Document:

Exhibit 10.35

 

LAUREATE EDUCATION, INC.

DEFERRED COMPENSATION PLAN

 

Amended and Restated Effective January 1, 2009

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
401(k) PLAN
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.2
    	
ACCOUNT
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.3
    	
ADMINISTRATIVE   COMMITTEE
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.4
    	
BENEFICIARY
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.5
    	
BOARD OF DIRECTORS and DIRECTOR(S)
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.6
    	
CLAIMANT
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.7
    	
CODE
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.8
    	
COMPENSATION
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.9
    	
COMPENSATION   DEFERRAL ACCOUNT
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.10
    	
COMPENSATION   DEFERRAL
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.11
    	
DESIGNATION   DATE
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.12
    	
DISABILITY
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.13
    	
DISCRETIONARY   CONTRIBUTION SUBACCOUNT
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.14
    	
EFFECTIVE   DATE
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.15
    	
ELECTION   FORM
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.16
    	
ELIGIBLE   INDIVIDUAL
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.17
    	
EMPLOYER
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.18
    	
EMPLOYER   CONTRIBUTION CREDIT ACCOUNT
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.19
    	
EMPLOYER   CONTRIBUTION CREDITS
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.20
    	
ENTRY   DATE
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.21
    	
ERISA
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.22
    	
IN-SERVICE   DISTRIBUTION
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.23
    	
MATCHING   CONTRIBUTION SUBACCOUNT
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.24
    	
PARTICIPANT
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.25
    	
PERFORMANCE-BASED   COMPENSATION
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.26
    	
PLAN
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.27
    	
PLAN   ADMINISTRATOR
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.28
    	
PLAN   SPONSOR
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.29
    	
PLAN   YEAR
    	
4
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.30
    	
SEPARATION   FROM SERVICE
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.31
    	
SUBACCOUNT
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.32
    	
TERMINATION   DISTRIBUTION
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.33
    	
TRUST
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.34
    	
TRUSTEE
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.35
    	
VALUATION   DATE
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE 2
    	
ELIGIBILITY AND PARTICIPATION
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
REQUIREMENTS
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.2
    	
RE-EMPLOYMENT
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.3
    	
CHANGE   OF SERVICE CATEGORY
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.4
    	
TERMINATION   OF PARTICIPATION
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 3
    	
CONTRIBUTIONS AND CREDITS
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
EMPLOYER   CONTRIBUTION CREDITS
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.2
    	
PARTICIPANT   COMPENSATION DEFERRALS
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 4
    	
ALLOCATION OF FUNDS
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
ALLOCATION   OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.2
    	
ACCOUNTING   FOR DISTRIBUTIONS
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.3
    	
ALLOCATION   NOT EQUIVALENT OF VESTING
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.4
    	
SEPARATE   ACCOUNTS
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.5
    	
INTERIM   VALUATIONS
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.6
    	
DEEMED   INVESTMENT DIRECTIONS OF PARTICIPANTS
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.7
    	
EXPENSES
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.8
    	
STOCK   DEFERRALS
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 5
    	
ENTITLEMENT TO BENEFITS
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
IN-SERVICE   DISTRIBUTIONS
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.2
    	
TERMINATION   DISTRIBUTIONS
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.3
    	
SEPARATION   FROM SERVICE
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.4
    	
DEATH;   DISABILITY
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.5
    	
UNFORESEEABLE   EMERGENCY DISTRIBUTIONS
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 6
    	
DISTRIBUTION OF BENEFITS
    	
13
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
AMOUNT
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.2
    	
METHOD   OF PAYMENT
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.3
    	
NO   ACCELERATIONS
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.4
    	
DEATH   OR DISABILITY BENEFITS
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 7
    	
BENEFICIARIES; PARTICIPANT DATA
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
DESIGNATION   OF BENEFICIARIES
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.2
    	
INFORMATION   TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE   PARTICIPANTS OR BENEFICIARIES
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.3
    	
DISTRIBUTION FOR MINOR BENEFICIARY
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 8
    	
ADMINISTRATION
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.1
    	
ADMINISTRATIVE   AUTHORITY
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.2
    	
LITIGATION
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.3
    	
CLAIMS   PROCEDURE
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 9
    	
AMENDMENT
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.1
    	
RIGHT   TO AMEND
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.2
    	
AMENDMENTS   TO ENSURE PROPER CHARACTERIZATION OF PLAN
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 10
    	
TERMINATION
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.1
    	
PLAN   SPONSOR’S RIGHT TO TERMINATE OR SUSPEND PLAN
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.2
    	
AUTOMATIC   TERMINATION OF PLAN
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.3
    	
SUSPENSION   OF PLAN
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.4
    	
ALLOCATION   AND DISTRIBUTION
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.5
    	
SUCCESSOR   TO EMPLOYER
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.6
    	
PROHIBITED   ACCELERATION/DISTRIBUTION TIMING
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 11
    	
THE TRUST
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.1
    	
ESTABLISHMENT   OF TRUST
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 12
    	
MISCELLANEOUS
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.1
    	
LIMITATIONS   ON LIABILITY OF EMPLOYER
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.2
    	
CONSTRUCTION
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.3
    	
SPENDTHRIFT   PROVISION
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.4
    	
NO   RIGHT TO SERVICE
    	
24
    

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.5
    	
AGGREGATION OF EMPLOYERS
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.6
    	
CODE   SECTION 409A COMPLIANCE
    	
24
    

 

iv

 

LAUREATE EDUCATION, INC. DEFERRED COMPENSATION PLAN

 

Amended and Restated Effective January 1, 2009

 

RECITALS

 

This Laureate Education, Inc. Deferred Compensation Plan (the “Plan”) is adopted by Laureate Education, Inc. (the “Plan Sponsor”) for certain of its executive employees and members of its Board of Directors.  The purpose of the Plan is to offer those employees and members of the Board of Directors an opportunity to elect to defer the receipt of compensation in order to provide deferred compensation benefits taxable pursuant to section 451 of the Internal Revenue Code of 1986 and the Treasury regulations or other authoritative guidance issued thereunder, as amended from time to time (the “Code”).  The Plan is intended to be a “top-hat” plan (i.e., an unfunded deferred compensation plan maintained for a select group of management or highly-compensated employees) under sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974 and regulations and other authoritative guidance issued thereunder, as amended from time to time (“ERISA”) and a Board of Directors deferred compensation plan.  The Plan is also intended to comply with the requirements of Code section 409A, as added by the American Jobs Creation Act of 2004.

 

Accordingly, the Plan is adopted as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1                       401(k) PLAN.  means the Laureate Education, Inc. 401(k) Plan.

 

1.2                       ACCOUNT.  means the balance credited to a Participant’s or Beneficiary’s Plan Account, including contribution credits and deemed income, gains, and losses (as determined by the Employer, in its discretion) credited thereto.  A Participant’s or Beneficiary’s Account shall be determined as of the date of reference.

 

1.3                       ADMINISTRATIVE COMMITTEE.  means the committee appointed by the Board of Directors of the Plan Sponsor to select the Eligible Individuals.  The Executive Director of Human Resources shall be a member of the Administrative Committee.

 

1.4                       BENEFICIARY.  means any person or persons so designated in accordance with the provisions of Article 7.

 

1.5                       BOARD OF DIRECTORS and DIRECTOR(S).  means each individual elected to the Plan Sponsor’s Board of Directors in accordance with the Plan Sponsor’s charter and by-laws and shall include each individual serving as a “Non-Voting Board Observer,” as that term is defined in the Wengen Alberta Limited Partnership Securityholders Agreement, dated July 11, 2007, as the same may be amended from time to time.

 

1.6                       CLAIMANT.  is described in Section 8.3.

 

1

 

1.7                       CODE.  means the Internal Revenue Code of 1986 and the Treasury regulations or other authoritative guidance issued thereunder, as amended from time to time.

 

1.8                       COMPENSATION.  means the total current cash remuneration paid by the Employer to an Eligible Individual with respect to his or her service for the Employer; and, in the case of Eligible Individuals who are Directors, including remuneration paid by the Employer in the form of stock or stock units of the Plan Sponsor with respect to his or her service for the Employer as a Director.  A “stock unit” means the Employer’s unfunded promise to deliver one share of common stock of the Plan Sponsor, or the fair market value of such share in cash, to a Participant.

 

1.9                       COMPENSATION DEFERRAL ACCOUNT.  is described in Section 3.2.

 

1.10                COMPENSATION DEFERRAL.  is described in Section 3.2.

 

1.11                DESIGNATION DATE.  means the date or dates as of which a designation of deemed investment directions by an individual pursuant to Section 4.6, or any change in a prior designation of deemed investment directions by an individual pursuant to Section 4.6, shall become effective.  The Designation Dates in any Plan Year shall be the first business day of each month so long as the investment directions are received by the Employer’s designee by the 25th day of the preceding month.

 

1.12                DISABILITY.  means a Participant becoming disabled within the meaning of Code section 409A (i.e., Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer, or (iii) is determined to be totally disabled by the Social Security Administration).

 

1.13                DISCRETIONARY CONTRIBUTION SUBACCOUNT.  is described in Section 3.1.

 

1.14                EFFECTIVE DATE.  means the Effective Date of the Plan as amended and restated herein, January 1, 2009.

 

1.15                ELECTION FORM.  means the form or forms on which a Participant elects to defer Compensation under the Plan and on which the Participant makes certain other designations as required on the form(s).

 

1.16                ELIGIBLE INDIVIDUAL.  means, for any Plan Year (or applicable portion thereof), a person employed by the Employer who is determined by the Administrative Committee to be a member of a select group of management or highly compensated employees, or a member of the Plan Sponsor’s Board of Directors, and who is designated by the Administrative Committee to be an Eligible Individual under the Plan.  By each December 31, the Administrative Committee shall notify those individuals, if any, who will be Eligible Individuals for the next Plan Year.  If

 

2

 

the Administrative Committee determines that an individual first becomes an Eligible Individual during a Plan Year, the Administrative Committee shall notify such individual of its determination and of the date during the Plan Year on which the individual shall first become an Eligible Individual.

 

1.17                EMPLOYER.  means Laureate Education, Inc. (the “Plan Sponsor”) and the participating Employers who have adopted the Plan and their successors and assigns unless otherwise herein provided, and any other subsidiary or affiliate of the Plan Sponsor which, with the consent of the Plan Sponsor, adopts the Plan or any other corporation or business organization which, with the consent of the Plan Sponsor or its successors or assigns, assumes an Employer’s obligations under the Plan.

 

1.18                EMPLOYER CONTRIBUTION CREDIT ACCOUNT.  is described in Section 3.1.

 

1.19                EMPLOYER CONTRIBUTION CREDITS.  is described in Section 3.1.

 

1.20                ENTRY DATE.  with respect to an individual means, unless permitted otherwise by the Employer in accordance with Code section 409A, January 1st of the first Plan Year that commences after the Administrative Committee notifies the individual that he or she is an Eligible Individual, but in no event earlier than the first day of the pay period following completion and submission of all required Election Forms.  Individuals identified as Eligible Individuals must complete and submit all forms within thirty (30) days of being notified of eligibility.  If completed Election Forms are not timely submitted, entry into the Plan shall be delayed until the next annual enrollment date (if the Election Forms are timely submitted by the December 31 preceding the next Plan Year).

 

1.21                ERISA.  means the Employee Retirement Income Security Act of 1974 and regulations and other authoritative guidance issued thereunder, as amended from time to time.

 

1.22                IN-SERVICE DISTRIBUTION.  means a scheduled distribution of part or all of a Participant’s vested Account prior to the Participant’s Separation from Service.

 

1.23                MATCHING CONTRIBUTION SUBACCOUNT.  is described in Section 3.1.

 

1.24                PARTICIPANT.  means any person so designated in accordance with the provisions of Article 2, including, where appropriate according to the context of the Plan, any former employee or former member of the Board of Directors who is or may become (or whose Beneficiaries may become) eligible to receive a benefit under the Plan.

 

1.25                PERFORMANCE-BASED COMPENSATION.  means that portion of an Eligible Individual’s Compensation which is based on the performance by the Eligible Individual of services for the Employer over a period of at least twelve (12) months and which qualifies as “performance-based compensation” under Code section 409A.

 

1.26                PLAN.  means this Laureate Education, Inc. Deferred Compensation Plan, as amended from time to time.

 

3

 

1.27                PLAN ADMINISTRATOR.  is described in Section 8.3.

 

1.28                PLAN SPONSOR.  means Laureate Education, Inc. and its successors and assigns.

 

1.29                PLAN YEAR.  means the twelve (12) month period ending on the December 31 of each year during which the Plan is in effect.

 

1.30                SEPARATION FROM SERVICE.  means the date as of which the Employer and the Participant reasonably anticipate that no further services will be performed by the Participant or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months), and shall be construed as the date that the Participant first incurs a “separation from service” within the meaning of Code section 409A.

 

1.31                SUBACCOUNT.  means the Subaccount established pursuant to Section 3.1.

 

1.32                TERMINATION DISTRIBUTION.  means a scheduled distribution of part or all of a Participant’s vested Account on or after the Participant’s Separation from Service.

 

1.33                TRUST.  means the Trust established pursuant to Article 11.

 

1.34                TRUSTEE.  means the Trustee of the Trust established pursuant to Article 11.

 

1.35                VALUATION DATE.  means the January 31 of each Plan Year and any other date that the Employer, in its sole discretion, designates as a Valuation Date.

