Document:

Exhibit 4.1

 

	
  NUMBER

  	
   

  	
  SHARES

  
	
  LE

  	
   

  	
   

  

 

 

LINCOLN EDUCATIONAL SERVICES
CORPORATION

 

	
  INCORPORATED
  UNDER THE LAWS OF THE STATE OF NEW JERSEY

  	
  SEE
  REVERSE FOR

  CERTAIN DEFINITIONS

  
	
   

  	
  COMMON
  STOCK

  	
  CUSIP

  	
  533535

  	
  10

  	
  0

  
	
   

  	
   

  	
   

  
	
  THIS CERTIFIES THAT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  IS THE OWNER OF

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

FULLY PAID AND NON-ASSESSABLE SHARES
OF COMMON STOCK OF NO PAR VALUE EACH OF

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  LINCOLN
  EDUCATIONAL SERVICES CORPORATION

  	
   

  	
   

  	
   

  
										

transferable on the books of the Corporation in person
or by attorney upon surrender of this certificate duly endorsed or
assigned.  This certificate and the
shares represented hereby are subject to the laws of the State of New Jersey,
and to the Articles of Incorporation and Bylaws of the Corporation, as now or
hereafter amended.  This certificate is
not valid until countersigned by the Transfer Agent and Registrar.

 

WITNESS the facsimile seal of the Corporation and the
facsimile signature of its duly authorized officers

 

LINCOLN
EDUCATIONAL SERVICES CORPORATION

CORPORATE SEAL

2003

NEW JERSEY

 

	
  DATED:

  	
   

  	
  COUNTERSIGNED:

  
	
   

  	
   

  	
  CONTINENTAL STOCK
  TRANSFER & TRUST COMPANY

  
	
   

  	
   

  	
  JERSEY CITY, NJ

  
	
   

  	
   

  	
  TRANSFER AGENT AND
  REGISTRAR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  
	
   

  	
   

  	
  AUTHORIZED OFFICER

  
	
   

  	
  /s/ Alexandra M. Luster

  	
   

  	
   

  	
  /s/ David F. Carney

  	
   

  
	
   

  	
  SECRETARY

  	
   

  	
   

  	
  CHAIRMAN
  AND CEO

  	
   

  

 

 

The following abbreviations, when used in the
inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:

 

	
  TEN COM – as tenants in common

  	
   

  	
  UNIF GIFT MIN ACT -

  	
  Custodian

  
	
  TEN ENT – as tenants by the entireties

  	
   

  	
   

  	
  (Cust)

  	
  (Minor)

  
	
  JT TEN – as joint tenants with rights of 

  	
   

  	
   

  	
  under Uniform Gifts to

  
	
   

  	
  survivorship and not as tenants in

  	
   

  	
   

  	
  Minors Act

  
	
   

  	
  common

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (State)

  

 

 

Additional abbreviations may also be used though not
in the above list.

 

For Value Received,                               
hereby sell, assign and transfer unto

 

	
  PLEASE INSERT SOCIAL
  SECURITY OR OTHER

  
	
  IDENTIFYING NUMBER OF
  ASSIGNEE

  

 

 

 

	
   

  
	
  (PLEASE PRINT OR
  TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNER)

  
	
   

  
	
                                                                                                                                                                                                                         

  
	
   

  
	
                                                                                                                                                                                                                         

  
	
   

  
	
                                                                                                                                                                                                             
  Shares

  
	
  of the stock represented by the within Certificate,
  and do hereby irrevocably constitute and appoint

  
	
   

  
	
                                                                                                                                                                                                          
  Attorney

  
	
  to transfer the said stock on the books of the
  within named Corporation with full power of substitution in the premises.

  
	
   

  
	
  Dated

  	
   

  	
   

  

 

 

	
   

  
	
  NOTICE: THE SIGNATURE TO THE
  ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE
  CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
  CHANGE WHATSOEVER.

  

 

 

THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND TO THE NAME AS WRITTEN
UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL
BANK OR TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL OR REGIONAL OR OTHER
RECOGNIZED STOCK EXCHANGE IN CONFORMANCE WITH A SIGNATURE GUARANTEE MEDALLION
PROGRAM.

 

 

	
   

  

 

 

COLUMBIA FINANCIAL
PRINTING CO., P.O. BOX 218 BETHPAGE, NY 11714

www.stockinformation.comExhibit 10.13

 

STOCKHOLDERS’
AGREEMENT

 

among

LINCOLN EDUCATIONAL
SERVICES CORPORATION,

BACK TO SCHOOL
ACQUISITION, L.L.C.,

STEVEN W. HART

And

STEVEN W. HART 2003
GRANTOR RETAINED ANNUITY TRUST

 

Dated as of June ___,
2005

 

 

 

TABLE OF CONTENTS

	
   

  
	
  ARTICLE I

  DEFINITIONS

  
	
   

  
	
  SECTION 1.01.
  Certain Defined Terms

  
	
   

  
	
  ARTICLE II

  CERTAIN
  AGREEMENTS

  
	
   

  
	
  SECTION 2.01.
  Voting

  
	
  SECTION 2.02.
  Company Financial Statements

  
	
   

  
	
  ARTICLE
  III

  RESTRICTIONS
  ON TRANSFER

  
	
   

  
	
  SECTION 3.01.
  General Restriction

  
	
  SECTION 3.02.
  Legends

  
	
  SECTION 3.03.
  Certain Restrictions on Transfer

  
	
  SECTION 3.04.
  Rights to Participate in Certain Sales

  
	
  SECTION 3.05.
  “Drag-Along” Rights

  
	
  SECTION 3.06.
  Certain Persons to Execute Agreement

  
	
  SECTION 3.07.
  Improper Sale or Encumbrance

  
	
   

  
	
  ARTICLE IV

  REGISTRATION
  RIGHTS

  
	
   

  
	
  SECTION 4.01.
  Incidental Registration

  
	
  SECTION 4.02.
  Furnish Information

  
	
  SECTION 4.03.
  Expenses of Registration

  
	
  SECTION 4.04.
  Underwriting Requirements

  
	
  SECTION 4.05.
  Registration Procedures

  
	
  SECTION 4.06.
  Rule 144 Information

  
	
  SECTION 4.07.
  Indemnification

  
	
   

  
	
  ARTICLE V

  MISCELLANEOUS

  
	
