Document:

EXHIBIT
      10.3

     

    THIS
      AGREEMENT IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AGREEMENT DATED APRIL
      24,
      2007 IN FAVOR OF COMVEST INVESTMENT PARTNERS III, L.P. OR AN AFFILIATE THEREOF,
      AS ASSIGNEE OF HARRIS N.A. (THE “INTERCREDITOR AGREEMENT”), WHICH IS
      INCORPORATED HEREIN BY REFERENCE. ALL RIGHTS AND REMEDIES OF THE LENDER
      HEREUNDER ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE INTERCREDITOR
      AGREEMENT.

     

    GUARANTY
      AGREEMENT (as amended, restated, supplemented or otherwise modified, this
“Guaranty”
or
      this
“Agreement”),
      dated
      as of December 31, 2007, is made by TECHNICAL CAREER INSTITUTES, INC., a New
      York corporation (“TCI”),
      PENNSYLVANIA SCHOOL OF BUSINESS, INC., a Pennsylvania corporation (“PSB”),
      INTERBORO INSTITUTE, INC., a New York corporation (“Interboro”),
      and
      INTERBORO HOLDING, INC., a Delaware corporation (“Holding”)
      (each
      a “Guarantor”
and
      collectively the “Guarantors”),
      in
      favor of COMVEST INVESTMENT PARTNERS III, L.P., a Delaware limited partnership
      (the “Lender”).

     

    STATEMENT
      OF PURPOSE

     

    Pursuant
      to the terms of the Loan Agreement of even date herewith by and between EVCI
      Career Colleges Holding Corp. (the “Borrower”)
      and
      the Lender (as same may be amended, modified, supplemented and/or restated
      from
      time to time, the “Loan
      Agreement”),
      the
      Lender has agreed to make Loans to the Borrower in the principal amount of
      up to
      $700,000, upon the terms and subject to the conditions set forth
      therein.

     

    Each
      of
      the Guarantors is a direct or indirect wholly-owned Subsidiary of the
      Borrower.

     

    The
      Guarantors anticipate that the Loans, and the other transactions being effected
      simultaneously with the Closing Date under the Loan Agreement, will inure,
      directly or indirectly, to the benefit of each of the Guarantors.

     

    It
      is a
      condition precedent to the obligation of the Lender to make the Loans under
      the
      Loan Agreement that the Guarantors shall have executed and delivered this
      Guaranty to the Lender.

     

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged by the parties hereto, and to induce the Lender
      to
      enter into the Loan Agreement and to make the Loans thereunder, the Guarantors
      hereby agree with the Lender as follows:

     

    ARTICLE
      I

     

    DEFINED
      TERMS

     

    SECTION
      1.1 Definitions.
      The
      following terms when used in this Guaranty shall have the meanings assigned
      to
      them below:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Applicable
      Insolvency Laws”
means
      all Applicable Laws governing bankruptcy, reorganization, arrangement,
      adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent
      transfers or conveyances or other similar laws (including, without limitation,
      11 U.S.C. Sections 544, 547, 548 and 550 and other “avoidance” provisions
      of Title 11 of the United States Code, as amended or supplemented).

     

    “Guaranteed
      Obligations”
has
      the
      meaning set forth in Section
      2.1.

     

    “Guaranty”
means
      this Guaranty Agreement, as amended, modified, supplemented and/or restated
      from
      time to time.

     

    SECTION
      1.2 Other
      Definitional Provisions.
      Capitalized terms used and not otherwise defined in this Guaranty, including
      the
      preambles and recitals hereof, shall have the meanings ascribed to them in
      the
      Loan Agreement. In the event of a conflict between capitalized terms defined
      herein and in the Loan Agreement, the Loan Agreement shall control. The words
      “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when
      used in this Guaranty shall refer to this Guaranty as a whole and not to any
      particular provision of this Guaranty, and Section references are to this
      Guaranty unless otherwise specified. The meanings given to terms defined herein
      shall be equally applicable to both the singular and plural forms of such terms.
      Where the context requires, terms relating to the Collateral or any part
      thereof, when used in relation to a Guarantor, shall refer to such Guarantor’s
      Collateral or the relevant part thereof. The word “including” and words of
      similar import when used in this Agreement shall mean “including, without
      limitation,” unless otherwise specified.

     

    ARTICLE
      II

     

    GUARANTY

     

    SECTION
      2.1 Guaranty.
      Each
      Guarantor hereby, jointly and severally with the other Guarantors,
      unconditionally guarantees to the Lender and its successors, endorsees,
      transferees and assigns, the prompt payment and performance of all Obligations
      of the Borrower, whether primary or secondary (whether by way of endorsement
      or
      otherwise), whether now existing or hereafter arising, whether or not from
      time
      to time reduced or extinguished (except by payment thereof) or hereafter
      increased or incurred, whether enforceable or unenforceable as against the
      Borrower, whether or not discharged, stayed or otherwise affected by any
      Applicable Insolvency Law or proceeding thereunder, whether matured or
      unmatured, whether joint or several, as and when the same become due and payable
      (whether at maturity or earlier, by reason of acceleration, mandatory repayment
      or otherwise), in accordance with the terms of the agreements and instruments
      evidencing such Obligations, including all renewals, extensions or modifications
      thereof (all such Obligations of the Borrower being hereafter collectively
      referred to as the “Guaranteed
      Obligations”).

     

    SECTION
      2.2 Bankruptcy
      Limitations on Guarantors.
      Notwithstanding anything to the contrary contained in Section
      2.1,
      it is
      the intention of each Guarantor and the Lender that, in any proceeding involving
      the bankruptcy, reorganization, arrangement, adjustment of debts, relief of
      debtors, dissolution or insolvency or any similar proceeding with respect to
      any
      Guarantor or its assets, the amount of such Guarantor’s obligations with respect
      to the Guaranteed Obligations shall be equal to, but not in excess of, the
      maximum amount thereof not subject to avoidance or recovery by operation of
      Applicable Insolvency Laws after giving effect to Section
      2.3.
      To that
      end, but only in the event and to the extent that after giving effect to
Section
      2.3
      such
      Guarantor’s obligations with respect to the Guaranteed Obligations or any
      payment made pursuant to such Guaranteed Obligations would, but for the
      operation of the first sentence of this Section
      2.2,
      be
      subject to avoidance or recovery in any such proceeding under Applicable
      Insolvency Laws after giving effect to Section
      2.3,
      the
      amount of such Guarantor’s obligations with respect to the Guaranteed
      Obligations shall be limited to the largest amount which, after giving effect
      thereto, would not, under Applicable Insolvency Laws, render such Guarantor’s
      obligations with respect to the Guaranteed Obligations unenforceable or
      avoidable or otherwise subject to recovery under Applicable Insolvency Laws.
      To
      the extent any payment actually made pursuant to the Guaranteed Obligations
      exceeds the limitation of the first sentence of this Section
      2.2
      and is
      otherwise subject to avoidance and recovery in any such proceeding under
      Applicable Insolvency Laws, the amount subject to avoidance shall in all events
      be limited to the amount by which such actual payment exceeds such limitation
      and the Guaranteed Obligations as limited by the first sentence of this
Section
      2.2
      shall in
      all events remain in full force and effect and be fully enforceable against
      such
      Guarantor. The first sentence of this Section 2.2 is intended solely to preserve
      the rights of the Lender hereunder against such Guarantor in such proceeding
      to
      the maximum extent permitted by Applicable Insolvency Laws and neither such
      Guarantor, the Borrower, any other Guarantor nor any other Person shall have
      any
      right or claim under such sentence that would not otherwise be available under
      Applicable Insolvency Laws in such proceeding.

     

    
      
         

      

      
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    SECTION
      2.3 Agreements
      for Contribution.

     

    (a) To
      the
      extent that any Guarantor is required, by reason of its obligations hereunder,
      to pay to the Lender an amount greater than the amount of value (as determined
      in accordance with Applicable Insolvency Laws) actually made available to or
      for
      the benefit of such Guarantor on account of the Loan Agreement, this Guaranty
      or
      any other Loan Document, such Guarantor shall have an enforceable right of
      contribution against the remaining Guarantors, and the remaining Guarantors
      shall be jointly and severally liable for repayment of the full amount of such
      excess payment. Subject only to the subordination provided in Section
      2.3(d),
      such
      Guarantor further shall be subrogated to any and all rights of the Lender
      against the Borrower and the remaining Guarantors to the extent of such excess
      payment.

     

    (b) To
      the
      extent that any Guarantor would, but for the operation of this Section 2.3
      and by
      reason of its obligations hereunder or its obligations to other Guarantors
      under
      this Section
      2.3,
      be
      rendered insolvent for any purpose under Applicable Insolvency Laws, each of
      the
      Guarantors hereby agrees to indemnify such Guarantor and commits to make a
      contribution to such Guarantor’s capital in an amount at least equal to the
      amount necessary to prevent such Guarantor from having been rendered insolvent
      by reason of the incurrence of any such obligations.

     

    (c) To
      the
      extent that any Guarantor would, but for the operation of this Section 2.3,
      be
      rendered insolvent under any Applicable Insolvency Law by reason of its
      incurring of obligations to any other Guarantor under the foregoing Sections
      2.3(a)
      and
(b),
      such
      Guarantor shall, in turn, have rights of contribution to the full extent
      provided in the foregoing Sections
      2.3(a)
      and
(b)
      against
      the remaining Guarantors, such that all obligations of all of the Guarantors
      hereunder and under this Section 2.3
      shall be
      allocated in a manner such that no Guarantor shall be rendered insolvent for
      any
      purpose under Applicable Insolvency Law by reason of its incurrence of such
      obligations.

     

    
      
         

      

      
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    (d) Notwithstanding
      any payment or payments by any of the Guarantors hereunder, or any set-off
      or
      application of funds of any of the Guarantors by the Lender, or the receipt
      of
      any amounts by the Lender with respect to any of the Guaranteed Obligations,
      none of the Guarantors shall be entitled to be subrogated to any of the rights
      of the Lender against the Borrower or the other Guarantors or against any
      collateral security held by the Lender for the payment of the Guaranteed
      Obligations, nor shall any of the Guarantors seek any reimbursement from the
      Borrower or any of the other Guarantors in respect of payments made by such
      Guarantor in connection with the Guaranteed Obligations, until all amounts
      owing
      to the Lender on account of the Guaranteed Obligations are paid in full and
      the
      Revolving Credit Commitment has been terminated. If any amount shall be paid
      to
      any Guarantor on account of such subrogation rights at any time when all of
      the
      Guaranteed Obligations shall not have been paid in full or the Revolving Credit
      Commitment has not terminated, such amount shall be held by such Guarantor
      in
      trust for the benefit of the Lender, segregated from other funds of such
      Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
      to the Lender in the exact form received by such Guarantor (duly endorsed by
      such Guarantor to the Lender, if required) to be applied against the Guaranteed
      Obligations, whether matured or unmatured, in the order set forth in the Loan
      Agreement.

     

    SECTION
      2.4 Nature
      of Guaranty.

     

    (a) Each
      Guarantor agrees that this Guaranty is a continuing, unconditional guaranty
      of
      payment and performance and not of collection, and that its obligations under
      this Guaranty shall be primary, absolute and unconditional, irrespective of,
      and
      unaffected by:

     

    (i) the
      genuineness, validity, regularity, enforceability or any future amendment of,
      or
      change in, the Loan Agreement or any other Loan Document or any other agreement,
      document or instrument to which the Borrower or any Subsidiary is or may become
      a party;

     

    (ii) the
      absence of any action to enforce this Guaranty, the Loan Agreement or any other
      Loan Document or the waiver or consent by the Lender with respect to any of
      the
      provisions of this Guaranty, the Loan Agreement or any other Loan
      Document;

     

    (iii) the
      existence, value or condition of, or failure to perfect any Lien against, any
      security for or other guaranty of the Guaranteed Obligations or any action,
      or
      the absence of any action, by the Lender in respect of such security or guaranty
      (including, without limitation, the release of any such security or guaranty);
      or

     

    (iv) any
      other
      action or circumstances which might otherwise constitute a legal or equitable
      discharge or defense of a surety or guarantor;

     

    
      
         

      

      
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    it
      being
      agreed by each Guarantor that, subject to the first sentence of Section
      2.2,
      its
      obligations under this Guaranty shall not be discharged until the final
      indefeasible payment and performance, in full, of the Guaranteed
      Obligations.

     

    (b) Each
      Guarantor represents, warrants and agrees that its obligations under this
      Guaranty are not and shall not be subject to any counterclaims, offsets or
      defenses of any kind against the Lender or the Borrower, whether now existing
      or
      which may arise in the future.

     

    (c) Each
      Guarantor hereby agrees and acknowledges that the
      Guaranteed Obligations, and any of them, shall conclusively be deemed to have
      been created, contracted or incurred, or renewed, extended, amended or waived,
      in reliance upon this Guaranty, and all dealings between the Borrower and either
      of the Guarantors, on the one hand, and the Lender, on the other hand, likewise
      shall be conclusively presumed to have been had or consummated in reliance
      upon
      this Guaranty.

     

    SECTION
      2.5 Waivers.
      To the
      extent permitted by law, each Guarantor expressly waives all of the following
      rights and defenses (and agrees not to take advantage of or assert any such
      right or defense):

     

    (a) any
      rights it may now or in the future have under any statute, or at law or in
      equity, or otherwise, to compel the Lender to proceed in respect of the
      Obligations against the Borrower or any other Person or against any security
      for
      or other guaranty of the payment and performance of the Guaranteed Obligations
      before proceeding against, or as a condition to proceeding against, such
      Guarantor;

     

    (b) any
      defense based upon the failure of the Lender to commence an action in respect
      of
      the Guaranteed Obligations against the Borrower, such Guarantor, any other
      guarantor or any other Person or any security for the payment and performance
      of
      the Guaranteed Obligations;

     

    (c) any
      right
      to insist upon, plead or in any manner whatever claim or take the benefit or
      advantage of, any appraisal, valuation, stay, extension, marshalling of assets
      or redemption laws, or exemption, whether now or at any time hereafter in force,
      which may delay, prevent or otherwise affect the performance by such Guarantor
      of its obligations under, or the enforcement by the Lender of this
      Guaranty;

     

    (d) any
      right
      of diligence, presentment, demand, protest and notice (except as specifically
      required herein) of whatever kind or nature with respect to any of the
      Guaranteed Obligations and waives, to the extent permitted by Applicable Law,
      the benefit of all provisions of law which are or might be in conflict with
      the
      terms of this Guaranty; and

     

    (e) any
      and
      all right to notice of the creation, renewal, extension or accrual of any of
      the
      Obligations and notice of or proof of reliance by the Lender upon, or acceptance
      of, this Guaranty.