 

ARTICLE 2

 

ELIGIBILITY AND PARTICIPATION

 

2.1                       REQUIREMENTS.  Every Eligible Individual on the Effective Date shall be eligible to become a Participant or continue to be a Participant on the Effective Date if all required Election Forms have been submitted by the Effective Date.  Every other Eligible Individual shall be eligible to become a Participant on his or her Entry Date.  No individual shall become a Participant, however, if he or she is not an Eligible Individual on the date his or her participation is to begin.

 

Participation in the Participant Compensation Deferral feature of the Plan is voluntary.  In order to participate in the Participant Compensation Deferral feature of the Plan, an otherwise Eligible Individual must make written application in such manner as may be required by the Employer and must agree to make Compensation Deferrals as provided in Article 3.

 

Participation in the Employer Contribution Credit Account portion of the Plan, if and when it is activated by the Board of Directors, is automatic and does not require a

 

4

 

Participant’s election to participate.

 

2.2                       RE-EMPLOYMENT.  Subject to Code section 409A, if a Participant whose employment or Director status with the Employer is terminated is subsequently re-employed or subsequently becomes a Director, he or she shall become a Participant in accordance with the provisions of Section 2.1.

 

2.3                       CHANGE OF SERVICE CATEGORY.  During any period in which a Participant remains in the service of the Employer, but ceases to be an Eligible Individual, he or she shall not be eligible to make Compensation Deferrals (subject to Code section 409A) nor shall he or she be eligible for any Employer Contribution Credits.

 

2.4                       TERMINATION OF PARTICIPATION.  To the extent permitted under Code section 409A, the Employer, in its sole discretion, may (i) permit a Participant during the 2005 calendar year to terminate participation in the Plan and receive a payment of his or her Account pursuant to Article 6, or (ii) require a Participant to terminate participation in the Plan during the 2005 calendar year and receive a payment of his or her vested Account pursuant to Article 6; provided that any amounts subject to termination are includible in the income of the Participant in the 2005 calendar year or, if later, the taxable year in which the amounts are earned and vested.

 

ARTICLE 3

 

CONTRIBUTIONS AND CREDITS

 

3.1                       EMPLOYER CONTRIBUTION CREDITS.  There shall be established and maintained a separate Employer Contribution Credit Account in the name of each Participant.  There shall be established two subaccounts under a Participant’s Employer Contribution Credit Account: (i) a Matching Contribution Subaccount and (ii) a Discretionary Contribution Subaccount (each, a “Subaccount”).  Each Subaccount shall be credited or debited, as applicable, with (a) amounts equal to the Employer’s Contribution Credits credited to that Subaccount, if any; (b) any deemed earnings and losses allocated to that Subaccount as determined by the Employer, in its discretion; and (c) any expenses charged to that Subaccount.

 

For purposes of this Section, the Employer Contribution Credits credited to a Participant’s Matching Contribution Subaccount for a particular Plan Year shall be an amount (if any) equal to the additional matching contributions which would have been made to the Participant’s account under the Laureate Education, Inc. 401(k) Plan if the 401(k) Plan did not limit compensation to the amount provided in Code section 401(a)(17).  Whether Employer Contribution Credits to Participants’ Matching Contribution Subaccounts shall be made for a particular Plan Year shall be determined by the Employer, in its sole and absolute discretion.  To receive any Employer Contribution Credits to the Participant’s Matching Contribution Subaccount, the Participant must (i) have made salary reduction contributions to the 401(k) Plan, (ii) received less than the full match under the 401(k) Plan on the salary reduction contribution because of Code section 401(a)(17) limit on compensation, and (iii) made at least the $5,000 minimum (or the applicable prorated minimum as provided in Section 3.2) in Participant Compensation Deferrals to the Plan during the applicable Plan Year.

 

5

 

For purposes of this Section, the Employer’s Contribution Credits credited to a Participant’s Discretionary Contribution Subaccount for a particular Plan Year shall be an amount (if any) determined by the Employer, in its sole and absolute discretion.

 

A Participant shall become vested in amounts credited to his or her Employer Matching Contribution Subaccount pursuant to the vesting schedule for matching contributions under the 401(k) Plan; provided, however, that unvested matching contributions shall become 100% vested if the Participant dies or suffers a Disability while an active Participant, or incurs a Separation from Service once he or she has attained age fifty-five (55) and completed at least ten (10) years of service (as determined by the Employer).

 

Discretionary Contribution Subaccount contributions shall vest pursuant to such vesting schedule for such amounts as is prescribed by the Employer, in its discretion.

 

The Employer shall contribute to the Trust maintained pursuant to Section 11.1, an amount (if any) equal to the amount required to be credited to the Participant’s Employer Contribution Account under this Section.  These amounts shall be contributed to the Trust on or before the last day of the Plan Year in which the Employer Contribution amounts are credited.

 

A Participant’s Employer Contribution Credit Account shall be credited or debited, as applicable, as of each Valuation Date, with deemed earnings or losses, as applicable, and expenses.  The amount of deemed earnings or losses and expenses shall be as determined by the Employer under the Plan.  The Employer shall have the discretion to allocate such deemed earnings or losses and expenses among Participants’ Employer Contribution Credit Accounts pursuant to such allocation rules as the Employer deems to be reasonable and administratively practicable.

 

3.2                       PARTICIPANT COMPENSATION DEFERRALS.  In accordance with rules established by the Plan Sponsor and subject to such amount limitations as set forth in the Plan, a Participant may elect to defer Compensation which is due to be earned and which would otherwise be paid to the Participant in any fixed periodic dollar amounts or whole percentage amounts designated by the Participant.  Amounts so deferred will be considered a Participant’s “Compensation Deferrals.”  Except as provided below, a Participant shall make such election(s) under this paragraph with respect to a coming twelve (12) month Plan Year during the period beginning on the December 1 and ending on the December 31 of the prior calendar year, or during such other period as might be established by the Employer, which period ends no later than the December 31 of the year before the calendar year in which the services giving rise to the Compensation to be deferred are to be performed.

 

Notwithstanding the preceding, in the case of the first Plan Year in which an Eligible Individual becomes eligible to become a Participant, if and to the extent permitted by the Employer, the Eligible Individual may make an election, no later than thirty (30) days after the date he or she becomes eligible to become a Participant, to defer Compensation for services to be performed after the election.

 

If and to the extent permitted by the Employer, a Participant may make an election to defer Performance-Based Compensation no later than six (6) months prior to the last

 

6

 

day of the period over which the services giving rise to the Performance-Based Compensation are performed.

 

In addition, notwithstanding the preceding, to the extent permitted by Code section 409A, the Employer may, in its sole discretion, permit a Participant to make an election to defer Compensation which relates in full or in part to services performed prior to December 31, 2005 (including elections to defer (i) regular salary amounts for services to be performed in the 2005 calendar year and/or (ii) bonus payment amounts payable in 2005 in respect of services performed during the 2004 calendar year) no later than the earlier of (a) March 15, 2005 or (b) the date such Compensation is otherwise payable to the Participant.

 

Compensation Deferrals shall be made through regular payroll or Director’s Compensation deductions and/or through an election by the Participant to defer a bonus payment not yet payable to him or her at the time of the election.  The Participant may change or revoke his or her Compensation Deferral election only if and to the extent permitted by the Employer and in accordance with Code section 409A specifically relating to the change and/or revocation of deferral elections.  To the extent permitted by Code section 409A and by the Employer, a Participant may terminate participation in the Plan or cancel a deferral election under the Plan at any time during the 2005 calendar year.

 

Once made, a Compensation Deferral or Director’s Compensation deduction election shall continue in force only for the Plan Year to which the election relates, unless changed as provided above.  A Compensation Deferral bonus payment election shall continue in force only for the bonus payment for which the election is specifically effective.  Compensation Deferrals shall be deducted by the Employer from the pay of a deferring Participant and shall be credited to the Compensation Deferral Account of the deferring Participant.

 

A Participant may defer up to 85% of base salary as well as up to 100% of any bonuses, annual incentive compensation, and/or long-term incentive compensation or Board of Directors’s fees; provided, however, that no deferral election shall reduce a Participant’s Compensation amount below the compensation amount needed to satisfy applicable employment taxes, any benefit plan withholding requirements, and any income tax withholding for compensation that has not or cannot be deferred.  The minimum amount which a Participant may defer for a Plan Year is $5,000; provided, however, that, if an individual is not a Participant for the entire Plan Year, this minimum shall be prorated based on the Participant’s full months of participation for the Plan Year.  Subject to Code section 409A, if a Participant does not defer at least the required minimum amount during a Plan Year, the amount actually deferred shall be returned to the Participant as taxable income.  No earnings shall be credited to said amount returned.

 

There shall be established and maintained by the Employer a separate Compensation Deferral Account in the name of each Participant to which shall be credited or debited: (i) amounts equal to the Participant’s Compensation Deferrals; (ii) amounts equal to any deemed earnings or losses (as determined by the Employer, in its discretion); and (iii) any expenses charged to that Account.

 

A Participant shall at all times be 100% vested in amounts credited to his or her

 

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Participant Compensation Deferral Account.

 

ARTICLE 4

 

ALLOCATION OF FUNDS

 

4.1                       ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS.  Subject to Section 4.6, each Participant shall have the right to direct the Employer as to how amounts in his or her Account shall be deemed to be invested in the deemed investment options made available under the Plan.  Subject to such limitations as may from time to time be required by law, imposed by the Employer or the Trustee, or contained elsewhere in the Plan, and subject to such operating rules and procedures as may be imposed from time to time by the Employer, prior to the date on which a direction will become effective, the Participant shall have the right to direct the Employer as to how amounts in his or her Account shall be deemed to be invested.

 

The Employer shall direct the Trustee to invest the account maintained in the Trust on behalf of the Participant pursuant to the deemed investment directions the Employer properly has received from the Participant.  The value of the Participant’s Account shall be equal to the value of the account maintained under the Trust on behalf of the Participant.  As of each Valuation Date of the Trust, the Participant’s Account will be credited or debited to reflect the Participant’s deemed investments of the Trust.

 

4.2                       ACCOUNTING FOR DISTRIBUTIONS.  As of the date of any distribution under the Plan, the distribution made under the Plan to the Participant or his or her Beneficiary or Beneficiaries shall be charged to such Participant’s Account.  Such amounts shall be charged on a pro-rata basis against the investments of the Trust in which the Participant’s Account (attributable to one or more particular Plan Years, as provided in Article 5) is deemed to be invested.

 

4.3                       ALLOCATION NOT EQUIVALENT OF VESTING.  The fact that an allocation has been made will not operate to vest in a Participant any right, title, or interest in any benefit under the Plan.  Vesting shall occur only as provided in Article 3.

 

4.4                       SEPARATE ACCOUNTS.  A separate bookkeeping account under the Plan shall be established and maintained by the Employer to reflect the Account for each Participant with subaccounts to show separately the applicable deemed investments of the Account.

 

4.5                       INTERIM VALUATIONS.  If it is determined by the Plan Sponsor that the value of a Participant’s Account as of any date on which distributions are to be made differs materially from the value of the Participant’s Account on the prior Valuation Date upon which the distribution is to be based, the Plan Sponsor, in its discretion, shall have the right to designate any date in the interim as a Valuation Date for the purpose of revaluing the Participant’s Account so that the Account will, prior to the distribution, reflect its share of such material difference in value.

 

4.6                       DEEMED INVESTMENT DIRECTIONS OF PARTICIPANTS.  Subject to such limitations as may from time to time be required by law, imposed by the Plan Sponsor, the Employer, or the Trustee, or contained elsewhere in the Plan, and subject to such operating rules and procedures as may be imposed from time to time by the Employer, the Plan Sponsor, or the

 

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Trustee, prior to and effective for each Designation Date, each Participant may communicate to the Employer a direction as to how his or her Account should be deemed to be invested (in any whole percentage multiples) among the deemed investment options.  Such direction may separately designate deemed investments (i) for that portion of the Participant’s Account attributable to amounts that will be credited to the Participant’s Account prior to the Designation Date on which such direction shall become effective, and (ii) for that portion of the Participant’s Account attributable to amounts that will be credited to the Participant’s Account after the Designation Date on which such direction shall become effective, and shall be subject to the following rules:

 

(a)                                 Any initial or subsequent deemed investment direction shall be in writing, on a form supplied by and filed with the Employer (or made in such other manner specified by the Employer).  Investment directions shall be effective the first business day of the month so long as instructions are received by the Employer’s designee by the 25th day of the previous month.

 

(b)                                 All amounts credited to the Participant’s Account shall be deemed to be invested in accordance with the then-effective deemed investment direction, and as of the effective date of any new deemed investment direction, all or a portion of the Participant’s Account at that date shall be reallocated among the designated deemed investment funds according to the percentages specified in the new deemed investment direction unless and until a subsequent deemed investment direction shall be filed and become effective.  An election concerning deemed investment choices shall continue indefinitely until changed by the Participant in a manner permitted by the Employer.

 

(c)                                  If the Employer receives an initial or revised deemed investment direction which it deems to be incomplete, unclear, or improper, the Participant’s investment direction then in effect shall remain in effect (or, in the case of a deficiency in an initial deemed investment direction, the Participant shall be deemed to have filed no deemed investment direction) until the next Designation Date, unless the Employer provides for, and permits the application of, corrective action prior thereto.

 

(d)                                 If the Employer possesses (or is deemed to possess as provided in (c), above) at any time directions as to the deemed investment of less than all of a Participant’s Account, the Participant shall be deemed to have directed that the undesignated portion of the Account be deemed to be invested in a money market, fixed income, or similar fund made available under the Plan as determined by the Employer in its discretion.

