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Exhibit 10.1

 
FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of June 18, 2013 (this
“Agreement”), is entered into among LINCOLN EDUCATIONAL SERVICES CORPORATION, a
New Jersey corporation (the “Borrower”), the Guarantors party hereto, the
Lenders party hereto, and BANK OF AMERICA, N.A., as Administrative Agent for the
Lenders (in such capacity, the “Administrative Agent”).  Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed thereto in the
Credit Agreement (as defined below).

RECITALS

WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative Agent
are parties to that certain Credit Agreement, dated as of April 5, 2012 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”); and

WHEREAS, the parties hereto have agreed to amend the Credit Agreement as
provided herein.

NOW, THEREFORE, in consideration of the agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1.                   Amendments.

(a)                The definition of “Aggregate Revolving Commitments” in
Section 1.01 of the Credit Agreement is hereby amended to read as follows:

“Aggregate Revolving Commitments” means the Revolving Commitments of all the
Lenders.  The amount of the Aggregate Revolving Commitments in effect on June
18, 2013 is $60,000,000.

(b)                The definition of “Consolidated Adjusted EBITDAR” in Section
1.01 of the Credit Agreement is hereby amended to read as follows:

“Consolidated Adjusted EBITDAR” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated EBITDA for such period plus (b) rent and lease expense for such
period minus (c) Consolidated Maintenance Capital Expenditures made during such
period minus (d) income taxes paid in cash during such period.

(c)                The definition of “Consolidated EBITDA” in Section 1.01 of
the Credit Agreement is hereby amended to read as follows:

“Consolidated EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Interest Charges for such period,
(ii) the provision for federal, state, local and foreign income taxes payable
for such period, (iii) the amount of depreciation and amortization expense for
such period, (iv) other non-cash charges for such period (excluding any
write-down of current assets and any such non-cash charges to the extent that
such charge represents an accrual of or reserve for a future cash payment), (v)
non-cash stock-based compensation expense for such period and (vi) cash charges
related to the closure of the Borrower’s Schools located in the States of Ohio
and Kentucky in an aggregate amount not to exceed $11,500,000 during the term of
this Agreement, minus (b) the following to the extent included in calculating
such Consolidated Net Income: (i) non-cash income or gains for such period and
(ii) tax benefits, refunds or credits for such period.

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(d)                The definition of “Consolidated Maintenance Capital
Expenditures” in Section 1.01 of the Credit Agreement is hereby amended to read
as follows:

“Consolidated Maintenance Capital Expenditures” means, for any period, for the
Borrower and its Subsidiaries on a consolidated basis, an amount equal to the
lesser of (a) 3.5% of the consolidated revenues for such period and (b)
Consolidated Capital Expenditures for such period.

(e)                 The definition of “Eurodollar Base Rate” in Section 1.01 of
the Credit Agreement is hereby amended to read as follows:

“Eurodollar Base Rate” means:

(a)            for any Interest Period with respect to a Eurodollar Rate Loan,
the rate per annum equal to (i) the British Bankers Association LIBOR Rate or
the successor thereto if the British Bankers Association is no longer making a
LIBOR rate available (“LIBOR”), as published by Reuters (or such other
commercially available source providing quotations of LIBOR as may be designated
by the Administrative Agent from time to time) at approximately 11:00 a.m.,
London time, two London Banking Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period or (ii) if such rate is
not available at such time for any reason, the rate per annum determined by the
Administrative Agent to be the rate at which deposits in Dollars for delivery on
the first day of such Interest Period in same day funds in the approximate
amount of the Eurodollar Rate Loan being made, continued or converted and with a
term equivalent to such Interest Period would be offered by Bank of America’s
London Branch to major banks in the London interbank eurodollar market at their
request at approximately 11:00 a.m. (London time) two London Banking Days prior
to the commencement of such Interest Period; and

(b)            for any interest calculation with respect to a Base Rate Loan on
any date, the rate per annum equal to (i) LIBOR, at approximately 11:00 a.m.,
London time determined two London Banking Days prior to such date for Dollar
deposits being delivered in the London interbank market for a term of one month
commencing that day or (ii) if such published rate is not available at such time
for any reason, the rate per annum determined by the Administrative Agent to be
the rate at which deposits in Dollars for delivery on the date of determination
in same day funds in the approximate amount of the Base Rate Loan being made or
maintained and with a term equal to one month would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar market
at their request at the date and time of determination.