     

    Each
      Guarantor agrees that any notice or directive given at any time to the Lender
      which is inconsistent with any of the foregoing waivers shall be null and void
      and may be ignored by the Lender, and, in addition, may not be pleaded or
      introduced as evidence in any litigation relating to this Guaranty for the
      reason that such pleading or introduction would be at variance with the written
      terms of this Guaranty, unless the Lender has specifically agreed otherwise
      in
      writing. The foregoing waivers are of the essence of the transaction
      contemplated by the Loan Agreement and the other Loan Documents and, but for
      this Guaranty and such waivers, the Lender would decline to enter into the
      Loan
      Agreement and the other Loan Documents.

     

    
      
         

      

      
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    SECTION
      2.6 Modification
      of Loan Documents, etc.
      The
      Lender shall not incur any liability to any Guarantor as a result of any of
      the
      following, and none of the following shall impair, limit or release this
      Guaranty or any of the obligations of any Guarantor under this
      Guaranty:

     

    (a) any
      change or extension of the manner, place or terms of payment of, or renewal
      or
      alteration of all or any portion of, the Guaranteed Obligations;

     

    (b) any
      action under or in respect of the Loan Agreement or the other Loan Documents
      in
      the exercise of any remedy, power or privilege contained therein or available
      to
      any of them at law, in equity or otherwise, or waiver or refrain from exercising
      any such remedies, powers or privileges;

     

    (c) any
      amendment or modification, in any manner whatsoever, of the Loan
      Documents;

     

    (d) any
      extension or waiver of the time for performance by either Guarantor, any other
      guarantor, the Borrower or any other Person, or compliance with, any term,
      covenant or agreement on its part to be performed or observed under a Loan
      Document, or waiver of such performance or compliance or consent to a failure
      of, or departure from, such performance or compliance;

     

    (e) the
      taking and holding security or Collateral for the payment of the Obligations
      or
      the sale, exchange, release, disposal of, or other dealing with, any property
      pledged, mortgaged or conveyed, or in which the Lender has been granted a Lien,
      to secure any indebtedness of any Guarantor, any other guarantor or the Borrower
      to the Lender;

     

    (f) the
      release of anyone who may be liable in any manner for the payment of any amounts
      owed by any Guarantor, any other guarantor or the Borrower to the Lender;
      or

     

    (g) any
      modification or termination of any intercreditor or subordination agreement
      pursuant to which claims of other creditors of any Guarantor, any other
      guarantor or Borrower are subordinated to the claims of the Lender.

     

    SECTION
      2.7 Demand
      by the Lender.
      In
      addition to the terms set forth in this Article II and in no manner imposing
      any
      limitation on such terms, if all or any portion of the then outstanding
      Guaranteed Obligations are declared to be immediately due and payable, then
      the
      Guarantors shall, upon demand in writing therefor by the Lender to the
      Guarantors, pay all or such portion of the outstanding Guaranteed Obligations
      then due and payable or declared due and payable.

     

    
      
         

      

      
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    SECTION
      2.8 Remedies.
      Upon
      the occurrence and during the continuance of any Event of Default, the Lender
      may enforce against the Guarantors their respective obligations and liabilities
      hereunder and exercise such other rights and remedies as may be available to
      the
      Lender hereunder, under the Loan Agreement or the other Loan Documents or
      otherwise.

     

    SECTION
      2.9 Benefits
      of Guaranty.
      The
      provisions of this Guaranty are for the benefit of the Lender and its
      successors, transferees, endorsees and assigns, and nothing herein contained
      shall impair, as between the Borrower and the Lender, the obligations of the
      Borrower under the Loan Documents. In the event that all or any part of the
      Obligations are transferred, endorsed or assigned by the Lender to any Person
      or
      Persons as permitted under the Loan Agreement, any reference to a “Lender”
herein shall be deemed to refer similarly and ratably to such Person or
      Persons.

     

    SECTION
      2.10 Termination;
      Reinstatement.

     

    (a) Subject
      to Section
      2.10(c)
      below,
      this Guaranty shall remain in full force and effect until all the Guaranteed
      Obligations shall have been indefeasibly paid in full.

     

    (b) No
      payment made by the Borrower, any Guarantor, or any other Person received or
      collected by the Lender from the Borrower, any Guarantor, or any other Person
      by
      virtue of any action or proceeding or any set-off or appropriation or
      application at any time or from time to time in reduction of or in payment
      of
      the Guaranteed Obligations shall be deemed to modify, reduce, release or
      otherwise affect the liability of any Guarantor hereunder which shall,
      notwithstanding any such payment (other than any payment made by such Guarantor
      in respect of the obligations of the Guarantors or any payment received or
      collected from such Guarantor in respect of the obligations of the Guarantors),
      remain liable for the obligations of the Guarantors up
      to the
      maximum liability of such Guarantor hereunder until the Guaranteed Obligations
      shall have been indefeasibly paid in full.

     

    (c) Each
      Guarantor agrees that, if any payment made by the Borrower or any other Person
      applied to the Obligations is at any time annulled, set aside, rescinded,
      invalidated, declared to be fraudulent or preferential or otherwise required
      to
      be refunded or repaid, or the proceeds of any Collateral are required to be
      refunded by the Lender to the Borrower, its estate, trustee, receiver or any
      other Person, including, without limitation, any Guarantor,
      under any Applicable Law or equitable cause, then, to the extent of such payment
      or repayment, each Guarantor’s liability hereunder (and any Lien or Collateral
      securing such liability) shall be and remain in full force and effect, as fully
      as if such payment had never been made, and, if prior thereto, this Guaranty
      shall have been canceled or surrendered (and if any Lien or Collateral securing
      such Guarantor’s liability hereunder shall have been released or terminated by
      virtue of such cancellation or surrender), this Guaranty (and such Lien or
      Collateral) shall be reinstated in full force and effect, and such prior
      cancellation or surrender shall not diminish, release, discharge, impair or
      otherwise affect the obligations of such Guarantor in respect of the amount
      of
      such payment (or any Lien or Collateral securing such obligation).

     

    SECTION
      2.11 Payments.
      Payments by the Guarantors shall be made to the Lender, to be credited and
      applied to the Guaranteed Obligations in accordance with the Loan Agreement,
      in
      immediately available Dollars to the account designated by the
      Lender.

     

    
      
         

      

      
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    SECTION
      2.12 Collateral.
      Each of
      the Guarantors hereby consents, acknowledges and confirms that the Guaranteed
      Obligations are and shall at all times constitute “Secured Obligations” under
      and as defined in the Security Agreement, and that the Collateral (as such
      term
      is defined in the Security Agreement) shall at all times constitute collateral
      security for the Obligations and the Guaranteed Obligations, on a pari passu
      basis
      with all other Secured Obligations under the Security Agreement.

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce
      the Lender to make the Loans, each Guarantor hereby represents and warrants
      that:

     

    SECTION
      3.1 Existence.
      Such
      Guarantor is duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its incorporation, has the requisite power and
      authority to own, lease and operate its properties and to carry on its business
      as now being and hereafter proposed to be conducted and is duly qualified and
      authorized to do business in each jurisdiction in which the character of its
      properties or the nature of its business requires such qualification and
      authorization and the failure to be so qualified would have a Material Adverse
      Effect.

     

    SECTION
      3.2 Authorization
      of Agreement; Enforceability.
      Such
      Guarantor has the right, power and authority to execute, deliver and perform
      this Guaranty and has taken all necessary corporate or other organizational
      action to authorize its execution, delivery and performance of this Guaranty.
      This Guaranty has been duly executed and delivered by the duly authorized
      officers of such Guarantor and this Guaranty constitutes the legal, valid and
      binding obligation of such Guarantor enforceable against such Guarantor in
      accordance with its terms, except as such enforcement may be limited by
      bankruptcy, insolvency, reorganization, moratorium or similar state or federal
      debtor relief laws from time to time in effect which affect the enforcement
      of
      creditors’ rights in general and the availability of equitable
      remedies.

     

    SECTION
      3.3 No
      Conflict; Consents.
      The
      execution, delivery and performance by such Guarantor of this Guaranty will
      not,
      by the passage of time, the giving of notice or otherwise, violate any material
      provision of any Applicable Law or contractual obligation of such Guarantor
      and
      will not result in the creation or imposition of any Lien upon or with respect
      to any property or revenues of such Guarantor. No consent or
      authorization of, filing with, or other act by or in respect of, any arbitrator
      or governmental authority and no consent of any other Person (including, without
      limitation, any stockholder or creditor of such Guarantor), is required in
      connection with the execution, delivery, performance, validity or enforceability
      of this Guaranty.

     

    SECTION
      3.4 Litigation.
      No
      actions, suits or proceedings before any arbitrator or governmental authority
      are pending or, to the Knowledge of such Guarantor, threatened by or against
      such Guarantor or against any of its properties with respect to this Guaranty
      or
      any of the transactions contemplated hereby.

     

    
      
         

      

      
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    SECTION
      3.5 Title
      to Assets.
      Such
      Guarantor has a valid ownership or leasehold interest in any and all real
      property owned or occupied by it, and has good title to all of its personal
      property sufficient to carry on its business free of any and all Liens of any
      type whatsoever, except Permitted Liens.

     

    SECTION
      3.6 Solvency.
      As of
      the Closing Date (or such later date upon which such Guarantor became a party
      hereto), such Guarantor (i) has capital sufficient to carry on its business
      and
      transactions and all business and transactions in which it engages and is able
      to pay its debts as they mature, (ii) owns property having a value, both at
      fair
      valuation on a going concern basis, and at present fair saleable value on a
      going concern basis, greater than the amount required to pay its probable
      liabilities (including contingencies), and (iii) does not believe that it will
      incur debts or liabilities beyond its ability to pay such debts or liabilities
      as they mature, subject in each case to the first sentence of Section
      2.2.

     

    ARTICLE
      IV

     

    MISCELLANEOUS

     

    SECTION
      4.1 Amendments
      in Writing.
      None of
      the terms or provisions of this Guaranty may be waived, amended, supplemented
      or
      otherwise modified except in accordance with Section
      8.04
      of the
      Loan Agreement.

     

    SECTION
      4.2 Notices.
      All
      notices and communications hereunder shall be given to the addresses and
      otherwise made in accordance with Section
      9.06
      of the
      Loan Agreement; provided that notices and communications to the Guarantors
      shall
      be directed to the Guarantors at the address of the Borrower set forth in
Section
      8.06 of
      the
      Loan Agreement.

     

    SECTION
      4.3 Enforcement
      Expenses, Indemnification.

     

    (a) Each
      Guarantor agrees to pay or reimburse the Lender on written demand for all its
      reasonable costs and expenses incurred in connection with enforcing or
      preserving any rights under this Guaranty and the other Loan Documents to which
      such Guarantor is a party, including, without limitation, the reasonable fees
      and disbursements of counsel (including the allocated fees and expenses of
      in-house counsel) to the Lender.

     

    (b) Each
      Guarantor agrees to pay, and to save the Lender harmless from, any and all
      liabilities with respect to, or resulting from any delay in paying, any and
      all
      stamp, excise, sales or other taxes which may be payable or determined to be
      payable with respect to any of the Collateral or in connection with any of
      the
      transactions contemplated by this Guaranty.

     

    (c) Each
      Guarantor agrees to pay, and to save the Lender harmless from, any and all
      liabilities, obligations, losses, damages, penalties, costs and expenses in
      connection with actions, judgments, suits, costs, expenses or disbursements
      of
      any kind or nature whatsoever with respect to the execution, delivery,
      enforcement, performance and administration of this Guaranty to the extent
      the
      Borrower would be required to do so pursuant to the Loan Agreement and/or the
      Security Agreement.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (d) The
      agreements in this Section
      4.3
      shall
      survive repayment of the Obligations and all other amounts payable under the
      Loan Agreement and the other Loan Documents.

     

    SECTION
      4.4 Governing
      Law.
      This
      Guaranty shall be governed by, and construed and interpreted in accordance
      with,
      the laws of the State of New York, without giving effect to principles of
      conflicts of laws.

     

    SECTION
      4.5 Consent
      to Jurisdiction and Venue.

     

    (a) Each
      Guarantor (and, by its acceptance of this Agreement, the Lender) hereby
      irrevocably consents to the non-exclusive personal jurisdiction of all state
      and
      federal courts located in New York, New York (and any courts from which an
      appeal from any of such courts must or may be taken) in any action, claim or
      other proceeding arising out of any dispute in connection with this Agreement
      and the other Loan Documents, any rights or obligations hereunder or thereunder,
      or the performance of such rights and obligations. Each Guarantor hereby
      irrevocably consents to the service of a summons and complaint and other process
      in any action, claim or proceeding brought by the Lender in connection with
      this
      Agreement or the other Loan Documents, any rights or obligations hereunder
      or
      thereunder, or the performance of such rights and obligations, on behalf of
      itself or its property, by registered or certified mail, return receipt
      requested, and otherwise in the manner specified in Section
      9.06
      of the
      Loan Agreement. Nothing in this Section
      4.5
      shall
      affect the right of the Lender to serve legal process in any other manner
      permitted by Applicable Law or affect the right of the Lender to bring any
      action or proceeding against any Guarantor or its properties in the courts
      of
      any other jurisdictions.

     

    (b) The
      Guarantors hereby irrevocably waive any objection each may have now or in the
      future to the laying of venue in the aforesaid jurisdiction in any action,
      claim
      or other proceeding arising out of or in connection with this Guaranty, any
      other Loan Document or the rights and obligations of the parties hereunder
      or
      thereunder. The Guarantors irrevocably waive, in connection with such action,
      claim or proceeding, any plea or claim that the action, claim or proceeding
      has
      been brought in an inconvenient forum.

     

    SECTION
      4.6 Preservation
      of Remedies, Damages.

     

    (a) Preservation
      of Certain Remedies.
      The
      parties hereto and the other Loan Documents preserve, without diminution,
      certain remedies that such Persons may employ or exercise freely, either alone,
      in conjunction with or during a dispute. Each such Person shall have and hereby
      reserves the right to proceed in any court of proper jurisdiction or by
      self-help to exercise or prosecute the following remedies, as applicable: (i)
      all rights to foreclose against any real or personal property or other security
      by exercising a power of sale granted in the Loan Documents or under Applicable
      Law or by judicial foreclosure and sale, including a proceeding to confirm
      the
      sale, (ii) all rights of self-help including peaceful occupation of property
      and
      collection of rents, set-off, and peaceful possession of property, and (iii)
      obtaining provisional or ancillary remedies including injunctive relief,
      sequestration, garnishment, attachment, appointment of receiver and in filing
      an
      involuntary bankruptcy proceeding. Preservation of these remedies does not
      limit
      the power of an arbitrator to grant similar remedies that may be requested
      by a
      party in a dispute.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (b) No
      Punitive/Exemplary Damages.
      The
      Lender and each Guarantor hereby agree that no such Person shall have a remedy
      of punitive or exemplary damages against any other party to a Loan Document
      and
      each such Person hereby waives any right or claim to punitive or exemplary
      damages that it may now have or may arise in the future in connection with
      any
      dispute hereunder or under any other Loan Document, whether such dispute is
      resolved through arbitration or judicially.

