SEPARATION AND RELEASE AGREEMENT

 

THIS SEPARATION AND RELEASE AGREEMENT (“Agreement”) is made between Lincoln
Educational Services Corporation (the “Company”) and Lawrence E. Brown (“you”),
and is in consideration of their mutual undertakings as set forth in this
Agreement.

 

WHEREAS, the Company and you entered into that certain Employment Agreement,
dated as of February 1, 2007 (the “Employment Agreement”);

 

WHEREAS, the Company and you mutually agree to terminate the Employment
Agreement and enter into this Agreement, which shall set forth the terms of your
separation of employment from the Company and shall supersede all prior
agreements between the parties regarding the subject matter contained herein;
and

WHEREAS, in consideration for the payments provided hereunder, you agree to
comply with the non-competition, non-solicitation and other restrictive
covenants set forth in Section 8 hereof.

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set
forth in this Agreement, the parties hereto hereby agree as follows:

 

1.         Termination. Effective as of the close of business on October 31,
2007 (the “Effective Date”), your employment with the Company shall terminate.

 

2.         Nonadmission of Liability. This Agreement shall not be construed as
an admission by the Company that it acted wrongfully with respect to you, nor
shall this Agreement be construed as an admission by you of any misconduct.

 

3.         Termination Pay and Benefits. In consideration of the waiver and
release of claims set forth below, the Company shall provide you with the
following severance payments and benefits:

 

(a)       Severance. The Company shall pay you a lump sum cash payment equal to
$446,666.67, less all lawful or required deductions. Such amount shall be paid
no later than the thirtieth day following the Effective Date, subject to your
execution of this Agreement and the irrevocability of the release.

 

(b)       Benefits Continuation: You shall have the right to continue coverage
under the Company’s group medical and dental plans in accordance with and
subject to the provisions of the Consolidated Omnibus Budget Reconciliation Act
of 1986 (“COBRA”). The Company shall reimburse you for the employer-portion of
the premiums due for continued participation in the Company’s group medical and
dental plans under COBRA until the earlier of (i) December 31, 2008 and (ii) the
date you are covered under the group medical and dental plans of another
employer. Any further continued coverage under COBRA, if available, shall be at
your expense.

 

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(c)       Automobile. You shall be entitled to the continued use of your
automobile and reimbursement of associated costs by the Company, through
December 31, 2008.

 

(d)       No Other Compensation. Except as otherwise specifically provided
herein or as required by applicable law, you shall not be entitled to any
compensation or benefits or to participate in any past, present or future you
benefit programs or arrangements of the Company (including, without limitation,
any compensation or benefits under any severance plan, program or arrangement)
on or after the Effective Date.

 

4.         References. All requests for references shall be routed to the
Company’s Vice President of Human Resources. The Company’s response shall be
limited to the dates of your employment and your job title. No additional
information shall be released.

 

5.         Transitional Services. You agree that, for a period of 14 months
following the Effective Date, you will make yourself reasonably available, upon
reasonable advance notice, to provide transitional assistance to the Company, on
an hourly basis and at your rate of annual base salary immediately prior to the
Effective Date. It is anticipated that such services shall not exceed 10 hours
per month. You will be performing such services as an independent contractor of
the Company, and you agree that you will not hold yourself out as an employee,
agent, representative or party of the Company.

 

6.         Support for Legal Matters. You also agree, within reasonable
convenience to you, to cooperate with the Company in any legal action for which
your participation is needed. The Company agrees to try to schedule all such
meetings so that they do not unduly interfere with your pursuits after the
Effective Date. The Company agrees to reimburse you for reasonable out-of-pocket
expenses incurred in connection with your services described in this Section 6.

 

 

7.

Restrictive Covenants.

 

(a)       Non-Competition. For 14 months following the Effective Date, you shall
not, without the prior written consent of the Company, directly or indirectly,
own, manage, operate, join, control, or participate in the ownership,
management, operation or control of, or be employed by or connected in any
manner with, any Competing Business, whether for compensation or otherwise;
provided, however, that you shall be permitted to hold, directly or indirectly,
any class of securities of any entity that is listed on a national securities
exchange or on the NASDAQ National Market System. For purposes of this
Agreement, “Competing Business” means any publicly-traded company within the
United States that involves for-profit, post secondary education.

 

(b)       Non-Solicitation. For 14 months following the Effective Date, you
shall not, without the prior written consent of the Company, directly or
indirectly, as a sole proprietor, member of a partnership, stockholder,
investor, officer or director of a corporation, or as an employee, associate,
consultant or agent of any person, partnership, corporation or other business
organization or entity other than a member of the Company

 

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or any of its subsidiaries or affiliates (the “Company Group”) (i) solicit or
endeavor to entice away from any member of the Company Group, any person or
entity who is, or was as of the Effective Date, employed by, or serving as a key
consultant of, any member of the Company Group or (ii) solicit or endeavor to
entice away from any member of the Company Group, any person or entity who is,
or was as of the Effective Date, a customer or client (or reasonably anticipated
to become a customer or client) of any member of the Company Group.

 

(c)       Confidentiality. You shall not, at any time, except in performance of
your obligations to the Company Group, directly or indirectly, disclose or use
any secret or protected information that you may have learned by reason of your
association with any member of the Company Group. The term “protected
information” includes trade secrets and confidential and proprietary business
information of the Company Group, including, but not limited to, customers
(including potential customers), sources of supply, processes, methods, plans,
apparatus, specifications, materials, pricing information, intellectual property
(including applications and rights in discoveries, inventions or patents),
internal memoranda, marketing plans, contracts, finances, personnel, research
and internal policies, but shall exclude any information which (i) is or becomes
available to the public or is generally known in the industry or industries in
which the Company Group operates other than as a result of disclosure by you in
violation of this Section 8(c) or in violation of your Employment Agreement or
(ii) you are required to disclose under any applicable laws, regulations or
directives of any government agency, tribunal or authority having jurisdiction
in the matter or under subpoena or other process of law.

 

 

(d)

Return of Property.

 

(i)        All protected information is and shall remain the exclusive property
of the Company Group. All business records, papers and documents kept or made by
you relating to the business of the Company shall be and remain the property of
the Company Group. Upon the request and at the expense of the Company Group, you
shall promptly make all disclosures, execute all instruments and papers and
perform all acts reasonably necessary to vest and confirm in the Company Group,
fully and completely, all rights created or contemplated by this Section 7(d).

 

(ii)       You acknowledge that you have returned to the Company Group all
property owned by the Company Group in your possession, specifically including
all keys and keycard badges, all company-owned equipment and all Company Group
documents, and computer-stored or transmitted information, specifically
including all trade secrets, and/or confidential information of the Company
Group.

 

(e)       Compliance with Restrictive Covenants. Without intending to limit any
other remedies available to the Company Group and except as required by law, in
the event that you breach or threaten to breach any of your restrictive
covenants set forth in this Section 7, (i) the Company Group shall be entitled
to seek a temporary restraining

 

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order and/or a preliminary or permanent injunction restraining you from engaging
in activities prohibited by this Section 7, or such other relief as may be
required to enforce any of such covenants and (ii) all obligations of the
Company to make payments and provide benefits under this Agreement shall
immediately cease.

 

 

8.

Release of Claims.

 

(a)       General Release. In consideration of the payments and benefits
provided to you under this Agreement and after consultation with counsel, you,
and each of the your respective heirs, executors, administrators,
representatives, agents, successors and assigns (collectively, the “Releasors”)
hereby irrevocably and unconditionally release and forever discharge the Company
Group and each of their respective officers, employees, directors, shareholders
and agents from any and all claims, actions, causes of action, rights,
judgments, obligations, damages, demands, accountings or liabilities of whatever
kind or character (collectively, “Claims”), including, without limitation, any
Claims under any federal, state, local or foreign law, that the Releasors may
have, or in the future may possess, arising out of (i) your employment
relationship with and service as an employee or officer of the Company Group,
and the termination of such relationship or service, or (ii) any event,
condition, circumstance or obligation that occurred, existed or arose on or
prior to the date hereof; provided, however, that the release set forth in this
Section 8 shall not apply to (i) the obligations of the Company under this
Agreement, (ii) claims for vested benefits under Company benefit plans, (iii)
claims for indemnification or contribution or (iv) claims related to your vested
equity.

 

Without limiting the scope of the foregoing provision in any way, you hereby
release all claims relating to or arising out of any aspect of your employment
with the Company Group, including but not limited to, all claims under Title VII
of the Civil Rights Act, the Civil Rights Act of 1991 and the laws amended
thereby; the Age Discrimination in Employment Act of 1967; the Older Workers
Benefit Protection Act of 1990; the Americans with Disabilities Act; the Family
and Medical Leave Act of 1993; the Fair Labor Standards Act of 1963; any
contract of employment, express or implied; any provision of the Constitution of
the United States or of any particular State; and any other law, common or
statutory, of the United States, or any particular State; any claim for the
negligent and/or intentional infliction of emotional distress or specific intent
to harm; any claims for attorneys fees, costs and/or expenses; any claims for
unpaid or withheld wages, severance pay, benefits, bonuses, commissions and/or
other compensation of any kind; and/or any other federal, state or local human
rights, civil rights, wage and hour, wage payment, pension or labor laws, rules
and/or regulations; all claims growing out of any legal restrictions on the
Company Group’s right to hire and/or terminate its employees, including all
claims that were asserted and/or that could have been asserted by you and all
claims for breach of promise, public policy, negligence, retaliation,
defamation, impairment of

 

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economic opportunity, loss of business opportunity, fraud, misrepresentation,
etc.

 

The Releasors further agree that the payments and benefits described in this
Agreement shall be in full satisfaction of any and all Claims for payments or
benefits, whether express or implied, that the Releasors may have against the
Company Group arising out of the your employment relationship or your service as
an employee or officer of the Company Group and the termination thereof.

 

(b)       Specific Release of ADEA Claims. In consideration of the payments and
benefits provided to you under this Agreement, the Releasors hereby
unconditionally release and forever discharge the Company Group from any and all
Claims arising under the Federal Age Discrimination in Employment Act of 1967,
as amended, and the applicable rules and regulations promulgated thereunder
(“ADEA”) that you may have as of the date of the your signature to this
Agreement. By signing this Agreement, you hereby acknowledge and confirm the
following:

 

(i)        You were advised by the Company in connection with your termination
to consult with an attorney of your choice prior to signing this Agreement and
to have such attorney explain to him the terms of this Agreement, including,
without limitation, the terms relating to your release of claims arising under
ADEA;

 

(ii)       You were given a period of not fewer than 21 days to consider the
terms of this Agreement and to consult with an attorney of your choosing with
respect thereto, and were given the option to sign the Agreement in fewer than
21 days if you desired;

 

(iii)      You are providing the release and discharge set forth in this Section
8(b) only in exchange for consideration in addition to anything of value to
which you is already entitled; and

 

 

(iv)  

You knowingly and voluntarily accept the terms of this Agreement.

 

You acknowledge that you understand that you may revoke the release contained in
this Section 8(b) within seven days following the date on which you sign this
Agreement (the “Revocation Period”) by providing to the Company written notice
of your revocation of the release and waiver contained in this Section 8(b)
prior to the expiration of the Revocation Period. This right of revocation
relates only to the ADEA release set forth in this Section 8(b) and does not act
as a revocation of any other term of this Agreement. Any payments or benefits
provided to you under this Agreement shall not commence until the expiration of
the Revocation Period.

(c)       No Claims. You agree that you have not instituted, assisted or
otherwise participated in connection with, any action, complaint, claim, charge,
grievance, arbitration, lawsuit, or administrative agency proceeding, or action
at law or otherwise

 

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against any member of the Company Group or any of their respective officers,
employees, directors, shareholders or agents.

 

(d)       No Assignment of Claims. You represent and warrant that you have not
assigned any of the Claims being released under this Section 8.

 

(e)       Voluntary Execution of Agreement. You acknowledge that, except as
expressly set forth herein, no representations of any kind or character have
been made to you by the Company or by any of its agents, representatives, or
attorneys to induce the execution of this Agreement. You understand and
acknowledge the significance and consequences of this Agreement, that it is
voluntary, that it has not been entered into as a result of any coercion, duress
or undue influence, and expressly confirm that it is to be given full force and
effect according to all of its terms, including those relating to unknown
Claims. You acknowledge that you had full opportunity to discuss any and all
aspects of this Agreement with legal counsel, and have availed yourself of that
opportunity to the extent desired. You acknowledge that you have carefully read
and fully understand all of the provisions of this Agreement and have signed
this Agreement only after full reflection and analysis.

 

 

9.

Miscellaneous.

 

(a)       Severability. In the event that any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder of the Agreement shall
not in any way be affected or impaired thereby. Moreover, if any one or more of
the provisions contained in this Agreement shall be held to be excessively broad
as to duration, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent allowed
by applicable law.

 

(b)       Entire Agreement. This Agreement sets forth the entire understanding
between the parties in connection with its subject-matter and supersedes and
replaces any express or implied, written or oral, prior agreement of plans or
arrangement with respect to the terms of the your employment and the termination
thereof which you may have had with the Company Group (including the Employment
Agreement). You acknowledge that in signing this Agreement, you have not relied
upon any representation or statement not set forth in this Agreement made by the
Company or any of its representatives. This Agreement may be amended only by a
written document signed by the parties hereto.

 

(c)       Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New Jersey, without reference to its
conflict of laws principles. Any action regarding the enforcement or
interpretation of this Agreement shall be commenced only in the state of New
Jersey.

 

(d)       Withholding Taxes. Any payments made or benefits provided to you under
this Agreement shall be reduced by any applicable withholding taxes.

 

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(e)       Waiver. The failure of any party to this Agreement to enforce any of
its terms, provisions or covenants shall not be construed as a waiver of the
same or of the right of such party to enforce the same. Waiver by any party
hereto of any breach or default by another party of any term or provision of
this Agreement shall not operate as a waiver of any other breach or default.

 

(f)        Notices. Any notices required or made pursuant to this Agreement
shall be in writing and shall be deemed to have been given when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, as follows:

 

if to you:

Lawrence E. Brown

   

   

 

if to the Company:

Lincoln Educational Services Corporation

200 Executive Drive, Suite 340

West Orange, New Jersey 07052

Attention: General Counsel

 

or to such other address as either party may furnish to the other in writing in
accordance with this Section 9(f). Notices of change of address shall be
effective only upon receipt.

(g)       Descriptive Headings. The paragraph headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

 

(h)       Counterparts. This Agreement may be executed in one or more
counterparts, which, together, shall constitute one and the same agreement.

 

(i)        Successors and Assigns. This Agreement is personal to you and may not
be assigned by you without the prior written consent of the Company. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company.

 

(j)        Arbitration. Any dispute or controversy arising under this Agreement,
other than as provided in Section 7(e) hereof, that cannot be mutually resolved
by you and the Company shall be settled exclusively by arbitration in West
Orange, New Jersey before three arbitrators of exemplary qualifications and
stature. The Company and you shall each select one arbitrator. The arbitrators
selected by the Company and you shall jointly select the third arbitrator.
Judgment may be entered on the arbitrators’ award in any court having
jurisdiction. The Company and you hereby agree that the arbitrators shall be
empowered to enter an equitable decree mandating specific enforcement of the

 

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provisions of this Agreement. The cost of the arbitration shall be borne by the
parties in the manner determined by the arbitrators.

 

(k)       Expiration. This Agreement shall be null, void and of no further force
and effect unless you sign and return this Agreement to the Company by no later
than November 2, 2007.

 

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IN WITNESS WHEREOF, the Company has executed this Agreement as of the date first
set forth above, and you have executed this Agreement as of the date set forth
below.

 

 

 

LINCOLN EDUCATIONAL SERVICES CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ David F. Carney

 

 

Name:

David F. Carney

 

 

Title:

Chairman & CEO

 

 

 

By signing this Agreement, I acknowledge that: (a) I have read this Agreement;
(b) I understand this Agreement and know that I am giving up important rights;
(c) this Agreement shall not become effective or enforceable for a period of
seven (7) days following its execution; (d) I was advised by the Company, and I
am aware, of my right to consult with an attorney before signing this Agreement;
and (e) I have signed this Agreement knowingly and voluntarily and without any
duress or undue influence on the part or behalf of the Company.

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

 

 

 

 

 

 

/s/ Lawrence E. Brown

 

 

 

Lawrence E. Brown

 

 

 

 

 

 

 

Date: October 15, 2007

 

 

 

 

 

 

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