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Exhibit 10.12
 
LINCOLN EDUCATIONAL SERVICES CORPORATION
2005 LONG-TERM INCENTIVE PLAN
 
RESTRICTED STOCK AGREEMENT
 
 
 

Date of Award:            Participant:     

  
Lincoln Educational Services Corporation (the “Company”) hereby grants the
Participant [_____] shares of restricted Common Stock of the Company (the
“Restricted Shares”), pursuant to the provisions of the Company’s 2005 Long-Term
Incentive Plan (the “Plan”).
 
This grant of the Restricted Shares shall be subject to the terms and conditions
of the Plan and this Award Agreement, including, but not limited to, the
transfer restrictions set forth in Section C hereof and the cancellation
provisions of Section B hereof.  The Plan provides a complete description of the
terms and conditions governing all Awards granted thereunder.  This Award
Agreement is subject to the terms and conditions of the Plan, as amended from
time to time, and to such rules and regulations as the Committee may adopt under
the Plan.  If there is any inconsistency between the Plan and this Award
Agreement, the Plan’s terms (or applicable rules and regulations of the
Committee) shall control and supersede and replace any terms of this Award
Agreement that conflict with the terms of the Plan.
 
All capitalized terms shall have the meanings ascribed to them in the Plan,
unless specifically set forth otherwise herein.
 
 
(A)
Vesting Schedule.

 
 
(1)
Subject to the Participant’s continued employment with the Company and its
Subsidiaries (the “Company Group”), __________ of the Restricted Shares shall
vest on each of the _____________ anniversaries of the Date of Award (each, a
“Vesting Date”).  Any fractional Restricted Shares resulting from the
application of the vesting schedule shall be aggregated and the Restricted
Shares resulting from such aggregation shall vest on the fifth anniversary of
the Date of Award.

 
 
(2)
Upon vesting, the Restricted Shares shall no longer be subject to the transfer
restrictions pursuant to Section D or cancellation pursuant to Section B.

 
 
(B)
Termination of Employment.

 
 
(1)
If, prior to a Vesting Date, the Participant’s employment with the Company Group
terminates for any reason other than death, Disability or due to an Involuntary
Termination, the unvested Restricted Shares shall be cancelled immediately
without consideration as of the date of such termination and the Participant
shall immediately forfeit any rights to the Restricted Shares.

 
 
 

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(2)
If, prior to a Vesting Date, the Participant’s employment with the Company Group
terminates as a result of the Participant’s death, Disability or Involuntary
Termination, all of the unvested Restricted Shares shall immediately vest in
full and shall no longer be subject to the transfer restrictions pursuant to
Section D or cancellation pursuant to Section B.

 
 
(3)
“Involuntary Termination” has the meaning set forth in the employment agreement
between the Participant and the Company.  In the event that the Participant is
not party to an employment agreement, “Involuntary Termination” means the
termination of the Participant’s employment (i) by the Company (or any successor
thereto) without Cause or (ii) by the Participant for Good Reason, each as
defined in Appendix A.

 
 
(4)
For purposes of this Agreement, “Disability” has the meaning set forth in the
employment agreement between the Participant and the Company.  In the event that
the Participant is not party to an employment agreement, Disability shall mean a
physical or mental disability or infirmity of the Participant that prevents the
normal performance of substantially all of the Participant’s duties as an
employee of the Company or any Subsidiary, which disability or infirmity shall
exist for any continuous period of 180 days within any twelve (12) month period.

 
 
(C)
Change in Control.

 
 
(1)
In the event of a Change of Control prior to any Vesting Date, all of the
unvested Restricted Shares shall immediately vest in full and shall no longer be
subject to the transfer restrictions pursuant to Section D or cancellation
pursuant to Section B.

 
 
(2)
“Change in Control” has the meaning set forth in the employment agreement
between the Participant and the Company.  In the event that the Participant is
not party to an employment agreement, “Change in Control” has the meaning set
forth on Appendix A.

