-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C4gCH8pRfiwFVHNM8No0Qijotv+37XR5gazbAYGstXHDLnT15DVtOUs6QbZtpxi+ g3fSXIQ3qKUYtlE74kowWA== 0000898822-01-000321.txt : 20010327 0000898822-01-000321.hdr.sgml : 20010327 ACCESSION NUMBER: 0000898822-01-000321 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20010326 GROUP MEMBERS: NEW MOUNTAIN GP, LLC GROUP MEMBERS: NEW MOUNTAIN INVESTMENTS, L.P. GROUP MEMBERS: NEW MOUNTAIN PARTNERS LP GROUP MEMBERS: STEVEN B. KLINSKY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STRAYER EDUCATION INC CENTRAL INDEX KEY: 0001013934 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 521975978 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-48233 FILM NUMBER: 1579354 BUSINESS ADDRESS: STREET 1: 1025 15TH STREET NW CITY: WASHINGTON STATE: DC ZIP: 20005 BUSINESS PHONE: 2024082400 MAIL ADDRESS: STREET 1: 1025 15TH STREET NW CITY: WASHINGTON STATE: DC ZIP: 20005 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NEW MOUNTAIN PARTNERS LP CENTRAL INDEX KEY: 0001105474 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O STEVEN B KLINKSY STREET 2: 712 FIFTH AVE 23RD FL CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127200300 MAIL ADDRESS: STREET 1: 712 FIFTH AVE STREET 2: 23RD FL CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D 1 0001.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Strayer Education, Inc. (NAME OF ISSUER) Common Stock, par value $.01 per share (TITLE OF CLASS OF SECURITIES) 863236105 (CUSIP NUMBER) Steven B. Klinsky With Copies to: New Mountain Partners, L.P. Trevor S. Norwitz 712 Fifth Avenue, 23rd Floor Wachtell, Lipton, Rosen & Katz New York, New York 10019 51 West 52nd St (212) 720-0300 New York, NY 10019 (212) 403-1000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS) March 16, 2001 (DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] NOTE. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Page 1 of 13 Pages) - -------------------------------------------------------------------------------- (1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Person New Mountain Partners, L.P. 13-4099832 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (a) [X] (b) [ ] - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds AF, OO - -------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of (7) Sole Voting Power None Shares ----------------------------------------------------------- Beneficially (8) Shared Voting Power 8,175,000 Owned by ----------------------------------------------------------- Each (9) Sole Dispositive Power None Reporting ----------------------------------------------------------- Person With: (10) Shared Dispositive Power 7,175,000 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 8,175,000 shares - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 52.8% - -------------------------------------------------------------------------------- (14) Type of Reporting Person PN - -------------------------------------------------------------------------------- (Page 2 of 13 Pages) - -------------------------------------------------------------------------------- (1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons New Mountain Investments, L.P. 13-4099829 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (a) [X] (b) [ ] - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds AF, OO - -------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of (7) Sole Voting Power None Shares ----------------------------------------------------------- Beneficially (8) Shared Voting Power 8,175,000 Owned by ----------------------------------------------------------- Each (9) Sole Dispositive Power None Reporting ----------------------------------------------------------- Person With: (10) Shared Dispositive Power 7,175,000 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 8,175,000 shares - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 52.8% - -------------------------------------------------------------------------------- (14) Type of Reporting Person PN - -------------------------------------------------------------------------------- (Page 3 of 13 Pages) - -------------------------------------------------------------------------------- (1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons New Mountain GP, LLC 13-4099827 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (a) [X] (b) [ ] - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds AF, OO - -------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of (7) Sole Voting Power None Shares ----------------------------------------------------------- Beneficially (8) Shared Voting Power 8,175,000 Owned by ----------------------------------------------------------- Each (9) Sole Dispositive Power None Reporting ----------------------------------------------------------- Person With: (10) Shared Dispositive Power 7,175,000 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 8,175,000 shares - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 52.8% - -------------------------------------------------------------------------------- (14) Type of Reporting Person OO - -------------------------------------------------------------------------------- (Page 4 of 13 Pages) - -------------------------------------------------------------------------------- (1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons Steven B. Klinsky - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (a) [X] (b) [ ] - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds OO, PF - -------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization United States of America - -------------------------------------------------------------------------------- Number of (7) Sole Voting Power None Shares ----------------------------------------------------------- Beneficially (8) Shared Voting Power 8,175,000 Owned by ----------------------------------------------------------- Each (9) Sole Dispositive Power None Reporting ----------------------------------------------------------- Person With: (10) Shared Dispositive Power 7,175,000 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 8,175,000 shares - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 52.8% - -------------------------------------------------------------------------------- (14) Type of Reporting Person IN - -------------------------------------------------------------------------------- (Page 5 of 13 Pages) ITEM 1. SECURITY AND ISSUER This statement on Schedule 13D ("Statement") relates to the Common Stock, par value $.01 per share ("Common Stock"), of Strayer Education, Inc., a Maryland corporation (the "Issuer"). The principal executive offices of the Issuer are located at 1025 Fifteenth Street, N.W., Washington, D.C. 20005. ITEM 2. IDENTITY AND BACKGROUND (a), (b), (c) and (f). This Statement is jointly filed by New Mountain Partners, L.P., a Delaware limited partnership ("New Mountain"), New Mountain Investments, L.P., a Delaware limited partnership ("NMI"), New Mountain GP, LLC, a Delaware limited liability company ("NM") and Steven B. Klinsky (collectively, the "Reporting Persons"). New