   

  
	
  SECTION 5.01.
  Termination

  
	
  SECTION 5.02.
  Conflict with Certificate of Incorporation or By-Laws

  
	
  SECTION 5.03.
  Expenses

  
	
  SECTION 5.04.
  Notices

  
	
  SECTION 5.05.
  Public Announcements

  
	
  SECTION 5.06.
  Headings

  
	
  SECTION 5.07.
  Severability

  
	
  SECTION 5.08.
  Entire Agreement

  

 

 

	
  SECTION 5.09.
  Assignment

  
	
  SECTION 5.10. No
  Third Party Beneficiaries

  
	
  SECTION 5.11.
  Amendment

  
	
  SECTION 5.12.
  Governing Law

  
	
  SECTION 5.13.
  Counterparts

  
	
  SECTION 5.14.
  Specific Performance

  
	
  SECTION 5.15.
  Waiver of Jury Trial

  

 

STOCKHOLDERS’ AGREEMENT, dated as of June ___, 2005
among LINCOLN EDUCATIONAL SERVICES CORPORATION, a New Jersey corporation (the “Company”);
BACK TO SCHOOL ACQUISITION, L.L.C., a Delaware limited liability company (“Stonington”);
STEVEN W. HART and STEVEN W. HART 2003 GRANTOR ANNUITY TRUST (the “Hart
Trust”).

WHEREAS, by a Stock Option and Consulting Agreement,
dated June 21, 1999, between the Company and Steven W. Hart, the Company
granted an option to Steven W. Hart to acquire 1,615 new shares of Common Stock
of the Company (“Common Stock”), which now constitutes an option to
acquire 161,500 new shares of Common Stock as a result of a stock split
effected by the Company (the “S. Hart Option”); and

WHEREAS, by an Assignment of Stock Options of Lincoln
Educational Services Corp., Inc. dated December 24, 2003 between Steven W. Hart
and the Hart Trust, Steven W. Hart assigned to the Hart Trust all of his
rights, title and interest as to 100,000 of the options included in the S. Hart
Option; and

WHEREAS, as a condition to the exercise of part of the
S. Hart Option and in order to make certain agreements with respect to their
respective rights and obligations as holders of Common Stock, the parties
hereto have determined that it is in their best interests to enter into this
Agreement;

NOW, THEREFORE, in consideration of the premises and
the mutual agreements and covenants hereinafter set forth, the parties hereto
hereby agree as follows:

ARTICLE
I

DEFINITIONS

SECTION 1.01.  Certain Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings:

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

“Agreement” or “this Agreement” means
this Stockholders’ Agreement, dated as of June ___, 2005, among the Company and
each of the other parties signatory hereto, and all amendments hereto made in
accordance with the provisions of Section 5.11.

“beneficial owner” or “beneficially own”
has the meaning given such term in Rule 13d-3 under the Exchange Act.

“Board” means the Board of Directors of the
Company.

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

 

 

“By-Laws” means the Company’s by-laws, as in
effect from time to time.

“Cash Equivalents” means (a) marketable direct
obligations issued or unconditionally guaranteed by the United States
government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one year from the
date of acquisition thereof; (b) marketable direct obligations issued by any
state of the United States or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor’s Ratings Services, a Division of The
McGraw-Hill Companies, Inc. (“S&P”) or Moody’s Investors Service,
Inc.; or (c) commercial paper maturing not more than one year from the date of
issuance thereof and, at the time of acquisition, having the highest rating
obtainable from either S&P or Moody’s Investors Service, Inc.

“Certificate of Incorporation” means the
Company’s Certificate of Incorporation as in effect from time to time.

“Commission” means the Securities and Exchange
Commission, and any successor commission or agency having similar powers.

“Common Stock” has the meaning specified in the
recitals to this Agreement.

“Company” has the meaning specified in the
preamble to this Agreement.

“Control” (including the terms “controlled
by” and “under common control with”), with respect to the
relationship between or among two or more Persons, means the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.

“Encumbrance” means any security interest,
pledge, mortgage, lien (including, without limitation, environmental and tax
liens), charge, encumbrance, adverse claim, preferential arrangement or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder.

“Fair Value” means (a) as to publicly traded
securities, the average of the daily closing prices or last reported sales
price, as applicable, or if closing prices or last reported sales prices are
not available, the average of the highest reported bid and the lowest reported
asked price, for the ten (10) consecutive trading days ending on the most
recent trading day prior to the date of determination, and (b) as to other
assets, the fair market value of such assets determined in good faith by an
independent nationally

2

recognized investment
banking firm selected by the Company and approved (which approval shall not be
unreasonably withheld) by (i) Steven W. Hart, the Hart Trust and their
Permitted Transferees and (ii) Stonington and its Affiliates, by action of the
majority in number of Fully Diluted Shares held by each such group, and which
investment banking firm shall have provided no material services to the Company
or any Stockholder within the preceding year.

“Fully Diluted Shares” means the aggregate of
(a) the number of Shares issued and outstanding (other than Shares held in the
treasury of the Company or held by any Subsidiary) and (b) the number of Shares
issuable upon (i) the exercise of any then outstanding options, warrants or
similar instruments (other than such instruments held by the Company or any
Subsidiary) and (ii) the exercise of any conversion or exchange rights with
respect to any outstanding securities or instruments (other than such
securities or instruments held by the Company or any Subsidiary).

“Marketable Securities” means securities that
are (a) (i) securities of or other interests in any Person that are traded on a
national securities exchange, reported on the Nasdaq Stock Market System or
otherwise actively traded over-the-counter or (ii) debt securities of an issuer
that has debt or equity securities that are so traded or so reported on and
which a nationally recognized securities firm has agreed to make a market in,
and (b) not subject to restrictions on transfer as a result of any applicable
contractual provisions or the provisions of the Securities Act or, if subject
to such restrictions under the Securities Act, are also subject to registration
rights reasonably acceptable to Stonington.

“Other Stockholder” means any of Steven W.
Hart, the Hart Trust and any of their Permitted Transferees.

“Permitted Transferee” means, in the case of
Steven W. Hart or the Hart Trust, (a) any of their Affiliates or, in the case
of Steven W. Hart, members of his immediate family, and (b) any Person with
respect to which the Stockholders agree that they have no objection if a Sale
of Shares is made to such Person.

