Exhibit 99.5
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of January 14, 2004 (the
"Agreement"), among New Mountain Partners, L.P., a Delaware limited partnership
(the "Fund"), Bank of America, N.A. as the intended trustee of a trust (the
"Trust") to be created to hold certain assets on behalf of the Fund's partners
(the "Trustee") and Bank of America, N.A. as the escrow agent (the "Escrow
Agent"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Fund and the Trustee anticipate entering into a trust
agreement (the "Trust Agreement"), providing, among other things, for the
creation of the Trust;
WHEREAS, the Fund intends to transfer irrevocably to the Trust all
of its right, title and interest in certain shares of Series A Convertible
Preferred Stock in Xxxxxxx Education, Inc., a Maryland corporation ("Strayer
Education");
WHEREAS, before the Fund irrevocably transfers to the Trust all of
its right, title and interest in certain shares of Series A Convertible
Preferred Stock in Xxxxxxx Education, the Fund intends to deposit irrevocably
those shares into escrow and to execute an irrevocable proxy that irrevocably
assigns to the Trustee its voting rights with regard to the Escrowed Shares
during the escrow period (the "Escrow Transaction");
WHEREAS, the Escrow Transaction is subject to approval by or other
action with respect to the Education Agencies listed on Schedule X;
WHEREAS, the Fund and the Trustee desire the Escrow Agent to hold
and dispose of the Escrowed Shares pending transfer of those shares to the Trust
in accordance with the terms of this Agreement, and the Escrow Agent is willing
to do so on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the transactions contemplated by
the parties, and of the premises and the mutual agreements hereinafter set
forth, the parties hereto hereby agree as follows:
1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms shall have the meanings set
forth below:
(a) "Business Day" means any day other than (i) a Saturday or Sunday
or (ii) a day on which banking institutions in New York City are authorized or
obligated by law or executive order to remain closed.
(b) "Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act of 1933,
as amended, and the rules and regulations thereunder.
(c) "DOE" means the U.S. Department of Education and any successor
agency administering Financial Assistance programs under Title IV.
(d) "DOE Approval Notice" means a program participation agreement,
both issued and executed by DOE, in conjunction with an Eligibility and
Certification Approval report (but not including a temporary provisional program
participation agreement).
(e) "Education Agency" means any person, entity or organization,
whether governmental, governmental chartered, private, or quasi-private, that
engages in granting or withholding Educational Approvals for or otherwise
regulates private post-secondary schools, their agents, or employees in
accordance with standards relating to the performance, operation, financial
condition, or academic standards of such schools, and the provision of Financial
Assistance by and to such schools or their students, including, without
limitation, the DOE, state authorizing or licensing agencies, accrediting
agencies, the U.S. Department of Veterans Affairs, the U.S. Department of
Homeland Security, and student loan guaranty agencies that have guaranteed loans
for students at the University.
(f) "Educational Approval" means any license, permit, authorization,
certification, agreement, accreditation, or similar approval material to the
operations of Strayer Education or the University issued by any Education Agency
to Xxxxxxx Education, Strayer, or the University.
(g) "Escrow Date" has the meaning assigned to such term in Section
3(a).
(h) "Escrowed Shares" has the meaning assigned to such term in
Section 3(a).
(i) "Escrow Transaction" has the meaning assigned to such term in
the Recitals hereto.
(j) "Financial Assistance" means any form of student financial
assistance, grants or loans, including without limitation Title IV Program
funding.
(k) "Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), voting or other restriction,
registration or other requirement, preemptive right or other security interest
of any kind or nature whatsoever.
(l) "DOE Pre-Escrow Date Notice" has the meaning assigned to such
term in Section 4(a).
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(m) "Strayer" means Xxxxxxx University, Inc., a Maryland
corporation.
(n) "Xxxxxxx Education" has the meaning assigned to such term in the
Recitals hereto.
(o) "Termination Date" has the meaning assigned to such term in
Section 5(a).
(p) "Title IV" means Chapter 28, Subchapter IV of the Higher
Education Act of 1965, as amended, 20 U.S.C.Section 1070 et seq., and any
amendments or successor statutes thereto.
(q) "Title IV Programs" means Federal student financial aid programs
authorized or administered under Title IV.
(r) "Transfer" has the meaning assigned to such term in Section
5(a).
(s) "University" means Xxxxxxx University, the institution of higher
education owned and operated by Strayer Education through Strayer.
2. Appointment of the Escrow Agent. The Fund and the Trustee hereby
appoint the Escrow Agent to serve as, and the Escrow Agent hereby agrees to act
as, escrow agent upon the terms and conditions of this Agreement.
3. Delivery and Deposit of the Escrowed Shares.
(a) On the later of (i) the first Business Day after the conditions
set forth in Section 4 have been satisfied and (ii) such other date as the
parties may agree in writing (the "Escrow Date"), the Fund shall (A) deposit
irrevocably into escrow one or more certificates representing 350,000 shares of
Xxxxxxx Education Series A Convertible Preferred Stock (the "Escrowed Shares")
plus cash in the amount of $25,000, (B) execute an irrevocable proxy in
substantially the form attached hereto as Exhibit A, which irrevocably assigns
to the Trustee the Fund's voting rights with regard to the Escrowed Shares
during the escrow period, (C) file with the Commission a Form 13D amendment and
a Form 4 reporting the transfer of the Escrowed Shares, and (D) notify Xxxxxxx
Education in writing that it has taken the action described in subparagraphs (A)
through (C) of this paragraph.