 

(e)                                  Each Participant under the Plan, as a condition to his or her participation under the Plan, agrees to indemnify and hold harmless the Employer and its agents and representatives from any losses or damages of any kind relating to the deemed investment of the Participant’s Account under the Plan.

 

(f)                                   Each reference in this Section to a Participant shall be deemed to include, where applicable, a reference to a Beneficiary.

 

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4.7                       EXPENSES.  Expenses, including Trustee fees, allocable to the administration or operation of an Account maintained under the Plan shall be paid by each Employer unless, in the discretion of the Employer, the Employer elects to charge such expenses against the appropriate Participant’s Account or Participants’ Accounts.  If an expense is charged against a Participant’s Account, such expense will reduce the contribution to the Trust next due to be made by the Employer in respect of the Account.

 

4.8                               STOCK DEFERRALS.

 

(a)                                 Notwithstanding anything to the contrary in this Article 4, no investment direction is permitted for Compensation Deferrals in the form of stock credited to a Participant’s Account, except as otherwise determined by the Plan Sponsor.

 

(b)                                 If a Participant has a valid election to defer Compensation in the form of stock, the Employer will credit to such Participant’s Account, on each date on which such Participant is entitled to the payment of Compensation, the number of stock units equal to the quotient, rounded down to three decimal places, obtained by dividing (i) the amount of Compensation that the Participant elected to defer in the form of stock by (ii) the fair market value of one share of common stock of the Plan Sponsor on such payment date.

 

(c)                                  Unless the Plan Sponsor determines otherwise, no dividends shall be paid to a Participant, nor shall dividend equivalents be credited to a Participant’s Account, for the stock units credited to such Participant’s Account.

 

(d)                                 The crediting of stock units to a Participant’s Account shall not entitle such Participant to voting or other rights as a stockholder until shares of common stock are issued upon distribution of benefits.

 

ARTICLE 5

 

ENTITLEMENT TO BENEFITS

 

5.1                       IN-SERVICE DISTRIBUTIONS.  Before the first day of each Plan Year or, if applicable, the Participant’s Entry Date with respect to a Participant’s initial year of participation (or by such later date as may be permitted by Code section 409A with respect to deferral elections affecting Performance-Based Compensation if such later election is permitted by the Administrative Committee), a Participant may select a scheduled payment date and form of payment for the payment (or commencement of payment) as an In-Service Distribution of his or her Compensation Deferrals or Employer Discretionary Contribution Credits for that Plan Year, which will be valued and payable according to the provisions of Article 6.  Participants may elect to have In-Service Distributions distributed in the form of a lump sum payment payable on the scheduled payment date or in up to five (5) annual installments (adjusted for gains or losses) that commence on the scheduled payment date; provided, however, that if the aggregate amount of a Participant’s Account to be paid as an In-Service Distribution with respect to a scheduled payment date (and which may be attributable to more than one Plan Year’s Compensation Deferrals and Employer Discretionary Contribution Credits) is less than $10,000, the In-Service Distributions payable for that scheduled payment date shall be paid in the form of a lump sum notwithstanding

 

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any election of the Participant to receive an In-Service Distribution in installments commencing on such date.

 

The scheduled payment date elected by a Participant for an In-Service Distribution must be in February of a specified calendar year and must be a date no earlier than the first February after the third calendar year after the Plan Year in which the Compensation Deferrals and/or Employer Contribution Credits subject to the scheduled payment date are to be made by or on behalf of the Participant.

 

A Participant may change the form of payment of an In-Service Distribution or extend the scheduled payment date of an In-Service Distribution to a later scheduled payment date up to two times for each such In-Service Distribution by submitting a new Election Form to the Employer.  Any such change to the form or timing of an In-Service Distribution must be made by the Participant at least twelve (12) months prior to the date on which the distribution was to be made (or commence being made) before the change and must extend the scheduled payment date at least five (5) full calendar years in length (measured from the scheduled payment date on which the In-Service Distribution was scheduled to be paid or commence being paid).  A scheduled payment date may not be accelerated, except as provided in the Plan.  Any election to change the form of payment or extend the scheduled payment date of an In-Service Distribution will not take effect until at least twelve (12) months after the date on which the election is made.

 

Notwithstanding the preceding, to the extent permitted under Code section 409A and by the Employer, the Participant may elect the timing of distributions during 2005, 2006, 2007, or 2008 (except that (i) a Participant cannot in 2006 change payment elections with respect to payments that the Participant would otherwise receive in 2006, or in 2006 make an election that causes post-2006 scheduled payments to be made in 2006; (ii) a Participant cannot in 2007 change payment elections with respect to payments that the Participant would otherwise receive in 2007, or in 2007 make an election that causes post-2007 scheduled payments to be made in 2007; or (iii) a Participant cannot in 2008 change payment elections with respect to payments that the Participant would otherwise receive in 2008, or in 2008 make an election that causes post-2008 scheduled payments to be made in 2008), and such election shall not be treated as a change in the timing of payment or an acceleration of payment.

 

5.2                       TERMINATION DISTRIBUTIONS.  Before the first day of each Plan Year or, if applicable, the Participant’s Entry Date with respect to a Participant’s initial year of participation (or by such later date as may be permitted by Code section 409A with respect to deferral elections affecting Performance-Based Compensation if such later election is permitted by the Administrative Committee), a Participant may elect to have Termination Distributions attributable to that Plan Year distributed in the form of a lump sum payment or in up to fifteen (15) annual installments (adjusted for gains or losses) in accordance with the provisions of Article 6.  Except as otherwise provided in Section 5.3 of the Plan, each Termination Distribution will be paid (or commence being paid) in the February following the year in which the Participant incurs a Separation from Service.  Notwithstanding the foregoing sentence, if the aggregate amount of a Participant’s Account to commence being paid as a Termination Distribution on a common date (and which may be attributable to more than one Plan Year’s Compensation Deferrals and Employer Discretionary Contribution Credits) is less than $25,000, the Termination Distributions

 

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scheduled to commence being paid on that date shall be paid in the form of a lump sum payment notwithstanding any election of the Participant to receive the Termination Distributions in installments commencing on such date.

 

If a Participant incurs a Separation from Service without a valid Termination Distribution election in place for a Plan Year, then, subject to Section 5.3 of the Plan, the portion of the Participant’s Account attributable to Compensation Deferrals or Employer Discretionary Contribution Credits for that Plan Year shall be distributed in the form of a lump sum payment in February of the year following the year in which the Separation from Service occurs.

 

A Participant may change the form of payment of a Termination Distribution or extend the payment date of a Termination Distribution to a later scheduled payment date by submitting a new Election Form to the Employer; provided, however, that a Termination Distribution may not be delayed more than 10 years and an election to delay a Termination Distribution will not be given effect if it would delay the distribution (or commencement of distribution) beyond the Participant’s age 75.  Any such change to the form or timing of a Termination Distribution must be made by the Participant at least twelve (12) months prior to the date on which the distribution was to be made (or commence being made) before the change and must extend the scheduled payment date at least five (5) full calendar years in length (measured from the scheduled payment date on which the Termination Distribution was scheduled to be paid or commence being paid).  A scheduled payment date may not be accelerated, except as provided in the Plan.  Any election to change the form of payment or extend the payment date of a Termination Distribution will not take effect until at least twelve (12) months after the date on which the election is made.

 

5.3                       SEPARATION FROM SERVICE.  If a Participant incurs a Separation from Service with the Employer after an In-Service Distribution has commenced being paid in the form of annual installments and before those installment payments have been completed, the balance of those In-Service Distribution installments shall be distributed in one lump sum in the February following the Separation from Service.  If a Participant incurs a Separation from Service with the Employer before the scheduled payment date of an In-Service Distribution, the In-Service Distribution election shall be of no further force or effect and the Termination Distribution election for the Plan Year to which such In-Service Distribution election related shall apply.

 

Notwithstanding anything in the Plan to the contrary, if a Participant is a “specified employee” (as defined under Code section 409A and determined in good faith by the Employer) when the Participant incurs a Separation from Service, any amount that would be payable under the terms of the Plan and applicable Participant elections during the six (6) -month period immediately following the Participant’s Separation from Service shall continue to be deemed to be invested pursuant to Article 4 and shall be paid (i) on the later of (a) within fifteen (15) days after the end of the six (6) -month period beginning on the date of such Separation from Service, or (b) within the period beginning February 1 and ending March 15 next following the Separation from Service; or, if earlier, (ii) in the February next following the Participant’s death.

 

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5.4                       DEATH; DISABILITY.  Upon the Participant’s death or Disability, the Participant’s entire vested Account shall be valued and paid to the Participant or the Participant’s designated Beneficiary(ies), as applicable, as provided in Article 6.

 

5.5                       UNFORESEEABLE EMERGENCY DISTRIBUTIONS.  In the event the Participant experiences an unforeseeable emergency, as defined in this Section, the Participant may apply to the Employer for the distribution of all or any part of his or her Account attributable to Compensation Deferrals and/or fully vested Employer Contribution Credits.  The Employer shall consider the circumstances of each such case, and the best interests of the Participant and his or her family, and shall have the right, in its sole discretion, if applicable, to allow such distribution, or, if applicable, to direct a distribution of part of the amount requested, or to refuse to allow any distribution; provided, however, that such distribution shall be permitted solely to the extent permitted under Code section 409A.  Upon a finding of unforeseeable emergency, the Employer shall direct that the appropriate distribution is made to the Participant with respect to the Participant’s vested Account in a lump sum payment.  In no event shall the aggregate amount of the distribution exceed either the full value of the Participant’s vested Account or the amount determined by the Employer to be necessary to satisfy the unforeseeable emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which the hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of assets would not itself cause severe financial hardship).  For purposes of this Section, the value of the Participant’s vested Account shall be determined as of the date of the distribution.

 

“Unforeseeable emergency” means (i) a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code section 152(a)) of the Participant, (ii) loss of the Participant’s property due to casualty, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, each as determined to exist by the Employer.  A distribution may be made under this Section only with the approval of the Employer.

 

ARTICLE 6

 

DISTRIBUTION OF BENEFITS

 

6.1                       AMOUNT.  A Participant (or his or her Beneficiary) shall become entitled to receive, on the date(s) provided in Article 5, a distribution (or commencement of distributions) of the Participant’s Account, to the extent vested and as adjusted for earnings and losses, as provided in Article 5.  Any payment due under the Plan from the Trust which is not paid by the Trust for any reason shall be paid from the general assets of the Employer for which the Participant provides services.

 

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6.2                       METHOD OF PAYMENT.

 

(a)                                 Payments.  All payments under the Plan shall be made in cash; except that the Employer shall have the discretion to make payments in whole or in part in shares of the Plan Sponsor’s common stock to Participants who have stock units credited to their Accounts.

 

(b)                                 Timing and Manner of Payment.  Except as otherwise provided in the Plan, distributions under the Plan shall be made in accordance with the time and form elections made by the Participant under Article 5 with respect to his or her Compensation Deferrals and Employer Discretionary Contribution Credits for each Plan Year.  In the absence of a valid election for a Plan Year, Compensation Deferrals and vested Employer Discretionary Contribution Credits for that Plan Year shall be made in a lump sum on the date or dates determined in accordance with Article 5.

 

Notwithstanding the preceding, to the extent permitted under Code section 409A and by the Employer, the Participant may elect the form and timing of distributions during 2005, 2006, 2007, or 2008 (except that (i) a Participant cannot in 2006 change payment elections with respect to payments that the Participant would otherwise receive in 2006, or in 2006 make an election that causes post-2006 scheduled payments to be made in 2006; (ii) a Participant cannot in 2007 change payment elections with respect to payments that the Participant would otherwise receive in 2007, or in 2007 make an election that causes post-2007 scheduled payments to be made in 2007; or (iii) a Participant cannot in 2008 change payment elections with respect to payments that the Participant would otherwise receive in 2008, or in 2008 make an election that causes post-2008 scheduled payments to be made in 2008), and such election shall not be treated as a change in the form and timing of payment or an acceleration of payment.

 

If the whole or any part of a payment under the Plan is to be in installments, the total to be so paid shall continue to be deemed to be invested pursuant to Article 4 under such procedures as the Employer may establish, in which case any deemed income, gain, loss, or expense or tax allocable thereto (as determined by the Employer, in its discretion) shall be reflected in the installment payments, using such method for the calculation of the installments as the Employer shall reasonably determine.

 

Notwithstanding the foregoing, pursuant to Code section 409A, if a Participant’s participation in the Plan terminates during the 2005 calendar year pursuant to Section 2.4, the Employer, in its sole discretion, may permit payment of the Participant’s vested Account to the Participant during the 2005 calendar year, or if later, the taxable year in which the amount is earned and vested.

 

6.3                       NO ACCELERATIONS.  Notwithstanding anything in the Plan to the contrary, no change submitted on an Election Form shall be accepted by the Employer if the change accelerates the time over which distributions shall be made to the Participant (except as otherwise permitted by Code section 409A) and the Employer shall deny any change made to an election if the Employer determines that the change violates the requirement under Code section 409A that the first payment with respect to which such election is made be deferred for a period of not less than five (5) full calendar years from the date such payment would otherwise have been made.

 

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Notwithstanding the preceding, the Employer, in its discretion, may accelerate distributions under the Plan to the extent permitted under Code section 409A (e.g., Treasury Regulation section 1.409A-3(j)(4)).

 

6.4                       DEATH OR DISABILITY BENEFITS.  If a Participant dies or suffers a Disability before incurring a Separation from Service, the entire value of the Participant’s Account shall be paid in one lump sum in the February following the Participant’s death or Disability, as applicable, to the Participant or the Participant’s Beneficiary(ies), as applicable.