“Person” means any individual, partnership, firm,
corporation, limited liability company, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Exchange Act.

“Public Company” means that, as of the date of
determination, the shares of Common Stock that have been sold in Public
Offerings shall equal not less than 10% of the Fully Diluted Shares.

“Public Offering” means an underwritten public
offering of equity securities of the Company pursuant to an effective
registration statement under the Securities Act.

“Registrable Shares” means the Shares,
including the Shares issued or issuable pursuant to the S. Hart Option, and any
securities issued or issuable with respect to any Shares by way of conversion,
exchange, replacement, stock dividend, stock split or other distribution or in
connection with a combination of shares, recapitalization, merger,

3

consolidation or other
reorganization or otherwise.  For
purposes of this Agreement, any Registrable Shares shall cease to be
Registrable Shares when (a) a registration statement covering such Registrable
Shares has been declared effective and such Registrable Shares have been
disposed of pursuant to such effective registration statement, (b) such
Registrable Shares are sold by a Person in a transaction in which the rights
under the provisions of this Agreement are not assigned or (c) such Registrable
Shares are sold pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act without registration under
the Securities Act.

“Restricted Shares” means all Shares other than
(a) Shares that have been registered under a registration statement pursuant to
the Securities Act; (b) Shares with respect to which a Sale has been made in
reliance upon, and in accordance with, Rule 144; or (c) Shares with respect to
which the holder thereof shall have delivered to the Company either (i) a
written opinion, in form and substance reasonably satisfactory to the Company,
of counsel, who shall be reasonably satisfactory to the Company, or (ii) a “no
action” letter from the Commission, to the effect that subsequent transfers of
such Shares may be effected without registration under the Securities Act.

“Rule 144” means Rule 144 (or any successor
provision) under the Securities Act.

“Rule 144 Transaction” means any Sale of Shares
made in reliance upon, and in accordance with, Rule 144.

“Sale” means any sale, assignment, transfer,
distribution or other disposition of Shares or of a participation or other
right therein, whether voluntarily or by operation of law.

“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations thereunder.

“Share” means any share of Common Stock.

“S. Hart Option” has the meaning specified in
the recitals to this Agreement.

“Stockholder” means each Person (other than the
Company) who or which shall be a party to this Agreement, whether in connection
with the execution and delivery hereof as of the date hereof, pursuant to
Section 3.06 or otherwise, so long as such Person shall own, beneficially or of
record, any Shares.

“Subsidiary” or “Subsidiaries” of any
Person means any corporation, partnership, joint venture, association or other
entity, all of the capital stock or other similar equity interests of which,
are owned beneficially and of record by such Person directly or indirectly
through one or more intermediaries.

“Stonington” has the meaning specified in the
preamble to this Agreement.

“Third Party” means, with respect to any
Stockholder, any Person, other than (i) the Company, (ii) any Subsidiary of the
Company or (iii) any Affiliate of such

 

4

 

Stockholder or, in the
case of Steven W. Hart or the Hart Trust, any Person described in clause (a) of
the definition of Permitted Transferee.

ARTICLE II

CERTAIN AGREEMENTS

 

 SECTION
2.01.  Voting.  Steven W. Hart and the Hart Trust hereby
agree to vote all Shares owned or held of record by each of them as directed by
Stonington at any annual or special stockholders’ meeting, or to take all
actions by written consent in lieu of any such meeting as directed by
Stonington.

SECTION 2.02.  Company Financial Statements.  For such time as Steven W. Hart, the Hart
Trust and their Permitted Transferees (other than the Persons described in
clause (b) of the definition of Permitted Transferee) hold any Shares, the
Company agrees to provide each of them with (i) unaudited quarterly financial
statements of the Company within 45 days of the end of each fiscal quarter of
the Company and (ii) audited financial statements of the Company within 90 days
of the end of each fiscal year of the Company.

ARTICLE III

RESTRICTIONS ON TRANSFER

 

SECTION 3.01.  General Restriction.  The Other Stockholders agree that they will
not, directly or indirectly, make or solicit any Sale of, or create, incur,
solicit or assume any Encumbrance with respect to, any Share, except in
compliance with the Securities Act and this Agreement.  Notwithstanding the foregoing, Steven W. Hart,
the Hart Trust and their Permitted Transferees may make or solicit sales to
Permitted Transferees, subject to compliance with this Article III.

SECTION 3.02.  Legends.  (a) 
The Company shall affix to each certificate evidencing Shares of the
Other Stockholders a legend in substantially the following form:

THE SECURITIES EVIDENCED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED.  NO REGISTRATION OF TRANSFER
OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS SUCH TRANSFER
IS MADE IN CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
SUCH ACT DOES NOT APPLY.

THE SECURITIES EVIDENCED
BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET
FORTH IN A STOCKHOLDERS’ AGREEMENT, DATED AS OF JUNE ___, 2005, AS IT MAY
THEREAFTER BE AMENDED, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE ISSUER.  NO REGISTRATION
OF

 

5

TRANSFER OF SUCH
SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH
RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH.

(b)           The Company shall affix to each certificate
evidencing Shares of any Stockholder a legend in substantially the following
form:

THE HOLDER OF THE
SECURITIES EVIDENCED BY THIS CERTIFICATE IS ENTITLED TO CERTAIN RIGHTS AND
SUBJECT TO CERTAIN OBLIGATIONS AS SET FORTH IN A STOCKHOLDERS’ AGREEMENT, DATED
AS OF JUNE ___, 2005, AS IT MAY THEREAFTER BE AMENDED, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.

(c)           In the event that any Shares shall
cease to be Restricted Shares, the Company shall, upon the written request of
the holder thereof, issue to such holder a new certificate evidencing such
Shares without the first paragraph of the legend required by Section 3.02(a)
endorsed thereon; provided, however, that such holder shall
furnish the Company or its transfer agent such certificates, legal opinions or
other information as the Company or its transfer agent may reasonably require
to confirm that the legend is not required on such certificate.  In the event that any Shares shall cease to
be subject to the restrictions on transfer set forth in this Agreement, the
Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Shares without the second paragraph of
the legend required by Section 3.02(a). 
In the event that any Shares shall cease to be entitled to any rights
and subject to any obligations set forth in this Agreement, the Company shall,
upon the written request of the holder thereof, issue to such holder a new
certificate evidencing such Shares without the legend required by Section
3.02(b).

