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                                                                   EXHIBIT 10.16

                                    AGREEMENT


                                                March 19, 2003

                  The parties to this Agreement (this "Agreement") are Robert P.
Gioella ("Mr. Gioella") and Education Management Corporation, a Pennsylvania
corporation (the "Company"). Mr. Gioella currently serves as President and Chief
Operating Officer of the Company pursuant to an Employment Agreement, dated as
of September 8, 1999 (as amended, the "Employment Agreement"). Capitalized terms
not otherwise defined in this Agreement shall have the respective meanings given
to such terms in the Employment Agreement. Mr. Gioella desires to resign from
the Company and all of its direct and indirect subsidiaries in order to pursue
other business opportunities. The parties, intending to be legally bound, agree
as follows:

                  1. Resignation from Employment. Mr. Gioella hereby resigns as
an employee, officer, director and member of any committee of the Company and
all of its direct and indirect subsidiaries effective March 31, 2003 (the
"Separation Date"). The Company, on its behalf and on behalf of its direct and
indirect subsidiaries, accepts Mr. Gioella's resignation, notwithstanding the
notice requirements of the Employment Agreement. Notwithstanding such
resignation, Mr. Gioella shall serve as a part-time consultant to the Company
during the period from the Separation Date through November 30, 2003 (the
"Completion Date"), during which period he shall perform such consulting
services as the Company may reasonably request from time to time. Mr. Gioella
shall receive no compensation for such consulting services other than the
payments and benefits set forth in Section 2. If requested by the Company,
promptly following the Completion Date, Mr. Gioella shall execute a further
release of claims in substantially the form of the release contained in Section
5 of this Agreement and if Mr. Gioella fails or otherwise refuses to execute
such a release within a reasonable time after the Company's request to do so,
Mr. Gioella will not be entitled to any further payments and benefits provided
under this Agreement and the Company shall have no further obligations with
respect to such payments and benefits.

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                  2. Benefits Upon Separation from Employment. In connection
with the termination of his employment, Mr. Gioella shall be entitled to the
following:

                     (a)       Mr. Gioella shall be entitled to receive payment
                               of his Accrued Obligations, that amount being
                               payable in a single lump sum cash payment within
                               thirty (30) days of the Separation Date.

                     (b)       The Company shall pay to Mr. Gioella a cash
                               amount equal to the sum of (1) one-twelfth (1/12)
                               of his Base Salary at the highest rate in effect
                               at any time during the twelve (12)-month period
                               prior to the Separation Date, and (2) one-twelfth
                               (1/12) of his Average Bonus, that total amount
                               being payable in each of the twelve (12) months
                               following March 2003 (such twelve (12)-month
                               period being hereinafter referred to as the
                               "Payment Period").

                     (c)       During the Payment Period, Mr. Gioella shall be
                               entitled to all welfare benefits, including (to
                               the extent applicable) medical, dental, vision,
                               life and disability benefits pursuant to plans
                               maintained by the Company under which the Mr.
                               Gioella and/or his family is eligible to receive
                               benefits and/or coverage, with such benefits
                               provided to Mr. Gioella at no less than the same
                               coverage level as in effect as of the Separation
                               Date and Mr. Gioella shall pay any portion of
                               such cost as was required to be borne by key
                               executives of the Company generally on the
                               Separation Date; provided, however, that,
                               notwithstanding the foregoing, the welfare
                               benefits described above may be discontinued
                               prior to the end of the Payment Period to the
                               extent, but only to the extent, that Mr. Gioella
                               receives substantially similar benefits from a
                               subsequent employer.

                     (d)       Mr. Gioella shall be entitled to key executive
                               outplacement services in accordance with Company
                               policies for senior executives as in effect on
                               the Separation Date (or, at the request of Mr.
                               Gioella, a lump sum payment in lieu thereof, in
                               an amount determined by the Company to be equal
                               to the estimated cost of those services).

