AGREEMENT AND PLAN OF MERGER

BY AND BETWEEN

EM ACQUISITION CORPORATION

AND

EDUCATION MANAGEMENT CORPORATION

DATED AS OF MARCH 3, 2006

INDEX OF DEFINED TERMS

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated as of March 3, 2006 (this "Agreement"), is by and between EM Acquisition Corporation, a Pennsylvania corporation ("Merger Co"), and Education Management Corporation, a Pennsylvania corporation (the "Company").

RECITALS

A. The respective Boards of Directors of each of the Company and Merger Co deem it in the best interests of their respective companies and shareholders to consummate the merger (the "Merger"), on the terms and subject to the conditions set forth in this Agreement, of Merger Co with and into the Company, and such Boards of Directors have approved this Agreement and declared its advisability (and, in the case of the Board of Directors of the Company (the "Company Board"), unanimously recommended that this Agreement be adopted by the Company's shareholders).

B. Upon consummation of the Merger, each issued and outstanding share of common stock, par value $.01 per share, of the Company (the "Company Common Stock"), will be converted into the right to receive $43 per share in cash, upon the terms and subject to the conditions of this Agreement.

C. Certain capitalized terms used in this Agreement that are not otherwise defined in context are defined in Section 9.03(a).

NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants, and agreements contained herein, and intending to be legally bound hereby, Merger Co and the Company hereby agree as follows:

ARTICLE 1

THE MERGER

1.01 The Merger. Upon the terms and subject to the conditions set forth in Article 7, and in accordance with the Pennsylvania Business Corporation Law of 1988, as amended (the "PBCL"), at the Effective Time, Merger Co shall be merged with and into the Company. At the Effective Time, the separate corporate existence of Merger Co shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation") and shall succeed to and assume all the rights and obligations of Merger Co in accordance with the PBCL.

1.02 Closing. Unless this Agreement shall have been terminated in accordance with Section 8.01, and subject to the satisfaction or waiver of the conditions set forth in Article 7, the closing of the Merger (the "Closing") will take place at 10:00 a.m., New York time, on the Business Day immediately following the satisfaction or waiver of the conditions set forth in Article 7 (other than those that by their terms are to be satisfied or waived at the Closing) that is the earlier of (a) a date during the Marketing Period to be specified by Merger Co on no less than three Business Days' notice to the Company and (b) the final day of the Marketing Period, at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York, unless another time, date, and/or place is agreed to in writing by Merger Co and the Company (the "Closing Date"); provided, however, that if the Closing does not occur on or before the tenth (10th) day of any month, the Closing shall occur on the first Business Day of the subsequent month.

1.03 Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, the parties hereto shall (a) file articles of merger (the "Articles of Merger") executed and acknowledged in accordance with the relevant provisions of the PBCL and (b) make all other filings or recordings required under the PBCL to effect the Merger. The Merger shall become effective at such date and time as the Articles of Merger are duly filed with the Secretary of State of the Commonwealth of Pennsylvania, or at such subsequent date and time as Merger Co and the Company shall agree and specify in the Articles of Merger. The date and time at which the Merger becomes effective is referred to in this Agreement as the "Effective Time".

1.04 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in Section 1929 of the PBCL.

1.05 Articles of Incorporation; Bylaws.

(a) The Articles of Merger shall provide that, at the Effective Time, the Articles of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation until thereafter amended in accordance with the provisions thereof and as provided by Law.

(b) At the Effective Time, the Bylaws of Merger Co, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by Law and the Articles of Incorporation and the Bylaws of the Surviving Corporation.

1.06 Directors. The directors of Merger Co immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation, until their respective successors are duly elected or appointed and qualified or until the earlier of their death, resignation, or removal.

ARTICLE 2

CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

2.01 Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Merger Co, the Company, or the holders of any of the following securities:

(a) Conversion of Company Common Stock. Each share of Company Common Stock (all issued and outstanding shares of Company Common Stock collectively referred to as the "Shares") issued and outstanding immediately prior to the Effective Time (other than any Shares to be cancelled pursuant to Section 2.01(b) and Shares owned by Subsidiaries of the Company), including Shares subject to restrictions or forfeiture conditions relating to time, performance, or otherwise (the "Restricted Shares"), shall be cancelled and shall be converted automatically into the right to receive $43 in cash, without interest (the "Merger Consideration"), payable upon surrender of the certificate that formerly evidenced such Share in the manner provided in Section 2.02.

(b) Cancellation of Treasury Stock and Merger Co Owned Stock. Each Share held in the treasury of the Company and each Share owned by Merger Co or any direct or indirect Subsidiary of Merger Co immediately prior to the Effective Time shall automatically be cancelled without any conversion thereof, and no payment or distribution shall be made with respect thereto.

(c) Capital Stock of Merger Co. Each share of common stock, par value $.01 per share, of Merger Co issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid, and nonassessable share of common stock, par value $.01 per share, of the Surviving Corporation. Following the Effective Time, each certificate evidencing ownership of shares of Merger Co common stock shall evidence ownership of such shares of the Surviving Corporation.

(d) Adjustments. If, between the date of this Agreement and the Effective Time, there is a reclassification, recapitalization, stock split, stock dividend, subdivision, combination or exchange of shares with respect to, or rights issued in respect of, the Shares, the Merger Consideration shall be adjusted accordingly, without duplication, to provide the holders of Shares the same economic effect as contemplated by this Agreement prior to such event.

2.02 Exchange of Certificates.

(a) Paying Agent. Prior to the Effective Time, the Company shall (i) appoint and designate Mellon Investor Services LLC or a bank or trust company reasonably acceptable to Merger Co as the paying agent (the "Paying Agent") and (ii) enter into a paying agent agreement with such Paying Agent for the payment of the Merger Consideration in accordance with this Article 2. At the Effective Time, the Surviving Corporation shall deposit with the Paying Agent, for the benefit of the holders of Shares, cash in an amount sufficient to pay the aggregate Merger Consideration required to be paid pursuant to Section 2.01(a) (such cash amount referred to as the "Exchange Fund"). The Exchange Fund shall not be used for any other purpose. The Exchange Fund shall be invested by the Paying Agent as directed by the Surviving Corporation; provided, however, that such investments shall be in obligations of or guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively, or in certificates of deposit, bank repurchase agreements, or banker's acceptances of commercial banks with capital exceeding $1 billion (based on the most recent financial statements of such bank which are then publicly available). Any net profit resulting from, or interest or income produced by, such investments shall be payable to the Surviving Corporation.

(b) Exchange Procedures. As promptly as practicable after the Effective Time (but no later than ten Business Days after the Effective Time), the Surviving Corporation shall cause the Paying Agent to mail to each person who was, at the Effective Time, a holder of record of Shares entitled to receive the Merger Consideration pursuant to Section 2.01(a): (i) a letter of transmittal (which shall be in customary form and containing customary terms and shall specify that delivery shall be effected, and risk of loss and title to the certificate(s) evidencing such Shares (the "Certificates") shall pass, only upon proper delivery of the Certificates, to the Paying Agent) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender to the Paying Agent of a Certificate for cancellation, together with such letter of transmittal, duly completed, and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration that such holder has the right to receive in respect of the Shares formerly represented by such Certificate pursuant to Section 2.01(a), and the Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of Shares that is not registered in the transfer records of the Company, payment of the Merger Consideration may be made to a person other than the person in whose name the Certificate so surrendered is registered if the Certificate representing such Shares shall be properly endorsed or otherwise be in proper form for transfer, and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of such Certificate or establish to the reasonable satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.02, each Certificate shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration to which the holder of such Certificate is entitled pursuant to this Article 2. No interest shall be paid or will accrue on any cash payable to holders of Certificates pursuant to the provisions of this Article 2.

(c) No Further Rights. From and after the Effective Time, holders of Certificates shall cease to have any rights as shareholders of the Company, except as provided herein or by applicable Law.

(d) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the holders of Shares for one year after the Effective Time shall be delivered to the Surviving Corporation, upon demand, and any holders of Shares who have not theretofore complied with this Article 2 shall thereafter look only to the Surviving Corporation for, and the Surviving Corporation shall remain liable for, payment of their claim for the Merger Consideration. Any portion of the Exchange Fund remaining unclaimed by holders of Shares as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation free and clear of any claims or interest of any person previously entitled thereto.

(e) No Liability. None of the Paying Agent, Merger Co, or the Surviving Corporation shall be liable to any holder of Shares for any such Shares (or dividends or distributions with respect thereto), or cash delivered to a public official pursuant to any abandoned property, escheat, or similar Law.