SECTION 3.03.  Certain Restrictions on Transfer.  (a)  So
long as Stonington and/or its Affiliates own at least twenty percent (20%) of
the then outstanding Shares, each Other Stockholder agrees that such Other
Stockholder will not, directly or indirectly, make any Sale of, or create,
incur, or assume any Encumbrance with respect to, any Shares held by such Other
Stockholder other than any Sale or Encumbrance to a Permitted Transferee (other
than the Persons described in clause (b) of the definition of Permitted
Transferee), without first granting Stonington and/or its Affiliates, the
option to acquire those Shares in accordance with this Section 3.03.

(b)           If an Other Stockholder receives a
bona fide offer that such Other Stockholder desires to accept from a Third
Party with respect to the Sale of such Other Stockholder’s Shares, such Other
Stockholder shall give to Stonington written notice (the “Transfer Notice”)
of such proposed Sale, specifying the proposed transferee, the number of Shares
proposed to be disposed of, the proposed purchase price to be received in
exchange therefor, and the other material terms of the proposed Sale.  Delivery of the Transfer Notice to Stonington
shall constitute an irrevocable offer to sell such Shares to Stonington on the
terms and conditions set forth therein; provided, however, that
if the proposed purchase price set out in the Transfer Notice is other than all
cash, such Other Stockholder shall accept an amount of cash equivalent to the
Fair Value of such non-cash consideration, such Fair Value to be determined at
the cost of the Company.

 

6

(c)           Stonington shall have the right,
exercisable by written notice given to such Other Stockholder within ten (10)
Business Days after receipt of such Transfer Notice, to purchase (or to cause
an Affiliate of Stonington to purchase) all, but not less than all, of the
Shares specified in such Transfer Notice at the purchase price and on the other
terms set forth therein.

(d)           If Stonington exercises its right of
first refusal pursuant to this Section 3.03, the closing of the purchase of the
Shares with respect to which such right has been exercised shall take place
within five Business Days after Stonington gives notice of such exercise.  If Stonington does not exercise its right of
first refusal pursuant to this Section 3.03 within the time specified for such
exercise, the Other Stockholder shall be free during the 90-day period
following the expiration of such time to sell the Shares specified in such
Transfer Notice to the Person specified therein for the consideration (or at
any price in excess thereof) and on substantially the same terms (or on other
terms more favorable to the Other Stockholder) specified therein.

SECTION 3.04.  Rights to Participate in Certain Sales.  (a) 
(i)  Neither Stonington nor any of
its Affiliates shall, in one or more transactions, directly or indirectly, make
any Sale of Shares held by them constituting more than forty-five percent (45%)
of the then outstanding Shares to any Third Party or Third Parties, unless the
terms and conditions of such Sale shall include an offer to include, at the
option of the Other Stockholders, in such Sale to the Third Party or Third
Parties, the number of Shares then owned by such Other Stockholders, as
determined by Section 3.04(a)(iii).

(ii)           If Stonington and/or any of its Affiliates receives from a
Third Party or Third Parties a bona fide offer or offers to purchase or
otherwise acquire (for purposes of this Section an “Offer”) any Shares
held by Stonington or such Affiliates (for purposes of this Section 3.04, the “Offered
Shares”) that, together with Shares previously disposed of by Stonington or
any of such Affiliates to Third Parties aggregate more than forty-five percent
(45%) of the then outstanding Shares (such Shares, together with the Offered
Shares, for purposes of this Section 3.04, the “Tag-Along Shares”), and
Stonington and/or such Affiliates intends to sell such Offered Shares to such
Third Party or Third Parties, then Stonington and such Affiliate (for purposes
of this Section 3.04, the “Prospective Sellers”) shall jointly provide
written notice (for purposes of this Section 3.04, the “Offer Notice”)
of such Offer to each of the Other Stockholders not later than thirty (30) days
prior to the consummation of the Sale contemplated by the Offer.  The Offer Notice shall identify the Offered
Shares, the price offered for such Offered Shares (for purposes of this Section
3.04, the “Offer Price”), all other material terms and conditions of the
Offer and, in the case of an Offer in which the consideration payable for
Offered Shares consists in whole or in part of consideration other than cash,
such information relating to such other consideration as may be reasonably
necessary to ascertain the value of such other consideration.

(iii)          Each of the Other Stockholders shall have the right and
option, for the period of ten (10) days after the date the Offer Notice is
given (for purposes of this Section 3.04, the “Notice Period”), to
notify the Prospective Sellers of such Other Stockholder’s interest in selling
or otherwise disposing of up to the Pro Rata Portion of such Other Stockholder’s
Shares pursuant to the Offer.  For
purposes of this subsection 3.04, “Pro Rata Portion” means, with

 

7

respect to each Other Stockholder, a number of Fully
Diluted Shares equal to the product of (x) the total number of Fully Diluted
Shares then owned by such Other Stockholder, multiplied  by (y) a
fraction, the numerator of which shall be the total number of Tag-Along Shares,
and the denominator of which shall be the total number of Shares owned by the
Prospective Sellers on the date of the first sale of Tag-Along Shares.

(iv)          Each Other Stockholder desiring to sell such Other
Stockholder’s Pro Rata Portion of Shares pursuant to this Section 3.04 shall,
prior to the expiration of the Notice Period, provide the Prospective Sellers
with a written notice specifying the number of Shares as to which such Other
Stockholder has an interest in selling or otherwise disposing of pursuant to
the Offer (for purposes of this Section 3.04, a “Notice of Interest”),
and shall deliver to the Prospective Sellers, to be held in trust, (A) the
certificate or certificates evidencing the Shares to be sold or otherwise
disposed of by such Other Stockholder duly endorsed in blank or accompanied by
written instruments of transfer in form reasonably satisfactory to the
Prospective Sellers executed by such Other Stockholder; (B) an instrument of
assignment reasonably satisfactory to the Prospective Sellers assigning, as of
the consummation of the Sale to the Third Party or Third Parties, all of such
Stockholder’s rights under this Agreement with respect to the Shares to be sold
or otherwise disposed of (to the extent assignable); (C) a special irrevocable
power-of-attorney authorizing the Prospective Sellers, on behalf of such Other
Stockholder, to sell or otherwise dispose of such Shares pursuant to the terms
of the Offer (at a price equal to the Offer Price) and to take all such actions
as shall be necessary or appropriate in order to consummate such Sale; provided,
however, that the Prospective Sellers shall not have the authority to
incur or create liabilities or to give representations or warranties on behalf
of such Other Stockholder; and (D) wire transfer instruction for payment of the
purchase price (if cash) for the purchase of the Other Stockholder’s
Shares.  Delivery of such certificate or
certificates evidencing the Shares to be sold, the instrument of assignment,
the special irrevocable power-of-attorney authorizing the Prospective Sellers
and wire transfer instructions, on behalf of such Other Stockholder, to sell or
otherwise dispose of such Shares shall constitute an irrevocable election by
such Other Stockholder to authorize and permit the Prospective Sellers to sell
such Shares, on behalf of such Other Stockholder, pursuant to the Offer.  The Prospective Sellers shall cause the Third
Party to whom or which the Shares of the Other Stockholders are being sold or
otherwise disposed of to deliver the appropriate purchase price for the
purchase of such Shares to the Other Stockholders, against delivery of the
Shares being sold or otherwise disposed of.

