Document:

Exhibit 10.13

 

STOCK OPTION AGREEMENT

 

This STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into effective as of                                by and between RestorGenex Corporation, a Nevada corporation (the “Company”), and                                  (“Optionee”) with reference to the following facts:

 

The board of directors of the Company (the “Board”) has authorized the granting to Optionee of the option represented by this Agreement on the terms set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the Company and Optionee agree as follows:

 

1.                                      Grant of Option.  The Company hereby grants to Optionee, upon the terms and subject to the conditions set forth in this Agreement, an option (the “Option”) to purchase all or any portion of                              shares (the “Option Shares”) of the Company’s Common Stock (the “Common Stock”), at an exercise price of $               per share, which represents 100% of the fair market value of a share of Common Stock on                            (such exercise price, as adjusted from time to time pursuant to Section 5, the “Exercise Price”).

 

2.                                      Vesting.  The Option shall vest and become exercisable in 12 quarterly equal (or as nearly equal as possible) installments on the last calendar day of each calendar quarter over a three-year period and may be exercised at any time prior to the termination or expiration of the Option.  Optionee shall receive a full quarter of vesting for the              calendar quarter of         .

 

3.                                      Exercise of the Option.

 

3.1.                            Subject to the vesting in Section 2, the Option may be exercised, in whole or in part, at any time and from time to time, only by delivery to the Company of written notice of the exercise of the Option in form identical to Exhibit “A” attached to this Agreement stating the number of Option Shares being purchased (the “Purchased Shares”) (and the representation and warranties in the notice of exercise must be true and correct).  The Exercise Price shall be payable in full in any one of the following alternative forms:

 

(a)                                 Full payment in cash or certified bank or cashier’s check;

 

(b)                                 Any broker assisted cashless exercise procedure which is acceptable to the Company; or

 

(c)                                  Cashless net exercise.

 

Upon a cashless net exercise, Optionee shall receive the number of shares of Common Stock equal to a number (as determined below) of shares of Common Stock computed using the following formula:

 

	
 
    	
X   =
    	
Y – 
    	
(A)(Y)
    	
 
    	
 
    
	
 
    	
B
    	
 
    	
 
    

 

 

	
Where
    	
 
    	
X
    	
=
    	
the   number of shares of Common Stock to be issued to the Optionee.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Y
    	
=
    	
the   number of shares of Common Stock purchasable upon exercise of all of the   Option or, if only a portion of the Option is being exercised, the portion of   the Option being exercised.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
A
    	
=
    	
the   exercise price.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
B
    	
=
    	
the   Per Share Market Value of one share of Common Stock on the trading day   immediately preceding the date of such election.
    	
 
    

 

“Per Share Market Value” means on any particular date (a) the closing sales price per share of the Common Stock on such date on any registered national stock exchange on which the Common Stock is then listed, or if there is no such closing sales price on such date, then the closing sales price on such exchange on the date nearest preceding such date, or (b) if the Common Stock is not then listed on a registered national stock exchange, the closing sales price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or the OTC Markets Group, or (c) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined in good faith by the Board; provided, however, that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period.

 

3.2.                            Following receipt of the exercise notice and the payment referred to above, the Company shall, as soon as reasonably practicable thereafter, cause certificates representing the Purchased Shares to be delivered to Optionee either at Optionee’s address set forth in the records of the Company or at such other address as Optionee may designate in writing to the Company; provided, however, that the Company shall not be obligated to issue a fraction or fractions of a share otherwise issuable upon exercise of the Option, and may pay to Optionee, in cash or cash equivalent, the fair market value of any such fraction or fractions of a share as of the date of exercise.

 

3.3.                            If requested by the Company in connection with any exercise of the Option, Optionee shall also deliver this Agreement to the Company, which shall endorse hereon a notation of the exercise and, and if the Option is exercised in part, shall return this Agreement to Optionee.  The date of exercise of an Option that is validly exercised shall be deemed to be the date on which there shall have been delivered to the Company the instruments referred to in this Section 3.  Optionee shall not be deemed to be a holder of any Option Shares pursuant to exercise of the Option until the date of issuance of a stock certificate to Optionee for such shares following payment in full for the Option Shares purchased.

 

3.4.                            As a condition to exercise of the Option, the Company may require Optionee to pay to the Company all applicable federal, state and local taxes that the Company is required to withhold with respect to the exercise of the Option.  At the discretion of the Company and upon the request of Optionee, the minimum statutory withholding tax requirements may be satisfied by the withholding of Option Shares otherwise issuable to Optionee upon the exercise of the Option.

 

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4.                                      Termination of Option.

 

4.1.                            Except as provided in this Section 4, the Option shall terminate, no longer be exercisable and expire at 5:00 p.m., Eastern Time, on [                                    ] (the “Time of Termination”).

 

4.2.                            In the event the Optionee’s employment or other service with the Company and all subsidiaries is terminated by reason of the Optionee’s death, the Option will remain exercisable, to the extent exercisable as of the date of such termination, for a period of one (1) year after such termination (but in no event after the Time of Termination).

