AMENDMENT NO. ONE TO WARRANT TO PURCHASE COMMON STOCK OF EVCI CAREER COLLEGES HOLDING CORP.
EXHIBIT
10.7
AMENDMENT
NO. ONE TO WARRANT
TO
PURCHASE COMMON STOCK OF
This
AMENDMENT NO. ONE (this “Amendment”),
is
made as of December 31, 2007, by and between EVCI CAREER COLLEGES HOLDING CORP.,
a Delaware corporation (the “Company”),
and
COMVEST INVESTMENT PARTNERS III, L.P., a Delaware limited partnership
(“ComVest”).
WHEREAS,
ComVest is the holder of a Warrant, issued by the Company on May 23, 2007,
to
purchase up to 8,621,032 shares (as adjusted in accordance with the reverse
stock split effected by the Company on August 28, 2007) of Common Stock (the
“Warrant”);
WHEREAS, ComVest
has agreed to extend to the Company loans in the aggregate principal amount
of
up to $700,000, pursuant to that certain Loan Agreement of even date herewith
by
and between ComVest and the Company (the “Company
Loan Agreement”);
WHEREAS, ComVest
has agreed to make advances to two subsidiaries of the Company, Technical Career
Institutes, Inc. (“TCI”)
and
Pennsylvania School of Business, Inc. (“PSB”,
and
collectively with TCI, the “Subsidiaries”),
in
the aggregate principal amount of up to $2,850,000 at any time outstanding,
upon
the terms and subject to the conditions set forth in that certain Revolving
Credit Agreement of even date herewith by and among ComVest and the Subsidiaries
(the “Subsidiary
Loan Agreement”
and,
together with the Company Loan Agreement, the “Loan
Agreements”);
WHEREAS,
pursuant to and in accordance with Section 14 of the Warrant, the parties wish
to amend the Warrant as set forth in this Amendment;
NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties agree as follows:
Section
1. Definitions;
References.
Unless
otherwise specified herein, each capitalized term used herein that is defined
in
the Warrant shall have the meaning assigned to such term in the Warrant. Each
reference to “hereof,” “hereto,” “hereunder,” “herein” and “hereby” and each
other similar reference, and each reference to “this Warrant” and each other
similar reference, contained in the Warrant shall from and after the date hereof
refer to the Warrant as amended hereby.
Section
2. Amendments
to the Warrant.
(a) Section
1.7 of the Warrant is hereby amended and replaced with the
following:
“1.7 “Per
Share Exercise Price”
shall
be (a) with respect to one-half, or 4,310,516 of the Warrant Shares, $0.01
and
(b) with respect to the balance, or 4,310,516 of the Warrant Shares, $1.62,
in
each case as may be adjusted in accordance with Section 4 of this Warrant.”
(b) The
following is added as a new Section 2(g) of the Warrant:
“(g) Holder’s
Put Option.
(i)
Subject to, and in accordance with, the provisions of this Section 2(g), the
Holder shall have the right and option, in the Holder’s sole discretion (the
“Put
Option”),
to
require the Company to redeem and purchase from the Holder all or any portion
of
this Warrant relating to the Option Warrant Shares (as defined in Section
2(g)(iii)). The Put Option shall be exercisable from time to time for all or
part of the Option Warrant Shares, as provided in Section 2(g)(ii). The purchase
price (the “Option
Purchase Price”)
shall
be $0.50, as may be adjusted in accordance with Section 4 of this Warrant,
multiplied by the number of Option Warrant Shares as to which this Put Option
is
then being exercised.
(ii) The
Put
Option shall be exercisable at any time and from time to time after the
occurrence of a Put Option Trigger Event (as defined in Section 2(g)(iv)).