Mountain was formed to seek long-term capital appreciation through direct private equity and equity-related investments. The address of the principal business and principal office of New Mountain is 712 Fifth Avenue, 23rd Floor, New York, New York 10019. NMI is the general partner of New Mountain, and is principally engaged in the business of serving as New Mountain's general partner. The address of the principal business and principal office of NMI is 712 Fifth Avenue, 23rd Floor, New York, New York 10019. NM is the general partner of NMI, and is principally engaged in the business of serving as NMI's general partner. The address of the principal business and principal office of NM is 712 Fifth Avenue, 23rd Floor, New York, New York 10019. Steven B. Klinsky is the sole member of NM. Mr. Klinsky is engaged principally in the business of serving as NM's sole member and as the Chief Executive Officer of New Mountain Capital LLC. New Mountain Capital LLC is the sole manager of, and is principally engaged in managing, New Mountain. Mr. Klinsky's principal business address and the principal business and principal office of New Mountain Capital LLC is 712 Fifth Avenue, 23rd Floor, New York, New York 10019. Mr. Klinsky is a citizen of the United States of America. (d) and (e). None of the Reporting Persons during the last five years, has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or was party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION On March 16, 2001, as a condition of the transactions more fully described in Item 4, New Mountain and DB Capital Investors, L.P. ("DB Capital") were granted an irrevocable proxy dated March 16, 2001 from Ron K. Bailey and Beverly W. Bailey, the Issuer's majority shareholders. The irrevocable proxy is included as Exhibit 10.1 to this Statement and is incorporated herein by reference. The irrevocable proxy gives shared voting power over all of the shares of Common Stock owned directly or indirectly by the Baileys (which, as of March 16, 2001, is 8,175,000 shares of (Page 6 of 13 Pages) Common Stock) (the "Shares") to New Mountain and DB Capital until the closing (the "Closing") as described in the Purchase Agreement, which is described below. The irrevocable proxy was granted pursuant to the Support and Option Agreement, dated as of November 28, 2000, by and among the Issuer, Ron K. Bailey, Beverly W. Bailey, New Mountain and DB Capital, which is included as Exhibit 10.2 to this Statement and is incorporated herein by reference, and the Preferred Stock Purchase Agreement, dated as of November 28, 2000 (the "Purchase Agreement"), by and among the Issuer, New Mountain and DB Capital, which is included as Exhibit 2.1 to this Statement and is incorporated herein by reference, as a condition to the consummation of the transactions to be effected on the date of the escrow closing under the Purchase Agreement. In addition, pursuant to the Support and Option Agreement, New Mountain and DB Capital have shared dispositive power over 7,175,000 shares of Common Stock. This shared dispositive power results solely from the Baileys' obligation under the Support and Option Agreement to tender 7,175,000 shares in the Issuer's self-tender, as described below, upon the request of New Mountain and DB Capital. In either case, neither the irrevocable proxy nor the Support and Option Agreement give New Mountain and DB Capital ownership of the Shares. At the escrow closing, pursuant to the Purchase Agreement, New Mountain delivered $115 million into escrow, DB Capital delivered $35 million in escrow and the Issuer delivered $62.5 million into escrow. New Mountain obtained the funds required to consummate the escrow closing from capital contributions from its partners. ITEM 4. PURPOSE OF THE TRANSACTION New Mountain was granted the irrevocable proxy in connection with its investment in the Issuer. New Mountain and DB Capital are investing $150 million in the Issuer in return for the Issuer's Series A Preferred Stock, which is convertible into Common Stock. The Issuer has agreed to use this money and $62.5 million of cash on hand to effect a tender offer for up to 8,500,000 of the Issuer's shares at a price of $25.00 per share (the "Self-Tender"). The Self-Tender is conditioned on, among other things, the valid tender of 7,175,000 shares. Upon the request of New Mountain and DB Capital, Mr. and Mrs. Bailey have agreed to tender 7,175,000 in the Self-Tender, and the Baileys have also agreed to give New Mountain and DB Capital an option to purchase 1,000,000 of their shares at a price of $30.00 per share. New Mountain believes that this investment is an attractive business opportunity. In accordance with the terms of the Purchase Agreement, New Mountain has appointed four directors of the Issuer's twelve-member Board (including the Chairman), and has with DB Capital jointly appointed a fifth director. New Mountain expects to be involved in and to influence the management and the direction of the Issuer. The description of the Purchase Agreement, other related agreements, other related documents and the transactions contemplated thereby ("the Transaction") are not intended to be complete, and are qualified throughout by reference to such documents. In addition, the Transaction is described in the Proxy Statement of the Issuer dated February 14, 2001 relating to a Special Meeting of Stockholders, which has been filed with the Securities and Exchange Commission. (Page 7 of 13 Pages) (a) Pursuant to the Purchase Agreement, New Mountain agreed to purchase from the Issuer up to 4,423,077 shares of Series A Preferred Stock for $115 million (with the ability to purchase fewer shares to the extent prior to the Closing a new purchaser of up to 1,346,154 shares of Series A Preferred Stock is found), and DB Capital agreed to purchase from the Issuer 1,346,154 shares of Series A Preferred Stock for $35 million. To effect the Transactions, after certain conditions were met (including shareholder approval of the issuance of the Series A Preferred Stock), the Issuer, New Mountain and DB Capital completed an escrow closing on March 16, 2001, whereby the Issuer delivered $62.5 million into escrow, New Mountain delivered $115 million into escrow and DB Capital delivered $35 million into escrow. Concurrent with the escrow closing, pursuant to the Stock and Option Agreement that was entered into as a condition of the execution of the Purchase Agreement, Mr. and Mrs. Bailey delivered an irrevocable proxy to vote 8,175,000 shares to New Mountain and DB Capital until the Closing. The Issuer has agreed to commence a Self-Tender after the escrow closing, and, upon the request of New Mountain and DB Capital, Mr. and Mrs. Bailey have agreed to tender 7,175,000 shares. Between the escrow closing and the Closing, New Mountain and DB Capital will be entitled to the rights set forth in the Articles Supplementary, the form of which is included as Exhibit 99.1 to this Statement and is incorporated herein by reference, including but not limited to board representation as described below and related rights set forth in