 
 
(D)
Transferability.  Pursuant to Section 12 of the Plan, the Restricted Shares are
not transferable other than by last will and testament or by the laws of descent
and distribution, and the Participant’s rights under this Award Agreement shall
be exercisable during the Participant’s lifetime by the Participant only.

 
 
(E)
Rights as a Stockholder.  The Participant shall have, with respect to the
Restricted Shares, all the rights of a stockholder of the Company, including, if
applicable, the right to vote the Restricted Shares and to receive any
dividends, subject to the restrictions set forth in the Plan and this Award
Agreement.

 
 
(F)
Dividends and Distributions.  Any shares of Common Stock or other securities of
the Company received by the Participant as a result of a distribution to holders
of Restricted Shares or as a dividend on the Restricted Shares shall be subject
to the same restrictions as the related Restricted Shares, and all references to
Restricted Shares hereunder shall be deemed to include such shares of Common
Stock or other securities.

 
 
(G)
Share Certificates.  The certificate representing the shares of Common Stock
covered by the Restricted Shares shall be held in custody by the Company until
the restrictions thereon shall have lapsed.  As a condition of the award of
Restricted Shares, the Participant shall deliver to the Company a stock power,
endorsed in blank, relating to such shares of Common Stock.  The Committee may
cause a legend or legends to be put on the certificate to make appropriate
reference to such restrictions as the Committee may deem advisable under the
Plan or as may be required by the rules, regulations, and other requirements of
the Securities and Exchange Commission, any exchange that lists the shares of
Common Stock, and any applicable federal or state laws.

 
 
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(H)
No Entitlements.

 
 
(1)
The Restricted Shares are discretionary awards.  Neither this Award Agreement
nor the Plan confers on the Participant any right or entitlement to receive
compensation or bonus in any specific amount for any future fiscal year
(including, without limitation, any grants of future Awards under the Plan) and
do not impact in any way the Company Group’s determination of the amount, if
any, of the Participant’s compensation or bonus.  The Restricted Shares do not
constitute salary, wages, regular compensation, recurrent compensation or
contractual compensation for the year of grant or any later year and shall not
be included in, nor have any effect on, the determination of employment-related
rights or benefits under law or any employee benefit plan or similar arrangement
provided by the Company Group (including, without limitation, severance,
termination of employment and pension benefits), unless otherwise specifically
provided for under the terms of such plan or arrangement or by the Company
Group.  The benefits provided pursuant to the Restricted Shares are in no way
secured, guaranteed or warranted by Company Group.

 
 
(2)
The Restricted Shares are awarded to the Participant by virtue of the
Participant’s employment with, and services performed for, the Company
Group.  Neither this Award Agreement nor the Plan constitutes an employment
agreement.  Nothing in either this Award Agreement or the Plan shall modify the
terms of the Participant’s employment.

 
 
(3)
Subject to the terms of any applicable employment agreement, the Company
reserves the right to change the terms and conditions of the Participant’s
employment, including the division, subsidiary or department in which the
Participant is employed.  This Award Agreement, the Plan, the grant of
Restricted Shares, and/or any action taken or omitted to be taken under this
Award Agreement or the Plan shall not be deemed to create or confer on the
Participant any right to be retained in the employ of the Company Group, or to
interfere with or to limit in any way the right of the Company Group to
terminate the Participant’s employment at any time.  Moreover, the termination
of employment provisions set forth in Section (B) only apply to the treatment of
the Restricted Shares in the specified circumstances and shall not otherwise
affect the Participant’s employment relationship.  By accepting this Award
Agreement, the Participant waives any and all rights to compensation or damages
in consequence of the termination of the Participant’s office or employment for
any reason whatsoever insofar as those rights arise or may arise from the
Participant’s ceasing to have rights under, or be entitled to receive payment in
respect of, the Restricted Shares as a result of such termination, or from the
loss or diminution in value of such rights or entitlements.  This waiver applies
whether or not such termination amounts to a wrongful discharge or unfair
dismissal.

