Document:

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:EXHIBIT
      10.8

     

    FORBEARANCE
      AGREEMENT

     

    THIS
      FORBEARANCE AGREEMENT (the "Agreement"),
      dated
      as of this 31st
      day of
      December, 2007, by and among EVCI Career Colleges Holding Corp., a Delaware
      corporation ("Borrower"),
      the
      direct and indirect Subsidiaries of Borrower from time to time party to this
      Agreement, as Guarantors, and ComVest Investment Partners III, L.P.
      ("Lender").

     

    BACKGROUND

     

    A. Borrower,
      Interboro Institute, Inc. ("Interboro"),
      Interboro Holding, Inc. ("Holding"),
      Pennsylvania School of Business, Inc. ("PSB"),
      Technical Career Institutes, Inc. ("TCI"
      and
      together with Interboro, Holding and PSB, the "Guarantors")
      and
      Harris N.A. entered into a Credit Agreement dated as of September 16, 2005
      (the
"Original
      Credit Agreement")
      pursuant to which Harris N.A. made available to Borrower a term loan in the
      original principal amount of $13,000,000 and a revolving credit facility in
      the
      maximum principal amount of $3,000,000. Borrower, Guarantors and Harris N.A.
      entered into an Amended and Restated Credit Agreement dated as of September
      16,
      2005 and amended and restated as of March 31, 2006 (the "Amended
      Credit Agreement")
      pursuant to which, among other things, the revolving credit facility was reduced
      to $2,000,000 and Harris N.A. waived certain Existing Events of Default (as
      such
      term was defined therein). Borrower, Guarantors and Harris N.A. entered into
      a
      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, 2006 (as so amended and as amended hereby and from time to time
      hereafter, the "Credit
      Agreement")
      pursuant to which, among other things, the revolving credit facility was
      increased to $5,000,000, Harris N.A. waived certain Existing Events of Default
      (as such term was defined therein) and Harris N.A. consented to the issuance
      of
      notes and warrants to Lender and other note purchasers pursuant to a Securities
      Purchase Agreement dated as of April 24, 2006 (the "Purchase
      Agreement")
      between
      ComVest and Borrower.

     

    B. On
      the
      date hereof, Lender has purchased from Harris N.A. all of Harris N.A.’s right,
      title and interest in and to the Credit Agreement, all related Loan Documents,
      and all obligations of the Borrower and the Guarantors thereunder.

     

    C. The
      Borrower's obligations to the Lender are secured by, among other things, a
      security interest in all of the property of the Borrower and each Guarantor.
      

     

    D. Events
      of
      Default under the Credit Agreement have occurred and are continuing, including
      without limitation, Events of Default under Section 9.1(j) and (o) relating
      to
      Borrower's stated inability to pay its debts as they come due and occurrences
      which have had a Material Adverse Effect. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    E. The
      Borrower and the Lender have conducted discussions regarding the Loans, without
      prejudice to or waiver by the Lender of the existing Events of Default and
      any
      of its rights and remedies. The Lender has at all times reserved its right
      to
      exercise its remedies at any time. The Borrower acknowledges that, prior to
      giving effect to this Agreement: (1) the Lender may declare at any time that
      all
      amounts under the Loans are due and payable in full and (2) the Lender is
      entitled, at this time, without further notice or demand, to exercise its
      remedies.

     

    F. The
      Borrowers have requested that the Lender: (1) forbear from exercising its rights
      and remedies with respect to all existing Events of Default, (2) defer principal
      payments until the Maturity Date of the Loans, (3) consent to the incurrence
      of
      additional Indebtedness for Borrowed Money to Lender (the “Additional
      Indebtedness”),
      and
      (4) make such other amendments and modifications to the Credit Agreement set
      forth herein.

     

    F. The
      Lender has agreed, subject to the terms and conditions set forth herein, to
      forbear with respect to the Events of Default set forth on Schedule 2 attached
      hereto (the “Existing
      Events of Default”),
      to
      defer principal payments until the Maturity Date of the Loans, to consent to
      the
      Additional Indebtedness and to make such other amendments and modifications
      to
      the Credit Agreement set forth herein.