the Articles Supplementary. Without limiting the foregoing, the Issuer shall not take any action that, if the Series A Preferred Stock had been issued, would require the approval of the holders of the Series A Preferred Stock without obtaining the prior written approval of New Mountain and DB Capital. Upon the completion of the Self-Tender, the issuance by the Department of Education of an approval notice and the satisfaction of certain other conditions, the funds in escrow will be released and used to pay for the tendered shares, and the shares of Series A Preferred Stock will be issued to New Mountain and DB Capital in their respective amounts. The terms of the Series A Preferred Stock will be governed by the Articles Supplementary. In addition, New Mountain and DB Capital are entitled to preemptive rights with respect to certain issuances of Common Stock issued after the Closing. The consummation of the Purchase Agreement is subject to conditions beyond New Mountain's control, such as the Department of Education issuing an approval notice to Strayer University. As of March 16, 2001, New Mountain has not acquired any shares of Series A Preferred Stock. In addition, effective as of the Closing, pursuant to the Support and Option Agreement, New Mountain will acquire from Mr. and Mrs. Bailey an option to purchase up to 767,000 shares of Common Stock (the "Option"), which can be exercised after the Closing and until the third anniversary of the Closing. As of March 16, 2001, New Mountain does not have the right to purchase these shares. (d) Pursuant to the Purchase Agreement, four directors of the Board resigned and the Board was expanded from nine to twelve directors. New Mountain then appointed four directors, DB Capital appointed one director, and New Mountain and DB Capital jointly appointed one director. Pursuant to the Purchase Agreement, Mr. Bailey retired from his position as Chief Executive Officer and President. Mr. Bailey was replaced by Robert S. Silberman, former President and Chief Operating Officer of CalEnergy Company, Inc., who was engaged by New Mountain to assist in effecting the Transactions and was recommended to the Board as a candidate for the Chief Executive Officer position. Also, the Board named Scott W. Steffey as Executive Vice President and Chief Operating Officer. The Articles Supplementary and the Shareholders' Agreement, dated as of March 16, 2001, by and among New Mountain and DB Capital, which is included as Exhibit 99.2 to this Statement and is (Page 8 of 13 Pages) incorporated herein by reference, govern the rights of New Mountain to nominate directors to the Board. (e) The Issuer has agreed to use up to $62.5 million of its cash on hand and the $150 million of the purchase price of the Series A Preferred Stock, both of which are held in escrow, to effect the Self-Tender. All of the stock tendered to the Issuer will be canceled and returned to the status of authorized but unissued stock. Assuming that the minimum number of 7,175,000 shares are tendered, after the Self-Tender, the amount of Common Stock outstanding will be reduced from 15,498,364 (the number of shares outstanding on February 28, 2001) to 8,323,264 shares. After the Closing, there will be authorized and outstanding 5,769,231 shares of Series A Preferred Stock. Pursuant to the Purchase Agreement, provided that the Issuer is current on its Series A Preferred Stock dividend payments, the directors elected by the holders of the Series A Preferred Stock will approve the declaration and payment of the Issuer's regular quarterly dividend upon the recommendation of the directors not elected by the holders of the Series A Preferred Stock. (g) Pursuant to the Purchase Agreement, the Board approved a charter amendment that, among other things, increased the authorized number of shares of preferred stock from 5 million to 8 million. The charter amendment was approved by the Issuer's shareholders on March 16, 2001 and will become effective immediately prior to the Closing. After the issuance of the shares of Series A Preferred Stock under the Purchase Agreement, there will be approximately 2.2 million shares of "blank check" preferred stock available for issuance. Although the charter amendment was not motivated by takeover concerns and is not considered by the Board to be an anti-takeover measure, the availability of additional authorized shares of preferred stock could enable the Board to make more difficult, discourage, or prevent an attempt by a person, group, or entity to obtain control of the Issuer by a merger, tender offer, proxy contest, or other means. Except as set forth in this Statement (including the exhibits incorporated by reference herein), the Reporting Persons have no present plans or proposals that relate to or would result in any of the actions described in Item 4(a) through (j) of Schedule 13D under Rule 13d-1(d). Depending upon prevailing economic and investment considerations and other factors that the Reporting Persons may deem relevant, the Reporting Persons may purchase or sell additional shares of Common Stock or other securities of the Issuer in the open market or in privately negotiated transactions or otherwise, or engage in any other transaction they deem appropriate. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) As of the date of this Statement, the Reporting Persons may be deemed to beneficially own 8,175,000 shares of Common Stock. Assuming the number of shares outstanding on February 28, 2001, the Reporting Persons may be deemed to beneficially own approximately 52.8% of the outstanding Common Stock. The Reporting Persons and DB Capital have shared voting power to direct the vote of 8,175,000 shares. The Reporting Persons and DB Capital have shared power to direct the disposition of 7,175,000 shares. The Reporting Persons have the sole power to vote and sole power to direct the disposition of 0 shares and disclaim beneficial ownership of the shares covered by the irrevocable proxy. (Page 9 of 13 Pages) (b) For purposes of Section 13 of the Act, NMI may be deemed to control New Mountain, NM may be deemed to control NMI and Mr. Klinsky may be deemed to control NM. Each of the Reporting Persons may thus be considered to beneficially own and to have shared voting with respect to all of the Common Stock held beneficially by New Mountain and shared dispositive power with respect to 7,175,000 shares. The Reporting Persons and DB Capital may be deemed to comprise a group for the purposes of the voting power under the irrevocable proxy as they have shared voting power to direct the vote of 8,175,000 shares and shared power to direct the disposition of 7,175,000 shares. DB Capital's principal business is to function as a merchant banking arm of Deutsche Bank AG. The address of the principal business and principal office of DB Capital is 130 Liberty Street, New York, New York 10006. (c) Except as set forth above, there have been no purchases or sales by any of the Reporting Persons of Common Stock during the last 60 days. (d) Mr. and Mrs. Bailey have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock beneficially owned by the Reporting Persons. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUERS The Shareholders' Agreement governs the rights of the holders of the shares of the Series A Preferred Stock, including Common Stock issuable upon conversion of the Series A Preferred Stock, purchased pursuant to the Purchase Agreement (the "Purchased Shares"). The Shareholders' Agreement includes restrictions on sales and transfers of the Purchased Shares, tag-along rights, drag-along rights, registration rights and governance rights. Under the Shareholders' Agreement, New Mountain will be entitled to nominate 2/3rds (rounded to the nearest whole number) of the directors entitled to be nominated by the holders of the Series A Preferred Stock, DB Capital will be entitled to appoint 1/6th (rounded to the nearest whole number, with 0.5 rounded up to 1) of the Series A Preferred Stock directors and, unless another purchaser joins the Purchase Agreement, New Mountain and DB will be entitled to mutually appoint 1/6th of the Series A Preferred Stock directors (rounded to the nearest whole number, with 0.5 rounded down to 0). The rights to appoint Series A Preferred Stock directors may be adjusted for conversions of the Series A Preferred Stock or the exercise of drag-along rights. Other than the Shareholder Agreement, Purchase Agreement, Support and Option Agreement and irrevocable proxy and the related documents and the transactions contemplated thereby and other understandings, as described in this item, Item 3 and Item 4 above, the Reporting Persons know of no other contracts, arrangements, understandings or relationships required to be described herein. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 2.1 Preferred Stock Purchase Agreement, dated as of November 28, 2000, by and among Strayer Education, Inc., New Mountain Partners, L.P. and DB Capital Investors, L.P. (incorporated by reference to Exhibit 2.01 to the Current Report on Form 8-K filed by Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)). 10.1 Irrevocable Proxy from Ron K. Bailey and Beverly W. Bailey to New Mountain (Page 10 of 13 Pages) Partners, L.P. and DB Capital Investors, L.P., dated March 16, 2001 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Strayer Education, Inc. on March 16, 2001 (File No. 000-21039)). 10.2 Support and Option Agreement, dated as of November 28, 2000, by and among Strayer Education, Inc., Ron K. Bailey, Beverly W. Bailey, New Mountain Partners, L.P. and DB Capital Investors, L.P (incorporated by reference to Exhibit 10.01 to the Current Report on Form 8-K filed by Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)). 99.1 Form of Articles Supplementary (incorporated by reference to Exhibit 3.01 to the Current Report on Form 8-K filed by Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)). 99.2 Shareholders' Agreement, dated as of March 16, 2001, by and among New Mountain and DB Capital. (Page 11 of 13 Pages) SIGNATURES After reasonable inquiry and to the best of his or her knowledge and belief, each of the undersigned certifies that the information in this statement is true, complete and correct. Date: March 26, 2001 NEW MOUNTAIN PARTNERS, L.P. By: New Mountain Investments, L.P., its general partner By: New Mountain GP, LLC, its general partner By: /s/ Steven B. Klinsky --------------------------------------- Name: Steven B. Klinsky Title: Member NEW MOUNTAIN INVESTMENTS, L.P. By: New Mountain GP, LLC, its general partner By: /s/ Steven B. Klinsky --------------------------------------- Name: Steven B. Klinsky Title: Member NEW MOUNTAIN GP, LLC By: /s/ Steven B. Klinsky --------------------------------------- Name: Steven B. Klinsky Title: Member /s/ Steven B. Klinsky --------------------------------------- Name: Steven B. Klinsky Page 12 of 13 INDEX TO EXHIBITS ----------------- 2.1 Preferred Stock Purchase Agreement, dated as of November 28, 2000, by and among Strayer Education, Inc., New Mountain Partners, L.P. and DB Capital Investors, L.P. (incorporated by reference to Exhibit 2.01 to the Current Report on Form 8-K filed by Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)). 10.1 Irrevocable Proxy from Ron K. Bailey and Beverly W. Bailey to New Mountain Partners, L.P. and DB Capital Investors, L.P., dated March 16, 2001 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Strayer Education, Inc. on March 16, 2001 (File No. 000-21039)). 10.2 Support and Option Agreement, dated as of November 28, 2000, by and among Strayer Education, Inc., Ron K. Bailey, Beverly W. Bailey, New Mountain Partners, L.P. and DB Capital Investors, L.P (incorporated by reference to Exhibit 10.01 to the Current Report on Form 8-K filed by Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)). 99.1 Form of Articles Supplementary (incorporated by reference to Exhibit 3.01 to the Current Report on Form 8-K filed by Strayer Education, Inc. on December 8, 2000 (File No. 000-21039)). 99.2 Shareholders' Agreement, dated as of March 16, 2001, by and among New Mountain and DB Capital. (Page 13 of 13 Pages) EX-99.2 2 0002.txt SHAREHOLDERS' AGREEMENT SHAREHOLDERS' AGREEMENT By and between NEW MOUNTAIN PARTNERS, L.P. and DB CAPITAL INVESTORS, L.P. Dated as of March 16, 2001 TABLE OF CONTENTS PAGE ARTICLE I DEFINITIONS..................................................................1 ARTICLE II TRANSFER RESTRICTIONS........................................................3 Section 2.1. General Restrictions on Transfer...............................3 Section 2.2. Certain Permitted Transfers....................................3 Section 2.3. Termination of Restrictions on Transfer........................4 Section 2.4. Sale of Shares to a Third Party................................4 ARTICLE III CORPORATE GOVERNANCE.........................................................5 Section 3.1. Directors......................................................5 ARTICLE IV REGISTRATION RIGHTS..........................................................6 Section 4.1. Rights of Investors............................................6 ARTICLE V MISCELLANEOUS................................................................7 Section 5.1. Recapitalizations, Exchanges, Etc. Affecting Shares............7 Section 5.2. Waiver and Amendment...........................................7 Section 5.3 Purchasers' Agent; Consultation................................7 Section 5.4. Additional Investors...........................................8 Section 5.5. Notices........................................................8 Section 5.6. Applicable Law and Time of Essence.............................9 Section 5.7. Integration....................................................9 Section 5.8. Descriptive Headings...........................................9 Section 5.9. Counterparts...................................................9 Section 5.10. Successors, Assigns and Transferees............................9 Section 5.11. Severability...................................................9 Section 5.12. Expenses.......................................................9 