5.	LONG-TERM DEBT AND LEASE OBLIGATIONS

Long-term debt and lease obligations consist of the following:

	September 30, 2015			December 31, 2014
Term loan (a)	$	44,650		$	-
Credit agreement (a)		-			30,000
Finance obligation (b)		9,672			9,672
Capital lease-property (rate of 8.0%) (c)		25,159			25,509
		79,481			65,181
Less current maturities		(6,328	)		(30,471	)
	$	73,153		$	34,710

(a) On July 31, 2015, the Company entered into a credit agreement (the “Agreement”) with three lenders, Alostar Bank of Commerce (“Alostar”), HPF Holdco, LLC and Rushing Creek 4, LLC, led by HPF Service, LLC, as administrative agent and collateral agent (the “Agent”), for an aggregate principal amount of $45 million (the “Loan”). The Loan consists of a $30 million term loan agreement from HPF Holdco, LLC and Rushing Creek 4, LLC secured by a first priority lien in favor of the Agent on substantially all of the real and personal property owned by the Company, and a $15 million term loan agreement from Alostar secured by a $15.3 million cash collateral account. At the Borrowers’ request, a percentage of the cash collateral may be released to the Borrowers in the Agent’s sole discretion and with the consent of Alostar upon the satisfaction of certain criteria as outlined in the Term Loan Agreement. The Loan, which matures on July 31, 2019, replaces the Company’s previously existing $20 million revolving credit facility with Bank of America, N.A. and other lenders, which was due to expire on April 5, 2016. The previously existing revolving credit facility was terminated concurrently with the effective date of the Term Loan Agreement on July 31, 2015 (the “Closing Date”).

A portion of the proceeds of the Loan were used by the Company to (i) repay approximately $6.3 million in outstanding principal, accrued interest and fees due under the previously existing revolving credit facility, (ii) fund the $15.3 million cash collateral account securing the portion of the Loan provided by Alostar, (iii) fund approximately $7.4 million in a cash collateral account securing the letters of credit issued under the previously existing revolving credit facility that remain outstanding after the termination of that facility and (iv) pay transaction expenses in connection with the Loan and the termination of the previously existing revolving credit facility. The remaining proceeds of the Loan of approximately $13.8 million may be used by the Borrowers to finance capital expenditures and for general corporate purposes consistent with the terms of the Term Loan Agreement.

Interest will accrue on the Loan at a per annum rate equal to the greater of (i) 11% or (ii) 90-day LIBOR plus 9% determined monthly by the Agent and will be payable monthly in arrears. The principal balance of the Loan will be repaid in equal monthly installments, commencing on August 1, 2017, determined as the quotient of (i) 10% of the outstanding principal balance of the Loan as of July 2, 2017 divided by (ii) 12. A final installment of principal and all accrued and unpaid interest will be due on the maturity date of the Loan.

The Loan may be prepaid in whole or in part at any time, subject to the payment of a prepayment premium equal to (i) 5% of the principal amount prepaid at any time up to but not including the second anniversary of the Closing Date and (ii) 3% of the principal amount prepaid at any time commencing on the second anniversary of the Closing Date up to but not including the third anniversary of the Closing Date. In the event of any sale or other disposition of a school or real property by the Company permitted under the Term Loan Agreement, the net proceeds of such sale or disposition must be used to prepay the Loan in an amount determined pursuant to the Term Loan Agreement, subject to the applicable prepayment premium; provided, however, that no prepayment premium will be due with respect to up to $15 million of aggregate repayments of the Loan made during the first year that the Loan is outstanding. A portion of the net cash proceeds of any disposition of a school in an amount determined pursuant to the terms of the Term Loan Agreement, must be deposited and held as cash collateral in a deposit account controlled by the Agent until the conditions for release set forth in the Term Loan Agreement are satisfied. In connection with the assets which are currently classified as held for sale and are expected to be sold within one year, we are required to classify $5.8 million as short term debt because of prepayment minimum as required with any disposition.

For the three months ended September 30, 2015, $0.4 million of the Term Loan Agreement was repaid in connection with the Company’s sale of real property located in Springdale, Ohio. The Company had $44.7 million outstanding under the Term Loan Agreement as of September 30, 2015.

The Company had $30.0 million outstanding under its previously existing revolving credit facility as of December 31, 2014 which was repaid on January 3, 2015. The interest rate on this borrowing was 7.25%.

The Term Loan Agreement contains customary representations, warranties and covenants such as minimum financial responsibility composite score, cohort default rate, and other financial covenants, including minimum liquidity, maximum capital expenditures, minimum fixed charge coverage ratio, maximum 90/10 ratio and minimum EBITDA (as defined in the Term Loan Agreement), as well as affirmative and negative covenants and events of default customary for facilities of this type. The Company was in compliance with all covenants as of September 30, 2015.

The Term Loan Agreement contains-events of default, the occurrence and continuation of which provide the lenders with the right to exercise remedies against the Company and the cash and other collateral securing the Loan. These events of default include, among other things, the failure to pay principal, interest or any other amounts when due with respect to the Loan, the breach of covenants in the Term Loan Agreement and related collateral security agreements, the occurrence of an insolvency event for the Company or any of its subsidiaries, the issuance of a notice of intent to suspend, terminate or limit Title IV program eligibility or an educational approval of the Company or any of its subsidiaries that could reasonably be expected to result in a Material Adverse Change (as defined in the Term Loan Agreement), the occurrence of a default respect to other indebtedness of the Company or any of its subsidiaries that involves an aggregate amount of $0.5 million or more, and the entry of a final judgment against the Company or any of its subsidiaries in the aggregate amount of $1 million or more.

Also, in connection with the Term Loan Agreement, the Company paid to the Agent a commitment fee of $1.0 million and is required to pay to the Agent other customary fees for facilities of this type. Total fees for the Term Loan Agreement were $2.8 million which are included in deferred finance charges on the consolidated balance sheet.

(b) The Company completed a sale and a leaseback of several facilities on December 28, 2001. The Company retains a continuing involvement in the lease and, as a result, it is prohibited from utilizing sale-leaseback accounting. Accordingly, the Company has treated this transaction as a finance lease. The lease expires on December 31, 2016.

(c) In 2009, the Company assumed real estate capital leases in Fern Park, Florida and Hartford, Connecticut. These leases bear interest at 8% and expire in 2032 and 2031, respectively.

Scheduled maturities of long-term debt and lease obligations at September 30, 2015 are as follows:

Year ending December 31,
2015	$	121
2016		6,384
2017		2,610
2018		5,275
2019		33,388
Thereafter		22,031
	$	69,809

The finance obligation of $9.7 million is excluded from the scheduled maturities schedule as it is a non-cash liability.