     

    NOW
      THEREFORE, the parties hereto, incorporating the foregoing Background by
      reference as if fully set forth below, in consideration of their mutual
      covenants contained herein and intending to be legally bound hereby, agree
      as
      follows:

     

    ARTICLE
      I

     

    AMENDMENTS
      TO CREDIT AGREEMENT

     

    SECTION
      1.1 No
      Further Obligations to Make Loans.
      Borrowers acknowledge and agree that the Lender has and shall have no further
      obligation to make any further Loans under the Credit Agreement, including
      without limitation, any further Disallowance Advance. Any Loans made by the
      Lender after the occurrence of the Existing Events of Default and/or after
      the
      date hereof shall not constitute a waiver of any Existing Events of Default
      and
      shall be without prejudice to the Lender's right to refuse to make any further
      Loans under and in accordance with the Credit Agreement.

     

    SECTION
      1.2 The
      Amendments.
      Subject
      to the satisfaction of the terms and conditions set forth herein, the Credit
      Agreement is hereby amended as follows:

     

    (a) Section
      1.8(a) of the Credit Agreement is hereby amended in its entirety to read as
      follows:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (a)  Scheduled
      Payments of Term Loans.
      Borrower
      shall repay the Term Loans plus all accrued and unpaid interest thereon and
      any
      other amount due and payable hereunder on March 31, 2009, the final maturity
      thereof.

     

    (b) Section
      1.8(b) of the Credit Agreement is hereby amended in its entirety to read as
      follows:

     

    (b) Revolving
      Loan.
      Borrower shall pay the Revolving Loan principal balance as of December 31,
      2007,
      plus all accrued and unpaid interest thereon and any other amount due and
      payable hereunder, on March 31, 2009.

     

    (c) Section
      1.9(b) of the Credit Agreement shall not apply to any proceeds of the Additional
      Indebtedness received by the Borrower or the Guarantors.

     

    (d) The
      following definition contained in Section 5.1 of the Credit Agreement is hereby
      amended to read as follows:

     

    "Loan
      Documents"
      means
      this Agreement, the Notes, the Applications, the Collateral Documents, the
      Guaranties, the Intercreditor Agreement, the Forbearance Agreement and all
      other
      agreements and instruments extending, renewing, refinancing or refunding any
      indebtedness, obligation or liability arising under any of the foregoing, in
      each case as the same may be amended, modified or supplemented from time to
      time
      hereafter and any other agreement, instrument or document executed in connection
      herewith or in connection with the Forbearance Agreement.

     

    (e) Section
      5.1 of the Credit Agreement is hereby amended to incorporate the following
      definitions, which shall read as follows:

     

    "Additional
      Comvest Documents"
      means
      those certain loan documents of even date herewith among the Borrower, the
      Guarantors and Lender.

     

    "Forbearance
      Agreement"
      means
      the Forbearance Agreement among the Borrower, the Guarantors and Lender dated
      December 31, 2007.

     

    (f) Upon
      the
      consummation of any Restructuring (as such term is defined in Section 1(g)
      below), the Borrower and the Guarantors shall cause the Business Trust (as
      such
      term is defined in Section 2.2(c) below) to become a Guarantor under the Credit
      Agreement pursuant to a joinder agreement in form and substance satisfactory
      to
      the Lender, and to join in, become a party to and agree to be bound by the
      Security Agreement (including, without limitation, the grant thereunder by
      the
      Business Trust of Liens on all of its assets) pursuant to a joinder agreement
      in
      form and substance satisfactory to the Lender.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (g) Any
      Events of Default pursuant to Sections 8.7 and 8.8 as a result of any
“Restructuring” under and as defined in the loan agreements evidencing the
      Additional Indebtedness (“Restructuring”)
      shall
      be considered Existing Events of Default.

     

    (h) Section
      8.21 and 8.22 of the Credit Agreement are hereby amended in their entirety
      to
      read as follows:

     

    Section
      8.21 Financial Covenants.

     

    (a) Intentionally
      Omitted.
      

     

    (b) Intentionally
      Omitted

     

    (c) Intentionally
      Omitted.

     

    (d) Intentionally
      Omitted 

     

    Section
      8.22  Payments
      to Junior Creditor.
      Excluding payments made on the Closing Date from the proceeds of the Notes
      and
      interest payments expressly permitted under the immediately following sentence,
      Borrower shall not make any cash payment on the notes issued under the Purchase
      Agreement or any other Indebtedness to any Junior Creditor (as such term is
      defined in the Intercreditor Agreement) prior to March 31, 2009. Borrower may
      pay interest to Junior Creditor at any time through the issuance of additional
      notes on substantially the same terms as the notes issued under the Purchase
      Agreement on the Closing Date.

