ex10_22.htm


    
      

    

    EXHIBIT
10.22

    
      


       

      
 

      
        
          

        



      


      STOCK
PURCHASE AGREEMENT

      


      

        
          

        

      

      


      


      among

      


      LINCOLN
TECHNICAL INSTITUTE, INC.,

      


      


      NN
ACQUISITION, LLC,

      


      


      BRAD
BARAN,

      


      


      UGP
EDUCATION PARTNERS, LLC,

      


      


      MERION
INVESTMENT PARTNERS, L.P.

      


      


      and, for
certain limited purposes only,

      


      


      UGPE
PARTNERS, INC.

      


      


      
        
          

        



      


      Dated as
of January 20, 2009


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      TABLE
OF CONTENTS

      


      Page

      
        
          	
                  ARTICLE
      I

                	
                  DEFINITIONS

                	 
      
	
                   

                	 	 
	
                  Section
      1.01

                	
                  Certain
      Defined Terms

                	
                  1

                
	
                  Section
      1.02

                	
                  Definitions

                	
                  11

                
	
                  Section
      1.03

                	
                  Interpretation
      and Rules of Construction

                	
                  12

                
	 	 	 
	
                  ARTICLE
      II

                	
                  PURCHASE
      AND SALE

                	 
      
	 	 	 
	
                  Section
      2.01

                	
                  Purchase
      and Sale of the Shares

                	
                  13

                
	
                  Section
      2.02

                	
                  Purchase
      Price

                	
                  13

                
	
                  Section
      2.03

                	
                  Closing

                	
                  13

                
	
                  Section
      2.04

                	
                  Deliveries
      by the Sellers

                	
                  13

                
	
                  Section
      2.05

                	
                  Deliveries
      by the Purchaser

                	
                  14

                
	
                  Section
      2.06

                	
                  Adjustment
      of Purchase Price

                	
                  15

                
	
                  Section
      2.07

                	
                  Escrow

                	
                  17

                
	
                  Section
      2.08

                	
                  Withholding

                	
                  17

                
	 	 	 
	
                  ARTICLE
      III

                	
                  REPRESENTATIONS
      AND WARRANTIES OF THE SELLERS AND UGPE

                	 
      
	 	 	 
	
                  Section
      3.01

                	
                  Organization,
      Authority and Qualification

                	
                  17

                
	
                  Section
      3.02

                	
                  Subsidiaries

                	
                  20

                
	
                  Section
      3.03

                	
                  Capitalization

                	
                  20

                
	
                  Section
      3.04

                	
                  No
      Conflict

                	
                  21

                
	
                  Section
      3.05

                	
                  Governmental
      Consents and Approvals

                	
                  21

                
	
                  Section
      3.06

                	
                  Financial
      Information; Books and Records; No Undisclosed Liabilities

                	
                  22

                
	
                  Section
      3.07

                	
                  Receivables

                	
                  23

                
	
                  Section
      3.08

                	
                  Conduct
      in the Ordinary Course; Absence of Certain Changes, Events and
      Conditions

                	
                  23

                
	
                  Section
      3.09

                	
                  Litigation

                	
                  26

                
	
                  Section
      3.10

                	
                  Compliance
      with Laws

                	
                  26

                
	
                  Section
      3.11

                	
                  Environmental
      and Other Permits and Licenses; Related Matters

                	
                  26

                
	
                  Section
      3.12

                	
                  No
      Preferential Rights

                	
                  28

                
	
                  Section
      3.13

                	
                  Material
      Contracts

                	
                  28

                
	
                  Section
      3.14

                	
                  Intellectual
      Property

                	
                  30

                
	
                  Section
      3.15

                	
                  Real
      Property

                	
                  31

                
	
                  Section
      3.16

                	
                  Tangible
      Personal Property

                	
                  33

                
	
                  Section
      3.17

                	
                  Employee
      Benefit Matters

                	
                  33

                
	
                  Section
      3.18

                	
                  Labor
      Matters

                	
                  35

                
	
                  Section
      3.19

                	
                  Assets

                	
                  36

                
	
                  Section
      3.20

                	
                  Student
      Lists

                	
                  36

                
	
                  Section
      3.21

                	
                  Student
      Financial Records

                	
                  37

                
	
                  Section
      3.22

                	
                  Certain
      Interests

                	
                  37

                
	
                  Section
      3.23

                	
                  Taxes

                	
                  37

                
	
                  Section
      3.24

                	
                  Insurance

                	
                  38

                
	
                  Section
      3.25

                	
                  Educational
      Approvals

                	
                  39

                


        

      

      
      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
          
            
              
                
                  
                  

                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Section
      3.26

                                        	
                                          Compliance
      with Educational Laws

                                        	
                                          39

                                        
	
                                          Section
      3.27

                                        	
                                          Employees

                                        	
                                          47

                                        
	
                                          Section
      3.28

                                        	
                                          Certain
      Business Practices

                                        	
                                          47

                                        
	
                                          Section
      3.29

                                        	
                                          Brokers

                                        	
                                          48

                                        
	
                                          Section
      3.30

                                        	
                                          No
      Other Representations

                                        	
                                          48

                                        
	
                                           

                                        	 	 
	
                                          ARTICLE
      IV

                                        	
                                          REPRESENTATIONS
      AND WARRANTIES OF PARENT AND THE PURCHASER

                                        	 
      
	 	 	 
	
                                          Section
      4.01

                                        	
                                          Organization,
      Authorization and Qualification of the Parent and the
      Purchaser

                                        	
                                          48

                                        
	
                                          Section
      4.02

                                        	
                                          No
      Conflict

                                        	
                                          49

                                        
	
                                          Section
      4.03

                                        	
                                          Governmental
      Consents and Approvals

                                        	
                                          50

                                        
	
                                          Section
      4.04

                                        	
                                          Litigation

                                        	
                                          50

                                        
	
                                          Section
      4.05

                                        	
                                          Financing

                                        	
                                          50

                                        
	
                                          Section
      4.06

                                        	
                                          Brokers

                                        	
                                          50

                                        
	
                                          Section
      4.07

                                        	
                                          No
      Other Representations

                                        	
                                          50

                                        
	 	 	 
	
                                          ARTICLE
      V

                                        	
                                          ADDITIONAL
      AGREEMENTS

                                        	 
      
	 	 	 
	
                                          Section
      5.01

                                        	
                                          Conduct
      of Business Prior to the Closing

                                        	
                                          50

                                        
	
                                          Section
      5.02

                                        	
                                          Access
      to Information

                                        	
                                          51

                                        
	
                                          Section
      5.03

                                        	
                                          Regulatory
      and Other Authorizations; Notices and Consents

                                        	
                                          52

                                        
	
                                          Section
      5.04

                                        	
                                          Notice
      of Developments

                                        	
                                          53

                                        
	
                                          Section
      5.05

                                        	
                                          No
      Solicitation or Negotiation

                                        	
                                          54

                                        
	
                                          Section
      5.06

                                        	
                                          Use
      of Intellectual Property

                                        	
                                          54

                                        
	
                                          Section
      5.07

                                        	
                                          Intercompany
      Arrangements

                                        	
                                          54

                                        
	
                                          Section
      5.08

                                        	
                                          Payments
      on Behalf of Affiliates

                                        	
                                          54

                                        
	
                                          Section
      5.09

                                        	
                                          Employees

                                        	
                                          55

                                        
	
                                          Section
      5.10

                                        	
                                          Non-Competition

                                        	
                                          55

                                        
	
                                          Section
      5.11

                                        	
                                          Payment
      Obligations

                                        	
                                          55

                                        
	
                                          Section
      5.12

                                        	
                                          Reimbursement
      of Restricted Cash

                                        	
                                          55

                                        
	
                                          Section
      5.13

                                        	
                                          Preferred
      Stock

                                        	
                                          56

                                        
	
                                          Section
      5.14

                                        	
                                          UGPE
      Guarantee

                                        	
                                          56

                                        
	
                                          Section
      5.15

                                        	
                                          December
      31, 2008 Financials

                                        	
                                          56

                                        
	
                                          Section
      5.16

                                        	
                                          Further
      Action

                                        	
                                          56

                                        
	 	 	 
	
                                          ARTICLE
      VI

                                        	
                                          TAX
      MATTERS

                                        	 
      
	 	 	 
	
                                          Section
      6.01

                                        	
                                          Indemnity

                                        	
                                          56

                                        
	
                                          Section
      6.02

                                        	
                                          Returns
      and Payments

                                        	
                                          57

                                        
	
                                          Section
      6.03

                                        	
                                          Refunds

                                        	
                                          58

                                        
	
                                          Section
      6.04

                                        	
                                          Contests

                                        	
                                          58

                                        
	
                                          Section
      6.05

                                        	
                                          Time
      of Payment

                                        	
                                          59

                                        
	
                                          Section
      6.06

                                        	
                                          Tax
      Cooperation and Exchange of Information

                                        	
                                          59

                                        
	
                                          Section
      6.07

                                        	
                                          Conveyance
      Taxes

                                        	
                                          60

                                        
	
                                          Section
      6.08

                                        	
                                          Amended
      Tax Returns

                                        	
                                          60

                                        
	
                                          Section
      6.09

                                        	
                                          Tax
      Covenants

                                        	
                                          61

                                        
	
                                          Section
      6.10

                                        	
                                          Miscellaneous

                                        	
                                          61

                                        


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
      

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      
        
          
            
              
                
                  
                    
                    

                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	
                                                ARTICLE
      VII

                                              	
                                                CONDITIONS
      TO CLOSING

                                              	 
      
	
                                                 

                                              	 	 
	
                                                Section
      7.01

                                              	
                                                Conditions
      to Obligations of the Sellers

                                              	
                                                62

                                              
	
                                                Section
      7.02

                                              	
                                                Conditions
      to Obligations of the Parent and the Purchaser

                                              	
                                                62

                                              
	 	 	 
	
                                                ARTICLE
      VIII

                                              	
                                                INDEMNIFICATION

                                              	 
      
	 	 	 
	
                                                Section
      8.01

                                              	
                                                Survival
      of Representations and Warranties

                                              	
                                                63

                                              
	
                                                Section
      8.02

                                              	
                                                Indemnification
      by the Sellers

                                              	
                                                64

                                              
	
                                                Section
      8.03

                                              	
                                                Indemnification
      by the Parent and the Purchaser

                                              	
                                                65

                                              
	
                                                Section
      8.04

                                              	
                                                Limits
      on Indemnification

                                              	
                                                65

                                              
	
                                                Section
      8.05

                                              	
                                                Indemnification
      Procedures

                                              	
                                                66

                                              
	
                                                Section
      8.06

                                              	
                                                Distributions
      from Escrow Account

                                              	
                                                67

                                              
	
                                                Section
      8.07

                                              	
                                                Sellers’
      Representative

                                              	
                                                67

                                              
	 	 	 
	
                                                ARTICLE
      IX

                                              	
                                                TERMINATION,
      AMENDMENT AND WAIVER

                                              	 
      
	 	 	 
	
                                                Section
      9.01

                                              	
                                                Termination

                                              	
                                                69

                                              
	
                                                Section
      9.02

                                              	
                                                Effect
      of Termination

                                              	
                                                70

                                              
	
                                                Section
      9.03

                                              	
                                                Amendment

                                              	
                                                70

                                              
	
                                                Section
      9.04

                                              	
                                                Waiver

                                              	
                                                70

                                              
	 	 	 
	
                                                ARTICLE
      X

                                              	
                                                GENERAL
      PROVISIONS

                                              	 
      
	 	 	 
	
                                                Section
      10.01

                                              	
                                                Expenses

                                              	
                                                70

                                              
	
                                                Section
      10.02

                                              	
                                                Notices

                                              	
                                                70

                                              
	
                                                Section
      10.03

                                              	
                                                Public
      Announcements

                                              	
                                                72

                                              
	
                                                Section
      10.04

                                              	
                                                Severability

                                              	
                                                72

                                              
	
                                                Section
      10.05

                                              	
                                                Entire
      Agreement

                                              	
                                                72

                                              
	
                                                Section
      10.06

                                              	
                                                Assignment

                                              	
                                                73

                                              
	
                                                Section
      10.07

                                              	
                                                No
      Third Party Beneficiaries

                                              	
                                                73

                                              
	
                                                Section
      10.08

                                              	
                                                Governing
      Law

                                              	
                                                73

                                              
	
                                                Section
      10.09

                                              	
                                                Waiver
      of Jury Trial

                                              	
                                                73

                                              
	
                                                Section
      10.10

                                              	
                                                Specific
      Performance

                                              	
                                                73

                                              
	
                                                Section
      10.11

                                              	
                                                Headings

                                              	
                                                73

                                              
	
                                                Section
      10.12

                                              	
                                                Counterparts

                                              	
                                                74

                                              
	
                                                Section
      10.13

                                              	
                                                Exhibits
      and Disclosure Schedule

                                              	
                                                74

                                              


                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      


      Exhibits

      Exhibit A
– Form of Assignment of Lease

      Exhibit B
– Form of General Release


      
        
           


        

        
          iii

          
            

          

        

        
           


        

      


      STOCK
PURCHASE AGREEMENT (this “Agreement”), dated as
of  January 20, 2009, among LINCOLN TECHNICAL INSTITUTE, INC., a New Jersey
corporation (the “Parent”), NN
ACQUISITION, LLC, a Delaware limited liability company and wholly owned
subsidiary of the Parent (the “Purchaser”), BRAD
BARAN (“Baran”)
UGP EDUCATION PARTNERS, LLC, a Delaware limited liability company (“UGP”), MERION
INVESTMENT PARTNERS, L.P., a Delaware limited partnership (“Merion”; each of
Baran, UGP and Merion, a “Seller” and
collectively, the “Sellers”), and, for
certain limited purposes only, UGPE PARTNERS, INC., a Delaware corporation
(“UGPE”).

      


      WHEREAS,
the Sellers own 100% of the issued and outstanding shares (the “Shares”) of common
stock, $0.01 par value per share (the “Clemens Common
Stock”), of Hospitality Acquisition Corporation (dba Clemens College), a
Connecticut corporation (the “Company”);

      


      WHEREAS,
the Company owns and operates a post-secondary educational institution in
Connecticut with one campus located in Suffield, Connecticut (the “Institution”), that
is engaged in the business of providing educational services with respect to,
among other things, hospitality management and culinary arts management (the
“Business”);

      


      WHEREAS,
the Sellers wish to sell to the Purchaser, and the Purchaser wishes to purchase
from the Sellers, the Shares, upon the terms and subject to the conditions set
forth herein (the “Acquisition”);

      


      WHEREAS,
the Sellers, UGPE Partners, Inc., Barbara Baran, the Parent and the Purchaser
are simultaneously with the execution of this Agreement entering into a Stock
Purchase Agreement (the “BIT Agreement”) for
the purchase of all of the outstanding limited liability company interests of
Hartford Urban Ventures, LLC, a Connecticut limited liability company (“HUV”), and all of the
outstanding stock of Baran Institute of Technology, Inc., a Connecticut
corporation (“BIT”; and together
with the Company and HUV, the “Companies”), as well
as its subsidiaries, Connecticut Culinary Institute, Inc., a Connecticut
corporation (“CCI”), Americare
Acquisition LLC, a Delaware limited liability company (“Americare”), and
Engine City Technical Institute, a New Jersey corporation (“Engine City”; and
together with CCI and Americare, the “Subsidiaries”);
and

      


      WHEREAS,
for certain limited purposes only, UGPE has agreed to be a party to this
Agreement.

      


      NOW,
THEREFORE, in consideration of the premises and the mutual agreements and
covenants hereinafter set forth, the parties hereby agree as
follows:

      


      


      ARTICLE
I

      


      DEFINITIONS

      


      Section 1.01  
Certain Defined
Terms.  For
purposes of this Agreement:

      


      “ABHES” means the
Accrediting Bureau of Health Education Schools.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      “Accounting
Principles” means the guidelines, rules and procedures described on Section 1.01(a) of the
Disclosure Schedule.

      


      “Accrediting Body”
means any entity or organization, whether governmental, private or
quasi-private, whether foreign or domestic, which engages in the granting or
withholding of accreditation of post-secondary institutions in accordance with
standards and requirements relating to the performance, operations, financial
condition, and/or academic standards of such institutions, including the ACCSCT,
the ABHES and the CIHE.

      


      “ACCSCT” means the
Accrediting Commission of Career Schools and Colleges of
Technology.

      


       “Acquisition
Documents” means this Agreement, the Ancillary Agreements and any
certificate, report or other document delivered pursuant to this Agreement or
the transactions contemplated by this Agreement.

      


      “Action” means any
Claim, action, suit, arbitration, proceeding or investigation by or before any
Governmental Authority or Educational Agency.

      


      “Affiliate” means,
with respect to any specified Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person.

      


      “Ancillary Agreements”
means the Escrow Agreement, the General Release and the Assignments of
Lease.

      


      “Assets” means the
assets and properties of the Company.

      


      “Assignments of
Lease” means the Assignment of Lease, in the form attached hereto as
Exhibit A, with
respect to each property set forth in Section 1.01(b) of the
Disclosure Schedule and entered into by the Purchaser and the
entity/entities listed opposite each such property on Section 1.01(b) of the
Disclosure Schedule.

      


      “Business Day” means
any day that is not a Saturday, a Sunday or other day on which banks are
required or authorized by Law to be closed in New York, New York.

      


      “CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended.

      


      “CERCLIS” means the
Comprehensive Environmental Response, Compensation and Liability Information
System, as updated through the Closing.

      


      “CIHE” means the
Commission on Institutions of Higher Education of the New England Association of
Schools and Colleges.

      


      “Claims” means any and
all administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation, investigations,
proceedings, consent orders or consent agreements, but excluding Educational
Claims.


      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      “Closing Balance
Sheet” means the balance sheet (including the related notes and schedules
thereto), dated as of the Closing Date, prepared and delivered by the Purchaser
in accordance with Section 2.06 and
setting forth the Net Working Capital with respect to the Company.

      


      “Code” means the
Internal Revenue Code of 1986, as amended.

      


      “Company IP Licenses”
means those (a) licenses of Intellectual Property by the Company or an Affiliate
of the Company to third parties, (b) licenses of Intellectual Property by third
parties to the Company or an Affiliate of the Company and (c) agreements between
the Company and third parties relating to the development or use of Intellectual
Property, the development or transmission of data, or the use, modification,
framing, linking advertisement, or other practices with respect to Internet web
sites, in each case, that are used or held for use in connection with the
Business.

      


      “Compliance Date”
means January 1, 2005.

      


      “control” (including
the terms “controlled
by” and “under
common control with”), with respect to the relationship between or among
two or more Persons, means the possession, directly or indirectly or as trustee,
personal representative or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee, personal representative or executor,
by contract, credit arrangement or otherwise.

      


      “Conveyance Taxes”
means all sales, use, value-added, transfer, stamp, stock transfer, real
property transfer or gains and similar Taxes and any transfer, recording,
registration and similar fees.

      


      “Current Assets” means
cash, accounts receivable, inventories, prepaid expenses and other assets that
could be converted to cash in less than one year, in accordance with GAAP and
GAGAS.

      


      “Current Liabilities”
means amounts owed for accounts payable, notes payable, line of credit, capital
lease obligations, unearned tuition, student deposits, deferred meal plan,
deferred housing costs, deferred promotional income, accrued expenses, deferred
tax liability and income tax payable and other liabilities that are due within
one year, in accordance with GAAP and GAGAS.

      


      “Disclosure Schedule”
means the Disclosure Schedule, dated as of the date hereof, delivered by the
Sellers to the Purchaser in connection with this Agreement.

      


      “ECAR” means
Eligibility and Certification Approval Report(s) issued to the
Institution.

      


      “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 post-secondary schools in accordance with
standards relating to performance, recruiting, operation, financial condition or
academic standards of such schools, including U.S. DOE, any Accrediting Body,
the State of Connecticut Board of Governors for Higher Education, the
Immigration and Naturalization Service of the United States Department of
Justice and the Department of Homeland Security.


      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      “Educational Approval”
means any license, permit, consent, franchise, approval, authorization,
certificate, U.S. DOE Approval or accreditation issued or required to be issued
by an Educational Agency to the Institution or to any campus or other facility
operated by the Institution with respect to any aspect of the Institution’s
operations subject to the oversight of such Educational Agency.

      


      “Educational Claims”
means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations, program reviews, audits, proceedings, consent orders or consent
agreements arising out of the operation of the Institution or the application
thereto of any Educational Law or with respect to any Educational Approval
required to be held by the Institution under any Educational Law.

      


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

      


      “Encumbrance” means
any security interest, pledge, hypothecation, mortgage, lien (including
environmental and Tax liens), violation, charge, lease, license, encumbrance,
servient easement, adverse claim, reversion, reverter, preferential arrangement
or restrictive covenant, condition or restriction of any kind, including any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership.

      


      “Environment” means
surface waters, groundwaters, sediment, soil, subsurface strata and outdoor or
indoor ambient air.

      


      “Environmental Claims”
means any Claims relating to any Environmental Law or any Environmental Permit,
including (a) any and all Claims by Governmental Authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (b) any and all Claims by
any Person seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the
Environment.

      


      “Environmental Laws”
means all Laws and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to the Environment, health, safety, natural resources or Hazardous
Materials, including CERCLA; the Resource Conservation and Recovery Act,
42 U.S.C. § 6901 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. § 5101 et seq.; the Clean Water
Act, 33 U.S.C. § 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air
Act, 42 U.S.C. § 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. § 300f et seq.; the Atomic
Energy Act, 42 U.S.C. § 2011 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.; and the Federal
Food, Drug and Cosmetic Act, 21 U.S.C. § 301 et
seq.


      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      “Environmental
Permits” means all permits, approvals, identification numbers, licenses
and other authorizations required under or issued pursuant to any applicable
Environmental Law.

      


      “Escrow Account” means
the account established, designated and maintained by the Escrow Agent pursuant
to the terms of the Escrow Agreement.

      


      “Escrow Agent” means
JPMorgan Chase Bank, National Association.

      


      “Escrow Agreement”
means the Escrow Agreement executed by the Purchaser, the Seller’s
Representative and the Escrow Agent.

      


      “Escrow Amount” means
$2,000,000.

      


      “Estimated Closing Balance
Sheet” means the balance sheet (including the related notes and schedules
thereto) for the Company dated as of the Closing Date and prepared and delivered
pursuant to Section
2.06(a).

      


      “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

      


      “Excluded Taxes” means
(a) all Income Taxes owed by the Sellers or any of their Affiliates for any
period; (b) all Taxes relating to the Assets or the Company or the
Institution for any Pre-Closing Period, including the portion of a Straddle
Period ending on the Closing Date; (c) Taxes imposed on the Purchaser or
any of its Affiliates or any of the Companies or Subsidiaries as a result of any
breach by the Sellers or any of their present or past Affiliates of a warranty
or misrepresentation, or breach of any covenant relating to Taxes; (d) all Taxes
for which the Purchaser, its Affiliates or the Company is liable by reason of
the Sellers, the Company being a member of a consolidated, combined, unitary,
affiliated or similar group that includes any Person prior to the Closing, by
reason of a Tax sharing, Tax indemnity or similar agreement entered into by the
Company or any of its present or past Affiliates prior to the Closing (other
than this Agreement) or by reason of transferee or successor Liability arising
in respect of a transaction undertaken by the Company or any of its present or
past Affiliates prior to the Closing; and (e) fifty percent (50%) of all
Conveyance Taxes payable in connection with the transactions contemplated by
this Agreement.

      


      “GAAP” means United
States generally accepted accounting principles and practices in effect from
time to time applied consistently throughout the periods involved.

      


      “GAGAS” means
generally accepted government auditing standards.

      


      “General Release”
means the General Release and Discharge, in the form attached hereto as Exhibit B, to be
executed by the Sellers at the Closing.


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      “Governmental
Authority” means any United States federal, state, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body, but excluding
any Educational Agency.

      


      “Governmental Order”
means any order, writ, judgment, injunction, decree, stipulation, determination
or award entered by or with any Governmental Authority.

      


      “Hazardous Materials”
means (a) petroleum and petroleum products, radioactive materials,
asbestos-containing materials, mold, urea formaldehyde foam insulation,
transformers or other equipment that contain polychlorinated biphenyls and radon
gas; (b) any other chemicals, materials or substances defined as or
included in the definition of “hazardous substances,” “hazardous wastes,”
“hazardous materials,” “extremely hazardous wastes,” “restricted hazardous
wastes,” “toxic substances,” “toxic pollutants,” “contaminants” or “pollutants,”
or words of similar import, under any applicable Environmental Law; and
(c) any other chemical, material or substance which is regulated by, or
with respect to which liability may be imposed under, any Environmental
Law.

      


      “HEA” means the Higher
Education Act of 1965, as amended, 20 U.S.C. § 1001 et seq., any amendments or
successor statutes thereto, and its implementing regulations.

      


      “Income Taxes” means
Taxes imposed on or measured by reference to gross or net income or receipts,
and franchise, net worth, capital or other doing business Taxes.

      


      “Indebtedness” means,
with respect to any Person, (a) all indebtedness of such Person, whether or
not contingent, for borrowed money; (b) all obligations of such Person for
the deferred purchase price of property or services; (c) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (d) all obligations
of such Person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases; (e) all obligations, contingent or
otherwise, of such Person under acceptance, Letter of Credit or similar
facilities; (f) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of such Person or any
warrants, rights or options to acquire such capital stock, valued, in the case
of redeemable preferred stock, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; (g) all
Indebtedness of others referred to in clauses (a) through (f) above
guaranteed directly or indirectly in any manner by such Person; and (h) all
Indebtedness referred to in clauses (a) through (f) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Encumbrance on property (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness.  For
the avoidance of doubt, “Indebtedness” shall not include any intercompany
indebtedness among the Companies, the Subsidiaries and/or the
Institutions.