(b) The Fund hereby agrees that it shall have no power to transfer,
sell or otherwise dispose of the Escrowed Shares during the escrow period.
(c) The Escrow Agent shall hold the Escrowed Shares in an Escrow
Account (the "Escrow Account") for the benefit of the Fund and the Trustee. The
Escrowed Shares shall be used solely for the purposes and subject to the
conditions set forth in this Agreement.
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(d) The Fund shall cause to be deposited into escrow any dividends
received with respect to the Escrowed Shares during the escrow period. Any
in-kind dividends shall, for all purposes under this agreement, to the extent
applicable, be deemed to be part of the Escrowed Shares.
4. Conditions Precedent to Escrow. The obligation of the Fund to
perform the actions described in Section 3(a) is subject to the fulfillment on
or prior to the Escrow Date of the following conditions, none of which may be
waived by any party:
(a) (i) Xxxxxxx Education, Strayer, or the University shall have
received from the DOE a complete written response regarding DOE's review of an
Application for Approval to Participate in the Federal Student Financial Aid
Programs filed by the University seeking pre-acquisition review before the
Escrow Date or any other materials filed by Xxxxxxx Education, Strayer, or the
University to obtain the DOE's pre-Escrow Date review (the "DOE Pre-Escrow Date
Notice") and (ii) the DOE Pre-Escrow Date Notice shall not notify the University
of any material impediment, which impediment has not been cured by the Escrow
Date, to obtaining (1) a temporary provisional program participation agreement
after the Escrow Date and (2) a DOE Approval Notice within 120 days after the
Escrow Date.
(b) Any and all other approvals and other action listed or required
to be listed on Schedule X, except those approvals indicated with an asterisk on
Schedule X which cannot be obtained prior to the Escrow Date, shall have been
obtained without any material adverse change in the terms and conditions of any
Educational Approval.
(c) The Escrowed Shares shall be free and clear of any Liens.
(d) The Fund and the Trustee shall have entered into the Trust
Agreement, which shall be in substantially the form attached hereto as Exhibit
B.
5. Release of the Escrowed Shares; Termination.
(a) On the later of (i) the first Business Day after the University
has received all approvals and other action listed on Schedule X, including but
not limited to a DOE Approval Notice, and (ii) such other date as the parties
may agree in writing (the "Termination Date"), the Escrow Agent shall transfer
to the Trust all of the Escrowed Shares and dividends received hereon (the
"Transfer"). In no event shall the Transfer occur before the University has
received all approvals and other action listed on Schedule X, including but not
limited to a DOE Approval Notice.
(b) Promptly following the Transfer, the Trustee will use all
reasonable efforts to ensure that Xxxxxxx Education's transfer agent registers
the Escrowed Shares in the name of the Trust.
(c) This Agreement shall terminate on the date of the Transfer,
subject to the next sentence.
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(d) If the University does not receive the approvals and other
action listed on Schedule X, including but not limited to a DOE Approval Notice,
within 120 days of the Escrow Date, (i) this Agreement shall terminate, (ii) the
certificates for all of the Escrowed Shares shall be returned to the Fund and
(iii) the Fund shall regain all rights and powers with respect to the Escrowed
Shares.
6. Concerning the Escrow Agent.
(a) The Fund agrees to pay the Escrow Agent as compensation for its
services as Escrow Agent the fees set forth in its regularly adopted schedule of
compensation for Trust Services in effect at the time such services are
rendered. The Fund agrees to pay the Escrow Agent a minimum aggregate fee of
$25,000 for services rendered under this Agreement. Such fees will be charged to
the escrow account on a monthly basis until the initial deposit of cash in the
account is exhausted. Upon such time as the initial cash deposit is exhausted,
the Escrow Agent will xxxx the Fund monthly for its services. No termination
fees shall apply. A copy of the Trust Services fee schedule currently in effect
is shown in Schedule I attached hereto. Further the Fund agrees to pay or
reimburse the Escrow Agent upon request for all expenses, disbursements and
advances incurred or made by it in connection with carrying out its duties
hereunder, including, without limitation, reasonable attorney's fees.
(b) The Fund agrees to indemnify the Escrow Agent for, and to hold
it harmless against, any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Escrow Agent or breach by the Escrow
Agent of the terms of this Agreement, arising out of or in connection with its
entering into this Agreement and carrying out its duties hereunder. The parties
hereto acknowledge that the foregoing indemnity shall survive the resignation or
removal of the Escrow Agent or the termination of this Agreement.
(c) The duties and responsibilities of the Escrow Agent hereunder
shall be determined solely by the express provisions of this Agreement, and no
other or further duties or responsibilities shall be implied.
(d) The Escrow Agent may act upon any instrument or other writing
provided by a duly authorized officer of any of the parties hereto believed by
it in good faith to be genuine, and to be signed or presented by the proper
person, and shall not be liable in connection with the performance by it of its
duties pursuant to the provisions of this Agreement, except for its own willful
misconduct, gross negligence or breach by it of the express terms of this
Agreement.