If
the Holder desires to exercise a Put Option after a Put Option Trigger Event,
the Holder shall surrender this Warrant, together with a completed Put Option
Exercise Form in the form attached hereto as Schedule III (or a reasonable
facsimile thereof) duly executed, to the Company at the address and in the
manner set forth in Section 11 hereof, or at such other place as is designated
in writing by the Company. Within five (5) business days after its receipt
of
the surrendered Warrant and the Put Option Exercise Form, the Company shall
purchase from the Holder that portion of this Warrant as shall be specified
in
the Put Option Exercise Form at the Option Purchase Price and pay the applicable
Option Purchase Price to the Holder, either by wire transfer of immediately
available funds to the account specified by the Holder in the Put Option
Exercise Form or by certified or bank check of immediately available funds
delivered to the Holder at the address specified in the Put Option Exercise
Form. If the Put Option is exercised in part, the Company shall deliver to
the
Holder a new Warrant, identical in form to this Warrant, in the name of the
Holder, evidencing the right to purchase the remaining number of Warrant Shares
after giving effect to such exercise of the Put Option, which new Warrant shall
be signed by an appropriate officer of the Company.
(iii) For
purposes of this Section 2(g), “Option
Warrant Shares”
shall
mean the Warrant Shares for which the Per Share Exercise Price is $1.62, as
may
be adjusted in accordance with Section 4 of this Warrant.
(iv) For
purposes of this Section 2(g), “Put
Option Trigger Event”
shall
mean the earlier of (A) ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) the occurrence of a Sale (as defined
in Section 2(g)(v)) of any of (1) TCI, (2) PSB, or (3) the business trust
participating in any “Restructuring” under and as defined in the Subsidiary Loan
Agreement (the “Trust”)
and
each Subsidiary (if any) thereof (TCI,
PSB
and the Trust, each a “Related
Company”)
or (C)
the date on which mandatory payment is required to be made of all obligations
under (1) the Loan Agreements, (2) the Second Amended and Restated Credit
Agreement, dated as of September 16, 2005, amended and restated as of March
31,
2006 and further amended and restated as of April 24, 2007, by and among the
Company, the direct and indirect Subsidiaries of the Company from time to time
party to the agreement, as guarantors, and ComVest (as assignee of ▇▇▇▇▇▇ ▇.▇.),
as amended from time to time, or (3) the Secured Convertible Promissory Note
issued by the Company to the Holder, dated as of May 23, 2007.
2
(v) For
purposes of this Section 2(g), “Sale”
shall
mean, with respect to each Related Company, any transaction or series of related
transactions (A) whereby a majority of the outstanding beneficial interests
or
equity interests in such Related Company which ordinarily has voting power
for
the election of directors (including preferred stock counted on an “as
converted” basis into common stock and common stock counted on a fully diluted
basis) is sold, assigned or transferred, (B) whereby additional beneficial
interests or equity interests in such Related Company which ordinarily have
voting power for the election of directors (calculated in accordance with clause
(A) of this definition) are issued, which beneficial interests or shares
constitute a majority of the outstanding beneficial interests or equity
interests in such Related Company which ordinarily has voting power for the
election of directors (calculated as aforesaid) after giving effect to such
transaction(s), (C) in which such Related Company is a constituent party to
any
merger or consolidation and as a result thereof (1) the holders of the
outstanding beneficial interests or equity interests in such Related Company
which ordinarily has voting power for the election of directors (including
preferred stock counted on an “as converted” basis into common stock)
immediately prior to such merger or consolidation cease to own a majority of
the
outstanding beneficial interests or equity interests in the Borrower which
ordinarily has voting power for the election of directors (including preferred
stock counted on an “as converted” basis into common stock), or (2) the subject
Related Company is not the surviving corporation or entity, or (D) whereby
all
or any material portion of the assets of any Related Company are sold, assigned
or transferred (other than the transfer of the shares of TCI and PSB to the
Trust).
(vi) For
purposes of this Section 2(g), “Subsidiary”
or
“Subsidiaries,”
with
respect to each Related Company, shall mean the individual or collective
reference to any corporation, limited liability company or other entity of
which
50% or more of the outstanding shares of stock or other equity interests of
each
class having ordinary voting power and/or rights to profits (other than stock
having such power only by reason of the happening of a contingency) is at the
time owned beneficially or of record by such Related Company, directly or
indirectly through one or more Subsidiaries of such Related
Company.
