UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
Date of Report (Date of Earliest Event Reported):
 
June 24, 2016
Universal Technical Institute, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
1-31923
86-0226984
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)
  
 
 
16220 North Scottsdale Road, Suite 100, Scottsdale, Arizona
 
85254
_________________________________
(Address of principal executive offices)
 
___________
(Zip Code)
 
 
 
Registrant’s telephone number, including area code:
 
623-445-9500
Not Applicable
______________________________________________

Former name or former address, if changed since last report
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 1.01 Entry Into a Material Definitive Agreement

Securities Purchase Agreement
On June 24, 2016, Universal Technical Institute, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Agreement”) with Coliseum Holdings I, LLC (the “Purchaser’), an affiliate of Coliseum Capital Management, LLC (“Coliseum”), a copy of which is attached as an exhibit hereto and incorporated herein by reference, pursuant to which the Company has issued and the Purchaser has purchased 700,000 shares of Series A Convertible Preferred Stock, Par Value $0.0001 per Share (the “Series A Preferred Stock”) for a total purchase price of $70,000,000.
The Purchase Agreement contains customary representations, warranties, covenants and indemnity provisions including covenants relating to, among other things, information rights, the Company’s financial reporting, tax matters, listing compliance under the New York Stock Exchange, stockholder and regulatory approval and use of proceeds. The following description of the terms of the Agreement and the accompanying Certificate of Designations of the rights of the Series A Preferred Stock is qualified in its entirety by those documents, which are filed as Exhibits to this report.
Rights and Preferences of the Series A Preferred Stock
The description below provides a summary of certain material terms of the Series A Preferred Stock issued pursuant to the Purchase Agreement and set forth in the Certificate of Designations of the Series A Convertible Preferred Stock (the “Certificate”), a copy of which is attached as an exhibit hereto and incorporated herein by reference.
·     Dividends . Dividends on the Series A Preferred Stock are noncumulative and accrue from the date of original issuance at a rate of 7.5% per annum on the liquidation preference then in effect (a “Cash Dividend”). If the Company does not declare and pay a Cash Dividend, the liquidation preference on the Series A Preferred Stock will be increased to an amount equal to the liquidation preference in effect at the start of the applicable dividend period, plus an amount equal to such then applicable liquidation preference multiplied by 9.5% per annum (an “Accrued Dividend”). Cash Dividends, if declared, are payable semi-annually in arrears on September 30, and March 31, of each year, and, if declared, will begin to accrue on the first day of the applicable dividend period. If applicable, the Accrued Dividend will begin to accrue and be cumulative on the same schedule as set forth above for Cash Dividends and will also be compounded on each applicable subsequent dividend date.
·     Dividend Adjustment . If the Company is required or elects to obtain stockholder and regulatory approval and if such approval is not obtained within the time periods set forth in the Certificate, the dividend rate with respect to the Cash Dividends and Accrued Dividends will be increased to a rate of 12.5% and 14.5%, respectively, subject to downward adjustment on obtaining the foregoing approvals.
Liquidation Preference . Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company (each, a “Liquidation Event”), after satisfaction of all liabilities and obligations to creditors of the Company and distribution of any assets of the Company to the holders of any stock or debt that is senior to the Series A Preferred Stock, and before any distribution or payment is made to holders of any junior stock, each holder of Series A Preferred Stock will be entitled to either share in any distribution made to the holders of common stock (on an as converted basis) or receive, out of the assets of the Company or proceeds thereof (whether capital or surplus) legally available therefor, an amount per share of Series A Preferred Stock equal to the liquidation preference. The liquidation preference is equal to $100.00, which may be adjusted from time to time by the accrual of Accrued Dividends or inability to pay any special cash dividends. The holders of the Series A Preferred Stock are also entitled, at their election, to either share in any distribution made to the common stock holders (on an as converted basis) or receive value equal to the liquidation preference (in the same form of consideration as is payable to the holders of common stock) upon the occurrence of events that are “Deemed Liquidation Events”, such as certain merger transactions or a sale of all or substantially all of the Company’s assets.
·     Rank . The Series A Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding up or dissolution, rank senior to the Company’s common stock and each other class or series of shares that the Company may issue in the future that do not expressly provide that such class or series ranks equally with, or senior to, the Series A Preferred Stock, with respect to dividend rights and/or rights upon liquidation, winding up or dissolution. The Series A Preferred Stock will also rank junior to the Company’s existing and future indebtedness.
·     Conversion Rate and Conversion Price . The conversion rate in effect at any applicable time for conversion of each share of Series A Preferred Stock into common stock will be the quotient obtained by dividing the liquidation preference then in effect (which will include any cash dividends that the Company has notified holders that it intends to pay but has not yet





declared and any cash dividends that have been declared but remain unpaid, calculated at the Accrued Dividend rate) by the conversion price then in effect, plus cash in lieu of fractional shares. The conversion price for the Series A Preferred Stock will initially be $3.33 and is subject to adjustment from time to time upon the occurrence of certain events, including a stock split, a reverse stock split, or a dividend of common stock to the Company’s common stockholders.
·     Optional Conversion by Purchaser . The Series A Preferred Stock may, at the option of the holder, be converted into Company common stock. Until stockholder approval is obtained or, in the event stockholder approval is not obtained by the Company, the Series A Preferred Stock beneficially owned by the holder of Series A Preferred Stock and their respective affiliates may not be converted to the extent that, after giving effect to such conversion, the amount of shares of Common Stock the Purchaser and its affiliates would beneficially own pursuant to such conversion, in the aggregate, is less than or equal to 4.99% of the shares of Common Stock outstanding on the date of issuance of the Series A Preferred Stock (the “Conversion Cap”). The Conversion Cap will not apply to the Series A Preferred Stock once the Company obtains stockholder approval.
·     Optional Conversion by Company . If, at any time following the third anniversary of the issuance of the Series A Preferred Stock, the volume weighted average price of the Company’s common stock equals or exceeds two and one-half (2.5) times the conversion price of the Series A Preferred Stock for a period of 20 consecutive trading days, the Company may, at its option and subject to obtaining any required stockholder and regulatory approvals, require that any or all of the then outstanding shares of Series A Preferred Stock be automatically converted into Company common stock at the conversion rate.
·     Optional Special Dividend and Conversion on Certain Change of Control . Upon the occurrence of a Change of Control (as defined in the Securities Purchase Agreement), at the written request of a majority of the voting power of the outstanding shares of Series A Preferred Stock: the Board of directors of the Company (the “Board”) will, subject to applicable law, declare and the Company will pay a special cash dividend on each share of Series A Preferred Stock, out of any legally available funds in an amount, depending upon the type of Change of Control, equal to either (i) one and one-half (1.5) times, or (ii) two (2.0) the dividend rate applicable to Cash Dividends times multiplied by the liquidation preference per share then in effect with respect to the Series A Preferred Stock .
·     Voting . Holders of shares of Series A Preferred Stock will be entitled to vote with the holders of shares of common stock (and any other class or series similarly entitled to vote with the holders of common stock) and not as a separate class, at any annual or special meeting of stockholders of the Company, and may act by written consent in the same manner as the holders of common stock, on an as-converted basis. Prior to the receipt of stockholder and regulatory approval, the Series A Preferred Stock beneficially owned by each holder of Series A Preferred Stock, or any of its respective affiliates may only be voted to an extent not to exceed 4.99% of the aggregate voting power of all of the Company’s voting stock outstanding who may vote with respect to any proposal (the “Voting Cap”). In addition, a majority of the voting power of the Series A Preferred Stock must approve certain significant actions of the Company, such as (i) amendments to the Company’s Certificate of Incorporation or bylaws in a manner adverse to the rights, preferences, privileges or voting powers of the Series A Preferred Stock, (ii) the creation or issuance of a series of stock, or other security convertible into a series of stock, with equal or greater rights than the Series A Preferred Stock, (iii) the issuance of equity securities, or securities convertible into equity, at a price that is 25% below fair market value at the time of issuance, (iii) subject to certain exceptions, the incurrence of indebtedness, (iv) subject to certain exceptions, the sale or licensing of any material asset of the Company, (v) subject to certain exceptions, the consummation of acquisitions (of stock or assets), (vi) subject to certain exceptions, the payment of certain dividends or distributions with respect to a series of stock junior to the Series A Preferred Stock, (vii) the voluntary liquidation, dissolution or winding-up of the Company if the Series A Preferred Stock would not have the option to receive the liquidation preference then in effect upon such liquidation, dissolution, or winding-up of the Company or, (viii) subject to certain exceptions, any merger, consolidation, recapitalization, reclassification or other transaction in which substantially all of the common stock of the Company is exchanged or converted into chase, securities or property and in which the holders of the Series A Preferred Stock shall not have the option to receive the full liquidation preference as a result of that transaction.
·     Redemption at the Option of the Holders . The Series A Preferred Stock is not redeemable at the option of the holders.
·     Redemption at the Option of the Company . From and after the third anniversary of the original issuance of the Series A Preferred Stock, if the Company is not able to exercise its right to convert the Series A Preferred Stock into common stock because the stock price has not met the required threshold and the holders of Series A Preferred Stock do not elect to convert their Series A Preferred Stock into common stock, the Company has the right to redeem the outstanding Series A Preferred Stock. The redemption price is generally equal to the product of (i) the then current conversion rate, and the greater of (ii) two and one-half (2.5) times the conversion price and (iii) volume weighted average price per share of the common stock for the 20 trading days preceding the date of redemption.





From and after the tenth anniversary of the original issuance of the Series A Preferred Stock, the Company may redeem the outstanding Series A Preferred Stock, in whole or in part, at a price per share equal to (i) the liquidation preference then in effect per share of Series A Preferred Stock if neither the Conversion Cap and the Voting Cap is then in effect, or, (ii) the greater of (A) the liquidation preference then in effect per share or the (B) product of (x) the then current conversion rate and (y) closing price of the Company’s Common Stock on the date immediately preceding the date of such redemption.
·     Board Representation . So long as Coliseum, its Affiliates or any of its or its Affiliates’ transferees approved by the Company beneficially own at least a majority of the then outstanding shares of Series A Preferred Stock, the holders of shares of Series A Preferred Stock, by the vote or written consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock shall have the right to designate one (1) member to the Company’s board of directors who, subject to applicable law and regulations ( including New York Stock Exchange listing standards) may be appointed to a minimum of two (2) committees of the board.
·     Anti-dilution . The conversion price of the Series A Preferred Stock is subject to anti-dilution protections if the Company effects a stock split, stock dividend, subdivision, reclassification or combination of its common stock.
·     Maturity Date . The Series A Preferred Stock is perpetual, and therefore does not have a maturity date.
Registration Rights Agreement
The Agreement required, as a condition to closing, that the Company enter into a Registration Rights Agreement which is filed as an Exhibit to this report.
Item 3.02 Unregistered Sales of Equity Securities

The information provided in Item 1.01 is incorporated by reference into this Item 3.02.

The Series A Preferred Stock was issued in reliance upon an exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), as set forth in Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.
Item 3.03 Material Modification to Rights of Security Holders

The information provided in Items 1.01 and 5.03 is incorporated by reference into this Item 3.03.

Item 3.03 Limitation on Rights of Security Holders
So long as the Series A Preferred Stock is outstanding, the Company may not pay dividends or make distributions to holders of Junior Stock, including the Company’s Common Stock, without paying a corresponding dividend to the holders of the Series A Preferred Stock, or under certain other circumstances, including while dividends are in arrears on the Series A Preferred Stock.
Item 5.01 Changes in Control of Registrant.
(a) Changes in Control of the Registrant That Have Occurred.

None.

(b) Arrangements that May Result in Changes in Control of the Registrant at a Subsequent Date.

The information disclosed by the Company in Item 1.01 is incorporated herein by reference.

The occurrence of certain events which may take place after the closing of the Agreement may, at such subsequent date or dates, result in a change in control of the Company, including: (i) shareholder approval; and (ii) regulatory approval; and (iii) the removal of the Voting Cap.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
 





In connection with issuance and sale of the Series A Preferred Stock, on June 24, 2016, the Board approved a Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock of the Company (the “Certificate of Designation”) setting forth the rights, powers and preferences of the Series A Preferred Stock.

The Company filed the Certificate of Designations with the Secretary of State of the State of Delaware on June 23, 2016. A copy of the Certificates of Designations is attached as Exhibit 3.1 hereto and is incorporated by reference herein, and the information set forth in Item 3.03 of this Current Report on Form 8-K is incorporated into this Item 5.03 by reference.

Item 9.01 Financial Statements and Exhibits.

The Exhibit Index attached to this Form 8-K is incorporated herein by reference.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
Universal Technical Institute, Inc.
  
 
 
 
 
June 24, 2016
 
By:
 
/s/ Chad A Freed
 
 
 
 
 
 
 
 
 
Name: Chad A Freed
 
 
 
 
Title: General Counsel, Senior Vice President of Business Development







Exhibit Index

 
 
 
Exhibit No.
 
Description
 
 
 
3.1
 
Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock

4.1
 
Registration Rights Agreement dated June 24, 2016 by and between Universal Technical Institute, Inc. and Coliseum Holdings I, LLC


10.1
 
Securities Purchase Agreement dated June 24, 2016, between Universal Technical Institute, Inc. and Coliseum Holdings I, LLC


99.1
 
Press Release of Universal Technical Institute, Inc. dated June 24, 2016










CERTIFICATE OF DESIGNATIONS OF
SERIES A CONVERTIBLE PREFERRED STOCK,
PAR VALUE $0.0001 PER SHARE,
OF
UNIVERSAL TECHNICAL INSTITUTE, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the Board of Directors (the “ Board ”) of Universal Technical Institute, Inc., a Delaware corporation (hereinafter called the “ Corporation ”), with the voting powers, designations, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, having been fixed by the Board pursuant to authority granted to it under Article IV of the Corporation’s Restated Certificate of Incorporation (as amended through the date hereof, the “ Certificate of Incorporation ”) and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware:
RESOLVED: that, pursuant to authority conferred upon the Board by the Certificate of Incorporation, the Board hereby authorizes 700,000 shares of Series A Preferred Stock, par value $0.0001 per share, of the Corporation and hereby fixes the voting powers, designations, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, of such shares, in addition to those set forth in the Certificate of Incorporation, as follows:
Defined terms used, but not separately defined herein, shall have the respective meanings ascribed thereto in Section 10 of this Certificate of Designations.
Section 1. Number and Designation The shares of such series shall be designated “Series A Preferred Stock,” and the number of shares so designated shall be 700,000 (the “ Series A Preferred Stock ”). The number of shares of Series A Preferred Stock may be increased or decreased by resolution of the Board and the approval by the holders of the Series A Preferred Stock as provided in Section 5(b)(ii) ; provided , however , that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares of such series then outstanding. Each share of Series A Preferred Stock shall have a par value of $0.0001 per share.

Section 2. Ranking The Series A Preferred Stock shall, with respect to dividend rights and rights upon liquidation, winding up or dissolution, rank senior to the common stock of the Corporation, par value $0.0001 per share (the “ Common Stock ”) and each other class or series of shares of the Corporation that the Corporation may issue in the future the terms of which do not expressly provide that such class or series ranks equally with, or senior to, the Series A Preferred Stock, with respect to dividend rights and/or rights upon liquidation, winding up or dissolution (such junior stock being referred to hereinafter collectively as “ Junior Stock ”).





The Series A Preferred Stock shall, with respect to dividend rights and rights upon liquidation, winding up or dissolution, rank equally with each other class or series of shares of the Corporation that the Corporation may issue in the future the terms of which expressly provide that such class or series shall rank equally with the Series A Preferred Stock with respect to dividend rights and rights upon liquidation, winding up or dissolution (“ Parity Stock ”).
The Series A Preferred Stock shall, with respect to dividend rights and rights upon liquidation, winding up or dissolution, rank junior to each class or series of shares of the Corporation that the Corporation may issue in the future the terms of which expressly provide that such class or series shall rank senior to the Series A Preferred Stock with respect to dividend rights and rights upon liquidation, winding up or dissolution (“ Senior Stock ”). The Series A Preferred Stock shall also rank junior to the Corporation’s existing and future Indebtedness.
Section 3. Dividends.

(a) Regular Dividends .

(i) The Corporation may pay a noncumulative cash dividend on each share of Series A Preferred Stock, when, as and if declared by the Board and permitted by the DGCL, out of any funds that are legally available therefor initially, at the rate of seven and one-half percent (7.5%) per annum on the Liquidation Preference then in effect (as defined in Section 4(a) below), as such amount may be adjusted pursuant to the terms hereof including Section 3(h) (a “ Cash Dividend ”), before any dividends shall be declared, set apart for or paid upon the Junior Stock. Following the Issue Date, on or before the third (3rd) Business Day immediately preceding every other fiscal quarter of the Corporation, the Corporation shall determine its intention whether or not to pay a Cash Dividend with respect to such ensuing two (2) fiscal quarters and shall give notice of such intention to each holder of Series A Preferred Stock as soon as practicable thereafter.

(ii) In the event the Corporation does not declare and pay a Cash Dividend pursuant to Section 3(a)(i) , the Liquidation Preference shall be increased to an amount equal to the Liquidation Preference in effect at the start of the applicable Regular Dividend Period, plus an amount equal to such then applicable Liquidation Preference multiplied by the total of then then in effect Cash Dividend rate plus two percent (2%) per annum, computed on the basis of a 365-day year and the actual number of days elapsed from the start of the applicable Regular Dividend Period to the applicable date of determination (the “ Accrued Dividend ” and together with the Cash Dividend, the “ Regular Dividends ”).

(iii) Notwithstanding Sections 3(a)(i) and 3(a)(ii) , unless otherwise consented to in writing by the holders of a majority of the then outstanding shares of Series A Preferred Stock, following the eleventh (11 th ) anniversary date of the Issue Date, the Board shall, subject to applicable law declare and the Corporation shall pay, the Cash Dividend contemplated by Section 3(a)(i) in accordance with the provisions thereof. To the extent that Legally Available Funds (as defined in Section 6(c)(i) ) are not sufficient to pay the Cash Dividend in full), Section 3(a)(ii) shall apply provided that the “Accrued Dividend” shall equal the Cash Dividend plus five percent (5%).

(b) Participating Dividends . In the event that the Corporation shall, at any time, pay a dividend or make a distribution, whether in cash, in kind or other property, on the outstanding shares of Common Stock (other than any dividend in the form of stock, warrants, options or other rights where the dividended stock or the stock issuable upon exercise of such warrants, options or other rights is Common Stock or stock that ranks equally with or junior to the Common Stock, in which case an adjustment shall





be made to the Conversion Price in accordance with Section 8(a) or Section 8(b) , as applicable), the Corporation shall, at the same time, pay to each holder of Series A Preferred Stock a dividend equal to the dividend that would have been payable to such holder if all ( i.e. , without regard to any restrictions on conversion (including the Conversion Cap) at such time) of the shares of Series A Preferred Stock Beneficially Owned by such holder had been converted into Common Stock pursuant to Section 6 immediately prior to the applicable record date for determining the stockholders eligible to receive such dividend or distribution (the “ Participating Dividends ”).

(c) Dividend Payment Dates . If and to the extent declared by the Board, Cash Dividends shall be payable semi-annually in arrears on September 30 and March 31 of each year (unless any such day is not a Business Day, in which event such Cash Dividends shall be payable on the next succeeding Business Day, without accrual to the actual payment date), commencing on September 30, 2016 (each such payment date being a “ Regular Dividend Payment Date ,” and the period from the Issue Date to September 30, 2016 and each full semi-annual period thereafter being a “ Regular Dividend Period ”). Participating Dividends shall be payable if, as and when paid to the holders of shares of Common Stock (each such date being a “ Participating Dividend Payment Date ”). For the avoidance of doubt, nothing herein shall require declaration or payment of any Cash Dividends on the shares of Series A Preferred Stock prior to the eleventh (11 th ) anniversary date of the Issue Date.

(d) Accrual of Dividends . If declared, the Cash Dividend shall begin to accrue on the first day of the applicable Regular Dividend Period. Cash Dividends are noncumulative. If applicable, the Accrued Dividend (i) shall begin to accrue and be cumulative on the first day of each applicable Regular Dividend Period and shall remain accumulated dividends with respect to such Series A Preferred Stock until paid and (ii) shall compound at the applicable annual rate on each applicable subsequent Regular Dividend Payment Date. Accrued Dividends shall accrue whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends. Any Cash Dividends payable on the Series A Preferred Stock pursuant to Section 3(a)(i) for any period shall be computed on the basis of a 365-day year and the actual number of days elapsed.

(e) Partial Payments of Dividends . When Cash Dividends are not paid in full upon the shares of Series A Preferred Stock, all dividends declared on Series A Preferred Stock and any other Parity Stock shall be paid pro rata so that the amount of dividends so declared on the shares of Series A Preferred Stock and each such other class or series of Parity Stock shall in all cases bear to each other the same ratio as accumulated dividends on the shares of Series A Preferred Stock and such other class or series of Parity Stock bear to each other.

(f) Priority of Series A Preferred Stock Dividends . The Corporation shall not declare or pay any dividends on shares of Common Stock unless the holders of the Series A Preferred Stock then outstanding shall simultaneously receive Participating Dividends. From and after the time, if any, that the Corporation shall have failed to pay on the date set for payment any Cash Dividend declared by the Board for any applicable Regular Dividend Period, no dividends shall be declared or paid or set apart for payment, or other distribution declared or made, upon any Junior Stock, nor shall any Junior Stock be redeemed, purchased or otherwise acquired for any consideration (nor shall any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such Junior Stock) by the Corporation, directly or indirectly until all such Cash Dividends have been paid in full, without the approval of holders of the Series A Preferred Stock, as provided in Section 5(b) ; provided , however , that, subject to the restrictions set forth in Section 5(b) , the foregoing limitation shall not apply to: (i) purchases, redemptions or other acquisitions of shares of Junior Stock that are approved by the Board and made in connection with any employment contract, benefit plan or other similar arrangement with or for





the benefit of any one or more employees, officers, directors, managers or consultants of or to the Corporation or any of its Subsidiaries; (ii) an exchange, redemption, reclassification or conversion of any class or series of Junior Stock solely for any class or series of Junior Stock; or (iii) any dividend in the form of stock, warrants, options or other rights where the dividended stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equal or junior to that stock.

(g) Forfeiture of Certain Cash Dividends . Shares of Series A Preferred Stock shall not be entitled to any Cash Dividends or any other cash dividend to the extent provided in Section 4(a) .

(h) Dividend Rate Adjustment; Regulatory Approval . At any time and from time to time, the holders of a majority of the then outstanding shares of Series A Preferred Stock may deliver a written notice to the Corporation requesting that the Corporation use best efforts to obtain the Regulatory Approval, and file other regulatory notices and applications at the direction of the holders of a majority of the then outstanding shares of Series A Preferred Stock, with respect to all or a portion of the Series A Preferred Stock or Common Stock issued upon conversion thereof. In the event that, in connection with such request from a majority of the then outstanding shares of Series A Preferred Stock, the Corporation receives an indication from any Educational Agency that removing the Investor Voting Cap would have, as determined by the Board in good faith, a material adverse impact on the Corporation (such as imposition of a requirement to post a letter of credit for a material amount of money or non-customary growth restrictions), the Corporation may cease any efforts to obtain the Regulatory Approval. In the event that (i) the Corporation ceases its efforts to obtain the Regulatory Approval in accordance with the preceding sentence, (ii) within one hundred twenty (120) days following a request by holders of a majority of the then outstanding shares of Series A Preferred Stock, the Corporation shall not have obtained the Regulatory Approval or (iii) the Corporation initiates efforts to obtain Regulatory Approval under Section 6 or Section 7 and such approval has not been obtained within one hundred twenty (120) days following such initiation, then the then-current dividend rate on each share of Series A Preferred Stock automatically (without any further action) shall increase by five percent (5%) per annum, not to exceed a maximum of fourteen and one-half percent (14.5%) per annum; provided , that (i) such increase shall be reversed if the Regulatory Approval is obtained after the expiration of such one hundred twenty (120) day period. For the avoidance of doubt, the dividend rate on the Series A Preferred Stock shall not increase (and, if applicable, any prior increase shall reverse) if the Investor Voting Cap and the Conversion Cap do not apply to the portion of the Series A Preferred Stock with respect to which the holders of a majority of the then outstanding shares of Series A Preferred Stock have requested Regulatory Approval; and (ii) there shall be no increase in the dividend rate if the failure to obtain Regulatory Approval is a Holder Caused Failure.

Section 4. Liquidation, Dissolution or Winding Up.

