and to develop and 
maintain executive compensation programs that link compensation to the          
short-term and long-term performance of the Company and the interests of its    
shareholders.                                                                   

The primary elements in the Company's compensation program for its    
executive officers are an annual base salary, an annual cash bonus and long-term
incentive grants.                                                               

Section 162(m) of the Internal Revenue Code of 1986, as amended (the  
"Code"), restricts the deductibility for federal income tax purposes of the     
compensation paid to the chief executive officer and each of the four other most
highly compensated executive officers of a public company for any fiscal year to
the extent that such compensation exceeds $1,000,000 and does not qualify as    
"performance-based" as defined under the Code. The Committee intends to obtain  
the fullest compensation deduction possible without sacrificing the flexibility 
needed to recognize and reward desired performance. The Committee believes that 
all compensation provided to the Company's executive officers in fiscal 2003 is 
fully deductible.                                                               

BASE SALARIES                                                                   

  The annual base salaries for the Company's executive officers for fiscal
2003 were established by the Committee based, in part, upon information         
available to it concerning the salaries paid to similar officers at the         
comparable, publicly-traded, postsecondary education companies, including those 
companies that were included in the peer group index for purposes of the        
performance graph set forth below. The Committee expects to adjust salaries     
periodically to take into account competitive market conditions, individual and 
corporate performance and changes in job responsibilities.                      

ANNUAL CASH BONUSES                                                             

    The Company provides annual incentives to its executive officers and other
key employees in the form of cash bonuses. The Company has established an       
incentive bonus plan for executive officers and other key employees. The plan   
provides that bonuses are to be paid based on the attainment of corporate and   
individual goals and objectives established at the beginning of each year. These
goals and objectives include earnings and revenue targets, placement rates and  
average starting salaries for graduates of the Company's schools, as well as the
achievement of individual performance objectives. In the event that the 2003    
Incentive Plan is approved by shareholders at the Annual Meeting, cash bonuses  
to executive officers will be administered under the terms of the 2003 Incentive
Plan rather than the current separate bonus plan. However, the applicable goals 
and objectives used to determine each executive's bonus will be essentially the 
same as provided under the current bonus plan.                                  

LONG-TERM INCENTIVES                                                            

    The Committee administers the 1996 Stock Incentive Plan (the "1996 Plan"),
which was adopted by the Company to attract and retain key personnel and        
non-employee directors. Under the 1996 Plan, the Committee is authorized to     
grant officers and key employees of the Company and its subsidiaries            
non-statutory stock options, incentive stock options, stock appreciation rights,
limited stock appreciation rights, performance shares and                       

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restricted stock with respect to up to 6,000,000 shares of Common Stock (subject
to adjustment in certain events in accordance with the 1996 Plan).              

   The Committee's primary objectives when making grants under the 1996 Plan
are to allow key employees to participate in the success of the Company through 
stock ownership, to provide a strong and direct link between employee           
compensation and the interests of shareholders, and to encourage recipients to  
focus on the long-term performance of the Company. The number of shares of      
Common Stock that are the basis of an award to any individual is determined by  
the individual's position in and level of responsibility at the Company, which, 
to a great extent, reflect that individual's ability to influence the Company's 
long-term performance. The grants previously made to and then held by an        
individual may also be taken into account by the Committee when determining the 
size of the award to that individual in the then-current year.                  

     Incentive stock options granted to any holder of more than 10% of the total
combined voting power of all classes of stock of the Company on the date of     
grant must be exercised not later than five years from the date of grant of the 
options. All other options granted under the 1996 Plan must be exercised within 
a period fixed by the Committee, which may not exceed ten years from the date of
any such grant. Additionally, in the case of incentive stock options granted to 
any holder of more than 10% of the total combined voting power of all classes of
stock of the Company on the date of grant, the exercise price may not be less   
than 110% of the market value per share of the Common Stock on the date of      
grant. In all other cases, the exercise price must be not less than the fair    
market value per share on the date of grant as determined pursuant to the       
methods and procedures established by the Committee. The Committee sets the     
exercise price for options granted under the 1996 Plan and is authorized to     
grant stock appreciation rights, which authorize payments of cash and/or stock  
to holders of such rights in an amount based on the appreciation in the value of
the Common Stock from the date of grant to the date of exercise. Limited stock  
appreciation rights are stock appreciation rights that become exercisable only  
upon a change in control (as defined in the 1996 Plan) of the Company.          

  The Committee also may grant performance shares, the number and value of
which are determined by the extent to which the grantee meets performance goals 
and other terms and conditions set by the Committee. In addition, the Committee 
is authorized to grant restricted stock, i.e., shares of Common Stock that are  
subject to restrictions on transferability and other restrictions the Committee 
may impose, including time-based and performance-based forfeiture restrictions. 
Such restricted stock is subject to forfeiture upon termination of employment   
during the restriction period.                                                  

   Options and other awards granted under the 1996 Plan are not transferable
by the grantee other than by will or the laws of descent and distribution,      
except that the Committee may grant non-statutory stock options that are        
transferable to immediate family members or trusts or partnerships for such     
family members. If a change in control (as defined in the 1996 Plan) occurs, all
outstanding options and other awards will become fully exercisable and all      
restrictions on outstanding options and other awards will lapse. The 1996 Plan  
also provides that, in the event of changes in the corporate structure of the   
Company affecting the Common Stock, the Committee will make adjustments in the  
number, class and/or price of the shares of capital stock subject to awards     
granted under the 1996 Plan to preserve the proportionate interests of          
participants in awards and to prevent dilution or enlargement of rights. The    
number of shares available for future awards will also be adjusted.             

   During fiscal 2003, options for a total of 269,783 shares of Common Stock
were granted to officers and other key employees. All such options have an      
exercise price at least equal to the fair market value per share of the Common  
Stock on the date of grant, vest over a period of three years (25% after one    
year, 50% after two years and 100% after three years) and expire ten years from 
the date of grant.                                                              

    If the Company's shareholders approve the 2003 Plan, the Committee intends
to grant long-term incentive awards under the 2003 Plan rather than the 1996    
Plan for fiscal 2004 and thereafter. The terms of the 2003 Plan are             
substantially similar to those of the 1996 Plan and are described in more detail
under Proposal Three of this Proxy Statement.                                   

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COMPENSATION OF CHIEF EXECUTIVE OFFICER                                         

     The Chief Executive Officer's compensation has been and will continue to be
based upon the Company's overall financial performance and his achievement of   
individual performance goals. In establishing that compensation, the Committee  
applied the factors described above, which are applicable to all executive      
officers of the Company. The Committee also took into account information       
concerning the overall compensation and bonuses paid to chief executive officers
of other publicly-traded, postsecondary education companies, including those    
companies that were included in the peer group index for purposes of the        
performance graph set forth below.                                              

     The Committee believes that the Company's compensation and benefit programs
for its executive officers effectively accomplish the objectives stated above.  

COMPENSATION COMMITTEE                                                          

William M. Campbell, III (Chair)                                                
James J. Burke, Jr.                                                             
Martin L. Garcia                                                                
Albert Greenstone                                                               

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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS 

The Board of Directors maintains an Audit Committee comprised of      
non-employee directors. The Board of Directors and the Audit Committee believe  
that the Audit Committee's current member composition satisfies the rule of the 
National Association of Securities Dealers, Inc. listing standards that governs 
audit committee composition, including the requirement that audit committee     
members all be independent directors. The Board of Directors has also determined
that Messrs. Burke and Pasman are "audit committee financial experts" as defined
by the rules of the Securities and Exchange Commission (SEC).                   

   In accordance with its written charter, the Audit Committee has oversight
responsibility regarding the quality and integrity of the accounting, auditing  
and financial reporting practices of the Company. In discharging its oversight  
responsibilities regarding the audit process, the Audit Committee: (1) reviewed 
and discussed the audited financial statements with management; (2) discussed   
with Ernst & Young LLP the material required to be discussed by Statement on    
Auditing Standards ("SAS") No. 61, as amended by SAS 90; and (3) reviewed the   
written disclosures and the letter from Ernst & Young LLP required by the       
Independence Standards Board's Standard No. 1, and discussed with Ernst & Young 
LLP any relationships that may impact their objectivity and independence. Based 
upon the review and discussions referred to above, the Audit Committee          
recommended to the Board of Directors that the audited financial statements be  
included in the Company's Annual Report on Form 10-K for the fiscal year ended  
June 30, 2003 for filing with the SEC.                                          

AUDIT COMMITTEE                                                                 

James J. Burke, Jr. (Chair)                                                     
Martin L. Garcia                                                                
Albert Greenstone                                                               
James S. Pasman, Jr.                                                            

In accordance with the rules of the SEC, the Report of the Audit Committee shall
not be incorporated by reference into any of the Company's future filings made  
under the Exchange Act or the Securities Act of 1933 (the "Securities Act"), and
shall not be deemed to be soliciting material or to be filed with the SEC under 
the Exchange Act or the Securities Act.                                         

RELATIONSHIP WITH INDEPENDENT AUDITORS                                          

  Ernst & Young LLP has been the independent auditing firm and has audited
the financial statements of the Company since 2002. In addition to performing   
the audit of the Company's consolidated financial statements, Ernst & Young LLP 
provided various audit-related, tax and other services during fiscal year 2003. 
The aggregate fees billed for each of the past two fiscal years for each of the 
following categories of services are set forth below:                           

                                                                [Download Table]

                                        FISCAL YEAR 2003   FISCAL YEAR 2002
                                        ----------------   ----------------
                                                                           
Annual audit.........................       $468,220           $315,350    
Audit-related services...............       $ 54,700           $      0*   
Tax services.........................       $263,560           $      0*   
All other fees.......................       $      0           $      0    
                                            --------           --------    
Total fees...........................       $786,480           $315,350    
                                            ========           ========    

The audit fees relate to professional services rendered for the audit of the    
consolidated financial statements of the Company, subsidiary and statutory      
audits. Audit-related services primarily relates to the issuance of consents and
assistance with the review of documents filed with the SEC and with             
acquisitions. Tax services relates to tax planning. The Audit Committee         
considered the effects that the provision of non-audit services may have on the 
auditors' independence. There were no fees billed by Ernst & Young LLP for      
professional services rendered in                                               

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

* Fees for audit-related and tax services for fiscal 2002 were paid to the      
Company's previous independent auditors; see the following section.         
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connection with financial information systems design and implementation services
during the fiscal years ended June 30, 2003 and June 30, 2002.                  

PREVIOUS INDEPENDENT AUDITORS                                                   

On May 9, 2002, the Board of Directors of the Company and its Audit   
Committee engaged Ernst & Young LLP, replacing Arthur Andersen LLP, to serve as 
the Company's independent public auditors for the fiscal year ending June 30,   
2002. This determination followed the Company's decision to seek proposals from 
independent auditors to audit its financial statements, and was approved by the 
Company's Board of Directors upon the recommendation of its Audit Committee.    

    The reports of Arthur Andersen LLP on the Company's consolidated financial
statements for each of the fiscal years ended June 30, 2001 and 2000 did not    
contain an adverse opinion or disclaimer of opinion, and they were not qualified
or modified as to uncertainty, audit scope or accounting principles.            