 

ARTICLE 7

 

BENEFICIARIES; PARTICIPANT DATA

 

7.1                       DESIGNATION OF BENEFICIARIES.  Each Participant from time to time may designate any person or persons (who may be named contingently or successively) to receive such benefits as may be payable under the Plan upon or after the Participant’s death, and such designation may be changed from time to time by the Participant by filing a new designation.  Each designation (i) will revoke all prior designations by the same Participant, (ii) shall be in a form prescribed by the Employer, and (iii) will be effective only when filed in writing with the Employer during the Participant’s lifetime.

 

In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the Employer shall pay any such benefit payment to the Participant’s spouse, if then living, but otherwise to the Participant’s then living descendants, if any, per stirpes, but, if none, to the Participant’s estate.  In determining the existence or identity of anyone entitled to a benefit payment, the Employer may rely conclusively upon information supplied by the personal representative or executor of the Participant’s estate.

 

If a question arises as to the existence or identity of anyone entitled to receive a benefit payment as aforesaid, or if a dispute arises with respect to any such payment, then, notwithstanding the foregoing, the Employer, in its sole discretion, may distribute such payment to the Participant’s estate without liability for any tax or other consequences which might flow therefrom, or may take such other action as the Employer deems to be appropriate.

 

7.2                       INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES.  Any communication, statement, or notice addressed to a Participant or to a Beneficiary at his or her last post office address as shown on the Employer’s records shall be binding on the Participant or Beneficiary for all purposes of the Plan.  The Employer shall not be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to such last known address.  If the Employer notifies any Participant or Beneficiary that he or she is entitled to an amount under the Plan and the Participant or Beneficiary fails to claim such amount or make his or her location known to the Employer within three (3) years thereafter, then, except as otherwise required by law, if the location of one or more of the next of kin of the Participant is known to the Employer,

 

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the Employer may direct distribution of such amount to any one or more or all of such next of kin, and in such proportions as the Employer determines.  If none of the foregoing persons can be located, the Employer shall have the right to direct that the amount payable shall be deemed to be forfeited, except that the dollar amount of the forfeiture, unadjusted for deemed gains or losses in the interim, shall be paid by the Employer if a claim for the benefit subsequently is made by the Participant or Beneficiary to whom it was payable.  If a benefit payable to an unlocated Participant or Beneficiary is subject to escheat pursuant to applicable state law, the Employer shall not be liable to any person for any payment made in accordance with such law.

 

7.3                       DISTRIBUTION FOR MINOR BENEFICIARY.  In the event a distribution is to be made to a minor, the Employer may, in the Employer’s sole discretion, direct that such distribution be paid to the legal guardian, or if none, to a parent of such Beneficiary or a responsible adult with whom the Beneficiary maintains his or her residence, or to the custodian for such Beneficiary under the Uniform Gifts to Minors Act, if such is permitted by the laws of the state in which the Beneficiary resides.  Such payment to the legal guardian or parent or custodian of a minor Beneficiary shall fully discharge the Trustee, the Employer, the Plan Sponsor, and the Plan from further liability on account thereof.

 

ARTICLE 8

 

ADMINISTRATION

 

8.1                       ADMINISTRATIVE AUTHORITY.  Except as otherwise specifically provided herein, the Plan Sponsor shall have the sole responsibility for and the sole control of the operation and administration of the Plan, and shall have the power and authority to take all action and to make all decisions and interpretations which may be necessary or appropriate in order to administer and operate the Plan, including, without limiting the generality of the foregoing, the power, duty, and responsibility to:

 

(a)                                 Resolve and determine all disputes or questions arising under the Plan, including the power to determine the rights of Eligible Individuals, Participants, and Beneficiaries, and their respective benefits, and to remedy any ambiguities, inconsistencies, or omissions in the Plan.

 

(b)                                 Adopt such rules of procedure and regulations as in the Plan Sponsor’s opinion may be necessary for the proper and efficient administration of the Plan and as are consistent with the Plan.

 

(c)                                  Implement the Plan in accordance with its terms and the rules and regulations adopted as above.

 

(d)                                 Make determinations with respect to the eligibility of any Eligible Individual as a Participant and make determinations concerning the crediting and distribution of Accounts.

 

(e)                                  Appoint any persons or firms, or otherwise act to secure specialized advice or assistance, as it deems necessary or desirable in connection with the administration and operation of the Plan, and the Plan Sponsor shall be entitled to rely conclusively upon, and shall

 

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be fully protected in any action or omission taken by it in good faith reliance upon, the advice or opinion of such firms or persons.  The Plan Sponsor shall have the power and authority to delegate from time to time by written instrument all or any part of its duties, powers, or responsibilities under the Plan, both ministerial and discretionary, as it deems appropriate, to any person or committee, and in the same manner to revoke any such delegation of duties, powers, or responsibilities.  Any action of such person or committee in the exercise of such delegated duties, powers, or responsibilities shall have the same force and effect for all purposes under the Plan as if such action had been taken by the Plan Sponsor.  Further, the Plan Sponsor may authorize one or more persons to execute any certificate or document on behalf of the Plan Sponsor, in which event any person notified by the Plan Sponsor of such authorization shall be entitled to accept and conclusively rely upon any such certificate or document executed by such person as representing action by the Plan Sponsor until such notified person shall have been notified of the revocation of such authority.

 

(f)                                   In its sole discretion, to determine the deemed investments (and to change the deemed investments at any time).

 

8.2                       LITIGATION.  In any action or judicial proceeding affecting the Plan, it shall be necessary to join as a party only the Plan Sponsor.  Except as may be otherwise required by law, no Participant or Beneficiary shall be entitled to any notice or service of process, and any final judgment entered in such action shall be binding on all persons interested in, or claiming under, the Plan.

 

8.3                       CLAIMS PROCEDURE.  This Section is based on final regulations issued by the Department of Labor and published in the Federal Register on November 21, 2000 and codified at section 2560.503-1 of the Department of Labor Regulations.  If any provision of this Section conflicts with the requirements of those regulations, the requirements of those regulations will prevail.

 

(a)                                 Initial Claim.  A Participant or Beneficiary who believes he or she is entitled to any Plan benefit under the Plan may file a claim (the “Claimant”) with the Employer or the administrator of the Plan (the “Plan Administrator”).  The Plan Administrator shall review the claim itself or appoint an individual or an entity to review the claim.

 

(i)                                     Benefit Claims That Do Not Require a Determination of Disability.  If the claim is for a benefit other than a Disability benefit, the Claimant will be notified within ninety (90) days after the claim is received whether the claim is allowed or denied, unless the Claimant receives written notice from the Plan Administrator prior to the end of the ninety (90) day period stating that special circumstances require an extension of the time for decision, such extension not to extend beyond the day which is one hundred eighty (180) days after the day the claim is received.

 

(ii)                                  Disability Benefit Claims.  In the case of a benefits claim that requires a determination by the Plan Administrator of a Participant’s Disability status, the Plan Administrator will notify the Claimant of the Plan’s adverse benefit determination within a reasonable period of time, but no later than forty-five (45) days after receipt of the claim.  If, due to matters beyond the control of the Plan, the Plan Administrator needs additional time to process

 

17

 

a claim, the Claimant will be notified within forty-five (45) days after the Plan Administrator receives the claim, of those circumstances and of when the Plan Administrator expects to make its decision but not beyond seventy-five (75) days after the claim is received.  If, prior to the end of the extension period, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to one hundred five (105) days after the claim is received, provided that the Plan Administrator notifies the Claimant of the circumstances requiring the extension and the date as of which the Plan expects to render a decision.  The extension notice will specifically explain (A) the standards on which entitlement to a Disability benefit is based, (B) the unresolved issues that prevent a decision on the claim and the additional information needed from the Claimant to resolve those issues, and (C) the Claimant will be afforded at least forty-five (45) days within which to provide the specified information.

 

(iii)                               Manner and Content of Denial of Initial Claims.  If the Plan Administrator makes an adverse benefit determination relating to a claim, it must provide to the Claimant, in writing or by electronic communication:

 

(A)                               the specific reasons for the adverse benefit determination;

 

(B)                               a reference to the Plan provision upon which the adverse benefit determination is based;

 

(C)                               a description of any additional information or material that the Claimant must provide in order to perfect the claim;

 

(D)                               an explanation of why such additional material or information is necessary;

 

(E)                                notice that the Claimant has a right to request a review of the adverse benefit determination and information on the steps to be taken if the Claimant wishes to request a review of the adverse benefit determination;

 

(F)                                 a statement of the Claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination; and

 

(G)                               if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse benefit determination relating to Disability benefits, a statement that a copy of the rule, guideline, protocol, or other similar criterion will be provided without charge to the Claimant upon request.

 

(b)                                 Review Procedures.

 

(i)                                     Benefit Claims That Do Not Require a Determination of Disability.  Except for claims requiring an independent determination of a Participant’s Disability status, a request for review of a denied claim must be made in writing to the Plan Administrator within sixty (60) days after receiving notice of the adverse benefit determination.  The decision upon review will be made within sixty (60) days after the Plan Administrator’s receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a

 

18

 

decision will be rendered no later than one hundred twenty (120) days after receipt of a request for review.  A notice of such an extension must be provided to the Claimant within the initial sixty (60) day period and must explain the special circumstances and provide an expected date of decision.

 

The reviewer will afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information, and records and to submit issues and comments in writing to the Plan Administrator.  The reviewer will take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim regardless of whether the information was submitted or considered in the initial benefit determination.

 

(ii)                                  Disability Benefit Claims.  In addition to having the right to review documents and submit comments as described in (i) above, a Claimant whose claim for Disability benefits requires an independent determination by the Plan Administrator of the Participant’s Disability status has at least one hundred eighty (180) days following receipt of a notification of an adverse benefit determination within which to request a review of the initial determination.  In such cases, the review will meet the following requirements:

 

(A)                               The Plan will provide a review that does not afford deference to the initial adverse benefit determination and that is conducted by an appropriate named fiduciary of the Plan who did not make the initial determination that is the subject of the appeal, nor is a subordinate of the individual who made the initial determination.

 

(B)                               The appropriate named fiduciary of the Plan will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment before making a decision on review of any initial adverse benefit determination based in whole or in part on a medical judgment.  The professional engaged for purposes of a consultation in the preceding sentence will not be an individual who was consulted in connection with the initial determination that is the subject of the appeal or the subordinate of any such individual.

 

(C)                               The Plan will identify to the Claimant the medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the review, without regard to whether the advice was relied upon in making the benefit determination on review.

 

(D)                               The decision on review will be made within forty-five (45) days after the Plan Administrator’s receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered no later than ninety (90) days after receipt of a request for review.  A notice of such an extension must be provided to the Claimant within the initial forty-five (45) day period and must explain the special circumstances and provide an expected date of decision.

 

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(iii)                               Manner and Content of Notice of Decision on Review.  Upon completion of its review of an initial adverse benefit determination, the Plan Administrator will give the Claimant, in writing or by electronic notification, a notice containing:

 

(A)                               its decision;

 

(B)                               the specific reasons for the decision;

 

(C)                               the relevant Plan provisions or insurance contract provisions on which its decision is based;

 

(D)                               a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records, and other information in the Plan’s files which is relevant to the Claimant’s claim for benefits;

 

(E)                                a statement describing the Claimant’s right to bring an action for judicial review under ERISA section 502(a); and

 

(F)                                 if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse benefit determination on review, a statement that a copy of the rule, guideline, protocol, or other similar criterion will be provided without charge to the Claimant upon request.

 

(c)                                  Calculation of Time Periods.  For purposes of the time periods specified in this Section, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim.  If a period of time is extended due to a Claimant’s failure to submit all information necessary, the period for making the benefit determination will be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

 

(d)                                 Failure of Plan to Follow Procedures.  If the Plan fails to follow the claims procedures required by this Section, a Claimant will be deemed to have exhausted the administrative remedies available under the Plan and will be entitled to pursue any available remedy under ERISA section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim.

 

(e)                                  Failure of Claimant to Follow Procedures.  A Claimant’s compliance with the foregoing provisions of this Section is a mandatory prerequisite to the Claimant’s right to commence any legal action with respect to any claim for benefits under the Plan.

 

ARTICLE 9

 

AMENDMENT

 

9.1                       RIGHT TO AMEND.  Subject to Code section 409A, the Plan Sponsor, by written instrument executed by a duly authorized representative of the Plan Sponsor, shall have the right

 

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to amend the Plan, at any time and with respect to any provisions hereof, and all parties hereto or claiming any interest under the Plan shall be bound by such amendment; provided, however, that no such amendment shall deprive a Participant or Beneficiary of a right accrued under the Plan prior to the date of the amendment.

 

9.2                       AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN.  Notwithstanding the provisions of Section 9.1, the Plan may be amended by the Plan Sponsor at any time, retroactively if required, if found necessary, in the opinion of the Plan Sponsor, in order (i) to ensure that the Plan is characterized as a “top-hat” plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA sections 201(2), 301(a)(3), and 401(a)(1), (ii) to conform the Plan to the provisions of Code section 409A, and (iii) to conform the Plan to the provisions and requirements of any applicable law (including ERISA and the Code).  No such amendment shall be considered prejudicial to any interest of a Participant or Beneficiary under the Plan.

 

ARTICLE 10

 

TERMINATION

 

10.1                PLAN SPONSOR’S RIGHT TO TERMINATE OR SUSPEND PLAN.  The Plan Sponsor reserves the right to terminate the Plan at any time.  The Plan Sponsor also reserves the right, at any time, to suspend the operation of the Plan for a fixed or indeterminate period of time.

 

10.2                AUTOMATIC TERMINATION OF PLAN.  The Plan, but not the Trust, shall automatically terminate as to the Eligible Individuals of an Employer upon the dissolution of the Employer, or upon the Employer’s merger into or consolidation with any other corporation or business organization if there is a failure by the surviving corporation or business organization to adopt specifically and agree to continue participation in the Plan.

 

10.3                SUSPENSION OF PLAN.  In the event of a suspension of the Plan, the Plan Sponsor shall continue all aspects of the Plan, other than Compensation Deferrals and Employer Contribution Credits, during the period of the suspension, in which event payments under the Plan will continue to be made during the period of the suspension in accordance with Articles 5 and 6.

 

10.4                ALLOCATION AND DISTRIBUTION.  This Section shall become operative on a complete termination of the Plan.  The provisions of this Section also shall become operative in the event of a partial termination of the Plan, as determined by the Employer, but only with respect to that portion of the Plan attributable to the Participants to whom the partial termination is applicable.  On the effective date of the termination or partial termination, (i) no persons who were not already Participants shall be eligible to become Participants, and (ii) the value of the vested Accounts of all affected Participants and Beneficiaries shall be determined and, after deduction of estimated expenses in liquidating and paying Plan benefits, paid to Participants and Beneficiaries as soon as is practicable after Plan benefits otherwise become due in accordance with Articles 5 and 6.

 

Notwithstanding anything in the Plan to the contrary, the Plan Sponsor, in its discretion, reserves the right, by action of its Board of Directors, to terminate the Plan and

 

21

 

distribute to Participants their vested Account balances but only as permitted in accordance with the Code (e.g., Treasury Regulation section 1.409A-3(j)(4)(ix)).

 

10.5                SUCCESSOR TO EMPLOYER.  Any corporation or other business organization which is a successor to an Employer by reason of a consolidation, merger, or purchase of substantially all of the assets of the Employer shall have the right to become a party to the Plan by adopting the same by resolution of the entity’s board of directors or other appropriate governing body.  If, within ninety (90) days from the effective date of such consolidation, merger, or sale of assets, such new entity does not become a party hereto, as above provided, the Plan automatically shall be terminated as to the Eligible Individuals of the affected Employer, and the provisions of Section 10.4 shall become operative.

 

10.6                PROHIBITED ACCELERATION/DISTRIBUTION TIMING.  This Section shall take precedence over any other provision of the Plan or this Article 10 to the contrary.  No provision of the Plan shall be followed if following the provision would result in the acceleration of the time or schedule of any payment from the Plan as would require immediate income tax to Participants based on the law in effect at the time the distribution is to be made, including Code section 409A.  In addition, if the timing of any distribution election would result in any tax or other penalty (other than ordinary Federal or state payroll taxes), which tax or penalty can be avoided by payment of the distribution at a later time, then the distribution shall be made (or commence, as the case may be) on the first date on which such distributions can be made (or commence) without such tax or penalty.

 

ARTICLE 11

 

THE TRUST

 

11.1                ESTABLISHMENT OF TRUST.  The Employer shall establish the Trust with the Trustee pursuant to such terms and conditions as are set forth in the Trust agreement to be entered into between the Employer and the Trustee or the Employer shall cause to be maintained one or more separate subaccounts in an existing Trust maintained with the Trustee with respect to one or more other plans of the Employer, which subaccount or subaccounts represent Participants’ interests in the Plan.  Any such Trust shall be intended to be treated as a “grantor” trust under the Code and the establishment of the Trust or the utilization of any existing Trust for Plan benefits, as applicable, is not intended to cause Participants to realize current income on amounts contributed thereto nor to cause the Plan to be “funded” within the meaning of ERISA, and the Trust shall be so interpreted.  Any amount of the Participant’s Account not paid by the Trust shall be paid from the general assets of the Employer for which the Participant provides services.

 

ARTICLE 12

 

MISCELLANEOUS

 

12.1                LIMITATIONS ON LIABILITY OF EMPLOYER.  Neither the establishment of the Plan nor any modification thereof, nor the creation of any account under the Plan, nor the payment of any benefits under the Plan shall be construed as giving to any Participant or other person any legal or equitable right against any Employer, or any officer or employee thereof,

 

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except as provided by law or by any Plan provision.  No Employer in any way guarantees any Participant’s Account from loss or depreciation, whether caused by poor investment performance of a deemed investment or the inability to realize upon an investment for any reason.  In no event shall any Employer, or any successor, employee, officer, director, or stockholder of any Employer, be liable to any person on account of any claim arising by reason of the provisions of the Plan or of any instrument or instruments implementing its provisions, or for the failure of any Participant, Beneficiary, or other person to be entitled to any particular tax consequences with respect to the Plan, or any credit or distribution under the Plan.  Receipt by a Participant or Beneficiary of the benefit to which the Participant or Beneficiary is entitled under the Plan (if any) shall release the Employer, and any successor, employee, director, and stockholder of any Employer, from all claims under the Plan by the Participant or Beneficiary.

 

12.2                CONSTRUCTION.  If any provision of the Plan is held to be illegal or void, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein.  For all purposes of the Plan, where the context permits, the singular shall include the plural, and the plural shall include the singular.  Headings of Articles and Sections herein are inserted only for convenience of reference and are not to be considered in the construction of the Plan.  The laws of the State of Maryland shall govern, control, and determine all questions of law arising with respect to the Plan and the interpretation and validity of its respective provisions, except where those laws are preempted by the laws of the United States.  Participation under the Plan will not give any Participant the right to be retained in the service of any Employer nor any right or claim to any benefit under the Plan unless such right or claim has specifically accrued under the Plan.

 

The Plan is intended to be and at all times shall be interpreted and administered so as to qualify as an unfunded deferred compensation plan, and no provision of the Plan shall be interpreted so as to give any individual any right in any assets of any Employer which right is greater than the rights of a general unsecured creditor of the Employer.

 

12.3                SPENDTHRIFT PROVISION.  No amount payable to a Participant or Beneficiary under the Plan will, except as otherwise specifically provided by law, be subject in any manner to anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in equity), levy, execution, pledge, encumbrance, charge, or any other legal or equitable process, and any attempt to do so will be void; nor will any benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled thereto.  Further, (i) the withholding of taxes from Plan benefit payments, (ii) the recovery under the Plan of overpayments of benefits previously made to a Participant or Beneficiary, (iii) if applicable, the transfer of benefit rights from the Plan to another plan, or (iv) the direct deposit of benefit payments to an account in a banking institution (if not actually part of an arrangement constituting an assignment or alienation) shall not be construed as an assignment or alienation.

 

In the event that any Participant’s or Beneficiary’s benefits under the Plan are garnished or attached by order of any court, the Plan Sponsor may bring an action for a declaratory judgment in a court of competent jurisdiction to determine the proper recipient of the benefits to be paid under the Plan.  During the pendency of said action, any benefits that become payable shall be held as credits to the Participant’s or Beneficiary’s Account or, if the Plan

 

23

 

Sponsor prefers, paid into the court as they become payable, to be distributed by the court to the recipient as the court deems proper at the close of said action.

 

12.4                NO RIGHT TO SERVICE.  Participation in the Plan shall not give any person the right to be retained in the service of any Employer.

 

12.5                AGGREGATION OF EMPLOYERS.  To the extent required under Code section 409A, if the Employer is a member of a controlled group of corporations or a group of trades or businesses under common control (as described in Code sections 414(b) or (c)), all members of the group shall be treated as a single employer for purposes of whether there has occurred a Separation from Service and for any other purposes under the Plan as Code section 409A shall require.

 

12.6                CODE SECTION 409A COMPLIANCE.

 

(a)                            The Plan is intended to comply with, or otherwise be exempt from, Code section 409A.

 

(b)                            Each Employer shall undertake to administer, interpret, and construe the Plan in a manner that does not result in the imposition on a Participant of any additional tax, penalty, or interest under Code section 409A.

 

(c)                             The preceding provisions, however, shall not be construed as a guarantee by the Employer or the Plan Sponsor of any particular tax effect to any Participant under the Plan.  The Employer and the Plan Sponsor shall not be liable to any Participant for any payment made under this Agreement, at the direction or with the consent of a Participant, that is determined to result in an additional tax, penalty, or interest under Code section 409A, nor for reporting in good faith any payment made under the Plan as an amount includible in gross income under Code section 409A.

 

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IN WITNESS WHEREOF, each Employer has caused the Plan to be executed and its seal to be affixed hereto, effective the 31st day of December, 2008.

 

	
ATTEST/WITNESS
    	
LAUREATE EDUCATION, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert W. Zentz
    	
(SEAL)
    
	
 
    	
 
    
	
 
    	
Date:
    
	
 
    	
 
    
	
 
    	
Participating Employers
    
	
 
    	
 
    
	
 
    	
LAUREATE VENTURES, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert W. Zentz
    	
(SEAL)
    
	
 
    	
 
    
	
 
    	
Date:
    
	
 
    	
 
    
	
 
    	
CANTER & ASSOCIATES,   LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert W. Zentz
    	
(SEAL)
    
	
 
    	
 
    
	
 
    	
Date:
    
	
 
    	
 
    
	
 
    	
WALDEN UNIVERSITY
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert W. Zentz
    	
(SEAL)
    
	
 
    	
 
    
	
 
    	
Date:
    

 

25Exhibit 10.36

 

MANAGEMENT STOCKHOLDER’S AGREEMENT

 

This Management Stockholder’s Agreement (as it may be amended, modified, restated or supplemented from time to time, this “Agreement”) is entered into as of [           ] among Laureate Education, Inc., a Maryland corporation (the “Company”), Wengen Alberta, Limited Partnership, an Alberta limited partnership (“Parent”), and the undersigned person (the “Management Stockholder”) (the Company, Parent and the Management Stockholder being hereinafter collectively referred to as the “Parties”).  All capitalized terms not immediately defined are hereinafter defined in Section 7(b) of this Agreement.

 

RECITALS

 

WHEREAS, pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of June 3, 2007 (as it may be amended, modified, restated or supplemented from time to time, the “Merger Agreement”), by and among Parent, L Curve Sub Inc., a Maryland corporation and a direct subsidiary of Parent (“Merger Sub”) and the Company, and subject to the terms and conditions set forth in the Merger Agreement, Merger Sub on August 17, 2007 (the “Closing Date”) merged with and into the Company (the “Merger”), with the Company surviving the Merger;

 

WHEREAS, in connection with the Merger, the Investors (as defined herein) contributed certain funds and/or securities to Parent in exchange for limited partnership interests representing, as of the Closing Date, all of the issued and outstanding limited partnership interests of Parent;

 

WHEREAS, the Management Stockholder has been selected by the Company to receive one or more of the following equity awards pursuant to the terms of the Laureate Education, Inc. 2013 Long-Term Incentive Plan (as it may be amended, modified, restated or supplemented from time to time, the “2013 Plan”):

 

(a)                                 options to purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock,” such options, the “Options”) pursuant to the terms set forth below, the terms of the 2013 Plan and the Stock Option Agreement dated as of the date hereof, entered into by and between the Company and the Management Stockholder (as it may be amended, modified, restated or supplemented from time to time, the “Stock Option Agreement”);

 

(b)                                 restricted stock units (“RSUs”), each representing the Company’s commitment to issue one share of Laureate’s Common Stock at a future date, pursuant to the terms set forth below, the terms of the 2013 Plan and the terms of the Restricted Stock Unit Agreement dated as of the date hereof, entered into by and between the Company and the Management Stockholder (as it may be amended, modified, restated or supplemented from time to time, the “RSU Agreement”); and/or

 

(c)                                  performance share units (“PSUs” and together with the Options and the RSUs, the “Equity Awards”), each representing the Company’s commitment to issue one share of

 

 

Laureate’s Common Stock at a future date, pursuant to the terms set forth below, the terms of the 2013 Plan and the terms of the Performance Share Unit Agreement dated as of the date hereof, entered into by and between the Company and the Management Stockholder (as it may be amended, modified, restated or supplemented from time to time, the “PSU Agreement” and, together with the Option Agreements and RSU Agreements, the “Equity Agreements”); and

 

WHEREAS, this Agreement is one of several other agreements (“Other Management Stockholders Agreements”) which concurrently with the execution hereof or in the future will be entered into between the Company and other individuals who are or will be key employees of the Company or one of its subsidiaries (collectively, the “Other Management Stockholders”).

 

NOW THEREFORE, to implement the foregoing and in consideration of the mutual agreements contained herein, the Parties agree as follows:

 

1.              Issuance of Equity Awards.

 

(a)         Subject to the terms and conditions hereinafter set forth and as set forth in the 2013 Plan, the Company is granting to the Management Stockholder Equity Awards, which will entitle the Management Stockholder the right to acquire the number of shares of Common Stock in accordance with the terms set forth in such Management Stockholder’s Equity Agreement(s) which the Parties shall execute and deliver to each other concurrently with the grant of such Equity Awards.