     

    SECTION
      4.7 Waiver
      of Jury Trial.
      TO
      THE EXTENT PERMITTED BY APPLICABLE LAW, THE LENDER AND EACH GUARANTOR HEREBY
      IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
      ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION
      WITH
      THIS GUARANTY, THE NOTE OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
      HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
      OBLIGATIONS.

     

    SECTION
      4.8 No
      Waiver by Course of Conduct, Cumulative Remedies.
      The
      Lender shall not by any act (except by a written instrument pursuant to
Section 4.1),
      delay,
      indulgence, omission or otherwise be deemed to have waived any right or remedy
      hereunder or to have acquiesced in any Default or Event of Default. No failure
      to exercise, nor any delay in exercising on the part of the Lender, any right,
      power or privilege hereunder shall operate as a waiver thereof. No single or
      partial exercise of any right, power or privilege hereunder shall preclude
      any
      other or further exercise thereof or the exercise of any other right, power
      or
      privilege. A waiver by the Lender of any right or remedy hereunder on any one
      occasion shall not be construed as a bar to any right or remedy which the Lender
      would otherwise have on any future occasion. The rights and remedies herein
      provided are cumulative, may be exercised singly or concurrently and are not
      exclusive of any other rights or remedies provided by law.

     

    SECTION
      4.9 Successors
      and Assigns.
      This
      Guaranty shall be binding upon and shall inure to the benefit of each Guarantor,
      the Lender and their successors and assigns; provided
      that any
      Guarantor may assign, transfer or delegate any of its rights or obligations
      under this Guaranty without the prior written consent of all holders of
      Obligations.

     

    SECTION
      4.10 Severability.
      If any
      provision hereof is held by a court of competent jurisdiction to be invalid
      or
      unenforceable in any jurisdiction, then, to the fullest extent permitted by
      law,
(a)
      the other provisions hereof shall remain in full force and effect in such
      jurisdiction and shall be liberally construed in favor of the Lender in order
      to
      carry out the intentions of the parties hereto as nearly as may be possible;
      and
      (b) the invalidity or unenforceability of any provisions hereof in any
      jurisdiction shall not affect the validity or enforceability of such provision
      in any other jurisdiction.

     

    SECTION
      4.11 Headings.
      The
      various section headings used in this Guaranty are for convenience of reference
      only and shall not affect the meaning or interpretation of this Guaranty or
      any
      provisions hereof.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    SECTION
      4.12 Counterparts.
      This
      Guaranty may be executed by the parties hereto in several counterparts, each
      of
      which shall be deemed to be an original and all of which shall constitute
      together but one and the same agreement.

     

    SECTION
      4.13 Set-Off.
      Each
      Guarantor hereby irrevocably authorizes the Lender, at any time and from time
      to
      time during the continuance of an Event of Default, without notice to such
      Guarantor or any other Guarantor, any such notice being expressly waived by
      each
      Guarantor, to set off and appropriate and apply any and all deposits (general
      or
      special, time or demand, provisional or final), in any currency, and any other
      credits, indebtedness or claims, in any currency, in each case whether direct
      or
      indirect, absolute or contingent, matured or unmatured, at any time held or
      owing by the Lender (or any agent of the Lender) to or for the credit or the
      account of such Guarantor, or any part thereof, in such amounts as the Lender
      may elect, against and on account of the obligations and liabilities of such
      Guarantor to the Lender hereunder, as the Lender may elect, whether or not
      the
      Lender has made any demand for payment. The Lender shall notify such Guarantor
      promptly of any such set-off and the application made by the Lender of the
      proceeds thereof; provided
      that the
      failure to give such notice shall not affect the validity of such set-off and
      application. The rights of the Lender under this Section 4.13 are in addition
      to
      other rights and remedies (including, without limitation, other rights of
      set-off) which the Lender may have.

     

    SECTION
      4.14 Integration.
      This
      Guaranty and the other Loan Documents represent the agreement of the Guarantors
      and the Lender with respect to the subject matter hereof and thereof, and there
      are no promises, undertakings, representations or warranties by the Lender
      relative to subject matter hereof and thereof not expressly set forth or
      referred to herein or in the other Loan Documents.

     

    SECTION
      4.15 Acknowledgements.
      Each
      Guarantor hereby acknowledges that:

     

    (a) it
      has
      been advised by counsel in the negotiation, execution and delivery of this
      Guaranty and the other Loan Documents to which it is a party;

     

    (b) the
      Lender as such has no fiduciary relationship with or duty to any Guarantor
      arising out of or in connection with this Guaranty or any of the other Loan
      Documents, and the relationship between the Guarantors, on the one hand, and
      the
      Lender as such, on the other hand, in connection herewith or therewith is solely
      that of debtor and creditor; and

     

    (c) no
      joint
      venture is created hereby or by the other Loan Documents or otherwise exists
      by
      virtue of the transactions contemplated hereby among the Lender or among the
      Guarantors and the Lender.

     

    SECTION
      4.16 Releases.
      At such
      time as the Guaranteed Obligations shall have been indefeasibly paid in full,
      this Guaranty and all obligations (other than those expressly stated to survive
      such termination) of the Guarantors hereunder shall terminate, all without
      delivery of any instrument or performance of any act by any party.

     

    [Signature
      Page to Follow]

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, each of the Guarantors has executed and delivered this Guaranty
      by its duly authorized officer, all as of the date first set forth
      above.

     

    
      	 	
              TECHNICAL
                CAREER INSTITUTES, INC.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J. McGrath

            
	 	 	
              Name:
                

            	
              Dr.
                John J. McGrath

            
	 	 	
              Title:
                

            	
              Chairman

            
	 	 	 	 
	 	 	 	 
	 	
              PENNSYLVANIA
                SCHOOL OF BUSINESS, INC.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J. McGrath

            
	 	 	
              Name:
                

            	
              Dr.
                John J. McGrath

            
	 	 	
              Title:
                

            	
              Chief
                Executive Officer and President

            
	 	 	 	 
	 	 	 	 
	 	
              INTERBORO
                INSTITUTE, INC.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J. McGrath

            
	 	 	
              Name:
                

            	
              Dr.
                John J. McGrath

            
	 	 	
              Title:
                

            	
              Chief
                Executive Officer

            
	 	 	 	 
	 	 	 	 
	 	
              INTERBORO
                HOLDING, INC.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J. McGrath

            
	 	 	
              Name: 

            	
              Dr.
                John J. McGrath

            
	 	 	
              Title:
                

            	
              President

            

    

     

    
      
         

      

      
        13EXHIBIT
      10.4

     

    REVOLVING
      CREDIT AGREEMENT

     

    AGREEMENT
      (this
“Agreement”)
      is
      made and entered into as of the 31st
      day of
      December, 2007, by and among COMVEST
      INVESTMENT PARTNERS III, L.P., a
      Delaware limited partnership (the “Lender”),
      TECHNICAL
      CAREER INSTITUTES, INC.,
      a New
      York corporation (“TCI”),
      and
PENNSYLVANIA
      SCHOOL OF BUSINESS, INC.,
      a
      Pennsylvania corporation (“PSB”)
      (TCI
      and PSB are sometimes hereinafter referred to singly and/or collectively as
      the
“Borrower”).

     

    WITNESSETH
      :

     

    WHEREAS,
      TCI and
      PSB are engaged in the provision of adult career training and education on
      a
      for-profit basis (collectively, the “Business
      Operations”);
      and

     

    WHEREAS,
      in
      order to provide funds for TCI’s and PSB’s working capital and other general
      corporate purposes, TCI and PSB have requested the Lender to extend to TCI
      and
      PSB a revolving credit facility on the terms and conditions of this Agreement;
      and

     

    WHEREAS,
      the
      Lender is willing and able to provide such revolving credit facility to the
      Borrower on the terms and conditions of this Agreement;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants herein contained, the
      parties hereby agree as follows:

     

    
      	I.	
              DEFINITIONS

            

    

     

    Section
      1.01. Defined Terms.
      In
      addition to the other terms defined elsewhere in this Agreement, as used herein,
      the following terms shall have the following meanings:

     

    “Advances”
shall
      mean the principal amounts loaned to the Borrower from time to time pursuant
      to
      Section 2.01 below.

     

    “Affiliate”
shall
      mean, with respect to any Person, any other Person in Control of, Controlled
      by,
      or under common Control with the first Person, and any other Person who has
      a
      substantial interest, direct or indirect, in the first Person or any of its
      Affiliates, including, without limitation, any officer or director of the first
      Person or any of its Affiliates

     

    “Agreement”
shall
      mean this Revolving Credit Agreement as it may from time to time be amended,
      modified and/or supplemented.

     

    “Applicable
      Law”
shall
      mean all applicable provisions of all (a) constitutions, statutes, ordinances,
      rules, regulations and orders of all governmental and/or quasi-governmental
      bodies, (b) Government Approvals, and (c) order, judgments and decrees of all
      courts and arbitrators.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Approved
      Budget”
shall
      have the meaning ascribed thereto in the Loan Agreement described in Section
      4.04 below.

     

    “Availability”
shall
      mean the amount (if any) by which, at the time of determination, (a) the
      Revolving Credit Commitment exceeds (b) the outstanding principal amount of
      Advances.

     

    “Borrowing
      Date”
means
      the Business Day on which the Lender makes an Advance hereunder.

     

    “Business
      Day”
shall
      mean a day other than (a) a Saturday, (b) a Sunday, or (c) a day on which
      banking institutions in the State of Florida are authorized or required by
      law
      or executive order to close.

     

    “Capitalized
      Lease”
shall
      mean any lease which is or should be capitalized on the balance sheet of the
      lessee thereunder in accordance with GAAP.

     

    “Cash
      Equivalents”
shall
      mean (a) marketable securities issued, or directly and fully guaranteed or
      insured, by the United States of America or any agency or instrumentality
      thereof provided that the full faith and credit of the United States of America
      is pledged in support thereof) having maturities of not more than twelve (12)
      months from the date of acquisition; (b) time deposits, demand deposits,
      certificates of deposit, acceptances or prime commercial paper issued by, or
      repurchase obligations for underlying securities of the types described in
      clause (a) entered into with any commercial bank having a short-term deposit
      rating of at least A-2 or the equivalent thereof by Standard & Poor’s
      Corporation or at least P-2 or the equivalent thereof by Moody’s Investors
      Service, Inc.; (c) commercial paper with a rating of A-I or A-2 or the
      equivalent thereof by Standard & Poor’s Corporation or P-1 or P-2 or the
      equivalent thereof by Moody’s Investors Service, Inc. and in each case maturing
      within twelve (12) months after the date of acquisition; (d) marketable direct
      obligations issued by any state in the United States or any agency or
      instrumentality thereof maturing within twelve (12) months from the date of
      acquisition thereof and, at the time of acquisition, have one of the two highest
      ratings generally obtainable from either Standard & Poor’s Corporation or
      Moody’s Investors Services, Inc.; (e) tax-exempt commercial paper of United
      States municipal, state or local governments rated at least A-2 or the
      equivalent thereof by Standard & Poor’s Corporation or at least P-2 or the
      equivalent thereof by Moody’s Investors Services, Inc. and maturing within
      twelve (12) months after the date of acquisition thereof; (f) any other items
      selected by the Borrower and approved by the Lender (which approval shall not
      be
      unreasonably withheld or delayed); or (g) any mutual fund or other pooled
      investment vehicle which invests principally in the foregoing
      obligations.

     

    “Closing
      Date”
shall
      mean the date on which the conditions precedent set forth in Article IV hereof
      are satisfied, and the initial Advance is funded to the Borrower.

     

    “Closing
      Fee”
shall
      mean the sum of $150,000, which shall be payable in accordance with Section
      2.02(a) below.

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, and the rules and regulations
      promulgated thereunder, as in effect from time to time.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Collateral”
shall
      mean all collateral pledged by the Borrower and/or any of the Subsidiaries
      as
      security for the payment and performance of the Obligations, whether pursuant
      to
      the Harris Credit Agreement and/or related loan documents, the Security
      Agreement or any other Security Document.

     

    “Commitment
      Expiration Date”
shall
      mean the earlier of (a) December 31, 2008, or (b) any termination of
      the Revolving Credit Commitment in accordance with this Agreement.

     

    “Confidential
      Information”
shall
      mean information that the Borrower furnishes to the Lender pursuant to any
      Loan
      Document, but does not include any such information once such information has
      become, or if such information is, generally available to the public or
      available to the Lender from a source other than the Borrower which is not,
      to
      the Lender’s knowledge, bound by any confidentiality agreement in respect
      thereof. 

     

    “Contract”
shall
      mean any indenture, agreement (other than this Agreement), other contractual
      restriction, lease in which the Borrower or any Subsidiary is a lessor or
      lessee, license or instrument.

     

    “Control”
shall
      mean the possession, directly or indirectly, of the power to direct or cause
      the
      direction of the management or policies of a Person, whether through the
      ownership of voting securities, by contract or otherwise, and the terms
“Controlling”
and
      “Controlled”
shall
      have meanings correlative thereto.

     

    “Convertible
      Notes”
shall
      mean the Secured Convertible Promissory Notes dated May 23, 2007 issued by
      EVCI
      to the Lender, Dr. Arol I. Buntzman, John J. McGrath, Joseph Alperin and Stephen
      Schwartz, respectively.

     

    “Default”
shall
      mean any of the events specified in Article VII hereof, whether or not any
      requirement for the giving of notice, the lapse of time, or both, or any other
      condition, has been satisfied.

     

    “Disclosure
      Schedule”
shall
      mean the disclosure schedule, dated the Closing Date, executed and delivered
      by
      the Borrower to the Lender, in which the schedule numbers correspond to the
      Section numbers of this Agreement.

     

    “Dollars”
or
      “$”
shall
      mean United States Dollars, lawful currency for the payment of public and
      private debts.

     

    “EVCI”
shall
      mean EVCI Career Colleges Holding Corp., a Delaware corporation. 

     

    “Event
      of Default”
shall
      mean any of the events specified in Article VII hereof, provided
      that any
      requirement for the giving of notice, the lapse of time, or both, or any other
      condition, has been satisfied. 

     

    “Existing
      Events of Default”
shall
      mean those events of default set forth in Schedule 2 attached to the Forbearance
      Agreement.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Exit
      Fee”
shall
      mean the fee payable to the Lender pursuant to Section 2.02(b)
      below.

     

    “Forbearance
      Agreement”
shall
      mean the written forbearance under or written amendment of the Harris Credit
      Agreement and related loan documents, restructuring the terms thereof in a
      manner satisfactory to the Lender and EVCI.