     

    SECTION
      1.4 Modification
      of Loan Documents.
      The
      provisions contained in this Article I modify and supersede any contrary
      provisions contained in the Credit Agreement and the other Loan Documents.
      Except for the modifications contained herein, the Credit Agreement and the
      other Loan Documents remain in full force and effect.

     

    ARTICLE
      II

     

    THE
      FORBEARANCE COVENANT

     

    SECTION
      2.1 The
      Forbearance.
      Borrowers acknowledge and agree that the Lender shall have the free and
      unrestricted right, at any time and from time to time, to exercise any and
      all
      rights available to the Lender under the Credit Agreement and the other Loan
      Documents; provided, however, that unless and until a Forbearance Default (as
      hereinafter defined) shall occur, the Lender shall not, prior to December 31,
      2008, exercise or attempt to exercise any right or remedy otherwise available
      to
      the Lender after the occurrence of an Event of Default with respect to the
      Loan
      Documents, including, without limitation, filing any action or proceeding
      against Borrower or any Guarantor, foreclosing or executing upon or seeking
      to
      foreclose or execute upon the collateral or any part thereof whether in a
      judicial or nonjudicial proceeding (the forbearance from such actions by the
      Lender, subject to the terms and conditions of this Agreement, being herein
      referred to as the "Forbearance
      Covenant").
      Borrowers expressly acknowledge and agree, however, that from and after January
      1, 2009 or such earlier date as a Forbearance Default may occur, the Lender
      shall have the right, at any time and from time to time, to exercise any and
      all
      rights and remedies available to it under the Loan Documents or hereunder and
      against or with respect to the collateral, at law and in equity, without notice
      to Borrowers and without the passage of any grace or cure period notwithstanding
      anything to the contrary set forth in the Loan Documents, to the same extent
      as
      the Lender would be entitled if the Forbearance Covenant had never been part
      of
      this Agreement.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.2 Forbearance
      Defaults.
      For the
      purposes of the Forbearance Covenant, each of the following shall constitute
      a
"Forbearance
      Default":

     

    (a) any
      Event
      of Default occurs under and as defined in the Loan Documents, except for the
      Existing Events of Default; or

     

    (b) any
      Event
      of Default occurs under and as defined in Section 6.1 of this Agreement;
      or

     

    (c) the
      Borrower fails to (i) enter into a stock or asset purchase agreement providing
      for the sale of the stock or assets of TCI, PSB and/or the business trust
      participating in any Restructuring (the “Business
      Trust”)
      with a
      purchase price no less than the amount necessary to pay the Obligations in
      full
      on or before April 1, 2008, or (ii) hire an investment banker reasonably
      acceptable to the Lender on or before April 1, 2008, to conduct a process for
      the sale of TCI, PCB and/or the Business Trust within a time frame reasonably
      calculated in order that, not later than November 30, 2008, a definitive
      agreement with a financially capable buyer(s) (who shall be reasonably
      satisfactory to the Lender) and containing no financing contingency can be
      expected to be executed and delivered for the sale(s) of TCI, PSB and/or the
      Business Trust (provided that the closing of any such transaction may be subject
      to obtaining applicable regulatory approvals); or

     

    (d) Borrower
      or the Guarantors do not enter into a stock or asset purchase agreement
      providing for the sale of the stock or assets of TCI and/or PSB to a financially
      capable buyer with a purchase price no less than the amount necessary to pay
      the
      Obligations in full on or before November 30, 2008. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES

     

    Borrower
      and Guarantors hereby make the following representations and warranties to
      the
      Lender which shall be true and correct on and as of the date
      hereof:

     

    SECTION
      3.1 No
      Waiver of Existing Events of Default. The
      Existing Events of Default have occurred and are continuing under the Loan
      Documents. Neither this Agreement nor any actions taken by any of the parties
      pursuant to this Agreement shall be deemed to cure the Existing Events of
      Default or any other existing Defaults or Events of Default under the Loan
      Documents or shall be deemed to be a waiver by the Lender of the Existing Events
      of Default or any other existing Defaults or Events of Default under the Loan
      Documents or of any rights or remedies in connection therewith or with respect
      thereto, it being the intention of the parties hereto that the obligations
      of
      Borrower and Guarantors are and shall remain in default notwithstanding this
      Agreement; and except as set forth herein to the contrary, that the Lender
      reserves all rights and remedies under the Loan Documents, at law and in equity,
      in connection with such defaults and any future defaults. 