 

4.3.                            In the event the Optionee’s employment or other service with the Company and all subsidiaries is terminated other than by reason of the Optionee’s death, the Option will remain exercisable, to the extent exercisable as of the date of such termination, for a period of three (3) months after such termination (but in no event after the Time of Termination).

 

4.4.                            In the event the Optionee’s employment or other service with the Company and all subsidiaries is terminated for “cause” (as determined by the Board in its sole discretion), the Option will terminate in its entirety without notice of any kind and no longer be exercisable.

 

5.                                      Changes in Capital Structure.

 

5.1.                            If outstanding shares of the Common Stock shall be subdivided into a greater number of shares, or a dividend in Common Stock shall be paid in respect of the Common Stock, the Exercise Price of the Option prior to such subdivision or at the record date of such dividend shall, simultaneously with the effectiveness of such subdivision or immediately after the record date of such dividend, be proportionately reduced, and conversely, if outstanding shares of the Common Stock of the Company shall be combined into a smaller number of shares, the Exercise Price of the Option prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased.  This Section 5.1 shall only be effective if and to the extent such change will not be treated as a modification of the Option under Treas. Reg. Sec. 1.409A-1(b)(5)(v)(H).

 

5.2.                            When any adjustment is required to be made in the Exercise Price, the number of Option Shares purchasable upon the exercise of the Option shall be adjusted to that number of Option Shares determined by dividing (a) an amount equal to the number of Option Shares purchasable upon the exercise of the Option immediately prior to such adjustment, multiplied by the Exercise Price in effect immediately prior to such adjustment, by (b) the Exercise Price in effect immediately after such adjustment.

 

5.3.                            Except as provided in Section 5.4, following any capital reorganization, any reclassification of the Common Stock of the Company (other than recapitalization described in Section 5.1), or the consolidation or merger of the Company, upon exercise of the Option the Optionee shall receive the securities or property (including cash) that the Optionee would have received had the Optionee exercised the Option immediately prior to such reorganization, reclassification, consolidation or merger, and in any such case appropriate adjustments shall be made in the application of the provisions set forth in this Agreement with respect to the rights 

 

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and interests thereafter of the Optionee, to the end that the provisions set forth in this Agreement (including the specified changes and other adjustments to the Exercise Price) shall thereafter be applicable in relation to any securities or other property thereafter issuable upon exercise of the Option.

 

5.4.                            The Option shall become immediately vested and exercisable immediately prior to (but conditioned upon completion of) a Change of Control (as defined below) and remain exercisable through the Time of Termination.  Notwithstanding any of the foregoing, in connection with a Change of Control, the Board in its sole discretion, at any time after the grant of the Option, may determine that the Option, whether or not exercisable or vested, as the case may be, will be canceled and terminated and that in connection with such cancellation and termination the Optionee will receive for each Option Share a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities with a fair market value (as determined by the Board in good faith) equivalent to such cash payment) equal to the difference, if any, between the consideration received by stockholders of the Company in respect of a share of Common Stock in connection with such Change of Control and the Exercise Price per share under the Option, multiplied by the number of Option Shares; provided, however, that if such product is zero ($0) or less, the Option may be canceled and terminated without payment therefor.  If any portion of the consideration pursuant to a Change of Control may be received by holders of shares of Common Stock on a contingent or delayed basis, the Board may, in its sole discretion, determine the fair market value per share of such consideration as of the time of the Change of Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration.  Notwithstanding the foregoing, any Option Shares issued pursuant to the Option prior to the effectiveness of the Change of Control will be deemed to be outstanding shares of Common Stock and receive the same consideration as other outstanding shares of Common Stock in connection with the Change of Control.

 

5.5.                            Notwithstanding any other provisions of this Agreement, if any “payments” (including, without limitation, any benefits or transfers of property or the acceleration of the vesting of any benefits) in the nature of compensation under any arrangement that is considered contingent on a Change of Control for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), together with any other payments that the Optionee has the right to receive from the Company or any corporation that is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), such “payments” may, at the Optionee’s sole election, be reduced to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999 of the Code.  The type of payments to be electively reduced under this Section 5.5, if any, will be at the discretion of the Optionee; provided, however, if any such payments are subject to Section 409A of the Code, such payments shall be reduced first, by first reducing any cash severance payments and then reducing all other payments and benefits, in each case, with the amounts having later payment dates being reduced first.