     

    “GAAP”
shall
      mean generally accepted accounting principles in the United States of America,
      consistently applied, unless the context otherwise requires, with respect to
      any
      financial terms contained herein, as then in effect with respect to the
      preparation of financial statements.

     

    “Government
      Approval”
shall
      mean an authorization, consent, non-action, approval, license or exemption
      of,
      registration or filing with, or report to, any governmental or
      quasi-governmental department, agency, body or other unit.

     

    “Guaranty”,
      “Guaranteed”
or
      to
“Guarantee”,
      as
      applied to any Indebtedness, liability or other obligation, shall mean (a)
      a
      guaranty, directly or indirectly, in any manner, including by way of endorsement
      (other than endorsements of negotiable instruments for collection in the
      ordinary course of business), of any part or all of such obligation, and (b)
      an
      agreement, contingent or otherwise, and whether or not constituting a guaranty,
      assuring, or intended to assure, the payment or performance (or payment of
      damages in the event of non-performance) of any part or all of such obligation
      by any means (including, without limitation, the purchase of securities or
      obligations, the purchase or sale of property or services, or the supplying
      of
      funds).

     

    “Guarantors”
shall
      mean the collective reference to EVCI, Interboro Holding and
      Interboro.

     

    “Guaranty
      Agreement”
shall
      mean the Guaranty Agreement, to be dated as of the Closing Date, made by the
      Guarantors in favor of the Lender, as same may be amended, modified,
      supplemented and/or restated from time to time.

     

    “Harris
      Credit Agreement”
shall
      mean the Second Amended and Restated Credit Agreement dated as of September
      16,
      2005 (as heretofore amended) among EVCI, the guarantors thereunder, and Harris
      N.A., which has been assigned by Harris N.A. to the Lender or its
      Affiliate.

     

    “Indebtedness”
shall
      mean (without
      duplication), with respect to any Person, (a) all obligations or liabilities,
      contingent or otherwise, for borrowed money, (b) any and all obligations
      represented by promissory notes, bonds, debentures or the like, or on which
      interest charges are customarily paid, (c) any liability secured by any
      mortgage, pledge, lien or security interest on property owned or acquired,
      whether or not such liability shall have been assumed, (d) obligations of such
      Person under conditional sale or other title retention agreements relating
      to
      property or assets purchased by such Person, (e) all obligations of such Person
      issued or assumed as the deferred purchase price of property or services
      (excluding trade payables and accrued obligations incurred in the ordinary
      course of business), (f) any obligations (contingent or otherwise) of such
      Person as an account party or applicant in respect of letters of credit and/or
      bankers’ acceptances, and (g) Guarantees, endorsements (other than for
      collection in the ordinary course of business) and other contingent obligations
      in respect of the obligations of others.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Interboro”
shall
      mean Interboro Institute, Inc., a New York corporation.

     

    “Interboro
      Holding”
shall
      mean Interboro Holding, Inc., a Delaware corporation.

     

    “Intercreditor
      Agreement”
shall
      mean the Intercreditor Agreement dated April 24, 2007 by and among the Lender
      or
      its Affiliate (as assignee of Harris N.A.), the Lender and the other Junior
      Creditors named therein.

     

    “Investment”,
      as
      applied to the Borrower or any Subsidiary, shall mean: (a) any shares of capital
      stock, evidence of Indebtedness or other security issued by any other Person
      to
      the Borrower or any Subsidiary, (b) any loan, advance or extension of credit
      to,
      or contribution to the capital of, any other Person, other than credit terms
      extended to customers in the ordinary course of business, (c) any other
      investment by the Borrower or any Subsidiary in any assets or securities of
      any
      other Person, and (d) any commitment to make any Investment.

     

    “Lien”,
      as
      applied to the property or assets (or the income or profits therefrom) of the
      Borrower or any Subsidiary, shall mean (in each case, whether the same is
      consensual or nonconsensual or arises by contract, operation of law, legal
      process or otherwise): (a) any mortgage, lien, pledge, hypothecation,
      attachment, assignment, deposit arrangement, encumbrance, charge, lease
      constituting a Capitalized Lease Obligation, conditional sale or other title
      retention agreement, or other security interest or encumbrance of any kind
      in
      respect of any property (including, without limitation, stock of any Subsidiary)
      of the Borrower or any Subsidiary, or upon the income or profits therefrom;
      (b)
      any arrangement under which any property of the Borrower or any Subsidiary
      is
      transferred, sequestered or otherwise identified for the purpose of subjecting
      or making available the same for the payment of Indebtedness or the performance
      of any other liability in priority to the payment of the general, unsecured
      creditors of the Borrower or any Subsidiary; (c) any Indebtedness or liability
      which remains unpaid after the same shall become due and payable and which,
      if
      unpaid, by law or otherwise is given any priority whatsoever over the general
      unsecured creditors of the Borrower or any Subsidiary; and (d) any agreement
      (other than this Agreement) or other arrangement which, directly or indirectly,
      prohibits the Borrower or any Subsidiary from creating or incurring any lien
      on
      any of its properties or assets or which conditions the ability to do so on
      the
      security, on a pro rata
      or other
      basis, of Indebtedness other than Indebtedness outstanding under this
      Agreement.

     

    “Loan
      Documents”
shall
      mean the collective reference to (a) this Agreement, the Revolving Credit Note,
      the Security Documents, and any and all other agreements, instruments,
      certificates and other documents as may be executed and delivered by the
      Borrower and/or any of the Loan Parties from time to time pursuant hereto or
      thereto, and (b) any and all promissory notes or other evidences of Indebtedness
      owed by EVCI to the Lender on the date of this Agreement. 

     

    “Loan
      Parties”
shall
      mean the collective reference to the Borrower and the Guarantors.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Material
      Adverse Effect”
shall
      mean any event, act, omission, condition or circumstance which has or would
      reasonably be expected to have a material adverse effect on (a) the business,
      operations, properties, assets or condition, financial or otherwise, of the
      Borrower or the Borrower and the Subsidiaries, taken as a whole, (b) the ability
      of the Borrower or any Subsidiary to perform any of its obligations under any
      of
      the Loan Documents, or (c) the validity or enforceability of, or the Lender’s
      rights and remedies under, any of the Loan Documents, other than due to the
      acts
      or omissions of the Lender or one of its Affiliates.

     

    “Maturity
      Date”
shall
      mean March 31, 2009.

     

    “Obligations”
shall
      mean the collective reference to all Indebtedness, interest, fees and other
      liabilities and obligations of every kind and description owed by the Borrower
      and/or any of the Loan Parties to the Lender from time to time under or pursuant
      to this Agreement, the Revolving Credit Note, the Security Documents and the
      other Loan Documents, however evidenced, created or incurred, fixed or
      contingent, now or hereafter existing, due or to become due.

     

    “Organic
      Documents”
shall
      mean the certificate of incorporation, articles of incorporation, certificate
      of
      formation, certificate of limited partnership, by-laws, operating agreement,
      limited partnership agreement or other such document of any Person.

     

    “Permitted
      Liens”
shall
      mean those Liens expressly permitted pursuant to Section 6.02
      below.

     

    “Person”
shall
      mean any individual, partnership, corporation, limited liability company,
      banking association, business trust, joint stock company, trust, unincorporated
      association, joint venture, governmental authority or other entity of whatever
      nature.

     

    “PSB”
shall
      mean Pennsylvania School of Business, Inc., a Pennsylvania
      corporation.

     

    “Restructuring”
shall
      mean (a) the formation of a Delaware business trust (the “Trust”)
      for
      the purpose of holding all of the issued and outstanding capital stock and
      other
      equity securities of TCI and PSB, whose board of trustees shall at all times
      consist solely of the same individuals serving as the directors of EVCI (subject
      to any statutory requirement of a resident trustee), (b) the transfer by EVCI
      to
      the Trust of all of the issued and outstanding capital stock and other equity
      securities of TCI, and the transfer by Interboro Holding to the Trust of all
      of
      the issued and outstanding capital stock and other equity securities of PSB,
      such that EVCI shall be the sole beneficial owner of the Trust and shall have
      an
      undivided beneficial interest in the property of the Trust, including the equity
      securities of TCI and PSB, and (c) the assignment to and assumption by the
      Trust
      of (i) the Indebtedness and other obligations owed by EVCI under or pursuant
      to
      the Harris Credit Agreement, (ii) all Indebtedness and other obligations of
      EVCI
      to the Lender as of the date of the consummation of the Restructuring (exclusive
      of obligations under the loan agreement described in Section 4.04 below), such
      that the Trust shall be deemed to be the Borrower hereunder, and in connection
      with which each of TCI and PSB shall join in and become a party to the Guaranty
      Agreement, and (iii) the Convertible Notes. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Revolving
      Credit Commitment”
shall
      mean the Lender’s agreement to make Advances to the Borrower within the
      limitations set forth in Section 2.01 below.

     

    “Revolving
      Credit Note”
shall
      mean the promissory note of the Borrower issued to the Lender to represent
      the
      Advances and interest thereon, as described in Section 2.01(f)
      below.

     

    “Sale”
shall
      mean any transaction or series of related transactions (a) whereby a majority
      of
      the outstanding equity interests in TCI and/or PSB which ordinarily has voting
      power for the election of directors (including preferred stock counted on an
“as
      converted” basis into Common Stock and Common Stock counted on a fully diluted
      basis) is sold, assigned or transferred, (b) whereby additional equity interests
      in TCI and/or PSB which ordinarily have voting power for the election of
      directors (calculated in accordance with clause (a) of this definition) are
      issued, which equity interests constitute a majority of the outstanding equity
      interests in TCI and/or PSB which ordinarily has voting power for the election
      of directors (calculated as aforesaid) after giving effect to such
      transaction(s), (c) in which TCI and/or TSB is a constituent party to any merger
      or consolidation and as a result thereof (i) the holders of the outstanding
      equity interests in TCI and/or PSB which ordinarily has voting power for the
      election of directors (including preferred stock counted on an “as converted”
basis into common stock) immediately prior to such merger or consolidation
      cease
      to own a majority of the outstanding equity interests in TCI and/or PSB which
      ordinarily has voting power for the election of directors (including preferred
      stock counted on an “as converted” basis into common stock), or (ii) TCI and/or
      PSB is not the surviving corporation, or (d) whereby all or any material portion
      of the assets of TCI and/or PSB are sold, assigned or transferred. Following
      any
      Restructuring, a “Sale” shall be deemed to include any of the foregoing
      transactions relating to the outstanding beneficial interests in the
      Trust.

     

    “Security
      Agreement”
shall
      mean the Security Agreement dated as of May 23, 2007 by and among EVCI, the
      other “Debtors” thereunder, and the Lender acting as agent, as same may be
      amended, modified, supplemented and/or restated from time to time. 

     

    “Security
      Documents”
shall
      mean the Guaranty Agreement, the Security Agreement, any collateral assignments,
      control agreements, financing statements or other such agreements or documents
      pursuant thereto, and any other agreements or instruments securing or creating
      or evidencing Liens securing the Obligations, and shall also include the
      security provisions of the Harris Credit Agreement and any related loan
      documents unless and until it is determined by a court of competent jurisdiction
      that the Obligations are not entitled to the benefits of the senior Liens
      accorded thereunder.

     

    “Subsidiary”
or
      “Subsidiaries”
shall
      mean the individual or collective reference to any corporation, limited
      liability company or other entity of which 50% or more of the outstanding shares
      of stock or other equity interests of each class having ordinary voting power
      and/or rights to profits (other than stock having such power only by reason
      of
      the happening of a contingency) is at the time owned beneficially or of record
      by the Borrower, directly or indirectly through one or more Subsidiaries of
      the
      Borrower.

     

    “TCI”
shall
      mean Technical Career Institutes, Inc., a New York corporation.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “UCC”
means
      the Uniform Commercial Code as in effect in the State of New York on the date
      hereof and hereafter from time to time.

     

    Section
      1.02. Use of Defined Terms.
      All
      terms defined in this Agreement shall have their defined meanings when used
      in
      the Revolving Credit Note, the Security Documents, the other Loan Documents,
      and
      all certificates, reports or other documents made or delivered pursuant to
      his
      Agreement, unless otherwise defined therein or unless the specific context
      shall
      otherwise require.

     

    Section
      1.03. Accounting Terms.
      All
      accounting terms not specifically defined herein shall be construed in
      accordance with GAAP.

     

    Section
      1.04. Other Definitional Provisions.
      The
      words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import
      when used in this Agreement shall refer to this Agreement as a whole and not
      to
      any particular provision of this Agreement, and Section references are to this
      Agreement unless otherwise specified. The meanings given to terms defined herein
      shall be equally applicable to both the singular and plural forms of such terms.
      The word “including” and words of similar import when used in this Agreement
      shall mean “including, without limitation,” unless otherwise
      specified.

     

    
      	II.	
              GENERAL
                TERMS

            

    

     

    Section
      2.01. Revolving Credit Loans.

     

    (a) Subject
      at all times to all of the terms and conditions of this Agreement, the Lender
      hereby agrees to extend to the Borrower a secured revolving credit facility,
      from the Closing Date to the Commitment Expiration Date, in an aggregate
      principal amount not to exceed, at any time outstanding, the sum of $2,850,000
      (the “Revolving
      Credit Commitment”).

     

    (b) Such
      revolving credit loans are herein sometimes referred to individually as an
      “Advance”
and
      collectively as the “Advances.”
      Subject at all times to all of the terms and conditions of this Agreement,
      from
      the Closing Date to the Maturity Date and within the limits of the Revolving
      Credit Commitment, the Lender shall lend, and the Borrower may borrow, prepay
      (without penalty, except as otherwise provided in Section 2.02(c) hereof) and
      reborrow under this Section 2.01. Each request for an Advance (i) shall indicate
      which Borrower is requesting the subject Advance, (ii) shall be irrevocable,
      (iii) shall be deemed to constitute an express affirmation that all conditions
      precedent set forth in Section 4B hereof are satisfied on the date of such
      request and will be satisfied on the requested Borrowing Date, and (iv) shall
      be
      made to the Lender in writing, not later than two (2) Business Days prior to
      the
      requested Borrowing Date, by an authorized officer of the subject Borrower
      or by
      telephonic communication by such authorized officer to the Lender, which shall
      be confirmed by written notice to the Lender to be delivered to the Lender
      by
      the Business Day next following the subject request. In no event shall the
      Borrower request, or shall the Lender be required to honor, (A) any request
      for
      an Advance in an amount greater than the Availability at such time, (B) any
      request for an Advance in an amount less than $100,000, or an amount which
      is
      not a whole integral multiple of $100,000 (or, if less, the remaining
      Availability), or (C) more than one request for the borrowing of Advances in
      any
      seven (7) calendar day period. The Lender’s records as to the outstanding
      Advances shall constitute prima facie
      evidence
      of such amounts, and TCI and PSB shall be jointly and severally liable for
      all
      Obligations.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (c) The
      Borrower shall pay the Lender interest on all Revolving Credit Advances at
      the
      rate(s) per annum as in effect from time to time, and at the times and in the
      manner, in accordance with the Revolving Credit Note. 