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                     (e)       Notwithstanding any provisions of any applicable
                               stock option plan and agreement(s) to the
                               contrary, and, to the extent necessary, any such
                               plan and agreement(s) are hereby amended such
                               that, any stock options held by the Mr. Gioella
                               as of the Separation Date, to the extent those
                               options were not forfeited under the terms of the
                               applicable plan and agreement(s) prior to the
                               Separation Date, that are not yet vested as of
                               the Separation Date pursuant to the vesting
                               schedule applicable to such options, shall
                               continue to vest pursuant to the vesting schedule
                               applicable to such options until the Completion
                               Date and such options, whether vested or
                               unvested, shall terminate upon the first
                               anniversary of the Separation Date; provided,
                               however, that the stock options granted by the
                               Company to the Executive on September 10, 1998
                               and held by the Executive as of the Separation
                               Date shall terminate ninety (90) days after the
                               Separation Date.

                     (f)       Mr. Gioella shall continue to be entitled to the
                               benefits of the indemnification provisions
                               applicable to officers of the Company under the
                               Company's By-laws.

                     (g)       The Company shall continue to provide, at the
                               Company's expense, all of the equipment located
                               in and services associated with Mr. Gioella's
                               home office for the duration of the Payment
                               Period, including virtual private network charges
                               and telecommunication charges. At the end of the
                               Payment Period, Mr. Gioella will be the sole and
                               exclusive owner of all equipment provided by
                               Company for his home office.

         If, following the Separation Date Mr. Gioella engages, without the
prior written consent of the Company, in any activities that would have violated
any of the covenants in Section 8.3 of the Employment Agreement
[Non-Competition], had those covenants been applicable, Mr. Gioella shall have
no further right or claim to any payments and benefits set forth in this Section


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2, other than any Accrued Obligations and the stock option vesting set forth in
subsection (e) above, from and after the date on which Mr. Gioella engages in
such activities and the Company shall have no further obligations with respect
to such payments and benefits.

         Except as expressly provided above, Mr. Gioella waives any
compensation, benefits or rights that may have accrued in his capacity as an
employee or otherwise prior to the date of this Agreement and shall not be
entitled to receive any salary or benefits or participate in any compensation
plans, programs or arrangements of the Company (including the Management
Incentive Compensation Plan) after the Separation Date.

                  3. Consulting and Cooperation. During the Payment Period, Mr.
Gioella shall, if requested by the Company from time to time, consult and
cooperate with the Company and its representatives and otherwise assist the
Company with regard to any business matters currently within the scope of his
employment with the Company; provided, however, that the Company shall take
reasonable measures to ensure that such obligations of Mr. Gioella do not
interfere with any employment opportunities or responsibilities of Mr. Gioella
during such period. Prior to the issuance of a press release with respect to Mr.
Gioella's resignation, the Company will give Mr. Gioella an opportunity to
review the press release, but the final content of the press release will be in
the sole and absolute discretion of the Company.

                  4. Restrictive Covenants. Following the Separation Date, Mr.
Gioella shall continue to be subject to the restrictive covenants set forth in
Section 8 of the Employment Agreement except that he shall be released from any
obligations under Section 8.3 [Non-Competition] of the Employment Agreement. Mr.
Gioella agrees that he will not make, publish or disseminate any derogatory
statements or comments, whether orally or in writing, about the Company or its
officers or directors, or take any action that a reasonable person would expect,
directly or indirectly, to impair the goodwill, business reputation or good name
of any of them. The Company agrees that it will use reasonable efforts to ensure
that its directors and executive officers will not make, publish or disseminate
any derogatory statements or comments, whether orally or in writing, about Mr.
Gioella, or take any action that a reasonable person would expect, directly or
indirectly, to impair his goodwill, business reputation or good name.