(a) Unless otherwise consented to in writing by the holders of a majority of the then outstanding shares of Series A Preferred Stock, upon any (A) voluntary or involuntary liquidation, dissolution or winding up of the Corporation, (B) any merger or consolidation with another Person (regardless of whether the Corporation is the surviving entity follow such merger or consolidation), recapitalization, reclassification or other transaction in which substantially all of the Common Stock of the Corporation is exchanged or converted into cash, securities or property (in each case other than a merger or consolidation) or (C) sale of substantially all of the assets of the Corporation (each, a “ Liquidation Event ” and, solely for purposes of this Section 4(a) , the transactions in subparagraphs (B) and (C), each a “ Deemed Liquidation Event” ), after satisfaction of all liabilities and obligations to creditors of the Corporation and distribution of any assets of the Corporation to the holders of Senior Stock, any





remaining amounts shall be distributed to the equityholders of the Corporation according to such equityholders’ rights and preferences in accordance with the terms of this Certificate of Designations. In the case of a Liquidation Event pursuant to Section 4(a)(A) , before any distribution or payment shall be made to holders of any Junior Stock, each holder of Series A Preferred Stock, at its election, shall be entitled to receive in cash out of the assets of the Corporation or proceeds thereof (whether capital, surplus or earnings) legally available therefor, (xx) an amount per share of Series A Preferred Stock equal to the Liquidation Preference or (yy) if so elected by the holder of the Series A Preferred Stock, such amount that is or would be payable per share of Common Stock issuable upon conversion of the Series A Preferred Stock pursuant to Section 6 immediately prior to such Liquidation Event, if any such amounts are payable to the holders of Common Stock in accordance with Section 4(b) (in either case, the “ Liquidation Amount ”). In the case of a Deemed Liquidation Event, each holder of Series A Preferred Stock shall be entitled to receive the Liquidation Amount with the same priority and subject to the same election made by such holder of Series A Preferred Stock as provided in connection with a Liquidation Event pursuant to Section 4(a)(A) ; provided , however , that the Liquidation Amount must be in the same form of consideration as is payable to the holders of Common Stock in accordance with Section 4(b) . As used in this Certificate of Designations, the term “ Liquidation Preference ” shall mean $100.00 (the “ Issue Price ”), as such amount may be adjusted from time to time pursuant to Section 3(a)(ii) ; provided , however , that if, at any applicable date of determination of the Liquidation Preference hereunder, (i) any Cash Dividend has been declared by the Board but is unpaid or (ii) the Corporation has given notice (or failed to give such notice) of its intention to pay a Cash Dividend pursuant to Section 3(a)(i) but such Cash Dividend has not yet been declared by the Board, then Cash Dividends described in the foregoing clause (i) and Cash Dividends described in the foregoing clause (ii) shall be deemed, for purposes of calculating the applicable Liquidation Preference, to be Accrued Dividends, determined and calculated as of the first day of any Regular Dividend Period in which the foregoing clauses (i) or (ii) shall apply. Upon (1) payment of the Liquidation Amount pursuant to this Section 4 or (2) the determination of the Liquidation Preference for purposes of a conversion or redemption of shares of Series A Preferred Stock pursuant to Section 6 or Section 7 , as applicable, shares of Series A Preferred Stock that have received such payment of the Liquidation Amount or the Liquidation Preference, as the case may be, or that are being so converted or redeemed shall not be entitled to any Cash Dividends described in the foregoing clause (i), even if outstanding on the record date set for payment of such Cash Dividends, or Cash Dividends described in the foregoing clause (ii). If, in connection with any distribution described in the first sentence of this Section 4(a) , the assets of the Corporation or proceeds thereof are not sufficient to pay in full the Liquidation Preference then in effect and the corresponding amounts payable on the Parity Stock, then such assets, or the proceeds thereof, shall be distributed to the holders of Series A Preferred Stock and the holders of the Parity Stock in proportion to the full amounts to which the holders of the Series A Preferred Stock and the holders of the Parity Stock would otherwise be entitled pursuant to this Section 4(a) and the certificate of designations (or other governing instrument) of the Parity Stock, respectively.

(b) After the payment of the full Liquidation Preference of the Series A Preferred Stock as set forth in Section 4(a) (if so elected by the holders of Series A Preferred Stock), the assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock. For the avoidance of doubt, the Series A Preferred Stock shall not be convertible into Common Stock after the payment of the Liquidation Preference pursuant to Section 4(a) above, and the holders of Series A Preferred Stock shall not participate in any distribution made to the holders of Common Stock pursuant to this Section 4(b) .






Section 5. Voting Rights.

(a) General Rights . Except as otherwise provided herein or as required by law, holders of shares of Series A Preferred Stock shall be entitled to vote with the holders of shares of Common Stock (and any other class or series that may similarly be entitled to vote with the holders of Common Stock) and not as a separate class, at any annual or special meeting of stockholders of the Corporation, and may act by written consent in the same manner as the holders of Common Stock. In the event of any such vote or action by written consent, each holder of shares of Series A Preferred Stock shall be entitled to that number of votes equal to the whole number of shares of Common Stock into which such holder’s aggregate number of shares of Series A Preferred Stock are convertible (pursuant to Section 6 ) as of the Close of Business on the record date fixed for such vote or such written consent; provided , however , that, prior to the receipt of Regulatory Approval, the Series A Preferred Stock may only be voted to the extent that the aggregate voting power of all the Series A Preferred Stock and any Common Stock issued upon conversion thereof does not exceed four and ninety-nine one-hundredths percent (4.99%) of the aggregate voting power of all of the Corporation’s Voting Stock outstanding at the Close of Business on the Issue Date (the “ Investor Voting Cap ”). The Series A Preferred Stock shall immediately and permanently cease to be subject to the Investor Voting Cap upon any Termination Event, other than a Liquidation Event. In connection with any vote or action by written consent with respect to the Regulatory Approval, the shares of Series A Preferred Stock shall not be considered for purposes of any such affirmative vote or action by written consent. Subject to the foregoing, each holder of shares of the Series A Preferred Stock shall be entitled to the number of votes equal to the largest number of full shares of Common Stock into which all shares of Series A Preferred Stock held of record by such holder could then be converted (taking into account, for the avoidance of doubt, the Liquidation Preference then in effect for purposes of the Conversion Rate, any Conversion Price adjustments made pursuant to Section 8 , and, if applicable, the Voting Cap) at the record date for the determination of the stockholders entitled to vote on or consent to such matters. The holders of Series A Preferred Stock shall be entitled to notice of any meeting of stockholders in accordance with the bylaws of the Corporation (the “ Bylaws ”).

(b) Separate Vote of Series A Preferred Stock . In addition to any other vote or consent required herein, the Corporation’s Certificate of Incorporation or Bylaws, or by applicable law, unless waived in writing by holders of a majority of the then outstanding shares of Series A Preferred Stock, the vote or written consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock shall be necessary for effecting or validating the following actions (whether taken by amendment, merger, consolidation or otherwise):

(i) changing, amending, altering or repealing (including as a result of a merger, consolidation or other similar or extraordinary transaction) any provision of the Certificate of Incorporation or Bylaws in a manner adverse to the rights, preferences, privileges or voting powers of the Series A Preferred Stock;

(ii) authorizing, designating, recapitalizing, whether by reclassification, by merger or otherwise, or issuing any new class or series of stock or any other securities convertible into equity securities of the Corporation having rights, preferences or privileges senior to or on a parity with the Series A Preferred Stock (including additional shares of Series A Preferred Stock);

(iii) increasing the number of members of the Corporation’s Board above twelve (12) members;






(iv) incurring any Indebtedness (including issuing any debt securities) or entering into any agreement or arrangement that would entitle any party to any preference over the Series A Preferred Stock upon the occurrence of a Liquidation Event, other than Indebtedness (1) in the form of a letter of credit or other credit enhancement that the Corporation is required to incur by an Educational Agency as a condition of continued operations, for maintenance of regulatory compliance or to qualify for Title IV funding or (2) in an amount at any one time outstanding not to exceed (a) $20 million, if Coliseum, its Affiliates or any of its or its Affiliates transferees approved by the Corporation hold a majority of the then outstanding shares of Series A Preferred Stock or (b) $40 million, if Coliseum, its Affiliates or any of its or its Affiliates transferees approved by the Corporation hold less than a majority of the then outstanding shares of Series A Preferred Stock;

(v) selling or agreeing to license any material asset or material portion of an asset or assets of the Corporation other than (1) in the ordinary course of business or (2) for consideration equal to the fair market value of any such assets sold and in an aggregate amount not to exceed (a) five percent (5%) of the then-current book value of the Corporation’s assets if Coliseum, its Affiliates or any of its or its Affiliates transferees approved by the Corporation hold a majority of the then outstanding shares of Series A Preferred Stock or (b) fifteen percent (15%) of the then-current book value of the Corporation’s assets if Coliseum, its Affiliates or any of its or its Affiliates transferees approved by the Corporation hold less than a majority of the then outstanding shares of Series A Preferred Stock;

(vi) consummating any acquisition (of assets, stock or otherwise) for consideration in an amount (whether in cash or otherwise) exceeding (a) five percent (5%) of the then-current book value of the Corporation’s assets, if Coliseum, its Affiliates or any of its or its Affiliates transferees approved by the Corporation hold a majority of the then outstanding shares of Series A Preferred Stock or (b) ten percent (10%) of the then-current book value of the Corporation’s assets, if Coliseum, its Affiliates or any of its or its Affiliates transferees approved by the Corporation hold less than a majority of the then outstanding shares of Series A Preferred Stock;

(vii) redeeming, repurchasing or acquiring any securities of the Corporation that constitute Junior Stock;

(viii) paying dividends or other distributions, with respect to any securities of the Corporation that constitute Junior Stock, on or prior to December 31, 2017, except as permitted by Section 3(f) ; provided , however , that in no case shall any dividend declared on any Junior Stock (including on an as converted basis, as applicable) exceed $0.10 per share;

(ix) entering into any contract, agreement, arrangement or understanding that in any way would prohibit or otherwise restrict the Corporation from performing its obligations to the holders of Series A Preferred Stock under this Certificate of Designations, the Certificate of Incorporation or otherwise;

(x) permitting any subsidiary of the Corporation to enter into any contract, agreement, arrangement or understanding that would prohibit or otherwise restrict the payment by such subsidiary of dividends or the making of distributions to the Corporation;

(xi) issuing equity or securities convertible into equity of the Corporation at a price that is more than twenty-five percent (25%) below the fair market value of such equity or securities on the Trading Day immediately preceding such issuance;






(xii) voluntarily initiating any liquidation, dissolution or winding up of the Corporation but only if such liquidation, dissolution or winding up of the Corporation would result in each holder of the Series A Stock not having the option to receive a distribution equal to the full Liquidation Preference in accordance with Section 4(a) above; or

(xiii) any voluntary merger or consolidation with another Person (regardless of whether the Corporation is the surviving entity following such merger or consolidation), recapitalization, reclassification or other transaction in which substantially all of the Common Stock of the Corporation is exchanged or converted into cash, securities or property; provided , however , that no such separate vote of the Series A Preferred Stock shall be required with respect to any transaction in which: the holders of the Series A Stock have either the right or the option to receive payments or distributions in cash, Marketable Securities, or a combination thereof in an aggregate amount greater than or equal to the full Liquidation Preference payable to such holders in accordance with Section 4(a) ; provided; however that the foregoing provisions of this Section 5(b) shall not prohibit or restrict the ability of the Corporation to adopt a shareholder rights plan (“ Rights Plan ”) so long as the issuance of the Series A Preferred Stock and the issuance of the Common Stock issuable upon conversion thereof shall be excluded from such Rights Plan and such Rights Plan would not prohibit the removal of the Investor Voting Cap or the Conversion Cap as provided herein.

(c) Board of Directors . So long as Coliseum, its Affiliates or any of its or its Affiliates’ transferees approved by the Corporation beneficially own at least a majority of the then outstanding shares of Series A Preferred Stock, the holders of shares of Series A Preferred Stock, by the vote or written consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock shall have the right to designate one (1) member to the Board of the Corporation in addition to such members as are elected by holders of Common Stock of the Corporation. Subject to applicable law (including the listing standards of the New York Stock Exchange) and the determination by the Board of the Corporation in its sole and absolute discretion, which discretion shall be exercised in good faith, that the director designated to the Board of the Corporation pursuant to this Section 5(c) is an independent director (in accordance with the applicable independence standard for each such determination), such director shall also be appointed to a minimum of two (2) committees of the Board of the Corporation at such director’s request.

Section 6. Conversion.

(a) Optional Conversion by Holders . Subject to and in compliance with the provisions of this Section 6 , any shares of Series A Preferred Stock may, at the option of the holder thereof, be converted at any time into fully paid and non-assessable shares of Common Stock. Upon conversion, a holder of Series A Preferred Stock shall be entitled to a number of shares of Common Stock equal to the product obtained by multiplying the Conversion Rate (as defined in and determined as provided for in Section 6(d) ) then in effect, by the number of shares of Series A Preferred Stock being converted, plus cash in lieu of fractional shares, as set out in Section 8(i) ; provided , however , that prior to the receipt of required Regulatory Approval, the Series A Preferred Stock may only be converted pursuant to this Section 6(a) to the extent that the amount of shares of Common Stock issued pursuant to such conversion, in the aggregate, is less than or equal to four and ninety-nine one-hundredths percent (4.99%) of the shares of Common Stock outstanding at the Close of Business on the Issue Date (the “ Conversion Cap ”).

(b) Optional Conversion by the Corporation . On a date on which the Conversion Trigger occurs, the Corporation shall have the right to deliver written notice (the “ Conversion Notice ”) to the holders of the Series A Preferred Stock notifying such holders of its desire to effect a Corporation Conversion (as defined below).





(i) If neither the Investor Voting Cap nor the Conversion Cap is in effect with respect to any portion of the Series A Preferred Stock and the Conversion Trigger has been met as of the date of delivery of the Conversion Notice, any or all shares of Series A Preferred Stock may be converted automatically (and without further action following such election) into a number of shares of Common Stock equal to the product obtained by multiplying the Conversion Rate then in effect, by the number of shares of Series A Preferred Stock being converted, plus cash in lieu of fractional shares, as set forth in Section 8(i) (the “ Corporation Conversion ”).

(ii) If either the Investor Voting Cap or the Conversion Cap is in effect with respect to any portion of the Series A Preferred Stock, the Corporation may initiate action to seek Regulatory Approval to remove the Investor Voting Cap and/or the Conversion Cap. No consent or approval shall be required by any holder of Series A Preferred Stock in connection with the Corporation taking such action unless the Corporation has knowledge, or reason to believe after consultation with counsel, that removing the Investor Voting Cap will impose any direct liability on any holder of Series A Preferred Stock in a manner that is materially greater than the liability that would have been imposed had the Investor Voting Cap been removed on the Issue Date for any obligations or liabilities of the Corporation (due to a change in applicable law, a change in events or circumstances, or otherwise) in which case the written consent of such holder shall be required in order for the Corporation to initiate an action to seek Regulatory Approval to remove the Investor Voting Cap and/or the Conversion Cap. In such case, if such holder of shares of Series A Preferred Stock affirmatively declines to provide such consent or does not affirmatively consent or decline such consent within thirty (30) days of receipt of such notice (the “ Initial Refusal Date ”), (A) the Regular Dividends shall cease to accrue and be payable with respect to such holder’s shares of Series A Preferred Stock on the Initial Refusal Date, provided that, for the avoidance of doubt, nothing in this Section 6(b)(ii)(A) shall relieve or limit the obligation of the Company to pay any Regular Dividends accrued prior to the Initial Refusal Date, and (B) notwithstanding Section 3(h) or any other provision of this Certificate of Designation to the contrary, the Corporation shall have the option (which option must be exercised by delivering notice of redemption within thirty (30) days, and fixing the date of redemption no more than ninety (90) days, of the Initial Refusal Date) to redeem all of the shares of Series A Preferred Stock at a per share redemption price equal to the product of (x) the then current Conversion Rate and (y) the greater of two and one-half (2.5) times the Conversion Price or the Closing Price of the Common Stock on the Business Day immediately preceding the date of such redemption, in accordance with the requirements of Section 7 . In the event that the Regular Dividends have ceased to accrue and be payable with respect to a holder’s shares of Series A Preferred Stock as provided in clause (A) above, such holder shall have the right at any time thereafter to request that the Corporation take action to obtain the Regulatory Approval; provided , however , that after the Corporation has initiated action to seek Regulatory Approval at the holder’s request, no further consent or approval of such holder pursuant to this Section 6(b)(ii) shall be required unless, following a period of one hundred eighty (180) days after such request, (x) Regulatory Approval has not been obtained and (y) the Corporation has knowledge, or reason to believe after consultation with counsel, that removing the Investor Voting Cap will impose any direct liability on such requesting holder of Series A Preferred Stock in a manner that is materially greater than the liability that would have been imposed had the Investor Voting Cap been removed on the date such requesting holder requested the Corporation seek Regulatory Approval for any obligations or liabilities of the Corporation (due to a change in applicable law, a change in events or circumstances, or otherwise) in which case the written consent of such requesting holder shall be required in order for the Corporation to initiate an action to seek Regulatory Approval to remove the Investor Voting Cap and/or the Conversion Cap. If such requesting holder affirmatively declines to provide such consent or does not affirmatively consent or decline such consent within thirty (30) days of receipt of such notice (the “ Second Refusal Date ”), (I) the Regular Dividends shall cease to accrue and be payable with respect to such holder’s shares of Series A Preferred Stock on the date thereof, provided that,





for the avoidance of doubt, subject to Section 6(b)(ii)(A) , nothing in this Section 6(b)(ii)(I) shall relieve or limit the obligation of the Company to pay any Regular Dividends accrued prior to the Second Refusal Date and (II) notwithstanding Section 3(h) or any other provision of this Certificate of Designations to the contrary, the Corporation shall have the option (which option must be exercised by delivering notice of redemption within thirty (30) days, and fixing the date of redemption no more than ninety (90) days, of the Second Refusal Date) to redeem all of the shares of Series A Preferred Stock at a per share redemption price equal to the product of (x) the then current Conversion Rate and (y) the greater of two and one-half (2.5) times the Conversion Price or the Closing Price of the Common Stock on the Business Day immediately preceding the date of such redemption, in accordance with the requirements of Section 7 . If the Corporation has not obtained the Regulatory Approval within one hundred twenty (120) days following such request, the Regular Dividends shall resume accruing and be payable with respect to such shares of Series A Preferred Stock at the expiration of such one hundred twenty (120) day period in accordance with Section 3(h) . At such time as Regulatory Approval has been obtained and neither the Investor Voting Cap nor the Conversion Cap is in effect, the Corporation may effectuate the Corporation Conversion by providing notice of the same to the holders of the Series A Preferred Stock so long as the Conversion Trigger has been met on the date of the delivery of the Conversion Notice.

(iii) Following the delivery of a Conversion Notice, if the Corporation is unable to obtain Regulatory Approval to remove the Investor Voting Cap and/or the Conversion Cap, as applicable, within one hundred twenty (120) days of the date of delivery of a Conversion Notice, the Corporation shall have the option (which option must be exercised within sixty (60) days following such one hundred twenty (120) day period) to redeem all of the shares of Series A Preferred Stock at a per share redemption price equal to the greater of (x) one hundred ten percent (110%) of the Liquidation Preference and (y) product of the then current Conversion Rate and one hundred ten percent (110%) of the greater of (A) two and one-half (2.5) times the Conversion Price and (B) the Closing Price of the Common Stock on the Business Day immediately preceding the date of such redemption, in accordance with the requirements of Section 7 .

(iv) The Series A Preferred Stock shall immediately and permanently cease to be subject to the Conversion Cap upon any Termination Event, other than a Liquidation Event.

(v) For the avoidance of doubt, in no event shall the Corporation have the right to effectuate a Corporation Conversion at any time that (x) the Investor Voting Cap is in effect or (y) the Conversion Cap is in effect.

(vi) Notwithstanding the foregoing, the Corporation may not elect a Corporation Conversion at any time during the period (the “ Standstill Period ”) in which any director or executive officer of the Corporation is prohibited by the Corporation to, directly or indirectly, purchase, sell or otherwise acquire or transfer any equity security of the Corporation during any blackout period with respect to such equity security. The Standstill Period shall also include the period commencing on the earlier of (1) the date that the Corporation shall have made a public announcement and (2) the date that such information is otherwise made public, that the Corporation is in negotiations relating to, or has entered into, a definitive agreement with respect to a transaction constituting a Change of Control (but solely to the extent contemplated by clause (ii) of the definition thereof) and ending on the date of the first to occur of (i) the consummation of such transaction and (ii) the date that the Corporation shall have made a public announcement that any such definitive agreement or the negotiations relating thereto has been terminated. For purposes of calculating the next date on which the Conversion Trigger has been satisfied, the VWAP shall not be deemed to equal or exceed two and one-half (2.5) times the Conversion Price at any time during the Standstill Period.






(c) Optional Special Dividend and Conversion on Change of Control . At the written election (including written notice to the Corporation) by holders of a majority of the then outstanding shares of Series A Preferred Stock, upon the occurrence of a Change of Control:

(i) the Board shall, subject to applicable law, declare and the Corporation shall pay, a special cash dividend (as such may be adjusted pursuant to this Section 6(c)(i) , the “ Special Dividend ”) on each share of Series A Preferred Stock, out of any funds that are legally available therefor (the “ Legally Available Funds ”), in the amount equal to, (i) in the event such Change of Control is contemplated by clause (i)(1) of the definition of such term contained in this Certificate of Designations, two (2) times the dividend rate applicable to Cash Dividends multiplied by the Liquidation Preference per share then in effect with respect to the Series A Preferred Stock; (ii) in the event such Change of Control is contemplated by clause (i)(2) of the definition of such term contained in this Certificate of Designations, two (2) times the dividend rate applicable to Cash Dividends multiplied by the Liquidation Preference per share then in effect with respect to the Series A Preferred Stock; provided that, for purposes of this clause (ii), Coliseum and its Affiliates hold less than fifty percent (50%) of the Capital Stock of the Corporation on an as converted basis as a result of dilution in connection with one or more issuances of Capital Stock by the Corporation; and (iii) in the event such Change of Control is contemplated by clause (ii) of the definition of such term contained in this Certificate of Designations and the holders of a majority of the then outstanding shares of Series A Preferred Stock have elected to receive in connection with such Change of Control a per share amount equal to the Liquidation Preference, one and one-half (1.5) times the dividend rate applicable to Cash Dividends multiplied by the Liquidation Preference per share then in effect with respect to the Series A Preferred Stock; provided , however , that to the extent the Legally Available Funds are not sufficient to pay the Special Dividend in full (the amount of such shortfall being referred to as a “ Funds Shortfall ”), the aggregate Special Dividend in respect of all shares of Series A Preferred Stock and any special dividend applicable to Parity Stock shall be reduced to an aggregate amount equal to the Legally Available Funds and the Special Dividend (as so reduced) and any applicable special dividend with respect to Parity Stock shall be paid to the holders of Series A Preferred Stock and the holders of the Parity Stock in proportion to the full amounts to which the holders of the Series A Preferred Stock and the holders of the Parity Stock would otherwise be entitled pursuant to Section 3(e) and the certificate of designations (or other governing instrument) of the Parity Stock, respectively;

(ii) for purposes of determining the Conversion Rate applicable at any time following payment of the Special Dividend, the aggregate Liquidation Preference on each share of Series A Preferred Stock and the liquidation preference on each share of any applicable Parity Stock as provided in the certificate of designations (or other governing instrument) of such Parity Stock shall be increased by the Funds Shortfall applicable to each such share; and

(iii) notwithstanding Section 6(c)(i) , in no event shall the Board be required to declare or the Corporation be required to pay a Special Dividend in connection with any transaction that requires approval of the holders of a majority of the then outstanding shares of Series A Preferred Stock pursuant to Section 5(b) if such approval has been provided.

(d) Conversion Rate and Conversion Price . The conversion rate in effect at any applicable time for conversion of each share of Series A Preferred Stock into Common Stock (the “ Conversion Rate ”) shall be the quotient obtained by dividing the Liquidation Preference then in effect by the Conversion Price (as defined below). The conversion price for the Series A Preferred Stock shall initially be $3.33 (the “ Conversion Price ”). Such initial Conversion Price shall be adjusted from time to





time in accordance with Section 8 . All references to the Conversion Price herein shall mean the Conversion Price as so adjusted.

(e) Conversion Procedures . In order to exercise the conversion privilege set forth in Section 6(a) with respect to any shares of Series A Preferred Stock held in book-entry form with the Depositary Trust Company or its successor (“ DTC ”), a holder must comply with DTC’s procedures for converting any shares of Series A Preferred Stock. In order to exercise the conversion privilege set forth in Section 6(a) with respect to any certificated shares of Series A Preferred Stock, a holder must do each of the following in order to convert its shares of Series A Preferred Stock:

(i) complete and manually sign the conversion notice provided by the conversion agent, and deliver such notice to the conversion agent;

(ii) deliver to the conversion agent the certificate or certificates representing the shares of Series A Preferred Stock to be converted (or, if such certificate or certificates have been lost, stolen or destroyed, a lost certificate affidavit and indemnity in form and substance reasonably acceptable to the Corporation);

(iii) if required, furnish appropriate endorsements and transfer documents in form and substance reasonably acceptable to the Corporation; and

(iv) if required, pay any stock transfer, documentary, stamp or similar taxes not payable by the Corporation pursuant to Section 6(i) .

(f) Effect of Conversion . Effective immediately prior to the Close of Business on the Conversion Date applicable to any shares of Series A Preferred Stock, dividends shall no longer accrue or be declared on any such shares of Series A Preferred Stock and such shares of Series A Preferred Stock shall cease to be outstanding.