 

2.              Management Stockholder’s Representations, Warranties and Agreements.

 

(a)         The Management Stockholder agrees and acknowledges that he will not, directly or indirectly, gift, offer, transfer, sell, assign, pledge, hypothecate, encumber or otherwise dispose of, whether for or without consideration, and whether voluntary, involuntary or by operation of law (any of the foregoing acts being referred to herein as a “Transfer”) Common Stock acquired and/or held by the Management Stockholder as of or after the date hereof or acquired upon exercise of the Options or the vesting of the RSUs and/or PSUs granted to the Management Stockholder pursuant to the Equity Award Agreement(s) dated as of the date hereof (collectively, the “Stock”), except as provided in this Section 2(a) and Section 3 hereof.  If the Management Stockholder is an Affiliate of the Company, the Management Stockholder also agrees and acknowledges that he or she will not Transfer any shares of the Stock unless:

 

(i)  the Transfer is pursuant to an effective registration statement under the Securities Act of 1933, as amended, and the rules and regulations in effect thereunder (the “Securities Act”), and in compliance with applicable provisions of state securities laws; or

 

(ii)  (A) counsel for the Management Stockholder (which counsel shall be reasonably acceptable to the Company) shall have furnished the Company with an opinion or other advice, reasonably satisfactory in form and substance to the Company, that no such registration is required because of the availability of an exemption from registration under the Securities Act and (B) if the Management Stockholder is a citizen or resident of any country other than the United States, or the Management Stockholder desires to effect any

 

2

 

Transfer in any such country, counsel for the Management Stockholder (which counsel shall be reasonably satisfactory to the Company) shall have furnished the Company with an opinion or other advice reasonably satisfactory in form and substance to the Company to the effect that such Transfer will comply with the securities laws of such jurisdiction.

 

Notwithstanding the foregoing, the Company acknowledges and agrees that any of the following Transfers of Stock are deemed to be in compliance with the Securities Act and this Agreement (including without limitation any restrictions or prohibitions herein) and no opinion of counsel is required in connection therewith: (I) a Permitted Transfer or Transfer made pursuant to Sections 4, 5 or 9 hereof, (II) a Transfer (x) upon the death or Disability of the Management Stockholder to the Management Stockholder’s Estate or (y) to the executors, administrators, testamentary trustees, legatees, immediate family members or beneficiaries of a person who has become a holder of Stock in accordance with the terms of this Agreement; provided that it is expressly understood that any such transferee shall be bound by the provisions of this Agreement, (III) a Transfer made in compliance with the federal securities laws to a Management Stockholder’s Trust; provided that such Transfer is made expressly subject to this Agreement and that the transferee agrees in writing to be bound by the terms and conditions hereof as a “Management Stockholder” with respect to the representations and warranties and other obligations of this Agreement; and provided further that it is expressly understood and agreed that if such Management Stockholder’s Trust at any point includes any person or entity other than the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants (including adopted children) such that it fails to meet the definition thereof as set forth in Section 6(b) hereof, such Transfer shall no longer be deemed in compliance with this Agreement and shall be subject to 3(d) below, and (IV) a Transfer made by the Management Stockholder, with the Board’s approval, to the Company or any subsidiary of the Company.

 

(b)         The certificate (or certificates) representing the Stock, if any, shall bear the following legend:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT STOCKHOLDER’S AGREEMENT BETWEEN LAUREATE EDUCATION, INC. (THE “COMPANY”) AND THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF OR THE SALE PARTICIPATION AGREEMENT AMONG SUCH MANAGEMENT STOCKHOLDER AND WENGEN ALBERTA, LIMITED PARTNERSHIP, (COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY) AND ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.”

 

(c)          The Management Stockholder acknowledges that he has been advised that (i) the Stock are characterized as “restricted securities” under the Securities Act inasmuch as they are being acquired from the Company in a transaction not involving a Public Offering and that under the Securities Act (including applicable regulations) the Stock may be resold without registration under the Securities Act only in certain limited circumstances, (ii) a restrictive legend in the form heretofore set forth shall be placed on the certificates (if any)

 

3

 

representing the Stock and (iii) a notation shall be made in the appropriate records of the Company indicating that the Stock is subject to restrictions on transfer and appropriate stop transfer restrictions will be issued to the Company’s transfer agent with respect to the Stock.

 

(d)         If any shares of the Stock are to be disposed of in accordance with Rule 144 under the Securities Act or otherwise, the Management Stockholder shall promptly notify the Company of such intended disposition and shall deliver to the Company at or prior to the time of such disposition such documentation as the Company may reasonably request in connection with such sale and take any actions requested by the Coordination Committee prior to any such sale (provided that such instructions shall not have a disproportionate adverse impact on any Management Stockholder vis-à-vis any other stockholders of the Company or limited partners of Parent) and, in the case of a disposition pursuant to Rule 144, shall deliver to the Company an executed copy of any notice on Form 144 required to be filed with the SEC.

 

(e)          The Management Stockholder agrees that, if any shares of the Stock are offered to the public pursuant to an effective registration statement under the Securities Act (other than registration of securities issued on Form S-8, S-4 or any successor or similar form), the Management Stockholder will not effect any public sale or distribution of any shares of the Stock not covered by such registration statement from the time of the receipt of a notice from the Company that the Company has filed or imminently intends to file such registration statement to, or within 180 days after the effective date of such registration statement (except if the underwriters shall require a longer period, but in any event no more than 270 days), unless otherwise agreed to in writing by the Company.

 

(f)           The Management Stockholder represents and warrants that (i) with respect to the Option Stock, the Management Stockholder has received and reviewed the available information relating to such Stock, including having received and reviewed the documents related thereto, certain of which documents set forth the rights, preferences and restrictions relating to the Options and the Stock underlying the Options and (ii) the Management Stockholder has been given the opportunity to obtain any additional information or documents and to ask questions and receive answers about such information, the Company and the business and prospects of the Company which the Management Stockholder deems necessary to evaluate the merits and risks related to the Management Stockholder’s election to receive, the Stock and to verify the information contained in the information received as indicated in this Section 2(f), and the Management Stockholder has relied solely on such information.

 

(g)          The Management Stockholder further represents and warrants that (i) the Management Stockholder’s financial condition is such that the Management Stockholder can afford to bear the economic risk of holding the Stock for an indefinite period of time and has adequate means for providing for the Management Stockholder’s current needs and personal contingencies, (ii) the Management Stockholder can afford to suffer a complete loss of his or her investment in the Stock, (iii) the Management Stockholder understands and has taken cognizance of all risk factors related to the purchase of, or election to receive, the Stock, (iv)  the Management Stockholder’s knowledge and experience in financial and business matters are such that the Management Stockholder is capable of evaluating the merits and risks of the Management Stockholder’s purchase of, or election to receive, the Stock as contemplated by 

 

4

 

this Agreement, and (v) if the box next to the Management Stockholder’s signature is checked, the Management Stockholder is an “accredited investor” as defined in Rule 501(a) of Regulation D, as amended, under the Securities Act.

 

3.              Transferability of Stock and Equity Awards.

 

(a)         Prior to the consummation of the Initial Public Offering, the Management Stockholder may only Transfer shares of Stock in compliance with Section 4.

 

(b)         Notwithstanding anything to the contrary herein, Equity Awards shall not be Transferable except, in the case of Equity Awards, as expressly provided in the applicable Equity Award Agreement.

 

(c)          No Transfer of any such Stock or Equity Awards in violation hereof shall be made or recorded on the books of the Company and any such Transfer shall be void ab initio and of no effect.

 

(d)         Notwithstanding anything to the contrary herein, Parent may, at any time and from time to time, waive the restrictions on Transfers contained in Section 3(a), whether such waiver is made prior to or after the transferee has effected or committed to effect the Transfer, or has notified the Investors of such Transfer or commitment to Transfer.  Any Transfers made pursuant to such waiver or which are later made subject to such a waiver shall, as of the date of the waiver and at all times thereafter, not be deemed to violate any applicable restrictions on Transfers contained in this Agreement.

 

4.              Right of First Refusal.

 

(a)         If, prior to the earlier to occur of a Change of Control or consummation of the Initial Public Offering, the Management Stockholder proposes to Transfer any or all of the Management Stockholder’s Stock, as permitted by this Agreement, to a third party (any proposal a “Proposed Sale” and any such third party, the “ROFR Transferee”) (other than any Transfer (i) pursuant to clauses (II), (III) or (IV) of Section 2(a), to the extent made to a third party, (ii) pursuant to a Permitted Transfer of the type described in clauses (i), (iii) or (iv) thereof or (iii) to a limited partner of Parent or an Affiliate of such limited partner and otherwise in accordance with this Agreement), the Management Stockholder (the “Selling Management Stockholder”) shall notify the Company in writing of the Management Stockholder’s intention to Transfer such Stock (such written notice, a “ROFR Notice”).  The ROFR Notice shall include a true and correct description of the number of shares of Stock to be Transferred and the material terms of such proposed Transfer and a copy of any proposed documentation to be entered into with any ROFR Transferee in respect of such Transfer) and shall contain an irrevocable offer to sell such Stock to the Company and the Founder ROFR Holders (in the manner set forth below) at a purchase price equal to the price contained in, and on the same terms and conditions of, the ROFR Notice.  Upon receipt of the ROFR Notice, the Company shall provide a copy thereof to the Founder ROFR Holders.

 

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(b)         The Company and the Founder ROFR Holders, at any time within ten (10) Business Days after the date of the receipt by the Company and the Founder ROFR Holders of the ROFR Notice:

 

(i)             with respect to all Stock covered by an ROFR Notice, the Founder ROFR Holders shall have the have the right and option to purchase up to the Founder ROFR Percentage of the Stock covered by the ROFR Notice; and

 

(ii)          the Company and/or any subsidiary, third party or Affiliate designated by the Company, shall have the right and option to purchase any Stock covered by the ROFR Notice not purchased by the Founder ROFR Holders pursuant to Section 4 (b)(i); and

 

(iii)        the Founder ROFR Holders shall again have the right and option to purchase any Stock covered by the ROFR Notice not already purchased by the Founder ROFR Holders pursuant to Section 4(b)(i) or the Company pursuant to Section 4(b)(ii).

 

in each such case at the minimum price at which the Management Stockholder proposes to Transfer such Stock to any ROFR Transferee and otherwise on the same terms and conditions of the Proposed Sale (or, if the Proposed Sale includes any consideration other than cash, then, at the sole option of such purchaser, at the equivalent all cash price, determined in good faith by the Company taking into account the value of the property), by delivering a certified bank check or checks in the appropriate amount (or by wire transfer of immediately available funds, if the Selling Management Stockholder provides wire transfer instructions) and any such non-cash consideration to be paid to the Selling Management Stockholder at the principal office of the Company against delivery of certificates or other instruments representing the Stock so purchased, appropriately endorsed by the Selling Management Stockholder.  If at the end of the ten (10) Business Day period, the Company and the Founder ROFR Holders have not, in the aggregate, exercised the right to purchase all of the Stock covered by the ROFR Notice in the manner set forth above, the Selling Management Stockholder may, during the succeeding 30-day period, sell not less than all of the Stock covered by the Proposed Sale to the ROFR Transferee in the Proposed Sale on terms no less favorable to the Selling Management Stockholder than those contained in the ROFR Notice.  Promptly after such sale, the Selling Management Stockholder shall notify the Company of the consummation thereof and shall furnish such evidence of the completion and time of completion of such sale and of the terms thereof as may reasonably be requested by the Company.  If, at the end of such 30 day period, the Selling Management Stockholder has not completed the sale of such Common Stock as aforesaid, all of the restrictions on sale, Transfer or assignment contained in this Agreement shall again be in effect with respect to such Stock.

 

5.                                          The Company’s Option to Purchase Stock and Equity Awards of the Management Stockholder Upon Certain Events.

 

(a)         Call Events.  If the Management Stockholder Entities effect a transfer of Stock (or Equity Awards) that is prohibited under this Agreement (or the Equity Award Agreements, as applicable), after notice from the Company of such impermissible transfer and a reasonable opportunity to cure such transfer which is not so cured (a “Call Event”), then:

 

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A.            With respect to Stock, the Company may purchase all or any portion of the shares of Stock then held by the applicable Management Stockholder Entities at a per share purchase price equal to the lesser of (x) the Base Price (or other applicable price paid by such Management Stockholder Entities for such Stock and in the case of Stock issued upon the vesting of RSUs and PSU, such Base Price shall be considered to be zero) and (y) the Fair Market Value on the Repurchase Calculation Date;

 

B.            With respect to any vested Options, all vested Options shall be terminated and cancelled without any payment therefor after the occurrence of a Call Event, upon the purchase of any Stock by the Company pursuant to paragraph A above; and

 

C.            In addition, and for the avoidance of doubt, upon a Call Event all unvested Equity Awards shall be terminated and cancelled without any payment therefor.

 

(b)         Call Notice.  The Company shall have a period (the “Call Period”) of one hundred eighty (180) days from the date of any Call Event (or, if later, the date after discovery of, and the applicable cure period for, an impermissible Transfer constituting a Call Event) in which to give notice in writing to the Management Stockholder of its election to exercise its rights and obligations pursuant to this Section 5 (“Repurchase Notice”).  The completion of the purchases pursuant to the foregoing shall take place at the principal office of the Company no later than the fifteenth business day after the giving of the Repurchase Notice.  The applicable Repurchase Price (including any payment with respect to the Options as described in this Section 5) shall be paid by delivery to the applicable Management Stockholder Entities of a certified bank check or checks in the appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire transfer of immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) against delivery of certificates or other instruments representing the Stock so purchased and appropriate documents canceling the Options so terminated, appropriately endorsed or executed by the applicable Management Stockholder Entities or any duly authorized representative.

