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Exhibit 10.1

SECOND AMENDMENT TO CREDIT AGREEMENT
 
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of this
23rd day of February, 2018 by and between LINCOLN EDUCATIONAL SERVICES
CORPORATION, a New Jersey corporation; LINCOLN TECHNICAL INSTITUTE, INC.; a New
Jersey corporation; NASHVILLE ACQUISITION, L.L.C., a Delaware limited liability
company; SOUTHWESTERN ACQUISITION, L.L.C., a Delaware limited liability company;
NEW ENGLAND ACQUISITION, LLC, a Delaware limited liability company; EUPHORIA
ACQUISITION, LLC, a Delaware limited liability company; NEW ENGLAND INSTITUTE OF
TECHNOLOGY AT PALM BEACH, INC., a Florida corporation; LCT ACQUISITION, LLC, a
Delaware limited liability company; NN ACQUISITION, LLC, a Delaware limited
liability company and LTI HOLDINGS, LLC, a Colorado limited liability company
(individually and collectively, jointly and severally, the “Borrower”), and
STERLING NATIONAL BANK (the “Bank”).
 
R E C I T A L S:
 
A.        Pursuant to that certain Credit Agreement dated as of March 31, 2017,
as amended by that certain First Amendment to Credit Agreement by and among
Borrower and the Bank dated as of November 29, 2017 (as the same has been and
may be amended from time to time, the “Credit Agreement”), the Bank agreed to
make available to Borrower (i) that certain line of credit facility in the
amount of $30,000,000, comprised of a $25,000,000 revolving loan designated as
“Tranche A” and a $5,000,000 non-revolving loan designated as “Tranche B”
(“Facility 1”), (ii) that certain line of credit facility in the amount of
$25,000,000 (“Facility 2”), and (iii) that certain line of credit facility in
the amount of $15,000,000 (“Facility 3”)  (collectively, as amended, modified,
supplemented, extended and restated from time to time, the “Loans”). The
$5,000,000 non-revolving loan drawn under Tranche B has been repaid and the
maximum principal amount of Facility 1 has been permanently reduced to
$25,000,000.00.
 
B.        Borrower has requested that Lender modify the terms of the Credit
Agreement to, among other things, (i) revise and/or delete certain financial
covenants, and (ii) allow for Borrower to sell certain real property located in
the State of Florida and the real property collateral serving as security for
the Loans, and Lender has agreed to such modifications to the Credit Agreement
in accordance with and subject to the terms and conditions hereof.
 
NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set
forth in this Amendment, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree
as follows:
 
1.         Recitals.  The Recitals are incorporated as if fully set forth
herein.
 
2.         Capitalized Terms.  Capitalized terms used but not defined in this
Amendment shall have the meanings set forth in the Credit Agreement.
 
3.         Definitions.  Section 1.1 of the Credit Agreement is hereby amended
as follows:
 
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The definitions of “Adjusted EBITDA” and “Revolving Maturity Date” are hereby
deleted in their entirety and the following inserted in place thereof:
 
“Adjusted EBITDA” means, for the period under review, for the Borrower on a
consolidated basis, an amount equal to Net Income for such period plus the
following, to the extent deducted in calculating such Net Income:  costs
associated with school closings (limited to an aggregate sum of $6,000,000 as
incurred during the 2017 Fiscal Year and amounts to be approved by the Bank in
any fiscal period thereafter) and other one-time charges with the Bank’s
approval; the amount of depreciation and amortization expense for such period;
with the Bank’s consent, impairment of goodwill and long-lived assets for such
period; Interest Expense; the provision for federal, state, local and foreign
income taxes payable for such period; other non-cash expenses related to
stock-based compensation and pension expense for such period, in each case as
determined in accordance with GAAP; and severance costs (limited to an aggregate
sum of $1,000,000 incurred during the 2018 Fiscal Year).
 
“Revolving Maturity Date” means, as to Facility 1 and Facility 2, May 31, 2020,
as to Facility 3, May 31, 2019, or, for each Facility, such earlier date upon
which the Revolving Facility shall terminate or the Revolving Facility shall
otherwise equal zero.
 