 During the fiscal years ended June 30, 2001 and 2000 and through May 9,
2002, there were no disagreements with Arthur Andersen LLP on any matter of     
accounting principles or practices, financial statement disclosure, or auditing 
scope or procedure which, if not resolved to the satisfaction of Arthur Andersen
LLP, would have caused them to make reference to the subject matter in          
connection with their report on the Company's consolidated financial statements 
for such years; and there were no reportable events as defined in Item          
304(a)(1)(v) of Regulation S-K.                                                 

The Company provided Arthur Andersen LLP with a copy of the foregoing 
statements, and Arthur Andersen LLP has stated its agreement with these         
statements.                                                                     

   During the fiscal years ended June 30, 2001 and 2000 and through the date
of the Board's decision, the Company did not consult Ernst & Young LLP with     
respect to the application of accounting principles to a specified transaction, 
either completed or proposed, or the type of audit opinion that might be        
rendered on the Company's consolidated financial statements, or any other       
matters or reportable events as set forth in Item 304(a)(2)(i) and (ii) of      
Regulation S-K.                                                                 

During the period from May 9 through June 30, 2003, there were no     
disagreements with Ernst & Young LLP on any matter of accounting principles or  
practices, financial statement disclosure, or auditing scope or procedures      
which, if not resolved to the satisfaction of Ernst & Young LLP, would have     
caused them to make reference to the subject matter in connection with their    
report on the Company's consolidated financial statements for such year. During 
the same periods, there were no reportable events as defined in Item            
304(a)(1)(v) of Regulation S-K.                                                 

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PERFORMANCE GRAPH                                                               

The performance graph set forth below compares the cumulative total   
shareholder return on the Common Stock with the Nasdaq Stock Market (U.S.) Index
and a Peer Group Index for the period from July 1, 1998 through June 30, 2003.  
The graph assumes the investment of $100 at the close of trading on June 30,    
1998 in the Common Stock, the Nasdaq Stock Market (U.S.) Index and the Peer     
Group Index and assumes re-investment of all dividends, if any. The peer group  
consists of the following companies selected on the basis of their similar      
businesses: Apollo Group, Inc., Career Education Corp., Corinthian Colleges,    
Inc., DeVry Inc., ITT Educational Services, Inc., and Strayer Education, Inc.   
The Company believes that, including itself, these companies represent a        
substantial portion of the market value of publicly traded companies whose      
primary business is postsecondary education.                                    

COMPARISON OF CUMULATIVE TOTAL RETURN 
AMONG EDUCATION MANAGEMENT CORPORATION, 
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP INDEX
[PERFORMANCE GRAPH]                                                             

                                                                [Download Table]

       EDUCATION                            
      MANAGEMENT               NASDAQ STOCK 
      CORPORATION  PEER GROUP  MARKET (U.S.)
      -----------  ----------  -------------
                                            
6/98    100.00       100.00       100.00    
6/99    126.24       143.67        88.47    
6/00    109.89       212.43        92.51    
6/01    243.65       115.46       191.39    
6/02    247.79        78.65       229.19    
6/03    322.68        87.33       326.94    

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SHAREHOLDER PROPOSALS FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN 2004     

     Shareholders who intend to submit a proposal for inclusion in the Company's
2004 proxy statement for consideration at the Annual Meeting of Shareholders to 
be held in 2004 must submit such proposal for receipt by the Secretary of the   
Company at the address of its executive offices no later than June 17, 2004. Any
such proposal must comply with Rule 14a-8 of the proxy rules of the Securities  
and Exchange Commission and must contain certain information specified in the   
Restated Bylaws (the "Bylaws") of the Company.                                  

The Bylaws require that all shareholder proposals to be submitted for 
consideration at the 2004 Annual Meeting of Shareholders, but not included in   
the Company's 2004 proxy statement, must be received by the Secretary of the    
Company at the address of its executive offices no earlier than August 23, 2004 
and no later than September 22, 2004, together with certain information         
specified in the Bylaws.                                                        

                                       By order of the Board of Directors,

                              /s/ FREDERICK W. STEINBERG
                          Frederick W. Steinberg
             Secretary
                    October 21, 2003

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                                                                      APPENDIX A

AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF EDUCATION MANAGEMENT CORPORATION 

  FIRST: The name of the Corporation is: EDUCATION MANAGEMENT CORPORATION.

  SECOND: The location and post office address of the registered office of
the Corporation in this Commonwealth is 300 Sixth Avenue, Pittsburgh, PA 15222, 
Allegheny County.                                                               

   THIRD: The Corporation is incorporated under the Business Corporation Law
of 1988.                                                                        

FOURTH: The term for which the Corporation is to exist is perpetual.  

FIFTH:                                                                

A. Authorized Shares                                                  

The aggregate number of shares which the Corporation shall have authority to    
issue is One Hundred Thirty Million (130,000,000) shares, as follows:           

    1. One Hundred Twenty Million (120,000,000) shares of Common Stock, with a
par value of one cent ($.01) per share. Except for and subject to those rights  
as may be expressly granted to the holders of Preferred Stock pursuant to the   
authority vested by these Articles of Incorporation in the Board of Directors of
the Corporation, or except as may be provided by the laws of the Commonwealth of
Pennsylvania, the holders of Common Stock shall have exclusively all rights of  
shareholders.                                                                   

    2. Ten Million (10,000,000) shares of Preferred Stock, with a par value of
one cent ($.01) per share.                                                      

  B. Authority is hereby expressly vested in the Board of Directors of the
Corporation at any time and from time to time by resolution to divide into and  
issue the Preferred Stock in one or more classes or series, or both, and to     
determine for any such class or series its designation and the number of shares 
of the class or series and the voting rights, preferences, limitations and      
special rights, if any, of the shares of the class or series.                   

SIXTH: The directors of the Corporation shall be divided into three   
classes: Class I, Class II and Class III. Each class shall consist, as nearly as
may be possible, of one-third of the whole number of the Board of Directors. The
initial Class I, II and III directors shall be those elected and designated to  
serve as such directors at the meeting of shareholders to held approve the      
Articles of Amendment dated as of October 24, 1996 (the "Shareholders Meeting"),
such Class I directors shall hold office for a term to expire at the first      
annual meeting of the shareholders after the Shareholders Meeting; such Class II
directors shall hold office for a term to expire at the second annual meeting of
the shareholders after the Shareholders Meeting; and such Class III directors   
shall hold office for a term to expire at the third annual meeting of the       
shareholders after the Shareholders Meeting, and in the case of each class,     
until their respective successors are duly elected and qualified. At each annual
election the directors elected to succeed those whose terms expire shall be     
identified as being of the same class as the directors they succeed and shall be
elected to hold office for a term to expire at the third annual meeting of the  
shareholders after their election, and until their respective successors are    
duly elected and qualified. If the number of directors is changed, any increase 
or decrease in directors shall be apportioned among the classes so as to        
maintain all classes as equal in number as possible, and any additional director
elected to any class shall hold office for a term which shall coincide with the 
terms of the other directors in such class and until his successor is duly      
elected and qualified. Subject to the rights of holders of any series of        
Preferred Stock then outstanding, in the case of any increase in the number of  
directors of the Corporation the additional director or directors shall be      
elected by the Board of Directors. No decrease in the number of directors of the
Corporation shall shorten the term of any incumbent director. The entire Board  
of Directors, or any class of the Board of Directors, or any individual director
may be removed from office by vote of the shareholders entitled to vote thereon 
only for cause. In case the Board of Directors or a class of the Board of       
Directors or any one or more directors are so removed, new directors may be     
elected at the same meeting. The repeal of a provision of these Articles or the 
Bylaws of the Corporation prohibiting, or the addition of a provision to these  
Articles or the Bylaws of the Corporation permitting, the removal by the        
shareholders of the Board of Directors, a class of the Board of                 
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Directors or a director without assigning any cause shall not apply to any      
incumbent director during the balance of the term for which he was elected.     

  SEVENTH: The shareholders of the Corporation shall not have the right to
cumulate their votes for the election of directors of the Corporation.          

     EIGHTH: Subchapters E, F, G and H of Chapter 25 of the Business Corporation
Law of 1988 shall not be applicable to the Corporation.                         

   NINTH: The Board of Directors is authorized to adopt, amend or repeal any
term or provision of the Bylaws of the Corporation by a vote of a majority of   
its members, subject always to the power of the shareholders to adopt, amend or 
repeal the Bylaws of the Corporation by the affirmative vote of the holders of  
at least two-thirds of the outstanding shares of Common Stock of the            
Corporation.                                                                    

TENTH: In addition to the requirements of (i) law, and (ii) the other 
provisions of these Articles of Incorporation, as amended, the affirmative vote 
of the holders of at least two-thirds of the outstanding shares of Common Stock 
of the Corporation entitled to vote shall be required to delete, amend or       
supplement any term or provision of this Article Ten, Articles Four, Six, Seven,
Eight or Nine, or Subparagraph B of Article Five hereof.                        

ELEVENTH: Immediately effective upon the filing of the Articles of    
Amendment dated as of October 29, 1996 in the Department of State of the        
Commonwealth of Pennsylvania (the "Effective Time"), each share of Class A      
Common Stock, par value $.0001 per share, and of Class B Common Stock, par value
$.0001 per share, outstanding immediately prior to the Effective Time, and each 
share of Class B Common Stock which immediately prior to the Effective Time is  
held by the Corporation as treasury stock, automatically and without any action 
on the part of the holder thereof shall be reclassified as and converted into   
one-half of a share of Common Stock, par value $.01 per share, subject to the   
treatment of fractional share interests as described below. Each holder of a    
certificate or certificates that immediately prior to the Effective Time        
represented outstanding shares of Class A and Class B Common Stock (the "Old    
Certificates") will be entitled to receive, upon surrender of such Old          
Certificates to the Corporation for cancellation, a certificate or certificates 
(the "New Certificate", whether one or more) representing the number of whole   
shares of the Common Stock into which and for which the shares of the Class A   
and Class B Common Stock formerly represented by such Old Certificates so       
surrendered are reclassified under the terms hereof. From and after the         
Effective Time, Old Certificates shall represent only the right to receive New  
Certificates (and, where applicable, cash in lieu of fractional shares, as      
provided below) pursuant to the provisions hereof. No certificates or scrip     
representing fractional share interests in Common Stock will be issued, and no  
such fractional share interest will entitle the holder thereof to vote, or to   
any rights of a shareholder of the Corporation. In lieu of any such fractional  
shares of Common Stock, each shareholder with a fractional share will be        
entitled to receive, upon surrender of Old Certificates to the Corporation for  
cancellation, an amount in cash equal to the fair market value thereof as       
determined in good faith by the Board of Directors to be the fair value of one  
share of Common Stock as of the Effective Time multiplied by such fraction. If  
more than one Old Certificate shall be surrendered at one time for the account  
of the same shareholder, the number of full shares of Common Stock for which New
Certificates shall be issued shall be computed on the basis of the aggregate    
number of shares represented by the Old Certificates so surrendered. In the     
event that the Corporation determines that a holder of Old Certificates has not 
tendered all his certificates for exchange, the Corporation shall carry forward 
any fractional share until all certificates of that holder have been presented  
for exchange such that payment for fractional shares to any one person shall not
exceed the value of four-fifths of one share of Common Stock. The Old           
Certificates surrendered for exchange shall be properly endorsed and otherwise  
in proper form for transfer, and the person or persons requesting such exchange 
shall affix any requisite stock transfer tax stamps to the Old Certificates     
surrendered, or provide funds for their purchase, or establish to the           
satisfaction of the Corporation that such taxes are not payable. From and after 
the Effective Time the amount of capital represented by the shares of the Common
Stock into which and for which the shares of the Old Common Stock are           
reclassified under the terms hereof shall be an amount equal to the product of  
the number of issued and outstanding shares of Common Stock and the One Cent    
($.01) par value of each such share.                                            

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                                                                      APPENDIX B

EDUCATION MANAGEMENT CORPORATION

2003 INCENTIVE PLAN 

ARTICLE I 

PURPOSE AND ADOPTION OF THE PLAN

 1.01  PURPOSE. The purpose of the Education Management Corporation 2003
Incentive Plan (hereinafter referred to as the "Plan") is to assist in          
attracting and retaining highly competent employees, consultants and directors  
and to act as an incentive in motivating selected officers and other key        
employees and directors of Education Management Corporation and its Subsidiaries
to achieve long-term corporate objectives.                                      

     1.02  ADOPTION AND TERM. The Plan was approved by the Board of Directors of
the Company on September 11, 2003 and shall become effective if approved by the 
shareholders of the Company at the 2003 annual meeting of shareholders (the     
"Effective Date"). The Plan shall automatically expire on the tenth anniversary 
of the Effective Date unless terminated earlier by action of the Board;         
provided, however, the provisions of Articles VII, VIII and IX with respect to  
performance-based awards to "covered employees" under Section 162(m) of the     
Code) shall expire as of the fifth anniversary of the Effective Date.           