(f) Withholding Rights. Each of the Paying Agent, the Surviving Corporation, and Merger Co shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as it is required to deduct and withhold with respect to such payment under all applicable Tax Laws and pay such withholding amount over to the appropriate taxing authority. To the extent that amounts are so properly withheld by the Paying Agent, the Surviving Corporation, or Merger Co, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by the Paying Agent, the Surviving Corporation, or Merger Co, as the case may be.

(g) Lost Certificates. If any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen, or destroyed, and, if reasonably required by the Surviving Corporation, the posting by such person of a bond, in such reasonable and customary amount as the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall pay in respect of such lost, stolen, or destroyed Certificate, the Merger Consideration to which the holder thereof is entitled pursuant to Section 2.01(a).

2.03 Stock Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of Shares thereafter on the records of the Company. From and after the Effective Time, the holders of Certificates representing Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares, except as otherwise provided in this Agreement or by Law. On or after the Effective Time, any Certificates presented to the Paying Agent or Merger Co for any reason shall be cancelled against delivery of the Merger Consideration to which the holders thereof are entitled pursuant to Section 2.01(a).

2.04 Company Stock Options.

(a) Immediately prior to the Effective Time, all options then outstanding to purchase shares of Company Common Stock (the "Company Stock Options") granted under any plan, arrangement, or agreement set forth in Section 3.13(a) of the Company Disclosure Schedule (collectively, the "Company Stock Option Plans") shall become fully vested and exercisable (whether or not then vested or subject to any time or performance condition that has not been satisfied). At the Effective Time, each Company Stock Option not previously exercised shall be cancelled and converted into the right to receive, as promptly as practicable thereafter (and in any event within ten Business Days), an amount of cash (without interest) (the "Option Amount") equal to the product of (i) the total number of shares of Company Common Stock subject to such Company Stock Option multiplied by (ii) the excess of the amount of the per share Merger Consideration over the exercise price per share of Company Common Stock under such Company Stock Option (with the aggregate amount of such payment rounded to the nearest cent) less applicable Taxes, if any, required to be withheld with respect to such payment. In the event the amount of the per share Merger Consideration over the exercise price per share of the Company Common Stock is zero or a negative number with respect to any Company Stock Option, the holder of such Company Stock Option shall receive no payment in connection with the cancellation of such Company Stock Option under this Agreement. After the Effective Time, any Company Stock Option cancelled in accordance with this Section 2.04(a) shall no longer be exercisable by the former holder thereof, but shall only entitle such holder to the payment described in this Section 2.04(a).

(b) Prior to the Effective Time, the Company Board, or, where appropriate, the applicable administrative committee under each Company Stock Option Plan and the ESPP, shall take all actions reasonably necessary and appropriate (including the adoption of any necessary resolutions, plan amendments, and/or the obtaining of any necessary consents) to make such adjustments and amendments to, or make such determinations with respect to, the Company Stock Option Plans and Company Stock Options to implement the foregoing provisions of this Section 2.04 and the provisions of Section 6.06(e), including the cancellation, subject to and effective on and as of the Effective Time, of all Company Stock Options without further obligation of the Company or its Affiliates (other than payment of the Option Amount pursuant to Section 2.04).

2.05 No Dissenters' Rights. In accordance with Section 1571 of the PBCL, holders of Shares shall not have the right to dissent in connection with the Merger or the Other Transactions.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the disclosure schedule delivered by the Company to Merger Co prior to or concurrently with the execution and delivery of this Agreement (the "Company Disclosure Schedule"), which Company Disclosure Schedule identifies the section (or if applicable, the subsection) to which such exception relates (provided, that disclosure of any fact or item in any section or subsection of the Company Disclosure Schedule shall, should the existence of such fact or item be relevant to any other section or subsection, be deemed to be disclosed with respect to that other section or subsection so long as the relevance of such disclosure to such other section or subsection is reasonably apparent from the nature of such disclosure), the Company hereby represents and warrants to Merger Co as follows:

3.01 Organization and Qualification; Subsidiaries.

(a) Except as set forth in Section 3.01(a) of the Company Disclosure Schedule, the Company and each Subsidiary of the Company is a corporation, limited partnership, or limited liability company (as applicable) duly organized, validly subsisting or existing, and in good standing under the laws of the jurisdiction of its organization and has the requisite power and authority to own, lease, and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, subsisting or existing, or in good standing or to have such power and authority would not have a Company Material Adverse Effect. Each of the Company and each Subsidiary is duly qualified or licensed as a foreign corporation, limited partnership, or limited liability company (as applicable) to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased, or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Company Material Adverse Effect.

(b) A true and complete list of all Subsidiaries of the Company, together with the jurisdiction of organization of each Subsidiary of the Company and the percentage of the outstanding capital stock (or other equity interest) of each Subsidiary of the Company owned by the Company, each other Subsidiary of the Company, and any other person, is set forth in Section 3.01(b) of the Company Disclosure Schedule.

(c) Section 3.01(c) of the Company Disclosure Schedule lists any and all persons of which the Company directly or indirectly owns an equity or similar interest, or an interest convertible into or exchangeable or exercisable for an equity or similar interest, of less than 50% (collectively, the "Investments"). Except as set forth in Section 3.01(c) of the Company Disclosure Schedule, the Company or one of its Subsidiaries, as the case may be, owns all Investments free and clear of all Liens, and there are no outstanding contractual obligations of the Company or any of its Subsidiaries permitting the repurchase, redemption or other acquisition of any of its interest in the Investments or requiring the Company or any of its Subsidiaries to provide funds to, make any investment (in the form of a loan, capital contribution or otherwise) in, provide any guarantee with respect to, or assume, endorse or otherwise become responsible for the obligations of, any Investment.

3.02 Articles of Incorporation and Bylaws. The Company has made available to Merger Co a complete and correct copy of the Articles of Incorporation and the Bylaws (or similar organizational documents), each as amended to date, of the Company and each Subsidiary. Such Articles of Incorporation and Bylaws (or similar organizational documents) are in full force and effect as of the date hereof. Neither the Company nor any Subsidiary set forth on Section 3.02 of the Company Disclosure Schedule (each a "Material Subsidiary") is in violation of any of the provisions of its Articles of Incorporation or Bylaws (or similar organizational documents). No Subsidiary of the Company (other than the Material Subsidiaries, which are subject to the immediately preceding sentence) is in violation of any of the provisions of its Articles of Incorporation or Bylaws (or similar organizational documents), except for violations that would not have a Company Material Adverse Effect. The Company has made available to Merger Co complete and correct copies of the minutes of all meetings of the Company Board (and each committee thereof) (other than the portion of any minutes regarding the deliberations of the Company Board (or any committee thereof) in connection with entering into this Agreement or pursuing other strategic alternatives or that would be reasonably expected to violate or result in the loss or impairment of any attorney-client or work-product privilege), and of the shareholders of the Company, in each case since January 1, 2002.

3.03 Capitalization.

(a) The authorized capital stock of the Company consists of (i) one hundred twenty million (120,000,000) shares of Company Common Stock and (ii) ten million (10,000,000) shares of preferred stock, par value $.01 per share ("Company Preferred Stock"). Except as set forth on Section 3.03(a) of the Company Disclosure Schedule, as of February 24, 2006 (the "Capitalization Date"), (i) 76,280,769 shares of Company Common Stock were issued and outstanding (excluding shares of Company Common Stock held in the treasury of the Company but including the Restricted Shares), all of which were duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive (or similar) rights, (ii) 190,234 shares of Company Common Stock were held in the treasury of the Company, (iii) no shares of Company Common Stock were held by the Company's Subsidiaries, and (iv) 10,202,275 shares of Company Common Stock were reserved for future issuance in connection with the Company Stock Option Plans (including shares issuable pursuant to outstanding Company Stock Options). Section 3.03(a) of the Company Disclosure Schedule sets forth, as of the Capitalization Date, the number of shares of Company Common Stock issuable upon exercise of outstanding Company Stock Options granted under each Company Stock Option Plan, and the number of Restricted Shares outstanding and, as of the Capitalization Date, there are no other Company Stock Options or Restricted Shares outstanding. Prior to the date hereof, the Company has provided a true, complete, and correct list of all Company Stock Options and Restricted Shares outstanding as of the Capitalization Date, including the per share exercise price, the date of grant, the vesting commencement date, and the vesting schedule thereof. The Company Common Stock is traded on the NASDAQ National Market. No other securities of the Company are listed or quoted for trading on any United States domestic or foreign securities market. Since the Capitalization Date, (i) no shares of Company Common Stock have been issued, except for shares of Company Common Stock issued pursuant to the exercise of Company Stock Options outstanding as of the Capitalization Date or except as otherwise disclosed in Section 3.03(a) of the Company Disclosure Schedule and (ii) no Company Stock Options have been issued or granted.

