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Exhibit 10.1
 
FIRST AMENDMENT TO CREDIT AGREEMENT
 
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of this
29th day of November, 2017 (the “Effective Date”) by and between LINCOLN
EDUCATIONAL SERVICES CORPORATION, a New Jersey corporation (the “Parent”);
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, 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
(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”), and (ii) that
certain line of credit facility in the amount of $25,000,000 (“Facility 2”)
(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 million.

B.           Borrower has requested that the Bank extend additional credit to
Borrower, and the Bank has agreed to extend such additional credit subject to
the terms and conditions contained in the Credit Agreement and this Amendment.

C.          Accordingly, Bank is extending a new line of credit facility in the
amount of $15,000,000 (“Facility 3”) as evidenced by that certain Revolving Note
of even date herewith made by Borrower in favor of Bank (“Facility 3 Note”).

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:

“Facilities” means, collectively, Facility 1, Facility 2, and Facility 3.
 
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“Facility 3” means that certain $15,000,000 revolving line of credit, secured by
a cash collateral account funded in an aggregate amount equal to the amount
outstanding of any draws on the revolving line of credit, pursuant to the terms
provided for in Section 2.1(c) hereof and in the Pledge Agreement, for the
purposes of financing for working capital and other general corporate purposes
required by Borrower to support its normal operations.

“Facility 3 Note” means that certain Revolving Note in the maximum principal
amount of $15,000,000.00 evidencing the Revolving Loans made under Facility 3.

“Revolving Facility Amount” means an aggregate amount of $70,000,000 consisting
of a maximum principal amount of $30,000,000 for Facility 1, a maximum principal
amount of $25,000,000 for Facility 2 (inclusive of the sublimit available for
the issuance of Letters of Credit of up to $10,000,000), and a maximum principal
amount of $15,000,000 for Facility 3.
 
“Revolving Note” means a collective reference to the promissory notes evidencing
the Revolving Loans for each of Facilities 1, 2 and 3 and/or the Letters of
Credit issued under Facility 2, as applicable, payable to the order of the Bank
in form acceptable to the Bank.
 
4.           Loans.  (a) Section 2.1(a) of the Credit Agreement is hereby
deleted and the following is inserted in place thereof:

"Revolving Loans Under Tranche A of Facility 1, Facility 2 and Facility 3;
Advance of Tranche B Non-Revolving Loan Under Facility 1.  Subject to the terms
and conditions hereof, the Bank may make revolving credit loans (each a
“Revolving Loan” and, collectively, the “Revolving Loans” or the “Loans”) under
each of Tranche A of Facility 1, Facility 2, and Facility 3 to the Borrower from
time to time during the Availability Period in an aggregate principal amount at
any one time outstanding which does not exceed the Revolving Facility Amount of
the respective Facility; provided, however that Tranche B of Facility 1 shall be
advanced on a one-time, non-revolving basis.  During the Availability Period,
within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, repay pursuant to Section 2.6 and reborrow
under this Section 2.1 with respect to the Facilities.”
 
  (b)          Section 2.1(c) of the Credit Agreement is hereby deleted and the
following is inserted in place thereof:

“Cash Collateral Account.  Throughout the term of the Facilities and while any
Letters of Credit under Facility 2 and/or Revolving Loans under Facility 2 and
Facility 3 are outstanding, the Borrower shall maintain a cash collateral
account with the Bank (the “Cash Collateral Account”).  The minimum amount of
monies on deposit in the Cash Collateral Account shall at all times be no less
than an amount equal to 100% of the aggregate Stated Amount of all outstanding
Letters of Credit made under Facility 2 plus all Revolving Loans made under
Facility 2 and Facility 3.  Prior to the Bank making any Revolving Loan under
Facility 2 or Facility 3, or issuing any Letter of Credit under Facility 2, the
Parent shall deposit, in immediately available funds, an amount necessary into
the Cash Collateral Account so that the requirements set forth in the previous
sentence are satisfied.  The Borrower represents to the Bank that all monies in
the Cash Collateral Account will be owned by the Parent and consequently the
Cash Collateral Account shall be titled in the Parent’s name; in the event,
however, that any Borrower (other than the Parent) has any interest in or
ownership of such monies, the Parent is hereby appointed as agent of said
Borrower for all purposes relating to such Cash Collateral Account, including
the opening thereof and any distribution of monies therefrom.  Pursuant to the
Pledge Agreement, the Borrower has granted, and does hereby grant, to the Bank
as security for the Obligations, a first and only lien on and security interest
in and to the Cash Collateral Account and all monies deposited therein and all
proceeds thereof. The Letters of Credit are presently secured by cash
collateral, and the Borrower hereby authorizes the Bank to deposit such existing
cash into the Cash Collateral Account.   The Parent agrees that in the event of
a drawing under any Letter of Credit the Bank is authorized to immediately debit
the amount thereof from the Cash Collateral Account as reimbursement therefor. 
Upon the occurrence of an Event of Default, in addition to all other remedies
set forth in the Loan Documents, the Bank shall be entitled to apply the funds
on deposit in the Cash Collateral Account to the Obligations, in such order of
application as the Bank may in its sole discretion elect.”
 