     

    (d) In
      the
      event and to the extent that, at any time, the outstanding principal amount
      of
      Advances (exclusive of interest which has been added to principal) exceeds
      the
      Revolving Credit Commitment then in effect, then the Borrower shall immediately,
      without notice or demand, make a payment to the Lender in respect of the
      Advances in an amount sufficient to cause the outstanding principal amount
      of
      Advances (exclusive of interest which has been added to principal) to be equal
      to or less than the Revolving Credit Commitment then in effect.

     

    (e) Unless
      sooner due and payable by reason of an Event of Default hereunder or a Sale
      having occurred, the Borrower shall pay in full all of the Obligations to the
      Lender in respect of all Advances on or prior to the Maturity Date.

     

    (f) All
      Advances shall be evidenced by a secured Revolving Credit Note of the Borrower
      payable to the Lender or registered assigns.

     

    (g) The
      Borrower may, at its option, terminate the Revolving Credit Commitment at any
      time upon ten (10) Business Days’ prior written notice, and paying to the
      Lender, on the date fixed for termination, an amount equal to the sum of (i)
      all
      outstanding principal and accrued interest of the Advances, and (ii) any and
      all
      other then-outstanding Obligations. Any such prepayment shall automatically
      terminate the Revolving Credit Commitment. 

     

    Section
      2.02. Fees.

     

    (a) The
      Closing Fee shall be deemed fully earned on the Closing Date, and shall not
      be
      refundable in whole or in part and shall not be subject to reduction or set-off
      under any circumstances. The Closing Fee shall be due and payable by the
      Borrower (jointly and severally) on the Maturity Date or the earlier termination
      of the Revolving Credit Commitment.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (b) In
      the
      event that the Obligations shall become due and payable by reason of the
      consummation of a Sale, then the subject Borrower(s) shall pay to the Lender
      a
      fee in the amount of (i) 5% of the Net Proceeds if the Agreement Date is on
      or
      prior to March 31, 2008, (ii) 9% of the Net Proceeds if the Agreement Date
      is
      subsequent to March 31, 2008 but on or prior to June 30, 2008, (iii) 14% of
      the
      Net Proceeds if the Agreement Date is subsequent to June 30, 2008 but on or
      prior to September 30, 2008, (iv) 20% of the Net Proceeds if the Agreement
      Date
      is subsequent to September 30, 2008 but on or prior to December 31, 2008, and
      (v) 20% of the Net Proceeds if the Agreement Date is subsequent to December
      31,
      2008, plus 1% for each 30-day period (or portion thereof) subsequent to December
      31, 2008 (up to a maximum fee of 25%). As used herein, the term “Net
      Proceeds”
means
      the aggregate amount paid by the purchaser in any Sale of TCI and/or PSB
      (provided that, if the Sale is for less than all of TCI and/or PSB, then the
      proceeds shall be deemed to be the full value of all equity interests in TCI
      and/or PSB, as the case may be, based on the valuation in the subject Sale),
      minus all reasonable expenses incurred by the Borrower in effecting the Sale
      and
      minus the aggregate Indebtedness of TCI and PSB under or pursuant to the Harris
      Credit Agreement, the aggregate Indebtedness of TCI and PSB to the Lender,
      and
      the aggregate Indebtedness under the Convertible Notes; and the term
“Agreement
      Date”
means
      the date on which the definitive sale agreement in respect of the subject Sale
      is executed and delivered (provided
      that any
      proposed Sale which is not consummated due to a failure to obtain any required
      regulatory approval(s) shall be disregarded in determining the Agreement Date
      for purposes of calculating the Exit Fee). In the event that the Sale of TSI
      is
      made separately from the Sale of PSB, and regardless of whether the Obligations
      have been repaid prior to the later of such transactions, the foregoing Exit
      Fee
      shall be payable in respect of each such Sale. In the event that the Obligations
      are repaid other than by reason of a Sale of both TSI and PSB (including,
      without limitation, a Sale of TCI or PSB without a contemporaneous sale of
      the
      other, payment by reason of the Maturity Date having occurred, or any
      refinancing or prepayment which is not in conjunction with a Sale), then the
      Borrower shall hire an independent financial advisor (i.e., a qualified
      investment banker which (A) has relevant industry experience, (B) is not an
      Affiliate of the Lender or the Borrower, and (C) has not provided investment
      banking services to the Lender, the Borrower or any of their respective
      Affiliates during the preceding 12 months) to render its opinion on the fair
      market value of each of TCI and/or PSB (as applicable) that would have been
      obtained if TCI and/or PSB (as applicable) had been sold to an unaffiliated
      third party in an arm’s length transaction (i.e., a willing buyer purchasing
      from a willing seller, with neither party being subject to any compulsion or
      duress to make a purchase or sale) as of the date of the repayment of the
      Obligations; and such valuation opinion shall be used to calculate Net Proceeds
      and in the determination of the Exit Fee. Any
      such
      investment banker shall be instructed to render its written opinion to the
      Lender and the Borrower within thirty (30) days after the date of its
      engagement, and the Borrower shall, and shall cause TSI and PSB to, provide
      to
      such investment banker all documents and information requested by such
      investment banker in connection with the preparation of its opinion. Following
      any Restructuring, the Trust shall be jointly and severally liable with each
      Borrower in respect of the Exit Fee. Any and all Exit Fees pursuant to this
      Section 2.02(b) shall be due and payable on the due date for the payment of
      the
      Obligations (if payment is required by reason of a Sale), and/or (if applicable)
      within ten (10) Business Days after delivery of the investment banker’s
      valuation opinion.

     

    (c) Payments
      received in respect of the Obligations after 12:00 Noon on any day shall be
      deemed to be received on the next succeeding Business Day, and if any payment
      is
      received other than by wire transfer of immediately available funds, such
      payment shall be subject to three (3) Business Days’ clearance prior to being
      credited to the Obligations for interest calculation purposes.

     

    Section
      2.03. Use of Proceeds.
      The
      Borrower shall utilize the proceeds of the Advances solely for working capital
      and other general corporate purposes of TCI and PSB (provided that not more
      than
      $1,000,000 of Advances may be utilized to provide credit support for standby
      letters of credit and no such credit support shall be posted or renewed at
      any
      time when an Event of Default is continuing).

     

    Section
      2.04. Further Obligations.
      With
      respect to all Obligations for which the interest rate is not otherwise
      specified herein (whether such Obligations arise hereunder, pursuant to the
      Revolving Credit Note or Security Documents, or otherwise), such Obligations
      shall bear interest from the due date thereof until the date paid at the rate(s)
      in effect from time to time pursuant to the Revolving Credit Note.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Section
      2.05. Application of Payments.
      All
      amounts paid to or received by the Lender in respect of the Advances from
      whatever source (whether from the Borrower, any Subsidiary, any realization
      upon
      any Collateral, or otherwise) shall, unless otherwise directed by the Borrower
      with respect to any particular payment (unless an Event of Default shall then
      be
      continuing, in which event the Lender may disregard the Borrower’s direction),
      be applied (a) first, to reimburse the Lender for all out-of-pocket costs and
      expenses incurred by the Lender which are reimbursable to the Lender in
      accordance with this Agreement, the Revolving Credit Note and/or any of the
      other Loan Documents, (b) next, to any Closing Fee then due and payable, (c)
      next, to unpaid accrued interest on the Advances, to the extent then due and
      payable in cash, (d) next, to the outstanding principal of the Advances
      (including interest which has been added to principal), and (e) finally, to
      the
      payment of any other outstanding Obligations; and after payment in full of
      the
      Obligations, any further amounts paid to or received by the Lender in respect
      of
      the Obligations shall be paid over to the Borrower or such other Person(s)
      as
      may be legally entitled thereto. The Lender shall credit each Borrower, in
      accordance with the foregoing, for all payments made by such Borrower
      hereunder.

     

    Section
      2.06. Sale.
      Anything elsewhere contained in this Agreement and/or the Revolving Credit
      Note
      to the contrary notwithstanding, the Revolving Credit Commitment shall terminate
      and all Obligations shall become immediately due and payable, and shall be
      paid,
      without requirement of notice or demand, simultaneously with the consummation
      of
      any Sale.

     

    Section
      2.07. Obligations Unconditional.

     

    (a) The
      payment and performance of all Obligations shall constitute the absolute and
      unconditional obligations of the Borrower, and shall be independent of any
      defense or rights of set-off, recoupment or counterclaim which the Borrower
      might otherwise have against the Lender. All payments required by this Agreement
      and/or the other Loan Documents shall be paid free of any deductions or
      withholdings for any taxes or other amounts and without abatement, diminution
      or
      set-off. If the Borrower is required by law to make such a deduction or
      withholding from a payment hereunder, the Borrower shall pay to the Lender
      such
      additional amount as is necessary to ensure that, after the making of such
      deduction or withholding, the Lender receives (free from any liability in
      respect of any such deduction or withholding) a net sum equal to the sum which
      it would have received and so retained had no such deduction or withholding
      been
      made or required to be made. The Borrower shall (i) pay the full amount of
      any
      deduction or withholding, which it is required to make by-law, to the relevant
      authority within the payment period set by the relevant law, and (ii) promptly
      after any such payment, deliver to the Lender an original (or certified copy)
      official receipt issued by the relevant authority in respect of the amount
      withheld or deducted or, if the relevant authority does not issue such official
      receipts, such other evidence of payment of the amount withheld or deducted
      as
      is reasonably acceptable to the Lender.

     

    (b) If,
      at
      any time and from time to time after the Closing Date, (i) any change in any
      existing law, regulation, treaty or directive or in the interpretation or
      application thereof, (ii) any new law, regulation, treaty or directive enacted
      or application thereof, or (iii) compliance by the Lender with any request
      or
      directive (whether or not having the force of law) from any governmental
      authority (A) subjects the Lender to any tax, levy, impost, deduction,
      assessment, charge or withholding of any kind whatsoever with respect to any
      Loan Document, or changes the basis of taxation of payments to the Lender of
      any
      amount payable thereunder (except for net income taxes, or franchise taxes
      imposed in lieu of net income taxes, imposed generally by federal, state or
      local taxing authorities with respect to interest or commitment fees or other
      fees payable hereunder or changes in the rate of tax on the overall net income
      of the Lender or its members), or (B) imposes on the Lender any other condition
      or increased cost in connection with the transactions contemplated thereby
      or
      participations therein, and the result of any of the foregoing is to increase
      the cost to the Lender of making or continuing any Loan or to reduce any amount
      receivable hereunder, then, in any such case, the Borrower shall promptly pay
      to
      the Lender any additional amounts necessary to compensate the Lender, on an
      after-tax basis, for such additional cost or reduced amount as determined by
      the
      Lender. If the Lender becomes entitled to claim any additional amounts pursuant
      to this Section 2.07(b), the Lender shall promptly notify the Borrower of the
      event by reason of which the Lender has become so entitled, and each such notice
      of additional amounts payable pursuant to this Section 2.07(b) submitted by
      the
      Lender to the Borrower shall, absent manifest error, be final, conclusive and
      binding for all purposes.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Section
      2.08. Reversal of Payments.
      To the
      extent that any payment or payments made to or received by the Lender pursuant
      to this Agreement or any other Loan Document are subsequently invalidated,
      declared to be fraudulent or preferential, set aside, or required to be repaid
      to any trustee, receiver or other person under any state or federal bankruptcy
      or other such law, then, to the extent thereof, such amounts shall be revived
      as
      Obligations and continue in full force and effect hereunder as if such payment
      or payments had not been received by the Lender.

     

    Section
      2.09. Collateral.
      The
      Obligations shall be secured by and entitled to the benefits of the Liens
      created under the Harris Credit Agreement and related loan documents as if
      the
      Obligations were expressly stated as being secured thereunder, and shall
      constitute “Secured Obligations” under and as defined in the Security Agreement,
      secured on a pari passu
      basis
      with all other such Secured Obligations. As part of any Restructuring, the
      Trust
      shall join in, become bound by and agree to comply with all obligations of
      EVCI
      under the Security Agreement, and shall grant to the Lender a Lien on all assets
      of the Trust, including (without limitation) all outstanding capital stock
      and
      equity securities of TCI and PSB. 

     

    
      	III.	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

    As
      of the
      Closing Date and on each Borrowing Date (unless the representation and warranty
      refers to a specific date), the Borrower hereby makes the following
      representations and warranties to the Lender, all of which representations
      and
      warranties shall survive the Closing Date, the delivery of the Revolving Credit
      Note and the making of the Loans, shall be continuing in nature so long as
      any
      Obligations are outstanding or the Revolving Credit Commitment remains in
      effect, and are as follows:

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Section
      3.01. Financial Matters.

     

    (a) All
      financial statements listed on Schedule
      3.01(a)
      of the
      Disclosure Schedule which have heretofore been provided to the Lender by or
      on
      behalf of TCI and PSB (i) have been prepared in accordance with GAAP on a
      consistent basis for all periods (subject, in the case of interim statements,
      to
      the absence of full footnote disclosures, and to normal non-material audit
      adjustments), (ii) are complete and correct in all material respects, (iii)
      fairly present the financial condition of TCI and PSB as at said dates, and
      the
      results of its operations for the periods stated, (iv) contain and reflect
      all
      necessary adjustments and accruals for a fair presentation of TCI’s and PSB’s
      financial condition and the results of their respective operations as of the
      dates of and for the periods covered by such financial statements, and (v)
      make
      full and adequate provision, subject to and in accordance with GAAP, for the
      various assets and liabilities of TCI and PSB, fixed or contingent, and the
      results of their operations and transactions in their accounts, as of the dates
      and for the periods referred to therein.

     

    (b) Except
      as
      set forth in Schedule
      3.01(b)
      of the
      Disclosure Schedule, since the date of the most recent financial statements
      provided to the Lender by or on behalf of TCI and PSB, there has been no
      material adverse change in the working capital, condition (financial or
      otherwise), assets, liabilities, reserves, business, management or Business
      Operations of TCI or PSB.

     

    Section
      3.02. Organization; Existence.

     

    (a) Each
      of
      TCI and PSB (i) is a corporation duly organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation, (ii) has
      all
      requisite corporate power and authority to own its properties and to carry
      on
      its business as now conducted and as proposed hereafter to be conducted, (iii)
      is qualified to do business as a foreign corporation in each jurisdiction in
      which the failure of such entity to be so qualified would have a Material
      Adverse Effect, and (iv) has all requisite corporate power and authority to
      execute and deliver, and perform all of its obligations under, the Loan
      Documents to which it is a party. True and complete copies of the Organic
      Documents of TCI and PSB, together with all amendments thereto, have been
      furnished to the Lender.