Section 5.13. Interpretation; Absence of Presumption.........................9 Section 5.14. Further Assurances............................................10 -i- Section 5.15. Specific Performance..........................................10 Section 5.16. Termination...................................................10 Section 5.17. Public Announcements and Confidentiality......................10 -ii- SHAREHOLDERS' AGREEMENT ----------------------- THIS SHAREHOLDERS' AGREEMENT (the "Agreement"), dated as of March 16, 2001, is by and between New Mountain Partners, L.P. ("NMP") and DB Capital Investors, L.P. ("DB," together with NMP, the "Investors," and each individually, an "Investor"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in that certain Preferred Stock Purchase Agreement, dated as of November 28, 2000, by and among Strayer Education, Inc., a Maryland corporation (the "Company"), NMP and DB (as the same may be amended from time to time as needed, the "Purchase Agreement"). W I T N E S S E T H: WHEREAS, the Company, NMP and DB have entered into the Purchase Agreement, pursuant to which the Company is issuing and selling, and NMP, DB and any additional Purchasers (as defined in the Purchase Agreement) are purchasing, the Series A Preferred Stock on the Closing Date; and WHEREAS, the parties believe it to be in their best interests that they enter into this Agreement and provide for certain rights with respect to the investment by the Investors and the corporate governance of the Company; NOW, THEREFORE, in consideration of the premises and mutual agreements, covenants and provisions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the meanings ascribed to them below: "Agreement" shall have the meaning specified in the preamble hereto. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "CONTROL" when used with respect to any specified Person means the power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing. "Board of Directors" shall mean the board of directors of the Company. "Company" shall have the meaning specified in the preamble hereto. "Company Investment" means the total value of all Subject Securities held by an Investor or by all Investors in the Company valuing the Series A Preferred Stock at its Liquidation Amount (as defined in the Articles Supplementary) plus accrued and unpaid dividends and valuing any Converted Shares at their Conversion Price (as defined in the Articles Supplementary). "Converted Shares" shall have the meaning specified in Section 2.1 hereof. "Drag-Along Right" shall have the meaning specified in Section 2.4 hereof. "Initial Appointment" shall have the meaning specified in Section 3.1(a) hereof. "Investor", "Investors" shall have the meanings specified in the preamble hereto and the Permitted Transferees (as defined herein) of any such Investor. "Majority Investor" means whichever of NMP or DB is the holder, at any time, of a larger Company Investment than the other. "Minority Investor" means, at any time, each Investor other than the Majority Investor. "New Investor" shall have the meaning specified in Section 3.1 hereof. "Original Investment Amount" shall have the meaning specified in Section 2.1 hereof. "Original Majority Investor" shall mean NMP or any of its Affiliates or Subsidiaries. "Original Minority Investor" shall mean DB or any of its Affiliates or Subsidiaries. "Permitted Transferee" shall have the meaning specified in Section 2.2 hereof. "Permitted Transfers" shall have the meaning specified in Section 2.2 hereof. "Person" shall mean an individual, partnership, joint venture, corporation, limited liability company, trust, unincorporated organization or government or any department or agency thereof. "Purchase Agreement" shall have the meaning specified in the first paragraph of this Agreement. "Registration Rights Agreement" shall have the meaning specified in Section 4.1 hereof. "Sell-Down" shall have the meaning specified in Section 2.2(a). "Subject Securities" shall have the meaning specified in Section 2.1 hereof. "Shareholders" shall mean the beneficial owners of the Series A Preferred Stock collectively, and each such individual holder shall be referred to as a "Shareholder." -2- "Tag-Along Right" shall have the meaning specified in Section 2.4 hereof. "Third Party" shall have the meaning specified in Section 2.4 hereof. "Transfer Restriction Lapse Date" shall have the meaning specified in Section 2.1 hereof. ARTICLE II TRANSFER RESTRICTIONS Section 2.1. GENERAL RESTRICTIONS ON TRANSFER. Prior to the earlier of (a) the date on which the Original Majority Investor has a Company Investment of less than 33% of the Original Investment Amount (as defined below) in the form of the Series A Preferred Stock and/or shares issuable on conversion of the Series A Preferred Stock (the "Converted Shares"), and (b) the date on which the Series A Preferred Stock becomes redeemable by the Company pursuant to Section 4 of the Articles Supplementary of the Company (the earlier of (a) or (b), the "Transfer Restriction Lapse Date") the Minority Investors shall not, without the prior written consent of the Majority Investor, directly or indirectly sell, offer, transfer, assign, pledge, hypothecate or otherwise dispose of any interest in ("Transfer") any securities of the Company purchased pursuant to the Purchase Agreement or issued upon conversion of such securities ("Subject Securities"), except for transfers or sales made in accordance with the provisions of Sections 2.2 or 2.4 hereof and which are made in compliance with the federal securities laws and all applicable state securities or "blue sky" laws (or pursuant to exemptions therefrom). No transfer of the Subject Securities in violation of this Agreement shall be made or recorded on the books of the Company and any such transfer shall be void and of no effect. For purposes of this Agreement, the term "Original Investment Amount" shall mean the original investment of the Original Majority Investor through the purchase of shares of Series A Preferred Stock representing an aggregate Liquidation Amount of $115 million; PROVIDED, that if the Original Majority Investor sells a number of shares of Series A Preferred Stock representing an aggregate Liquidation Amount of up to $35 million to one or more co-investors, in accordance with the terms set forth in Section 2.3(c) of the Purchase Agreement, such Original Investment Amount will be reduced by the amount which the Original Majority Investor sells, up to $35 million. Section 2.2. CERTAIN PERMITTED TRANSFERS. Each of the Investors acknowledges and agrees that any of the following transfers of Subject Securities (collectively, the "Permitted Transfers") are deemed to be permitted transfers of such securities: (a) a transfer or sale of a number of shares of Series A Preferred Stock representing an aggregate Liquidation Amount of up to $35 million by the Original Majority Investor to one or more co-investors effected in accordance with the terms set forth in Section 2.3(c) of the Purchase Agreement and approved by DB, such approval not to be unreasonably withheld (the "Sell-Down"), PROVIDED, that no approval of DB will be required for a Sell-Down of $5 million or greater aggregate Liquidation Amount of Series A Preferred Stock to an institutional limited partner of NMP that is not an Affiliate of NMP; -3- (b) a transfer of Subject Securities made in compliance with the federal and all applicable state securities laws by an Investor to (i) a controlled Affiliate of the Investor or (ii) to any other Affiliate of the Investor other than a controlled Affiliate with the permission of NMP, whose permission shall not be unreasonably withheld; and (c) a transfer of Subject Securities made pursuant to the piggyback registration rights of an Investor in accordance with Section 4.1 hereof and the Registration Rights Agreement (as defined below) PROVIDED, that no transfers pursuant to Sections 2.2(a) and (b) shall be permitted (and any such transfer shall be void and of no effect) unless and until the Affiliate or co-investor, as the case may be, shall agree in writing, in form and substance reasonably satisfactory to the Investors, to become bound, and becomes bound, by all the terms of this Agreement. The Affiliate or co-investor, as the case may be, to whom the Subject Securities may be transferred or pledged pursuant to Section 2.2(a) or (b) is hereinafter sometimes referred to as a "Permitted Transferee." Section 2.3. TERMINATION OF RESTRICTIONS ON TRANSFER. After the Transfer Restriction Lapse Date, transfers of the Subject Securities beneficially owned by the Investors or their Permitted Transferees shall be permitted, to the extent not already permitted, subject to compliance with all applicable federal and state securities or "blue sky" laws (or pursuant to exemptions therefrom). Section 2.4. SALE OF SUBJECT SECURITIES TO A THIRD PARTY. (a) Until the Transfer Restriction Lapse Date, if at any time the Original Majority Investor proposes to sell, for its own account, in one or more private transactions, Subject Securities of the Company to a party which is not, and following such sale will not be, an Affiliate of such Investor (a "Third Party"), the Minority Investors shall have the right to participate (a "Tag-Along Right") in such sale with respect to any Subject Securities held by them on a pro rata basis (based on the percentage of the Subject Securities being sold to the Third Party corresponding to the relationship of the Company Investment owned by each Investor to the aggregate Company Investment owned by all of the Investors) for the same consideration per Security and otherwise on the same terms as the Original Majority Investor sells; PROVIDED, HOWEVER, that no Tag-Along Rights shall exist with respect to a Permitted Transfer. If circumstances occur which give rise to the Tag-Along Right, then the Original Majority Investor shall give written notice (a "Sales Notice") to the Minority Investors at least ten business days prior to such sale, which Sales Notice shall describe the class and number of shares of Subject Securities to be sold, the purchase price of each such share of Subject Securities to be sold, the material details of such sale transaction and the anticipated closing date of such sale, and shall advise the Minority Investors of their Tag-Along Rights. Each Minority Investor may exercise its Tag-Along Right by written notice to the Original Majority Investor given not more than five business days after receiving the notice from the Original Majority Investor stating the number of Subject Securities that it wishes to sell, up to the maximum number permitted (being its pro rata amount referred to above and as disclosed in the notice to be given to it). If a Minority Investor gives written notice indicating that it wishes to sell, it shall be obligated to sell that number of Subject Securities specified in its written acceptance notice upon the same terms and conditions as the Original Majority Investor -4- is selling to the Third Party conditional upon and contemporaneous with completion of the transaction of purchase and sale with the Third Party. (b) Until the Transfer Restriction Lapse Date, if the Original Majority Investor proposes to sell for its own account, in one or more private transactions, Subject Securities of the Company to a Third Party, the Original Majority Investor shall, upon written request at least ten business days prior to such sale, have the right to require the Minority Investors (without the consent of the Minority Investors or the exercise of appraisal rights, if any, which are hereby waived) to participate (a "Drag-Along Right") in such sale with respect to any Subject Securities held by them on a pro rata basis (as defined in clause (a) above) for the same consideration per Security and otherwise on the same terms as the Original Majority Investor sells its Subject Securities; PROVIDED, HOWEVER, that no Drag-Along Rights shall exist (1) with respect to a Permitted Transfer or (2) if the Series A Preferred Stock is sold for a price less than the Liquidation Amount per share, as adjusted and PROVIDED, FURTHER, that proper allowance is made to implement the provisions of Section 3.1(c)(ii). ARTICLE III CORPORATE GOVERNANCE Section 3.1. DIRECTORS. (a) Pursuant to Section 5.4 of the Purchase Agreement, at the Escrow Date, one-half of the Company's Board of Directors (or six directors) are to be comprised of persons nominated by the Investors, who shall serve as directors of the Company until their successors are duly elected and qualified (the "Initial Appointment"). Of the Investors' initial appointees, (i) four of the directors on the Company's Board of Directors shall be nominated by NMP, in its sole discretion, (ii) one of the directors on the Company's Board of Directors shall be nominated by DB, in its sole discretion and (iii) one of the directors on the Company's Board of Directors shall be nominated by a purchaser of shares of Series A Preferred Stock in the Sell-Down designated by NMP (the "New Investor"), if any, in its sole discretion, or if (x) there is no Sell-Down prior to the Initial Appointment or (y) there is no New Investor, the sixth director shall be chosen by mutual agreement of NMP and DB; PROVIDED, that such mutually agreed director will resign his or her directorship or NMP and DB shall vote to remove such director upon the closing of the purchase by a New Investor. All of the Investors agree to vote their Subject Securities in favor of the directors nominated pursuant to this Section 3.1 and Section 5.4 of the Purchase Agreement and to cause the directors designated by them to vote in favor of the initial management team specified in Section 5.4 of the Purchase Agreement. The failure of any Investor entitled to nominate directors pursuant to this Section 3.1 to fully exercise its respective nomination rights shall not constitute a waiver or diminution of such rights, nor shall it prevent such Investor from fully exercising such rights prospectively. (b) After the Initial Appointment, (i) NMP shall be entitled to nominate 2/3rds (rounded to the nearest whole number) of the directors