ASSUMPTION AGREEMENT AND FIRST AMENDMENT TO MANAGEMENT STOCKHOLDERS AGREEMENT
Exhibit
4.5
ASSUMPTION
AGREEMENT AND FIRST
AMENDMENT TO MANAGEMENT STOCKHOLDERS AGREEMENT
THIS
ASSUMPTION AGREEMENT AND THIS FIRST AMENDMENT (together, this “Amendment”) TO THE
MANAGEMENT STOCKHOLDERS AGREEMENT (the “Agreement”) dated as
of January 1, 2002, by and among LINCOLN TECHNICAL INSTITUTE, INC., a New Jersey
corporation (“LTI”), the Management
Investors (as such term is defined in the Agreement) and BACK TO SCHOOL
ACQUISITION L.L.C., a Delaware limited liability corporation (“Stonington”), is
entered into as of December 20, 2007 (the “Effective Date”) by
and among LINCOLN EDUCATIONAL SERVICES CORPORATION, a New Jersey corporation
(“LESC”), LTI,
Stonington and the undersigned Management Investors (together, the “Consenting
Investors”).
RECITALS
WHEREAS,
LTI, Stonington and Management Investors entered into the Agreement to provide
for certain rights and obligations among them, including, but not limited to,
the right, under certain circumstances, of the Other Stockholders to have their
Registrable Securities included in a registration statement filed by
LTI;
WHEREAS,
Section 5.10 of the Agreement provides that the Agreement shall be binding
upon
and shall inure to the benefit of the parties thereto and their respective
successors, assigns and transferees;
WHEREAS,
LESC, LTI, Stonington and the Consenting Investors desire to amend Section
4.01
of the Agreement to reduce the notice period to be afforded to the Other
Stockholders in connection with certain registration rights and to enter into
certain other amendments;
WHEREAS,
LTI desires to amend the Agreement and to assign its rights, duties and
obligations under the Agreement to LESC and LESC wishes to so assume all rights,
duties and obligations of LTI under the Agreement;
WHEREAS,
Section 5.04 of the Agreement provides, among other things, that the Agreement
may be amended by a written instrument signed by LTI, Stonington and Management
Investors beneficially owning at least a majority of the then outstanding
Management Shares; and
WHEREAS,
the Consenting Investors own at least a majority of the currently outstanding
Management Shares;
NOW,
THEREFORE, in consideration of the premises and covenants hereinafter set forth,
the receipt, sufficiency and adequacy of which are hereby acknowledged, LESC,
LTI, Stonington and the Consenting Investors hereto mutually agree as
follows:
ARTICLE
I
DEFINITIONS
1.1 Capitalized
terms used but not otherwise defined in this Amendment shall have the meanings
set forth in the Agreement.
1.2 Each
reference in the Agreement to “the Company” shall mean and be a reference in all
respects to LESC.
ARTICLE
II
ASSUMPTION
OF
AGREEMENT
2.1 Assignment. LTI
hereby assigns, transfers, conveys and delegates to LESC any and all of LTI’s
interest in and rights, duties and obligations under the Agreement, and LESC
hereby accepts such assignment, transfer, conveyance and
delegation.
2.2 Assumption. LESC
hereby assumes full responsibility for the full performance of, and undertakes,
assumes and agrees to perform, pay or otherwise discharge when due, any and
all
duties and obligations of LTI arising under the Agreement.
2.3 Further
Assurances. Each of LESC, LTI, Stonington and the Consenting
Investors hereto agrees that it will hereafter execute all further instruments
or documents and do such other acts and things as may be necessary or desirable
to more fully effectuate the assignment and assumption provided for
herein.
2.4 Release
of
LTI. Notwithstanding anything to the contrary contained
herein, upon the execution and delivery of this Amendment, LESC, Stonington
and
the Consenting Investors hereby agree that LTI shall be released from all of
its
duties and obligations under the Agreement.