     

    SECTION
      3.2 Other
      Creditors.
      Neither
      the execution and delivery of this Agreement nor the performance of any actions
      required hereunder or described herein is being consummated by Borrower or
      Guarantors with or as a result of any actual intent by Borrower or Guarantors,
      to hinder, delay or defraud any entity to which Borrower or Guarantors, are
      now
      or will hereafter become indebted.

     

    SECTION
      3.3 Material
      Inducement.
      Borrower and Guarantors acknowledge and agree that the representations,
      warranties, covenants and agreements of Borrower and Guarantors contained in
      this Agreement are a material part of the consideration received by the Lender;
      are a material inducement to the Lender for the execution and delivery by the
      Lender of this Agreement; are made with the intent that the Lender rely upon
      them and the understanding that the Lender is relying upon them and that such
      reliance by the Lender is reasonable.

     

    SECTION
      3.4 Existing
      Events of Default.
      The
      Existing Events of Default are the only Events of Default existing as of the
      date of this Agreement. Moreover, Borrower and Guarantors are not aware of
      any
      potential for the occurrence of any further Events of Default other than
      continuance of the Existing Events of Default.

     

    SECTION
      3.5 No
      Defenses.
      Borrower and Guarantors hereby confirm that they have no set-offs, defenses
      or
      counterclaims to enforcement of the indebtedness evidenced by the Loan
      Documents.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

     

    COVENANTS
      OF BORROWER AND GUARANTORS

     

    So
      long
      as any indebtedness owing to the Lender under the Loan Documents is outstanding,
      and unless compliance with this Article IV (or any part hereof) is waived by
      the
      Lender in writing in advance of any violation of any of the covenants contained
      herein:

     

    SECTION
      4.1 Indemnification.
      Borrower and Guarantors jointly and severally agree to indemnify and hold
      harmless the Lender and the past, present and future officers, directors,
      employees, agents, attorneys, representatives, participants, heirs, successors
      and assigns thereof (collectively, the "Indemnitees")
      from
      and against any and all claims, damages, liabilities, judgments and expenses
      including, without limitation, reasonable fees and disbursements of counsel
      including, without limitation, all such fees and disbursements arising in
      connection with the bankruptcy proceedings of Borrower and Guarantors, which
      may
      be instituted by Borrower and Guarantors or Borrower or any Guarantor, their
      respective agents, designees or representatives against any of the Indemnitees
      as a result of any transaction contemplated by this Agreement or any action
      or
      nonaction arising from this Agreement.

     

    ARTICLE
      V

     

    CONDITIONS
      PRECEDENT

     

    SECTION
      5.1  General
      Conditions Precedent.
      As a
      condition precedent to the obligation of the Lender to enter into the amendments
      set forth in Article I hereof and to forbear from exercising its remedies in
      accordance with Article II hereof, Borrowers shall deliver to the Lender on
      or
      before the date of this Agreement the following:

     

    (a) this
      Agreement duly executed by Borrower and Guarantors;

     

    (b) a
      copy,
      certified in writing as of the Closing Date (as defined below) by the Secretary
      or Assistant Secretary of Borrower and each Guarantor, of resolutions of the
      Board of Directors of such Person evidencing approval of this Agreement and
      the
      transactions contemplated herein and the Restructuring Transaction;

     

    (c) in
      connection with any Restructuring as hereinabove described, any transferee
      of
      any assets of Borrower or Guarantors (including capital stock) shall assume
      or
      guaranty and become surety for the Obligations and shall pledge and grant a
      security interest in and to all of its assets to the Lender;

     

    (d) payment
      of all costs and out-of-pocket expenses (including, without limitation,
      reasonable attorneys' fees and costs) of the Lender in connection with this
      Agreement which includes, among other things, the preparation of this Agreement
      and related modification documents, all related filings and recordation fees
      and
      taxes, and the enforcement of the Loan Documents and all costs and expenses
      incurred in connection with the above; and

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e) such
      other documents as the Lender may reasonably require.