 

5.6.                            For purposes of this Agreement, “Change of Control” shall mean the occurrence of any one or more of the following: (i) the accumulation (if over time, in any consecutive twelve (12) month period), whether directly, indirectly, beneficially or of record, by

 

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any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of 50.1% or more of the shares of the outstanding common stock of the Company, whether by merger, consolidation, sale or other transfer of shares of Common Stock (other than a merger or consolidation where the stockholders of the Company prior to the merger or consolidation are the holders of a majority of the voting securities of the entity that survives such merger or consolidation), (ii) a sale of all or substantially all of the assets of the Company or (iii) during any period of twelve (12) consecutive months, the individuals who, at the beginning of such period, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the 12-month period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; provided, however, that the following acquisitions shall not constitute a Change of Control for the purposes of this Agreement: (A) any acquisitions of Company common stock or securities convertible, exercisable or exchangeable into Company common stock directly from the Company or (B) any acquisition of Company common stock or securities convertible, exercisable or exchangeable into Company common stock by any employee benefit plan (or related trust) sponsored by or maintained by the Company.

 

6.                                      Optionee’s Representations.  Optionee represents and warrants to and agrees with the Company as follows:

 

6.1.                            Optionee is acquiring the Option for Optionee’s own account, for investment purposes only and not with a view to or for sale in connection with a distribution of the Option.

 

6.2.                            Optionee understands that an investment in the Option involves a high degree of risk, and Optionee has the financial ability to bear the economic risk of this investment, including a complete loss of such investment.  Optionee has adequate means for providing for Optionee’s current financial needs and has no need for liquidity with respect to this investment.

 

6.3.                            Optionee has such knowledge and experience in financial and business matters that Optionee is capable of evaluating the merits and risks of an investment in the Option and in protecting Optionee’s own interest in connection with this transaction.

 

6.4.                            Optionee has had the opportunity to ask questions of, and to receive answers from, appropriate officers of the Company with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial condition and results of operations of the Company.  Optionee has had access to such financial and other information as is necessary in order for Optionee to make a fully informed decision as to investment in the Company, and has had the opportunity to obtain any additional information necessary to verify any of such information to which Optionee has had access.

 

6.5.                            Optionee acknowledges that if at the time of exercise of this Option by Optionee there is no effective registration statement registering the issuance of the Option Shares upon exercise of this Option under the Securities Act of 1933, as amended (the “Securities Act”), any certificate evidencing the Option Shares will have a legend to the following effect:

 

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

 

6.6.                            Optionee has consulted with Optionee’s own tax counsel and advisors as to the federal, state and other tax consequences to Optionee of the grant and exercise of the Option and the sale of Option Shares, and acknowledges that the Company makes no representation or warranty to the Optionee regarding such tax consequences.

 

7.                                      Modification.  The Option may not be amended or modified except by a written instrument executed by the Company and the Optionee.

 

8.                                      Market Stand-off.  The Optionee, if so requested by the Company or any representative of the underwriters in connection with the first firmly underwritten public offering of securities by the Company pursuant to a registration statement under the Securities Act following the date of this Agreement, shall not sell or otherwise transfer any Option Shares during the 180-day period following the effective date of such registration statement.  The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restriction until the end of such 180-day period.  This Section 8 will not apply to the sale of any Option Shares to an underwriter pursuant to an underwriting agreement and shall only be applicable to the Optionee if all then current executive officers and directors of the Company enter into similar agreements.

 

9.                                      General Provisions.

 

9.1.                            Notices.  All notices, requests, demands and other communications (collectively, “Notices”) given pursuant to this Agreement shall be in writing, and shall be delivered by personal service, courier, facsimile transmission, email transmission of a pdf format data file or by United States first class, registered or certified mail, postage prepaid, addressed to the party at the address set forth on the signature page of this Agreement.  Any Notice, other than a Notice sent by registered or certified mail, shall be effective when received; a Notice sent by registered or certified mail, postage prepaid return receipt requested, shall be effective on the earlier of when received or the third day following deposit in the United States mails.  Any party may from time to time change its address for further Notices hereunder by giving notice to the other party in the manner prescribed in this Section.

 

9.2.                            Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by email delivery of a “pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “pdf” signature page were an original thereof.

 

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9.3.                            Failure to Enforce Not a Waiver.  The failure of the Company or the Optionee to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

 

9.4.                            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada applicable to contracts made in, and to be performed within, that State.

 

9.5.                            Option Non-transferable.  Optionee may not sell, transfer, assign or otherwise dispose of the Option other than (a) by will or by the laws of descent and distribution or (b) to a Family Member (within the meaning given such term in Form S-8 under the Securities Act) provided such transfer is made as a gift without consideration and such transfer complies with applicable securities laws.  The person or persons, if any, to whom this Option is transferred shall be treated after Optionee’s death the same as Optionee under this Agreement.

 

9.6.                            Successors and Assigns.  Except to the extent specifically limited by the terms and provision of this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs and personal representatives.

 

9.7.                            Advice from Independent Counsel.  The parties hereto understand that this Agreement is a legally binding agreement that affects such party’s rights and imposes obligations on such party.  Each party represents to the other that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it.

 

9.8.                            Miscellaneous.  Titles and captions contained in this Agreement are inserted for convenience of reference only and do not constitute a part of this Agreement for any other purpose.  References to Sections in this Agreement refer to Sections of this Agreement unless otherwise stated.  Except as specifically provided herein, neither this Agreement nor any right pursuant hereto or interest herein shall be assignable by any of the parties hereto without the prior written consent of the other party hereto.