The following definition of “Funded Debt” is hereby added to Section 1.1 of the
Credit Agreement:
 
“Funded Debt” means, at any date, the aggregate principal amount of total
Indebtedness of the Borrower minus Indebtedness of the Borrower secured by cash.
 
4.         Facility 1 Interest Rate.  Section 3.1(A)(a)(i) of the Credit
Agreement is hereby deleted in its entirety and the following inserted in place
thereof:
 
“Facility 1.  The Borrower shall pay to the Bank interest on the unpaid
principal amount of each Revolving Loan made by the Bank to the Borrower under
Tranche A of Facility 1 for the period commencing on the date of such Revolving
Loan until such Revolving Loan shall be paid in full, at a rate per annum equal
to the greater of (x) the Prime Rate plus 2.85%, and (y) 6.00%.  Any change in
the interest rate resulting from a change in the Prime Rate shall be effective
as of the opening of business on the day on which such change in the Prime Rate
becomes effective.”
 
The remaining provisions of Section 3 of the Credit Agreement shall remain
unchanged and in full force and effect.
 
5.         Financial Covenants. The Borrower has requested, and the Bank has
agreed, to modify certain of said financial covenants as set forth below.
 
A)  Section 7.18(b) of the Credit Agreement entitled “Minimum Adjusted EBITDA”
is deleted in its entirety and the following inserted in place thereof:
 
“(b) Minimum Adjusted EBITDA.  The Borrower shall maintain a minimum Adjusted
EBITDA, tested quarterly on a rolling twelve month basis, as follows:
 
1Q17
   
$
10,000,000
 
2Q17
   
$
7,000,000
 
3Q17
   
$
7,000,000
 
4Q17
   
$
10,000,000
 
1Q18
   
$
6,000,000
 
2Q18
   
$
6,000,000
 
3Q18
   
$
5,000,000
 
4Q18
   
$
6,000,000
 
1Q19
   
$
7,000,000
 
2Q19
   
$
7,000,000
 
3Q19
   
$
7,000,000
 
4Q19
   
$
7,000,000
 
1Q20
   
$
8,000,000”
 

 
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B) Section 7.18(c) of the Credit Agreement entitled “Minimum Tangible Net Worth”
is deleted in its entirety.
 
C) Section 7.18(d) of the Credit Agreement entitled “No Net Loss” is deleted in
its entirety and the following inserted in place thereof:
 
“(d) No Net Loss.  The Borrower shall suffer no Net Loss, at any time, as
determined in accordance with GAAP, commencing December 31, 2019 and tested
annually at each Fiscal Year end thereafter.”
 
D) There shall be added to the Credit Agreement a new Section 7.18(e) entitled
“Minimum Funded Debt to Adjusted EBITDA Ratio” as follows:
 
“(e) Minimum Funded Debt to Adjusted EBITDA Ratio.  The Borrower shall maintain
a minimum Funded Debt to Adjusted EBITDA Ratio, tested quarterly, as follows:
 
1Q18
     
5.00 to 1.00
 
2Q18
     
5.00 to 1.00
 
3Q18
     
5.00 to 1.00
 
4Q18
     
5.00 to 1.00
 
1Q19
     
4.00 to 1.00
 
2Q19
     
4.00 to 1.00
 
3Q19
     
4.00 to 1.00
 
4Q19
     
4.00 to 1.00
 
1Q20
     
3.00 to 1.00
 

Compliance with this covenant shall be determined on a rolling twelve month
basis and shall be measured commencing as of the fiscal quarter ended March 31,
2018.”
 