     

    SECTION
      5.2 Additional
      Conditions Precedent.
      The
      obligations of the Lender hereunder are subject to the further conditions
      precedent that:

     

    (a) the
      representations and warranties contained in this Agreement shall be correct
      on
      the date hereof; and

     

    (b) no
      Event
      of Default shall have occurred and be continuing after giving effect to this
      Agreement (including without limitation under Section 6.24 (s) and (t) of the
      Credit Agreement) excluding the Existing Events of Default. 

     

    The
      date
      on which all of the conditions contained herein are satisfied shall be the
      "Closing Date".

     

    ARTICLE
      VI

     

    EVENTS
      OF DEFAULT; REMEDIES

     

    SECTION
      6.1 Events
      of Default.
      For
      purposes of this Agreement, each of the following shall constitute an "Event
      of
      Default": 

     

    (a) if
      Borrowers shall breach, default under or fail to fully perform any of its
      covenants, agreements and obligations under this Agreement; or

     

    (b) if
      a
      Forbearance Default occurs: or

     

    (c) if
      there
      is filed any legal proceeding against the Lender or any of its officers,
      directors, employees, agents, or attorneys by any person with respect to any
      matter involving, relating to or arising out the Loan Documents or this
      Agreement, or the administration or enforcement of any of the foregoing;
      or

     

    (d) if
      any
      representation or warranty of Borrower or any Guarantor in this Agreement or
      in
      any report, certificate, financial statement or other instrument furnished
      in
      connection herewith shall be untrue, misleading or inaccurate in any material
      respect when made or deemed made; or

     

    (e) if
      Borrower, any Guarantor, or any person claiming by or through Borrower or any
      Guarantor ever commences, joins in, assists, cooperates, or participates in
      any
      activity which hinders, delays, or impedes exercise by the Lender of its rights
      and remedies after occurrence of an Event of Default under this Agreement or
      Loan Documents, or files or institutes against the Lender or any of the Lender's
      respective officers, directors, employees, agents, accountants or attorneys
      any
      lawsuit, complaint, administrative claim, adversary proceeding or other legal
      action, arising out of or in connection with the Loan Documents or this
      Agreement, or the administration or enforcement of any of the foregoing, or
      joins in, cooperates, or participates as an adverse party or adverse witness
      in
      any suit or other proceeding relating directly or indirectly to the Loans or
      Loan Documents.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    SECTION
      6.2 Remedies.
      Upon
      the occurrence of any Event of Default (as defined in Section 6.1 above) the
      Forbearance Covenant and any and all other obligations of the Lender pursuant
      to
      this Agreement shall immediately terminate and be without further force or
      effect in the same manner and to the same extent as if the same had never been
      included in this Agreement and the Lender shall immediately and without further
      notice be entitled to exercise any and all of their respective rights and
      remedies against Borrower or any Guarantor, and the Collateral available at
      law
      or in equity or granted under any of the Loan Documents.

     

    ARTICLE
      VII

     

    MISCELLANEOUS

     

    SECTION
      7.1  Governing
      Law.
      This
      Agreement shall for all purposes be governed by and construed and enforced
      in
      accordance with the substantive law of the State of Illinois without giving
      effect to the principles of conflict of laws.

     

    SECTION
      7.2  Notice
      of Proceedings.
      Borrower agrees to notify the Lender in writing, promptly upon learning thereof,
      of the institution of any suit, administrative proceeding, adversary proceeding,
      audit or compliance proceedings of any governmental department or agency or
      other legal proceeding which may materially adversely affect the operations,
      financial condition or business of Borrower or any Guarantor or any
      Collateral.

     

    SECTION
      7.3  Further
      Assurances.
      Borrower and Guarantors agree to execute and deliver to the Lender such
      agreements, instruments, documents, financial statements and other writings
      as
      may be requested from time to time by the Lender, to perfect and to maintain
      the
      perfection of the Lender's security interest in and to the Collateral and to
      consummate the transactions contemplated by or in the Loan Documents or this
      Agreement.