 

[Remainder of page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, the Company has granted to Optionee the Option effective as of the date set forth above.

 

	
OPTIONEE:
    	
 
    	
RESTORGENEX   CORPORATION 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Stephen   M. Simes, Chief Executive Officer 
    
	
 
    	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    	
Address:
    	
2150   East Lake Cook Road, Suite 750
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Buffalo   Grove, Illinois 60089
    

 

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EXHIBIT “A”

 

NOTICE OF EXERCISE

 

(To be signed only upon exercise of the Option)

 

TO:                           RestorGenex Corporation

 

The undersigned, the holder of the enclosed Stock Option Agreement (“Optionee”), hereby irrevocably elects to exercise the purchase right represented by the Option and to purchase thereunder             * shares (the “Option Shares”) of Common Stock of RestorGenex Corporation (the “Company”) and herewith encloses payment of $                   or pursuant to the cashless exercise provisions set forth in Section 3.1 in full payment of the purchase price of such shares being purchased.

 

The Optionee represents and warrants to the Company as follows:

 

1.                                      Optionee is acquiring the Option Shares for Optionee’s own account, for investment purposes only and not with a view to or for sale in connection with a distribution of the Option Shares.

 

2.                                      Optionee understands that an investment in the Option Shares involves a high degree of risk, and Optionee has the financial ability to bear the economic risk of this investment, including a complete loss of such investment.  Optionee has adequate means for providing for Optionee’s current financial needs and has no need for liquidity with respect to this investment.

 

3.                                      Optionee has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Option Shares and in protecting Optionee’s own interest in connection with this transaction.

 

4.                                      Optionee understands that if at the time of exercise of the Option by Optionee there is no effective registration statement registering the issuance of the Option Shares upon exercise of the Option under the Securities Act of 1933, as amended (the “Securities Act”), the Option Shares have not been registered under the Securities Act, the California Corporate Securities Law of 1968, as amended (the “California Law”) or other state securities laws.  Optionee is familiar with the provisions of the Securities Act and Rule 144 thereunder, and the California Law and understands that such restrictions on transfer of the Option Shares may result in Optionee being required to hold the Option Shares for an indefinite period of time.

 

5.                                      Optionee agrees not to transfer or encumber (“Transfer”) any of the Option Shares except pursuant to an effective registration statement under the Securities Act or an exemption from registration.  As a further condition to any such Transfer, except in the event that such Transfer is made pursuant to an effective registration statement under the Securities Act, if, in the reasonable opinion of counsel to the Company, any Transfer of the Option Shares by the contemplated transferee thereof would not be exempt from the registration and prospectus delivery requirements of the Securities Act, the Company may require the contemplated 

 

 

transferee to furnish the Company with an investment letter setting forth such information and agreements as may be reasonably requested by the Company to ensure compliance by such transferee with the Securities Act.

 

6.                                      Optionee has had the opportunity to ask questions of, and to receive answers from, appropriate officers of the Company with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial condition and results of operations of the Company.  Optionee has had access to such financial and other information as is necessary in order for Optionee to make a fully informed decision as to investment in the Company, and has had the opportunity to obtain any additional information necessary to verify any of such information to which Optionee has had access.

 

7.                                      Optionee acknowledges that if at the time of exercise of the Option by Optionee there is no effective registration statement registering the issuance of the Option Shares upon exercise of the Option under the Securities Act any certificate evidencing the Option Shares will have a legend to the following effect:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.”

 

8.                                      Optionee understands that the issuance of the Option Shares to Optionee may generate income, taxable at ordinary rates, equal to the value of the Shares less the exercise price and that the Options when they are exercised or at an earlier time may result in income, taxable at ordinary rates or greater (if a penalty rate is applicable), pursuant to Sections 83 or 409A of the Internal Revenue Code of 1986, as amended, and the regulations or proposed regulations thereunder.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Address)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social Security Number
    

 

*Insert here the number of shares being exercised making all adjustments for cashless exercise pursuant to Section 3 or for stock splits, stock dividends or other additional Common Stock of the Company, other securities or property which, pursuant to the adjustment provisions of Section 5 of the Option, may be deliverable upon exercise.

 

2ex10-1.htm

 

Exhibit 10.1

 

EXECUTION COPY

 

 

FORBEARANCE AGREEMENT

 

This FORBEARANCE AGREEMENT, dated as of March 31, 2015 (this “Agreement”), is by and among Corinthian Colleges, Inc. (the “Domestic Borrower”), the Guarantors party hereto, the Lenders party hereto and Bank of America, N.A., as Domestic Administrative Agent (in such capacity, the “Domestic Administrative Agent”) and Canadian Agent (in such capacity, the “Canadian Administrative Agent”; the Domestic Administrative Agent and the Canadian Administrative Agent are referred to herein collectively as the “Administrative Agents”). Capitalized terms which are used in this Agreement without definition and which are defined in the Credit Agreement shall have the same meanings herein as in the Credit Agreement. 

