Exhibit 99.10
New Mountain Partners, L.P. MidOcean Capital Investors, L.P.
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February 3, 2004
▇▇▇▇▇▇▇ Education, Inc.
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
and General Counsel
Ladies and Gentlemen:
Reference is made to (1) the Preferred Stock Purchase Agreement,
dated as of November 28, 2000 (the "Preferred Stock Purchase Agreement"), by
and among ▇▇▇▇▇▇▇ Education, Inc., a Maryland corporation (the "Company"), New
Mountain Partners, L.P. ("New Mountain") and MidOcean Capital Investors, L.P.
(formerly DB Capital Investors, L.P.) ("MidOcean") pursuant to which, among
other things, the Company issued and sold to New Mountain and MidOcean an
aggregate of 5,769,231 shares of the Company's Series A Convertible Preferred
Stock, par value $0.01 per share ("Series A Preferred Stock"), (2) the
Registration Rights Agreement, dated as of May 15, 2001 (the "Registration
Rights Agreement"), by and among the Company, New Mountain and MidOcean, (3)
the Articles Supplementary of the Company, as filed with the State Department
of Assessments and Taxation of Maryland on May 15, 2001 (the "Articles
Supplementary"), which, among other things, sets forth the powers, rights and
other terms of the Series A Preferred Stock, (4) the Support and Option
Agreement, dated as of November 28, 2000 by and among the Company, ▇▇▇ ▇.
▇▇▇▇▇▇ individually and in any Representative Capacity, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
individually and in any Representative Capacity, and New Mountain and MidOcean
(the "Support and Option Agreement") and (5) the letter agreement dated
November 14, 2002 among the Company, New Mountain and MidOcean (the "Side
Letter" and, together with the Preferred Stock Purchase Agreement, the
Registration Rights Agreement and the Articles Supplementary, the Support and
Option Agreement, the "Preferred Stock Documents"). Capitalized terms used and
not otherwise defined herein have the meanings given in the Preferred Stock
Documents.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and notwithstanding anything to the contrary in
the Preferred Stock Documents, the Company, New Mountain and MidOcean agree as
follows:
1. Dividends. In order to resolve potentially differing
interpretations of Section 7 of Article FIRST of the Articles Supplementary,
the Company, New Mountain and MidOcean agree that, for purposes of determining
the number of shares of Common Stock issuable in connection with any
conversion of Series A Preferred Stock pursuant to the Articles Supplementary,
full credit shall be given for dividends accruing on a daily basis since the
most recent Dividend Payment Date preceding the Conversion Date through but
excluding the Conversion Date. New Mountain and MidOcean (each a "Stockholder"
and collectively, the "Stockholders") hereby release any claim they may have
for accrued and unpaid dividends in connection with any conversions of Series
A Preferred Stock prior to the date hereof, including, without limitation, as
provided in paragraph 3(c) of the Side Letter, in connection with the
conversion of shares of Series A Preferred Stock into Common Stock in November
2002.
2. Regulatory Approvals; Legal Fees. In connection with the possible
sale or other disposition by the Stockholders of all or any portion of their
remaining ownership interest in the Company (the "Sell Down"), the Company
agrees to diligently pursue and exercise its reasonable best efforts to
obtain, as promptly as practicable, all necessary Educational Approvals
required from all applicable Governmental Authorities and Educational Agencies
for the lawful conduct of the businesses of the Company, and its subsidiaries,
including the University, following the Sell Down in the manner and to the
extent presently conducted at every location where the University conducts any
material business (collectively, the "Required Approvals"). The Stockholders
hereby severally agree to directly pay up to $850,000 (with New Mountain
paying up to $651,667 and MidOcean paying up to $198,333), as they are
incurred, for all legal fees, accounting fees, education regulatory, SEC,
NASDAQ filing fees, printing costs, roadshow costs and all other Registration
Expenses (as defined in the Registration Rights Agreement) and other expenses
of any kind reasonably incurred by the Company in connection with obtaining
the Required Approvals and preparing for and effecting the Sell Down,
including any private sales and secondary offerings, whether or not the Sell
Down or any such sales or offerings are in fact consummated ("Sell Down
Expenses"); subject to the Company providing the Stockholders with reasonably
detailed supporting documentation in customary form, evidencing the incurrence
of such Sell Down Expenses; provided, that the Stockholders' shall not be
responsible for any such Sell Down Expenses incurred in connection with any
registration effected pursuant to Section 2 of the Registration Rights
Agreement other than the first registration after the date hereof.