(vii) Notwithstanding
anything to the contrary contained in this Section 2(g), the exercise of the
Put
Option shall be subject to the terms and conditions of an Intercreditor
Agreement dated April 24, 2007 in favor of ComVest (as assignee of ▇▇▇▇▇▇ ▇.▇.)
(the “Intercreditor
Agreement”),
which
is incorporated herein by reference.”
3
Section
3. Parties
in Interest; Successors and Assigns.
This
Amendment shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns, and nothing in this Amendment, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Amendment. Neither
the Company nor ComVest shall assign this Amendment or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, ComVest may assign its rights hereunder to any of its Affiliates
to
whom it assigns its rights under the Warrant.
Section
4. Entire
Agreement.
This
Amendment constitutes the entire agreement of the parties hereto with respect
to
the subject matter hereof and supersedes all prior agreements and undertakings,
both written and oral, between ComVest and the Company with respect to the
subject matter hereof. Except as amended hereby, all terms and provisions of
the
Warrant shall continue and remain in full force and effect.
Section
5. Severability.
If any
term or other provision of this Amendment shall be invalid or unenforceable
in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Amendment or the validity
or
enforceability of this Amendment in any other jurisdiction.
Section
6. Governing
Law.
This
Amendment shall be governed by, and interpreted in accordance with, the laws
of
the State of Delaware, without regard to principles governing conflicts of
law.
Any action or proceeding arising out of or relating to this Amendment shall
be
commenced in a federal or state court having competent jurisdiction in the
State
of Delaware, and for the purpose of any such action or proceeding, each of
the
Company and ComVest and any assignee of ComVest submits to the personal
jurisdiction of the State of Delaware. The parties hereby irrevocably consent
to
the exclusive jurisdiction of any state or federal court in the State of
Delaware. The parties hereby waive any objection to venue and any objection
based on a more convenient forum in any action instituted under this
Amendment.
Section
7. Headings.
The
descriptive headings of the several sections of this Amendment are inserted
for
purposes of reference only, and shall not affect the meaning or construction
of
any of the provisions hereof.
Section
8. Counterparts.
This
Amendment may be executed and delivered (including by facsimile or portable
document format (pdf) transmission) in one or more counterparts, and by each
of
the parties hereto in separate counterparts, each of which when executed shall
be deemed to be an original, but all of which taken together shall constitute
one and the same agreement.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
4
IN
WITNESS WHEREOF, the Company and ComVest have caused this Amendment to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
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By:
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/s/
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
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▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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Chief
Executive Officer and President
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COMVEST
INVESTMENT PARTNERS III, L.P.
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By:
ComVest III Partners LLC, its General Partner
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By:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name:
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▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇.
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Title:
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Authorized
Signatory
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5
Schedule
III
PUT
OPTION EXERCISE FORM
(To
be executed upon partial or full exercise
of the Put Option pursuant to Section 2(g) of the
Warrant)
The
undersigned hereby irrevocably elects to require EVCI Career Colleges Holding
Corp. to purchase a portion of the Warrant No. 1 [representing the right to
purchase ____________ Option Warrant Shares] pursuant to the Put Option
provisions of the within Warrant, as provided for in Section 2(g) of such
Warrant.
Please
send cash in the amount of the applicable Option Purchase Price (either by
wire
transfer of immediately available funds or bank or certified check of
immediately available funds) to:
(Please
print name, address, and social security number/tax identification
number:)
Wire
transfer instructions:
(insert
wire instructions)
Please
send a new Warrant for the right to purchase the balance remaining of the
Warrant Shares purchasable under the within Warrant to be registered in the
name
of the undersigned Holder or its transferee as below indicated and delivered
to
the address stated below.
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Dated:
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Name
of Warrant Holder or transferee:
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(Please
print)
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Address:
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Signature:
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