ARTICLE II

DEFINITIONS 

  For the purpose of this Plan, capitalized terms shall have the following
meanings:                                                                       

     2.01  AWARD means (a) any grant to a Participant of one or a combination of
Non-Qualified Stock Options or Incentive Stock Options described in Article VI, 
Stock Appreciation Rights described in Article VI, Restricted Shares and        
Restricted Units described in Article VII, Performance Awards described in      
Article VIII and short-term cash incentive Awards described in Article IX and   
(b) any grant to a Non-Employee Director of a Non-Employee Director Award       
described in Article X.                                                         

   2.02  AWARD AGREEMENT means a written agreement between the Company and a
Participant or a written acknowledgment from the Company to a Participant       
specifically setting forth the terms and conditions of an Award granted under   
the Plan.                                                                       

    2.03  AWARD PERIOD means, with respect to an Award, the period of time set
forth in the Award Agreement during which specified target performance goals    
must be achieved or other conditions set forth in the Award Agreement must be   
satisfied.                                                                      

   2.04  BENEFICIARY means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company or by operation of
law, succeeds to the rights and obligations of the Participant under the Plan   
and the Award Agreement upon the Participant's death.                           

2.05  BOARD means the Board of Directors of the Company.              

  2.06  CHANGE IN CONTROL means, and shall be deemed to have occurred upon
the occurrence of, any one of the following events:                             

      (a) The acquisition in one or more transactions by any individual,
  entity (including any employee benefit plan or any trust for an employee
    benefit plan) or group (within the meaning of Section 13(d)(3) or 14(d)(2)
     of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3   
promulgated under the Exchange Act) of shares or other securities (as 
   defined in Section 3(a)(10) of the Exchange Act) representing 50% or more
of either (A) the shares of common stock of the Company (the "Company 
  Common Stock") or (B) the combined voting power of the securities of the
Company entitled to vote generally in the election of directors (the  
  "Company Voting Securities"), in each case calculated on a fully-diluted
basis in accordance with generally                                    
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accepted accounting principles after giving effect to the acquisition;
     provided, however, that none of the following acquisitions shall constitute
   a Change in Control as defined in this clause (i): (x) any acquisition by
   any shareholder of the Company immediately prior to the Effective Date (a
"Current Shareholder") or any Permitted Transferee (as defined in the 
     Stockholders Agreement among the Company and certain of its shareholders as
in effect immediately prior to the Effective Date (the "Stockholders  
    Agreement")) or any group that consists solely of Current Shareholders and
   Permitted Transferees (a "Permitted Group") or (y) any acquisition by the
  Company so long as such acquisition does not result in any Person (other
than any Current Shareholder, Permitted Transferee or Permitted Group)
     beneficially owning shares or securities representing 50% or more of either
the Company Common Stock or Company Voting Securities; or             

     (b) Any election has occurred of persons to the Board that causes
  two-thirds of the Board to consist of persons other than (i) persons who
   were members of the Board on the Effective Date and (ii) persons who were
   nominated for elections as members of the Board at a time when two-thirds
of the Board consisted of persons who were members of the Board on the
   Effective Date; provided, however, that any person nominated for election
 by a Board at least two-thirds of whom constituted persons described in
     clauses (i) and/or (ii) or by persons who were themselves nominated by such
    Board shall, for this purpose, be deemed to have been nominated by a Board
composed of persons described in clause (i);                          

       (c) The shareholder rights plan of the Company is triggered and the
     Board fails to redeem the rights within the time provided for in the rights
agreement;                                                            

        (d) Approval by the shareholders of the Company of a reorganization,
merger, consolidation or similar transaction (a "Reorganization       
Transaction"), in each case, unless, immediately following such       
     Reorganization Transaction, more than 50% of, respectively, the outstanding
   shares of common stock (or similar equity security) of the corporation or
  other entity resulting from or surviving such Reorganization Transaction
and the combined voting power of the securities of such corporation or
  other entity entitled to vote generally in the election of directors, in
    each case calculated on a fully-diluted basis in accordance with generally
   accepted accounting principles after giving effect to such Reorganization
 Transaction, is then beneficially owned, directly or indirectly, by the
Current Shareholders and Permitted Transferees; or                    

     (e) Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other    
     disposition of all or substantially all of the assets of the Company, other
  than to a corporation or other entity, with respect to which immediately
  following such sale or other disposition more than 50% of, respectively,
     the shares of common stock (or similar equity security) of such corporation
 or other entity and the combined voting power of the securities of such
   corporation or other entity entitled to vote generally in the election of
   directors, in each case calculated on a fully-diluted basis in accordance
   with generally accepted accounting principles after giving effect to such
sale or other disposition, is then beneficially owned, directly or    
indirectly, by the Current Shareholders and Permitted Transferees.    

    2.07  CODE means the Internal Revenue Code of 1986, as amended. References
to a section of the Code shall include that section and any comparable section  
or sections of any future legislation that amends, supplements or supersedes    
said section.                                                                   

2.08  COMMITTEE means the Committee defined in Section 3.01.          

2.09  COMPANY means Education Management Corporation, a Pennsylvania  
corporation, and its successors.                                                

  2.10  COMMON STOCK means Common Stock of the Company, par value $.01 per
share.                                                                          

2.11  COMPANY VOTING SECURITIES means the combined voting power of all
outstanding voting securities of the Company entitled to vote generally in the  
election of directors to the Board.                                             

    2.12  DATE OF GRANT means the date designated by the Committee as the date
as of which it grants an Award, which shall not be earlier than the date on     
which the Committee approves the granting of such Award.                        

   2.13  EFFECTIVE DATE shall have the meaning given to such term in Section
1.02.                                                                           

   2.14  EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
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     2.15  EXERCISE PRICE means, with respect to a Stock Appreciation Right, the
amount established by the Committee in the Award Agreement which is to be       
subtracted from the Fair Market Value on the date of exercise in order to       
determine the amount of the payment to be made to the Participant, as further   
described in Section 6.02(b).                                                   

     2.16  FAIR MARKET VALUE means, as of any applicable date: (i) if the Common
Stock is listed on a national securities exchange or is authorized for quotation
on The Nasdaq Stock Market's national Market ("NNM"), the closing price, regular
way, of the Common Stock on such exchange or NNM, as the case may be, or if no  
such reported sale of the Common Stock shall have occurred on such date, on the 
next preceding date on which there was such a reported sale; or (ii) if the     
Common Stock is not listed for trading on a national securities exchange or     
authorized for quotation on NNM, the closing bid price as reported by The Nasdaq
Stock Market or The Nasdaq SmallCap Market (if applicable), or if no such prices
shall have been so reported for such date, on the next preceding date for which 
such prices were so reported; or (iii) if the Common Stock is not listed for    
trading on a national securities exchange or authorized for quotation on NNM,   
The Nasdaq Stock Market or The Nasdaq SmallCap Market (if applicable), the last 
reported bid price published in the "pink sheets" or displayed on the National  
Association of Securities Dealers, Inc. ("NASD") Electronic Bulletin Board, as  
the case may be; or (iv) if the Common Stock is not listed for trading on a     
national securities exchange, or is not authorized for quotation on NNM, The    
Nasdaq Stock Market or The Nasdaq SmallCap Market, or is not published in the   
"pink sheets" or displayed on the NASD Electronic Bulletin Board, the Fair      
Market Value of the Common Stock as determined in good faith by the Committee.  

 2.17  INCENTIVE STOCK OPTION means a stock option within the meaning of
Section 422 of the Code.                                                        

     2.18  LIMITED STOCK APPRECIATION RIGHT means an Award granted in accordance
with Section 6.06.                                                              

 2.19  MERGER means any merger, reorganization, consolidation, exchange,
transfer of assets or other transaction having similar effect involving the     
Company.                                                                        

  2.20  NON-EMPLOYEE DIRECTOR means each member of the Board who is not an
employee of the Company.                                                        

    2.21  NON-EMPLOYEE DIRECTOR AWARDS means Awards granted in accordance with
Article X.                                                                      

2.22  NON-QUALIFIED STOCK OPTION means a stock option which is not an 
Incentive Stock Option.                                                         

 2.23  OPTIONS means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.                                     

    2.24  ORIGINAL OPTION shall have the meaning given to such term in Section
6.07.                                                                           

2.25  OUTSTANDING COMMON STOCK means, at any time, the issued and     
outstanding shares of Common Stock.                                             

   2.26  PARTICIPANT means a person designated to receive an Award under the
Plan in accordance with Section 5.01 and, solely to the extent provided in      
Article X of the Plan, any Non-Employee Directors of the Company.               

  2.27  PERFORMANCE AWARDS means Awards granted in accordance with Article
VIII.                                                                           

  2.28  PERFORMANCE GOALS means any of the following (in absolute terms or
relative to one or more other companies or indices): economic value added       
(EVA(R)), operating income, return on stockholders' equity, stock price         
appreciation, earnings before interest, taxes, depreciation and amortization,   
cash flow, sales growth, margin improvement, income before taxes (IBT), IBT     
margin, return on investment, return on invested assets, working capital        
performance, earnings per share, growth in earnings per share, expense targets, 
productivity targets or ratios, student placement rates, average starting salary
for graduates and new student enrollment goals for new programs and new         
concentrations.                                                                 

   2.29  PLAN means the Education Management Corporation 2003 Incentive Plan
as described herein, as the same may be amended from time to time.              

   2.30  PURCHASE PRICE, with respect to Options, shall have the meaning set
forth in Section 6.01(b).                                                       

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  2.31  RELOAD OPTION shall have the meaning given to such term in Section
6.07.                                                                           

    2.32  RESTRICTED SHARES means Common Stock subject to restrictions imposed
in connection with Awards granted under Article VII.                            

