Document:

trtx-ex1038_556.htm

Exhibit 10.38

REIT Grant Form

 

TPG RE FINANCE TRUST, INC. 

2017 EQUITY INCENTIVE PLAN

 

Restricted Stock Award Agreement

(For Non-Management Directors)

TPG RE Finance Trust, Inc., a Maryland corporation (the “Company”), hereby grants to [●] (the “Holder”) as of [●], 20[●] (the “Grant Date”), pursuant to the terms and conditions of the TPG RE Finance Trust, Inc. 2017 Equity Incentive Plan (the “Plan”), a restricted stock award (the “Award”) of [●] shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), upon and subject to the restrictions, terms, and conditions set forth in the Plan and this agreement (this “Agreement”).

1.Award Subject to Acceptance of Agreement.  The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company.

2.Rights as a Stockholder.  Except as otherwise provided in this Agreement, the Holder shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends, and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock, other than a regular cash dividend, shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.

3.Restriction Period and Vesting.

3.1Service-Based Vesting Condition.  Except as otherwise provided in this Section 3, the Award shall vest in its entirety on [●], provided the Holder continues to serve as a director of the Company through the applicable vesting date. The period of time prior to the vesting shall be referred to herein as the “Restriction Period.”

3.2Change in Control.  Upon a Change in Control, the Award shall be subject to Section 6.8 of the Plan.

3.3Termination of Service as a Director.  If the Holder’s service as a director of the Company terminates prior to the end of the Restriction Period for any reason other than death or Disability, then the portion of the Award that was not vested immediately prior to such termination of service as a director of the Company shall be immediately forfeited by the Holder and cancelled by the Company.  The foregoing vesting schedule notwithstanding, if the Holder’s continuous service terminates due to the Holder’s death or Disability, 100% of the unvested portion of the Award shall vest as of the date of such termination.  For purposes of this Award, “Disability” means, as determined by the Board or the Committee in its sole discretion exercised in good faith, a physical or mental impairment of sufficient severity that the Holder is unable to 

 

 

perform the essential functions of his duties as a director of the Company for three (3) consecutive months or three (3) months during any twelve (12)-month period.  

4.Book Entry; Certificates.  The Company shall recognize the Holder’s ownership through uncertificated book entry. If elected by the Company, certificates evidencing the Common Stock granted hereunder may be issued by the Company, and any such certificates shall be registered in the Holder’s name on the stock transfer books of the Company promptly after the date hereof, but shall remain in the physical custody of the Company or its designee at all times prior to the later of (a) the vesting of the Award pursuant to this Agreement and (b) the expiration of any transfer restrictions set forth in this Agreement or otherwise applicable to the Common Stock subject to the Award. As soon as practicable following such time, any certificates for the Common Stock subject to the Award shall be issued to the Holder or to the Holder’s legal guardian or representative, along with the stock powers relating thereto. No certificates shall be issued for fractional shares. To the extent required by the Company, the Holder shall deliver to the Company a stock power, duly endorsed in blank, relating to any portion of the Award that has not previously vested. However, the Company shall not be liable to the Holder for damages relating to any delays in issuing the certificates (if any) to the Holder, any loss by the Holder of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.

5.Nontransferability of Award.  Prior to the date on which shares of Common Stock subject to this Award have become vested pursuant to Section 3, such shares of Common Stock may not be offered, sold, transferred, assigned, pledged, hypothecated, encumbered, or otherwise disposed of (whether by operation of law or otherwise) by the Holder or be subject to execution, attachment, or similar process, except for transfers (i) by will, the laws of descent and distribution, or pursuant to beneficiary designation procedures approved by the Company, or (ii) to the Holder’s family members, a trust or entity established by the Holder for estate planning purposes, or a charitable organization designated by Holder or pursuant to a qualified domestic relations order, in each case, without consideration. Any attempt to so sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of such shares of Common Stock other than as permitted hereunder shall be null and void.

6.Investment Representation.  The Holder hereby represents and covenants that (a) any share of Common Stock acquired pursuant to this Agreement will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares of Common Stock shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share of Common Stock, as applicable. As a further condition precedent to the delivery to the Holder of any shares of Common Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over 

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the issuance or delivery of the shares of Common Stock and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

7.Additional Terms and Conditions of Award.