(v)           Each Stockholder shall bear such Stockholder’s own
expenses in connection with any such Sale pursuant to this Section 3.04.

(vi)          If at the end of the Notice Period any Other Stockholder
shall not have given a Notice of Interest (and delivered all other required
documents) with respect to some or all of such Other Stockholder’s Shares, such
Other Stockholder will be deemed to have waived all of such Other Stockholder’s
rights under this Section 3.04 with respect to the portion of such Other Stockholder’s
Shares for which a Notice of Interest shall not have been given.  If, at the end of the 180-day period
following the giving of the Offer Notice, the Prospective Sellers shall not
have completed the Sale of all the Offered Shares and the Shares with respect
to which any Other Stockholders shall have given Notices of Interest pursuant
to this Section 3.04, the Prospective Sellers shall return to such Other
Stockholders all certificates evidencing the unsold Shares that such Other
Stockholders delivered for Sale pursuant to this Section 3.04 and such

 

8

Other Stockholders’ related instruments of
assignment and powers-of-attorney and the Prospective Sellers shall not
consummate the Sale with such Third Party or Third Parties without again
complying with the terms and procedures set forth in this Section 3.04,
including providing to the Other Stockholders another Offer Notice.

(vii)         Except as expressly provided in this Section 3.04, no
Prospective Seller shall have any obligation to any Other Stockholder with
respect to the Sale of any Shares owned by any Other Stockholder in connection
with this Section 3.04.  Anything herein
to the contrary notwithstanding and irrespective of whether any Notice of
Interest shall have been given, no Prospective Seller shall have any obligation
to any Other Stockholder to sell or otherwise dispose of any Offered Shares
pursuant to this Section 3.04 as a result of any decision by such Prospective
Seller not to accept or consummate any Offer or Sale with respect to the
Offered Shares (it being understood that any and all such decisions shall be
made by such Prospective Seller in its sole discretion).  Except as otherwise permitted herein, no
Other Stockholder shall be entitled to sell or otherwise dispose of Shares
directly to any Third Party or Third Parties pursuant to an Offer (it being
understood that all such Sales shall be made only on the terms and pursuant to
the procedures set forth in this Section 3.04).

(b)           Anything in this Section 3.04 to the
contrary notwithstanding, in the event that Stonington and/or its Affiliates
shall exercise their rights under Section 3.05, the Other Stockholders shall
thereafter have no right pursuant to this Section 3.04 to participate in any
Sale pursuant to this Section 3.04 with respect to the Sale the subject of
Section 3.05.  Nothing in this Section
3.04 shall affect any of the obligations of any of the Stockholders under any
other provision of this Agreement.

SECTION 3.05.  “Drag-Along” Rights.  (a)  If
Stonington and/or any of its Affiliates shall, in any transaction or series of
related transactions, directly or indirectly, propose to make a Sale of Shares
constituting more than 50% of the Fully Diluted Shares (for purposes of this
Section 3.05, the “Controlling Shares”) to a Third Party or Third
Parties (for purposes of this Section 3.05, an “Offer”), Stonington
and/or such Affiliates may, at their option, require each of the Other
Stockholders to sell the Pro Rata Portion of such Stockholder’s Shares to such
Third Party or Third Parties for the same consideration per Share and otherwise
upon the same terms and conditions upon which Stonington and/or such Affiliates
sell their Shares.  For purposes of this
Section 3.05, “Pro Rata Portion” means, with respect to each Other
Stockholder, a number of Shares equal to the product of (x) the total number of
Fully Diluted Shares then owned by such Other Stockholder, multiplied  by
(y) a fraction, the numerator of which shall be the total number of Shares
proposed to be sold by Stonington and/or such Affiliates, and the denominator
of which shall be the total number of Shares then owned by Stonington and/or
its Affiliates.

(b)           (i) 
Stonington and/or such Affiliates shall provide a written notice (for
purposes of this Section 3.05, the “Offer Notice”) of such Offer to each
of the Other Stockholders not later than the fifteenth Business Day prior to
the consummation of the Sale contemplated by the Offer.  The Offer Notice shall contain written notice
of the exercise of the “drag-along” rights of Stonington and/or its Affiliates
pursuant to Section 3.05(a), setting forth the consideration per Share to be
paid by the Third Party or Third Parties and the other material terms and
conditions of the Offer.  Within ten (10)
Business Days following the date the Offer Notice is given, each of the Other
Stockholders shall deliver to Stonington and/or such Affiliates,