7. Resignation of Escrow Agent; Appointment of Successor. The Escrow
Agent may at any time resign by giving forty-five days' prior written notice to
the Fund. The Fund may at any time remove the Escrow Agent by giving ten days'
prior written notice to the Escrow Agent. If the Escrow Agent shall resign or be
removed, a successor escrow agent shall be appointed by the Fund and notified to
the Escrow Agent and to such successor escrow agent and, thereupon, the
resignation or removal of the
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predecessor Escrow Agent shall become effective and such successor escrow agent,
without any further act, deed or conveyance, shall become vested with all right,
title and interest to all property held hereunder of such predecessor Escrow
Agent, and such predecessor Escrow Agent shall execute and deliver to such
successor escrow agent all the right, title and interest hereunder in and to the
Escrowed Shares of such predecessor Escrow Agent and all other rights hereunder
of such predecessor Escrow Agent.
8. Notices. Any and all notices or other instruments to be sent to
any party hereto by any other party hereto pursuant to this Agreement shall be
(a) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, (b) transmitted by hand delivery, (c) sent charges
prepaid by next-day or overnight mail or delivery or (d) sent by telecopy or
e-mail, addressed as follows:
(i) if to the Fund, to:
New Mountain Partners, L.P.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
E-mail: xxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
with a copy to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
E-mail: xxxxxxxxxx@xxxxxxxxx.xxx
(ii) if to the Trustee, to:
Bank of America, N.A.
Private Bank
NC1-002-22-22
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: XxXx Xxxxxxx
E-mail: xxxx.xxxxxxx@xxxxxxxxxxxxx.xxx
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(iii) if to the Escrow Agent, to:
Bank of America, N.A.
Private Bank
NC1-002-22-22
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: XxXx Xxxxxxx
E-mail: xxxx.xxxxxxx@xxxxxxxxxxxxx.xxx
or, in each case, to such other address as may be specified in writing to the
other parties hereto.
9. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the respective successors, assigns and legal representatives of
the Fund, the Trustee and the Escrow Agent.
10. Governing Law. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of New York, without giving effect to the conflict of laws rules thereof
to the extent such rules would require or permit the application of the laws of
another jurisdiction.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
12. Amendment; Waivers, etc. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought and by the Escrow Agent.
Any such waiver shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the rights of the
party granting such waiver in any other respect or at any other time. Neither
the waiver by any of the parties hereto of a breach of or a default under any of
the provisions of this Agreement, nor the failure by any of the parties, on one
or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity.
13. Severability. If any provision of this Agreement, including any
phrase, sentence, clause, section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other
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provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever.
14. Change of Control of Escrow Agent. Any corporation into which
the Escrow Agent in its individual capacity may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Escrow Agent in its individual capacity
shall be a party, or any corporation to which substantially all the corporate
trust business of the Escrow Agent in its individual capacity may be
transferred, shall be the Escrow Agent under this Escrow Agreement without
further act.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed as of the day and year first above written.
BANK OF AMERICA, N.A.,
as Escrow Agent
By: /s/ XxXx Xxxxxxx
----------------
Name: XxXx Xxxxxxx
Title: Vice President
NEW MOUNTAIN PARTNERS, L.P.
By: NEW MOUNTAIN INVESTMENTS, L.P., its
general partner
By: NEW MOUNTAIN GP, LLC, its
general partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Member
BANK OF AMERICA, N.A.,
as Trustee
By: /s/ XxXx Xxxxxxx
----------------
Name: XxXx Xxxxxxx
Title: Vice President
SCHEDULE X
Education Agencies; Approvals and Other Action
Approval and other action by the following Education Agencies must be obtained
prior to the Escrow Date, except those approvals indicated with an asterisk
which cannot be obtained prior to the Escrow Date. Approval and other action by
the following Education Agencies must be obtained prior to the Termination Date,
including those approvals indicated with an asterisk.
1. U.S. Department of Education*
2. Georgia Nonpublic Postsecondary Education Commission*
3. North Carolina Community College System
Schedule I
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[BANK OF AMERICA LOGO]
The Private Bank
TRUST SERVICES
SCHEDULE OF FEES
As your trustee, The Private Bank at Bank of America will provide trust
management services, and is also able to provide portfolio management and
safekeeping of securities, if you choose. In addition, collection and
distribution of interest and dividends, execution of the purchase or sale
of securities, daily cash investment, and periodic investment reports and
transaction statements are provided. If your account is invested in
Nations Funds, see the prospectus for information on fund expenses.
ANNUAL FEES ON MARKET VALUE OF FINANCIAL ASSETS
RATE CURRENT MARKET VALUE
---- --------------------
1.45% on the first $1,000,000
0.90% on the next 2,000,000
0.70% on the next 2,000,000
0.55% on the next 5,000,000
0.45% on the balance over 10,000,000
The minimum annual market value fee for all assets included in these trust
services is $8,000.
Fees in accordance with published schedules will apply for investments in the
Consulting Group Portfolios (Portfolio Selects Program), tax return preparation,
management and valuation of closely held business interests, oil and gas
services, note and mortgage services, real estate property management and
distributions. Charges for asset distributions and terminations will reflect the
time, effort and costs involved.
When special or unusual services are required, outside of the published fee
schedules, our fee will include reasonable additional compensation,
out-of-pocket expenses, or both, based upon the nature of service and the extent
of the duties and responsibility assumed.