(b) Except as set forth in Section 3.03(b) of the Company Disclosure Schedule and for the rights (the "Rights") issued pursuant to the Rights Agreement, dated as of October 1, 1996, as amended by the Amendment No. 1 to Rights Agreement, dated as of November 9, 1999 (the "Company Rights Agreement"), between the Company and Mellon Bank, N.A., as rights agent, in respect of which no Distribution Date (as defined in the Company Rights Agreement) has occurred, there are no (i) subscriptions, calls, contracts, options, warrants, or other rights, agreements, arrangements, understandings, restrictions, or commitments of any character to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound relating to the issued or unissued capital stock of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue or sell any shares of capital stock of, other equity interests in or debt securities of the Company or any of its Subsidiaries, (ii) securities of the Company or securities convertible, exchangeable or exercisable for shares of capital stock or voting securities of the Company, or (iii) equity equivalents, stock appreciation rights, phantom stock, ownership interests in the Company or any of its Subsidiaries or similar rights. All shares of Company Common Stock subject to issuance as set forth in Section 3.03(b) of the Company Disclosure Schedule, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable and free of preemptive (or similar) rights. Except as set forth in Section 3.03(b) of the Company Disclosure Schedule, there are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any outstanding securities of the Company or any of its Subsidiaries, to vote or to dispose of any shares of Company Common Stock or any capital stock of any Company Subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution, or otherwise) in, any Subsidiary of the Company or any other person. Except as set forth in Section 3.03(b) of the Company Disclosure Schedule, none of the Company or any of its Subsidiaries is a party to any shareholders' agreement, voting trust agreement, or registration rights agreement relating to any equity securities of the Company or any of its Subsidiaries or any other Contract relating to disposition, voting, or dividends with respect to any equity securities of the Company or of any its Subsidiaries. No cash dividends on the Company Common Stock have been declared or have accrued since December 1, 2003. To the Knowledge of the Company, all of the Shares have been issued by the Company in compliance in all material respects with all applicable securities laws including the Securities Act and "blue sky" laws.

(c) Except as set forth in Section 3.03(c) of the Company Disclosure Schedule, each outstanding share of capital stock (or other equity interest) of each Subsidiary of the Company is duly authorized, validly issued, fully paid, and nonassessable and was issued free of preemptive (or similar) rights, and each such share is owned by the Company or another Subsidiary of the Company (except for, in the case of certain non-United States Subsidiaries, nominal numbers of shares held by a director, officer or other agent of a Company Subsidiary in trust for such Company Subsidiary) free and clear of all options, rights of first refusal, agreements, limitations on the Company's or of its Subsidiaries' voting, dividend or transfer rights, charges, and other Liens of any nature whatsoever.

(d) As of the date hereof, the only principal amount of outstanding indebtedness for borrowed money of the Company and its Subsidiaries (not including intercompany amounts or operating or capital leases) is (i) borrowings that would be permitted under Section 5.01 if incurred after the date hereof, (ii) $2,710,963 for letters of credit under the Company's $250,000,000 Second Amended and Restated Credit Agreement, dated as of August 18, 2003, as amended, among the Company, as Borrower, National City Bank of Pennsylvania, as Agent, Wachovia Bank, as Syndication Agent, SunTrust Bank, as Syndication Agent, Fleet National Bank, as Documentation Agent, and JPMorgan Chase Bank, as Documentation Agent, and the other parties thereto (the "Credit Agreement"), and (iii) amounts set forth in Section 3.03(d) of the Company Disclosure Schedule.

3.04 Authority Relative to this Agreement. The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Merger and the other transactions contemplated by this Agreement to be consummated by the Company (the "Other Transactions"). The execution, delivery, and performance of this Agreement by the Company and the consummation by the Company of the Merger and the Other Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Merger or such Other Transactions (other than the adoption of this Agreement by the affirmative vote of a majority of the votes cast by all holders of Company Common Stock entitled to vote thereon and the filing and recordation of appropriate merger documents, including the Articles of Merger, as required by the PBCL). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution, and delivery by Merger Co, constitutes a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting creditors' rights generally and subject to general principles of equity and an implied covenant of good faith and fair dealing (the "Bankruptcy and Equity Exception").

3.05 No Conflict; Required Filings and Consents.

(a) Except as set forth in Section 3.05(a) of the Company Disclosure Schedule, the execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation by the Company of the Merger and the Other Transactions will not, (i) conflict with, violate, or result in a breach of the Articles of Incorporation or Bylaws (or similar organizational documents) of the Company or any of its Subsidiaries, (ii) assuming that all consents, approvals, and other authorizations described in Section 3.05(b) have been obtained and that all filings and other actions described in Section 3.05(b) have been made or taken, violate any federal, state, local or foreign governmental statute, law, ordinance, regulation, rule, code, executive order, judgment, decree or requirement, including any rule, regulation and order promulgated thereunder and any order, decree, writ, settlement, stipulation, injunction, award, consent or judgment of any Governmental Entity ("Law") applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any Subsidiary is bound or affected, (iii) assuming that all consents, approvals, and other authorizations described in Section 3.05(b) have been obtained and that all filings and other actions described in Section 3.05(b) have been made or taken, result in any breach or violation of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, require consent, or result in a material loss of a material benefit under, give rise to a right or obligation to purchase or sell assets or securities under, give to others any right of termination, amendment, acceleration, or cancellation of, or cause additional fees to be due under or result in the creation of a Lien on any property or asset of the Company or any Subsidiary pursuant to any note, bond, mortgage, indenture, contract (written or oral), obligation, Plan, undertaking, arrangement, agreement, lease, license, permit, franchise or other binding commitment, instrument, or obligation (each, a "Contract") to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any property or asset of the Company or any Subsidiary is bound or affected, (iv) assuming that all consents, approvals, and other authorizations described in Section 3.05(b) have been obtained and that all filings and other actions described in Section 3.05(b) have been made or taken, violate any permits, licenses, accreditations, certificates, approvals, exemptions, orders, franchises, permissions, agreements, qualifications, authorizations, and registrations required by Law (each, a "Permit") of the Company or any of its Subsidiaries or any of the schools regulated as such by the United States Department of Education (the "DOE") or other Education Department or Accrediting Body and owned and operated by the Company or any of its Subsidiaries (the "Schools") or any Law applicable to the Company or any of its Subsidiaries or the Schools, or (v) assuming that all consents, approvals, and other authorizations described in Section 3.05(b) have been obtained and that all filings and other actions described in Section 3.05(b) have been made or taken, violate any standard or requirement of any entity or organization, whether private or quasi-private, whether foreign or domestic, which engages in the granting or withholding of accreditation of post-secondary schools or their educational programs in accordance with standards and requirements relating to the performance, operations, financial condition and/or academic standards of such schools (each such entity or organization, an "Accrediting Body"), except, with respect to clauses (ii), (iii), (iv), and (v) above, for any such violations, conflicts, breaches, defaults, or other occurrences which would not have a Company Material Adverse Effect.

(b) Except as set forth in Section 3.05(b) of the Company Disclosure Schedule, the execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation by the Company of the Merger and the Other Transactions will not, require any consent, approval, authorization or permit of, or filing with or notification to, any supranational, national, provincial, federal, state, local, or foreign government, court, arbitral tribunal, non-educational administrative agency or commission or other non-educational governmental or regulatory authority or non-educational administrative agency or commission (each, a "Governmental Entity"), or any federal or state education regulatory bodies having specific jurisdiction over the operation of or provision of Student Financial Assistance Programs funds to or on behalf of the students of post-secondary educational or training institutions or guaranteeing student loans to students at such institutions (each, an "Education Department") or any Accrediting Body, except for (i) applicable requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the competition or merger control Laws of any other applicable jurisdiction, (iii) the filing with the Securities and Exchange Commission (the "SEC") of a proxy statement relating to the adoption of this Agreement by the Company's shareholders (as amended or supplemented from time to time, the "Proxy Statement"), (iv) any required filing with, and any required approval of, the National Association of Securities Dealers, Inc. or its wholly owned Subsidiary, NASD Regulation, Inc., or any successor entity or entities thereto (collectively, the "NASD"), including requirements of the NASDAQ National Market, (v) any filings with, and approvals from, relevant state securities administrators or related to the blue sky laws of various states, (vi) the filing and recordation of appropriate merger documents as required by the PBCL, including the Articles of Merger, and appropriate documents with the relevant authorities of other states in which the Company or any of its Material Subsidiaries is qualified to do business, (vii) the Pre-Closing Education Consents and the Post-Closing Education Consents set forth on Section 3.05(b)(vii) of the Company Disclosure Schedule, (viii) filings required as a result of facts or circumstances solely attributable to Merger Co's or any Equity Investor's (as opposed to any other third party's) participation in the transactions contemplated by this Agreement, or (ix) where the failure to obtain such consents, approvals, authorizations, or permits, or to make such filings or notifications, would not have a Company Material Adverse Effect.