     

    (b) EVCI
      is
      the record and beneficial owner of all outstanding capital stock and other
      equity securities of TCI and Interboro Holding. Interboro Holding is the sole
      record and beneficial owner of all outstanding capital stock and other equity
      securities of PSB.

     

    (c) Neither
      TCI nor PSB has any Subsidiaries.

     

    Section
      3.03. Authorization.
      

     

    (a) The
      execution, delivery and performance by the Loan Parties of their respective
      obligations under the Loan Documents have been duly authorized by all requisite
      corporate and other action and will not, either prior to or as a result of
      the
      consummation of the transactions contemplated by this Agreement: (i) violate
      any
      provision of Applicable Law, any order of any court or other agency of
      government, any provision of the Organic Documents of any Loan Party, or, except
      as set forth in Schedule
      3.03
      of the
      Disclosure Schedule, any Contract, indenture, agreement or other instrument
      to
      which any Loan Party is a party, or by which any Loan Party or any of its assets
      or properties are bound, or (ii) be in conflict with, result in a breach of,
      or
      constitute (after the giving of notice or lapse of time or both) a default
      under, or, except as may be provided in the Loan Documents, result in the
      creation or imposition of any Lien of any nature whatsoever upon any of the
      property or assets of the Borrower or any of the Subsidiaries pursuant to,
      any
      such Contract, indenture, agreement or other instrument. All Loan Documents
      to
      which any Loan Party is a party have been or will be duly and validly executed
      and delivered by such Loan Party.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (b) Except
      with respect to any assertion which may hereafter be made as described in
      Section 7.03 below, no Loan Party is required to obtain any Government Approval,
      consent or authorization from, or to file any declaration or statement with,
      any
      governmental instrumentality or agency in connection with or as a condition
      to
      the execution, delivery or performance of any of the Loan
      Documents.

     

    Section
      3.04. Solvency.
      After
      giving effect to the Loans and the other transactions contemplated hereby,
      the
      borrowings made and/or to be made by the Borrower under this Agreement do not
      and will not render either Borrower insolvent or with unreasonably small capital
      for its business; the fair saleable value of all of the assets and properties
      of
      each Borrower does now, and will, upon the funding of the Loans contemplated
      hereby, exceed the aggregate liabilities and Indebtedness of such Borrower
      (including contingent liabilities); neither Borrower is contemplating either
      the
      filing of a petition under any state or federal bankruptcy or insolvency law,
      or
      the liquidation of all or any substantial portion of its assets or property;
      neither Borrower has any knowledge of any Person contemplating the filing of
      any
      such petition against either Borrower; and each Borrower reasonably anticipates
      that it will be able to pay its debts as they mature.

     

    Section
      3.05. No Investment Company.
      Neither
      Borrower is an “investment company” or a company “controlled” by an “investment
      company” as such terms are defined in the Investment Company Act of 1940, as
      amended.

     

    Section
      3.06. Margin Securities.
      Neither
      Borrower owns or has any present intention of acquiring any “margin security” or
      any “margin stock” within the meaning of Regulations T, U or X of the Board of
      Governors of the Federal Reserve System (herein called “margin security” and
“margin stock”). None of the proceeds of the Loans will be used, directly or
      indirectly, for the purpose of purchasing or carrying, or for the purpose of
      reducing or retiring any Indebtedness which was originally incurred to purchase
      or carry, any margin security or margin stock or for any other purpose which
      might constitute the transactions contemplated hereby a “purpose credit” within
      the meaning of said Regulations T, U or X, or cause this Agreement to violate
      any other regulation of the Board of Governors of the Federal Reserve System
      or
      the Exchange Act, or any rules or regulations promulgated under such
      statutes.

     

    Section
      3.07. Harris Credit Agreement.
      Except
      for Existing Events of Default, all representations and warranties made in
      the
      Harris Credit Agreement with respect to TCI and PSB are true and correct in
      all
      material respects on and as of the date of this Agreement. 

     

    Section
      3.08. Full Disclosure.
      No
      statement of fact made by the Borrower in this Agreement or any other Loan
      Document, or in any information memorandum, business summary, agreement,
      certificate, schedule or other written statement furnished by the Borrower
      or
      any Subsidiary to the Lender pursuant hereto, contains or will contain any
      untrue statement of a material fact, or omits or will omit to state any material
      fact necessary to make any statements contained herein or therein not
      misleading. Except for matters of a general economic or political nature which
      do not affect the Borrower or any Subsidiary uniquely, there is no fact
      presently known to the Borrower or any Subsidiary which has not been disclosed
      to the Lender, which has had or would reasonably be expected to have a Material
      Adverse Effect.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
      3.09. Reaffirmation.
      Each
      and every request by a Borrower for an Advance shall constitute a reaffirmation
      of the truth and accuracy of the Borrowers’ representations and warranties made
      in this Agreement and the Security Documents on and as of the date of such
      request.

     

    
      	IV.	
              CONDITIONS
                OF MAKING THE LOANS

            

    

     

    A. The
      obligation of the Lender to make the initial Advance hereunder and to consummate
      the other transactions contemplated hereby are subject to the following
      conditions precedent:

     

    Section
      4.01. Representations and Warranties.
      The
      representations and warranties set forth in Article III hereof and in the other
      Loan Documents shall be true and correct on and as of the Closing
      Date.

     

    Section
      4.02. Loan Documents.
      The
      Borrower or other applicable Loan Party or Loan Parties shall have duly executed
      and/or delivered to the Lender all of the following:

     

    (a) The
      Revolving Credit Note;

     

    (b) The
      Guaranty Agreement, which shall be duly executed and delivered by each of the
      Guarantors; 

     

    (c) A
      certificate or certificates of insurance, with loss payable endorsements,
      evidencing the insurance required by this Agreement and the Security Agreement;
      

     

    (d) A
      certificate of good standing (or other comparable certificate) of the
      appropriate official of the jurisdiction of formation of each Loan Party,
      certifying that such Loan Party is validly existing and subsisting or in good
      standing in such jurisdiction; each such certificate to be as of a date
      reasonably prior to the Closing Date;

     

    (e) A
      certificate of the Secretary or an Assistant Secretary of each Borrower and
      each
      other Loan Party, certifying the votes of the Board of Directors of such
      Borrower and such other Loan Party, authorizing and directing the execution
      and
      delivery of the Loan Documents and all further agreements, instruments,
      certificates and other documents pursuant hereto and thereto;

     

    (f) A
      certificate of the Secretary or an Assistant Secretary of each Borrower and
      each
      other Loan Party, certifying the names of the officers of such Borrower and
      such
      Loan Party who are authorized to execute and deliver the Loan Documents and
      all
      other agreements, instruments, certificates and other documents to be delivered
      pursuant hereto and thereto, together with the true signatures of such officers.
      The Lender may conclusively rely on such certificate until the Lender shall
      receive any further such certificate canceling or amending the prior certificate
      and submitting the signatures of the officers named in such further
      certificate;

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (g) Such
      other agreements, instruments, documents and certificates (including, without
      limitation, satisfactory lien and judgment searches respecting the Borrower)
      as
      the Lender or its counsel may reasonably request. 

     

    Section
      4.03. Forbearance Agreement.
      The
      Borrower and the Lender or its Affiliate (as the assignee of Harris N.A. under
      the Harris Loan Agreement) shall have entered into the Forbearance
      Agreement.

     

    Section
      4.04. EVCI Loan Closing.
      The
      transactions contemplated by that certain Loan Agreement of even date herewith
      by and between the Lender and EVCI shall have been consummated in accordance
      with the terms thereof.

     

    Section
      4.05. Regulatory Approvals.
      TCI
      shall have received any and all regulatory approvals (other than approvals
      from
      Middle States) required in order to permit TCI (a) on a permanent basis, to
      offer the degree programs heretofore offered by Interboro, and (b) on an interim
      basis, to utilize certain physical facilities of Interboro to accommodate
      existing Interboro students who transfer to TCI. 

     

    Section
      4.06. Fees and Reimbursements.
      The
      Borrower shall have paid or reimbursed the Lender for its reasonable
      out-of-pocket costs, charges and expenses incurred to the Closing Date; and
      in
      connection herewith, the Borrower hereby irrevocably authorizes the Lender
      to
      charge such amounts as Advances to the Borrower’s revolving credit loan account.
      Failure of the Lender to effect any such charge shall not excuse the Borrower
      from its obligation to pay such amounts.

     

    Section
      4.07. Further Matters.
      All
      legal matters, and the form and substance of all documents, incident to the
      transactions contemplated hereby shall be satisfactory to counsel for the
      Lender.

     

    Section
      4.08. No Default.
      No
      Default or Event of Default shall have occurred and be continuing.

     

    B. The
      obligation of the Lender to make any Advances subsequent to the Closing Date
      is
      subject to (a) the representations and warranties set forth in Article III
      and
      in the other Loan Documents being true and correct in all material respects
      (except that, to the extent that any representation or warranty is already
      qualified by concepts of materiality and/or Material Adverse Effect, then such
      representations and warranties shall be true and correct in all respects) on
      and
      as of the subject Borrowing Date, (b) the execution and delivery of such further
      Security Documents as the Lender may have requested pursuant to the Security
      Documents theretofore executed and delivered, and (c) there being no continuing
      Default or Event of Default.

     

    
      
        
        

      

      
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      	V.	
              AFFIRMATIVE
                COVENANTS

            

    

     

    The
      Borrower hereby covenants and agrees that, from the date hereof and until all
      Obligations (whether now existing or hereafter arising) have been paid in full
      and the Revolving Credit Commitment has been terminated, unless the Lender
      shall
      otherwise consent in writing, the Borrower shall, and shall cause each of its
      Subsidiaries to:

     

    Section
      5.01. Harris Credit Agreement.
      Comply
      with all of its obligations (including, without limitation, affirmative and
      negative covenants) under the Harris Credit Agreement. 

     

    Section
      5.02. Notices.
      Give
      prompt written notice to the Lender of (a) any proceedings instituted against
      the Borrower or any Subsidiary in any federal or state court or before any
      commission or other regulatory body, whether federal, state or local, which,
      if
      adversely determined, could reasonably be expected to have a Material Adverse
      Effect, and (b) the occurrence of any material casualty to any Collateral,
      any
      Material Adverse Effect, or any Default or Event of Default, and the action
      that
      the Borrower has taken, is taking, or proposes to take with respect
      thereto.

     

    Section
      5.03. Periodic Reports.
      Furnish
      to the Lender:

     

    (a) Within
      ninety (90) calendar days after the end of each Fiscal Year, consolidated
      balance sheets, and consolidated and consolidating statements of income,
      statements of stockholders’ equity, and statements of cash flows of each
      Borrower and its Subsidiaries, together with footnotes and supporting schedules
      thereto, audited and certified (as to the consolidated statements) by
      independent certified public accountants selected by the Borrower and reasonably
      acceptable to the Lender (with the form of audit certification to be without
      qualification as a going concern and otherwise reasonably satisfactory to the
      Lender), showing the financial condition of each Borrower and its Subsidiaries
      at the close of such Fiscal Year and the results of operations of each Borrower
      and its Subsidiaries during such Fiscal Year;

     

    (b) Within
      thirty (30) calendar days after the end of each calendar month, (i) unaudited
      consolidated and consolidating balance sheets, statements of income and
      statements of cash flows of each Borrower and its Subsidiaries, together with
      supporting schedules thereto, prepared by each Borrower and certified by its
      Chairman, President, Chief Executive Officer, Chief Financial Officer or Chief
      Accounting Officer, such balance sheets to be as of the close of such calendar
      month and such statements of income and statements of cash flows to be for
      the
      period from the beginning of the then-current Fiscal Year to the end of such
      calendar month, together with comparative statements of income and cash flows
      for the corresponding period in the immediately preceding Fiscal Year, in each
      case subject to normal audit and year-end adjustments, and (ii) operating cash
      flow statements for each of TCI and PSB, in form reasonably satisfactory to
      the
      Lender and prepared and certified as aforesaid, setting forth each Borrower’s
      revenues received in cash during such month and its expenses paid in cash during
      such month;

     

    (c) Concurrently
      with the delivery of each of the financial statements required by Sections
      5.03(a) and 5.03(b) above, a certificate on behalf of each Borrower (signed
      by
      its Chairman, President, Chief Executive Officer, Chief Financial Officer or
      Chief Accounting Officer), certifying that he has examined the provisions of
      this Agreement and that no Default or Event of Default has occurred and/or
      is
      continuing;

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (d) As
      and
      when distributed to the holders of equity interests in the Borrower or EVCI,
      copies of all proxy materials, reports and other information which the Borrower
      provides to its stockholders; and as and when distributed to any other lenders
      for borrowed money to EVCI, any Borrower or any Subsidiaries, copies of all
      reports, statements and other information provided by the Borrower to such
      lenders; and

     

    (e) Promptly,
      from time to time, such other information (including, without limitation,
      receivables and payables agings, and sales reports) regarding either Borrower’s
      or any Subsidiary’s operations, assets, business, affairs and financial
      condition, as the Lender may reasonably request.

     

    Section
      5.04. Books and Records; Inspection.
      Maintain centralized books and records regarding all of the Business Operations
      at each Borrower’s principal place of business, and permit agents or
      representatives of the Lender to inspect, at any time during normal business
      hours, upon reasonable notice, and without undue material disruption of the
      Business Operations, all of each Borrower’s and its Subsidiaries’ various books
      and records, to make copies, abstracts and/or reproductions thereof, and to
      discuss the business and affairs of each Borrower and the Subsidiaries with
      the
      management of such Borrower.

     

    Section
      5.05. Accounting.
      Maintain a standard system of accounting in order to permit the preparation
      of
      financial statements in accordance with GAAP.

     

    Section
      5.06. Reimbursements.
      Pay or
      reimburse the Lender or other appropriate Persons on demand for all reasonable
      costs, expenses and other charges incurred or payable from time to time in
      connection with the transactions contemplated by this Agreement, any waivers
      or
      amendments (whether or not implemented) in respect of any Loan Documents, and
      any “workout” or enforcement action, including but not limited to any and all
      search fees, recording fees, costs of inspections and legal and accounting
      fees.

     

    Section
      5.07. Use of Proceeds.
      Cause
      all proceeds of the Loans to be utilized solely in the manner and for the
      purposes set forth in Section 2.03 hereof.

     

    Section
      5.08. Closing of Interboro.
      To the
      extent within the Borrower’s control, cause Interboro to cease all business
      operations (other than with respect to the winding up of its business) not
      later
      than January 1, 2008 (provided that TCI may utilize Interboro facilities to
      continue instruction programs to existing Interboro students).

     

    Section
      5.09. Approvals.
      TCI
      shall use its best efforts to obtain from Middle States, as soon as practicable
      (but in any event not later than May 31, 2008), all required approvals of Middle
      States in respect of the matters described in clause (a) of Section 4.05
      above.

