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