7.1Withholding Taxes.  To the extent applicable:

(a)The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock upon the vesting of the Award, payment by the Holder of such Award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such Award (the “Required Tax Payments”).

(b)The Holder may satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, (3) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered, or an amount of cash which would otherwise be payable to the Holder, having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments or (4) any combination of (1), (2) and (3).   If shares of Common Stock are used to pay all or part of such withholding tax obligation, the number of shares of Common Stock which may be withheld, surrendered, or reduced shall be limited to the number of shares of Common Stock which have a Fair Market Value on the date of withholding, surrender, or reduction equal to the aggregate amount of such liabilities based on the greatest statutory withholding rates for federal, state, foreign, and/or local tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment with respect to such Award, as determined by the Committee.  Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the Holder.  Notwithstanding any action the Company takes with respect to any or all Required Tax Payments, the ultimate liability for all Required Tax Payments is and remains the Holder’s responsibility, and the Company (a) makes no representation or undertakings regarding the treatment of any Required Tax Payments in connection with the grant or vesting of the Restricted Stock or the subsequent sale of any shares and (b) does not commit to structure the Restricted Stock to reduce or eliminate the Holder’s liability for Required Tax Payments. 

7.2Adjustment.  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the terms of this Award, including the number and class of securities subject hereto, shall be appropriately adjusted by the Board. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Board (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the 

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surviving corporation) to prevent dilution or enlargement of rights of participants. The decision of the Board regarding any such adjustment shall be final, binding and conclusive.

7.3Compliance with Applicable Law.  The Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the vesting or delivery of shares of Common Stock hereunder, the shares of Common Stock subject to the Award shall not vest or be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

7.4Award Confers No Rights to Continued Service.  In no event shall the granting of the Award or its acceptance by the Holder, or any provision of the Agreement or the Plan, give or be deemed to give the Holder any right to continued service as a director of the Company, any Subsidiary or any affiliate of the Company, including the Manager, or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company, including the Manager, to terminate the employment or service of any person at any time.

7.5Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by the Holder or by the Company forthwith to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on all parties.

7.6Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Holder and his or her heirs, executors, administrators, successors, and assigns.

7.7Section 83(b) Election.  By accepting this Agreement, Holder acknowledges his or her understanding that Holder may file with the Internal Revenue Service an election pursuant to section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”) (a “Section 83(b) Election”), no later than 30 days after the Grant Date, to include in his or her gross income the fair market value of the unvested shares of Common Stock subject to the Award as of the Grant Date. Before filing a Section 83(b) Election with the Internal Revenue Service, the Holder shall (i) notify the Company of such election by delivering to the Company a copy of the fully-executed Section 83(b) Election Form attached hereto as Exhibit A, and (ii) pay to the Company an amount sufficient to satisfy any taxes or other amounts required by any governmental authority to be withheld or paid over to such authority with respect to such unvested shares of Common Stock, or otherwise make arrangements satisfactory to the Company for the payment of such amounts through withholding or otherwise.

7.8Notices.  All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to TPG RE Finance Trust, Inc., Attn: Deborah J. Ginsberg, at 888 Seventh Avenue, 35th Floor, New York, New York, 10106, and if to the 

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Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mail or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

7.9Governing Law.  This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Maryland and construed in accordance therewith without giving effect to principles of conflicts of laws.

7.10Agreement Subject to the Plan.  This Agreement is subject to the provisions of the Plan, and shall be interpreted in accordance therewith. The Holder hereby acknowledges receipt of a copy of the Plan, and by signing and returning this Agreement to the Company, at the address stated herein, it agrees to be bound by the terms and conditions of this Agreement and the Plan.

7.11Entire Agreement.  The Plan is incorporated herein by reference. Capitalized terms not defined herein shall have the meanings specified in the Plan. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.

7.12Partial Invalidity.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.

7.13Amendment and Waiver.  The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect, or enforceability of this Agreement.