(f)                 The definition of “Guarantors” in Section 1.01 of the Credit
Agreement is hereby amended to read as follows:

“Guarantors” means, collectively, (a) each Domestic Subsidiary of the Borrower
identified as a “Guarantor” on the signature pages hereto, (b) each Person that
joins as a Guarantor pursuant to Section 7.13 or otherwise, (c) with respect to
(i) Obligations under any Secured Hedge Agreement (other than with the
Borrower), (ii) Obligations under any Secured Cash Management Agreement (other
than with the Borrower) and (iii) any Swap Obligations of a Specified Loan Party
(determined before giving effect to Sections 4.01 and 4.08) under the Guaranty,
the Borrower, and (d) the successors and permitted assigns of the foregoing.
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(g)                The definition of “Obligations” in Section 1.01 of the Credit
Agreement is hereby amended to read as follows:

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, Letter of Credit, Secured Cash Management
Agreement or Secured Hedge Agreement, in each case, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding; provided, however, that the “Obligations” of
a Loan Party shall exclude any Excluded Swap Obligations with respect to such
Loan Party.

(h)                The following definitions are hereby added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order to read as follows:

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1
et seq.).

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Guaranty of such
Guarantor of, or the grant under a Loan Document by such Guarantor of a security
interest to secure, such Swap Obligation (or any Guarantee thereof) is or
becomes illegal under the Commodity Exchange Act (or the application or official
interpretation thereof) by virtue of such Guarantor’s failure for any reason to
constitute an “eligible contract participant” as defined in the Commodity
Exchange Act (determined after giving effect to Section 4.08 and any and all
guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the
time the Guaranty of such Guarantor, or grant by such Guarantor of a security
interest, becomes effective with respect to such Swap Obligation.  If a Swap
Obligation arises under a Master Agreement governing more than one Swap
Contract, such exclusion shall apply to only the portion of such Swap
Obligations that is attributable to Swap Contracts for which such Guaranty or
security interest becomes illegal.

“Master Agreement” has the meaning specified in the definition of “Swap
Contract.”

“Qualified ECP Guarantor” means, at any time, each Loan Party with total assets
exceeding $10,000,000 or that qualifies at such time as an “eligible contract
participant” under the Commodity Exchange Act and can cause another Person to
qualify as an “eligible contract participant” at such time under Section
1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Specified Loan Party” has the meaning specified in Section 4.08.

“Swap Obligations” means with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of Section 1a(47) of the Commodity Exchange Act.
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(i) Section 2.04(a) of the Credit Agreement is hereby amended to read as
follows:

 
(a)            Swing Line Facility.  Subject to the terms and conditions set
forth herein, the Swing Line Lender, in reliance upon the agreements of the
other Lenders set forth in this Section 2.04, may in its sole discretion make
loans (each such loan, a “Swing Line Loan”) to the Borrower in Dollars from time
to time on any Business Day during the Availability Period in an aggregate
amount not to exceed at any time outstanding the amount of the Swing Line
Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated
with the Applicable Percentage of the Outstanding Amount of Revolving Loans and
L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount
of such Lender’s Revolving Commitment; provided, however, that (i) after giving
effect to any Swing Line Loan, (A) the Total Revolving Outstandings shall not
exceed the Aggregate Revolving Commitments, and (B) the aggregate Outstanding
Amount of the Revolving Loans of any Lender, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall
not exceed such Lender’s Revolving Commitment, (ii) the Borrower shall not use
the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan
and (iii) the Swing Line Lender shall not be under any obligation to make any
Swing Line Loan if it shall determine (which determination shall be conclusive
and binding absent manifest error) that it has, or by such Credit Extension may
have, Fronting Exposure.  Within the foregoing limits, and subject to the other
terms and conditions hereof, the Borrower may borrow under this Section 2.04,
prepay under Section 2.05, and reborrow under this Section 2.04.  Each Swing
Line Loan shall be a Base Rate Loan.  Immediately upon the making of a Swing
Line Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such
Lender’s Applicable Percentage times the amount of such Swing Line Loan.