     

    Section
      5.10. Sale of TCI and PSB.
      If a
      definitive agreement for the Sale of TCI and PSB is not in effect on
      April 1, 2008, TCI and PSB shall retain an investment banker, reasonably
      satisfactory to the Lender, to conduct a process for the sale of TCI and PSB
      (either separately or in combination) within a time frame reasonably calculated
      in order that, not later than November 30, 2008, a definitive agreement(s)
      with a financially capable buyer(s) (who shall be reasonably satisfactory to
      the
      Lender) and containing no financing contingency can be expected to be executed
      and delivered for the Sale(s) of TCI and PSB (provided that the closing of
      any
      such transaction may be subject to obtaining applicable regulatory approvals).
      The Lender shall have the right to waive this covenant.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Section
      5.11. Restructuring.
      Upon
      request of the Lender at any time, implement a Restructuring pursuant to
      agreements and instruments in form and substance satisfactory to the Lender,
      and
      on such terms and conditions (not inconsistent with the definition of
“Restructuring” in Article I above) as the Lender may reasonably require; and
      cause all necessary Persons to execute and deliver such agreements, instruments,
      certificates and other documents as may be necessary or appropriate in
      connection therewith; all subject to obtaining any and all required regulatory
      approvals.

     

    
      	VI.	
              NEGATIVE
                COVENANTS

            

    

     

    The
      Borrower hereby covenants and agrees that, until all Obligations (whether now
      existing or hereafter arising) have been paid in full and the Revolving Credit
      Commitment has been terminated, unless the Lender shall otherwise consent in
      writing, the Borrower shall not, and shall not permit any Subsidiary to,
      directly or indirectly:

     

    Section
      6.01. Indebtedness.
      Incur,
      create, assume, become or be liable in any manner with respect to, or permit
      to
      exist, any Indebtedness, other than:

     

    (a) Indebtedness
      to the Lender pursuant to the Loan Documents, and Indebtedness pursuant to
      the
      Harris Credit Agreement and related loan documents; and

     

    (b) Indebtedness
      permitted under the Harris Credit Agreement. 

     

    Section
      6.02. Liens.
      Create,
      incur, assume or suffer to exist any Lien or other encumbrance of any nature
      whatsoever on any of its assets, now or hereafter owned, other than Liens as
      and
      to the extent permitted under the Harris Credit Agreement.

     

    Section
      6.03. Guarantees.
      Guarantee, endorse or otherwise in any manner become or be responsible for
      obligations of any other Person, except (a) endorsements of negotiable
      instruments for collection in the ordinary course of business, (b) pursuant
      to
      the Guaranty Agreement, and (c) guarantees otherwise permitted pursuant to
      the
      Harris Credit Agreement.

     

    Section
      6.04. Investments; Acquisitions.
      Make
      any Investment in, or otherwise acquire or hold securities (including, without
      limitation, capital stock and evidences of Indebtedness) of, or make loans
      or
      advances to, or enter into any arrangement for the purpose of providing funds
      or
      credit to, any other Person (including any Affiliate), except:

     

    (a) advances
      to employees of the Borrowers or any Subsidiaries for normal business expenses
      not to exceed at any time $15,000 in the aggregate; 

     

    (b) Investments
      of excess cash generated in the Business Operations in Cash Equivalents; and
      

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (c) Investments
      of cash in overnight deposits or other customary cash management Investments
      with commercial banks or in commercial paper satisfying the criteria for such
      banks or commercial paper as set forth in the definition of Cash
      Equivalents.

     

    Section
      6.05. Corporate Form; Acquisitions.
      Form or
      acquire any Subsidiary. 

     

    Section
      6.06. Restricted Payments.
      Directly or indirectly declare or pay any dividends, or make any distribution
      of
      cash or property, or both, to any Person in respect of any equity interests
      in
      either Borrower, or directly or indirectly redeem, purchase or otherwise acquire
      for consideration any equity interests in either Borrower or any equity
      securities of any other Person, or create any sinking fund therefor;
provided,
      that
      this Section 6.06 shall not be deemed to prohibit (a) the Borrower from paying
      periodic dividends and distributions to EVCI on a semi-monthly basis to the
      extent that the aggregate such dividends subsequent to the Closing Date do
      not
      exceed the lesser of (i) the projected distribution set forth in the Approved
      Budget on a cumulative basis for all periods from the Closing Date to the date
      of the subject distribution, or (ii) the combined positive operating cash flow
      (after payment or allowance for all accrued interest and all required principal
      payments on Indebtedness) of TCI and PSB for the period from the Closing Date
      to
      the date of the subject distribution, and (b) the payment of dividends or
      distributions by any Subsidiary to the Borrower.

     

    
      	VII.	
              DEFAULTS

            

    

     

    Section
      7.01. Events of Default.
      Each of
      the following events is herein, and in the Notes, sometimes referred to as
      an
      Event of Default: 

     

    (a) if
      any
      representation or warranty made herein or in any other Loan Document, or in
      any
      certificate, financial statement, instrument or other written statement
      furnished by the Borrower or any Subsidiary in connection with this Agreement
      or
      any of the borrowings hereunder, shall be false, inaccurate or misleading in
      any
      material respect when made or when deemed made hereunder;

     

    (b) any
      default in the payment of any principal or interest under the Revolving Credit
      Note or any other Obligations when the same shall be due and payable, whether
      at
      the due date thereof or at a date required for prepayment or by acceleration
      or
      otherwise, and the continuance of any such non-payment (in whole or in part)
      for
      a period of three (3) Business Days;

     

    (c) any
      default in the due observance or performance of any covenant, condition or
      agreement contained in any Section of Article VI above, which, if capable of
      being cured, is not fully cured within thirty (30) days after the occurrence
      thereof;

     

    (d) any
      default in the due observance or performance of any covenant, condition or
      agreement to be observed or performed under Article V above, or otherwise
      pursuant to the terms of this Agreement (and not addressed in any other
      subsection of this Section 7.01), or pursuant to any other Loan Document, and
      the continuance of such default unremedied for a period of thirty (30) days
      (five (5) Business Days in the case of Section 5.01(d) hereof) after written
      notice thereof to the Borrower, or such other cure period (if any) as may be
      provided in the subject Loan Document (provided that, as respects Section 5.01
      above, the applicable cure period shall be the cure period, if any, provided
      in
      the Harris Credit Agreement);

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (e) (i)
      any
      default with respect to any Indebtedness for money borrowed of either Borrower
      or any of its Subsidiaries (other than under this Agreement) in an amount
      (individually or in the aggregate) in excess of $100,000, if the effect of
      such
      default is to permit the holder, with or without notice or lapse of time or
      both, to accelerate the maturity of any such Indebtedness for money borrowed
      or
      to cause such Indebtedness for money borrowed to become due prior to the stated
      maturity thereof, or (ii) the occurrence of any “Event of Default” under and as
      defined in the Harris Credit Agreement or under the Loan Agreement desribed
      in
      Section 4.04 above (other than, in the case of clauses (i) and (ii), Existing
      Events of Default, and any default under the Convertible Notes resulting from
      the consummation of this Agreement); 

     

    (f) if
      either
      Borrower or any Subsidiary shall: (i) apply for or consent to the appointment
      of
      a receiver, trustee, custodian or liquidator of it or any of its properties,
      (ii) admit in writing its inability to pay its debts as they mature, (iii)
      make
      a general assignment for the benefit of creditors, (iv) be adjudicated a
      bankrupt or insolvent or be the subject of an order for relief under Title
      11 of
      the United States Code, or (v) file a voluntary petition in bankruptcy, or
      a
      petition or an answer seeking reorganization or an arrangement with creditors
      or
      to take advantage or any bankruptcy, reorganization, insolvency, readjustment
      of
      debt, dissolution or liquidation law or statute, or an answer admitting the
      material allegations of a petition filed against it in any proceeding under
      any
      such law, or (vi) take or permit to be taken any action in furtherance of or
      for
      the purpose of effecting any of the foregoing;

     

    (g) if
      any
      order, judgment or decree shall be entered, without the application, approval
      or
      consent of either Borrower or any of its Subsidiaries, by any court of competent
      jurisdiction, approving a petition seeking reorganization of such Borrower
      or
      such Subsidiary, or appointing a receiver, trustee, custodian or liquidator
      of
      such Borrower or such Subsidiary, or of all or any substantial part of its
      assets, and such order, judgment or decree shall continue unstayed and in effect
      for any period of sixty (60) days;

     

    (h) if
      final
      judgment(s) for the payment of money in an uninsured amount in excess of
      $100,000 individually or in the aggregate shall be rendered against the Borrower
      and/or any Subsidiary, and the same shall remain undischarged or unbonded for
      a
      period of thirty (30) consecutive days, during which execution shall not be
      effectively stayed; 

     

    (i) the
      occurrence of any levy upon or seizure or attachment of, or any uninsured loss
      of or damage to, any property of the Borrower or any Subsidiary having an
      aggregate fair value or repair cost (as the case may be) in excess of $100,000
      individually or in the aggregate, and any such levy, seizure or attachment
      shall
      not be set aside, bonded or discharged within thirty (30) days after the date
      thereof; 

     

    (j) if
      any
      Lien purported to be created by any Security Document shall cease to be a valid
      perfected first priority Lien (subject only to the priority of the Liens created
      under or pursuant to the Harris Credit Agreement, and any priority accorded
      by
      law to Permitted Liens) on the assets or properties covered thereby, or either
      Borrower or any Subsidiary shall assert in writing that any Lien purported
      to be
      created by any Security Document is not a valid perfected first priority lien
      (subject only to the priority of the Liens securing obligations under or
      pursuant to the Harris Credit Agreement, and any priority accorded by law to
      Permitted Liens) on the assets or properties purported to be covered
      thereby;

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (k) if
      any of
      the Loan Documents shall cease to be in full force and effect (other than as
      a
      result of the discharge thereof in accordance with the terms thereof or by
      written agreement of all parties thereto), or if any Loan Party shall disclaim
      or deny the validity of any Loan Document or such Loan Party’s obligations
      thereunder;

     

    (l) the
      occurrence of a Material Adverse Effect;

     

    (m) if
      any
      regulatory or accrediting authority having jurisdiction over any Loan Party
      shall assert or impose any fines or penalties exceeding $25,000 in the aggregate
      on any Loan Party (other than Interboro) which have not been asserted or imposed
      in writing prior to the date of this Agreement; or if any such regulatory or
      accrediting authority shall assert or impose any such fines or penalties against
      Interboro and shall also assert that any other Loan Party has liability for
      the
      payment thereof;

     

    (n) if
      either
      TCI or PSB becomes or is declared ineligible to receive TAP or Pell Grant funds
      for any reason whatsoever; or

     

    (o) the
      failure to have entered into a definitive Sale agreement(s) complying with
      the
      criteria set forth in Section 5.10 above on or before November 30, 2008.

     

    Section
      7.02. Remedies.
      Upon
      the occurrence of any Event of Default, and at all times thereafter during
      the
      continuance thereof: (a) the Revolving Credit Note, and any and all other
      Obligations, shall, at the Lender’s option (except in the case of Sections
      7.01(f) and 7.01(g) hereof, the occurrence of which shall automatically effect
      acceleration, regardless of any action or forbearance in respect of any prior
      or
      ongoing Default or Event of Default which may be inconsistent with such
      automatic acceleration), become immediately due and payable, both as to
      principal, interest and other charges, without presentment, demand, protest
      or
      notice of any kind, all of which are hereby expressly waived, anything contained
      herein or in the Revolving Credit Note or other evidence of such Obligations
      to
      the contrary notwithstanding, (b) all outstanding Obligations under the
      Revolving Credit Note, and all other outstanding Obligations, shall bear
      interest at the default rate of interest provided in the Revolving Credit Note,
      (c) the Lender may file suit against the Borrower on the Revolving Credit Note
      and/or seek specific performance or injunctive relief thereunder (whether or
      not
      a remedy exists at law or is adequate), (d) the Lender shall have the right,
      in
      accordance with the Security Documents, to exercise any and all remedies in
      respect of the Guarantors and/or such or all of the Collateral as the Lender
      may
      determine in its discretion (without any requirement of marshalling of assets,
      or other such requirement), (e) the Revolving Credit Commitment shall, at the
      Lender’s option (except in the case of Sections 7.01(f) and 7/01(g) hereof, the
      occurrence of which shall automatically effect termination, regardless of any
      action or forbearance in respect of any prior or ongoing Default or Event of
      Default which may be inconsistent with such automatic termination), be
      immediately terminated or reduced, and the Lender shall be under no further
      obligation to consider making any further Advances, and (f) the Borrower shall
      cause either (i) the cancellation and return of any and all then outstanding
      letters of credit provided by or on behalf of the Lender for the benefit of
      the
      Borrower or any of its Subsidiaries, or (ii) post cash collateral with the
      Lender in an amount equal to 100% of the undrawn amount of any and all such
      outstanding letters of credit.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Section
      7.03. Unwinding.
      In the
      event that, following any Restructuring, any regulatory or accrediting authority
      having jurisdiction over EVCI, the Borrower, TSI or PSB shall assert that the
      Restructuring constitutes a change of control such as would materially impair
      or
      restrict the ability of TSI and/or PSB to conduct the Business Operations as
      currently conducted, then, upon request of the Lender, the Borrower shall,
      and
      shall cause EVCI, TSI and PSB to, unwind the Restructuring, including but not
      limited to (a) transferring all outstanding capital stock and other equity
      securities of TSI and PSB to EVCI, (b) assigning the Obligations to EVCI, with
      the assumption thereof by EVCI and the Guaranty thereof by TCI and PSB, and
      (c)
      such other actions as may be appropriate to accomplish the rescission of the
      Restructuring and restore, as closely as possible, all applicable Persons to
      their respective pre-Restructuring positions (subject to the express
      requirements of this Section 7.03). The Borrower shall, and shall cause EVCI,
      TSI and PSB to take any and all such action, and to execute and deliver any
      and
      all such agreements, instruments, certificates and other documents, as may
      be
      necessary or appropriate to accomplish the intent of this Section 7.3 as
      promptly as practicable following the Lender’s demand therefor.

     

    
      	VIII.	
              PARTICIPATING
                LENDERS; ASSIGNMENT.

            

    

     

    Section
      8.01. Participations.
      Anything in this Agreement to the contrary notwithstanding, the Lender may,
      at
      any time and from time to time, without in any manner affecting or impairing
      the
      validity of any Obligations, transfer, assign or grant participating interests
      in the Loans as the Lender shall in its sole discretion determine, to such
      other
      Persons (the “Participants”)
      as the
      Lender may determine. Upon any such transfer, assignment or granting of
      participating interests, the Participants shall be deemed to be included within
      the term “Lender” for all purposes of this Agreement, subject to such agreements
      and arrangements as the Lender and the Participants may agree upon.
      Notwithstanding the granting of any such participating interests: (a) the
      Borrower shall look solely to the Lender for all purposes of this Agreement
      and
      the transactions contemplated hereby, (b) the Borrower shall at all times have
      the right to rely upon any waivers or consents signed by the Lender as being
      binding upon all of the Participants, and (c) all communications in respect
      of
      this Agreement and such transactions shall remain solely between the Borrower
      and the Lender (exclusive of Participants) hereunder.