Fees are subject to change and are computed and charged monthly.
EXHIBIT A
IRREVOCABLE PROXY
THIS IRREVOCABLE PROXY is entered into as of the 14th day of January,
2004, by and among New Mountain Partners, L.P., a Delaware limited partnership
(the "Stockholder"), and Bank of America, N.A. in its capacity as trustee (the
"Trustee") of the New Mountain Strayer Trust (the "Trust").
WHEREAS, in anticipation of the transfer by the Stockholder to the
Trust of 350,000 shares of Series A Convertible Preferred Stock (the "Shares")
of Xxxxxxx Education, Inc., a Maryland corporation (the "Company"), the
Stockholder is depositing the Shares into escrow pursuant to the terms of the
Escrow Agreement, dated as of January 14, 2004 (the "Escrow Agreement");
WHEREAS, the Stockholder has agreed pursuant to the Escrow Agreement,
among other things, to execute an irrevocable proxy transferring voting rights
with regard to the Shares to the Trustee promptly following the deposit of the
Shares into escrow;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
receipt and adequacy of which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. The Stockholder hereby constitutes and appoints the Trustee as the
Stockholder's true and lawful proxy and attorney-in-fact, with full power of
substitution, to vote all of the Shares (and any and all securities issued or
issuable in respect thereof) which the Stockholder is entitled to vote, for and
in the name, place and stead of the Stockholder, at any annual, special or other
meeting of the stockholders of the Company, and at any adjournment or
adjournments thereof, or pursuant to any consent in lieu of a meeting or
otherwise. All power and authority hereby conferred is coupled with an interest
granted in consideration of the Trust and is irrevocable. In the event that the
Trustee is unable to exercise such power and authority for any reason, the
Stockholder agrees to vote all the Shares owned by the Stockholder in accordance
with the Trustee's instructions at any such meeting or adjournment thereof, or
provide his or her written consent thereto.
2. The Stockholder hereby covenants and agrees that until this Proxy is
terminated in accordance with the terms of Section 5 hereof, the Stockholder
will not, and will not agree to, directly or indirectly, grant any proxy or
interest in or with respect to the Shares or deposit the Shares into a voting
trust or enter into a voting agreement or arrangement with respect to the
Shares.
3. The Stockholder represents and warrants to the Trustee that the
Stockholder owns beneficially and of record the 350,000 shares of Series A
Convertible Preferred Stock that the Stockholder is transferring to escrow on
the date hereof; the
Stockholder owns the Shares free and clear of all liens, charges, claims,
encumbrances and security interests of any nature whatsoever; and except as
provided herein, the Stockholder has not granted any proxy with respect to the
Shares, deposited the Shares into a voting trust or entered into any voting
agreement or other arrangement with respect to the Shares.
4. This Proxy shall be binding upon, inure to the benefit of, and be
enforceable by the successors and permitted assigns of the parties hereto. This
Proxy and the rights and obligations hereunder may not be assigned by the
Stockholder without the prior written consent of the Trustee.
5. This Proxy shall remain in effect from the date hereof until the
termination of the Escrow Agreement.
6. The Stockholder acknowledges that this Proxy is coupled with an
interest sufficient in law to support an irrevocable power and shall not be
terminated by any act of the Stockholder, by lack of appropriate power or
authority or by the occurrence of any other event or events, other than the
termination of the Escrow Agreement.
7. The Stockholder hereby releases the Trustee from any and all claims
based on the manner in which the Trustee exercises its right to vote the Shares
pursuant to this Proxy.
8. The Stockholder will, upon request, execute and deliver any
additional documents and take such actions as may reasonably be deemed by the
Trustee to be necessary or desirable to complete the Proxy granted herein or to
carry out the provisions hereof.
9. If any term, provision, covenant, or restriction of this Proxy is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Proxy
shall remain in full force and effect and shall not in any way be affected,
impaired or invalidated.
10. This Proxy shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the provisions
thereof relating to conflicts of law.
11. This Proxy may be executed in several counterparts, each of which
shall be deemed to be an original but which together shall constitute one and
the same document.
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IN WITNESS WHEREOF, the parties hereto have caused this Proxy to be
duly executed on the date first above written.
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P., its
general partner
By: New Mountain GP, LLC, its general
partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Member
BANK OF AMERICA, N.A., as Trustee
By: /s/ XxXx Xxxxxxx
-----------------------------
Name: XxXx Xxxxxxx
Title: Vice President
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EXHIBIT B
THE NEW MOUNTAIN STRAYER TRUST
THIS AGREEMENT is made and delivered as of the 23rd day of December,
2003, between NEW MOUNTAIN PARTNERS, L.P., a Delaware Limited Partnership
(hereinafter referred to as the "Settlor"), and BANK OF AMERICA, N.A.
(hereinafter and its successors collectively referred to as the "Trustee"),
creating the "New Mountain Strayer Trust."