(j)                  A new Section 4.08 is hereby added to the Credit Agreement,
immediately following Section 4.07 of the Credit Agreement, to read as follows:

4.08            Keepwell.

Each Loan Party that is a Qualified ECP Guarantor at the time the Guaranty in
this Article IV by any Loan Party that is not then an “eligible contract
participant” under the Commodity Exchange Act (a “Specified Loan Party”) or the
grant of a security interest under the Loan Documents by any such Specified Loan
Party, in either case, becomes effective with respect to any Swap Obligation,
hereby  jointly and severally, absolutely, unconditionally and irrevocably
undertakes to provide such funds or other support to each Specified Loan Party
with respect to such Swap Obligation as may be needed by such Specified Loan
Party from time to time to honor all of its obligations under the Loan Documents
in respect of such Swap Obligation (but, in each case, only up to the maximum
amount of such liability that can be hereby incurred without rendering such
Qualified ECP Guarantor’s obligations and undertakings under this Article IV
voidable under applicable Debtor Relief Laws, and not for any greater amount).
 The obligations and undertakings of each applicable Loan Party under this
Section shall remain in full force and effect until the Obligations have been
indefeasibly paid and performed in full.  Each Loan Party intends this Section
to constitute, and this Section shall be deemed to constitute, a “keepwell,
support, or other agreement” for the benefit of each Loan Party that would
otherwise not constitute an “eligible contract participant” for any Swap
Obligation for all purposes of the Commodity Exchange Act.

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(k)                Section 8.06 of the Credit Agreement is hereby amended to
read as follows:

8.06            Restricted Payments.

Declare or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except that:

(a)               each Subsidiary may make Restricted Payments to Persons that
own Equity Interests in such Subsidiary, ratably according to their respective
holdings of the type of Equity Interest in respect of which such Restricted
Payment is being made;

(b)              each Loan Party and each Subsidiary may declare and make
dividend payments or other distributions payable solely in common Equity
Interests of such Person;

(c)               any Subsidiary may make payments to the Borrower of dividends
or distributions in an amount sufficient to enable the Borrower to timely pay
when due United States federal, state and local income tax liabilities in
respect of income earned by the Loan Parties and their Subsidiaries; provided,
that the proceeds of such dividends or distributions are in fact used to pay
such tax liabilities;

(d)               any Loan Party or any Subsidiary may purchase, redeem or
otherwise acquire its Equity Interests with proceeds received from the
substantially concurrent issue of new Equity Interests; and

(e)               the Borrower may make other Restricted Payments so long as (i)
no Default exists immediately prior and after giving effect thereto, (ii) except
in the case of the payment of quarterly dividends on or prior to March 31, 2014,
after giving effect to such Restricted Payments on a Pro Forma Basis, the
Consolidated Leverage Ratio is less than 1.00 to 1.0, (iii) for a Restricted
Payment which is a stock repurchase, if Consolidated EBITDA for the twelve
months ending on the last day of the most recently reported fiscal quarter does
not exceed $60,000,000, the Borrower may only make stock repurchases if, after
giving effect to such stock repurchase, the aggregate amount of all stock
repurchases made by the Borrower during the current fiscal quarter and the
immediately preceding four fiscal quarters does not exceed $15,000,000 and (iv)
with respect to any Restricted Payments in the form of cash dividends, neither
the amount of such dividends per share nor the frequency of payment thereof
shall be increased without the prior written consent of the Required Lenders.