    2.23  RESTRICTED UNIT means units representing the right to receive Common
Stock in the future subject to restrictions imposed in connection with Awards   
granted under Article VIII.                                                     

   2.34  RETIREMENT means early or normal retirement under a pension plan or
arrangement of the Company or one of its Subsidiaries in which the Participant  
participates.                                                                   

 2.35  STOCK APPRECIATION RIGHTS means Awards granted in accordance with
Section 6.02.                                                                   

   2.36  STOCK UNIT means an Award consisting of the right to receive shares
of Common Stock in the future.                                                  

  2.37  SUBSIDIARY means a subsidiary of the Company within the meaning of
Section 424(f) of the Code.                                                     

2.38  TERMINATION OF EMPLOYMENT means the voluntary or involuntary    
termination of a Participant's employment with the Company or a Subsidiary for  
any reason, including death, disability, retirement or as the result of the     
divestiture of the Participant's employer or any similar transaction in which   
the Participant's employer ceases to be the Company or one of its Subsidiaries. 
Whether entering military or other government service shall constitute          
Termination of Employment, or whether a Termination of Employment shall occur as
a result of disability, shall be determined in each case by the Committee in its
sole discretion.                                                                

ARTICLE III 

ADMINISTRATION

     3.01  COMMITTEE. The Plan shall be administered by a committee of the Board
("Committee") comprised of at least two persons. The Committee shall have       
exclusive and final authority in each determination, interpretation or other    
action affecting the Plan and its Participants. The Committee shall have the    
sole discretionary authority to interpret the Plan, to establish and modify     
administrative rules for the Plan, to impose such conditions and restrictions on
Awards as it determines appropriate, and to take such steps in connection with  
the Plan and Awards granted hereunder as it may deem necessary or advisable. The
Committee may, subject to compliance with applicable legal requirements, with   
respect to Participants who are not subject to Section 16(b) of the Exchange    
Act, delegate such of its powers and authority under the Plan as it deems       
appropriate to designated officers or employees of the Company. In addition, the
Board may exercise any of the authority conferred upon the Committee hereunder. 
In the event of such delegation of authority or exercise of authority by the    
Board, references in the Plan to the Committee shall be deemed to refer to the  
delegate of the Committee or the Board, as the case may be.                     

  3.02  INDEMNIFICATION. Each person who is or shall have been a member of
the Board, or a Committee appointed by the Board, or an officer of the Company  
to whom authority was delegated in accordance with the Plan shall be indemnified
and held harmless by the Company against and from any loss, cost, liability, or 
expense that may be imposed upon or reasonably incurred by him or her in        
connection with or resulting from any claim, action, suit, or proceeding to     
which he or she may be a party or in which he or she may be involved by reason  
of any action taken or failure to act under the Plan and against and from any   
and all amounts paid by him or her in settlement thereof, with the Company's    
approval, or paid by him or her in satisfaction of any judgment in any such     
action, suit, or proceeding against him or her, provided he or she shall give   
the Company an opportunity, at its own expense, to handle and defend the same   
before he or she undertakes to handle and defend it on his or her own behalf;   
provided, however, that the foregoing indemnification shall not apply to any    
loss, cost, liability, or expense that is a result of his or her own willful    
misconduct. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the 
Company's Certificate of Incorporation or Bylaws, conferred in a separate       
agreement with the Company, as a matter of law, or otherwise, or any power that 
the Company may have to indemnify them or hold them harmless.                   

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ARTICLE IV

SHARES

   4.01  NUMBER OF SHARES ISSUABLE. The total number of shares authorized to
be issued under the Plan shall be 2,700,000 shares of Common Stock. The number  
of shares available for issuance under the Plan shall be further subject to     
adjustment in accordance with Section 11.07. Notwithstanding any contrary       
provision of this Plan, no more than 20% of the aggregate shares of Common Stock
authorized for issuance under the Plan shall be granted in the form of          
Restricted Shares, Restricted Units or Performance Awards. The shares to be     
offered under the Plan shall be authorized and unissued Common Stock, or issued 
Common Stock which shall have been reacquired by the Company. Options in respect
of no more than 2,700,00 shares shall be issued as Incentive Stock Options.     
Shares issued pursuant to Section 11.07(c) shall not be counted against the     
number of shares remaining available for issuance under the Plan.               

4.02  SHARES SUBJECT TO TERMINATED AWARDS. Common Stock covered by any
unexercised portions of terminated Options (including canceled Options) granted 
under Article VI, Common Stock forfeited as provided in Section 7.02(a) and     
Common Stock subject to any Awards which are otherwise surrendered by the       
Participant may again be subject to new Awards under the Plan. Shares of Common 
Stock surrendered to or withheld by the Company in payment or satisfaction of   
the Purchase Price of an Option or tax withholding obligation with respect to an
Award shall be available for the grant of new Awards under the Plan. Common     
Stock subject to Options, or portions thereof, which have been surrendered in   
connection with the exercise of Stock Appreciation Rights shall not be available
for subsequent Awards under the Plan, but Common Stock issued in payment of such
Stock Appreciation Rights shall not be charged against the number of shares of  
Common Stock available for the grant of Awards hereunder.                       

ARTICLE V 

PARTICIPATION 

5.01  ELIGIBLE PARTICIPANTS. Participants in the Plan shall be such   
officers and other key employees, consultants and directors of the Company and  
its Subsidiaries as the Committee, in its sole discretion, may designate from   
time to time. The Committee's designation of a Participant in any year shall not
require the Committee to designate such person to receive Awards or grants in   
any other year. The designation of a Participant to receive awards or grants    
under one portion of the Plan does not require the Committee to include such    
Participant under other portions of the Plan. The Committee shall consider such 
factors as it deems pertinent in selecting Participants and in determining the  
type and amount of their respective Awards. Subject to adjustment in accordance 
with Section 11.07, during the term of this Plan, no Participant shall be       
granted Awards in respect of more than 500,000 shares of Common Stock (whether  
through grants of Options or Stock Appreciation Rights or other grants of Common
Stock or rights with respect thereto) and $2,000,000 in cash in any calendar    
year. Non-Employee Directors shall receive Non-Employee Director Awards in      
accordance with Article X of the Plan, the provisions of which are automatic and
non-discretionary in operation. Non-Employee Directors shall not be eligible to 
receive any other Awards under the Plan. Persons who are members of the board of
directors or the board of trustees of a Subsidiary shall be eligible to receive 
grants of Options but shall not be eligible to receive any other Awards under   
the Plan.                                                                       

ARTICLE VI

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS 

6.01  OPTION AWARDS.                                                  

          (a) The Committee may grant, to such Participants as the Committee may
select, Options entitling the Participant to purchase shares of Common
     Stock from the Company in such number, at such price, and on such terms and
   subject to such conditions, not inconsistent with the terms of this Plan,
 as may be established by the Committee. The terms of any Option granted
under this Plan shall be set forth in an Award Agreement.             
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      (b) PURCHASE PRICE OF OPTIONS. The Purchase Price of each share of
 Common Stock which may be purchased upon exercise of any Option granted
 under the Plan shall be determined by the Committee; provided, however,
    that the Purchase Price shall in all cases be equal to or greater than the
    Fair Market Value on the Date of Grant. Except for adjustments pursuant to
     Section 11.07 (relating to the adjustment of shares) or any action approved
    by the shareholders of the Company, the Purchase Price for any outstanding
    Option granted under the Plan may not be decreased after the Date of Grant
   nor may an outstanding Option be otherwise modified or surrendered to the
Company in a manner or under circumstances that would be treated as a 
 "modification that would reduce the exercise price" of such outstanding
Option for financial accounting purposes.                             

         (c) DESIGNATION OF OPTIONS. Except as otherwise expressly provided in
 the Plan, the Committee may designate, at the time of the grant of each
  Option, the Option as an Incentive Stock Option or a Non-Qualified Stock
Option.                                                               

      (d) INCENTIVE STOCK OPTION SHARE LIMITATION. No Participant may be
   granted Incentive Stock Options under the Plan (or any other plans of the
Company and its Subsidiaries) which would result in shares with an    
  aggregate Fair Market Value (measured on the Date of Grant) of more than
$100,000 first becoming exercisable in any one calendar year.         

    (e) RIGHTS AS A SHAREHOLDER. A Participant or a transferee of an
     Option pursuant to Section 11.04 shall have no rights as a shareholder with
respect to Common Stock covered by an Option until the Participant or 
   transferee shall have become the holder of record of any such shares, and
no adjustment shall be made for dividends in cash or other property or
 distributions or other rights with respect to any such Common Stock for
  which the record date is prior to the date on which the Participant or a
     transferee of the Option shall have become the holder of record of any such
shares covered by the Option; provided, however, that Participants are
entitled to share adjustments to reflect capital changes under Section
11.07.                                                                

6.02  STOCK APPRECIATION RIGHTS.                                      

       (a) STOCK APPRECIATION RIGHT AWARDS. The Committee is authorized to
    grant to any Participant one or more Stock Appreciation Rights. Such Stock
    Appreciation Rights may be granted either independent of or in tandem with
    Options granted to the same Participant. Stock Appreciation Rights granted
    in tandem with Options may be granted simultaneously with, or, in the case
of Non-Qualified Stock Options, subsequent to, the grant to such      
    Participant of the related Option; provided, however, that: (i) any Option
     covering any share of Common Stock shall expire and not be exercisable upon
the exercise of any Stock Appreciation Right with respect to the same 
     share, (ii) any Stock Appreciation Right covering any share of Common Stock
     shall expire and not be exercisable upon the exercise of any related Option
    with respect to the same share, and (iii) an Option and Stock Appreciation
Right covering the same share of Common Stock may not be exercised    
     simultaneously. Upon exercise of a Stock Appreciation Right with respect to
  a share of Common Stock, the Participant shall be entitled to receive an
     amount equal to the excess, if any, of (A) the Fair Market Value of a share
     of Common Stock on the date of exercise over (B) the Exercise Price of such
   Stock Appreciation Right established in the Award Agreement, which amount
shall be payable as provided in Section 6.02(c).                      

      (b) EXERCISE PRICE. The Exercise Price established under any Stock
Appreciation Right granted under this Plan shall be determined by the 
   Committee, but in the case of Stock Appreciation Rights granted in tandem
with Options shall not be less than the Purchase Price of the related 
  Option. Upon exercise of Stock Appreciation Rights, the number of shares
     subject to exercise under any related Option shall automatically be reduced
by the number of shares of Common Stock represented by the Option or  
   portion thereof which are surrendered as a result of the exercise of such
Stock Appreciation Rights.                                            

      (c) PAYMENT OF INCREMENTAL VALUE. Any payment which may become due
from the Company by reason of a Participant's exercise of a Stock     
Appreciation Right may be paid to the Participant as determined by the
Committee (i) all in cash, (ii) all in Common Stock, or (iii) in any  
     combination of cash and Common Stock. In the event that all or a portion of
   the payment is made in Common Stock, the number of shares of Common Stock
   delivered in satisfaction of such payment shall be determined by dividing
the amount of                                                         

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  such payment or portion thereof by the Fair Market Value on the Exercise
Date. No fractional share of Common Stock shall be issued to make any 
  payment in respect of Stock Appreciation Rights; if any fractional share
    would be issuable, the combination of cash and Common Stock payable to the
 Participant shall be adjusted as directed by the Committee to avoid the
issuance of any fractional share.                                     