 
 
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(I)
Miscellaneous.

 
 
(1)
The Committee shall have the right to impose such restrictions on the Restricted
Shares as it deems necessary or advisable under applicable federal securities
laws, the rules and regulations of any stock exchange or market upon which such
Shares are then listed and/or traded, and/or under any blue sky or state
securities laws applicable to such Shares.  It is expressly understood that the
Committee is authorized to administer, construe, and make all determinations
necessary or appropriate to administer the Plan and this Award Agreement, all of
which shall be binding upon the Participant.

 
 
(2)
The Board may, at any time, or from time to time, terminate, amend, modify or
suspend the Plan, and the Board or the Committee may amend or modify this Award
Agreement at any time; provided, however, that no termination, amendment,
modification or suspension shall materially and adversely alter or impair the
rights of the Participant under this Award Agreement without the Participant’s
written consent.

 
 
(3)
Shares of restricted stock are not subject to Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”).  Notwithstanding the forgoing
or any provision of the Plan or this Award Agreement, if any provision of this
Award Agreement or the Plan contravenes Section 409A or could cause the
Participant to incur any tax, interest or penalties under Section 409A, the
Committee may, in its sole discretion and without the Participant’s consent,
modify such provision to (i) comply with, or avoid being subject to, Section
409A, or to avoid the incurrence of any taxes, interest and penalties under
Section 409A, and/or (ii) maintain, to the maximum extent practicable, the
original intent and economic benefit to the Participant of the applicable
provision without materially increasing the cost to the Company or contravening
the provisions of Section 409A.  This Section (H)(3) does not create an
obligation on the part of the Company to modify the Plan or this Award Agreement
and does not guarantee that the Restricted Shares will not be subject to taxes,
interest and penalties under Section 409A.

 
 
(4)
Vesting of the Restricted Shares shall be subject to the Participant satisfying
all applicable federal, state, local and foreign taxes (including the
Participant’s FICA obligation).  The Company shall have the power and the right
to (i) deduct or withhold from all amounts payable to the Participant in
connection with the Restricted Shares or otherwise, or (ii) require the
Participant to remit to the Company, an amount sufficient to satisfy any
applicable taxes required by law.  Further, the Company may permit or require
the Participant to satisfy, in whole or in part, the tax obligations by
withholding Shares that would otherwise be received upon vesting of the
Restricted Shares.

 
 
(5)
This Award Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required, or the Committee determines are
advisable.  The Participant agrees to take all steps the Company determines are
necessary to comply with all applicable provisions of federal and state
securities law in exercising his rights under this Award Agreement.

 
 
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(6)
All obligations of the Company under the Plan and this Award Agreement, with
respect to the Restricted Shares, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.

 
 
(7)
To the extent not preempted by federal law, this Award Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

 
 
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IN WITNESS WHEREOF, this Award Agreement has been executed by the Company by one
of its duly authorized officers as of the Date of Award.
 

 
LINCOLN EDUCATIONAL SERVICES CORPORATION
     
By:
     
Name:
 
Title:

 
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APPENDIX A
 
“Cause” shall mean, with respect to the Participant, the following:
 
 
(a)
prior to a Change in Control, (i) the Participant’s willful failure to perform
the duties of his employment in any material respect, (ii) malfeasance or gross
negligence in the performance of the Participant’s duties of employment, (iii)
the Participant’s conviction of a felony under the laws of the United States or
any state thereof (whether or not in connection with his employment), (iv) the
Participant’s intentional or reckless disclosure of protected information
respecting any member of the Company Group’s business to any individual or
entity which is not in the performance of the duties of his employment, (v) the
Participant’s commission of an act or acts of sexual harassment that would
normally constitute grounds for termination, or (vi) any other act or omission
by the Participant (other than an act or omission resulting from the exercise by
the Participant of good faith business judgment), which is materially injurious
to the financial condition or business reputation of any member of the Company
Group; provided, however, that in the case of (i) and (ii) above, the
Participant shall not be deemed to have been terminated for cause unless he has
received written notice of the alleged basis therefor from the Company, and
fails to remedy the matter within 30 days after he has received such notice,
except that no such “cure opportunity” shall be required in the case of two
separate episodes occurring within any 12-month period that give the Company the
right to terminate for cause for such reason; or