(l)                  Section 8.11(c) of the Credit Agreement is hereby amended
to read as follows:

(c)          Consolidated Fixed Charge Coverage Ratio.  Permit the Consolidated
Fixed Charge Coverage Ratio as of the end of any fiscal quarter of the Borrower
set forth below (commencing with the fiscal quarter ending June 30, 2012) to be
less than the ratio corresponding to such fiscal quarter:

 
Calendar Year
March 31
June 30
September 30
December 31
2012
N/A
1.15 to 1.0
1.15 to 1.0
1.15 to 1.0
2013
1.15 to 1.0
1.15 to 1.0
1.15 to 1.0
1.05 to 1.0
2014
1.05 to 1.0
1.15 to 1.0
1.15 to 1.0
1.25 to 1.0
thereafter
1.25 to 1.0
1.25 to 1.0
1.25 to 1.0
1.25 to 1.0

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(m)               The penultimate paragraph in Section 9.03 of the Credit
Agreement is hereby amended to add the following sentence at the end thereto to
read as follows:

Excluded Swap Obligations with respect to any Guarantor shall not be paid with
amounts received from such Guarantor or such Guarantor’s assets, but appropriate
adjustments shall be made with respect to payments from other Loan Parties to
preserve the allocation to Obligations otherwise set forth above in this
Section.

(n)                Schedule 2.01 of the Credit Agreement is hereby amended in
its entirety in the form of Schedule 2.01 attached hereto.

(o)                Exhibit 7.02 of the Credit Agreement is hereby amended in its
entirety in the form of Exhibit 7.02 attached hereto.

2.                   Effectiveness; Conditions Precedent.  This Agreement shall
be effective when all of the conditions set forth in this Section 2 shall have
been satisfied:

(a)            receipt by the Administrative Agent of copies of this Agreement
duly executed by the Borrower, the Guarantors and the Required Lenders; and

(b)            receipt by the Administrative Agent, for the account of each
Lender executing this Agreement, a fee in an amount equal to 0.10% of such
Lender's Revolving Commitment (after giving effect to the reduction of the
Aggregate Revolving Commitments pursuant to this Agreement).

3.                   Expenses.  The Loan Parties agree to reimburse the
Administrative Agent for all reasonable out-of-pocket costs and expenses of the
Administrative Agent incurred in connection with the preparation, execution and
delivery of this Agreement, including without limitation the reasonable fees and
expenses of Moore & Van Allen PLLC.

4.                   Ratification of Credit Agreement.  Each Loan Party
acknowledges and consents to the terms set forth herein and agrees that this
Agreement does not impair, reduce or limit any of its obligations under the Loan
Documents, as amended hereby.  This Agreement is a Loan Document.  Except as
expressly modified and amended in this Agreement, all of the terms, provisions
and conditions of the Credit Agreement, and the obligations of the Loan Parties
thereunder and under the other Loan Documents, are hereby ratified and confirmed
and shall remain in full force and effect according to their terms.  Each Loan
Party acknowledges and affirms all of its obligations under the Loan Documents.

5.                   Authority/Enforceability.  Each Loan Party represents and
warrants as follows:

(a)            It has taken all necessary action to authorize the execution,
delivery and performance of this Agreement.

(b)            This Agreement has been duly executed and delivered by such Loan
Party and constitutes its legal, valid and binding obligations, enforceable in
accordance with its terms, subject to applicable Debtor Relief Laws and to
general principles of equity.

(c)            No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority or any other Person
is necessary or required in connection with the execution, delivery or
performance by such Loan Party of this Agreement.

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(d)            The execution and delivery of this Agreement does not (i)
contravene the terms of its Organization Documents or (ii) violate any Law.

6.                   Representations and Warranties of the Loan Parties.  Each
Loan Party represents and warrants to the Lenders that after giving effect to
this Agreement (a) the representations and warranties set forth in Article VI of
the Credit Agreement are true and correct in all material respects (or, if such
representation or warranty is qualified by materiality or Material Adverse
Effect, it shall be true and correct in all respects as written) as of the date
hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects (or, if such representation or warranty is
qualified by materiality or Material Adverse Effect, it shall be true and
correct in all respects as written) as of such earlier date, and (b) no event
has occurred and is continuing which constitutes a Default.

7.                   Counterparts/Facsimile.  This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the same instrument.
 Delivery of executed counterparts of this Agreement by facsimile or other
secure electronic format (.pdf) shall be effective as an original.