 

R E C I T A L S:

 

WHEREAS, the Borrower, Everest Colleges Canada, Inc. (the “Canadian Borrower”; the Domestic Borrower and the Canadian Borrower are referred to herein collectively as the “Borrowers”), the lenders party thereto from time to time (the “Lenders”) and the Administrative Agents are parties to that certain Fourth Amended and Restated Credit Agreement, dated as of May 17, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, the Domestic Borrower has informed the Administrative Agents and the Lenders of the Events of Default arising under the Credit Agreement listed on Schedule I hereto (together, the “Specified Defaults”);

 

WHEREAS, the Domestic Borrower has requested that the Administrative Agents and the Lenders agree to temporarily forbear from the exercise of certain remedies available to them under the Credit Agreement with respect to the Specified Defaults (but not waive the Specified Defaults); and

 

WHEREAS, the Administrative Agents and the Lenders party hereto are willing to grant such forbearance on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, and subject to the terms and conditions hereof, the parties hereto agree as follows:

 

section 1.     FORBEARANCE AND RELATED PROVISIONS. 

 

1.1     Forbearance. Subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, the Administrative Agents and the Lenders hereby agree to forbear from taking any of the “Enforcement Actions” defined below as a result of the occurrence and continuation of the Specified Defaults solely during the period beginning on the Effective Date and ending immediately upon the earliest of (such period being referred to herein as the “Forbearance Period”): (a) April 30, 2015, (b) the occurrence of any Default under Section 8.01(f) or (g) of the Credit Agreement with respect to any Domestic Loan Party and (c) the termination of the Forbearance Period by the Domestic Administrative Agent, acting at the direction of the Required Lenders, due to: (i) the occurrence of any Default other than the Specified Defaults or (ii) the failure of any Domestic Loan Party to timely comply with any undertaking set forth in this Agreement, or the breach by any Domestic Loan Party in any material respect of any representation or warranty set forth in this Agreement, in each case unless the Required Lenders, in writing, waive such noncompliance or breach. “Enforcement Actions” shall mean any (1) commencement of judicial or non-judicial enforcement proceedings against any Domestic Loan Party with respect to the payment of any Obligations or (2) commencement of any foreclosure, enforcement or levy against or seizure or transfer of all or any portion of the Domestic Collateral; provided, that Enforcement Action shall not include any action by the Domestic Administrative Agent with respect to any deposit account of the Domestic Loan Parties subject to a garnishment action or similar action or proceeding with respect to claims by other creditors of the Domestic Loan Parties. “Domestic Loan Parties” shall mean, collectively, the Domestic Borrower and the Domestic Guarantors.

 

 

 

 

 

1.2     Reservation of Rights. The Administrative Agents and the Lenders expressly reserve the right to exercise all rights and remedies under the Credit Agreement, the other Loan Documents and applicable law immediately upon the expiration of the Forbearance Period, including, without limitation, the Enforcement Actions, in respect of the Specified Defaults and any other Default then existing. Except for the forbearance to the extent expressly set forth above, the Administrative Agents and the Lenders reserve each and every right and remedy they may have under the Loan Documents and under applicable law with respect to the Specified Defaults. Nothing in this Agreement shall be deemed to constitute a waiver by the Administrative Agents or any Lender of the Specified Defaults or any other Default, whether now existing or hereafter arising, or of any right or remedy that the Administrative Agents and the Lenders may have under any of the Loan Documents or applicable law. The Domestic Loan Parties acknowledge that the Administrative Agents and the Lenders may, among other actions, demand cash collateral, payments and other conditions in connection with any disposition of assets or any other transaction, notwithstanding the forbearance set forth herein.

 

1.3     Forbearance Fee. The Domestic Borrower shall pay to the Domestic Administrative Agent, for the ratable benefit of the Lenders in accordance with their respective share of the Total Outstandings, a forbearance fee equal to (x) $10,000 on April 10, 2015 and (y) $250,000 on April 24, 2015 (each, a “Forbearance Fee”).

 

1.4     Other Covenants. (a)     The Domestic Borrower hereby agrees to repay all outstanding L/C Borrowings of the Canadian Borrower (in the amounts shown on Item 3 of Schedule I hereto), together with all accrued and unpaid interest thereon, pursuant to its obligations under the Third Amended and Restated Guaranty (Canadian Obligations) in full in cash on April 17, 2015 from the Specified Account to the extent of funds on deposit in the Specified Account as of such date. If such amounts are not repaid in full on April 17, 2015, the Domestic Borrower shall repay all outstanding L/C Borrowings of the Canadian Borrower (in the amounts shown on Item 3 of Schedule I hereto), together with all accrued and unpaid interest thereon, pursuant to its obligations under the Third Amended and Restated Guaranty (Canadian Obligations) from the Specified Account in full in cash no later than April 24, 2015. “Specified Account” shall have the meaning set forth in that certain Consent Agreement, dated as of September 26, 2014, among the Loan Parties, the Lenders party thereto and the Administrative Agents.