6.03  TERMS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.           

          (a) CONDITIONS ON EXERCISE. An Award Agreement with respect to Options
     and/or Stock Appreciation Rights may contain such waiting periods, exercise
     dates and restrictions on exercise (including, but not limited to, periodic
   installments) as may be determined by the Committee at the time of grant.

      (b) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options and
   Stock Appreciation Rights shall terminate after the first to occur of the
following events:                                                     

     (i) Expiration of the Option or Stock Appreciation Right as
provided in the Award Agreement; or                             

       (ii) Termination of the Award as provided in Section 6.03(e),
following the Participant's Termination of Employment; or       

       (iii) Ten years from the Date of Grant of the Option or Stock
Appreciation Right; or                                          

          (iv) Solely in the case of a Stock Appreciation Right granted in
 tandem with an Option, upon the expiration of the related Option.

 (c) ACCELERATION OF EXERCISE TIME. The Committee, in its sole
    discretion, shall have the right (but shall not in any case be obligated),
    exercisable at any time after the Date of Grant, to permit the exercise of
 any Option or Stock Appreciation Right prior to the time such Option or
     Stock Appreciation Right would otherwise become exercisable under the terms
of the Award Agreement.                                               

 (d) EXTENSION OF EXERCISE TIME. In addition to the extensions
    permitted under Section 6.03(e) in the event of Termination of Employment,
    the Committee, in its sole discretion, shall have the right (but shall not
    in any case be obligated), exercisable on or at any time after the Date of
    Grant, to permit any Option or Stock Appreciation Right granted under this
Plan to be exercised after its expiration date described in Section   
6.03(e), subject, however, to the limitations described in Section    
6.03(b)(i), (iii), and (iv).                                          

         (e) EXERCISE OF OPTIONS OR STOCK APPRECIATION RIGHTS UPON TERMINATION
OF EMPLOYMENT.                                                        

         (i) TERMINATION OF VESTED OPTIONS AND STOCK APPRECIATION RIGHTS
UPON TERMINATION OF EMPLOYMENT.                                 

               (A) TERMINATION. In the event of Termination of Employment of a
          Participant other than by reason of death, disability or Retirement,
  the right of the Participant to exercise the Option or Stock
           Appreciation Right under the Plan shall terminate on the date of such
          Termination of Employment, unless the exercise period is extended by
the Committee in accordance with Section 6.03(d).         

             (B) DISABILITY OR RETIREMENT. In the event of a Participant's
          Termination of Employment by reason of disability or Retirement, the
right of the Participant to exercise the Options or Stock 
       Appreciation Rights which he or she was entitled to exercise upon
       Termination of Employment (or which became exercisable at a later
          date pursuant to Section 6.03(e)(ii)) shall terminate one year after
     the date of such Termination of Employment, unless the exercise
    period is extended by the Committee in accordance with Section
         6.03(d). In no event, however, may any Option or Stock Appreciation
        Right be exercised later than the date of expiration of the Option
determined pursuant to Section 6.03(b)(i), (iii) or (iv). 
          Notwithstanding the foregoing, with respect to any Options and Stock
       Appreciation Rights granted on or after the date of the Company's
          2001 Annual Meeting of Shareholders, in the event of a Participant's
          Termination of Employment by reason of disability or Retirement, the
right of the Participant to exercise the Options or Stock 
       Appreciation Rights which he or she was entitled to exercise upon
       Termination of Employment (or which became exercisable at a later
       date pursuant to Section 6.03(e)(ii)) shall terminate three years

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           after the date of such Termination of Employment, unless the exercise
    period is extended by the Committee in accordance with Section
         6.03(d). In no event, however, may any Option or Stock Appreciation
        Right be exercised later than the date of expiration of the Option
determined pursuant to Section 6.03(b)(i), (iii) or (iv). 

           (C) DEATH. In the event of the death of a Participant while
      employed by the Company or a Subsidiary or within the additional
      period of time from the date of the Participant's Termination of
   Employment and prior to the expiration of the Option or Stock
        Appreciation Right as may be permitted in Section 6.03(e)(i)(B) or
           Section 6.03(d) above, to the extent the right to exercise the Option
or Stock Appreciation Right accrued as of the date of such
         Termination of Employment and did not expire during such additional
   period and prior to the Participant's death, the right of the
Participant's Beneficiary to exercise the Option or Stock 
           Appreciation Right under the Plan shall terminate upon the expiration
           of one year from the date of the Participant's death (but in no event
          more than one year from the date of the Participant's Termination of
   Employment by reason of disability or retirement), unless the
     exercise period is extended by the Committee in accordance with
    Section 6.03(d). In no event, however, may any Option or Stock
          Appreciation Right be exercised later than the date of expiration of
          the Option determined pursuant to Section 6.03(b)(i), (iii) or (iv).
          Notwithstanding the foregoing, with respect to any Options and Stock
       Appreciation Rights granted on or after the date of the Company's
       2001 Annual Meeting of Shareholders, in the event of a death of a
         Participant while employed by the Company or a Subsidiary or within
      the additional period of time form the date of the Participant's
          Termination of Employment and prior to the expiration of the Options
           or Stock Appreciation Rights as permitted in Section 6.03(e)(i)(B) or
    Section 6.03(d) above, to the extent the right to exercise the
           Options or Stock Appreciation Rights accrued as of the date of death,
           the right of the Participant's Beneficiary to exercise the Options or
      Stock Appreciation Rights shall terminate upon the expiration of
           three years from the date of the Participant's death (but in no event
          more than three years from the date of the Participant's Termination
      of Employment by reason of disability or retirement), unless the
     exercise period is extended by the Committee in accordance with
    Section 6.03(d). In no event, however, may any Option or Stock
          Appreciation Right be exercised later than the date of expiration of
          the Option determined pursuant to Section 6.03(b)(i), (iii) or (iv).

           (ii) TERMINATION OF UNVESTED OPTIONS OR STOCK APPRECIATION RIGHTS
  UPON TERMINATION OF EMPLOYMENT. Subject to Section 6.03(c), to the
        extent the right to exercise an Option or a Stock Appreciation Right, or
     any portion thereof, has not accrued as of the date of Termination of
      Employment, such right shall expire at the date of such Termination of
    Employment. Notwithstanding the foregoing, the Committee, within its
     discretion and under such terms as it deems appropriate, may permit a
     Participant who terminates employment by reason of Retirement and who
     will continue to render significant services to the Company or one of
        its Subsidiaries after his or her Termination of Employment, to continue
      vesting in his or her Options and Stock Appreciation Rights during the
 period in which the individual continues to render such services.

6.04  EXERCISE PROCEDURES.                                            

          (a) IN GENERAL. Each Option and Stock Appreciation Right granted under
    the Plan shall be exercised by written notice to the Company which must be
    received by the officer or employee of the Company designated in the Award
    Agreement on or before the close of business on the expiration date of the
  Award. The Purchase Price of shares purchased upon exercise of an Option
 granted under the Plan shall be paid in full in cash by the Participant
    pursuant to the Award Agreement; provided, however, that the Committee may
     (but shall not be required to) permit payment to be made by delivery to the
    Company of either (a) Common Stock (which may include Restricted Shares or
  shares otherwise issuable in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate) or (b) any  
  combination of cash and Common Stock, or (c) such other consideration as
the Committee deems appropriate and in compliance with applicable law 
 (including payment in accordance with a cashless exercise program under
which, if so instructed by the Participant, Common Stock may be issued
directly to the Participant's broker or dealer                        

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upon receipt of an irrevocable written notice of exercise from the    
  Participant). In the event that any Common Stock shall be transferred to
   the Company to satisfy all or any part of the Purchase Price, the part of
     the Purchase Price deemed to have been satisfied by such transfer of Common
    Stock shall be equal to the product derived by multiplying the Fair Market
     Value as of the date of exercise times the number of shares of Common Stock
     transferred to the Company. The Participant may not transfer to the Company
     in satisfaction of the Purchase Price any fractional share of Common Stock.
     Any part of the Purchase Price paid in cash upon the exercise of any Option
    shall be added to the general funds of the Company and may be used for any
   proper corporate purpose. Unless the Committee shall otherwise determine,
  any Common Stock transferred to the Company as payment of all or part of
the Purchase Price upon the exercise of any Option shall be held as   
treasury shares.                                                      

    (b) DEFERRED DELIVERY OF OPTION SHARES. In lieu of exercising an
     Option for the immediate delivery of the underlying shares of Common Stock,
a Participant shall have the right, in accordance with procedures     
    established by the Committee, to elect to receive Stock Units which do not
   reflect current ownership of shares of Common Stock, but rather the right
    to receive delivery of shares at a later date. Upon such an exercise of an
    Option, a book account maintained by the Company for the Participant shall
 be credited with the shares of Common Stock otherwise issuable upon the
exercise. The number of shares of Common Stock credited to the account
shall be delivered to the Participant at a later date specified by the
     Participant at the time of the election. During the deferral period, in the
    discretion of the Committee, either (i) the account shall be credited with
additional Stock Units reflecting the dividends that would have been  
received on the Stock Units if those dividends were reinvested in     
 additional shares of Common Stock or (ii) the deemed dividends shall be
    paid to the Participant currently in cash. During the deferral period, the
 Company's obligation to the Participant shall be an unfunded, unsecured
promise to deliver shares of Common Stock at the end of the deferral  
period.                                                               

    6.05  CHANGE IN CONTROL. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all Options    
outstanding on the date of such Change in Control, and all Stock Appreciation   
Rights shall become immediately and fully exercisable. The provisions of this   
Section 6.05 shall not be applicable to any Options or Stock Appreciation Rights
granted to a Participant if any Change in Control results from such             
Participant's beneficial ownership (within the meaning of Rule 13d-3 under the  
Exchange Act) of Common Stock or Company Voting Securities.                     