8.                   GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

9.                   Successors and Assigns.   This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

10.                Headings.  The headings of the sections hereof are provided
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.

11.                Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the illegal, invalid or unenforceable provisions.  The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

[signature pages follow]
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Each of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

BORROWER:
LINCOLN EDUCATIONAL SERVICES CORPORATION,
 
a New Jersey corporation
 
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: CFO
 
 
GUARANTORS:
LINCOLN TECHNICAL INSTITUTE, INC.,
 
a New Jersey corporation
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer
 
 
 
NEW ENGLAND ACQUISITION, LLC,
 
a Delaware limited liability company
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer
 
 
 
SOUTHWESTERN ACQUISITION, L.L.C.,
 
a Delaware limited liability company
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer
 
 
 
NASHVILLE ACQUISITION, L.L.C.,
 
a Delaware limited liability company
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer
 
 
 
EUPHORIA ACQUISITION, LLC,
 
a Delaware limited liability company
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer

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NEW ENGLAND INSTITUTE OF TECHNOLOGY AT PALM BEACH, INC.,
 
a Florida corporation
 
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer
 
 
LCT ACQUISITION, LLC,
 
a Delaware limited liability company
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer
 
 
 
NN ACQUISITION, LLC,
 
a Delaware limited liability company
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer
 
 
 
LTI HOLDINGS, LLC,
 
a Colorado limited liability company
 
 
By:
/s/ Cesar Ribeiro
 
Name: Cesar Ribeiro
 
Title: Treasurer

 

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ADMINISTRATIVE
 
AGENT:
BANK OF AMERICA, N.A.,
 
as Administrative Agent
 
 
 
By:
/s/ Charlene Wright-Jones
 
Name: Charlene Wright-Jones
 
Title:   Vice President

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LENDERS:
BANK OF AMERICA, N.A.,
 
as a Lender
 
 
 
By:
/s/ Jonathan M. Phillips
 
Name: Jonathan M. Phillips
 
Title:   Senior Vice President
 
 
BARCLAYS BANK PLC,
 
as a Lender
 
 
 
By:
/s/ Alicia Borys
 
Name: Alicia Borys
 
Title:   Vice President
 
 
PNC BANK, NATIONAL ASSOCIATION,
 
as a Lender
 
 
By:
/s/ Steven Wexler
 
Name: Steven Wexler
 
Title:   Vice President
 
 
BMO HARRIS FINANCING, INC.,
 
as a Lender
 
 
By:
 
 
Name:
 
Title:

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Schedule 2.01
 
COMMITMENTS AND APPLICABLE PERCENTAGES
 
Lender
 
Revolving Commitment
   
Applicable Percentage of
Revolving Commitment
 
Bank of America, N.A.
 
$
24,705,882.35
     
41.176470588
%
Barclays Bank PLC
 
$
14,117,647.06
     
23.529411765
%
PNC Bank, National Association
 
$
14,117,647.06
     
23.529411765
%
BMO Harris Financing, Inc.
 
$
7,058,823.53
     
11.764705882
%
TOTAL
 
$
60,000,000.00
     
100.000000000
%

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Exhibit 7.02

FORM OF COMPLIANCE CERTIFICATE

For the fiscal quarter ended _________________, 20___.

I, ______________________, [Title] of LINCOLN EDUCATIONAL SERVICES CORPORATION,
a New Jersey corporation (the "Borrower") hereby certify that, to the best of my
knowledge and belief, with respect to that certain Credit Agreement dated as of
April 5, 2012 (as amended, modified, restated or supplemented from time to time,
the "Credit Agreement"; all of the defined terms in the Credit Agreement are
incorporated herein by reference) among the Borrower, the Guarantors, the
Lenders and Bank of America, N.A., as Administrative Agent:

(a) The company-prepared financial statements which accompany this certificate
are true and correct in all material respects and have been prepared in
accordance with GAAP applied on a consistent basis, subject to changes resulting
from normal year-end audit adjustments.