(g) Record Holder of Underlying Securities as of Conversion Date . The Person or Persons entitled to receive the Common Stock and, to the extent applicable, cash, payable in lieu of fractional shares, upon conversion of Series A Preferred Stock on any applicable Conversion Date shall be treated for all purposes as the record holder(s) of such shares of Common Stock and/or cash as of the Close of Business on such Conversion Date. As promptly as practicable on or after the applicable Conversion Date and, in the case of a conversion pursuant to Section 6(a) , compliance by the applicable holder with the relevant conversion procedures contained in Section 6(e) (and in any event no later than three (3) Trading Days thereafter), the Corporation shall issue the number of whole shares of Common Stock issuable upon conversion (and deliver payment of cash in lieu of fractional shares). Such delivery of shares of Common Stock shall be made, at the option of the applicable holder, in certificated form or by book-entry. Any such certificate or certificates shall be delivered by the Corporation to the appropriate holder on a book-entry basis or by mailing certificates evidencing the shares to the holders at their respective addresses as set forth in the conversion notice. If fewer than all of the shares of Series A Preferred Stock Beneficially Owned by any holder hereto are converted pursuant to this Section 6 , then book-entry shares (or, if elected by the holder, a new certificate) representing the unconverted shares of Series A Preferred Stock shall be issued to such holder concurrently with the issuance of the certificates (or book-entry shares) representing the applicable shares of Common Stock. Any cash payable in lieu of fractional shares shall be delivered to the applicable holder at the address for such holder as set forth in the conversion notice. In the event that a holder shall not by written notice designate the name in which shares of Common Stock and, to the extent applicable, cash to be delivered upon conversion of shares of





Series A Preferred Stock should be registered or paid, or the manner in which such shares and, if applicable, cash should be delivered, the Corporation shall be entitled to register and deliver such shares and, if applicable, cash in the name of the holder and in the manner shown on the records of the Corporation.

(h) Status of Converted or Acquired Shares . Shares of Series A Preferred Stock duly converted in accordance with this Certificate of Designations, or otherwise acquired by the Corporation in any manner whatsoever, shall be retired promptly after the conversion or acquisition thereof. All such shares shall upon their retirement and any filing required by the DGCL become authorized but unissued shares of preferred stock of the Corporation, without designation as to series until such shares are once more designated as part of a particular series by the Board pursuant to the provisions of the Certificate of Incorporation.

(i) Taxes .

(i) The Corporation and its paying agent shall be entitled to withhold taxes on all payments on the Series A Preferred Stock, Common Stock or other securities issued upon conversion of the Series A Preferred Stock to the extent required by law. Prior to the date of any such payment, each holder of Series A Preferred Stock shall deliver to the Corporation or its paying agent a duly executed, valid, accurate and properly completed Internal Revenue Service Form W-9 or an appropriate Internal Revenue Service Form W-8, as applicable.

(ii) The Corporation shall pay any and all documentary, stamp and similar issue or transfer tax due on (A) the issue of the Series A Preferred Stock and (B) the issue of shares of Common Stock upon conversion of the Series A Preferred Stock. However, in the case of conversion of Series A Preferred Stock, the Corporation shall not be required to pay any tax or duty that may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or Series A Preferred Stock in a name other than that of the holder of the shares to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax or duty, or has established to the satisfaction of the Corporation that such tax or duty has been paid.

(j) Conversion Prohibited Without Regulatory Approval . For the avoidance of doubt, without the Corporation first obtaining Regulatory Approval or a good faith determination by the Corporation that Regulatory Approval is not required (i) the Investor Voting Cap shall not be eliminated; and (ii) no shares of Series A Preferred Stock may be converted; provided , that the foregoing shall not limit Coliseum or its Affiliates from converting up to four and nine-tenths percent (4.9%) of the Common Stock outstanding at the Close of Business on the Issue Date at any time without seeking Regulatory Approval.

Section 7. Redemption.

(a) [Reserved]

(b) Redemption at the Option of the Corporation.

(i) Year Three Option . Subject to applicable law, the Series A Preferred Stock may be redeemed in whole out of funds legally available therefor at any time from and after the third (3 rd ) anniversary date of the Issue Date, at the option of the Corporation upon giving notice of redemption





(“ Redemption Notice ”) pursuant to Section 7(c) , provided that the Conversion Trigger has not been met on the date of the Redemption Notice.

a. If neither the Investor Voting Cap nor the Conversion Cap is in effect with respect to any portion of the Series A Preferred Stock, the holder of Series A Preferred Stock shall have the right to convert such shares into shares of Common Stock in accordance with the mechanics set forth in Section 6 . If the holders of Series A Preferred Stock do not provide the Corporation with notice of their intention to convert (which notice shall be irrevocable) within ten (10) days of receipt of the Redemption Notice, the Corporation may effectuate a redemption at a redemption price per share of Series A Preferred Stock equal to the product of (x) the then current Conversion Rate and the greater of (y) two and one-half (2.5) times the Conversion Price and (z) the 20-day VWAP of the Common Stock measured at the Close of Business on the Business Day immediately preceding the date of redemption.

b. If either the Investor Voting Cap or the Conversion Cap is in effect with respect to any portion of the Series A Preferred Stock, the holders of a majority of the then outstanding shares of Series A Preferred Stock may request within ten (10) days of receipt of such Redemption Notice that the Corporation take the action set forth in Section 3(h) to obtain Regulatory Approval to remove the Investor Voting Cap and/or the Conversion Cap. If such request is made and Regulatory Approval is obtained within one hundred twenty (120) days of such request, the holders of Series A Preferred Stock shall have the right, upon notice delivered to the Corporation within ten (10) days of such removal, to convert such shares into shares of Common Stock in accordance with Section 6 . If any shares of Series A Preferred Stock remain outstanding more than one hundred twenty (120) days following receipt of the Notice of Redemption, the Corporation may effectuate the redemption with respect to such shares at a price per share equal to the product of (x) the then current Conversion Rate and (y) two and one-half (2.5) times the Conversion Price. If Regulatory Approval is not obtained within one hundred twenty (120) days of such request, the Corporation may effectuate the redemption with respect to such shares at a price per share equal to the product of (x) the then current Conversion Rate and the greater of (y) two and one-half (2.5) times the Conversion Price and (z) the 20-day VWAP of the Common Stock measured at the Close of Business on the Business Day immediately preceding the date of redemption.

(ii) Year Ten Option . Subject to applicable law, the Series A Preferred Stock may be redeemed in whole or in part out of funds legally available therefor, at any time from and after the tenth (10th) anniversary date of the Issue Date, at the option of the Corporation upon giving a Redemption Notice pursuant to Section 7(c) .

a. Upon delivery of a Redemption Notice to the holders of the Series A Preferred Stock, and if neither the Investor Voting Cap nor the Conversion Cap is in effect with respect to any portion of the Series A Preferred Stock, the holders of Series A Preferred Stock shall have ten (10) days upon receipt of such Redemption Notice to provide the Corporation notice of such holders’ intent to convert such shares of Series A Preferred Stock into shares of Common Stock in accordance with Section 6 . If the holders of Series A Preferred Stock do not provide the Corporation with notice of their intention to convert (which notice shall be irrevocable), the Corporation may effectuate the redemption at a price per share equal to the Liquidation Preference then in effect per share of Series A Preferred Stock.

b. Upon delivery of a Redemption Notice, and if either the Investor Voting Cap or the Conversion Cap is in effect with respect to any portion of the Series A Preferred Stock, the holders of a majority of the then outstanding shares of Series A Preferred Stock may request within ten (10) days of receipt of such Redemption Notice that the Corporation take the action set forth in Section 3(h) to obtain Regulatory Approval to remove the Investor Voting Cap and/or the Conversion Cap. If such





request is made and Regulatory Approval is obtained within one hundred twenty (120) days of such request, the holders of Series A Preferred Stock shall have the right, upon notice delivered to the Corporation within ten (10) days of such removal, to convert such shares into shares of Common Stock in accordance with Section 6 . In such case, if any shares of Series A Preferred Stock remain outstanding more than one hundred twenty (120) days following receipt of the Notice of Redemption, the Corporation may effectuate the redemption with respect to such shares at a price per share equal to the Liquidation Preference then in effect per share of Series A Preferred Stock. If Regulatory Approval is not obtained within one hundred twenty (120) days of such request, the Corporation may effectuate the redemption with respect to such shares at a price per share equal to the greater of the Liquidation Preference then in effect per share or the product of (x) the then current Conversion Rate and (y) Closing Price of the Corporation’s Common Stock on the date immediately preceding the date of such redemption. Notwithstanding the foregoing, if at any time prior to redemption by the Corporation, Regulatory Approval is obtained, the Corporation shall promptly provide notice to the holders of Series A Preferred Stock and such holders shall have the option to convert such shares into common stock in accordance with Section 6 .

(c) Notice of Redemption at the Option of the Corporation . Notice of every redemption of shares of Series A Preferred Stock by the Corporation hereunder shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares of Series A Preferred Stock to be redeemed at such holder’s respective last addresses appearing on the books of the Corporation. Any such notice shall be delivered at least thirty (30) days and not more than sixty (60) days before the date fixed for redemption (as such date may be adjusted in accordance with Section 7(b)(ii)b . Any notice delivered as provided in this Section 7(c) shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice, or any defect in such notice or in the delivery thereof, to any holder of shares of Series A Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series A Preferred Stock. Each notice of redemption shall state: (i) the redemption date; (ii) the number of shares of the Series A Preferred Stock to be redeemed and, if less than all the shares held by any such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; and (iv) the place or places where certificates for such shares are to be surrendered (or an indemnification undertaking as reasonably determined by the Corporation with respect to such certificates in the event of their loss, theft or destruction) for payment of the redemption price.

(d) Notwithstanding the foregoing, the Corporation may not provide a Notice of Redemption at any time during the Standstill Period.

(e) Partial Redemption . In the event of any redemption of part of the shares of Series A Preferred Stock at the time outstanding pursuant to this Section 7 , the shares to be redeemed shall be selected pro rata. Subject to the provisions hereof, the Corporation shall have the power and authority to prescribe reasonable and customary terms and conditions upon which shares of Series A Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, then book-entry shares (or, if elected by the holder, a new certificate) shall be issued representing the unredeemed shares without charge to the holder thereof.

(f) Effectiveness of Redemption . Notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall be retired as provided for in Section 6(h) and such shares will no longer be issued and outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate,





except only the right of the holders thereof to receive the amount payable on such redemption, without interest.

Section 8. Anti-Dilution Provisions.

(a) Adjustment Upon Common Stock Event . Upon the (i) the issuance by the Corporation of additional shares of Common Stock as a dividend or other similar distribution on outstanding shares of Common Stock (other than in connection with exercises of options or other derivative securities to purchase Common Stock or pursuant to the Corporation’s duly authorized compensation or benefit plans); (ii) a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock; or (iii) a combination of the outstanding shares of Common Stock into a smaller number of shares of Common Stock (other than such events wherein the holders of the Series A Preferred Stock participate therein pursuant to Section 3(b) ) (each, a “ Common Stock Event ”) after the Issue Date, the Conversion Price shall, simultaneously with the happening of such Common Stock Event, be adjusted by multiplying the Conversion Price in effect immediately prior to such Common Stock Event by a fraction, (A) the numerator of which shall be the number of shares of Common Stock issued and outstanding immediately prior to such Common Stock Event and (B) the denominator of which shall be the number of shares of Common Stock issued and outstanding immediately after such Common Stock Event, and the product so obtained shall thereafter be the Conversion Price. The Conversion Price shall be readjusted in the same manner upon the happening of each subsequent Common Stock Event.

(b) Adjustments for Other Dividends and Distributions . If at any time or from time to time after the Issue Date, the Corporation pays a dividend or makes another distribution to the holders of the Common Stock payable in securities of the Corporation, other than an event constituting a Common Stock Event and other than such events wherein the holders of the Series A Preferred Stock participate therein pursuant to Section 3(b) , then in each such event provision shall be made so that the holders of Series A Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable upon conversion thereof, the amount of securities of the Corporation which they would have received had their Series A Preferred Stock been converted into Common Stock on the date of such event (or such record date, as applicable) and had they thereafter, during the period from the date of such event (or such record date, as applicable) to and including the applicable Conversion Date, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 8 with respect to the rights of the holders of Series A Preferred Stock or with respect to such other securities by their terms.

(c) Adjustment for Reclassification, Exchange and Substitution . If at any time or from time to time after the Issue Date, the Common Stock issuable upon the conversion of Series A Preferred Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than by a Common Stock Event described in Section 8(a) or as described in Section 8(b) ), then in any such event each holder of such Series A Preferred Stock shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares of Common Stock into which such shares of Series A Preferred Stock could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

(d) Reorganizations, Mergers and Consolidations . If at any time or from time to time after the Issue Date, there is a reorganization of the Corporation (other than as described in Section 8(a) ,





(b) or (c) ) or a merger or consolidation of the Corporation with or into another corporation, then, as a part of such reorganization, merger or consolidation, provision shall be made so that the holders of such Series A Preferred Stock shall then have the right to convert such stock into the kind and amount of stock and other securities and property receivable upon such reorganization, merger or consolidation by holders of the number of shares of Common Stock into which such shares of Series A Preferred Stock could have been converted immediately prior to such reorganization, merger or consolidation, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 8 with respect to the rights of the holders of such Series A Preferred Stock after the reorganization, merger or consolidation to the end that the provisions of this Section 8 (including adjustment of the Conversion Price then in effect and number of shares issuable upon conversion of the Series A Preferred Stock) shall be applicable after that event and be as nearly equivalent to the provisions hereof as may be practicable. This Section 8(d) shall similarly apply to successive reorganizations, mergers and consolidations. The Corporation shall not effect any such reorganization, merger or consolidation unless prior to the consummation thereof the successor entity (if other than the Corporation) resulting from such consolidation or merger shall assume by written instrument the obligations of the Corporation under this Certificate of Designations.

(e) Successive Adjustments . After an adjustment to the Conversion Price under this Section 8 , any subsequent event requiring an adjustment under this Section 8 shall cause an adjustment to each such Conversion Price as so adjusted.

(f) Multiple Adjustments . For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Price pursuant to this Section 8 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder; provided , however , that if more than one subsection of this Section 8 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.

(g) Notice of Adjustments . Whenever the Conversion Price is adjusted as provided under this Section 8 , the Corporation shall as soon as reasonably practicable following the occurrence of an event that requires such adjustment (or if the Corporation is not aware of such occurrence, as soon as reasonably practicable after becoming so aware):

(i) compute the adjusted applicable Conversion Rate in accordance with this Section 8 and prepare and transmit to the conversion agent an officer’s certificate setting forth the applicable Conversion Rate, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and

(ii) provide a written notice to the holders of the Series A Preferred Stock of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the applicable Conversion Rate was determined and setting forth the adjusted applicable Conversion Rate.

(h) Conversion Agent . The conversion agent, if other than the Corporation, shall not at any time be under any duty or responsibility to any holder of Series A Preferred Stock to determine whether any facts exist that may require any adjustment of the applicable Conversion Price or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The conversion agent, if other than the Corporation, shall be fully authorized and protected in relying on any officer’s certificate delivered pursuant to Section 8(g) and any





adjustment contained therein and the conversion agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate. The conversion agent, if other than the Corporation, shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, that may at the time be issued or delivered with respect to any Series A Preferred Stock; and the conversion agent makes no representation with respect thereto. The conversion agent, if other than the Corporation, shall not be responsible for any failure of the Corporation to issue, transfer or deliver any shares of Common Stock pursuant to the conversion of Series A Preferred Stock or to comply with any of the duties, responsibilities or covenants of the Corporation contained in this Section 8 .

(i) Fractional Shares . No fractional shares of Common Stock will be delivered to the holders of Series A Preferred Stock upon conversion of shares of Series A Preferred Stock into Common Stock as provided herein. In lieu of fractional shares otherwise issuable, holders of Series A Preferred Stock will be entitled to receive an amount in cash equal to the fraction of a share of Common Stock, multiplied by the Closing Price of the Common Stock on the Trading Day immediately preceding the applicable Conversion Date. In order to determine whether the number of shares of Common Stock to be delivered to a holder of Series A Preferred Stock upon the conversion of such holder’s shares of Series A Preferred Stock will include a fractional share (in lieu of which cash would be paid hereunder), such determination shall be based on the aggregate number of shares of Series A Preferred Stock of such holder that are being converted on any single Conversion Date.

Section 9. Reservation of Shares Issuable Upon Conversion Unless expressly agreed to by a holder of Series A Preferred Stock with respect to such holder’s shares of Series A Preferred Stock, the Corporation shall at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series A Preferred Stock and payment of dividends on the Series A Preferred Stock, each as herein provided, free from preemptive rights, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 8 ) upon the conversion of all outstanding shares of Series A Preferred Stock and payment of dividends hereunder (and all dividends payable in the next twelve (12) months, assuming all such dividends will be Accrued Dividends), assuming for purposes of this calculation that at all times the Regulatory Approval has been obtained and that the Conversion Cap does not apply. The Corporation shall comply with all securities laws regulating the offer and delivery of shares of Common Stock upon conversion of the Series A Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then-outstanding shares of the Series A Preferred Stock and payment of dividends hereunder (and all dividends payable in the next twelve (12) months, assuming all such dividends will be Accrued Dividends), the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. All shares of Common Stock which may be issued in connection with the conversion provisions set forth herein will, upon issuance by the Corporation, be validly issued, fully paid and non-assessable.

Section 10. Certain Definitions.

As used in this Certificate of Designations, the following terms shall have the following meanings, unless the context otherwise requires:
Accrued Dividend ” shall have the meaning ascribed to it in Section 3(a)(ii) .






Affiliate ” with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person; provided , however , that the Corporation, any of its Subsidiaries, or any of the Corporation’s other controlled Affiliates, in each case, will not be deemed to be Affiliates of the holders for purposes of this Certificate of Designations. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

Beneficially Own ” shall mean “beneficially own” as defined in Rule 13d-3 of the Exchange Act or any successor provision thereto.

Board ” shall have the meaning ascribed to it in the recitals.

Business Day ” shall mean a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York, New York generally are authorized or obligated by law, regulation or executive order to close.

Bylaws ” shall have the meaning ascribed to it in Section 5(a) .

Capital Stock ” shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by the Corporation.

Cash Dividend ” shall have the meaning ascribed to it in Section 3(a)(i) .

Certificate of Designations ” shall mean this Certificate of Designations relating to the Series A Preferred Stock, as it may be amended from time to time.

Certificate of Incorporation ” shall have the meaning ascribed to it in the recitals.

Change of Control ” shall mean the occurrence of any of the following:

(i) any Person (other than Coliseum or any of its Affiliates or a Person acting as a group with Coliseum or any of its respective Affiliates) shall Beneficially Own, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, shares of the Corporation’s Capital Stock entitling such Person to exercise (1) thirty percent (30%) or more (if the Regulatory Approval shall not have been obtained) or (2) fifty percent (50%) or more (if Regulatory Approval shall have been obtained), in each case, of the total voting power of all classes of Voting Stock of the Corporation (for purposes of this clause (i), “Person” shall include any group as such term is used in Rule 13d-5(b) promulgated under the Exchange Act); or

(ii) the Corporation (A) merges or consolidates with or into any other Person, another Person merges with or into the Corporation, or the Corporation sells, leases, licenses, transfers, or otherwise disposes of all or substantially all of the assets of the Corporation to another Person or (B) engages in any recapitalization, reclassification or other transaction in which all or substantially all of the Common Stock is exchanged for or converted into cash, securities or other property, in each case other than a merger or consolidation:






(1) that does not result in a reclassification, conversion, exchange or cancellation of the Common Stock outstanding immediately prior to such transaction; or

(2) which is effected solely to change the Corporation’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding shares of the Common Stock solely into shares of common stock of the surviving entity; or

(3) where the Voting Stock outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance).

Close of Business ” shall mean 5:00 p.m., New York City time, on any applicable Business Day.

Closing Price ” shall mean, on any particular date, (a) the last reported trade price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there is no such price on such date, the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (c) if the Common Stock is not then listed or quoted for the Trading Market and if prices for the Common Stock are then reported in the “pink sheets” published by Pink Sheets LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) if the shares of Common Stock are not publicly traded, the fair market value of a share of Common Stock as determined by the Board in good faith.

Coliseum ” shall mean Coliseum Holdings I, LLC, a Delaware limited liability company.

Common Stock ” shall have the meaning ascribed to it in Section 2 .

Common Stock Event ” shall have the meaning ascribed to it in Section 8(a) .

Conversion Cap ” shall have the meaning ascribed to it in Section 6(a) .

Conversion Date ” shall mean, with respect to a conversion of Series A Preferred Stock pursuant to:

(a) Section 6(a) , the date on which a holder complies in all respects with the procedures set forth in Section 6(e) ;
(b) Section 6(b) , the date on which a Corporation Conversion occurs; and
(c) Section 6(c) , the date of the applicable conversion event specified therein.
Conversion Notice ” shall have the meaning ascribed to it in Section 6(b) .

Conversion Price ” shall have the meaning ascribed to it in Section 6(d) .

Conversion Rate ” shall have the meaning ascribed to it in Section 6(d) .






Conversion Trigger ” shall mean, any time following the third (3 rd ) anniversary date of the Issue Date, a date on which the VWAP of the Common Stock equals or exceeds two and one-half (2.5) times the Conversion Price for a period of twenty (20) consecutive Trading Days ending on such date.

Corporation ” shall have the meaning ascribed to it in the recitals.

Corporation Conversion ” shall have the meaning ascribed to it in Section 6(b)(i) .

Deemed Liquidation Event ” shall have the meaning ascribed to in Section 4(a) .

DGCL ” shall mean the Delaware General Corporation law, as amended from time to time.

Dividends ” shall have the meaning ascribed to it in Section 3(b) .

DOE ” means the U.S. Department of Education or any successor agency.

DTC ” shall have the meaning ascribed to it in Section 6(d)

Educational Agency ” means any person, entity or organization, whether governmental, government chartered, private, or quasi-private, that engages in granting or withholding Educational Approvals for, administers financial assistance to or for students of, or otherwise regulates private postsecondary schools, including without limitation the DOE, any state education department or agency, any guaranty agency, and any institutional accreditation agency.

Educational Approval ” means any license, authorization, approval, certification, or accreditation, issued or required to be issued by an Educational Agency with respect to any aspect of a School’s operations in order for such School or any location to operate or participate in Title IV, but excluding approvals or licenses with respect to the activities of individual recruiters or instructors at any School.

Funds Shortfall ” shall have the meaning ascribed to it in Section 6(c)(i) .

Holder Caused Failure ” shall mean any failure to obtain Regulatory Approval within one hundred twenty (120) days that is wholly due (i) to the failure of Coliseum or its Affiliates, including any holder to reasonably cooperate in the process for obtaining such approval, including, but not limited to, the failure to provide reasonably requested information pertaining to Coliseum or its Affiliates, including any holder, as required by any Educational Agency; (ii) to Coliseum or any Affiliate of Coliseum’s, including any holder, failure or refusal to consent to reasonable requirements imposed by any Educational Agency; or (iii) to any Education Agency making a specific determination that a holder is not an acceptable owner of the Corporation as a result of an adverse finding or circumstance related to such holder (such as a bankruptcy of such holder or prior “bad act” by such holder in the education industry). For the avoidance of doubt, (i) neither Coliseum nor any Affiliate shall be required to directly pay any consideration or incur any costs, liabilities or obligations to be deemed to have acted reasonably in respect of clauses (i) or (ii) above and (ii) a request for two years of audited financial statements of any holder shall be deemed to be a reasonable request for information; provided , however , that (i) Coliseum and any Affiliate, including any holder, shall bear its own expenses in connection with the preparation of such audited financial statements and (ii) the Corporation shall bear all expenses in connection with any filing required by the Educational Agency.






Indebtedness ” shall mean any indebtedness (including principal and premium) in respect of borrowed money. For the avoidance of doubt, Indebtedness shall not include (i) obligations under leases or real property mortgages; or (ii) indebtedness for borrowed money the proceeds of which will be used to redeem all of the Series A Preferred Stock pursuant to any provision of this Certificate.

Investor Voting Cap ” shall have the meaning set forth in Section 5(a) .

Issue Date ” shall mean June 24, 2016.

Issue Price ” shall have the meaning ascribed to it in Section 4(a) .

Junior Stock ” shall have the meaning ascribed to it in Section 2 .

Legally Available Funds ” shall have the meaning ascribed to it in Section 6(c)(i) .

Liquidation Amount ” shall have the meaning ascribed to it in Section 4(a) .

Liquidation Event ” shall have the meaning ascribed to it in Section 4(a) .

Liquidation Preference ” shall have the meaning ascribed to it in Section 4(a) .

Marketable Securities ” means securities issued by any Person that can be readily and promptly sold on a United States national securities exchange without (i) regulatory restrictions (including, but not limited to, lack of eligibility for sale pursuant to a registration statement effective under the Securities Act or pursuant to Rule 144(k) of the Securities Act), (ii) contractual restrictions (including, but not limited to, existing lock-up or lock-out periods or (iii) volume limitations. Volume limitations shall be deemed to exist if such securities issued constitute more than four and nine-tenths percent (4.9%) of the outstanding capital stock of the issuer or the number of securities issued constitute more than trading volume of such securities each of the five (5) Trading Days preceding the issuance.

Parity Stock ” shall have the meaning ascribed to it in Section 2 .

Participating Dividend Payment Date ” shall have the meaning ascribed to it in Section 3(c) .

Participating Dividends ” shall have the meaning ascribed to it in Section 3(b) .

Person ” shall mean any individual, company, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, government or agency or political subdivision thereof or any other entity.

Redemption Notice ” shall have the meaning ascribed to it in Section 7(b)(i) .

Regular Dividend Payment Date ” shall have the meaning ascribed to it in Section 3(c) .

Regular Dividends ” shall have the meaning ascribed to it in Section 3(a)(ii) .

Regular Dividend Period ” shall have the meaning ascribed to it in Section 3(c) .