     

    SECTION
      7.4 Survival
      of Agreements and Representations; JURY
      WAIVER.
      The
      covenants, acknowledgements, representations, warranties, waivers, releases,
      agreements and obligations of Borrower and Guarantors contained in this
      Agreement and the Loan Documents shall survive the expiration or termination
      of
      the forbearance period described herein and the consummation of the transactions
      contemplated by this Agreement. Any and all judicial proceedings brought by
      the
      Lender against Borrower and Guarantors with respect to this Agreement may be
      brought in: (A) any court of competent jurisdiction in the State of Illinois
      and
      (B) any Federal district court having subject matter jurisdiction and being
      located in the State of Illinois.
      AFTER CONSULTATION WITH COUNSEL, AND WITH KNOWLEDGE OF THE CONSEQUENCES,
      BORROWER, GUARANTORS AND THE LENDER HEREBY WAIVE ALL RIGHTS TO DEMAND A JURY
      TRIAL AND AGREE THAT ALL SUITS WILL BE HEARD BY JUDGE ONLY. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.5 No
      Waivers.
      Nothing
      contained herein shall constitute a waiver, forbearance, or release by the
      Lender of any indebtedness due and owing to the Lender by Borrower, Guarantors
      or any of them under loans or extensions of credit not expressly identified
      in
      this Agreement, and documents related thereto. Nothing contained in this
      Agreement shall constitute a waiver of any other rights or remedies of the
      Lender under the Loan Documents or at law or in equity. No delay or failure
      on
      the part of the Lender to exercise any right or remedy hereunder or under the
      Loan Documents shall operate as a waiver thereof, and no single or partial
      exercise of any right or remedy hereunder or thereunder shall preclude other
      or
      further exercise thereof or the exercise of any other right or remedy. No action
      or forbearance by the Lender contrary to the provisions of this Agreement or
      any
      of the Loan Documents shall be construed to constitute a waiver of any of the
      provisions hereof or thereof. Any party may in writing expressly waive any
      of
      such party's rights under this Agreement or under any of the Loan Documents
      without invalidating this Agreement or any of the Loan Documents or any portion
      hereof or thereof. Nothing set forth in this Section 7.5 shall be deemed to
      be
      in derogation of the Forbearance Covenant set forth in Article II
      hereof.

     

    SECTION
      7.6 No
      Partnership, Joint Venture or Agency.
      Neither
      this Agreement nor any of the related documents shall in any respect be
      interpreted, deemed or construed as making the Lender a partner or joint
      venturer with Borrower or Guarantors nor shall they be interpreted, deemed
      or
      construed as making the Lender the agent or representative of Borrower or
      Guarantors, and Borrower and Guarantors hereby agree not to make any contrary
      assertion, contention, claim or counterclaim in any action, suit or other legal
      proceeding involving the Lender. In no event shall the Lender be liable for
      debts or claims accruing or arising against Borrower or Guarantors. The
      relationship of the Lender to Borrower or Guarantors is that of "creditor"
      to
      "debtor".

     

    SECTION
      7.7 Successors
      or Assigns.
      Whenever in this Agreement any party is named or referred to, the successors,
      successors-in-title and assigns of such parties shall be included, and all
      covenants and agreements contained in this Agreement shall bind and inure to
      the
      benefit of their respective successors, successors-in-title and assigns, whether
      so expressed or not.

     

    SECTION
      7.8 Pronouns.
      All
      personal pronouns used in this Agreement, whether used in the masculine,
      feminine or neuter gender, shall include all other genders; the singular shall
      include the plural, and vice versa.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.9  Construction
      of Agreement.
      Borrower and Guarantors at all times have had access to an attorney in the
      negotiation of the terms of and in the preparation and execution of this
      Agreement, and Borrower and Guarantors have had the opportunity to review and
      analyze this Agreement for a sufficient period of time prior to the execution
      and delivery thereof; no representations or warranties have been made by or
      on
      behalf of the Lender, or relied upon by Borrower and Guarantors pertaining
      to
      the subject matter of this Agreement, other than those that are set forth in
      this Agreement, and all prior statements, representations and warranties, if
      any, are totally superseded and merged into this Agreement, which Agreement
      represents the final and sole agreement of the parties with respect to the
      matters which are the subject hereof and thereof; that all of the terms of
      this
      Agreement were negotiated at arms length, and that this Agreement was prepared
      and executed without fraud, duress, undue influence or coercion of any kind
      exerted by any of the parties upon the others; and that the execution and
      delivery of this Agreement is the free and voluntary act of Borrower and
      Guarantors.