      


      “Indemnified Party”
means a Purchaser Indemnified Party or a Seller Indemnified Party, as the case
may be.

      
      

      
        
           


        

        
          6

          
            

          

        

        
           


        

      

          


      “Indemnifying Party”
means the Sellers or the Indemnifying Purchasers, as the case may
be.
    

      “Indemnifying
Purchasers” means the Purchaser and the Parent.

      


      “Institutions” means,
collectively, (i) the Institution, (ii) the post-secondary educational
institution in Connecticut with one campus located in East Windsor, Connecticut
owned and operated by BIT, (iii) Americare School of Nursing, a post-secondary
educational institution in Florida with two campuses located in Fern Park,
Florida and St. Petersburg, Florida owned and operated by Americare and (iv) the
post-secondary educational institution in New Jersey with one campus located in
South Plainfield, New Jersey owned and operated by Engine City, including, in
each case, any campus or other facility at which any such institution offers any
portion of an educational program.

      


      “Intellectual
Property” means:  (a) patents and patent applications; (b)
trademarks, service marks, domain names, trade dress, logos, trade names,
corporate names and slogans, together with the goodwill associated therewith;
(c) copyrights; (d) Software, data, databases, data rights and Internet
websites; (e) confidential and proprietary information, including trade secrets
and know-how; (f) advertising and promotional rights and rights to privacy and
publicity; (g) registrations and applications for registration of the foregoing,
including reissues, divisions, continuations, continuations-in-part, extensions,
renewals and reexaminations thereof; (h) all common law rights thereto; and (i)
proprietary rights in curricula, course design and educational
services.

      


      “Inventory” means all
inventory, merchandise, goods and other personal property maintained, held or
stored by or for the Company at the Closing, and any prepaid deposits for any of
the same.

      


      “IRS” means the
Internal Revenue Service of the United States.

      


      “Knowledge of the
Sellers” means the actual knowledge, after due inquiry, of Baran, Barbara
Baran, Stephen Schwartz, John Milne, Robert Miner, George Cinquegrana, Stan Lau
and Randy Rock.

      


      “Law” means any United
States federal, state, local or similar statute, law, ordinance, regulation,
rule, code, order, or Accrediting Body standard, including any Educational
Law.

      


      “Leased Real Property”
means the real property leased by the Company, as tenant, together with, to the
extent leased by the Company, all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Company attached or appurtenant
thereto and all easements, licenses, rights and appurtenances relating to the
foregoing.

      


      “Letter of Credit”
means any instruments or documents issued by a bank guaranteeing the payment of
a customer’s drafts up to a stated amount for a specified
period.


      
        
           


        

        
          7

          
            

          

        

        
           


        

      


      “Liabilities” means
any and all debts, liabilities and obligations, whether accrued or fixed,
absolute or contingent, asserted or unasserted, matured or unmatured or
determined or determinable, including those arising under any Law (including any
Environmental Law or Educational Law), Action or Governmental Order and those
arising under any contract, agreement, arrangement, commitment or
undertaking.

      


      “Licensed Intellectual
Property” means Intellectual Property licensed to the Company, an
Affiliate of the Company, or the Institution and used or held for use in
connection with the Business.

      


      “Material Adverse
Effect” means any circumstance, change in or effect on the Business, the
Institution, or the Company that, individually or in the aggregate with all
other circumstances, changes in or effects on the Business, the Institution, or
the Company, is or is reasonably likely to be materially adverse to the
business, operations, assets, liabilities, results of operations or the
condition (financial or otherwise) of the Institution or the Company; provided, however, that in no
event shall any of the following be deemed to constitute a Material Adverse
Effect: (a) circumstances, changes or effects resulting from (i) the
announcement of the execution of this Agreement or compliance with the terms of,
or the taking of any action required by, this Agreement other than (A) pursuant
to any requirement to operate in the ordinary course of business consistent with
past practice or to make the representations and warranties of the Sellers
accurate or (B) the consummation of the transactions contemplated hereby, (ii)
acts of war, sabotage, terrorism, military actions or the escalation thereof,
(iii) a change in applicable Laws, regulations or accounting rules after the
date hereof, (iv) a change in general economic, political or financial market
conditions, (v) a change in conditions generally applicable to the industry in
which the Institution or Company operates except, in the case of the foregoing
clauses (ii), (iii), (iv) and (v) where such circumstances, changes or effects
affect the Institution or the Company in a manner materially disproportionate to
other Persons in the industries in which the Institution and the Company
conducts their business or (b) circumstances, changes or effects that do not or
would not reasonably be expected to result in aggregate Losses to the Company or
the Institution of less than One Million Dollars ($1,000,000).

      


      “Net Working Capital”
means the excess of Current Assets over Current Liabilities for the Company, in
accordance with GAAP and GAGAS, as shown on the Estimated Closing Balance Sheet
or the Closing Balance Sheet, as the case may be.

      


      “Owned Intellectual
Property” means Intellectual Property owned by the Company, an Affiliate
of the Company, or the Institution and used or held for use in connection with
the Business.

      


      “Owned Real Property”
means the real property owned by the Company, together with all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of the
Company attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.


      
        
           


        

        
          8

          
            

          

        

        
           


        

      


      “Permitted
Encumbrances” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced
and as to which the Company is otherwise subject to civil or criminal liability
due to its existence:  (a) (i) liens for Taxes, assessments and
governmental charges or levies not yet due and payable or (ii) Taxes for which
the Company is contesting in good faith, and for which in the case of (i) and
(ii) adequate reserves have been maintained in accordance with GAAP;
(b) Encumbrances imposed by Law, such as materialmen’s, mechanics’,
carriers’, workmen’s and repairmen’s liens and other similar liens arising in
the ordinary course of business securing obligations that (i) are not
overdue for a period of more than 30 days and (ii) are not in excess
of $5,000 in the
case of a single property or $10,000 in the aggregate at any time;
(c) pledges or deposits to secure obligations under workers’ compensation
laws or similar legislation or to secure public or statutory obligations;
(d) zoning laws and ordinances, minor survey exceptions, reciprocal
easement agreements and other customary encumbrances on or defects in title to
real or personal property that (i) were not incurred in connection with any
Indebtedness, (ii) do not render title to the property encumbered thereby
unmarketable and (iii) do not, individually or in the aggregate, materially
adversely affect the value of or the use of such property for its current and
anticipated purposes; and (e) liens securing rental payments under capital lease
arrangements.

      


      “Person” means any
individual, partnership, firm, corporation, limited liability company,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.

      


      “Pre-Closing Period”
means any taxable period (or portion of a taxable period) ending on or prior to
the Closing Date.

      


      “Preferred Stock”
means issued and outstanding shares of Series A Preferred Stock of the Company
and Series B Convertible Preferred Stock of the Company to be redeemed
immediately prior to the Closing.

      


      “Purchase Price Bank
Accounts” means the bank accounts in the United States to be designated
by the Sellers in a written notice to the Purchaser at least one Business
Day before the Closing.

      


      “Purchaser’s
Accountants” means Deloitte & Touche LLP, independent accountants of
the Purchaser.

      


      “Real Property” means
the Leased Real Property and the Owned Real Property.

      


      “Receivables” means
any and all accounts receivable (including Student Accounts Receivable), notes
and other amounts receivable from third parties, including customers and
employees, arising from the conduct of the Business before the Closing Date,
whether or not in the ordinary course, together with any unpaid financing
charges accrued thereon.

      


      “Release” means
disposing, discharging, injecting, spilling, leaking, leaching, dumping,
emitting, escaping, emptying, seeping, placing and the like into or upon any
land or water or air or otherwise entering into the
Environment.


      
        
           


        

        
          9

          
            

          

        

        
           


        

      


      “Remedial Action”
means “remove”, “removal”, “remedy” or “remedial action” as those terms are
defined in Section 101(23) and (24) of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601.

      


      “SEC” means the
Securities and Exchange Commission.

      


      “Securities Act” means
the Securities Act of 1933, as amended.

      


      “Sellers’ Accountants”
means Knutte & Associates, P.C.

      


      “Software” means all
(i) computer programs, applications, systems and code, including software
implementations of algorithms, models and methodologies, and source code and
object code, (ii) Internet and intranet websites, databases and
compilations, including data and collections of data, whether machine-readable
or otherwise, (iii) development and design tools, library functions and
compilers, (iv) technology supporting websites, and the contents and
audiovisual displays of websites, and (v) documentation, other works of
authorship and media, including user manuals and training materials, relating to
or embodying any of the foregoing or on which any of the foregoing is
recorded.

      


      “Straddle Period”
means any taxable period beginning on or prior to and ending after the Closing
Date.

      


      “Student Accounts
Receivable” means the Company’s accounts receivable for student tuition,
fees and institutional charges (including U.S. DOE accounts receivable) with
respect to students currently attending the Institution as of the Closing Date,
as determined in accordance with GAAP applied on a basis consistent with the
past practices of the Company.

      


      “Target Working
Capital” means $185,683.

      


      “Tax” or “Taxes” means any and
all taxes and other fees, levies, duties, tariffs, imposts and other charges
that are in the nature of taxes (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Authority or taxing authority, including:  taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers’ compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value-added, or gains taxes.

      


      “Tax Returns” means
all returns, computations, reports and statements required to be filed with any
Governmental Authority with respect to Taxes.

      


      “Title IV” means Title
IV of the HEA and all definitional and other provisions set forth elsewhere in
the HEA that are referenced in Title IV or that relate to any Title IV
provision.

      


      “Title IV Programs”
means the programs of federal student financial assistance administered pursuant
to Title IV of the HEA.


      
        
           


        

        
          10

          
            

          

        

        
           


        

      


      “TPPPA” means a
temporary provisional program participation agreement executed by the U.S. DOE
and issued to the Institution following the Closing for an interim period
allowing U.S. DOE’s further review of the Purchaser’s application for U.S. DOE
Approval of the Institution following a change in ownership.

      


      “Treasury Regulations”
means the Treasury Regulations (including Temporary Treasury Regulations)
promulgated by the United States Department of Treasury with respect to the Code
or other federal tax statutes.

      


      “U.S.” and “United States” means
the United States of America.

      


      “U.S. DOE” means the
United States Department of Education.

      


      “U.S. DOE
Approval” means a provisional program participation agreement issued
and countersigned by the Secretary of U.S. DOE, or his designee, in conjunction
with an accurate ECAR (but not including a TPPPA) that is complete and accurate
in all material respects, certifying an institution for participation in the
Title IV Programs that does not include any condition that would materially
impair the Parent’s operations.

      


      Section
1.02    Definitions.  The
following terms have the meanings set forth in the Sections set forth
below:

       

      
        
          
            
              	
                      Definition

                       

                    	
                      Location

                       

                    
	
                      “Acquisition”

                    	
                      Recitals

                    
	
                      “Agreement”

                    	
                      Preamble

                    
	
                      “Americare”

                    	
                      Recitals

                    
	
                      “Ancillary
      Lease Documents”

                    	
                      3.15(d)

                    
	
                      “Baran”

                    	
                      Preamble

                    
	
                      “Basket”

                    	
                      8.04(a)

                    
	
                      “BIT”

                    	
                      Recitals

                    
	
                      “BIT
      Agreement”

                    	
                      Recitals

                    
	
                      “Business”

                    	
                      Recitals

                    
	
                      “Cap”

                    	
                      8.04(a)

                    
	
                      “CCI”

                    	
                      Recitals

                    
	
                      “Closing”

                    	
                      2.03

                    
	
                      “Closing
      Date”

                    	
                      2.03

                    
	
                      “Company”

                    	
                      Recitals

                    
	
                      “Companies”

                    	
                      Recitals

                    
	
                      “Engine
      City”

                    	
                      Recitals

                    
	
                      “ERISA”

                    	
                      3.17(a)

                    
	
                      “Financial
      Statements”

                    	
                      3.06(a)

                    
	
                      “HUV”

                    	
                      Recitals

                    
	
                      “Independent
      Accounting Firm”

                    	
                      2.06(c)(ii)

                    
	
                      “Internal
      Controls”

                    	
                      3.06(d)

                    
	
                      “Institution”

                    	
                      Recitals

                    
	
                      “lease”

                    	
                      3.13(a)

                    
	
                      “Loss”

                    	
                      8.02(a)

                    


            

          

        

      


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

       

      
        
          
            
              	
                      “Material
      Contracts”

                    	
                      3.13(a)

                    
	
                      “Merion”

                    	
                      Preamble

                    
	
                      “Multiemployer
      Plan”

                    	
                      3.17(b)

                    
	
                      “Multiple
      Employer Plan”

                    	
                      3.17(b)

                    
	
                      “Non-Disclosure
      Agreement”

                    	
                      5.02(b)

                    
	
                      “Options”

                    	
                      3.15(d)

                    
	
                      “Parent”

                    	
                      Preamble

                    
	
                      “Plans”

                    	
                      3.17(a)(ii)

                    
	
                      “Policy
      Guidelines”

                    	
                      3.26(e)

                    
	
                      “Purchase
      Price”

                    	
                      2.02

                    
	
                      “Purchaser”

                    	
                      Preamble

                    
	
                      “Purchaser
      Indemnified Party”

                    	
                      8.02(a)

                    
	
                      “Required
      Consents”

                    	
                      3.05

                    
	
                      “Restricted
      Business”

                    	
                      5.10(a)

                    
	
                      “Restricted
      Period”

                    	
                      5.10(a)

                    
	
                      “Seller”

                    	
                      Preamble

                    
	
                      “Seller
      Indemnified Party”

                    	
                      8.03(a)

                    
	
                      “Sellers”

                    	
                      Preamble

                    
	
                      “Sellers’
      Representative”

                    	
                      8.07(a)

                    
	
                      “Shares”

                    	
                      Recitals

                    
	
                      “Subsidiaries”

                    	
                      Recitals

                    
	
                      “Tangible
      Personal Property”

                    	
                      3.16(a)

                    
	
                      “Third
      Party Claim”

                    	
                      8.05(b)

                    
	
                      “UGP”

                    	
                      Preamble

                    
	
                      “UGPE”

                    	
                      Preamble

                    
	
                      “WARN
      Act”

                    	
                      3.17(g)

                    


            

          

        

      

      


      Section 1.03  
Interpretation
and Rules of Construction.  In
this Agreement, except to the extent otherwise provided or indicated, or that
the context otherwise requires:

      


      (a)       when
a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference is to an Article or Section of, or a Schedule or
Exhibit to, this Agreement;

      


      (b)       the
table of contents and headings for this Agreement are for reference purposes
only and do not affect in any way the meaning or interpretation of this
Agreement;

      


      (c)       whenever
the words “include,” “includes” or “including” are used in this Agreement, they
are deemed to be followed by the words “without limitation”;

      


      (d)       the
words “hereof,” “herein” and “hereunder” and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement;

      


      (e)       all
terms defined in this Agreement have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;


      
        
           


        

        
          12

          
            

          

        

        
           


        

      


      (f)        the
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms;

      


      (g)       any
Law defined or referred to herein or in any agreement or instrument that is
referred to herein means such Law or statute as from time to time amended,
modified or supplemented, including by succession of comparable successor
Laws;

      


      (h)       references
to a Person are also to its successors and permitted assigns; and

      


      (i)        the
use of “or” is not intended to be exclusive unless expressly indicated
otherwise.

      


      


      ARTICLE
II

      


      PURCHASE
AND SALE

      


      Section 2.01  
Purchase and
Sale of the Shares.  Upon
the terms and subject to the conditions of this Agreement, at the Closing, the
Sellers shall sell, assign, transfer, convey and deliver, or cause to be sold,
assigned, transferred, conveyed and delivered, to the Purchaser, the Shares, and
the Purchaser shall purchase the Shares.

      


      Section 2.02  
Purchase
Price.  Subject
to the adjustments set forth in Section 2.06,
the purchase price for the Shares and the covenants contained in Section 5.10 shall be
an amount in cash equal to Three Million Dollars ($3,000,000) (the “Purchase Price”)
which shall be allocated $2,800,000 to the Shares and $200,000 to the covenants
contained in Section
5.10.

      


      Section
2.03   Closing.  Subject
to the terms and conditions of this Agreement, the sale and purchase of the
Shares contemplated by this Agreement shall take place at a closing (the “Closing”) to be held
at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New
York, New York at 10:00 A.M., New York time (a) within the first five
Business Days of the month following the month in which the satisfaction or
waiver of the conditions to the obligations of the parties set forth in Article VII has
occurred, or (b) at such other time or on such other date as the Sellers and the
Purchaser may mutually agree upon in writing (the date on which the Closing
takes place being the “Closing
Date”).

      


      Section 2.04  
Deliveries by
the Sellers.  (a)  On
or prior to the Closing Date, the Sellers shall have delivered or caused to be
delivered to the Purchaser:

      


      (i)        stock
certificates evidencing the Shares duly endorsed in blank, or accompanied by
stock powers duly executed in blank, in form satisfactory to the Purchaser and
with all required stock transfer tax stamps affixed;

      


      (ii)       the
Assignments of Lease, each duly executed by all the parties
thereto;

      


      (iii)      the
General Release, duly executed by the Sellers;


      
        
           


        

        
          13

          
            

          

        

        
           


        

      


      (iv)
     a receipt for the Purchase
Price;

      


      (v)
      the resignations, effective as of the
Closing, of all of the directors and officers of the Company, except for such
persons as shall have been designated in writing prior to the Closing Date by
the Purchaser to the Sellers;

      


      (vi)
     a certificate of non-foreign status (in a
form reasonably acceptable to the Purchaser) pursuant to Section 1.1445-2(b)(2)
of the Treasury Regulations of each Seller (provided that if a Seller is a
disregarded entity then such certificate shall be provided by its sole
beneficial owner);

      


      (vii)     a
copy of (i) the certificate of incorporation (or other similar organizational
document), as amended, of the Company, certified by the Secretary of State in
its jurisdiction of organization, as of a date not earlier than five Business
Days prior to the Closing Date and accompanied by a certificate of the Secretary
or Assistant Secretary of the Company, dated as of the Closing Date, stating
that no amendments have been made to such certificate of incorporation (or other
similar organizational document) since such date, and (ii) the by-laws of the
Company, certified by the Secretary or Assistant Secretary of the
Company;

      


      (viii)
   a good standing certificate for the Company from the
Secretary of State in its jurisdiction of organization and from the Secretary of
State in each other jurisdiction in which the operation of the Company’s
business in such jurisdiction, requires the Company to qualify to do business as
a foreign corporation, in each case dated as of a date not earlier than five
Business Days prior to the Closing Date;

      


      (ix)      a
certificate of the Secretary or an Assistant Secretary of each of UGP and Merion
certifying the names and signatures of the officers of such Seller authorized to
sign this Agreement and the Ancillary Agreements and the other documents to be
delivered hereunder and thereunder; and

      


      (x)       such
other certificates and documents that the Purchaser is entitled to receive from
the Sellers pursuant to Section 7.02 as a
condition of the Purchaser’s obligations to consummate the
Acquisition.

      


      Section 2.05 
 Deliveries by the
Purchaser.  (a)  On
or prior to the Closing Date, the Purchaser shall have delivered or caused to be
delivered to the Sellers:

      


      (i) 
      the Purchase Price, in the manner set
forth in Section
2.05(a)(i) of the Disclosure Schedule, by wire transfer in immediately
available funds to the Purchase Price Bank Accounts;

      


      (ii) 
     a certificate of the Secretary or an
Assistant Secretary of the Purchaser certifying the names and signatures of the
officers of the Purchaser authorized to sign this Agreement and the Ancillary
Agreements and the other documents to be delivered hereunder and
thereunder;


      
        
           


        

        
          14

          
            

          

        

        
           


        

      


      (iii)      a
true and complete copy, certified by the Secretary or an Assistant Secretary of
the Purchaser, of the resolutions duly and validly adopted by the board of
managers of the Purchaser, evidencing its authorization of the execution and
delivery of this Agreement and the Ancillary Agreements to which the Purchaser
is a party and the consummation of the transactions contemplated hereby and
thereby subject only to the conditions set forth herein;

      


      (iv)      such
other certificates and documents that the Sellers are entitled to receive from
the Purchaser pursuant to Section 7.01 as a
condition of the Sellers’ obligations to consummate the
Acquisition.

      


      (b) 
     On the date hereof (and pursuant to the BIT
Agreement), the Purchaser shall deliver or cause to be delivered to the Escrow
Agent, in accordance with the Escrow Agreement, the Escrow Amount by wire
transfer in immediately available funds to the Escrow Account.

      


      Section 2.06  
Adjustment of
Purchase Price.  The
Purchase Price shall be subject to adjustment on and after the date hereof as
specified in this Section
2.06:

      


      (a)
      Estimated Closing Balance
Sheet.  At least five Business Days prior to the Closing Date,
the Sellers shall deliver to the Purchaser the Estimated Closing Balance
Sheet.  The Sellers shall prepare the Estimated Closing Balance Sheet
in accordance with GAAP and GAGAS, and the Estimated Closing Balance Sheet shall
set forth the Sellers’ good faith estimate of the Net Working Capital of the
Company as of the Closing Date.  The Sellers shall make available to
the Purchaser the work papers used in preparing the Estimated Closing Balance
Sheet.  If the Net Working Capital reflected on the Estimated Closing
Balance Sheet exceeds the Target Working Capital, then the Purchase Price
payable by the Purchaser at the Closing shall be adjusted upwards in an amount
equal to such excess.  If the Net Working Capital reflected on the
Estimated Closing Balance Sheet is less than the Target Working Capital, then
the Purchase Price payable by the Purchaser at the Closing shall be adjusted
downward in an amount equal to such deficiency.

      


      (b) 
     Closing Balance
Sheet.  Within 30 Business Days following the Closing Date, the
Sellers shall deliver to the Purchaser a revised Estimated Closing Balance
Sheet, prepared in accordance with GAAP and GAGAS and setting forth the Sellers’
good faith calculation of the Net Working Capital with respect to the Company as
of the Closing Date.  The Sellers shall make available to the
Purchaser the work papers used in preparing such balance sheet.  As
promptly as practicable, but in any event within 45 Business Days following the
Closing Date, the Purchaser shall prepare and deliver to the Sellers’
Representative the Closing Balance Sheet, prepared in accordance with GAAP and
GAGAS.

      


      (c) 
     Disputes.  (i)
The Sellers’ Representative may dispute any amounts reflected on the Closing
Balance Sheet delivered by the Purchaser, but only on the basis that the amounts
reflected on such Closing Balance Sheet were not arrived at in accordance with
GAAP and GAGAS or were arrived at based on mathematical or clerical
error.  If the Sellers’ Representative intends to dispute any such
amounts, the Sellers’ Representative shall notify the Purchaser and the
Purchaser’s Accountants in writing of each disputed item, specifying the amount
thereof in dispute and setting forth, in reasonable detail, the basis for such
dispute, within 30 Business Days of the delivery by the Purchaser of the Closing
Balance Sheet to the Sellers’ Representative.  In the event of such a
dispute, the Sellers’ Representative and the Purchaser shall attempt to
reconcile the disputed amounts, and any resolution agreed by them as to such
disputed amounts shall be final, conclusive and binding on the parties
hereto.


      
        
           


        

        
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      (ii) 
     If the Sellers’ Representative and the Purchaser
are unable to reach a resolution with such effect within 30 Business Days of the
receipt by the Purchaser and the Purchaser’s Accountants of the Sellers’
Representative’s written notice of dispute, the Sellers’ Representative and the
Purchaser shall submit the items remaining in dispute for resolution to an
independent accounting firm of national reputation mutually acceptable to the
Sellers and the Purchaser (such accounting firm being referred to herein as an
“Independent
Accounting Firm”), which shall, within 30 Business Days after such
submission, determine and report to the Sellers’ Representative and the
Purchaser upon such remaining disputed items, and such determination shall be
final, conclusive and binding on the Sellers and the Purchaser. The fees and
expenses of the Independent Accounting Firm shall be allocated between the
Sellers, on the one hand, and the Purchaser, on the other hand, in the same
proportion as the aggregate amount of such remaining disputed items so submitted
to the Independent Accounting Firm that is unsuccessfully disputed by each such
party (as finally determined by the Independent Accounting Firm) bears to the
total amount of such remaining disputed items so submitted.

      


      (iii)      In
acting under this Section 2.06, the
Sellers’ Accountants, the Purchaser’s Accountants and the Independent Accounting
Firm shall be entitled to the privileges and immunities of
arbitrators.

      


      (d)      Purchase Price
Adjustment.  (i) The Closing Balance Sheet shall be deemed
final upon the earliest to occur of (A) the Sellers’ Representative’s
failure to notify the Purchaser of a dispute by the 30th
Business Day after the Purchaser’s delivery of the Closing Balance Sheet to the
Sellers’ Representative, (B) the resolution of all disputes, pursuant to
Section 2.06(c)(i),
by the Sellers’ Accountants and the Purchaser’s Accountants and (C) the
resolution of all disputes, pursuant to Section 2.06(c)(ii),
by the Independent Accounting Firm.