    6.06  LIMITED STOCK APPRECIATION RIGHTS. Limited Stock Appreciation Rights
may be granted independent of or in tandem with Options and shall be exercisable
by the Participant for a period of sixty (60) days following the occurrence of a
Change in Control. Upon the exercise of a Limited Stock Appreciation Right, the 
Participant shall be entitled to receive from the Company in exchange therefor  
cash in the amount equal to the excess of the value on the date of exercise of  
the number of shares of Common Stock subject to the Limited Stock Appreciation  
Rights being exercised over the Exercise Price of such Limited Stock            
Appreciation Right. For this purpose, the value of Common Stock shall be the    
highest Fair Market Value of the Common Stock during the period beginning on the
90th day prior to the date on which the Limited Stock Appreciation Rights are   
exercised and ending on such date. The date of exercise of Limited Stock        
Appreciation Rights shall be determined under procedures established by the     
Committee, and payment under this Section 6.06 shall be made by the Company as  
soon as practicable after the date of exercise. To the extent that any Option in
tandem with which the Limited Stock Appreciation Rights shall have been granted 
is exercised, cancelled, terminates or expires, the Limited Stock Appreciation  
Rights shall be cancelled. Subject to the foregoing provisions of this Section  
6.06 and the other provisions of the Plan, Limited Stock Appreciation Rights    
granted under the Plan shall be subject to such other terms and conditions as   
shall be determined by the Committee, in its discretion, and set forth in the   
applicable Award Agreement.                                                     

  6.07  RELOAD OPTIONS. With respect to any Option (an "Original Option"),
the Committee shall have the authority to specify, at or after the time of grant
of such Original Option, that, subject to the availability of shares of Common  
Stock under the Plan, a Participant shall be granted a new option (referred to  
as a "Reload Option") in the event (i) such Participant exercises all or a part 
of such Original Option by surrendering previously acquired shares of Common    
Stock in full or partial payment of the Purchase Price under such Original      
Option, and/or (ii) a Participant's withholding tax obligation with respect to  
the exercise of an Original Option is satisfied                                 
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in whole or in part by the delivery of previously acquired shares of Common     
Stock by the Participant to the Company or the withholding of shares of Common  
Stock from the shares otherwise issuable to the Participant upon the exercise of
the Original Option. Each such Reload Option shall cover a number of shares of  
Common Stock equal to the number of shares of Common Stock surrendered in       
payment of the Purchase Price under such Original Option and/or surrendered or  
withheld to pay withholding taxes with respect to such Original Option. Each    
such Reload Option shall have a Purchase Price per share of Common Stock equal  
to the Fair Market Value of the Common Stock on the date of exercise of the     
Original Option in respect of which the Reload Option was granted and shall     
expire on the stated expiration date of the Original Option. A Reload Option    
shall be exercisable at any time and from time to time from and after the Date  
of Grant of such Reload Option, subject to such restrictions on exercisability  
as may be imposed in the discretion of the Committee. Any Reload Option may     
provide for the grant, when exercised, of subsequent Reload Options to the      
extent and upon such terms and conditions, consistent with this Section 6.07, as
the Committee in its sole discretion shall specify at or after the time of grant
of such Reload Option. A Reload Option shall contain such other terms and       
conditions, which may include a restriction on the transferability of the shares
of Common Stock received upon exercise of the Reload Option, as the Committee in
its sole discretion shall deem desirable and which may be set forth in rules or 
guidelines adopted by the Committee or in the Award Agreements evidencing the   
Reload Options.                                                                 

ARTICLE VII 

RESTRICTED SHARES AND RESTRICTED UNITS

    7.01  RESTRICTED SHARE AND RESTRICTED UNIT AWARDS. The Committee may grant
to any Participant a Restricted Share Award consisting of such number of shares 
of Common Stock on such terms, conditions and restrictions, whether based on    
performance standards, periods of service, retention by the Participant of      
ownership of specified shares of Common Stock or other criteria, as the         
Committee shall establish. The Committee may also grant Restricted Stock Units  
representing the right to receive shares of Common Stock in the future subject  
to the achievement of one or more goals relating to the completion of service by
the Participant and/or the achievement of performance or other objectives. With 
respect to performance-based Awards of Restricted Shares or Restricted Units    
intended to qualify for deductibility under the "performance-based" compensation
exception contained in Section 162(m) of the Code, performance targets will     
consist of specified levels of one or more of the Performance Goals. The terms  
of any Restricted Share and Restricted Unit Awards granted under this Plan shall
be set forth in an Award Agreement which shall contain provisions determined by 
the Committee and not inconsistent with this Plan.                              

       (A) ISSUANCE OF RESTRICTED SHARES. As soon as practicable after the
 Date of Grant of a Restricted Share Award by the Committee, the Company
 shall cause to be transferred on the books of the Company or its agent,
     shares of Common Stock, registered on behalf of the Participant, evidencing
  the Restricted Shares covered by the Award, subject to forfeiture to the
   Company as of the Date of Grant if an Award Agreement with respect to the
Restricted Shares covered by the Award is not duly executed by the    
    Participant and timely returned to the Company. All shares of Common Stock
covered by Awards under this Article VII shall be subject to the      
     restrictions, terms and conditions contained in the Plan and the applicable
  Award Agreements entered into by the appropriate Participants. Until the
   lapse or release of all restrictions applicable to an Award of Restricted
  Shares the share certificates representing such Restricted Shares may be
    held in custody by the Company, its designee, or, if the certificates bear
    a restrictive legend, by the Participant. Upon the lapse or release of all
    restrictions with respect to an Award as described in Section 7.01(d), one
    or more share certificates, registered in the name of the Participant, for
     an appropriate number of shares as provided in Section 7.01(d), free of any
     restrictions set forth in the Plan and the related Award Agreement shall be
delivered to the Participant.                                         

          (B) STOCKHOLDER RIGHTS. Beginning on the Date of Grant of a Restricted
Share Award and subject to execution of the related Award Agreement as
     provided in Section 7.01(a), and except as otherwise provided in such Award
   Agreement, the Participant shall become a stockholder of the Company with
    respect to all shares subject to the Award Agreement and shall have all of
  the rights of a stockholder, including, but not limited to, the right to
 vote such shares and the right to receive dividends; provided, however,
that any shares                                                       

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    of Common Stock distributed as a dividend or otherwise with respect to any
   Restricted Shares as to which the restrictions have not yet lapsed, shall
   be subject to the same restrictions as such Restricted Shares and held or
restricted as provided in Section 7.01(a).                            

         (C) RESTRICTION ON TRANSFERABILITY. None of the Restricted Shares may
   be assigned or transferred (other than by will or the laws of descent and
distribution or to an inter vivos trust with respect to which the     
   Participant is treated as the owner under Sections 671 through 677 of the
  Code), pledged or sold prior to the lapse of the restrictions applicable
thereto.                                                              

   (D) DELIVERY OF SHARES UPON VESTING. Upon expiration or earlier
termination of the forfeiture period without a forfeiture and the     
satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of
  Section 7.03, the restrictions applicable to the Restricted Shares shall
    lapse. As promptly as administratively feasible thereafter, subject to the
     requirements of Section 11.05, the Company shall deliver to the Participant
   or, in case of the Participant's death, to the Participant's Beneficiary,
one or more share certificates for the appropriate number of shares of
  Common Stock, free of all such restrictions, except for any restrictions
that may be imposed by law.                                           

7.02  TERMS OF RESTRICTED SHARES.                                     

        (A) FORFEITURE OF RESTRICTED SHARES. Subject to Sections 7.02(b) and
    7.03, Restricted Shares shall be forfeited and returned to the Company and
    all rights of the Participant with respect to such Restricted Shares shall
     terminate unless the Participant continues in the service of the Company or
a Subsidiary until the expiration of the forfeiture period for such   
   Restricted Shares and satisfies any and all other conditions set forth in
  the Award Agreement. The Committee shall determine the forfeiture period
  (which may, but need not, lapse in installments) and any other terms and
conditions applicable with respect to any Restricted Share Award.     

          (B) WAIVER OF FORFEITURE PERIOD. Notwithstanding anything contained in
this Article VII to the contrary, the Committee may, in its sole      
    discretion, waive the forfeiture period and any other conditions set forth
in any Award Agreement under appropriate circumstances (including the 
    death, disability or Retirement of the Participant or a material change in
     circumstances arising after the date of an Award) and subject to such terms
and conditions (including forfeiture of a proportionate number of the 
Restricted Shares) as the Committee shall deem appropriate.           

  7.03  RESTRICTED STOCK UNITS. Restricted Unit Awards shall be subject to
the restrictions, terms and conditions contained in the Plan and the applicable 
Award Agreements entered into by the appropriate Participants. Until the lapse  
or release of all restrictions applicable to an Award of Restricted Units, no   
shares of Common Stock shall be issued in respect of such Awards and no         
Participant shall have any rights as a stockholder of the Company with respect  
to the shares of Common Stock covered by such Restricted Unit Award. Upon the   
lapse or release of all restrictions with respect to a Restricted Unit Award or 
at a later date if distribution has been deferred, one or more share            
certificates, registered in the name of the Participant, for an appropriate     
number of shares, free of any restrictions set forth in the Plan and the related
Award Agreement shall be delivered to the Participant. A Participant's          
Restricted Unit Award shall not be contingent on any payment by or consideration
from the Participant other than the rendering of services. Notwithstanding      
anything contained in this Section 7.03 to the contrary, the Committee may, in  
its sole discretion, waive the forfeiture period and any other conditions set   
forth in any Award Agreement under appropriate circumstances (including the     
death, Permanent Disability or Retirement of the Participant or a material      
change in circumstances arising after the date of an Award) and subject to such 
terms and conditions (including forfeiture of a proportionate number of the     
Restricted Units) as the Committee shall deem appropriate.                      

    7.03  CHANGE IN CONTROL. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all            
restrictions applicable to the Restricted Share and Restricted Unit Awards shall
terminate fully and the Participant shall immediately have the right to the     
delivery of share certificate or certificates for such shares in accordance with
Section 7.01(d).                                                                

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ARTICLE VIII

PERFORMANCE AWARDS

8.01  PERFORMANCE AWARDS.                                             

          (a) AWARD PERIODS AND CALCULATIONS OF POTENTIAL INCENTIVE AMOUNTS. The
     Committee may grant Performance Awards to Participants. A Performance Award
shall consist of the right to receive a payment (measured by the Fair 
    Market Value of a specified number of shares of Common Stock, increases in
    such Fair Market Value during the Award Period and/or a fixed cash amount)
contingent upon the extent to which certain predetermined performance 
 targets have been met during an Award Period. Performance Awards may be
made in conjunction with, or in addition to, Restricted Share and     
  Restricted Unit Awards made under Article VII. The Award Period shall be
  two or more fiscal or calendar years as determined by the Committee. The
    Committee, in its discretion and under such terms as it deems appropriate,
may permit newly eligible employees, such as those who are promoted or
newly hired, to receive Performance Awards after an Award Period has  
commenced.                                                            

     (b) PERFORMANCE TARGETS. The performance targets may include such
     goals related to the performance of the Company and/or the performance of a
  Participant as may be established by the Committee in its discretion. In
    the case of Performance Awards intended to qualify for deductibility under
  Section 162(m) of the Code, the targets will include specified levels of
   one or more of the Performance Goals. The performance targets established
   by the Committee may vary for different Award Periods and need not be the
     same for each Participant receiving a Performance Award in an Award Period.
   Except to the extent inconsistent with the performance-based compensation
exception under Section 162(m) of the Code, in the case of Performance
Awards granted to employees to whom such section is applicable, the   
     Committee, in its discretion, but only under extraordinary circumstances as
determined by the Committee, may change any prior determination of    
 performance targets for any Award Period at any time prior to the final
   determination of the Award when events or transactions occur to cause the
performance targets to be an inappropriate measure of achievement.    

   (c) EARNING PERFORMANCE AWARDS. The Committee, at or as soon as
     practicable after the Date of Grant, shall prescribe a formula to determine
    the percentage of the Performance Award to be earned based upon the degree
of attainment of performance targets.                                 

(d) PAYMENT OF EARNED PERFORMANCE AWARDS. Payments of earned
    Performance Awards shall be made in cash or Common Stock, or a combination
of cash and Common Stock, in the discretion of the Committee. The     
 Committee, in its sole discretion, may define such terms and conditions
 with respect to the payment of earned Performance Awards as it may deem
desirable.                                                            

8.02  TERMS OF PERFORMANCE AWARDS.                                    

        (a) TERMINATION OF EMPLOYMENT. Unless otherwise provided below or in
Section 8.03, in the case of a Participant's Termination of Employment
   prior to the end of an Award Period, the Participant will not have earned
any Performance Awards                                                

   (b) RETIREMENT. If a Participant's Termination of Employment is
    because of Retirement prior to the end of an Award Period, the Participant
    will not be paid any Performance Awards, unless the Committee, in its sole
    and exclusive discretion, determines that an Award should be paid. In such
    a case, the Participant shall be entitled to receive a pro-rata portion of
his or her Award as determined under Subsection (d).                  