ARTICLE
III
FIRST
AMENDMENT TO THE
AGREEMENT
3.1 Amendment
of Section 4.01 of
the Agreement. Section 4.01 of the Agreement shall be deleted and
replaced with the following:
“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 pursuant to the Company’s employee benefit plans) on any form that would
also permit the registration of the Registrable Securities 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 promptly give each Other Stockholder written notice of such
determination, setting forth the earliest date on which the Company proposes
to
file such registration statement, which date shall be no earlier than fifteen
(15) days from the date of such notice, and advising each Other Stockholder
of
its right to have such Other Stockholder’s Registrable Securities included in
such registration; provided that the
Other Stockholders shall not have any right to have their Registrable Securities
included in the initial public offering of the Company if no other Stockholder
has its Registrable Securities so included. Upon the written request of any
Other Stockholder received by the Company no later than seven (7) 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
Securities 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 Securities, 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 Securities to be sold in the offering by the Other Stockholders,
and
any other stockholders of the Company exercising incidental registration 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 Securities 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.”
2
3.2 Addition
of Section 4.08 to
the Agreement. The Agreement is hereby amended by adding the
following Section 4.08 thereto:
“SECTION
4.08. Limitation on Registration
Rights. Notwithstanding anything to the contrary contained in this
Article IV, the Company shall not be required to give notice of a proposed
filing of a registration statement pursuant to this Article IV of this Agreement
to an Other Stockholder or include Registrable Securities of an Other
Stockholder in a proposed registration if such Other Stockholder, at the date
immediately prior to the date of the Company’s notice (if such notice is
required) beneficially owns less than twenty-five thousand (25,000) Registrable
Securities (the “Ineligible Other
Stockholder”). An Ineligible Other Stockholder shall have no rights under
this Agreement to have its Registrable Securities included in a registration
statement of the Company, and shall have no other rights under this Article
IV
of the Agreement that may be available to any Other Stockholder.”
3.3 Amendment
to the Term
“Registrable Shares”. Each reference in the Agreement to
“Registrable Shares” shall be deleted and replaced with “Registrable
Securities”.
3.4 Amendment
of Section 5.5 of
the Agreement. Section 5.5 of the Agreement shall be deleted
and replaced with the following:
“All
notices and other communications provided for herein and in the Agreement shall
be dated and in writing and shall be deemed to have been duly given when
delivered, if delivered personally, or when deposited in the mail if sent by
registered or certified mail, return receipt requested, postage prepaid and
when
received if delivered otherwise, to the party to whom it is
directed:
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(a)
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if
to LESC, to:
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000
Xxxxxxxxx Xxxxx
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Xxxx
Xxxxxx, Xxx Xxxxxx 00000
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Facsimile:
(000) 000-0000
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Attention:
Xxxxx X. Xxxxxx
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3
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with
a copy to:
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Stonington
Partners, Inc.
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000
Xxxxx Xxxxxx, 00xx Xxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attention:
Xxxxx X. Xxxxx, Xx.
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and
a copy to:
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Shearman
& Sterling LLP
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000
Xxxxxxxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Facsimile:
000-000-0000 and 000-000-0000
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Attention:
Xxxxx X. Xxxxxxxxxxx, Esq.
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Xxxxxxxxx
X. Xxxxx, Esq.
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(b) if
to any of the Management Investors, to the address of such Management Investor
as shown in the stock record book of LESC or LTI;
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(c)
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if
to Stonington to:
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Stonington
Partners, Inc.
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000
Xxxxx Xxxxxx, 00xx Xxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attention:
Xxxxx X. Xxxxx, Xx.
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with
a copy to:
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Shearman
& Sterling LLP
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000
Xxxxxxxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Facsimile:
000-000-0000 and 000-000-0000
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Attention:
Xxxxx X. Xxxxxxxxxxx, Esq.
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Xxxxxxxxx X. Xxxxx, Esq.
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ARTICLE
IV
MISCELLANEOUS
4.1 Effective
Date. This Amendment
shall
become effective on the Effective Date.
4.2 Applicable
Law. The laws of the State of New York without reference to
the choice of law principles thereof shall govern the interpretation, validity
and performance of the terms of this Amendment, regardless of the law that
might
be applied under principles of conflicts of law.
4.3 Integration. This
Amendment and the documents referred to herein or delivered pursuant hereto
which form a part of the Agreement, contain the entire understanding of the
parties with respect to its subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants
or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein or therein and in the Management Subscription
Agreement, the Management Stock Option Plan, the Stock Option Agreements, and,
if any, the employment agreement between a Management Investor and LESC or
one
of its subsidiaries. The Agreement, as amended by this Amendment,
supersedes all prior agreements and understandings between the parties with
respect to its subject matter other than such agreements and understandings
set
forth in the Management Subscription Agreement, the Management Stock Option
Plan, the Stock Option Agreements and any such employment
agreement.