9

to be held in
trust, (A) the certificate or certificates evidencing the Pro Rata Portion of
Shares owned or held by such Other Stockholder duly endorsed in blank or
accompanied by written instruments of transfer in form reasonably satisfactory
to Stonington and/or such Affiliate executed by such Other Stockholder, (B) a
special irrevocable power-of-attorney authorizing Stonington and/or such
Affiliate, on behalf of such Other Stockholder, to sell or otherwise dispose of
such Shares pursuant to the terms of the Offer and to take all such actions as
shall be necessary or appropriate in order to consummate such Sale; provided,
however, that Stonington and/or such Affiliate shall not have the
authority to incur or create liabilities or to give representations and
warranties on behalf of such Other Stockholder, and (C) wire transfer
instructions for payment of the purchase price of the Other Stockholder’s
Shares; provided that no Other Stockholder shall have any liability to
any purchaser of the Shares pursuant to the Offer in excess of the aggregate
proceeds received by such Other Stockholder in exchange for such Stockholder’s
Shares or in a manner that is disproportionate or different from Stonington and
its Affiliates.  Stonington and/or such
Affiliate shall cause the Third Party to whom or which the Shares of the
Stockholders are being sold or otherwise disposed to deliver the appropriate
amount of immediately available funds for the purchase of such Shares to the
Other Stockholders pursuant to the wire transfer instructions described in
clause (C) above.  If in connection with
such Sale, Stonington and/or such Affiliate are to receive consideration other
than cash, Cash Equivalents or Marketable Securities, each Other Stockholder
shall have the right to elect to receive in lieu thereof cash or Cash Equivalents
equal to the Fair Value of the consideration otherwise payable to such Other
Stockholder.  Such Other Stockholder
shall make such election in a written notice to Stonington and/or such
Affiliate within ten (10) Business Days following the date the Offer Notice is
provided to such Other Stockholder.

(ii)           Each Stockholder shall bear such
Stockholder’s own expenses incurred in connection with a Sale pursuant to this
Section 3.05.

(iii)          If, at the end of the 180-day
period following the giving of the Offer Notice, Stonington and/or its
Affiliates shall not have completed the Sale of all the Controlling Shares and
the Other Stockholders’ Shares delivered pursuant to Section 3.05(b)(i),
Stonington and/or its Affiliates shall return to each of the Other Stockholders
all certificates evidencing unsold Shares and related powers-of-attorney that
such Other Stockholder delivered pursuant to this Section 3.05.

(iv)          Except as expressly provided in this
Section 3.05, Stonington and its Affiliates shall have no obligation to any
Other Stockholder with respect to the Sale of any Shares owned by any Other
Stockholder in connection with this Section 3.05.  Anything herein to the contrary
notwithstanding, Stonington and/or its Affiliates shall have no obligation to
any Other Stockholder to sell or otherwise dispose of any Controlling Shares
pursuant to this Section 3.05 as a result of any decision by Stonington and/or
its Affiliates not to accept or consummate any Offer or Sale with respect to
the Controlling Shares (it being understood that any and all such decisions
shall be made by Stonington and/or its Affiliates in their sole
discretion).  No Other Stockholder shall
be entitled to make any Sale of Shares directly to any Third Party pursuant to
an Offer (it being understood that all such Sales shall be made only on the
terms and pursuant to the procedures set forth in this Section 3.05).  Nothing in this Section 3.05 shall affect any
of the obligations of any of the Stockholders under any other provision of this
Agreement.

 

10

SECTION 3.06.  Certain Persons to Execute Agreement.  (a) 
Each Stockholder agrees that it will not directly or indirectly make any
Sale of, or create, incur or assume any Encumbrance with respect to, any Shares
held by such Stockholder, unless, prior to the consummation of any such Sale or
the creation, incurrence or assumption of any such Encumbrance, the Person to
whom or which such Sale is proposed to be made or the Person in whose favor
such Encumbrance is proposed to be created, incurred or assumed (for purposes
of this Section 3.06, a “Prospective Transferee”) (i) executes and
delivers to the Company an agreement, in form and substance reasonably
satisfactory to the Company, whereby such Prospective Transferee confirms that,
with respect to the Shares that are the subject of such Sale or Encumbrance, it
shall be deemed to be a “Stockholder” for the purposes of this Agreement and
agrees to be bound by all the terms of this Agreement and (ii) delivers to the
Company a written opinion of counsel, satisfactory in form and substance to the
Company, to the effect that the agreement referred to above that is delivered
by such Prospective Transferee is a legal, valid and binding obligation of such
Prospective Transferee enforceable against such Prospective Transferee in
accordance with its terms.  Upon the
execution and delivery by such Prospective Transferee of the agreement referred
to in clause (i) of the next preceding sentence and, the delivery of the opinion
of counsel referred to in clause (ii) of the next preceding sentence, such
Prospective Transferee shall be deemed a “Stockholder” for the purposes of this
Agreement, and shall have the rights and be subject to the obligations of a
Stockholder hereunder with respect to the Shares held by such Prospective
Transferee or in respect of which such Encumbrance shall have been created,
incurred or assumed.

(b)           Anything in this Section 3.06 to the
contrary notwithstanding, the provisions of this Section 3.06 will not be
applicable to (i) any Sale of Shares pursuant to a Public Offering or (ii) any
Sale of Shares in a Rule 144 Transaction so long as immediately prior to, and
immediately after the consummation of, such Rule 144 Transaction the Company is
a Public Company.

SECTION 3.07.  Improper Sale or Encumbrance.  Any attempt by any Stockholder to make any
Sale of, or create, incur or assume any Encumbrance with respect to, any Shares
not in compliance with this Agreement shall be null and void and the Company
shall not give any effect in the Company’s stock records to such attempted Sale
or Encumbrance.

ARTICLE IV

REGISTRATION RIGHTS

 

SECTION 4.01.  Incidental Registration.  If at any time the Company determines that it
shall file a registration statement under the Securities Act (other than a
registration statement on a Form S-4 or S-8 or filed in connection with an
exchange offer or an offering of securities solely to the Company’s employee
benefit plans) on any form that would also permit the registration of the
Registrable Shares and such filing is to be on behalf of the Company and/or on
behalf of selling holders of its securities for the general registration of its
Common Stock to be sold for cash, the Company shall each such time promptly
give each Other Stockholder written notice of such determination setting forth
the date on which the Company proposes to file such registration statement,
which date shall be no earlier than thirty (30) days

 