W I T N E S S E T H:
- - - - - - - - - -
The Settlor hereby irrevocably assigns, transfers and conveys to the
Trustee the property listed on Schedule A, receipt of which is hereby
acknowledged by the Trustee. The property from time to time held by the Trustee
is hereinafter sometimes referred to as the "trust fund." The Trustee shall hold
the property of the trust fund, IN TRUST, shall manage, invest and reinvest the
same, shall collect the income therefrom and shall dispose of the same as
follows:
ARTICLE FIRST
Disposition of the Trust Fund
A. The Trustee shall make distributions pursuant to this Subdivision A
upon the receipt of proceeds of any Sale and upon the receipt of cash or
marketable securities as a distribution or dividend (each such receipt a
"Distribution Event"). Within sixty (60) days of a Distribution Event, the
Trustee shall transfer, pay over and distribute the cash or marketable
securities received by the trust (net of any administration expenses including,
without limitation, those payable pursuant to Article FOURTH, hereinafter the
"Net Distribution Amount") to and among the General Partner and those persons
who were citizens or residents of the United States or domestic corporations
within the meaning of Section 672(f)(1) of the Code and Limited Partners of the
Settlor as of the closing date of the Sale or the record date of such
distribution or dividend, as the case may be, pro rata among such Partners in
the same proportions as their capital contributions to the Settlor with respect
to the Strayer Stock as of such date (hereinafter the "Recipients").
B. On January 18, 2010 or the earlier dissolution of the Settlor, the
trust shall terminate and the Trustee shall transfer, pay over and distribute
all remaining assets comprising the trust fund among the Recipients as of such
date, pro rata in the same proportions as the capital contributions of the
Recipients to the Settlor with respect to the Strayer Stock as of such date.
C. In determining the identity of the Recipients and the proportions of
their capital contributions to the Settlor for the purposes of Subdivisions A
and B of this Article, the Trustee shall be entitled to rely upon a certificate
which shall be provided to the Trustee by the Settlor within thirty (30) days of
a Distribution Event, upon termination of the trust and upon demand by the
Trustee at any time.
ARTICLE SECOND
Trustee Powers and Administrative Matters
A. 1. The Trustee is expressly authorized to receive and hold Xxxxxxx
Stock as a contribution from the Settlor and to acquire a limited
partnership, membership, stock or other equity interest in one or more
limited partnerships, limited liability companies and corporations, and in
connection with any such receipt or acquisition to enter into any
covenants or agreements restricting the trust hereunder from selling,
transferring, assigning, conveying, distributing, pledging, mortgaging,
encumbering, hypothecating or otherwise transferring shares or interests
in Xxxxxxx Stock or any such interest in such entity.
2. Subject to Paragraph 3 of this Subdivision, the Trustee is
expressly authorized to continue to invest and hold the entire trust fund
as Xxxxxxx Stock and/or any other interest described in Paragraph 1 of
this Subdivision A, notwithstanding any contrary rule of law regarding
diversification of assets, delegation of investment decisions or
otherwise, and further notwithstanding the fact that such property may not
be marketable or liquid at any time or at all times.
3. The Trustee is expressly directed to sell all Xxxxxxx Stock that
may be received pursuant to Article SIXTH on the public market at the
earliest available opportunity following the registration of such stock
pursuant the Registration Rights Agreement, provided that the sale price
and other market conditions at such time are favorable to the
Beneficiaries as determined in the sole discretion of the Trustee. In
connection with such registration and sale, the Trustee is expressly
authorized to exercise on behalf of the Settlor the piggy-back
registration rights described in Section 3. of the Registration Rights
Agreement and held by the Settlor in its capacity as a party to the
Registration Rights Agreement.
4. It being the desire of the Settlor that the Trustee not confine
the Trustee's investments of the trust under this Agreement to those
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authorized by law or by any rule of court, unless the Trustee shall deem
such course advisable, the Settlor hereby declares that the Trustee shall
not be liable for any loss sustained by the trust under this Agreement by
reason of the purchase, retention, sale or exchange of any investment by
the Trustee pursuant to this Subdivision and in good faith.
5. Any decision of the Trustee with respect to the exercise or
nonexercise of any discretionary power under this Agreement, or with
respect to the time or manner of the exercise thereof, made in good faith,
shall fully protect the Trustee and shall be conclusive and binding upon
all persons interested in the trust under this Agreement. In no event and
under no circumstances shall the Trustee incur any liability either
individually or as Trustee, with respect to any duty, responsibility,
power, authority or discretion of the Trustee under this Agreement unless
the same shall be done or omitted by the Trustee by reason of willful
misconduct, fraud or bad faith, and the Settlor hereby agrees that any
Trustee will at all times, including after the Trustee ceases to serve as
a Trustee, be protected and indemnified from the trust fund from any and
all liability, loss, damages, or expenses of whatsoever kind or nature
which such Trustee, individually or as Trustee, may at any time sustain or
incur or become liable for by reason of acting as a Trustee hereunder,
arising out of the Trustee's performance of the Trustee's duties
hereunder, or otherwise arising in connection with this Agreement and the
trust hereby created except by reason of willful misconduct, fraud or bad
faith on the part of such Trustee.
B. Subject to Subdivision A of this Article, the Trustee shall have,
with respect to any and all property at any time held by the Trustee, whether
constituting principal or income therefrom, the following powers, in addition to
those granted elsewhere in this Agreement and those conferred by law:
1. To retain any such property as an investment without regard to
the proportion which such property or property of a similar character, so
held, may bear to the entire amount of the trust hereunder, whether or not
trustees are authorized by law or by any rule of court to invest trust
funds in such property.
2. To sell any such property at either public or private sale for
cash or on credit of any duration, to exchange any such property and to
grant options for the purchase of any such property, including, without
limitation, stocks, with or without consideration and without any
limitation on the period of any such option.
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3. To invest and reinvest in property of any character, real or
personal, foreign or domestic, including, without limitation, the
following: bonds; notes; debentures; mortgages; certificates of deposit;
common and preferred stocks; shares or interests in partnerships or
investment trusts and companies; mutual funds; participations in any
common trust fund maintained by any corporate trustee acting hereunder;
futures contracts in commodities of any kind (including, without
limitation, financial futures, stock market indexes and currencies); and
calls, puts and options (both covered and uncovered) on securities and
commodities; to sell securities short and maintain and trade in both
margin accounts and commodity accounts; all such investing and reinvesting
to be without regard to the proportion which such property or property of
a similar character, so held, may bear to the entire amount of the trust
in which such property is held, whether or not trustees are authorized by
law or by any rule of court to so invest trust funds.
4. To consent to and participate in, or to oppose, any foreclosure,
liquidation or plan of reorganization, consolidation, merger, combination
or other similar plan and to consent to any contract, lease, mortgage,
purchase, sale or other action by any corporation pursuant to such plan.
5. To deposit any such property with any protective, reorganization
or similar committee, to delegate discretionary power thereto and to pay
part of its expenses and compensation and any assessments levied with
respect to such property.
6. To exercise all conversion, subscription, voting and other rights
of whatsoever nature pertaining to any such property and to grant proxies,
discretionary or otherwise, with respect thereto.
7. To make or guaranty loans or borrow money in such amounts and
upon such terms, with or without security, to or from the Trustee
individually or others (other than loans to the Settlor), and for such
purpose or purposes as the Trustee in the Trustee's discretion may
determine, and in connection therewith to execute promissory notes,
mortgages or other obligations and to pledge or mortgage any such property
as security.
8. To engage and compensate agents (including, without limitation,
accountants, custodians, investment advisers and attorneys, and regardless
of whether the Trustee is a principal or employee thereof) to act in the
Trustee's behalf, and to delegate discretionary power to such agents.
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9. To extend the time of payment of any obligation at any time owing
by or to the Trustee or the trust hereunder and to compromise, settle or
submit to arbitration upon such terms as the Trustee may deem advisable,
or to release, with or without consideration, any claim in favor of or
against the trust hereunder.
10. To cause any such property to be held either in nominee
registration, with or without indication of the fiduciary character
thereof, or unregistered.
11. In dividing or distributing the trust hereunder, or any part
thereof, to make partition, division or distribution of property in kind,
whether equal or disproportionate, and with or without thereafter making
any adjustment for disproportionate income tax bases in such property, as
the Trustee may deem advisable, and, for any such purpose, to determine
the value of any such property so far as permitted by law.
12. To change the situs of the trust property of the trust under
this Agreement and/or to change the law governing the administration of
such trust in any or all respects.
13. To do all such acts, take all such proceedings and exercise all
such rights and privileges, although not herein specifically mentioned,
with respect to any such property, as if the absolute owner thereof and in
connection therewith to make, execute and deliver any instruments and to
enter into any covenants or agreements binding the trust hereunder.
C. Persons dealing with the Trustee shall not be obligated to look to
the application of any moneys or other property paid or delivered to the Trustee
or to inquire into the Trustee's authority as to any transaction. All powers
granted to the Trustee shall continue until actual distribution of the property.
D. The Trustee (other than any beneficiary) may amend the
administrative and technical provisions of the trust under this Agreement at any
time as the Trustee deems appropriate for the proper administration of the
trust, by acknowledged written instrument, with a copy delivered to the Settlor.
The authority to amend pursuant to this Subdivision may not be exercised in any
manner that would alter any beneficial interest in any trust. It is the
Settlor's wish that the Trustee bear in mind the purpose for which the Settlor
established the trust in exercising this authority to amend.
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ARTICLE THIRD
Accounting and Settlement
A. Any Trustee may at any time and from time to time render to the
General Partner an account of the acts and transactions of such Trustee with
respect to the income and principal of such trust, from the date of the creation
of such trust or from the date of the last previous account of such Trustee, as
the case may be; and the General Partner shall have full power and authority on
behalf of all persons and entities interested in such trust finally to settle
and adjust such account; and upon such account being settled and adjusted to the
satisfaction of the General Partner, it shall be binding and conclusive upon
each and every person and entity (whether or not then living or then
ascertainable) who shall then or thereafter be or become interested in either
the income or the principal of such trust, with like effect as a judgment of a
court having jurisdiction judicially settling such account in an action in which
such Trustee and all persons having or claiming any interest in such trust were
parties; and the approval by the General Partner of such account shall
constitute a full discharge and release of such Trustee and of the estate of any
deceased Trustee for whom such account is rendered, from all further liability,
responsibility and accountability for or with respect to the acts and
transactions of such Trustee as set forth in said account, as to both income and
principal of such trust.
B. Nothing contained in this Article shall preclude any Trustee from
having an account judicially settled or from filing periodic accounts if such
Trustee shall deem such settlement or such filing advisable.
C. If, in any accounting or other proceeding or in any nonjudicial
settlement of any Trustee's account, any party to such proceeding or settlement
shall be a person under a disability, service of process in such proceeding
shall not be required upon such person under a disability, or such person under
a disability shall not be required to join in such settlement, if there is
another person, not under a disability, who is a party to the proceeding or
settlement and who has the same interest as the person under a disability.
ARTICLE FOURTH
Trustees
A. 1. The Trustee shall have the power to designate a successor Trustee
(other than the Settlor). If within forty-five (45) days of the event
creating a vacancy in the office of Trustee no designation of
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successor Trustee shall have been made pursuant to the foregoing
provisions of this Subdivision A and no Trustee shall be acting hereunder,
then the Settlor shall have the power to designate a successor Trustee.
2. Any designation of a successor Trustee pursuant to this Article
shall be made by a duly acknowledged instrument in writing designating a
bank or trust company with at least $1 billion under management and with
authority to act as Trustee in the jurisdiction in which the trust is then
situated. Any such instrument of designation shall become effective
according to its terms and shall be revocable by a similar instrument at
any time before such designation shall become effective. In the event that
the same person shall have executed more than one instrument designating a
successor, then the instrument that shall bear the most recent date and
shall be unrevoked shall govern.
B. 1. Any Trustee may resign at any time and for any reason.
2. Any such resignation shall be effected by a duly acknowledged
instrument in writing delivered to the successor of the resigned Trustee
and to the Settlor, and filed with the records of the trust to which it
relates.
C. No Trustee shall be required to give any bond or other security in
any jurisdiction whatever, whether for the faithful performance of such
Trustee's duties, to secure payment or payments on account of commissions, or
otherwise, and if, notwithstanding this direction, any such bond or other
security shall be required, no sureties shall be required thereon.
D. 1. The Settlor agrees to pay Bank of America as compensation for its
services as Trustee the fees set forth in its regularly adopted schedule
of compensation for Trust Services in effect at the time such services are
rendered. The Settlor agrees to pay the Trustee a minimum aggregate fee of
$75,000 for services rendered under this Agreement. To the extent of cash
contributed by the Settlor to the Trust as set forth on Schedule A and
remaining on hand from time to time, such fees will be paid out of such
cash and to that extent the Settlor will be relieved of the obligation to
pay such fees as set forth in the preceding two sentences. Upon such time
as the initial cash on Schedule A is exhausted, the Trustee will xxxx the
Settlor monthly for its services. No termination fees shall apply. A copy
of the Trust Services fee schedule currently in effect is shown in Exhibit
1.
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2. The reasonable compensation of each successor Trustee shall be
fixed by agreement or as provided in the instrument of designation of such
Trustee. If no agreement has been made pursuant to the foregoing
provisions of this Paragraph and no compensation is specified in the
instrument of designation, each successor Trustee's compensation shall be
the compensation to which a sole individual Trustee of an express trust
shall be entitled under New York law in effect at the time such
compensation is payable.
3. In addition to the foregoing provisions of this Subdivision, the
Trustee shall be specifically entitled to the reimbursement of any costs
and expenses the Trustee incurs in connection with the administration of
the trust, including, without limitation, the costs associated with
engaging accountants, custodians, investment advisers and/or attorneys.
Such reimbursement (i) shall be paid from the proceeds of any sale of
trust property and (ii) shall occur prior to the distribution of proceeds
to the beneficiaries pursuant to Subdivision A of Article FIRST. In the
event proceeds are not available to reimburse such expenses within a
reasonable time, the Settlor agrees to reimburse such expenses upon thirty
(30) days written notice from the Trustee.
ARTICLE FIFTH
Irrevocability and Governing Law
This Agreement shall be irrevocable and unamendable by the Settlor.
Subject to the Trustee's power to change the situs of the trust property of the
trust hereunder and/or to change the law governing the administration of such
trust, this Agreement and the trust hereunder shall be governed and construed in
all respects according to the laws of the State of New York.
ARTICLE SIXTH
Additions to Trust
At any time the Settlor may add (i) Xxxxxxx Stock and (ii) any
dividends with respect to such Xxxxxxx Stock to the trust hereunder, but there
shall be no other additions of any property to the trust hereunder.
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ARTICLE SEVENTH
No Assignments
Neither the principal nor the income of the trust under this Agreement,
so long as the same is held by the Trustee, shall be subject to assignment or
any other anticipation by the beneficiary for whom the same is intended, nor to
attachment, execution, garnishment, sequestration or other seizure under any
legal, equitable or other process.
ARTICLE EIGHTH
Special Tax and Pourover Provisions
A. Notwithstanding any other provision of this Agreement, the Trustee
is authorized and empowered to pay over to the trustees of any other trust
having substantially identical terms and conditions for the same beneficiaries
any or all principal (and income on hand or accrued) out of the trust hereunder
or out of property otherwise directed to be held in the trust hereunder, for the
primary benefit of such beneficiary or beneficiaries, if such other trust was
created by the Settlor, regardless of when such other trust was created (whether
before or after the creation of the trust hereunder), and whether or not such
other trust was created for the express purpose of being the repository of such
principal and/or income.
B. Notwithstanding anything to the contrary in Paragraph 7 of
Subdivision B of Article SECOND hereof, the Trustee shall have the power at any
time or times to lend the trust corpus or income without adequate security to
the Settlor on such terms as the Trustee shall deem appropriate and to demand
repayment of any such loan at any time and for any reason or for no reason. Such
power may be exercised at any time, and for any reason (or for no reason), in
the sole, absolute and unreviewable discretion of the Trustee with respect to
the trust under this Agreement.
