Exhibit 1
VOTING TRUST AGREEMENT
Relating to Shares of
EDISON SCHOOLS INC.
THIS VOTING TRUST AGREEMENT (the "Agreement") is made and entered
into as of November 16, 1999, by and among Sprout Capital VI, L.P.,
Sprout Capital VII L.P., The Sprout CEO Fund, L.P., DLJ Capital
Corporation, Xxxxxxxxx, Xxxxxx & Xxxxxxxx, Inc. and Norwest Bank
Indiana, N.A., as trustee (the "Trustee").
WHEREAS, the parties hereto desire to record their arrangements
with respect to shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock") and Class B Common Stock. par value $.01 per
share ("Class B Common Stock" and, together with Class A Common Stock,
"Common Stock"), of Edison Schools Inc., a Delaware corporation whose
principal offices are located at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (the "Corporation").
NOW, THEREFORE, the parties hereto agree as follows
1. CERTAIN DEFINITIONS. In this Agreement:
(a) "Control Affiliate" means DLJ or any person or entity
controlling, controlled by or under common control with, directly or
indirectly, DLJ.
(b) "DLJ" means Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc., a
Delaware corporation, and its successors.
(c) "DLJSC" means Xxxxxxxxx. Lufkin & Xxxxxxxx Securities
Corporation, a Delaware corporation, and its successors.
(d) "DLJ" Affiliate" means any person or entity who is a
Control Affiliate, Employee Affiliate or Other Affiliate.
(e) "DLJCC" means DLJ Capital Corporation, a Delaware
corporation, wholly owned by DLJ.
(f) "Employee Affiliate" means any person who is a
director of or employed by (or who is the spouse, relative or relative
of a spouse, in each case residing in the home of a person employed by)
a Control Affiliate.
(g) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(h) "Holder" means from time to time, any person or entity
for which Shares are held hereunder by the Trustee.
(i) "Majority Holders" means from time to time, Holders of
Trust Certificates representing at least 50% of the Shares then
deposited hereunder.
(j) "Other Affiliate" means any person or entity which has
a substantial business relationship with a Control Affiliate.
(k) "Securities Act" means the means the Securities Act of
1933, as amended.
(l) "Share Equivalents" means to the extent applicable,
and unless the context otherwise requires, all securities convertible
into, exchangeable for, or carrying the right to acquire, voting capital
stock (of any class) of the Corporation or subscriptions, warrants,
options, rights or other arrangements obligating the Corporation to
issue or dispose of any of its shares of the voting capital stock (of
any class) or any ownership interest therein.
(m) "Shares" means (i) all shares of the voting capital
stock (of any class) of the Corporation and (ii) Share Equivalents.
(n) "Sprout VI" means Sprout Capital VI, L.P.
(o) "Sprout VII" means Sprout Capital VII, L.P.
(p) "Sprout CEO Fund" means The Sprout CEO Fund, L.P.
2. DEPOSIT.
(a) Sprout VI, Sprout VII, Sprout CEO Fund and DLJCC
hereby assign and deliver or have caused to be assigned and delivered to
the Trustee to be held pursuant to this Agreement an aggregate of
2,472,063 Shares, in the amounts set forth on Schedule A hereto (the
"initial deposit") and, subject to the provisions of Section 2(b) below,
DLJ shall assign and deliver or cause to be assigned and delivered to
the Trustee all Shares owned by any DLJ Affiliate or acquired by any DLJ
Affiliate at any time in excess of five percent (5%) in the aggregate of
the total number of shares of the voting capital stock (of any class) of
the Corporation outstanding. Each person for whom Shares are held from
time to time by the Trustee hereunder shall be a Holder and shall be
bound by all the provisions of this Agreement applicable to Holders.
(b) For purposes of determining for Section 2(a) only.
whether more than five percent (5%) in the aggregate of the total number
of shares of the voting capital stock (of any class) of the Corporation
at any time outstanding are owned by DLJ Affiliates, there shall be
excluded from the calculation of shares owned by DLJ Affiliates, and no
deposit of Shares shall be required hereunder as a consequence of any
Shares:
(A) held by DLJSC or any other Control Affiliate
which is registered as a broker-dealer under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") if such Shares are held in
connection with its normal trading activities as a broker-dealer;
provided, however, that DLJ will cause DLJSC or such other Control
Affiliate to agree that it will not vote such Shares,
(B) held by DLJSC or any other Control Affiliate
which is a registered broker-dealer under the Exchange Act, if such
Shares are held in a syndicate or trading account and were acquired in
its capacity as an underwriter or placement agent whether in an offering
registered under the Securities Act of 1933, as amended (the "1933
Act"), or otherwise; provided, however, that DLJ will cause DLJSC or
such other Control Affiliate to agree that it will not vote such Shares,
(C) held by DLJCC for the account of any person or
entity other than a Control Affiliate or Employee Affiliate or in the
name of a customer account, which customer is a person or entity other
than a Control Affiliate or Employee Affiliate; provided, however, that
DLJCC may vote the Shares only when instructed by the beneficial owner
thereof or as otherwise permitted under the rules of all exchanges, if
any, on which the Shares are listed,
(D) held by an Employee Affiliate other than a
person holding the position of Senior Vice President or above (or
performing the comparable function) of DLJ or any of its subsidiaries or
held by an Other Affiliate, unless in either case a contract or other
arrangement (other than this Agreement) regarding the voting of such
Shares exists between such Employee Affiliate or Other Affiliate and any
Control Affiliate, or
(E) held by the Trustee pursuant to this Agreement.