4
4.4 Descriptive
Headings,
Etc. The headings in this Amendment are for convenience of
reference only and shall not limit or otherwise affect the meaning of terms
contained herein. Unless the context of the Agreement or this Amendment
otherwise requires, (i) words of any gender shall be deemed to include each
other gender; (ii) words using the singular or plural number shall also include
the plural or singular number, respectively; and (iii) references to “hereof,”
“herein,” “hereby” and similar terms shall refer to this entire
Amendment.
4.5 Counterparts. This
Amendment may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument, and it shall not be necessary in making proof of this Amendment
to
produce or account for more than one such counterpart.
4.6 Successors,
Assigns and
Transferees. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and the parties in the Agreement
and
their respective successors, assigns and transferees except to the extent that
the terms of this Amendment limit or otherwise restrict the transferability
of
any rights or obligations hereunder.
4.7 Severability. In
the event that any one or more of the provisions, paragraphs, words, clauses,
phrases or sentences contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any
reason, the validity, legality and enforceability of any such provision,
paragraph, word, clause, phrase or sentence in every other respect and of the
other remaining provisions, paragraphs, words, clauses, phrases or sentences
hereof shall not be in any way impaired, it being intended that all rights,
powers and privileges of the parties hereto shall be enforceable to the fullest
extent permitted by law.
4.8 Consent
to
Jurisdiction. (a) Each party hereto hereby irrevocably
consents and submits to the exclusive jurisdiction of any state or federal
court
whose situs is within New York City in any action or proceeding arising out
of
or relating to the Agreement or this Amendment, and each party hereby
irrevocably agrees that all claims in respect of such action or proceeding
may
be heard and determined in any federal court sitting in New York that possesses
subject matter jurisdiction over the asserted claims or by any state court
sitting in New York City.
(b) Each
party further irrevocably agrees that venue for any action or proceeding arising
out of or relating to the Agreement or this Amendment shall be proper in any
state or federal court located in New York City, and each party irrevocably
waives any right it may have to transfer or change the venue of any such action
or proceeding brought against it in a state or federal court located in New
York
City. Each party agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
5
(c) Nothing
in this Section 4.9 shall affect the right of any party to serve legal process
in any other manner permitted by law or affect the right of any party to bring
any action or proceeding against any other party or its property in the courts
of other jurisdiction.
4.9 WAIVER
OF JURY
TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR
RELATING TO THE AGREEMENT OR THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
4.10 Benefits
of this
Amendment. Nothing in this Amendment, express or implied,
shall give to any party, other than the parties hereto and the parties under
the
Agreement, including their successors or Permitted Transferees, any benefit
of
any legal or equitable right, remedy or claim under the Agreement or this
Amendment.
[Signatures
on Following
Pages]
6
IN
WITNESS WHEREOF, the parties hereto
have executed this Amendment to the Management Stockholders Agreement as of
the
Effective Date.
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By:
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/s/ Xxxxx X. Xxxxxx | |
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Chairman
and Chief Executive Officer
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LINCOLN
TECHNICAL INSTITUTE,
INC.
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By:
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/s/ Xxxxx X. Xxxxxx | |
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Chairman
and Chief Executive Officer
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BACK
TO SCHOOL ACQUISITION,
L.L.C.
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By:
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/s/ Xxxxx X. Xxxxx, Xx. | |
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Name:
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Xxxxx
X. Xxxxx, Xx.
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Title:
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President
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MANAGEMENT
INVESTORS
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By:
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/s/ Xxxxx X. Xxxxxx | |
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Name:
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Xxxxx X. Xxxxxx | |
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By:
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/s/ Xxxxx X. Xxxx | |
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Name:
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Xxxxx X. Xxxx | |
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By:
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/s/ Xxxxx Xxxxxxx | |
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Name:
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Xxxxx Xxxxxxx | |
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By:
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/s/ Xxxxxxxx X. Xxxxx | |
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Name:
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Xxxxxxxx X. Xxxxx | |
