Unassociated Document


     

    

      SECURITIES
        PURCHASE AGREEMENT

       

      This
        Securities Purchase Agreement (this “Agreement”)
        is
        dated as of April 24, 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
        (“Purchaser”).

       

      WHEREAS,
        subject to the terms and conditions set forth in this Agreement and in
        accordance with and in reliance upon the exemption from securities registration
        afforded by Section 4(2) of the Securities Act of 1933, as amended, and the
        rules and regulations of the Commission promulgated thereunder (the
“Securities
        Act”),
        including Regulation D (“Regulation
        D”),
        and/or upon such other exemption from the registration requirements of the
        Securities Act as may be available with respect to any or all of the investments
        to be made hereunder, the Company desires to issue and sell to Purchaser,
        and
        Purchaser desires to purchase from the Company on the Closing Date (i) a
        secured
        convertible note (the “Secured
        Note”),
        in a
        form attached hereto as Exhibit
        A,
        in an
        aggregate principal amount of $9,202,313 (such amount representing the principal
        amount plus the addition of prepayment of certain interest as set forth in
        Section 4.3(b) of this Agreement and reimbursement of fees and expenses of
        Purchaser in accordance with Section 5.1(b) of this Agreement), (ii) 2,374,922
        shares (the “Shares”)
        of
        common stock, $0.0001 par value per share (“Common
        Stock”),
        of
        the Company for an aggregate purchase price of $1,282,458, (iii) warrants
        to
        purchase up to 25,863,095 shares of Common Stock (the “Warrant”);

       

      WHEREAS,
        Purchaser has agreed to assist the Company in procuring a one-year letter(s)
        of
        credit (the “Letter(s)
        of Credit”)
        in an
        amount up to $6,700,000 and has further agreed to guarantee such Letter(s)
        of
        Credit, if required, with an irrevocable corporate guaranty or irrevocable
        letter of credit (the “L/C
        Guaranty”)
        in a
        form to be reasonably acceptable to Purchaser and the applicable letter(s)
        of
        credit bank;

       

      WHEREAS,
        the Board of Directors (the “Board”)
        of the
        Company, upon the unanimous recommendation of a special committee comprised
        of
        independent directors of the Company (the “Special
        Committee”),
        has
        approved this Agreement and the other Transaction Documents, including but
        not
        limited to those transactions contemplated by the Management Subscription
        Documents and the Employment Agreements, and has deemed it advisable and
        in the
        best interests of its stockholders to consummate the transactions contemplated
        hereby;

       

      WHEREAS,
        simultaneous with the execution of this Agreement, Dr. Arol I. Buntzman,
        Dr.
        John J. McGrath, Joseph D. Alperin and Stephen Schwartz (collectively, the
        “Management
        Group”)
        will
        enter into employment letters or employment agreements (collectively, the
        “Employment
        Agreements”),
        in
        the forms attached hereto as Exhibits
        B-1, B-2, B-3 and B-4,
        as the
        case may be, each effective as of the Closing, amending certain current
        employment arrangements with the Company (including, without limitation,
        any
        change of control payments possibly owed as a result of the transactions
        contemplated hereby) with the Company;

       

      WHEREAS,
        the Management Group, simultaneous with the execution of this Agreement,
        has
        entered into the Management Subscription Documents agreeing to purchase the
        Management Securities on the Closing Date;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      WHEREAS,
        simultaneous with the execution of this Agreement, the Company, Purchaser,
        each
        member of the Management Group and Harris N. A. (the “Senior
        Lender”)
        have
        entered into an Intercreditor Agreement (the “Intercreditor
        Agreement”),
        a
        copy of which is attached hereto as Exhibit
        C,
        relating to, among other things, the subordination of the Company’s obligations
        under the Notes to the Senior Debt (as such term is defined in the Intercreditor
        Agreement) and any Encumbrance securing the Company’s obligations under the
        Notes to the Senior Debt to any Encumbrance and security interest in favor
        of
        the Senior Lender;

       

      WHEREAS,
        simultaneous with the execution of this Agreement, the Company and the Senior
        Lender have agreed to further amend and restate that certain Credit Agreement,
        originally dated as of September 16, 2005, as amended and restated as of
        March
        31, 2006 and further amended as of April 30, 2006 and June 26, 2006 (as so
        amended and restated, the “Credit
        Agreement”),
        on
        commercially reasonable terms acceptable to each of the Company, the Senior
        Lender and Purchaser (as so further amended and restated on the date hereof,
        the
“Amended
        and Restated Credit Agreement”);
        and