Regulatory Approval ” shall mean (i) the approvals by the holders of Common Stock that are required under the listing standards of the New York Stock Exchange (or any successor thereto or other trading market on which the Common Stock is listed), including New York Stock Exchange Listed Company Manual Section 312.03 and (ii) the approval of any Educational Agency, in each case, as applicable, to remove the Investor Voting Cap and the Conversion Cap and allow the issuance of the Series A Preferred Stock and the Common Stock issuable thereunder without limitations on voting or number of shares to be issued.

Rights Plan ” shall have the meaning ascribed to it in Section 5(b)(xiii) .

School ” means a postsecondary institution of higher education consisting of a main campus and, if applicable, any additional locations, campuses or branches thereof operated by the Corporation or any of its respective Subsidiaries identified by an Office of Postsecondary Education Identification number issued by the DOE or approved by any Educational Agency.

Senior Stock ” shall have the meaning ascribed to it in Section 2 .

Series A Preferred Stock ” shall have the meaning ascribed to it in Section 1 .

Special Dividend ” shall have the meaning ascribed to it in Section 6(c)(i) .

Subsidiary ” means any entity for which the Corporation owns, directly or indirectly, an amount of the voting securities, other voting rights or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, more than fifty percent (50%) of the equity interests of such entity).

Termination Event ” shall mean the occurrence of any of the following: (a) the date on which Regulatory Approval has been obtained or (b) a Liquidation Event.

Title IV ” shall mean Title IV of the Higher Education Act of 1965, as amended (20 U.S.C. §§ 1070 et seq. ), and any amendments or successor statutes thereto.

Trading Day ” shall mean any Business Day on which the Common Stock is traded, or able to be traded, on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or if the Common Stock is not trading on a national securities exchange, a Business Day on which the Common Stock is trading in its principal market.

Trading Market ” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange.

Voting Stock ” shall mean Capital Stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances (determined without regard to any classification of directors) to elect one or more members of the Board (without regard to whether or not, at the relevant time, Capital Stock of any other class or classes (other than Common Stock) shall have or might have voting power by reason of the happening of any contingency).

VWAP ” shall mean, as of any applicable date of determination, the volume weighted average per share price of the Common Stock on the applicable Trading Day on the principal national





securities exchange on which the Common Stock is listed or admitted to trading, of not so admitted or listed, as otherwise reasonably determined by the Board.

Section 11. Headings The headings of the paragraphs of this Certificate of Designations are for convenience of reference only and shall not define, limit or affect any of the provisions hereof.

Section 12. Record Holders To the fullest extent permitted by applicable law, the Corporation and the transfer agent, if any, may deem and treat the record holder of any share of the Series A Preferred Stock as the true and lawful owner thereof for all purposes, and, to the fullest extent permitted by law, neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.

Section 13. Notices All notices or communications in respect of the Series A Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law or regulation. Notwithstanding the foregoing, if the Series A Preferred Stock is issued in book-entry form through The Depository Trust Corporation or any similar facility, such notices may be given to the holders of the Series A Preferred Stock in any manner permitted by such facility.

In the event:
(a) that the Corporation shall authorize the issuance of rights, options or warrants to subscribe for or purchase shares of Common Stock or of any other subscription rights or warrants;

(b) that the Corporation shall authorize a dividend or distribution to all holders of shares of Common Stock; or

(c) of any Change of Control or Liquidation Event;

then the Corporation shall cause to be given to each holder of Series A Preferred Stock notice, pursuant to this Section 13 , at least twenty (20) Business Days prior to the applicable record date (or in the case of events for which there is no record date, at least twenty (20) Business Days prior to such event), of: (x) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such dividend or distribution are to be determined, (y) the initial expiration date set forth in any tender offer or exchange offer for shares of Common Stock or (z) the date on which any such Change of Control or Liquidation Event is expected to become effective or be consummated, and the date as of which it is expected that holders of record of shares of Common Stock shall be entitled to exchange such shares for securities or other property, if any, deliverable upon such Change of Control or Liquidation Event or other transactions.
Section 14. Replacement Certificates The Corporation shall replace any mutilated certificate at the holder’s expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the Corporation.









Section 15. Transfer Agent, Conversion Agent, Registrar and Paying Agent The duly appointed transfer agent, conversion agent, registrar and paying agent for the Series A Preferred Stock shall be the Corporation. The Corporation may, in its sole discretion, appoint a successor transfer agent and remove such transfer agent in accordance with the agreement between the Corporation and the transfer agent; provided , however , that the Corporation shall appoint a successor transfer agent who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall send notice thereof by first-class mail, postage prepaid, to the holders of the Series A Preferred Stock.

Section 16. Severability If any term of the Series A Preferred Stock (or part thereof) set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms (or parts thereof) set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless, remain in full force and effect, and no term herein (or parts thereof) set forth will be deemed dependent upon any other such term unless so expressed herein.

Section 17. Other Rights The shares of Series A Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law and regulation.






















IN WITNESS WHEREOF, Universal Technical Institute, Inc. has caused this Certificate of Designations to be duly executed by its authorized corporate officer this 24 th day of June, 2016.
UNIVERSAL TECHNICAL INSTITUTE, INC.




By:         
Name:      Kimberly J. McWaters
Title:      Chairman of the Board and Chief Executive Officer









REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is made and entered into as of June 24, 2016, by and between Universal Technical Institute, Inc., a Delaware corporation (the “ Company ”) and Coliseum Holdings I, LLC, a Delaware limited liability company (the “ Stockholder ”). The Company and the Stockholder may be referred to in this Agreement as a “ Party ,” and, collectively, as the “ Parties .” Capitalized terms used but not otherwise defined herein have the meanings assigned such terms in Section 10 .
A.      The Company and the Stockholder are parties to that certain Securities Purchase Agreement, dated as of June 24, 2016 (the “ Purchase Agreement ”), pursuant to which the Stockholder is purchasing an aggregate of 700,000 shares of Series A Preferred Stock of the Company, $0.0001 par value per share (the “ Purchased Shares ”).
B.      In connection with the transactions contemplated by the Purchase Agreement, and pursuant to the terms of the Purchase Agreement, the Parties desire to enter into this Agreement in order to grant to the Stockholder and certain of its permitted transferees certain demand and piggyback registration rights covering the Purchased Shares, all in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Stockholder hereby agree as follows:
1. Demand Registrations.

(a) Short-Form Registrations . At any time after twelve (12) months following the date hereof, each Holder may request registration under the Securities Act of all or any portion of its Registrable Securities on Form S-3 or any successor form (each, a “ Short-Form Registration ”), which may, if so requested, be a “shelf” registration under Rule 415 under the Securities Act. A registration shall not count as a Short-Form Registration unless and until a registration statement relating thereto has become effective under the Securities Act. Each request for a Short-Form Registration shall specify the number of Registrable Securities requested to be registered.

(b) Long-Form Registrations . At any time that a Holder is then eligible to request registration under the Securities Act of all or any portion of its Registrable Securities but where Short-Form Registration pursuant to Section 1(a) is not available to be used by the Company in respect of such proposed registration, but in no event earlier than twelve (12) months following the date hereof, each Holder shall be entitled to request a registration on Form S-1 or any similar form (each, a “ Long-Form Registration ”). A registration shall not count as a permitted Long-Form Registration unless and until a registration statement relating thereto has become effective under the Securities Act. Each request for a Long-Form Registration shall specify the number of Registrable Securities requested to be registered.




(c) Underwriting; Priority .






(i) Holders shall have the right to request that a Demand Registration be effected as an underwritten offering at any time, subject to this Section 1 , by delivering to the Company a notice setting forth such request and the number of Registrable Securities sought to be disposed of by such Holder in such underwritten offering. All Holders proposing to participate in such underwriting shall (A) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting by a Majority-in-Interest of the Registrable Securities included in such offering, which underwriter(s) shall be reasonably acceptable to the Company, provided that, with respect to such underwriting agreement or any other documents reasonably required under such agreement, (1) no Holder shall be required to make any representation or warranty with respect to or on behalf of the Company or any other stockholder of the Company and (2) the liability of any Holder shall be limited as provided in Section 7(b) ; (B) complete and execute all questionnaires, powers-of-attorney, indemnities, opinions and other documents required under the terms of such underwriting agreement; (C) provide all customary information reasonably requested by the Company or the underwriter in connection with such registration; and (D) comply with all federal and state securities laws applicable thereto in connection with such registration. A request for an underwritten offering may be withdrawn by Holders of a majority of the Registrable Securities proposed to be included in such offering prior to the consummation thereof, and, in such event, such withdrawal shall not be treated as a request for an underwritten offering pursuant to this paragraph.

(ii) If the managing underwriter(s) for an underwritten offering advise(s) the Company and the Holders in writing that the dollar amount or number of Registrable Securities which the Holders desire to sell, taken together with all other Common Stock or other securities which the Company desires to sell and the Common Stock or other securities, if any, as to which registration has been requested pursuant to written contractual piggyback registration rights held by other stockholders of the Company, if any, who desire to sell or otherwise, exceeds the maximum dollar amount or maximum number of securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method or the probability of success of such offering (such maximum dollar amount or maximum number of securities, as applicable, the “ Maximum Threshold ”), then the Company shall include in such registration: (1) first , the Registrable Securities (pro rata in accordance with the number of Registrable Securities which such Holders have requested be included in such underwritten offering, regardless of the number of Registrable Securities or other securities held by each such Person) that can be sold without exceeding the Maximum Threshold; (2) second , to the extent that the Maximum Threshold has not been reached under the foregoing clause (1), the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold; (3) third , to the extent that the Maximum Threshold has not been reached under the foregoing clauses (1) and (2), the Common Stock or other securities for the account of other Persons that the Company is obligated to register pursuant to written contractual arrangements, if any, with such Persons and that can be sold without exceeding the Maximum Threshold; and (4) fourth , to the extent that the Maximum Threshold has not been reached under the foregoing clauses (1), (2) and (3), the Common Stock that other stockholders desire to sell that can be sold without exceeding the Maximum Threshold to the extent that the Company, in its sole discretion, wishes to permit such sales pursuant to this clause (4).

(d) Limitations . The Company shall not be obligated to effect (i) more than five (5) Demand Registrations; provided , however , that the holders of Registrable Securities collectively shall only be entitled to request a maximum of three (3) Demand Registrations at any time that the Company is not eligible to use Form S-3 (or a comparable form) for the registration under the Securities Act of any of its securities, (ii)any Demand Registration unless it shall have received requests from Holders to register Registrable Securities having an aggregate market value, based upon the most recent closing price of the





Common Stock at the time of the demand, of not less than $10 million, (iii) any Demand Registration that does not cover the offer and sale of at least ten percent (10%) of the total number of shares of Common Stock then outstanding (it being understood that the determination whether a registration covers the requisite number of shares shall be made without regard to any over-allotment option of any underwriters) or (iv) any Demand Registration within 180 days following the effective date of any registered offering of the Company’s securities to the general public in which the Stockholder shall have been able effectively to register all Registrable Securities. Notwithstanding anything contained herein to the contrary, in no event will a Demand Registration count as a Demand Registration unless at least fifty percent (50)% of all Registrable Securities requested to be registered in such Demand Registration by the Holders initiating such Demand Registration are, in fact, registered in such registration.

(e) Follow-On Registrations . If the filings contemplated herein are not permitted under the rules and regulations promulgated by the United States Securities and Exchange Commission (“ SEC ”) or by any Commission Guidance, then within one hundred twenty (120) days after a written request by one or more Holders to register for resale any additional Registrable Securities owned by such Holders that have not been registered for resale on a “shelf” Registration Statement, the Company shall file a Registration Statement similar to the Registration Statement then effective (each, a “ Follow-On Registration Statement ”), to register for resale one hundred percent (100%), or such portion as permitted by Commission Guidance (provided that the Company shall use commercially reasonable efforts to advocate with the SEC for the registration of all or the maximum number of the Registrable Securities as permitted by Commission Guidance), of such additional Registrable Securities. The Company shall give written notice of the filing of the Follow-On Registration Statement at least twenty-five (25) days prior to filing the Follow-On Registration Statement to all Holders (the “ Follow-On Registration Notice ”) and shall include in such Follow-On Registration Statement all such additional Registrable Securities with respect to which the Company has received written requests for inclusion therein within twenty (20) days after sending the Follow-On Registration Notice. Notwithstanding the foregoing, the Company shall not be required to file a Follow-On Registration Statement (i) if it has filed a Follow-On Registration Statement within the prior twelve (12)-month period. The Company shall use commercially reasonable efforts to cause such Follow-On Registration Statement to be declared effective as promptly as practicable after filing such Follow-On Registration Statement.

(f) Allocation Among Holders . Notwithstanding any other provision of this Agreement, if any Commission Guidance sets forth a limitation of the number of Registrable Securities to be registered on a particular Registration Statement (notwithstanding the Company’s commercially reasonable efforts to advocate with the SEC for the registration of all or a greater number of Registrable Securities), then, unless otherwise directed in writing by a Holder as to its Registrable Securities, the amount of Registrable Securities to be registered on such Registration Statement will be reduced pro rata among the Holders based on the total number of unregistered Registrable Securities held by such Holders.

2. Piggyback Registrations.

(a) Right to Piggyback . Whenever the Company proposes to register any of its securities under the Securities Act, and the registration form proposed to be used may be used to register the resale of Registrable Securities (each, a “ Piggyback Registration ”), the Company shall give prompt written notice (in any event at least ten (10) Business Days prior to the anticipated filing date of the Registration Statement relating to such registration) to each Holder of its intention to effect such a registration and shall use its commercially reasonable efforts to include in such registration all Registrable Securities with respect to which the Company has received a written request from each Holder for inclusion therein within five (5) Business Days following such Holder’s receipt of the Company’s notice. All Holders proposing to distribute





their securities through a Piggyback Registration that involves an underwriter(s) shall (i) enter into an underwriting agreement in reasonable and customary form with the underwriter(s) selected for such Piggyback Registration, provided that with respect to such underwriting agreement or any other documents reasonably required under such agreement, (A) no Holder shall be required to make any representation or warranty with respect to or on behalf of the Company or any other stockholder of the Company and (B) the liability of any Holder shall be limited as provided in Section 7(b) ; (ii) each Holder shall complete and execute all questionnaires, powers- of-attorney, indemnities, opinions and other documents reasonably required under the terms of such underwriting agreement; (iii) provide all customary information reasonably requested by the Company or the underwriter in connection with such registration; and (iv) comply with all federal and state securities laws applicable thereto in connection with such registration. No registration effected under this Section 2 shall relieve the Company of its obligations to effect a Demand Registration required by Section 1 . If at any time after giving notice of its intention to register any Company securities pursuant to this Section 2(a) and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company shall give notice to all of the Holders participating in such Piggyback Registration and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration.

(b) Reduction of Offering . If the managing underwriter(s) for a Piggyback Registration that is to be an underwritten offering advises the Company and the Holders that in their opinion the dollar amount or number of Common Stock or other securities which the Company desires to sell, taken together with Common Stock or other securities, if any, as to which registration has been demanded pursuant to written contractual arrangements with third parties, if any, the Registrable Securities as to which registration has been requested under this Section 2 , and the Common Stock or other securities as to which registration has been requested pursuant to the written contractual piggyback registration rights of other stockholders of the Company, exceeds the Maximum Threshold, then the Company shall include in any such registration:

(i) If the registration is undertaken for the Company’s account: (A) first , the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold and (ii) second , to the extent that the Maximum Threshold has not been reached under the foregoing clause (A), the Registrable Securities and the Common Stock or other securities proposed to be sold for the account of other Persons that the Company is obligated to register pursuant to any written contractual piggyback registration rights with such Persons and that can be sold without exceeding the Maximum Threshold (pro rata in accordance with the number of Registrable Securities and Common Stock or other securities which such Holders and other Persons have requested be included in such underwritten offering, regardless of the number of Registrable Securities and Common Stock or other securities held by each such Holder or other Person), and

(ii) If the registration is a “demand” registration undertaken at the demand of one or more Persons other than the Company and any Holder, (A) first , the Common Stock or other securities for the account of such demanding Persons that can be sold without exceeding the Maximum Threshold; (B) second , to the extent that the Maximum Threshold has not been reached under the foregoing clause (A), the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold; and (C) third , to the extent that the Maximum Threshold has not been reached under the foregoing clauses (A) and (B), the Registrable Securities and the Common Stock or other securities proposed to be sold for the account of other Persons that the Company is obligated to register pursuant to any written contractual piggyback registration rights with such Persons and that can be sold without exceeding the Maximum Threshold (pro rata in accordance with the number of Registrable Securities and Common Stock or other securities which such Holders and other Persons have requested be included in such underwritten offering, regardless





of the number of Registrable Securities and Common Stock or other securities held by each such Holder or other Person).

(c) Selection of Underwriters . If any Piggyback Registration is an underwritten primary offering, the investment banker(s) and manager(s) for the offering shall (as between the Company and the Holders) be selected by the Company.

3. Market Standoff Agreements.

(a) Notwithstanding anything contained herein to the contrary, the Company may delay the filing of any registration statement and may withhold any and all efforts to cause such registration statement to be become effective if the Company determines in good faith that such registration will (i) materially and adversely interfere with or affect the negotiation or consummation of any actual or pending material transaction that is being contemplated by the Company (whether or not a final decision has been made to undertake such transaction), (ii) otherwise have a Material Adverse Effect on the Company or (iii) involve initial or continuing disclosure obligations that are not in the best interest of the Company’s stockholders; provided , however , that the Company may not exercise such right to delay or to withhold efforts more than once in any consecutive 12 month period or for more than ninety (90) days. Without in any way limiting the foregoing, if the Company exercises its right to delay or to withhold efforts pursuant to this Section 3(a) , then the Company shall use commercially reasonable efforts to have the applicable registration statement filed or declared effective, as the case may be, at the earliest practicable date after the Company’s bases for delaying or withholding its efforts are no longer applicable.

(b) The Company (i) shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the period beginning on the date the Company receives a valid request for an underwritten offering permitted hereunder from any Holder and continuing until ninety (90) days after the commencement of an underwritten offering, unless the underwriters managing the registered public offering otherwise agree after consultation with a Majority-in-Interest and (ii) shall cause each executive officer and director of the Company, and shall use commercially reasonable efforts to cause each holder of five percent (5%) or greater of the then outstanding Common Stock of the Company and each additional holder of Common Stock of the Company, or any securities convertible into or exchangeable or exercisable for such Common Stock, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.

(c) Each Holder of Registrable Securities agrees that in connection with any public offering of the Company's equity securities, or any securities convertible into or exchangeable or exercisable for such securities, and upon the request of the managing underwriter(s) in such offering, such Holder shall not, without the prior written consent of such managing underwriter(s), during the period commencing on the date that is ten (10) days prior to the consummation of such offering and continuing until ninety (90) days after the commencement of an underwritten offering, (i) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into, exercisable for or exchangeable for shares of Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common





Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 3(c) shall not apply to sales of Registrable Securities to be included in such offering pursuant to Section 1 or Section 2 , and shall be applicable to the holders of Registrable Securities only if all executive officers and directors of the Company and each holder of its Common Stock, or any securities convertible into or exchangeable or exercisable for such Common Stock, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) are subject to the same restrictions. Each holder of Registrable Securities agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter and that are consistent with the foregoing or otherwise necessary to give further effect thereto. Notwithstanding anything to the contrary contained in this Section 3(c) , each holder of Registrable Securities shall be released, pro rata, from any lock-up agreement entered into pursuant to this Section 3(c) in the event and to the extent that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any executive officer, director or other holder of Common Stock.

4. Registration Procedures.

(a) Whenever the Holder has requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use commercially reasonable efforts to effect the registration and the sale of such Registrable Securities in accordance with the Holder’s intended method of disposition thereof, and pursuant thereto the Company shall:

(i) (A) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities as soon as reasonably practicable, but in any event within thirty (30) days, if a Short-Form Registration, and ninety (90) days, if a Long-Form Registration, following the date of a demand for registration pursuant to Section 1(a) or Section 1(b) , as applicable, and (B) use commercially reasonable efforts to cause such Registration Statement (1) to become effective as soon as practicable, and in any event within thirty (30) days, if the SEC indicates it will not review the Registration Statement, and ninety (90) days, if the SEC indicates it will review the Registration Statement (provided that, in the event the SEC indicates it will review such Registration Statement and the SEC’s response in connection with such review is not received by the Company within thirty (30) days of filing such Registration Statement, such ninety (90) day period shall be tolled until such SEC response is received by the Company), following the date of filing such Registration Statement (provided that before filing a Registration Statement or prospectus or any amendments or supplements thereto, the Company shall furnish to one counsel selected by Holders of a majority of the Registrable Securities proposed to be included therein copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel) and (2) to remain effective and in compliance with the provisions of the Securities Act for a period of not less than one hundred eighty (180) days in order to permit the disposition of all Registrable Securities (and any other securities, if applicable) covered by such Registration Statement during such period in accordance with the intended method(s) of distribution set forth in such Registration Statement or until such securities have been withdrawn;

(ii) respond to written comments received from the SEC upon a review of any Registration Statement in a timely manner;

(iii) promptly notify each Holder of the effectiveness of each Registration Statement filed hereunder; by 9:30 a.m. (New York time) on the Business Day following such effectiveness, file with the SEC in accordance with Rule 424 under the Securities Act the final prospectus to be used in connection with sales pursuant to such Registration Statement; and prepare





and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith, and otherwise take such actions, as may be necessary to keep such Registration Statement effective until the earlier of (A) the date as of which each Holder may sell all of the Registrable Securities covered by such Registration Statement pursuant to Rule 144 under the Securities Act without limitation, restriction or condition thereunder, and (B) the date on which all of such Registrable Securities have been disposed of by each Holder, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

(iv) promptly furnish to each Holder such number of copies of such Registration Statement, each amendment and supplement thereto, the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents as the Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by each Holder;

(v) if applicable, use commercially reasonable efforts to register or qualify the shares covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as each Holder shall reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable each Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder (provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction);

(vi) notify each Holder at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, as expeditiously as possible following the happening of such event, prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

(vii) without limiting any obligations of the Company under the Purchase Agreement, use its commercially reasonable efforts to (A) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or (B) if such listing is not then permitted, or no similar securities issued by the Company are then so listed, secure a designation and quotation of all of the Registrable Securities covered by each Registration Statement on the OTC Bulletin Board;

(viii) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such Registration Statement;





(ix) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Holders or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split or a combination of shares);

(x) make available for inspection by any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such Registration Statement;

(xi) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder, and which requirement will be deemed satisfied if the Company timely files complete and accurate information on Forms 10-Q and 10-K and Current Reports on Form 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;

(xii) in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Stock included in such Registration Statement for sale in any jurisdiction, promptly notify each Holder and use commercially reasonable efforts to promptly obtain the withdrawal of such order;

(xiii) use commercially reasonable efforts to cause such Registrable Securities covered by such Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Securities;

(xiv) permit any Holder who, in the reasonable judgment of the Company upon the advice of counsel, might be deemed to be an underwriter or controlling person of the Company, and, if applicable, any underwriter, a cold comfort letter from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the Holders of a majority of the Registrable Securities being sold reasonably request (provided that such Registrable Securities constitute at least ten percent (10%) of the securities covered by such Registration Statement); and

(xv) cooperate with each Holder and any broker or dealer through which any such Holder proposes to sell its Registrable Securities in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Holder.

(b) Each Holder that requested that any Registrable Securities be registered pursuant to this Agreement shall deliver to the Company such requisite information with respect to itself and its Registrable Securities as the Company may reasonably request for inclusion in the Registration Statement (and the prospectus included therein) in order to comply with all applicable rules and regulations of the SEC,





and that it will promptly notify the Company of any material changes in the information set forth in the Registration Statement furnished by or regarding the Holder or its plan of distribution.

(c) The Holders shall not effect sales of the shares covered by the Registration Statement (i) prior to the withdrawal of any stop order suspending the effectiveness of the Registration Statement, or of any order suspending or preventing the use of any related prospectus or suspending the registration or qualification of any Registrable Securities included in the Registration Statement for sale in any jurisdiction where such shares had previously been registered or qualified or (ii) after receipt of facsimile or other written notice from the Company instructing such Holders to suspend sales to permit the Company to correct or update the Registration Statement or prospectus until such Holder receives copies of a supplemented or amended prospectus that corrects the misstatement(s) or omission(s) referred to above and receives notice that any required post-effective amendment has become effective. Such Holder agrees that it will immediately discontinue offers and sales of Registrable Securities under the Registration Statement until such Holder receives copies of a supplemented or amended prospectus that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective.

(d) Notwithstanding anything herein to the contrary, the Company shall have the right to suspend the use of a Registration Statement for a period of not greater than forty-five (45) consecutive days and for not more than ninety (90) days in any twelve (12) month period in connection with each Demand Registration (a “ Blackout Period ”), if, in the good faith opinion of the Board of Directors of the Company, after consultation with counsel, material, nonpublic information exists, including without limitation the proposed acquisition or divestiture of assets by the Company, a strategic alliance or a financing transaction involving the Company or the existence of pending material corporate developments, the public disclosure of which would be necessary to cause the Registration Statement to be materially true and to contain no material misstatements or omissions, and in each such case, where, in the good faith opinion of the Board of Directors, such disclosure would be reasonably likely to have a Material Adverse Effect (as defined in the Securities Purchase Agreement) on the Company or on the proposed transaction. The Company shall give the Holders prompt written notice of the commencement of any Blackout Period. Upon the conclusion of any Blackout Period, the Company shall provide the Holders prompt written notice that the Registration Statement is again available for use.