3.06 Compliance with Law and Permits; Education Department Compliance.

(a) Permits; Compliance with Law. As of the date hereof, except (i) as set forth in Section 3.06(a) of the Company Disclosure Schedule and (ii) for Education Permits and educational Laws and regulations which are exclusively provided for in Section 3.06(b), all Permits of the Company or any of its Subsidiaries which are necessary to the conduct of the business of the Company and the Schools are in full force and effect and neither the Company nor any of its Subsidiaries are in violation of any Permit or Law, other than where such failures to be in full force or effect or such violations would not have a Company Material Adverse Effect.

(b) Education Permits and Compliance. Unless otherwise specifically indicated, the representations and warranties contained in this Section 3.06(b) apply to the period from July 1, 2002, through the date hereof. Except as set forth in Section 3.06(b) of the Company Disclosure Schedule, each School has maintained without interruption in all material respects all Permits issued by any Education Department or Accrediting Body and necessary for the operation of the School, including each location, site and educational program thereof, as conducted at such time, including the receipt of funding under Student Financial Assistance Programs (each such Permit, an "Education Permit"), except where the failure to have such an Education Permit would not have a Company Material Adverse Effect. The Company has made available to Merger Co a copy of each Education Permit listed on Section 3.06(b) (under schedule references 1(a), 1(b) and 1(c)) of the Company Disclosure Schedule. Except as set forth in Section 3.06(b) of the Company Disclosure Schedule, the Company and each of its Subsidiaries have operated the Schools in compliance with all Education Permits, Accrediting Body approvals and applicable Laws pertaining to Student Financial Assistance Programs or administered by an Education Department, except where such noncompliance would not have a Company Material Adverse Effect. Without limiting the generality of the foregoing and except as set forth in Section 3.06(b) of the Company Disclosure Schedule, the Company and each of its Subsidiaries are in compliance in all material respects with the regulations and requirements of the DOE governing each Institution's eligibility to participate in and administration of the federal student financial assistance programs authorized by Title IV (the "Title IV Programs") of the Higher Education Act of 1965, as amended, 20 U.S.C.A. Section 1070 et seq., and any amendments or successor statutes thereto (the "HEA"), including the regulations and requirements regarding compensation (34 C.F.R. Section 668.14(b)(22)) and any other program authorized by the HEA and administered by the DOE, as well as any state student assistance grant or loan programs or other government-sponsored student assistance program (collectively the "Student Financial Assistance Programs"), except to the extent that any noncompliance would not have a Company Material Adverse Effect. Except as set forth in Section 3.06(b) of the Company Disclosure Schedule, the Company does not have any Knowledge of any pending or threatened program review, survey, investigation, or any audit by any Education Department or Accrediting Body with respect to compliance with any Education Permit or any requirements of any Student Financial Assistance Program. In addition, and without limiting the generality of the foregoing:

(i) Cohort Default Rate. Section 3.06(b)(i) of the Company Disclosure Schedule sets forth each Institution's official cohort default rate ("OCDR") for Federal Family Education Loan Program loans or Federal Direct Loan Program loans, as published by the DOE, for the federal fiscal years 2002 through 2003, each Institution's draft cohort default rate for Federal Family Education Loan Program loans or Federal Direct Loan Program loans for the federal fiscal year 2004, and each Institution's OCDR on Federal Perkins Loan Program loans for the federal award years ended June 30, 2003 through June 30, 2005 for each Institution which participated in such loan program. The Company has made available to Merger Co true and correct copies of the notices issued by the DOE with respect to all such OCDRs, to the extent available.

(ii) Compliance with Definition of Proprietary Institution of Higher Education. Each Institution is, and since July 1, 2003 has been, duly qualified as a "proprietary institution of higher education" as defined by the DOE.

(iii) Institutional Refunds. Since July 1, 2002, except as set forth in Section 3.06(b)(iii) of the Company Disclosure Schedule, (A) the Company and each of its Subsidiaries are in compliance in all material respects with Education Department and Accrediting Body requirements and regulations relating to (x) the implementation of a fair and equitable refund policy and (y) the implementation of DOE's "return of Title IV funds" requirements, and (B) any and all refunds or returns required thereunder have been accurately calculated and timely paid.

(iv) Accreditation and Licensing. Since July 1, 2002, except as set forth in Section 3.06(b)(iv) of the Company Disclosure Schedule or as would not have a Company Material Adverse Effect, the Schools are (A) accredited by, and in good standing with, and in compliance in all material respects with the requirements of their respective applicable Accrediting Bodies and (B) licensed to operate by, in good standing with, and in compliance in all material respects with the requirements of the Education Departments in the states or foreign jurisdictions in which they operate; and, in each case, the Schools have not received written notice of, and the Company has no Knowledge of, any facts or circumstances which would materially interfere with or jeopardize such license or accreditation.

(v) Title IV Program Funds. No Institution has derived more than ninety percent (90%) of its revenues from Title IV Program funds, as determined in accordance with DOE's "90/10 Rule" as codified at 34 C.F.R. Section 600.5(a)(8), for any reporting period required by the DOE ended on or after June 30, 2002. Section 3.06(b)(v) of the Company Disclosure Schedule sets forth the percentage of Title IV Program funds received by each Institution, as calculated pursuant to such "90/10 Rule" for each fiscal year ended on or after June 30, 2002 and for the period from July 1, 2005 through the date hereof.

(vi) Policies and Procedures. The Company has provided to Merger Co true and correct copies of all readily available policy manuals and other statements of procedures of the Company, any Subsidiary or any School currently in effect and relating to: (A) recruitment of students for the Schools, including procedures for assisting in the application by prospective students for Student Financial Assistance Program funds; (B) admissions procedures, including any descriptions of procedures for ensuring compliance with Education Department or Accrediting Body requirements applicable to such procedures; (C) procedures for encouraging and verifying attendance, minimum required attendance policies, and other relevant criteria relating to course performance requirements and completion; and (D) procedures for processing, disbursing and returning Student Financial Assistance Program funds (collectively, the "Policy Guidelines"). The applicable operations of the Schools have been conducted in substantial compliance with the Policy Guidelines, which comply in all material respects with Law, Education Department requirements and Accrediting Body standards applicable to the Schools, except as set forth in Section 3.06(b)(vi) of the Company Disclosure Schedule or to the extent that noncompliance would not have a Company Material Adverse Effect.

(vii) Reports and Audits. Since July 1, 2002, except as set forth in Section 3.06(b)(vii) of the Company Disclosure Schedule, the Company and each of its Subsidiaries and Schools have submitted on a timely basis all reports, audits, and other information, whether periodic in nature or pursuant to specific requests, for the Company, any of its Subsidiaries, and the Schools to all Education Departments and Accrediting Bodies with which such filings are required relating to its compliance with (A) applicable Education Department and Accrediting Body requirements or (B) Student Financial Assistance Program requirements, except, in the case of each of the foregoing clauses, where the failure to submit such reports, audits, and other information would not have a Company Material Adverse Effect.

(viii) Financial Aid Disbursements. Except as set forth in Section 3.06(b)(viii) of the Company Disclosure Schedule, since July 1, 2002, each School has calculated and made all Student Financial Assistance Program disbursements in compliance with all Education Department requirements and Accrediting Body standards, except where any such noncompliance would not have a Company Material Adverse Effect.

(ix) Status of Company and Subsidiaries. Neither the Company, nor any person or entity that exercises Substantial Control over the Company, any of its Subsidiaries, or the Schools (as the term "Substantial Control" is used in 34 C.F.R. Section 668.174(b) and (c)), or member of such person's family (as the term "family" is defined in 34 C.F.R. Section 600.21(f)), alone or together, (A) exercises or exercised Substantial Control over an institution other than the Schools or over a third-party servicer (as that term is defined in 34 C.F.R. Section 668.2) that owes a liability for a violation of a Title IV Program or other HEA program requirement, or (B) owes a liability for a Title IV Program or other HEA program violation. At no time has the Company, any of its Subsidiaries, or the Schools, nor any person or entity that exercises Substantial Control over any of them, filed for relief in bankruptcy or had entered against it an order for relief in bankruptcy. None of the Company, any of its Subsidiaries, or the Schools, nor any person or entity that exercises Substantial Control over any of them, has pled guilty to, has pled nolo contendere to, or has been found guilty of a crime involving the acquisition, use, or expenditure of funds under the Title IV Programs or has been judicially determined to have committed fraud involving funds under the Title IV Programs. Except as set forth in Section 3.06(b)(ix) of the Company Disclosure Schedule, to the Company's Knowledge, neither the Company, nor any of its Subsidiaries, or Schools have employed any individual or entity in a capacity that involves the administration or receipt of funds under the Title IV Programs, or contracted with any institution or third-party servicer, which has been terminated under the Title IV Programs for a reason involving the acquisition, use, or expenditure of federal, state or local government funds, or has been convicted of, or has pled nolo contendere or guilty to, a crime involving the acquisition, use or expenditure of federal, state, or local government funds, or has been administratively or judicially determined to have committed fraud or any other material violation of law involving federal, state, or local government funds. Other than as would not have a Company Material Adverse Effect, no school not then a School or any third-party servicer (as that term is defined at 34 C.F.R. Section 668.2) is, or since July 1, 2002 has been, administered commonly, jointly, or in conjunction with the Company or any School, and no other school or organization not then a School has provided educational services on behalf of the Company or any School, except for instruction provided under clinical affiliation, externship, internship, or similar agreements. Other than as would not have a Company Material Adverse Effect, neither the Company nor any School provides, or since July 1, 2002, has provided, any educational instruction for students of a school not then a School for which students could qualify for Title IV Program funding on behalf of any other institution or organization of any sort.