     

    SECTION
      7.10 Invalid
      Provision to Affect No Others.
      If,
      from any circumstances whatsoever, fulfillment of any provision of this
      Agreement or any transaction related thereto at the time performance of such
      provision shall be due, shall involve transcending the limit of validity
      presently prescribed by any applicable usury statute or any other applicable
      law, with regard to obligations of like character and amount, then ipso facto,
      the
      obligation to be fulfilled shall be reduced to the limit of such validity;
      and
      if any clause or provisions herein contained operates or would prospectively
      operate to invalidate this Agreement, in whole or in part, then such clause
      or
      provision only shall be for naught, as though not herein contained, and the
      remainder of this Agreement shall remain operative and in full force and
      effect.

     

    SECTION
      7.11 Notices.
      All
      notices, requests, demands and other communications under this Agreement shall
      be in writing and shall be given to each party hereto at its address specified
      in the Credit Agreement.

     

    SECTION
      7.12  Future
      Negotiations.
      The
      parties hereto acknowledge and agree that (A) the Lender has not agreed to
      and
      has no future obligation whatsoever to discuss, negotiate or agree to any
      restructuring of Borrower and Guarantors' obligations with respect to the Loan
      Documents or any of them, or any modification, amendment, restructuring or
      reinstatement of the Loan Documents or to forbear from exercising its rights
      and
      remedies under the Loan Documents, except as expressly provided in this
      Agreement; (B) that if there are any future discussions among the Lender and
      Borrower and Guarantors concerning any such restructuring, modification,
      amendment or reinstatement, then no restructuring, modification, amendment,
      reinstatement, compromise, settlement, agreement or understanding with respect
      to Borrower and Guarantors' obligations with respect to the Loan Documents,
      or
      any of them, or any aspect thereof, shall constitute a legally binding agreement
      or contradict or have any force or effect whatsoever unless and until reduced
      to
      writing and signed by authorized representatives of all parties, and that none
      of the parties hereto shall assert or claim in any legal proceedings or
      otherwise that any such agreement exists except in accordance with the terms
      of
      this Section 7.12.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.13  Modifications.
      The
      terms of this Agreement may not be changed, modified, waived, discharged or
      terminated orally, but only by an instrument or instruments in writing, signed
      by the party against whom the enforcement of the change, modification, waiver,
      discharge or termination is asserted.

     

    SECTION
      7.14  Counterparts.
      This
      Agreement may be executed in any number of counterparts and by different parties
      hereto on separate counterparts, each of which, when so executed and delivered,
      shall be an original, but all such counterparts shall together constitute one
      and the same instrument; provided, however, that this Agreement shall not be
      effective unless and until it is executed by all parties hereto. This Agreement
      may be executed by fax signatures, each of which shall be fully binding on
      the
      signing party.

     

    [The
      remainder of this page is intentionally blank]

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    This
      Agreement is entered into between us for the uses and purposes hereinabove
      set
      forth as of the date first above written.

     

    
      	 	
              "Borrower"

            
	 	 
	 	
              EVCI
                Career Colleges Holding Corp.

            
	 	 
	 	
              By:

            	
              /s/
                Dr. John J.
                McGrath            

            
	 	
              Name:

            	
              Dr.
                John J. McGrath

            
	 	
              Title:

            	
              Chief
                Executive Officer and President

            
	 	 	 
	 	 	 
	 	
              "Guarantors"

            
	 	 
	 	
              Interboro
                Institute, Inc.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J. McGrath

            
	 	
              Name:

            	
              Dr.
                John J. McGrath

            
	 	
              Title:

            	
              Chief
                Executive Officer

            
	 	 	 
	 	 	 
	 	
              Interboro
                Holding, Inc.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J.
                McGrath            

            
	 	
              Name:

            	
              Dr.
                John J. McGrath

            
	 	
              Title:

            	
              President

            
	 	 	 
	 	 	 
	 	
              Pennsylvania
                School of Business, Inc.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J.
                McGrath            

            
	 	
              Name:

            	
              Dr.
                John J. McGrath

            
	 	
              Title:

            	
              Chief
                Executive Officer and President

            
	 	 	 
	 	 	 
	 	
              Technical
                Career Institutes, Inc.

            
	 	 
	 	
              By:
                

            	
              /s/
                Dr. John J. McGrath 

            
	 	
              Name:

            	
              Dr.
                John J. McGrath

            
	 	
              Title:

            	
              Chairman

            
	 	 	 
	 	 	 
	 	
              "Lender"

            
	 	 
	 	
              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

            

    

     

    
      
        
        

      

      
        13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}]]