 
 
(b)
on or after a Change in Control, (i) the Participant’s willful failure to
perform the duties of his employment in any material respect, (ii) malfeasance
or gross negligence in the performance of the Participant’s duties of
employment, (iii) the Participant’s conviction of a felony under the laws of the
United States or any state thereof (whether or not in connection with his
employment), or (iv) the Participant’s intentional or reckless disclosure of
protected information respecting any member of the Company Group’s business to
any individual or entity which is not in the performance of the duties of his
employment; provided, however, that in the case of (i) and (ii) above, the
Participant shall not be deemed to have been terminated for cause unless he has
received written notice of the alleged basis therefor from the Company, and
fails to remedy the matter within 30 days after he has received such notice,
except that no such “cure opportunity” shall be required in the case of two
separate episodes occurring within any 12-month period that give the Company the
right to terminate for cause for such reason.

 
 “Change in Control” shall mean:
 
 
(a)
when a “person” (as defined in Section 3(a)(9) of the Securities Exchange Act of
1934, the “Exchange Act”), including a “group” (as defined in Section 13(d) and
14(d) of the Exchange Act), either directly or indirectly becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of 25% or
more of either (i) the then outstanding Common Stock, or (ii) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors; provided, however, that the
following acquisitions shall not constitute a Change in Control:  (1) any
acquisition directly from the Company; (2) any acquisition by the Company; or
(3) any acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company;

 
 
 

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(b)
when, during any period of 24 consecutive months of employment, the individuals
who, at the beginning of such period, constitute the Board (the “Company
Incumbent Directors”) cease for any reason other than death to constitute at
least a majority thereof;  provided, however, that a director who was not a
director at the beginning of such 24-month period shall be deemed to be a
Company Incumbent Director if such director was elected by, or on the
recommendation of or with the approval of at least two-thirds of the directors
of the Company, who then qualified as Company Incumbent Directors;

 
 
(c)
when the stockholders of the Company approve a reorganization, merger or
consolidation of the Company without the consent or approval of a majority of
the Company Incumbent Directors;

 
 
(d)
consummation of a merger, amalgamation or consolidation of the Company with any
other corporation, the issuance of voting securities of the Company in
connection with a merger, amalgamation or consolidation of the Company or sale
or other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another corporation (each, a “Business
Combination”), unless, in each case of a Business Combination, immediately
following such Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners of the Common Stock outstanding
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then outstanding shares of common stock and 50%
of the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
entity resulting from such Business Combination (including, without limitation,
an entity which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Common Stock; or

 
 
(e)
a complete liquidation or dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company;

 
“Good Reason” shall mean, with respect to the Participant, the occurrence of any
of the following (without his written consent):  (a) a reduction in the
Participant’s base salary or target annual bonus; (b) an adverse change in the
Participant’s title, authority, duties, responsibilities or reporting lines as
specified in Section 2.1 of this Agreement; (c) the relocation of the
Participant’s principal place of employment to a location more than 10 miles
from West Orange, New Jersey; (d) a failure by the Company to pay material
compensation when due in connection with the Participant’s employment; or (e) a
material breach of this Agreement by the Company; provided, however, that, if
any such Good Reason is reasonably susceptible to cure, then the Participant
shall not terminate his employment hereunder unless the Participant first
provides the Company with written notice of his intention to terminate and of
the grounds for such termination, and the Company has not, within 10 business
days following receipt of such written notice, cured such Good Reason.
 
 
 

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