         (c) DEATH OR DISABILITY. If a Participant's Termination of Employment
is due to death or disability (as determined in the sole and exclusive
discretion of the Committee) prior to the end of an Award Period, the 
    Participant or the Participant's personal representative shall be entitled
to receive a pro-rata share of his or her Award as determined under   
Subsection (d).                                                       

         (d) PRO-RATA PAYMENT. The amount of any payment made to a Participant
  whose employment is terminated by retirement, death or disability (under
circumstances described in Subsections (b) and (c)) will be the amount
   determined by multiplying the amount of the Performance Award which would
have been                                                             

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    earned, determined at the end of the Award Period, had such employment not
 been terminated, by a fraction, the numerator of which is the number of
     whole months such Participant was employed during the Award Period, and the
     denominator of which is the total number of months of the Award Period. Any
    such payment made to a Participant whose employment is terminated prior to
     the end of an Award Period under this Section 8.02 shall be made at the end
of the respective Award Period, unless otherwise determined by the    
  Committee in its sole discretion. Any partial payment previously made or
     credited to a deferred account for the benefit of a Participant as provided
under Section 8.01(d) of the Plan shall be subtracted from the amount 
otherwise determined as payable as provided in this Section.          

      (e) OTHER EVENTS. Notwithstanding anything to the contrary in this
Article VIII, the Committee may, in its sole and exclusive discretion,
     determine to pay all or any portion of a Performance Award to a Participant
 who has terminated employment prior to the end of an Award Period under
     certain circumstances (including the death, disability or retirement of the
     Participant or a material change in circumstances arising after the Date of
     Grant) and subject to such terms and conditions as the Committee shall deem
appropriate.                                                          

    8.03  CHANGE IN CONTROL. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all Performance
Awards for all Award Periods shall immediately become fully payable to all      
Participants and shall be paid to Participants within 30 days after such Change 
in Control.                                                                     

ARTICLE IX

SHORT-TERM CASH INCENTIVE AWARDS

9.01  ELIGIBILITY. This Article IX is a limited purpose provision that
shall apply only in the event the Committee deems it appropriate that the       
Company's short-term cash incentives for executive officers of the Company who  
are from time to time determined by the Committee to be "covered employees" for 
purposes of Section 162(m) of the Code qualify for deductibility under the      
"performance-based" compensation exception contained in Section 162(m).         

9.02  AWARDS.                                                         

     (A) PERFORMANCE TARGETS. For each fiscal year of the Company with
    respect to which the Committee determines this Article IX to be in effect,
the Committee shall establish objective performance targets based on  
    specified levels of one or more of the Performance Goals. Such performance
   targets shall be established by the Committee on a timely basis to ensure
   that the targets are considered "pre-established" for purposes of Section
162(m) of the Code.                                                   

   (B) AMOUNTS OF AWARDS. In conjunction with the establishment of
performance targets for a fiscal year, the Committee shall adopt an   
   objective formula (on the basis of percentages of Participants' salaries,
   shares in a bonus pool or otherwise) for computing the respective amounts
payable under the Plan to Participants if and to the extent that the  
performance targets are attained. Such formula shall comply with the  
requirements applicable to performance-based compensation plans under 
 Section 162(m) of the Code and, to the extent based on percentages of a
bonus pool, such percentages shall not exceed 100% in the aggregate.  

         (C) PAYMENT OF AWARDS. Awards will be payable to Participants in cash
   each year upon prior written certification by the Committee of attainment
of the specified performance targets for the preceding fiscal year.   

          (D) NEGATIVE DISCRETION. Notwithstanding the attainment by the Company
of the specified performance targets, the Committee shall have the    
   discretion, which need not be exercised uniformly among the Participants,
to reduce or eliminate the award that would be otherwise paid.        

     (E) GUIDELINES. The Committee may adopt from time to time written
   policies for its implementation of this Article IX. Such guidelines shall
     reflect the intention of the Company that all payments hereunder qualify as
performance-based compensation under Section 162(m) of the Code.      

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     9.03  NON-EXCLUSIVE ARRANGEMENT. The adoption and operation of this Article
IX shall not preclude the Board or the Committee from approving other short-term
incentive compensation arrangements for the benefit of individuals who are      
Participants hereunder as the Board or Committee, as the case may be, deems     
appropriate and in the best interests of the Company.                           

ARTICLE X 

NON-EMPLOYEE DIRECTOR AWARDS

 10.01  GRANT OF NON-EMPLOYEE DIRECTOR AWARDS. Each person whose initial
election or appointment as a Non-Employee Director occurs after the Effective   
Date shall be granted as of the date of such election or appointment an Option  
to purchase 15,000 shares of Common Stock. If a Board member who is an employee 
of the Company or a Subsidiary retires as an employee but continues to serve on 
the Board after such retirement, such person may receive an initial Option grant
for service as a Non-Employee Director on such terms and conditions as the Board
shall determine. Each person whose term as a Non-Employee Director continues    
after the date of each annual meeting of shareholders of the Company, commencing
with the initial annual meeting after the Effective Date and continuing until   
the date this Plan terminates, shall as of the date of each such annual meeting 
of shareholders be granted an Option to purchase 5,000 shares of Common Stock.  
The exercise price for such Options shall be the Fair Market Value on the Date  
of Grant of the shares subject to the Option. All such Options shall be         
designated as Non-Qualified Stock Options and shall have a ten year term. Such  
Options shall vest and become exercisable in equal installments on the first and
second anniversaries of the Date of Grant, except that, in the event of a Change
in Control, all outstanding Non-Employee Director Awards shall be immediately   
vested and exercisable.                                                         

   10.02  TERMINATION OF SERVICE AND OTHER TERMS. Unless otherwise specified
in the applicable Award Agreement, if a Non-Employee Director's service with the
Company terminates by reason of death or disability, any Award held by such     
Non-Employee Director may be exercised for a period of one year from the date of
such termination or until the expiration of the Award, whichever is shorter.    
Unless otherwise specified in the applicable Award Agreement, if a Non-Employee 
Director's service with the Company terminates other than by reason of death or 
disability, under mutually satisfactory conditions, any Award held by such      
Non-Employee Director shall expire on the date of such termination. All         
applicable provisions of the Plan not inconsistent with this Article X shall    
apply to Awards granted to Non-Employee Directors; provided, however, that the  
Committee may not exercise discretion under any provision of the Plan with      
respect to Awards granted under this Article X except to the extent expressly   
provided herein.                                                                

ARTICLE XI

TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN 

 11.01  PLAN PROVISIONS CONTROL AWARD TERMS. The terms of the Plan shall
govern all Awards granted under the Plan, and in no event shall the Committee   
have the power to grant any Award under the Plan which is contrary to any of the
provisions of the Plan. In the event any provision of any Award granted under   
the Plan shall conflict with any term in the Plan as constituted on the Date of 
Grant of such Award, the term in the Plan as constituted on the Date of Grant of
such Award shall control. Except as provided in Section 11.03 and Section 11.07,
the terms of any Award granted under the Plan may not be changed after the Date 
of Grant of such Award so as to materially decrease the value of the Award      
without the express written approval of the holder.                             

 11.02  AWARD AGREEMENT. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom 
such Award shall have been granted shall have executed and delivered an Award   
Agreement or received any other Award acknowledgment authorized by the Committee
expressly granting the Award to such person and containing provisions setting   
forth the terms of the Award.                                                   

   11.03  MODIFICATION OF AWARD AFTER GRANT. No Award granted under the Plan
to a Participant may be modified (unless such modification does not materially  
decrease the value of the Award) after the Date of Grant                        

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except by express written agreement between the Company and the Participant,    
provided that any such change (a) shall not be inconsistent with the terms of   
the Plan, and (b) shall be approved by the Committee.                           

     11.04  LIMITATION ON TRANSFER. Except as provided in Section 7.01(c) in the
case of Restricted Shares, a Participant's rights and interest under the Plan   
may not be assigned or transferred other than by will or the laws of descent and
distribution, and during the lifetime of a Participant, only the Participant    
personally (or the Participant's personal representative) may exercise rights   
under the Plan. The Participant's Beneficiary may exercise the Participant's    
rights to the extent they are exercisable under the Plan following the death of 
the Participant. Notwithstanding the foregoing, the Committee may grant         
Non-Qualified Stock Options that are transferable, without payment of           
consideration, to immediate family members of the Participant or to trusts or   
partnerships for such family members, and the Committee may also amend          
outstanding Non-Qualified Stock Options to provide for such transferability.    

11.05  TAXES. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in  
lieu of withholding) the amount of any withholding or other tax required by law 
to be withheld or paid by the Company with respect to any amount payable and/or 
shares issuable under such Participant's Award, or with respect to any income   
recognized upon a disqualifying disposition of shares received pursuant to the  
exercise of an Incentive Stock Option, and the Company may defer payment or     
issuance of the cash or shares upon exercise or vesting of an Award unless      
indemnified to its satisfaction against any liability for any such tax. The     
amount of such withholding or tax payment shall be determined by the Committee  
and shall be payable by the Participant at such time as the Committee determines
in accordance with the following rules:                                         

        (a) The Participant shall have the right to elect to meet his or her
withholding requirement (i) by having withheld from such Award at the 
   appropriate time that number of shares of Common Stock, rounded up to the
next whole share, whose Fair Market Value is equal to the amount of   
     withholding taxes due, (ii) by direct payment to the Company in cash of the
   amount of any taxes required to be withheld with respect to such Award or
(iii) by a combination of shares and cash.                            

         (b) The Committee shall have the discretion as to any Award, to cause
   the Company to pay to tax authorities for the benefit of any Participant,
    or to reimburse such Participant for the individual taxes which are due on
the grant, exercise or vesting of any share Award, or the lapse of any
     restriction on any share Award (whether by reason of a Participant's filing
  of an election under Section 83(b) of the Code or otherwise), including,
    but not limited to, Federal income tax, state income tax, local income tax
and excise tax under Section 4999 of the Code, as well as for any such
taxes as may be imposed upon such tax payment or reimbursement.       

        (c) In the case of Participants who are subject to Section 16 of the
     Exchange Act, the Committee may impose such limitations and restrictions as
it deems necessary or appropriate with respect to the delivery or     
    withholding of shares of Common Stock to meet tax withholding obligations.

11.06  SURRENDER OF AWARDS. Any Award granted under the Plan may be   
surrendered to the Company for cancellation on such terms as the Committee and  
the holder approve.                                                             

11.07  ADJUSTMENTS TO REFLECT CAPITAL CHANGES.                        

  (a) RECAPITALIZATION. The number and kind of shares subject to
   outstanding Awards, the Purchase Price or Exercise Price for such shares,
 the number and kind of shares available for Awards subsequently granted
    under the Plan and the maximum number of shares in respect of which Awards
    can be made to any Participant in any calendar year shall be appropriately
adjusted to reflect any stock dividend, stock split, combination or   
     exchange of shares, merger, consolidation or other change in capitalization
     with a similar substantive effect upon the Plan or the Awards granted under
the Plan. The Committee shall have the power and sole discretion to   
determine the amount of the adjustment to be made in each case.       