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The remaining provisions of Section 2.1 of the Credit Agreement remain unchanged
and in full force and effect.

5.           Note.     Section 2.3 of the Credit Agreement is hereby deleted and
the following is inserted in place thereof:

“Note.  Loans under Facility 1 shall be evidenced by the Facility 1 Note.  Loans
under Facility 2 shall be evidenced by the Facility 2 Note.  Loans under
Facility 3 shall be evidenced by the Facility 3 Note.  Borrower agrees that,
absent manifest error, the records of the Bank will be conclusive with respect
to the Loans, including the amounts borrowed, the amounts repaid, the
outstanding principal balance and all interest payments.”

6.           Repayment of Loans. Section 2.5 of the Credit Agreement is hereby
deleted and the following is inserted in place thereof:

“Repayments of the Loans.  The Borrower hereby unconditionally promises to pay
to the order of the Bank the then unpaid principal amount of each Revolving Loan
(including any amounts outstanding under Tranche A and Tranche B of Facility 1
and under Facility 2 and under Facility 3) on the Revolving Maturity Date.”

7.           Revolving Loans. Section 3.1(A)(a) of the Credit Agreement is
hereby amended to include the following as subsection (iii):

“Facility 3.  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
Facility 3 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 0.00%, and (y) 3.50%.  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 3.1 of the Credit Agreement shall remain
unchanged and in full force and effect.
 
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8.           Unused Facility Fee. Section 3.3 is hereby deleted and the
following is inserted in place thereof:

“Unused Facility Fee.  The Borrowers agree to pay to the Bank an unused facility
fee (“Unused Facility Fee”) on the average daily unused balance of Facility 1
from and including the Effective Date to but excluding the Revolving Maturity
Date at a rate per annum equal to one-half of one percent (0.50%). The Unused
Facility Fee is calculated based on a year of 360 days for the actual number of
days elapsed. The accrued Unused Facility Fee shall be paid on the first day of
each Fiscal Quarter, in arrears.  For the avoidance of doubt, there is no Unused
Facility Fee due upon the average daily unused balance of Facility 2 or Facility
3 at any time.”

9.           Each Revolving Loan or Letter of Credit. Section 5.2(c) is hereby
deleted and the following is inserted in place thereof:

“At the time of and at all times after the issuance of any Letter of Credit, the
aggregate amount of all outstanding Letters of Credit issued under Facility 2
and any advances made thereunder plus the requested Letters of Credit under
Facility 2, together with all outstanding Revolving Loans advanced under
Facility 2 and Facility 3 shall not, in the aggregate, exceed the amount in the
Cash Collateral Account.”

The remaining provisions of Section 5.2 of the Credit Agreement shall remain
unchanged and in full force and effect.

10.         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.

11.         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.

12.         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)          Borrower shall have executed and delivered to Bank this Amendment
and the Facility 3 Note duly executed by an authorized officer of Borrower;
 
 (b)          Borrower shall have paid to the Bank a Facility 3 origination fee
of $75,000.00; and
 
 (c)          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.
 
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13.         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 with Facility 3, including the preparation of this
Amendment, and certain other loan administrative matters related to the Loan
Documents.

14.         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.

15.         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.

16.         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.

17.         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.

18.         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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