(b) [select the applicable provision:]

[Since ___________ (the date of the last similar certification, or, if none, the
Closing Date) no Default or Event of Default has occurred under the Credit
Agreement.]

[or:]

[The following covenants or conditions have not been performed or observed and
the following is a list of each such Default or Event of Default and its nature
and status, and a description of the action, if any, taken by the Borrower or
any Subsidiary to remedy the same.]

Delivered herewith are detailed calculations demonstrating compliance by the
Loan Parties with the financial covenants contained in Section 8.11 of the
Credit Agreement and Section 8.15 of the Credit Agreement as of the end of the
fiscal period referred to above.

This ______ day of ___________, 20__.

,
LINCOLN EDUCATIONAL SERVICES CORPORATION
 
 
a New Jersey corporation
 
 
 
 
 
By:
 
 
 
Name:
 
 
Title:
 

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Computation of Financial Covenants
For the Fiscal Quarter/Fiscal Year ended ______________, 20____

1.
Consolidated Adjusted Net Worth
 
 
 
Consolidated Adjusted Net Worth
 
 
 
 
(a)
consolidated shareholders' equity of the Borrower and its Subsidiaries as of
such date:
$_________________________
 
 
 
(b)
to the extent reducing consolidated shareholders’ equity, non-cash impairment
charges for goodwill and other intangible assets as of such date:
$_________________________
 
 
 
 
 
 
 
(c)
outstanding student loan commitments of the Borrower and its Subsidiaries as of
such date:
$_________________________
 
 
 
 
 
 
 
(d)
Consolidated Adjusted Net Worth:
[1.(a) + 1.(b) – 1.(c)]
$_________________________
 
 
Minimum permitted: See Section 8.11(a) of the Credit Agreement
 
2.
Consolidated Leverage Ratio
 
 
(a)
Consolidated Funded Indebtedness (as of such date)
 
 
 
 
(i)
all obligations for borrowed money, whether current or long-term (including the
Obligations) and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments:
$_________________________
 
 
 
(ii)
all Purchase Money Indebtedness:
$_________________________
 
 
 
(iii)
the maximum amount available to be drawn under letters of credit (including
standby and commercial), bankers' acceptances, bank guaranties, surety bonds and
similar instruments
$_________________________
 
 
 
(iv)
all obligations in respect of the deferred purchase price of property or
services (other than (i) contingent obligations not yet due and payable to pay
the earn out portion of the purchase price for Permitted Acquisitions and not
required to be reflected as liabilities on the balance sheet and (ii) trade
accounts payable in the ordinary course of business)
$_________________________
 
 
 
(v)
all Attributable Indebtedness:
$_________________________

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(vi)
all obligations to purchase, redeem, retire, defease or otherwise make any
payment prior to the Maturity Date in respect of any Equity Interests or any
warrant, right or option to acquire such Equity Interest, valued, in the case of
a redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends:
$_________________________
 
 
 
 
 
 
 
(vii)
all Guarantees with respect to Indebtedness of the types specified in clauses
(i) through (vi) above of Persons other than the Borrower or any Subsidiary:
 
$_________________________
 
 
(viii)
all Indebtedness of the types referred to in clauses (i) through (vii) above of
any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which any Loan Party or any
Subsidiary is a general partner or joint venturer, except to the extent that
Indebtedness is expressly made non-recourse to such Loan Party or such
Subsidiary:
$_________________________
 
 
 
(ix)
Consolidated Funded Indebtedness:
[2.(a)(i) + 2.(a)(ii) + 2.(a)(iii) + 2.(a)(iv) + 2.(a)(v) + 2.(a)(vi) +
2.(a)(vii) + 2.(a)(viii)]
$_________________________
 
 
(b)
Consolidated EBITDA (for the most recently completed four fiscal quarters)
 
 
 
 
(i)
Consolidated Net Income for such period:
$_________________________
 
 
 
 
(the following (ii) – (vii), to the extent deducted in calculating such
Consolidated Net Income):
 
 
 
 
 
 
 
 
(ii)
Consolidated Interest Charges for such period:
$_________________________
 
 
 