      (b) MERGER. After any Merger in which the Company is the surviving
 corporation, each Participant shall, at no additional cost, be entitled
    upon any exercise of an Option or receipt of an Award, to receive (subject
    to any required action by shareholders, in lieu of the number of shares of
Common Stock receivable                                               

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  or exercisable pursuant to such Award, the number and class of shares or
other securities to which such Participant would have been entitled   
 pursuant to the terms of the Merger if, at the time of the Merger, such
  Participant had been the holder of record of a number of shares equal to
the number of shares receivable or exercisable pursuant to such Award.
Comparable rights shall accrue to each Participant in the event of    
successive Mergers of the character described above. In the event of a
Merger in which the Company is not the surviving corporation, the     
  surviving, continuing, successor, or purchasing corporation, as the case
 may be (the "Acquiring Corporation"), shall either assume the Company's
 rights and obligations under outstanding Award Agreements or substitute
     awards in respect of the Acquiring Corporation's stock for such outstanding
Awards. In the event the Acquiring Corporation elects not to assume or
  substitute for such outstanding Awards, the Board shall provide that any
  unexercisable and/or unvested portion of the outstanding Awards shall be
 immediately exercisable and vested as of a date prior to such merger or
   consolidation, as the Board so determines. The exercise and/or vesting of
  any Award that was permissible solely by reason of this Section 11.07(b)
    shall be conditioned upon the consummation of the merger or consolidation.
Any Options which are neither assumed by the Acquiring Corporation not
    exercised as of the date of the Merger shall terminate effective as of the
effective date of the Merger.                                         

        (c) OPTIONS TO PURCHASE SHARES OR STOCK OF ACQUIRED COMPANIES. After
any merger in which the Company or a Subsidiary shall be a surviving  
corporation, the Committee may grant substituted options under the    
    provisions of the Plan, pursuant to Section 424 of the Code, replacing old
     options granted under a plan of another party to the merger whose shares or
stock subject to the old options may no longer be issued following the
merger. The foregoing adjustments and manner of application of the    
foregoing provisions shall be determined by the Committee in its sole 
 discretion. Any such adjustments may provide for the elimination of any
fractional shares which might otherwise become subject to any Options.

   11.08  NO RIGHT TO EMPLOYMENT. No employee or other person shall have any
claim of right to be granted an Award under this Plan. Neither the Plan nor any 
action taken hereunder shall be construed as giving any employee any right to be
retained in the employ of the Company or any of its Subsidiaries.               

   11.09  AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the 
determination of benefits under any pension, group insurance or other benefit   
plan applicable to the Participant which is maintained by the Company or any of 
its Subsidiaries, except as may be provided under the terms of such plans or    
determined by the Board.                                                        

     11.10  GOVERNING LAW. All determinations made and actions taken pursuant to
the Plan shall be governed by the laws of the Commonwealth of Pennsylvania and  
construed in accordance therewith.                                              

11.11  NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the          
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.                          

     11.12  CAPTIONS. The captions (i.e., all Section headings) used in the Plan
are for convenience only, do not constitute a part of the Plan, and shall not be
deemed to limit, characterize or affect in any way any provisions of the Plan,  
and all provisions of the Plan shall be construed as if no captions have been   
used in the Plan.                                                               

11.13  SEVERABILITY. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such     
manner as to be effective and valid under applicable law, but if any provision  
of the Plan or any Award at any time granted under the Plan shall be held to be 
prohibited by or invalid under applicable law, then (a) such provision shall be 
deemed amended to accomplish the objectives of the provision as originally      
written to the fullest extent permitted by law and (b) all other provisions of  
the Plan and every other Award at any time granted under the Plan shall remain  
in full force and effect.                                                       

11.14  AMENDMENT AND TERMINATION.                                     

       (a) AMENDMENT. The Board shall have complete power and authority to
  amend the Plan at any time. No termination or amendment of the Plan may,
    without the consent of the Participant to whom any Award shall theretofore
have been granted under the Plan, adversely affect the right of such  
individual under such Award.                                          

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    (b) TERMINATION. The Board shall have the right and the power to
  terminate the Plan at any time. No Award shall be granted under the Plan
  after the termination of the Plan, but the termination of the Plan shall
not have any other effect and any Award outstanding at the time of the
   termination of the Plan may be exercised after termination of the Plan at
     any time prior to the expiration date of such Award to the same extent such
Award would have been exercisable had the Plan not terminated.        

  11.15  EMPLOYEES BASED OUTSIDE OF THE UNITED STATES. Notwithstanding any
provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company and its Subsidiaries operate or have employees or
directors, the Board, in its sole discretion, shall have the power and authority
to:                                                                             

  (a) Determine which Subsidiaries shall be covered by the Plan;

        (b) Determine which employees or directors outside the United States
are eligible to participate in the Plan;                              

         (c) Modify the terms and conditions of any Award granted to employees
  or directors outside the United States to comply with applicable foreign
laws;                                                                 

          (d) Establish sub-plans and modify exercise procedures and other terms
   and procedures, to the extent such actions may be necessary or advisable.
  Any sub-plans and modifications to Plan terms and procedures established
under this Section 11.15 by the Board shall be attached to this Plan  
document as appendices; and                                           

        (e) Take any action, before or after an Award is made, that it deems
    advisable to obtain approval or comply with any necessary local government
regulatory exemptions or approvals.                                   

Notwithstanding the above, the Board may not take any actions hereunder, and no 
Awards shall be granted, that would violate the Exchange Act, the Code, any     
securities law, or governing statute or any other applicable law.               

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                                                                PRELIMINARY COPY

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED            Please             
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED             Mark Here          
SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY            for Address     |_|
WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 and 4.                 Change or          
                                                  Comments
                                                          SEE REVERSE SIDE

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL DIRECTORS AND FOR PROPOSALS    
2, 3 and 4.                                                                     

1.    The election of three directors, each for a term of three years:          

FOR all nominees listed                WITHHOLD AUTHORITY       
(except as marked                to vote for all nominees 
to the contrary)                      listed below      

|_|                                  |_|    

Nominees: 01 Robert H. Atwell                                                   
02 William M. Campbell, III                                 
03 Friedrich Teroerde                                       

(INSTRUCTIONS: To withhold authority to vote for any individual nominee, draw a 
line through such nominee's name.)                                              

2.    The proposed Amendment and Restatement of the Company's Articles of       
Incorporation.                                                      

FOR                     AGAINST                 ABSTAIN         

|_|                       |_|                     |_|           

3.    The proposal to adopt the Company's 2003 Incentive Plan.                  

FOR                     AGAINST                 ABSTAIN         

|_|                       |_|                     |_|           

4.    The proposal to ratify the selection of Ernst & Young LLP as independent  
public auditors for the Company.                                    

FOR                     AGAINST                 ABSTAIN         

|_|                       |_|                     |_|           

In their discretion, the proxy holders are authorized to vote upon such other   
business as may properly come before the Annual Meeting.                        

By checking the box to the right, I consent to future delivery of annual        
reports, proxy statements, prospectuses and other materials and shareholder     
communications electronically via the Internet at a webpage that will be        
disclosed to me. I understand that the Company may no longer distribute      |_|
printed materials to me from any future shareholder meeting until such          
consent is revoked. I understand that I may revoke my consent at any time       
by contacting the Company's transfer agent, Mellon Investor Services LLC,       
Ridgefield Park, NJ, and that costs normally associated with electronic         
delivery, such as usage and telephone charges as well as any costs I may        
incur in printing documents, will be my responsibility.                         

Signature                     Signature                  Dated:           , 2003
    -------------------           ----------------        ----------

NOTE: Please sign exactly as name or names appear hereon. When signing as       
attorney, executor, administrator, trustee or guardian, please give your full   
title. If a corporation, please sign in corporate name by president or other    
authorized officer. If a partnership, please sign in partnership name by        
authorized partner.                                                             

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

FOLD AND DETACH HERE

 Vote by Internet or Telephone or Mail
 24 Hours a Day, 7 Days a Week

  Internet and telephone voting will be available until 11 PM Eastern Time
on November 19, 2003. 

Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card. 

                                                        [Enlarge/Download Table]
                                                                                                           
-------------------------------------      ------------------------------------      ----------------------
             Internet                                   Telephone                            Mail          
  http://www.eproxy.com/edmc                         1-800-435-6710                                        
Use the Internet to vote your proxy.       Use any touch-tone telephone to            Mark, sign and date  
Have your proxy card in hand when          vote your proxy. Have your proxy            your proxy card     
you access the web site. You will be   OR  card in hand when you call. You will  OR          and           
prompted to enter your control             be prompted to enter your control           return it in the    
number, located in the box below, to       number, located in the box below,         enclosed postage-paid 
create and submit an electronic            and then follow the directions                 envelope.        
ballot.                                    given.                                                          
-------------------------------------      ------------------------------------      ----------------------


If you vote your proxy by Internet or by telephone, 
you do NOT need to mail back your proxy card. 

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 PROXY

EDUCATION MANAGEMENT CORPORATION

 210 Sixth Avenue, 33rd Floor, Pittsburgh, Pennsylvania 15222-2603

Proxy for Annual Meeting of Shareholders on November 20, 2003 

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 

The undersigned hereby appoints Robert T. McDowell and Frederick W. 
Steinberg and each or either of them as proxies, each with the power to appoint 
his substitute, and hereby authorizes either of them to represent and to vote   
all shares of Common Stock of Education Management Corporation, a Pennsylvania  
corporation (the "Company"), that the undersigned is entitled to vote at the    
Annual Meeting of Shareholders of the Company to be held on November 20, 2003,  
commencing at 10:00 a.m., local time, at the Omni William Penn Hotel, 530       
William Penn Place, Pittsburgh, Pennsylvania 15219, or any adjournment or       
postponement thereof, as designated on the reverse side of this proxy card.     

PLEASE DATE AND SIGN ON REVERSE SIDE

------------------------------------------------------------------------------- 
Address Change/Comments (Mark the corresponding box on the reverse side)
------------------------------------------------------------------------------- 

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

------------------------------------------------------------------------------- 
FOLD AND DETACH HERE

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRE 14A’ Filing		Date		First		Last			Other Filings
		9/22/04		30
		8/23/04		30
		6/17/04		30					4
For Period End:		11/20/03		2		51			3,  4,  8-K,  DEF 14A
		11/19/03		50					4
		10/21/03		2		30			4
Filed on:		10/10/03
		9/30/03		9		21			10-Q
		9/23/03		3		12			4
		9/11/03		6		33
		9/2/03		18		23			3,  8-K,  8-K/A
		9/1/03		6		22
		8/31/03		20
		8/5/03		21		22			4,  8-K
		6/30/03		4		29			10-K
		6/12/03		23
		4/14/03		15
		4/1/03		15					4
		3/31/03		9		23			10-Q
		3/19/03		23
		1/31/03		15
		1/2/03		15					4
		11/14/02		15					DEF 14A
		10/1/02		15
		8/23/02		4
		7/1/02		15
		6/30/02		28					10-K
		5/9/02		28					8-K
		12/21/01		23					8-K
		7/9/01		23
		6/30/01		28					10-K,  4
		6/30/00		28					10-K
		9/8/99		23
		7/1/98		29
		6/30/98		29					10-K,  DEF 14A
		10/29/96		32					8-A12G,  8-A12G/A
		10/24/96		31
									List all Filings