Unassociated Document


     

    EXHIBIT
      10.7

     

    AMENDMENT
      NO. ONE TO WARRANT 

    TO
      PURCHASE COMMON STOCK OF 

    EVCI
      CAREER COLLEGES HOLDING CORP.

     

    This
      AMENDMENT NO. ONE (this “Amendment”),
      is
      made as of December 31, 2007, by and between EVCI CAREER COLLEGES HOLDING CORP.,
      a Delaware corporation (the “Company”),
      and
      COMVEST INVESTMENT PARTNERS III, L.P., a Delaware limited partnership
      (“ComVest”).

     

    WHEREAS,
      ComVest is the holder of a Warrant, issued by the Company on May 23, 2007,
      to
      purchase up to 8,621,032 shares (as adjusted in accordance with the reverse
      stock split effected by the Company on August 28, 2007) of Common Stock (the
      “Warrant”);

     

    WHEREAS, ComVest
      has agreed to extend to the Company loans in the aggregate principal amount
      of
      up to $700,000, pursuant to that certain Loan Agreement of even date herewith
      by
      and between ComVest and the Company (the “Company
      Loan Agreement”);

     

    WHEREAS, ComVest
      has agreed to make advances to two subsidiaries of the Company, Technical Career
      Institutes, Inc. (“TCI”)
      and
      Pennsylvania School of Business, Inc. (“PSB”,
      and
      collectively with TCI, the “Subsidiaries”),
      in
      the aggregate principal amount of up to $2,850,000 at any time outstanding,
      upon
      the terms and subject to the conditions set forth in that certain Revolving
      Credit Agreement of even date herewith by and among ComVest and the Subsidiaries
      (the “Subsidiary
      Loan Agreement”
and,
      together with the Company Loan Agreement, the “Loan
      Agreements”);

     

    WHEREAS,
      pursuant to and in accordance with Section 14 of the Warrant, the parties wish
      to amend the Warrant as set forth in this Amendment;

     

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

     

    Section
      1. Definitions;
      References.
      Unless
      otherwise specified herein, each capitalized term used herein that is defined
      in
      the Warrant shall have the meaning assigned to such term in the Warrant. Each
      reference to “hereof,” “hereto,” “hereunder,” “herein” and “hereby” and each
      other similar reference, and each reference to “this Warrant” and each other
      similar reference, contained in the Warrant shall from and after the date hereof
      refer to the Warrant as amended hereby.

     

    Section
      2. Amendments
      to the Warrant.
      

     

    (a) Section
      1.7 of the Warrant is hereby amended and replaced with the
      following:

     

    “1.7 “Per
      Share Exercise Price”
shall
      be (a) with respect to one-half, or 4,310,516 of the Warrant Shares, $0.01
      and
      (b) with respect to the balance, or 4,310,516 of the Warrant Shares, $1.62,
      in
      each case as may be adjusted in accordance with Section 4 of this Warrant.”


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) The
      following is added as a new Section 2(g) of the Warrant: 

     

    “(g) Holder’s
      Put Option.
      

     

    (i)
      Subject to, and in accordance with, the provisions of this Section 2(g), the
      Holder shall have the right and option, in the Holder’s sole discretion (the
“Put
      Option”),
      to
      require the Company to redeem and purchase from the Holder all or any portion
      of
      this Warrant relating to the Option Warrant Shares (as defined in Section
      2(g)(iii)). The Put Option shall be exercisable from time to time for all or
      part of the Option Warrant Shares, as provided in Section 2(g)(ii). The purchase
      price (the “Option
      Purchase Price”)
      shall
      be $0.50, as may be adjusted in accordance with Section 4 of this Warrant,
      multiplied by the number of Option Warrant Shares as to which this Put Option
      is
      then being exercised.

     

    (ii) The
      Put
      Option shall be exercisable at any time and from time to time after the
      occurrence of a Put Option Trigger Event (as defined in Section 2(g)(iv)).
      If
      the Holder desires to exercise a Put Option after a Put Option Trigger Event,
      the Holder shall surrender this Warrant, together with a completed Put Option
      Exercise Form in the form attached hereto as Schedule III (or a reasonable
      facsimile thereof) duly executed, to the Company at the address and in the
      manner set forth in Section 11 hereof, or at such other place as is designated
      in writing by the Company. Within five (5) business days after its receipt
      of
      the surrendered Warrant and the Put Option Exercise Form, the Company shall
      purchase from the Holder that portion of this Warrant as shall be specified
      in
      the Put Option Exercise Form at the Option Purchase Price and pay the applicable
      Option Purchase Price to the Holder, either by wire transfer of immediately
      available funds to the account specified by the Holder in the Put Option
      Exercise Form or by certified or bank check of immediately available funds
      delivered to the Holder at the address specified in the Put Option Exercise
      Form. If the Put Option is exercised in part, the Company shall deliver to
      the
      Holder a new Warrant, identical in form to this Warrant, in the name of the
      Holder, evidencing the right to purchase the remaining number of Warrant Shares
      after giving effect to such exercise of the Put Option, which new Warrant shall
      be signed by an appropriate officer of the Company.