      


      (ii) 
     If the Net Working Capital reflected on the
Estimated Closing Balance Sheet exceeds the Net Working Capital reflected on the
Closing Balance Sheet, then the Purchase Price shall be adjusted downward in an
amount equal to such excess, and within five Business days of the Closing
Balance Sheet being deemed final, the Sellers’ Representative shall pay the
amount of such excess to the Purchaser by wire transfer in immediately available
funds.  If the Sellers’ Representative shall fail to pay the amount of
such deficiency within the period specified in the immediately preceding
sentence, then the Purchaser may deliver written notice to the Escrow Agent and
the Sellers’ Representative specifying such amount, and the Escrow Agent shall,
within three Business Days of its receipt of such notice and in accordance with
the terms of the Escrow Agreement, pay such amount to the Purchaser out of the
Escrow Account by wire transfer in immediately available funds.  No
failure of the Purchaser to deliver a notice of the type specified in the
immediately preceding sentence shall relieve the Sellers’ Representative of the
obligation to pay the amount of such deficiency to the
Purchaser.


      
        
           


        

        
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      (iii)      If
the Net Working Capital reflected on the Estimated Closing Balance Sheet is less
than the Net Working Capital reflected on the Closing Balance Sheet, then the
Purchase Price shall be adjusted upward in an amount equal to such deficiency,
and within five Business days of the Closing Balance Sheet being deemed final,
the Purchaser shall pay the amount of such deficiency to the Sellers, in the
manner set forth in Section 2.05(a)(i) of the
Disclosure Schedule, by wire transfer in immediately available funds to
the Purchase Price Bank Accounts.

      


      Section
2.07   Escrow.  In
accordance with the terms of the Escrow Agreement, on the date hereof (and
pursuant to the BIT Agreement) the Purchaser shall deposit the Escrow Amount in
the Escrow Account.  The Escrow Account shall be managed and paid out
by the Escrow Agent in accordance with the terms of the Escrow
Agreement.

      


      Section
2.08   Withholding.  The
Purchaser shall be entitled at any time to deduct and withhold from any portion
of the Purchase Price otherwise payable pursuant to this Agreement such amounts
as Purchaser is required to deduct and withhold and pay over to applicable
taxing authorities with respect to the making of such payment under the Code or
any applicable provision of state or local Tax Law.  To the extent
that amounts are so withheld by the Purchaser, the Purchaser shall pay over such
amounts to the applicable taxing authorities.  To the extent that
amounts are so withheld by the Purchaser and paid over to the applicable taxing
authority, such amounts shall be treated for all purposes as having been paid to
the Sellers.

      


      


      ARTICLE
III

      


      REPRESENTATIONS
AND WARRANTIES OF THE SELLERS AND UGPE

           

      As an
inducement to the Purchaser to enter into this Agreement, except as set forth in
the Disclosure Schedule (each section of which qualifies the
correspondingly numbered representation and warranty or covenant herein; provided, that the
disclosure of any fact or item in any Section of the Disclosure Schedule shall,
should the existence of such factor or item be relevant to any other Section, be
deemed to be disclosed with respect to that Section, so long as the relevance of
such disclosure to such other Section is reasonably apparent on the face of such
disclosure), each of the Sellers hereby, jointly and severally (except with
respect to Sections 3.01(b), (c) and (d), pursuant to
which each Seller represents and warrants each statement therein only to the
extent directly applicable to such Seller), and, solely with respect to Section 3.01(e), UGPE
hereby, represents and warrants to the Purchaser and the Parent as
follows:

      


      Section 3.01  
Organization,
Authority and Qualification.  (a)  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all necessary
corporate power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on the Business as it has been
and is currently conducted.  The Company is duly licensed or qualified
to do business and is in good standing in each jurisdiction which the properties
owned or leased by it or the operation of the Institution makes such licensing
or qualification necessary, except to the extent that the failure to be so
licensed or qualified and in good standing would not (i) adversely affect the
ability of the Company to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Ancillary Agreements to
which it is a party or (ii) otherwise have a Material Adverse
Effect.  All corporate actions taken by the Company have been duly
authorized, and the Company has not taken any action that in any respect
conflicts with, constitutes a default under, or results in a violation of, any
provision of its certificate of incorporation or by-laws.  True and
correct copies of the certificate of incorporation and by-laws of the Company,
each in effect on the date hereof, have been delivered or made available by the
Sellers to the Purchaser.


      
        
           


        

        
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      (b)  
   UGP is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation and has all necessary limited liability company power and authority to
enter into this Agreement and the Ancillary Agreements to which it is a party,
to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.  UGP is duly licensed or
qualified to do business and is in good standing in each jurisdiction which the
properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified and in good standing would not (i) adversely affect
the ability of UGP to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Ancillary Agreements to
which it is a party or (ii) otherwise have a Material Adverse
Effect.  The execution and delivery by UGP of this Agreement and the
Ancillary Agreements to which it is a party, the performance by UGP of its
obligations hereunder and thereunder and the consummation by UGP of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of UGP and its members.  This Agreement
has been, and upon their execution the Ancillary Agreements to which UGP is a
party shall have been, duly executed and delivered by UGP and (assuming due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and upon their execution such Ancillary Agreements
shall constitute, legal, valid and binding obligations of UGP, enforceable
against UGP in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency (including all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors’ rights generally, now or hereafter in effect, and subject to the
effect of general principles of equity (regardless of whether considered in a
proceeding at law or in equity).

      


      (c)  
   Merion is a limited partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation and has all necessary power and authority to enter into this Agreement
and the Ancillary Agreements to which it is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  Merion is duly licensed or qualified
to do business and is in good standing in each jurisdiction which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary, except to the extent that the failure to be so licensed
or qualified and in good standing would not (i) adversely affect the ability of
Merion to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Agreements to which Merion is
a party or (ii) otherwise have a Material Adverse Effect.  The
execution and delivery by Merion of this Agreement and the Ancillary Agreements
to which Merion is a party, the performance by Merion of its obligations
hereunder and thereunder and the consummation by Merion of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of Merion and its partners.  This Agreement has
been, and upon their execution the Ancillary Agreements to which Merion is a
party shall have been, duly executed and delivered by Merion, and (assuming due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and upon their execution such Ancillary Agreements
shall constitute, legal, valid and binding obligations of Merion, enforceable
against Merion in accordance with their respective terms, except as the same may
be limited by applicable bankruptcy, insolvency (including all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors’ rights generally, now or hereafter in effect, and subject to the
effect of general principles of equity (regardless of whether considered in a
proceeding at law or in equity).


      
        
           


        

        
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      (d)  
   Baran is an individual and has all requisite right,
power and authority and full legal capacity to execute and deliver this
Agreement and the Ancillary Agreements to which he is a party, to perform his
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.  This Agreement has been, and upon
his execution the Ancillary Agreements to which Baran is a party will be, duly
and validly executed and delivered by Baran and (assuming due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and upon their execution such Ancillary Agreements shall
constitute, legal, valid and binding obligations of Baran, enforceable against
Baran in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency (including all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors’ rights generally, now or hereafter in effect, and subject to the
effect of general principles of equity (regardless of whether considered in a
proceeding at law or in equity).  The failure of the spouse of Baran
to be a party or signatory to this Agreement shall not (i) prevent Baran from
performing his obligations and consummating the transactions contemplated
hereunder or (ii) prevent this Agreement from constituting the legal, valid and
binding obligation of Baran in accordance with its terms.

      


      (e)  
   (i)  UGPE is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary corporate power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party, to carry out
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  UGPE is duly licensed or qualified
to do business and is in good standing in each jurisdiction which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary, except to the extent that the failure to be so licensed
or qualified and in good standing would not (i) adversely affect the ability of
UGPE to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Agreements to which it is a
party or (ii) otherwise have a Material Adverse Effect.  The execution
and delivery by UGPE of this Agreement and the Ancillary Agreements to which it
is a party, the performance by UGPE of its obligations hereunder and thereunder
and the consummation by UGPE of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action.  This
Agreement has been, and upon their execution the Ancillary Agreements to which
UGPE is a party shall have been, duly executed and delivered by UGPE and
(assuming due authorization, execution and delivery by the other parties hereto
and thereto) this Agreement constitutes, and upon their execution such Ancillary
Agreements shall constitute, legal, valid and binding obligations of UGPE,
enforceable against UGPE in accordance with their respective terms, except as
the same may be limited by applicable bankruptcy, insolvency (including all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting creditors’ rights generally, now or hereafter in effect, and subject
to the effect of general principles of equity (regardless of whether considered
in a proceeding at law or in equity).


      
        
           


        

        
          19

          
            

          

        

        
           


        

      


      (ii)      Assuming
that all consents, approvals, authorizations filings, notifications and other
actions described in Section 3.04 and Section
3.05 of the Disclosure Schedule have been obtained or made, the
execution, delivery and performance by UGPE of this Agreement and the Ancillary
Agreements to which it is a party do not and will not (A) violate, conflict with
or result in the breach of any provision of the certificate of incorporation or
by-laws of UGPE, (B) conflict with or violate (or cause an event that could have
a Material Adverse Effect as a result of) any Law or Governmental Order
applicable to UGPE or any of its assets, properties or businesses or (C)
conflict with, result in any breach of, constitute a default (or event that with
the giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance, other than Permitted Encumbrances, on any of
the Shares or the Assets pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which UGPE is a party or by which any of the Shares
or the Assets is bound or affected, except, in the case of this clause (C), to
the extent that such conflicts, breaches, defaults or other matters would not
(1) adversely affect the ability of UGPE to carry out its obligations under, and
to consummate the transactions contemplated by, this Agreement and the Ancillary
Agreements to which UGPE is a party or (2) otherwise have a Material Adverse
Effect.

      


      (iii)      Except
for the Required Consents, the execution, delivery and performance by UGPE of
this Agreement and each Ancillary Agreement to which it is a party do not and
will not require any consent, approval, authorization or other order of, action
by, filing with or notification to, any Governmental Authority or Educational
Agency.  To the knowledge of UGPE, there is no reason why all the
Required Consents will not be received.

      


      Section
3.02   Subsidiaries.  There
are no other corporations, partnerships, joint ventures, associations or other
entities in which the Company owns, of record or beneficially, any direct or
indirect equity or other interest or any right (contingent or otherwise) to
acquire the same.  The Company is not a member of (nor is any part of
the Business conducted through) any partnership and the Company is not a
participant in any joint venture or similar arrangement.

      


      Section 3.03  
Capitalization.  (a)  The
authorized capital stock or other ownership interests of the Company is set
forth in Section
3.03(a) of the Disclosure Schedule.  All of the issued and
outstanding shares of capital stock or other ownership interests of the Company
are duly authorized, validly issued, fully paid and
nonassessable.  None of the issued and outstanding Shares were issued
in violation of any preemptive rights.  Except for the Preferred Stock
and as set forth in Section 3.03(a) of the
Disclosure Schedule, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to the Shares or obligating any Seller or the Company to
issue or sell any Shares, or any other interest in, the
Company.  There are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of Clemens Common
Stock or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other Person.  The Shares
constitute all of the issued and outstanding capital stock or other ownership
interests of the Company and are owned of record and beneficially by the Sellers
as set forth in Section 3.03(a) of the
Disclosure Schedule free and clear of all Encumbrances, other than
Permitted Encumbrances.  Upon consummation of the transactions
contemplated by this Agreement and registration of the Shares in the name of the
Purchaser in the stock or other records of the Company, the Purchaser, assuming
it shall have purchased the Shares for value in good faith and without notice of
any adverse claim, will own all the issued and outstanding capital stock or
other ownership interests of the Company free and clear of all Encumbrances,
other than Permitted Encumbrances.  Upon consummation of the
transactions contemplated by this Agreement, the Shares will be fully paid and
nonassessable.  There are no voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect to the
voting or transfer of any of the Shares.


      
        
           


        

        
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      (b)      The
stock or other register of the Company accurately records:  (i) the
name and address of each Person owning shares of capital stock or other
ownership interests of the Company and (ii) the certificate number of each
certificate evidencing shares of capital stock or other ownership interests
issued by the Company, the number of shares or other ownership interests
evidenced by each such certificate, the date of issuance thereof and, in the
case of cancellation, the date of cancellation.

      


      Section
3.04   No
Conflict.  Assuming
that all consents, approvals, authorizations filings, notifications and other
actions described in Section 3.04 and
Section 3.05 of the Disclosure Schedule have been obtained or made, the
execution, delivery and performance by any Seller of this Agreement and the
Ancillary Agreements to which any Seller is a party do not and will not
(a) violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws of any Seller or the Company,
(b) conflict with or violate (or cause an event that could have a Material
Adverse Effect as a result of) any Law or Governmental Order applicable to any
Seller or the Company or any of their respective assets, properties or
businesses or (c) conflict with, result in any breach of, constitute a
default (or event that with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance, other than
Permitted Encumbrances, on any of the Shares or the Assets pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which any
Seller or the Company is a party or by which any of the Shares or the Assets is
bound or affected, except, in the case of this clause (c), to the extent
that such conflicts, breaches, defaults or other matters would not
(i) adversely affect the ability of any Seller or the Company to carry out
its or his obligations under, and to consummate the transactions contemplated
by, this Agreement and the Ancillary Agreements to which such Seller or the
Company is a party or (ii) otherwise have a Material Adverse
Effect.

      


      Section 3.05 
 Governmental Consents and
Approvals.  Except
for the consents, approvals and notifications that must be obtained or given
prior to the Closing as set forth on Section 3.05 of the
Disclosure Schedule (the “Required Consents”),
the execution, delivery and performance by each Seller of this Agreement and
each Ancillary Agreement to which such Seller is a party, as the case may be, do
not and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority or
Educational Agency.  To the Knowledge of the Sellers, there is no
reason why all the Required Consents will not be received.


      
        
           


        

        
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      Section 3.06  
Financial
Information; Books and Records; No Undisclosed Liabilities.  (a)  True
and complete copies of (1) the unaudited balance sheet of the Company for
the fiscal year ended December 31, 2007, and the related unaudited statements of
income, retained earnings, shareholders’ equity and changes in financial
position of the Company, together with all related notes and schedules thereto
and (2) the unaudited balance sheet of the Company for the nine-month period
ending September 30, 2008 and the related financial statements of the Company,
together with all related notes and schedules thereto (collectively referred to
herein as the “Financial
Statements”) have been delivered or made available by the Sellers to the
Purchaser.  The Financial Statements (A) were prepared in
accordance with the books of account and other financial records of the Company,
(B) present fairly, in all material respects, the financial condition and
results of operations of the Company as of the dates thereof or for the period
covered thereby, (C) have been prepared in accordance with GAAP and GAGAS,
on a basis consistent with the Accounting Principles and the past practices of
the Company, and (D) include all adjustments (consisting only of normal
recurring accruals) that are necessary for a fair presentation in all material
respects of the financial condition of the Company and the results of the
operations of the Company as of the dates thereof or for the period covered
thereby.

      


      (b)      The
books of account and other financial records of the Company:  (i)
reflect all items of income and expense and all assets and Liabilities required
to be reflected therein in accordance with GAAP applied on a basis consistent
with the past practices of the Company, respectively, (ii) are in all material
respects complete and correct, and do not contain or reflect any material
inaccuracies or discrepancies and (iii) have been maintained in accordance with
good business and accounting practices.

      


      (c)      The
minute books of the Company reflecting records of actions taken by the
shareholders or members, boards of directors/managers and all committees of the
boards of directors/managers of the Company have been provided or made available
to the Purchaser and are complete and accurate in all material
respects.

      


      (d)      The
Company has established and maintains a system of internal accounting controls
(“Internal
Controls”) sufficient to comply with all legal and accounting
requirements applicable to the Company and the Institution and to provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and GAGAS, subject
to the adjustments set forth in the Accounting Principles.  Except as
set forth in Section
3.06(d) of the Disclosure Schedule, there are no significant deficiencies
or material weaknesses in the design or operation of such Internal Controls, and
the Company has not been advised by any independent auditor or other third party
that any such significant deficiency or material weakness in such Internal
Controls exists or existed.  Except as set forth in Section 3.06(d) of the
Disclosure Schedule, neither the Company nor any of its respective
directors, officers, employees, auditors, accountants or representatives has
received or otherwise had or obtained knowledge of any complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company or its
Internal Controls, including any complaint, allegation, assertion or claim that
the Company has engaged in questionable financial reporting, accounting or
auditing practices.  There has not been any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Internal Controls or, to the Knowledge of the Sellers, any
allegations or investigations of any such fraud.


      
        
           


        

        
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      (e)      There
are no Liabilities of the Company, other than Liabilities (i) reflected or
reserved against in the Financial Statements, (ii) set forth in Section 3.06(e) of the
Disclosure Schedule, or (iii) incurred since September 30, 2008 in
the ordinary course of business, consistent with the past practice of the
Company and which do not and could not have a Material Adverse
Effect.

      


      Section
3.07   Receivables.  Set
forth in Section 3.07
of the Disclosure Schedule is an aged list of the Receivables as of
September 30, 2008.  All Receivables arising from the date thereof
until the Closing have or will have arisen in the ordinary course of business
from bona fide transactions and constitute or will constitute only valid,
undisputed claims of the Company or the Institution, and no valid claims of
setoff or other defenses or counterclaims have been formally asserted with
respect thereto, other than normal cash discounts accrued in the ordinary course
of business consistent with the past practices of the Company or as reserved for
in the Financial Statements.

      


      Section 3.08  
Conduct in the
Ordinary Course; Absence of Certain Changes, Events and
Conditions.  Since
December 31, 2007, the Business has been conducted in the ordinary course
consistent with past practice.  As amplification and not limitation of
the foregoing, since such date, except as set forth in Section 3.08 of the
Disclosure Schedule, neither the Company nor the Institution
has:

      


      (a)      permitted
or allowed any of the Assets to be subjected in any material respect to any
Encumbrance, other than Permitted Encumbrances and Encumbrances that will be
released at or prior to the Closing;

      


      (b)      except
in the ordinary course of business consistent with past practice, discharged or
otherwise obtained the release of any Encumbrance related to the Company or paid
or otherwise discharged any material Liability related to the Company, other
than current liabilities incurred in the ordinary course of business consistent
with past practice;

      


      (c)      written
down or written up in any material respect (or failed to write down or write up
in accordance with accounting methods consistent with past practice) the value
of any Inventory or Receivables or revalued in any material respect any of the
Assets other than in the ordinary course of business consistent with past
practices and in accordance with GAAP;

      


      (d)      made
any change in any method of accounting or accounting practice or policy used by
the Company, other than such changes required by GAAP;


      
        
           


        

        
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      (e)  
    amended, terminated, cancelled or compromised any
material claims of the Company or waived any other rights of material value to
the Company;

      


      (f) 
     sold, transferred, leased, subleased or licensed
to any Person, or abandoned or otherwise disposed of any properties or assets,
real, personal or mixed (including leasehold interests and intangible property)
of the Business other than in the ordinary course of business consistent with
past practice;

      


      (g)      redeemed
any of the capital stock or declared, made or paid any dividends or
distributions (whether in cash, securities or other property) to the holder(s)
of capital stock of the Company with respect to such capital stock;

      


      (h)      merged
with, entered into a consolidation with or acquired an interest of 5% or more in
any Person or acquired a substantial portion of the assets or business of any
Person or any division or line of business thereof, or otherwise acquired any
material assets other than in the ordinary course of business consistent with
past practice;

      


      (i) 
      made any capital expenditure or commitment
for any capital expenditure in excess of $10,000 individually or $50,000 in the
aggregate;

      


      (j) 
      issued any sales orders or otherwise agreed
to make any purchases involving exchanges in value in excess of $10,000
individually or $50,000 in the aggregate;

      


      (k)
      incurred any Indebtedness in excess of
$10,000 individually or $50,000 in the
aggregate;

      


      (l)   
    made any loan to, guaranteed any Indebtedness of, or
otherwise incurred any Indebtedness on behalf of, any Person;

      


      (m)      failed
to pay any creditor any material amount owed to such creditor when
due;

      


      (n)      (i) granted
or announced any increase in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable by the Company to any of its
employees, including any increase or change pursuant to any Plan, or
(ii) established or increased or promised to increase any benefits under
any Plan in either case, except as required by Law or involving ordinary
increases consistent with the past practices of the Company;

      


      (o)      entered
into any agreement, arrangement or transaction with any directors, officers,
employees, consultants, or stockholders of the Company or the Institution (or
with any relative, beneficiary, spouse or Affiliate thereof);

      


      (p)      entered
into any agreement, arrangement or transaction with any Person or Governmental
Authority providing for the furnishing of services by the Company or the
Institution at a discount to rates or tuition amounts charged by the Company or
the Institution as of December 31, 2007;


      
        
           


        

        
          24

          
            

          

        

        
           


        

      


      (q)      terminated,
discontinued, closed or disposed of any facility or other business operation, or
laid off any employees (other than layoffs of fewer than 50 employees in any
six-month period in the ordinary course of business consistent with past
practice) or implemented any early retirement, separation or other program
providing early retirement window benefits within the meaning of Section
1.401(a)-4 of the Treasury Regulations or announced or planned any such action
or program for the future;

      


      (r)
      allowed any permit required of the Company
or the Institution by any Governmental Authority or any Environmental Permit in
connection with the ownership or operation of the Business and the Institution
to lapse or terminate or failed to renew any insurance policy or any such permit
or Environmental Permit that is scheduled to terminate or expire within 45
calendar days of the Closing Date;

      


      (s)
      failed to maintain the Company’s and the
Institution’s buildings, property and equipment in good repair and operating
condition, ordinary wear and tear excepted;

      


      (t) 
     suffered any casualty loss or damage with respect
to any of the Assets which in the aggregate have a replacement cost of more than
$20,000, whether or not such loss or damage shall have been covered by
insurance;

      


      (u)      amended
or modified or consented to the termination of any Material Contract or the
Company’s or the Institution’s rights thereunder;

      


      (v)      made
any material charitable contribution;

      


      (w)      suffered
any Material Adverse Effect;

      


      (x)
      agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 3.08, or
granted any options to purchase, rights of first refusal, rights of first offer
or any similar rights or commitments with respect to any of the actions
specified in this Section 3.08, except
as expressly contemplated by this Agreement and the Ancillary
Agreements;

      


      (y)      failed
to comply in any material respect with or remain in material compliance with any
Educational Law applicable to the Company, the Institution, or the Business, or
to maintain in full force and effect any Educational Approval necessary for the
Business’ and the Institution’s existing operations and the Company has not
received written notice from any Educational Agency of any such
failure;

      


      (z) 
     unless required by applicable Law, made any
material change in any of its established practices or procedures for complying
with any Educational Law;

      


      (aa)     made,
changed or revoked any material Tax election or settled or compromised any Tax
liability or consented to any claim or assessment relating to Taxes or any
waiver of the statute of limitations for any such claim or assessment, in each
case, with respect to the Assets or the Company; or


      
        
           


        

        
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      (bb)    not
shortened or lengthened the customary payment cycles for any of its payables or
receivables.

      


      Section
3.09   Litigation.  Except
as set forth in Section 3.09 of the
Disclosure Schedule, there are no Actions, Claims or Educational Claims
by or against the Company, or the Institution (or by or against any Seller or
any Affiliate thereof and relating to the Business, the Company or the
Institution) or affecting any of the Assets or the Business pending before any
Governmental Authority or Educational Agency (nor, to the Knowledge of the
Sellers, threatened to be brought by or before any Governmental Authority or
Educational Agency).  Timely claims for insurance with respect to all
such Actions, Claims and Educational Claims set forth in Section 3.09 of the
Disclosure Schedule have been submitted by or on behalf of the Company or
the Institution.  Neither the Sellers, the Company, or the Institution
nor any of their respective assets and properties, including the Assets, is
subject to any Governmental Order or order of any Educational Agency (nor, to
the Knowledge of the Sellers, are any Governmental Orders or orders of any
Educational Agency threatened to be imposed) that has or has had a Material
Adverse Effect or could affect the legality, validity or enforceability of this
Agreement, any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby.

      


      Section 3.10  
Compliance with
Laws.  (a)  The
Company and the Institution have conducted and continue to conduct the Business
in accordance in all material respects with all Laws (excluding Educational
Laws) and Governmental Orders applicable to the Company and the Institution or
the Assets, and neither the Company nor the Institution is in violation in any
material respect of any such Law or Governmental Order.  Neither the
Company nor the Institution has, in the last three years, received any written
communication from any Governmental Authority alleging that such Company or the
Institution is not in compliance in any material respect with any Law or
Governmental Order that has not been resolved.

      


      (b)      Section 3.10(b) of the
Disclosure Schedule sets forth a brief description of each Governmental
Order applicable to the Company, the Institution or the Assets, and no such
Governmental Order has or has had a Material Adverse Effect or could affect the
legality, validity or enforceability of this Agreement, any Ancillary Agreement
or the consummation of the transactions contemplated hereby or
thereby.

      


      Section 3.11  
Environmental
and Other Permits and Licenses; Related Matters.

      


      (a) 
     The Company and the Institution are in
compliance in all material respects with all applicable Environmental
Laws.  The Company and the Institution have all material Environmental
Permits required under Environmental Law, all such permits are in full force and
effect and the Company and the Institution are in material compliance
therewith.

      


      (b)
      There has been no Release of any
Hazardous Material (i) by the Company or the Institution, (ii) to the Knowledge
of the Sellers, on the Real Property, (iii) to the Knowledge of the Sellers, on
any property formerly leased, used or occupied by the Company or the Institution
during the period of the Company’s or the Institution’s lease, use or occupancy
thereof, or (iv) on any property formerly owned by the Company or the
Institution during the period of the Company’s or the Institution’s ownership
thereof, in the case of (i), (ii), (iii) and (iv), that requires any Remedial
Action.