11

from the date of such
notice, and advising each Other Stockholder of its right to have such Other
Stockholder’s Registrable Shares included in such registration; provided
that the Other Stockholders shall not have any right to have their Registrable
Shares included in the initial public offering of the Company if no other
Stockholder has its Registrable Shares so included.  Upon the written request of any Other
Stockholder received by the Company no later than fifteen (15) days after the
date of the Company’s notice, the Company shall use all reasonable efforts to
cause to be registered under the Securities Act all of the Registrable Shares
that each Other Stockholder has so requested to be registered.  If, in the written opinion of the managing
underwriter (or, in the case of a non-underwritten offering, as reasonably
determined by the Board and communicated in writing to the Stockholders), the
total amount of such securities to be so registered, including such Registrable
Shares, will exceed the maximum amount of the Company’s securities which can be
marketed (i) at a price reasonably related to the then current market value of
such securities, or (ii) without otherwise materially and adversely affecting
the entire offering, then the Company shall be entitled to reduce the number of
Registrable Shares to be sold in the offering by the Other Stockholders, and
any other stockholders of the Company exercising incidental registrations
rights similar to those set forth herein, to that number which in the written
opinion of the managing underwriter (or, in the case of a non-underwritten
offering, as reasonably determined by the Board and communicated in writing to
the Other Stockholders) would permit all such securities (including Shares held
by any other stockholder of the Company who proposes to exercise such
incidental registration rights) to be so marketed.  Such reduction shall be allocated among the
Other Stockholders in proportion (as nearly as practicable) to the amount of
Registrable Shares owned by each such Other Stockholder and the number of
Shares owned by any other stockholders of the Company which are sought to be
included in the registration statement by such other stockholders of the
Company, all measured at the time of filing the registration statement.

SECTION 4.02.  Furnish Information.  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 4.01 that the
Other Stockholders shall furnish to the Company such information regarding
themselves, the Registrable Shares held by them, and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.

SECTION 4.03.  Expenses of Registration.  All expenses incurred in connection with each
registration pursuant to Section 4.01, excluding underwriters’ discounts and
commissions, but including without limitation all registration, filing and
qualification fees, word processing, duplicating, printers’ and accounting fees
(including the expenses of any special audits or “cold comfort” letters
required by or incident to such performance and compliance), fees of the
National Association of Securities Dealers, Inc. or listing fees, messenger and
delivery expenses, all fees and expenses of complying with state securities or
blue sky laws, fees and disbursements of counsel for the Company, and the fees
and disbursements of one counsel for the selling Other Stockholders (which
counsel shall be selected by the Other Stockholders holding a majority in
interest of the Registrable Shares being registered), shall be paid by the
Company.  The Other Stockholders shall
bear and pay the underwriting commissions and discounts applicable to securities
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement.

 

12

 

SECTION 4.04.  Underwriting Requirements.  In connection with any underwritten offering,
the Company shall not be required under Section 4.01 to include Registrable
Shares in such underwritten offering unless the Other Stockholders holding such
Registrable Shares accept the terms of the underwriting of such offering that
have been reasonably agreed upon between the Company and the underwriters
selected by the Company and which are customary with respect to such an
offering and not inconsistent with this Article IV.  No such Other Stockholder shall be required
to make any representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or agreements regarding
such Other Stockholder, such Other Stockholders’ Registrable Shares and such
Stockholders’ intended method of distribution customarily given to underwriters
and any other representation required by law.

SECTION 4.05.  Registration Procedures.  If and whenever the Company is required by
the provisions of Section 4.01 to effect the registration of any Registrable
Shares under the Securities Act, the Company shall, as expeditiously as
possible:

(a)           furnish to each Other Stockholder of
Registrable Shares covered by such registration statement and each underwriter
thereof, if any, such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement filed under Rule 424 under the Securities Act, and such
other documents, as such Other Stockholder and underwriter may reasonably
request in order to facilitate the public sale or other disposition of such
Registrable Shares;

(b)           use all reasonable efforts to
register or qualify all Registrable Shares covered by such registration
statement under such other securities laws or blue sky laws of such
jurisdictions as any Other Stockholder thereof and any underwriter thereof
shall reasonably request; and

(c)           notify each Other Stockholder of
Registrable Shares covered by such registration statement and each underwriter
thereof, if any, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, upon the Company’s discovery that, or
upon the happening of any event of which the Company has knowledge as a result
of which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of any such Other Stockholder or such underwriter promptly prepare
and furnish to such Other Stockholder or such underwriter, if any, a reasonable
number of copies of a prospectus supplemented or amended so that, as thereafter
delivered to the purchasers of such Registrable Shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.

SECTION 4.06.  Rule 144 Information.  With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Shares to the public without registration, at all
times after ninety (90) days

13

after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:

(i)            make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act;

(ii)           use its reasonable efforts to file
with the Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act; and

(iii)          furnish to each Other Stockholder
holding Registrable Shares forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of such Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed by the Company as such Other Stockholder may reasonably request in
availing itself of any rule or regulation of the Commission allowing such Other
Stockholder to sell any Registrable Shares without registration.

SECTION 4.07.  Indemnification.  In the event any Registrable Shares are
included in a registration statement under Section 4.01:

(a)           The Company shall indemnify and hold
harmless each Other Stockholder, such Other Stockholder’s managers, directors
and officers, each Person who participates in the offering of such Registrable
Shares, including underwriters (as defined in the Securities Act), and each
Person, if any, who controls such Stockholder or participating Person within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based on
any untrue or alleged untrue statement of any material fact contained in such
registration statement on the effective date thereof (including any prospectus
filed under Rule 424 under the Securities Act or any amendments or supplements
thereto) or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the Company of
the Securities Act or any rule or regulation thereunder, and shall reimburse
each such Other Stockholder, such Other Stockholder’s managers, directors and
officers, such participating person or controlling person for any legal or
other expenses reasonably incurred by them (but not in excess of expenses
incurred in respect of one counsel for all of them unless there is an actual
conflict of interest between any indemnified parties, which indemnified parties
may be represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 4.07(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld); provided  further
that the Company shall not be liable to any Other  Stockholder, such Other Stockholder’s
managers, directors and officers, participating person or controlling person in
any such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in connection with such
registration statement, preliminary

 

14

 

prospectus,
final prospectus or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Other Stockholder, such Other Stockholder’s
directors and officers, participating person or controlling person.  Such indemnity shall remain in full force
regardless of any investigation made by or on behalf of any such Other
Stockholder, such Other Stockholder’s directors and officers, participating
person or controlling person, and shall survive the transfer of such securities
by such Other Stockholder.