     

    (iii) For
      purposes of this Section 2(g), “Option
      Warrant Shares”
shall
      mean the Warrant Shares for which the Per Share Exercise Price is $1.62, as
      may
      be adjusted in accordance with Section 4 of this Warrant.

     

    (iv) For
      purposes of this Section 2(g), “Put
      Option Trigger Event”
shall
      mean the earlier of (A) March 31, 2009, (B) the occurrence of a Sale (as defined
      in Section 2(g)(v)) of any of (1) TCI, (2) PSB, or (3) the business trust
      participating in any “Restructuring” under and as defined in the Subsidiary Loan
      Agreement (the “Trust”)
      and
      each Subsidiary (if any) thereof (TCI,
      PSB
      and the Trust, each a “Related
      Company”)
      or (C)
      the date on which mandatory payment is required to be made of all obligations
      under (1) the Loan Agreements, (2) the Second Amended and Restated Credit
      Agreement, dated as of September 16, 2005, amended and restated as of March
      31,
      2006 and further amended and restated as of April 24, 2007, by and among the
      Company, the direct and indirect Subsidiaries of the Company from time to time
      party to the agreement, as guarantors, and ComVest (as assignee of Harris N.A.),
      as amended from time to time, or (3) the Secured Convertible Promissory Note
      issued by the Company to the Holder, dated as of May 23, 2007.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (v) For
      purposes of this Section 2(g), “Sale”
shall
      mean, with respect to each Related Company, any transaction or series of related
      transactions (A) whereby a majority of the outstanding beneficial interests
      or
      equity interests in such Related Company which ordinarily has voting power
      for
      the election of directors (including preferred stock counted on an “as
      converted” basis into common stock and common stock counted on a fully diluted
      basis) is sold, assigned or transferred, (B) whereby additional beneficial
      interests or equity interests in such Related Company which ordinarily have
      voting power for the election of directors (calculated in accordance with clause
      (A) of this definition) are issued, which beneficial interests or shares
      constitute a majority of the outstanding beneficial interests or equity
      interests in such Related Company which ordinarily has voting power for the
      election of directors (calculated as aforesaid) after giving effect to such
      transaction(s), (C) in which such Related Company is a constituent party to
      any
      merger or consolidation and as a result thereof (1) the holders of the
      outstanding beneficial interests or equity interests in such Related Company
      which ordinarily has voting power for the election of directors (including
      preferred stock counted on an “as converted” basis into common stock)
      immediately prior to such merger or consolidation cease to own a majority of
      the
      outstanding beneficial interests or equity interests in the Borrower which
      ordinarily has voting power for the election of directors (including preferred
      stock counted on an “as converted” basis into common stock), or (2) the subject
      Related Company is not the surviving corporation or entity, or (D) whereby
      all
      or any material portion of the assets of any Related Company are sold, assigned
      or transferred (other than the transfer of the shares of TCI and PSB to the
      Trust).

     

    (vi) For
      purposes of this Section 2(g), “Subsidiary”
or
      “Subsidiaries,”
with
      respect to each Related Company, shall mean the individual or collective
      reference to any corporation, limited liability company or other entity of
      which
      50% or more of the outstanding shares of stock or other equity interests of
      each
      class having ordinary voting power and/or rights to profits (other than stock
      having such power only by reason of the happening of a contingency) is at the
      time owned beneficially or of record by such Related Company, directly or
      indirectly through one or more Subsidiaries of such Related
      Company.

     

    (vii) Notwithstanding
      anything to the contrary contained in this Section 2(g), the exercise of the
      Put
      Option shall be subject to the terms and conditions of an Intercreditor
      Agreement dated April 24, 2007 in favor of ComVest (as assignee of Harris N.A.)
      (the “Intercreditor
      Agreement”),
      which
      is incorporated herein by reference.”