7.14Counterparts.  This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

 

 

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TPG RE FINANCE TRUST, INC.

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
Name:

	
 
	
 
	
Title:

 

 

	
Accepted this [●]th day of [●], 20[●]

	
 
	
 
	
 

	
[●]
	
 
	
 

 

 

Signature Page to Restricted Stock Award Agreement

ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY
IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)

The undersigned hereby elects pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), to include the value of the property described below in gross income in the year of transfer and supplies the following information in accordance with the regulations promulgated thereunder:

1.The name, address and taxpayer identification number of the undersigned are:

[Name]

[Address]

[Social Security Number]

 

2.Description of the property with respect to which the election is being made:

__________ shares of Common Stock of TPG RE Finance Trust, Inc., a Maryland corporation, granted to the undersigned as restricted stock.

 

	
3.
	
The date on which the property was transferred is [insert grant date] (the “Grant Date”).

The taxable year to which this election relates is calendar year [___]

 

4.The nature of the restrictions to which the property is subject is:

The property shall vest in its entirety on the one-year anniversary of the Grant Date, provided the taxpayer continues to serve as a director of TPG RE Finance Trust, Inc. through the applicable vesting date, except in the case of death or disability, in which case, the property shall become 100% vested upon the termination of the taxpayer’s services.

 

5.Fair market value:

The fair market value (determined without regard to any restrictions) of the property with respect to which this election is being made was $[_____] per share at the time of transfer.

 

6.Amount paid for property:

The taxpayer has paid $0 for the property.

 

7.Furnishing statement to employer:

A copy of this statement has been furnished to TPG RE Finance Trust, Inc.

	
Dated:
	
 
	
 
	
 
	
 

 

A-1Exhibit 10.1

SECOND AMENDMENT TO CREDIT AGREEMENT

 

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of this 23rd day of February, 2018 by and between LINCOLN EDUCATIONAL SERVICES CORPORATION, a New Jersey corporation; 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, jointly and severally, 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, as amended by that certain First Amendment to Credit Agreement by and among Borrower and the Bank dated as of November 29, 2017 (as the same has been and may be amended from time to time, 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”), (ii) that certain line of credit facility in the amount of $25,000,000 (“Facility 2”), and (iii) that certain line of credit facility in the amount of $15,000,000 (“Facility 3”)  (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 $25,000,000.00.

 

B.        Borrower has requested that Lender modify the terms of the Credit Agreement to, among other things, (i) revise and/or delete certain financial covenants, and (ii) allow for Borrower to sell certain real property located in the State of Florida and the real property collateral serving as security for the Loans, and Lender has agreed to such modifications to the Credit Agreement in accordance with and subject to the terms and conditions hereof.

 

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:

 

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The definitions of “Adjusted EBITDA” and “Revolving Maturity Date” are hereby deleted in their entirety and the following inserted in place thereof:

 

“Adjusted EBITDA” means, for the period under review, for the Borrower on a consolidated basis, an amount equal to Net Income for such period plus the following, to the extent deducted in calculating such Net Income:  costs associated with school closings (limited to an aggregate sum of $6,000,000 as incurred during the 2017 Fiscal Year and amounts to be approved by the Bank in any fiscal period thereafter) and other one-time charges with the Bank’s approval; the amount of depreciation and amortization expense for such period; with the Bank’s consent, impairment of goodwill and long-lived assets for such period; Interest Expense; the provision for federal, state, local and foreign income taxes payable for such period; other non-cash expenses related to stock-based compensation and pension expense for such period, in each case as determined in accordance with GAAP; and severance costs (limited to an aggregate sum of $1,000,000 incurred during the 2018 Fiscal Year).

 

“Revolving Maturity Date” means, as to Facility 1 and Facility 2, May 31, 2020, as to Facility 3, May 31, 2019, or, for each Facility, such earlier date upon which the Revolving Facility shall terminate or the Revolving Facility shall otherwise equal zero.

 

The following definition of “Funded Debt” is hereby added to Section 1.1 of the Credit Agreement:

 

“Funded Debt” means, at any date, the aggregate principal amount of total Indebtedness of the Borrower minus Indebtedness of the Borrower secured by cash.

 

4.         Facility 1 Interest Rate.  Section 3.1(A)(a)(i) of the Credit Agreement is hereby deleted in its entirety and the following inserted in place thereof:

 

“Facility 1.  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 Tranche A of Facility 1 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 2.85%, and (y) 6.00%.  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 of the Credit Agreement shall remain unchanged and in full force and effect.

 

5.         Financial Covenants. The Borrower has requested, and the Bank has agreed, to modify certain of said financial covenants as set forth below.

 

A)  Section 7.18(b) of the Credit Agreement entitled “Minimum Adjusted EBITDA” is deleted in its entirety and the following inserted in place thereof:

 

“(b) Minimum Adjusted EBITDA.  The Borrower shall maintain a minimum Adjusted EBITDA, tested quarterly on a rolling twelve month basis, as follows:

 

	
1Q17

	 	 	
$

	
10,000,000

	 
	
2Q17

	 	 	
$

	
7,000,000

	 
	
3Q17

	 	 	
$

	
7,000,000

	 
	
4Q17

	 	 	
$

	
10,000,000

	 
	
1Q18

	 	 	
$

	
6,000,000

	 
	
2Q18

	 	 	
$

	
6,000,000

	 
	
3Q18

	 	 	
$

	
5,000,000

	 
	
4Q18

	 	 	
$

	
6,000,000

	 
	
1Q19

	 	 	
$

	
7,000,000

	 
	
2Q19

	 	 	
$

	
7,000,000

	 
	
3Q19

	 	 	
$

	
7,000,000

	 
	
4Q19

	 	 	
$

	
7,000,000

	 
	
1Q20

	 	 	
$

	
8,000,000”

	 

 

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B) Section 7.18(c) of the Credit Agreement entitled “Minimum Tangible Net Worth” is deleted in its entirety.

 

C) Section 7.18(d) of the Credit Agreement entitled “No Net Loss” is deleted in its entirety and the following inserted in place thereof:

 

“(d) No Net Loss.  The Borrower shall suffer no Net Loss, at any time, as determined in accordance with GAAP, commencing December 31, 2019 and tested annually at each Fiscal Year end thereafter.”

 

D) There shall be added to the Credit Agreement a new Section 7.18(e) entitled “Minimum Funded Debt to Adjusted EBITDA Ratio” as follows:

 

“(e) Minimum Funded Debt to Adjusted EBITDA Ratio.  The Borrower shall maintain a minimum Funded Debt to Adjusted EBITDA Ratio, tested quarterly, as follows:

 

	
1Q18

	 	 	 	
5.00 to 1.00

	 
	
2Q18

	 	 	 	
5.00 to 1.00

	 
	
3Q18

	 	 	 	
5.00 to 1.00

	 
	
4Q18

	 	 	 	
5.00 to 1.00

	 
	
1Q19

	 	 	 	
4.00 to 1.00

	 
	
2Q19

	 	 	 	
4.00 to 1.00

	 
	
3Q19

	 	 	 	
4.00 to 1.00

	 
	
4Q19

	 	 	 	
4.00 to 1.00

	 
	
1Q20

	 	 	 	
3.00 to 1.00

	 

Compliance with this covenant shall be determined on a rolling twelve month basis and shall be measured commencing as of the fiscal quarter ended March 31, 2018.”

 

6.         Sale of Mortgaged Property.  Section 7.6 of the Credit Agreement is hereby modified to add the following Section 7.6(J):

 

“(j) the arm’s-length sale of the property owned by NEIT located at 1126 53rd Court North, Mangonia Park, Palm Beach County, Florida (the “Florida Property”) or any Mortgaged Property at an approximate market sales price acceptable to the Bank so long as the appropriate Borrower applies the net proceeds (i.e., all gross sales proceeds less customary and reasonable closing costs and expenses) of any such sale to repay a corresponding amount of the outstanding principal balance under Facility 1 immediately upon receipt of such net proceeds, which repayment of principal shall permanently reduce the amount available under Facility 1.”