Notwithstanding the foregoing, except as expressly modified hereby, this
Letter Agreement shall not, in any manner, affect any of the Stockholders'
rights under the Registration Rights Agreement, and all of the terms and
conditions of the Registration Rights Agreement shall remain in full force and
effect.
3. Information Rights.
(a) For so long as New Mountain beneficially owns (within the meaning
of Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934) at least 5% of the Common Stock determined on an
as-converted basis (excluding (i) any shares of Series A Preferred Stock held
of record by MidOcean, (ii) any shares of Common Stock MidOcean may acquire
upon exercise of its portion of the Option, (iii) 350,000 shares of Series A
Preferred Stock deposited by New Mountain into an escrow account (the
"Escrowed Shares"), subject to the receipt of Required Approvals; provided
that the Escrowed Shares do not revert back to New Mountain (the "Reversion")
upon failure to receive Required Approvals within 120 days of such deposit and
(iv) any additional Common Stock that New Mountain may acquire beneficial
ownership of, following the date of this Letter Agreement, except to the
extent New Mountain acquires beneficial ownership of the Escrowed Shares due
to the Reversion), the Company shall furnish such Stockholder with:
(i) promptly following delivery to members of the board of
directors of the Company, copies of all board packages,
reports and materials so delivered to the board of directors
of the Company; and
(ii) such other information as may be mutually agreed between the
Company and such Stockholder.
All information received by New Mountain or its Representatives pursuant to
paragraph 3(a) of this Letter Agreement, together with any other confidential
information previously provided by the Company or its Representatives (as
defined hereinafter) to New Mountain or its Representatives ("Previous
Confidential Information") is hereinafter referred to as "Confidential
Information."
(b) Notwithstanding the foregoing, the following will not constitute
"Confidential Information" for purposes of this Letter Agreement:
(i) information which was in the possession of New Mountain
or its Representatives prior to receipt thereof from the Company
(other than Previous Confidential Information); provided that such
information is not subject to another confidentiality agreement with,
or other obligation (legal, fiduciary or contractual) of secrecy,
among the relevant parties;
(ii) information which is now or hereafter becomes generally
available to the public, other than as a result of a disclosure by
New Mountain or its Representatives not in violation of this Letter
Agreement;
(iii) information which was or may hereafter be available to
New Mountain on a non-confidential basis from a third party that is
not known to such Stockholder or its Representatives, after
reasonable inquiry, to be under any confidential obligation (legal,
fiduciary or contractual) to the Company regarding such information;
or
(iv) information which is independently acquired or
developed by New Mountain or its Representatives without violating
any of its obligations under paragraph 3 of this Letter Agreement.
(c) New Mountain agrees to, and to cause its agents, officers,
directors, partners, employees, affiliates and advisors (collectively,
"Representatives") to, (a) hold in strict confidence any Confidential
Information received from the Company by such Stockholder or its
Representatives pursuant to paragraph 3(a) of this Letter Agreement, and (b)
not use any Confidential Information for any purpose other than such
Stockholder's internal evaluation of its investment in the Company; provided,
however, that such Stockholder may reveal such portions of the Confidential
Information (i) with the prior written consent of the Company, (ii) as
required, pursuant to a judicial or regulatory proceeding, by subpoena, civil
investigative demand or other similar legal process, after compliance with
paragraph 3(d) of this Letter Agreement, and (iii) to its Representatives who
need to know the Confidential Information in connection with such
Stockholder's internal evaluation of its investment in the Company and who are
informed by such Stockholder of the confidential nature of the Confidential
Information. New Mountain will inform its Representatives of the terms of such
Stockholder's obligation of confidentiality under this Letter Agreement, and
will be responsible for any breach of such obligation of confidentiality by
any of its Representatives.
(d) If New Mountain or any of its Representatives is required,
pursuant to a judicial or regulatory proceeding, by subpoena, civil
investigative demand or other similar legal process to disclose any of the
Confidential Information, such Stockholder will notify the Company promptly so
that the Company may seek a protective order or other appropriate remedy or,
in its sole discretion, waive compliance with the obligations of
confidentiality under this Letter Agreement. In the event that no such
protective order or other remedy is obtained, or the Company does not promptly
waive compliance with the obligations of confidentiality under this Letter
Agreement, New Mountain will furnish only that portion of the Confidential
Information which is legally required to be disclosed and will, at the
Company's request, use reasonable efforts to cooperate with the Company in
obtaining reasonable assurance that confidential treatment will be accorded
such Confidential Information.