 

(c)          Use of Note to Satisfy Call Payment.  Notwithstanding anything in this Section 5 to the contrary, (i) if there exists and is continuing a default or an event of default on the part of the Company or any subsidiary of the Company under any loan, guarantee or other agreement under which the Company or any subsidiary of the Company has borrowed money, (ii) the repurchase referred to in Section 5(a) above would result in a default or an event of default on the part of the Company or any affiliate of the Company under any such agreement referred to in clause (i), (iii) the Board determines in good faith that the repurchase referred to in Section 5(a) would cause significant harm to the short term liquidity needs of the Company, (iv) all or any portion of the proceeds required to effect the repurchase referred to in Section 5(a) are not available for borrowing by the Company under any such agreement referenced in clause (i) or (v) a repurchase referred to in Section 5(a) would reasonably be expected to be prohibited by under the Maryland General Corporation Law (“MGCL”) or any federal or state securities laws or regulations (or if the Company reincorporates in another state, the business corporation law of such state) (each such occurrence being an “Event”), the Company will, to the extent it has exercised its rights to purchase Stock or Options pursuant to this Section 5, in order to complete the purchase of any Stock or Options pursuant to this Section 5, deliver to

 

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the applicable Management Stockholder Entities a cash payment for any amounts payable pursuant to this Section 5 that would not cause an Event and (ii) a note having the same terms as that provided in Section 5(c) above with a principal amount equal to the amount payable but not paid in cash pursuant to this Section 5 due to the Event.  Notwithstanding the foregoing, if an Event exists and is continuing for ninety (90) days from the date of the Call Event, the Management Stockholder Entities shall be permitted by written notice to cause the Company to rescind any Repurchase Notice with respect to that portion of the Stock repurchased by the Company from the Management Stockholder Entities pursuant to this Section 5 with the note described in the foregoing sentence; provided that, upon such rescission, such repurchase shall be immediately rescinded and such note shall be immediately canceled without any action on the part of the Company or the Management Stockholder Entities and, notwithstanding anything herein or in such note to the contrary, the Company shall have no obligation to pay any amounts of principal or interest thereunder; provided, further that the Company shall have another thirty (30) days from the date the Event ceases to exist to give another Repurchase Notice on the terms applicable to the first Repurchase Notice.

 

(d)         Effect of Accounting Principles.  Notwithstanding anything set forth in Section 5 to the contrary, in the event that it is determined by the Board that any of the provisions of Section 5 would result in any of the Stock or Equity Awards being classified as a liability as contemplated by FASB Statement No. 123R, Share-Based Payment, including any amendments and interpretations thereto, then the following terms shall apply:

 

(i) Any shares of Stock that are to be purchased by the Company pursuant to Section 5 may only be so purchased if and when such shares have been held by the applicable Management Stockholder Entities for at least six months; and

 

(ii) With respect to any exercisable Options, upon the occurrence of a Call Event, the Management Stockholder Entities may be required by the Company to elect, in accordance with the terms of the relevant Stock Option Agreement, to receive from the Company, on one occasion, in exchange for all of the exercisable Options then held by the applicable Management Stockholder Entities, if any, a number of shares of Stock equal to the quotient of (x) the product of (A) the excess, if any, of the Fair Market Value over the Option Exercise Price and (B) the number of shares then acquirable on exercise, divided by (y) the Fair Market Value, which Options shall be terminated in exchange for such payment of shares of Stock (such shares of Stock, the “Net Settled Stock”).  (In the event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable Options shall be automatically terminated without any payment in respect thereof.)  Upon the occurrence of such net settlement of all exercisable Options, the Call Period shall be deemed to be the period that is 30 days following the date that is six months after the receipt by the applicable Management Stockholder Entities of the Net Settled Stock, during which time the Company may, on delivery of Repurchase Notice, purchase all or any portion of the Net Settled Stock held by the applicable Management Stockholder Entities, at a per share price equal to the applicable Repurchase Price for Option Stock identified in Section 5.

 

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(e)          Effect of Change in Control.  Notwithstanding anything in this Agreement to the contrary, except for any payment obligation of the Company which has arisen prior to the occurrence of a Change in Control, this Section 5 shall terminate and be of no further force or effect upon the occurrence of such Change in Control.

 

6.              Adjustment of Repurchase Price; Definitions.

 

(a)         Adjustment of Repurchase Price.  In determining the applicable repurchase price of the Stock and Options, as provided for in Section 5 above, appropriate adjustments shall be made for any stock dividends, splits, combinations, recapitalizations or any other adjustment in the number of outstanding shares of Stock in order to maintain, as nearly as practicable, the intended operation of the provisions of Section 5.

 

(b)         Definitions.  All capitalized terms used in this Agreement and not defined herein shall have such meaning as such terms are defined in the Option Plan.  Terms used herein and as listed below shall be defined as follows:

 

“Affiliate” shall mean, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such Person.  For purposes hereof, “control” or any other form thereof, when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

 

“Agreement” shall have the meaning set forth in the introductory paragraph.

 

“Board” shall mean the board of directors of the Company.

 

“Business Day” means any day other than a Saturday, a Sunday, or a holiday on which national banking associations in the State of New York are authorized by law to close.

 

“Call Events” shall have the meaning set forth in Section 5 (a) hereof.

 

“Call Period” shall have the meaning set forth in Section 5(b) hereof.

 

“Cause” shall mean (i) gross negligence or willful malfeasance by the Management Stockholder in connection with the performance of his or her duties with respect to the Company and its subsidiaries; (ii) conviction of, or pleading guilty or nolo contendere to any felony; (iii) theft, embezzlement, fraud or other similar conduct by the Management Stockholder in connection with the performance of his or her duties with the Company and its subsidiaries; and (iv) a willful and material breach of any other applicable agreements with the Company and its subsidiaries including, without limitation, engaging in any action in breach of any applicable restrictive covenants.

 

“Change in Control” shall mean (a) the first to occur of any of the following: (i) the sale of all or substantially all of the assets of Parent or the Company, as applicable, to a Person or (ii) a sale by Parent, any Securityholder (as defined in the Securityholders Agreement), or any of their respective Affiliates, to a Person that results in more than 50% of the total equity interests of Parent or of the Company, as applicable, being held by a Person, which may include any

 

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Securityholder (as defined in the Securityholders Agreement) or any of their respective Affiliates; provided, however, that in no event shall any relationship among any Securityholder (as defined in the Securityholders Agreement) created by the occurrence of the consummation of the transactions contemplated by the Merger (including the Securityholders Agreement and the organizational documents of Parent and its general partner) be deemed to, de facto, create a Group for purposes of this clause (a); and (b) in the case of the occurrence of an event identified in clause (a), also results in any Person that acquired more than 50% of the total equity interests of Parent,  or the Company, as applicable, having the ability to appoint a majority of the applicable board of directors.

 

“Closing Date” shall have the meaning set forth in the recitals to this Agreement.

 

“Common Stock” shall have the meaning set forth in the recitals to this Agreement.

 

“Company” shall have the meaning set forth in the introductory paragraph.

 

“Confidential Information” shall mean all non-public information concerning trade secret, know-how, software, developments, inventions, processes, technology, designs, the financial data, strategic business plans or any proprietary or confidential information, documents or materials in any form or media, including any of the in forth in the Merger Agreement.

 

“Event” shall have the meaning set forth in Section 5(c) hereof.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or any successor section thereto).

 

“Exercisable Option Shares” shall mean the shares of Common Stock that, at the time that Redemption Notice or Repurchase Notice is delivered (as applicable), could be purchased by the Management Stockholder upon exercise of his or her outstanding and exercisable Options.

 

“Fair Market Value” shall mean on a per Share basis, (i) if there is a public market for the Shares on such date, the average of the high and low closing bid prices of the Shares on such stock exchange on which the Shares are principally trading on the applicable date, or, if there were no sales on such date, on the closest preceding date on which there were sales of Shares, or (ii) if there is no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Board, which determination shall take into account an appraisal of the fair market value of the Shares conducted by Duff & Phelps (or such other nationally recognized appraisal firm as the Board may select), which appraisal shall be conducted at least annually.

 

“Founder ROFR Holders” means Douglas L. Becker and Steven M. Taslitz, acting together.

 

“Founder ROFR Percentage” means, as of any time, the fraction, the numerator of which is the number Series A-1 Interests (as defined in the Partnership Agreement) held, in the aggregate, by the Founder ROFR Holders, The Irrevocable BBHT II IDGT, Irrevocable Grantor Retained Annuity Trust No. 11 and KJT Gift Trust and the denominator of which is the total number of units of Series A-1 Interests (as defined in the Partnership Agreement).

 

“General Partner” shall mean Wengen Investments Limited.

 

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“Good Reason” shall mean, without the consent of the Management Stockholder: (i) a reduction in base salary (other than a general reduction in base salary that affects all similarly situated employees); (ii) a substantial diminution in the Management Stockholder’s title, duties and responsibilities, other than any isolated, insubstantial and inadvertent failure by the Company or its subsidiaries that is not in bad faith; or (iii) a transfer of the Management Stockholder’s primary workplace by more than fifty (50) miles from his or her current workplace;  provided, however, in any event that if such conduct is cured within ten (10) business days after the Management Stockholder gives the Company notice of such event it shall not constitute Good Reason.

 

“Group” shall mean “group,” as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

 

“Initial Public Offering” means the initial firm commitment underwritten offering of Common Stock to the public pursuant to an effective registration statement (other than Form S-4 or Form S-8 or any similar or successor form) filed under the Securities Act or any comparable law or regulatory scheme of any foreign jurisdiction.

 

“Investors” shall mean the Persons listed in Appendix 2 of the Partnership Agreement, and each other Person who, in accordance with the terms of the Partnership Agreement, hereafter executes a separate agreement to be bound by the terms thereof and is added to such appendix.

 

“Management Stockholder” shall have the meaning set forth in the introductory paragraph.

 

“Management Stockholder Entities” shall mean the Management Stockholder’s Trust, the Management Stockholder and the Management Stockholder’s Estate, collectively.

 

“Management Stockholder’s Estate” shall mean the conservators, guardians, executors, administrators, testamentary trustees, legatees or beneficiaries of the Management Stockholder.

 

“Management Stockholder’s Trust” shall mean a partnership, limited liability company, corporation, trust, private foundation or custodianship, the beneficiaries of which may include only the Management Stockholder, his or her spouse (or ex-spouse) or his or her lineal descendants (including adopted) or, if at any time after any such Transfer there shall be no then living spouse or lineal descendants, then to the ultimate beneficiaries of any such trust or to the estate of a deceased beneficiary.

 

“Merger” shall have the meaning set forth in the recitals to this Agreement.

 

“Merger Agreement” shall have the meaning set forth in the recitals to this Agreement.

 

“Merger Sub” shall have the meaning set forth in the recitals to this Agreement.

 

“MGCL” shall have the meaning set forth in Section 5(c) hereof.

 

“Net Settled Stock” shall have the meaning set forth in Section 5(d)(ii) hereof.

 

“Options” shall have the meaning set forth in the recitals to this Agreement.

 

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“Option Excess Price” shall mean the aggregate amount paid or payable by the Company in respect of Exercisable Option Shares, as determined pursuant to Section 5 hereof.

 

“Option Exercise Price” shall mean the then-current exercise price of the shares of Common Stock covered by the applicable Option.

 

“Option Plan” shall have the meaning set forth in the recitals to this Agreement.

 

“Option Stock” shall have the meaning set forth in Section 2(a) hereof.

 

“Other Management Stockholders” shall have the meaning set forth in the recitals to this Agreement.

 

“Other Management Stockholders Agreements” shall have the meaning set forth in the recitals to this Agreement.

 

“Parent” shall have the meaning set forth in the introductory paragraph.

 

“Parties” shall have the meaning set forth in the introductory paragraph.

 

“Partnership Agreement” shall mean the Amended and Restated Limited Partnership Agreement of Wenger Alberta, Limited Partnership, dated as of July 11, 2007, as it may be amended, modified, restated or supplemented from time to time.

 

“Permitted Transfer” shall mean (i) Transfers permitted by Section 5; (ii) Transfers permitted by clauses (II) or (III) of Section 2(a); (iii) a sale of shares of Common Stock pursuant to an effective registration statement under the Securities Act filed by the Company upon the proper exercise of registration rights of such Management Stockholder under Section 8 (excluding any registration on Form S-8, S-4 or any successor or similar form); (iv) Transfers permitted pursuant to the Sale Participation Agreement (as defined in Section 6(b));  (v) Transfers permitted by the Board or (vi) Transfers to Parent or its designee.

 

“Person” shall mean an individual, a partnership, a joint venture, a corporation, an association, a joint stock company, a limited liability company, a trust, an unincorporated organization or a government or any department or agency or political subdivision thereof, or any group consisting of one or more of the foregoing.

 

“Piggyback Notice” shall have the meaning set forth in Section 8(b) hereof.

 

“Piggyback Registration Rights” shall have the meaning set forth in Section 8(a) hereof.

 

“Proposed Registration” shall have the meaning set forth in Section 8(b) hereof.

 

“Proposed Sale” shall have the meaning set forth in Section 4(a).

 

“Public Offering” shall mean the sale of Common Stock to the public pursuant to an effective Registration Statement (other than Form S-4 or Form S-8 or any similar or successor form) filed under the Securities Act or any comparable law or regulatory scheme of any foreign jurisdiction.

 

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“Purchased Stock” shall have the meaning set forth in the recitals to this Agreement.

 

“Registrable Securities” shall have the meaning set forth in Section 8(a) hereof.

 

“Registration Rights Agreement” shall mean the Registration Rights Agreement, dated as of July 11, 2007, by and among Parent, the General Partner and each of the parties thereto, as it may be amended, modified, restated or supplemented from time to time.

 

“Repurchase Calculation Date” shall mean the date on which a repurchase occurs.

 

“Repurchase Notice” shall have the meaning set forth in Section 5(c) hereof.