      
        
           


        

        
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      (c) 
     There are no Environmental Claims pending
(or, to the Knowledge of the Sellers, threatened) against the Company or the
Institution, and there are no circumstances that can reasonably be expected to
form the basis of any such Environmental Claim, including, to the Knowledge of
the Sellers, with respect to any off-site disposal location currently or
formerly used by the Company or the Institution or any of its predecessors or
with respect to previously owned or operated facilities.

      


      (d) 
     The Company is not conducting, or has
undertaken or completed or funded, any Remedial Action relating to any Release
or threatened Release of any Hazardous Material at the Real Property or at any
other site, location or operation, either voluntarily or pursuant to the order
of any Governmental Authority or the requirements of any Environmental Law or
Environmental Permit.

      


      (e)
      To the Knowledge of the Sellers,
there is no asbestos or asbestos-containing material on any of the Real Property
that requires abatement, removal or encapsulation pursuant to Environmental
Law.

      


      (f)  
    None of the Real Property is listed or proposed
for listing, nor to the Knowledge of the Sellers does the Real Property adjoin
any other property that is listed or proposed for listing, on the National
Priorities List or CERCLIS or on any analogous federal, state or local
list.

      


      (g)
      To the Knowledge of the Sellers,
there are no wetlands or any areas subject to any legal requirement or
restriction in any way related to wetlands (including requirements or
restrictions related to buffer or transition areas or open waters) at or
affecting the Real Property.

      


      (h) 
     The Sellers have provided or made available
to the Purchaser copies of (i) any environmental assessment or audit reports or
other similar studies or analyses relating to the Business, the Real Property or
the Company in their possession, and (ii) all insurance policies issued at any
time that may provide coverage to the Company or the Institution for
environmental matters.

      


      (i) 
      There are no underground storage
tanks, surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or have been treated, stored or disposed on the
Real Property by the Sellers.

      


      (j)  
     Neither the execution of this Agreement or
the Ancillary Agreements nor the consummation of the transactions contemplated
hereby or thereby will require any Remedial Action or notice to or consent of
any Governmental Authority or third party pursuant to any applicable
Environmental Law or Environmental Permit.

      


      (k) 
     Except with respect to Section 3.05 and
Section 3.08,
the representations set forth in this Section 3.11 are the
only representations with respect to environmental matters.


      
        
           


        

        
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      Section 3.12  
No Preferential
Rights.  There
is no contract, agreement or other arrangement granting any Person any
preferential right to purchase any of the Assets (other than in the ordinary
course of business consistent with past practice), or any of the
Shares.

      


      Section 3.13  
Material
Contracts.  (a)  Section 3.13(a) of the
Disclosure Schedule lists each of the following types of contracts and
agreements (including oral agreements) of the Company and the Institution (such
contracts and agreements, together with all contracts, agreements, leases and
subleases concerning the use, occupancy, management or operation of any Leased
Real Property (including all contracts, agreements, leases and subleases
relating to Intellectual Property and all contracts, agreements, leases and
subleases relating to Tangible Personal Property), being “Material
Contracts”):

      


      (i)  
     each contract or agreement, or related
series of agreements, that cannot be cancelled by the Company or the Institution
on 30 days’ notice or less without penalty or further payment and under the
terms of which the Company or the Institution:  (A) is likely to pay
or otherwise give consideration of more than $25,000 in the aggregate during the
calendar year ended December 31, 2009; (B) is likely to pay or otherwise give
consideration of more than $50,000 in the aggregate over the remaining term of
such contract; (C) is reasonably likely to be entitled to receive consideration
of more than $25,000 in the aggregate during the calendar year ended December
31, 2009; or (D) is likely to be entitled to receive consideration of more than
$50,000 in the aggregate over the remaining term of the contract;

      


      (ii) 
     all advertising agency, sales promotion,
market research, marketing, web site creation and maintenance, consulting and
advertising contracts and agreements to which the Company or the Institution is
a party and involving the payment of consideration of more than $25,000 in the
aggregate;

      


      (iii)      all
management contracts and contracts with independent contractors or consultants
(or similar arrangements) to which the Company or the Institution is a party and
that are not cancelable without penalty or further payment and without more than
30 days’ notice;

      


      (iv)      all
contracts and agreements relating to Indebtedness of the Company or the
Institution;

      


      (v)
      all contracts and agreements between
the Company or the Institution, on the one hand, and any Educational Agency, on
the other hand, but excluding any Educational Approval;

      


      (vi)      all
contracts and agreements that limit or purport to limit the ability of the
Company or the Institution to compete in any line of business or with any Person
or in any geographic area or during any period of time;

      


      (vii)     all
contracts and agreement between the Company or the Institution, on the one hand,
and any Seller or any Affiliate of any Seller (other than the other Companies,
the Subsidiaries or the other Institutions), on the other hand;


      
        
           


        

        
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      (viii)   all
contracts and agreements between the Company or the Institution, on the one
hand, and any of its directors, managers, officers, employees, stockholders or
members (or any relative, beneficiary, spouse or Affiliate thereof), on the
other hand, other than any oral contracts of employment terminable on no more
than 30 days’ notice without penalty or further payment obligation;

      


      (ix)      all
material contracts, agreements and leases relating to the use, occupancy,
management or operation of the Leased Real Property;

      


      (x)       all
material agreements included in the Company IP Licenses (and exclusive of any
agreements or licenses included in the Company IP Licenses that arise from the
purchase of any commercially available “off-the-shelf” computer software
products that are not material to the Business, or any other “shrink-wrap” or
“click-wrap” licenses or agreements that are included in the Company IP Licenses
and that are not material to the Business);

      


      (xi)      all
agreements regarding any special pricing, discount or reduced tuition
arrangement including agreements providing for tuition or pricing that is
materially inconsistent with the tuition reflected in the enrollment agreements,
catalogs, and other written materials of the Company or the Institution
disseminated to students and prospective students;

      


      (xii)     all
joint venture, community college, partnership or similar agreements involving a
sharing of profits, losses, costs or liabilities with any other
Person;

      


      (xiii)    all
agreements with any Third-Party Servicer, as that term is defined in 34 C.F.R. §
668.2;

      


      (xiv)    all
agreements in existence since the Compliance Date under which the Company or the
Institution provides or has provided educational instruction on behalf of any
other institution or organization, or another institution provides or has
provided educational instruction on behalf of the Company or the Institution,
including all consortium, contractual, internship, externship or articulation
agreements;

      


      (xv)     all
agreements respecting the funding of student scholarships;

      


      (xvi)    all
agreements under which the Company or the Institution is a lender;

      


      (xvii)   all
agreements for the sale of tuition receivables;

      


      (xviii)  all
marketing agreements and agreements for student recruiting and retention
services (other than agreements with employees of the other Companies, the
Subsidiaries or the other Institutions);

      


      (xix)  
  all agreements by which the Company or the Institution
provides or facilitates scholarships or grants; 


      
        
           


        

        
          29

          
            

          

        

        
           


        

      


      (xx)     all
agreements by which the Company or the Institution provides private capital
loans to students attending the Institution;

      


      (xxi)    all
agreements for student recruiting services whether entered into with an employee
or with third parties;

      


      (xxii)   all
amendments, supplements, and modifications (whether oral or written) in respect
of any of the foregoing; and

      


      (xxiii)  all
other contracts and agreements, whether or not made in the ordinary course of
business, the absence of which would have a Material Adverse
Effect.

      


      For
purposes of this Agreement, the term “lease” shall include
any and all leases, subleases, sale/leaseback agreements or similar
arrangements.

      


      (b)      Except
as set forth in Section 3.13(b) of the
Disclosure Schedule, each Material Contract:  (i) is valid and
binding on the Seller, the Company or the Institution that is a party thereto
and, to the Knowledge of Sellers, on the other parties thereto and is in full
force and effect, (ii) does not require consent, approval or notice to any third
party as a result of the transactions contemplated by this Agreement and the
Ancillary Agreements, and (iii) assuming receipt of the Required Consents, upon
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements shall continue in full force and effect without penalty or
other adverse consequence.  Neither the Company nor the is in breach
of, or default under, any Material Contract and neither the Company nor the
Institution has received written notice from any third party to any Material
Contract alleging or asserting any such breach or default or any notice of
termination or cancellation thereof.

      


      (c)      To
the Knowledge of the Sellers, no other party to any Material Contract is in
material breach thereof or default thereunder, and neither the Company nor the
Institution has given any notice of termination, cancellation, breach or default
under any Material Contract.

      


      (d)      The
Sellers have made available to the Purchaser true and complete copies of all
written Material Contracts and has provided to the Purchaser a summary of all
oral Material Contracts (if any).

      


      Section 3.14  
Intellectual
Property.  (a)  Section 3.14(a) of the
Disclosure Schedule sets forth a true and complete list of (i) all
patents and patent applications, registered trademarks and trademark
applications, registered copyrights and copyright applications, and domain names
included in the Owned Intellectual Property, if any (ii) all Company IP
Licenses, other than commercially available off-the-shelf computer software
products licensed pursuant to shrink-wrap or click-wrap licenses that are not
material to the Business or any other “shrink-wrap” or “click-wrap” licenses or
agreements that are included in the Company IP Licenses and that are not
material to the Business, if any, and (iii) any other Owned Intellectual
Property material to the Business.

      


      (b)      The
conduct of the Business as currently conducted does not infringe,
misappropriate, or otherwise violate the Intellectual Property of any third
party, and no Claim has been asserted that the conduct of the Business as
currently conducted infringes, misappropriates or otherwise violates the
Intellectual Property of any third party.  With respect to each item
of Owned Intellectual Property, the Company is the exclusive owner of the entire
right, title and interest in and to such Intellectual Property free and clear of
any Encumbrances, other than Permitted Encumbrances, and is entitled to use such
Intellectual Property on an unrestricted basis in the continued operation of the
Business.  With respect to each item of Licensed Intellectual Property
the Company has the right to use such Intellectual Property in the continued
operation of the Business in accordance with the terms of the Company IP
Licenses governing such Intellectual Property.


      
        
           


        

        
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      (c)      Except
as set forth in Section 3.14(c) of the
Disclosure Schedule, to the Knowledge of the Sellers, no Person is
engaging in any activity that infringes, dilutes, misappropriates, or otherwise
violates the Owned Intellectual Property.  Each Company IP License is
valid and enforceable, is binding on the Company or the Institution and, to the
Knowledge of the Sellers, on the other parties thereto, is in full force and
effect, and no party to any Company IP License is in material breach thereof or
default thereunder.

      


      Section 3.15  
Real
Property.  (a)  The
Company does not hold title to any Owned Real Property.

      


      (b)      Section 3.15(b) of the
Disclosure Schedule lists:  (i) the street address of each
parcel of Leased Real Property and (ii) the identity of the lessor, lessee and
current occupant (if different from lessee) of each such parcel of Leased Real
Property.

      


      (c)      There
is no material violation of any Law (including any building, planning or zoning
law) relating to any of the Real Property.  The Sellers have made
available to the Purchaser true, legible and complete copies of each deed for
each parcel of Leased Real Property and all the title insurance policies, title
reports, surveys, certificates of occupancy, environmental reports and audits,
appraisals, permits, other Encumbrances, title documents and other documents
relating to or otherwise affecting the Real Property, the operations of the
Company or the Institution thereon or any other uses thereof.  The
Company or the Institution is in peaceful and undisturbed possession of each
parcel of Real Property, and there are no contractual or legal restrictions that
preclude or restrict the ability to use the Real Property for the purposes for
which it is currently being used.  All existing water, sewer, steam,
gas, electricity, telephone, cable, fiber optic cable, Internet access and other
utilities required for the construction, use, occupancy, operation and
maintenance of the Real Property are adequate for the conduct of the Business as
they have been and currently are conducted.  There are no material
latent defects or material adverse physical conditions affecting the Real
Property or any of the facilities, buildings, structures, erections,
improvements, fixtures, fixed assets and personalty of a permanent nature
annexed, affixed or attached to, located on or forming part of the Real
Property.  Neither the Company nor the Institution has leased any
parcel or any portion of any parcel of Real Property to any other Person and no
other Person has any rights to the use, occupancy or enjoyment thereof pursuant
to any lease, license, occupancy or other agreement, nor have the Sellers
assigned its interest under any lease listed in Section 3.15(b) of the
Disclosure Schedule to any third party.


      
        
           


        

        
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      (d)      Section 3.15(d) of the
Disclosure Schedule sets forth a true and complete list of all leases
relating to the Leased Real Property and any and all ancillary documents (the
“Ancillary Lease
Documents”) pertaining thereto (including all amendments, modifications,
supplements, exhibits, schedules, addenda and restatements thereto and thereof
and all consents, including consents for alterations, assignments and sublets,
documents recording variations, memoranda of lease, options, rights of
expansion, extension, first refusal and first offer and evidence of commencement
dates and expiration dates).  Except as set forth in Section 3.15(d) of the
Disclosure Schedule, with respect to each of such leases, neither the
Company, nor the Institution has exercised or given any notice of exercise of,
nor has any lessor or landlord exercised or received any notice of exercise by a
lessor or landlord of, any option, right of first offer or right of first
refusal contained in any such lease or sublease, including any such option or
right pertaining to purchase, expansion, renewal, extension or relocation
(collectively, “Options”).

      


      (e)      The
interests of the Company and the Institution in the Leased Real Property to be
transferred pursuant to this Agreement are sufficient in all material respects
for the continued conduct of the Business after the Closing in substantially the
same manner as conducted prior to the Closing.

      


      (f)      There
are no condemnation proceedings or eminent domain proceedings of any kind
pending or, to the Knowledge of the Sellers, threatened against the Leased Real
Property.

      


      (g)      (i)
All the Leased Real Property is occupied under a valid and current certificate
of occupancy or similar permit, (ii) the transactions contemplated by this
Agreement and the Ancillary Agreements will not require the issuance of any new
or amended certificate of occupancy, and (iii) to the Knowledge of the Sellers,
there are no facts that would prevent the Real Property from being occupied by
the Company or the Institution after the Closing in the same manner as occupied
by the Company or the Institution immediately prior to the Closing.

      


      (h)      All
improvements on the Real Property constructed by or on behalf of the Company or
the Institution or constructed by or on behalf of any other Person, were
constructed in compliance in all material respects with all applicable Laws
(including any building, planning or zoning Laws) affecting such Real
Property.

      


      (i)  
     No improvements on the Real Property and
none of the current uses and conditions thereof violate any Encumbrance,
applicable deed restrictions or other applicable covenants, restrictions,
agreements, existing site plan approvals, zoning or subdivision regulations or
urban redevelopment plans as modified by any duly issued variances, and no
permits, licenses or certificates pertaining to the ownership or operation of
all improvements on the Real Property, other than those which are transferable
with the Real Property, are required by any Governmental Authority having
jurisdiction over the Real Property.

      


      (j)  
     All improvements on any Real Property are
wholly within the lot limits of such Real Property and do not encroach on any
adjoining premises or Encumbrance benefiting such Real Property, and there are
no encroachments on any Real Property or any easement or property right or
benefit appurtenant thereto by any improvements located on any adjoining
premises.


      
        
           


        

        
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      (k) 
     There have been no improvements of a value
in excess of $10,000 in the aggregate made to or constructed on any Real
Property within the applicable period for the filing of mechanics’
liens.

      


      (l)  
     The rental set forth in each lease of the
Leased Real Property is the actual rental being paid, and there are no separate
agreements or understandings with respect to the same.

      


      (m)      The
Company or the Institution has the full right to exercise any Options contained
in the leases pertaining to the Leased Real Property on the terms and conditions
contained therein and upon due exercise would be entitled to enjoy the full
benefit of such Options with respect thereto.

      


      Section 3.16  
Tangible
Personal Property.  (a)  Section 3.16(a) of the
Disclosure Schedule lists each item or distinct group of equipment,
supplies, furniture, fixtures, personalty, books and other tangible personal
property (the “Tangible Personal
Property”) used at the Institution having an individual value equal to or
greater than $5,000.

      


      (b)      Section 3.16(b) of the
Disclosure Schedule sets forth a true and complete list of all leases for
Tangible Personal Property and any and all material ancillary documents
pertaining thereto (including all amendments, consents and evidence of
commencement dates and expiration dates) having an individual value equal to or
greater than $5,000.

      


      Section 3.17  
Employee
Benefit Matters.  (a)  Plans and Material
Documents.  Section 3.17(a) of the
Disclosure Schedule lists (i) all employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974
(“ERISA”)) and
all bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements to which the Company is
a party (other than any oral contracts of employment terminable on no more than
30 days’ notice without penalty or further payment obligation), with respect to
which the Company has any obligation or that are maintained, contributed to or
sponsored by the Company for the benefit of any current or former employee,
officer, director or consultant of the Company (other than any oral contracts of
employment terminable on no more than 30 days’ notice without penalty or further
payment obligation) and (ii) any contracts, arrangements or understandings
between any Seller or any of its Affiliates and any employee or consultant of
the Company, including any contracts, arrangements or understandings relating to
the sale of the Company (collectively, the “Plans”).  The
Sellers have made available to the Purchaser a complete and accurate copy of
each written Plan and a summary of the material terms of any unwritten Plan and
there are no other employee benefit plans, programs, arrangements or agreements,
whether formal or informal, whether in writing or not, to which the Company is a
party, with respect to which the Company has any obligation or that are
maintained, contributed to or sponsored by the Company for the benefit of any
current or former employee, officer, director or consultant of the
Company.


      
        
           


        

        
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      (b)      Absence of Certain Types of
Plans.  None of the Plans is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a “Multiemployer Plan”)
or a single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which the Company could incur liability under Section 4063 or 4064 of
ERISA (a “Multiple
Employer Plan”).  None of the Plans provides for the payment of
separation, severance, termination or similar-type benefits to any Person or
obligates the Company to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this Agreement or
as a result of a “change in control”, within the meaning of such term under
Section 280G of the Code.  None of the Plans provides for or
promises retiree medical, disability or life insurance benefits to any current
or former employee, officer or director of the Company.  Each of the
Plans is subject only to the Laws of the United States or a political
subdivision thereof.

      


      (c)      Compliance with Applicable
Law.  Each Plan is now and has always been operated in all
material respects in accordance with the requirements of all applicable Law,
including ERISA and the Code.  The Company has performed all
obligations required to be performed by it under, is not in any respect in
default under or in violation of, and has no knowledge of any default or
violation by any party to, any Plan.  No Action is pending or, to the
Knowledge of the Sellers, threatened with respect to any Plan (other than claims
for benefits in the ordinary course), and no material fact or event exists that
could give rise to any such Action or claim.

      


      (d)      Qualification of Certain
Plans.  Each Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received
a favorable determination letter from the IRS that it is so qualified, and each
trust established in connection with any Plan that is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter from the IRS to affect
adversely the qualified status of any such Plan or the exempt status of any such
trust.  Each trust maintained or contributed to by the Company that is
intended to be qualified as a voluntary employees’ beneficiary association and
that is intended to be exempt from federal income taxation under
Section 501(c)(9) of the Code has received a favorable determination letter
from the IRS that it is so qualified and so exempt, and no fact or event has
occurred since the date of such determination by the IRS to adversely affect
such qualified or exempt status.

      


      (e)
      Absence of Certain
Liabilities and Events.  There has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Plan.  The Company has not incurred any
liability for any penalty or tax arising under Section 4971, 4972, 4980, 4980B
or 6652 of the Code or any liability under Section 502 of ERISA, and no fact or
event exists that could give rise to any such liability.  The Company
has not incurred any liability under, arising out of or by operation of Title IV
of ERISA (other than liability for premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), including any liability in
connection with (i) the termination or reorganization of any employee benefit
plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer
Plan or Multiple Employer Plan, and no fact or event exists that could give rise
to any such liability.  No complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
Plan.  No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or is expected to occur with respect to any Plan subject to
Title IV of ERISA.  No Plan had an accumulated funding deficiency
(within the meaning of Section 302 of ERISA or Section 412 of the Code), whether
or not waived, as of the most recently ended plan year of such
Plan.  None of the assets of the Company is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code; the Company
has not been required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code; and no fact or event exists which could give rise to any
such lien or requirement to post any such security.


      
        
           


        

        
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      (f) 
     Plan Contributions and
Funding.  All contributions, premiums or payments required to
be made with respect to any Plan prior to the Closing Date have been or will be
made on or before their due dates.  All such contributions have been
fully deducted for income tax purposes and no such deduction has been challenged
or disallowed by any Governmental Authority, and to the Knowledge of the
Sellers, no fact or event exists that could give rise to any such challenge or
disallowance.

      


      (g)      WARN
Act.  The Company is in compliance with the requirements of the
Workers Adjustment and Retraining Notification Act (the “WARN Act”) and has no
Liabilities pursuant to the WARN Act.

      


      Section 3.18  
Labor
Matters.  (a)  Neither
the Company nor the Institution is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or the Institution, and to the Knowledge of the Sellers, currently there
are no organizational campaigns, petitions or other unionization activities
seeking recognition of a collective bargaining unit that could materially affect
the Company or the Institution.

      


      (b)      There
are no unfair labor practice complaints pending against the Company or the
Institution before the National Labor Relations Board or any other Governmental
Authority.

      


      (c)      The
Company is currently in compliance in all material respects with all applicable
Laws relating to the employment of labor, including those related to wages,
hours, collective bargaining and the payment and withholding of taxes and other
sums as required by the appropriate Governmental Authority and has withheld and
paid to the appropriate Governmental Authority or is holding for payment not yet
due to such Governmental Authority all amounts required to be withheld from
employees of the Company and is not liable for any arrears of wages, Taxes,
penalties or other sums for failure to comply with any of the
foregoing.

      


      (d)      The
Company has paid in full to all its respective employees, or adequately accrued
for in accordance with GAAP, all wages, salaries, commissions, bonuses, benefits
and other compensation due to or on behalf of such employees.

      


      (e)      There
is no Claim with respect to payment of wages, salary or overtime pay that has
been asserted or is now pending or, to the Knowledge of the Sellers, threatened
before any Governmental Authority with respect to any Persons currently or
formerly employed by the Company.

      


      (f) 
     The Company is not a party to, or otherwise
bound by, any consent decree with, or citation by, any Governmental Authority
relating to employees or employment practices.


      
        
           


        

        
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      (g)      There
is no charge or proceeding with respect to a violation of any occupational
safety or health standard that has been asserted or is now pending or, to the
Knowledge of the Sellers, threatened, with respect to the Company.

      


      (h)      Except
as set forth in Section 3.18(h) of the
Disclosure Schedule, there is no charge of discrimination in employment
or employment practices, for any reason, including age, gender, race, religion
or other legally protected category, which has been asserted or is now pending
or, to the Knowledge of the Sellers, threatened before the United States Equal
Employment Opportunity Commission, or any other Governmental Authority with
respect to the Company.

      


      Section
3.19   Assets.  (a)  Except
as set forth on Section 3.19(a) of the
Disclosure Schedule, the Company has good and marketable title to, or in
the case of leased Assets and Licensed Intellectual Property, a valid and
subsisting leasehold interest in or lawful right to use, as applicable, all the
Assets, free and clear of all Encumbrances except Permitted
Encumbrances.

      


      (b)      The
Company owns, leases or has the legal right to use, as applicable, all the
properties and assets, including the Owned Intellectual Property, the Licensed
Intellectual Property, the Company IP Licenses, the Leased Real Property and the
Tangible Personal Property, used or intended to be used in the conduct of the
Business or otherwise owned, leased or used by the Company, and, with respect to
contract rights, is a party to and enjoys the right to the benefits of all
contracts, agreements and other arrangements used or intended to be used by the
Company or in or relating to the conduct of the Business, all of which
properties, assets and rights constitute Assets.

      


      (c)      The
Assets constitute all the properties, assets and rights forming a part of, used,
new or intended to be used in, and all such properties, assets and rights as are
necessary in the conduct of the Business, and at all times the Sellers have
caused the Assets to be maintained in accordance with good business practice,
and all the Assets are in good operating condition and repair and are suitable
for the purposes for which they are used and intended (subject to ordinary wear
and tear).

      


      (d)      The
Sellers have the complete and unrestricted power and unqualified right to sell,
assign, transfer, convey and deliver the Assets to the Purchaser without penalty
or other adverse consequences.  Following the consummation of the
transactions contemplated by this Agreement and the execution of the instruments
of transfer contemplated by this Agreement, the Purchaser will own, with good,
valid and marketable title, or lease, under valid and subsisting leases, or
otherwise acquire the interests of the Sellers in the Assets, free and clear of
any Encumbrances, other than Permitted Encumbrances, and without incurring any
penalty or other adverse consequence, including any increase in rentals,
royalties, or license or other fees imposed as a result of, or arising from, the
consummation of the transactions contemplated by this Agreement.

      


      Section 3.20  
Student
Lists.  (a)  Section 3.20(a) of the
Disclosure Schedule lists the names and educational programs of all
students enrolled at the Institution as of the date hereof for the then current
academic period.


      
        
           


        

        
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      (b)      Section 3.20(b) of the
Disclosure Schedule lists the names and intended educational programs of
all students enrolled at the Institution as of the date hereof for future
academic periods and not otherwise included in Section 3.20(a) of the
Disclosure Schedule.

