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

EXHIBIT 10.1

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

 
CREDIT AGREEMENT

by and among

LINCOLN EDUCATIONAL SERVICES CORPORATION
and its Subsidiaries
as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,

HPF SERVICE, LLC
as the Administrative Agent and Tranche A Collateral Agent,

and

ALOSTAR BANK OF COMMERCE
as the Tranche B Collateral Agent

Dated as of July 31, 2015
 

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

 

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

TABLE OF CONTENTS

   
Page
     
W I T N E S S E T H:
1
     
1.
DEFINITIONS AND CONSTRUCTION.
1
1.1.
Definitions
1
1.2.
Accounting Terms
1
1.3.
Code
2
1.4.
Construction
2
1.5.
Schedules and Exhibits
2
     
2.
LOANS AND TERMS OF PAYMENT.
2
2.1.
Making of Term Loans
2
2.2.
Amortization of Term Loans
3
2.3.
Payments; Prepayments
3
2.4.
Interest Rates, Default Rate, Payments and Calculations
6
2.5.
Crediting Payments
7
2.6.
Statements of Obligations
7
2.7.
Fees
7
2.8.
Capital Requirements
8
2.9.
Joint and Several Liability of Borrowers.
9
     
3.
CONDITIONS; TERM OF AGREEMENT.
11
3.1.
Conditions Precedent to the Extension of the Term Loans
11
3.2.
Effect of Maturity
11
     
4.
REPRESENTATIONS AND WARRANTIES.
11
4.1.
Due Organization and Qualification; Subsidiaries
11
4.2.
Due Authorization; No Conflict.
12
4.3.
Governmental Consents
12
4.4.
Binding Obligations; Perfected Liens
12
4.5.
Title to Assets; No Encumbrances
13
4.6.
Litigation
13
4.7.
Compliance with Laws, Governmental Authority and Licensing; Educational
Approvals; Compliance with Educational Laws
13
4.8.
Historical Financial Statements; No Material Adverse Change
15
4.9.
Fraudulent Transfer.
15
4.10.
Employee Benefits
16
4.11.
Environmental Condition
16
4.12.
Intellectual Property
16
4.13.
Leases
16
4.14.
Complete Disclosure
16
4.15.
Material Contracts
17
4.16.
Patriot Act; Foreign Corrupt Practices Act
17
4.17.
Indebtedness
17
4.18.
Payment of Taxes
17
4.19.
Margin Stock
18
4.20.
Governmental Regulation
18
4.21.
OFAC
18
4.22.
Employee and Labor Matters
18
     
5.
AFFIRMATIVE COVENANTS.
18
5.1.
Financial Statements, Reports, Certificates
18
5.2.
Regulatory Updates
20
5.3.
Existence
22

 
- i -

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

TABLE OF CONTENTS
(continued)

   
Page
     
5.4.
Maintenance of Properties
22
5.5.
Taxes
22
5.6.
Insurance
22
5.7.
Inspection
23
5.8.
Compliance with Laws and Regulatory Requirements
23
5.9.
Environmental
24
5.10.
Disclosure Updates
25
5.11.
Formation of Subsidiaries
25
5.12.
Further Assurances
25
5.13.
Lender Meetings
26
5.14.
Material Contracts
26
5.15.
Cash Collateral
26
5.16.
School Closure and Capex Cash Collateral
27
     
6.
NEGATIVE COVENANTS.
27
6.1.
Indebtedness
27
6.2.
Liens
27
6.3.
Restrictions on Fundamental Changes.
28
6.4.
Disposal of Assets
28
6.5.
Change Name
28
6.6.
Nature of Business
28
6.7.
Prepayments and Amendments
28
6.8.
Change of Control
29
6.9.
Restricted Payments
29
6.10.
Accounting Methods
29
6.11.
Investments; Controlled Investments
29
6.12.
Transactions with Affiliates
30
6.13.
Use of Proceeds
30
6.14.
Limitation on Issuance of Stock
30
6.15.
Collateral Access Agreements
30
     
7.
FINANCIAL COVENANTS.
30
7.1.
Minimum Liquidity
31
7.2.
Minimum EBITDA
31
7.3.
Maximum Capital Expenditures
32
7.4.
Minimum Fixed Charge Coverage Ratio
32
     
8.
EVENTS OF DEFAULT.
32
8.1.
Payment Default
32
8.2.
Covenant Default
33
8.3.
Judgments
33
8.4.
Voluntary Bankruptcy
33
8.5.
Involuntary Bankruptcy
33
8.6.
Conduct of Business
33
8.7.
Debt Default
33
8.8.
Representations and Warranties
34
8.9.
Liens
34
8.10.
Validity and Enforceability
34
8.11.
ERISA Event
34
8.12.
Title IV Program Eligibility
34
8.13.
DOE Emergency Action
34

 
- ii -

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

TABLE OF CONTENTS
(continued)

   
Page
     
8.14.
Educational Approvals and Significant Regulatory Events
34
     
9.
RIGHTS AND REMEDIES.
34
9.1.
Rights and Remedies
34
9.2.
Remedies Cumulative
35
     
10.
WAIVERS; INDEMNIFICATION.
35
10.1.
Demand; Protest; etc
35
10.2.
The Lender Group’s Liability for Collateral
35
10.3.
Indemnification
36
     
11.
NOTICES.
36
     
12.
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
38
     
13.
ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
39
13.1.
Assignments and Participations.
39
13.2.
Successors
42
     
14.
AMENDMENTS; WAIVERS.
43
14.1.
Amendments and Waivers
43
14.2.
Replacement of Certain Lenders.
45
14.3.
No Waivers; Cumulative Remedies
45
     
15.
AGENTS; THE LENDER GROUP.
46
15.1.
Appointment and Authorization of Agents
46
15.2.
Delegation of Duties
48
15.3.
Liability of Agents
48
15.4.
Reliance by Agents
48
15.5.
Notice of Default or Event of Default
49
15.6.
Credit Decision
49
15.7.
Costs and Expenses; Indemnification
50
15.8.
Agent in Individual Capacity
52
15.9.
Successor Agents
52
15.10.
Lender in Individual Capacity
53
15.11.
Collateral Matters.
54
15.12.
Restrictions on Actions by Lenders; Sharing of Payments.
56
15.13.
Agency for Perfection
57
15.14.
Payments by Administrative Agent to the Lenders
57
15.15.
Concerning the Collateral and Related Loan Documents
58
15.16.
Several Obligations; No Liability
58
     
16.
WITHHOLDING TAXES.
58
     
17.
GENERAL PROVISIONS.
61
17.1.
Effectiveness
61
17.2.
Section Headings
61
17.3.
Interpretation
61
17.4.
Severability of Provisions
61
17.5.
Debtor-Creditor Relationship; Separate Classes
61
17.6.
Counterparts; Electronic Execution
62
17.7.
Revival and Reinstatement of Obligations
62
17.8.
Confidentiality
62
17.9.
Lender Group Expenses
63
17.10.
Survival
63

 
- iii -

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

TABLE OF CONTENTS
(continued)

   
Page
     
17.11.
Patriot Act
63
17.12.
Integration
64
17.13.
Parent as Administrative Agent for Borrowers
64

 
- iv -

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

EXHIBITS AND SCHEDULES

Exhibit A Form of Assignment and Acceptance

Exhibit B Form of Compliance Certificate

Schedule A-1 Administrative Agent’s Account

Schedule C-1 Commitments

Schedule P-1 Permitted Investments

Schedule P-2 Permitted Liens

Schedule R-1 Real Property Collateral

Schedule 1.1 Definitions

Schedule 3.1 Conditions Precedent

Schedule 4.1(b) Capitalization of Borrowers

Schedule 4.1(c) Capitalization of Borrowers’ Subsidiaries

Schedule 4.6 Litigation

Schedule 4.7 Compliance with Laws, Etc.

Schedule 4.10 ERISA

Schedule 4.11 Environmental Matters

Schedule 4.12 Intellectual Property

Schedule 4.15 Material Contracts

Schedule 4.17 Permitted Indebtedness

Schedule 4.18 Taxes

Schedule 4.22 Employee and Labor Matters

Schedule 6.6 Nature of Business

 
- 1 -

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

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of July 31, 2015,
by and among LINCOLN EDUCATIONAL SERVICES CORPORATION, a New Jersey corporation
(“Parent”), and its Subsidiaries that are now or hereafter a party hereto
(Parent and such Subsidiaries, each, individually, a “Borrower”, and
collectively, “Borrowers”), the lenders identified on the signature pages hereof
as Tranche A Lenders (each of such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter as a “Tranche A
Lender”, as that term is hereinafter further defined), the lenders identified on
the signature pages hereof as Tranche B Lenders (each of such lenders, together
with their respective successors and permitted assigns, are referred to
hereinafter as a “Tranche B Lender”, as that term is hereinafter further
defined; each Tranche A Lender and Tranche B Lender is referred to hereinafter,
individually, as a “Lender”, as that term is hereinafter further defined), HPF
SERVICE, LLC, as administrative agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity, “Administrative
Agent”), HPF SERVICE, LLC, as collateral agent for the Tranche A Lenders (in
such capacity, together with its successors and assigns in such capacity, the
“Tranche A Collateral Agent”), and ALOSTAR BANK OF COMMERCE, as collateral agent
for the Tranche B Lenders (in such capacity, together with its successors and
assigns in such capacity, the “Tranche B Collateral Agent”).

W I T N E S S E T H:

WHEREAS, Borrowers have requested that the Agents and Lenders provide certain
credit facilities to Borrowers, and the Agents and Lenders are willing to
provide such credit facilities, in each case as more fully set forth herein.

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein set forth and other good and valuable consideration, the
receipt and adequacy of all of the foregoing as legally sufficient consideration
being hereby acknowledged, Borrowers, the Agents and the Lenders do hereby agree
as follows:

1.             DEFINITIONS AND CONSTRUCTION.

1.1.          Definitions. Capitalized terms used in this Agreement shall have
the meanings specified therefor on Schedule 1.1.

1.2.          Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP; provided, however, that if
Administrative Borrower notifies Administrative Agent that Borrowers request an
amendment to any provision hereof to eliminate the effect of any Accounting
Change occurring after the Closing Date or in the application thereof on the
operation of such provision (or if Administrative Agent notifies Administrative
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such Accounting Change or in the application thereof, then Administrative
Agent and Administrative Borrower agree that they will negotiate in good faith
amendments to the provisions of this Agreement that are directly affected by
such Accounting Change with the intent of having the respective positions of the
Lenders and Borrowers after such Accounting Change conform as nearly as possible
to their respective positions as of the date of this Agreement and, until any
such amendments have been agreed upon and agreed to by the Required Lenders, the
provisions in this Agreement shall be calculated as if no such Accounting Change
had occurred. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrower” or “Borrowers” is
used in respect of a financial covenant or a related definition, it shall be
understood to mean Parent and its Subsidiaries on a consolidated basis, unless
the context clearly requires otherwise.
 
- 1 -

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

1.3.          Code. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein; provided, however, that to the extent that the Code is used to
define any term herein and such term is defined differently in different
Articles of the Code, the definition of such term contained in Article 9 of the
Code shall govern.

1.4.          Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein or therein). The words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties. Any reference
herein or in any other Loan Document to the satisfaction, repayment, or payment
in full of the Obligations (or any tranche of the Obligations) shall mean the
repayment in full in cash or immediately available funds of all of the
Obligations (or such tranche of Obligations), including the payment of any
Lender Group Expenses that have accrued irrespective of whether demand has been
made therefor. Any reference herein to any Person shall be construed to include
such Person’s successors and assigns. Any requirement of a writing contained
herein or in any other Loan Document shall be satisfied by the transmission of a
Record.

1.5.          Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.

2.             LOANS AND TERMS OF PAYMENT.

2.1.          Making of Term Loans. Subject to the terms and conditions of this
Agreement, on the Closing Date (a) each Tranche A Lender agrees (severally, not
jointly or jointly and severally) to make a term loan (collectively, the
“Tranche A Term Loan”) to Borrowers in an amount equal to such Lender’s share of
the Tranche A Term Loan Amount based on its Tranche A Commitment, and (b) each
Tranche B Lender agrees (severally, not jointly or jointly and severally) to
make term loans (collectively, the “Tranche B Term Loan”) to Borrowers in an
amount equal to such Lender’s share of the Tranche B Term Loan Amount based on
its Tranche B Commitment.
 
- 2 -

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

2.2.          Amortization of Term Loans

(a)           Amortization. The principal balance of the Term Loans shall be due
and payable in equal monthly installments, commencing on August 1, 2017 (the
“Amortization Commencement Date”) and continuing on the first day of each
calendar month thereafter, with each such installment to be equal to the
quotient of (i) ten percent (10%) of the outstanding principal balance of the
Term Loans as of the 30th day prior to the Amortization Commencement Date,
divided by (ii) twelve (12), together with a final installment of all
outstanding unpaid principal on the Term Loans due and payable on the earlier of
the Maturity Date and the date of the acceleration of the Term Loans (or either
of them) in accordance with the terms hereof.

(b)           Allocation. Except as set forth in Section 2.3(b)(iii) and (iv),
Administrative Agent shall have the right to apply installment payments between
the Tranche A Term Loan and the Tranche B Term Loan in such manner as
Administrative Agent may determine in its sole discretion (including (i) by
applying the entire amount of any such payment to the Tranche A Term Loan, (ii)
with the consent of the Required Lenders, by applying the entire amount of any
such payment to the Tranche B Term Loan, or (iii) with the consent of the
Required Lenders, by applying a portion of any such payment to the Tranche A
Term Loan and the remaining portion of such payment to the Tranche B Term Loan).

(c)           Miscellaneous. Any principal amount of the Term Loans that is
repaid or prepaid may not be reborrowed.

2.3.          Payments; Prepayments.

(a)           Payments by Borrowers.

(i)            Except as otherwise expressly provided herein, all payments by
any Borrower shall be made to Administrative Agent’s Account for the account of
the applicable member(s) of the Lender Group and shall be made in immediately
available funds, no later than 2:00 p.m. (Eastern time) on the date specified
herein. Any payment received by Administrative Agent later than 2:00 p.m.
(Eastern time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue until such
following Business Day.

(ii)           Administrative Agent shall distribute (A) each interest and
scheduled principal payment received by it for the account of any Lender to the
appropriate recipient within one Business Day following the date such payment is
received (or deemed to be received) by Administrative Agent in accordance with
clause (i) above, and (B) each other payment (including principal prepayments)
received by it for the account of any Lender or Agent to the appropriate
recipient within three Business Days following the date such payment is received
(or deemed to be received) by Administrative Agent in accordance with clause (i)
above.

(iii)          Unless Administrative Agent receives notice from Borrowers prior
to the date on which any payment is due hereunder that Borrowers will not make
such payment in full as and when required, Administrative Agent may assume that
Borrowers have made (or will make) such payment in full to Administrative Agent
on such date in immediately available funds and Administrative Agent may (but
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent Borrowers do not make such payment in full to Administrative
Agent on the date when due, each Lender severally shall repay to Administrative
Agent on demand such amount distributed to such Lender.
 
- 3 -

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

(b)           Apportionment and Application.

(i)            So long as no Application Event has occurred and is continuing,
but subject to the provisions of Section 2.2(b), all scheduled principal and
interest payments received by Administrative Agent shall be apportioned ratably
among the Lenders having a Pro Rata Share of the type of Obligation subject to
such payments (according to the unpaid principal balance of the type of
Obligations to which such payments relate held by each Lender) and all payments
of fees and expenses received by Administrative Agent (other than fees or
expenses that are for Administrative Agent’s separate account) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the type of
Obligation to which a particular fee or expense relates.

(ii)           All payments to be made hereunder by Borrowers shall be remitted
to Administrative Agent and, subject to Section 2.2(b), Section 2.3(b)(iv),
Section 2.3(c) and Section 2.3(e), all such payments, and all proceeds of
Collateral received by Administrative Agent, shall be applied, so long as no
Application Event has occurred and is continuing, in accordance with
instructions from Administrative Borrower.

(iii)          At any time that an Application Event has occurred and is
continuing, subject to Sections 2.3(b)(iv):

(A)           all payments remitted to Administrative Agent (other than proceeds
of Collateral) shall be applied as follows: (1) first, to pay any Lender Group
Expenses (including cost or expense reimbursements) or indemnities then due to
the Agents under the Loan Documents, until paid in full; (2) second, to pay any
fees or premiums then due to Administrative Agent under the Loan Documents until
paid in full; (3) third, to pay any Lender Group Expenses (including cost or
expense reimbursements) or indemnities then due to any of the Lenders under the
Loan Documents, until paid in full; (4) fourth, ratably, to pay any fees or
premiums then due to any of the Lenders under the Loan Documents until paid in
full; (5) fifth, ratably, to pay interest accrued in respect of the Term Loans
until paid in full; (6) sixth, ratably, to pay the principal of the Tranche A
Term Loan until paid in full; (7) seventh, ratably, to pay the principal of the
Tranche B Term Loan until paid in full; (8) eighth, to pay any other
Obligations; and (9) ninth, to Borrowers or such other Person entitled thereto
under applicable law; and

(B)           all proceeds of Collateral received by Administrative Agent shall
be applied as follows: (1) first, to pay any Lender Group Expenses (including
cost or expense reimbursements) or indemnities then due to Administrative Agent
and the Tranche A Collateral Agent under the Loan Documents, until paid in full;
(2) second, to pay any fees or premiums then due to Administrative Agent under
the Loan Documents until paid in full; (3) third, to pay any Lender Group
Expenses (including cost or expense reimbursements) or indemnities then due to
any of the Tranche A Lenders under the Loan Documents, until paid in full; (4)
fourth, ratably, to pay any fees or premiums then due to any of the Tranche A
Lenders under the Loan Documents until paid in full; (5) fifth, ratably, to pay
interest accrued in respect of the Tranche A Term Loan until paid in full; (6)
sixth, ratably, to pay the principal of the Tranche A Term Loan until paid in
full; (7) seventh, to pay any other Tranche A Obligations; and (8) eighth, to
Borrowers or such other Person entitled thereto under applicable law.

(iv)          Notwithstanding the foregoing, all proceeds of the Tranche B
Collateral shall be applied first to the payment of the Tranche B Obligations in
such order as the Tranche B Collateral Agent may elect and then to the other
Obligations in accordance with Sections 2.3(b)(iii)(B).
 
- 4 -

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

(v)           Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such funds as
it may be entitled to receive.

(vi)          For purposes of Section 2.3(b)(iii), “paid in full” of a type of
Obligation means payment in cash or immediately available funds of all amounts
owing on account of such type of Obligation, including interest accrued after
the commencement of any Insolvency Proceeding, default interest, interest on
interest, and expense reimbursements, irrespective of whether any of the
foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

(vii)         In the event of a direct conflict between the priority provisions
of this Section 2.3 and any other provision contained in this Agreement or any
other Loan Document, it is the intention of the parties hereto that such
provisions be read together and construed, to the fullest extent possible, to be
in concert with each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, then the terms and provisions of this
Section 2.3 shall control and govern.

(c)           Voluntary Prepayments. Borrowers may, upon at least 10 Business
Days prior written notice to Administrative Agent, prepay the principal of the
Term Loans, in whole or in part.

(d)           Mandatory Prepayments.

(i)            School Dispositions and Real Property Collateral Sales. On the
date of receipt by any Borrower of the Net Cash Proceeds of (A) any Permitted
School Disposition, such Borrower shall prepay the outstanding Obligations in
accordance with Section 2.3(e) in such amounts as are required under the
definition of School Release Conditions, and (B) any Permitted Real Property
Sale, such Borrower shall prepay the outstanding Obligations in accordance with
Section 2.3(e) in such amounts as are required under the definition of Real
Property Collateral Sale Conditions. Nothing contained in this Section 2.3(d)(i)
shall permit Borrowers or any of their Subsidiaries to make any School
Disposition that is not a Permitted School Disposition or to sell or dispose of
any Real Property Collateral other than pursuant to a Permitted Real Property
Sale.

(ii)           Other Dispositions. On the date of receipt by any Borrower of the
Net Cash Proceeds of any voluntary or involuntary sale or disposition by any
Borrower of assets (including casualty losses or condemnations, but excluding
Permitted School Dispositions and Permitted Real Property Sales), such Borrower
shall prepay the outstanding principal amount of the Obligations in accordance
with Section 2.3(e) in an amount equal to 100% of such Net Cash Proceeds
(including condemnation awards and payments in lieu thereof) received by such
Person in connection with such sales or dispositions; provided, that, so long as
(A) no Default or Event of Default shall have occurred and is continuing or
would result therefrom, (B) such Borrower shall have given Administrative Agent
prior written notice of such Borrower’s intention to apply such monies to the
costs of replacement of the properties or assets that are the subject of such
sale or disposition, and (C) the monies (in an amount not to exceed $1,000,000
in the aggregate at any time) are held in a Deposit Account in which the Tranche
A Collateral Agent has a perfected first-priority security interest, then
Borrowers shall have the option to apply such monies to the costs of replacement
of the assets that are the subject of such sale or disposition unless and to the
extent that such applicable period shall have expired without such replacement
being made, in which case, any amounts remaining in the Deposit Account referred
to in clause (C) above shall be paid to Administrative Agent and applied in
accordance with Section 2.3(e); provided, that Borrowers shall not have the
right to use such Net Cash Proceeds to make such replacements in excess of
$1,000,000 in any given fiscal year. Nothing contained in this Section
2.3(d)(ii) shall permit Borrowers or any of their Subsidiaries to sell or
otherwise dispose of any assets other than in accordance with Section 6.4.
 
- 5 -

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

(iii)           Indebtedness. On the date of the incurrence by any Borrower or
any of its Subsidiaries of any Indebtedness (excluding Permitted Indebtedness),
Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.3(e) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such incurrence. The
provisions of this Section 2.3(d)(iii) shall not be deemed to be implied consent
to any such incurrence otherwise prohibited by the terms and conditions of this
Agreement.

(iv)          Equity. On the date of the issuance by any Borrower or any of its
Subsidiaries of any shares of its or their Stock (other than (A) in the event
that such Borrower or any of its Subsidiaries forms any Subsidiary in accordance
with the terms hereof, the issuance by such Subsidiary of Stock to such Borrower
or any of its Subsidiaries, as applicable, and (B) the issuance of Stock of such
Borrower to directors, officers and employees of such Borrower and its
Subsidiaries pursuant to employee stock option plans (or other employee
incentive plans or other compensation arrangements) approved by the Board of
Directors), Borrowers shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.3(e) in an amount equal to 100% of the
Net Cash Proceeds received by such Person in connection with such issuance. The
provisions of this Section 2.3(d)(iv) shall not be deemed to be implied consent
to any such issuance otherwise prohibited by the terms and conditions of this
Agreement.

(e)           Application of Payments. Each prepayment made pursuant to Section
2.3(c) or (d) shall be accompanied by the payment of accrued interest to the
date of such payment on the amount prepaid, together with the Applicable
Prepayment Premium. Each such prepayment shall be applied by Administrative
Agent to installment payments (for the avoidance of doubt, any amount that is
payable on the Maturity Date shall constitute an installment) between the
Tranche A Term Loan and the Tranche B Term Loan in such manner as Administrative
Agent may determine in its sole discretion (including (i) by applying the entire
amount of any such prepayment to the Tranche A Term Loan, (ii) with the consent
of the Required Lenders, by applying the entire amount of any such prepayment to
the Tranche B Term Loan, or (iii) with the consent of the Required Lenders, by
applying a portion of any such prepayment to the Tranche A Term Loan and the
remaining portion of such prepayment to the Tranche B Term Loan).

2.4.          Interest Rates, Default Rate, Payments and Calculations.

(a)           Interest Rates. Except as provided in Section 2.4(b), the Term
Loans shall bear interest on the outstanding principal balance thereof at per
annum rate equal to the greater of (i) eleven percent (11.0%), and (ii) the sum
of the LIBOR Rate plus the Applicable Margin.

(b)           Default Rate. Upon the occurrence and during the continuation of
an Event of Default, the Term Loans shall bear interest on the outstanding
principal balance thereof at a per annum rate equal to 4 percentage points above
the per annum rate otherwise applicable thereunder.

(c)           Payment. All interest shall be due and payable, in arrears, on the
first day of each month. All costs and expenses payable hereunder or under any
of the other Loan Documents, and all Lender Group Expenses, shall be due and
payable within 10 days after Administrative Agent’s request to Administrative
Borrower for the payment thereof.

(d)           Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year, in each case, for
the actual number of days elapsed in the period during which the interest or
fees accrue.

(e)           Late Charges. Borrowers shall pay to Administrative Agent, for its
own account, a “late charge” equal to five percent (5%) of any past due
installment or payment of principal, interest or fees which is not paid by
Borrowers within five Business Days of the due date thereof, to cover the extra
cost and expense involved in handling any such delinquent payment.
 
- 6 -

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

(f)            Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Each Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if such rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum amount as is allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess,
without prepayment penalty or premium.

2.5.          Crediting Payments. The receipt of any payment item by
Administrative Agent shall not be considered a payment on account unless such
payment item is a wire transfer of immediately available federal funds made to
Administrative Agent’s Account or unless and until such payment item is honored
when presented for payment. Should any payment item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Administrative Agent only if it is received into Administrative Agent’s Account
on a Business Day on or before 2:00 p.m. (Eastern time). If any payment item is
received into Administrative Agent’s Account on a non-Business Day or after 2:00
p.m. (Eastern time) on a Business Day, it shall be deemed to have been received
by Administrative Agent as of the opening of business on the immediately
following Business Day.

2.6.          Statements of Obligations. Administrative Agent shall render
monthly statements regarding the Term Loans to Borrowers, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute
an account stated between Borrowers and the Lender Group unless, within 45 days
after receipt thereof by Borrowers, Borrowers shall deliver to Administrative
Agent written objection thereto describing the error or errors contained in any
such statements.

2.7.          Fees.

(a)           Borrowers shall pay to Administrative Agent, for the account of
Administrative Agent, as and when due and payable under the terms of the Fee
Letter, the fees set forth in the Fee Letter.

(b)           Except for mandatory prepayments resulting from the application of
insurance proceeds or condemnation awards, in the event all or any portion of
the principal balance of the Term Loans are prepaid for any reason whatsoever
(including as a result of (i) any voluntary or mandatory prepayment under
Section 2.3 hereof), (ii) the acceleration of any of the Obligations in
connection with the occurrence of an Event of Default, (iii) any foreclosure and
sale of, or collection of, the Collateral, (iv) any sale of the Collateral in
any Insolvency Proceeding, or (v) the restructure, reorganization, or compromise
of any of the Obligations by the confirmation of a plan of reorganization or any
other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to the Lender Group or profits lost by
the Lender Group as a result of such prepayment, and by mutual agreement of the
parties as to a reasonable estimation and calculation of the lost profits or
damages of the Lender Group, (A) Borrowers shall pay to Administrative Agent, in
cash, the Applicable Prepayment Premium, measured as of the date of such
prepayment, and (B) Administrative Agent shall remit to each Lender (subject to
any contrary agreement between Administrative Agent and such Lender), from the
Applicable Prepayment Premium actually received by Administrative Agent, such
Lender’s Pro Rata Share of such Applicable Prepayment Premium based on the
principal amount of the Term Loans held by such Lender that are prepaid in
connection therewith. As used herein, “Applicable Prepayment Premium” means, as
of any date of determination, an amount equal to (i) during the period from and
after the Closing Date up to (but not including) the date that is the first
anniversary of the Closing Date (the “First Period”), 5.00% times the amount
prepaid, (ii) during the period from and including the date that is the first
anniversary of the Closing Date up to (but not including) the date that is the
second anniversary of the Closing Date, 5.00% times the amount prepaid, and
(iii) during the period from and including the date that is the second
anniversary of the Closing Date up to (but not including) the date that is the
third anniversary of the Closing Date, 3.00% times the amount prepaid; provided,
that, no Applicable Prepayment Premium shall be due with respect to up to
$15,000,000 in the aggregate of prepayments of the Term Loans that are made
during the First Period pursuant to Sections 2.3(d)(i) and (ii).
 
- 7 -

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

(c)           Borrowers shall pay to Administrative Agent, the actual charges
paid or incurred by Administrative Agent if it elects to employ the services of
one or more third Persons to perform audits or examinations of Borrowers or
their Subsidiaries (or the Collateral), to appraise the Collateral, or any
portion thereof, or to assess Borrowers’ or their Subsidiaries’ business
valuation; provided, however, that so long as no Event of Default shall have
occurred and be continuing, Borrowers shall not be obligated to reimburse Agent
for more than one appraisal of Real Property or Equipment during any calendar
year.

2.8.          Capital Requirements.

(a)           If, after the date hereof, any Lender determines that (i) the
adoption of or change in any law, rule, regulation or guideline regarding
capital or reserve requirements for banks or bank holding companies, or any
change in the interpretation, implementation, or application thereof by any
Governmental Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any guideline,
request or directive of any such entity regarding capital adequacy (whether or
not having the force of law), has the effect of reducing the return on such
Lender’s or such holding company’s capital as a consequence of such Lender’s Pro
Rata Share in the applicable Term Loan to a level below that which such Lender
or such holding company could have achieved but for such adoption, change, or
compliance (taking into consideration such Lender’s or such holding company’s
then existing policies with respect to capital adequacy and assuming the full
utilization of such entity’s capital) by any amount deemed by such Lender to be
material, then such Lender may notify Administrative Borrower and Administrative
Agent thereof. Following receipt of such notice, Borrowers agree to pay such
Lender on demand the amount of such reduction of return of capital as and when
such reduction is determined, payable within 30 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender’s calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s right to demand such compensation; provided that no Borrower shall be
required to compensate a Lender pursuant to this Section for any reductions in
return incurred more than 90 days prior to the date that such Lender notifies
Administrative Borrower of such law, rule, regulation or guideline giving rise
to such reductions and of such Lender’s intention to claim compensation
therefor; provided further that if such claim arises by reason of the adoption
of or change in any law, rule, regulation or guideline that is retroactive, then
the 90-day period referred to above shall be extended to include the period of
retroactive effect thereof.
 
- 8 -

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

(b)           If any Lender requests amounts under Section 2.8(a) (any such
Lender, an “Affected Lender”), then such Affected Lender shall use reasonable
efforts to promptly designate a different one of its lending offices or to
assign its rights and obligations hereunder to another of its offices or
branches, if (i) in the reasonable judgment of such Affected Lender, such
designation or assignment would eliminate or reduce amounts payable pursuant to
Section 2.8(a), and (ii) in the reasonable judgment of such Affected Lender,
such designation or assignment would not subject it to any material unreimbursed
cost or expense and would not otherwise be materially disadvantageous to it.
Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred
by such Affected Lender in connection with any such designation or assignment.
If, after such reasonable efforts, such Affected Lender does not so designate a
different one of its lending offices or assign its rights and obligations to
another of its offices or branches so as to eliminate Borrowers’ obligation to
pay any future amounts to such Affected Lender pursuant to Section 2.8(a), then
Borrowers (without prejudice to any amounts then due to such Affected Lender
under Section 2.8(a)) may, unless prior to the effective date of any such
assignment the Affected Lender withdraws its request for such additional amounts
under Section 2.8(a), seek a substitute Lender reasonably acceptable to
Administrative Agent to purchase the Obligations owed to such Affected Lender (a
“Replacement Lender”), and if such Replacement Lender agrees to such purchase,
such Affected Lender shall assign to the Replacement Lender its Obligations,
pursuant to an Assignment and Acceptance Agreement, and upon such purchase by
the Replacement Lender, such Replacement Lender shall be deemed to be a “Lender”
for purposes of this Agreement and such Affected Lender shall cease to be a
“Lender” for purposes of this Agreement.