 

 

 

 

 

(b) The Domestic Borrower has established, and shall hereafter maintain, the Specified Account, which account shall (i) be subject to a control agreement in favor of the Domestic Administrative Agent in accordance with Section 6.17 of the Credit Agreement and (ii) contain solely non-Title IV funds. The Loan Parties shall cause all amounts representing non-Title IV revenue to be either deposited directly to the Specified Account or transferred to the Specified Account directly from the accounts where the deposits are received. The Domestic Borrower shall not deposit, and shall not permit any other Person to deposit, any Title IV funds in the Specified Account at any time.

 

1.5     Second Everest Plus Closing. The Lenders hereby authorize the Domestic Administrative Agent to execute and deliver the Release Letter attached hereto as Exhibit A in connection with the Everest Plus Sale, together with such closing memoranda, releases, termination statements, agreements, documents and instruments as may be reasonably requested by the Loan Parties or the Purchaser (as defined in the Everest Plus Consent) to evidence the lien releases described therein, in form and substance acceptable to the Domestic Administrative Agent.

 

section 2.     CONDITIONS. This Agreement shall become effective as of the date hereof (the “Effective Date”) upon receipt by the Administrative Agent of duly executed counterparts to this Agreement from the Domestic Loan Parties, the Administrative Agents and the Lenders.

 

section 3.     REPRESENTATION AND WARRANTIES.

 

3.1     Enforceability. Each Domestic Loan Party hereby represents and warrants that this Agreement is the legal, valid and binding obligation of such Domestic Loan Party and is enforceable against such Domestic Loan Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

3.2     Authorization; No Conflicts. Each Domestic Loan Party hereby represents and warrants that its execution and delivery of this Agreement (i) have been duly authorized by all necessary corporate or other organizational action on the part of such Domestic Loan Party and are within such Domestic Loan Party’s corporate or other organizational power and authority, (ii) do not (A) contravene the terms of such Domestic Loan Party’s Organization Documents, (B) conflict with or result in any breach or contravention of, or the creation of any Lien under (i) any Contractual Obligation to which such Domestic Loan Party is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Domestic Loan Party or its property is subject; or (C) violate any Law.

 

section 4.     RATIFICATION AND RELEASE.

 

4.1     Ratification. Each Domestic Loan Party hereby (a) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, and each grant of security interests and liens in favor of each Administrative Agent, the L/C Issuers or the Lenders, as the case may be, under each Loan Document, (b) agrees and acknowledges that the liens in favor of each Administrative Agent, the L/C Issuers or the Lenders under each Loan Document constitute valid, binding, enforceable and perfected first priority liens and security interests and are not subject to avoidance, disallowance or subordination pursuant to any requirement of Law, (c) agrees and acknowledges the Obligations constitute legal, valid and binding obligations of the Domestic Loan Parties and that (x) no offsets, defenses or counterclaims to the Obligations or any other causes of action with respect to the Obligations or the Loan Documents exist and (y) no portion of the Obligations is subject to avoidance, disallowance, reduction or subordination pursuant to any requirement of Law, (d) agrees that such ratification and reaffirmation is not a condition to the continued effectiveness of the Loan Documents, and (e) agrees that neither such ratification and reaffirmation, nor the Administrative Agents’, the L/C Issuers’ nor any Lender’s solicitation of such ratification and reaffirmation, constitutes a course of dealing giving rise to any obligation or condition requiring a similar or any other ratification or reaffirmation from each party to the Loan Documents with respect to any subsequent modifications, consent or waiver with respect to the Credit Agreement or other Loan Documents. This Agreement shall not constitute a waiver of, or (except as expressly set forth herein with respect to the Specified Defaults) forbearance with respect to, any Default, whether known or unknown, and the Administrative Agent and the Lenders shall reserve all rights and remedies in respect thereof. This Agreement shall constitute a “Loan Document” for purposes of the Credit Agreement.

 

 

 

 

 

4.2     Release; Covenant Not to Sue; Acknowledgement. (a) Each Domestic Loan Party hereby absolutely and unconditionally releases and forever discharges each Administrative Agent, each L/C Issuer, each Swing Line Lender, each Lender and each of their respective Related Parties (each a “Released Party”) from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which any Domestic Loan Party has had, now has or has made claim to have against any such Person for or by reason of any act, omission, matter, cause or thing whatsoever arising out of or with respect to the Obligations, the Credit Agreement, this Agreement or any other Loan Document from the beginning of time to and including the Effective Date, whether such claims, demands and causes of action are matured or unmatured or known or unknown. It is the intention of each Domestic Loan Party in providing this release that the same shall be effective as a bar to each and every claim, demand and cause of action specified. Each Domestic Loan Party acknowledges that it may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, or causes of action and agrees that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts. Each Domestic Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release. Nothing in this Section 4.2 shall relieve any Administrative Agent or Lender of any continuing contractual obligations under this Agreement.