3. TRANSFER ON BOOKS OF CORPORATION. The Trustee shall, to the
extent applicable, cause all Shares transferred to or deposited with it
in its capacity as Trustee hereunder to be transferred to it as Trustee
on the books of the Corporation and will issue and deliver to each
Holder a Voting Trust Certificate (a "Trust Certificate") for the number
of Shares so transferred to the Trustee.
4. FORM. Trust Certificates shall be in substantially the
following form (which such modifications as may be appropriate if the
applicable Trust Certificate represents rights or other arrangements
with respect to the voting stock defined as "Shares"):
"THE TRANSFER OF THIS VOTING TRUST CERTIFICATE IS
SUBJECT TO TERMS AND CONDITIONS SET FORTH IN THE
VOTING TRUST AGREEMENT DATED AS OF NOVEMBER 16,
1999, A COPY OF WHICH HAS BEEN FILED IN THE
REGISTERED OFFICE IN THE STATE OF DELAWARE OF
EDISON SCHOOLS INC., A DELAWARE CORPORATION (THE
"CORPORATION"), SUCH COPY IS OPEN TO INSPECTION
DAILY DURING BUSINESS HOURS BY ANY STOCKHOLDER OF
THE CORPORATION OR ANY BENEFICIARY OF THE VOTING
TRUST CREATED PURSUANT TO SUCH VOTING TRUST
AGREEMENT."
EDISON SCHOOLS INC.
VOTING TRUST CERTIFICATE
Certificate No. ____ No. of Shares of Class A Common Stock ______
No. of Shares of Class B Common Stock ______
This certifies that ____________________________________ (the
"Holder") has transferred to the undersigned Trustee or is otherwise the
beneficial owner of thc above-stated number of Shares (as defined in the
Voting Trust Agreement referred to below) of Edison Schools Inc., a
Delaware corporation (the "Corporation"), to be held by the Trustee
pursuant to the terms of the Voting Trust Agreement dated as of November
16, 1999 (the "Voting Trust Agreement"), a copy of which agreement has
been delivered to the above-named Holder and filed in the registered
office of the Corporation in the State of Delaware. The Holder, or its
registered assigns, will be entitled (i) to receive payments equal to
any and all cash dividends collected by the Trustee on the above-stated
number of Shares, (ii) to receive all other dividends or distributions
except to the extent that property received is required to be deposited
in the trust created by the Voting Trust Agreement, and (iii) to receive
a certificate or certificates representing that number of Shares on thc
termination of the Voting Trust Agreement, in accordance with its
provisions.
This Voting Trust Certificate is transferable on the books
maintained by the Trustee at the principal office of the Trustee by the
registered holder hereof, in person or by duly authorized attorney, and
upon surrender hereof; and until so transferred the Trustee may treat
the registered holder hereof as the absolute owner hereof for all
purposes,
The Holder and each subsequent registered holder hereof, by the
acceptance of this Voting Trust Certificate, agrees to be bound by all
of the provisions of the Voting Trust Agreement as fully as if its terms
were set forth in this Voting Trust Certificate.
EXECUTED this ________ day of _______________________, 1999
__________________________________
as Trustee
By: ______________________________
Name:
Title:
[Form of Assignment for Reverse of Voting Trust Certificate]
For value received, _______________________________ hereby sells,
assigns, and transfers unto _____________________________ the within
Voting Trust Certificate and all rights and interests represented
thereby, and does hereby irrevocably constitute and appoint
____________________________ attorney to transfer such Voting Trust
Certificate on the books of the within-named Trustee with full power of
substitution in the premises.
Date: _____________________________
Signed: ____________________________
5. ADDITIONAL TRUST CERTIFICATES. Any person may at any time
deposit with the Trustee additional certificates for Shares and thereby
become a Holder hereunder. Any DLJ affiliate acquiring Shares shall, if
required under this Agreement, become a Holder by (a) depositing, or
causing to be deposited, certificates for Shares, duly endorsed for
transfer, with the Trustee and (b) accepting a Voting Trust Certificate
in respect of such Shares.
6. VOTING: POWERS. At all times prior to the termination of
the voting trust created herein, the Trustee shall have the exclusive
right to vote the Shares, or give written consent, in person or by
proxy, at all meetings of stockholders of the Corporation, and in all
proceedings in which the vote or consent, written or otherwise, of the
holders of Shares may be required or authorized by law.