2.9.          Joint and Several Liability of Borrowers.

(a)           Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the Term Loans to be
provided by the Lender Group under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.

(b)           Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including any Obligations arising under
this Section 2.9), it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.

(c)           If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation until such time as all of the Obligations are paid in full.

(d)           The Obligations of each Borrower under the provisions of this
Section 2.9 constitute the absolute and unconditional, full recourse Obligations
of each Borrower enforceable against each Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of the provisions of this Agreement (other than this Section
2.9(d)) or any other circumstances whatsoever.

(e)           Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and several liability,
notice of the making of the Term Loans, notice of the occurrence of any Default,
Event of Default, or of any demand for any payment under this Agreement, notice
of any action at any time taken or omitted by Administrative Agent or Lenders
under or in respect of any of the Obligations, any requirement of diligence or
to mitigate damages and, generally, to the extent permitted by applicable law,
all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Administrative Agent or Lenders at
any time or times in respect of any default by any Borrower in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Administrative Agent or Lenders in
respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Borrower. Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on the part of
any Administrative Agent or Lender with respect to the failure by any Borrower
to comply with any of its respective Obligations, including, without limitation,
any failure strictly or diligently to assert any right or to pursue any remedy
or to comply fully with applicable laws or regulations thereunder, which might,
but for the provisions of this Section 2.9 afford grounds for terminating,
discharging or relieving any Borrower, in whole or in part, from any of its
Obligations under this Section 2.9, it being the intention of each Borrower
that, so long as any of the Obligations hereunder remain unsatisfied, the
Obligations of each Borrower under this Section 2.9 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Borrower under this Section 2.9 shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any other
Borrower or Administrative Agent or any Lender.
 
- 9 -

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

(f)           Each Borrower represents and warrants to Administrative Agent and
Lenders that such Borrower is currently informed of the financial condition of
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Borrower
further represents and warrants to Administrative Agent and Lenders that such
Borrower has read and understands the terms and conditions of the Loan
Documents. Each Borrower hereby covenants that such Borrower will continue to
keep informed of Borrowers’ financial condition and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g)           The provisions of this Section 2.9 are made for the benefit of
Administrative Agent, each member of the Lender Group, and their respective
successors and assigns, and may be enforced by it or them from time to time
against any or all Borrowers as often as occasion therefor may arise and without
requirement on the part of Administrative Agent, any member of the Lender Group,
or any of their successors or assigns first to marshal any of its or their
claims or to exercise any of its or their rights against any Borrower or to
exhaust any remedies available to it or them against any Borrower or to resort
to any other source or means of obtaining payment of any of the Obligations
hereunder or to elect any other remedy. The provisions of this Section 2.9 shall
remain in effect until all of the Obligations shall have been paid in full or
otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of the Obligations, is rescinded or must otherwise be
restored or returned by Administrative Agent or any Lender upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, the provisions of
this Section 2.9 will forthwith be reinstated in effect, as though such payment
had not been made.
 
- 10 -

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

(h)           Each Borrower hereby agrees that it will not enforce any of its
rights of contribution or subrogation against any other Borrower with respect to
any liability incurred by it hereunder or under any of the other Loan Documents,
any payments made by it to Administrative Agent or Lenders with respect to any
of the Obligations or any collateral security therefor until such time as all of
the Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to any
Administrative Agent or any member of the Lender Group hereunder are hereby
expressly made subordinate and junior in right of payment, without limitation as
to any increases in the Obligations arising hereunder or thereunder, to the
prior payment in full in cash of the Obligations and, in the event of any
insolvency, bankruptcy, receivership, liquidation, reorganization or other
similar proceeding under the laws of any jurisdiction relating to any Borrower,
its debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.

(i)            Each Borrower hereby agrees that after the occurrence and during
the continuance of any Event of Default described in Section 8.4 or 8.5, or any
other Event of Default and the election by Administrative Agent or the Required
Lenders to exercise any rights or remedies under Section 9.1, such Borrower will
not demand, sue for or otherwise attempt to collect any indebtedness of any
other Borrower owing to such Borrower until the Obligations shall have been paid
in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Administrative Agent, and such Borrower shall deliver any such amounts to
Administrative Agent for application to the Obligations in accordance with
Section 2.3(b).

3.             CONDITIONS; TERM OF AGREEMENT.

3.1.          Conditions Precedent to the Extension of the Term Loans. The
obligation of each Lender to make its share of the Term Loans on the Closing
Date is subject to the fulfillment, to the satisfaction of Administrative Agent
and each Lender, of each of the conditions precedent set forth on Schedule 3.1
(the making of its share of the Term Loans by a Lender being conclusively deemed
to be its satisfaction or waiver of the conditions precedent).

3.2.          Effect of Maturity. On the Maturity Date, all of the Obligations
immediately shall become due and payable without notice or demand and Borrowers
shall be required to repay all of the Obligations in full.

4.             REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Borrower
makes the following representations and warranties to the Lender Group as of the
Closing Date, which representations and warranties shall survive the execution
and delivery of this Agreement:

4.1.          Due Organization and Qualification; Subsidiaries.

(a)           Each Borrower (i) is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization, (ii) is
qualified to do business in each state where the failure to be so qualified
could reasonably be expected to result in a Material Adverse Change, and (iii)
has all requisite power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to enter
into the Loan Documents to which it is a party and to carry out the transactions
contemplated thereby.
 
- 11 -

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

(b)           Set forth on Schedule 4.1(b) is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and a
description of the number of shares of each such class that are issued and
outstanding. Other than as described on Schedule 4.1(b), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower’s capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. No Borrower is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.

(c)           Set forth on Schedule 4.1(c), is a complete and accurate list of
the Borrowers’ direct and indirect Subsidiaries, showing: (i) the number of
shares of each class of common and preferred Stock authorized for each of such
Subsidiaries, and (ii) the number and the percentage of the outstanding shares
of each such class owned directly or indirectly by such Borrower. All of the
outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.

(d)           Except as set forth on Schedule 4.1(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrowers’
Subsidiaries’ capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Borrowers nor any of their
Subsidiaries are subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrowers’ Subsidiaries’
capital Stock or any security convertible into or exchangeable for any such
capital Stock.

4.2.          Due Authorization; No Conflict.

(a)           As to each Borrower, the execution, delivery, and performance by
such Borrower of the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Borrower.

(b)           As to each Borrower, the execution, delivery, and performance by
such Borrower of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Borrower or its Subsidiaries or any School, including any
Educational Law, the Governing Documents of any Borrower or its Subsidiaries, or
any order, judgment, or decree of any court or other Governmental Authority
binding on any Borrower or its Subsidiaries, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contract of any Borrower or its Subsidiaries, (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any assets of any Borrower, other than Permitted Liens, or (iv) require any
approval of any Borrower’s shareholders or any approval or consent of any Person
under any Material Contract of any Borrower, other than consents or approvals
that have been obtained and that are still in force and effect.

4.3.          Governmental Consents. The execution, delivery, and performance by
each Borrower of the Loan Documents to which it is a party and the consummation
of the transactions contemplated by the Loan Documents do not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority or Educational Agency, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect and except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
the applicable Collateral Agent for filing or recordation, as of the Closing
Date.

4.4.          Binding Obligations; Perfected Liens.

(a)           Each Loan Document has been duly executed and delivered by each
Borrower that is a party thereto and is the legally valid and binding obligation
of such Borrower, enforceable against such Borrower in accordance with its
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors’ rights generally.
 
- 12 -

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

(b)           The Collateral Documents create valid security interests in, and
Liens on, the Collateral purported to be covered thereby and (i) when all
appropriate filings or recordings are made with the appropriate Governmental
Authorities as may be required under applicable law and (ii) upon the taking of
possession or control by the Collateral Agents of such Collateral with respect
to which a security interest may be perfected only by possession or control,
such security interests and Liens will constitute perfected security interests
and Liens, prior to all other Liens (except that the Tranche A Collateral
Agent’s Liens in the Cash Collateral are junior to the Tranche B Collateral
Agent’s Liens therein) other than Permitted Liens which are expressly permitted
by the terms of this Agreement to have priority over the Collateral Agents’
Liens.

4.5.          Title to Assets; No Encumbrances. Each of the Borrowers and its
Subsidiaries has (a) good, sufficient and legal title to (in the case of fee
interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.1, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby. All of such assets are free
and clear of Liens except for Permitted Liens.

4.6.          Litigation. Schedule 4.6 sets forth a complete and accurate
description, with respect to each of the actions, suits, or proceedings that is
pending or, to the knowledge of Borrowers, threatened against a Borrower or any
of its Subsidiaries, of (i) the parties to such actions, suits, or proceedings,
(ii) the nature of the dispute that is the subject of such actions, suits, or
proceedings, (iii) the status, as of the Closing Date, with respect to such
actions, suits, or proceedings, and (iv) whether any liability of the Borrowers’
and their Subsidiaries in connection with such actions, suits, or proceedings is
covered by insurance. Except as set forth on Schedule 4.6, there are no actions,
suits, or proceedings pending or, to the knowledge of Borrowers, threatened in
writing against a Borrower or any of its Subsidiaries that, either individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Change

4.7.          Compliance with Laws, Governmental Authority and Licensing;
Educational Approvals; Compliance with Educational Laws.

(a)           Except as set forth on Schedule 4.7, no Borrower nor any of its
Subsidiaries or Schools (a) is in violation of any applicable laws, rules,
regulations, executive orders, or codes (including Environmental Laws) to the
extent that any such violations, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Change. Without
limiting the generality of the foregoing and notwithstanding any limitations
contained therein, all operations of Borrowers, each of their Subsidiaries and
each School are in compliance with (i) all Educational Laws, the violation of
which would terminate or materially impair any Borrower's, any Subsidiary's or
any School's eligibility for participation in student financial assistance
programs under Title IV, (ii) all Consumer Protection Laws applicable to any
Borrower, any Subsidiary or any School in connection with School Provided
Financing, except where the failure to so comply could not reasonably be
expected to result in a Material Adverse Regulatory Change, (iii) all statutory
and regulatory requirements to hold authorization to provide post-secondary
education in the jurisdictions in which its educational facilities are located
or, to the knowledge of the Borrowers, their Subsidiaries and each School, where
it provides educational services via distance education, and (iv) all
Accrediting Body standards to hold its Accreditations.
 
- 13 -

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

(b)           Except as set forth on Schedule 4.7, Borrowers, their Subsidiaries
and each School have since July 1, 2013 received the licenses, permits, and
approvals of all Governmental Authorities and Educational Agencies necessary to
conduct their businesses, including without limitation, all material Educational
Approvals necessary for each School to conduct its operations and offer its
educational programs and School Provided Financing, and all material specialized
accrediting agency approvals required for graduates of the Schools to take the
examinations necessary to qualify to work in the field for which they were
trained or to otherwise be licensed in such field. Without limiting the
foregoing and except as set forth on Schedule 4.7, since July 1, 2013, each
School, as applicable: (i) has qualified under all necessary Educational Laws to
participate in Title IV Programs and has been approved by the DOE for that
purpose; (ii) has been accredited by the applicable Accrediting Bodies set forth
on Schedule 4.7, and no such Accreditation has been denied, suspended or
revoked; and (iii) has been licensed to the extent required for its existing
operations by any applicable Educational Agency or Educational Law. Borrowers,
their Subsidiaries and each School have been licensed or registered as a retail
installment seller, sales finance company, consumer lender or collection agency
to the extent required for its existing operations by any applicable Consumer
Protection Law. Except as set forth on Schedule 4.7, no proceeding, and to the
knowledge of any of Borrowers, their Subsidiaries and each School, no
investigation, which could reasonably be expected to result in a Significant
Regulatory Event or Material Adverse Regulatory Change is pending or, to their
knowledge, threatened, and to their knowledge no ground exists that could
reasonably be expected to result in a Significant Regulatory Event or Material
Adverse Regulatory Change or in any such proceeding or investigation. Except as
set forth on Schedule 4.7, to the knowledge of any of Borrowers, their
Subsidiaries and each School, there is no ground for any Educational Agency to
deny or materially delay in issuing any Educational Approval.

(c)           Except as set forth on Schedule 4.7, each of Borrowers, their
Subsidiaries and each School, as applicable, has since July 1, 2013 been in
material compliance with all applicable Educational Laws. Without limiting the
foregoing, except as forth on Schedule 4.7, since July 1, 2013: (i) each School
has qualified as an "eligible institution", as defined in 34 C.F.R. § 600.2 (and
the other applicable sections incorporated therein by reference); (ii) each
School has qualified as a "proprietary institution of higher education" as
defined at 34 C.F.R. § 600.5 and is in compliance with the applicable "state
authorization" requirements set forth at 34 C.F.R. § 600.9; (iii) each School
has derived no more than 90 percent of its revenues from Title IV Program funds,
as calculated under 34 C.F.R. §§ 668.14(b)(16) and 668.28, for any fiscal year
ending after July 1, 2013; (iv) each School has been in compliance with the
applicable limitations set forth in 34 C.F.R. § 600.7; (v) each School has
timely reported any shifts in ownership or control, or the addition of new
educational programs or locations, in compliance in all material respects with
34 C.F.R. Part 600; (vi) none of the Schools has closed, ceased operating,
ceased offering instruction during any time period, or otherwise lost
eligibility as defined in 34 C.F.R. § 600.40, except for any Schools that have
conducted an orderly teachout process and closeout audit, as applicable, of the
Title IV Program administration at such School, or campus or location thereof,
provided that such closure and teachout was not a result of an order or other
mandate of the DOE or any other Educational Agency or Governmental Authority, or
as a result of the imposition of any finding or liability or disallowance
imposed by the DOE or any other Educational Agency or Governmental Authority, or
following the initiation of any investigation, inquiry, program review or other
type of compliance review or initiation of any investigation, inquiry, program
review or other type of compliance review or audit (including any audit by the
Office of Inspector General) by the DOE, any Accrediting Body, or any other
Educational Agency or Governmental Authority; (vii) each School and each of its
educational programs in which students are enrolled who receive Title IV Program
funds has been operated in all material respects in compliance with the academic
year definition in 34 C.F.R. § 668.3, the eligible program regulations in 34
C.F.R. § 668.8 and the credit hour definition in 34 C.F.R. § 600.2; (viii) each
School has complied in all material respects with the terms of its Program
Participation Agreement; (ix) each School has complied with the prohibition on
the payment of commissions, bonuses, or other incentive payments in 34 C.F.R. §
668.14(b)(22); (x) each School has complied in all material respects with the
standards of administrative capability set forth 34 C.F.R. § 668.16; (xi) each
School has complied in all material respects with the return of funds
regulations in 34 C.F.R. § 668.22 and 34 C.F.R. § 682.605, as applicable; (xii)
each School has in all material respects timely submitted to the DOE the annual
compliance audit required by 34 C.F.R. § 668.23(b) and in accordance with
instructions issued by the DOE; (xiii) each School has in all material respects
timely submitted to the DOE the audited financial statements required by 34
C.F.R. § 668.23(d); (xiv) each School has complied in all material respects with
the third-party servicer regulations in 34 C.F.R. § 668.25; (xv) none of the
Schools has been placed by the DOE on the reimbursement method or heightened
cash monitoring 2 method of Title IV Program funding; (xvi) each School has
complied with the applicable factors of financial responsibility set forth in
668.171-175 that apply to institutions that are in the "zone alternative" and
that apply to the posting of a letter of credit; (xvii) each School has complied
with the applicable Cohort Default Rate regulations set forth in 34 C.F.R. Part
668, Subparts M and N, except that there shall be no failure of compliance if
any School has not met the Cohort Default Rate standard for one year; (xviii)
each School has complied in all material respects with the DOE regulations and
standards governing the determination of student eligibility for Title IV
Program funding and the awarding and disbursing of such funding to its students;
(xx) each School has complied in all material respects with the Educational Laws
governing preferred lenders set forth in Title I, Part E of the HEA, and 34
C.F.R. § 682.212(h); (xxi) each School has complied in all material respects
with the Educational Laws governing Private Educational Loans set forth in Title
I, Part E of the HEA and 15 U.S.C. §1631 et seq.; (xxii) each School has
complied in all material respects with the Educational Laws prohibiting any
School, employee, agent or official thereof from accepting any gift, payment,
inducement, benefit, staffing assistance, advisory board position, or other
thing of value in exchange for directing Educational Loan or Private Educational
Loan applications to any lender; (xxiii) each School has complied in all
material respects with the Gainful Employment Rule and the Gainful Employment
Disclosure Requirements, as applicable, for the relevant periods; (xxiii) each
School has complied in all material respects with the Program Integrity Rules as
applicable for the relevant periods; (xxv) each School has complied in all
material respects with the requirements of any specialized accrediting body
which approves its educational programs; and (xxvi) each School has complied
with any applicable Educational Laws regarding a School’s completion, placement,
withdrawal and retention rates, and has accurately calculated all such rates.
 
- 14 -

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

4.8.          Historical Financial Statements; No Material Adverse Change. All
historical financial statements relating to the Borrowers and their Subsidiaries
that have been delivered by any of the Borrowers to Administrative Agent were
prepared in accordance with GAAP at the time of the preparation thereof (except,
in the case of unaudited financial statements, for the lack of footnotes and
being subject to year-end audit adjustments) and present fairly in all material
respects the Borrowers’ and their Subsidiaries’ consolidated financial condition
as of the date thereof and results of operations for the period then ended. From
December 31, 2014 to the Closing Date, no event, circumstance, or change has
occurred that has or could reasonably be expected to result in a Material
Adverse Change.

4.9.          Fraudulent Transfer.

(a)           Borrowers taken as a whole are Solvent.

(b)           No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Borrower.

4.10.        Employee Benefits. Except as set forth on Schedule 4.10, no
Borrower, none of their Subsidiaries, nor any of their ERISA Affiliates
maintains or contributes to any Benefit Plan or Multiemployer Plan. No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected to
occur, could reasonably be expected to result in a Material Adverse Change. Each
Borrower reasonably anticipates that no Material Adverse Change will arise from
any increase either in the annual financial expense for any such Benefit Plan or
Multiemployer Plan (determined in accordance with Statement of Financial
Accounting Standards No. 87), any nonqualified deferred compensation arrangement
or any welfare plan sponsored by any Borrower, any of their Subsidiaries, or any
of their ERISA Affiliates, or in the annual minimum funding contribution for any
such plan (determined in accordance with the assumptions used for funding such
plan). None of the assets of any Borrower, any of their Subsidiaries, or any of
their ERISA Affiliate is the subject of any Lien arising under Section 303(k) of
ERISA or Section 430(k) of the IRC, and there are no facts which could be
expected to give rise to such a Lien. Each Borrower, each of their Subsidiaries,
and each of their ERISA Affiliates maintains each Benefit Plan in substantial
compliance with the applicable provisions of ERISA, the IRC and other Federal
and State law and has caused each Benefit Plan which is intended to be qualified
under Section 401(a) of the IRC to maintain such qualification, except as could
not reasonably be expected to have a Material Adverse Change. Each nonqualified
deferred compensation plan or arrangement sponsored or maintained by Borrower or
its ERISA Affiliates is in substantial compliance with or is exempt from,
Section 409A of the IRC and regulations issued thereunder.
 
- 15 -

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

4.11.        Environmental Condition. Except as set forth on Schedule 4.11, (a)
no Borrower’s nor any of its Subsidiaries’ properties or assets has ever been
used by a Borrower, its Subsidiaries, or, to the knowledge of Borrowers, by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such disposal,
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of any applicable Environmental Law, (b) no Borrower’s
nor any of its Subsidiaries’ properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) no Borrower nor any of its Subsidiaries
has received notice that a Lien arising under any Environmental Law has attached
to any revenues or to any Real Property owned or operated by a Borrower or its
Subsidiaries, and (d) no Borrower nor any of its Subsidiaries nor any of their
respective facilities or operations is subject to any outstanding written order,
consent decree, or settlement agreement with any Person relating to any
Environmental Law or Environmental Liability that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Change.

4.12.        Intellectual Property. Each Borrower and its Subsidiaries own, or
hold licenses in, all trademarks, trade names, copyrights, patents, and licenses
that are necessary to the conduct of its business as currently conducted, and
attached hereto as Schedule 4.12 is a true, correct, and complete listing of all
material trademarks, trade names, copyrights, patents, and licenses as to which
any Borrower or one of its Subsidiaries is the owner or is an exclusive
licensee.

4.13.        Leases. Each Borrower and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating (including, without
limitation, all leases of Schools or any portion thereof), and, subject to
Permitted Protests, all of such material leases are valid and subsisting and no
material default by the applicable Borrower or its Subsidiaries exists under any
of them.

4.14.        Complete Disclosure. All factual information taken as a whole
(other than forward-looking information and projections and information of a
general economic nature and general information about Borrowers’ industry)
furnished by or on behalf of a Borrower or its Subsidiaries in writing to
Administrative Agent or any Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement or the other Loan Documents, and all other such
factual information taken as a whole (other than forward-looking information and
projections and information of a general economic nature and general information
about Borrowers’ industry) hereafter furnished by or on behalf of a Borrower or
its Subsidiaries in writing to Administrative Agent or any Lender will be, true
and accurate, in all material respects, on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided. The Projections delivered to Administrative Agent on July 2, 2015
represent, and as of the date on which any other Projections are delivered to
Administrative Agent, such additional Projections will represent, Borrowers’
good faith estimate, on the date such Projections are delivered, of the
Borrowers’ and their Subsidiaries’ future performance for the periods covered
thereby based upon assumptions believed by Borrowers to be reasonable at the
time of the delivery thereof to Administrative Agent (it being understood that
such Projections are subject to uncertainties and contingencies, many of which
are beyond the control of the Borrowers and their Subsidiaries, that no
assurances can be given that such Projections will be realized, and that actual
results may differ in a material manner from such Projections).
 
- 16 -

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

4.15.        Material Contracts. Set forth on Schedule 4.15 is a reasonably
detailed description of the Material Contracts of each Borrower and its
Subsidiaries. Except for matters which, either individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Change, each
Material Contract (a) is in full force and effect and is binding upon and
enforceable against the applicable Borrower or its Subsidiary and, to Borrowers’
knowledge, each other Person that is a party thereto in accordance with its
terms and (b) is not in default due to the action or inaction of the applicable
Borrower or its Subsidiary.

4.16.        Patriot Act; Foreign Corrupt Practices Act. To the extent
applicable, each Borrower is in compliance, in all material respects, with the
(a) Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, and (b) Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act
of 2001) (the “Patriot Act”). No part of the proceeds of the loans made
hereunder will be used by any Borrower or any of their Affiliates, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.

4.17.        Indebtedness. Set forth on Schedule 4.17 is a true and complete
list of all Indebtedness of each Borrower and each of its Subsidiaries
outstanding immediately prior to the Closing Date that is to remain outstanding
immediately after giving effect to the closing hereunder on the Closing Date and
such Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the Closing Date.

4.18.        Payment of Taxes. Except as otherwise permitted under Section 5.5,
all tax returns and reports of each Borrower and its Subsidiaries required to be
filed by any of them have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon a Borrower and its Subsidiaries and upon their respective assets,
income, businesses and franchises that are due and payable have been paid when
due and payable. Except as set forth on Schedule 4.18, each Borrower and each of
its Subsidiaries have made adequate provision in accordance with GAAP for all
taxes not yet due and payable. No Borrower knows of any proposed tax assessment
against a Borrower or any of its Subsidiaries that is not being actively
contested by such Borrower or such Subsidiary diligently, in good faith, and by
appropriate proceedings (and with such reserves or other appropriate provisions,
if any, as shall be required in conformity with GAAP having been made or
provided therefor).

4.19.        Margin Stock. No Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrowers will be used to purchase or carry
any such Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any purpose that violates
the provisions of Regulation T, U or X of the Board of Governors of the United
States Federal Reserve.
 
- 17 -

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

4.20.        Governmental Regulation. No Borrower nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Borrower nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

4.21.        OFAC. No Borrower nor any of its Subsidiaries is in violation of
any of the country or list based economic and trade sanctions administered and
enforced by OFAC. No Borrower nor any of its Subsidiaries (a) is a Sanctioned
Person or a Sanctioned Entity, (b) has its assets located in Sanctioned
Entities, or (c) derives revenues from investments in, or transactions with
Sanctioned Persons or Sanctioned Entities. No proceeds of any loan made
hereunder will be used to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned
Entity.

4.22.        Employee and Labor Matters. Except as set forth on Schedule 4.22,
there is (a) no unfair labor practice complaint pending or, to the knowledge of
Borrowers, threatened against any Borrower or its Subsidiaries before any
Governmental Authority and no grievance or arbitration proceeding pending or, to
the knowledge of Borrowers, threatened against any Borrower or its Subsidiaries
which arises out of or under any collective bargaining agreement, (b) no strike,
labor dispute, slowdown, stoppage or similar action or grievance pending or, to
the knowledge of Borrowers, threatened in writing against any Borrower or its
Subsidiaries, or (c) to the knowledge of Borrowers, no union representation
question existing with respect to the employees of any Borrower or its
Subsidiaries and no union organizing activity taking place with respect to any
of the employees of any Borrower or its Subsidiaries. No Borrower nor any
Subsidiary of any Borrower has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied. The hours worked and payments made to employees
of each Borrower or its Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable legal requirements. All material
payments due from any Borrower or its Subsidiaries on account of wages and
employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of any Borrower.

5.             AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, until payment in full of the
Obligations, the Borrowers shall and shall cause each of their Subsidiaries to
comply with each of the following:

5.1.          Financial Statements, Reports, Certificates. Deliver to
Administrative Agent, with copies to each Lender, each of the financial
statements, reports, and other items set forth below no later than the times
specified therein:

(a)           If and when filed by Parent, (i) Form 10-Q quarterly reports, Form
10-K annual reports, and Form 8-K current reports, and (ii) any other filings
made by Parent with the SEC.

(b)           Regardless of whether Parent files a Form 10-Q quarterly report
with respect to any fiscal quarter, as soon as available, but in any event
within 45 days (90 days in the case of a quarter that is the end of Borrowers’
fiscal year) after the end of each fiscal quarter during each of Borrowers’
fiscal years, an unaudited consolidated and consolidating balance sheet, income
statement, statement of cash flow, and statement of shareholder’s equity
covering Borrowers’ and their Subsidiaries’ operations during such period and
compared to the prior period and to the Projections for the current period,
together with a corresponding discussion and analysis of results from
management.
 
- 18 -

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

(c)           As soon as available, but in any event within 45 days (90 days in
the case of a quarter that is the end of Borrowers’ fiscal year) after the end
of each fiscal quarter during each of Borrowers’ fiscal years (or, if earlier,
within two Business Days after the due date for Parent’s filing of its Form 10-Q
quarterly report with respect to each fiscal quarter), a Compliance Certificate,
which certificate shall include: (i) a calculation of the financial covenants
set forth in Section 7 of this Agreement; (ii) a calculation of each School's
ratio under the "90/10 Rule" calculated in accordance with the requirements set
forth at 34 C.F.R. §§ 668.14(b)(16) and 668.28 for the most recently completed
fiscal year or fiscal quarter, as applicable; (iii) a calculation of the
composite score and each ratio comprising the composite score for each School
(or Parent, as applicable), as such financial ratios are set forth in 34 C.F.R.
Part 668, Subpart L for the most recently completed fiscal year; (iv) each
School's Cohort Default Rate (as issued by the DOE in draft form or published by
the DOE in final form, as the case may be) with respect to the most recent
federal fiscal year for which such rates are available from the DOE; (v) the
Gainful Employment Rates (as issued by the DOE in draft form or published by the
DOE in final form, as the case may be) for each educational program at each
School to the extent that such rates have been issued or published by the DOE
for a particular program for the most recent year for which such rates are
available from the DOE; (vi) if available, the Parent’s current projection of
Gainful Employment Rates for each educational program at each School, to the
extent that such rates are expected to be issued or published by the DOE for the
program, for the next award year for which the DOE is expected to issue rates;
(vii) if available, the Parent’s current projection of Cohort Default Rates for
each School for the next federal fiscal year for which the DOE is expected to
issue draft rates; and (viii) the graduation rates, completion rates, withdrawal
rates, retention rates, placement rates, and licensure pass rates as filed with
or calculated and delivered or publicly posted by any Educational Agency or
Governmental Authority with respect to any School or educational program;
provided, however, that in the case of the quarter which is the end of the
Borrowers’ fiscal year, Borrowers shall also deliver drafts of the items
described in the foregoing clauses (i)-(viii) within 45 days after the end of
such fiscal quarter.

(d)           Regardless of whether Parent files a Form 10-K annual report with
respect to any fiscal year, as soon as available, but in any event within 90
days after the end of each of Borrowers’ fiscal years (or, if earlier, within
two Business Days after the due date for Parent’s filing of its Form 10-K annual
report with respect to each fiscal year), consolidated financial statements of
Borrowers and their Subsidiaries for each such fiscal year, audited by
independent certified public accountants reasonably acceptable to Administrative
Agent and certified, without any qualifications (including any (A) “going
concern” or like qualification or exception, (B) qualification or exception as
to the scope of such audit, or (C) qualification which relates to the treatment
or classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 7 of this
Agreement), by such accountants to have been prepared in accordance with GAAP
(such audited financial statements to include a balance sheet, income statement,
statement of cash flow, and statement of shareholder’s equity and, if prepared,
such accountants’ management letter or internal control letter), together with
unaudited balance sheets and statements of income on a consolidating basis.

(e)           As soon as available, but in any event within 90 days after the
end of each of Borrowers’ fiscal years, a Compliance Certificate, which
certificate shall include a calculation of the financial covenants set forth in
Section 7 of this Agreement.
 
- 19 -

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

(f)           Prior to December 15 of each year, copies of Borrowers’
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Administrative Agent for the forthcoming calendar
year, month by month, certified by the chief financial officer of Parent as
being such officer’s good faith estimate of the performance of Borrowers during
the period covered thereby.

(g)           Within 30 days after the last day of each fiscal month, a report
as to all of Borrowers’ Deposit Accounts and Securities Accounts, including
details as to the amount of Unrestricted Cash as of the last day of such fiscal
month and accompanied by supporting account statements, in form and detail
reasonably acceptable to Administrative Agent.

(h)           Within 30 days after the last day of each fiscal quarter (and, if
requested by Administrative Agent, each fiscal month), a detailed report of
accounts receivable by student (including student loan (and installment
contract) receivables) as of the last day of such period, in form and detail
reasonably acceptable to Administrative Agent.

(i)            Within 30 days after the last day of each fiscal quarter, a
report as to all of Borrowers’ Equipment (including additions and deletions
thereto) as of the last day of such period, in form and detail acceptable to
Administrative Agent.

(j)            Within 30 days after the last day of each fiscal month, a report
as to (i) new Student Enrollments (starts) and total Student Enrollment during
such month (to be prepared by School, segment and on a cumulative basis, and to
include a comparison to new Student Enrollments (starts) and total Student
Enrollment as contemplated for such month in Borrowers’ Projections), and (ii)
revenues during such month and the twelve month period then ended (to be
prepared by School, segment and on a cumulative basis, and to include a
comparison to revenue as contemplated for such month and period in Borrowers’
Projections), in each case in form and detail reasonably acceptable to
Administrative Agent.