(iii)
the provision for federal, state, local and foreign income taxes payable for
such period:
$_________________________
 
 
 
(iv)
the amount of depreciation and amortization expense for such period:
$_________________________
 
 
 
(v)
other non-cash charges for such period (excluding any write-down of current
assets and any such non-cash charges to the extent that such charge represents
an accrual of or reserve for a future cash payment):
$_________________________
 
 
 
 
 
 
 
(vi)
non-cash stock-based compensation expense for such period:
$_________________________
 
 
(vii)
cash charges related to the closure of the Borrower’s Schools located in the
States of Ohio and Kentucky (in an aggregate amount not to exceed $11,500,000
during the term of the Credit Agreement)
 
$_________________________

 

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(viii)
to the extent included in calculating such Consolidated Net Income, non-cash
income or gains for such period:
$_________________________
 
 
 
 
 
 
 
(ix)
to the extent included in calculating such Consolidated Net Income, tax
benefits, refunds or credits for such period
$_________________________
 
 
 
 
 
 
 
(x)
Consolidated EBITDA:
[2.(b)(i) + 2.(b)(ii) + 2.(b)(iii) + 2.(b)(iv) + 2.(b)(v) + 2.(b)(vi) +
2.(b)(vii) – 2.(b)(viii) – 2.(b)(ix)]
$_________________________
 
 
(c)
Consolidated Leverage Ratio
[2.(a)(ix) / 2.(b)(x)]
________ to 1.0
Maximum permitted: 2.25 to 1.0
 
3.
Consolidated Fixed Charge Coverage Ratio
 
 
(a)
Consolidated Adjusted EBITDAR (for the most recently completed four fiscal
quarters)
 
 
 
 
(i)
Consolidated EBITDA (See Line 2.(b)(x) above):
$_________________________
 
 
 
(ii)
rent and lease expense for such period:
$_________________________
 
 
 
(iii)
Consolidated Maintenance Capital Expenditures made during such period (to equal
the lesser of (x) 3.5% of consolidated revenues for such period and (y)
Consolidated Capital Expenditures for such period):
$_________________________
 
 
 
 
 
 
 
(iv)
income taxes paid in cash during such period:
$_________________________
 
 
 
 
 
 
 
(v)
Consolidated Adjusted EBITDAR:
[3.(a)(i) + 3.(a)(ii) –  3.(a)(iii) – 3.(a)(iv)]
$_________________________
 
 
(b)
Consolidated Fixed Charges (for the most recently completed four fiscal
quarters)
 
 
 
 
(i)
the cash portion of Consolidated Interest Charges for such period:
$_________________________
 
 
 
(ii)
rent and lease expense for such period:
$_________________________
 
 
(iii)
Consolidated Scheduled Funded Debt Payments for such period:
$_________________________
 
 
 
 
 
 
 
(iv)
Consolidated Fixed Charges:
[3.(b)(i) + 3.(b)(ii) + 3.(b)(iii)]
$_________________________
 
 
(c)
 
Consolidated Fixed Charge Coverage Ratio
[3.(a)(v) / 3.(b)(iv)]
________ to 1.0
 
Minimum permitted: See Section 8.11(c) of the Credit Agreement.

 

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4.
Minimum Financial Responsibility Composite Score
 
 
 
Financial Responsibility Composite Score:
$_________________________
 
Minimum permitted: 1.5
 
 
5.
Cohort Default Rate
 
 
Cohort Default Rate:
_________________________%
Maximum permitted: See Section 8.11(e) of the Credit Agreement
 
 
6.
Consolidated Capital Expenditures
 
 
 
Consolidated Capital Expenditures
 
 
 
 
(a)
all consolidated capital expenditures for such period:
$_________________________
 
 
 
(b)
expenditures to the extent made with the proceeds of any Involuntary Disposition
used to purchase property that is useful in the business of the Borrower and its
Subsidiaries for such period:
$_________________________
 
 
 
(c)
Consolidated Capital Expenditures:
[6.(a) – 6.(b)]
$_________________________
 
 
Maximum permitted: $75,000,000 in any fiscal year

 
 

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