      


      Section 3.21  
Student
Financial Records.  True
and complete copies of the financial records for each student have been provided
or made available to the Purchaser by the Sellers.

      


      Section 3.22  
Certain
Interests.  Except
as set forth in Section 3.22 of the
Disclosure Schedule, no director, manager, member, stockholder or officer
of any Seller, the Company or the Institution, and no relative or spouse (or
relative of such spouse) who resides with, or is a dependent of, any such
Person:

      


      (a)      has
any direct or indirect financial interest in or with respect to (i) any
competitor or supplier of the Company or the Business or (ii) any other party to
any arrangement or contract (including a lease) relating to the Company or the
Business; provided, however, that the
ownership of securities representing no more than one percent of the outstanding
voting power of any competitor or supplier, and which are also listed on any
national securities exchange, shall not be deemed to be a “financial interest”
so long as the Person owning such securities has no other connection or
relationship with such competitor or supplier;

      


      (b)      owns,
directly or indirectly, in whole or in part, or has any other interest in any
tangible or intangible property which the Company or the Institution uses or has
used in the conduct of the Business or otherwise; or

      


      (c)      has
outstanding any Indebtedness to the Company or the Institution.

      


      Section
3.23   Taxes.  (a)  (i) All
Tax Returns required by applicable Law to be filed by or with respect to the
Company prior to the Closing Date have been or will be timely filed;
(ii) all Taxes required to be shown on such Tax Returns or otherwise due
prior to the Closing Date in respect of the Company have been or will be timely
paid; (iii) all such Tax Returns are true, correct and complete in all
material respects; (iv) no adjustment relating to such Tax Returns has been
proposed formally or informally by any Governmental Authority, and no basis
exists for any such adjustment; (v) there are no pending or, to the
Knowledge of the Sellers, threatened Actions for the assessment or collection of
Taxes against the Company; (vi) there are no Tax liens on
any assets of the Company, other than Permitted Encumbrances; (vii) no
Seller nor any Affiliate of any Seller is a party to any agreement or
arrangement that would result, separately or in the aggregate, in the actual or
deemed payment by the Company of any “excess parachute payments” within the
meaning of Section 280G of the Code (without regard to
Section 280G(b)(4) of the Code); (viii) no acceleration of the vesting
schedule for any property that is substantially unvested within the meaning of
the regulations under Section 83 of the Code will occur in connection with
the transactions contemplated by this Agreement; (ix) none of the Sellers
is a foreign person as such term is defined in Section 1445 of the Code;
(x) the Company has properly and timely withheld, collected and deposited
all Taxes that are required to be withheld, collected and deposited under
applicable Law; (xi) the Company is
not doing business in or engaged in a trade or business in any jurisdiction in
which it has not filed all required Tax Returns, and no notice or inquiry
has been received from any jurisdiction in which Tax Returns have not been filed
by the Company to the effect that the filing of Tax Returns may be required; and
(xii) the Company has not been at any time a member of any
consolidated, unitary, combined, affiliated or similar group for Tax purposes
(other than, with respect to the Company, a group that includes only other
Companies or Subsidiaries) or a member of any partnership or joint venture or
the holder of a beneficial interest in any trust for any period for which the
statute of limitations for any Tax has not expired.


      
        
           


        

        
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      (b)     
(i) there are no
outstanding waivers or agreements extending the statute of limitations for any
period with respect to any Tax to which the Company may be subject;
(ii) there are no requests for information currently outstanding that could
affect the Taxes of the Company; (iii) there are no proposed reassessments
of any property owned by the Company or other proposals that could increase the
amount of any Tax to which the Company would be subject; (iv) no power of
attorney that is currently in force has been granted with respect to any matter
relating to Taxes that could affect the Company; (v) the Company
(A) does not have an unrecaptured overall foreign loss within the meaning
of Section 904(f) of the Code, or (B) has not participated in or
cooperated with an international boycott within the meaning of Section 999
of the Code; (vi) the Company has no (A) income reportable for a
period ending after the Closing but attributable to a transaction (e.g., an installment
sale) occurring in, or a change in accounting method made for, a period ending
on or prior to the Closing that resulted in a deferred reporting of income from
such transaction or from such change in accounting method (other than a deferred
intercompany transaction) or (B) deferred gain or loss arising out of any
deferred intercompany transaction; and (vii) no Indebtedness attributable to the
Company is characterized as equity for federal income Tax purposes.

      


      (c)     
 (i) Section 3.23(c) of the
Disclosure Schedule lists all income, information, franchise and similar
Tax Returns (federal, state, local and foreign) filed with respect to the
Company for taxable periods ended on or after January 1, 2004, indicates the
most recent income, information, franchise or similar Tax Return for each
relevant jurisdiction for which an audit has been completed or the statute of
limitations has lapsed, and indicates all Tax Returns that currently are the
subject of audit; (ii) the Sellers have delivered or made available to the
Purchaser correct and complete copies of all federal, state and foreign income,
information, franchise and similar Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company since
January 1, 2005; and
(iii) the Sellers have delivered or made available to the Purchaser a true
and complete copy of any tax-sharing or allocation agreement or arrangement
involving the Company and a true and complete description of any such unwritten
or informal agreement or arrangement.

      


      (d)    
 On the Estimated Closing Balance Sheet, reserves and allowances
have been provided, and on the Closing Balance Sheet, reserves and allowances
will be provided, in each case adequate to satisfy all Liabilities for Taxes
relating to the Company for all taxable periods through the Closing (without
regard to the materiality thereof).

      


      Section
3.24   Insurance.  All
material assets, properties and risks of the Company are, and for the past five
years have been, covered by valid and, except for insurance policies that have
expired under their terms in the ordinary course, currently effective insurance
policies or binders of insurance (including general liability insurance,
property insurance and workers’ compensation insurance) issued in favor of the
Company, as the case may be, in each case with responsible insurance companies,
in such types and amounts and covering such risks as are consistent with
customary practices and standards of companies engaged in businesses and
operations similar to those of the Company.


      
        
           


        

        
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      Section 3.25  
Educational
Approvals.  (a)  Section 3.25(a) of the Disclosure
Schedule lists, with respect to the Company and the Institution, each
Educational Approval issued by any Educational Agency since the Compliance Date
to the Company or the Institution (i) with respect to any educational program(s)
offered by the Company or the Institution, (ii) with respect to the authority of
the Company or the Institution to recruit students in any state where it engages
employees or agents to recruit students, and (iii) with respect to all
locations, branches, campuses, buildings, classrooms, learning sites, and
facilities at which any portion of an educational program is offered or taught
in whole or in part by or in association with the Institution.  The
Sellers have delivered or made available to Purchaser complete and correct
copies of all Educational Approvals.

      


      (b)      The
current Educational Approvals set forth on Section 3.25(a) of the Disclosure
Schedule are in full force and effect, including provisional and
non-provisional certifications, and no proceeding for the suspension,
limitation, revocation, condition, restriction, withdrawal, termination or
cancellation of any of them is pending or, to the Knowledge of the Sellers, has
been threatened.  There are no facts, circumstances or omissions
concerning the Company or the Institution that could result in such a
proceeding.  Neither the Company nor the Institution have received any
notice that any of the Educational Approvals set forth on Section 3.25(a) of the Disclosure
Schedule will not be renewed (to the extent that renewal is required) and
there is no basis for any such nonrenewal (if applicable).

      


      Section 3.26 Compliance with Educational
Laws. (a) Since the Compliance Date, and except as set forth on Section 3.26(a) of the
Disclosure Schedule, the Company and the Institution has been and is in
compliance in all material respects with any and all applicable Educational
Laws.

      


      (i)  
     The Company and the Institution currently
hold and, since the Compliance Date, have held all Educational Approvals
required under all laws, rules, regulations, standards and requirements of any
Educational Agency, including all Educational Approvals for each education
program the Company or the Institution has offered and for each campus,
location, or facility where such entity offered all or any portion of an
educational program.

      


      (ii) 
     Since the Compliance Date, the Company and
the Institution have complied in all material respects with the terms and
conditions of all such Educational Approvals.  Since the Compliance
Date, the Company and the Institution have complied with all Educational Laws of
all applicable Educational Agencies. 

      


      (iii)      Since
the Compliance Date, the Company and the Institution have timely notified, and
obtained all required approvals from all applicable Educational Agencies for
each substantive change in the Company or the Institution, including any
addition of new education programs or changes in ownership, control or
governance.


      
        
           


        

        
          39

          
            

          

        

        
           


        

      


      (iv)      Since
the Compliance Date, neither the Company nor the Institution has received notice
that the Company or the Institution is in violation of any of the terms or
conditions of any Educational Approval or alleging the failure to hold or obtain
any Educational Approval.  There are no facts or circumstances
concerning the operations or management of the Institution that reasonably could
result in the denial or delay in issuance of any Educational Approval to be
issued in connection with the consummation of the transactions contemplated
under this Agreement.

      


      (v)      Section 3.26(a)(v) of the Disclosure
Schedule lists each program pursuant to which financial assistance is
provided or, since the Compliance Date, has been provided, to or on behalf of
the students of the Institution.

      


      (vi)      The
facilities listed on Section 3.26(a)(vi) of the
Disclosure Schedule are and, since the Compliance Date, have been the
only addresses at which the Company, and the Institution have offered
educational instruction or otherwise operated.  With respect to any
facility that has closed or at which the Institution ceased operating
instruction, the Company and the Institution materially complied with all
applicable laws and all Accrediting Body and Educational Agency standards
related to the closure or cessation of instruction at a location or campus,
including requirements for teaching out students from that location or
campus.

      


      (b)      Without
limiting the foregoing provisions in Section
3.26(a):

      


      (i)  
     The Company and the Institution possess,
and since the Compliance Date, have possessed, all requisite Educational
Approvals to operate the Institution in each jurisdiction in which the
Institution is located or in which they conduct any operations or are otherwise
required to obtain such Educational Approvals, including providing educational
services in person or via distance learning, student marketing or
recruiting.

      


      (ii)  
    The Institution is, and since the Compliance Date
has been, fully or provisionally certified by the U.S. DOE to participate in the
Title IV Programs and is party to, and in compliance with, a valid and effective
Program Participation Agreement with the U.S. DOE that is in full force and
effect.  Neither the Company nor the Institution is subject to, or
since the Compliance Date has been, threatened with, any fine, limitation,
suspension or termination proceeding, or subject to any other action or
proceeding by the U.S. DOE that could result in the suspension, limitation,
conditioning, or termination of certification or eligibility, or a liability or
fine.  To the Knowledge of the Sellers, there are no facts,
circumstances, or omissions concerning the Company or the Institution that
reasonably could result in such an action by the U.S. DOE.

      


      (iii)      The
Company and the Institution are, and since the Compliance Date have been, in
material compliance with all applicable rules, regulations and requirements
pertaining to the Institution’s participation in the Title IV
Programs.  To the Knowledge of the Sellers, there are no facts,
circumstances, or omissions concerning the Company or the Institution that
reasonably could result in a finding of material non-compliance with regard to
such rules, regulations and requirements.  Without limiting the
foregoing:


      
        
           


        

        
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      (A)  
    Since the Compliance Date, each educational
program offered by the Institution, including programs involving externships,
internships or consortium agreements, was and is an eligible program in
accordance with all applicable rules, regulations and requirements, including
the requirements of 34 C.F.R. § 668.8, and the Company and the Institution have
properly measured the length of such educational programs for the purpose of
disbursing Title IV Program funding to students enrolled in each such
program.

      


      (B)  
     Since the Compliance Date, the Institution has
possessed the Educational Approvals necessary for each campus, branch,
additional location and other facility or site at which the Institution offered
or students received all or part of an educational program and at which students
received funds under the Title IV Programs.  Since the Compliance
Date, the Institution has been duly qualified as a “proprietary institution of
higher education” as defined at 34 C.F.R. § 600.5.

      


      (C) 
      Except as set forth in Section 3.26(b)(iii)(C) of
the Disclosure Schedule, since the Compliance Date, neither the Company
nor the Institution has received notice from the U.S. DOE or any Educational
Agency that the Company or the Institution lacked financial responsibility or
administrative capability for any period.

      


      (D)  
    The Institution is and has been financially
responsible in accordance with the provisions of 34 C.F.R. §§ 668.171-175 and
any predecessor regulations for each fiscal year ending on or after the
Compliance Date.

      


      (E)   
    Since the Compliance Date, neither the Company
nor the Institution has received notice of a request by any Educational Agency
or governmental entity that the Company or the Institution post a Letter of
Credit or other form of surety with respect to the Institution for any reason,
including any request for a Letter of Credit based on late refunds pursuant to
34 C.F.R. § 668.173, 34 C.F.R. § 668.15 or any predecessor
regulation.

      


      (F)  
     Except as set forth on Section 3.26(b)(iii)(F) of
the Disclosure Schedule, since the Compliance Date, the U.S. DOE has not
placed the Company or the Institution on either the cash monitoring or
reimbursement methods of payment.

      


      (G)  
    Since the Compliance Date, the Company and the
Institution has timely filed with the U.S. DOE all required compliance audits
and audited financial statements, including those required by 34 C.F.R. § 668.23
or any predecessor regulation.

      


      (H)  
    Except as listed in Section 3.26(b)(iii)(H) of
the Disclosure Schedule, no audits, program reviews, investigations or
visits have been conducted by an Educational Agency or by a Governmental
Authority in connection with an Educational Approval or the Institution since
the Compliance Date, including but not limited to any U.S. DOE or guaranty
agency program reviews, U.S. DOE Office of Inspector General audits, U.S. DOE
Office of Inspector General investigations and Department of Justice
investigations.  Except as listed in Section 3.26(b)(iii)(H) of
the Disclosure Schedule, there is no audit, program review,
investigation, or visit that remains pending or is scheduled to
occur.  The Sellers have provided or made available to the Purchaser
true and complete copies of all correspondence, reports, determinations, audits
or other documents related to the items listed on Section 3.26(b)(iii)(H) of
the Disclosure Schedule.


      
        
           


        

        
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      (I) 
       Except as disclosed on Section 3.26(b)(iii)(I) of
the Disclosure Schedule, since the Compliance Date, the Company and the
Institution have calculated and paid refunds and calculated dates of withdrawal
and leaves of absence in material accordance with all applicable rules,
regulations and requirements, including the requirements of 34 C.F.R. § 668.22,
34 C.F.R. § 682.605 and any predecessor regulations.

      


      (J) 
      Except as listed in Section 3.26(b)(iii)(J) of
the Disclosure Schedule, since the Compliance Date, the Company and the
Institution have disbursed and processed Title IV Program funds in material
accordance with all applicable rules, regulations and requirements, including
the requirements of 34 C.F.R. § 668.164, 34 C.F.R. § 682.604 and any predecessor
regulations.

      


      (K) 
     Except as listed in Section 3.26(b)(iii)(K) of
the Disclosure Schedule, since the Compliance Date, the Company and the
Institution have properly determined students’ eligibility to obtain Title IV
Program funds for which they are eligible prior to disbursing, and have
disbursed, all Title IV Program funds in material accordance with all applicable
rules, regulations and requirements, including the requirements of 34 C.F.R. §
682.201, 34 C.F.R. § 668, Subpart C, and any predecessor
regulation.

      


      (L) 
     Since the Compliance Date, the Company and
the Institution have at all times complied with the limitations in 34 C.F.R. §
600.7 on the number of courses that the Institution may offer by correspondence
or telecommunications, the number of students who may enroll in such courses,
the number of students that were incarcerated, and the number of students that
had neither a high school diploma nor the recognized equivalent of a high school
diploma.

      


      (M)      Section 3.26(b)(iii)(M) of
the Disclosure Schedule lists the official published cohort default rates
for the Institution calculated by the U.S. DOE and issued pursuant to 34 C.F.R.
§ 668.181-186 or predecessor regulations, for the federal fiscal years 2004,
2005 and 2006.

      


      (N)
      Neither the Company nor the
Institution receives funds as a result of Federal Perkins
Loans.


      
        
           


        

        
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      (O)  
    For each fiscal year ending on or after the
Compliance Date, neither the Company nor the Institution has derived more than
ninety percent (90%) of its revenues from Title IV Program funds, as determined
in accordance with the applicable provisions of the HEA and 34 C.F.R. § 600.5(d)
and § 600.5(e) and guidance issued thereunder.  Section 3.26(b)(iii)(O) of
the Disclosure Schedule lists a correct statement of the percentage of
revenue from Title IV Program funds as determined in accordance with the
applicable provisions of the HEA and 34 C.F.R. § 600.5(d) and § 600.5(e) for
each of such fiscal years.

      


      (iv)      Except
as set forth on Section 3.26(b)(iv) of the
Disclosure Schedule, neither the Company nor the Institution is, nor
since the Compliance Date, has been placed on probation, reporting, monitoring
or warning status with any Educational Agency, nor has the Institution been
subject to any adverse action by any Educational Agency (including being
directed to show cause why accreditation or other Educational Approval should
not be revoked, withdrawn, conditioned, suspended, or limited) to revoke,
withdraw, deny, suspend, condition or limit its accreditation or other
Educational Approval.  To the Knowledge of the Sellers, there are no
facts, circumstances or omissions concerning the Company or the Institution that
reasonably could lead to any such actions by an Educational Agency.

      


      (v)      The
Company and the Institution have materially complied with all written
stipulations, conditions and other requirements imposed by any Educational
Agency at the time of, or since, the last issuance of any Educational Approval,
including but not limited to the timely filing of all required reports and
responses.

      


      (vi)      Neither
the nor the Institution provides, or since the Compliance Date, has provided or
contracted with any entity that provides, any commission, bonus or other
incentive payment based directly or indirectly on success in securing
enrollments or awarding financial aid to any persons or entities engaged in any
student recruiting or admissions activities or in making decisions regarding the
awarding of student financial aid.

      


      (vii) 
   Since the Compliance Date, all student financial aid
grants and loans, disbursements and record keeping relating thereto have been
completed by the Institution in material compliance with all federal and state
requirements, and there are no material deficiencies in respect
thereto.  Except as disclosed on Section 3.26(b)(vii) of the
Disclosure Schedule, since the Compliance Date, the students at the
Institution have been funded in material accordance with the rules regarding the
proper time for disbursement and in the amount for which they were eligible, and
such students’ records conform in form and substance, in all material respects,
to all relevant regulatory requirements.  All appropriate reports and
surveys have been accurately prepared, in all material respects, and filed
timely.

      


      (viii)
   Since the Compliance Date, no principal, affiliate (as
those terms are defined in 34 C.F.R. Part 85), owner, shareholder, member,
manager, trustee, or officer of the Company or the Institution or any other
individual or entity holding an ownership interest in the Company or the
Institution, whether legal or equitable, is or has been a principal, affiliate,
owner, shareholder or trustee or held an ownership interest, whether legal or
equitable, in any other post-secondary institution (whether or not participating
in the Title IV Programs).  


      
        
           


        

        
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      (ix)      Except
as set forth on Section 3.26(b)(ix) of the
Disclosure Schedule, since the Compliance Date, neither the Company nor
the Institution, nor any Person that exercises substantial control over the
Institution (as the term “substantial control” is defined in 34 C.F.R. §
668.174(c)(3)) or member of such Person’s family (as the term “family” is
defined in 34 C.F.R. § 668.174(c)(4)), alone or together, (A) exercises or
exercised substantial control over another school or third-party servicer (as
that term is defined in 34 C.F.R. § 668.2) that owes a liability for a violation
of a Title IV Program requirement or (B) owes a liability for a Title IV Program
violation.

      


      (x)
      Neither the Company nor the
Institution, nor any Person or entity that exercises substantial control over
the Company or the Institution, or member of such Person’s family, has filed for
relief in bankruptcy or had entered against it an order for relief in
bankruptcy.

      


      (xi)      Neither
the Company nor the Institution nor any of their employees has pled guilty to,
pled nolo contendere to, or been found guilty of, a crime involving the
acquisition, use or expenditure of funds under the Title IV Programs or been
judicially determined to have committed fraud involving Title IV Program
funds.

      


      (xii)     To
the Knowledge of the Sellers, neither the Company nor the Institution employs
nor, since the Compliance Date, has employed in a capacity that involves the
administration of Title IV Program funds or the receipt of funds under the Title
IV Programs, any individual that has been convicted of, or has pled nolo
contendere or guilty to, a crime involving the acquisition, use, or expenditure
of federal, state, or local government funds, or has been administratively or
judicially determined to have committed fraud or any other material violation of
Law involving federal, state or local government funds.  To the
Knowledge of the Sellers, neither the Company nor the Institution has contracted
with any institution or third-party servicer that has been limited, suspended or
terminated under the HEA, for a reason involving the acquisition, use, or
expenditure of federal, state, or local government funds, or that has been
administratively or judicially determined to have committed fraud or any other
material violation of Law involving federal, state or local government
funds.  To the Knowledge of the Sellers, neither the Company nor the
Institution has contracted with or employed any individual, agency or
organization that has been, or whose officers or employees have been convicted
of, or pled nolo contendere or guilty to, a crime involving the acquisition,
use, or expenditure of federal, state, or local government funds, or have been
administratively or judicially determined to have committed fraud or any other
material violation of Law involving federal, state, or local government
funds.

      


      (xiii)    Except
as listed in Section
3.26(b)(xiii) of the Disclosure Schedule, neither the nor the Institution
provides, or since the Compliance Date, has provided, any educational
instruction on behalf of any other institution or organization of any sort other
than the Institution.  No other institution or organization of any
sort provides, or since the Compliance Date, has provided, any educational
instruction on behalf of the Institution.


      
        
           


        

        
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      (xiv)    No
principal or, to the Knowledge of the Sellers, affiliate of the Company or the
Institution has been debarred or suspended, or engaged in any activity that is a
cause for debarment or suspension, pursuant to the U.S. DOE regulations at 34
C.F.R. Part 85.

      


      (c) 
     Except as listed in Section 3.26(c) of the
Disclosure Schedule, neither the Company nor the Institution has received
notice of any written student complaints or employee grievances made to the
Company or the Institution, or to any Accrediting Body or Educational Agency,
whether received from any current or former student or any applicant, or
received from any Educational Agency in relation to any such complaint or
grievance, or sent by or on behalf of the Company or the Institution in regard
to any such complaint, in each case (except as expressly otherwise indicated),
on or after the Compliance Date.  The Sellers have delivered or made
available to the Purchaser correct and complete copies of any such written
complaint or grievance and related correspondence.

      


      (d)     
The Sellers have delivered or made available to the Purchaser true and
materially complete copies of all correspondence (excluding general
correspondence routinely sent to, or received from, any Educational Agency)
received from or sent by or on behalf of the Company or the Institution to any
Educational Agency to the extent such correspondence (i) was sent or received
since the Compliance Date or relates to any issue that remains pending, and (ii)
relates to (A) any notice that any Educational Approval is not in full force and
effect or that an event has occurred which constitutes or, with the giving of
notice or the passage of time or both, would constitute a breach or violation
thereunder; (B) any notice that the Company, the Institution, or any Affiliate,
employee, or agent of the Company or the Institution has violated or is
violating any Educational Law, including any law related to the Title IV
Programs, or any criterion, rule, standard, or other written guidance of any
applicable accrediting body, or any law, regulation, or requirement related to
maintaining and retaining in full force and effect any and all Educational
Approvals necessary for the existing operations of, and receipt of financial
assistance by, the Company or the Institution; (C) any audits, program reviews,
inquiries, investigations, or site visits conducted by any Educational Agency,
any guaranty agency, or any independent auditor reviewing compliance by the
Company or the Institution with any Educational Law or Educational Approval; (D)
the qualification of the Company, the Institution or any Affiliate thereof for
the receipt of financial assistance; (E) any written notice of an intent to
limit, suspend, terminate, revoke, cancel, not renew, or condition the
Educational Approvals of, or the provision of financial assistance to, the
Company, the Institution or to the Institution’s students; (F) any written
notice of an intent or threatened intent to condition the provision of financial
assistance to the Company or the Institution on the posting of a Letter of
Credit or other surety in favor of the U.S. DOE; (G) written notice of an intent
to provisionally certify the eligibility of the Company or the Institution to
participate in the Title IV Programs; or (H) the placement or removal of the
Company or the Institution on or from the reimbursement method of payment or any
method of payment other than the advance payment method under the Title IV
Programs.


      
        
           


        

        
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      (e)     
 Section 3.26(e) of the
Disclosure Schedule sets forth a complete list of all policy manuals and
other statements of procedures or instruction relating to (i) recruitment of
students at the Institution, including procedures for assisting in the
application by prospective students for direct or indirect funding under state
or Title IV Programs; (ii) admissions procedures, including any descriptions of
procedures for insuring compliance with federal, state and accrediting body
requirements applicable to such procedures; (iii) procedures for encouraging and
verifying attendance, minimum required attendance policies, and other relevant
criteria relating to course performance requirements and completion; and (iv)
procedures for processing, disbursing, and returning Title IV Program funds,
except as contained in the catalogs of the Company or the Institution previously
provided or made available to the Purchaser (collectively, the “Policy
Guidelines”).  The Sellers have delivered or made available to
the Purchaser true, correct and materially complete copies of all Policy
Guidelines.

      


      (f)      
Since the Compliance Date, the operations of the Company and the
Institution have been conducted in material accordance with the Policy
Guidelines which comply in all material respects with all applicable rules,
regulations and requirements.  Complete and correct books and records
for all present and past students attending the Institution have been maintained
consistent with the operations of a school business in all material
respects.  All forms and records have been prepared, completed,
maintained and filed in material accordance with all applicable laws, and are
materially complete and correct.