that the Investors are entitled to nominate pursuant to the Articles Supplementary, (ii) DB shall be entitled to appoint 1/6th (rounded to the nearest whole number with 0.5 being rounded up to 1) of the directors that the Investors are entitled to nominate pursuant to the Articles Supplementary and (iii) the New Investor, if any, or if none NMP and DB by mutual agreement, shall be entitled to appoint 1/6th (rounded to the nearest whole number with 0.5 being rounded down to 0) of the directors that the Investors are -5- entitled to nominate pursuant to the Articles Supplementary; PROVIDED, that such mutually agreed upon director will resign his or her directorship or NMP and DB will vote to remove such director upon the closing of the purchase by the New Investor, if any. (c) Notwithstanding the foregoing, (i) if (x) one Investor converts Series A Preferred Stock and as a result of such conversion the number of directors which can be appointed by the Investors in the aggregate is decreased, the ability of such Investor to nominate director(s) shall be adjusted so that such Investor will lose its ability to nominate one director (or more directors depending on the size of the decrease in the aggregate number of directors which can be appointed by the Investors) and (y) such reduction in the number of directors that may be appointed by the Investors is occasioned by conversion of Series A Preferred Stock by more than one Investor, then the Investor (or Investors) that converted the greatest proportion of its (or their) Series A Preferred Stock shall first lose their right to designate one or more directors; and (ii) if the number of directors which can be appointed by the Investors in the aggregate is decreased as a result of a sale of less than all of the Subject Securities held by the Original Majority Investor and in which sale the Original Majority Investor exercises its Drag-Along Right, then so long as NMP retains the right to appoint at least one director, NMP shall first lose its right to designate one director (or more directors depending on the size of the decrease in the aggregate number of directors which can be appointed by the Investors) before DB loses its right to designate a director. Should any of the individuals elected as directors pursuant to this Section 3.1 be unwilling or unable to serve, or otherwise cease to serve (including by means of removal in accordance with the following sentence), then subject to applicable law, the Investor(s) who nominated such individual shall be entitled to fill the resulting vacancies on the Board of Directors by nominating or designating any replacement for any director originally nominated by it pursuant to this Section 3.1. Subject to applicable law, if any Investor proposes to remove any of its nominated directors, the other Investor or Investors, if any, agree to cooperate in such removal (including voting with such removing Investor, if necessary) and any resulting vacancy shall be filled in accordance with the preceding sentence. (d) With respect to all matters on which the Series A Preferred Stock shall vote as a class, each Share of Series A Preferred Stock shall be entitled to one vote. ARTICLE IV REGISTRATION RIGHTS Section 4.1. RIGHTS OF INVESTORS. The Original Majority Investor will have the right to exercise the Investors' rights pursuant to Section 2 (Demand Registration) of the Registration Rights Agreement to be entered into by the Company, NMP, DB and any additional Purchasers (as defined in the Purchase Agreement) on or prior to the Closing Date (the "Registration Rights Agreement") as Covered Holders (as defined in the Registration Rights Agreement) and the other Investors shall take such actions as may be necessary to allow for such exercise by the Original Majority Investor; PROVIDED, HOWEVER, that beginning on the Transfer Restriction Lapse Date, DB and its Permitted Transferees, so long as they hold at least 10% of the outstanding Series A Preferred Stock or shares of common stock issued upon the conversion thereof, may require on one occasion during the term of their investment, the Company to register for offer and sale pursuant to a Registration Statement on Form S-3, if the Company is S- -6- 3 Eligible and such S-3 registration right is otherwise available, and the Original Majority Investor shall take reasonable efforts to allow for such exercise. Nothing in the preceding sentence shall be deemed to limit the ability of either the Minority Investors or the Original Minority Investor to exercise their rights pursuant to Section 3 (Piggy-back Registration) of the Registration Rights Agreement. Notwithstanding the foregoing, if the amount of Subject Securities to be registered in any offering is cut back because the managing underwriters for such offering determine that the full amount requested to be distributed cannot be included without adversely affecting the offering, the Investors shall be cut back on a pro rata basis (based on their Company Investments at the time they exercised such "piggyback" registration rights, irrespective of who made the original registration demand). ARTICLE V MISCELLANEOUS Section 5.1. RECAPITALIZATIONS, EXCHANGES, ETC. AFFECTING SHARES. The provisions of this Agreement regarding the Subject Securities shall apply to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets, reorganization or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Subject Securities by reason of any stock dividend, stock split, stock issuance, reverse stock split, combination, recapitalization, reclassification, merger, consolidation or otherwise. Upon the occurrence of any of such events, amounts hereunder shall be appropriately adjusted. Subject only to the provisions of the preceding sentence, nothing contained in this Agreement shall prohibit or restrict the Company from taking any corporate action, including, without limitation, declaring any dividend (whether in cash or stock) or engaging in any corporate transaction of any kind, including, without limitation, any merger, consolidation, liquidation or sale of assets. Section 5.2. WAIVER AND AMENDMENT. Any party hereto may waive its rights under this Agreement at any time, and no such waiver shall operate to waive such party's rights under this Agreement on any other occasion. Any agreement on the part of any such party to any such waiver shall be valid only if set forth in an instrument in writing signed by such party. This Agreement may be amended only by a written instrument signed by all Investors. Section 5.3. PURCHASERS' AGENT; CONSULTATION. The Investors agree that NMP shall be the Purchasers' Agent under the Purchase Agreement for purposes of responding to Company requests for and providing to the Company those required consents or waivers to be provided by the Purchasers' Agent prior to the Closing Date; PROVIDED, that NMP shall consult with the other Investors with respect to all such decisions and shall not waive any closing conditions or grant any material consents to the Company without either (i) obtaining the Original Minority Investor's prior