(k)           Promptly, but in any event within 5 days after any Borrower has
knowledge of any event or condition that constitutes a Default or an Event of
Default, notice of such event or condition and a statement of the curative
action that the Borrowers propose to take with respect thereto.

(l)           Upon the request of Administrative Agent, from time to time such
other information as Administrative Agent may reasonably request with respect to
Borrowers, their Subsidiaries, the Schools and the Collateral.

In addition, each Borrower agrees that no Subsidiary of a Borrower will have a
fiscal year different from that of Parent. In addition, Borrowers agree to
maintain a system of accounting that enables Borrowers to produce financial
statements in accordance with GAAP.

5.2.          Regulatory Updates. Provide Administrative Agent with the
following at the times specified below:

(a)           Within 10 Business Days of submission to any Accrediting Body or
Educational Agency, a copy of each School's annual report, including any
financial reports submitted to such Accrediting Body or Educational Agency.

(b)           [RESERVED.]

(c)           Promptly, and in any event within 5 Business Days, after the
occurrence thereof, notice of any Change of Control.
 
- 20 -

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

(d)           Within 10 Business Days after the deadline established by the DOE
for the Gainful Employment Reporting Requirements, written notice regarding the
Schools’ compliance with the Gainful Employment Reporting Requirements for the
applicable year.

(e)           Within 30 days after the last day of each fiscal quarter, or such
longer time as the Administrative Agent may agree in its sole discretion in
writing from time to time, a copy of any new information posted to any School
website during that fiscal quarter under the Gainful Employment Disclosure
Requirements.

(f)            Within 10 Business Days after submission to the DOE, a copy of
all certifications made under the Gainful Employment Certification Requirements.

(g)           Within 10 Business Days of receipt from the DOE, each School’s
debt to earnings rates as calculated by the DOE under the Gainful Employment
Rule (as issued by the DOE in draft form or published by the DOE in final form,
as the case may be).

(h)           Promptly, and in any event within 10 Business Days, after
knowledge thereof shall have come to the attention of any Borrower, any
Subsidiary or any School, written notice of (i) any threatened or pending
litigation, governmental proceeding or investigation or labor controversy
against any Borrower or any Subsidiary or any School; (ii) the assertion of any
claim by the DOE for recoupment pursuant to 34 C.F.R. § 685.206(c)(3); (iii) the
assertion of any claims by more than 25 students in a single fiscal year that
assert a defense to repayment of any Title IV loans that are explicitly based on
the students’ rights under 34 C.F.R. § 685.206 and that, in the aggregate, have
a loan value of more than $250,000; or (iv) any civil investigative demand,
investigation or examination by a Governmental Authority, Educational Agency or
Consumer Protection Agency.

(i)            Promptly, and in any event within 5 Business Days, after
knowledge thereof shall have come to the attention of any Borrower, any
Subsidiary or any School, written notice of the intent of any Educational Agency
to limit, suspend, terminate, revoke, withdraw or not renew the Educational
Approval of any Borrower or any Subsidiary or any School.

(j)            Promptly after any Borrower or any Subsidiary or School has
received the same, and in no event later than 10 Business Days after obtaining
knowledge thereof, a copy of each audit report or review report, including
preliminary review reports, issued by any federal or state regulatory agency,
including any Educational Agency, related to the books and records of any
Borrower and/or its Subsidiaries or any School, or of any notice of
noncompliance with any applicable Educational Law relating to any Borrower
and/or its Subsidiaries or any of their respective businesses or any School.

(k)           Promptly, and in any event within 10 Business Days, after
submission thereof to the DOE, copies of the annual Title IV compliance audit
for each School and the Parent’s audited financial statements and any other
financial statements submitted to the DOE, to the extent not already provided to
Administrative Agent hereunder.

(l)            Promptly, and in any event within 10 Business Days, after
receipt, each School’s Cohort Default Rate (as issued by the DOE in draft form
or published by the DOE in final form, as the case may be).

(m)          Promptly after knowledge thereof shall have come to the attention
of any Borrower or any Subsidiary or any School, and in no event later than 10
Business Days after obtaining knowledge thereof, whether based on the
preparation of any report or other submission to be filed with any Educational
Agency or Governmental Authority or information received from any Educational
Agency, Governmental Authority or other source, notice of any anticipated or
likely failure of any of the covenants identified in Section 5.8.
 
- 21 -

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

5.3.          Existence. Except as otherwise permitted under Section 6.3 or
Section 6.4, at all times maintain and preserve in full force and effect its
existence (including being in good standing in its jurisdiction of organization)
and all rights and franchises, licenses and permits material to its business;
provided, however, that no Borrower nor any of its Subsidiaries shall be
required to preserve any such right or franchise, licenses or permits if the
preservation thereof is no longer desirable in the conduct of the business of
such Person and the loss thereof is not disadvantageous in any material respect
to Borrowers, taken as a whole, or to any of the Lenders. Without limiting the
generality of the foregoing and notwithstanding any limitation contained
therein, each Borrower shall, and shall cause each School to, maintain in full
force and effect (a) its status as an "eligible institution," as defined in 34
C.F.R. §§ 600.2 (and the other applicable sections incorporated therein by
reference) and 600.5, (b) its eligibility to participate in all Title IV
Programs in which and to the extent that it currently participates, (c) its
Accreditations, and (d) its state authorizations to provide postsecondary
education in all jurisdictions where it is required to maintain such
authorizations.

5.4.          Maintenance of Properties. Maintain and preserve all of its assets
that are necessary in the proper conduct of its business (including all Real
Property Collateral and all Equipment) in good working order and condition,
ordinary wear, tear, obsolescence and casualty excepted and Permitted
Dispositions excepted, and comply with the material provisions of all material
leases to which it is a party as lessee, so as to prevent the loss or forfeiture
thereof, unless such provisions are the subject of a Permitted Protest.

5.5.          Taxes. Cause all assessments and taxes imposed, levied, or
assessed against any Borrower or its Subsidiaries, or any of their respective
assets or in respect of any of its income, businesses, or franchises to be paid
in full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest and so long as, in the case of an assessment or
tax that has or may become a Lien against any of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such assessment or tax. Each Borrower will, upon request,
furnish Administrative Agent with proof reasonably satisfactory to
Administrative Agent indicating that each Borrower and its Subsidiaries has paid
all such assessments and taxes.

5.6.          Insurance. At Borrowers’ expense, maintain insurance respecting
the Borrowers’ and their Subsidiaries’ assets wherever located, covering loss or
damage by fire, theft, explosion, and all other hazards and risks as may be
reasonably required by Administrative Agent. Borrowers also shall maintain (with
respect to each of the Borrowers and their Subsidiaries) business interruption,
general liability, product liability insurance, director’s and officer’s
liability insurance, and fiduciary liability insurance, as well as insurance
against larceny, embezzlement, criminal misappropriation, and flood insurance
covering any Real Property which has improvements used in the commercial
operations of any Borrower that are located in an area identified as having
special flood hazards and in which flood insurance has been made available under
the National Flood Insurance Act of 1968. All such policies of insurance shall
be with responsible and reputable insurance companies reasonably acceptable to
Administrative Agent and in such amounts as is carried generally in accordance
with sound business practice by companies in similar businesses similarly
situated and located and in any event in amount, adequacy and scope reasonably
satisfactory to Administrative Agent. All certificates of general liability
insurance are to be delivered to Administrative Agent, with additional insured
endorsements in favor of Administrative Agent and shall provide for not less
than 30 days (10 days in the case of non-payment) prior written notice to
Administrative Agent of the exercise of any right of cancellation. If any
Borrower fails to maintain such insurance, Administrative Agent may arrange for
such insurance, but at such Borrower’s expense and without any responsibility on
Administrative Agent’s part for obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims.
 
- 22 -

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

5.7.          Inspection. Permit Administrative Agent and each of its duly
authorized representatives or agents to visit any of its properties and inspect
any of its assets or books and records, to conduct appraisals and valuations, to
examine and make copies of its books and records, and to discuss its affairs,
finances, and accounts with, and to be advised as to the same by, its officers
and employees at such reasonable times and intervals as Administrative Agent may
designate, so long as no Default or Event of Default exists, with reasonable
prior notice to Administrative Borrower, all at the expense of Borrowers;
provided, however, that absent an Event of Default, Borrowers shall only be
required to pay for one inspection per year.

5.8.          Compliance with Laws and Regulatory Requirements. Comply with the
requirements of all applicable laws, rules, regulations, and orders of any
Governmental Authority, Educational Agency or Consumer Protection Agency
(including, without limitation, all Environmental Laws, Educational Laws and
Consumer Protection Laws), other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change or Material
Adverse Regulatory Change. Without limiting the generality of the foregoing and
notwithstanding any limitation contained therein, each Borrower will, and will
cause each School to:

(a)           maintain all Educational Approvals and specialized accrediting
agency approvals necessary for such School to conduct its operations and offer
its educational programs or for graduates of such School to take the
examinations necessary to qualify to work in the filed for which they were
trained or to otherwise be licensed in such field, except where the failure to
maintain such Educational Approvals or specialized accrediting agency approvals
could not reasonably be expected to result in a Material Adverse Regulatory
Change;

(b)           maintain compliance with all Consumer Protection Laws applicable
to any Borrower, any Subsidiary or any School in connection with the advancing
of student loans, except where the failure to maintain such Educational
Approvals could not reasonably be expected to result in a Material Adverse
Regulatory Change;

(c)           maintain compliance with all statutory and regulatory requirements
for authorization to provide post-secondary education in the jurisdictions in
which any School’s educational facilities are located or where it provides
educational services via distance education, except where the failure to
maintain such Educational Approvals could not reasonably be expected to result
in a Material Adverse Regulatory Change;

(d)           maintain compliance with all applicable Educational Laws regarding
a School’s completion, placement, withdrawal and retention rates, except where
the failure to maintain such Educational Approvals could not reasonably be
expected to result in a Material Adverse Regulatory Change;

(e)           maintain a composite score of 1.0 or more under the factors of
financial responsibility set forth in 34 C.F.R. Part 668, Subpart L, and
otherwise comply with (i) the "zone alternative" requirements set forth at 34
C.F.R. § 668.175(d) and (ii) any requirement to post a Title IV Letter of Credit
pursuant to the "Alternative Standards and Requirements" codified at 34 C.F.R. §
668.175;
 
- 23 -

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

(f)           not allow its final and draft Cohort Default Rates for any two
consecutive federal fiscal years to exceed 30%, as such rates are calculated
pursuant to 34 C.F.R., Part 668, Subpart N, provided that one School may have
Cohort Default Rates of 30% or more in two consecutive federal fiscal years
without violating this covenant;

(g)           not allow its percentage of Title IV Program funding, as
calculated under 34 C.F.R. §§ 668.14(b)(16) and 668.28 or any successor
regulation, to exceed 90% for any fiscal year and exceed 90% under a separate
calculation for the first 9 months of the following fiscal year, provided that
any School that exceeds 90% in a single fiscal year shall provide the
Administrative Agent with a complete and accurate internal calculation of its
percentage for the first 9 months of the following fiscal year within 14 days
after the close of such 9-month period;

(h)           maintain its status to receive Title IV Program funds on the
advanced payment method or the heightened cash monitoring 1 payment method,
except that the failure to maintain such status with respect to one or more
Schools that, in the aggregate, received less than $5,000,000 in Title IV
Program funds in the most recently completed fiscal year shall not constitute a
violation of this covenant;

(i)            maintain material compliance with all Educational Laws, including
(i) administrative capability requirements under 34 C.F.R. § 668.16, (ii)
Program Participation Agreement requirements under 34 C.F.R. § 668.14, and (iii)
eligible program requirements under 34 C.F.R. § 668.8; and

(j)            maintain material compliance with the applicable provisions of
the Gainful Employment Rule.

5.9.          Environmental.

(a)           Keep each property either owned or operated by Borrowers or their
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,

(b)           Provide to Administrative Agent such documentation as
Administrative Agent reasonably requests with respect to compliance with
applicable Environmental Laws,

(c)           Promptly notify Administrative Agent of any release of which any
Borrower has knowledge of a Hazardous Material in any material quantity from or
onto property owned or operated by any Borrower or its Subsidiaries and take any
Remedial Actions required to abate said release or otherwise to come into
compliance, in all material respects, with applicable Environmental Law, and

(d)           Promptly, but in any event within 5 Business Days of its receipt
thereof, provide Administrative Agent with written notice of any of the
following: (i) notice that an Environmental Lien has been filed against any of
the real or personal property of any Borrower or its Subsidiaries, (ii)
commencement of any Environmental Action or written notice that an Environmental
Action will be filed against any Borrower or its Subsidiaries, and (iii) written
notice of a violation, citation, or other administrative order from a
Governmental Authority.

5.10.        Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Administrative Agent if any
written information, exhibit, or report furnished to Administrative Agent or the
Lenders contained, at the time it was furnished, any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made. The foregoing to the contrary notwithstanding, any notification
pursuant to the foregoing provision will not cure or remedy the effect of the
prior untrue statement of a material fact or omission of any material fact nor
shall any such notification have the effect of amending or modifying this
Agreement or any of the Schedules hereto.
 
- 24 -

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

5.11.        Formation of Subsidiaries. At the time that any Borrower forms any
direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, such Borrower shall (a) within 10 Business Days of such
formation or acquisition (or such later date as permitted by Administrative
Agent in its sole discretion) cause any such new Subsidiary to provide to the
Administrative Agent a joinder to this Agreement and provide to the Tranche A
Collateral Agent a joinder to the Tranche A Collateral Documents, together with
such other security documents (including mortgages with respect to any owned
Real Property), as well as appropriate financing statements (and with respect to
all property subject to a mortgage, fixture filings), all in form and substance
reasonably satisfactory to Administrative Agent and the Tranche A Collateral
Agent (including being sufficient to grant the Tranche A Collateral Agent a
first priority Lien in and to the assets of such newly formed or acquired
Subsidiary), (b) within 10 Business Days of such formation or acquisition (or
such later date as permitted by Administrative Agent in its sole discretion)
provide to the Tranche A Collateral Agent a pledge agreement (or an addendum to
the Security Agreement) and appropriate certificates and powers or financing
statements, pledging all of the direct or beneficial ownership interest in such
new Subsidiary reasonably satisfactory to the Tranche A Collateral Agent, and
(c) within 10 Business Days of such formation or acquisition (or such later date
as permitted by Administrative Agent in its sole discretion) provide to
Administrative Agent and the Tranche A Collateral Agent all other documentation,
including one or more opinions of counsel reasonably satisfactory to
Administrative Agent and the Tranche A Collateral Agent, which in their opinion
is appropriate with respect to the execution and delivery of the applicable
documentation referred to above (including policies of title insurance (with
coverage amounts reasonably acceptable to Administrative Agent) or other
documentation with respect to all owned Real Property). Any document, agreement,
or instrument executed or issued pursuant to this Section 5.11 shall be a Loan
Document. Nothing contained in this Section 5.11 shall permit Borrowers to form
or acquire any direct or indirect Subsidiary other than in accordance with
Section 6.3.

5.12.        Further Assurances. At any time upon the reasonable request of
Administrative Agent or the Tranche A Collateral Agent, execute or deliver to
Administrative Agent or the Tranche A Collateral Agent any and all financing
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, mortgages, deeds of trust, opinions of
counsel, and all other documents (the “Additional Documents”) that
Administrative Agent or the Tranche A Collateral Agent may reasonably request,
in form and substance reasonably satisfactory to Administrative Agent and the
Tranche A Collateral Agent, to create, perfect, and continue perfected or to
better perfect the Tranche A Collateral Agent’s Liens in all of the assets of
each Borrower and its Subsidiaries (whether now owned or hereafter arising or
acquired, tangible or intangible, real or personal), to create and perfect Liens
in favor of the Tranche A Collateral Agent in any Real Property acquired by any
Borrower or its Subsidiaries after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, if any Borrower
refuses or fails to execute or deliver any reasonably requested Additional
Documents within a reasonable period of time following the request to do so,
such Borrower hereby authorizes Administrative Agent and the Tranche A
Collateral Agent to execute any such Additional Documents in the applicable
Borrower’s or its Subsidiary’s name, as applicable, and authorizes
Administrative Agent and the Tranche A Collateral Agent to file such executed
Additional Documents in any appropriate filing office. In furtherance and not in
limitation of the foregoing, each Borrower shall take such actions as
Administrative Agent and the Tranche A Collateral Agent may reasonably request
from time to time to ensure that the Obligations are secured by substantially
all of the assets of Borrowers and their Subsidiaries and all of the outstanding
Stock of the Subsidiaries of Parent.
 
- 25 -

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

5.13.        Lender Meetings. Within 90 days after the close of each fiscal year
of Parent, at the request of Administrative Agent or of the Required Lenders and
upon reasonable prior notice, hold a meeting (at a mutually agreeable location
and time or, at the option of Administrative Agent, by conference call) with all
Lenders who choose to attend such meeting at which meeting shall be reviewed the
financial results of the previous fiscal year and the financial condition of
Parent and its Subsidiaries and the projections presented for the current fiscal
year of Parent and its Subsidiaries.

5.14.        Material Contracts. Contemporaneously with the delivery of each
Compliance Certificate pursuant to Section 5.1, provide Administrative Agent
with copies of (a) each Material Contract entered into since the delivery of the
previous Compliance Certificate, and (b) each material amendment or modification
of any Material Contract entered into since the delivery of the previous
Compliance Certificate.

5.15.        Cash Collateral. Maintain the Cash Collateral in the Cash
Collateral Account, subject to a Control Agreement, at all times (it being
agreed that all interest that accrues from time to time on the Cash Collateral
shall be property of Borrowers and constitute Cash Collateral). Notwithstanding
the foregoing: (a) if (i) no Default or Event of Default shall then exist or
would result therefrom, (ii) EBITDA for the four fiscal quarter period ended as
of the last day of the most recent fiscal quarter for which Borrowers are then
required to have delivered quarterly financial statements to Administrative
Agent in accordance with Section 5.1 is at least $30,000,000, (iii) the
outstanding principal balance of the Term Loans is less than 50% of the
aggregate of the Real Property Minimum Sale Amount with respect to all Real
Property Collateral then owned by Borrowers, and (iv) Borrowers provide the
Administrative Agent a certification in form and detail reasonably acceptable to
the Administrative Agent as to the satisfaction of the foregoing conditions,
then Borrowers may request that the Administrative Agent arrange for the release
of a to-be-determined percentage of the Cash Collateral, and the Administrative
Agent may elect to approve or deny all or a portion of such request in its sole
discretion (but no such approval may be made without the direction of all of the
Tranche A Lenders and the consent of the Tranche B Collateral Agent); and (b) if
(i) no Default or Event of Default shall then exist, and (ii) the amount of Cash
Collateral exceeds the outstanding principal balance of the Tranche B Term Loan
by more than $250,000, then Administrative Agent (at the direction of all of the
Tranche A Lenders) shall have the right in its sole discretion, at the request
of Borrowers, to require the Tranche B Collateral Agent and the Tranche A
Collateral Agent to release such excess amount of the Cash Collateral, it being
understood that the amount of Cash Collateral shall at all times exceed the
outstanding principal amount of the Tranche B Term Loan by at least $250,000;
and (c) if (i) no Default or Event of Default shall then exist, and (ii) the
amount of Cash Collateral would exceed the outstanding principal balance of the
Tranche B Term Loan by more than $250,000 after giving effect thereto, then, not
more than once during each calendar quarter, Borrowers may request, by written
notice to Administrative Agent and the Tranche B Collateral Agent, that the
Tranche B Collateral Agent and the Tranche A Collateral Agent release to
Borrowers (and the Tranche B Collateral Agent and the Tranche A Collateral Agent
hereby agree to release) any or all interest in the Cash Collateral Account that
has accrued and is then payable in accordance with the scheduled interest
payment terms applicable to the Cash Collateral Account.

5.16.        School Closure and Capex Cash Collateral. Maintain the School
Closure and Capex Cash Collateral in the School Closure and Capex Cash
Collateral Account at Bank of America, N.A. or such other depository bank from
time to time at the discretion of Borrowers and reasonably satisfactory to
Administrative Agent subject to a Control Agreement, at all times (it being
agreed that all interest accruing from time to time on the School Closure and
Capex Cash Collateral shall be the property of Borrowers and constitute School
Closure and Capex Cash Collateral). Notwithstanding the foregoing, Borrowers may
request that the Tranche A Collateral Agent release School Closure and Capex
Cash Collateral to Borrowers, and the Tranche A Collateral Agent shall release
School Closure and Capex Cash Collateral to Borrowers, subject to the following
terms and conditions: (a) Borrowers may not request, and the Tranche A
Collateral Agent shall have no obligation to effect, the release of School
Closure and Capex Cash Collateral on more than one occasion with respect to any
fiscal quarter of Borrowers, such request to be made not more than 30 days (45
days in the case of a quarter that is the end of Borrowers’ fiscal year) after
the end of each fiscal quarter; (b) Borrowers may not request, and the Tranche A
Collateral Agent shall have no obligation to effect, the release of School
Closure and Capex Cash Collateral if an Anticipated Default, Default or Event of
Default shall then exist or would result therefrom; (c) the aggregate amount of
School Closure and Capex Cash Collateral released to Borrowers with respect to
any fiscal quarter shall not exceed the lesser of (i) the amount of immediately
available funds in the School Closure and Capex Cash Collateral Account, and
(ii) the sum of (A) the Designated School Release Amount for all Designated
Schools that are closed by Borrowers during such fiscal quarter (provided, that,
(1) the amount included in this clause (A) with respect to any Designated School
shall not exceed the amount of Borrowers’ verified out-of-pocket costs with
respect to the closure of such Designated School, and (2) no amount shall be
included in this clause (A) with respect to any Designated School that is sold
for Net Cash Proceeds equal to $0 or more), plus (B) the Excess Capex Amount
with respect to such fiscal quarter, plus (C) the aggregate amount of interest
in the School Closure and Capex Cash Collateral Account that has accrued and is
then payable in accordance with the scheduled interest payment terms applicable
to the School Closure and Capex Cash Collateral Account; and (d) Borrowers shall
provide Administrative Agent and the Tranche A Collateral Agent, at least 10
days prior to the date of any proposed release of School Closure and Capex Cash
Collateral, such verifications as Administrative Agent and the Tranche A
Collateral Agent may reasonably request with respect to such closures of
Designated Schools, such invoices and other information as Administrative Agent
and the Tranche A Collateral may reasonably request with respect to such Excess
Capex Amount, and a certification in form and detail reasonably acceptable to
Administrative Agent and the Tranche A Collateral Agent as to the satisfaction
of the foregoing conditions. Without limitation of the rights of Administrative
Agent and the Tranche A Collateral Agent with respect to any Default or Event of
Default, upon the occurrence and during the continuation of an Anticipated
Default, the Tranche A Collateral Agent may, and, at the instruction of the
Required Lenders, shall, apply any or all of the School Closure and Capex Cash
Collateral to the Tranche A Obligations in accordance with Section
2.3(b)(iii)(B) as if an Application Event had then occurred.
 
- 26 -

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

6.             NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, until payment in full of the
Obligations, the Borrowers will not and will not permit any of their
Subsidiaries to do any of the following:

6.1.          Indebtedness. Create, incur, assume, suffer to exist, guarantee,
or otherwise become or remain, directly or indirectly, liable with respect to
any Indebtedness, except for Permitted Indebtedness.

6.2.          Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.

6.3.          Restrictions on Fundamental Changes.

(a)           Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock, except for any merger between
Borrowers, provided that Parent must be the surviving entity of any such merger
to which it is a party,
 
- 27 -

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

(b)           Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Borrowers with nominal assets and nominal liabilities, and (ii)
the liquidation or dissolution of a Borrower (other than Parent) so long as all
of the assets (including any interest in any Stock) of such liquidating or
dissolving Borrower are transferred to another Borrower that is not liquidating
or dissolving,

(c)           Suspend or go out of a substantial portion of the business of
Borrowers, taken as a whole, except as permitted pursuant to clauses (a) or (b)
above or in connection with the transactions permitted pursuant to Section 6.4,

(d)           Form or acquire any direct or indirect Subsidiary, except with the
consent of Administrative Agent, or

(e)           Close any School other than Designated Schools.

6.4.          Disposal of Assets. Other than Permitted Dispositions or
transactions expressly permitted by Sections 6.3 or 6.11, convey, sell, lease,
license, assign, transfer, or otherwise dispose of (or enter into an agreement
to convey, sell, lease, license, assign, transfer, or otherwise dispose of) any
Borrower’s or its Subsidiaries’ assets.

6.5.          Change Name. Change its or any of its Subsidiaries’ name,
organizational identification number, state of organization or organizational
identity; provided, however, that any Borrower or any of its Subsidiaries may
change its name upon at least 10 days prior written notice to Administrative
Agent of such change.

6.6.          Nature of Business. Make any change in the nature of its or their
business as described in Schedule 6.6 or acquire any properties or assets that
are not reasonably related to the conduct of such business activities.

6.7.          Prepayments and Amendments.

(a)           Except in connection with Refinancing Indebtedness permitted by
Section 6.1,

(i)            optionally prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Borrower and its Subsidiaries, other than the
Obligations in accordance with this Agreement and other Permitted Indebtedness,
or

(ii)           make any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the Obligations if such
payment is not permitted at such time under the subordination terms and
conditions applicable thereto, or

(b)           Except as permitted pursuant to subsection (a) above, directly or
indirectly, amend, modify, or change any of the terms or provisions of:

(i)           any agreement, instrument, document, indenture, or other writing
evidencing or concerning Permitted Indebtedness other than (A) the Obligations
in accordance with this Agreement, and (B) other Permitted Indebtedness except
to the extent that such amendment, modification, or change could not,
individually or in the aggregate, reasonably be expected to be materially
adverse to the interests of Administrative Agent or any of the Lenders,
 
- 28 -

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

(ii)           any Material Contract except to the extent that such amendment,
modification, or change could not, individually or in the aggregate, reasonably
be expected to be materially adverse to the interests of Administrative Agent or
any of the Lenders, or

(iii)           the Governing Documents of any Borrower or any of its
Subsidiaries if the effect thereof, either individually or in the aggregate,
could reasonably be expected to be materially adverse to the interests of
Administrative Agent or any of the Lenders.

6.8.          Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.

6.9.          Restricted Payments. Make any Restricted Payment.

6.10.        Accounting Methods. Modify or change its fiscal year or its method
of accounting (other than pursuant to an Accounting Change the details of which
are disclosed to Administrative Agent in writing in the first set of financial
statements delivered pursuant to Section 5.1 in which such change in method of
accounting is effective).

6.11.        Investments; Controlled Investments.

(a)           Except for Permitted Investments, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment.

(b)           Other than (i) an aggregate amount of not more than $1,500,000 at
any one time, (ii) amounts deposited into Deposit Accounts to serve as
collateral for Indebtedness owed with respect to Permitted Letters of Credit,
and (iii) amounts deposited into Deposit Accounts specifically and exclusively
used for payroll, payroll taxes, other employee wage and benefit payments to or
for Borrowers’ employees, or Title IV Program funds that constitute trust funds,
make, acquire, or permit to exist Permitted Investments consisting of cash, Cash
Equivalents, or amounts credited to Deposit Accounts or Securities Accounts
unless the applicable Borrower and the applicable bank or securities
intermediary have entered into Control Agreements with the Tranche A Collateral
Agent governing such Permitted Investments in order to perfect (and further
establish) the Tranche A Collateral Agent’s Liens in such Permitted Investments.

(c)           Without limitation of the provisions of Section 6.11(b), open or
establish any new Deposit Account or Securities Account unless (i) Borrowers
have provided Administrative Agent at least 5 Business Days notice thereof
(including the name of the applicable bank or securities intermediary with which
such Deposit Account or Securities Account is to be opened or established and
the purpose of such Deposit Account or Securities Account), and (ii) the
applicable Borrower and the applicable bank or securities intermediary have
entered into a Control Agreement with the Tranche A Collateral Agent governing
such Deposit Account or Securities Account in order to perfect (and further
establish) the Tranche A Collateral Agent’s Liens in such Deposit Account or
Securities Account (except to the extent such Control Agreement is not required
under Section 6.11(b)).

6.12.        Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower or any of its
Subsidiaries except for:

(a)           transactions (other than the payment of management, consulting,
monitoring, or advisory fees) between any Borrower or its Subsidiaries, on the
one hand, and any Affiliate of such Borrower or its Subsidiaries, on the other
hand, so long as such transactions (i) are fully disclosed to Administrative
Agent prior to the consummation thereof, and (ii) are no less favorable, taken
as a whole, to such Borrower or its Subsidiaries, as applicable, than would be
obtained in an arm’s length transaction with a non-Affiliate,
 
- 29 -

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

(b)           so long as it has been approved by such Borrower’s or such
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, any indemnity provided for the benefit of directors (or
comparable managers) of such Borrower or such Subsidiary,

(c)           so long as it has been approved by such Borrower’s or such
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, the payment of reasonable compensation, severance, or
employee benefit arrangements to employees, officers, and outside directors of
such Borrower and its Subsidiaries in the ordinary course of business and
consistent with industry practice, including the issuance of Stock of Parent
pursuant to the terms of employee equity incentive plans and other compensation
arrangements (and cash payments and/or the forfeiture of shares of Stock in
connection with the exercise of options and the vesting of Stock awards made
pursuant to employee equity incentive plans and other compensation arrangements
in order to satisfy related employee income tax obligations), and

(d)           transactions permitted by Section 6.3.

6.13.        Use of Proceeds. Use the proceeds of the Term Loans for any purpose
other than (a) to repay outstanding principal, accrued interest, and accrued
fees and expenses owing under or in connection with the Existing Credit Facility
other than Indebtedness set forth on Schedule 4.17 with respect to letters of
credit issued under the Existing Credit Facility, (b) to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (c)
thereafter, consistent with the terms and conditions hereof, for their lawful
and permitted purposes (including that no part of the proceeds of the Term Loans
will be used to purchase or carry any such Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock or for
any purpose that violates the provisions of Regulation T, U or X of the Board of
Governors of the United States Federal Reserve).

6.14.        Limitation on Issuance of Stock. Except for the issuance or sale of
common stock or Permitted Preferred Stock by Parent, issue or sell or enter into
any agreement or arrangement for the issuance and sale of any of its Stock.

6.15.        Collateral Access Agreements. Permit any Equipment, or books and
records relating to Collateral, to be located at any real property leased by a
Borrower or its Subsidiaries, or with any warehouseman, processor, consignee, or
other Person, unless Borrowers have used all commercially reasonable efforts to
obtain and maintain in full force and effect a Collateral Access Agreement with
respect thereto.

7.           FINANCIAL COVENANTS.

Each Borrower covenants and agrees that, until payment in full of the
Obligations:

7.1.          Minimum Liquidity. Borrowers will maintain Unrestricted Cash as of
each fiscal quarter end of not less than the applicable amount required below:
 
- 30 -

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

Fiscal Quarter End
Minimum Unrestricted Cash
September 30, 2015
$24,000,000
December 31, 2015
$27,000,000
March 31, 2016
$21,000,000
June 30, 2016
$17,000,000
September 30, 2016
$25,000,000
December 31, 2016
$32,000,000

; provided, that, (a) to the extent that, as of any fiscal quarter end, the
Borrowers’ reimbursement obligations under Permitted Letters of Credit exceed
the aggregate amount of Permitted Letters of Credit outstanding as of the
Closing Date, the minimum Unrestricted Cash required as of such fiscal quarter
end shall be reduced, on a dollar for dollar basis, by the lesser of the amount
of such excess and $3,000,000, (b) in Administrative Agent’s sole discretion,
Administrative Agent may consent to the reduction of the minimum Unrestricted
Cash in amounts not to exceed verified out of pocket costs incurred by Borrowers
after the Closing Date with respect to closures of Designated Schools, and (c)
subject to Administrative Agent’s receipt of account statements or other
supporting documentation reasonably acceptable to it, Borrowers shall be
entitled to include in the calculation of Unrestricted Cash as of any fiscal
quarter end the aggregate amount of Title IV Program trust funds that were
transferred by Borrowers from the trust fund accounts containing such funds to a
Deposit Account of Borrowers that exclusively contain Unrestricted Cash (and is
subject to a Control Agreement) within two Business Days after such fiscal
quarter end.

7.2.          Minimum EBITDA. Borrowers and their Subsidiaries will have EBITDA,
measured as of the last day of each fiscal quarter for the four fiscal quarter
period then ending, of not less than the applicable amount required below:

Fiscal Quarter Ending
Minimum EBITDA
September 30, 2015
$10,600,000
December 31, 2015
$7,000,000
March 31, 2016
$7,800,000
June 30, 2016
$8,600,000
September 30, 2016
$8,500,000
December 31, 2016
$8,400,000

7.3.          Maximum Capital Expenditures. Borrowers and their Subsidiaries
will not make or incur Capital Expenditures (a) during the fiscal year ending
December 31, 2015 or any portion thereof, in excess of the sum of $4,625,000
plus the Excess Capex Amount with respect to such fiscal year or then applicable
portion thereof, or (b) during the fiscal year ending December 31, 2016 or any
portion thereof, in excess of the sum of $5,250,000 plus the Excess Capex Amount
with respect to such fiscal year or then applicable portion thereof.
 
- 31 -

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

7.4.          Minimum Fixed Charge Coverage Ratio. Borrowers and their
Subsidiaries will maintain a Fixed Charge Coverage Ratio, measured as of the
last day of each fiscal quarter for the applicable period set forth below, of
not less than the applicable ratio required below:
 
Period
Minimum Fixed Charge Coverage Ratio
October 1, 2014 through and including September 30, 2015
2.00 to 1.0
January 1, 2015 through and including December 31, 2015
1.00 to 1.0
April 1, 2015 through and including March 31, 2016
1.00 to 1.0
July 1, 2015 through and including June 30, 2016
1.00 to 1.0
October 1, 2015 through and including September 30, 2016
1.00 to 1.0
January 1, 2016 through and including December 31, 2016
1.00 to 1.0

It is the intention of the parties hereto that the covenants set forth in
Sections 7.1, 7.2, 7.3 and 7.4 will be re-set for each fiscal year ending after
December 31, 2016 and will be negotiated by the parties in good faith based on
Borrowers’ Projections for such fiscal year to be delivered by Borrowers under
Section 5.1(f), but in any case at levels not less stringent than the applicable
levels with respect to the fiscal quarter and fiscal year ending December 31,
2016. In the event Administrative Agent, the Required Lenders and Borrowers are
not able to come to an agreement as to the levels for such covenants at least 30
days prior to the start of such fiscal year (as evidenced by an amendment to
this Agreement executed by Administrative Agent, the Required Lenders and
Borrowers), then such covenants shall remain at the applicable levels with
respect to the fiscal quarter and fiscal year ending December 31, 2016.

8.             EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1.          Payment Default. If Borrowers fail to pay when due and payable, or
when declared due and payable, (a) all or any portion of the Obligations
consisting of interest, fees, or charges due the Lender Group, reimbursement of
Lender Group Expenses, or other amounts (other than any portion thereof
constituting principal) constituting Obligations (including any portion thereof
that accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding), and such failure continues for a period of 3 Business
Days, or (b) all or any portion of the principal of the Obligations;

8.2.          Covenant Default. If any Borrower or any of its Subsidiaries:
 
- 32 -

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

(a)           breaches or fails to perform or observe any covenant or other
agreement contained in (i) Sections 5.1, 5.2, 5.3 (solely as to any failure to
maintain and preserve and Borrower’s existence in its jurisdiction of
organization in full force and effect),5.6, 5.7, 5.8, 5.11, 5.12, 5.15, 5.16 or
5.17 of this Agreement, (ii) Section 6 of this Agreement (or any sub-section
thereof), (iii) Section 7 of this Agreement, (iv) the Security Agreement or the
Cash Collateral Security Agreement, or (v) any Mortgage; or

(b)           breaches or fails to perform or observe any covenant or other
agreement contained in this Agreement, or in any of the other Loan Documents, in
each case, other than any such covenant or agreement that is the subject of
another provision of this Section 8 (in which event such other provision of this
Section 8 shall govern), and such failure continues for a period of 15 days
after the earlier of (i) the date on which such failure shall first become known
to any officer of any Borrower or (ii) the date on which written notice thereof
is given to Administrative Borrower by Administrative Agent;

8.3.          Judgments. If one or more judgments, orders, or awards for the
payment of money involving an aggregate amount of $1,000,000 or more (except to
the extent fully covered (other than to the extent of customary deductibles) by
insurance pursuant to which the insurer has not denied coverage) is entered or
filed against a Borrower or any of its Subsidiaries, or with respect to any of
their respective assets, and either (a) there is a period of 45 consecutive days
at any time after the entry of any such judgment, order, or award during which
(i) the same is not discharged, satisfied, vacated, or bonded pending appeal, or
(ii) a stay of enforcement thereof is not in effect, or (b) enforcement
proceedings are commenced upon such judgment, order, or award;

8.4.          Voluntary Bankruptcy. If an Insolvency Proceeding is commenced by
a Borrower or any of its Subsidiaries;

8.5.          Involuntary Bankruptcy. If an Insolvency Proceeding is commenced
against a Borrower or any of its Subsidiaries and any of the following events
occur: (a) such Borrower or such Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, such Borrower or its Subsidiary,
or (e) an order for relief shall have been issued or entered therein;

8.6.          Conduct of Business. If a Borrower or any of its Subsidiaries is
enjoined, restrained, or in any way prevented by the order of any court or any
administrative or regulatory agency from continuing to conduct all or any
material part of the business affairs of Borrowers and their Subsidiaries, taken
as a whole;

8.7.          Debt Default. If there is a default in one or more agreements to
which a Borrower or any of its Subsidiaries is a party with one or more third
Persons relative to a Borrower’s or any of its Subsidiaries’ Indebtedness
involving an aggregate amount of $500,000 or more, and such default (a) occurs
at the final maturity of the obligations thereunder, or (b) results in a right
by such third Person, irrespective of whether exercised, to accelerate the
maturity of such Borrower’s or its Subsidiary’s obligations thereunder;

8.8.          Representations and Warranties. If any warranty, representation,
certificate, statement, or Record made herein or in any other Loan Document or
delivered in writing to Administrative Agent or any Lender in connection with
this Agreement or any other Loan Document proves to be untrue in any material
respect (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;
 
- 33 -

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

8.9.          Liens. If any Mortgage, Security Agreement or other Loan Document
that purports to create a Lien, shall, for any reason (other than as a result of
the action or failure to act of a Collateral Agent), fail or cease to create a
valid and perfected and, except to the extent of Permitted Liens which are
expressly permitted by the terms of this Agreement to have priority over the
applicable Collateral Agent’s Liens, first priority Lien on the Collateral
covered thereby, except as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement;

8.10.        Validity and Enforceability. The validity or enforceability of any
Loan Document shall at any time for any reason (other than as a result of the
action or failure to act on the part of any member of the Lender Group), be
declared to be null and void, or a proceeding shall be commenced by a Borrower
or its Subsidiaries, or by any Governmental Authority having jurisdiction over a
Borrower or its Subsidiaries, seeking to establish the invalidity or
unenforceability thereof, or a Borrower or its Subsidiaries shall deny that such
Borrower or its Subsidiaries has any liability or obligation purported to be
created under any Loan Document;

8.11.        ERISA Event. If an ERISA Event shall have occurred;

8.12.        Title IV Program Eligibility. The DOE shall have, pursuant to
Subpart G of 34 C.F.R. Part 668, notified any Borrower, any Subsidiary or any
School, as the case may be, of the intent to initiate an action to suspend,
terminate or limit Title IV Program eligibility or funding for any Borrower, any
Subsidiary or any School that, in the sole discretion of the Required Lenders,
could reasonably be expected to result in a Material Adverse Change or Material
Adverse Regulatory Change, and such suspension, termination or limitation shall
not have been withdrawn or otherwise terminated within 75 days of such
notification;

8.13.        DOE Emergency Action. The DOE shall have notified any Borrower, any
Subsidiary or any School that the DOE intends to initiate an emergency action
against a School pursuant to 34 C.F.R. § 668.83; or

8.14.        Educational Approvals and Significant Regulatory Events. Any of the
following shall have occurred: (a) the issuance of a notice of intent by an
Educational Agency to suspend, terminate, withdraw, limit or not renew an
Educational Approval of a School that, in the sole discretion of the Required
Lenders, could reasonably be expected to result in a Material Adverse Change or
Material Adverse Regulatory Change, and such suspension, termination,
withdrawal, limitation or decision not to renew shall not have been withdrawn or
terminated within 75 days from such notification; or (b) any Significant
Regulatory Event.

9.            RIGHTS AND REMEDIES.

9.1.          Rights and Remedies. Upon the occurrence and during the
continuation of an Event of Default:

(a)           Administrative Agent may, and, at the instruction of the Required
Lenders, shall (by written notice to Administrative Borrower), declare the
Obligations, whether evidenced by this Agreement or by any of the other Loan
Documents, immediately due and payable, whereupon the same shall become and be
immediately due and payable and Borrowers shall be obligated to repay all of
such Obligations in full, without presentment, demand, protest, or further
notice or other requirements of any kind, all of which are hereby expressly
waived by each Borrower;
 
- 34 -

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

(b)           the Tranche A Collateral Agent may, and, at the instruction of the
Required Lenders, shall, exercise any and all rights available to the Tranche A
Collateral Agent under the Tranche A Collateral Documents;

(c)           the Tranche B Collateral Agent may, and, at the instruction of the
Required Tranche B Lenders, shall, exercise any and all rights available to the
Tranche B Collateral Agent under the Tranche B Collateral Documents; and

(d)           each Agent may exercise all other rights and remedies available to
it under the Loan Documents or applicable law.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to any Borrower or any other Person or any
act by the Lender Group, the Obligations, inclusive of all accrued and unpaid
interest thereon and all fees and all other amounts owing under this Agreement
or under any of the other Loan Documents, shall automatically and immediately
become due and payable and Borrowers shall be obligated to repay all of such
Obligations in full, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by each Borrower.

9.2.          Remedies Cumulative. The rights and remedies of each Agent and
other member of the Lender Group under this Agreement, the other Loan Documents,
all other agreements and applicable law shall be cumulative. Each Agent and
other member of the Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by any Agent or any other member of the Lender Group of one right or
remedy shall be deemed an election, and no waiver by any Agent or any other
member of the Lender Group of any Event of Default shall be deemed a continuing
waiver. No delay by any Agent or any other member of the Lender Group shall
constitute a waiver, election, or acquiescence by it.

10.           WAIVERS; INDEMNIFICATION.

10.1.        Demand; Protest; etc. Each Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which such Borrower may in any way be liable.

10.2.        The Lender Group’s Liability for Collateral. Each Borrower hereby
agrees that, subject to and except as expressly set forth in the Collateral
Documents: (a) no member of the Lender Group shall in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.

10.3.        Indemnification. Borrowers shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an “Indemnified Person”) harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrowers’ and their
Subsidiaries’ compliance with the terms of the Loan Documents (provided,
however, that the indemnification in this clause (a) shall not extend to (i)
disputes solely between or among the Lenders, (ii) disputes solely between or
among the Lenders and their respective Affiliates; it being understood and
agreed that the indemnification in this clause (a) shall extend to disputes
among Indemnified Persons, including among Lenders and their Affiliates, to the
extent relating to any action or omission of a Borrower, and in addition to
Administrative Agent (but not the Lenders) relative to disputes between or among
Administrative Agent on the one hand, and one or more Lenders, or one or more of
their Affiliates, on the other hand, or (iii) any Taxes or any costs
attributable to Taxes, which shall be governed by Section 16), (b) with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto, and (c) in
connection with or arising out of any presence or release of Hazardous Materials
at, on, under, to or from any assets or properties owned, leased or operated by
any Borrower or any of its Subsidiaries or any Environmental Actions,
Environmental Liabilities or Remedial Actions related in any way to any such
assets or properties of any Borrower or any of its Subsidiaries (each and all of
the foregoing, the “Indemnified Liabilities”). The foregoing to the contrary
notwithstanding, no Borrower shall have any obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person or its officers,
directors, employees, attorneys, or agents. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which any Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
 
- 35 -

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

11.           NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile. In the case of notices or
demands to Borrowers or Administrative Agent, as the case may be, they shall be
sent to the respective address set forth below:
 
- 36 -

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

 
If to Borrowers:
Lincoln Educational Services Corporation
200 Executive Drive – Suite 340
West Orange, New Jersey 07052
Attn: Scott M. Shaw, Chief Executive Officer
Email: sshaw@lincolntech.edu
 
and
 
Attn.: Kenneth M. Swisstack, General Counsel
Email: kswisstack@lincolntech.edu
Fax No. (973) 766-9886
   
with copies to:
McCarter & English, LLP
100 Mulberry Street
Four Gateway Center
Newark, New Jersey 07102-4096
Attn: Michele Vaillant, Esq.
Email: mvaillant@mccarter.com
Fax No. (973) 624-7070
   
If to Administrative Agent or the Tranche A Collateral Agent:
HPF Service, LLC
14785 Preston Road, Suite 575
Dallas, TX 75254           
Attn: Jonathan Goodman
Email: jgoodman@hudsonpf.com
Fax No. (972) 702-6171
   
with copies to:
Greenberg Traurig, LLP
3333 Piedmont Road, Suite 2500
Terminus 200 Building
Atlanta, Georgia 30305
Attn: Michael Leveille, Esq.
Email: leveillem@gtlaw.com
Fax No.: (404) 678-7315
 
Virgo Service Company, LLC
555 Twin Dolphin Drive, Suite 615
Redwood Shores, CA 94065
Attn: Bob Racusin
Email: bob@virgo-llc.com
Fax No.: (646) 619-4035

 
- 37 -

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

If to the Tranche B Collateral Agent:
AloStar Bank of Commerce
3630 Peachtree Road NE, Suite 1050
Atlanta, GA 30326
Attn: Brian Long
Fax No. (404) 365-7112
   
with copies to:
King & Spalding LLP
1180 Peachtree Street
Atlanta, GA 30309
Attn: Chris Molen, Esq.
Email: cmolen@kslaw.com
Fax No.: (404) 572-5100

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
parties. All notices or demands sent in accordance with this Section 11 shall be
deemed received on the earlier of the date of actual receipt or three Business
Days after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received, (b)
notices by facsimile shall be deemed to have been given when sent (except that,
if not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next Business Day for the
recipient) and (c) notices by electronic mail shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return email or other
written acknowledgment).

12.           CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a)           THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

(b)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE APPLICABLE AGENT’S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE
LENDER GROUP WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12(b).
 
- 38 -

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

(c)           TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER
AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENTS
THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

(d)           EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
ANY AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

13.           ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1.        Assignments and Participations.

(a)           At no cost or expense to any Borrower, any Lender may assign and
delegate to one or more commercial banks, financial institutions, or other
Persons (each, an “Assignee”, provided that no Borrower or Affiliate of a
Borrower shall be permitted to become an Assignee), all or any portion of the
Obligations, and the other rights and obligations of such Lender hereunder and
under the other Loan Documents, in a minimum amount (unless waived by
Administrative Agent) of $5,000,000 (except such minimum amount shall not apply
to (x) an assignment or delegation by any Lender to any other Lender or an
Affiliate of any Lender, (y) a group of new Lenders, each of which is an
Affiliate of each other or a Related Fund of such new Lender, to the extent that
the aggregate amount to be assigned to all such new Lenders is at least
$5,000,000, or (z) an assignment by any Lender of the entire principal balance
of the Obligations owing to it); provided, however, that (i) Borrowers and
Administrative Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee until (A) written
notice of such assignment, together with payment instructions, addresses, and
related information with respect to the Assignee, have been given to
Administrative Borrower and Administrative Agent by such Lender and the
Assignee, (B) such Lender and its Assignee have delivered to Administrative
Borrower and Administrative Agent an Assignment and Acceptance and
Administrative Agent has notified the assigning Lender of its receipt thereof in
accordance with Section 13.1(b), and (C) unless waived by Administrative Agent,
the assigning Lender or Assignee has paid to Administrative Agent for
Administrative Agent’s separate account a processing fee in the amount of
$3,500, and (ii) no Tranche B Lender may assign the Tranche B Obligations owing
to it without the prior consent of Administrative Agent. Borrowers shall, at no
cost or expense to any Borrower, execute and deliver (to Administrative Agent)
new or replacement Tranche A Notes, as applicable, in connection with any
Tranche A Lender’s assignment of all or any portion of the Tranche A Obligations
owing to such Tranche A Lender.
 
- 39 -

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

(b)           From and after the date that Administrative Agent notifies the
assigning Lender (with a copy to Administrative Borrower) that it has received
an executed Assignment and Acceptance and, unless waived by Administrative
Agent, payment of the required processing fee, (i) the Assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, shall be a
“Lender” and shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 10.3) and be released from any future obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender’s rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto); provided, however, that nothing contained herein shall
release any assigning Lender from obligations that survive the termination of
this Agreement, including such assigning Lender’s obligations under Section 15
and Section 17.8(a).

(c)           By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Assignee will, independently and without
reliance upon Administrative Agent, such assigning Lender or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such Assignee appoints and authorizes Administrative
Agent to take such actions and to exercise such powers under this Agreement and
the other Loan Documents as are delegated to Administrative Agent, by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vi) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

(d)           Immediately upon Administrative Agent’s receipt of the required
processing fee, unless waived by Administrative Agent, and delivery of notice to
the assigning Lender pursuant to Section 13.1(b), this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the amount of the Term
Loans held by each Lender arising therefrom. The amount of the Term Loans
allocated to each Assignee shall reduce the amount of the Term Loans of the
assigning Lender pro tanto.

(e)           At no cost or expense to any Borrower, any Lender may at any time
sell to one or more commercial banks, financial institutions, or other Persons
(a “Participant”) participating interests in all or any portion of its
Obligations, and the other rights and interests of that Lender (the “Originating
Lender”) hereunder and under the other Loan Documents; provided, however, that:
(i) the Originating Lender shall remain a “Lender” for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations and the other rights and interests of
the Originating Lender hereunder shall not constitute a “Lender” hereunder or
under the other Loan Documents and the Originating Lender’s obligations under
this Agreement shall remain unchanged; (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations; (iii) Borrowers,
Administrative Agent, and the Lenders shall continue to deal solely and directly
with the Originating Lender in connection with the Originating Lender’s rights
and obligations under this Agreement and the other Loan Documents; (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has the right to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender (other than a
waiver of default interest), or (E) decreases the amount or postpones the due
dates of scheduled principal repayments or prepayments or premiums payable to
such Participant through such Lender; (v) all amounts payable by Borrowers
hereunder shall be determined as if such Lender had not sold such participation,
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement; and (vi) no Tranche
B Lender may sell participation interests in the Tranche B Obligations owing to
it without the prior consent of Administrative Agent. The rights of any
Participant only shall be derivative through the Originating Lender with whom
such Participant participates and no Participant shall have any rights under
this Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Administrative Agent, Borrowers, payments by Borrowers or their
Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
 
- 40 -

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

(f)           In connection with any such assignment or participation or
proposed assignment or participation or any grant of a security interest in, or
pledge of, its rights under and interest in this Agreement, a Lender may,
subject to the provisions of Section 17.8(a), disclose all documents and
information which it now or hereafter may have relating to any Borrower and its
Subsidiaries and their respective businesses.

(g)           Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of (i) any Federal
Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law,
or (ii) with the prior written consent of Administrative Agent, one or more
commercial banks, financial institutions, or other Persons as security for any
financing or other credit accommodations provided to such Lender by any such
commercial bank, financial institution, or other Person, and any such commercial
bank, financial institution, or other Person may enforce such pledge or security
interest in any manner permitted under applicable law.
 
- 41 -

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

(h)           Administrative Agent (as a non-fiduciary agent on behalf of
Borrower) shall maintain, or cause to be maintained, a register (the “Register”)
on which it enters the name and address of each Lender as the registered owner
of the loans hereunder (and the principal amount thereof and stated interest
thereon) held by such Lender (each, a “Registered Loan”). Other than in
connection with an assignment by a Lender of all or any portion of its portion
of its Pro Rata Share of the Term Loans to an Affiliate of such Lender or a
Related Fund of such Lender (i) a Registered Loan (and the registered note, if
any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each registered
note shall expressly so provide) and (ii) any assignment or sale of all or part
of such Registered Loan (and the registered note, if any, evidencing the same)
may be effected only by registration of such assignment or sale on the Register,
together with the surrender of the registered note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such registered note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new registered notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s), all at no cost or expense to any Borrower. Prior
to the registration of assignment or sale of any Registered Loan (and the
registered note, if any evidencing the same), Borrowers shall treat the Person
in whose name such Registered Loan (and the registered note, if any, evidencing
the same) is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding notice to the
contrary. In the case of any assignment by a Lender of all or any portion of its
Pro Rata Share of the Term Loan to an Affiliate of such Lender or a Related Fund
of such Lender, and which assignment is not recorded in the Register, the
assigning Lender, on behalf of Borrowers, shall maintain a register comparable
to the Register.

(i)            In the event that a Lender sells participations in the Registered
Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall
maintain (or cause to be maintained) a register on which it enters the name of
all participants in the Registered Loans held by it (and the principal amount
(and stated interest thereon) of the portion of such Registered Loans that is
subject to such participations) (the “Participant Register”). A Registered Loan
(and the registered note, if any, evidencing the same) may be participated in
whole or in part only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide). Any
participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.

(j)            Agent shall make a copy of the Register (and each Lender shall
make a copy of its Participant Register in the extent it has one) available for
review by Borrowers from time to time as Borrowers may reasonably request.

13.2.        Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that no Borrower may assign this Agreement or any rights or duties hereunder
without the Lenders’ prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 13.1 and, except as expressly required pursuant to Section
13.1, no consent or approval by any Borrower is required in connection with any
such assignment.
 
- 42 -

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

14.           AMENDMENTS; WAIVERS.

14.1.        Amendments and Waivers.

(a)           No amendment, waiver or other modification of any provision of
this Agreement or any other Loan Document (other than the Fee Letter), and no
consent with respect to any departure by any Borrower therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
(or by Administrative Agent at the written request of the Required Lenders) and
the Borrowers that are party thereto and then any such waiver or consent shall
be effective, but only in the specific instance and for the specific purpose for
which given; provided, however, that:

(i)           no such waiver, amendment or consent shall (A) postpone or delay
any date fixed by this Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts with respect to the Tranche A Term
Loan, unless in writing and signed by all of the Tranche A Lenders directly
affected thereby (and the Borrowers), or (B) postpone or delay any date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts with respect to the Tranche B Term Loan, unless
in writing and signed by all of the Tranche B Lenders directly affected thereby
(and the Borrowers);

(ii)           no such waiver, amendment or consent shall (A) reduce the
principal of, or the rate of interest on, the Tranche A Term Loan, or reduce any
fees or other amounts payable hereunder or under any other Loan Document with
respect to the Tranche A Term Loan (except in connection with the waiver of
applicability of Section 2.4(b) or (e) with respect thereto (which waiver shall
be effective with the written consent of the Required Lenders)), unless in
writing and signed by all of the Tranche A Lenders directly affected thereby
(and the Borrowers), or (B) reduce the principal of, or the rate of interest on,
the Tranche B Term Loan, or reduce any fees or other amounts payable hereunder
or under any other Loan Document with respect to the Tranche B Term Loan (except
in connection with the waiver of applicability of Section 2.4(b) or (e) with
respect thereto (which waiver shall be effective with the written consent of the
Required Tranche B Lenders)), unless in writing and signed by all of the Tranche
B Lenders directly affected thereby (and the Borrowers),

(iii)           no such waiver, amendment or consent shall (A) amend, modify or
eliminate this Section 14.1 or any provision of this Agreement providing for
consent or other action by all Lenders, unless in writing and signed by all of
the Lenders directly affected thereby (and the Borrowers), (B) amend, modify or
eliminate any provision of this Agreement providing for consent or other action
by all Tranche A Lenders, unless in writing and signed by all of the Tranche A
Lenders directly affected thereby (and the Borrowers), or (C) amend, modify or
eliminate any provision of this Agreement providing for consent or other action
by all Tranche B Lenders, unless in writing and signed by all of the Tranche B
Lenders directly affected thereby (and the Borrowers),

(iv)           no such waiver, amendment or consent shall (A) amend, modify, or
eliminate Section 15.11(a), unless in writing and signed by all of the Tranche A
Lenders directly affected thereby, or (B) amend, modify, or eliminate Section
15.11(c), unless in writing and signed by all of the Tranche B Lenders directly
affected thereby,

(v)           no such waiver, amendment or consent shall (A) other than as
permitted by Section 15.11(a), release or contractually subordinate the Tranche
A Collateral Agent’s Lien in and to any of the Tranche A Collateral, unless in
writing and signed by all of the Tranche A Lenders directly affected thereby, or
(B) other than as permitted by Section 15.11(c), release or contractually
subordinate the Tranche B Collateral Agent’s Lien in and to any of the Tranche B
Collateral, unless in writing and signed by all of the Tranche B Lenders
directly affected thereby,
 
- 43 -

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

(vi)          no such waiver, amendment or consent shall (A) amend, modify, or
eliminate the definition of “Pro Rata Share”, unless in writing and signed by
all of the Lenders directly affected thereby, (B) amend, modify, or eliminate
the definition of “Required Lenders”, unless in writing and signed by all of the
Tranche A Lenders directly affected thereby, or (C) amend, modify, or eliminate
the definition of “Required Tranche B Lenders”, unless in writing and signed by
all of the Tranche B Lenders directly affected thereby,

(vii)         no such waiver, amendment or consent shall, other than in
connection with a merger, liquidation, dissolution or sale of such Person
expressly permitted by the terms hereof or the other Loan Documents, (A) release
any Borrower from any obligation for the payment of money with respect to the
Tranche A Term Loan, unless in writing and signed by all of the Tranche A
Lenders directly affected thereby, (B) release any Borrower from any obligation
for the payment of money with respect to the Tranche B Term Loan, unless in
writing and signed by all of the Tranche B Lenders directly affected thereby, or
(C) consent to the assignment or transfer by any Borrower of any of its rights
or duties under this Agreement or the other Loan Documents, unless in writing
and signed by all of the Lenders directly affected thereby,

(viii)        no such waiver, amendment or consent shall amend, modify, or
eliminate any of the provisions of Section 2.3(b)(i), (ii), (iii) or (iv),
unless in writing and signed by all of the Lenders directly affected thereby,

(ix)           no such waiver, amendment or consent shall amend, modify, or
eliminate any of the provisions of Section 5.15, unless in writing and signed by
all of the Lenders directly affected thereby, and

(x)           no such waiver, amendment or consent shall amend, modify, or
eliminate any of the provisions of Section 13.1(a) to permit a Borrower or an
Affiliate of a Borrower to become an Assignee, unless in writing and signed by
all of the Lenders directly affected thereby.

(b)           Notwithstanding anything to the contrary set forth in Section
14.1(a), Administrative Agent shall have the right to apply payments and
prepayments between the Tranche A Term Loan and the Tranche B Term Loan in
accordance with the provisions of Sections 2.2(b) and 2.3(e) (subject to any
consent or approval of the Required Lenders required under such Sections).

(c)           No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive any provision of Section 15 pertaining to Administrative
Agent, or any other rights or duties of Administrative Agent under this
Agreement or the other Loan Documents, without the written consent of
Administrative Agent, Borrowers, and the Required Lenders.

(d)           No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive any provision of Section 15 pertaining to the Tranche A
Collateral Agent, or any other rights or duties of the Tranche A Collateral
Agent under this Agreement or the other Loan Documents, without the written
consent of the Tranche A Collateral Agent, Borrowers, and the Required Lenders.

(e)           No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive any provision of Section 15 pertaining to the Tranche B
Collateral Agent, or any other rights or duties of the Tranche B Collateral
Agent under this Agreement or the other Loan Documents, without the written
consent of the Tranche B Collateral Agent, Borrowers, and the Required Tranche B
Lenders.
 
- 44 -

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

(f)            Anything in this Section 14.1 to the contrary notwithstanding,
any amendment, modification, elimination, waiver, consent, termination, or
release of, or with respect to, any provision of this Agreement or any other
Loan Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of any Borrower,
shall not require consent by or the agreement of any Borrower.

14.2.        Replacement of Certain Lenders.

(a)           If (i) any action to be taken by the Lender Group or
Administrative Agent hereunder requires the consent, authorization, or agreement
of all Lenders or all Lenders affected thereby and if such action has received
the consent, authorization, or agreement of the Required Lenders but not of all
Lenders or all Lenders affected thereby, or (ii) any Lender makes a claim for
compensation under Section 16, then Administrative Agent, upon at least 5
Business Days prior irrevocable notice, may permanently replace any Lender that
failed to give its consent, authorization, or agreement (a “Holdout Lender”) or
any Lender that made a claim for compensation (a “Tax Lender”), at no cost or
expense to any Borrower, with one or more Replacement Lenders, and the Holdout
Lender or Tax Lender, as applicable, shall have no right to refuse to be
replaced hereunder. Such notice to replace the Holdout Lender or Tax Lender, as
applicable, shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.

(b)           Prior to the effective date of such replacement, the Holdout
Lender or Tax Lender, as applicable, and each Replacement Lender shall execute
and deliver an Assignment and Acceptance, subject only to the Holdout Lender or
Tax Lender, as applicable, being repaid in full its share of the outstanding
Obligations (without any premium or penalty of any kind whatsoever, but
including all interest, fees and other amounts that may be due in payable in
respect thereof), which Assignment and Acceptance shall include the Holdout
Lender’s or Tax Lender’s waiver and release of all claims, demands, suits and
actions against each Agent and each other Lender in connection with or as a
result of or related to this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby. If the Holdout Lender or Tax
Lender, as applicable, shall refuse or fail to execute and deliver any such
Assignment and Acceptance prior to the effective date of such replacement,
Administrative Agent may, but shall not be required to, execute and deliver such
Assignment and Acceptance in the name or and on behalf of the Holdout Lender or
Tax Lender, as applicable, and irrespective of whether Administrative Agent
executes and delivers such Assignment and Acceptance, the Holdout Lender or Tax
Lender, as applicable, shall be deemed to have executed and delivered such
Assignment and Acceptance. The replacement of any Holdout Lender or Tax Lender,
as applicable, shall be made in accordance with the terms of Section 13.1.

14.3.        No Waivers; Cumulative Remedies. No failure by any Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
other Loan Document, or delay by any Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by any Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by any Agent or any Lender on any occasion shall affect or
diminish each Agent’s and each Lender’s rights thereafter to require strict
performance by each Borrower of any provision of this Agreement and the other
Loan Documents. Each Agent’s and each Lender’s rights under this Agreement and
the other Loan Documents will be cumulative and not exclusive of any other right
or remedy that any Agent or any Lender may have.
 
- 45 -

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

15.           AGENTS; THE LENDER GROUP.

15.1.        Appointment and Authorization of Agents.

(a)           Each Lender hereby designates and appoints HPF as its agent under
this Agreement and the other Loan Documents, as Administrative Agent, and each
Lender hereby irrevocably authorizes Administrative Agent to execute and deliver
each of the other Loan Documents on its behalf and to take such other action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to Administrative Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Administrative Agent agrees to act as agent for and on behalf of the Lenders on
the conditions contained in this Section 15. Except as expressly otherwise
provided in this Agreement, Administrative Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that
Administrative Agent expressly is entitled to take or assert under or pursuant
to this Agreement and the other Loan Documents. Without limiting the generality
of the foregoing, or of any other provision of the Loan Documents that provides
rights or powers to Administrative Agent, the Lenders agree that Administrative
Agent shall have the right to exercise the following powers as long as this
Agreement remains in effect: (a) maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, and related matters, (b) execute or file any and
all notices, amendments, renewals, supplements, documents, instruments, proofs
of claim, notices and other written agreements with respect to the Loan
Documents, (c) exclusively receive, apply, and distribute payments by Borrowers
and their Subsidiaries as provided in the Loan Documents, (d) open and maintain
such bank accounts and cash management arrangements as Administrative Agent
deems necessary and appropriate in accordance with the Loan Documents, (e)
perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrowers or their Subsidiaries, the Obligations,
or otherwise related to any of same as provided in the Loan Documents, and (f)
incur and pay such Lender Group Expenses as Administrative Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.

(b)           Each Tranche A Lender hereby designates and appoints HPF as its
agent under this Agreement and the other Loan Documents, as the Tranche A
Collateral Agent, and each Tranche A Lender hereby irrevocably authorizes the
Tranche A Collateral Agent to execute and deliver each of the other Tranche A
Collateral Documents on its behalf and to take such other action on its behalf
under the provisions of this Agreement and each other Tranche A Collateral
Document and to exercise such powers and perform such duties as are expressly
delegated to the Tranche A Collateral Agent by the terms of this Agreement or
any other Tranche A Collateral Document, together with such powers as are
reasonably incidental thereto. The Tranche A Collateral Agent agrees to act as
agent for and on behalf of the Tranche A Lenders on the conditions contained in
this Section 15. Each Tranche A Lender hereby further authorizes the Tranche A
Collateral Agent to act as the secured party under each of the Tranche A
Collateral Documents that creates a Lien on any item of Tranche A Collateral.
Except as expressly otherwise provided in this Agreement, the Tranche A
Collateral Agent shall have and may use its sole discretion with respect to
exercising or refraining from exercising any discretionary rights or taking or
refraining from taking any actions that the Tranche A Collateral Agent expressly
is entitled to take or assert under or pursuant to this Agreement and the other
Tranche A Collateral Documents. Without limiting the generality of the
foregoing, or of any other provision of the Tranche A Collateral Documents that
provides rights or powers to the Tranche A Collateral Agent, the Tranche A
Lenders agree that the Tranche A Collateral Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect: (a)
maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Tranche A Obligations, the Tranche A
Collateral, payments by Borrowers and their Subsidiaries, and related matters,
(b) execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Tranche A Collateral
Documents, (c) receive and distribute proceeds of Tranche A Collateral as
provided in the Tranche A Collateral Documents, (d) open and maintain such bank
accounts and cash management arrangements as the Tranche A Collateral Agent
deems necessary and appropriate in accordance with the Tranche A Collateral
Documents for the foregoing purposes with respect to the Tranche A Collateral,
(e) perform, exercise, and enforce any and all other rights and remedies with
respect to the Tranche A Collateral, or otherwise related to any of same as
provided in the Tranche A Collateral Documents, and (f) incur and pay such
Lender Group Expenses as the Tranche A Collateral Agent may deem necessary or
appropriate for the performance and fulfillment of its functions and powers
pursuant to the Tranche A Collateral Documents.
 
- 46 -

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

(c)           Each Tranche B Lender hereby designates and appoints AloStar Bank
of Commerce as its agent under this Agreement and the other Loan Documents, as
the Tranche B Collateral Agent, and each Tranche B Lender hereby irrevocably
authorizes the Tranche B Collateral Agent to execute and deliver each of the
other Tranche B Collateral Documents on its behalf and to take such other action
on its behalf under the provisions of this Agreement and each other Tranche B
Collateral Document and to exercise such powers and perform such duties as are
expressly delegated to the Tranche B Collateral Agent by the terms of this
Agreement or any other Tranche B Collateral Document, together with such powers
as are reasonably incidental thereto. The Tranche B Collateral Agent agrees to
act as agent for and on behalf of the Tranche B Lenders on the conditions
contained in this Section 15. Each Tranche B Lender hereby further authorizes
the Tranche B Collateral Agent to act as the secured party under each of the
Tranche B Collateral Documents that create a Lien on any item of Tranche B
Collateral. Except as expressly otherwise provided in this Agreement, the
Tranche B Collateral Agent shall have and may use its sole discretion with
respect to exercising or refraining from exercising any discretionary rights or
taking or refraining from taking any actions that the Tranche B Collateral Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Tranche B Collateral Documents. Without limiting the generality of the
foregoing, or of any other provision of the Tranche B Collateral Documents that
provides rights or powers to the Tranche B Collateral Agent, the Tranche B
Lenders agree that the Tranche B Collateral Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect: (a)
maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Tranche B Obligations, the Tranche B
Collateral, payments by Borrowers and their Subsidiaries, and related matters,
(b) execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Tranche B Collateral
Documents, (c) receive and distribute proceeds of Tranche B Collateral as
provided in the Tranche B Collateral Documents, (d) open and maintain such bank
accounts and cash management arrangements as the Tranche B Collateral Agent
deems necessary and appropriate in accordance with the Tranche B Collateral
Documents for the foregoing purposes with respect to the Tranche B Collateral,
(e) perform, exercise, and enforce any and all other rights and remedies with
respect to the Tranche B Collateral, or otherwise related to any of same as
provided in the Tranche B Collateral Documents, and (f) incur and pay such
Lender Group Expenses as the Tranche B Collateral Agent may deem necessary or
appropriate for the performance and fulfillment of its functions and powers
pursuant to the Tranche B Collateral Documents.

(d)           Any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document notwithstanding, no Agent shall any have
any duties or responsibilities, except those expressly set forth herein or in
the other Loan Documents, nor shall any Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
Without limiting the generality of the foregoing, the use of the term “agent” in
this Agreement or the other Loan Documents with reference to any Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only a
representative relationship between independent contracting parties.
 
- 47 -

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

15.2.        Delegation of Duties. Each Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

15.3.        Liability of Agents. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any of its
Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or its
Subsidiaries or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lenders to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the books and records or properties of any
Borrower or its Subsidiaries.

15.4.        Reliance by Agents.

(a)           Each Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, telefacsimile or other electronic method of
transmission, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent, or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to Borrowers or counsel to any Lender),
independent accountants and other experts selected by such Agent.

(b)           Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless Administrative Agent shall first receive such advice or concurrence of
the Lenders as it deems appropriate and until such instructions are received,
Administrative Agent shall act, or refrain from acting, as it deems advisable.
If Administrative Agent so requests, it shall first be indemnified to its
reasonable satisfaction by the Lenders against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action. Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.

(c)           The Tranche A Collateral Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Tranche A
Collateral Document unless the Tranche A Collateral Agent shall first receive
such advice or concurrence of the Tranche A Lenders as it deems appropriate and
until such instructions are received, the Tranche A Collateral Agent shall act,
or refrain from acting, as it deems advisable. If the Tranche A Collateral Agent
so requests, it shall first be indemnified to its reasonable satisfaction by the
Tranche A Lenders against any and all liability and expense that may be incurred
by it by reason of taking or continuing to take any such action. The Tranche A
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Tranche A Collateral
Document in accordance with a request or consent of the Required Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Tranche A Lenders.
 
- 48 -

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

15.5.        Notice of Default or Event of Default. No Agent shall be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
unless such Agent shall have received written notice from a Lender or any
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.” Administrative
Agent promptly will notify the Lenders of its receipt of any such notice or of
any Event of Default of which Administrative Agent has actual knowledge. If any
Lender obtains actual knowledge of any Event of Default, such Lender promptly
shall notify the other Lenders and Administrative Agent of such Event of
Default. Each Lender shall be solely responsible for giving any notices to its
Participants, if any. Subject to Section 15.4, (a) Administrative Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Required Lenders in accordance with Section 9; provided,
however, that unless and until Administrative Agent has received any such
request, Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable; (b) the Tranche A Collateral Agent
shall take such action with respect to such Default or Event of Default as may
be requested by the Required Lenders in accordance with Section 9; provided,
however, that unless and until the Tranche A Collateral Agent has received any
such request, the Tranche A Collateral Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable; and (c) the Tranche B
Collateral Agent shall take such action with respect to such Default or Event of
Default as may be requested by the Required Tranche B Lenders in accordance with
Section 9; provided, however, that unless and until the Tranche B Collateral
Agent has received any such request, the Tranche B Collateral Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable.

15.6.        Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by any Agent hereinafter taken, including any review of the affairs of any
Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agents that it has, independently and without reliance
upon any Agent-Related Person and based on such due diligence, documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of any Borrower or any other Person party
to a Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrowers. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of any Borrower or any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by a particular Agent, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any Borrower or any other Person party to a
Loan Document that may come into the possession of any of the Agent-Related
Persons. Each Lender acknowledges that no Agent has any duty or responsibility,
either initially or on a continuing basis (except to the extent, if any, that is
expressly specified herein) to provide such Lender with any credit or other
information with respect to any Borrower, its Affiliates or any of their
respective business, legal, financial or other affairs, and irrespective of
whether such information came into such Agent’s or its Affiliates’ or
representatives’ possession before or after the date on which such Lender became
a party to this Agreement.
 
- 49 -

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

15.7.        Costs and Expenses; Indemnification.

(a)           Administrative Agent may incur and pay Lender Group Expenses to
the extent Administrative Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, and costs of collection by outside collection agencies, whether or
not Borrowers are obligated to reimburse Administrative Agent or Lenders for
such expenses pursuant to this Agreement or otherwise. Administrative Agent is
authorized and directed to deduct and retain sufficient amounts from funds
received by Administrative Agent hereunder and under the other Loan Documents to
reimburse Administrative Agent for such out-of-pocket costs and expenses prior
to the distribution of any amounts to Lenders. In the event Administrative Agent
is not reimbursed for such costs and expenses by Borrowers or their
Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay
to Administrative Agent such Lender’s ratable share thereof. Whether or not the
transactions contemplated hereby are consummated, each of the Lenders, on a
ratable basis, shall indemnify and defend the Administrative Agent-Related
Persons (to the extent not reimbursed by or on behalf of Borrowers and without
limiting the obligation of Borrowers to do so) from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Administrative Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse Administrative Agent upon demand for such Lender’s ratable share of
any costs or out of pocket expenses (including attorneys, accountants, advisors,
and consultants fees and expenses) incurred by Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Loan Document to the extent
that Administrative Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section 15.7(a) shall survive the payment of
all Obligations hereunder and the resignation or replacement of Administrative
Agent.

(b)           The Tranche A Collateral Agent may incur and pay Lender Group
Expenses to the extent the Tranche A Collateral Agent reasonably deems necessary
or appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Tranche A Collateral Documents, including court
costs, attorneys fees and expenses, fees and expenses of financial accountants,
advisors, consultants, and appraisers, and costs of collection by outside
collection agencies, whether or not Borrowers are obligated to reimburse the
Tranche A Collateral Agent or Tranche A Lenders for such expenses pursuant to
this Agreement or otherwise. The Tranche A Collateral Agent is authorized and
directed to deduct and retain sufficient amounts from funds received by the
Tranche A Collateral Agent hereunder and under the Tranche A Collateral
Documents to reimburse the Tranche A Collateral Agent for such out-of-pocket
costs and expenses prior to the distribution of any amounts to Tranche A
Lenders. In the event the Tranche A Collateral Agent is not reimbursed for such
costs and expenses by Borrowers or their Subsidiaries, each Tranche A Lender
hereby agrees that it is and shall be obligated to pay to the Tranche A
Collateral Agent such Tranche A Lender’s ratable share thereof. Whether or not
the transactions contemplated hereby are consummated, each of the Tranche A
Lenders, on a ratable basis, shall indemnify and defend the Tranche A Collateral
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers
and without limiting the obligation of Borrowers to do so) from and against any
and all Indemnified Liabilities; provided, however, that no Tranche A Lender
shall be liable for the payment to any Tranche A Collateral Agent-Related Person
of any portion of such Indemnified Liabilities resulting solely from such
Person’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Tranche A Lender shall reimburse the Tranche A Collateral Agent
upon demand for such Tranche A Lender’s ratable share of any costs or out of
pocket expenses (including attorneys, accountants, advisors, and consultants
fees and expenses) incurred by the Tranche A Collateral Agent in connection with
the preparation, execution, delivery, administration, modification, amendment,
or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement or any other Tranche A Collateral Document to the extent that the
Tranche A Collateral Agent is not reimbursed for such expenses by or on behalf
of Borrowers. The undertaking in this Section 15.7(b) shall survive the payment
of all Obligations hereunder and the resignation or replacement of the Tranche A
Collateral Agent.
 
- 50 -

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

(c)           The Tranche B Collateral Agent may incur and pay Lender Group
Expenses to the extent the Tranche B Collateral Agent reasonably deems necessary
or appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Tranche B Collateral Documents, including court
costs, attorneys fees and expenses, fees and expenses of financial accountants,
advisors, consultants, and appraisers, and costs of collection by outside
collection agencies, whether or not Borrowers are obligated to reimburse the
Tranche B Collateral Agent or Tranche B Lenders for such expenses pursuant to
this Agreement or otherwise. The Tranche B Collateral Agent is authorized and
directed to deduct and retain sufficient amounts from funds received by the
Tranche B Collateral Agent hereunder and under the Tranche B Collateral
Documents to reimburse the Tranche B Collateral Agent for such out-of-pocket
costs and expenses prior to the distribution of any amounts to Tranche B
Lenders. In the event the Tranche B Collateral Agent is not reimbursed for such
costs and expenses by Borrowers or their Subsidiaries, each Tranche B Lender
hereby agrees that it is and shall be obligated to pay to the Tranche B
Collateral Agent such Tranche B Lender’s ratable share thereof. Whether or not
the transactions contemplated hereby are consummated, each of the Tranche B
Lenders, on a ratable basis, shall indemnify and defend the Tranche B Collateral
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers
and without limiting the obligation of Borrowers to do so) from and against any
and all Indemnified Liabilities; provided, however, that no Tranche B Lender
shall be liable for the payment to any Tranche B Collateral Agent-Related Person
of any portion of such Indemnified Liabilities resulting solely from such
Person’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Tranche B Lender shall reimburse the Tranche B Collateral Agent
upon demand for such Tranche B Lender’s ratable share of any costs or out of
pocket expenses (including attorneys, accountants, advisors, and consultants
fees and expenses) incurred by the Tranche B Collateral Agent in connection with
the preparation, execution, delivery, administration, modification, amendment,
or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement or any other Tranche B Collateral Document to the extent that the
Tranche B Collateral Agent is not reimbursed for such expenses by or on behalf
of Borrowers. The undertaking in this Section 15.7(c) shall survive the payment
of all Obligations hereunder and the resignation or replacement of the Tranche B
Collateral Agent.

(d)           In the event that (i) any Tranche A Lender fails to make payment
to Administrative Agent or the Tranche A Collateral Agent when due of any amount
payable by such Tranche A Lender to Administrative Agent or the Tranche A
Collateral Agent, whether under this Section 15.7 or any other provision of this
Agreement, then Administrative Agent or the Tranche A Collateral Agent, as
applicable, shall be entitled to recover for its account such amount on demand
from such Lender together with interest thereon at the interest rate then
applicable to the Tranche A Term Loan under Section 2.4(a), or (ii) any Tranche
B Lender fails to make payment to Administrative Agent or the Tranche B
Collateral Agent when due of any amount payable by such Tranche B Lender to
Administrative Agent or the Tranche B Collateral Agent, whether under this
Section 15.7 or any other provision of this Agreement, then Administrative Agent
or the Tranche B Collateral Agent, as applicable, shall be entitled to recover
for its account such amount on demand from such Lender together with interest
thereon at the interest rate then applicable to the Tranche B Term Loan under
Section 2.4(a).
 
- 51 -

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

15.8.        Agent in Individual Capacity. Each Person acting as an Agent
hereunder, and its Affiliates, may make loans to, issue letters of credit for
the account of, accept deposits from, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory, underwriting, or other
business with Borrowers and their Subsidiaries and Affiliates and any other
Person party to any Loan Document as though such Person were not an Agent
hereunder, and, in each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, such Person or its Affiliates may receive
information regarding Borrowers or their Affiliates or any other Person party to
any Loan Documents that is subject to confidentiality obligations in favor of
Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders. and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Agent will use its reasonable efforts to obtain),
such Agent shall not be under any obligation to provide such information to
them. The terms “Lender” and “Lenders” include each Person acting as an Agent
hereunder in its individual capacity.

15.9.        Successor Agents.

(a)           Administrative Agent may resign as Administrative Agent upon 30
days prior written notice to the Lenders and Administrative Borrower (unless
such notice is waived by the Required Lenders). If Administrative Agent resigns
under this Agreement, the Required Lenders shall be entitled to appoint a
successor Administrative Agent for the Lenders. If no successor Administrative
Agent is appointed prior to the effective date of the resignation of
Administrative Agent, Administrative Agent may, after consulting with the
Lenders, appoint a successor Administrative Agent. If Administrative Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Administrative Agent with a successor Administrative Agent
from among the Lenders. In any such event, upon the acceptance of its
appointment as successor Administrative Agent hereunder, such successor
Administrative Agent shall succeed to all the rights, powers, and duties of the
retiring Administrative Agent and the term “Administrative Agent” shall mean
such successor Administrative Agent and the retiring Administrative Agent’s
appointment, powers, and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 15 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor Administrative Agent
has accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided for above.

(b)           The Tranche A Collateral Agent may resign as the Tranche A
Collateral Agent upon 30 days prior written notice to the Tranche A Lenders and
Administrative Borrower (unless such notice is waived by the Required Lenders).
If the Tranche A Collateral Agent resigns under this Agreement, the Required
Lenders shall be entitled to appoint a successor Tranche A Collateral Agent for
the Tranche A Lenders. If no successor Tranche A Collateral Agent is appointed
prior to the effective date of the resignation of the Tranche A Collateral
Agent, the Tranche A Collateral Agent may, after consulting with the Tranche A
Lenders, appoint a successor Tranche A Collateral Agent. If the Tranche A
Collateral Agent has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required Lenders may agree
in writing to remove and replace the Tranche A Collateral Agent with a successor
Tranche A Collateral Agent from among the Tranche A Lenders. In any such event,
upon the acceptance of its appointment as successor the Tranche A Collateral
Agent hereunder, such successor Tranche A Collateral Agent shall succeed to all
the rights, powers, and duties of the retiring Tranche A Collateral Agent and
the term “Tranche A Collateral Agent” shall mean such successor Tranche A
Collateral Agent and the retiring Tranche A Collateral Agent’s appointment,
powers, and duties as the Tranche A Collateral Agent shall be terminated. After
any retiring Tranche A Collateral Agent’s resignation hereunder as the Tranche A
Collateral Agent, the provisions of this Section 15 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was the Tranche A
Collateral Agent under this Agreement. If no successor Tranche A Collateral
Agent has accepted appointment as the Tranche A Collateral Agent by the date
which is 30 days following a retiring Tranche A Collateral Agent’s notice of
resignation, the retiring Tranche A Collateral Agent’s resignation shall
nevertheless thereupon become effective and the Tranche A Lenders shall perform
all of the duties of the Tranche A Collateral Agent hereunder until such time,
if any, as the Required Lenders appoint a successor Tranche A Collateral Agent
as provided for above.
 
- 52 -

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

(c)           The Tranche B Collateral Agent may resign as the Tranche B
Collateral Agent upon 30 days prior written notice to the Tranche B Lenders and
Administrative Borrower (unless such notice is waived by the Required Tranche B
Lenders). If the Tranche B Collateral Agent resigns under this Agreement, the
Required Tranche B Lenders shall be entitled to appoint a successor Tranche B
Collateral Agent for the Tranche B Lenders. If no successor Tranche B Collateral
Agent is appointed prior to the effective date of the resignation of the Tranche
B Collateral Agent, the Tranche B Collateral Agent may, after consulting with
the Tranche B Lenders, appoint a successor Tranche B Collateral Agent. If the
Tranche B Collateral Agent has materially breached or failed to perform any
material provision of this Agreement or of applicable law, the Required Tranche
B Lenders may agree in writing to remove and replace the Tranche B Collateral
Agent with a successor Tranche B Collateral Agent from among the Tranche B
Lenders. In any such event, upon the acceptance of its appointment as successor
the Tranche B Collateral Agent hereunder, such successor Tranche B Collateral
Agent shall succeed to all the rights, powers, and duties of the retiring
Tranche B Collateral Agent and the term “Tranche B Collateral Agent” shall mean
such successor Tranche B Collateral Agent and the retiring Tranche B Collateral
Agent’s appointment, powers, and duties as the Tranche B Collateral Agent shall
be terminated. After any retiring Tranche B Collateral Agent’s resignation
hereunder as the Tranche B Collateral Agent, the provisions of this Section 15
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Tranche B Collateral Agent under this Agreement. If no
successor Tranche B Collateral Agent has accepted appointment as the Tranche B
Collateral Agent by the date which is 30 days following a retiring Tranche B
Collateral Agent’s notice of resignation, the retiring Tranche B Collateral
Agent’s resignation shall nevertheless thereupon become effective and the
Tranche B Lenders shall perform all of the duties of the Tranche B Collateral
Agent hereunder until such time, if any, as the Required Tranche B Lenders
appoint a successor Tranche B Collateral Agent as provided for above.

15.10.      Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with any
Borrower and its Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though such Lender were not a Lender hereunder without notice
to or consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding Borrowers or their
Affiliates or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
efforts to obtain), such Lender shall not be under any obligation to provide
such information to them.
 
- 53 -

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

15.11.      Collateral Matters.

(a)           The Tranche A Lenders hereby irrevocably authorize the Tranche A
Collateral Agent to release any Lien on any Tranche A Collateral (i) upon the
payment and satisfaction in full by Borrowers of all of the Tranche A
Obligations, (ii) constituting property being sold or disposed of if a release
is required or desirable in connection therewith and if Borrowers certify to the
Tranche A Collateral Agent that the sale or disposition is permitted under
Section 6.4 (and the Tranche A Collateral Agent may rely conclusively on any
such certificate, without further inquiry), (iii) constituting Cash Collateral
if Borrowers certify to the Tranche A Collateral Agent that the release of such
Cash Collateral is permitted under Section 5.15 (and the Tranche A Collateral
Agent may rely conclusively on any such certificate, without further inquiry),
(iv) constituting School Closure and Capex Cash Collateral if Borrowers certify
to the Tranche A Collateral Agent that the release of such School Closure and
Capex Cash Collateral is permitted under Section 5.16 (and the Tranche A
Collateral Agent may rely conclusively on any such certificate, without further
inquiry), (v) constituting property in which no Borrower and no Subsidiary of
Borrowers owned any interest at the time the Tranche A Collateral Agent’s Lien
was granted nor at any time thereafter, or (vi) constituting property leased to
any Borrower or its Subsidiaries under a lease that has expired or is terminated
in a transaction permitted under this Agreement. The Borrowers and the Tranche A
Lenders hereby irrevocably authorize the Tranche A Collateral Agent, based upon
the instruction of the Required Lenders, to (a) consent to, credit bid or
purchase (either directly or through one or more acquisition vehicles) all or
any portion of the Tranche A Collateral at any sale thereof conducted under the
provisions of the Bankruptcy Code, including under Section 363 of the Bankruptcy
Code, (b) credit bid or purchase (either directly or through one or more
acquisition vehicles) all or any portion of the Tranche A Collateral at any sale
or other disposition thereof conducted under the provisions of the Code,
including pursuant to Sections 9-610 or 9-620 of the Code, or (c) credit bid or
purchase (either directly or through one or more acquisition vehicles) all or
any portion of the Tranche A Collateral at any other sale or foreclosure
conducted by the Tranche A Collateral Agent (whether by judicial action or
otherwise) in accordance with applicable law. In connection with any such credit
bid or purchase, the Tranche A Obligations owed to the Tranche A Lenders shall
be credit bid on a ratable basis (with Tranche A Obligations with respect to
contingent or unliquidated claims being estimated for such purpose if the fixing
or liquidation thereof would not unduly delay the ability of the Tranche A
Collateral Agent to credit bid or purchase at such sale or other disposition of
the Tranche A Collateral and, if such claims cannot be estimated without unduly
delaying the ability of the Tranche A Collateral Agent to credit bid, then such
claims shall be disregarded, not credit bid, and not entitled to any interest in
the asset or assets purchased by means of such credit bid) and the Tranche A
Lenders shall be entitled to receive interests (ratably based upon the
proportion of their Tranche A Obligations credit bid in relation to the
aggregate amount of Tranche A Obligations so credit bid) in the asset or assets
so purchased (or in the Stock of the acquisition vehicle or vehicles that are
used to consummate such purchase). Except as provided above, the Tranche A
Collateral Agent will not execute and deliver a release of any Lien on any
Tranche A Collateral without the prior written authorization of (y) if the
release is of all or substantially all of the Tranche A Collateral, all of the
Tranche A Lenders, or (z) otherwise, the Required Lenders. Upon request by the
Tranche A Collateral Agent or any Borrower at any time, the Tranche A Lenders
will confirm in writing the Tranche A Collateral Agent’s authority to release
any such Liens on particular types or items of Tranche A Collateral pursuant to
this Section 15.11; provided, however, that (1) the Tranche A Collateral Agent
shall not be required to execute any document necessary to evidence such release
on terms that, in the Tranche A Collateral Agent’s opinion, would expose the
Tranche A Collateral Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Tranche A Obligations or any Liens (other than
those expressly being released) upon (or obligations of any Borrower in respect
of) all interests retained by any Borrower, including the proceeds of any sale,
all of which shall continue to constitute part of the Tranche A Collateral. Each
Tranche A Lender authorizes the Tranche A Collateral Agent to enter into such
subordination and other agreements as the Tranche A Collateral Agent deems
appropriate, or as the Tranche B Collateral Agent may reasonably request, in
order to evidence the priority of the Tranche B Collateral Agent’ s Lien in the
Tranche B Collateral to the Tranche A Collateral Agent’s Lien therein, and each
of the Tranche A Lenders agrees that it will be bound by all such agreements of
the Tranche A Collateral Agent.
 
- 54 -

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

(b)           The Tranche A Collateral Agent shall have no obligation whatsoever
to any of the Tranche A Lenders to assure that the Tranche A Collateral exists
or is owned by a Borrower or its Subsidiaries or is cared for, protected, or
insured or has been encumbered, or that the Tranche A Collateral Agent’s Liens
have been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Tranche A Collateral Agent pursuant to any of the Tranche A
Collateral Documents, it being understood and agreed that in respect of the
Tranche A Collateral, or any act, omission, or event related thereto, subject to
the terms and conditions contained herein, the Tranche A Collateral Agent may
act in any manner it may deem appropriate, in its sole discretion given the
Tranche A Collateral Agent’s own interest in the Tranche A Collateral in its
capacity as one of the Tranche A Lenders and that the Tranche A Collateral Agent
shall have no other duty or liability whatsoever to any Tranche A Lender as to
any of the foregoing, except as otherwise provided herein.

(c)           The Tranche B Lenders hereby irrevocably authorize the Tranche B
Collateral Agent to release any Lien on any Tranche B Collateral (i) upon the
payment and satisfaction in full by Borrowers of all of the Tranche B
Obligations, and (ii) constituting Cash Collateral if Borrowers certify to the
Tranche B Collateral Agent that the release of such Cash Collateral is permitted
under Section 5.15 (and the Tranche B Collateral Agent may rely conclusively on
any such certificate, without further inquiry). Except as provided above, the
Tranche B Collateral Agent will not execute and deliver a release of any Lien on
any Tranche B Collateral without the prior written authorization of all of the
Tranche B Lenders. Each Tranche B Lender authorizes the Tranche B Collateral
Agent to enter into such subordination and other agreements as the Tranche B
Collateral Agent deems appropriate in order to evidence the priority of the
Tranche B Collateral Agent’ s Lien in the Tranche B Collateral to the Tranche A
Collateral Agent’s Lien therein, and each of the Tranche B Lenders agrees that
it will be bound by all such agreements of the Tranche B Collateral Agent.

(d)           The Tranche B Collateral Agent shall have no obligation whatsoever
to any of the Tranche B Lenders to assure that the Tranche B Collateral exists
or is owned by a Borrower or its Subsidiaries or is cared for, protected, or
insured or has been encumbered, or that the Tranche B Collateral Agent’s Liens
have been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Tranche B Collateral Agent pursuant to any of the Tranche B
Collateral Documents, it being understood and agreed that in respect of the
Tranche B Collateral, or any act, omission, or event related thereto, subject to
the terms and conditions contained herein, the Tranche B Collateral Agent may
act in any manner it may deem appropriate, in its sole discretion given the
Tranche B Collateral Agent’s own interest in the Tranche B Collateral in its
capacity as one of the Tranche B Lenders and that the Tranche B Collateral Agent
shall have no other duty or liability whatsoever to any Tranche B Lender as to
any of the foregoing, except as otherwise provided herein.
 
- 55 -

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

(e)           Each of the Tranche B Lenders and the Tranche B Collateral Agent
acknowledges and agrees that, notwithstanding anything to the contrary in this
Agreement or any other Loan Document, the Tranche B Collateral Agent’s Liens are
and shall be limited exclusively to the Tranche B Collateral and that neither
the Tranche B Collateral Agent nor any Tranche B Lender has a Lien in any
Collateral other than the Tranche B Collateral.

15.12.      Restrictions on Actions by Lenders; Sharing of Payments.

(a)           Each of the Tranche A Lenders agrees that it shall not, without
the express written consent of the Tranche A Collateral Agent, and that it
shall, to the extent it is lawfully entitled to do so, upon the written request
of the Tranche A Collateral Agent, set off against the Tranche A Obligations,
any amounts owing by such Tranche A Lender to any Borrower or its Subsidiaries
or any deposit accounts of any Borrower or its Subsidiaries now or hereafter
maintained with such Tranche A Lender. Each of the Tranche A Lenders further
agrees that it shall not, unless specifically requested to do so in writing by
the Tranche A Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings to enforce any Loan Document
against any Borrower or to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Tranche A Collateral.

(b)           If, at any time or times any Tranche A Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Tranche A Collateral
or any payments with respect to the Tranche A Obligations, except for any such
proceeds or payments received by such Tranche A Lender from Administrative Agent
or the Tranche A Collateral Agent pursuant to the terms of this Agreement, or
(ii) payments from Administrative Agent or the Tranche A Collateral Agent in
excess of such Tranche A Lender’s Pro Rata Share of all such distributions by
Administrative Agent or the Tranche A Collateral Agent, such Tranche A Lender
promptly shall (A) turn the same over to Administrative Agent, in kind, and with
such endorsements as may be required to negotiate the same to Administrative
Agent, or in immediately available funds, as applicable, for the account of all
of the Tranche A Lenders and for application to the Tranche A Obligations in
accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the
Tranche A Obligations owed to the other Tranche A Lenders so that such excess
payment received shall be applied ratably as among the Tranche A Lenders in
accordance with their Pro Rata Shares; provided, however, that to the extent
that such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.

(c)           Each of the Tranche B Lenders agrees that it shall not, without
the express written consent of the Tranche B Collateral Agent, and that it
shall, to the extent it is lawfully entitled to do so, upon the written request
of the Tranche B Collateral Agent, set off against the Tranche B Obligations,
any amounts owing by such Tranche B Lender to any Borrower or its Subsidiaries
or any deposit accounts of any Borrower or its Subsidiaries now or hereafter
maintained with such Tranche B Lender. Each of the Tranche B Lenders further
agrees that it shall not, unless specifically requested to do so in writing by
the Tranche B Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings to enforce any Loan Document
against any Borrower or to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Tranche B Collateral.
 
- 56 -

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

(d)           If, at any time or times any Tranche B Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Tranche B Collateral
or any payments with respect to the Tranche B Obligations, except for any such
proceeds or payments received by such Tranche B Lender from Administrative Agent
or the Tranche B Collateral Agent pursuant to the terms of this Agreement, or
(ii) payments from Administrative Agent or the Tranche B Collateral Agent in
excess of such Tranche B Lender’s Pro Rata Share of all such distributions by
Administrative Agent or the Tranche B Collateral Agent, such Tranche B Lender
promptly shall (A) turn the same over to Administrative Agent, in kind, and with
such endorsements as may be required to negotiate the same to Administrative
Agent, or in immediately available funds, as applicable, for the account of all
of the Tranche B Lenders and for application to the Tranche B Obligations in
accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the
Tranche B Obligations owed to the other Tranche B Lenders so that such excess
payment received shall be applied ratably as among the Tranche B Lenders in
accordance with their Pro Rata Shares; provided, however, that to the extent
that such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.

15.13.      Agency for Perfection.

(a)           The Tranche A Collateral Agent hereby appoints each other Tranche
A Lender as its agent (and each Tranche A Lender hereby accepts) for the purpose
of perfecting the Tranche A Collateral Agent’s Liens in assets which, in
accordance with Article 8 or Article 9, as applicable, of the Code can be
perfected by possession or control. Should any Tranche A Lender obtain
possession or control of any such Tranche A Collateral, such Tranche A Lender
shall notify the Tranche A Collateral Agent thereof, and, promptly upon the
Tranche A Collateral Agent’s request therefor shall deliver possession or
control of such Tranche A Collateral to the Tranche A Collateral Agent or in
accordance with the Tranche A Collateral Agent’s instructions.

(b)           The Tranche B Collateral Agent hereby appoints each other Tranche
B Lender as its agent (and each Tranche B Lender hereby accepts) for the purpose
of perfecting the Tranche B Collateral Agent’s Liens in assets which, in
accordance with Article 8 or Article 9, as applicable, of the Code can be
perfected by possession or control. Should any Tranche B Lender obtain
possession or control of any such Tranche B Collateral, such Tranche B Lender
shall notify the Tranche B Collateral Agent thereof, and, promptly upon the
Tranche B Collateral Agent’s request therefor shall deliver possession or
control of such Tranche B Collateral to the Tranche B Collateral Agent or in
accordance with the Tranche B Collateral Agent’s instructions.

15.14.      Payments by Administrative Agent to the Lenders. All payments to be
made by Administrative Agent to the Lenders shall be made by bank wire transfer
of immediately available funds pursuant to such wire transfer instructions as
each party may designate for itself by written notice to Administrative Agent.
Concurrently with each such payment, Administrative Agent shall identify whether
such payment (or any portion thereof) represents principal, premium, fees, or
interest of the Obligations.
 
- 57 -

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

15.15.      Concerning the Collateral and Related Loan Documents.

(a)           Each Lender authorizes and directs Administrative Agent to enter
into this Agreement and the other Loan Documents. Each Lender agrees that any
action taken by Administrative Agent in accordance with the terms of this
Agreement or the other Loan Documents relating to the exercise by Administrative
Agent of its powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.

(b)           Each Tranche A Lender authorizes and directs the Tranche A
Collateral Agent to enter into this Agreement and the other Tranche A Collateral
Documents. Each Tranche A Lender agrees that any action taken by the Tranche A
Collateral Agent in accordance with the terms of this Agreement or the other
Tranche A Collateral Documents relating to the Tranche A Collateral and the
exercise by the Tranche A Collateral Agent of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Tranche A Lenders.

(c)           Each Tranche B Lender authorizes and directs the Tranche B
Collateral Agent to enter into this Agreement and the other Tranche B Collateral
Documents. Each Tranche B Lender agrees that any action taken by the Tranche B
Collateral Agent in accordance with the terms of this Agreement or the other
Tranche B Collateral Documents relating to the Tranche B Collateral and the
exercise by the Tranche B Collateral Agent of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Tranche B Lenders.

15.16.      Several Obligations; No Liability. Nothing contained herein shall
confer upon any Lender any interest in, or subject any Lender to any liability
for, or in respect of, the business, assets, profits, losses, or liabilities of
any other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in Section
15.7, no member of the Lender Group shall have any liability for the acts of any
other member of the Lender Group. No Lender shall be responsible to any Borrower
or any other Person for any failure by any other Lender to fulfill its
obligations to fund its Pro Rata Share of the Term Loans on the Closing Date,
nor to take any other action on behalf of such Lender hereunder or in connection
with the financing contemplated herein.

16.           WITHHOLDING TAXES.

(a)           All payments made by any Borrower hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense.
In addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, Borrowers shall comply with the
next sentence of this Section 16(a). If any Taxes are so levied or imposed,
Borrowers agree to pay the full amount of such Taxes and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement, any note, or other Loan Document, including any amount paid pursuant
to this Section 16(a) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts if the
increase in such amount payable results from Administrative Agent’s or such
Lender’s own willful misconduct or gross negligence (as finally determined by a
court of competent jurisdiction). Borrowers will furnish to Administrative Agent
as promptly as possible after the date the payment of any Tax is due pursuant to
applicable law, copies of tax receipts evidencing such payment by Borrowers.
 
- 58 -

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

(b)           Borrowers agree to pay any present or future stamp, value added or
documentary taxes or any other excise or property taxes, charges, or similar
levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.

(c)           If a Lender or Participant is entitled to claim an exemption or
reduction from United States withholding tax, such Lender or Participant agrees
with and in favor of Administrative Agent, to deliver to Administrative Agent
and Administrative Borrower (or, in the case of a Participant, the Lender
granting the participation only) one of the following before receiving its first
payment under this Agreement:

(i)            if such Lender or Participant is entitled to claim an exemption
from United States withholding tax pursuant to the portfolio interest exception,
(A) a statement of the Lender or Participant, signed under penalty of perjury,
that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder of any Borrower (within the meaning of Section
871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related to
any Borrower within the meaning of Section 864(d)(4) of the IRC, and (B) a
properly completed and executed IRS Form W‑8BEN or Form W-8IMY (with proper
attachments);

(ii)           if such Lender or Participant is entitled to claim an exemption
from, or a reduction of, withholding tax under a United States tax treaty, a
properly completed and executed copy of IRS Form W-8BEN;

(iii)           if such Lender or Participant is entitled to claim that interest
paid under this Agreement is exempt from United States withholding tax because
it is effectively connected with a United States trade or business of such
Lender, a properly completed and executed copy of IRS Form W-8ECI;

(iv)          if such Lender or Participant is entitled to claim that interest
paid under this Agreement is exempt from United States withholding tax because
such Lender or Participant serves as an intermediary, a properly completed and
executed copy of IRS Form W-8IMY (with proper attachments); or

(v)           a properly completed and executed copy of any other form or forms,
including IRS Form W-9, as may be required under the IRC or other laws of the
United States as a condition to exemption from, or reduction of, United States
withholding or backup withholding tax.

Each Lender or Participant shall provide new forms (or successor forms) upon the
expiration or obsolescence of any previously delivered forms and shall promptly
notify Administrative Agent and Administrative Borrower (or, in the case of a
Participant, the Lender granting the participation only) of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

(d)           If a Lender or Participant claims an exemption from withholding
tax in a jurisdiction other than the United States, such Lender or such
Participant agrees with and in favor of Administrative Agent, to deliver to
Administrative Agent and Administrative Borrower (or, in the case of a
Participant, the Lender granting the participation only) any such form or forms,
as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, provided, however,
that nothing in this Section 16(d) shall require a Lender or Participant to
disclose any information that it deems to be confidential (including without
limitation, its tax returns). Each Lender and each Participant shall provide new
forms (or successor forms) upon the expiration or obsolescence of any previously
delivered forms and shall promptly notify Administrative Agent and
Administrative Borrower (or, in the case of a Participant, the Lender granting
the participation only) of any change in circumstances which would modify or
render invalid any claimed exemption or reduction.
 
- 59 -

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

(e)           If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender or Participant, such Lender or Participant agrees to
notify Administrative Agent and Administrative Borrower (or, in the case of a
sale of a participation interest, to the Lender granting the participation only)
of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrowers to such Lender or Participant. To the extent of such
percentage amount, Administrative Agent and Administrative Borrower will treat
such Lender’s or such Participant’s documentation provided pursuant to Section
16(c) or 16(d) as no longer valid. With respect to such percentage amount, such
Participant or Assignee may provide new documentation, pursuant to Section 16(c)
or 16(d), if applicable. Each Borrower agrees that each Participant shall be
entitled to the benefits of this Section 16 with respect to its participation in
any portion of the Obligations so long as such Participant complies with the
obligations set forth in this Section 16 with respect thereto.

(f)           If a Lender or a Participant is entitled to a reduction in the
applicable withholding tax, Administrative Agent (or, in the case of a
Participant, the Lender granting the participation) may withhold from any
interest payment to such Lender or such Participant an amount equivalent to the
applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by Section 16(c) or 16(d) are not
delivered to Administrative Agent and Administrative Borrower (or, in the case
of a Participant, the Lender granting the participation), then Administrative
Agent (or, in the case of a Participant, the Lender granting the participation)
may withhold from any interest payment to such Lender or such Participant not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.

(g)           If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Administrative Agent (or, in
the case of a Participant, the Lender granting the participation) did not
properly withhold tax from amounts paid to or for the account of any Lender or
any Participant due to a failure on the part of the Lender or any Participant
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Administrative Agent (or such Participant
failed to notify the Lender granting the participation) of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Administrative Agent harmless (or, in the case of a Participant, such
Participant shall indemnify and hold the Lender granting the participation
harmless) for all amounts paid, directly or indirectly, by Administrative Agent
(or, in the case of a Participant, the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Administrative Agent (or,
in the case of a Participant, the Lender granting the participation only) under
this Section 16, together with all costs and expenses (including attorneys fees
and expenses). The obligation of the Lenders and the Participants under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Administrative Agent.

(h)           If Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes as to which it has been
indemnified by Borrowers or with respect to which Borrowers have paid additional
amounts pursuant to this Section 16, so long as no Default or Event of Default
has occurred and is continuing, it shall promptly pay over such refund to
Borrowers (but only to the extent of payments made, or additional amounts paid,
by Borrowers under this Section 16 with respect to Taxes giving rise to such a
refund), net of all reasonable out-of-pocket expenses of Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such a refund); provided, that Borrowers,
upon the request of Administrative Agent or such Lender, agree to repay the
amount paid over to Borrowers (plus any penalties, interest or other charges,
imposed by the relevant Governmental Authority, other than such penalties,
interest or other charges imposed as a result of the willful misconduct or gross
negligence of Administrative Agent or such Lender hereunder) to Administrative
Agent or such Lender in the event Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. Notwithstanding
anything in this Agreement to the contrary, this Section 16 shall not be
construed to require Administrative Agent or any Lender to make available its
tax returns (or any other information which it deems confidential) to any
Borrower or any other Person.
 
- 60 -

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

17.           GENERAL PROVISIONS.

17.1.        Effectiveness. This Agreement shall be binding and deemed effective
when executed by each Borrower, each Agent, and each Lender whose signature is
provided for on the signature pages hereof.

17.2.        Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.

17.3.        Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or any Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

17.4.        Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5.        Debtor-Creditor Relationship; Separate Classes.

(a)           The relationship between the Lenders and the Agents, on the one
hand, and the Borrowers, on the other hand, is solely that of creditor and
debtor. No member of the Lender Group has (or shall be deemed to have) any
fiduciary relationship or duty to any Borrower arising out of or in connection
with the Loan Documents or the transactions contemplated thereby, and there is
no agency or joint venture relationship between the members of the Lender Group,
on the one hand, and the Borrowers, on the other hand, by virtue of any Loan
Document or any transaction contemplated therein.

(b)           Each Borrower, Agent and Lender acknowledges that (i) the Tranche
A Term Loan and the Tranche B Term Loan are separate and distinct extensions of
credit that are evidenced by a single credit agreement solely as an
administrative convenience, (ii) the grants of Liens pursuant to the Tranche A
Collateral Documents and the Tranche B Collateral Documents constitute separate
and distinct grants of Liens, and (iii) because of, among other things, the
differing rights in the Collateral (including the limitation of the Tranche B
Collateral Agent’s Liens to the Tranche B Collateral), the Tranche A Obligations
are fundamentally different and distinct from the Tranche B Obligations.
Accordingly, each Borrower, Agent and Lender agrees that, in the event of any
Insolvency Proceeding with respect to any Borrower, the Tranche A Obligations
and Tranche B Obligations must be treated for all purposes as separate and
distinct classes of debt and separately classified in any plan of reorganization
(or other plan of similar effect under any applicable law) proposed or adopted
in any such Insolvency Proceeding.
 
- 61 -

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

17.6.        Counterparts; Electronic Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

17.7.        Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Borrower or the transfer to the Lender Group
of any property should for any reason subsequently be asserted, or declared, to
be void or voidable under any state or federal law relating to creditors’
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (each, a “Voidable Transfer”), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the advice of counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Lender Group related thereto, the liability of Borrowers automatically
shall be revived, reinstated, and restored and shall exist as though such
Voidable Transfer had never been made.

17.8.        Confidentiality.

(a)           Each Agent and Lender individually (and not jointly or jointly and
severally) agrees that material, non-public information regarding Borrowers and
their Subsidiaries, their operations, assets, and existing and contemplated
business plans (“Confidential Information”) shall be treated by such Agent or
Lender in a confidential manner, and shall not be disclosed by such Agent or
Lender to Persons who are not parties to this Agreement, except: (i) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group and to employees, directors and officers of any
member of the Lender Group (the Persons in this clause (i), “Lender Group
Representatives”) on a “need to know” basis in connection with this Agreement
and the transactions contemplated hereby and on a confidential basis, (ii) to
Subsidiaries and Affiliates of any member of the Lender Group, provided that any
such Subsidiary or Affiliate shall have agreed to receive such information
hereunder subject to the terms of this Section 17.8, (iii) as may be required by
regulatory authorities so long as such authorities are informed of the
confidential nature of such information, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; provided
that (x) prior to any disclosure under this clause (iv), the disclosing party
agrees to provide Administrative Borrower with prior written notice thereof, to
the extent that it is practicable to do so and to the extent that the disclosing
party is permitted to provide such prior written notice to Administrative
Borrower pursuant to the terms of the applicable statute, decision, or judicial
or administrative order, rule, or regulation and (y) any disclosure under this
clause (iv) shall be limited to the portion of the Confidential Information as
may be required by such statute, decision, or judicial or administrative order,
rule, or regulation, (v) as may be agreed to in advance in writing by Borrowers,
(vi) as requested or required by any Governmental Authority pursuant to any
subpoena or other legal process, provided, that, (x) prior to any disclosure
under this clause (vi) the disclosing party agrees to provide Administrative
Borrower with prior written notice thereof, to the extent that it is practicable
to do so and to the extent that the disclosing party is permitted to provide
such prior written notice to Administrative Borrower pursuant to the terms of
the subpoena or other legal process and (y) any disclosure under this clause
(vi) shall be limited to the portion of the Confidential Information as may be
required by such Governmental Authority pursuant to such subpoena or other legal
process, (vii) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by such Agent,
Lender or Lender Group Representative), (viii) in connection with any
assignment, participation or pledge of any Lender’s interest under this
Agreement, provided that prior to receipt of Confidential Information any such
assignee, participant, or pledgee shall have agreed in writing to receive such
Confidential Information hereunder subject to the terms of this Section, (ix) in
connection with any litigation or other adversary proceeding involving parties
hereto which such litigation or adversary proceeding involves claims related to
the rights or duties of such parties under this Agreement or the other Loan
Documents; provided, that, prior to any disclosure to any Person (other than any
Borrower, any Agent, any Lender, any of their respective Affiliates, or their
respective counsel) under this clause (ix) with respect to litigation involving
any Person (other than any Borrower, any Agent, any Lender, any of their
respective Affiliates, or their respective counsel), the disclosing party agrees
to provide Borrowers with prior written notice thereof, and (x) in connection
with, and to the extent reasonably necessary for, the exercise of any secured
creditor remedy under this Agreement or under any other Loan Document.
 
- 62 -

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

(b)           Anything in this Agreement to the contrary notwithstanding,
Administrative Agent may (i) provide information concerning the terms and
conditions of this Agreement and the other Loan Documents to loan syndication
and pricing reporting services, and (ii) use the name, logos, and other insignia
of Borrowers in any “tombstone” or comparable advertising on its website or in
other marketing materials of the Administrative Agent.

17.9.        Lender Group Expenses. Borrowers agree to pay the Lender Group
Expenses on the earlier of (a) the first day of the month following the date on
which such Lender Group Expenses were first incurred or (b) within 10 days after
demand therefor is made by Administrative Agent, accompanied by supporting
documentation (which may take the form of a summary invoice). Borrowers agree
that their respective obligations contained in this Section 17.9 shall survive
payment or satisfaction in full of all other Obligations.

17.10.      Survival. All representations and warranties made by the Borrowers
in the Loan Documents and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that any Agent or Lender may have had notice or
knowledge of any Default or Event of Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid.

17.11.      Patriot Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies Borrowers that pursuant to the requirements of the
Act, it is required to obtain, verify and record information that identifies
each Borrower, which information includes the name and address of each Borrower
and other information that will allow such Lender to identify each Borrower in
accordance with the Patriot Act. In addition, if any Agent is required by law or
regulation or internal policies to do so, it shall have the right to
periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary
individual background checks for the Borrowers and (b) OFAC/PEP searches and
customary individual background checks for the Borrowers’ senior management and
key principals, and each Borrower agrees to cooperate in respect of the conduct
of such searches and further agrees that the reasonable costs and charges for
such searches shall constitute Lender Expenses hereunder and be for the account
of Borrowers.
 
- 63 -

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

17.12.      Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

17.13.      Parent as Administrative Agent for Borrowers. Each Borrower hereby
irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the “Administrative Borrower”) which appointment shall remain in full
force and effect unless and until Administrative Agent shall have received prior
written notice signed by each Borrower that such appointment has been revoked
and that another Borrower has been appointed Administrative Borrower. Each
Borrower hereby irrevocably appoints and authorizes the Administrative Borrower
to take such action as the Administrative Borrower deems appropriate on its
behalf to carry out the purposes of this Agreement. It is understood that the
handling of the Term Loans in a combined fashion, as more fully set forth
herein, is done solely as an accommodation to Borrowers in order to utilize the
collective borrowing powers of Borrowers in the most efficient and economical
manner and at their request, and that Lender Group shall not incur liability to
any Borrower as a result hereof. Each Borrower expects to derive benefit,
directly or indirectly, from the handling of the Term Loans in a combined
fashion since the successful operation of each Borrower is dependent on the
continued successful performance of the integrated group. To induce the Lender
Group to do so, and in consideration thereof, each Borrower hereby jointly and
severally agrees to indemnify each member of the Lender Group and hold each
member of the Lender Group harmless against any and all liability, expense, loss
or claim of damage or injury, made against the Lender Group by any Borrower or
by any third party whosoever, arising from or incurred by reason of (a) the
handling of the Term Loans as herein provided, or (b) the Lender Group’s relying
on any instructions of the Administrative Borrower, except that Borrowers will
have no liability to the relevant Agent-Related Person or Lender-Related Person
under this Section 17.13 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.

[Signature pages to follow.]
 
- 64 -

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 
BORROWERS:
         
LINCOLN EDUCATIONAL SERVICES
 
CORPORATION, a New Jersey corporation
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
LINCOLN TECHNICAL INSTITUTE, INC.,
 
a New Jersey corporation
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
NEW ENGLAND ACQUISITION, LLC,
 
a Delaware limited liability company
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
SOUTHWESTERN ACQUISITION, L.L.C.,
 
a Delaware limited liability company
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
 

[LINCOLN—CREDIT AGREEMENT]
 

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

 
NASHVILLE ACQUISITION, L.L.C.,
 
a Delaware limited liability company
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
EUPHORIA ACQUISITION, LLC,
 
a Delaware limited liability company
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
NEW ENGLAND INSTITUTE OF TECHNOLOGY
 
AT PALM BEACH, INC., a Florida corporation
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
LTI HOLDINGS, LLC,
 
a Colorado limited liability company
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
NN ACQUISITION, LLC,
 
a Delaware limited liability company
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
           
LCT ACQUISITION, LLC,
 
a Delaware limited liability company
         
BY:
/s/ Kenneth M. Swisstack
   
NAME:
Kenneth M. Swisstack
   
TITLE:
Secretary
 

[LINCOLN—CREDIT AGREEMENT]
 

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

 
AGENTS AND LENDERS:
         
HPF SERVICE, LLC,
 
as Administrative Agent and Tranche A Collateral Agent
         
BY:
VIRGO SERVICE COMPANY LLC,
   
its Managing Member
         
BY:
/s/ Jesse Watson
   
NAME:
Jesse Watson
   
TITLE:
Manager
 

[LINCOLN—CREDIT AGREEMENT]
 

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

 
RUSHING CREEK 4, LLC,
 
as a Tranche A Lender
         
BY:
VIRGO SERVICE COMPANY LLC,
   
its Managing
         
BY:
/s/ Jesse Watson
   
NAME:
Jesse Watson
   
TITLE:
Manager
 

[LINCOLN—CREDIT AGREEMENT]
 

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

 
HPF HOLDCO, LLC,
 
as a Tranche A Lender
         
BY:
/s/ Jonathan Goodman
   
NAME:
Jonathan Goodman
   
TITLE:
Manager
 

[LINCOLN—CREDIT AGREEMENT]
 

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

 
ALOSTAR BANK OF COMMERCE,
 
as Tranche B Collateral Agent and Tranche B Lender
         
BY:
/s/ Brian Long
   
NAME:
Brian Long
   
TITLE:
Vice President
 

[LINCOLN—CREDIT AGREEMENT]
 

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

Schedule 1.1

As used in the Agreement, the following terms shall have the following
definitions:

“Accounting Changes” means changes in accounting principles (a) required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions) or (b)
permitted by GAAP and concurred in by Borrowers’ auditors.

“Accrediting Body” means any entity or organization that is recognized as an
accrediting agency by the DOE which engages in granting or withholding
Accreditation or similar approval for private post-secondary schools , in
accordance with standards relating to the performance, operation, financial
condition and/or educational quality of such schools, including, without
limitation, the Accrediting Commission of Career Schools and Colleges,
Accrediting Council for Independent Colleges and Schools, New England
Association of Schools and Colleges of Technology and Accrediting Bureau of
Health Education Schools.

“Accreditation” means the status of public recognition granted by any
Accrediting Body to an educational institution or location or program thereof
that meets the Accrediting Body's standards and requirements.

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

“Administrative Agent” has the meaning specified therefor in the preamble to the
Agreement.

“Administrative Agent-Related Persons” means Administrative Agent, together with
its Affiliates, officers, directors, employees, attorneys, and agents.

“Administrative Agent’s Account” means the Deposit Account of Administrative
Agent identified on Schedule A-1.

“Administrative Borrower” has the meaning specified therefor in Section 17.13 of
the Agreement.

“Affected Lender” has the meaning specified therefor in Section 2.8(b) of the
Agreement.

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise.

“Agent-Related Persons” means, collectively, the Administrative Agent-Related
Persons, the Tranche A Collateral Agent-Related Persons, and the Tranche B
Collateral Agent-Related Persons.

“Agents” means, collectively, the Administrative Agent, the Tranche A Collateral
Agent and the Tranche B Collateral Agent.

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.
 
Schedule 1.1 - 1

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

“Anticipated Default” means a default or breach under Section 5.8 of the
Agreement that is anticipated or likely to occur (but has not yet occurred), as
reflected in any certificate, information or report delivered by Borrowers to
Administrative Agent under Section 5.1(c) or 5.2(m) of the Agreement, in each
case with respect to any of the following defaults or breaches by any Borrower
or School: (a) failure to maintain a composite score of 1.0 or more under the
factors of financial responsibility set forth in 34 C.F.R. Part 668, Subpart L,
or to satisfy the "zone alternative" requirements set forth at 34 C.F.R. §
668.175(d) if applicable; (b) failure to maintain the final and draft Cohort
Default Rates for all Schools, except for up to one School per federal fiscal
year, at less than 30% as calculated pursuant to 34 C.F.R., Part 668, Subpart N
for any two consecutive federal fiscal years, and failure to maintain the final
and draft Cohort Default Rates for all Schools at less than 40% as calculated
pursuant to 34 C.F.R., Part 668, Subpart N for any one federal fiscal year; (c)
failure to derive no more than 90 percent of its revenues from Title IV Program
funds as calculated consistent with 34 C.F.R. §§ 668.14 and 668.28 or any
successor regulation or regulations as measured in the first six-month period of
any fiscal year that follows a fiscal year in which any School derived more than
90% of its revenues from Title IV Program funds; or (d) failure to maintain
material compliance with all Educational Laws, including (i) administrative
capability requirements under 34 C.F.R. § 668.16, (ii) Program Participation
Agreement requirements under 34 C.F.R. § 668.14, and (iii) eligible program
requirements under 34 C.F.R. § 668.8.

 “Applicable Margin” means 9.0%.

“Applicable Prepayment Premium” has the meaning specified therefor in Section
2.7(b) of the Agreement.

“Application Event” means the occurrence of (a) a failure by Borrowers to repay
all of the Obligations in full on the Maturity Date, or (b) an Event of Default
and the election by Administrative Agent or the Required Lenders to require that
payments and proceeds of Collateral be applied pursuant to Section 2.3(b)(iii)
of the Agreement.

“Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which any Borrower or any of its Subsidiaries or ERISA Affiliates has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

“Board of Directors” means the board of directors (or comparable managers) of
Parent or any committee thereof duly authorized to act on behalf of the board of
directors (or comparable managers).

“Borrower” and “Borrowers” have the respective meanings specified therefor in
the preamble to the Agreement.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of New York.
 
Schedule 1.1 - 2

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

“Business Operations” means, in the case of any School, the business operations
specifically related to such School.

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed, but in any event
excluding capital expenditures incurred for the replacement of assets that were
the subject of a casualty loss to the extent of the cash insurance proceeds
received by Borrowers as a result of the loss of such assets.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Cash Collateral” means cash collateral in the initial amount of $15,250,000
maintained in the Cash Collateral Account.

“Cash Collateral Account” means a Deposit Account maintained with a bank or
other financial institution that is acceptable to the Tranche B Collateral Agent
in the name and under the control of the Tranche B Collateral Agent and the
Tranche A Collateral Agent.

“Cash Collateral Security Agreement” means the security agreement, dated as of
even date with the Agreement, in form and substance reasonably satisfactory to
the Tranche B Collateral Agent, executed and delivered by Borrowers to the
Tranche B Collateral Agent, pursuant to which Borrowers grant the Tranche B
Collateral Agent a Lien in the Cash Collateral and the Cash Collateral Account
as security for the Tranche B Obligations.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $1,000,000,000, (e) Deposit
Accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the full amount maintained with any such
other bank is insured by the Federal Deposit Insurance Corporation, (f)
repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or recognized securities dealer having combined
capital and surplus of not less than $1,000,000,000, having a term of not more
than seven days, with respect to securities satisfying the criteria in clauses
(a) or (d) above, (g) debt securities with maturities of six months or less from
the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the criteria described in clause (d) above, and (h)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (g) above.
 
Schedule 1.1 - 3

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

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other customary cash
management arrangements.

“Change of Control” means that (a) any “person” or “group” (within the meaning
of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
Stock of Parent representing the right to vote 35% more of the total voting
rights for the election of members of the Board of Directors, (b) a majority of
the members of the Board of Directors do not constitute Continuing Directors,
(c) Parent fails to own and control, directly or indirectly, 100% of the Stock
of each other Borrower (other than as a result of a transaction permitted under
Section 6.3 or 6.4) or (d) any change in ownership or control of Parent, any
other Borrower or any Subsidiary or any School under any Educational Law.

“Closing Date” means the date of the making of the Term Loans under the
Agreement.

“Code” means the New York Uniform Commercial Code, as in effect from time to
time.

“Cohort Default Rate” shall have the meaning ascribed to such term in 34 C.F.R.
§ 668 Subparts M and N, including Cohort Default Rates calculated for the
periods specified in 34 C.F.R. § 668.183 and Cohort Default Rates calculated for
the period specified in 34 C.F.R. § 668.202.

“Collateral” means, collectively, all Tranche A Collateral and Tranche B
Collateral.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgment agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in any Borrower’s or its Subsidiaries’ books and records or Equipment, in each
case, in form and substance reasonably satisfactory to the Tranche A Collateral
Agent.

“Collateral Agents” means, collectively, the Tranche A Collateral Agent and the
Tranche B Collateral Agent.

“Collateral Agent’s Liens” means, collectively, the Tranche A Collateral Agent’s
Liens and the Tranche B Collateral Agent’s Liens.

“Collateral Documents” means, collectively, the Tranche A Collateral Documents
and the Tranche B Collateral Documents.

“Commitment” means, collectively, each Tranche A Commitment and Tranche B
Commitment.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit B delivered by the chief financial officer of Parent to Administrative
Agent.

“Confidential Information” has the meaning specified therefor in Section 17.8(a)
of the Agreement.

“Consumer Protection Agency” means any Governmental Authority that regulates,
administers or enforces Consumer Protection Laws, including, without limitation,
the federal Consumer Financial Protection Bureau, the Federal Trade Commission,
any state financial institutions department or agency, or any state attorney
general.
 
Schedule 1.1 - 4

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

“Consumer Protection Law” means any law, regulation, rule, order or binding
standard directly or indirectly related to the protection of consumers in
financing transactions, including, without limitation, the federal Truth in
Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the privacy and data security provisions
of the Gramm-Leach-Bliley Act, Section 5 of the Federal Trade Commission Act,
the Consumer Financial Protection Act (including the prohibition against unfair,
deceptive or abusive acts or practices) and the rules and regulations
implementing the foregoing, and any state retail installment sales act, loan
law, usury law, or unfair or deceptive acts or practices law and the rules and
regulations implementing the foregoing.

 “Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was approved, appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent and whose initial assumption of office resulted from such contest or the
settlement thereof.

“Control Agreement” means (a) in the case of the Cash Collateral Account, a
control agreement, in form and substance reasonably satisfactory to the Tranche
B Collateral Agent and the Tranche A Collateral Agent, executed and delivered by
the applicable Borrower, the Tranche B Collateral Agent, the Tranche A
Collateral Agent, and the applicable bank, and (b) in the case of the School
Closure and Capex Cash Collateral Account and any other Deposit Account (other
than the Cash Collateral Account), a control agreement, in form and substance
reasonably satisfactory to the Tranche A Collateral Agent, executed and
delivered by the applicable Borrower, the Tranche A Collateral Agent, and the
applicable bank.

“Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement.

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Deposit Account” means any deposit account (as that term is defined in the
Code).

“Designated School” means a School identified as a “Designated School” in the
School and Real Property Information Certificate.

“Designated School Deposit Amount” means, with respect to each School, the
applicable amount set forth in the School and Real Property Information
Certificate as the “Designated School Deposit Amount” for such School.

“Designated School Release Amount” means, with respect to each Designated
School, the applicable amount set forth in the School and Real Property
Information Certificate as the “Designated School Release Amount” for such
Designated School.

“DOE” means the U.S. Department of Education or any successor agency.
 
Schedule 1.1 - 5

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

“Dollars” or “$” means United States dollars.

“EBITDA” means, with respect to any fiscal period, (a) Net Income, plus (b) to
the extent included in determining Net Income, Interest Expense, corporate
income taxes, depreciation and amortization, expenses (including but not limited
to school closing expenses) reflected as one-time charges in Parent’s periodic
reports and current reports and the exhibits thereto filed with the SEC, and
non-cash charges with respect to stock-based compensation and impairment of
goodwill and long-lived assets, minus (c) all payments under finance leases and
other Capital Leases that are either classified by Borrowers as an Interest
Expense or not included in the determination of Net Income, minus (d) income
from the termination of Capital Leases, minus (e) any cash payments in
connection with the exercise of options and the vesting of Stock awards made
pursuant to employee equity incentive plans and other compensation arrangements
in order to satisfy related employee income tax obligations, in each case as Net
Income and such other items are determined on a consolidated basis for Borrowers
and their Subsidiaries in accordance with GAAP.

“Educational Agency” means any person, entity or organization, whether
governmental, government chartered, private, or quasi-private, that engages in
granting or withholding Educational Approvals for, administers financial
assistance to or for students of, or otherwise regulates private postsecondary
schools, including without limitation the DOE, any state education department or
agency, any guaranty agency, and any Accrediting Body.

“Educational Approval” means any license, authorization, approval,
certification, or Accreditation, issued or required to be issued by an
Educational Agency with respect to any aspect of a School’s operations in order
for such School or any location or educational program thereof to operate or
participate in Title IV, but excluding approvals or licenses with respect to the
activities of individual recruiters at any School.

“Educational Law” means any statute, law, regulation, rule, order, or binding
standard issued or administered by, or related to, any Educational Agency.

“Educational Loan” means any student loan made, insured or originated under
Title IV.

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of any Borrower, any Subsidiary of a Borrower, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by any
Borrower, any Subsidiary of a Borrower, or any of their predecessors in
interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, in each case as amended
from time to time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.
 
Schedule 1.1 - 6

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

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

“Equipment” means equipment (as that term is defined in the Code).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of any Borrower or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of any Borrower or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which any Borrower or any of its Subsidiaries is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with any
Borrower or its Subsidiaries and whose employees are aggregated with the
employees of any Borrower or its Subsidiaries under IRC Section 414(o).

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Benefit Plan (other
than an event for which the 30 day notice period is waived), (b) the failure to
make sufficient contributions to a Benefit Plan or a Multiemployer Plan for any
plan year which, in the aggregate, are less than the minimum required
contribution determined under Sections 412, 430, 431 or 432 of the IRC, as
applicable, or Sections 302 or 303 of ERISA, as applicable, for such plan for
any plan year, (c) the filing pursuant to Section 412(c) of the IRC or Section
302(c) of ERISA of an application for a waiver of the minimum funding standard
with respect to any Benefit Plan or Multiemployer Plan, (d) the incurrence by
any Borrower, any of its Subsidiaries or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Benefit
Plan or Multiemployer Plan, (e) the receipt by any Borrower, any of its
Subsidiaries or any of its ERISA Affiliates from the PBGC of any written notice
relating to an intention to terminate any Benefit Plan or Multiemployer Plan or
to appoint a trustee to administer any Benefit Plan or Multiemployer Plan, (f)
the incurrence by any Borrower, any of its Subsidiaries or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Benefit Plan or Multiemployer Plan, or (g) the receipt by any Borrower,
any of its Subsidiaries or any of its ERISA Affiliates of any written notice
assessing the imposition of Withdrawal Liability or concerning a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

“Excess Capex Amount” means, with respect to any fiscal quarter, the aggregate
amount of Capital Expenditures made or incurred by Borrowers and their
Subsidiaries during such fiscal quarter which would result in the aggregate
amount of Capital Expenditures made or incurred by Borrowers and their
Subsidiaries during the fiscal year to date period exceeding the applicable
Dollar limit under Section 7.3 of the Agreement; provided, that, (a) until the
release of School Closure and Capex Cash Collateral to Borrowers in accordance
with Section 5.16 of the Agreement with respect to such fiscal quarter, the
Excess Capex Amount with respect to such fiscal quarter shall not exceed the
amount of immediately available funds in the School Closure and Capex Cash
Collateral Account, and (b) following the release of School Closure and Capex
Cash Collateral to Borrowers in accordance with Section 5.16 of the Agreement
with respect to such fiscal quarter, the Excess Capex Amount with respect to
such fiscal quarter shall not exceed the amount of School Closure and Capex Cash
Collateral actually released to Borrowers with respect to such fiscal quarter
(but excluding School Closure and Capex Cash Collateral released to Borrowers
based on the closure of Designated Schools by Borrowers during such fiscal
quarter).
 
Schedule 1.1 - 7

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

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

“Existing Credit Facility” means the credit facility provided to Parent and some
or all of the other Borrowers by Bank of America, N.A., as agent for certain
other lenders.

“Fee Letter” means that certain fee letter, dated as of even date with the
Agreement, among Administrative Borrower and Administrative Agent, in form and
substance reasonably satisfactory to Administrative Agent and Administrative
Borrower.

“Fixed Charges” means, with respect to any fiscal period, the sum, without
duplication, of (a) principal payments in respect of Indebtedness that are
scheduled or required to be paid during such period (excluding, however, any
prepayments made on the Terms Loans), plus (b) Interest Expense accrued (other
than interest paid-in-kind, amortization of financing fees, and other non-cash
Interest Expense) during such period, in each case as determined on a
consolidated basis for Borrowers and their Subsidiaries in accordance with GAAP.

“Fixed Charge Coverage Ratio” means, with respect to any fiscal period, the
ratio of (a) EBITDA for such period, minus Capital Expenditures (but excluding
Capital Expenditures financed with the proceeds of Indebtedness for borrowed
money) made (to the extent not already incurred in a prior period) or incurred
during such period, minus cash income taxes paid during such period, to (b)
Fixed Charges for such period, in each case as determined on a consolidated
basis for Borrowers and their Subsidiaries in accordance with GAAP.

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC Section 7701(a)(30).

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, however, that all
calculations relative to liabilities shall be made without giving effect to
Statement of Financial Accounting Standards No. 159.

“Gainful Employment Certification Requirements” means the certification
requirements set forth at 34 C.F.R. § 668.414.

“Gainful Employment Disclosure Requirements” means the disclosure requirements
set forth at 34 C.F.R. § 668.6, effective from July 1, 2011 to January 1, 2017,
and the disclosure requirements set forth at 34 C.F.R. § 668.412, effective as
of January 1, 2017.

“Gainful Employment Minimum Standards” means, with respect to any gainful
employment educational program in a given award year, either (a) an “Annual
Earnings Rate” of 8% or less, or (b) a “Discretionary Income Rate” of 20% or
less, each as defined and calculated in accordance with the Gainful Employment
Rule and issued as final debt measures, as set forth at 34 C.F.R. § 668.403.

“Gainful Employment Rates” means the annual earnings rate and discretionary
income rate for an educational program, as calculated and issued by the DOE (in
draft or final form) pursuant to 34 C.F.R. § 668.404.
 
Schedule 1.1 - 8

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

“Gainful Employment Reporting Requirements” means the reporting requirements set
forth at 34 C.F.R. § 668.411.

“Gainful Employment Rule” means the rule to be codified at 34 C.F.R. § 668.401
et seq. as published in the Federal Register on October 31, 2014, and effective
as of July 1, 2015.

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body, but excludes any Educational
Agency.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

“HEA” means the Higher Education Act of 1965, as amended.

“Hedge Agreement” means a “swap agreement” as that term is defined in Section
101(53B)(A) of the Bankruptcy Code.

 “Holdout Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“HPF” means HPF Service, LLC.

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), (g) any Prohibited Preferred
Stock of such Person, and (h) any obligation of such Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (g) above. For
purposes of this definition, (i) the amount of any Indebtedness represented by a
guaranty or other similar instrument shall be the lesser of the principal amount
of the obligations guaranteed and still outstanding and the maximum amount for
which the guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness
described in clause (d) above shall be the lower of the amount of the obligation
and the fair market value of the assets of such Person securing such obligation.
 
Schedule 1.1 - 9

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

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
the Agreement.

“Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

“Interest Expense” means, for any period, the aggregate of the interest expense
of Borrowers and their Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide accounts receivable arising in the ordinary course
of business), or acquisitions of Indebtedness, Stock, or all or substantially
all of the assets of such other Person (or of any division or business line of
such other Person), and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“Lender” has the meaning set forth in the preamble to the Agreement, and shall
also include any other Person made a party to the Agreement as a Lender pursuant
to the provisions of Section 13.1 of the Agreement, and “Lenders” means each of
the Lenders or any one or more of them.

“Lender Group” means each of the Lenders and Agents, or any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by any Borrower or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by the
Lender Group, (b) reasonable out-of-pocket fees or charges paid or incurred by
any Agent in connection with the Lender Group’s transactions with any Borrower
or its Subsidiaries under any of the Loan Documents, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
the Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) reasonable out-of-pocket costs and
expenses paid or incurred by the Lender Group to correct any default or enforce
any provision of the Loan Documents, or during the continuance of an Event of
Default, in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral, or
any portion thereof, irrespective of whether a sale is consummated, (d)
reasonable out-of-pocket audit fees and expenses (including travel, meals, and
lodging) of any Agent related to any inspections or audits to the extent of the
fees and charges (and up to the amount of any limitation) contained in the
Agreement, (e) reasonable out-of-pocket costs and expenses of third party claims
or any other suit paid or incurred by the Lender Group in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or the Lender Group’s relationship with any Borrower or any of
its Subsidiaries, (f) each Agent’s reasonable costs and expenses (including
reasonable attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering (including travel, meals, and lodging), syndicating, or
amending the Loan Documents, and (g) each Agent’s and each Lender’s reasonable
costs and expenses (including reasonable attorneys, accountants, consultants,
and other advisors fees and expenses) incurred in terminating, enforcing
(including attorneys, accountants, consultants, and other advisors fees and
expenses incurred in connection with a “workout,” a “restructuring,” or an
Insolvency Proceeding concerning any Borrower or any of its Subsidiaries or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.
 
Schedule 1.1 - 10

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

“Lender Group Representatives” has the meaning specified therefor in Section
17.8 of the Agreement.

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

“LIBOR Rate” means, during any calendar month, the 90 day “Libor Rate” published
in the Wall Street Journal (the “WSJ”) as of the first Business Day of such
month; provided, that, in the event that the 90 day “Libor Rate” is not
available from or published by the WSJ, Administrative Agent shall give written
notice thereof to Administrative Borrower as soon as practicable thereafter and,
until the 90 day “Libor Rate” is available from and/or published by the WSJ, the
“LIBOR Rate” shall be determined by Administrative Agent from such source or
service as Administrative Agent determines to be comparable in its good faith
judgment.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

“Loan Documents” means the Agreement, the Notes, the Collateral Documents, and
any other instrument or agreement entered into, now or in the future, by any
Borrower or any of its Subsidiaries and any member of the Lender Group in
connection with the Agreement.

“Margin Stock” as defined in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.

“Material Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrowers, taken as a whole, (b) a material adverse
change in any Real Property Collateral, (c) a material impairment of Borrowers’
ability to perform their obligations under the Loan Documents to which they are
parties or of the Lender Group’s ability to enforce any of the Obligations or
realize upon any of the Collateral, or (d) a material impairment of the
enforceability or priority of either Collateral Agent’s Liens with respect to
any of the Collateral as a result of an action or failure to act on the part of
any Borrower or its Subsidiaries.
 
Schedule 1.1 - 11

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

“Material Adverse Regulatory Change” means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers, taken as a whole, or (b) any
occurrence or occurrences that, individually or in the aggregate, in the sole
discretion of the Required Lenders, could reasonably be expected to result in
any combination of additional expenses or damages, or the loss of or reduction
in revenues, of $7,500,000 or more in any single fiscal year of Borrowers.

“Material Contract” means, with respect to any Person, (i) each contract or
agreement which is required to be filed by such Person with the SEC on a
“current report” on Form 8-K or would otherwise be deemed to be a material
contract as provided in Regulation S-K promulgated by the SEC under the
Securities Act (whether or not such Person is then required to provide current
reports or other reports to the SEC), and (ii) all other contracts or agreements
the loss or termination of which could reasonably be expected to result in a
Material Adverse Change , but excluding any Program Participation Agreement, or
any temporary program participation agreement, issued by DOE.

“Maturity Date” means July 31, 2019.

“Mortgage Policy” has the meaning specified therefor in Schedule 3.1.

“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by a Borrower in favor
of the Tranche A Collateral Agent, in form and substance reasonably satisfactory
to the Tranche A Collateral Agent, that encumber the Real Property Collateral.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA to which any Borrower, any of their Subsidiaries or any of their ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding six (6) plan years made or accrued an obligation, or
had any liability, to make contributions.

“Net Cash Proceeds” means:

(a)           With respect to any sale or disposition by a Borrower or any of
its Subsidiaries of assets (including any School Disposition or Permitted Real
Property Sale), the amount of cash proceeds received (directly or indirectly)
from time to time (whether as initial consideration or through the payment of
deferred consideration) by or on behalf of such Borrower or its Subsidiaries in
connection therewith after deducting therefrom only (i) the amount of any
Indebtedness secured by any Permitted Lien on any asset (other than (A)
Indebtedness owing to Agent or any Lender under the Agreement or the other Loan
Documents and (B) Indebtedness assumed by the purchaser of such asset) which is
required to be, and is, repaid in connection with such sale or disposition, and
(ii) reasonable fees, commissions, and expenses related thereto and required to
be paid by such Borrower or such Subsidiary in connection with such sale or
disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid or
payable to a Person that is not an Affiliate of any Borrower or any of its
Subsidiaries, and are properly attributable to such transaction. In the case of
any sale of Real Property Collateral in connection with a School Disposition
involving a School that, in whole or in part, occupies such Real Property
Collateral, the aggregate Net Cash Proceeds relating thereto shall be allocated
between the Real Property Collateral and the related School Disposition in
accordance with clause (h) of the definition of School Release Conditions. In
the case of any sale of student loan (or installment contract) receivables with
respect to graduated students in connection with a School Disposition, the
portion of the Net Cash Proceeds to be allocated to such student loan (or
installment contract) receivables shall be determined in accordance with clause
(i) of the definition of School Release Conditions.
 
Schedule 1.1 - 12

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

(b)           With respect to the issuance or incurrence of any Indebtedness by
a Borrower or any of its Subsidiaries, or the issuance by a Borrower or any of
its Subsidiaries of any shares of its Stock, the aggregate amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of such Borrower or such Subsidiary in connection with such
issuance or incurrence, after deducting therefrom only reasonable fees,
commissions, and expenses related thereto and required to be paid by such
Borrower or such Subsidiary in connection with such issuance or incurrence, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate of any Borrower or any of its Subsidiaries, and are
properly attributable to such transaction.

“Net Income” means, with respect to any fiscal period, the net earnings (or
loss) for such fiscal period of Borrowers and their Subsidiaries, but excluding:
(a) any gain or loss arising from School Dispositions and sales or write-downs
of any other capital assets; (b) any gain or loss arising from any write-up or
write-down of assets or any write-down of goodwill during such period; (c)
earnings of any Subsidiary accrued prior to the date it became a Subsidiary; (d)
earnings or losses of any Person, substantially all the assets of which have
been acquired in any manner by any Borrower, realized by such Person prior to
the date of such acquisition; (e) net earnings of any entity (other than a
Subsidiary of a Borrower) in which any Borrower has an ownership interest unless
such net earnings have actually been received by a Borrower in the form of cash
distributions; (f) any portion of the net earnings of any Subsidiary which for
any reason is unavailable for payment of distributions to a Borrower; (g) the
earnings of any Person to which any assets of a Borrower shall have been sold,
transferred or disposed of, or into which a Borrower shall have merged, or been
a party to any consolidation or other form of reorganization, prior to the date
of such transaction; (h) any gain arising from the acquisition of any Stock of
any Borrower; (i) any loss arising from Stock based compensation expense; (j)
any gain or non-cash loss arising from extraordinary or non-recurring items; and
(k) subject to Administrative Agent’s approval (in its sole discretion) of the
exclusion thereof, any cash loss arising from extraordinary or non-recurring
items, in each case as net earnings (or loss) and all such exclusions are
determined on a consolidated basis for Borrowers and their Subsidiaries in
accordance with GAAP.

“Notes” means, collectively, all Tranche A Notes and Tranche B Notes, and “Note”
means any Tranche A Note or Tranche B Note, individually.

“Obligations” means all loans (including the Term Loans), principal, interest
(including any interest that accrues after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding), premiums, liabilities, obligations
(including indemnification obligations), fees, Lender Group Expenses (including
any fees or expenses that accrue after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding), guaranties, and all covenants and
duties of any other kind and description owing by any Borrower pursuant to or
evidenced by the Agreement or any of the other Loan Documents and irrespective
of whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all other expenses or other amounts
that any Borrower is required to pay or reimburse by the Loan Documents or by
law or otherwise in connection with the Loan Documents. Any reference in the
Agreement or in the other Loan Documents to the Obligations shall include all or
any portion thereof and any extensions, modifications, renewals, or alterations
thereof, both prior and subsequent to any Insolvency Proceeding.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.
 
Schedule 1.1 - 13

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

“Ohio Real Property Collateral” means the Real Property Collateral located in
Springdale (Hamilton County), Ohio

“Originating Lender” has the meaning specified therefor in Section 13.1(e) of
the Agreement.

“Parent” has the meaning specified therefor in the preamble to the Agreement.

“Participant” has the meaning specified therefor in Section 13.1(e) of the
Agreement.

“Participant Register” has the meaning set forth in Section 13.1(i) of the
Agreement.

“Patriot Act” has the meaning specified therefor in Section 4.16 of the
Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA.

“Permitted Dispositions” means:

(a)           Permitted School Dispositions and Permitted Real Property Sales;

(b)           sales, abandonment or other dispositions of Equipment that is
substantially worn, damaged, or obsolete or no longer used or useful in the
ordinary course of business;

(c)           the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of the Agreement or the other Loan Documents;

(d)           the licensing, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business;

(e)           the granting of Permitted Liens;

(f)            the sale or discount, in each case without recourse, of
non-performing accounts receivable arising in the ordinary course of business,
but only in connection with the compromise or collection thereof;

(g)           any involuntary loss, damage or destruction of property, whether
real property or personal property;

(h)           any involuntary condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, or confiscation or requisition of use
of property, whether real property or personal property;

(i)            the sale or issuance of Stock (other than Prohibited Preferred
Stock) of Parent;

(j)            (i) the lapse of registered patents, trademarks, copyrights and
other intellectual property of Borrowers and their Subsidiaries to the extent
not economically desirable in the conduct of their business or (ii) the
abandonment of patents, trademarks, copyrights, or other intellectual property
rights in the ordinary course of business so long as (in each case under clauses
(i) and (ii)), (A) with respect to copyrights, such copyrights are not material
revenue generating copyrights, and (B) such lapse is not materially adverse to
the interests of the Lender Group;
 
Schedule 1.1 - 14

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

(k)           the making of Restricted Payments that are expressly permitted to
be made pursuant to the Agreement;

(l)            the making of Permitted Investments; and

(m)          so long as no Event of Default has occurred and is continuing or
would immediately result therefrom, transfers of assets from any Borrower to
another Borrower.

“Permitted Indebtedness” means:

(a)           Indebtedness evidenced by the Agreement or the other Loan
Documents;

(b)           Indebtedness set forth on Schedule 4.17 to the Agreement and any
Refinancing Indebtedness in respect of such Indebtedness;

(c)           Permitted Purchase Money Indebtedness and any Refinancing
Indebtedness in respect of such Indebtedness;

(d)           endorsement of instruments or other payment items for deposit;

(e)           Indebtedness owed to issuers of Permitted Letters of Credit;

(f)           Indebtedness incurred in the ordinary course of business under
performance, surety, statutory, or appeal bonds;

(g)           Indebtedness owed to any Person providing property, casualty,
liability, or other insurance to Borrowers or any of their Subsidiaries, so long
as the amount of such Indebtedness is not in excess of the amount of the unpaid
cost of, and shall be incurred only to defer the cost of, such insurance for the
year in which such Indebtedness is incurred and such Indebtedness is outstanding
only during such year;

(h)           the incurrence by Borrowers or their Subsidiaries of Indebtedness
under Hedge Agreements that are incurred for the bona fide purpose of hedging
the interest rate risks associated with Borrowers’ and their Subsidiaries’
operations and not for speculative purposes;

(i)            Indebtedness incurred in the ordinary course of business in
respect of credit cards, credit card processing services, debit cards, stored
value cards, commercial cards, or Cash Management Services;

(j)            Indebtedness consisting of Permitted Investments;

(k)           unsecured Indebtedness incurred in respect of netting services,
overdraft protection, and other like services, in each case, incurred in the
ordinary course of business;

(l)            accrual of interest, accretion or amortization of original issue
discount, or the payment of interest in kind, in each case, on Indebtedness that
otherwise constitutes Permitted Indebtedness; and

(m)          any other unsecured Indebtedness incurred by Borrowers and their
Subsidiaries in an aggregate outstanding amount not to exceed $3,000,000 at any
one time.
 
Schedule 1.1 - 15

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

“Permitted Investments” means:

(a)           Investments in cash and Cash Equivalents;

(b)           Investments in negotiable instruments deposited or to be deposited
for collection in the ordinary course of business;

(c)           advances made in connection with purchases of goods or services in
the ordinary course of business;

(d)           Investments received in settlement of amounts due to any Borrower
or any of its Subsidiaries effected in the ordinary course of business or owing
to any Borrower or any of its Subsidiaries as a result of Insolvency Proceedings
involving an account debtor or upon the foreclosure or enforcement of any Lien
in favor of a Borrower or its Subsidiaries;

(e)           Investments owned by any Borrower or any of its Subsidiaries on
the Closing Date and set forth on Schedule P-1 to the Agreement;

(f)           deposits of cash made in the ordinary course of business to secure
performance of operating leases;

(g)           Investments in the form of capital contributions and the
acquisition of Stock made by any Borrower in any other Borrower; and

(h)           so long as no Event of Default has occurred and is continuing or
would result therefrom, any other Investments in an aggregate amount not to
exceed $2,000,000 during the term of the Agreement.

“Permitted Letters of Credit” means letters of credit issued by a bank or
financial institution for the account of Borrowers or their Subsidiaries for the
purpose of securing or supporting Borrowers’ and their Subsidiaries’ obligations
incurred in the ordinary course of business with respect to (a) landlords of
real property leased by Borrowers and their Subsidiaries, and (b) performance,
surety, statutory and appeal bonds, but excluding any Title IV Letter of Credit
or any other letter of credit in favor of the Secretary of the DOE.

“Permitted Liens” means

(a)           Liens granted to, or for the benefit of, (i) the Tranche A
Collateral Agent to secure the Tranche A Obligations, and (b) the Tranche B
Collateral Agent to secure the Tranche B Obligations;

(b)           Liens for unpaid taxes, assessments, or other governmental charges
or levies that either (i) are not yet delinquent, or (ii) do not have priority
over either Collateral Agent’s Liens and the underlying taxes, assessments, or
charges or levies are the subject of Permitted Protests;

(c)           judgment Liens arising solely as a result of the existence of
judgments, orders, or awards that do not constitute an Event of Default under
Section 8.3 of the Agreement;

(d)           Liens set forth on Schedule P-2 to the Agreement; provided, that
to qualify as a Permitted Lien, any such Lien described on Schedule P-2 to the
Agreement shall only secure the Indebtedness that it secures on the Closing Date
and any Refinancing Indebtedness in respect thereof;
 
Schedule 1.1 - 16

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

(e)           the interests of lessors under operating leases and licensors
under non-exclusive license agreements;

(f)           purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as (i) such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, and (ii) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing Indebtedness in respect thereof;

(g)           Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests;

(h)           Liens on amounts deposited to secure Borrowers’ and their
Subsidiaries obligations in connection with worker’s compensation or other
unemployment insurance;

(i)           Liens on amounts deposited to secure Borrowers’ and their
Subsidiaries obligations in connection with the making or entering into of bids,
tenders, or leases in the ordinary course of business and not in connection with
the borrowing of money;

(j)           Liens on amounts deposited to secure Borrowers’ and their
Subsidiaries reimbursement obligations with respect to Permitted Letters of
Credit;

(k)           with respect to any Real Property, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof;

(l)           non-exclusive licenses of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business;

(m)           Liens that are replacements of Permitted Liens to the extent that
the original Indebtedness is the subject of permitted Refinancing Indebtedness
and so long as the replacement Liens only encumber those assets that secured the
original Indebtedness;

(n)           rights of setoff or bankers’ liens upon deposits of funds in favor
of banks or other depository institutions, solely to the extent incurred in
connection with the maintenance of such Deposit Accounts in the ordinary course
of business; and

(o)           Liens granted in the ordinary course of business on the unearned
portion of insurance premiums securing the financing of insurance premiums to
the extent the financing is permitted under the definition of Permitted
Indebtedness.

“Permitted Preferred Stock” means and refers to any Preferred Stock issued by
Parent (and not by one or more of its Subsidiaries) that is not Prohibited
Preferred Stock.

“Permitted Protest” means the right of any Borrower or any of its Subsidiaries
to protest any Lien (other than any Lien that secures the Obligations), taxes
(other than taxes that are the subject of a United States federal tax lien), or
rental payment, provided that (a) a reserve with respect to such obligation is
established on such Borrower’s or its Subsidiaries’ books and records in such
amount as is required under GAAP, (b) any such protest is instituted promptly
and prosecuted diligently by such Borrower or its Subsidiary, as applicable, in
good faith, and (c) the Tranche A Collateral Agent is satisfied that, while any
such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Tranche A Collateral Agent’s Liens.
 
Schedule 1.1 - 17

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

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Indebtedness (other than the Obligations, but including Capital Leases),
incurred after the Closing Date and at the time of, or within 20 days after, the
acquisition of any fixed assets for the purpose of financing all or any part of
the acquisition cost thereof, in an aggregate principal amount outstanding at
any one time not in excess of $3,000,000.

“Permitted Real Property Sales” means any sale of Real Property Collateral with
respect to which all of the Real Property Collateral Sale Conditions have been
satisfied in full.

“Permitted School Disposition” means any School Disposition with respect to
which all of the School Release Conditions have been satisfied in full.

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

“Preferred Stock” means, as applied to the Stock of any Person, the Stock of any
class or classes (however designated) that is preferred with respect to the
payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of Stock of
any other class of such Person.

“Private Educational Loan” shall mean any loan provided by a lender that is not
made, insured, or guaranteed under Title IV and is issued expressly for
postsecondary educational expenses.

“Program Integrity Rules” means those DOE regulations that became effective on
July 1, 2011, as published in final form in the Federal Register on October 29,
2010 that are legally in effect.

“Program Participation Agreement” has the meaning ascribed to such term in 34
C.F.R. § 668.14.

“Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends, other than dividends of shares of Preferred Stock
of the same class and series payable in kind or dividends of shares of common
stock) on or before a date that is less than 1 year after the Maturity Date, or,
on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities
(other than distributions in kind of shares of Preferred Stock of the same class
and series or of shares of common stock).

“Projections” means (a) Borrowers’ forecasted balance sheets, profit and loss
statements, and cash flow statements, (b) Borrowers’ forecasted new Student
Enrollments (starts) and total Student Enrollments (to be prepared by School and
on a cumulative basis), and (c) details as to Borrowers’ expectations to open or
close any School or any location thereof during such fiscal year, or to add,
discontinue or withdraw the Title IV eligibility of any educational program, all
prepared on a basis consistent with Borrowers’ historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.
 
Schedule 1.1 - 18

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

“Pro Rata Share” means, as of any date of determination with respect to any
Lender, (a) in the case of the Tranche A Term Loan, the percentage obtained by
dividing the outstanding principal amount of the portion of the Tranche A Term
Loan held by such Lender by the outstanding principal amount of the Tranche A
Term Loan, (b) in the case of the Tranche B Term Loan, the percentage obtained
by dividing the outstanding principal amount of the portion of the Tranche B
Term Loan held by such Lender by the outstanding principal amount of the Tranche
B Term Loan, and (c) in the case of the Term Loans, the percentage obtained by
dividing the outstanding principal amount of the portion of the Term Loans held
by such Lender by the outstanding principal amount of the Term Loans.

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Borrowers or their Subsidiaries and the improvements
thereto.

“Real Property Collateral” means the Real Property identified on Schedule R-1
and any Real Property hereafter acquired by Borrowers or their Subsidiaries.

“Real Property Collateral Sale Conditions” means, with respect to any proposed
sale of Real Property Collateral, the following conditions, the satisfaction of
each of which shall be a condition precedent to such proposed sale:

(a)           no Default or Event of Default exists or would result from such
proposed sale; and

(b)           Borrowers shall make a prepayment of the Term Loans in accordance
with Sections 2.3(d) and (e) of the Agreement (which, in the case of any
proposed sale of Real Property Collateral in connection with a School
Disposition involving a School that, in whole or in part, occupies such Real
Property Collateral, shall be in addition to the prepayment required under
clause (e) of the definition of School Release Conditions) in an amount equal to
the greater of (A) the Net Cash Proceeds of such proposed sale of Real Property
Collateral, and (B) the Real Property Minimum Sale Amount with respect to such
Real Property Collateral; provided, that, in the case of a sale of the Real
Property Collateral located in Suffield, Connecticut, in no case shall the
required prepayment exceed $5,000,000.

Promptly following the satisfaction of all such Real Property Collateral Sale
Conditions with respect to any proposed sale of Real Property Collateral, the
Tranche A Collateral Agent shall release its Lien in the Real Property
Collateral sold by Borrowers as part of such sale, all at Borrowers’ expense and
pursuant to release documents that are reasonably satisfactory to the Tranche A
Collateral Agent and the title insurance company insuring the sale of such Real
Property Collateral.

 “Real Property Minimum Rent Amount” means, with respect to each parcel of Real
Property Collateral, the applicable amount set forth in the School and Real
Property Information Certificate as the “Real Property Minimum Rent Amount” for
such parcel of Real Property Collateral.

“Real Property Minimum Sale Amount” means, with respect to each parcel of Real
Property Collateral, the applicable amount set forth in the School and Real
Property Information Certificate as the “Real Property Minimum Sale Amount” for
such parcel of Real Property Collateral.