      


      (g)     
Since the Compliance Date, neither the Company nor the Institution has
received any written or oral notice of, and there is not any currently
unresolved investigation, review, audit, compliance review or site visit
relating to the Institution’s participation in and administration of the Title
IV Programs or other financial assistance programs or its compliance with the
requirements of any other Educational Agency.  The Sellers have
delivered or made available to the Purchaser correct and complete copies of all
annual federal financial aid compliance audits and audited financial statements
filed with the U.S. DOE pursuant to 34 C.F.R. § 668.23 for all fiscal years
ending after the Compliance Date and have listed in Section 3.26(g) of the
Disclosure Schedule and provided or made available correct and complete
copies of all material correspondence related to any draft or final
investigative reports, program reviews, audits or compliance reviews received
from any other Educational Agency since the Compliance Date.  Other
than the matters listed in Section 3.26(g) of the
Disclosure Schedule, to the Knowledge of the Sellers, there are no
current investigations, reviews or audits of the operation of the financial
assistance programs of the Institution or any current investigation, review or
audit of any institution by any Educational Agency or other governmental
authority.

      


      (h) 
     Except as set forth in Section 3.26(h) of the
Disclosure Schedule, there are no surety bonds or other forms of security
that the Company or the Institution have been required to file since the
Compliance Date with any Educational Agency with respect to its state
authorization, federal eligibility, recruiter permits or other
matters.

      


      (i)       
Neither the Company nor the Institution has paid or otherwise extended
any points, premiums, payments or additional interest of any kind to any
eligible lender or any other party to secure funds for making loans or induce a
lender to make loans to either the students or parents of students at the
Institution or to a particular category of students or their
parents.  Neither the Institution nor any officer, employee or agent
of the Company or the Institution has solicited, accepted, or received, directly
or indirectly, any benefit or item of more than nominal value from or on behalf
of a lending institution in connection with educational loans for or on behalf
of the Company’s or the Institution’s students.  Neither the Company
nor the Institution has received any written notice of any investigation by any
Governmental Authority or Educational Agency that any lender or marketing agent
has provided, directly or indirectly, points, premiums, payments, or other
inducements to the Company, the Institution, or any employee or agent of the
Company, to secure applicants for Federal Family Education Loan Program
loans.  No lender or marketing agent has provided, directly or
indirectly, points, premiums, payments, or other inducements to the Company or
the Institution, or any employee or agent of the Company or the Institution, to
secure applicants for Federal Family Education Loan Program
loans.


      
        
           


        

        
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      (j)   
    Since the Compliance Date, all employees of the
Company and the Institution have engaged in student recruiting activities have
maintained the necessary state approvals to conduct such
activities.  The Company and the Institution have maintained material
compliance with the rules and regulations applicable to the recruitment of
students.

      


      (k) 
     Since the Compliance Date, the Company and
the Institution have complied with federal and state laws regarding
misrepresentation including but not limited to 34 C.F.R. § 668 subpart F, and
(i) have not included in its catalogs or advertising literature reference to any
Educational Approval which the Company or the Institution did not at the time
possess, and (ii) have not misrepresented prospective or enrolled students that
the academic programs provided by such Company or the Institution prepare
students for any certification, licensure or employment test for which the
Company or the Institution is or was not qualified or authorized to prepare
students.  Section 3.26(k) of the
Disclosure Schedule lists all certification, licensure or employment
tests for which the Company and the Institution represents its academic programs
prepare students.

      


      (l) 
      To the Knowledge of the Sellers,
there exists no fact or set of facts with respect to the operation of the
Institution prior to the Closing Date which could have a negative effect on the
ability of the Institution to obtain any Educational Approval under the
ownership of the Purchaser without such burdensome or unusual conditions as, in
the reasonable determination of the Purchaser, would materially reduce the
economic benefits that the Purchaser expects to receive from the consummation of
the transactions contemplated by this Agreement.

      


      Section
3.27   Employees.  Section 3.27 of the
Disclosure Schedule lists the name, place of employment, the current
annual salary rates, bonuses, deferred or contingent compensation, pension,
accrued vacation, “golden parachute” and other like benefits paid or payable (in
cash or otherwise) in 2007 and 2008, the date of employment and a description of
the position and job function of each current salaried employee, officer,
director, consultant or agent of the Company or the Institution.

      


      Section 3.28  
Certain
Business Practices.  None
of the Sellers, the Company or the Institution or any of their respective
directors, officers, agents, representatives or employees (in their capacity as
directors, officers, agents, representatives or employees) has:  (a)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity in respect of the Business; (b)
directly or indirectly, paid or delivered any fee, commission or other sum of
money or item of property, however characterized, to any finder, agent, or other
party acting on behalf of or under the auspices of a governmental official or
Governmental Authority, in the United States or any other country, which is in
any manner illegal under any Law of the United States or any other country
having jurisdiction; or (c) made any other unlawful payment or given any other
unlawful consideration in respect of the Business.


      
        
           


        

        
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      Section 3.29  
Brokers.  No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement or the Ancillary Agreements based upon arrangements made by or on
behalf of any Seller.

      


      Section 3.30  
No Other
Representations.  None of the Sellers, or any of their
respective affiliates, directors, officers, employees, agents or representatives
has made, or shall be deemed to have made, and no Seller is liable for or bound
in any manner by, any express or implied representations, warranties,
guaranties, promises or statements pertaining to their business or any of their
assets except as specifically set forth in this Agreement or the Ancillary
Agreements.

      
      

      
      

      ARTICLE
IV

      


      REPRESENTATIONS
AND WARRANTIES OF PARENT AND THE PURCHASER

      


      As an
inducement to the Sellers to enter into this Agreement, the Parent and the
Purchaser hereby represents and warrants to the Sellers as follows:

      


      Section 4.01  
Organization,
Authorization and Qualification of the Parent and the
Purchaser.  (a)  The Purchaser is a limited liability
company duly organized and validly existing and in good standing under the laws
of the State of Delaware and has not conducted any business operations except
operations incident to the transactions contemplated by this
Agreement.  As of the Closing, the Purchaser shall not have any assets
or Liabilities.  The Purchaser has all necessary power and authority
to enter into this Agreement and the Ancillary Agreements to which the Purchaser
is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The
execution and delivery by the Purchaser of this Agreement and the Ancillary
Agreements to which the Purchaser is a party, the performance by the Purchaser
of its obligations hereunder and thereunder and the consummation by the
Purchaser of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Purchaser.  This
Agreement has been, and upon their execution the Ancillary Agreements to which
the Purchaser is a party shall have been, duly executed and delivered by the
Purchaser, and (assuming due authorization, execution and delivery by the other
parties hereto and thereto) this Agreement constitutes, and upon their execution
such Ancillary Agreements shall constitute, legal, valid and binding obligations
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, except as the same may be limited by applicable bankruptcy,
insolvency (including all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting creditors’ rights
generally, now or hereafter in effect, and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).


      
        
           


        

        
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      (b) 
     The Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary power and authority to enter into this Agreement and the
Ancillary Agreements to which the Parent is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.  The
Parent is duly licensed or qualified to do business and is in good standing in
each jurisdiction which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary, except to the
extent that the failure to be so licensed or qualified and in good standing
would not (i) adversely affect the ability of the Parent to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements to which the Parent is a party or (ii)
otherwise have a material adverse effect on the business, results of operations
or financial condition of the Parent.  The execution and delivery by
the Parent of this Agreement and the Ancillary Agreements to which the Parent is
a party, the performance by the Parent of its obligations hereunder and
thereunder and the consummation by the Parent of the transactions contemplated
by this Agreement and the Ancillary Agreements have been duly authorized by all
requisite action on the part of the Parent, and, if required by Law, its
shareholders.  This Agreement has been, and upon their execution the
Ancillary Agreements to which the Parent is a party shall have been, duly
executed and delivered by the Parent, and (assuming due authorization, execution
and delivery by the other parties hereto and thereto) this Agreement
constitutes, and upon their execution such Ancillary Agreements shall
constitute, legal, valid and binding obligations of the Parent, enforceable
against the Parent in accordance with their respective terms, except as the same
may be limited by applicable bankruptcy, insolvency (including all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors’ rights generally, now or hereafter in effect, and subject to the
effect of general principles of equity (regardless of whether considered in a
proceeding at law or in equity).

      


      (c) 
     To the knowledge of the Parent and the
Purchaser, there exists no fact or set of facts with respect to the Purchaser
that would reasonably be likely to have a negative effect on the ability of the
Institution to obtain the approval of the change in ownership by any Educational
Agency listed in Section 4.03 of the
Disclosure Schedule.

      


      Section
4.02   No
Conflict.  Assuming the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.03
of the Disclosure Schedule, except as may result from any facts or
circumstances relating solely to the Seller, the execution, delivery and
performance by the Parent and the Purchaser of this Agreement and the Ancillary
Agreements to which the Parent or the Purchaser is a party, as the case may be,
do not and will not (a) violate, conflict with or result in the breach of
any provision of the certificate of formation or limited liability agreement of
the Parent or the Purchaser, (b) conflict with or violate any Law or
Governmental Order applicable to the Parent or the Purchaser or
(c) conflict with, or result in any breach of, constitute a default (or
event that with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
any note, bond, mortgage or indenture, contract, agreement, lease, license,
permit, franchise or other instrument or arrangement to which the Parent or the
Purchaser is a party or to which any of its assets or properties are bound or
affected, which would materially and adversely affect the ability of the Parent
or the Purchaser to carry out their obligations under, and to consummate the
transactions contemplated by, this Agreement or the Ancillary Agreements to
which the Parent or the Purchaser is a party, as the case may
be.


      
        
           


        

        
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      Section 4.03  
Governmental Consents and
Approvals.  Except for the Required Consents or as otherwise
set forth on Section 4.03 of the
Disclosure Schedule, the execution, delivery and performance by the
Parent and the Purchaser of this Agreement and each Ancillary Agreement to which
the Parent or the Purchaser is a party, as the case may be, do not and will not
require any consent, approval, authorization or other order of, action by,
filing with, or notification to any Governmental Authority or Educational
Agency.  To the knowledge of the Parent and the Purchaser there is no
reason why all the Required Consents or the consents listed on Section 4.03 of the
Disclosure Schedule will not be received.

      


      Section
4.04   Litigation.  No
Action by or against the Parent or the Purchaser is pending or, to the knowledge
of the Parent or the Purchaser, threatened, that could affect the legality,
validity or enforceability of this Agreement, any Ancillary Agreement or the
consummation of the transactions contemplated hereby or thereby.

      


      Section
4.05   Financing.  The
Purchaser has or will have available, prior to the Closing, sufficient funds
necessary to consummate the transactions contemplated by this Agreement and the
Ancillary Agreements and acknowledges and affirms that it is not a condition to
Closing or any of its other obligations under this Agreement that the Purchaser
obtain financing for or relating to any of the transactions contemplated by this
Agreement and the Ancillary Agreement.

      


      Section
4.06   Brokers.  No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement or the Ancillary Agreements based upon arrangements made by or on
behalf of the Parent or the Purchaser.

      


      Section 4.07  
No Other
Representations.  None of the Parent, the Purchaser, or any of
their affiliates, directors, officers, employees, agents or representatives has
made, or shall be deemed to have made, and neither the Parent nor the Purchaser
is liable for or bound in any manner by, any express or implied representations,
warranties, guaranties, promises or statements pertaining to their business or
any of their assets except as specifically set forth in this Agreement or the
Ancillary Agreements.

      


      


      ARTICLE
V

      


      ADDITIONAL
AGREEMENTS

      


      Section 5.01  
Conduct of Business Prior to the
Closing.  (a)  The Sellers covenant and agree that,
between the date hereof and the Closing Date, except as specifically permitted
elsewhere in this Agreement, the Company shall not, and the Sellers shall cause
the Institution not to, conduct the Business other than in the ordinary course
and consistent with past practice.  Without limiting the generality of
the foregoing, the Sellers shall cause the Company and the Institution to
(i) not take any action with respect to any Leased Real Property that would
impair or affect in any material respect the Company’s and the Institution’s
continued ability to use any Leased Real Property; (ii) exercise, but only
after notice to the Purchaser and receipt of the Purchaser’s prior written
approval, any rights of renewal pursuant to the terms of any of the leases set
forth on Section
3.15(b) of the Disclosure Schedule and any Ancillary Lease Documents that
by their terms would otherwise expire; and (iii) not engage in any
practice, take any action, fail to take any action or enter into any transaction
that could cause any representation or warranty of the Sellers regarding the
Company, the Business or the Institution to be untrue in any material respect or
result in a breach of any covenant made by the Sellers in this
Agreement.


      
        
           


        

        
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      (b)      Except
as described in Section 5.01(b) of the
Disclosure Schedule, the Sellers covenant and agree that, between the
date hereof and the Closing Date, without the prior written consent of the
Purchaser, no Seller and neither the Company nor the Institution will do any of
the things specified in the second sentence of Section 3.08
(including clauses (a) through (bb) thereof), subject to the
exceptions set forth therein.

      


      Section 5.02  
Access to
Information.  (a)  From the date hereof until the
Closing Date, upon reasonable prior notice, the Sellers shall cause their and
the Company’s and the Institution’s officers, directors, employees, agents,
representatives, accountants and counsel to:  (i) afford the
officers, employees, agents, accountants, counsel, financing sources and
representatives of the Purchaser and the Parent reasonable access, during normal
business hours, to the offices, properties, plants, other facilities and books
and records of the Company and the Institution, and to those officers,
directors, employees, agents, accountants, managers, personnel and counsel of
the Sellers, the Company and the Institution who have any knowledge relating to
the Institution as they may reasonably request from time to time, provided that such
access does not unreasonably interfere with the operations of the party
providing such access; (ii) furnish to the officers, employees, agents,
accountants, counsel, financing sources and representatives of the Purchaser and
the Parent such additional financial and operating data and other information
regarding the assets, properties and Liabilities of the Company and the
Institution (or legible copies thereof) as they may from time to time reasonably
request; and (iii) otherwise cooperate with the Purchaser, the Parent, and their
representatives in connection with their due diligence investigation or
negotiations in connection with the consummation of the transactions
contemplated hereby.  Notwithstanding the foregoing, the Sellers shall
not be required to provide access to any information or take any other action
that would constitute a waiver of the attorney-client privilege.

      


      (b)      Subject
to Section 6.06
(relating to Tax matters), until the later of (i) seven years after the
Closing and (ii) the expiration of the relevant record retention period
under any Governmental Authority or Educational Agency requirements, none of the
Sellers, the Company, the Purchaser or the Parent will destroy or otherwise
dispose of any of the books, records, files or documents in its possession that
relate to the Company or the Institution for the periods prior to the Closing
without giving the other party hereto at least 90 days’ prior written
notice and an opportunity, at such other party’s cost and expense, to take
possession or make extracts or copies thereof.  “Books, records, files
or documents” shall include copies of any insurance policies, testing logs,
applications for admission, all student records, including student accounts,
accreditation reports, personnel files, financial statements, operational
reports, policies and procedures, correspondence, all reports prepared for or
provided to any Governmental Authority or Educational Agency, all records
retained pursuant to relevant Governmental Authority or Educational Agency
requirements and any other books, records, files or documents.  After
the Closing Date, each party hereto shall permit the other party, its officers,
counsel, accountants and other authorized representatives during normal business
hours and on reasonable prior written notice, to have access to and examine and
make copies of any books, records, files or documents in its possession that
relate to or concern the Institution or their operations for the periods prior
to the Closing; provided that such
access does not unreasonably interfere with the operations of the party
providing such access; provided, further, that the
party requesting access to such books, records, files or documents will bear any
costs, other than wages and salaries and employee benefits of relevant
personnel, of obtaining such access.  All information obtained shall
be kept confidential in accordance with the Non-Disclosure Agreement, dated June
6, 2008, by and between Lincoln Educational Services Corporation and BIT, as
amended on July 23, 2008 and the Non-Disclosure Agreement, dated July 10, 2008,
by and among Lincoln Educational Services Corporation, BIT and UGP (the “Non-Disclosure
Agreement”).


      
        
           


        

        
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      (c)      Each
Seller agrees to, and shall cause its agents, representatives, employees,
officers and directors to, keep confidential all nonpublic information in their
possession regarding the Assets, the Company, the Institution or Business
(including any information made available to the Sellers pursuant to this Section 5.02)
unless the Parent and the Purchaser consent to such disclosure; provided, however, that no
Seller will be required to maintain as confidential any information that
(i) becomes generally available to the public other than as a result of
disclosure by any Seller or any of their respective agents, representatives,
employees, officers and directors in breach of this Agreement; (ii) is
subsequently received by the Company or the Institution or any of their
Affiliates or representatives from a third party that is not under any
obligation of confidentiality to the Parent or the Purchaser with respect to
such information or (iii) is required to be disclosed pursuant to the terms of a
valid subpoena or order by any Governmental Authority or Educational Agency or
under any Law or other legal requirement; provided further that, in the
event that any Seller or any such agent, representative, employee, officer or
director becomes legally compelled to disclose any such information, (A) 
such Seller shall provide the Purchaser with prompt written notice of such
requirement so that the Purchaser may seek a protective order or other remedy or
waive compliance with this Section 5.02 and
(B) in the event that such protective order or other remedy is not obtained
or the Purchaser waives compliance with this Section 5.02,
furnish only that portion of such confidential information which is legally
required to be provided and exercise its best efforts to obtain assurances that
confidential treatment will be accorded such information.

      


      Section 5.03  
Regulatory and Other
Authorizations; Notices and Consents.  (a)  The
Sellers shall cooperate fully with the Purchaser and use all commercially
reasonable efforts in good faith to assist the Purchaser in obtaining all
Required Consents and any other authorizations, consents, orders and approvals
(including any authorizations, consents, orders and approvals listed in Section 4.03 of the
Disclosure Schedule) that may be or become necessary for its execution
and delivery of, and the performance of its obligations pursuant to, this
Agreement and the Ancillary Agreements; provided, however, that no
Seller shall have any obligation to give any guaranty or other consideration of
any nature in connection with any authorizations, consents, orders and
approvals.  The Sellers agree to provide to the Purchaser such
information as any Educational Agencies or other parties may require, in
connection with their review of any related application.  The Sellers
agree to cooperate before and after the Closing at the Purchaser’s expense to
assist the Purchaser to obtain or renew any Educational Approvals or any other
necessary authorizations and approvals from Governmental Authorities or
Educational Agencies with respect to the Institution, including obtaining U.S.
DOE Approvals on a provisional basis after the Closing Date.


      
        
           


        

        
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      (b) 
     The Sellers shall give promptly such
notices to third parties and use all commercially reasonable efforts, in good
faith, to obtain such third party consents and estoppel certificates as the
Purchaser may deem reasonably necessary in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements; provided, however, that no
Seller shall have any obligation to give any guaranty or other consideration of
any nature in connection with any such consents or estoppel
certificates.

      


      (c) 
     The Purchaser shall cooperate and use all
commercially reasonable efforts, in good faith, to assist the Sellers in giving
such notices to third parties and obtaining such third-party consents and
estoppel certificates; provided, however, that the
Purchaser shall have no obligation to give any guarantee or other consideration
of any nature in connection with any such notice, consent or estoppel
certificate or to consent to any change in the terms of any agreement or
arrangement that the Purchaser in its reasonable discretion may deem adverse to
the interests of the Purchaser or the Institution.

      


      (d) 
     The Sellers shall cooperate and use all
commercially reasonable efforts, in good faith, to assist the Purchaser in
prosecuting and expediting any necessary applications in respect of the
Institution’s continued participation in the Title IV Programs.

      


      (e)  
    The Sellers and the Purchaser agree that, in the
event that any consent, approval or authorization necessary or desirable to
preserve for the Business or the Company any right or benefit under any lease,
license, contract, commitment or other agreement or arrangement to which the
Sellers or the Company is a party is not obtained prior to the date hereof, the
Sellers will, subsequent to the date hereof, cooperate with the Purchaser or the
Company in attempting to obtain such consent, approval or authorization as
promptly thereafter as practicable.

      


      Section 5.04  
Notice of
Developments.  Prior to the Closing, (a) the Sellers shall
promptly notify the Parent in writing within three Business Days of all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement that will result in any breach of a representation, warranty or
covenant of the Sellers in this Agreement relating to the Company, the Business
or the Institution or that will have the effect of making any representation or
warranty of the Sellers in this Agreement relating to the Company, the Business
or the Institution untrue or incorrect in any material respect and (b) the
Parent shall promptly notify the Sellers in writing within three Business Days
of all events, circumstances, facts and occurrences arising subsequent to the
date of this Agreement that could result in any breach of a representation,
warranty or covenant of any party to this Agreement or that could have the
effect of making any representation or warranty of any party to this Agreement
untrue or incorrect in any respect.


      
        
           


        

        
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      Section 5.05  
No Solicitation or
Negotiation.  Each Seller agrees that, between the date of this
Agreement and the earlier of (a) the Closing and (b) the termination of this
Agreement in accordance with its terms, such Seller (or any of
its  respective Affiliates, officers, members, managers,
representatives or agents) will not (i) solicit, initiate, consider, encourage
or accept any other proposals or offers from any Person (A) relating to any
acquisition or purchase of all or any portion of the capital stock of the
Company or the assets and properties of the Company, (B) to enter into any
merger, consolidation or other business combination with the Company or the
Business or (C) to enter into a recapitalization, reorganization or any other
extraordinary business transaction involving or otherwise relating to the
Company or the Business or (ii) participate in any discussions, conversations,
negotiations or other communications regarding, or furnish to any other Person
any information with respect to, or otherwise cooperate in any way, assist or
participate in, facilitate or encourage, any effort or attempt by any Person to
seek to do any of the foregoing.  Each Seller immediately shall cease
and cause to be terminated, and shall not resume, all existing discussions,
conversations, negotiations and other communications with any Person conducted
heretofore with respect to any of the foregoing.  Each Seller agrees
not to, and to cause the Company not to, without the prior written consent of
the Purchaser, release, without the prior written consent of the Purchaser, any
Person from, or waive any provision of, any confidentiality or standstill
agreement to which any Seller or the Company is a party.

      


      Section 5.06  
Use of Intellectual
Property.  The Sellers acknowledge that, from and after the
Closing Date, (a) the applicable Owned Intellectual Property shall be owned by
the Purchaser or the Company, that no Seller nor any of their Affiliates shall
have any rights in such Owned Intellectual Property and that no Seller nor any
of their Affiliates will contest the ownership or validity of any rights of the
Purchaser or the Company in or to such Owned Intellectual Property, and (b) no
Seller nor any of their Affiliates shall use any of the applicable Owned
Intellectual Property or Licensed Intellectual Property.

      


      Section 5.07  
Intercompany
Arrangements.  (a)  Prior to the Closing Date, the
Sellers shall cause any contract or arrangement that is disclosed (or should
have been disclosed) in response to Section 3.13(a)(vii)
on Section 3.13 of the
Disclosure Schedule to be terminated or otherwise amended to exclude the
Company as a party thereto.

      


      (b)    
  Immediately prior to the Closing Date, the Sellers shall
contribute, or caused to be contributed, to the capital of the Company, the
difference between (i) the intercompany Indebtedness owed by the Company to any
Seller or its Affiliates as of the Closing Date and (ii) the intercompany
Indebtedness owed by any Seller or its Affiliates to the Company as of the
Closing Date, and all such intercompany Indebtedness shall cease to exist and be
of no further force or effect.

      


      Section 5.08 
 Payments on Behalf of
Affiliates.  Payments made or received by the Purchaser
pursuant to Article
II or Article
VIII hereof shall, in appropriate circumstances, be made on behalf of, or
received in trust for the benefit of, the relevant Affiliate of the
Purchaser.  The Purchaser may direct in writing any such payment to be
made by or to the appropriate Affiliate, and the Sellers shall comply with any
such direction received at least two Business Days prior to the date such
payment is due.


      
        
           


        

        
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      Section
5.09   Employees.  As
of the Closing Date, all existing employment agreements to which the Company is
a party shall be terminated.

      


      Section 5.10 
 Non-Competition.  (a)  Baran
hereby agrees that, for a period of three years after the Closing Date (the
“Restricted
Period”), he shall not engage, directly or indirectly, in any business
anywhere in the United States that provides products or services of the kind
provided by the Business and the Institution as of the Closing Date (a “Restricted Business”)
or, without the prior written consent of the Purchaser and the Parent (such
consent not to be unreasonably withheld), directly or indirectly, own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as an officer,
employee, partner, shareholder, consultant or otherwise, any Restricted
Business; provided, however, that Baran
may own, directly or indirectly, solely as an investment, up to 2% of any class
of any securities traded on a national securities exchange of any business that
engages in the Restricted Business.

      


      (b) 
     As a separate and independent covenant,
Baran agrees that, for the Restricted Period, he will in no way, directly or
indirectly, interfere with or attempt to interfere with any officers, employees,
representatives or agents of the Business and the Institution in a manner
relating to the Business that adversely affects such person’s performance of
duties with respect to the Business, or induce or attempt to induce any of them
to leave the employ of the Purchaser or the Institution or violate the terms of
their contracts, or any employment arrangements, with the Purchaser; provided,
however, that the foregoing will not prohibit a general solicitation to the
public of general advertising.

      


      (c)   
   The Restricted Period with respect to Baran shall be
extended by the length of any period during which he is in breach of the terms
of this Section 5.10.