5. Registration Expenses . All expenses (excluding underwriting discounts and commissions and brokerage fees) incident to the Company’s performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and independent certified public accountants, underwriters and other persons retained by the Company, and reasonable fees and expenses of one counsel for the Holders in connection with any Demand Registration or Piggyback Registration (all such expenses being herein called “Registration Expenses”), shall be borne by the Company. To the extent that Registration Expenses are not required to be paid by the Company (including, without limitation, underwriting discounts and commissions and brokerage fees), each holder of securities included in any registration hereunder shall pay all Registration Expenses specifically allocable to such holder’s included securities.

6. Holder's Obligations . Each Holder covenants and agrees that, in the event the Company informs such Holder in writing that it does not satisfy the conditions specified in Rule 172 and, as a result thereof, such Holder is required to deliver a prospectus in connection with any disposition of Registrable Securities, it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to





the Registration Statement, and shall sell the Registrable Securities only in accordance with a method of distribution described in the Registration Statement.

7. Indemnification.
(a) The Company shall indemnify, to the extent permitted by applicable law, each Holder, its officers, directors, partners, managers, members, investment managers, employees, agents and representatives, and each Person who controls each Holder (within the meaning of Section 15 the Securities Act and Section 20 of the Exchange Act) against all losses, claims, damages, liabilities and expenses (including reasonable legal expenses) arising out of or based upon (i) any untrue or alleged untrue statement of material fact contained in (or incorporated by reference therein) any Registration Statement, free writing prospectus, roadshow, prospectus or preliminary prospectus, filing under any state securities (or blue sky) law or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law, including any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iii) any breach or violation of this Agreement; provided, however, that the Company shall not be liable to any such indemnified party in any such case to the extent that (A) such claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in (or incorporated by reference therein) any Registration Statement, free writing prospectus, roadshow, prospectus or preliminary prospectus, filing under any state securities (or blue sky) law or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact in reliance upon and in conformity with information furnished to the Company by or on behalf of such Holder or its representatives by or on behalf of such Holder expressly for use therein, or (B) such claim is related to the use by a Holder or underwriter, if any, of an outdated or defective prospectus after such party has received written notice from the Company that such prospectus is outdated or defective. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

(b) Each Holder shall, severally and not jointly, to the extent permitted by applicable law, indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of Section 15 the Securities Act and Section 20 of the Exchange Act), to the fullest extent permitted by applicable law, against any losses, claims, damages, liabilities and expenses (including reasonable legal expenses) arising out of or based upon any untrue or alleged untrue statement of material fact contained in (or incorporated by reference therein) the Registration Statement, free writing prospectus, roadshow, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements herein not misleading, but only to the extent that such untrue statement or omission was made in reliance upon and in conformity with any information furnished in writing to the Company by such Holder or its representatives by or on behalf of such Holder expressly for use therein; provided that each Holder shall be liable under this Section 7(b) (and otherwise) for only up to the net amount of proceeds actually received by each Holder as a result of the sale of Registrable Securities pursuant to the Registration Statement giving rise to such indemnification obligation.

(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless, in the Company’s reasonable judgment, a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim,





permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. After written notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim, the indemnifying party shall not be subject to any liability for any settlement subsequently made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of the Company, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which case the indemnifying party shall be liable for the fees and expenses of one additional firm of attorneys with respect to the indemnified parties. The indemnifying party shall keep the indemnified party reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect to such claim. No indemnifying party shall, without the prior written consent of the indemnified party, consent to entry of any judgment or enter into any settlement or other compromise that (A) cannot be settled in all respects by the payment of money and (B) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a full release from all liability with respect to such claim.

(d) If the indemnification provided for in this Section 7 is unavailable to or is insufficient to hold harmless an indemnified party under the provisions above in respect to any losses, claims, damages or liabilities referred to therein, then the indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities to the fullest extent permitted by law; provided, however, that: (i) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation, and (ii) contribution by each Holder shall be limited in amount to the net amount of proceeds actually received by such Holder from the sale of such Registrable Securities pursuant to the applicable Registration Statement, less the amount of any damages that such Holder has otherwise been required to pay in connection with such sale.

(e) The indemnification and contribution provisions set forth in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, partner, manager, member, investment manager, employee, agent, representative or controlling Person of such indemnified party and shall survive the transfer of Registrable Securities. The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the indemnified party against the indemnifying party or others, and (ii) any liabilities to which the indemnifying party may be subject pursuant to the law

8. Reports under the Exchange Act . With a view to making available to the each Holder the benefits of Rule 144 under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration (“ Rule 144 ”), at all times during which there are Registrable Securities outstanding that have not been previously (i) sold to or through a broker or dealer or underwriter in a public distribution or (ii) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof, in the case of either clause (i) or clause (ii) in such a manner that, upon the consummation of such sale, all transfer restrictions and restrictive legends with respect to such shares are removed upon the consummation of such sale, the Company agrees to use its commercially reasonable efforts to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144;





(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act, so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

(c) furnish to each Holder so long as such Holder owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144 and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit each Holder to sell such securities pursuant to Rule 144 without registration.

9. Preservation of Rights . Without the prior written consent of a Majority-in- Interest, the Company shall not, on or after the date of this Agreement, (i) grant any registration rights to third parties which are more favorable than or inconsistent with the rights granted hereunder, or (ii) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that is inconsistent with or violates or subordinates the rights expressly granted to each Holder in this Agreement, such as (A) affecting the ability of each Holder to include the Registrable Securities in a registration undertaken pursuant to this Agreement or (B) affecting the marketability of such Registrable Securities in any such registration (including effecting a stock split or a combination of shares).

10. Definitions.

Affiliate ” means (i) any Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such other Person, (ii) any executive officer or general partner of such other Person and (iii) any legal entity for which such Person acts as executive officer or general partner, and “ control ” for these purposes means the direct or indirect power to direct or cause the direction of the management and policies of another Person, whether by operation of law or regulation, through ownership of securities, as trustee or executor or in any other manner.
Business Day ” means any day on which the principal offices of the SEC in Washington, DC are open to accept filings.
Commission Guidance ” means (i) any publicly available written guidance or rule of general applicability of the SEC staff or (ii) written comments, requirements or requests of the SEC staff to the Company in connection with the review of a Registration Statement.
Common Stock ” means the common stock, par value $0.0001 per share, of the Company, and includes all securities of the Company issued or issuable with respect to such securities by way of a stock split, stock dividend or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, or other corporate reorganization.
Demand Registration ” means a Short-Form Registration or a Long-Form Registration.
Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder.
FINRA ” means the Financial Industry Regulatory Authority, and any agency or authority succeeding to the functions thereof.





Holder ” means (i) Stockholder in its capacity as a holder of record of Registrable Securities, (ii) any Affiliate of Stockholder that is a direct or indirect transferee of Registrable Securities from Stockholder or any subsequent Holder and (iii) any direct or indirect transferee of Registrable Securities from Stockholder or any subsequent Holder; provided , however , that any transferee of Stockholder shall only be a Holder under this Agreement if the instrument pursuant to which such transferee purchases or otherwise acquires Registrable Securities from Stockholder expressly transfers Stockholder’s rights with respect to such Registrable Securities under this agreement to such transferee.
Majority-in-Interest ” means Holders of more than fifty percent (50%) of the Registrable Securities.
Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency or political subdivision thereof).
Registrable Securities ” means the Purchased Shares, it being understood that such Purchased Shares shall be converted to Common Stock prior to or contemporaneously with any sale pursuant to the terms of this Agreement, and Common Stock that has been or will be issued upon conversion of the Purchased Shares, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing. For purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire such Registrable Securities (upon conversion or exercise, in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (A) a Registration Statement covering such securities has been declared effective by the SEC and such securities have been disposed of pursuant to such effective Registration Statement, (B) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, (C) such securities are eligible for sale by the Holder without registration pursuant to Rule 144 (or any similar provisions then in force) under the Securities Act without limitation thereunder on volume or manner of sale, (D) such securities are otherwise transferred and such securities may be resold without limitation or subsequent registration under the Securities Act, (E) such securities shall have ceased to be outstanding, or (F) the stock certificates or evidences of book- entry registration relating to such securities have had all restrictive legends removed.
Registration Statement ” means any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the prospectus, amendments, and supplements to such Registration Statement, including post- effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.
Securities Act ” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder.
11. Miscellaneous.

(a) Remedies . Each Party shall be entitled to enforce its rights under any provision of this Agreement specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by applicable law. The Parties agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any Party may, in its sole discretion, apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement.






(b) Termination . All rights and obligations of the Company hereunder (other than those set forth in Section 5 and Section 7 ) shall terminate and be of no further force or effect on the first date on which no Registrable Securities are outstanding. The right of Stockholder to effect any Demand Registration pursuant to Section 1(a) or Section 1(b) shall terminate and be of no further force or effect from and after the date on which the Stockholder ceases to have Beneficial Ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of at least ten percent (10%) of the issued and outstanding shares of Common Stock. The right of the Stockholder to effect any Piggyback Registration pursuant to Section 2 shall terminate and be of no further force or effect from and after the date on which the Stockholder ceases to have Beneficial Ownership of at least one percent (1%) of the issued and outstanding shares of Common Stock.

(c) Amendments and Waivers . Except as otherwise provided herein, the provisions of this Agreement may be amended, modified or waived only upon the prior written consent of the Company, a Majority-in-Interest and any Holder that would be materially and disproportionately affected by such an amendment or waiver. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

(d) Assignment; No Third Party Beneficiaries . This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. This Agreement and the rights, duties and obligations of the Holders hereunder may be freely assigned or delegated by such Holder in conjunction with and to the extent of any transfer of Registrable Securities. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the Parties and their respective permitted successors and assigns; provided , however , that no such transfer or assignment shall be binding upon or obligate the Company to any such assignee, and no such assignee shall be deemed a Holder hereunder, unless and until the Company shall have received written notice of such transfer or assignment as herein provided and a written agreement of the assignee to be bound by the provisions of this Agreement. This Agreement is not intended to confer any rights or benefits on any Persons that are not party hereto other than as expressly set forth in Section 7 and this Section 11(d) .

(e) Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

(f) Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each Party to this Agreement and delivered to the other Party, it being understood that all Parties need not sign the same counterpart. Signatures delivered by electronic methods shall have the same effect as signatures delivered in person.

(g) Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

(h) Governing Law; Waiver of Jury Trial . This Agreement shall be governed by and construed in accordance with the internal laws of New York applicable to parties residing in New York, without regard applicable principles of conflicts of law. Each Party irrevocably consents to the exclusive jurisdiction of any court located within New York County, New York, in connection with any matter based





upon or arising out of this Agreement or the matters contemplated hereby and it agrees that process may be served upon it in any manner authorized by the laws of the State of New York for such Persons and waives and covenants not to assert or plead any objection which it might otherwise have to such jurisdiction and such process. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE, IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11(h) .

(i) Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly delivered: (i) upon receipt if delivered personally; (ii) three (3) Business Days after being mailed by registered or certified mail, postage prepaid, return receipt requested; (iii) one (1) Business Day after it is sent by commercial overnight courier service; or (iv) upon transmission if sent via facsimile or electronic mail with confirmation of receipt, in each case to the Parties to this Agreement at the addresses set forth in the Purchase Agreement (or at such other address for a Party as shall be specified upon like notice).

(j) Rules of Construction . The Parties agree that they have each been represented by counsel during the negotiation, preparation and execution of this Agreement (or, if executed following the date hereof by counterpart, have been provided with an opportunity to review the Agreement with counsel) and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the Party drafting such agreement or document.

(k) Interpretation . This Agreement shall be construed in accordance with the following rules: (i) the terms defined in this Agreement include the plural as well as the singular; (ii) unless otherwise specified, all references in the Agreement to designated “Sections” and other subdivisions are to the designated sections and other subdivisions of the body of this Agreement; (iii) pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms; (iv) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision; and (v) the words “includes” and “including” are not limiting.

[ Signature Page Follows. ]










Registration Rights Agreement

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first above written.
COMPANY :

Universal Technical Institute, Inc.

By:         
Name:      Kimberly J. McWaters     
Title:      Chairman of the Board and Chief Executive Officer
    



STOCKHOLDER :

COLISEUM HOLDINGS I, LLC

By: Coliseum Capital Management, LLC, its Manager

By:     
Name:      Christopher Shackelton
Title:      Managing Partner










SECURITIES PURCHASE AGREEMENT
between
UNIVERSAL TECHNICAL INSTITUTE, INC.
and
COLISEUM HOLDINGS I, LLC
Dated June 24, 2016

















 










TABLE OF CONTENTS
Page

Article 1 SALE AND PURCHASE; CLOSING
1
1.1
Authorization of Issuance and Sale                          1
1.2
Commitment to Purchase the Preferred Shares                  1
1.3
Payment of the Subscription Price and Purchase Price for the Preferred Shares      1
1.4
Closing of the Preferred Shares                              1
Article 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2
2.1
Reporting Compliance                                  2
2.2
Common Stock; Preferred Stock                              2
2.3
Capitalization and Other Capital Stock Matters                      2
2.4
No Material Misstatement or Omission                          3
2.5
Preparation of the Financial Statements                          3
2.6
Disclosure Controls and Procedures                              3
2.7
Independent Accountants                                  4
2.8
No Material Adverse Change                                  4
2.9
[Reserved]                                          5
2.10
Subsidiaries                                          5
2.11
Incorporation and Good Standing of the Company and its Subsidiaries          5
2.12
Legal Power and Authority                                  5
2.13
This Agreement                                      5
2.14
Compliance with Existing Instruments                          6
2.15
No Conflicts                                          6
2.16
No Consents                                          6
2.17
Litigation                                          6
2.18
All Necessary Permits                                      7





2.19
Title to Properties                                      7
2.20
Tax Law Compliance                                      7
2.21
Intellectual Property Rights                                  7
2.22
ERISA Matters                                      8
2.23
Labor Matters                                          8
2.24
Compliance with Environmental Laws                          9
2.25
Insurance                                          9
2.26
Accounting System                                  10
2.27
Use of Proceeds; Solvency; Going Concern                      10
2.28
No Price Stabilization or Manipulation                      10
2.29
No Registration Required Under the Securities Act                  11
2.30
No Integration                                      11
2.31
No Applicable Registration or Other Similar Rights                  11
2.32
Investment Company Act                              11
2.33
No Brokers                                      11
2.34
No Restrictions on Payments of Dividends                      11
2.35
Sarbanes-Oxley                   12
2.36
No Unlawful Contributions or Other Payments                  12
2.37      Foreign Corrupt Practices Act                          12
2.38
Money Laundering                                  12
2.39
[Reserved]                                       12
2.40
Related Party Transactions                              12
2.41
Stamp Taxes                                      13
2.42
Education Approvals; Compliance with Education Laws              13
2.43
No Contract Terminations                              17
2.44
Certificates                                      17
Article 3 REPRESENTATIONS OF THE INVESTOR
18





3.1
Existence and Good Standing; Authority                      18
3.2
Authorization of Agreement; Enforceability                      18
3.3
Accredited Investor                                  18
3.4
No Disqualification Event                              18
3.5
Information; Knowledge of Business                          18
3.6
Investment Intent                                  18
3.7
No Manipulation or Stabilization of Price                      19
3.8
Compliance with Securities Laws                          19
3.9
Reliance on Own Investigation                          19
3.10
Regulatory Qualifications.                              19
Article 4 CLOSING DELIVERABLES
     21
4.1
Conditions to Obligations of the Investor for Closing              21
4.2
Compliance with Covenants                          21
4.3
Required Consents                                  21
Article 5 COVENANTS
22
5.1
Access to Records                                  22
5.2
Financial Reporting                                  22
5.3
Tax Matters                                      22
5.4
New York Stock Exchange Listing                          23
5.5
Use of Proceeds                                  23
5.6
HSR Filing                                      23
5.7
Investor Transfers                                  23
5.8
Regulatory Updates                                  23
5.9
Survival                                       24
Article 6 INDEMNIFICATION
24
Article 7 MISCELLANEOUS
26
7.1
Construction                                  26





7.2
Fees and Expenses                                  26
7.3
Assignment; Parties in Interest                          27
7.4
Entire Agreement; Severability                          27
7.5
No Third-Party Beneficiaries                              27
7.6
Notices                                      27
7.7
Amendments; Waivers                              28
7.8
Counterparts                                      28
7.9
Headings                                      29
7.10
Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial 29

























INDEX OF SCHEDULES & EXHIBITS
Exhibits
Exhibit A:      Certificate of Designations of Preferences and Rights of Series A Preferred Stock
Exhibit B:      Registration Rights Agreement
Exhibit C:      Form of Opinion of Counsel to the Company

Schedules
Schedule 1.2:      Investor Allocations
Schedule 2.3:      Capitalization and Other Capital Stock Matters
Schedule 2.6:      Disclosure Controls and Procedures
Schedule 2.10:      Subsidiaries
Schedule 2.14:      Compliance with Existing Instruments
Schedule 2.16:      No Consents
Schedule 2.17:      Litigation
Schedule 2.23:      Labor Matters
Schedule 2.25:      Insurance
Schedule 2.28:      No Price Stabilization or Manipulation
Schedule 2.33:      No Brokers
Schedule 2.34:      No Restrictions
Schedule 2.42:      Regulatory Disclosure Schedule







































THIS SECURITIES PURCHASE AGREEMENT dated as of June 24, 2016 (this “ Agreement ”), by and between Universal Technical Institute, Inc., a Delaware corporation (the “ Company ”) and Coliseum Holdings I, LLC, a Delaware limited liability company (the “ Investor ”). Certain capitalized terms used herein are defined in Annex A .
R E C I T A L S
WHEREAS, the Company desires to sell to the Investor, and the Investor desires to purchase from the Company 700,000 shares (the “ Preferred Shares ”) of Series A Preferred Stock of the Company, $0.0001 par value per share (the “ Series A Preferred Stock ”), with the designations, preferences, and rights set forth in the Certificate of Designations of Preferences and Rights of Series A Preferred Stock, dated the date hereof, in the form of Exhibit A hereto (the “ Series A Certificate ” and, together with this Agreement and the Registration Rights Agreement (as defined herein), the “ Transaction Documents ”).
WHEREAS, the Company intends to use the net proceeds from the offering of the Preferred Shares pursuant to the terms of this Agreement (the “ Offering ”) for general working capital purposes or other purposes approved by the Board of Directors of the Company (the “ Use of Proceeds ”);
NOW THEREFORE, in consideration of the foregoing and of the agreements set forth below, the parties agree as follows:
Article 1

SALE AND PURCHASE; CLOSING

1.1 Authorization of Issuance and Sale . Subject to the terms and conditions hereof, the Company has authorized the issuance and sale of the Preferred Shares.

1.2 Commitment to Purchase the Preferred Shares . Subject to the terms and conditions of this Agreement, the Investor shall purchase from the Company the Preferred Shares, and the Company shall issue and deliver to the Investor stock certificates representing the Preferred Shares. Schedule 1.2 sets forth the number of Preferred Shares to be purchased by each Investor (each such number of Preferred Shares, an “ Investor’s Allocation ”).

1.3 Payment of the Subscription Price and Purchase Price for the Preferred Shares . All payments pursuant to this Section 1.3 shall be made by the Investor by wire transfer of immediately available funds to the Company. The account for payment shall be designated by the Company to the Investor at least one business day prior to the Closing Date. On the Closing Date the Investor shall pay a dollar amount equal to the product of (a) $100.00 (one hundred dollars) per share (the “ Per Share Purchase Price ”) and (b) the number of shares of Series A Preferred Stock issued by the Company to the Investor pursuant to the terms of this agreement (the “ Preferred Shares Purchase Price ”).

1.4 Closing of the Preferred Shares . The closing of the purchase and sale of the Preferred Shares (the “ Closing ”) shall take place upon the execution of this Agreement via e-mail by means of PDF copies of signed documents (with the original signed documents to be delivered promptly after Closing), or at such other time and by such other means as shall be agreed to by the Company and the Investor (such date, the “ Closing Date ”).





Article 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investor as of the date hereof as follows:
2.1 Reporting Compliance . The Company is subject to, and is in material compliance with, the reporting requirements of Section 13 and Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”). All reports (including all current, quarterly and annual reports) filed under the Exchange Act with respect to the fiscal year ended September 30, 2014 and thereafter (including filings incorporated by reference therein) are herein referred to collectively as the “ Company Disclosure Package .”

2.2 Common Stock; Preferred Stock . The authorized capital stock of the Company consists of 100,000,000 shares of common stock, par value $0.0001 per share (“ Common Stock ”) , of which 31,418,541 shares are issued and 24,553,644 shares outstanding, and 10,000,000 shares preferred stock, par value $0.0001 (“ Preferred Stock ”), none of which are issued and outstanding. Upon consummation of the transactions contemplated by the Transaction Documents (the “ Transaction ”), (a) 700,000 shares of Preferred Stock shall be designated as Series A Preferred Stock pursuant to the terms of the Series A Certificate, all of which will be duly authorized, are validly issued, fully paid and non-assessable and (b) the shares of Common Stock issuable upon conversion of the Series A Preferred Stock will have been duly authorized for issuance, and, when so issued, will be validly issued, fully paid and non-assessable. As of Closing, the Investor shall own all of the outstanding Preferred Stock, free and clear of all liens, security interests, mortgages, pledges, charges, equities, claims or restrictions on transferability or encumbrances of any kind (collectively, “ Liens ”) and none of the shares of Series A Preferred Stock, or shares of Common Stock issuable upon conversion of the Series A Preferred Stock, will have been, or will be, issued in violation of the preemptive rights of any security holders of the Company arising as a matter of law or under or pursuant to the Company’s certificate of incorporation, as amended, the Company’s bylaws, as amended, or any material agreement or instrument to which the Company is a party or by which it is bound, and the holders thereof shall be entitled to all rights accorded to a holder of Series A Preferred Stock or Common Stock, as applicable.

2.3 Capitalization and Other Capital Stock Matters . All of the issued and outstanding shares of capital stock of the Company and each of the Subsidiaries (as defined herein) have been duly authorized and validly issued, are fully paid and non-assessable and were not issued in violation of, and are not subject to, any preemptive or similar rights. The table attached hereto as Schedule 2.3 sets forth, as of the date hereof, the capitalization of the Company. All of the outstanding shares of capital stock or other equity interests of each of the Subsidiaries are owned, directly or indirectly, by the Company, free and clear of all Liens, other than those Liens (i) for taxes or governmental assessments, charges or claims, in each case the payment of which is not yet due and for which the Company has established adequate reserves, (ii) imposed by applicable law such as mechanics’, materialmen’s, landlords’, warehousemen’s and carriers’ liens and other similar liens securing obligations incurred in the ordinary course of business, (iii) under workers’ compensation, unemployment insurance, social security or similar legislation, in each case for which the Company has established adequate reserves (collectively, “ Permitted Liens ”), and (iv) those imposed by the Securities Act of 1933, as amended (the “ Securities Act ”), and the securities or “Blue Sky” laws of certain U.S. state or non-U.S. jurisdictions. Except as disclosed in the Company Disclosure Package, there are no outstanding (A) options, warrants or other rights to purchase from the Company or any of the Subsidiaries, (B) agreements, contracts, arrangements or other obligations of the Company or any of the Subsidiaries to issue or (C) other rights to convert any obligation into or exchange any securities for, in the case of each of clauses (A) through (C), shares of capital stock of or other ownership or equity interests in the Company or any of the Subsidiaries.






2.4 No Material Misstatement or Omission . (i) The items composing the Company Disclosure Package, as of the date each such item was filed (or, if amended by a filing prior to the date of this Agreement, then on the date of such filing and in the case of registration statements, solely on the dates of effectiveness) complied with all applicable laws and regulations, including the regulations of the SEC applicable thereto, and to the Knowledge of the Company, the Company is not required pursuant to SEC rules to update or make corrective disclosures to such items. As of the date hereof, there are no outstanding or unresolved material comments received from the SEC with respect to any such items filed with the SEC. No injunction or order has been issued that either (i) asserts that the Transaction is subject to the registration requirements of the Securities Act or (ii) would prevent or suspend the issuance or sale of any of the Preferred Shares or the use of the Company Disclosure Package in any jurisdiction, and no proceeding for either such purpose has commenced or is pending or, to the Knowledge (defined below) of the Company and the Subsidiaries, is contemplated. For purposes of this Agreement, “ Knowledge ” means in the case of the Company and the Subsidiaries, the actual knowledge, as of the date of this Agreement, of Kimberly J. McWaters, Eugene S. Putnam, Jr., Sherrell E. Smith, Chad A. Freed, and John Jenson.

2.5 Preparation of the Financial Statements . Each of the consolidated financial statements (audited and unaudited) and related notes and supporting schedules of the Company and the Subsidiaries contained in the Company Disclosure Package present fairly in all material respects the financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries as of the respective dates and for the respective periods to which they apply and have been prepared in accordance with U.S. generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved and the requirements of Regulation S-X. All other financial, statistical and market and industry data and forward-looking statements (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Company Disclosure Package are fairly and accurately presented, are based on or derived from sources that the Company believes to be reliable and accurate and are presented on a reasonable basis. To the Company’s Knowledge, the interactive data in extensible Business Reporting Language in the Company Disclosure Package fairly presents the information called for in all material respects and has been prepared in accordance with the U.S. Securities and Exchange Commission’s (the “ SEC ”) rules and guidelines applicable thereto.

2.6 Disclosure Controls and Procedures . Except as set forth on Schedule 2.6(a) , the Company and the Subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. The Company and the Subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act. The statements relating to disclosure controls and procedures made by the principal executive officers (or their equivalents) and principal financial officers (or their equivalents) of the Company in the certifications required by the Sarbanes Oxley Act of 2002 and the rules and regulations promulgated in connection therewith are complete and correct. The Company Disclosure Package describes all outstanding and identified material weaknesses, and Schedule 2.6(b) sets forth the Company’s plans to remediate all outstanding and identified material weaknesses.