(x) Delivery of Documents. The Company has provided to Merger Co true and complete copies of all correspondence (excluding general correspondence routinely sent to or received from any Education Department or Accrediting Body) received from or sent by or on behalf of the Company, any Subsidiary, or any School to any Education Department or any Accrediting Body, to the extent such correspondence is readily available and was sent or received within the past two years or relates to any issue which remains pending, and relates to: (A) any notice that any Education Permit is not in full force and effect or that an event has occurred which constitutes or, with the giving of notice or the passage of time or both, would reasonably be expected to constitute a breach or violation thereunder; (B) any written notice that the Company, any Subsidiary, or any School has violated or are violating any Law administered by any Education Department or any applicable Accrediting Body; (C) any audits, program reviews, investigations, or site visits conducted by any Education Department or any Accrediting Body, or any independent auditor reviewing compliance by the Company, any of its Subsidiaries, or any School with the statutory, regulatory or other requirements of the Title IV Programs; (D) any written notice of an intent to limit, suspend, terminate, revoke, cancel, not renew, or condition any Education Permit of the Company, any of its Subsidiaries, or any School; (E) any written notice of an intent or threatened intent to condition the provision of Title IV Program funds to the Company, any of its Subsidiaries, or any School or the continued operation of any of the Schools on the posting of a letter of credit or other surety in favor of the DOE or any Education Department, and any documentation indicating that such letter of credit is or was posted; (F) any written notice of an intent to provisionally certify the eligibility of any Schools to participate in the Title IV Programs; (G) the placement or removal of any Schools on or from the reimbursement or cash monitoring method of payment under Title IV Programs; or (H) any matter or proceeding disclosed under Sections 3.06, 3.07, 3.09 or 3.11 of the Company Disclosure Schedule. The Company has made available to Merger Co the audited financial statements of the Company, any Subsidiary and any School, for any fiscal year ended on or after June 30, 2002, to the extent filed with the DOE.

(xi) Financial Assistance Programs. Section 3.06(b)(xi) of the Company Disclosure Schedule lists each material Student Financial Assistance Program, and the Company has made available to Merger Co true and complete copies of each available contract or agreement listed in Section 3.06(b)(xi) of the Company Disclosure Schedule.

(xii) Distance Education. For each year ended on or after June 30, 2002, each Institution has complied in all material respects with the applicable regulations codified at 34 C.F.R. Section 600.7 with respect to offering telecommunications programs and enrolling students in telecommunications programs, as those terms are used at 34 C.F.R. Section 600.7. To the extent readily available, the Company has provided to Merger Co the back-up data to support the compliance of each Institution with these distance education requirements in each such year, including any material consortium or articulation agreements related to the provision of online education instruction.

(xiii) Financial Responsibility. Except as set forth in Section 3.06(b)(xiii) of the Company Disclosure Schedule, since July 1, 2002, neither the Company nor any Institution or School, as applicable, has received written notice from any Education Department, Accrediting Body or other Governmental Entity that any Institution or School owned by the Company or any of its Subsidiaries at the time lacked financial responsibility or was required to post a letter of credit or other form of surety for any reason, including any request for a letter of credit based on late refunds pursuant to 34 C.F.R. Section 668.173.

3.07 Sarbanes-Oxley Compliance; Internal Controls. The Company has made all certifications and statements required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, and the related rules and regulations promulgated thereunder (the "Sarbanes-Oxley Act") with respect to the Company's filings pursuant to the Exchange Act. The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act) designed to ensure that material information relating to the Company, including its Material Subsidiaries, is made known on a timely basis to the individuals responsible for the preparation of the Company's filings with the SEC and other public disclosure documents. Except as would not have a Company Material Adverse Effect or as set forth in Section 3.07 of the Company Disclosure Schedule, (a) the Company has established and maintains a system of internal accounting control over financial reporting sufficient to comply with all legal and accounting requirements applicable to the Company, (b) the Company has disclosed, based on its most recent evaluation of internal controls, to the Company's auditors and its audit committee, (i) any significant deficiencies and material weaknesses in the design or operation of its internal accounting controls which are reasonably likely to materially and adversely affect the Company's ability to record, process, summarize, and report financial information, and (ii) any fraud known to the Company that involves management or other employees who have a significant role in internal controls, and (c) the Company has not received any complaint, allegation, assertion, or claim in writing regarding the accounting practices, procedures, methodologies, or methods of the Company or its internal accounting controls over financial reporting, including any such complaint, allegation, assertion, or claim that the Company has engaged in questionable accounting or auditing practices.

3.08 Governmental Entity or Accrediting Body Approval. As of the date hereof, there exists no fact or circumstance attributable to the Company, any of its Subsidiaries, or any of the Schools, which would reasonably be expected to have a material adverse impact on Merger Co's or the Company's ability to obtain any authorization, consent, or similar approval from the DOE or any other Education Department, Governmental Entity, or Accrediting Body whose authorization, consent, or similar approval is contemplated in connection with this Agreement, including, without limitation, any authorization, consent, or similar approval which must be obtained following the Closing from the DOE or any Education Department or Accrediting Body in order to continue the operations of the Schools as presently conducted.

3.09 SEC Filings; Financial Statements; Undisclosed Liabilities.

(a) Except as set forth in Section 3.09(a) of the Company Disclosure Schedule, the Company has filed all forms, reports, statements, schedules, and other documents required to be filed by it with the SEC since July 1, 2003 (together with all exhibits and schedules thereto and all information incorporated therein by reference, the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the applicable requirements of the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act, the Sarbanes-Oxley Act and, in each case, the rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed, or, if amended prior to the date hereof, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of the Company is required to file any form, report, or other document with the SEC. The Company has made available to Merger Co all material correspondence between the SEC, on the one hand, and the Company, on the other hand, since July 1, 2003 through the date of this Agreement.

(b) Except as set forth in Section 3.09(b) of the Company Disclosure Schedule, each of the consolidated financial statements (including, in each case, any notes thereto) contained in the SEC Reports, when filed, complied with applicable accounting requirements and with published rules and regulations of the SEC with respect thereto, was prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and each fairly presents, in all material respects, the consolidated financial position, results of operations, and changes in cash flows of the Company and its consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject to footnotes and other presentation items, and, in the case of pro forma financial statements, to the qualifications stated therein, and, in the case of unaudited statements, normal and recurring year-end adjustments). All of the Company's Subsidiaries are consolidated for GAAP purposes.

(c) Except as and to the extent set forth in Section 3.09(c) of the Company Disclosure Schedule or specifically accrued or reserved against in the consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2005 (including the notes thereto) included in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2005, neither the Company nor any its Subsidiaries has any liability or obligation of any nature (whether direct, indirect, accrued, absolute, unasserted, contingent, known or unknown, determined or determinable, matured or unmatured or otherwise), except for liabilities and obligations (i) incurred in connection with the transactions contemplated hereby, (ii) incurred in the ordinary course of business and in a manner consistent with past practice after December 31, 2005, (iii) reasonable fees and expenses incurred by the Company in connection with the Merger and the Other Transactions, or (iv) that would not have a Company Material Adverse Effect.

3.10 Information Supplied. None of the information included or incorporated by reference in the Proxy Statement or any other document filed with the SEC in connection with the Merger (the "Other Filings") will, in the case of the Proxy Statement, at the date it is first mailed to the Company's shareholders or at the time of the Company Shareholders' Meeting or at the time of any amendment or supplement thereof, or, in the case of any Other Filing, at the date it is first filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Merger Co or any Affiliate of Merger Co in connection with the preparation of the Proxy Statement or the Other Filings for inclusion or incorporation by reference therein. The Proxy Statement and the Other Filings that are filed by the Company will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder.