 “Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:
 
Schedule 1.1 - 19

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

(a)           such refinancings, renewals, or extensions do not result in an
increase in the principal amount of the Indebtedness so refinanced, renewed, or
extended, other than by the amount of premiums paid thereon and the fees and
expenses incurred in connection therewith and by the amount of unfunded
commitments with respect thereto,

(b)           such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity (measured as of the refinancing,
renewal, or extension) of the Indebtedness so refinanced, renewed, or extended,
nor are they on terms or conditions that, taken as a whole, are or could
reasonably be expected to be materially adverse to the interests of any of the
Lenders,

(c)           if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and

(d)           the Indebtedness that is refinanced, renewed, or extended is not
recourse to any Person that is liable on account of the Obligations other than
those Persons which were obligated with respect to the Indebtedness that was
refinanced, renewed, or extended.

“Register” has the meaning set forth in Section 13.1(h) of the Agreement.

“Registered Loan” has the meaning set forth in Section 13.1(h) of the Agreement.

“Related Fund” means, with respect to any Lender that is an investment fund, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

“Replacement Lender” has the meaning specified therefor in Section 2.8(b) of the
Agreement.

“Required Lenders” means, (a) at any time prior to the payment in full of all of
the Tranche A Obligations, Tranche A Lenders whose aggregate Pro Rata Shares of
the Tranche A Term Loan exceed 50%, and (b) at any time following the payment in
full of all of the Tranche A Obligations, Lenders whose aggregate Pro Rata
Shares of the remaining Term Loans exceed 50%.

“Required Tranche B Lenders” means Tranche B Lenders whose aggregate Pro Rata
Shares of the Tranche B Term Loan exceed 50%.

“Restricted Payment” means to (a) declare or pay any dividend or make any other
payment or distribution on account of Stock issued by Parent (including any
payment in connection with any merger or consolidation involving Parent) or to
the direct or indirect holders of Stock issued by Parent in their capacity as
such (other than dividends or distributions payable in Stock (other than
Prohibited Preferred Stock)) issued by Parent, or (b) purchase, redeem, or
otherwise acquire or retire for value (including in connection with any merger
or consolidation involving Parent) any Stock issued by Parent.
 
Schedule 1.1 - 20

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

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, and (d) a Person resident
in or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

“School” means a postsecondary institution of higher education consisting of a
main campus and, if applicable, any additional locations, campuses or branches
thereof operated by any Borrower or any of their respective Subsidiaries
identified by an Office of Postsecondary Education Identification (OPEID) number
issued by the DOE or approved by any Educational Agency.

“School and Real Property Information Certificate” means the certificate (in
form and substance acceptable to Administrative Agent) delivered by
Administrative Borrower to Administrative Agent on or prior to the Closing Date,
and acknowledged in writing by Administrative Agent, as to the designation of
certain Schools as “Designated Schools”, the establishment of the Designated
School Deposit Amount for each School and the Designated School Release Amount
for each Designated School, the establishment of the School Disposition Amount
and School Prepayment Amount for each School, and the establishment of the Real
Property Minimum Rent Amount and Real Property Minimum Sale Amount for each
parcel of Real Property Collateral.

 “School Closure and Capex Cash Collateral” means cash collateral deposited and
maintained in the School Closure and Capex Cash Collateral Account in accordance
with clause (f) of the definition of School Release Conditions and Section 5.16
of the Agreement.

“School Closure and Capex Cash Collateral Account” means a Deposit Account
maintained with a bank or other financial institution that is acceptable to the
Tranche A Collateral Agent in the name and under the control of the Tranche A
Collateral Agent.

“School Disposition” means any sale or other disposition of a School (or a
portion thereof) and/or the Business Operations associated therewith.

“School Disposition Amount” means, with respect to each School, the applicable
amount set forth in the School and Real Property Information Certificate as the
“School Disposition Amount” for such School.

 “School Prepayment Amount” means, with respect to each School, the applicable
amount set forth in the School and Real Property Information Certificate as the
“School Prepayment Amount” for such School.

“School Provided Financing” means any financing provided to a student by any
School, Borrower or Subsidiary that is not a Private Educational Loan.

 “School Release Conditions” means, with respect to any proposed School
Disposition, the following conditions, the satisfaction of each of which shall
be a condition precedent to such School Disposition:
 
Schedule 1.1 - 21

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

(a)           no Default or Event of Default exists or would result from such
proposed School Disposition;

(b)           Borrowers have provided Administrative Agent with written notice
of the proposed School Disposition (which shall include a detailed and complete
description of all Collateral proposed to be sold off in connection with such
proposed School Disposition) at least 30 days prior to the anticipated closing
date of the proposed School Disposition and, not later than 5 Business Days
prior to the anticipated closing date of the proposed School Disposition, copies
of the sale agreement and other material documents relative to the proposed
School Disposition, which agreement and documents must be reasonably acceptable
to Administrative Agent;

(c)           Borrowers have provided Administrative Agent with written
confirmation, supported by reasonably detailed calculations, that on a pro forma
basis (including pro forma adjustments arising out of events which are directly
attributable to such proposed School Disposition, are factually supportable, and
are expected to have a continuing impact, in each case, determined as if the
School Disposition had been accomplished at the beginning of the relevant
period), Borrowers and their Subsidiaries would have been in compliance with the
minimum EBITDA and minimum Fixed Charge Coverage Ratio covenants set forth in
Sections 7.2 and 7.4 of the Agreement, measured as of the last day of the fiscal
quarter most recently ended prior to the proposed date of consummation of such
proposed School Disposition for which Borrowers are then required to have
delivered internally prepared financial statements to Administrative Agent in
accordance with Section 5.1 of the Agreement, and (ii) are projected to be in
compliance with the minimum EBITDA and minimum Fixed Charge Coverage Ratio
covenants set forth in Sections 7.2 and 7.4 of the Agreement as of each fiscal
quarter ending during the one year period after the proposed date of
consummation of such proposed School Disposition;

(d)           the Net Cash Proceeds from such proposed School Disposition shall
not be less than the School Disposition Amount with respect to such School;

(e)           Borrowers shall prepay the Term Loans in accordance with Sections
2.3(d) and (e) of the Agreement from the Net Cash Proceeds of such proposed
School Disposition (exclusive of any portion of such Net Cash Proceeds allocated
to student loan (or installment contract) receivables sold as part of such
School Disposition in accordance with clause (i) below) in an amount not less
than the greater of (i) 25% of such Net Cash Proceeds (exclusive of any portion
of such Net Cash Proceeds allocated to student loan (or installment contract)
receivables sold as part of such School Disposition in accordance with clause
(i) below), and (ii) the School Prepayment Amount with respect to such School;

(f)           Borrowers shall deposit with the Tranche A Collateral Agent, from
the Net Cash Proceeds of any proposed School Disposition, as School Closure and
Capex Cash Collateral to be held in the School Closure and Capex Cash Collateral
Account, an amount not less than the greater of (i) 25% of such Net Cash
Proceeds, and (ii) the Designated School Deposit Amount with respect to such
School;

(g)           Administrative Agent shall have received all such agreements,
documents, certificates, opinions and other items in connection with such
proposed School Disposition as Administrative Agent may require, in each case in
form and substance acceptable to Administrative Agent;

(h)           if the proposed School Disposition involves a School that, in
whole or in part, occupies Real Property Collateral, in addition to the minimum
prepayments and other requirements described above with respect to such proposed
School Disposition, such proposed School Disposition must be accompanied by a
sale or lease of such Real Property Collateral that satisfies the applicable
conditions set forth below (it being agreed, however, that, unless
Administrative Agent otherwise agrees in its sole discretion, the Real Property
Collateral located in Suffield, Connecticut shall not be leased):
 
Schedule 1.1 - 22

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

(i)           in the case of a sale of such Real Property Collateral, (A)
Borrowers shall have provided Administrative Agent with Borrowers’ proposed
allocation, between the Real Property Collateral and the related School
Disposition, of the aggregate Net Cash Proceeds relating thereto not later than
5 Business Days prior to the anticipated closing date of the proposed School
Disposition, which allocation shall be subject to Administrative Agent’s
approval (not to be unreasonably withheld), and (B) Borrowers shall have
satisfied the Real Property Collateral Sale Conditions; or

(ii)           in the case of a lease of such Real Property Collateral, (A) the
tenant under such lease shall be acceptable to the Administrative Agent in all
respects (and, if the tenant is a single purpose entity, the owner(s) of such
entity shall be acceptable to the Administrative Agent in all respects and shall
provide a guaranty or other credit support for such entity’s lease obligations
on terms acceptable to the Administrative Agent), (B) such lease shall be a
triple net lease, obligating the tenant to pay for all property taxes,
insurance, utilities and other costs associated with the Real Property
Collateral, as well as to pay annual rent (in addition to such property taxes,
insurance, utilities and other costs ) not less than Real Property Minimum Rent
Amount with respect to such Real Property Collateral, (C) such lease shall have
a non-cancellable term of at least 10 years, (D) all of the other terms of such
lease shall be acceptable to Administrative Agent, and (E) Administrative Agent
and the Tranche A Collateral Agent shall have received all such agreements,
documents, certificates, opinions and other items in connection with such lease
as Administrative Agent and the Tranche A Collateral Agent may require,
including, without limitation, a collateral assignment of Borrowers’ rights
under such lease and a subordination, non-disturbance and attornment agreement
from the lessee, in each case in form and substance acceptable to Administrative
Agent and the Tranche A Collateral Agent;

(i)           if the proposed School Disposition includes the sale or other
disposition of student loan (or installment contract) receivables with respect
to graduated students, in addition to the minimum prepayments and other
requirements described above with respect to such proposed School Disposition,
(i) Borrowers shall have provided Administrative Agent with Borrowers’ proposal
as to the portion of the aggregate Net Cash Proceeds relating to such proposed
School Disposition to be allocated to such student loan (or installment
contract) receivables not later than 5 Business Days prior to the anticipated
closing date of the proposed School Disposition, which allocation shall be
subject to Administrative Agent’s approval, (ii) Borrowers shall prepay the Term
Loans in accordance with Sections 2.3(d) and (e) of the Agreement from the Net
Cash Proceeds allocated to such student loan (or installment contract)
receivables in an amount not less than 50% of such allocated Net Cash Proceeds,
and (iii) if the Net Cash Proceeds allocated to such student loan (or
installment contract) receivables is less than 50% of the aggregate outstanding
principal amount of such student loan (or installment contract) receivables,
Administrative Agent shall have consented (in its discretion) to the sale or
disposition of such student loan (or installment contract) receivables; and

(j)           prior to (or contemporaneous with) the consummation of such
proposed School Disposition, Borrowers shall deliver to Administrative Agent a
certificate, in form and detail reasonably satisfactory to Administrative Agent,
duly executed by the chief financial officer of Parent, as to the satisfaction
of the foregoing conditions.

Promptly following the satisfaction of all such School Release Conditions with
respect to any proposed School Disposition, the Tranche A Collateral Agent shall
release its Lien in the Collateral sold by Borrowers as part of such School
Disposition, all at Borrowers’ expense and pursuant to release documents that
are reasonably satisfactory to the Tranche A Collateral Agent.
 
Schedule 1.1 - 23

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

 “SEC” means the United States Securities and Exchange Commission and any
successor thereto.

"Secretary of the DOE" shall mean the Secretary of the DOE or an official
employee of the DOE acting for the Secretary of the DOE under a delegation of
authority.

“Securities Account” means a securities account (as that term is defined in the
Code).

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Security Agreement” means the security agreement, dated as of even date with
the Agreement, in form and substance reasonably satisfactory to the Tranche A
Collateral Agent, executed and delivered by Borrowers to the Tranche A
Collateral Agent, pursuant to which Borrowers grant the Tranche A Collateral
Agent a Lien in all or substantially all of their assets as security for the
Tranche A Obligations.

“Significant Regulatory Event” means, with respect to any Borrower, any
Subsidiary or any School, as the context may require (a) any of the following
occurrences except to the extent that any such occurrence could not reasonably
be expected to result in a Material Adverse Regulatory Change: (i) a failure of
any School to maintain its eligibility to participate in Title IV Programs
(including, without limitation, any suspension, termination or limitation of
Title IV funding); (ii) a failure of any Borrower, any Subsidiary or any School
to maintain in effect any of its Accreditations or specialized accreditations
necessary for the relevant School to conduct its operations and offer its
educational programs or for graduates of such School to take the examinations
necessary to qualify to work in the field for which they were trained or to
otherwise be licensed in such field; or (iii) a failure of any Borrower, any
Subsidiary or any School to maintain in effect its Educational Approvals; (b)
the placement of one or more Schools on the reimbursement payment method or the
heightened cash monitoring 2 payment method to the extent such School(s), in the
aggregate, received more than $5,000,000 in Title IV Program funds in the most
recently completed fiscal year; (c) the imposition of any fine, liability,
disallowance, or other sanction instituted against any Borrower, any Subsidiary
or any School by the DOE or any other Educational Agency, Consumer Protection
Agency or Governmental Authority, in an amount equal to or greater than
$2,000,000 individually or $3,000,000 in the aggregate, in each case, in any
fiscal year of Borrowers; or (d) the issuance by the DOE of Gainful Employment
Rates (in final form) that trigger the requirement for any School or Schools to
issue student warnings pursuant to the Gainful Employment Rule, with respect to
educational programs that make up more than 20% of the Student Enrollments of
all of the Schools.

“Student Enrollments” means the aggregate number, as of the last day of the most
recently completed fiscal month, of full-time and part-time students enrolled
and in attendance in all Schools pursuant to enforceable enrollment contracts or
similar agreements.

“Solvent” means, with respect to any Person as of any date of determination,
that (a) at fair valuations, the sum of such Person’s debts (including
contingent liabilities) is less than all of such Person’s assets measured on a
going concern basis, (b) such Person is not engaged or about to engage in a
business or transaction for which the remaining assets of such Person are
unreasonably small in relation to the business or transaction or for which the
property remaining with such Person is an unreasonably small capital, (c) such
Person has not incurred and does not intend to incur, or reasonably believe that
it will incur, debts beyond its ability to pay such debts as they become due
(whether at maturity or otherwise), and (d) such Person is “solvent” or not
“insolvent”, as applicable within the meaning given those terms and similar
terms under applicable laws relating to fraudulent transfers and conveyances.
For purposes herein, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability (irrespective of whether such contingent
liabilities meet the criteria for accrual under Statement of Financial
Accounting Standard No. 5).
 
Schedule 1.1 - 24

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

“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity. Unless the
context otherwise indicates, each reference to “Subsidiary” or “Subsidiaries”
shall be deemed to refer to a Subsidiary or the Subsidiaries of Parent or
Borrowers, as applicable.

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect to
such payments and all interest, penalties or similar liabilities with respect
thereto; provided, however, that Taxes shall exclude (i) any tax imposed on the
net income or net profits of any Lender or any Participant (including any branch
profits taxes), in each case imposed by the jurisdiction (or by any political
subdivision or taxing authority thereof) in which such Lender or such
Participant is organized or the jurisdiction (or by any political subdivision or
taxing authority thereof) in which such Lender’s or such Participant’s principal
office is located in each case as a result of a present or former connection
between such Lender or such Participant and the jurisdiction or taxing authority
imposing the tax (other than any such connection arising solely from such Lender
or such Participant having executed, delivered or performed its obligations or
received payment under, or enforced its rights or remedies under the Agreement
or any other Loan Document); (ii) taxes resulting from a Lender’s or a
Participant’s failure to comply with the requirements of Section 16(c) or (d) of
the Agreement, and (iii) any United States federal withholding taxes that would
be imposed on amounts payable to a Foreign Lender based upon the applicable
withholding rate in effect at the time such Foreign Lender becomes a party to
the Agreement (or designates a new lending office), except that Taxes shall
include (A) any amount that such Foreign Lender (or its assignor, if any) was
previously entitled to receive pursuant to Section 16(a) of the Agreement, if
any, with respect to such withholding tax at the time such Foreign Lender
becomes a party to the Agreement (or designates a new lending office), and (B)
additional United States federal withholding taxes that may be imposed after the
time such Foreign Lender becomes a party to the Agreement (or designates a new
lending office), as a result of a change in law, rule, regulation, order or
other decision with respect to any of the foregoing by any Governmental
Authority.

“Term Loans” means, collectively, the Tranche A Term Loan and the Tranche B Term
Loan.

“Title IV” shall mean Chapter 28, Subchapter IV of the Higher Education Act of
1965, as amended (20 U.S.C.A. §§ 1070 et seq.), and any amendments or successor
statutes thereto.
 
Schedule 1.1 - 25

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

“Title IV Letter of Credit” shall mean a letter of credit required by the DOE to
enable any Borrower, any Subsidiary or a School to satisfy the DOE's
requirements of financial responsibility necessary for its continued eligibility
to participate in the Title IV Programs.

“Title IV Programs” shall mean the federal student financial assistance programs
authorized by Title IV, including in particular those programs as listed in 34
C.F.R. § 668.1(c) or any successor regulation.

“Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement.

“Tranche A Collateral” means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by a Borrower or its Subsidiaries in or
upon which a Lien is granted by such Person in favor of the Tranche A Collateral
Agent under any of the Tranche A Collateral Documents.

“Tranche A Collateral Agent” has the meaning specified therefor in the preamble
to the Agreement.

“Tranche A Collateral Agent-Related Persons” means the Tranche A Collateral
Agent, together with its Affiliates, officers, directors, employees, attorneys,
and agents.

“Tranche A Collateral Agent’s Liens” means the Liens granted by any Borrower or
its Subsidiaries to the Tranche A Collateral Agent under the Tranche A
Collateral Documents.

“Tranche A Collateral Documents” means the Copyright Security Agreement, the
Mortgages, the Security Agreement, the Trademark Security Agreement, and each
other pledge, assignment and agreement entered into, now or in the future, by
any Borrower or any of its Subsidiaries with or in favor of the Tranche A
Collateral Agent as security for any or all of the Tranche A Obligations.

“Tranche A Commitment” means, with respect to each Tranche A Lender, its
commitment to make its Pro Rata Share of the Tranche A Term Loan on the Closing
Date and, with respect to all Tranche A Lenders, their commitments to make the
Tranche A Term Loan on the Closing Date, in each case as such Dollar amounts are
set forth beside such Tranche A Lender’s name under the applicable heading on
Schedule C-1.

“Tranche A Lender” has the meaning set forth in the preamble to the Agreement,
and shall also include any other Person made a party to the Agreement as a
Tranche A Lender pursuant to the provisions of Section 13.1 of the Agreement,
and “Tranche A Lenders” means each of the Tranche A Lenders or any one or more
of them.

“Tranche A Note” means each Tranche A Term Note executed and delivered by
Borrowers to the order of a Tranche A Lender in connection with the Tranche A
Term Loan, in form and substance reasonably satisfactory to the Tranche A
Collateral Agent.

“Tranche A Obligations” means, collectively, (a) the Tranche A Term Loan and, to
the extent relating to or arising from the Tranche A Term Loan, all principal,
interest (including any interest that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), premiums, liabilities,
obligations (including indemnification obligations), fees, Lender Group Expenses
(including any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), guaranties, and covenants
and duties of any other kind and description owing by any Borrower pursuant to
or evidenced by the Agreement or any of the other Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all other expenses or other
amounts that any Borrower is required to pay or reimburse by the Loan Documents
or by law or otherwise in connection with the Loan Documents, and (b) all other
Obligations except for Tranche B Obligations that are to be paid to and retained
by the Tranche B Lender or the Tranche B Collateral Agent. Any reference in the
Agreement or in the other Loan Documents to the Tranche A Obligations shall
include all or any portion thereof and any extensions, modifications, renewals,
or alterations thereof, both prior and subsequent to any Insolvency Proceeding.
 
Schedule 1.1 - 26

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

“Tranche A Term Loan” has the meaning specified therefor in Section 2.1 of the
Agreement.

“Tranche A Term Loan Amount” means $30,000,000.

“Tranche B Collateral” means the Cash Collateral.

“Tranche B Collateral Agent” has the meaning specified therefor in the preamble
to the Agreement.

“Tranche B Collateral Agent-Related Persons” means the Tranche B Collateral
Agent, together with its Affiliates, officers, directors, employees, attorneys,
and agents.

“Tranche B Collateral Agent’s Liens” means the Liens granted by any Borrower or
its Subsidiaries to the Tranche B Collateral Agent under the Tranche B
Collateral Documents.

“Tranche B Collateral Documents” means the Cash Collateral Security Agreement
and each other pledge, assignment and agreement entered into, now or in the
future, by any Borrower or any of its Subsidiaries with or in favor of the
Tranche B Collateral Agent with respect to the Cash Collateral as security for
any or all of the Tranche B Obligations.

“Tranche B Commitment” means, with respect to each Tranche B Lender, its
commitment to make its Pro Rata Share of the Tranche B Term Loan on the Closing
Date and, with respect to all Tranche B Lenders, their commitments to make the
Tranche B Term Loan on the Closing Date, in each case as such Dollar amounts are
set forth beside such Tranche B Lender’s name under the applicable heading on
Schedule C-1.

“Tranche B Lender” has the meaning set forth in the preamble to the Agreement,
and shall also include any other Person made a party to the Agreement as a
Tranche B Lender pursuant to the provisions of Section 13.1 of the Agreement,
and “Tranche B Lenders” means each of the Tranche B Lenders or any one or more
of them.

“Tranche B Note” means each Tranche B Term Note executed and delivered by
Borrowers to the order of a Tranche B Lender in connection with the Tranche B
Term Loan, in form and substance reasonably satisfactory to the Tranche B
Collateral Agent.

“Tranche B Obligations” means the Tranche B Term Loan and, to the extent
relating to or arising from the Tranche B Term Loan, all principal, interest
(including any interest that accrues after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding), premiums, liabilities, obligations
(including indemnification obligations), fees, Lender Group Expenses (including
any fees or expenses that accrue after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding), guaranties, and covenants and duties
of any other kind and description owing by any Borrower pursuant to or evidenced
by the Agreement or any of the other Loan Documents and irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and including all
interest not paid when due and all other expenses or other amounts that any
Borrower is required to pay or reimburse by the Loan Documents or by law or
otherwise in connection with the Loan Documents. Any reference in the Agreement
or in the other Loan Documents to the Tranche B Obligations shall include all or
any portion thereof and any extensions, modifications, renewals, or alterations
thereof, both prior and subsequent to any Insolvency Proceeding.
 
Schedule 1.1 - 27

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

“Tranche B Term Loan” has the meaning specified therefor in Section 2.1 of the
Agreement.

“Tranche B Term Loan Amount” means $15,000,000.

“United States” means the United States of America.

“Unrestricted Cash” means cash and Cash Equivalents of Borrowers that are not
subject to any Lien or restriction on the use thereof, other than (a) the
Tranche A Collateral Agent’s Liens, and (b) Liens permitted under clause (n) of
the definition of Permitted Liens, it being understood that, without limitation
of the foregoing, (i) cash and Cash Equivalents maintained in any Deposit
Account for payroll, payroll taxes and other employee wage and benefit payments
to or for Borrowers’ employees, or that is otherwise subject to any restriction
on the use thereof (such as escrow funds, deposits, and, subject to proviso
clause (c) of Section 7.1 of the Agreement, Title IV Program trust funds), shall
not constitute Unrestricted Cash, (ii) the Cash Collateral shall not constitute
Unrestricted Cash, (iii) the School Closure and Capex Cash Collateral shall not
constitute Unrestricted Cash, and (iv) cash deposits securing reimbursement
obligations of Borrowers and their Subsidiaries with respect to Permitted
Letters of Credit shall not constitute Unrestricted Cash.

“Voidable Transfer” has the meaning specified therefor in Section 17.7 of the
Agreement.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
 
Schedule 1.1 - 28

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

Schedule 3.1

The obligation of each Lender to make its initial extension of credit provided
for in the Agreement is subject to the fulfillment, to the satisfaction of each
Lender (the making of such initial extension of credit by any Lender being
conclusively deemed to be its satisfaction or waiver of the following), of each
of the following conditions precedent:

(a)           the Closing Date shall occur on or before July 31, 2015;

(b)           the Tranche A Collateral Agent shall have received a letter duly
executed by each Borrower authorizing the Tranche A Collateral Agent to file
appropriate financing statements in such office or offices as may be necessary
or, in the opinion of the Tranche A Collateral Agent, desirable to perfect the
security interests to be created by the Tranche A Collateral Documents;

(c)           the Tranche A Collateral Agent shall have received evidence that
appropriate financing statements have been duly filed in such office or offices
as may be necessary or, in the opinion of the Tranche A Collateral Agent,
desirable to perfect the Tranche A Collateral Agent’s Liens in and to the
Tranche A Collateral, and the Tranche A Collateral Agent shall have received
searches reflecting the filing of all such financing statements;

(d)           Administrative Agent shall have received each of the following
documents, in form and substance satisfactory to Administrative Agent, duly
executed, and each such document shall be in full force and effect:

(i)            the Notes,

(ii)           the Security Agreement, the Copyright Security Agreement and the
Trademark Security Agreement,

(iii)          the Cash Collateral Security Agreement and a Control Agreement
with respect to the Cash Collateral Account,

(iv)          a Control Agreement with respect to the School Closure and Capex
Cash Collateral Account;

(v)           a Control Agreement with respect to Lincoln Technical Institute’s
concentration account maintained at Bank of America,

(vi)          the Mortgages,

(vii)         a letter, in form and substance satisfactory to Administrative
Agent, from Bank of America, N.A. to Administrative Agent respecting the amount
necessary to repay in full all of the obligations of each Borrower and its
Subsidiaries owing under the Existing Credit Facility and obtain a release of
all of the Liens existing in favor of Bank of America, N.A. in and to the assets
of each Borrower and its Subsidiaries (other than Permitted Liens in cash with
respect to Permitted Letters of Credit), together with termination statements
and other documentation evidencing the termination by Bank of America, N.A. of
its Liens in and to the properties and assets of each Borrower and its
Subsidiaries,
 
Schedule 3.1 - 1

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

(viii)        a disbursement letter executed and delivered by Administrative
Borrower to Administrative Agent regarding the extensions of credit to be made
on the Closing Date, the form and substance of which is satisfactory to
Administrative Agent, and

(ix)           Collateral Access Agreements with respect to the following
locations: 8317 W. North Ave., Melrose Park, IL 60160; 70-82 McKee Drive,
Mahwah, NJ; 9325 Snowden River Parkway, Columbia, Maryland 21046; 15-30 Petracca
Place, Whitestone, NY 11357; 1315 Gallatin Road, Nashville, TN 37238; 1003
Douglas Avenue, Bldg. 3, Nashville, TN; 2279 Mount Vernon Road, Southington, CT
06489; 200 Executive Drive, Suite 340, West Orange, NJ

(e)           Administrative Agent shall have received a certificate from the
Secretary of each Borrower (i) attesting to the resolutions of such Borrower’s
Board of Directors (or comparable governing body) authorizing its execution,
delivery, and performance of this Agreement and the other Loan Documents to
which such Borrower is a party, (ii) authorizing specific officers of such
Borrower to execute the same, and (iii) attesting to the incumbency and
signatures of such specific officers of such Borrower;

(f)           Administrative Agent shall have received copies of each Borrower’s
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;

(g)           Administrative Agent shall have received a certificate of status
with respect to each Borrower, dated within 30 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;

(h)           Administrative Agent shall have received certificates of status
with respect to each Borrower, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Borrower) in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that such Borrower is in good standing
in such jurisdictions;

(i)           Administrative Agent shall have received certificates of
insurance, together with the endorsements thereto, as are required by Section
5.6, the form and substance of which shall be satisfactory to Administrative
Agent;

(j)           Administrative Agent shall have received opinions of Borrowers’
primary and local counsels in form and substance satisfactory to Administrative
Agent;

(k)           Administrative Agent shall have received an opinion of Borrowers’
regulatory counsel in form and substance satisfactory to Administrative Agent;

(l)           Administrative Agent shall have completed its business, legal, and
collateral due diligence;

(m)           Administrative Agent shall have completed (i) Patriot Act
searches, OFAC/PEP searches and customary individual background checks for each
Borrower, and (ii) OFAC/PEP searches and customary individual background
searches for each Borrower’s senior management and key principals, in each case,
the results of which shall be satisfactory to Administrative Agent;
 
Schedule 3.1 - 30

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

(n)           Administrative Agent shall have received a set of Projections of
Borrowers for the fiscal years 2015 and 2016, in form and substance (including
as to scope and underlying assumptions) satisfactory to Administrative Agent;

(o)           Administrative Agent shall have received evidence satisfactory to
it that Unrestricted Cash shall be equal to or greater than $2,000,000 (which
amount shall be equal to or greater than $10,000,000 upon the funding of the
Term Loans on the Closing Date), with all accounts payable, leases,
Indebtedness, taxes and other obligations of Borrowers and their Subsidiaries
current (excluding any of the foregoing that are subject to a good faith
dispute)

(p)           Borrowers shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;

(q)           Administrative Agent shall have received appraisals of the Real
Property Collateral (other than the Ohio Real Property Collateral) satisfactory
to Administrative Agent, together with reliance letters expressly entitling
Administrative Agent to rely on such appraisals;

(r)           Administrative Agent shall have received a phase-I environmental
report with respect to the Real Property Collateral located at (i) 11194 E. 45th
Avenue, Denver, Colorado 80223, (ii) 1524 Gallatin Road, Nashville, Tennessee
37206, (iii) 2400 Metrocentre Boulevard, West Palm Beach, Florida 33407, (iv)
2410 Metrocentre Boulevard, West Palm Beach, Florida 33407 and (v) 1126 53rd
Court North, Mangonia Park, Florida 33407, from environmental consultants
acceptable to Administrative Agent and with a scope and results thereof
acceptable to Administrative Agent, together with reliance letters expressly
entitling Administrative Agent to rely on such reports;

(s)           the Tranche A Collateral Agent shall have received (i) mortgagee
title insurance policies (or marked commitments to issue the same) for the Real
Property Collateral (other than the Ohio Real Property Collateral) issued by a
title insurance company satisfactory to the Tranche A Collateral Agent (each a
“Mortgage Policy” and, collectively, the “Mortgage Policies”) in amounts
satisfactory to the Tranche A Collateral Agent assuring the Tranche A Collateral
Agent that the Mortgages on such Real Property Collateral are valid and
enforceable first priority mortgage Liens on such Real Property Collateral free
and clear of all defects and encumbrances except Permitted Liens, and the
Mortgage Policies otherwise shall be in form and substance satisfactory to the
Tranche A Collateral Agent, and (ii) an attorney’s title report confirming that
the Ohio Real Property Collateral is free and clear of all defects and
encumbrances except Permitted Liens;

(t)           Administrative Agent shall have received a real estate survey with
respect to each parcel of the Real Property Collateral (other than the Ohio Real
Property Collateral), from surveyors acceptable to Administrative Agent and with
a scope and results thereof acceptable to Administrative Agent;

(u)           Administrative Agent shall have received such additional items
with respect to the Real Property Collateral as Administrative Agent may
reasonably require, including local counsel opinions and evidence that the Real
Property Collateral is not located in a flood zone;

(v)           Borrowers and each of their Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrowers or their
Subsidiaries of the Loan Documents or with the consummation of the transactions
contemplated thereby;
 
Schedule 3.1 - 31

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

(w)           the representations and warranties of each Borrower and their
Subsidiaries contained in this Agreement or in the other Loan Documents shall be
true and correct in all material respects on and as of the Closing Date, as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date);

(x)           no Default or Event of Default shall have occurred and be
continuing on the Closing Date, nor shall either result from the making thereof;
and

(y)           all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Administrative
Agent.
 
 
Schedule 3.1 - 32
 

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