2.7 Independent Accountants

(a) PricewaterhouseCoopers LLP, who have certified and expressed its opinion with respect to the audited financial statements of the Company and the Subsidiaries including the related notes thereto and supporting schedules contained in the Company Disclosure Package through the Company’s Annual Report filed as Form 10-K with the Securities and Exchange Commission on December 3, 2014 for the fiscal year ended September 30, 2014, were, to the Company’s Knowledge after due inquiry, at all times prior to its decision not to stand for reelection as the Company’s independent auditor as disclosed in Company’s current report on Form 8-K, dated December 19, 2014: (i) an independent registered public accounting firm with respect to the Company and the Subsidiaries within the applicable rules and regulations adopted by the SEC and as required by the Securities Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants under Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board (United States) whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

(b) Deloitte & Touche LLP, who were engaged as auditors as of February 3, 2015, are, to the Company’s Knowledge after due inquiry, (i) an independent registered public accounting firm with respect to the Company and the Subsidiaries within the applicable rules and regulations adopted by the SEC and as required by the Securities Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants under Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board (United States) whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

2.8 No Material Adverse Change . Subsequent to the fiscal year ended September 30, 2015, (i) except as incurred in the ordinary course of business, neither the Company nor any of the Subsidiaries has incurred any liabilities, direct or contingent, including without limitation any losses or interference with its business from fire, explosion, flood, earthquakes, accident or other calamity, whether or not covered by insurance, or from any strike, labor dispute or court or governmental action, order or decree, that are material, individually or in the aggregate, to the Company and the Subsidiaries, taken as a whole, or has entered into any transactions not in the ordinary course of business, (ii) there has not been any material decrease in the capital stock or, other than in the ordinary course of business, any material increase in any short-term or long-term indebtedness of the Company or the Subsidiaries, or any payment of or declaration to pay any dividends or any other distribution with respect to the Company and (iii) there has not been any material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the properties, business, prospects, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole (each of clauses (i), (ii) and (iii), a “ Material Adverse Change ”); provided , that (a) the consummation of the Transaction, (b) any material expansion of enforcement actions by regulators in the education industry following the date hereof, provided any such expansion does not disproportionately impact the Company, (c) general economic or political conditions, (d) conditions generally affecting the industry in which the Company operates, provided such conditions do not disproportionately impact the Company, (e) any changes in financial or securities markets in general and (f) any changes in Applicable Laws or accounting rules shall not be deemed to be a Material Adverse Change on the prospects of the Company and the Subsidiaries, taken as a whole.

2.9 [Reserved]






2.10 Subsidiaries . Each corporation, partnership or other entity in which the Company, directly or indirectly through any of its subsidiaries, owns more than fifty percent (50%) of any class of equity securities or interests is listed on Schedule 2.10 (the “ Subsidiaries ”).

2.11 Incorporation and Good Standing of the Company and its Subsidiaries . The Company and each of the Subsidiaries (i) has been duly organized or formed, as the case may be, is validly existing and is in good standing under the laws of its jurisdiction of organization, (ii) has all requisite power and authority to carry on its business and to own, lease and operate its properties and assets as described in the Company Disclosure Package and (iii) is duly qualified or licensed to do business and is in good standing as a foreign corporation, partnership or other entity as the case may be, authorized to do business in each jurisdiction in which the nature of such businesses or the ownership or leasing of such properties requires such qualification, except where the failure to be so qualified or, solely with respect to the Subsidiaries, in good standing would not, individually or in the aggregate, have a material adverse effect on (A) the properties, business, prospects, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, (B) the ability of the Company or any Subsidiary to perform its obligations in all material respects under any Transaction Document, (C) the validity or enforceability of any of the Transaction Documents or (D) the consummation of the Transaction (each, a “ Material Adverse Effect ”); provided , that (a) the consummation of the Transaction, (b) any material expansion of enforcement actions by regulators in the education industry following the date hereof, provided any such expansion does not disproportionately impact the Company, (c) general economic or political conditions, (d) conditions generally affecting the industry in which the Company operates, provided such conditions do not disproportionately impact the Company, (e) any changes in financial or securities markets in general and (f) any changes in Applicable Laws or accounting rules shall not be deemed to have a Material Adverse Effect on the prospects of the Company and the Subsidiaries, taken as a whole.

2.12 Legal Power and Authority . The Company has all necessary power and authority to execute, deliver and perform its obligations under the Transaction Documents and to consummate the Transaction, and no stockholder actions are necessary for the Company’s execution, delivery and performance of its obligations under the Transaction Documents and to consummate the Transaction.

2.13 This Agreement . This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating to creditors’ rights generally, (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought and (iii) with respect to the rights to indemnity or contribution hereunder, federal and state securities laws and public policy considerations.

2.14 Compliance with Existing Instruments . Neither the Company nor any of the Subsidiaries is (i) in violation of its certificate of incorporation, bylaws or other organizational documents (the “ Charter Documents ”); (ii) in violation of any U.S. or non-U.S. federal, state or local statute, law (including, without limitation, common law) or ordinance, or any judgment, decree, rule, regulation, order or injunction (collectively, “ Applicable Law ”) of any Governmental Authority, applicable to any of them or any of their respective properties, except as would not result in a Material Adverse Effect; or (iii) in breach of or default under any Applicable Agreement (defined below) , except as set forth in Schedule 2.14 . To the Company’s Knowledge, all Applicable Agreements are in full force and effect and are legal, valid and binding obligations,





other than as disclosed in the Company Disclosure Package. For purposes of this Agreement, “ Applicable Agreement ” means any agreement or instrument filed as a material agreement or contract in the Company Disclosure Package.

2.15 No Conflicts . Neither the execution, delivery or performance of the Transaction Documents nor the consummation of the Transaction (including the Use of Proceeds from the sale of the Preferred Shares as described above) will conflict with, violate, constitute a breach of or a default (with the passage of time or otherwise) or a “ Debt Repayment Triggering Event ” under, or result in the imposition of a Lien on any assets of the Company or any of its Subsidiaries, or the imposition of any penalty under or pursuant to (i) the Charter Documents, (ii) any Applicable Agreement, (iii) any Applicable Law or (iv) any order, writ, judgment, injunction, decree, determination or award binding upon the Company and the Subsidiaries. As used herein, a “ Debt Repayment Triggering Event ” means any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of the Subsidiaries or any of their respective properties.

2.16 No Consents . Except as set forth on Schedule 2.16 , no consent, approval, authorization, order, filing, confirmation or registration of or with any Governmental Authority, Educational Agency or third party is required for execution, delivery or performance of the Transaction Documents or the consummation of the Transaction, except those that have been official or made, as the case may be, that are in full force and effect and as may be required under the securities or “Blue Sky” laws of U.S. state or non-U.S. jurisdictions.

2.17 Litigation . Except as set forth on Schedule 2.17, and except as disclosed in the Company Disclosure Package, there are no pending actions, suits or proceedings (including any inquiries or investigations by any Governmental Authority or Educational Agency) against or affecting the Company or any of the Subsidiaries and, to the Knowledge of the Company, no such actions, suits or proceedings (including any inquiries or investigations by any Governmental Authority or Educational Agency) are threatened that, if determined adversely to the Company or any of the Subsidiaries would individually or in the aggregate have a Material Adverse Effect.

2.18 All Necessary Permits . Other than the permits and accreditation contemplated in Section 2.42(d) , each of the Company and the Subsidiaries possess all material licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all Governmental Authorities, presently required or necessary to own or lease, as the case may be, and to operate its properties and to carry on its businesses as now, or proposed to be, conducted as described in the Company Disclosure Package (“ Permits ”); each of the Company and the Subsidiaries has fulfilled and performed in all material respects all of its obligations with respect to such Permits; to the Knowledge of the Company or any Subsidiary, no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination of any such Permit or has resulted, or after notice or lapse of time would result, in any other material impairment of the rights of the holder of any such Permit the result of which would have a Material Adverse Effect; and none of the Company or the Subsidiaries has received or has any reason to believe it will receive any notice of any proceeding relating to revocation or modification of any such Permit, except as described in the Company Disclosure Package.

2.19 Title to Properties . Each of the Company and the Subsidiaries has good, marketable and valid title to all real property owned by it and good title to all personal property owned by it and, to the Knowledge of the Company, good and valid title to all leasehold estates in real and personal property being leased by it (except where the failure to hold good title or good and valid title, as applicable, would not materially impair





the operations of the Company or its Subsidiaries) and, as of the date hereof, are free and clear of all Liens other than Permitted Liens.

2.20 Tax Law Compliance . All material Tax (as hereinafter defined) returns required to be filed by the Company and each of the Subsidiaries have been filed and all such returns are true, complete and correct in all material respects. All material Taxes that are due from the Company and the Subsidiaries have been paid other than those (i) currently payable without penalty or interest or (ii) being contested in good faith and by appropriate proceedings and for which adequate accruals have been established in accordance with GAAP, applied on a consistent basis throughout the periods involved. To the Knowledge of the Company, there are no actual or proposed Tax assessments against the Company or any of the Subsidiaries that would, individually or in the aggregate, have a Material Adverse Effect. The accruals on the books and records of the Company and the Subsidiaries in respect of any material Tax liability for any period not finally determined are adequate to meet any assessments of Tax for any such period. For purposes of this Agreement, the term “ Tax ” and “ Taxes ” shall mean all U.S. and non-U.S. federal, state, local and taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax or penalties applicable thereto.

2.21 Intellectual Property Rights . Each of the Company and the Subsidiaries owns, or has the right to use, all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, domain names and trade names (collectively, “ Intellectual Property ”) necessary for the conduct of its businesses and, as of the date hereof, the Intellectual Property is free and clear of all Liens, other than Permitted Liens. The Company is not a party to, or bound by, any options, licenses or agreements with respect to the intellectual property rights of any other person or entity that are necessary to be described in the Company Disclosure Package to avoid a material misstatement or omission and are not described therein. The Company has not received notice of any claims or notices of any potential claim by any person challenging the use of any such Intellectual Property by the Company or any of the Subsidiaries or questioning the validity or effectiveness of any Intellectual Property or any license or agreement related thereto, other than any claims that, if successful, would not, individually or in the aggregate, have a Material Adverse Effect. To the Knowledge of the Company, none of the intellectual property used by the Company or any of the Subsidiaries has been obtained or is being used by the Company or any of the Subsidiaries in material violation of any contractual obligation binding on the Company or any of the Subsidiaries or, to the Company or any of the Subsidiaries’ Knowledge, its officers, directors or employees or otherwise in material violation of the rights of any person.

2.22 ERISA Matters . Each of the Company, the Subsidiaries and each ERISA Affiliate (as hereinafter defined) has fulfilled, in all material respects, its obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) with respect to each “pension plan” (as defined in Section 3(2) of ERISA), subject to Section 302 of ERISA, which the Company, the Subsidiaries or any ERISA Affiliate sponsors or maintains, or with respect to which it has (or within the last three years had) any obligation to make contributions, and each such plan is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended (the “ Code ”). None of the Company, the Subsidiaries or any ERISA Affiliate has incurred any material unpaid liability to the Pension Benefit Guaranty Corporation (other than for the payment of premiums in the ordinary course) or to any such plan under Title IV of ERISA. “ ERISA Affiliate ” means a corporation, trade or business that is, along with the Company or any Subsidiary, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Section 414 of the Code or Section 4001 of ERISA.






2.23 Labor Matters . (i) Neither the Company nor any of the Subsidiaries is party to or bound by any collective bargaining agreement with any labor organization; (ii) other than as set forth on Schedule 2.23 , in the three (3)-year period prior to the date hereof, there has been no union representation question with respect to the employees of the Company or the Subsidiaries, and, to the Knowledge of the Company, no union organizing activities are currently taking place that could, individually or in the aggregate, have a Material Adverse Effect; (iii) to the Knowledge of the Company, no union organizing or decertification efforts are underway or threatened against the Company or the Subsidiaries; (iv) no labor strike, work stoppage, slowdown or other material labor dispute is pending against the Company or the Subsidiaries, or, to the Company’s Knowledge, threatened against the Company or the Subsidiaries; (v) to the Knowledge of the Company and the Subsidiaries, there is no worker’s compensation liability, experience or matter that could be reasonably expected to have a Material Adverse Effect; (vi) to the Knowledge of the Company, there is no threatened or pending liability against the Company or the Subsidiaries pursuant to the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar state or local law; (vii) there is no employment-related charge, complaint, grievance, investigation, unfair labor practice claim or inquiry of any kind, pending against the Company or the Subsidiaries that could, individually or in the aggregate, have a Material Adverse Effect; and (viii) to the Knowledge of the Company and the Subsidiaries, no employee or agent of the Company or the Subsidiaries has committed any act or omission giving rise to liability for any violation identified in clauses (vi) and (vii) of this Section 2.23 , other than such acts or omissions that would not, individually or in the aggregate, have a Material Adverse Effect.

2.24 Compliance with Environmental Laws . Each of the Company and the Subsidiaries (i) is in material compliance with any and all applicable U.S. or non-U.S. federal, state and local laws and regulations relating to health and safety, or the pollution or the protection of the environment or hazardous or toxic substances of wastes, pollutants or contaminants (“ Environmental Laws ”), (ii) has received and is in material compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its respective businesses and (iii) has not received notice of, and is not aware of, any actual or potential liability for damages to natural resources or the investigation or remediation of any disposal, release or existence of hazardous or toxic substances or wastes, pollutants or contaminants, in each case except where such non-compliance with Environmental Laws, failure to receive and comply with required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor any of the Subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or any similar U.S. or non-U.S. state or local Environmental Laws or regulation requiring the Company or any of the Subsidiaries to investigate or remediate any pollutants or contaminants, except where such requirements would not, individually or in the aggregate, have a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business. In the ordinary course of its business, the Company periodically reviews the effects of Environmental Laws on the business, operations and properties of the Company and the Subsidiaries, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs would not have a Material Adverse Effect.

2.25 Insurance . Each of the Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged. All policies of insurance insuring the Company or any of the Subsidiaries or their respective businesses, assets, employees, officers and directors are in full force and effect. The Company and the Subsidiaries are in compliance with the terms of such policies and instruments in all material respects, and there are no claims by the Company or any of the Subsidiaries under any such policy or instrument as





to which any insurance company is denying liability or defending under a reservation of rights clause, except claims that if finally denied or successfully defended by any insurance company, would not have a Material Adverse Effect on the Company and its Subsidiaries, except as set forth on Schedule 2.25. Except as to claims not meeting coverage requirements, neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage or obtain such coverage as may be necessary and appropriate for the continuation of the Company’s business at a cost that would not, individually or in the aggregate, have a Material Adverse Effect.

2.26 Accounting System . The Company and each of the Subsidiaries make and keep accurate books and, except as set forth on Schedule 2.6(a) , records and maintain a system of internal accounting controls and procedures sufficient to provide reasonable assurance that transactions are executed in accordance with management’s general or specific authorization, transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences. The Company’s independent auditors and board of directors have been advised of: (i) all “material weaknesses” and “significant deficiencies” (each, as defined in Rule 12b-2 of the Exchange Act), if any, in the design or operation of the Company’s internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data and (ii) all fraud, if any, whether or not material, that involves management or other employees who have a role in the Company’s internal controls (whether or not remediated); all such material weaknesses and significant deficiencies, if any, have been disclosed in the Company Disclosure Package in all material respects; and, except as set forth on Schedule 2.6(b) , since the date of the most recent evaluation of such internal controls and procedures, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

2.27 Use of Proceeds; Solvency; Going Concern . As of the date hereof, after giving pro forma effect to the Offering and the Use of Proceeds, the Company and the Subsidiaries, on a consolidated basis, will be Solvent (as hereinafter defined). As used in this paragraph, the term “ Solvent ” means, with respect to any particular date, that on such date (a) the fair value of the property of the Company is greater than the total amount of liabilities, including subordinated and contingent liabilities, of the Company; (b) the present fair saleable value of the assets of the Company is not less than the amount that will be required to pay the probable liability of the Company on its debts and liabilities, including subordinated and contingent liabilities as they become absolute and matured; (c) the Company does not intend to, and does not believe that it will, incur debts or liabilities beyond the Company’s ability to pay as such debts and liabilities mature; and (d) the Company is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which the Company’s property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that would reasonably be expected to become an actual or matured liability.

2.28 No Price Stabilization or Manipulation . Other than actions taken in the ordinary course with respect the Company’s most recent earnings release (which actions do not include the disclosure of the existence or pendency of the Transaction contemplated hereby), neither the Company nor any of its Affiliates has and, to the Company’s Knowledge, no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company, whether to facilitate the sale or





resale of any of the Preferred Shares or otherwise, (ii) sold, bid for, purchased, or paid anyone any compensation for soliciting purchases of, Preferred Shares, (iii) except as disclosed in the Schedule 2.28 , paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company or (iv) taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute an impact on the price that will be used to set the Conversion Price (as defined in the Series A Certificate). “ Affiliates ” has the meaning set forth in Rule 405 of the Securities Act.

2.29 No Registration Required Under the Securities Act . Without limiting any provision herein, no registration under the Securities Act is required for the offer or sale of the Preferred Shares to the Investor as contemplated hereby.

2.30 No Integration . No securities of the Company of the same class as the Preferred Shares have been offered, issued or sold by the Company or any of its Affiliates within the six-month period immediately prior to the date hereof; and the Company does not have any intention of making, and will not make, an offer or sale of such securities of the Company of the same class as the Preferred Shares, for a period of six months after the date of this Agreement, except for the offering of the Preferred Shares as contemplated by this Agreement. As used in this paragraph, the terms “offer” and “sale” have the meanings specified in Section 2(a)(3) of the Securities Act.


2.31 No Applicable Registration or Other Similar Rights . Except as disclosed in the Company Disclosure Package, there are no persons with registration or other similar rights to have any equity or debt securities of the Company or any Affiliate registered for sale under a registration statement, except for rights as have been duly waived.

2.32 Investment Company Act . The Company has been advised of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder (collectively, the “ Investment Company Act ”); as of the date hereof and, after giving effect to the Offering and the Use of Proceeds of the Offering, each of the Company and its Subsidiaries is not and will not be, individually or on a consolidated basis, an “investment company” that is required to be registered under the Investment Company Act; and following the Closing, the Company and its Subsidiaries will conduct their businesses and invest the proceeds of the offering in a manner so as not to be required to register under the Investment Company Act.

2.33 No Brokers . Other than as set forth in Schedule 2.33 , neither the Company nor any of its Affiliates has engaged any broker, finder, commission agent or other person in connection with the Transaction, and neither the Company nor any of its Affiliates is under any obligation to pay any broker’s fee or commission in connection with such Transaction.

2.34 No Restrictions on Payments of Dividends . Except as prohibited or restricted by applicable law or as disclosed in the Schedule 2.34 or as otherwise disclosed in the Company Disclosure Package, there is no encumbrance or restriction on the ability of any Subsidiary of the Company (x) to pay dividends or make other distributions on such Subsidiary’s capital stock or to pay any indebtedness to the Company or any other Subsidiary of the Company, (y) to make loans or advances or pay any indebtedness to, or investments in, the Company or any other Subsidiary or (z) to transfer any of its property or assets to the Company or any other Subsidiary of the Company.

2.35 Sarbanes-Oxley . There is and has been no failure on the part of the Company and the Subsidiaries or any of the officers and directors of the Company or any of the Subsidiaries, in their capacities as such, to





comply in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith.

2.36 No Unlawful Contributions or Other Payments . Neither the Company nor any of the Subsidiaries nor, to the best of the Company’s Knowledge, any employee or agent of the Company or any Subsidiary, has made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law or of the character required to be disclosed in the Company Disclosure Package.

2.37 Foreign Corrupt Practices Act . None of the Company or any Subsidiary or any director, officer or, to the Knowledge of the Company or any Subsidiary, employee or any agent or other person acting on behalf of the Company or any Subsidiary has, in the course of its actions for, or on behalf of, the Company or any Subsidiary (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any domestic government official, “foreign official” (as defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “ FCPA ”) or employee from corporate funds; (iii) violated or is in violation of any provision of the FCPA or any applicable non-U.S. anti-bribery statute or regulation; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any domestic government official, such foreign official or employee; and the Company and the Subsidiaries, and, to the Knowledge of the Company and the Subsidiaries, its and their other affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to ensure, continued compliance therewith.
2.38 Money Laundering . The operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or the Subsidiaries with respect to the Money Laundering Laws is pending or, to the Company’s Knowledge, threatened.

2.39 [Reserved]

2.40 Related Party Transactions . Except as disclosed in the Company Disclosure Package, no relationship, direct or indirect, exists between or among any of the Company or any affiliate of the Company, on the one hand, and any director, officer, member, stockholder, customer or supplier of the Company or any affiliate of the Company, on the other hand, which is required by the Securities Act to be disclosed in a registration statement on Form S-1 which is not so disclosed in the Company Disclosure Package. There are no outstanding loans, advances (except advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company or any affiliate of the Company to or for the benefit of any of the officers or directors of the Company or any affiliate of the Company or any of their respective family members.

2.41 Stamp Taxes . There are no stamp or other issuance or transfer taxes or duties or other similar fees or charges required to be paid in connection with the execution and delivery of this Agreement or the issuance or sale of the Preferred Shares pursuant to this Agreement.

2.42 Education Approvals; Compliance with Education Laws . The following representations set forth in this Section 2.42 are subject to the exceptions set forth in the Regulatory Disclosure Schedule . It is understood and agreed that any matter disclosed in the Company’s Disclosure Package that relates to the representations and warranties in this Section 2.42 shall be deemed to be included in the Regulatory Disclosure Schedule.






(a) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has received the material licenses, permits, and approvals of all Governmental Authorities and Educational Agencies necessary to conduct their businesses, including without limitation, all material Educational Approvals necessary for each School to conduct its operations and offer its educational programs. Since the Compliance Date, the Company, including its Subsidiaries and Schools, is and has been in material compliance with all applicable Education Laws and with the terms and conditions of all Educational Approvals. Each current Educational Approval is in full force and effect, and no proceeding for the suspension, material limitation, revocation, termination or cancellation of any of them is pending or, to the Knowledge of the Company, threatened. Since the Compliance Date, no application made by the any School to any Educational Agency has been denied. Since the Compliance Date, neither the Company nor any of its Subsidiaries or Schools has received notice from any Educational Agency that it has been placed on probation or ordered to show cause why any Educational Approval for any School or any of its educational programs should not be revoked. Since the Compliance Date, neither the Company nor any of its Subsidiaries or Schools has received notice that any current Educational Approval will not be renewed. To the Knowledge of the Company, the Company, its Subsidiaries and each School is in material compliance with Consumer Protection Laws applicable to the Company, any Subsidiary or any School as in effect and as interpreted by the Company as of the date of this Agreement.

(b) Each School is an “eligible institution”, as defined in 34 C.F.R. § 600.2 (and the other applicable sections incorporated therein by reference) and each School is a “proprietary institution of higher education” as defined at 34 C.F.R. § 600.5. Each School is in material compliance with the applicable “state authorization” requirements set forth at 34 C.F.R. § 600.9 and meets the qualifications to be licensed by the applicable State Educational Agencies. Each School is accredited by the applicable Accrediting Bodies, and has been certified by the DOE as an eligible institution of higher education and is a party to a program participation agreement with the DOE.

(c) To the Knowledge of the Company, no fact or circumstance exists or is reasonably likely to occur that would reasonably be expected to result in the delay, termination, revocation, suspension, restriction or failure to obtain renewal of any Educational Approval or the imposition of any material fine, penalty or other sanctions for violation of any legal or regulatory requirements relating to any Educational Approval.

(d) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has been in material compliance with any and all applicable Educational Laws relating to Financial Assistance Programs, including, without limitation, the program participation and administrative capability requirements, as defined by the DOE at 34 C.F.R. 668 subpart B, including without limitation §§ 668.14 and 668.15-16, as well as the student eligibility requirements and satisfactory progress requirements, as defined by DOE at 34 C.F.R. § 668.31-39, and all other statutory and regulatory provisions related to any School’s participation in the Title IV Programs.

(e) Since the Compliance Date, the School(s) have not received greater than ninety percent (90%) of its revenues from Title IV Programs, as such percentage is required to be calculated under 34 C.F.R. §§ 668.14 and 668.28.

(f) Since the Compliance Date, each School has complied with the Cohort Default Rate regulations set forth in 34 C.F.R. Part 668, Subpart N.






(g) Since the Compliance Date, each School is in compliance, in all material respects, with the Gainful Employment Certification Requirements, the Gainful Employment Disclosure Requirements, and the Gainful Employment Reporting Requirements, as applicable to the School for the relevant periods.

(h) Each School has been in compliance, in all material respects, with the applicable limitations set forth in 34 C.F.R. § 600.7.
 
(i) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has obtained or maintained all material Educational Approvals required to operate each additional campus, location, or facility of the Schools and required in order to disburse Title IV Program funds to students at such additional campus, location, or facility, as applicable.

(j) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has timely reported, in compliance in all material respects with the applicable provisions of 34 C.F.R. Part 600: (i) the addition of any new educational programs or locations; and (ii) any shifts in ownership or control, including any changes in reported ownership levels or percentages. Since the Compliance Date, the Company, including its Subsidiaries and Schools, has complied, in all material respects, with all Educational Laws related to the closure or cessation of instruction at that location or facility, including without limitation requirements for teaching out students from that location or facility.