 

7.         Negative Pledge.  As a material inducement to the Bank to enter into this Amendment and in consideration for the Bank’s agreement to modify the financial covenants contained in the Credit Agreement as set forth herein, to permit the sale of Mortgaged Property and the Florida Property subject to the terms set forth herein:

 

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(a)       approximately simultaneously herewith, NEIT shall execute and deliver to the Bank (and permit the Bank to record on the applicable land records) that certain Negative Pledge Agreement (the “Negative Pledge Agreement”) in connection with the Florida Property, wherein NEIT agrees, among other things, that it will not create, incur, assume, or suffer to exist, or permit any Subsidiary or Affiliate to create, incur, assume, or suffer to exist, any lien, encumbrance, security interest, mortgage, pledge, claim, assignment, hypothecation, or change of any kind upon or with respect to any of its right, title or interest in and, or otherwise related, to the Florida Property, including, without limitation, any and all rights in any improvements or appurtenances thereon or therein, or any other personalty related there, now owned or hereafter acquired;

 

(b)       The Borrower shall actively pursue the sale of the Florida Property; provided, however, in the event the Florida Property is not subject to a contract of sale acceptable to the Bank within six (6) months from the date of this Amendment, NEIT shall execute and deliver to the Bank a mortgage and security agreement (the “Mortgage”), constituting a first-priority mortgage lien on the Florida Property as security for the Obligations, and simultaneously therewith or prior to the execution thereof, provide to the Bank, at the Borrower’s sole cost and expense, an appraisal of the Florida Property, insurance on the Florida Property, a survey of the Florida Property, environmental assessments, as required by the Bank, and title insurance, all in form and content reasonably acceptable to the Bank. Borrower shall be responsible for all of the Bank’s fees and expenses incurred in connection with placing such mortgage lien on the Florida Property, including without limitation the reasonable fees and expenses of Bank’s counsel. The Mortgage shall be cross defaulted with each Loan Document; accordingly, the occurrence of (i) an Event of Default under the Mortgage shall constitute an Event of Default under each Loan Document and (ii) an Event of Default under any Loan Document shall constitute an event of default under the Mortgage.  In the event an amendment to the Credit Agreement is deemed to be necessary in connection with such Mortgage, as determined by the Bank, the Borrower agrees to cooperate with the Bank in effectuating same and to pay all reasonable costs and expenses of the Bank in connection therewith (including reasonable attorney’s fees and expenses).

 

8.         Conditions to Advances under Facility 3. Section 5.2 of the Credit Agreement entitled “Each Revolving Loan or Letter of Credit” is hereby modified to add the following additional provision 5.2(f):

 

“(f) with respect to advances under Facility 3, the Bank shall have received an opinion letter, in form and content reasonably satisfactory to the Bank, from Borrower’s regulatory counsel, that opines (whether by making reference to any existing authoritative guidance from an applicable Educational Agency or Government Authority or otherwise), that Borrower’s practice of borrowing under the Loan facilities for the purposes of evidencing liquidity and compliance with applicable laws, is not in violation of applicable law, including without limitation, laws and regulations of any U.S. Government Authority or Educational Agency, including without limitation the United States Government Accountability Office and the DOE.”

 

9.         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.

 

10.       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.

 

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11.       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)        Each Borrower shall have delivered to the Bank this Amendment duly executed by an authorized officer of each Borrower;

 

(b)        NEIT shall have delivered to the Bank the Negative Pledge Agreement duly executed by an authorized officer of such Borrower;

 

(c)        Borrower shall have paid to the Bank a modification fee of $50,000.00 in good and available funds;

 

(d)        Each Borrower shall have delivered to the Bank resolutions of its board of directors or other governing body authorizing the execution and delivery to the Bank of this Amendment and, in the case of NEIT, the resolutions shall authorize the execution and delivery of the Negative Pledge Agreement and permit the Bank to record the Negative Pledge Agreement in the applicable land records; and

 

(e)        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.

 

12.       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 herewith, including the preparation of this Amendment, and certain other loan administrative matters related to the Loan Documents.

 

13.       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.

 

14.       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.

 

15.       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.

 

16.        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.

 

17.        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

 

6

	 	
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

 

 

7

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