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                  5. Acknowledgment and Release. Mr. Gioella acknowledges that
the benefits he is to receive pursuant to this Agreement shall be in full
satisfaction of all claims (whether asserted or unasserted), if any, against or
with respect to the Company, its subsidiaries and other affiliates, and their
respective stockholders, directors, officers, employees and agents, past and
present. Except for the obligations of the respective parties under this
Agreement (including the restrictive covenant obligations referred to in Section
4), each of Mr. Gioella, on the one hand, and the Company, on the other hand,
does, for himself or itself, and his or its heirs, personal representatives,
successors and assigns, hereby irrevocably release, promise, quitclaim and
discharge the Company, its subsidiaries and other affiliates, their respective
stockholders, directors, officers, employees and agents, past and present, and
the Company's predecessors, successors and attorneys, in the case of Mr.
Gioella, and Mr. Gioella and his heirs and personal representatives, in the case
of the Company, of and from any and all manner of actions, causes of action,
claims, suits, debts, dues, sums of money, controversies, agreements, promises
and demands whatsoever, both at law and in equity, which he or the Company,
respectively, now has or ever had or may in the future have, for, upon, or by
reason of any matter, cause or thing whatsoever on or before the Separation Date
for, on account of or arising out of any transactions or events that have
occurred prior to the Separation Date; provided, however, that this release
shall not apply to any claim that arises out of or is otherwise related to any
fraudulent act committed by Mr. Gioella or any criminal act for which Mr.
Gioella is convicted or otherwise pleads no contest or any similar plea that is
the equivalent of a guilty plea. This release is for any relief no matter how
called, including, but not limited to, wages, back pay, front pay, stock or
other equity compensation, debt repayment, compensatory damages, liquidated
damages, punitive damages, damages for pain or suffering, costs, attorneys' fees
and expenses and claims to be reinstated to employment with the Company. Mr.
Gioella represents that he has carefully read the foregoing release, that he has
had the opportunity to have an attorney explain to him the terms of the
foregoing release, that he accepts full responsibility and consequences of his
action or nonaction in this regard, that he knows and understands the content of
this Agreement, that he executes this Agreement knowingly and voluntarily as his
own free act and deed, that the terms of this Agreement are totally satisfactory
and thoroughly understood by him, and that this Agreement was freely negotiated
and entered into without fraud, duress or coercion.

                  6. Assignment; Successors; Binding Agreement. This Agreement
may not be assigned by either party, whether by operation of law or otherwise,
without the prior written

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consent of the other party, except that any right, title or interest of the
Company arising out of this Agreement may be assigned to any corporation or
entity controlling, controlled by, or under common control with the Company, or
succeeding to the business and substantially all of the assets of the Company or
any affiliates for which Mr. Gioella performed substantial services; provided,
however, that no such assignment shall relieve the Company of its obligations
hereunder without the express written consent of Mr. Gioella. Subject to the
foregoing, this Agreement shall be binding upon and shall inure to the benefit
of the parties and their respective heirs, legatees, devisees, personal
representatives, successors and assigns.

                  7. Modification and Waiver. No provision of this Agreement may
be modified, waived, or discharged unless such waiver, modification or discharge
is duly approved by the Board of Directors of the Company and is agreed to in
writing by Mr. Gioella and such officer(s) as may be specifically authorized by
the Board of Directors of the Company to effect it. No waiver by any party of
any breach by any other party of, or of compliance with, any term or condition
of this Agreement to be performed by any other party, at any time, shall
constitute a waiver of similar or dissimilar terms or conditions at that time or
at any prior or subsequent time.

                  8. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania other than the conflict of laws provision thereof.

                  9. Arbitration. In the event of any dispute, controversy or
claim between the Company and Mr. Gioella arising out of or relating to the
interpretation, application or enforcement of any provision of this Agreement
(other than with respect to restrictive covenant provisions discussed under
Section 4), either the Company or Mr. Gioella may, by written notice to the
other, require such dispute or difference to be submitted to arbitration. The
arbitrator or arbitrators shall be selected by agreement of the parties or, if
they do not agree on an arbitrator or arbitrators within 30 days after one party
has notified the other of his or its desire to have the question settled by
arbitration, then the arbitrator or arbitrators shall be selected by the
American Arbitration Association (the "AAA") in Pittsburgh, Pennsylvania. The
determination reached in such arbitration shall be final and binding on all
parties without any right of appeal or further dispute. Execution of the
determination by such arbitrator may be sought in any court of

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competent jurisdiction. The arbitrators shall not be bound by judicial
formalities and may abstain from following the strict rules of evidence and
shall interpret this Agreement as an honorable engagement and not merely as a
legal obligation. Unless otherwise agreed by the parties, any such arbitration
shall take place in Pittsburgh, Pennsylvania, and shall be conducted in
accordance with the Commercial Arbitration Rules of the AAA.