Thc Trustee shall have full power and authority to vote the Shares
in its sole and absolute discretion, it being understood that the
Trustee will not communicate or consult with or receive instruction from
any DLJ Affiliate regarding such voting of such Shares, and to do any
and all other things and take any and all other actions as fully as any
stockholder of the Corporation might do if personally present at a
meeting of the stockholders of the Corporation. The Trustee may rely
(and shall be fully protected in so relying) upon advisors; provided
that such advisors are not DLJ Affiliates. At any time upon the written
request of the Trustee, DLJ shall promptly provide to the Trustee such
information as is reasonably necessary (including certificates and/or
other documents) in order to enable the Trustee to carry out the
foregoing obligations; provided that for all purposes of this Agreement,
thc Trustee shall have no duty to inquire or investigate whether a
person or entity is a DLJ Affiliate, shall not be responsible for and
shall have no personal liability in connection with identifying or
failing to identify a person or entity as a DLJ Affiliate unless a
Responsible Officer of the Trustee has actual knowledge that such person
or entity is a DLJ Affiliate, and shall be entitled to assume and be
fully protected in assuming that a person or entity is not a DLJ
Affiliate unless a Responsible Officer of the Trustee has actual
knowledge that such person or entity is a DLJ Affiliate. "Responsible
Officer of the Trustee'' shall mean an officer of the Trustee in its
principal corporate trust office having primary responsibility for the
administration of the voting trust created under this Agreement,
7. DIVIDENDS. If the Corporation pays or issues dividends or
makes other distributions on the Shares, the Trustee shall accept and
receive such dividends and distributions. Upon receipt of dividends and
distributions, the same shall be prorated among the Holders in
accordance with their interests and, subject to the next sentence, the
amount shall be distributed immediately pursuant to transfer
instructions set forth on Schedule B attached hereto. If the dividend
or distribution is in Shares, such Shares shall be held by the Trustee
under the voting trust created herein and new Trust Certificates
representing the Shares received shall be issued to thc Holders.
Holders entitled to receive such dividends or distributions, or Trust
Certificates in respect thereof, described in this Section 7 shall be
those Holders registered as such on the transfer books of the Trustee at
the close of business on the day fixed by the Corporation for the taking
of a record to determine those holders of its stock entitled to receive
such dividends or distributions. The Trustee may, if reasonably
required in connection with any payment or distribution hereunder to a
Holder, call for IRS Form W-9 or other appropriate documentation from
such Holder as a condition to making such payment or distribution
without deduction on account of withholding taxes. In the performance
of its duties to deliver cash dividends under this Agreement, the
Trustee shall not be obligated to risk its own funds and will not be
liable for taxes or other charges related to the delivery of such
dividends or distributions.
8. TERMINATION. The voting trust created herein shall
terminate on the earlier to occur of:
(a) Ten years from the date hereof; or
(b) The written election of the Majority Holders, but only
if prior to the time such notice is given;
(i) DLJ shall have received an opinion of
independent nationally recognized counsel who are experts in matters
involving the federal securities law, that, immediately after such
termination, no DLJ Affiliate will be an "affiliate" of the Corporation
within the meaning of Rule 144 under the Securities Act; and
(ii) Trustee shall have received a certificate of an
officer of DLJ (in relying on which the Trustee shall be fully
protected) to the effect that clause (i) above has been satisfied,
together with a copy of the opinion called for thereby; or
(c) The written election of DLJ or the Majority Holders
(notice of which shall be provided to all other parties hereto and all
other Holders), but only if prior to the time the notice is given the
Trustee shall have received a certificate of an officer of DLJ to the
effect that no DLJ Affiliate intends to make a market in any security
of the Corporation (in relying on which the Trustee shall be fully
protected); or
(d) Transfer of all of the Shares in accordance with
Section 9; or
(e) The effective date of a liquidation or dissolution of
the Corporation.
An election pursuant to Section 8(b) or 8(c) above shall be effective
upon delivery of notice hereof (together with the required copy of the
opinion) to the Trustee.
Upon the termination of the voting trust herein created, the
Holders shall surrender their Trust Certificates to the Trustee, and the
Trustee shall deliver or cause to be delivered to the Holders
certificates (or the equivalent evidence of ownership in the case of
Share Equivalents) for Shares, properly endorsed for transfer (to the
extent necessary), equivalent to the number and type of Shares the
beneficial interest in which was represented by the respective Trust
Certificates surrendered.
9. TRANSFER. Except as provided in subsections (a), (b). (c),
(d), (e) and (f) of this Section 9, certificates (or the equivalent
evidence of ownership in the case of Share Equivalents) for Shares may
not be delivered to a Holder, a Holder's designee or any other third
party prior to the termination of the voting trust created herein.
(a) A Holder may notify the Trustee in writing that the
Holder desires to cause a certificate or certificates (or the equivalent
evidence of ownership in the case of Share Equivalents) for Shares in
which the Holder has a beneficial interest hereunder to be transferred
to any person or entity only if such transfer is an Eligible Transfer as
defined herein. Any person or entity that acquires Shares pursuant to
an Eligible Transfer is hereinafter referred to as an "Eligible
Transferee."