      


      (d)  
    Baran acknowledges that the covenants set forth
in this Section 5.10 are
an essential element of this Agreement and that, but for his agreement to comply
with these covenants, the Parent and the Purchaser would not have entered into
this Agreement.  Baran acknowledges that this Section 5.10
constitutes an independent covenant that shall not be affected by performance or
nonperformance of any other provision of this Agreement by the Parent or the
Purchaser.  Baran has independently consulted with his counsel and
after such consultation agrees that the covenants set forth in this Section 5.10 are
reasonable and proper.

      


      Section 5.11  
Payment
Obligations.  On or before the Closing Date, the Sellers shall
pay all outstanding amounts with respect to and satisfy in full, and shall
deliver to the Purchaser “payoff” letters or similar releases or confirmations
from third parties in forms reasonably satisfactory to the Purchaser with
respect to, the obligations set forth in Section 5.11 of the
Disclosure Schedule.

      


      Section 5.12  
Reimbursement of Restricted
Cash.  If prior to December 31, 2009 the Purchaser, or any of
its Affiliates, is no longer required to maintain any Letter of Credit issued on
behalf of Clemens in favor of the U.S. DOE, then at the time such Letter of
Credit is released, the Purchaser shall deliver to the Sellers that amount of
cash (not to exceed $74,425) equal to the face value of such Letter of Credit in
the manner set forth in Section 2.05(a)(i) of the
Disclosure Schedule, within three Business Days of such
release.  The amount so delivered shall be delivered out of the
proceeds of the withdrawal of the Certificate of Deposit currently in place
securing such Letter of Credit, and in no event shall any Seller take any action
to cause the withdrawal of such Certificate of Deposit.


      
        
           


        

        
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      Section 5.13  
Preferred
Stock.  Simultaneously with the Closing, the Sellers shall
cause all Preferred Stock of the Company to be converted or redeemed, so that no
such Preferred Stock shall remain outstanding.

      


      Section 5.14  
UGPE
Guarantee.  UGPE hereby (a) absolutely, unconditionally and
irrevocably guarantees all of the payment obligations of UGP under this
Agreement and the Ancillary Agreements to which UGP is a party, and (b)
unconditionally and irrevocably waives any right to revoke this guarantee and
acknowledges that this guarantee is continuing in nature and applies to all
obligations of UGP under this Agreement and the Ancillary
Agreements.  The obligations of UGPE under or in respect of this
guarantee are independent of the guaranteed obligations, and a separate action
or actions may be brought and prosecuted against UGPE to enforce this guarantee,
irrespective of whether any action is brought against UGP or whether UGP is
joined in any such action or actions.

      


      Section 5.15  
December 31, 2008
Financials.  On or prior to January 30, 2009, provided that the
Purchaser provides the assistance necessary for Sellers to complete such
documents, the Sellers shall deliver to the Purchaser, the unaudited balance
sheet of the Company for the three-month period ending December 31, 2008 and the
related financial statements of the Company, together with all related notes and
schedules thereto.

      


      Section 5.16  
Further
Action.  Each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all appropriate action, do or cause to be
done all things necessary, proper or advisable under applicable Law, and to
execute and deliver such documents and other papers, as may be required to carry
out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.

      


      


      ARTICLE
VI

      


      TAX
MATTERS

      


      Section
6.01   Indemnity.  (a)  The
Sellers agree to indemnify and hold harmless, on a joint and several basis, the
Purchaser, the Company against Excluded Taxes and, except as otherwise provided
in Section
6.04, against any loss, damage, liability or expense, including
reasonable fees for attorneys and other outside consultants incurred in
contesting or otherwise in connection with any such Taxes; provided, however, that the
Sellers shall only be liable for a particular Tax to the extent in excess of the
amount specifically identified and reserved for such Tax for purposes of, and
taken into account in computing, Net Working Capital; provided, further, that any
indemnity obligations in respect of Income Taxes of the Sellers shall be several
but not joint.  All Taxes payable under this Section 6.01 shall
first be satisfied from the Escrow Amount.


      
        
           


        

        
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      (b)       In
the case of Taxes that are payable with respect to a Straddle Period, the
portion of any such Tax that is allocable to the portion of the Straddle Period
ending on the date of the Closing shall be:

      


      (i)   
     in the case of Taxes that are either
(x) based upon or related to income or receipts, or (y) imposed in
connection with any sale or other transfer or assignment of property (real or
personal, tangible or intangible) (other than conveyances pursuant to this
Agreement, as provided under Section 6.07), deemed
equal to the amount which would be payable if the taxable year ended on the date
of the Closing; and

      


      (ii)   
    in the case of Taxes imposed on a periodic basis
with respect to the assets of the Company or otherwise measured by the level of
any item, deemed to be the amount of such Taxes for the entire period (or, in
the case of such Taxes determined on an arrears basis, the amount of such Taxes
for the immediately preceding period), multiplied by a fraction, the numerator
of which is the number of calendar days in the period ending on the date of the
Closing and the denominator of which is the number of calendar days in the
entire Straddle Period.  Any credit or refund resulting from an
overpayment of Taxes for a Straddle Period shall be prorated based upon the
method employed in this Section 6.01(b)
taking into account the type of the Tax to which the refund
relates.  In the case of any Tax based upon or measured by capital
(including net worth or long-term debt) or intangibles, any amount thereof
required to be allocated under this Section 6.01(b)
shall be computed by reference to the level of such items on the date of the
Closing.  All determinations necessary to effect the foregoing
allocations shall be made in a manner consistent with prior practice of the
Company.

      


      Section 6.02  
Returns and
Payments.  (a)  From the date of this Agreement
through and after the Closing, the Sellers shall prepare and file or otherwise
furnish in proper form to the appropriate Governmental Authority (or cause to be
prepared and filed or so furnished) in a timely manner all Tax Returns relating
to the Company, as applicable, that are due on or before or relate to any
taxable period ending on or before the Closing Date (and the Purchaser shall do
the same with respect to any Straddle Period).  Tax Returns of the
Company not yet filed for any taxable period that begins before the Closing Date
shall be prepared in a manner consistent with past practices employed with
respect to the Company (except to the extent that counsel for the Sellers or the
Company renders a legal opinion that there is no reasonable basis in law
therefor or determines that a Tax Return cannot be so prepared and filed without
being subject to penalties).  With respect to any such Tax Return
required to be filed by the Purchaser or the Sellers, for a taxable period that
ends on or before, or includes, the Closing Date, the filing party shall provide
the other party with a copy of such completed Tax Return and, if applicable, a
statement certifying the amount of Tax shown on such Tax Return that is
allocable to such other party pursuant to Section 6.01(b),
together with appropriate supporting information and schedules at least 20
Business Days prior to the due date (including any extension hereof) for the
filing of such Tax Return, and such other party shall have the right to review
and comment on such Tax Return and statement prior to the filing of such Tax
Return (which comments the filing party shall consider in good
faith).

      


      (b) 
     The Sellers shall pay, or cause to be paid,
when due and payable all Taxes with respect to the Company, as applicable, for
any taxable period ending on or before the Closing Date, and the Purchaser shall
so pay or cause to be paid Taxes for any Straddle Period (subject to its right
of indemnification from the Sellers by the date set forth in Section 6.05 for
Taxes attributable to the portion of any Straddle Period that ends on the
Closing Date pursuant to Sections 6.01(a) and
6.01(b)).  Notwithstanding
the foregoing, the Sellers shall only be liable for a particular Tax of the
Company for any Pre-Closing Period or portion of a Straddle Period that ends on
the Closing Date to the extent that the amount of such Tax exceeds the amount
specifically identified and reserved for purposes of, and taken into account in
computing, Net Working Capital.


      
        
           


        

        
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      Section
6.03   Refunds.  Any
Tax refund (including any interest with respect thereto) relating to the Company
for any Pre-Closing Period, other than Tax refunds to the extent of the amount
included in Net Working Capital, shall be the property of the Sellers, and if
received by the Purchaser or the Company shall be paid over promptly to the
Sellers (in the manner set forth in Section 2.05(a)(i) of the
Disclosure Schedule).  Notwithstanding the foregoing,
(a) any Tax refund (or equivalent benefit to the Sellers through a
reduction in Tax liability) for any Pre-Closing Period arising out of the
carryback of a loss or credit incurred by the Company in any Post-Closing Period
shall be the property of the Purchaser and, if received by the Sellers, shall be
paid over promptly to the Purchaser; and (b) if a taxing authority subsequently
disallows any refund with respect to which the Sellers have received a payment
pursuant to this Section 6.03, the
Sellers shall promptly pay (or cause to be paid) to the Purchaser the full
amount of such refund (including any interest with respect
thereto).

      


      Section
6.04   Contests.


      


      (a) 
     After the Closing, the Purchaser shall
promptly notify the Sellers’ Representative in writing of any written notice of
a proposed assessment or claim in an audit or administrative or judicial
proceeding of the Purchaser or the Company which, if determined adversely to the
taxpayer, would be grounds for indemnification under this Article VI;
provided, however, that the
failure to give such notice will not affect the Purchaser’s right to
indemnification under this Article VI except to
the extent, if any, that, but for such failure, the Sellers could have avoided
all or a portion of the Tax liability in question.

      


      (b)
      In the case of an audit or
administrative or judicial proceeding that relates to taxable periods ending on
or before the Closing Date, provided that, and only to the extent that, the
Sellers acknowledge in writing their liability under this Agreement to hold the
Purchaser and the Company harmless against the full amount of any adjustment
which may be made as a result of such audit or proceeding, the Sellers’
Representative shall have the right at his expense to participate in and control
the conduct of such audit or proceeding; the Purchaser also may participate in
any such audit or proceeding at its own expense and, if the Sellers’
Representative does not assume the defense of any such audit or proceeding, the
Purchaser may defend the same in such manner as it may deem appropriate,
including settling such audit or proceeding after fifteen days prior written
notice to the Sellers’ Representative setting forth the terms and conditions of
settlement.  Notwithstanding anything to the contrary contained in
Section 8.05,
in the event that issues relating to a potential adjustment for which the
Sellers have acknowledged liability are required to be contested in the same
audit or proceeding as separate issues relating to a potential adjustment for
which the Purchaser would be liable, the Purchaser shall have the right, at its
expense, to control the audit or proceeding with respect to the latter issues;
provided, however, that the
Purchaser shall not have the right to settle any such matter without the consent
of the Sellers’ Representative, which consent shall not be unreasonably
withheld.


      
        
           


        

        
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      (c)
      Notwithstanding anything to the
contrary contained in Section 6.04, with
respect to issues relating to a potential adjustment for which both the Sellers
(as evidenced by their written acknowledgement under this Section 6.04)
and the Purchaser or the Company could be liable, (i) both the Sellers’
Representative and the Purchaser may participate in the audit or proceeding;
(ii) the audit or proceeding shall be controlled by that party which would
bear the burden of the greater portion of the sum of the adjustment and any
corresponding adjustments that may reasonably be anticipated for future taxable
periods; and (iii) the controlling party shall not settle any such matter
without the consent of the non-controlling party (which consent shall not be
unreasonably withheld).  The principle set forth in this Section 6.04(c) also
shall govern for purposes of deciding any issue that must be decided jointly
(including choice of judicial forum) in situations in which separate issues are
otherwise controlled under this Article VI by
the Purchaser and the Sellers’ Representative.

      


      (d)  
    With respect to any Tax audit or proceeding for a
taxable period that begins before the Closing Date, neither the Purchaser nor
the Sellers’ Representative shall enter into any compromise or agree to settle
any claim pursuant to such audit or proceeding which would adversely affect the
other party for such taxable period or a subsequent taxable period without the
written consent of the other party, which consent may not be unreasonably
withheld.  The Purchaser and the Sellers’ Representative agree to
cooperate, and the Purchaser agrees to cause the Company to cooperate, in the
defense against or compromise of any claim in any such audit or
proceeding.

      


      Section 6.05  
Time of
Payment.  Payment by the Sellers of any amounts due under this
Article VI
in respect of Taxes shall be made (a) at least three Business Days before
the due date of the applicable estimated or final Tax Return required to be
filed by the Purchaser on which is required to be reported income for a taxable
period ending after the Closing Date for which the Sellers are responsible under
Sections
6.01(a) and 6.01(b) without
regard to whether the Tax Return shows overall net income or loss for such
period or (b) within three Business Days following an agreement between the
Sellers’ Representative and the Purchaser that an indemnity amount is payable,
an assessment of a Tax by a taxing authority, or a “determination” as defined in
Section 1313(a) of the Code.  If liability under this Article VI is in
respect of costs or expenses other than Taxes, payment by the Sellers of any
amounts due under this Article VI shall
be made within five Business Days after the date when the Sellers’
Representative has been notified by the Purchaser that the Sellers have a
liability for a determinable amount under this Article VI and is provided
with calculations or other materials supporting such liability.

      


      Section 6.06  
Tax Cooperation and Exchange of
Information.  The Sellers and the Purchaser shall provide each
other with such cooperation and information as either of them reasonably may
request of the other (and the Purchaser shall cause the Company to provide such
cooperation and information) in (a) filing any Tax Return, amended Tax Return or
claim for refund, (b) determining a liability for Taxes or a right to a refund
of Taxes, (c) participating in or conducting any audit or other proceeding in
respect of Taxes, or (d) making representations to or furnishing information to
parties subsequently desiring to purchase any part of the Assets, the Business
or the Company from the Purchaser.  Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with related work papers and documents relating to rulings or other
determinations by taxing authorities.  The Sellers and the Purchaser
shall make themselves (and their respective employees) reasonably available on a
mutually convenient basis to provide explanations of any documents or
information provided under this Section
6.06.  Notwithstanding anything to the contrary in Section 5.02, each
Seller and the Purchaser shall retain all Tax Returns, work papers and all
material records or other documents in its possession (or in the possession of
its Affiliates) relating to Tax matters of the Company for any taxable period
that includes the date of the Closing and for all prior taxable periods until
the later of (i) the expiration of the statute of limitations of the
taxable periods to which such Tax Returns and other documents relate, without
regard to extensions, and (ii) six years following the due date (without
extension) for such Tax Returns.  After such time, before any Seller
or the Purchaser shall dispose of any such documents in his, her or its
possession (or in the possession of Affiliates), the other parties shall be
given an opportunity, after 90 days prior written notice, to remove and retain
all or any part of such documents as such other party may select (at such other
party’s expense).  Any information obtained under this Section 6.06
shall be kept confidential, except as may be otherwise necessary in connection
with the filing of Tax Returns or claims for refund or in conducting an audit or
other proceeding.


      
        
           


        

        
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      Section 6.07  
Conveyance
Taxes.  The Sellers, on the one hand, and the Purchaser, on the
other hand, shall each be liable for and shall hold the other harmless against,
on a joint and several basis in the case of the Sellers, 50% of any Conveyance
Taxes which become payable in connection with the transactions contemplated by
this Agreement.  The Sellers, after the review and consent by the
Purchaser, shall file such applications and documents as shall permit any such
Conveyance Taxes to be assessed and paid on or prior to the Closing in
accordance with any available pre-sale filing procedure.  The
Purchaser shall execute and deliver all instruments and certificates necessary
to enable the Sellers to comply with the foregoing.  The Purchaser
shall complete and execute a resale or other exemption certificate with respect
to the inventory items sold hereunder, and shall provide the Sellers with an
executed copy thereof.

      


      Section 6.08  
Amended Tax
Returns.  (a)  Any amended Tax Return of the Company
or claim for Tax refund on behalf of either Company for any period ending on or
prior to the Closing Date may be filed, or caused to be filed, by the Sellers’
Representative; provided that the Sellers’ Representative shall not, without the
prior written consent of the Purchaser (which consent shall not be unreasonably
withheld), make or cause to be made, any such filing, to the extent such filing,
if accepted, reasonably might change the Tax Liability of the Purchaser for any
period ending after the Closing Date.  Notwithstanding the foregoing,
the Purchaser may amend any Tax Return to the extent such amendment would not
adversely affect or increase the Sellers’ liability for any Tax or adversely
affect the Sellers’ claim for any Tax refund.

      


      (b) 
     Any amended Tax Return of the Company or
claim for Tax refund on behalf of the Company for any period ending after the
Closing Date shall be filed, or caused to be filed, only by the Purchaser;
provided that the Purchaser shall not, without the prior written consent of the
Sellers’ Representative (which consent shall not be unreasonably withheld), make
or cause to be made, any such filing, to the extent such filing, if accepted,
reasonably might change the Tax Liability of the Sellers for (i) any period
ending on or prior to the Closing Date or (ii) any portion of a Straddle Period
ending on the Closing Date.


      
        
           


        

        
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      Section 6.09  
Tax
Covenants.

      


      (a) 
     The Purchaser covenants that without
obtaining the prior written consent of the Sellers’ Representative it will not,
and will not cause or permit either Company or any Affiliate of Purchaser, to
(i) take any action on the Closing Date other than in the ordinary course of
business that could give rise to any Tax liability of Sellers or any
indemnification obligation of Sellers under Section 8.02, or (ii)
make a material Tax election under Section 338(g) of the Code with respect to
the transactions contemplated hereby.

      


      (b) 
     After the Closing Date, the Purchaser, the
Company will not, without obtaining the written consent of the Sellers’
Representative (which consent shall not be unreasonably withheld), agree to the
waiver or any extension of the statute of limitations relating to any Taxes of
the Company for any Pre-Closing Period (other than Taxes with respect to any
Straddle Period) other than extensions of time to file Tax Returns obtained in
the ordinary course.  Notwithstanding the foregoing, if the Sellers do
not respond to a request for written consent from the Purchaser within five
days, the Sellers will be irrevocably deemed to consent to such waiver or
extension.

      


      Section 6.10  
Miscellaneous.  (a)  The
Sellers and the Purchaser agree to treat all payments made by either of them to
or for the benefit of the other (including any payments to the Company) under
this Article VI,
under other indemnity provisions of this Agreement and for any
misrepresentations or breaches of warranties or covenants as adjustments to the
Purchase Price and that such treatment shall govern for purposes hereof except
to the extent that the Laws of a particular jurisdiction provide
otherwise.

      


      (b) 
     All payments payable under any tax sharing
agreement or arrangement (other than this Agreement) between any Seller, on the
one hand, and the Company, on the other hand, for any taxable period ending on
or prior to the Closing Date shall be calculated on a basis consistent with past
practice and shall be payable in full prior to the Closing.  Any such
tax sharing agreement or arrangement (other than this Agreement) between any
Seller and the Company shall be terminated prior to the Closing.

      


      (c)
      Notwithstanding any provisions in
this Agreement to the contrary, the obligations of the Sellers to indemnify and
hold harmless the Purchaser and the Company pursuant to this Article VI, and
the representations and warranties contained in Section 3.23,
shall terminate at the close of business on the 60th day following the
expiration of the applicable statute of limitations with respect to the Tax
liabilities in question (giving effect to any waiver, mitigation or extension
thereof).

      


      (d) 
     From and after the date of this Agreement,
no Seller shall, without the prior written consent of the Purchaser (which may,
in its sole and absolute discretion, withhold such consent), make, or cause or
permit to be made, any Tax election that would materially affect the
Company.

      


      (e)  
    For purposes of this Article VI, “the
Purchaser” and “a Seller,” respectively, shall include each member of the
affiliated group of corporations of which it is or becomes a member (other than
the Company except to the extent expressly referenced).


      
        
           


        

        
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      (f)  
     The Purchaser shall be entitled to recover
professional fees and related costs that it may reasonably incur to enforce the
provisions of this Article VI.

      


      (g)  
    Notwithstanding anything to the contrary in this
Agreement, the rights and obligations of the parties with respect to
indemnification for any and all Tax matters shall be governed solely by this
Article
VI.

      


      


      ARTICLE
VII

      


      CONDITIONS
TO CLOSING

      


      Section 7.01  
Conditions to Obligations of the
Sellers.  The obligations of the Sellers to consummate the
Acquisition shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:

      


      (a)
      Representations, Warranties
and Covenants.  The representations and warranties of the
Parent and the Purchaser contained in this Agreement shall have been true and
correct when made and shall be true and correct in all material respects as of
the Closing, in each case with the same force and effect as if made as of the
Closing Date, other than such representations and warranties as are made as of
another date which shall be true and correct in all material respects as of such
date; the covenants and agreements contained in this Agreement to be complied
with by the Parent and the Purchaser on or before the Closing Date shall have
been complied with in all material respects, and the Sellers shall have received
a certificate from the Parent and the Purchaser to such effect signed,
respectively, by a duly authorized officer thereof;

      


      (b)   
   No
Order.  No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Governmental Order which is in
effect and has the effect of making the Acquisition illegal or otherwise
restraining or prohibiting consummation of the Acquisition; and

      


      (c)  
    Ancillary
Agreements.  The Parent and the Purchaser, as applicable, shall
have executed and delivered to the Sellers counterparts to the Ancillary
Agreements.

      


      Section 7.02  
Conditions to Obligations of the
Parent and the Purchaser.  The obligations of the Parent and
the Purchaser to consummate the Acquisition shall be subject to the fulfillment
or waiver, at or prior to the Closing, of each of the following
conditions:

      


      (a)   
   Representations, Warranties
and Covenants.  The representations and warranties of the
Sellers contained in this Agreement shall have been true and correct when made
and shall be true and correct as of the Closing Date, with the same force and
effect as if made as of the Closing Date (other than such representations and
warranties as are made as of another date, which shall be true and correct as of
such date) except where the failure of such representations and warranties to be
true and correct (without giving effect to any “materiality” or “Material
Adverse Effect” qualification) would not individually or in the aggregate have a
Material Adverse Effect; the covenants and agreements contained in this
Agreement to be complied with by the Sellers on or before the Closing Date shall
have been complied with in all material respects; and the Purchaser shall have
received a certificate of each Seller to such effect signed by a duly authorized
officer thereof;


      
        
           


        

        
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      (b)
      No
Order.  No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Governmental Order which is in
effect and has the effect of making the Acquisition illegal or otherwise
prohibiting consummation of the Acquisition;

      


      (c) 
     Resolutions of UGP and
Merion.  The Purchaser shall have received a true and complete
copy, certified by the Secretary or an Assistant Secretary of each of UGP and
Merion, of the resolutions duly and validly adopted by the board of
directors/managers of such Seller, as applicable, evidencing its authorization
of the execution and delivery of this Agreement and the Ancillary Agreements to
which such Seller is a party and the consummation of the transactions
contemplated hereby and thereby;

      


      (d) 
     Consents and
Approvals.  The CIHE shall have approved the substantive change
application, in form and substance satisfactory to the Purchaser;

      


      (e)
      No Material Adverse
Effect.  No event or events shall have occurred, which,
individually or in the aggregate, have, or would reasonably be expected to have
a Material Adverse Effect with respect to the Company;

      


      (f)       Ancillary
Agreements.  The Sellers shall have executed and delivered to
the Purchaser counterparts to the Ancillary Agreements; and

      


      (g) 
     Preferred
Stock.  No Preferred Stock with respect to the Company shall be
outstanding.

      


      


      ARTICLE
VIII

      


      INDEMNIFICATION

      


      Section 8.01  
Survival of Representations and
Warranties.  (a)  The representations and warranties
of the Sellers contained in this Agreement and the Ancillary Agreements to which
any Seller is a party shall survive the Closing for 15 months from the Closing
Date; provided,
however, that
(i) the representations and warranties made pursuant to Section 3.01
(Organization), Section 3.03
(Capitalization) and Section
3.29 (Brokers) shall survive indefinitely, (ii) the
representations and warranties dealing with Tax matters shall survive as
provided in Section
6.10(c) hereof, (iii) the representations and warranties made
pursuant to Section 3.11
(Environmental), Section 3.26
(Compliance With Educational Laws) and Section 3.25
(Education Approvals) shall survive the Closing for 36 months from the Closing
Date.  Neither the period of survival nor the liability of the Sellers
with respect to the Sellers’ representations and warranties shall be reduced by
any investigation made at any time by or on behalf of the
Purchaser.  If written notice of a claim has been given prior to the
expiration of the applicable representations and warranties by the Purchaser to
the Sellers, then the relevant representations and warranties shall survive as
to such claim until such claim has been finally resolved.


      
        
           


        

        
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      (b) 
     The representations and warranties of the
Parent and the Purchaser contained in this Agreement and the Ancillary
Agreements to which the Parent or the Purchaser is a party shall survive the
Closing for 15 months from the Closing Date.  Neither the period of
survival nor the liability of the Parent or the Purchaser with respect to such
party’s representations and warranties shall be reduced by any investigation
made at any time by or on behalf of the Sellers.  If written notice of
a claim has been given prior to the expiration of the applicable representations
and warranties by the Sellers to the Parent or the Purchaser, then the relevant
representations and warranties shall survive as to such claim until such claim
has been finally resolved.