(k) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has complied, in all material respects, with the DOE requirements that no student receive a disbursement of Title IV Program funds prior to the date for which such student was eligible for such disbursement.

(l) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has complied, in all material respects, with Title IV Program requirements, as set forth at 20 U.S.C. § 1094(a)(20) and implemented at 34 C.F.R. § 668.14(b)(22), regarding the payment of a commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruiting or admission activities or in making decisions regarding the awarding of Title IV Program funds.

(m) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has complied, in all material respects, with 20 U.S.C. § 1085(d)(5) and 34. C.F.R. § 682.212 regarding prohibited inducements in the Federal Family Education Loan Program. Since the Compliance Date, each School has complied, in all material respects, with the Educational Laws prohibiting any School, employee, agent or official thereof from accepting any gift, payment, inducement, benefit, staffing assistance, advisory board position, or other thing of value in exchange for directing Educational Loan or Private Educational Loan applications to any lender. Since the Compliance Date, neither the Company, nor any of its Subsidiaries or Schools have received any written notice of any investigation by any Educational Agency or other Governmental Authority regarding Seller’s, any Subsidiary of the Company’s or the Schools’ student lending practices.

(n) Since the Compliance Date, neither the Company, nor any of its Subsidiaries and Schools has provided any educational instruction on behalf of any other institution or organization of any sort, and no other institution or organization of any sort has provided any educational instruction on behalf of any School.

(o) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has materially complied with the DOE’s financial responsibility requirements in accordance with 34 C.F.R. § 668.171-175 not including any compliance based on the posting of an irrevocable letter of credit in favor of the DOE or





the placement by the DOE in the “zone alternative” as set forth at 34 C.F.R. § 668.175(d). Except for state surety bonds required for the purposes of licensure or authorization by any State Educational Agency, since the Compliance Date, neither the Company, nor any of its Subsidiaries or Schools have received written notice of a request by any Educational Agency requiring the Company, its Subsidiaries or any School to post a letter of credit or other form of surety for any reason, including any request for a letter of credit based on late refunds pursuant to 34 C.F.R. § 668.173, or received any request or requirement that the School process its Title IV Program funding under the reimbursement or heightened cash monitoring procedures, other than Heightened Cash Monitoring Level 1 procedures, as those procedures are set forth at 34 C.F.R. § 668.162.

(p) The Company, including its Subsidiaries and Schools, are in material compliance with all Educational Agency and DOE requirements and regulations, including but not limited to requirements set forth at 34 C.F.R. § 668.22, relating to (i) fair and equitable refunds policy and (ii) the calculation and timely repayment of federal and nonfederal funds.

(q) To the Knowledge of the Company, there exist no facts or circumstances attributable to the Company, its Subsidiaries or Schools or any other Person that exercises Substantial Control (as that term is defined at 34 C.F.R. § 668.174(c)(3)) with respect to the Company, its Subsidiaries or Schools, that would, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s, or any Subsidiary’s or School’s ability to obtain any Pre-Closing Educational Notices/Consent, Educational Approval or other consent or approval that must be obtained in connection with the transactions contemplated herein.

(r) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has complied in all material respects with Educational Laws regarding misrepresentation, including 34 C.F.R. Part 668 Subpart F.

(s) Since the Compliance Date, the Company, including its Subsidiaries and Schools, has complied, in all material respects, with the consumer disclosure requirements in 34 C.F.R. Part 668 Subpart D.

(t) Since the Compliance Date, each School has complied, in all material respects, with any applicable Educational Laws regarding that School’s completion, placement, withdrawal and retention rates, and, to the Company’s Knowledge, has accurately calculated and reported all such rates.

(u) Since the Compliance Date, neither the Company nor its Subsidiaries, nor any Person that exercises Substantial Control (as that term is defined at 34 C.F.R. § 668.174(c)(3)) over the Company or any Subsidiary of the Company or any School, or member of such person’s family (as the term “family” is defined in 34 C.F.R. § 668.174(c)(4)), alone or together, (i) exercises or exercised Substantial Control over another institution or third-party servicer (as that term is defined in 34 C.F.R. § 668.2) that owes a liability for a violation of a Title IV Program requirement or (ii) owes a liability for a Title IV Program violation.

(v) Since the Compliance Date, neither the Company nor any of its Subsidiaries or Schools have knowingly employed in a capacity involving administration of Title IV Program funds, any individual who has been convicted of, or has pled nolo contendere or guilty to, a crime involving the acquisition, use or expenditure of funds of a Governmental Authority or Educational Agency, or has been administratively or judicially determined to have committed fraud or any other material violation of law involving funds of any Governmental Authority or Educational Agency.

(w) Since the Compliance Date, neither the Company nor any of its Subsidiaries or Schools have knowingly contracted with an institution or third-party servicer that has been terminated under § 487 of the





HEA for a reason involving the acquisition, use, or expenditure of funds of a Governmental Authority or Educational Agency, or has been administratively or judicially determined to have committed fraud or any other material violation of law involving funds of any Governmental Authority or Educational Agency.

(x) Since the Compliance Date, neither the Company nor any of its Subsidiaries, nor any owner that has the power, by contract or ownership interest, to direct or cause the direction or management of policies of any School has filed for relief in bankruptcy or had entered against it an order for relief in bankruptcy.

(y) Since the Compliance Date, neither the Company nor any of its Subsidiaries, or any officer of the Company or a Subsidiary or a School has pled guilty to, pled nolo contendere , or been found guilty of, a crime involving the acquisition, use or expenditure of funds under the Title IV Programs or been judicially determined to have committed fraud involving funds under the Title IV Programs.

(z) Since the Compliance Date, neither the Company nor any of its Subsidiaries or Schools has knowingly contracted with any Person that has been, or whose officers or employees have been, convicted of, or pled nolo contendere or guilty to, a crime involving the acquisition, use or expenditure of funds of any Governmental Authority or Educational Agency, or administratively or judicially determined to have committed fraud or any other material violation of law involving funds of any Governmental Authority or Educational Agency.

(aa) Since the Compliance Date, the Company, its Subsidiaries and each School has complied, in all material respects, with Educational Requirements regarding the safeguarding of student records, including the Family Educational Rights and Privacy Act (20 U.S.C. § 1232g; 34 C.F.R. Part 99.

2.43 No Contract Terminations . Neither the Company nor any of the Subsidiaries has sent or received any communication regarding termination of, or intent not to renew, any of the material contracts or agreements referred to or described in the Company Disclosure Package, and no such termination or non-renewal has been threatened by the Company or any of the Subsidiaries or, to the Company’s Knowledge, any other party to any such contract or agreement, which threat of termination or non-renewal has not been rescinded as of the date hereof.

2.44 Certificates . Each certificate signed by any officer of the Company or any of the Subsidiaries, delivered to the Investor shall be deemed a representation and warranty by the Company or any such Subsidiary (and not individually by such officer) to the Investor with respect to the matters covered thereby.
Article 3

REPRESENTATIONS OF THE INVESTOR

The Investor represents to the Company as follows:
3.1 Existence and Good Standing; Authority . The Investor is validly existing and in good standing under the laws of the state of its formation and has all requisite power and authority to carry on its business as now conducted.

3.2 Authorization of Agreement; Enforceability . This Agreement has been duly and validly authorized, executed and delivered by the Investor. This Agreement is valid, binding and enforceable against the Investor in accordance with its terms, subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium,





fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating to creditors’ rights generally, (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought and (iii) with respect to the rights to indemnity or contribution hereunder, federal and state securities laws and public policy considerations.

3.3 Accredited Investor . The Investor is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act.

3.4 No Disqualification Event . The Investor is not, or to the extent it has them, any of its shareholders, members, managers, general partners, directors, or executive officers are not, subject to any Disqualification Event set forth in Rule 506(d) under the Securities Act. The Investor confirms that it has exercised reasonable care to determine whether it or any of the aforementioned persons are subject to a Disqualification Event. The purchase of the Preferred Shares by the Investor will not subject the Company to any Disqualification Event. The Investor shall notify the Company immediately in writing of the occurrence of any Disqualification Event that has not previously been disclosure to the Company.

3.5 Information; Knowledge of Business . The Investor is familiar with the business in which the Company is engaged. The Investor has knowledge and experience in financial and business matters; is familiar with the investments of the type that it is undertaking to purchase; is fully aware of the problems and risks involved in making an investment of this type; and is capable of evaluating the merits and risks of this investment. The Investor acknowledges that, prior to executing this Agreement, it (and each of its representatives) has had the opportunity to ask questions of and receive answers or obtain additional information from a representative of the Company concerning the financial and other affairs of the Company.


3.6 Investment Intent . The Investor is acquiring the Preferred Shares in the ordinary course of its business and for its own account, with the intention of holding such shares for investment purposes and with no present intention of participating, directly or indirectly, in a distribution of such shares in violation of applicable securities laws.

3.7 No Manipulation or Stabilization of Price . The Investor has not taken and will not take, directly or indirectly, any action designed to, or that would constitute or that might reasonably be expected to, cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the Company in order to facilitate the sale or resale of any securities of the Company, and the Investor is not aware of any such action taken or to be taken by any person.

3.8 Compliance with Securities Laws . The Investor will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Preferred Shares except in compliance with the Securities Act, and the rules and regulations promulgated thereunder, and the Investor acknowledges that certificates representing such Preferred Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT, AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNLESS SUCH OFFER, SALE, TRANSFER OR





HYPOTHECATION IS IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 144 PROMULGATED UNDER THE ACT.

3.9 Reliance on Own Investigation . The Investor has conducted its own independent review and analysis of the business, assets, condition, operations and prospects of the Company. In entering into this Agreement, the Investor has relied solely upon its own investigation and analysis, and the Investor acknowledges that, except for the representations and warranties of the Company expressly set forth in Article 2 , none of the Company or its subsidiaries nor any of their respective representatives makes any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to the Investor or any of its representatives. Without limiting the generality of the foregoing, none of the Company or its subsidiaries nor any of their respective representatives or any other person has made a representation or warranty to the Investor with respect to (a) projections, estimates or budgets for the Company or its subsidiaries or (b) except as expressly and specifically covered by a representation or warranty set forth in Article 2 , any material, documents or information relating to the Company or its subsidiaries made available to the Investor or its representative in any “data room” (electronic or otherwise), confidential memorandum or otherwise.

3.10 Regulatory Qualifications.
    
(a) To the knowledge of the Investor, there exist no facts or circumstances attributable to the Investor, its Subsidiaries or any other Person that exercises Substantial Control with respect to the Investor or its Subsidiaries, that would, individually or in the aggregate, reasonably be expected to materially and adversely affect the Investor’s, or any Subsidiary of the Investor’s ability to obtain any Pre-Closing Educational Notices/Consent, Educational Approval or other consent or approval that must be obtained in connection with the transactions contemplated herein.

(b) Since the Compliance Date, neither the Investor nor its Subsidiaries, nor any Person that exercises Substantial Control (as that term is defined at 34 C.F.R. § 668.174(c)(3)) over the Investor or its Subsidiaries, or member of such person’s family (as the term “family” is defined in 34 C.F.R. § 668.174(c)(4)), alone or together, (i) exercises or exercised Substantial Control over another institution or third-party servicer (as that term is defined in 34 C.F.R. § 668.2) that owes a liability for a violation of a Title IV Program requirement or (ii) owes a liability for a Title IV Program violation.

(c) Since the Compliance Date, neither the Investor nor any of its Subsidiaries, nor any owner that has the power, by contract or ownership interest, to direct or cause the direction or management of policies of the Investor or any of its Subsidiaries has filed for relief in bankruptcy or had entered against it an order for relief in bankruptcy.

(d) Since the Compliance Date, neither the Investor, any of its Subsidiaries, nor any officer of the Investor, any of its Subsidiaries or any schools owned by the Investor, has pled guilty to, pled nolo contendere to or been found guilty of, a crime involving the acquisition, use or expenditure of funds under the Title IV Programs or been judicially determined to have committed fraud involving funds under the Title IV Programs nor has such Investor, Subsidiary or any such Investor-owned schools knowingly employed any person who has pled guilty to, pled nolo contendere to or been found guilty of, a crime involving the acquisition, use or expenditure of funds under the Title IV Programs or been judicially determined to have committed fraud





involving funds under the Title IV Programs or any other violation of law involving funds of a Governmental Authority or Educational Agency.

(e) Since the Compliance Date, neither such Investor nor any of its Subsidiaries nor any school owned by such Investor has knowingly employed in a capacity involving administration of funds under the Title IV Programs or the receipt of funds under the Title IV Programs, any individual who has been convicted of, or has pled nolo contendere or guilty to, a crime involving the acquisition, use or expenditure of funds of a Governmental Authority or Educational Agency, or has been administratively or judicially determined to have committed fraud or any other violation of law involving funds of a Governmental Authority or Educational Agency.
Article 4
CLOSING DELIVERABLES

4.1 Conditions to Obligations of the Investor for Closing . The Investor acknowledges that the following conditions have been satisfied, or have been waived on or before Closing:

(a) Series A Certificate. The Series A Certificate shall have been filed with and accepted by the Secretary of State of the State of Delaware and shall have become effective.

(b) Registration Rights Agreement. The Company shall have executed and delivered to the Investor the Registration Rights Agreement, in the form attached hereto as Exhibit B .

(c) Required Consents. All consents, approvals and other actions of, and notices and filings with, all Governmental Authorities and other third parties, as may be necessary or required under law or any contract to which the Company is a party with respect to the execution and delivery by the parties of the Transaction Documents and the consummation by the parties of the transactions contemplated thereby, shall have been obtained or made, except for any filings, consents and approvals required under any federal or state securities laws required to be made following Closing.

(d) Authorizing Actions of the Company. The Investor shall have received certified copies of all requisite corporate actions taken by the Company to authorize the Company’s execution and delivery of the Transaction Documents to which it is a party and its consummation of the transactions contemplated thereby, and such other documents and other instruments as the Investor or its counsel may reasonably request.

(e) Opinion of Counsel. The Investor shall have received from Squire Patton Boggs (US) LLP, counsel to the Company, a legal opinion, dated as of the Closing Date and in the form attached hereto as Exhibit C .

4.2 Compliance with Covenants . The Investor shall have performed and complied in all material respects with all agreements and covenants contained in the Transaction Documents as of the Closing Date.

4.3 Required Consents . All consents, approvals, confirmations and other actions of, and notices and filings with, all Governmental Authorities and Educational Agencies as may be necessary or required with respect to the execution and delivery by the parties of the Transaction Documents and the consummation by the parties of the transactions contemplated thereby, shall have been obtained or made, including all filings, consents and approvals required under any state securities laws and any Education Laws.





Article 5

COVENANTS

5.1 Access to Records . From the date hereof until such time as the Investor, its Affiliates and their respective transferees that are approved by the Company in the aggregate own less than a majority of the Preferred Shares, upon the prior written request on reasonable notice as to time, of the Investor, subject to the execution by the Investor of a confidentiality agreement in form and substance reasonably acceptable to the Company (it being understood that if the Investor has already signed a confidentiality agreement with the Company, an agreement on substantially identical terms shall be acceptable), and during reasonable hours and in a manner so as not to interfere with normal business operations of the Company and its subsidiaries, the Company and its subsidiaries shall afford to the Investor and its authorized employees, counsel, accountants and other representatives, (i) full access at the Company’s and its subsidiaries’ offices and to true and correct copies of all documents, reports financial data and other information and (ii) an opportunity to interview, consult with and advise any officer or director, representative, accountant and other advisor of the Company or any of its subsidiaries regarding the Company’s or such subsidiary’s affairs.

5.2 Financial Reporting . The Company agrees and covenants to remain in full compliance, in all material respects, with the reporting requirements of Section 13 and Section 15(d), as applicable, of the Exchange Act. From the date hereof until the Preferred Shares are converted, redeemed or repurchased in accordance with the Series A Certificate or this Agreement, if at any time the Company is no longer subject to the reporting requirements of Section 13 and Section 15(d), as applicable, of the Exchange Act, the Company shall deliver to the Investor the following: (a) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if the Company were required to file such reports; and (b) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports. All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report on Form 10-K will include a report on the Company’s consolidated financial statements by the Company’s independent registered public accounting firm.

5.3 Tax Matters . For so long as any Preferred Shares remain outstanding, the Company will not (i) treat dividends in arrears with respect to Preferred Shares as constructively paid or received for U.S. federal income purposes if such dividends were not declared or paid or issue a Form 1099 with respect to such dividends in arrears or (ii) treat the Preferred Shares as other than capital stock for U.S. federal income tax purposes; provided that (A) there shall not have been a change in the Applicable Law that otherwise requires the treatment contemplated in clauses (i) or (ii) of this Section 5.3 or (B) the Company shall not be subject to any action by the Internal Revenue Service (“ IRS ”) challenging the treatment of the Preferred Shares contemplated in clauses (i) or (ii) of this Section 5.3 . Prior to any change to the treatment of dividends by the Company in response to an action contemplated by clause (B) of this Section 5.3 , the Company shall make commercially reasonable efforts to challenge or shall make commercially reasonably efforts to assist with a challenge by a holder of Preferred Shares or its affiliates of such IRS action so long as the Investor assumes responsibility for any and all Company cost, fees (including attorney’s fees) and expenses associated with any such challenge.

5.4 New York Stock Exchange Listing . After Closing, the Company shall use its commercially reasonable efforts to list all of the Common Stock into which the Series A Preferred Stock is convertible on the New York Stock Exchange.






5.5 Use of Proceeds . The Company agrees and covenants that it will use the net proceeds from the Offering for general corporate purposes.

5.6 HSR Filing .

(a) If approval of the Transaction under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) is required contemporaneously herewith or in the future, the parties hereto shall use their reasonable best efforts to take such actions as are necessary or advisable to obtain prompt approval of the consummation of the Transaction or expiration of applicable waiting periods under the HSR Act.

(b) Any filing fees associated with the filings pursuant to the HSR Act that are contemplated in this Section 5.6 shall be borne by the Company.

5.7 Investor Transfers . The Investor acknowledges that prior to any transfer of Series A Preferred Stock, to the extent that (i) the Investor Voting Cap is in place and (ii) such transfer would require Regulatory Approval, the Investor will deliver reasonable notice to the Company of such transfer to allow the Company to take such action as may be required with respect to such transfer.

5.8 Regulatory Updates . Except as otherwise disclosed in any public filing made by the Company and subject to the Investor’s agreement to maintain any material non-public information disclosed to it confidential in accordance with the provisions of Regulation FD, the Company covenants and agrees that it shall and shall cause each of its Subsidiaries and Schools to provide the Investor with the following at the times specified below:

(a) Within ten (10) Business Days of receipt from the DOE, each School’s debt to earnings rates as calculated by the DOE under the Gainful Employment Rule (as issued by the DOE in draft form or published by the DOE in final form, as the case may be).

(b) Within ten (10) Business Days, after the matter has come to the knowledge of the Company, written notice of: (i) any material litigation; (ii) any material governmental proceeding by any Governmental Authority or Educational Agency (other than but not limited to, routine audits, reviews and inquiries conducted by such agencies); (iii) any material National Labor Relations Board (“ NLRB ”) complaint or initiation of a proceeding; and (iv) any material civil investigative demand or material investigation by a Governmental Authority, Educational Agency or Consumer Protection Agency (other than routine inquiries and reviews conducted by such agencies).

(c) Within ten (10) Business Days, after knowledge thereof shall have come to the attention of the Company, any Subsidiary or any School: (i) written notice of the intent of any Educational Agency to limit, suspend, terminate, revoke, withdraw or not renew any Educational Approval of the Company or any Subsidiary or any School that is not resolvable by the Company by the filing of a form, payment of an ordinary course fee or taking such other action that is routine in the industry and (ii) written notice of any initiation of a show cause or probation action initiated by any Educational Agency against the Company, or any Subsidiary or any School.

(d) Within ten (10) Business Days after knowledge thereof shall have come to the attention of the Company, any Subsidiary or any School any final Title IV program review reports or DOE Inspector General reports.






(e) Within ten (10) Business Days of providing such information to the DOE, copies of the annual Title IV compliance audit and audited financial statements required pursuant to 34 C.F.R. § 668.23(a)-(b).

(f) Within ten (10) Business Days, after receipt, each School’s Cohort Default Rate (as issued by the DOE in draft form or published by the DOE in final form, as the case may be).
    
(g) Within ten (10) days after knowledge thereof shall have come to the attention of the Company, any Subsidiary or any School, written notice of the assertion of any claims by more than 40 students (whether at one time or cumulatively) in a single fiscal year that assert a defense to repayment of any Title IV loans that are explicitly based on the students’ rights under 34 C.F.R. § 685.206 or any successor regulation and that, in the aggregate, have a loan value of more than $500,000.

(h) Within ten (10) Business Days of receipt: (a) copies of any written notice of any removal, denial, or loss of any Educational Approval of any School by any Educational Agency; (b) copies of any written notice by the DOE that it has placed one or more Schools on the reimbursement payment method or the Heightened Cash Monitoring 2 payment method; (c) copies of any written notice regarding the imposition of any fine, liability, disallowance, or other sanction instituted against any School by the DOE or any other Educational Agency, Consumer Protection Agency or Governmental Authority, in an amount equal to or greater than $2,000,000 individually or $3,000,000 in the aggregate, in each case, in any fiscal year of the Company; (d) copies of any written notice from the DOE that any School has failed to maintain a composite score of 1.0 or more under the factors of financial responsibility set forth in 34 C.F.R. Part 668, Subpart L, or to satisfy the “zone alternative” requirements set forth at 34 C.F.R. § 668.175(d) if applicable; or (e) information concerning claims by the DOE for recoupment pursuant to 34 C.F.R. § 685.206(c)(3) or any successor regulation.

5.9 Survival . Irrespective of any investigation, inquiry or examination made by, for or on behalf of the Investor, or the acceptance by the Investor of any certificate or opinion, the representations and warranties contained herein shall survive Closing for a period not to exceed twenty-four (24) months and the covenants set forth herein shall survive until the earlier of the (1) full satisfaction of the obligations under the covenant or (2) the date in which all the Preferred Shares have been converted, redeemed or repurchased in full in accordance with the Series A Certificate or this Agreement. This Section 5.9 shall not limit any covenant or agreement of the Parties to this Agreement which, by its terms, expressly contemplates performance after such twenty-four (24) month period.
5.10      Reasonably Requested Information . The Investor (i) shall maintain audited financial statements and (ii) shall use commercially reasonable efforts to provide information solely pertaining to the Investor or its Affiliates that is reasonably requested by any Educational Agency; provided, that the Investor shall not be required to incur costs (other than de minimis costs) or agree to be bound by any obligations in the provision of any information requested pursuant to clause (ii) hereto.

Article 6

INDEMNIFICATION

6.1 Indemnification.  






(a) The Company shall indemnify, defend and hold the Investor and its Affiliates and each officer, director, member, partner, Affiliate, employee, agent and representative of the Investor and its Affiliates (collectively, “ Investor Indemnitees ”) harmless against any demand, claim, action, cause of action, cost, obligation, settlement, award, damage, deficiency, tax, penalty, fine or other loss or expense, including all interest, penalties, reasonable attorneys’ fees and expenses and amounts paid or incurred in connection with any action, demand, proceeding, investigation or claim, including any amounts paid in settlement thereof (collectively, “ Losses ”), relating to or arising from: (i) any breach of any of the representations, warranties, covenants or agreements of the Company contained in the Transaction Documents and (ii) the execution or delivery of any Transaction Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties to the Transaction Documents of their respective obligations thereunder or the consummation of the transactions contemplated hereby or thereby. In the event that any Investor Indemnitee claims any such right of indemnification, the Investor Indemnitee shall provide to the Company written notice thereof, together with reasonable detail regarding such claims (to the extent known) and in the event that such claim involves third party claims, allow the Company at its expense to defend such claim(s) on the Investor Indemnitee’s behalf, provided that the Company agrees in writing to indemnify the Investor Indemnitee for any Losses arising out of or related to such third party claim. Notwithstanding the foregoing, the Company may not assume control of the defense of a third party claim (A) involving alleged criminal liability or (B) in which equitable relief is sought against any Investor Indemnitee. The Company shall be liable for the fees and expenses of counsel employed by the Investor Indemnity for any period during which the Company has failed (or is not permitted) to assume the defense thereof and, if the Company has assumed the defense thereof, if the Investor Indemnitee reasonably concludes, upon the advice of counsel, that it and the parties have conflicting interests with respect to such third party claim. The Investor Indemnitee shall be entitled to participate in (but not to control) the defense of any third party claim of which the Company has elected to assume the defense (and is permitted to); provided that any such participation by the Investor Indemnitee shall be with its own counsel and at its own expense. The Company shall promptly reimburse each Investor Indemnitee for any reasonable and documented legal and any other necessary expenses incurred by the Investor Indemnitee in connection with investigating and defending any such Losses. Any reimbursement by the Company under this Section 6.1 shall be within thirty (30) days. The parties shall take commercially reasonable efforts to make mutually available to each other all relevant information in their possession relating to any third party claim (except to the extent that such action would result in a loss of attorney client privilege) and shall cooperate with each other in the defense thereof. In the event the Company assumes the defense of any third party claim, the Company agrees that it will not, without the Investor Indemnitee’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof in any pending or threatened action, suit, claim or proceeding in respect of which indemnification has been sought hereunder unless such settlement or compromise includes an unconditional release of the Investor Indemnitee from all liability arising out of such action, suit, claim or proceeding. The obligations of the Company under this Article 6 shall survive Closing and the transfer, conversion, exchange or redemption of any Series A Preferred Stock.