6.         Sale of Mortgaged Property.  Section 7.6 of the Credit Agreement is
hereby modified to add the following Section 7.6(J):
 
“(j) the arm’s-length sale of the property owned by NEIT located at 1126 53rd
Court North, Mangonia Park, Palm Beach County, Florida (the “Florida Property”)
or any Mortgaged Property at an approximate market sales price acceptable to the
Bank so long as the appropriate Borrower applies the net proceeds (i.e., all
gross sales proceeds less customary and reasonable closing costs and expenses)
of any such sale to repay a corresponding amount of the outstanding principal
balance under Facility 1 immediately upon receipt of such net proceeds, which
repayment of principal shall permanently reduce the amount available under
Facility 1.”
 
7.         Negative Pledge.  As a material inducement to the Bank to enter into
this Amendment and in consideration for the Bank’s agreement to modify the
financial covenants contained in the Credit Agreement as set forth herein, to
permit the sale of Mortgaged Property and the Florida Property subject to the
terms set forth herein:
 
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(a)       approximately simultaneously herewith, NEIT shall execute and deliver
to the Bank (and permit the Bank to record on the applicable land records) that
certain Negative Pledge Agreement (the “Negative Pledge Agreement”) in
connection with the Florida Property, wherein NEIT agrees, among other things,
that it will not create, incur, assume, or suffer to exist, or permit any
Subsidiary or Affiliate to create, incur, assume, or suffer to exist, any lien,
encumbrance, security interest, mortgage, pledge, claim, assignment,
hypothecation, or change of any kind upon or with respect to any of its right,
title or interest in and, or otherwise related, to the Florida Property,
including, without limitation, any and all rights in any improvements or
appurtenances thereon or therein, or any other personalty related there, now
owned or hereafter acquired;
 
(b)       The Borrower shall actively pursue the sale of the Florida Property;
provided, however, in the event the Florida Property is not subject to a
contract of sale acceptable to the Bank within six (6) months from the date of
this Amendment, NEIT shall execute and deliver to the Bank a mortgage and
security agreement (the “Mortgage”), constituting a first-priority mortgage lien
on the Florida Property as security for the Obligations, and simultaneously
therewith or prior to the execution thereof, provide to the Bank, at the
Borrower’s sole cost and expense, an appraisal of the Florida Property,
insurance on the Florida Property, a survey of the Florida Property,
environmental assessments, as required by the Bank, and title insurance, all in
form and content reasonably acceptable to the Bank. Borrower shall be
responsible for all of the Bank’s fees and expenses incurred in connection with
placing such mortgage lien on the Florida Property, including without limitation
the reasonable fees and expenses of Bank’s counsel. The Mortgage shall be cross
defaulted with each Loan Document; accordingly, the occurrence of (i) an Event
of Default under the Mortgage shall constitute an Event of Default under each
Loan Document and (ii) an Event of Default under any Loan Document shall
constitute an event of default under the Mortgage.  In the event an amendment to
the Credit Agreement is deemed to be necessary in connection with such Mortgage,
as determined by the Bank, the Borrower agrees to cooperate with the Bank in
effectuating same and to pay all reasonable costs and expenses of the Bank in
connection therewith (including reasonable attorney’s fees and expenses).
 
8.         Conditions to Advances under Facility 3. Section 5.2 of the Credit
Agreement entitled “Each Revolving Loan or Letter of Credit” is hereby modified
to add the following additional provision 5.2(f):
 
“(f) with respect to advances under Facility 3, the Bank shall have received an
opinion letter, in form and content reasonably satisfactory to the Bank, from
Borrower’s regulatory counsel, that opines (whether by making reference to any
existing authoritative guidance from an applicable Educational Agency or
Government Authority or otherwise), that Borrower’s practice of borrowing under
the Loan facilities for the purposes of evidencing liquidity and compliance with
applicable laws, is not in violation of applicable law, including without
limitation, laws and regulations of any U.S. Government Authority or Educational
Agency, including without limitation the United States Government Accountability
Office and the DOE.”
 
9.         Reaffirmation of Credit Agreement.  Borrower acknowledges and
reaffirms its obligations under the Credit Agreement, and Borrower acknowledges
and agrees that it has no claims against the Bank, or any offsets or defenses
with respect to the payment of any sums due under the Facilities or any Loan
Document, or with respect to the enforcement of the Loan Documents.
 
10.       Confirmation of Representations and Warranties.  Borrower hereby (a)
confirms that all of the representations and warranties set forth in the Credit
Agreement are true and correct in all material respects (provided that if any
representation or warranty is by its terms qualified by concepts of materiality,
such representation or warranty is true and correct in all respects), except to
the extent any representation or warranty relates to a specific date in which
case such representation or warranty shall be true and correct as of such
earlier date, and (b) covenants to perform its obligations under the Credit
Agreement and all other Loan Documents.
 
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11.       Conditions to Effectiveness.  This Amendment shall become effective as
of the date on which each of the following conditions has been satisfied (the
“Effective Date”):
 
(a)        Each Borrower shall have delivered to the Bank this Amendment duly
executed by an authorized officer of each Borrower;
 
(b)        NEIT shall have delivered to the Bank the Negative Pledge Agreement
duly executed by an authorized officer of such Borrower;
 
(c)        Borrower shall have paid to the Bank a modification fee of $50,000.00
in good and available funds;
 
(d)        Each Borrower shall have delivered to the Bank resolutions of its
board of directors or other governing body authorizing the execution and
delivery to the Bank of this Amendment and, in the case of NEIT, the resolutions
shall authorize the execution and delivery of the Negative Pledge Agreement and
permit the Bank to record the Negative Pledge Agreement in the applicable land
records; and
 
(e)        all representations and warranties of Borrower contained herein shall
be true and correct as of the Effective Date, except to the extent that such
representation or warranty relates to a specific date, in which case such
representation and warranty was true as of such earlier date, and such parties
delivery of their respective signatures hereto shall be deemed to be its
certification thereof.
 
12.       Fees and Expenses.  In consideration of the Bank entering into this
Amendment, Borrower shall be responsible for the payment of Bank’s counsel’s
fees incurred in connection herewith, including the preparation of this
Amendment, and certain other loan administrative matters related to the Loan
Documents.
 
13.       Reference to the Effect on the Credit Agreement.  Upon the
effectiveness of this Amendment, each reference in the Credit Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall
mean and be a reference to the Credit Agreement as modified by this Amendment.
 
14.       Affirmation.  Except as specifically modified pursuant to the terms
hereof, the Credit Agreement, and all other Loan Documents (and all covenants,
terms, conditions and agreements therein), shall remain in full force and
effect, and are hereby ratified and confirmed in all respects by Borrower. 
Borrower covenants and agrees to comply with all of the terms, covenants and
conditions of the Loan Documents, as modified hereby, notwithstanding any prior
course of conduct, waivers, releases or other actions or inactions on Bank’s
part which might otherwise constitute or be construed as a waiver of or
amendment to such terms, covenants and conditions.
 
15.       Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT
REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
 
16.        Headings.  Section headings in this Amendment are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
 
17.        Counterparts.  This Amendment may be executed in counterparts, and
all counterparts taken together shall be deemed to constitute one and the same
instrument.

[signatures appear on successive pages]
 
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the year
and date first set forth above.
 

 
LINCOLN EDUCATIONAL SERVICES CORPORATION
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Chief Financial Officer
       
LINCOLN TECHNICAL INSTITUTE, INC.
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer
       
NASHVILLE ACQUISITION, L.L.C.
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer
       
SOUTHWESTERN ACQUISITION, L.L.C.
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer
       
NEW ENGLAND ACQUISITION, LLC
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer

 
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EUPHORIA ACQUISITION, LLC
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer
       
NEW ENGLAND INSTITUTE OF TECHNOLOGY AT PALM BEACH, INC.
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer

 

 
LCT ACQUISITION, LLC
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer
       
NN ACQUISITION, LLC
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer
       
LTI HOLDINGS, LLC
       
By:
/s/ Brian K. Meyers
   
Brian K. Meyers
   
Treasurer
       
STERLING NATIONAL BANK
     
By:
 /s/ Charles W. Jones
   
Charles W. Jones
   
Managing Director

 
 
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