For purposes of this Section 9 but subject to the limitations on
transfer set forth in this Section 9, an "Eligible Transfer" is defined
as any transfer of Shares
(i) to a person who is not a DLJ Affiliate;
(ii) to a person who is a DLJ Affiliate; provided
that, contemporaneously with such transfer the DLJ Affiliate (x) becomes
a party to this Agreement and (y) assigns and delivers such Shares to
the Trustee to be held pursuant to this Agreement;
(iii) to an investment advisory account as to which a
Control Affiliate is an investment adviser, the assets of which account
are not owned by a Control Affiliate;
(iv) to any Employee Affiliate other than a person
holding the position of Senior Vice President or above (or performing
the comparable function) of DLJ or any of its subsidiaries or to an
Other Affiliate, unless in either case a contract or other arrangement
(other than this Agreement) regarding the voting of such Shares exists
between such Employee Affiliate or Other Affiliate and any Control
Affiliate;
(v) to DLJSC for the account of any person or entity
other than a Control Affiliate or Employee Affiliate or in the name of a
customer account, which customer is a person or entity other than a
Control Affiliate or an Employee Affiliate; provided, however, that
DLJSC may vote the shares only when instructed by the beneficial owner
thereof or as otherwise permitted under the rules of all exchanges on
which the Shares are listed; or
(vi) by any Holder which is a limited partnership (a
"Limited Partnership") to a limited partner as long as such limited
partner is not a Control Affiliate and as long as the Limited
Partnership will be fully divested of dispositive and voting power over
such Shares being transferred after such transfer.
Such notice shall name such Eligible Transferee and shall state
(i) its mailing address, (ii) the proposed transfer date (which date
shall be not less than five days after the Trustee's receipt of such
notice), (iii) the number of Shares to be transferred, and (iv) the
consideration, if any, to be paid by such Eligible Transferee therefor.
The notice to the Trustee shall also contain a representation that such
transferee is an Eligible Transferee and shall be accompanied by a Trust
Certificate or Certificates of the Holder, duly endorsed for transfer,
representing not less than the number of Shares to be transferred to the
Eligible Transferee. On the date specified in such notice, and upon
receipt by the Trustee from such Eligible Transferee of the specified
consideration, if any, the Trustee shall deliver: (i) to the Eligible
Transferee, a certificate for the number of Shares specified in such
notice, registered in the name of the Trustee and duly endorsed for
transfer, and (ii) to the Holder, (x) a Trust Certificate representing a
number of shares equal to the number of Shares represented by the
surrendered Trust Certificate less the number of Shares transferred to
such Eligible Transferee, and (y) the consideration, if any, received
from such Eligible Transferee distributed immediately pursuant to
transfer instructions set forth on Schedule B attached hereto or
otherwise communicated to the Trustee in writing. Any Holder may, in
connection with any Eligible Transfer and in lieu of causing the Trustee
to receive the specified consideration from the Eligible Transferee,
request the Trustee to release the certificates for the Shares and the
Trust Certificates against certification by such Holder of receipt of
the specified consideration from the Eligible Transferee.
(b) A Holder (hereinafter referred to as a "Requesting
Party" for the purpose of this Section 9(b)) may request of the Trustee
in writing that the Trustee transfer to such Requesting Party a
certificate or certificates for Shares in which the Requesting Party has
a beneficial interest hereunder; provided, however, that the Trustee
shall not honor such request if after giving effect thereto the Holders
and all other DLJ Affiliates will own in the aggregate in excess of five
percent (5%) of the total number of shares then outstanding of the
voting capital stock (of all classes) of the Corporation computed as set
forth in Section 2(b) hereof, and provided further if the Requesting
Party is not DLJ, the Trustee shall not honor such request unless DLJ
consents in writing to such request. In determining, for purposes of
this Section 9(b) only, whether DLJ Affiliates will own in the aggregate
in excess of 5% of the total number of shares of the voting capital
stock (of all classes) of the Corporation then outstanding, (x) no
effect shall be given to the exclusions set forth in Section 2(b), (y)
shares of voting capital stock underlying Share Equivalents owned by a
DLJ Affiliate shall be deemed to be outstanding and owned by such DLJ
Affiliate and (z) shares of Common Stock held by the Trustee pursuant to
this Agreement shall be excluded. Such written request shall name such
Requesting Party and shall state (1) the proposed transfer date (which
date shall be not less than five days after the Trustee's receipt of
such request), and (ii) the number of Shares to be transferred. The
notice to the Trustee shall also be accompanied by (i) a Trust
Certificate or Certificates of the Requesting Party, duly endorsed for
transfer, representing not less than the number of Shares to be
transferred to the Requesting Party and (ii) a certificate of an officer
of the Requesting Party and of DLJ certifying that after giving effect
to such request the Holders and all other DLJ Affiliates will own in the
aggregate five percent (5%) or less of the total number of shares then
outstanding of the voting capital stock (of all classes) of the
Corporation. On the date specified in such request, and upon receipt by
the Trustee from the Requesting Party of such certificates, the Trustee
shall deliver to the Requesting Party a certificate (or the equivalent
evidence of ownership in the case of Share Equivalents) for the number
of Shares specified in such notice, registered in the name of the
Trustee and duly endorsed for transfer.
(c) Any Eligible Transferee to whom a Trust Certificate
has been transferred may notify the Trustee in writing that it desires
to cause a certificate or certificates for Shares in which it has a
beneficial interest to be transferred to it. Such notice shall name
such Eligible Transferee and shall state (i) its mailing address,
(ii) the proposed transfer date (which date shall be not less than five
days after the Trustee's receipt of such notice), (iii) the number of
Shares to be transferred and (iv) that such transferee is an Eligible
Transferee. The notice to the Trustee shall also be accompanied by a
Trust Certificate or Certificates of the Eligible Transferee, duly
endorsed for transfer, representing not less than the number of Shares
to be transferred to the Eligible Transferee. On the date specified in
such notice, the Trustee shall deliver to the Eligible Transferee: (i) a
certificate for the number of Shares specified in such notice,
registered in the name of the Trustee and duly endorsed for transfer,
and (ii) a Trust Certificate representing a number of Shares equal to
the number of Shares represented by the surrendered Trust Certificate
less the number of Shares transferred to such Eligible Transferee.
(d) A Holder may at any time direct the Trustee by notice
in writing to transfer a certificate or certificates for Shares in which
the Holder has a beneficial interest hereunder (i) to an underwriter or
placement agent (including DLJSC) in connection with a public offering
of the Shares registered under the 1933 Act or otherwise or (ii) in
connection with sales made pursuant to Rule 144 under the 1933 Act
through a broker-dealer (including DLJSC). Such notice shall state (a)
the underwriter's, placement agent's or broker dealer's mailing address,
(b) the proposed transfer date (which date shall not be less than five
days after the Trustee's receipt of such notice), (c) the number of
Shares to be transferred, and (d) the consideration, if any, to be paid.
The notice shall also be accompanied by a certificate of an officer of
the Holder certifying that the purpose of such request is being made
solely for sales made in connection with a public offering or private
placement of the Shares or sales made pursuant to Rule 144 under the
1933 Act and a Trust Certificate or Certificates of the Holder, duly
endorsed for transfer, representing not less than the number of Shares
to be transferred. The Trustee shall be entitled to conclusively rely
upon such certificate. On the date specified in such notice, and upon
receipt by the Trustee from such underwriter, placement agent or such
other transferee of the specified consideration, if any, the Trustee
shall deliver: (x) to the underwriter, placement agent or such other
transferee, a certificate for the number of Shares specified in such
notice, registered in the name of the Trustee and duly endorsed for
transfer, and (y) to the Holder, a Trust Certificate representing a
number of Shares equal to the number of Shares represented by the
surrendered Trust Certificate less the number of Shares transferred to
such underwriter, placement agent or such other transferee, and (z) to
the Holder the consideration, if any, received from such underwriter,
placement agent or such other transferee. Such consideration shall be
distributed promptly to the Holder pursuant to transfer instructions set
forth on Schedule B attached hereto. Any Holder may, in connection with
any such transfer and in lieu of causing the Trustee to receive the
specified consideration from the underwriter or other transferee,
request the Trustee to release the certificates for the Shares and the
Trust Certificates against certification by such Holder of receipt of
the specified consideration from the underwriter or other transferee.
Notwithstanding the foregoing, if the Holder intends to transfer
Shares pursuant to the exercise of the over-allotment option granted to
the underwriters in connection with the initial public offering of the
shares of Common Stock of the Corporation, the transfer date in the
notice may be less than five but shall not be less than two days after
the Trustee's receipt of such notice.
(e) In connection with any transfer of Shares pursuant to
Section 9(a)(i), (iv) or (v), the Holder (together with any other
Holders who may be acting in concert) shall not direct the Trustee to
transfer, whether in a single transaction or in a series of related
transactions, a certificate or certificates (or the equivalent evidence
of ownership in the case of Share Equivalents) for Shares representing
ten percent (10%) or more of the total number of shares then outstanding
of the voting capital stock (of all classes) of the Corporation, where
such transfer is to a single Eligible Transferee or to Eligible
Transferees acting as a group. Notwithstanding the foregoing, the
limitation on transfer under this section shall not be applicable to a
transfer of Shares in connection with (A) any acquisition of the
Corporation, whether by merger, reorganization or sale of all or
substantially all of the assets of the Corporation, in which the holders
of the Common Stock of the Corporation prior to the merger,
consolidation or sale cease to hold at least 51% of the Common Stock of
the surviving entity or (B) in response to an offer to purchase or
exchange for cash or other consideration any voting stock (i) which is
made by or on behalf of the Corporation, or (ii) which is made by
another person or group and is not opposed by the Board of Directors of
the Corporation within the time the Board is required under the
regulations under the Exchange Act to advise the stockholders of the
Corporation of the Board's position on such offer, or (C) any other
offer by another person or group to purchase or exchange for cash or
other consideration any voting capital stock which, if successful, would
result in such person or group owning or having the right to acquire
voting capital stock representing a majority of the total voting power
of the Corporation then in effect.
(f) In connection with any transfer of Shares under Section 9(d),
DLJ shall use its reasonable best efforts to ensure that the public
offering or private placement as it relates to Shares for sale by or
on behalf of the Holder (together with any other Holder who may be
participating in such offering or placement) shall be structured
to distribute such shares through an underwriter, placement agent or
otherwise in such a manner as will not result in a sale or sales of the
Shares representing ten percent (10%) or more of the total number of
shares then outstanding of the voting capital stock (of all classes) of
the Corporation to any person or group.
Nothing in this Section 9 or elsewhere in this Agreement shall
prohibit a Holder from transferring Trust Certificates in accordance
with the terms of the Trust Certificates.
10. INCREASE OR DECREASE IN NUMBER OF SHARES. In the event of
an increase in the number of Shares by virtue of a stock split or the
decrease in the number of Shares because of a contraction of shares or a
change in the number of outstanding shares as a result of some other
recapitalization in which the Corporation receives no consideration for
the issuance of the additional or reduced number of shares, the new
additional or changed number of Shares shall be held by the Trustee
under this Agreement, the Trust Certificates outstanding immediately
prior to such increase, decrease or change in the number of outstanding
Shares shall thereupon represent the beneficial interest in the number
of Shares to which the Holders are entitled as a result of such
increase, decrease or change, and new Trust Certificates representing
the appropriate changed number of Shares shall be issued to Holders upon
surrender of the then existing Trust Certificates.
11. SUCCESSOR TRUSTEE. There shall initially be one Trustee of
the voting trust created herein. Upon the liquidation, dissolution,
winding-up, suspension, incapacity, resignation or removal (in
accordance with Section 12 below) of the initial Trustee, DLJ or the
Majority Holders shall appoint a successor Trustee; provided, however,
that such successor Trustee may not be a Control Affiliate, an Employee
Affiliate, or an Other Affiliate unless such Other Affiliate is a bank
or trust company. In the event a successor Trustee shall not have been
appointed within 30 days of such removal, the Trustee may petition a
court of competent jurisdiction to appoint such a successor. In the
event that the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to,
another corporation that is a bank or trust company, the surviving or
transferee corporation may become the successor Trustee upon notice to
the signatories hereto, but without further action by the signatories or
any Holder.
12. REMOVAL/RESIGNATION OF TRUSTEE.
(a) A Trustee may be removed at the instance of DLJ or the
Majority Holders:
(i) if it is determined as a result of binding
arbitration pursuant to this Section 12, that either the Trustee (A)
willfully and materially violated the terms of the trust created herein,
or (B) the Trustee has been guilty of malfeasance, misfeasance or
dereliction of duty hereunder;
(ii) if the Trustee shall have commenced a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall
have consented to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall have made a general assignment
for the benefit of creditors, or shall have failed generally to pay its
debts as they become due, or shall have taken any corporate action to
authorize any of the foregoing; or
(iii) if an involuntary case or other proceeding shall have been
commenced against the Trustee seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall have remained undismissed and
unstayed for a period of 60 days; or an order for relief shall have been
entered against the Trustee under the federal bankruptcy laws as now or
hereafter in effect.
(b) If DLJ or the Majority Holders determine that a basis
exists for removal of the Trustee under Section 12(a) above, they shall
deliver written notice of such determination to the Trustee stating the
basis for such removal.
(c) Any arbitration pursuant to this Section 12 shall be
conducted in accordance with this Section 12(o), DLJ, the Holders, and
the Trustee agree and hereby acknowledge that only the propriety of thc
removal of thc Trustee pursuant to this Section 12 shall be subject to
arbitration and that no other controversies arising under this Agreement
shall be subject to arbitration unless otherwise expressly agreed by the
Trustee, DLJ, and the Holders in a separate document. Such arbitration
shall be governed by the commercial rules of the American Arbitration
Association to the extent not inconsistent with this Agreement. Such
arbitration shall be conducted in New York, New York. Within 15 days
after the notice required by Section 12(b) above, the Trustee shall
choose one arbitrator and DLJ or the Majority Holders shall choose one
arbitrator; and, within 15 days after the selection of both such chosen
arbitrators, the two chosen arbitrators shall choose an impartial third
arbitrator. The decision of a majority of such arbitrators shall be
final and binding on DLJ, the Holders and the Trustee.
(d) The Trustee may resign its position as such hereto, but only if
a successor Trustee, appointed as provided for in Section 11
above, has agree to serve as such effective upon the effectiveness of
the resignation of the Trustee then acting, or in any event upon thirty
days' written notice to DLJ.
13. ACCEPTANCE OF TRUST; Trustee May Own Shares. The Trustee
hereby accepts the trust created hereby and agrees to carry out the
terms and provisions hereof, but assumes no responsibility for the
management of the Corporation or for any action taken by it, by any
person elected as a director of the Corporation or by the Corporation
pursuant to any vote cast or consent given by the Trustee. Nothing in
this Agreement shall prevent the Trustee from owning shares or options
to purchase shares in its individual capacity or in any capacity other
than as trustee hereunder or for any DLJ Affiliate.
14. TRUSTEE NOT AN AFFILIATE. The Trustee represents that it is
a bank or trust company which is not a Control Affiliate or an Employee
Affiliate.
15. COMPENSATION; EXPENSES. Reasonable expenses lawfully
incurred in the administration of the Trustee's duties hereunder shall
be reimbursed to it by DLJ; provided that charges in respect of such
expenses not directly attributable to the Trustee's performance of its
duties hereunder shall not in any year exceed in the aggregate
_____________ percent (___%) of the total annual fees hereunder. During
the period of its services hereunder, the Trustee shall receive from DLJ
(i) an initial fee of $3,000.00; (ii) thereafter, during the period of
its services hereunder, a fee of $4,500.00 per annum, payable quarterly
in arrears and (iii) thereafter, such fee as the parties may from time
to time agree. Such compensation, expenses and fees payable under this
Section 15 shall survive the termination of this Agreement.
16. MERGER. ETC. Upon any merger, consolidation, reorganization
or dissolution of the Corporation or the sale of all or substantially
all of the assets of the Corporation pursuant to which shares of capital
stock or other voting securities of another entity are to be issued in
payment or exchange for or upon conversion of Shares and other voting
securities, the shares of said other entity shall automatically be and
become subject to the terms of this Agreement and be held by the Trustee
hereunder in the same manner and upon the same terms as the Shares, and
in such event the Trustee shall issue to the Holders that have deposited
Shares with the Trustee new Trust Certificates in lieu of the old Trust
Certificates for the appropriate number of shares and other voting
securities of such other entity.
At the request of any Holder, the Trustee may transfer, sell or
exchange or join with the Holder in such transfer, sale or exchange of
Shares and other voting securities in exchange for shares of another
corporation, and in said event the shares and other voting securities of
the other corporation received by the transferor shall be and become
subject to this Agreement and be held by the Trustee hereunder in the
same manner as the Shares.
17. NOTICES. All notices, reports, statements and other
communications directed to the Trustee from the Corporation shall be
forwarded promptly by the Trustee to DLJ and each Holder. All notices,
notices of election and other communications required herein shall be
given in writing by overnight courier, telegram or facsimile
transmission and shall be addressed, or sent, to the appropriate
addresses as set forth beneath the signature of each party hereto, or at
such other address as to which notice is given in accordance with this
Section 17.
18. INDEMNITY, ETC. The Trustee shall be indemnified from and
against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claims
whatsoever) (the "Indemnified Claims") arising out of or based upon this
Agreement, or the actions or failures to act of the Trustee hereunder,
except to the extent such loss, liability, claim, damage or expense is
caused by or results from the Trustee's gross negligence or willful
misconduct (as determined by a final and unappealable order of a court
of competent jurisdiction). DLJ agrees that it will indemnify and hold
harmless the Trustee from and against any Indemnified Claims. DLJ's
obligation hereunder shall survive the transfer of all or any of the
Shares from the trust, the termination of the voting trust created
herein, or the resignation or removal of the Trustee.
The Trustee shall be entitled to the prompt reimbursement for its
out-of-pocket expenses (including reasonable attorneys' fees and
expenses) incurred in investigating, preparing or defending against any
litigation, commenced or threatened, arising out of or based upon this
Agreement, or the actions or failures to act of the Trustee hereunder,
without regard to the outcome of such litigation; provided, however,
that the Trustee shall be obligated to return any such reimbursement if
it is subsequently determined by a final and unappealable order of a
court of competent jurisdiction that the Trustee was grossly negligent
or engaged in willful misconduct in the matter in question. Such
expenses shall be payable by DLJ.
If a claim under this Section 18 is not paid in full within 30
days after a written claim has been submitted by the Trustee, the
Trustee may at any time thereafter bring suit to recover the unpaid
amount of the claim and, if successful in whole or in part, the Trustee
shall be entitled to be paid also the expense of prosecuting such
claims.
The Trustee is authorized and empowered to construe this
Agreement and its construction of the same, made in good faith, shall be
final, conclusive, and binding upon all Holders and all other parties
interested. The Trustee may, in its discretion, consult with counsel to
be selected and employed by it, and the reasonable fees and expenses of
such counsel shall be an expense for which the Trustee is entitled to
indemnity hereunder.
19. CERTAIN CALCULATIONS. For purposes of Sections 2 and 9 and
the definition of "Majority Holders," a Holder owning a Trust
Certificate representing Shares defined as such by Section l(p) shall,
in respect of such ownership, be deemed to be the Holder of a Trust
Certificate representing the number of shares of voting capital stock of
the Corporation that the Trustee, on behalf of such Holder, may acquire,
whether by conversion, subscription or otherwise, pursuant to or by
reason of ownership of such Shares.
20. COUNTERPARTS. This Agreement may be executed in multiple
counterparts all of which counterparts together shall constitute one
agreement. Upon execution of this Agreement and the establishment of
the voting trust created herein, the Trustee shall cause a copy of this
Agreement to be filed in the registered office of the Corporation in the
State of Delaware and the Agreement shall be open to inspection in the
manner provided for inspection under the laws of the State of Delaware.
21. CHOICE OF LAW. This Agreement is intended by thc parties to
be a voting trust agreement under Section 218 of the General Corporation
Law of the State of Delaware and shall be governed and construed in
accordance with the laws of the State of Delaware.
22. BOND. The Trustee shall not be required to provide any bond
to secure the performance of his duties hereunder.
23. RELIANCE. The Trustee, the signatories hereto and each
Holder acknowledge that DLJ will rely on this Agreement in complying
with the federal securities laws. The Trustee acknowledges that DLJ
will rely on the Trustee abiding by the terms of this Agreement,
including, without limitation, that (x) the Trustee will vote the
Deposited Shares in its sole and absolute discretion and will not
consult with any DLJ Affiliate regarding the voting of such Shares and
(y) the Trustee will not consent to any amendment or waiver of this
Agreement prohibited by Section 24 hereof whether or not such amendment
or waiver is approved by each of the parties hereto and the Holders.
DLJ will cause each Control Affiliate to perform the covenants hereof
that are applicable to Control Affiliates.
24. AMENDMENTS AND WAIVER. This Agreement may not be amended or
waived in any material respect unless DLJ shall have delivered to the
Trustee an opinion (in relying on which the Trustee shall be fully
protected) of independent nationally recognized counsel who are experts
in matters involving the federal securities law, that, immediately after
such amendment or waiver, no DLJ Affiliate will be an "affiliate" of the
Corporation within the meaning of Rule 144 under the Securities Act.
