--------------------------------------------------------------------------------
FIRST AMENDMENT TO THE INVESTORS AGREEMENT
BY AND BETWEEN
SYLVAN LEARNING SYSTEMS, INC.
AND
APOLLO MANAGEMENT IV, L.P.
Dated as of March __, 2003
--------------------------------------------------------------------------------
FIRST AMENDMENT TO THE INVESTORS AGREEMENT
This FIRST AMENDMENT TO THE INVESTORS AGREEMENT (the "Amendment") is
made and entered into as of March __, 2003, by and between Sylvan Learning
Systems, Inc., a Maryland corporation (the "Company"), and Apollo Management IV,
L.P., a Delaware limited partnership ("Apollo"), on behalf of Apollo Investment
Fund IV, L.P. and Apollo Overseas Partners IV, L.P. (together with their Related
Parties, the "Apollo Entities"). Capitalized terms used and not defined in this
Amendment have the meanings set forth or referred to in the Investors Agreement,
dated as of June 30, 2000, by and between the Company and Apollo, on behalf of
the Apollo Entities (the "Investors Agreement").
WHEREAS, the parties hereto are parties to the Investors Agreement; and
WHEREAS, the parties hereto desire to amend certain provisions of the
Investors Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Amendment to Section 2. Section 2 of the Investors Agreement is hereby
deleted in its entirety.
2. Amendment to Section 3. Section 3 of the Investors Agreement is hereby
amended and restated in its entirety as follows:
"Section 3. Nomination and Election of Directors. So long as the
Converted Shares represent one million (1,000,000) shares of Common
Stock, the Apollo Entities shall have the right to designate one person
for election to the Board."
3. Amendment to Section 4. Section 4 of the Investors Agreement is hereby
deleted in its entirety.
4. Amendment to Section 5. Section 5 of the Investors Agreement is hereby
amended and restated in its entirety as follows:
"Section 5. Standstill.
(a) At all times prior to the Early Termination Date, Apollo shall
not, and shall cause its Affiliates not to, acquire or agree to
acquire, by purchase or otherwise, any Voting Securities of the Company
or any of its Affiliates, other than:
(i) the Converted Shares, or an acquisition as a result of a
stock split, stock dividend or similar recapitalization,
(ii) acquisitions of Voting Securities that together with all
Voting Securities owned by Apollo and its Affiliates do not exceed 15%
of the Total Voting Power,
(iii) stock options or similar rights granted as compensation
for performance as a director or officer of the Company or its
Subsidiaries (and any shares issuable upon exercise thereof),
(iv) transfers between or among the Apollo Entities,
(v) any rights that are granted to all Stockholders (and any
shares issuable upon exercise thereof), and
(vi) acquisitions of Voting Securities approved by the
Company;
provided, however, that (A) if Apollo or any of its Affiliates in good
faith inadvertently acquires Voting Securities in violation of these
provisions and within 30 business days after the first date on which it
has actual knowledge (including by way of written notice given by the
Company) that a violation has occurred Apollo or any of its Affiliates
shall have transferred any shares of Common Stock held in violation of
these provisions to unrelated third parties so that Apollo and its
Affiliates no longer beneficially own any such shares or have any
agreement or understanding relating to such shares, this Section 5(a)
shall be deemed to not have been violated; and (B) no violation of this
provision shall be deemed to have occurred by reason of the indirect
acquisition of beneficial ownership of securities resulting from (x)
investments in investment funds as to which Apollo has no control or
power to control with respect to voting or investment decisions or (y)
acquisitions of securities by a limited partner in Apollo or an
Affiliate thereof as to which limited partner Apollo has no control or
power to control;
(b) The obligations of Stockholders under Section 5(a) shall terminate
on the first date (the "Early Termination Date') on which either of the
following events occurs:
(i) The earlier of (A) any time after the fifth anniversary of
the Closing Date, if at such time, the Shares represent the lesser of
(1) 3% of the fully diluted equity interests in the Company (calculated
giving effect to the exercise of all outstanding options, warrants and
other rights to purchase or acquire any Equity Interests of the
Company), and (2) one million (1,000,000) shares of Common Stock; and
(B) [__________], 2008.
(ii) If the Company shall, in breach of its obligations under
this Agreement, fail to nominate for election to the Board the designee
set forth by Apollo pursuant to Section 3(a).
5. Amendment to Section 6. Section 6 of the Investors Agreement is hereby
deleted in its entirety.
6. Date of the Investors Agreement. Notwithstanding this Amendment,
references to the date of the Investors Agreement contained in the
Investors Agreement, such as "on the date hereof" and similar phrases,
shall continue to reference June 30, 2000.
7. Counterparts. This Amendment may be signed in two or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall
be effective as delivery of an original executed counterpart of this
Amendment.
8. Headings. The headings herein are for convenience of reference only, do
not constitute a part of this Amendment, and shall not be deemed to
limit or affect any of the provisions hereof. The section references
herein refer to the sections of the Investors Agreement.
9. Entire Agreement. This Amendment, together with the Investors
Agreement, is intended by the parties as a final expression of the
Investors Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
10. Provisions Unaffected. Except as otherwise expressly amended hereby,
the provisions of the Investors Agreement remain in full force and
effect.
11. Governing Law. This Amendment shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State
of Maryland applicable to contracts made and to be performed in that
State, regardless of the choice of laws provisions of such state or any
other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
SYLVAN LEARNING SYSTEMS, INC.
By:____________________________
Name:__________________________
Title:_________________________
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors IV, L.P.,
its general partner
By: Apollo Capital Management IV, Inc.,
its general partner
By: ___________________________
Name:__________________________
Title: ________________________
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors IV, L.P.,
its general partner
By: Apollo Capital Management IV, Inc.,
its general partner
By: ___________________________
Name: _________________________
Title: ________________________