 

(b)     Each Domestic Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Released Party above that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Released Party on the basis of any claim released, remised and discharged by any Domestic Loan Party pursuant to the above release. If any Domestic Loan Party or any of their successors, assigns or other legal representatives violates the foregoing covenant, each Domestic Loan Party, for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Released Party may sustain as a result of such violation, all reasonable attorneys’ fees and costs incurred by such Released Party as a result of such violation.

 

 

 

 

 

(c)     Each Domestic Loan Party represents and warrants that, to its knowledge, there are no liabilities, claims, suits, debts, liens, losses, causes of action, demands, rights, damages or costs, or expenses of any kind, character or nature whatsoever, fixed or contingent, which any Domestic Loan Party may have or claim to have against any Released Party arising with respect to the Obligations, the Credit Agreement, this Agreement or any other Loan Document.

 

(d)     Each of the Domestic Loan Parties has been advised by counsel with respect to the release contained in this Section 4.2. Upon advice of such counsel, each of the Domestic Loan Parties hereby waives and relinquishes all of the rights and benefits each Domestic Loan Party has, or may have, with respect to the claims released under Section 1542 of the California Civil Code or any other similar statute. Section 1542 states as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

section 5.     MISCELLANEOUS.

 

5.1     Effect. Except as specifically set forth in this Agreement, the execution, delivery and effectiveness of this Agreement shall not (i) limit, impair, constitute an amendment, forbearance or waiver by, or otherwise affect any right, power or remedy of, any Administrative Agent or any Lender under the Credit Agreement or any other Loan Document or waive, affect or diminish any right of any Administrative Agent or any Lender to demand strict compliance and performance therewith, (ii) constitute a waiver of, or forbearance with respect to, any Default, whether known or unknown or (iii) alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or in any of the other Loan Documents, all of which are ratified and affirmed in all respects and shall continue in full force and effect.

 

5.2     Severability. Any provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable in any jurisdiction shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the provision so held to be invalid or unenforceable and will not affect the effectiveness thereof in any other jurisdiction.

 

5.3     Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument. This Agreement may also be executed by facsimile or electronic transmission and each facsimile or electronic transmission signature hereto shall be deemed for all purposes to be an original signatory page.

 

 

 

 

 

5.4     GOVERNING LAW. This AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

5.5     Section Titles. The Section titles contained in this Agreement are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

 

5.6     Reimbursement of each Administrative Agent’s Expenses. Without limiting any of the Administrative Agents’ rights, or any of Borrowers’ obligations, under Section 10.04(a) of the Credit Agreement, each Borrower agrees to reimburse the Administrative Agents for all reasonable and documented out-of-pocket fees, costs and expenses, including the reasonable fees, costs, and expenses of the Agent Financial Advisor and Sidley Austin LLP for advice, assistance or other representation in connection with this Agreement.

 

5.7     Entire Agreement. This Agreement contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings or agreements.

 

 

 

[Signature Pages Follow]

 

 

 

 

 

WITNESS the due execution hereof by the respective duly authorized officers of the undersigned of this Agreement as of the date first written above.

 

	
 
	
BORROWERS:
	
 

	 	 	 
	 	CORINTHIAN COLLEGES, INC.	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Robert C. Owen  
	
 

	
 
	
 
	
Name: Robert C. Owen
	
 

	
 
	
 
	
Title: EVP and CFO
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	
GUARANTORS: 

 

Ashmead Education, Inc.

Career Choices, Inc.

CDI Education USA, Inc.

Corinthian Property Group, Inc.

Corinthian Schools, Inc.

ECAT Acquisition, Inc.

Eton Education, Inc.

Florida Metropolitan University, Inc.

Grand Rapids Educational Center, Inc.

Heald Capital, LLC

Heald Education, LLC

Heald Real Estate, LLC

MJB Acquisition Corporation

Pegasus Education, Inc.

Rhodes Business Group, Inc.

Rhodes Colleges, Inc.

SD III-B Heald Holdings Corp.

Sequoia Education, Inc.

Socle Education, Inc.

Sp PE VII-B Heald Holdings Corp.