(b) The Investor shall indemnify, defend and hold the Company and its Affiliates and each officer, director, member, partner, Affiliate, employee, agent and representative of the Company (collectively, “ Company Indemnitees ”) harmless against any Losses, relating to or arising from any breach of any of the representations, warranties, covenants or agreements of the Investor contained in the Transaction Documents. In the event that any Company Indemnitee claims any such right of indemnification, such Company Indemnitee shall provide to the Investor written notice thereof, together with reasonable detail regarding such claims (to the extent known) and in the event that such claim involves third party claims, allow the Investor at its expense to defend such claim(s) on the Company Indemnitee’s behalf, provided that the Investor agrees in writing to indemnify the Company Indemnitee for any Losses arising out of or related to such third party claim. Notwithstanding the foregoing, the Investor may not assume control of the defense of a third





party claim (A) involving alleged criminal liability or (B) in which equitable relief is sought against any Company Indemnitee. The Investor shall be liable for the fees and expenses of counsel employed by the Company Indemnitee for any period during which the Investor has failed (or is not permitted) to assume the defense thereof and, if the Investor has assumed the defense thereof, if the Company Indemnitee reasonably concludes, upon the advice of counsel, that it and the parties have conflicting interests with respect to such third party claim. The Company Indemnitee shall be entitled to participate in (but not to control) the defense of any third party claim of which the Investor has elected to assume the defense (and is permitted to); provided that any such participation by the Company Indemnitee shall be with its own counsel and at its own expense.. The Investor shall promptly reimburse the Company Indemnitee for any reasonable and documented legal and any other necessary expenses incurred by the Company Indemnitee in connection with investigating and defending any Losses. Any reimbursement by the Investor under this Section 6.2 shall be within thirty (30) days. The parties shall take commercially reasonable efforts to make mutually available to each other all relevant information in their possession relating to any third party claim (except to the extent that such action would result in a loss of attorney client privilege) and shall cooperate with each other in the defense thereof. In the event an Investor assumes the defense of any third party claim, the Investor agrees that it will not, without the Company Indemnitee’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof in any pending or threatened action, suit, claim or proceeding in respect of which indemnification has been sought hereunder unless such settlement or compromise includes an unconditional release of such Company Indemnitee from all liability arising out of such action, suit, claim or proceeding. The obligations of the Investor under this Article 6 shall survive Closing and the transfer, conversion, exchange or redemption of any Series A Preferred Stock.

6.2      Limitations .

(a)      [Reserved]

(b)      No Indemnified Party shall be entitled to indemnification pursuant to Section 6.1 until the aggregate of all Loses claimed by the Indemnified Parties pursuant to this Article 6 exceeds $1.0 million (the “ Threshold Amount ”), in which case, subject to Section 6.2(c) , the Indemnifying Party shall indemnify the Indemnified Parties for all Losses then incurred (including the Threshold Amount) and subsequently incurred.

(c)      No Indemnifying Party shall have any obligation to indemnify any Indemnitee under Section 6.1(a)(i) or (b) for Losses resulting from breaches of the representations, warranties and covenants of such Indemnifying Party included in this Agreement exceeding, in the aggregate $20.0 million.

(d)      NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO INDEMNIFYING PARTY OR THEIR RESPECTIVE AFFILIATES SHALL BE LIABLE HEREUNDER TO ANY INDEMNIFIED PARTY FOR ANY (i) PUNITIVE OR EXEMPLARY DAMAGES OR (ii) LOST PROFITS OR CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES EXCEPT, IN THE CASE OF THIS CLAUSE (ii), TO THE EXTENT SUCH LOST PROFITS OR DAMAGES ARE (A) NOT BASED ON ANY SPECIAL CIRCUMSTANCES OF THE PARTY ENTITLED TO INDEMNIFICATION AND (B) THE NATURAL, PROBABLE AND REASONABLY FORESEEABLE RESULT OF THE EVENT THAT GAVE RISE THERETO OR THE MATTER FOR WHICH INDEMNIFICATION IS SOUGHT HEREUNDER, REGARDLESS OF THE FORM OF ACTION THROUGH WHICH SUCH DAMAGES ARE SOUGHT, EXCEPT IN EACH CASE OF THE FOREGOING CLAUSES (i) AND (ii), TO THE EXTENT ANY SUCH LOST PROFITS OR DAMAGES ARE INCLUDED IN ANY ACTION BY A THIRD PARTY AGAINST SUCH INDEMNIFIED PARTY FOR WHICH IT IS ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, THE INVESTOR ACKNOWLEDGES AND AGREES





THAT THE COMPANY SHALL NOT BE LIABLE HEREUNDER PURSUANT TO ANY CLAIM MADE PURSUANT TO SECTION 6.1(A)(ii) TO ANY INVESTOR INDEMNIFIED PARTY FOR ANY DIMINUTION IN VALUE OF OR LOST PROFITS WITH RESPECT TO THE CAPITAL STOCK OF THE COMPANY.

6.3      For the avoidance of doubt, Investor or its Affiliates shall not be entitled to indemnity under this Article 6 for Losses incurred as a result of a reduction in the trading price of the Common Stock of the Company following the date hereof unless such reduction is caused by facts and circumstances that constitute a breach of the representations, warranties or covenants included in this Agreement.

6.4      No Duplication . In no event shall any Indemnified Party be entitled to recover any Loss under one section or provision of this Agreement to the extent of the full amount of such Loss already recovered by such Indemnified Party, nor shall its insurer or indemnitor be entitled to any kind of subrogation or substitution which would give it the right to make a claim against the Indemnifying Party.

6.5      Exclusive Remedy .

(a) EXCEPT (i) PURSUANT TO THIS Article 6 OR ANY OTHER TRANSACTION DOCUMENT OR (ii) IN THE CASE OF CRIMINAL ACTIVITY OR COMMON LAW FRAUD ON THE PART OF ANY PARTY, BUT OTHERWISE NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY SHALL HAVE ANY LIABILITY, AND NO PARTY SHALL MAKE ANY CLAIM, FOR ANY LOSS (AND THE PARTIES HEREBY WAIVE ANY RIGHT OF CONTRIBUTION AGAINST EACH OTHER AND THEIR RESPECTIVE AFFILIATES) UNDER, ARISING OUT OF, OR RELATING TO, THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY CERTIFICATE DELIVERED PURSUANT TO THIS AGREEMENT, WHETHER BASED IN CONTRACT, TORT, STRICT LIABILITY, COMMON LAW, OTHER LAWS OR OTHERWISE.

(b) Except as otherwise expressly set forth in this Agreement, any other Transaction Document or in any certificate delivered pursuant hereto or thereto, each of the Parties, on behalf of itself and its Affiliates, covenants, agrees and acknowledges that (i) no Person other than the Parties or the parties thereto shall have any obligation or Liability hereunder, under any Transaction Document or under any certificate delivered pursuant hereto or thereto; and (ii) the Parties and their Affiliates and Representatives shall have no rights of recovery in respect of any claim made pursuant to this Agreement or any Transaction Document against, no recourse in respect of any claim made pursuant to this Agreement or any Transaction Document shall be had against and no personal Liability in respect of any claim made pursuant to this Agreement or any Transaction Document shall attach to, any former, current or future Affiliate, general or limited partner, member, equityholder, representative, director, officer, agent, manager, assignee or employee of any Party, or of any Affiliate of any of the foregoing (other than any party to any of the Transaction Documents or any of their respective successors or permitted assignees to the extent of such party’s obligations thereunder), or any of their respective successors or permitted assignees (excluding any party to the Transaction Documents to the extent of its obligations thereunder to the other parties thereto or express third party beneficiaries thereof, collectively, “ Non-Recourse Persons ”), whether by or through attempted piercing of the “corporate veil,” by or through a claim (whether in tort, contract, at law, in equity or otherwise) by or on behalf of any Party against any Non-Recourse Person, by the enforcement of any judgment, fine or penalty or by any legal or equitable proceeding, or by virtue of any statute, regulation or other Law, or otherwise. The Non-Recourse Persons shall be express third party beneficiaries of this Section 6.5(b) as if expressly party hereto.

(c)      For the avoidance of doubt, the parties hereto acknowledge and agree that nothing in this Section 6.5 shall restrict or be deemed to waive any claim or right that the Investor or any of its Affiliates





may have solely in such entity’s capacity as a stockholder of the Company (as opposed to a contracting party entitled to indemnification hereunder which rights are limited in accordance with Section 6.5(b)).
6.6      No Reliance . EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR IN ANY CERTIFICATE DELIVERED PURSUANT HERETO OR THERETO, NONE OF THE PARTIES OR ANY OTHER PERSON, INCLUDING ANY AFFILIATE OF ANY PARTY, MAKES ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO SUCH PARTIES OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND EACH PARTY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SUCH PARTIES OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING WITH RESPECT TO THE DISTRIBUTION OF, OR ANY SUCH PERSON’S RELIANCE ON, ANY INFORMATION, DISCLOSURE OR OTHER DOCUMENT OR OTHER MATERIAL MADE AVAILABLE IN ANY DATA ROOM, MANAGEMENT PRESENTATION OR IN ANY OTHER FORM IN EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS CONTEMPLATED HEREBY). EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR IN ANY CERTIFICATE DELIVERED PURSUANT HERETO OR THERETO, EACH PARTY HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO ANY OTHER PARTY OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED TO ANY PARTY OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT OR REPRESENTATIVE OF SUCH PARTY OR ANY OF ITS AFFILIATES) WITH RESPECT TO SUCH PARTY OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

Article 7

MISCELLANEOUS

7.1 Construction . Unless the context of this Agreement otherwise requires, (a) words of any gender are deemed to include the other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this Agreement as a whole and not to any particular provision; (d) the terms “Article,” “Section,” “Schedule” and “Exhibit” refer to the specified Article or Section of or Schedule or Exhibit to this Agreement; (f) the term “including” and other forms of such term, with respect to any matter or thing, mean “including but not limited to” such matter or thing; (g) the term “control” shall include, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise; (h) all references to “dollars” or “$” refer to currency of the United States of America; and (i) when calculating the period of time within or following which any act is to be done, any notice is to be given or any other action is to be taken, the date which is the reference date in such period shall be excluded and if the last day of such period is not a business day, then such period shall end on the next succeeding day that is a business day. The parties acknowledge and agree that nothing herein nor the disclosure obligations of the parties pursuant to this Agreement shall be deemed to constitute





a waiver of the attorney-client privilege with respect to any communication that may constitute a privileged communication.

7.2 Fees and Expenses . Each of the Company, on the one hand, and the Investor, on the other hand, shall pay all of their respective expenses incurred in connection with the preparation, execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby; provided, however, that the Company shall pay, and hold the Investor, its Affiliates and each of their representatives harmless against all liability for the payment of (i) the reasonable and properly documented fees and charges of Latham & Watkins LLP and Hogan Marren Babbo & Rose, Ltd, each, counsel to the Investor, that are incurred in connection with the consummation of the transactions contemplated thereby, including the preparation, execution and delivery of the Transaction Documents and (ii) any stamp or similar taxes which may be determined to be payable in connection with the execution and delivery and performance of any Transaction Document or any modification, amendment or alteration of any Transaction Document, and all issue taxes in respect of the issuance of the Preferred Shares. At Closing, the Company shall pay or reimburse the Investor pursuant to this Section 7.2 for the reasonable and properly documented fees and charges of Latham & Watkins LLP and Hogan Marren Babbo & Rose, Ltd, not to exceed the amount of $330,000.00 which shall be fulfilled at Closing by permitting the Investor to deduct such fees and charges from the proceeds payable by the Investor to the Company and to wire such amounts directly to Latham & Watkins LLP and Hogan Marren Babbo & Rose, Ltd at Closing.

7.3 Assignment; Parties in Interest . This Agreement shall bind and inure to the benefit of the parties and each of their respective successors and permitted assigns. The Company may not assign either this Agreement or any of its rights, interests or obligations hereunder. The Investor may assign any of its rights, interests or obligations hereunder, either prior to or following the Closing; provided, however, that the transferee agrees to be bound by, and entitled to the benefits of, this Agreement as an original party hereto. In the event that the Investor shall assign only a portion of its rights pursuant to this Agreement, or assign its rights pursuant to this Agreement in connection with the transfer of less than all of the Investor’s shares of Series A Preferred Stock, the Investor shall also retain its rights with respect to its remaining shares of Series A Preferred Stock.

7.4 Entire Agreement; Severability . This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings among the parties with respect to such subject matter. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, in the event that any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

7.5 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except the Investor Indemnitees and Company Indemnitees are intended third party beneficiaries of Article 6 hereof.

7.6 Notices . All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or if sent by nationally-





recognized overnight courier, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company:
Universal Technical Institute, Inc.
16220 North Scottsdale Road, Suite 100
Scottsdale, Arizona 85254
Attention: General Counsel
with a copy to:
Squire Patton Boggs (US) LLP
1 East Washington Street, Suite 2700
Phoenix, Arizona 85004
Attention: Frank M. Placenti
If to the Investor:
Coliseum Capital Management, LLC
One Station Place, 7th Floor South
Stamford, CT 06902
Attention: Christopher Shackelton;
with a copy to:
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Attention: Roger G. Schwartz
Zachary Judd
Roderick O. Branch
or to such other address as the party to whom notice is to be given may have furnished to the other parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery if a business day or, if not a business day, the next succeeding business day, (b) in the case of nationally-recognized overnight courier, on the next business day after the date when sent and (c) in the case of registered or certified mail, return receipt requested and postage prepaid, on the third business day after the date when sent.





7.7 Amendments; Waivers . The terms and provisions of this Agreement may only be modified or amended pursuant to an instrument signed by the Company and the Investor. Any waiver of any term or provision of this Agreement requested by any party hereto must be granted in advance, in writing, by the Company (if the Investor is requesting such waiver) or by the holders of at least a majority of the Preferred Shares outstanding at the time of such waiver (if the Company is requesting such waiver), as the case may be.

7.8 Counterparts . This Agreement may be executed in any number of original or facsimile counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Any such counterpart may be delivered by facsimile, “pdf” or other form of electronic transmission and such delivery shall be deemed to be the physical delivery of a manually executed counterpart.

7.9 Headings . The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

7.10 Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of New York to be applied. ANY PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH PROCEEDING. EACH OF THE PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.




[Remainder of page intentionally left blank; signatures on next succeeding page.]































































IN WITNESS WHEREOF, the parties have executed and delivered this Securities Purchase Agreement on the date first above written.
UNIVERSAL TECHNICAL INSTITUTE, INC.
By:     
Name: Kimberly J. McWaters     
Title:      Chairman of the Board and Chief Executive Officer





Coliseum HOLDINGS I, LLC

By: Coliseum Capital Management, LLC, its Manager





By:     
Name:      Christopher Shackelton
Title:      Managing Partner






























Annex A - Definitions
Affiliates                          Section 2.28
Agreement                          Preamble
Applicable Agreement                  Section 2.14
Applicable Law                      Section 2.14
Charter Documents                      Section 2.14
Closing                          Section 1.4
Closing Date                          Section 1.4
Code                              Section 2.22
Common Stock                      Section 2.2
Company                          Preamble
Company Disclosure Package                  Section 2.1
Company Indemnitees                  Section 6.2
Credit Facility                          Section 2.3
Debt Repayment Triggering Event              Section 2.15
DOE                              Section 2.42(c)
Environmental Laws                      Section 2.24
ERISA                              Section 2.22
ERISA Affiliate                      Section 2.22
Exchange Act                          Section 2.1





Existing Indebtedness Agreements             Section 2.3
FCPA                              Section 2.37
GAAP                              Section 2.5
HSR Act                      Section 5.6
Intellectual Property                      Section 2.21
Investment Company Act                  Section 2.32
Investor                          Preamble
Investor Indemnitees                      Section 6.1
Investor’s Allocation                      Section 1.2
Investor                          Preamble
Knowledge                          Section 2.4
Liens                              Section 2.2
Material Adverse Change                  Section 2.8
Material Adverse Effect                  Section 2.11
Money Laundering Laws                  Section 2.38
OFAC                              Section 2.39
Offering                          Recitals
Per Share Purchase Price                  Section 1.3
Permits                          Section 2.18
Permitted Liens                      Section 2.3
Placement Agent                      Section 3.10
Preferred Shares                      Recitals
Preferred Shares Purchase Price              Section 1.3
Preferred Stock                      Section 2.2
Proceedings                          Section 2.17
SEC                              Section 2.5
Securities Act                          Section 2.3
Series A Certificate                      Recitals
Series A Preferred Stock                  Recitals
Solvent                          Section 2.27
Subsidiaries                          Section 2.10
Tax                              Section 2.20
Taxes                              Section 2.20
Threshold Amount                      Section 6.2(a)
Transaction Documents                  Recitals
Transaction                          Section 2.2
Use of Proceeds                      Recitals

The following terms have the meanings specified or referred to in this Annex A :
Accrediting Body ” means any entity or organization that is recognized as an accrediting agency by the DOE which engages in granting or withholding Accreditation or similar approval for private post-secondary schools, in accordance with standards relating to the performance, operation, financial condition and/or educational quality of such schools, including, without limitation, the Accrediting Commission of Career Schools and Colleges.
Accreditation ” means the status of public recognition granted by any Accrediting Body to an educational institution or location or program thereof that meets the Accrediting Body's standards and requirements.





Cohort Default Rate ” shall have the meaning ascribed to such term in 34 C.F.R. § 668 Subpart N.
Compliance Date ” means July 1, 2014.
Consumer Protection Agency ” means any Governmental Authority that regulates, administers or enforces Consumer Protection Laws, including, without limitation, the federal Consumer Financial Protection Bureau, the Federal Trade Commission, any state institutions department or agency, or any state attorney general.
Consumer Protection Law ” means any law, regulation, rule, order or binding standard directly or indirectly related to the protection of consumers in financing transactions, including, without limitation, the federal Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the privacy and data security provisions of the Gramm-Leach-Bliley Act, Section 5 of the Federal Trade Commission Act, the Consumer Financial Protection Act and applicable federal agency regulations implementing the foregoing, and any state law or regulation regarding retail installment sales agreements, consumer loans, or unfair or deceptive acts or practices.     
DOE ” means the U.S. Department of Education or any successor agency.
Educational Agency ” means any person, entity or organization, whether governmental, government chartered, private, or quasi-private, that engages in granting or withholding Educational Approvals for, administers financial assistance to or for students of, or otherwise regulates private postsecondary schools, including without limitation the DOE, any state education department or agency, any guaranty agency, and any Accrediting Body.
Educational Approval ” means any license, authorization, approval, certification, or Accreditation, issued or required to be issued by an Educational Agency with respect to any aspect of a School’s operations in order for such School or any location to operate or participate in Title IV, but excluding approvals or licenses with respect to the activities of individual recruiters or instructors at any School.
Educational Law ” means the HEA and any other statute, law, regulation, rule, order, or binding standard issued or administered by, or related to, any Educational Agency.
Educational Loan ” means any student loan made, insured or originated under Title IV.
Educational Notices/Consents ” means any approval, authorization, confirmation or consent by any Educational Agency or any notification to be made by the Parties to an Educational Agency, with regard to the transactions contemplated herein, which is necessary to be made or obtained under applicable Educational Laws in order to maintain or continue any Educational Approval held by any School as of the date of this Agreement.
Financial Assistance Programs ” means each Title IV Program pursuant to which Title IV Program funding has been provided to or on behalf of any School’s students; and any other government-sponsored or private student financial assistance program other than the Title IV Programs pursuant to which student financial assistance, grants or loans were provided to or on behalf of any School’s students.
Gainful Employment Certification Requirements ” means the certification requirements set forth at 34 C.F.R. § 668.414.





Gainful Employment Disclosure Requirements ” means the disclosure requirements set forth at 34 C.F.R. § 668.6, effective from July 1, 2011 to January 1, 2017, and the disclosure requirements set forth at 34 C.F.R. § 668.412, effective as of January 1, 2017.
     Gainful Employment Reporting Requirements ” means the reporting requirements set forth at 34 C.F.R. § 668.411.
Gainful Employment Rule ” means the rule set forth at 34 C.F.R. Part 668, Subpart Q.
Governmental Authority ” means any governmental, regulatory or administrative body, agency, subdivision or authority, any court quasi-judicial or judicial authority, or any public, private or industry regulatory authority, whether national, Federal, state, local, foreign or otherwise, but excluding any Educational Agency.
HEA ” means the Higher Education Act of 1965, as amended.
Pre-Closing Educational Notices/Consents ” shall mean all Educational Notices/Consents required before the Closing Date.
Private Educational Loan ” shall mean any loan provided by a lender that is not made, insured, or guaranteed under Title IV and is issued expressly for postsecondary educational expenses.
School ” means a postsecondary institution of higher education consisting of a main campus and, if applicable, any additional locations, campuses or branches thereof operated by any Borrower or any of their respective Subsidiaries identified by an Office of Postsecondary Education Identification (OPEID) number issued by the DOE or approved by any Educational Agency.
State Educational Agency ” means any state educational licensing body that provides a license or authorization necessary for any School to provide postsecondary education in that state.
Title IV ” shall mean Title IV of the Higher Education Act of 1965, as amended (20 U.S.C. §§ 1070 et seq. ), and any amendments or successor statutes thereto.
Title IV Programs ” shall mean the federal student financial assistance programs authorized by Title IV, including in particular those programs as listed in 34 C.F.R. § 668.1(c) or any successor regulation.







 

































    
    




Contact:

John Jenson         
Vice President, Corporate Controller     
Universal Technical Institute, Inc.     
(623) 445-0821

Universal Technical Institute Raises $70 Million in Private Placement of Convertible Preferred Stock to Coliseum Capital Management

Chris Shackelton to Join UTI Board of Directors

SCOTTSDALE, ARIZ. - June 24, 2016 - Universal Technical Institute, Inc. (NYSE: UTI) , the nation's leading provider of technician training for the auto, diesel, motorcycle, marine and collision repair industry, has entered into an agreement to sell 700,000 shares of Series A 7.5% convertible preferred stock to Coliseum Holdings I, LLC, an affiliate of Coliseum Capital Management (“Coliseum”) for $70 million.
 
Each share of preferred stock is initially convertible into 30.03 shares of UTI common stock, representing a conversion premium of 22.9% based upon UTI’s closing stock price of $2.71 per share on the New York Stock Exchange on June 23, 2016. After three years, UTI can redeem any outstanding preferred stock under certain circumstances at various prices. The preferred stock may be voted on an as-converted basis with the common stock but both the voting rights and conversion rights are subject to a 4.99% cap until certain regulatory and shareholder approvals are requested and received.

UTI expects to use the proceeds of the private placement to fund strategic long-term growth initiatives, including the expansion of the Company’s successful metro-model campuses to new markets and the creation of new programs in existing markets with under-utilized campus facilities, as well as opportunistic acquisitions that complement UTI’s core business. UTI intends to execute these plans while meeting the expectations of state and federal regulators, as well as those of its accreditor. 
 
Chris Shackelton, a co-founder and Managing Partner of Coliseum Capital, will join the UTI Board of Directors.

“Coliseum’s strategic investment, combined with the expertise and leadership Chris brings to our Board of Directors, gives us the ability to meaningfully accelerate profitable growth for the Company,” said Kim McWaters, UTI’s Chairman and Chief Executive Officer. “Additionally, this new capital bolsters our financial position, which will now further exceed the Department of Education’s regulatory financial responsibility standards. We believe Chris and Coliseum will be valuable, long-term partners to UTI as we strengthen our business for the benefit of all of our stakeholders, including our students, industry partners, employees and shareholders.”






"I look forward to working closely with Kim, management and the Board of Directors of UTI," said Chris Shackelton. "Our strategic investment in the Company is based on our respect for UTI’s mission and our confidence in its ability to capitalize on current competitive dynamics and extend its industry leadership. We believe this financing has positioned UTI to opportunistically and aggressively pursue attractive, long-term value creation initiatives, while maintaining its important mission of providing an un-matched specialized education to students across the country.”

The closing of the private placement will occur pursuant to a securities purchase agreement in connection with a financing transaction pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Regulation D promulgated thereunder. The securities to be sold in the completed private placement have not been registered under the Securities Act, or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from such registration requirements .


About Universal Technical Institute, Inc.
Headquartered in Scottsdale, Arizona, Universal Technical Institute, Inc. (NYSE: UTI) is the leading provider of post-secondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians. With more than 200,000 graduates in its 51-year history, UTI offers undergraduate degree and diploma programs at 12 campuses across the United States, as well as manufacturer-specific training programs at dedicated training centers. Through its campus-based school system, UTI provides specialized post-secondary education programs under the banner of several well-known brands, including Universal Technical Institute (UTI), Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NASCAR Tech). For more information visit www.uti.edu .

About Mr. Shackelton
Chris Shackelton has significant public company investment and board experience. He is currently Chairman of Providence Service Corp, a diversified holding company. He also serves on the board of LHC Group Inc, a nursing company, and BioScrip Inc, an infusion services company. He was previously Chairman of Rural/Metro Corp, an emergency ambulance company. He is a co-founder and Managing Partner of Coliseum Capital Management, LLC. Mr. Shackelton received a bachelor's degree in economics from Yale University.

About Coliseum Capital Management, LLC
Coliseum is an investment firm founded in 2005 by Chris Shackelton and Adam Gray, which focuses on long-term investments in both public and private companies. Coliseum directs capital behind strong management teams, with a willingness to work alongside companies to facilitate value creation.  



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