3.11 Absence of Certain Changes or Events. Since June 30, 2005, there has not been any Company Material Adverse Effect. Since June 30, 2005 and prior to the date hereof, except as expressly contemplated by this Agreement or as set forth in Section 3.11 of the Company Disclosure Schedule, (a) the Company and its Subsidiaries have conducted their businesses only in the ordinary course of business and in a manner consistent with past practice, (b) neither the Company nor any of its Subsidiaries has suffered any damage, destruction or loss (whether or not covered by insurance), other than in the ordinary course of business, that would have a Company Material Adverse Effect, and (c) neither the Company nor any of its Subsidiaries has taken any action that would materially breach any of the prohibitions set forth in clauses (a) through (r) of Section 5.01 if taken after the date hereof.

3.12 Absence of Litigation. Except as set forth in Section 3.12 of the Company Disclosure Schedule, there is no litigation, suit, claim, action, proceeding, hearing, petition, grievance, complaint, or investigation (an "Action") pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries, or any property or asset of the Company or any of its Subsidiaries, before any Governmental Entity or arbitrator, except such Actions that would not have a Company Material Adverse Effect. To the Knowledge of the Company, the Company knows of no valid basis for any other Actions that would have a Company Material Adverse Effect. As of the date of this Agreement, no executive officer or director of the Company is a defendant in any Action in connection with his status as an executive officer or director of the Company or any of its Subsidiaries. Except as set forth in Section 3.12 of the Company Disclosure Schedule, other than pursuant to Certificates of Incorporation, Bylaws, and other organizational documents, no Contracts between the Company or any Material Subsidiary and any current or former director or officer exists that provides for indemnification. Neither the Company nor any of its Subsidiaries nor any material property or material asset of the Company or any Subsidiary is subject to any continuing order of, consent decree, settlement agreement, or other similar written agreement with, or, to the Knowledge of the Company, continuing investigation by, any Governmental Entity, or any order, writ, judgment, injunction, decree, determination, settlement, stipulation or award of, any Governmental Entity. Except as set forth in Section 3.12 of the Company Disclosure Schedule, there are no outstanding orders, judgments, injunctions, settlements, stipulations, awards, or decrees of any Governmental Entity or Accrediting Body against the Company, its Subsidiaries, or the Schools that would have a Company Material Adverse Effect.

3.13 Employee Benefit Plans.

(a) Section 3.13(a) of the Company Disclosure Schedule lists all material employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance (other than Contracts with individual members of the faculty of the Schools), consulting, change-in-control, collective bargaining, termination, or other benefit plans, programs, arrangements and material Contracts to which the Company or any of its Subsidiaries is a party (whether legally binding or not and whether subject to ERISA or not), which are maintained, contributed to or sponsored by the Company or any of its Subsidiaries for the benefit of any current or former employee, consultant, officer or director of the Company or any of its Subsidiaries (each, a "Company Employee") or pursuant to which the Company or any of its Subsidiaries has or may reasonably be expected to have any material obligations or material liabilities of any nature (whether direct, indirect, accrued, absolute, contingent, determined or determinable, matured or unmatured or otherwise). All such plans, programs, arrangements and Contracts, whether material or not, shall be collectively referred to as the "Plans". The Company has made available to Merger Co a true and complete copy (where applicable) of (A) each Plan (or, where a Plan has not been reduced to writing, a summary of all material Plan terms of such Plan), (B) each trust or funding arrangement prepared in connection with each such Plan, (C) the three most recently filed annual reports on Internal Revenue Service ("IRS") Form 5500 (with attached Schedules) for each Plan, (D) the most recently received IRS determination letter and all material communications with any Governmental Entity for each such Plan, (E) the three most recently prepared actuarial reports and financial statements in connection with each such Plan, and (F) the most recent summary plan description, any summaries of material modification, any employee handbooks, and any material written communications (or a description of any material oral communications) by the Company or its Subsidiaries to any Company Employee concerning the extent of the benefits provided under a Plan.

(b) None of the Company or any of its Subsidiaries or any other person or entity that, together with the Company or any of its Subsidiaries, is or was treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (each, together with the Company and any of its Subsidiaries, an "ERISA Affiliate") has now or at any time within the past six years (and in the case of any such other person or entity, only during the period within the past six years that such other person or entity was an ERISA Affiliate) contributed to, sponsored, or maintained: (i) a pension plan (within the meaning of Section 3(2) of ERISA) subject to Section 412 of the Code or Title IV of ERISA; (ii) a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan"); or (iii) a single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for which an ERISA Affiliate would incur liability under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). Except as set forth in Section 3.13(b) of the Company Disclosure Schedule (each, a "Change in Control Agreement"), no Plan exists that would result in the payment to any Company Employee of any money or other property or accelerate or provide any other rights or benefits to any Company Employee as a result of the consummation of the Merger or any other transaction contemplated by this Agreement (whether alone or in connection with any other event). Except as set forth in Section 3.13(b) of the Company Disclosure Schedule, there is no Plan covering any Company Employee that, individually or collectively, would give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G or Section 162(m) of the United States Internal Revenue Code of 1986, as amended (the "Code").

(c) Each Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS covering all of the material provisions applicable to the Plan for which determination letters are currently available that the Plan is so qualified, and each trust established in connection with any Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS that it is so exempt, and, to the Knowledge of the Company, no fact or circumstance exists that would result in the revocation of such letter.

(d) Each Plan has been established and administered in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other applicable Laws, except to the extent such noncompliance would not have a Company Material Adverse Effect, and except as set forth in Section 3.13(d) of the Company Disclosure Schedule, no Plan provides post-termination or retiree welfare benefits, and neither the Company nor any of its Subsidiaries has any obligation to provide any post-termination or retiree welfare benefits other than health care continuation as required by Section 4980B of the Code.

(e) All contributions (including all employer contributions and employee salary reduction contributions) that are due have been made to each pension plan (as defined in Section 3(2) of ERISA), and to the extent not due have been appropriately accrued on the financial statements described in Section 3.09 in accordance with GAAP. All premiums or other payments which are due have been paid with respect to each welfare plan or fringe benefit plan, and to the extent such amounts are owed with respect to periods prior to the Closing Date but are not yet payable, have been appropriately accrued on the financial statements described in Section 3.09 in accordance with GAAP.

(f) Each plan that is a "non-qualified deferred compensation plan" (as defined in Section 409A(d)(1) of the Code) and is otherwise subject to the requirements of Section 409A of the Code (together with the guidance and proposed regulations promulgated thereunder, "Section 409A") has been operated and administered in good faith compliance in all material respects with Section 409A since January 1, 2005.

(g) Except as set forth in Section 3.13(g) of the Company Disclosure Schedule, with respect to any Plan, (i) no Actions (other than routine claims for benefits in the ordinary course) are pending or, to the Knowledge of the Company, threatened, except for those that would not be material to the Company, (ii) to the Knowledge of the Company, no facts or circumstances exist that would give rise to any such Actions, and (iii) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the IRS, or other Governmental Entity, is pending, in progress or, to the Knowledge of the Company, threatened, except for those that would not be material to the Company.

(h) With respect to each Plan that is not subject to United States Law (a "Foreign Benefit Plan"), except as set forth in Section 3.13(h) of the Company Disclosure Schedule or as would not have a Company Material Adverse Effect: (i) all employer and employee contributions to each Foreign Benefit Plan required by Law or by the terms of such Foreign Benefit Plan have been made or, if applicable, accrued in accordance with normal accounting practices; (ii) the fair market value of the assets of each funded Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit Plan funded through insurance or the book reserve established for any Foreign Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such plan, according to the actuarial assumptions and valuations most recently used and consistent with applicable Law and normal accounting practices to determine employer contributions to such Foreign Benefit Plan, and no transaction contemplated by this Agreement shall cause such assets, reserve or insurance obligations to be less than such benefit obligations; (iii) each Foreign Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities; and (iv) each Foreign Benefit Plan is in compliance in all material respects with all applicable Laws.

3.14 Labor and Employment Matters. Except as set forth in Section 3.14 of the Company Disclosure Schedule, neither the Company nor any of its Material Subsidiaries is a party to any collective bargaining agreement or other labor union agreements applicable to persons employed by the Company or any of its Material Subsidiaries nor, to the Knowledge of the Company, are there any formal activities or proceedings of any labor union to organize any such employees. There are no material unfair labor practice complaints pending against the Company or any of its Material Subsidiaries before the National Labor Relations Board or any other Governmental Entity or any current union representation questions involving employees of the Company or any of its Material Subsidiaries. There is no strike, controversy, slowdown, work stoppage or lockout in progress, or, to the Knowledge of the Company, threatened in writing, by or with respect to any employees of the Company or any of its Material Subsidiaries.