(e) New Mountain acknowledges that it is aware and that it will
advise its Representatives that the U.S. securities laws prohibit any person
who has material non-public information from purchasing or selling securities
or communicating that information to any other person under circumstances
where it is reasonably foreseeable that such other person is likely to
purchase or sell securities. If New Mountain no longer beneficially owns at
least 5% of the Common Stock determined on an as-converted basis excluding
those shares excluded in clauses (i), (ii), (iii) and (iv) of the
parenthetical of the first sentence of paragraph 3(a) above, then, upon the
Company's written request, such Stockholder shall return to the Company, or
cause to be returned to the Company, and/or destroy, or cause to be destroyed,
any and all Confidential Information, in whatever form (whether hard copy,
electronic or other form) no later than ten (10) business days after receipt
of the Company's written request.
(f) New Mountain understands and acknowledges that the Company is not
making any representation or warranty, express or implied, as to the accuracy
or completeness of the Confidential Information. The Company disclaims any and
all liability to New Mountain and its Representatives arising from such
party's use of, or reliance on the Confidential Information.
(g) New Mountain agrees that money damages would not be sufficient
remedy for any breach of such Stockholder's obligations of confidentiality
under paragraph 3 of this Letter Agreement and, therefore, in addition to any
other remedy available to the Company in the event of such Stockholder's
breach of its obligations of confidentiality under paragraph 3 of this Letter
Agreement, the Company shall also be entitled to specific performance and
injunctive or other equitable relief.
4. Miscellaneous.
(a) The Company hereby represents and warrants that the execution and
delivery of this Letter Agreement and the performance by the Company of its
obligations hereunder have been duly authorized by all necessary corporate
action on the part of the Company, including authorization by the Company's
board of directors at a meeting held on July 30, 2003, and no other corporate
action on the part of the Company is necessary to authorize the execution,
delivery and performance of this Letter Agreement.
(b) Each Stockholder hereby represents and warrants that the
execution and delivery of this Letter Agreement and the performance by such
Stockholder of its obligations hereunder have been duly authorized by all
necessary partnership action on the part of such Stockholder and no other
partnership action on the part of such Stockholder is necessary to authorize
the execution, delivery and performance of this Letter Agreement.
(c) The agreement set forth in the first sentence of paragraph 1 of
this Letter Agreement shall inure to the benefit of and shall be enforceable
by transferees from the Stockholders and the other holders from time to time
of Series A Preferred Stock, it being understood that such parties are
intended third party beneficiaries thereof. The other provisions of this
Letter Agreement shall not inure to the benefit of and shall not be
enforceable by transferees from the Stockholders and other holders from time
to time of Series A Preferred Stock, it being understood that such parties are
not intended third party beneficiaries thereof.
(d) It is understood and agreed that no failure or delay by either
party in exercising any of its respective rights, powers or privileges
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise of any right, power or
privilege. In case any provision of this Letter Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Letter Agreement shall not in any way be affected
or impaired thereby.
(e) This Letter Agreement may not be amended or modified except by a
writing executed by the Company and the Stockholders.
(f) The internal laws, and not the laws of conflicts (other than
Section 5-1401 General Obligations Law of the State of New York), of New York
shall govern the enforceability and validity of this Letter Agreement, the
construction of its terms and the interpretation of the rights and duties of
the parties.
(g) This Letter Agreement may be executed in one or more separate
counterparts, each of which is deemed an original and both of which taken
together constitute one and the same Letter Agreement.
Very truly yours,
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments,
L.P., its general partner
By: New Mountain GP, LLC, its
general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
MIDOCEAN CAPITAL INVESTORS, L.P.
By: MidOcean Capital Partners,
L.P., its general partner
By: Existing Fund GP, Ltd., its
general partner
By: /s/ J. ▇▇▇▇▇▇ Virtue
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Name: J. ▇▇▇▇▇▇ Virtue
Title: Managing Director
Agreed to and Accepted as of
the date first above written:
▇▇▇▇▇▇▇ EDUCATION, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
and General Counsel