      


      Section 8.02  
Indemnification by the
Sellers.  (a)  The Parent, the Purchaser and their
respective Affiliates, and the officers, directors, employees and agents of the
foregoing (each a “Purchaser Indemnified
Party”) shall be indemnified and held harmless, on a joint and several
basis, by the Sellers for and against any and all Liabilities, Taxes, losses,
damages, claims, costs and expenses, interest, awards, judgments and penalties
(including reasonable attorneys’ fees and expenses) actually suffered or
incurred by them (including any Action brought or otherwise initiated by any of
them) (hereinafter a “Loss”) arising out of
or resulting from:

      


      (i)  
     the breach of any representation or
warranty made by any Seller contained in any Acquisition Document (it being
understood that such representations and warranties shall be interpreted without
giving effect to any limitations or qualifications as to “materiality”
(including the word “material”) or “Material Adverse Effect” set forth
therein);

      


      (ii) 
     the breach of any covenant or agreement by
any Seller contained in any Acquisition Document;

      


      (iii)      any
and all Losses suffered or incurred by the Purchaser, or the Company by reason
of, or in connection with, any claim or cause of action of any third party to
the extent arising out of any action, inaction, event, condition, liability or
obligation of any Seller or the Business occurring or existing prior to the
Closing Date; or

      


      (iv)      any
and all Losses arising out of or resulting from the termination of employment,
for any reason at any time prior to the date six months following the Closing
Date, of any of the employees of the Company listed on Section 8.02(a)(iv) of the
Disclosure Schedule, which Losses arise pursuant to any arrangements made
with such employees prior to Closing.

      


      (b)  
    Subject to Section 8.04, to the
extent that the undertakings of the Sellers set forth in this Section 8.02 may
be unenforceable, the Sellers shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Losses incurred by the Purchaser Indemnified Parties.

      


      (c)  
    The joint and several liability of all of the
Sellers set forth in Sections 6.01(a) or
8.02(a) shall
only apply to Losses to the extent that such Losses may be satisfied from the
funds remaining in the Escrow Account.  For all Losses (i) in excess
of the funds remaining in the Escrow Account or (ii) which arise under Sections 6.01(a) or
8.02(a) after disbursement of the funds remaining in the Escrow Account,
subject to any limitations set forth in Section 8.04, only
Baran and UGP (and no other Seller) shall be jointly and severally liable for
such Losses.  Notwithstanding anything to the contrary set forth
hereinabove, with respect to any Losses suffered pursuant to a breach described
in Section
8.02(a)(ii), each Seller shall be liable severally, and not jointly,
based upon which Seller is responsible for such Losses, and the Purchaser shall
only be entitled to pursue indemnification for such Losses from such breaching
Seller (and no other Seller).


      
        
           


        

        
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      Section 8.03  
Indemnification by the Parent
and the Purchaser.  (a)  The Sellers and their
officers, directors, employees and agents (each a “Seller Indemnified
Party”) shall be indemnified and held harmless by each of the Parent and
the Purchaser, jointly and severally, for and against any and all Losses arising
out of or resulting from:

      


      (i)   
    the breach of any representation or warranty made
by the Parent or the Purchaser contained in this Agreement or any of the
Ancillary Agreements to which the Parent or the Purchaser is a party;
or

      


      (ii)  
    the breach of any covenant or agreement by the
Parent or the Purchaser contained in this Agreement or any of the Ancillary
Agreements to which the Parent or the Purchaser is a party.

      


      (b) 
     To the extent that the undertakings of the
Parent or the Purchaser set forth in this Section 8.03 may
be unenforceable, the Parent or the Purchaser shall contribute the maximum
amount that it is permitted to contribute under applicable Law to the payment
and satisfaction of all Losses incurred by the Seller Indemnified
Parties.

      


      Section 8.04  
Limits on
Indemnification.  (a)  Notwithstanding anything to
the contrary contained in this Agreement, (a) the Sellers shall not be liable to
any Purchaser Indemnified Party for any claim for indemnification pursuant to
Section
8.02(a)(i) and Section 8.02(a)(iii),
unless and until the aggregate amount of indemnifiable Losses which may be
recovered by the Purchaser Indemnified Party under this Agreement (together with
the amount of indemnifiable Losses which may be recovered by the Purchaser
Indemnified Party under the BIT Agreement) equals or exceeds $300,000 (the
“Basket”),
after which the Sellers shall be liable only for those Losses under Section 8.02(a)(i)
and Section
8.02(a)(iii) of this Agreement and Section 7.02(a)(i)
and Section
7.02(a)(iii) of the BIT Agreement in excess of the Basket, and (b) the
maximum amount of indemnifiable Losses which may be recovered by the Purchaser
Indemnified Parties pursuant to Section 8.02(a)(i)
and Section
8.02(a)(iii) of this Agreement and Section 7.02(a)(i)
and Section
7.02(a)(iii) of the BIT Agreement, as applicable, shall be $5,000,0000
(the “Cap”).  Notwithstanding
the foregoing, the Basket and the Cap limitations set forth in this Section 8.04 shall
not apply with respect to Tax matters.

      


      (b) 
     Notwithstanding anything to the contrary
contained in this Agreement, (a) the Parent and the Purchaser shall not be
liable to any Seller Indemnified Party for any claim for indemnification
pursuant to Section
8.03(a)(i), unless and until the aggregate amount of indemnifiable Losses
which may be recovered by the Seller Indemnified Party under this Agreement
(together with the amount of indemnifiable Losses which may be recovered by the
Seller Indemnified Party under the BIT Agreement) equals or exceeds the Basket,
after which the Parent and the Purchaser shall be liable only for those Losses
under Section
8.03(a)(i) of this Agreement and Section 7.03(a)(i) of
the BIT Agreement in excess of the Basket, and (b) the maximum amount of
indemnifiable Losses which may be recovered by the Seller Indemnified Parties
pursuant to Section
8.03(a)(i) of this Agreement and Section 7.03(a)(i) of
the BIT Agreement shall be the Cap.


      
        
           


        

        
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      (c)   
    Notwithstanding Section 8.02 or Section 8.03, no
Indemnified Party shall be entitled to indemnification under this Article VIII with
respect to any amounts taken into consideration in computing any adjustment to
the Purchase Price pursuant to Section
2.06.

      


      (d)  
    The remedies provided in Section 6.01 and this
Article VIII
shall constitute the exclusive remedies of the parties hereto at law following
the Closing for any breach of a representation, warranty or covenant contained
in this Agreement or any other Acquisition Document and the parties hereto waive
any other remedy which they or any other person entitled to be indemnified
pursuant to Section
6.01 or this Article VIII may have
at law with respect to any breach of any such representation, warranty or
covenant.

      


      Section 8.05  
Indemnification
Procedures.  (a)  An Indemnified Party shall give the
Indemnifying Party notice of any matter that an Indemnified Party has determined
has given or could give rise to a right of indemnification under this Agreement,
within 30 days of such determination, stating the amount of the Loss, if known,
and method of computation thereof, and containing a reference to the provisions
of this Agreement in respect of which such right of indemnification is claimed
or arises.

      


      (b)    
  If an Indemnified Party shall receive notice of any Action,
audit, demand or assessment (each, a “Third Party Claim”)
against it or which may give rise to a claim for a Loss under this Article VIII, within
30 days of the receipt of such notice, the Indemnified Party shall give the
Indemnifying Party notice of such Third Party Claim; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from any
of its obligations under this Article VIII except
to the extent that the Indemnifying Party is materially prejudiced by such
failure and shall not relieve the Indemnifying Party from any other obligation
or Liability that it may have to any Indemnified Party otherwise than under this
Article
VIII.  If the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party hereunder against any Losses that
may result from such Third Party Claim, then the Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives written notice of its
intention to do so to the Indemnified Party within ten days of the receipt of
notice from the Indemnified Party of such Third Party Claim; provided, however, that if
there exists or is reasonably likely to exist a conflict of interest based upon
the opinion of counsel of such Indemnified Party that would make it
inappropriate in the judgment of the Indemnified Party in its reasonable
discretion for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its
own counsel, at the expense of the Indemnifying Party; provided, however, that the
Indemnified Party shall only be entitled to retain one separate counsel for
which the Indemnified Party reasonably determined counsel is
required.  In the event that the Indemnifying Party exercises the
right to undertake any such defense against any such Third Party Claim as
provided above, the Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party, at the
Indemnifying Party’s expense, all witnesses, pertinent records, materials and
information in the Indemnified Party’s possession or under the Indemnified
Party’s control relating thereto as is reasonably required by the Indemnifying
Party.  Similarly, in the event the Indemnified Party is, directly or
indirectly, conducting the defense against any such Third Party Claim, the
Indemnifying Party shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party’s
expense, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably required by the Indemnified
Party.  No such Third Party Claim may be settled by the Indemnifying
Party without the prior written consent of the Indemnified Party, which consent
shall be given or withheld by the Imdemnified Party in its sole discretion,
provided that
if such settlement is a purely economic settlement that involves the full
release of the Indemnified Party and the Indemnifying Party agrees to pay all
amounts payable pursuant to such settlement, the Indemnified Party’s consent
will not be unreasonably withheld.  Notwithstanding the foregoing, if
an Indemnified Party reasonably believes an adverse determination with respect
to any Educational Claim could adversely affect any Educational Approval of the
Institution or an Institution’s ability to participate fully in the Title IV
Programs, the Indemnified Party may, by notice to the Indemnifying Party, assume
the exclusive right to defend, compromise, or settle such matter, provided that
the Indemnifying Party shall not be bound by a settlement effected without its
consent (which may not be unreasonably withheld).


      
        
           


        

        
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      Section 8.06  
Distributions from Escrow
Account.  Subject to Section 8.07 below,
all Losses payable under this Article VIII and
Section 6.01(a)
shall first be satisfied by the Escrow Amount.  In the event that
(a) the Sellers shall not have objected to the amount claimed by the
Purchaser for indemnifications with respect to any Loss in accordance with the
procedures set forth in the Escrow Agreement or (b) the Sellers have
delivered notice of its disagreement as to the amount of any indemnification
requested by the Purchaser and either (i) the Sellers, on the one hand, and
the Purchaser, on the other hand, shall have subsequent to the giving of such
notice, mutually agreed that the Sellers are obligated to indemnify the
Purchaser for a specified amount and the Purchaser and the Sellers’
Representative shall have so jointly notified the Escrow Agent or (ii) a final
nonappealable judgment shall have been rendered by the court having jurisdiction
over the matters relating to such claim by the Purchaser for indemnification
from the Sellers and the Escrow Agent shall have received in the case of
clause (i) above, written instructions from the Sellers’ Representative and
the Purchaser or, in the case of clause (ii) above, a copy of the final
nonappealable judgment of the court, the Escrow Agent shall deliver to the
Purchaser from the Escrow Account any amount determined to be owed to the
Purchaser under this Article VIII in
accordance with the Escrow Agreement.  If and to the extent the Escrow
Amount is insufficient to cover any amount determined to be owed to the
Purchaser under Section 6.01(a) or
this Article VIII,
then Baran and UGP (and no other Seller) shall pay the amount of such deficiency
to the Purchaser by wire transfer in immediately available funds to a bank
account designated by the Purchaser, subject to the provisions of Section 8.06.

      


      Section 8.07  
Sellers’
Representative.  (a)  By the execution and delivery
of this Agreement, each of the Sellers and UGPE hereby irrevocably constitutes
and appoints Baran, as the true and lawful agent and attorney in fact (in such
capacity, the “Sellers’
Representative”) of the Sellers and UGPE with full power of substitution
to act in the name, place and stead of the Sellers and UGPE with respect to this
Agreement, the Escrow Agreement and the transactions contemplated hereby and
thereby as the Sellers’ Representative may deem appropriate, and to act on
behalf of the Sellers and UGPE in any litigation or arbitration involving this
Agreement or the Escrow Agreement, do or refrain from doing all such further
acts and things, and execute all such documents as the Sellers’ Representative
shall deem necessary or appropriate in connection with the transactions
contemplated by this Agreement and the Escrow Agreement, including the
power:


      
        
           


        

        
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      (i)   
    to act for the Sellers and UGPE with regard to
matters pertaining to the determination of the Purchase Price, the adjustment to
the Purchase Price and pertaining to the indemnification referred to in this
Agreement, including the power to settle any indemnity claim on behalf of the
Sellers and UGPE and to transact matters of litigation;

      


      (ii) 
     to execute and deliver all ancillary
agreements, certificates and documents that the Sellers’ Representative deems
necessary or appropriate in connection with the consummation of the transactions
contemplated by this Agreement and the Escrow Agreement;

      


      (iii)      to
receive funds and give receipts for funds, including in respect of any
adjustments to the Purchase Price or any amounts distributed under the Escrow
Agreement;

      


      (iv)      to
do or refrain from doing any further act or deed on behalf of the Sellers and
UGPE that the Sellers’ Representative deems necessary or appropriate in its sole
discretion relating to the subject matter of this Agreement or the Escrow
Agreement as fully and completely as the Sellers and UGPE could do if personally
present;

      


      (v)   
   to receive service of process in connection with any
claims under this Agreement or the Escrow Agreement; and

      


      (vi)      to
accept notices in accordance with Section
10.02.

      


      (b)  
    Baran hereby agrees and consents to his
appointment as the Sellers’ Representative pursuant to this Section 8.07,
effective as of the date of this Agreement.  The appointment of the
Sellers’ Representative shall be deemed coupled with an interest and shall be
irrevocable, and the Purchaser and any other Person may conclusively and
absolutely rely, without inquiry, upon any action or decision of the Sellers’
Representative in all matters referred to herein.  All actions and
decisions of Sellers’ Representative shall be binding and conclusive on each
Seller and UGPE.  All notices required to be made or delivered by the
Purchaser to the Sellers or UGPE and shall be made to the Sellers’
Representative for the benefit of the Sellers and UGPE and shall discharge in
full all notice requirements of the Purchaser to the Sellers and UGPE with
respect thereto.  The Sellers and UGPE hereby confirm all that the
Sellers’ Representative shall do or cause to be done by virtue of its
appointment as the Sellers’ Representative of the Sellers and
UGPE.  The Sellers’ Representative shall act for the Sellers and UGPE
on all of the matters set forth in this Agreement and the Escrow Agreement in
the manner the Sellers’ Representative believes to be in the best interest of
the Sellers and UGPE and consistent with the obligations under this Agreement
and the Escrow Agreement, but the Sellers’ Representative shall not be
responsible to the Sellers or UGPE for any loss or damages the Sellers or UGPE
may suffer by the performance by the Sellers’ Representative of its duties under
this Agreement or the Escrow Agreement, other than loss or damage arising from
intentional violation of the law by the Sellers’ Representative of his duties
under this Agreement or the Escrow Agreement.


      
        
           


        

        
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      (c)   
    If any individual Seller should die or become
incapacitated, if any trust or estate should terminate or if any other similar
event should occur, any action taken by the Sellers’ Representative pursuant to
this Section
8.07 shall be valid as if such death or incapacity, termination or other
event had not occurred, regardless of whether or not the Sellers’ Representative
or the Purchaser shall have received notice of such death, incapacity,
termination or similar event.  The Person appointed as Sellers’
Representative may resign as such at any time on not less than five Business
Days’ notice to the Sellers, UGPE and the Parent.  A vacancy in the
position of Sellers’ Representative shall be filled by a Person determined by
the holders of a majority in interest of the amount then held in the Escrow
Account.

      


      


      ARTICLE
IX

      


      TERMINATION,
AMENDMENT AND WAIVER

      


      Section
9.01   Termination.  With
respect to the Acquisition, this Agreement may be terminated at any time prior
to the Closing:

      


      (a)  
    by either the Sellers or the Purchaser if the
Closing shall not have occurred on or before May 15, 2009; provided, however, that the
right to terminate this Agreement under this Section 9.01(a)
shall not be available to a party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur on or prior to such date;

      


      (b) 
     by the Purchaser, upon a material breach of
any representation, warranty, covenant or agreement of the Sellers regarding the
Company, the Business or the Institution set forth in this Agreement, or if any
representation or warranty of the Sellers regarding the Company, the Business or
the Institution shall have become untrue, in either case such that the
conditions set forth in Section 7.02
would not be satisfied; provided, however, that if such
breach is curable by the Sellers through the exercise of their reasonable best
efforts within 30 days of its receipt of the Purchaser’s written notice of
such breach, then the Purchaser may not terminate this Agreement pursuant to
this Section 9.01(b)
prior to the expiration of such 30-day period;

      


      (c) 
     by the Sellers, upon a material breach of
any representation, warranty, covenant or agreement of the Purchaser set forth
in this Agreement, or if any representation or warranty of the Purchaser shall
have become untrue, in either case such that the conditions set forth in Section 7.01
would not be satisfied; provided, however, that if such
breach is curable by the Purchaser through the exercise of its reasonable best
efforts within 30 days of its receipt of the Sellers’ written notice of
such breach, then the Sellers may not terminate this Agreement pursuant to this
Section 9.01(c)
prior to the expiration of such 30-day period;


      
        
           


        

        
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      (d) 
     by either the Sellers or the Purchaser in
the event that any Governmental Authority shall have issued a Governmental Order
or taken any other action restraining, enjoining or otherwise prohibiting the
Acquisition and such Governmental Order or other action shall have become final
and nonappealable; or

      


      (e)       by
the mutual written consent of the Sellers and the Purchaser.

      


      Section 9.02  
Effect of
Termination.  In the event of termination of this Agreement as
provided in Section
9.01, with respect to the Acquisition only, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto relating to or arising out of the Acquisition except (i) as set forth in
Article X and
(ii) that nothing herein shall relieve any party from liability for any breach
of this Agreement.

      


      Section
9.03   Amendment.  This
Agreement may not be amended or modified except (a) by an instrument in
writing signed by or on behalf of the parties hereto or (b) by a waiver in
accordance with Section 9.04.

      


      Section
9.04   Waiver.  Any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of another party, (b) waive any inaccuracies in
the representations and warranties of another party contained herein or in any
document delivered by another party pursuant hereto or (c) waive compliance
with any of the agreements of another party or conditions to such party’s
obligations contained herein.  Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.  Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or condition
of this Agreement.  The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such
rights.  All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.

      


      


      ARTICLE
X

      


      GENERAL
PROVISIONS

      


      Section
10.01   Expenses.  Except
as otherwise specified in this Agreement, all costs and expenses, including fees
and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such costs and expenses, whether
or not the Closing shall have occurred.

      


      Section
10.02   Notices.  All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by nationally recognized
overnight courier service, by telecopy, by facsimile, by email or by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 10.02):


      
        
           


        

        
          70

          
            

          

        

        
           


        

      


      
        	
                 
      

              	
                (a)

              	
                if
      to the Sellers Representative:

              


      

      


      Brad
Baran

      25
Cobtail Way

      Simsbury,
CT  06070

      Telephone:  (203)
494-6134

      Facsimile:  (860)
627-4308

      


      
        	
                 
      

              	
                (b)

              	
                if
      to the Sellers

              


      

      


      Brad
Baran

      25
Cobtail Way

      Simsbury,
CT  06070

      Telephone:  (203)
494-6134

      Facsimile:  (860)
627-4308

      


      


      UGP
Education Partners, LLC

      Two
Greenwich Office Park

      Greenwich,
CT  06831

      Telephone:  (203)
422-0650

      Facsimile:  (203)
422-0659

      Attention:  Stan
Lau

      


      Merion
Investment Partners, L.P.

      Merion
Building, Suite 210

      700 S.
Henderson Rd.

      King of
Prussia, PA  19406

      Facsimile:  (610)
965-1654

      Attention:  William
M. Means

      


      with a
copy to:

      


      Blank
Rome LLP

      405
Lexington Avenue

      New York,
NY 10174

      Telephone:  (212)
885-5435

      Facsimile:  (212)
885-2001

      Attention:  Peter
Schnur, Esq.

      


      and

      


      Updike,
Kelly & Spellacy, P.C.

      One State
Street

      Hartford,
CT 06103

      Telephone:
(860) 548-2651

      Attention:  David
E. Sturgess, Esq.


      
        
           


        

        
          71

          
            

          

        

        
           


        

      


      
        	
                 
      

              	
                (c)

              	
                if
      to the Parent or the Purchaser:

              


      

      


      NN
Acquisition, LLC

      c/o
Lincoln Educational Services Corporation

      200
Executive Drive

      West
Orange, NJ  07052

      Telephone:  (973)
736-9340

      Facsimile:  (973)
243-0841

      Attention:  David
F. Carney, Chairman and Chief Executive Officer

      


      with a
copy to:

      


      Shearman
& Sterling LLP

      599
Lexington Avenue

      New York,
NY  10022-6069

      Telephone:  (212)
848-4000

      Facsimile:  (646)
848-8966

      Attention:  Eliza
W. Swann, Esq.

      


      Section 10.03  
Public
Announcements.  No party hereto shall make, or cause to be
made, any press release or public announcement in respect of this Agreement or
the transactions contemplated by this Agreement or otherwise communicate with
any news media without the prior written consent of the other parties, and the
parties shall cooperate as to the timing and contents of any such press release
or public announcement.

      


      Section
10.04   Severability.  If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any Law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect for so long as
the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any
party.  In addition, if any one or more of the provisions contained in
this Agreement is for any reason held to be excessively broad as to duration,
geographical scope, activity or subject, it is to be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable Law as it then appears.  Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated by this Agreement
are consummated as originally contemplated to the greatest extent
possible.

      


      Section 10.05  
Entire
Agreement.  This Agreement, the Ancillary Agreements and the
Non-Disclosure Agreement constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, between the Sellers on the
one hand, and the Parent and the Purchaser, on the other hand, with respect to
the subject matter hereof and thereof.


      
        
           


        

        
          72

          
            

          

        

        
           


        

      


      Section
10.06   Assignment.  This
Agreement may not be assigned by any party hereto by operation of law or
otherwise without the express written consent of the other parties hereto (which
consent may be granted or withheld in the sole discretion of such parties);
provided, that
the Purchaser may assign this Agreement or any of its rights and obligations
hereunder to one or more Affiliates of the Purchaser without the consent of the
Sellers.

      


      Section 10.07  
No Third Party
Beneficiaries.  This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person, including any union or any employee or former or retired employee
of any Seller or spouse or dependents of such Persons, any legal or equitable
right, benefit or remedy of any nature whatsoever, including any rights of
employment for any specified period, under or by reason of this
Agreement.

      


      Section
10.08   Governing
Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed entirely within that State.  All
Actions arising out of or relating to this Agreement shall be heard and
determined exclusively in any New York state or federal court.  The
parties hereto hereby (a) submit to the exclusive jurisdiction of any state
or federal court sitting in the State of New York for the purpose of any Action
arising out of or relating to this Agreement brought by any party hereto, and
(b) irrevocably waive, and agree not to assert by way of motion, defense,
or otherwise, in any such Action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated by this Agreement may not be enforced
in or by any of the above-named courts.

      


      Section 10.09  
Waiver of Jury
Trial.  Each of the parties hereto hereby waives to the fullest
extent permitted by applicable Law any right it may have to a trial by jury with
respect to any litigation directly or indirectly arising out of, under or in
connection with this Agreement or the transactions contemplated by this
Agreement.  Each of the parties hereto (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce that foregoing waiver and (b) acknowledges that neither it nor
the other parties hereto has been induced to enter into this Agreement and the
transactions contemplated by this Agreement, as applicable, by, among other
things, the mutual waivers and certifications in this Section 10.09.

      


      Section 10.10  
Specific
Performance.  Each party hereto agrees and acknowledges that
remedies at law for any breach of its or his obligations under this Agreement
are inadequate and will cause irreparable harm and that in addition thereto, the
non-breaching parties shall be entitled to seek equitable relief, including
injunction and specific performance, to prevent or cure the violation of any
party’s obligations hereunder.

      


      Section
10.11   Headings.  The
descriptive headings contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.


      
        
           


        

        
          73

          
            

          

        

        
           


        

      


      Section
10.12   Counterparts.  This
Agreement may be executed and delivered (including by facsimile transmission) in
two or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement.

      


      Section 10.13  
Exhibits and Disclosure
Schedule.  The Exhibits to this Agreement and the Disclosure
Schedule are a part of this Agreement as if set forth in full
herein.


      
        
           


        

        
          74

          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the Parent, the Purchaser and the Sellers and the have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.

      


      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                LINCOLN
      TECHNICAL INSTITUTE, INC.

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      David F. Carney  	 
      
	 
      	 
      	
                                Name:
      David F. Carney

                              	 
      
	 
      	 
      	
                                Title:
      CEO

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                NN
      ACQUISITION, LLC

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      David F. Carney  	 
      
	 
      	 
      	
                                Name:
      David F. Carney

                              	 
      
	 
      	 
      	
                                Title:
      CEO

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                BRAD
      BARAN

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	/s/
      Brad Baran  	 
      
	 
      	 
      	 
      	 
      
	 	 	 	 
	 
      	
                                UGP
      EDUCATION PARTNERS, LLC

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      George V. Cinquegrana  	 
      
	 
      	 
      	
                                Name:
      George V. Cinquegrana

                              	 
      
	 
      	 
      	
                                Title:
      Partner

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                MERION
      INVESTMENT PARTNERS, L.P.

                              	 
      
	 
      	
                                By:  MERION
      FINANCIAL PARTNERS, L.P.,

                              	 
      
	 
      	 
      	
                                Its
      General Partner

                              	 
      
	 
      	
                                By:  MERION
      FUND MANAGEMENT, LLC

                              	 
      
	 
      	 
      	
                                Its
      General Partner

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      William M. Means  	 
      
	 
      	 
      	
                                Name:
      William M. Means

                              	 
      
	 
      	 
      	
                                Title:
      Managing Partner

                              	 
      


                      

                    

                  

                

              

            

          

        

      


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, for purposes of Sections 3.01(e), 5.14 and
8.07 only, UGPE has caused this Agreement to be executed by its
respective officer thereunto duly authorized, as of the date first written
above.

      


      
        
          
            	 
      	
                    UGPE
      PARTNERS, INC.

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	/s/
      George V. Cinquegrana  	 
      
	 
      	 
      	
                    Name:
      George V. Cinquegrana

                  	 
      
	 
      	 
      	
                    Title:
      Partner