                  10. Consent to Jurisdiction and Service of Process. In the
event of any dispute, controversy or claim between the Company and Mr. Gioella
arising out of or relating to the interpretation, application or enforcement of
the provisions of Section 4 or Section 9, the Company and Mr. Gioella agree and
consent to the personal jurisdiction of the Court of Common Pleas for Allegheny
County, Pennsylvania and/or the United States District Court for the Western
District of Pennsylvania for resolution of the dispute, controversy or claim,
and that those courts, and only those courts, shall have exclusive jurisdiction
to determine any dispute, controversy or claim related to, arising under or in
connection with Section 4. The Company and Mr. Gioella also agree that those
courts are convenient forums for the parties to any such dispute, controversy or
claim and for any potential witnesses and that process issued out of any such
court or in accordance with the rules of practice of that court may be served by
mail or other forms of substituted service to the Company at the address of its
principal executive offices and to Mr. Gioella at his or her last known address
as reflected in the Company's records.

                  11. Withholding of Taxes. The Company shall withhold from any
amounts payable under the Agreement all Federal, state, local or other taxes as
legally shall be required to be withheld.

                  12. Notices. Any and all notices under this Agreement shall be
in writing and shall be deemed to have been duly given or made for all purposes
if hand delivered, sent by a nationally recognized overnight courier or sent by
telephone facsimile transmission (confirmation of receipt requested), as
follows:

If to the Company, to it at:

                           210 Sixth Avenue
                           Pittsburgh, PA  15222
                           Attention:  Frederick W. Steinberg
                           FAX:  (412) 471-2954

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If to Mr. Gioella, to him at:

                           157 Bittersweet Circle
                           Venetia, PA  15367

or at such other address or fax number as any party specifies by notice given to
the other party in accordance with this Section 6. The date of giving of or
making notice shall be deemed to be the date of hand delivery, the date sent by
telephone facsimile transmission, or the day after delivery to an overnight
courier service.

                  13. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.

                  14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.

                  15. Headings. The headings used in this Agreement are for
convenience only, do not constitute a part of the Agreement, and shall not be
deemed to limit, characterize, or affect in any way the provisions of the
Agreement, and all provisions of the Agreement shall be construed as if no
headings had been used in the Agreement.

                  16. Construction. As used in this Agreement, unless the
context otherwise requires: (a) the terms defined herein shall have the meanings
set forth herein for all purposes; (b) references to "Section" are to a section
hereof; (c) all "Schedules" referred to herein are incorporated herein by
reference and made a part hereof; (d) "include," "includes" and "including" are
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import; (e) "writing," "written" and
comparable terms refer to printing, typing, lithography and other means of
reproducing words in a visible form; (f) "hereof," "herein," "hereunder" and
comparable terms refer to the entirety of this Agreement and not to any
particular section or other subdivision hereof or attachment hereto; (g)
references to

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any gender include references to all genders; and (h) references to any
agreement or other instrument or statute or regulation are referred to as
amended or supplemented from time to time (and, in the case of a statute or
regulation, to any successor provision).

                  17. Complete Agreement. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter, supersedes all
prior agreements and understandings with respect to such subject matter, and may
be terminated or amended only by a writing signed by all of the parties to this
Agreement. The Employment Agreement shall be terminated as of the Separation
Date except to the extent expressly provided in this Agreement.

                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.

                                             EDUCATION MANAGEMENT CORPORATION


                                             By: /s/ Robert B. Knutson
                                                 ---------------------
                                                   Robert B. Knutson
                                                   Chief Executive Officer


                                                 /s/ Robert P. Gioella
                                                 ---------------------
                                                   Robert P. Gioella

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