       

      WHEREAS,
        the Company has agreed to seek stockholder approval for an amendment to the
        Company’s certificate of incorporation to increase the Company’s authorized
        Common Stock to accommodate the issuance of the Conversion Shares and the
        Warrant Shares upon full conversion of the Secured Note and exercise of the
        Warrant, as the case may be, in excess of the Available Capitalization
        (including the filing of such amendment in the State of Delaware, the
“Share
        Authorization”).

       

      NOW,
        THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
        and for other good and valuable consideration the receipt and adequacy of
        which
        are hereby acknowledged, the Company and Purchaser agree as
        follows:

       

      ARTICLE
        I.

      DEFINITIONS

       

      1.1   Definitions

       

      .
        In
        addition to the terms defined elsewhere in this Agreement, for all purposes
        of
        this Agreement, the following terms have the meanings indicated in this Section
        1.1:

       

      “Action”
means
        any claim, action, suit, arbitration, mediation, inquiry, action, proceeding
        or
        investigation by or before any Governmental Authority.

       

      “Advisory
        Fee”
shall
        have the meaning set forth in Section 5.2.

       

      “Affiliate”
means,
        with respect to any specified Person, any other Person that directly, or
        indirectly through one or more intermediaries, controls, is controlled by,
        or is
        under common control with, such specified Person.

       

      “Agreement”
shall
        have the meaning set forth in the Preamble.

       

      “Amended
        and Restated Credit Agreement”
shall
        have the meaning set forth in the Recitals.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      “Available
        Capitalization”
shall
        mean the number of authorized but unissued shares of Common Stock of the
        Company
        immediately prior to the Closing less (i) the Shares and the shares of Common
        Stock of the Company purchased by the Management Group at the Closing pursuant
        to the Management Subscription Documents, (ii) the L/C Shares, (iii) 362,592
        shares of Common Stock that are reserved for issuance upon currently outstanding
        options and warrants as set forth in Section 3.1(c)(i), (iv) 2,157,113 Shares
        of
        Common Stock that are reserved for issuance upon stock options to be issued
        pursuant to the Employment Agreements, (v) 1,000,000 shares of Common Stock
        that
        are reserved for issuance upon exercise of the Warrant, and (vi) 1,000,000
        shares of Common Stock that are reserved for issuance under Company stock
        options relating to grants to a new director appointed to the Board in
        accordance with the Company’s governing documents.

       

      “Board”
shall
        have the meaning set forth in the Recitals.

       

      “Board
        Recommendation”
shall
        have the meaning set forth in Section 4.15.

       

      “Business
        Day”
means
        any day that is not a Saturday, a Sunday or other day on which banks are
        required or authorized by Law to be closed in The City of New York.

       

      “Claims”
means
        any and all administrative, regulatory or judicial actions, suits, petitions,
        appeals, demands, demand letters, claims, Encumbrances, notices of noncompliance
        or violation, investigations, Actions, consent orders or consent
        agreements.

       

      “Closing”
shall
        have the meaning set forth in Section 2.1(a).

       

      “Closing
        Date”
shall
        have the meaning set forth in Section 2.1(a).

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended from time to time.

       

      “Commission”
means
        the Securities and Exchange Commission.

       

      “Common
        Stock”
shall
        have the meaning set forth in the Recitals.

       

      “Common
        Stock Equivalents”
means
        any securities of the Company or the Subsidiaries which would entitle the
        holder
        thereof to acquire at any time Common Stock, including without limitation,
        any
        debt, preferred stock, rights, options, warrants or other instrument that
        is at
        any time convertible into or exchangeable for, or otherwise entitles the
        holder
        thereof to receive, Common Stock.

       

      “Company”
shall
        have the meaning set forth in the Preamble.

       

      “Company
        Counsel”
means
        Phillips Nizer LLP with offices located at 666 Fifth Avenue, New York, New
        York
        10103.

       

      “Company
        Indemnified Party”
shall
        have the meaning set forth in Section 4.8(b).

       

      “Company
        Intellectual Property”
means
        Intellectual Property owned by the Company or any Subsidiary.