(b)           Each Other Stockholder joining in a
registration severally and not jointly shall indemnify and hold harmless the
Company, each of its directors and officers, each person, if any, who controls
the Company within the meaning of the Securities Act, and each agent and any
underwriter for the Company (within the meaning of the Securities Act) against
any losses, claims, damages or liabilities, joint or several, to which the Company
or any such director, officer, controlling person, agent or underwriter may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement on the effective date
thereof (including any prospectus filed under Rule 424 under the Securities Act
or any amendments or supplements thereto) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished by or on behalf of such Other Stockholder expressly for
use in connection with such registration; and each such Other Stockholder shall
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling person, agent or underwriter  (but not in excess of expenses incurred in
respect of one counsel for all of them unless there is an actual conflict of
interest between any indemnified parties, which indemnified parties may be
represented by separate counsel) in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 4.07(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of such Other
Stockholder (which consent shall not be unreasonably withheld), and provided
further that the liability of each Other Stockholder hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the net proceeds from the sale of the
Shares sold by such Other Stockholder under such registration statement bears
to the total net proceeds from the sale of all securities sold thereunder, but
not in any event to exceed the net proceeds received by such Other Stockholder
from the sale of Registrable Securities covered by such registration statement.

(c)           Promptly after receipt by an
indemnified party under this Section 4.06 of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under this Section 4.06, notify the
indemnifying party in writing of the commencement thereof and the indemnifying
party shall have the right to participate in and assume the defense thereof
with counsel selected by the indemnifying party and reasonably satisfactory to
the indemnified party; provided, however, that an indemnified
party shall have the right to retain its own counsel, with all reasonable fees
and 

 

15

expenses
thereof to be paid by such indemnified party, and to be apprised of all
progress in any proceeding the defense of which has been assumed by the
indemnifying party.  The failure to
notify an indemnifying party promptly of the commencement of any such action,
if and to the extent prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 4.07, but the omission so to notify the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 4.07.

(d)           To the extent any indemnification by
an indemnifying party is prohibited or limited by law, the indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the actions which resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations.  The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action.  The amount paid or payable by a
party as a result of the losses, claims, damages or liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.

The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.07(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

ARTICLE V

MISCELLANEOUS

 

SECTION 5.01.  Termination.  Unless otherwise expressly provided herein,
the obligations of the parties hereto shall terminate on the date upon which
the Other Stockholders or their Permitted Transferees cease to own any Shares.

SECTION 5.02.  Conflict with Certificate of Incorporation
or By-Laws.  In the event any
provision of this Agreement conflicts with any provision of the Certificate of
Incorporation or the By-Laws, the terms of this Agreement shall control,
and each Stockholder shall vote all Shares which such Stockholder holds of
record, and shall take all actions necessary, to ensure that at all times the
Certificate of Incorporation and the By-Laws do not conflict with any
provision of this Agreement.

 

16

SECTION 5.03.  Expenses.  Except as expressly set forth herein, costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Person incurring
such costs and expenses.

SECTION 5.04.  Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 5.04):

(a)           if
to Steven W. Hart or the Hart Trust:

Steven W. Hart

131 Rowayton
Avenue

Rowayton, CT  06851

Telecopy: (203) 857-6051

 

with a copy to:

 

Shipman & Goodwin LLP

One Constitution Plaza

Hartford, CT  06103

Telecopy:  (860) 251-5311

Attention:  Marcus D. Wilkinson, Esq.

 

(b)           if
to the Company:

Lincoln
Educational Services Corporation

200 Executive
Drive

West Orange, NJ  07052

Telecopy:  (973) 243-0841

Attention:  President

 

with a copy to:

 

Stonington
Partners, Inc.

767 Fifth Avenue,
48th Floor

New York, NY  10153

Telecopy:  (212) 339-8585

Attention:  James J. Burke, Jr.

 

 

17

 

 

(c)           if
to Stonington:

c/o Stonington
Partners, Inc.

767 Fifth Avenue,
48 Floor

New York, NY  10153

Telecopy:  (212) 339-8585

Attention:  James J. Burke, Jr.

 

with a copy to:

 

Shearman &
Sterling

599 Lexington
Avenue

New York, NY  10022

Telecopy:  (212) 848-7179

Attention:  Clare O’Brien, Esq.

 

SECTION 5.05.  Public Announcements.  Unless otherwise required by applicable law,
no party to this Agreement shall make, or cause to be made, any press release
or public announcement in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without the
prior written consent of the other party, and the parties shall cooperate as to
the timing and contents of any such press release or public announcement.

SECTION 5.06.  Headings.  The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.

SECTION 5.07.  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law,
governmental regulation or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.

SECTION 5.08.  Entire Agreement.  This Agreement and the agreements referred to
herein constitute 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 the Company, Stonington, Steven W. Hart and the
Hart Trust with respect to the subject matter hereof and thereof.

SECTION 5.09.  Assignment.  Except as expressly provided herein, this
Agreement shall not be assigned without the express written consent of each of
the Company, Stonington, Steven W. Hart and the Hart Trust (which consent may
be granted or withheld in the sole discretion of each of the Company,
Stonington, Steven W. Hart and the Hart Trust).

 

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SECTION 5.10.  No Third Party Beneficiaries.  Except as set forth in Sections 2.01 and
4.07, this Agreement shall be binding upon and inure solely to the benefit of
the parties hereto, their successors and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other
Person, any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

SECTION 5.11.  Amendment.  This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, each of the
parties.

SECTION 5.12.  Governing Law.  This Agreement shall be governed by the laws
of the State of New York.  All actions
and proceedings arising out of or relating to this Agreement shall be heard and
determined in any New York state or federal court sitting in The City of New
York, and the parties hereto hereby consent to the jurisdiction of such courts
in any such action or proceeding.

SECTION 5.13.  Counterparts.  This Agreement may be executed in one or more
counterparts, and by the different 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.

SECTION 5.14.  Specific Performance.  The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.

SECTION 5.15.  Waiver of Jury Trial.  Each of the parties hereto irrevocably and
unconditionally waives trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to
this Agreement or the actions of the Company, Stonington, Steven W. Hart or the
Hart Trust in the negotiation, administration, performance and enforcement
thereof.

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IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed, as of the day
and year first above written, by their respective authorized signatories
thereunto duly authorized.

	
   

  	
  LINCOLN EDUCATIONAL SERVICES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
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  BACK TO SCHOOL ACQUISITION, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
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  STEVEN W. HART

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STEVEN W. HART 2003 GRANTOR RETAINED ANNUITY TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
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    Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
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    Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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