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Section
      3. Parties
      in Interest; Successors and Assigns.
      This
      Amendment shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns, and nothing in this Amendment, express or
      implied, is intended to or shall confer upon any other person any right, benefit
      or remedy of any nature whatsoever under or by reason of this Amendment. Neither
      the Company nor ComVest shall assign this Amendment or any rights or obligations
      hereunder without the prior written consent of the other. Notwithstanding the
      foregoing, ComVest may assign its rights hereunder to any of its Affiliates
      to
      whom it assigns its rights under the Warrant.

     

    Section
      4. Entire
      Agreement.
      This
      Amendment constitutes the entire agreement of the parties hereto with respect
      to
      the subject matter hereof and supersedes all prior agreements and undertakings,
      both written and oral, between ComVest and the Company with respect to the
      subject matter hereof. Except as amended hereby, all terms and provisions of
      the
      Warrant shall continue and remain in full force and effect. 

     

    Section
      5. Severability.
      If any
      term or other provision of this Amendment shall be invalid or unenforceable
      in
      any jurisdiction, such invalidity or unenforceability shall not affect the
      validity or enforceability of the remainder of this Amendment or the validity
      or
      enforceability of this Amendment in any other jurisdiction.

     

    Section
      6. Governing
      Law.
      This
      Amendment shall be governed by, and interpreted in accordance with, the laws
      of
      the State of Delaware, without regard to principles governing conflicts of
      law.
      Any action or proceeding arising out of or relating to this Amendment shall
      be
      commenced in a federal or state court having competent jurisdiction in the
      State
      of Delaware, and for the purpose of any such action or proceeding, each of
      the
      Company and ComVest and any assignee of ComVest submits to the personal
      jurisdiction of the State of Delaware. The parties hereby irrevocably consent
      to
      the exclusive jurisdiction of any state or federal court in the State of
      Delaware. The parties hereby waive any objection to venue and any objection
      based on a more convenient forum in any action instituted under this
      Amendment.

     

    Section
      7. Headings.
      The
      descriptive headings of the several sections of this Amendment are inserted
      for
      purposes of reference only, and shall not affect the meaning or construction
      of
      any of the provisions hereof.

     

    Section
      8. Counterparts.
      This
      Amendment may be executed and delivered (including by facsimile or portable
      document format (pdf) transmission) in one or more counterparts, and by each
      of
      the parties hereto in separate counterparts, each of which when executed shall
      be deemed to be an original, but all of which taken together shall constitute
      one and the same agreement.

     

    [THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company and ComVest have caused this Amendment to be
      executed as of the date first written above by their respective officers
      thereunto duly authorized.

     

    
      	 	
              EVCI
                CAREER COLLEGES HOLDING CORP.

            
	 	 
	 	
              By:

            	
              /s/
                Dr. John J. McGrath

            
	 	 	
              Name:
                

            	
              Dr.
                John J. McGrath

            
	 	 	
              Title:
                

            	
              Chief
                Executive Officer and President

            
	 	 	 	 
	 	 	 	 
	 	
              COMVEST
                INVESTMENT PARTNERS III, L.P.

            
	 	 
	 	
              By:
                ComVest III Partners LLC, its General Partner

            
	 	 
	 	
              By:

            	
              /s/
                Larry E. Lenig, Jr.

            
	 	 	
              Name:
                

            	
              Larry
                E. Lenig, Jr.

            
	 	 	
              Title:
                

            	
              Authorized
                Signatory

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Schedule
      III

     

    PUT
      OPTION EXERCISE FORM

     

    (To
      be executed upon partial or full exercise
      of the Put Option pursuant to Section 2(g) of the
      Warrant)

     

    The
      undersigned hereby irrevocably elects to require EVCI Career Colleges Holding
      Corp. to purchase a portion of the Warrant No. 1 [representing the right to
      purchase ____________ Option Warrant Shares] pursuant to the Put Option
      provisions of the within Warrant, as provided for in Section 2(g) of such
      Warrant.

     

    Please
      send cash in the amount of the applicable Option Purchase Price (either by
      wire
      transfer of immediately available funds or bank or certified check of
      immediately available funds) to:

     

    (Please
      print name, address, and social security number/tax identification
      number:)

     

    Wire
      transfer instructions:

     

    (insert
      wire instructions)

     

    Please
      send a new Warrant for the right to purchase the balance remaining of the
      Warrant Shares purchasable under the within Warrant to be registered in the
      name
      of the undersigned Holder or its transferee as below indicated and delivered
      to
      the address stated below.

     

    
      
        	
                Dated:

              	
                                             
                  

              


      

    

    


    
      	
              Name
                of Warrant Holder or transferee: 

            	                         
              
	 	
              (Please
                print)

            


    

     

    
      
        	
                Address:

              	               
                
	 	 
	
                Signature: