Lincoln Educational Services Corporation Severance and Retention Pay Policy

Severance pay may be granted, on a discretionary basis, to those eligible employees who:

are terminated involuntarily due to reduction in the work force, or

are terminated due to inability to perform the duties of their position, or

When a non-Director or non-Senior Executive level employee is terminated under the conditions described above, the employee may be granted severance pay, based on the following guidelines:

When an Assistant Vice President, Assistant Controller, Corporate Director, National Director, Academic Dean, Director of Administrative Services, Director of Admissions, Director of Career Services, Director of Education, Director of Financial Aid: or another Director title deemed eligible by the Senior Vice President and Chief Human Resources Officer is terminated under the conditions described above, the employee may be granted severance pay based on the following guidelines:

When the President & Chief Executive Officer, any Executive Vice President, any Senior Vice President, any Vice President or Group Vice President or Campus President, without an employment agreement with the Company, is terminated under the conditions described above, the employee may be granted severance pay based on the following guidelines:

When the President & Chief Executive Officer, any Executive Vice President, any Senior Vice President, any Vice President, or Group Vice President, without an employment agreement, is terminated within twelve months after a Change in Control either by the Company without Cause, or by the employee for Good Reason, the employee may be granted severance pay and benefits, based on the following guidelines:

When an employee with an employment agreement is terminated under the conditions described above or within twelve months after a Change in Control either by the Company without Cause, or by the employee for Good Reason, the employee will receive severance pay and benefits in accordance with his or her employment agreement.

For purposes of this Policy, “Cause” shall mean (a) the employee’s failure to perform their duties (other than such failure resulting from incapacity due to physical or mental illness); (b) the employee’s failure to comply with any valid and legal directive of the Board or the person to whom the employee reports; (c) the employee’s engagement in dishonesty, illegal conduct or misconduct; (d) the employee’s embezzlement, misappropriation or fraud whether or not related to the employee’s employment with the Company; (e) the employee’s conviction of or please of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude; (f) the employee’s violation of the Company’s policies or codes of conduct including policies related to discrimination, harassment, performance of illegal or unethical activities and ethical misconduct; or (g) the employee’s engagement in conduct that brings or is reasonably likely to bring the Company negative publicity or into public embarrassment or disrepute. “Good Reason” shall mean (a) a material reduction in the employee’s base salary other than a general reduction in base salary that affects all similarly situated employees in substantially the same proportions; (b) a relocation of the employee’s principal place of employment by more than 50 miles; or (c) a material, adverse change in the employee’s title, reporting relationship, authority, duties or responsibilities (other than temporarily while the employee is physically or mentally incapacitated); provided, however, that the employee cannot terminate his or her employment for Good Reason unless he or she has provided written notice to the Company of the existence of the circumstances providing grounds for termination for Good Reason within thirty days of the initial existence of such grounds and the Company has had at least thirty days from the date of such notice to cure such circumstances if curable; and further provided, that if the employee shall not have terminated his or her employment within ninety days after the first occurrence of the applicable grounds, the employee will be deemed to have waived the right to terminate for Good Reason with respect to such grounds.

Receipt of severance payments shall be conditioned upon the execution and delivery of a release of claims form in the form specified by the Company from time to time which may include, without limitation, a non-compete provision, a non-disparagement provision, a non-solicitation provision, a confidentiality provision and such further terms as the Company may determine. In addition to execution and delivery of the release of claims form, payment of severance shall be conditioned upon the employee’s continued work, in a satisfactory manner, until his or her date of termination and the employee’s cooperation in transitioning all of the employee’s work in consultation with such employee’s supervisor or other designated employee.

Timing of payments shall be determined as follows:

With respect to an employee aged 40 or older on the date that the employee executes the release of claims form (an “ADEA Employee”), the release of claims form must be executed and delivered within the time period specified under the terms of the applicable release of claims form; provided, however, that in no event will severance pay be paid in the event that a release of claims form is executed later than sixty days following the employees’ separation from employment.  For purposes of waiving any potential claims under the Age Discrimination in Employment Act (the “ADEA”) and for purposes of compliance with Section 7(f) of the ADEA and the applicable guidance thereunder, no severance pay shall commence prior to a period ending seven days following the execution of the release of claims form (the “Revocation Period”).  In no event will severance pay be paid with respect to an ADEA Employee if the release of claims form is revoked during the Revocation Period.  Severance pay shall commence with respect to an ADEA Employee as soon as practicable following expiration of the Revocation Period, which generally shall be the first regularly scheduled payroll date following the expiration of the Revocation Period and shall thereafter be paid in accordance with the Company’s regular payroll practice.

With respect to an employee younger than age 40 on the date that the employee executes a release of claims form (a “Non-ADEA Employee”), severance pay shall commence as soon as practicable which generally shall be the first regularly scheduled payroll date following the date on which the Non-ADEA Employee submits an executed release of claims form to the Company and shall thereafter be paid in accordance with the Company’s regular payroll practice.

Any payment of severance pay to an employee shall be subject to normal withholding for local, state and federal income taxes and Social Security taxes.

Upon the death of an employee who has not received all severance pay payable to him or her, the benefits otherwise payable shall be paid in the form of a lump sum to the employee’s estate as soon as practicable.

Employees who receive severance pay and are subsequently rehired shall be eligible for additional severance pay based on their rehire date.

The foregoing guidelines, and in particular the severance pay guidelines set forth in Sections III A 3-6, do not establish any entitlement.  The Company may vary the eligibility requirements and the amount of severance pay, if any.

Retention pay may be granted to those eligible employees who will be terminated due to a reduction in work force or such other reasons as the Company may determine, but are asked to continue working until a specified date.

Employees may be eligible for up to four weeks of retention pay in addition to any severance pay. Retention pay may be increased to recognize such extended employment based on the length of time an employee is asked to continue working.

It is expected that employees whose positions are being eliminated will accept a comparable position if offered. Comparable positions may be located within the Company or within any company assuming control of the operation of any Company program and/or campus. Employees who elect not to accept a comparable position may not be eligible for severance or retention pay.

For purposes of this Policy, “comparable position” means any position that pays a base salary of at least 85% of the employee’s then-current base salary, excluding overtime, benefits, or other aspects of employment, and is located within 50 miles of the employee’s then-current work location and/or the position can work remotely.

If an employee is involuntarily transitioned from full-time to part-time the employee may elect to decline the part-time position and be eligible to receive severance pay as if the employee’s position had been eliminated.