Subject to the foregoing, this Agreement may be amended with the written
consent of the Trustee, DLJ and the Majority Holders, and if so amended
then this Agreement (as so amended) shall bind all of the parties hereto
and all of the Holders.
25. SEVERABILITY. In case any provision in this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
EXECUTED as of the date and year first above written.
NORWEST BANK INDIANA, N.A.
By: /s/ Xxxxxx X. Xxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President
Address: Norwest Bank Indiana, N.A.
Corporate Trust Department
000 Xxxx Xxxxx Xxxxxx
MAC X0000-000
Xxxx Xxxxx, XX 00000
Attention: ______________
Telephone: ________________________
XXXXXXXXX, XXXXXX & XXXXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
Address 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SPROUT CAPITAL VI, L.P.
By: DLJ CAPITAL CORPORATION
Its: Managing General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxx
Xxx Xxxx Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
SPROUT CAPITAL VII, L.P.
By: DLJ CAPITAL CORPORATION
Its: Managing General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxx
Xxx Xxxx Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
THE SPROUT CEO FUND, L.P.
By: DLJ CAPITAL CORPORATION
Its: Managing General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxx
Xxx Xxxx Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
DLJ CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxx
Xxx Xxxx Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
SCHEDULE A
(Initial Deposit)
Name Shares Deposited
Class A Common Stock Class B Common Stock
Sprout Capital VI, L.P. 671,571 87,632
Sprout Capital VII, L.P. 1,278,007 166,764
The Sprout CEO Fund, L.P. 29,005 3,223
DLJ Capital Corporation 212,274 23,587
Total 2,190,857 281,206
SCHEDULE B
TRANSFER INSTRUCTIONS
SPROUT CAPITAL VI, L.P.
All payments shall be made by check mailed to:
Sprout Capital VI, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
SPROUT CAPITAL VII, L.P.
All payments shall be made by check mailed to:
Sprout Capital VII, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
THE SPROUT CEO FUND. L.P.
All payments shall be made by check mailed to:
The Sprout CEO Fund, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
DLJ CAPITAL CORPORATION
All payments shell be made by r heck mailed to.
DLJ Capital Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
THE TRANSFER OF THIS VOTING TRUST CERTIFICATE IS SUBJECT TO TERMS AND
CONDITIONS SET FORTH IN THE VOTING TRUST AGREEMENT DATED AS OF NOVEMBER
16, 1999, A COPY OF WHICH HAS BEEN FILED IN THE REGISTERED OFFICE IN THE
STATE OF DELAWARE OF EDISON SCHOOLS INC., A DELAWARE CORPORATION (THE
"CORPORATION"), SUCH COPY IS OPEN TO INSPECTION DAILY DURING BUSINESS
HOURS BY ANY STOCKHOLDER OF THE CORPORATION OR ANY BENEFICIARY OF THE
VOTING TRUST CREATED PURSUANT TO SUCH VOTING TRUST AGREEMENT.
EDISON SCHOOLS INC.
VOTING TRUST CERTIFICATE
Certificate No. ______
No of Shares: ____ shares of Class A Common Stock, par value $.01 per
share
No of Shares: ____ shares of Class B Common Stock, par value $.01 per
share
This certifies that _________________________ (the "Holder") has
transferred to thc undersigned Trustee or is otherwise the beneficial
owner of the above-stated number of Shares (as defined in the Voting
Trust Agreement referred to below) of Edison Schools Inc., a Delaware
corporation (the "Corporation"), to be held by the Trustee pursuant to
the terms of the Voting Trust Agreement dated as of November 16, 1999
(the "Voting Trust Agreement"), a copy of which agreement has been
delivered to the above-named Holder and filed in the registered office
of the Corporation in the State of Delaware. The Holder, or its
registered assigns, will be entitled (i) to receive payments equal to
any and all cash dividends collected by the Trustee on the above-stated
number of Shares, (ii) to receive all other dividends or distributions
except to the extent that property received is required to be deposited
in the trust created by the Voting Trust Agreement, and (iii) to receive
a certificate or certificates representing that number of Shares on the
termination of the Voting Trust Agreement, in accordance with its
provisions
This Voting Trust Certificate is transferable on the books
maintained by the Trustee at the principal office of the Trustee by the
registered holder hereof in person or by duly authorized attorney, and
upon surrender hereof; and until so transferred the Trustee may treat
the registered holder hereof as the absolute owner hereof for all
purposes.
The Holder and each subsequent registered holder hereof by the
acceptance of this Voting Trust Certificate agrees to be bound by all of
the provisions of the Voting Trust Agreement as fully as if its terms
were set forth in this Voting Trust Certificate.
EXECUTED this ______ day of ___________________, 1999
__________________________________
as Trustee
By: _____________________________
Name:
Title:
[Form of Assignment for Reverse of Voting Trust Certificate]
For value received, ___________________________ hereby sells,
assigns, and transfers unto the within Voting Trust Certificate and all
rights and interests represented thereby, and does hereby irrevocably
constitute and appoint ________________________________ attorney to
transfer such Voting Trust Certificate on the books of the within-named
Trustee with full power of substitution in the premises.
Date: ___________________________
Signed: _________________________
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