ARTICLE NINTH
Rules of Construction
A. Except as otherwise specifically provided in this Agreement, each
reference herein to:
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1. "Distribution Event" and "Net Distribution Amount" shall have the
meanings set forth in Subdivision A of Article FIRST;
2. "General Partner" of the Settlor shall mean New Mountain
Investments, L.P., a Delaware limited partnership;
3. The "Internal Revenue Code," the "Code" or to a Section thereof,
shall be deemed to mean and refer either to the United States Internal
Revenue Code of 1986 or such Section thereof, as amended, or to such other
statutory provisions as shall correspond thereto;
4. "Limited Partners" of the Settlor shall mean the individuals or
entities listed on Schedule A of the Settlor's Limited Partnership
Agreement, as amended and restated from time to time;
5. "Partners" of the Settlor shall mean the General Partner and the
Limited Partners of the Settlor from time to time;
6. "Registration Rights Agreement" for purposes of Subdivision A of
Article SECOND shall mean a certain Registration Rights Agreement dated
May 15, 2001 entered into by and among New Mountain Partners, L.P., DB
Capital Investors, L.P. and Xxxxxxx Education, Inc., a Maryland
Corporation;
7. "Sale" shall mean any disposition of trust property (other than
cash or marketable securities) for consideration consisting of cash and/or
marketable securities;
8. "Xxxxxxx Stock" shall mean the aggregate of all stock in Xxxxxxx
Education, Inc., a Maryland corporation, held at any time by the Settlor
and by the Trustee as an asset of the trust fund; and
9. The "Trustee" shall be deemed to mean and refer to the Trustee at
the time acting under this Agreement, and except as otherwise specifically
provided in this Agreement, the powers, privileges and immunities and the
discretions granted herein shall attach to the office of Trustee and shall
continue as long as any assets are held in trust under this Agreement and
until the final distribution thereof.
B. Whenever necessary or appropriate, the use herein of any gender
shall be deemed to include the other genders and the use herein of either the
singular or the plural shall be deemed to include the other.
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C. The headings in this Agreement have been inserted solely for
convenient reference and shall be ignored in its construction.
D. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute but one and the same instrument.
E. This Agreement shall become effective as of the day and year first
above written.
IN WITNESS WHEREOF, the Settlor and the Trustee have hereunto set their
respective hands as of the day and year first above written.
NEW MOUNTAIN PARTNERS, L.P., Settlor
By: New Mountain Investments, L.P.,
its general partner
By: New Mountain GP, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Xxxxxx X. Xxxxxxx
Managing Member
BANK OF AMERICA, N.A., Trustee
By: /s/ XxXx Xxxxxxx
--------------------------
XxXx Xxxxxxx
Vice President
00
XXXXX XX Xxx Xxxx)
: ss.:
COUNTY OF New York)
On December 23rd , 2003, before me, the undersigned, personally appeared XXXXXX
X. XXXXXXX, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his capacity, and that by
his signature on the instrument, the individual, or the person on behalf of
which the individual acted, executed the instrument.
/s/ Xxxxxx Xxxxxx
---------------------------
Notary Public
STATE OF North Carolina)
: ss.:
COUNTY OF Mecklenburg)
On December 23rd , 2003, before me, the undersigned, personally appeared XXXX
XXXXXXX, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that she executed the same in her capacity, and that by
her signature on the instrument, the individual, or the person on behalf of
which the individual acted, executed the instrument and that such individual
made such appearance before the undersigned in Charlotte, North Carolina.
/s/ Xxxxx X. Marsly
---------------------------
Notary Public
SCHEDULE A
Seventy-Five Thousand Dollars ($75,000.00)
Exhibit 1
---------
[BANK OF AMERICA LOGO]
The Private Bank
TRUST SERVICES
SCHEDULE OF FEES
As your trustee, The Private Bank at Bank of America will provide trust
management services, and is also able to provide portfolio management and
safekeeping of securities, if you choose. In addition, collection and
distribution of interest and dividends, execution of the purchase or sale
of securities, daily cash investment, and periodic investment reports and
transaction statements are provided. If your account is invested in
Nations Funds, see the prospectus for information on fund expenses.
ANNUAL FEES ON MARKET VALUE OF FINANCIAL ASSETS
RATE CURRENT MARKET VALUE
---- --------------------
1.45% on the first $1,000,000
0.90% on the next 2,000,000
0.70% on the next 2,000,000
0.55% on the next 5,000,000
0.45% on the balance over 10,000,000
The minimum annual market value fee for all assets included in these trust
services is $8,000.
Fees in accordance with published schedules will apply for investments in the
Consulting Group Portfolios (Portfolio Selects Program), tax return preparation,
management and valuation of closely held business interests, oil and gas
services, note and mortgage services, real estate property management and
distributions. Charges for asset distributions and terminations will reflect the
time, effort and costs involved.
When special or unusual services are required, outside of the published fee
schedules, our fee will include reasonable additional compensation,
out-of-pocket expenses, or both, based upon the nature of service and the extent
of the duties and responsibility assumed.
Fees are subject to change and are computed and charged monthly.