Titan Schools, Inc.
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Robert C. Owen    
	
 

	
 
	
 
	
Name: Robert C. Owen  
	
 

	
 
	
 
	
Title: EVP, CFO, Treasurer and Assistant Secretary
	
 

	 	 	 	 
	 	EVEREST COLLEGE PHOENIX, INC.	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Robert C. Owen    	 
	 	 	Name: Robert C. Owen  	 
	 	 	Title: EVP, CFO and Treasurer	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	HEALD COLLEGE, LLC	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Robert C. Owen   	 
	 	 	Name: Robert C. Owen  	 
	 	 	Title: CAO	 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	
QUICKSTART INTELLIGENCE CORPORATION
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Robert C. Owen       
	
 

	
 
	
 
	
Name: Robert C. Owen
	
 

	
 
	
 
	
Title: EVP and Treasurer
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	
BANK OF AMERICA, N.A., as Domestic Administrative Agent 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Anthea Del Bianco    
	
 

	
 
	
 
	
Name: Anthea Del Bianco
	
 

	
 
	
 
	
Title: Vice President
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement 

 

 

 

 

 

	
 
	BANK OF AMERICA, N.A., acting through its Canada Branch, as Canadian Administrative Agent	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Medina Sales de Andrade
	
 

	
 
	
 
	
Name: Medina Sales de Andrade
	
 

	
 
	
 
	
Title: Vice President
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	BANK OF AMERICA, N.A.,	
 

	 	as a Domestic Lender	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Janet Sleeper
	
 

	
 
	
 
	
Name: Janet Sleeper
	
 

	
 
	
 
	
Title: Senior Vice President
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	BANK OF AMERICA, N.A., acting through	
 

	 	its Canada Branch, as a Canadian Lender	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Medina Sales de Andrade
	
 

	
 
	
 
	
Name: Medina Sales de Andrade
	
 

	
 
	
 
	
Title: Vice President
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	U.S. BANK NATIONAL ASSOCIATION,	
 

	 	as a Domestic Lender	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ William J. Umscheid
	
 

	
 
	
 
	
Name: William J. Umscheid
	
 

	
 
	
 
	
Title: Senior Vice President
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	
U.S. BANK NATIONAL ASSOCIATION,
	
 

	 	as a Canadian Lender	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ John P. Rehob
	
 

	
 
	
 
	
Name: John P. Rehob
	
 

	
 
	
 
	
Title: Principal Officer
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	
MUFG UNION BANK, N.A.,
	
 

	 	as a Domestic Lender	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Andrew Jarvis  
	
 

	
 
	
 
	
Name: Andrew Jarvis
	
 

	
 
	
 
	
Title: Associate
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	
BANK OF THE WEST,
	
 

	 	as a Domestic Lender	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Dennis Boesen
	
 

	
 
	
 
	
Name: Dennis Boesen
	
 

	
 
	
 
	
Title: Vice President
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

	
 
	
ONEWEST BANK N.A.,
	
 

	 	as a Domestic Lender	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Todd Camp  
	
 

	
 
	
 
	
Name: Todd Camp
	
 

	
 
	
 
	
Title: Senior Vice President
	
 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 

 

 

 

SCHEDULE I

 

SPECIFIED DEFAULTS

 

1.     Event of Default arising under Section 8.01(a) of the Credit Agreement resulting from the failure by the Borrowers to make a mandatory prepayment of the Loans and/or Cash Collateralize Acceptances and L/C Obligations on September 30, 2014 in the amount required pursuant to Section 2.07(c) of the Credit Agreement. 

 

2.     Event of Default arising under Section 8.01(a) of the Credit Agreement resulting from the failure by the Borrowers to repay the Loans and Cash Collateralize Acceptances and L/C Obligations in accordance with the requirements of Section 2.06(c) of the Credit Agreement upon termination of the Aggregate Canadian Commitments and Aggregate Domestic Commitments.

 

3.     Events of Default arising under Section 8.01(a) of the Credit Agreement resulting from the failure by the Borrowers to reimburse the Canadian L/C Issuer for amounts drawn under Letter of Credit number 7114 SB103490/06 in the amount of C$3,000,000 on February 19, 2015 and Letter of Credit number 7114 SB105332/10 in the amount of C$107,949 on March 16, 2015.

 

4.     Event of Default arising under Section 8.01(a) of the Credit Agreement due to the failure of the Borrowers to pay all Obligations and Cash in full on the Maturity Date.

 

5.     Events of Default arising under Sections 8.01(f) and (g) of the Credit Agreement resulting from the institution by the Canadian Borrower and Career Canada C.F.P. Limited of a proceeding under the Bankruptcy & Insolvency Act, R.S.C., 1985, c. B-3 (BIA) on February 20, 2015.

 

6.     Any Default or Event of Default in respect of or relating to the Canadian Borrower or Canada C.F.P. Limited arising after February 20, 2015.

 

7.     Event of Default arising under Section 8.01(k) of the Credit Agreement resulting from the failure by the Borrowers to file audited financial statements with the Department of Education for the year ended June 30, 2014.

 

8.     Event of Default arising under Section 8.01(e) of the Credit Agreement in respect of the failure of the Borrowers to make payments to ASFG in excess of the threshold referenced in Section 8.01(e) of the Credit Agreement.

 

9.     Event of Default arising under Section 8.01(b) of the Credit Agreement in respect of the failure of the Borrowers to provide monthly financial statements with respect to February 2015 as required pursuant to Section 2.1(a) of the Waiver Agreement.

 

 

 

 

 

EXHIBIT A

 

RELEASE LETTER

 

[Attached]

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