3.15 Real Property.

(a) Section 3.15(a) of the Company Disclosure Schedule contains a true and complete list of each parcel of real property owned by the Company or any of its Subsidiaries and sets forth the entity owning such property (the "Owned Real Property"). The Company or the applicable entity identified on Section 3.15(a) of the Company Disclosure Schedule has good and marketable fee simple title to all of the Owned Real Property, in each case free and clear of all mortgages, pledges, liens, security interests, conditional and installment sale agreements, options, rights of first offer, rights of first refusal, charges or other claims of third parties of any kind, including any easements or rights-of-way, or other encumbrances (collectively, "Liens"), other than (i) Liens for current taxes not yet due and payable, and water, sewer and other assessments not yet due and payable, (ii) ordinary course inchoate mechanics' and materialmen's Liens for construction in progress with respect to amounts not yet overdue, (iii) ordinary course workmen's, repairmen's, warehousemen's and carriers' Liens, (iv) Liens securing debt reflected as secured debt on the financial statements included or incorporated by reference in the SEC Reports or otherwise disclosed in Section 3.15(a) of the Company Disclosure Schedule, and (v) Liens, matters of record, including, without limitation, easements, rights-of-way, covenants, restrictions, conditions, setbacks, encroachments, gaps and gores, and other imperfections of title, that are typical for the applicable property type and locality, none of which, individually or in the aggregate, materially impairs the use, value or operations of the affected property or materially interferes with the conduct of the business of the Company and its Subsidiaries, taken as a whole, as presently conducted, (collectively, "Permitted Liens"). Copies of title insurance policies obtained by the Company for each parcel of Owned Real Property have been made available to Merger Co to the extent existing and readily available.

(b) Section 3.15(b) of the Company Disclosure Schedule lists by address each parcel of real property leased or subleased by the Company or any of its Subsidiaries (the "Leased Properties," and, together with the Owned Real Property, the "Real Property"), with the name of the entity holding such leasehold interest, the date of the lease or sublease, any guaranty given by the Company or any of its Subsidiaries in connection therewith and each material amendment to any such lease or sublease. True, correct, and complete copies of all documents pursuant to which the Company or its Subsidiaries lease or sublease the Leased Properties, including all assignments, material amendments and modifications thereto (each a "Lease," and collectively, the "Leases") have been made available to Merger Co. Except as would not have a Company Material Adverse Effect or as disclosed on Section 3.15(b) of the Company Disclosure Schedule, the Company or one of its Subsidiaries, as applicable, has (i) the exclusive right to the use and occupancy of the Leased Properties, subject to the terms of the applicable lease or sublease relating thereto and (ii) a valid leasehold estate in all Leased Properties free and clear of all Liens, other than Permitted Liens.

(c) Each Lease is in full force and effect and is valid and enforceable against the Company or the applicable Subsidiary of the Company, and, to the Knowledge of the Company, any counterparty thereto, in accordance with its terms, and there is no material default under any Lease either by the Company or one of its Subsidiaries party thereto or, to the Company's Knowledge, by any other party thereto and, to the Company's Knowledge, no event has occurred that, with the lapse of time or the giving of notice or both, would constitute a material default by the Company or any of its Subsidiaries thereunder.

(d) There does not exist any pending or, to the Company's Knowledge, threatened condemnation or eminent domain proceedings with respect to any parcel of Real Property and, to the Company's Knowledge, neither the Company nor any of its Subsidiaries have received any written notice of the intention of a Governmental Entity or other Person to take or use any parcel of Real Property.

(e) To the Knowledge of the Company, there are no latent defects or adverse physical conditions affecting any parcel of Real Property or the improvements thereon that would materially interfere with the operation of the Real Property.

3.16 Intellectual Property.

(a) Except as set forth in Section 3.16(a) of the Company Disclosure Schedule or as would not have a Company Material Adverse Effect, (i) there are no Actions instituted or pending against the Company or any of its Subsidiaries or, to the Knowledge of the Company, threatened by any person contesting or challenging the right of the Company or any of its Subsidiaries to use any of their Intellectual Property, and to the Knowledge of the Company, no person is infringing or otherwise violating the Intellectual Property of the Company or any of its Subsidiaries; (ii) each trademark registration, service mark registration, copyright registration, domain name registration, and patent, which is owned by the Company or any of its Subsidiaries has been maintained in good standing and, with respect to those licensed to the Company or any of its Subsidiaries, has, to the Knowledge of the Company, been maintained in good standing; (iii) there is no Intellectual Property owned by a third party which, to the Company's Knowledge, the Company or any of its Subsidiaries are using without a license; (iv) the Company and each of its Subsidiaries own or possess adequate licenses or other rights to use all Intellectual Property necessary to conduct the Company's business as now conducted; (v) neither the Company nor any of its Subsidiaries has received any written, or to the Company's Knowledge, oral notice claiming that it has infringed or otherwise violated any Intellectual Property of any third parties; (vi) the Company and its Subsidiaries make reasonable efforts to protect and maintain their Intellectual Property and the security of their systems and software; and (vii) to the Company's Knowledge, the consummation of the Merger and the Other Transactions contemplated by this Agreement will not impair the validity, enforceability, ownership or right of the Company or any of its Subsidiaries to use its Intellectual Property. To the Knowledge of the Company, the Company and its Subsidiaries are in compliance in all material respects with applicable Laws relating to data protection and privacy and their own privacy policies.

(b) Section 3.16(b) of the Company Disclosure Schedule sets forth all registered trademarks and registered service marks, trademark and service mark applications, and to the Knowledge of the Company, all patents and patent applications, currently owned by the Company and its Subsidiaries that are material to the business of the Company and its Subsidiaries, taken as a whole.

(c) For purposes of this Agreement, "Intellectual Property" means (i) all inventions or discoveries (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all United States and foreign patents, patent applications, and patent disclosures; (ii) all trade names, trade dress, logos, slogans, brand names, corporate names, domain names, trademarks, service marks and other source indicators, and all goodwill associated therewith; (iii) all copyrightable works (including files, computer programs, software, firmware, Internet site content, databases and compilations, advertising and promotional materials, curricula, course materials, instructional video tapes, tape recordings, visual aids and textual works) and copyrights; and (iv) all trade secrets and confidential, proprietary, or non-public business information (including ideas, research and development, know-how, technology, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals).

3.17 Taxes.

(a) Except as set forth in Section 3.17(a) of the Company Disclosure Schedule, (i) the Company and its Subsidiaries have timely filed or caused to be filed or will timely file or cause to be filed (taking into account any extension of time to file granted or obtained) all Tax Returns required to be filed by them, and any such filed Tax Returns are true, correct and complete, (ii) the Company and its Subsidiaries have timely paid (or have had paid on their behalf) or will timely pay any Taxes due and payable except to the extent that such Taxes are being contested in good faith and for which the Company or the appropriate Subsidiary of the Company has set aside adequate reserves in accordance with GAAP, other than reserves for deferred Taxes reflecting the differences between book and Tax bases and liabilities and (iii) adequate reserves in accordance with GAAP have been established by the Company and its Subsidiaries for all Taxes not yet due and payable in respect of taxable periods ending on the date hereof. To the Knowledge of the Company, no claim for unpaid Taxes has become a Lien against the property of the Company or any of its Subsidiaries or is being asserted against the Company or any of its Subsidiaries. All material amounts of Tax required to be withheld by the Company and its Subsidiaries have been or will be timely withheld and paid over to the appropriate Tax authority.

(b) Except as set forth in Section 3.17(b) of the Company Disclosure Schedule, no deficiency for any material amount of Tax has been asserted or assessed by any Governmental Entity in writing against the Company or any of its Subsidiaries (or, to the Knowledge of the Company, has been threatened or proposed), except for deficiencies which have been satisfied by payment, settled or been withdrawn or which are being contested in good faith and are Taxes for which the Company or the appropriate Subsidiary of the Company has set aside adequate reserves in accordance with GAAP, other than reserves for deferred Taxes reflecting the differences between book and Tax bases and liabilities.

(c) Except as set forth in Section 3.17(c) of the Company Disclosure Schedule, (i) there are no pending or, to the Knowledge of the Company, threatened audits, examinations, investigations or other proceedings in respect of a material amount of Taxes of the Company or any of its Subsidiaries with respect to which the Company or a Subsidiary of the Company has been notified in writing and (ii) neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of a material amount of Taxes or agreed to any extension of time with respect to an assessment or deficiency for a material amount of Taxes (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course).

(d) Except as set forth in Section 3.17(d) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any indemnification, allocation, or sharing agreement, with respect to Taxes that would give rise to a material payment or indemnification obligation (other than agreements among the Company and its Subsidiaries and customary Tax indemnifications contained in credit or other commercial agreements the primary purpose of which does not relate to Taxes).