     

    Section
      8.02. Transfer.
      Anything in this Agreement to the contrary notwithstanding, the Lender may,
      at
      any time and from time to time, without in any manner affecting or impairing
      the
      validity of any Obligations, pledge, transfer and/or assign all or any portion
      of its interest in this Agreement, the Revolving Credit Note and the other
      Loan
      Documents to any Person (an “Assignee
      Lender”)
      as the
      Lender may determine. Upon any such transfer or assignment, the Assignee Lender
      shall be deemed to succeed (to the extent of the interest assigned) to the
      rights and obligations of the Lender for all purposes of this Agreement. In
      the
      event of any transfer and assignment of the Lender’s entire interest in this
      Agreement, the Revolving Credit Note and the Security Documents, the Lender
      shall be replaced by the Assignee Lender as “Secured Party” under the Collateral
      Agreement and all other Security Documents.

     

    Section
      8.03. Recordation of Assignment.
      In
      respect of any negotiation, transfer or assignment of all or any portion of
      any
      Lender’s interest in this Agreement, any Note and/or any other Loan Documents at
      any time and from time to time, the following provisions shall be
      applicable:

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (a) The
      Borrower, or any agent appointed by the Borrower, shall maintain a register
      (the
“Register”)
      in
      which there shall be recorded the name and address of each Person holding any
      Note(s) hereunder or any commitment to lend hereunder, and the principal amount
      payable to such Person under such Person’s Note(s) or committed by such Person
      under such Person’s lending commitment. The Borrower hereby irrevocably appoints
      the Lender (and/or any subsequent Lender appointed by the Lender then
      maintaining the Register) as the Borrower’s agent for the purpose of maintaining
      the Register.

     

    (b) In
      connection with any negotiation, transfer or assignment as aforesaid, the
      transferor/assignor shall deliver to the Lender then maintaining the Register
      an
      assignment and assumption agreement executed by the transferor/assignor and
      the
      transferee/assignee, setting forth the specifics of the subject transaction,
      including but not limited to the amount and nature of Obligations and/or lending
      commitments being transferred or assigned (and being assumed, as applicable),
      and the proposed effective date of such transfer or assignment and the related
      assumption (if applicable).

     

    (c) Subject
      to receipt of completed tax forms (indicating withholding status, or exemption
      from withholding, as applicable, of the transferee/assignee) reasonably required
      by the Person then maintaining the Register, and (if required by such Person)
      surrender of the negotiated, transferred or assigned Note(s) for reissuance
      by
      the Borrower, such Person shall record the subject transfer, assignment and
      assumption in the Register. Anything contained in any Note or other Loan
      Document to the contrary notwithstanding, no negotiation, transfer or assignment
      shall be effective until it is recorded in the Register pursuant to this Section
      8.03(c). The entries in the Register shall be conclusive and binding for all
      purposes, absent manifest error; and the Borrower and each Lender shall treat
      each Person whose name is recorded in the Register as a Lender hereunder for
      all
      purposes of this Agreement. The Register shall be available for inspection
      by
      the Borrower and each Lender at any reasonable time and from time to time upon
      reasonable prior notice.

     

    
      	IX.	
              MISCELLANEOUS

            

    

     

    Section
      9.01. Survival.
      This
      Agreement and all covenants, agreements, representations and warranties made
      herein and in the certificates delivered pursuant hereto, shall survive the
      making by the Lender of the Advances and the execution and delivery to the
      Lender of the Revolving Credit Note, and shall continue in full force and effect
      for so long as the Revolving Credit Note or any other Obligations are
      outstanding and unpaid or the Revolving Credit Commitment remains outstanding.
      Whenever in this Agreement any of the parties hereto is referred to, such
      reference shall be deemed to include the successors and permitted assigns of
      such party; and all covenants, promises and agreements in this Agreement made
      by
      or on behalf of the Borrower shall inure to the benefit of the successors and
      assigns of the Lender.

     

    Section
      9.02. Indemnification.
      The
      Borrower (jointly and severally) shall indemnify the Lender and its managers,
      directors, officers, employees, attorneys and agents against, and shall hold
      the
      Lender and such Persons harmless from, any and all losses, claims, damages
      and
      liabilities and related expenses, including reasonable counsel fees and
      expenses, incurred by the Lender or any such Person arising out of, in any
      way
      connected with, or as a result of: (a) the use of any of the proceeds of the
      Advances made by the Lender to the Borrower; (b) this Agreement, the ownership
      and operation of the Borrower’s and the Subsidiaries’ assets, including all real
      properties and improvements or any Contract, the performance by the Borrower
      or
      any other Person of their respective obligations thereunder, and the
      consummation of the transactions contemplated by this Agreement; and/or (c)
      any
      claim, litigation, investigation or proceeding relating to any of the foregoing,
      whether or not the Lender or its directors, officers, employees, attorneys
      or
      agents are a party thereto; provided
      that
      such indemnity shall not apply to any such losses, claims, damages, liabilities
      or related expenses arising from (i) any unexcused breach by the Lender of
      any
      of its obligations under this Agreement, (ii) the willful misconduct or gross
      negligence of the Lender as determined by a final, non-appealable judgment
      of a
      court of competent jurisdiction, or (iii) the breach of any commitment or legal
      obligation of the Lender to any Person other than the Borrower or its
      Affiliates, provided
      that
      such breach is determined pursuant to a final and nonappealable decision of
      a
      court of competent jurisdiction. The foregoing indemnity shall remain operative
      and in full force and effect regardless of the expiration or any termination
      of
      this Agreement, the consummation of the transactions contemplated by this
      Agreement, the repayment of the Obligations, the invalidity or unenforceability
      of any term or provision of any Loan Document, any investigation made by or
      on
      behalf of the Lender, and the content or accuracy of any representation or
      warranty made by the Borrower or any Subsidiary in any Loan Document. All
      amounts due under this Section 9.02 shall be payable on written demand
      therefor.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    Section
      9.03. Governing Law.
      This
      Agreement and the other Loan Documents shall (irrespective of where same are
      executed and delivered) be governed by and construed in accordance with the
      laws
      of the State of New York (without giving effect to principles of conflicts
      of
      laws).

     

    Section
      9.04. Waiver and Amendment.
      Neither
      any modification or waiver of any provision of this Agreement, the Revolving
      Credit Note, or any other Loan Document, nor any consent to any departure by
      the
      Borrower or any Subsidiary therefrom, shall in any event be effective unless
      the
      same shall be set forth in writing duly signed or acknowledged by the Lender
      and
      the Borrower, and then such waiver or consent shall be effective only in the
      specific instance, and for the specific purpose, for which given. No notice
      to
      or demand on the Borrower in any instance shall entitle the Borrower to any
      other or future notice or demand in the same, similar or other
      circumstances.

     

    Section
      9.05. Reservation of Remedies.
      Neither
      any failure nor any delay on the part of the Lender in exercising any right,
      power or privilege hereunder or under the Revolving Credit Note or any other
      Loan Document shall operate as a waiver thereof, nor shall a single or partial
      exercise thereof preclude any other or future exercise, or the exercise of
      any
      other right, power or privilege.

     

    Section
      9.06. Notices.
      All
      notices, requests, demands and other communications under or in respect of
      this
      Agreement or any transactions hereunder shall be in writing (which may include
      telegraphic or telecopied communication) and shall be personally delivered
      or
      mailed (by prepaid registered or certified mail, return receipt requested),
      sent
      by prepaid recognized overnight courier service, or telegraphed or telecopied
      by
      facsimile transmission to the applicable party at its address or telecopier
      number indicated below.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Lender:

               

              ComVest
                Investment Partners III, L.P.

              One
                North Clematis, Suite 300

              West
                Palm Beach, FL 33401

              Attention:
                Chief Financial Officer

              Telecopier:
                (212) 829-5986

            
	 
	
              with
                a copy to:

               

              Greenberg
                Traurig, LLP

              200
                Park Avenue

              New
                York, New York 10166

              Attention:
                Alan Annex, Esq.

              Telecopier:
                (212) 801-6400

            
	 
	
              If
                to the Borrower:

               

              c/o
                EVCI Career Colleges Holding Corp.

              1
                Van Der Donek Street

              Yonkers,
                New York 10701

              Attention:
                Dr. John J. McGrath

              Telecopier:
                (914) 964-8222

            
	 
	
              with
                a copy to:

               

              Technical
                Career Institutes, Inc.

              320
                West 31st
                Street

              New
                York, New York 10001

              Attention:
                Dr. John J. McGrath

              Telecopier:
                (212) 330-0898

            

    

     

    or,
      as to
      each party, at such other address or telecopier number as shall be designated
      by
      such party in a written notice to the other party delivered as aforesaid. All
      such notices, requests, demands and other communications shall be deemed given
      (a) when personally delivered, (b) three (3) Business Days after being
      deposited in the mails with postage prepaid (by registered or certified mail,
      return receipt requested), (c) one (1) Business Day after being delivered to
      the
      telegraph company or overnight courier service, if prepaid and sent overnight
      delivery, addressed as aforesaid and with all charges prepaid or billed to
      the
      account of the sender, or (d) when sent by facsimile transmission to a
      telecopier number designated by such addressee.

     

    Section
      9.07. Binding Effect.
      This
      Agreement shall be binding upon and inure to the benefit of the Borrower and
      the
      Lender and their respective successors and assigns, except that the Borrower
      shall not assign any of its rights or obligations hereunder without the prior
      written consent of the Lender.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Section
      9.08. Consent to Jurisdiction; Waiver of Jury Trial.
      The
      Borrower hereby consents to the jurisdiction of all courts of the State of
      New
      York and the United States District Court for the Southern District of New
      York,
      as well as to the jurisdiction of all courts from which an appeal may be taken
      from such courts, for the purpose of any suit, action or other proceeding
      arising out of or with respect to this Agreement, any other Loan Document,
      any
      other agreements, instruments, certificates or other documents executed in
      connection herewith or therewith, or any of the transactions contemplated hereby
      or thereby, or any of the Borrower’s or any Subsidiary’s obligations hereunder
      or thereunder. The Borrower hereby waives the right to interpose any
      counterclaims (other than compulsory counterclaims) in any action brought by
      the
      Lender hereunder or in respect of any other Loan Document, provided that this
      waiver shall not preclude the Borrower from pursuing any such claims by means
      of
      separate proceedings. THE BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL
      OBJECTIONS WHICH IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS, AND ALSO WAIVES
      ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.
      The
      Lender may file a copy of this Agreement as evidence of the foregoing consent
      to
      jurisdiction and waiver of right to jury trial.

     

    Section
      9.09. Certain Waivers.
      The
      Borrower and the Lender each hereby waives any claims for special, consequential
      or punitive damages in any way arising out of or relating to this Agreement,
      any
      of the other Loan Documents, or any breach hereof or thereof.

     

    Section
      9.10. Severability.
      If any
      provision of this Agreement is held invalid or unenforceable, either in its
      entirety or by virtue of its scope or application to given circumstances, such
      provision shall thereupon be deemed modified only to the extent necessary to
      render same valid, or not applicable to given circumstances, or excised from
      this Agreement, as the situation may require, and this Agreement shall be
      construed and enforced as if such provision had been included herein as so
      modified in scope or application, or had not been included herein, as the case
      may be.

     

    Section
      9.11. Captions.
      The
      Article and Section headings in this Agreement are included herein for
      convenience of reference only, and shall not affect the construction or
      interpretation of any provision of this Agreement.

     

    Section
      9.12. Sole and Entire Agreement.
      This
      Agreement, the Revolving Credit Note, the other Loan Documents, and the other
      agreements, instruments, certificates and documents referred to or described
      herein and therein constitute the sole and entire agreement and understanding
      between the parties hereto as to the subject matter hereof, and supersede all
      prior discussions, agreements and understandings of every kind and nature
      between the parties as to such subject matter.

     

    Section
      9.13. Confidentiality.
      The
      Lender shall not disclose any Confidential Information to any Person without
      the
      prior consent of the Borrower; provided,
      however,
      that
      nothing herein contained shall limit any disclosure of the tax structure of
      the
      transactions contemplated hereby, or the disclosure of any information (a)
      to
      the extent required by statute, rule, regulation or judicial process, (b) to
      counsel for the Lender, (c) to bank examiners, auditors, accountants or, if
      required by law, any regulatory authority, (d) to the officers, partners,
      managers, directors, employees, agents and advisors (including independent
      auditors and counsel) of the Lender, (e) in connection with any litigation
      which
      relates to this Agreement to which the Lender is a party, (f) to a subsidiary
      or
      Affiliate of the Lender, or (g) to any pledgee, assignee or participant (or
      prospective pledgee, assignee or participant) which agrees to be bound by this
      Section 9.13; and further provided,
      that in
      no event shall the Lender be obligated or required to return any materials
      furnished by the Borrower. The obligations of the Lender under this Section
      9.13
      shall supersede and replace the obligations of the Lender under any
      confidentiality letter in respect of this financing previously signed and
      delivered by the Lender to the Borrower.

     

    Section
      9.14. Counterparts; Fax Signatures.
      This
      Agreement may be executed in any number of counterparts, all of which shall
      constitute one and the same agreement. This Agreement may be executed by fax
      signatures, each of which shall be fully binding on the signing
      party.

     

    [The
      remainder of this page is intentionally blank]

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Agreement to be duly executed by their
      respective duly authorized officers as of the date first written
      above.

     

    
      	 	
              COMVEST
                INVESTMENT PARTNERS III, L.P. 

            
	 	
              By:
                

            	
              ComVest
                III Partners LLC, its General Partner

            
	 	 	 
	 	
              By:

            	
              /s/
                Larry E. Lenig, Jr.

            
	 	 	
              Name:
                

            	
              Larry
                E. Lenig, Jr.

            
	 	 	
              Title:
                

            	
              Authorized
                Signatory

            
	 	 	 	 
	 	 	 	 
	 	
              TECHNICAL
                CAREER INSTITUTES, INC.

            
	 	 
	 	
              By:

            	
              /s/
                Dr. John J. McGrath

            
	 	 	
              Name:
                

            	
              Dr.
                John J. McGrath

            
	 	 	
              Title:
                

            	
              Chairman

            
	 	 	 	 
	 	 	 	 
	 	
              PENNSYLVANIA
                SCHOOL OF BUSINESS, INC.

            
	 	 	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J. McGrath 

            
	 	 	
              Name:
                

            	
              Dr.
                John J. McGrath 

            
	 	 	
              Title:
                

            	
              Chief
                Executive Officer and President

            

    

     

    
      
        
        

      

      
        28

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