approval or (ii) if the matter is one which would, under the Purchase Agreement, otherwise permit the Original Minority Investor not to proceed with the investment, entering into arrangements to replace the Original Minority Investor as a Purchaser under the Purchase Agreement. Notwithstanding the forgoing, nothing in this Section 5.3 shall affect the ability of each Investor to vote its Subject Securities in a manner that it deems appropriate, or as specified in this Agreement and the Purchase Agreement and the transactions contemplated hereby and thereby. -7- Section 5.4. ADDITIONAL INVESTORS. The Investors agree that upon the Sell-Down, each new investor shall execute counterpart signature pages to this Agreement and such new investors will, upon delivery to the Original Majority Investor and the Original Minority Investor of such signature pages, become parties to, and bound by, this Agreement, each to the same extent as if they had been an Investor and Minority Investor at the Closing Date. Section 5.5. NOTICES. All notices and other communications provided for herein shall be dated and in writing and shall be deemed to have been duly given and effective (1) when delivered, if delivered personally; (2) when transmitted via telecopy (or other facsimile device) to the number set forth below; (3) the day following the day on which the same has been delivered prepaid to a reputable overnight courier service; or (4) the fifth business day after its being deposited in the mail if sent by registered or certified mail, return receipt requested, postage prepaid, to the party to whom it is directed: New Mountain Partners, L.P. 712 Fifth Avenue, 23rd Floor New York, NY 10019 Attn: Steve B. Klinsky Telecopy: (212) 582-1816 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attn: Trevor S. Norwitz, Esq. Telecopy No.: (212) 403-2000 DB Capital Investors, L.P. c/o DB Capital Partners, Inc. One Market Plaza Steuart Tower, Suite 2400 San Francisco, California 94105 Attn: Steven K. Dollinger Telecopy: (415) 217-4288 with a copy to: White & Case LLP 1155 Avenue of the Americas New York, NY 10036-2787 Attn: Oliver C. Brahmst, Esq. Telecopy No.: (212) 354-8113 If to any other Investor to the address of such Investor as shown in the stock record book of the Company or at such other address as the parties hereto shall have specified by notice in writing to the other parties. -8- Section 5.6. APPLICABLE LAW. The laws of the State of New York shall govern the interpretation, validity and performance of the terms of this Agreement, without regard to the application of principles of conflicts of law. Section 5.7. INTEGRATION. This Agreement, the Support Agreement, the Purchase Agreement and the documents referred to herein and therein or delivered pursuant hereto or thereto which form a part hereof or thereof contain the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and therein. This Agreement, the Support Agreement and the Purchase Agreement and the documents referred to herein and therein supersede all prior agreements and understandings between the parties with respect to its subject matter. Section 5.8. DESCRIPTIVE HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. Section 5.9. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Section 5.10. SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns and transferees except to the extent that the terms of this Agreement limit or otherwise restrict the transferability of any rights or obligations hereunder. Section 5.11. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. Section 5.12. EXPENSES. Expenses related to this Agreement and the Purchase Agreement and the actions contemplated hereby and thereby shall be paid in accordance with Section 12.2 of the Purchase Agreement, and the Closing Amount (and any other transaction fees received from the Company in connection with the transactions contemplated hereby and thereby) shall be divided in accordance with the percentages set forth in the Allocation Notice presented immediately prior to the Closing Date, once all of the unreimbursed reasonable out-of-pocket expenses of each of the Purchasers have been paid. Section 5.13. INTERPRETATION; ABSENCE OF PRESUMPTION. (a) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of -9- one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph, Schedule and Exhibit references are to the Articles, Sections, paragraphs, Schedules and Exhibits to this Agreement unless otherwise specified, (iii) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions. (b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. Section 5.14. FURTHER ASSURANCES. Each Investor agrees that, from time to time, each of them will, and will cause their respective Affiliates to, execute and deliver such further instruments and take such other action as may be necessary to carry out the purposes and intents hereof. Section 5.15. SPECIFIC PERFORMANCE. Each Investor acknowledges that, in view of the uniqueness of arrangements contemplated by this Agreement, the parties hereto would not have an adequate remedy at law for money damages in the event that this Agreement were not performed in accordance with its terms, and therefore agrees that the parties hereto shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which the parties hereto may be entitled at law or in equity. Section 5.16. TERMINATION. This Agreement may be terminated at any time by the mutual consent of all of the Investors hereto and shall terminate upon the earlier of (x) the termination of the Purchase Agreement pursuant to Article 10 thereof and (y) March 16, 2011. Section 5.17. PUBLIC ANNOUNCEMENTS AND CONFIDENTIALITY. Except as contemplated in this Agreement, the Support Agreement, the Purchase Agreement and the documents referred to herein and therein or delivered pursuant hereto or thereto, no party hereto will make any public announcement concerning transactions contemplated by this Agreement prior to reaching an agreement with the other parties hereto, unless required to do so by applicable law or regulation. The parties hereto agree, except as contemplated in this Agreement, the Support Agreement, the Purchase Agreement and the documents referred to herein and therein or delivered pursuant hereto or thereto and as may be required by applicable law or regulation (including the rules of any applicable stock exchange) or disclosed to a potential Permitted Transferee, not to further disclose any terms of this Agreement or any of the transactions or other matters contemplated hereby or related hereto. -10- IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be executed on its behalf as of 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/ Steven B. Klinsky ----------------------------- Name: Steven B. Klinsky Title: Member DB CAPITAL INVESTORS, L.P. By: DB Capital Partners, L.P., its general partner By: DB Capital Partners, Inc., its general partner By: /s/ Steven K. Dollinger ------------------------------ Name: Steven K. Dollinger Title: Director [SIGNATURE PAGE TO SHAREHOLDERS' AGREEMENT] -11- -----END PRIVACY-ENHANCED MESSAGE-----