(e) Neither the Company nor any of its Subsidiaries is required to make any disclosure to the IRS with respect to a "listed transaction" pursuant to Section 1.6011-4(b)(2) of the Treasury Regulations promulgated under the Code.

(f) Neither the Company nor any of its Subsidiaries (i) is or has ever been a member of an affiliated group (other than a group the common parent of which is the Company) filing a consolidated federal income Tax Return or (ii) has any liability for Taxes of any person arising from the application of Treasury Regulation Section 1.1502-6 or any analogous provision of state, local or foreign law, or as a transferee or successor, by contract or otherwise.

(g) Neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

(h) The Company will not be required to include amounts in income, or exclude items of deduction, in a taxable period beginning after the Closing Date as a result of (i) a change in method of accounting occurring prior to the Closing Date, (ii) an installment sale or open transaction arising in a taxable period (or portion thereof) ending on or before the Closing Date, (iii) a prepaid amount received prior to the Closing Date or (iv) deferred gains arising prior to the Closing Date.

(i) For purposes of this Agreement:

"Tax" or "Taxes" mean any and all federal, state, local and foreign income, gross receipts, payroll, employment, excise, stamp, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, real property, personal property, sales, use, transfer, value added, alternative or add-on minimum, estimated, or other taxes (together with interest, penalties and additions to tax imposed with respect thereto) imposed by any Governmental Entity.

"Tax Returns" means returns, declarations, claims for refund, or information returns or statements, reports, and forms, relating to Taxes filed or required to be filed with any Governmental Entity (including any schedule or attachment thereto) with respect to the Company or its Subsidiaries, including any amendment thereof.

3.18 Environmental Matters.

(a) Except as set forth in Section 3.18 of the Company Disclosure Schedule: (i) none of the Company or any of its Subsidiaries is in violation in any material respect of any Environmental Law or, except for any violation that has been fully resolved, has violated in any material respect in the past any Environmental Law; (ii) the Company has not released, and to the Knowledge of the Company, there is and has been no release of Hazardous Substances which would reasonably be expected to give rise to a material liability of, or otherwise result in material costs to the Company or any of its Subsidiaries at, on or under any of the properties currently or formerly owned by the Company or any of its Subsidiaries, or at any other location (including, without limitation, any location to which Hazardous Substances have been sent by or on behalf of the Company for re-use, recycling, treatment, storage or disposal; (iii) the Company and its Subsidiaries have obtained and are in compliance in all material respects with all required Environmental Permits and, except for any noncompliance that has been fully resolved, have been in the past in compliance in all material respects with such Environmental Permits; (iv) there are no claims or notices issued to, or pending against, or, to the Knowledge of the Company, threatened against, the Company or any of its Subsidiaries alleging material violations of or material liability under any Environmental Law or otherwise concerning the presence, release, or management of Hazardous Substances; (v) neither the Company nor any of its Subsidiaries has received any written request for information, or been notified that it is a potentially responsible party under or relating to the federal Comprehensive Environmental Response, Compensation, and Liability Act or any similar Environmental Law, or with respect to any Hazardous Substances; and (vi) neither the Company nor any of its Subsidiaries has assumed or retained, by contract or operation of law, any material liabilities of any kind, fixed or contingent, known or unknown, under any Environmental Law or with respect to any Hazardous Substances.

(b) For purposes of this Agreement:

"Environmental Laws" means any Laws relating to (A) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (B) the manufacture, handling, transport, use, treatment, storage, emission, discharge or disposal of Hazardous Substances or materials containing Hazardous Substances; or (C) pollution or protection of the environment or protection of human health and safety as such is affected by Hazardous Substances or materials containing Hazardous Substances.

"Environmental Permits" means any permit, license, registration, approval, notification, exemption or any other authorization required under or pursuant to Environmental Law.

"Hazardous Substances" means those substances, materials, or wastes, defined as toxic, hazardous, acutely hazardous, pollutants or contaminants, in or regulated under any of the following United States federal statutes: the Hazardous Substances Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; comparable Laws of any other Governmental Entity; and any regulations under any of the foregoing; and includes, without limitation, any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea formaldehyde insulation, asbestos, molds, pollutants, contaminants, radioactivity, and any other harmful or deleterious substance that would reasonably be expected to have an adverse effect on human health or the environment.

3.19 Specified Contracts.

(a) Except as set forth in Section 3.19(a) of the Company Disclosure Schedule, (i) each Specified Contract is a legal, valid, and binding obligation of the Company or a Subsidiary, as applicable, in full force and effect and enforceable against the Company or a Subsidiary, as applicable, in accordance with its terms, subject to the Bankruptcy and Equity Exception, (ii) the Company has not received written notice, and has no reason to believe, that any Specified Contract is not a legal, valid, and binding obligation of the counterparty thereto, in full force and effect and enforceable against such counterparty in accordance with its terms, subject to the Bankruptcy and Equity Exception, (iii) neither the Company nor any of its Subsidiaries is and, to the Company's Knowledge, no counterparty is in breach or violation of, or default under, in any material respect, any Specified Contract, (iv) none of the Company or any of its Subsidiaries have received any claim of default under any Specified Contract, and (v) to the Company's Knowledge, no event has occurred which would result in a material breach or material violation of, or a material default under, any Specified Contract (in each case, with or without notice or lapse of time or both).

(b) For purposes of this Agreement, the term "Specified Contract" means any of the following Contracts (together with all exhibits and schedules thereto) to which the Company or any of its Subsidiaries is a party as of the date hereof:

(i) any limited liability company agreement, joint venture, or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture that is material to the business of the Company and its Subsidiaries, taken as a whole, other than any such limited liability company, partnership or joint venture that is a Subsidiary of the Company;

(ii) any Contract (other than among consolidated Company Subsidiaries or capital or operating leases) relating to (A) indebtedness for borrowed money and having an outstanding principal amount in excess of $3,000,000 or (B) conditional sale arrangements or obligations secured by a Lien, in each case in connection with which the aggregate actual or contingent obligations of the Company and its Subsidiaries under such Contract are greater than $3,000,000;

(iii) any Contract filed or required to be filed as an exhibit to the Company's Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed or required to be disclosed by the Company in a Current Report on Form 8-K, other than Plans disclosed in Section 3.13(a) of the Company Disclosure Schedule;

(iv) any Contract that purports to limit the right of the Company or its Material Subsidiaries (A) to engage or compete in any line of business or (B) to compete with any person or operate in any location, in the case of each of (A) and (B), in any respect material to the business of the Company and its Subsidiaries, taken as a whole;

(v) any Contract entered into after September 30, 2005 or not yet consummated for the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets constituting a business or business unit or of capital stock or other equity interests of another person for aggregate consideration under such Contract in excess of $5,000,000;

(vi) any lease of real or personal property providing for annual rentals of $1,000,000 or more;

(vii) any Contract providing for the sale or exchange of, or option to sell or exchange, any Real Property, or for the purchase or exchange of, or option to purchase or exchange any real estate;

(viii) any Contract which by its terms calls for aggregate payments by the Company and its Subsidiaries under such Contract of more than $5,000,000 over the remaining term of such Contract;

(ix) any acquisition Contract pursuant to which the Company or any of its Subsidiaries has (A) continuing indemnification that would reasonably be likely to result in aggregate payments in excess of $2,000,000 or (B) "earn-out" or other contingent payment obligations that would reasonably be likely to result in aggregate payments in excess of $1,000,000;

(x) collective bargaining agreements;

(xi) Contracts containing covenants restricting the payment of dividends;

(xii) any Contract for the purchase of materials, supplies, goods, services, equipment or other assets that is not terminable without material penalty on 90 days notice by the Company or its Subsidiaries and that provides for or is reasonably likely to require either (A) annual payments to or from the Company and its Subsidiaries of $2,000,000 or more, or (B) aggregate payments to or from the Company and its Subsidiaries of $5,000,000 or more;

(xiii) any license, royalty or other Contract concerning material Intellectual Property owned, held or used by the Company or its Subsidiaries that cannot be terminated on 90 days notice and provides for or is reasonably likely to require either (A) annual payments to or from the Company and its Subsidiaries of $750,000 or more, or (B) aggregate payments to or from the Company and its Subsidiaries of $1,500,000 or more; and

(xiv) any advertising or other promotional Contract that (A) provides for or is reasonably likely to require either (1) annual payments to or from the Company and its Subsidiaries of $1,000,000 or more, or (2) aggregate payments to or from the Company and its Subsidiaries of $2,000,000 or more, and (B) cannot be terminated on 90 days notice.

A true and complete list of the Specified Contracts is set forth in Section 3.19(b) of the Company Disclosure Schedule. The Company has made available to Merger Co true and complete copies of all of the Specified Contracts including any amendments thereto.

(c) Except as disclosed in the Company's SEC Reports, there are no Contracts between the Company or any S