 

“Repurchase Price” shall mean the amount to be paid in respect of the Stock and Options to be purchased by the Company pursuant to Section 5.

 

“Request” shall have the meaning set forth in Section 8(b) hereof.

 

“Restricted Group” shall mean, collectively, the Company, its subsidiaries, the Investors and their respective affiliates.

 

“ROFR Notice” shall have the meaning set forth in Section 4(a) hereof.

 

“ROFR Transferee” shall have the meaning set forth in Section 4(a) hereof.

 

“Sale Participation Agreement” shall mean that certain sale participation agreement entered into by and between the Management Stockholder and Parent dated as of the date hereof, as it may be amended, modified, restated or supplemented from time to time.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“Securityholders Agreement” shall mean that certain Securityholders Agreement dated July 11, 2007, among Parent, the General Partner, Douglas L. Becker and the other parties appearing on the signature pages thereto, as it may be amended, modified, restated or supplemented from time to time.

 

“Securities Act” shall have the meaning set forth in Section 2(a)(i) hereof.

 

“Selling Management Stockholder” shall have the meaning set forth in Section 4(a) hereof.

 

“Stock” shall have the meaning set forth in Section 2(a) hereof.

 

“Stock Option Agreements” shall have the meaning set forth in the recitals to this Agreement.

 

“Transfer” shall have the meaning set forth in Section 2(a) hereof.

 

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7.              The Company’s Representations and Warranties and Covenants.

 

(a)         The Company represents and warrants to the Management Stockholder that (i) this Agreement has been duly authorized, executed and delivered by the Company and is enforceable against the Company in accordance with its terms and (ii) the Stock, when issued and delivered in accordance with the terms hereof and the other agreements contemplated hereby, will be duly and validly issued, fully paid and nonassessable.

 

(b)         If the Company becomes subject to the reporting requirements of Section 12 of the Exchange Act, the Company will file the reports required to be filed by it under the Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, to the extent required from time to time to enable the Management Stockholder to sell shares of Stock, subject to compliance with the provisions hereof (including requirements of the Coordination Committee) without registration under the Exchange Act within the limitations of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be amended from time to time, or (B) any similar rule or regulation hereafter adopted by the SEC.  Notwithstanding anything contained in this Section 7(b), the Company may de-register under Section 12 of the Exchange Act if it is then permitted to do so pursuant to the Exchange Act and the rules and regulations thereunder and, in such circumstances, shall not be required hereby to file any reports which may be necessary in order for Rule 144 or any similar rule or regulation under the Act to be available.  Nothing in this Section 7(b) shall be deemed to limit in any manner the restrictions on Transfers of Stock and Equity Awards contained in this Agreement.

 

8.              “Piggyback” Registration Rights.  Effective after the occurrence of the Initial Public Offering:

 

(a)         The Parties agree to be bound, with respect to the Management Stockholders who are provided such rights pursuant to this Section 8, by all of the terms, conditions and obligations of the Registration Rights Agreement (including, without limitation, with respect to obligations as to indemnification and/or contribution) as they relate to the exercise of piggyback registration rights as provided in Sections 4, 6, 7, 8 and 11 (provided, however, that Section 11(l) shall not apply to any Management Stockholders)  of the Registration Rights Agreement (the “Piggyback Registration Rights”), as in effect on the date hereof (subject, with respect to any such Management Stockholder provided Piggyback Registration Rights, to any amendments thereto to which such Management Stockholder has agreed to be bound or which are effected in accordance with the terms thereof), and, if any of the Investors are directly or indirectly selling stock or having stock sold on their behalf, shall have all of the rights and privileges of the Piggyback Registration Rights (including, without limitation, any rights to indemnification and/or contribution from the Company and/or the Investors), in each case as if the Management Stockholder were an original party (other than the Company) to the Registration Rights Agreement, subject to applicable and customary underwriter restrictions; provided, however, for the avoidance of doubt, that at no time shall the Management Stockholder have any rights to request registration under Section 3 of the Registration Rights Agreement.  Following the Initial Public Offering, all Stock purchased or held by the applicable Management Stockholder Entities pursuant to this Agreement shall be deemed to be “Registrable Securities” as defined in the Registration Rights Agreement.

 

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(b)         In the event of a sale of Common Stock by any of the Investors in accordance with the terms of the Registration Rights Agreement, the Company will promptly notify each Management Stockholder, in writing (a “Piggyback Notice”) of any proposed registration (a “Proposed Registration”), which Piggyback Notice shall include: the principal terms and conditions of the proposed registration, including (A) the number of shares of Common Stock to be sold, (B) the fraction, expressed as a percentage, determined by dividing the number of shares of Common Stock to be sold by the holders of Registrable Securities by the total number of shares of Common Stock held by the holders of Registrable Securities selling shares of Common Stock, (C) the proposed per share purchase price (or an estimate thereof), and (D) the proposed date of sale.  If within fifteen (15) days of the receipt by the Management Stockholder of such Piggyback Notice, the Company receives from the applicable Management Stockholder a written request (a “Request”) to register shares of Stock held by the applicable Management Stockholder Entities (which Request will be irrevocable unless otherwise mutually agreed to in writing by the Management Stockholder and the Company), shares of such Stock will be so registered as provided in this Section 8; provided, however, that for each such registration statement only one Request, which shall be executed by the applicable Management Stockholder Entities, may be submitted for all Registrable Securities held by the applicable Management Stockholder Entities.

 

(c)          The maximum number of shares of Stock which will be registered pursuant to a Request will be the lowest of (i) the number of shares of Stock then held by the Management Stockholder Entities, including all shares of such Stock which the Management Stockholder Entities are then entitled to acquire under an unexercised Option to the extent then exercisable, multiplied by a fraction, the numerator of which is the aggregate number of shares of Common Stock being sold by holders of Registrable Securities and the denominator of which is the aggregate number of shares of Common Stock owned by the holders of Registrable Securities or (ii) the maximum number of shares of Common Stock which the Company can register in connection with such Request in the Proposed Registration without adverse effect on the offering in the view of the managing underwriters (reduced pro rata as more fully described in subsection (d) of this Section 8 or (iii) the maximum number of shares of Stock which the Management Stockholder (pro rata based upon the aggregate number of shares of such Stock the Management Stockholders have requested to be registered) is permitted to register under the Piggyback Registration Rights, in any event subject to reduction as provided in subsection (d) of Section 9.

 

(d)         If a Proposed Registration involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of shares of Common Stock requested to be included in the Proposed Registration exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of the shares of Stock offered in such Public Offering as contemplated by the Company, then, unless the managing underwriter advises that marketing factors require a different allocation, the number of shares of Stock which the Management Stockholders will be entitled to include will be reduced in accordance with Section 3 or 4 of the Registration Rights Agreement, as applicable, which the Company will include in the Proposed Registration (i) first, 100% of the shares of Common Stock the Company proposes to sell and (ii) second, to the extent of the number of shares of Common Stock requested to be included in such registration which, in the opinion of such managing underwriter, can be sold 

 

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without having the adverse effect referred to above, the number of shares of Common Stock which the selling holders of Registrable Securities, the Management Stockholders and all Other Management Stockholders and any other Persons who are entitled to piggyback or incidental registration rights in respect of Common Stock (together, the “Holders”) have requested to be included in the Proposed Registration, such amount to be allocated pro rata among all requesting Holders on the basis of the relative number of shares of Common Stock or other Registrable Securities then held by each such Holder (including upon exercise of all exercisable Options) (provided that any shares thereby allocated to any such Holder that exceed such Holder’s request will be reallocated among the remaining requesting Holders in like manner).

 

(e)          Upon delivering a Request a Management Stockholder having Piggyback Registration Rights pursuant to clause (b) of this Section 8 will, if requested by the Company, execute and deliver a custody agreement and power of attorney having customary terms and in form and substance reasonably satisfactory to the Company with respect to the shares of Stock to be registered pursuant to this Section 8 (a “Custody Agreement and Power of Attorney”).  The Custody Agreement and Power of Attorney will provide, among other things, that the Management Stockholder will deliver to and deposit in custody with the custodian and attorney-in-fact named therein a certificate or certificates (to the extent applicable) representing such shares of Stock (duly endorsed in blank by the registered owner or owners thereof or accompanied by duly executed stock powers in blank) and irrevocably appoint said custodian and attorney-in-fact as the Management Stockholder’s agent and attorney-in-fact with full power and authority to act under the Custody Agreement and Power of Attorney on the Management Stockholder’s behalf with respect to the matters specified therein.

 

(f)           The Management Stockholder agrees that he will execute such other agreements as the Company may reasonably request to further evidence the provisions of this Section 8, including reasonable and customary lock-up agreements.

 

(g)          Notwithstanding Section 11(l) of the Registration Rights Agreement, this Section 8 will terminate on the earlier of (i) the occurrence of a Change in Control and (ii) with respect to each Management Stockholder, on the date on which such Management Stockholder ceases to own any Registrable Securities.

 

9.              Covenant Regarding 83(b) Election.  Except as the Company may otherwise agree in writing, the Management Stockholder hereby covenants and agrees that the Management Stockholder will make an election provided pursuant to Treasury Regulation Section 1.83-2 with respect to any Stock that is acquired by the Management Stockholder that is subject to this Agreement and the Option Stock acquired on exercise of any Options; and the Management Stockholder further covenants and agrees that he or she will furnish the Company with copies of the forms of election the Management Stockholder files within thirty (30) days after each exercise of the Management Stockholder’s Options and with evidence that each such election has been filed in a timely manner.

 

10.       Rights to Negotiate Repurchase Price.  Nothing in this Agreement shall be deemed to restrict or prohibit the Company from purchasing, redeeming or otherwise acquiring for value shares of Stock or Equity Awards from the Management Stockholder, at

 

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any time, upon such terms and conditions, and for such price, as may be mutually agreed upon in writing between the Parties, whether or not at the time of such purchase, redemption or acquisition circumstances exist which specifically grant the Company the right to purchase, or the Management Stockholder the right to sell, shares of Stock or any Equity Awards under the terms of this Agreement; provided that no such purchase, redemption or acquisition shall be consummated, and no agreement with respect to any such purchase, redemption or acquisition shall be entered into, without the prior approval of the Board.

 

11.       Notice of Change of Beneficiary.  Immediately prior to any Transfer of Stock, as permitted under this Agreement, to a Management Stockholder’s Trust, the Management Stockholder shall provide the Company with a copy of the instruments creating the Management Stockholder’s Trust and with the identity of the beneficiaries of the Management Stockholder’s Trust.  The Management Stockholder shall notify the Company as soon as practicable prior to any change in the identity of any beneficiary of the Management Stockholder’s Trust.

 

12.       Recapitalizations, etc.  The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Stock or the Equity Awards, to any and all shares of capital stock of the Company or any capital stock, partnership units or any other security evidencing ownership interests in any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or substitution of the Stock or the Equity Awards by reason of any stock dividend, split, reverse split, combination, recapitalization, liquidation, reclassification, merger, consolidation or otherwise.

 

13.       Management Stockholder’s Employment by the Company.  Nothing contained in this Agreement (a) obligates the Company or any subsidiary of the Company to employ the Management Stockholder in any capacity whatsoever or (b) prohibits or restricts the Company (or any such subsidiary) from terminating the employment of the Management Stockholder at any time or for any reason whatsoever, with or without Cause, and the Management Stockholder hereby acknowledges and agrees that neither the Company nor any other person has made any representations or promises whatsoever to the Management Stockholder concerning the Management Stockholder’s employment or continued employment by the Company or any subsidiary of the Company.

 

14.       Binding Effect.  The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.  In the case of a transferee permitted under Section 2(a) or Section 3(a) (other than clauses (iii) or (iv) thereof) hereof, such transferee shall be deemed the Management Stockholder hereunder; provided, however, that no transferee (including without limitation, transferees referred to in Section 2(a) or Section 3(a) hereof) shall derive any rights under this Agreement unless and until such transferee has delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement.  No provision of this Agreement is intended to or shall confer upon any Person other than the Parties any rights or remedies hereunder or with respect hereto.

 

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15.       Amendment.  This Agreement may be amended by the Company at any time upon notice to the Management Stockholder thereof; provided that any amendment (i) that materially disadvantages the Management Stockholder shall not be effective unless and until the Management Stockholder has consented thereto in writing and (ii) that disadvantages a class of stockholders in more than a de minimis way but less than a material way shall require the consent of a majority of the equity interests held by such affected class of stockholders.

 

16.       Closing.  Except as otherwise provided herein, the closing of each purchase and sale of shares of Stock pursuant to this Agreement shall take place at the principal office of the Company on the tenth business day following delivery of the notice by either Party to the other of its exercise of the right to purchase or sell such Stock hereunder.

 

17.       Applicable Law; Jurisdiction; Arbitration; Legal Fees.

 

(a)         The laws of the State of Maryland applicable to contracts executed and to be performed entirely in such state shall govern the interpretation, validity and performance of the terms of this Agreement.

 

(b)         In the event of any controversy among the parties hereto arising out of, or relating to, this Agreement which cannot be settled amicably by the parties, such controversy shall be finally, exclusively and conclusively settled by mandatory arbitration conducted expeditiously in accordance with the American Arbitration Association rules by a single independent arbitrator.  Such arbitration process shall take place in Baltimore, Maryland.  The decision of the arbitrator shall be final and binding upon all parties hereto and shall be rendered pursuant to a written decision, which contains a detailed recital of the arbitrator’s reasoning.  Judgment upon the award rendered may be entered in any court having jurisdiction thereof.

 

(c)          Notwithstanding the foregoing, the Management Stockholder acknowledges and agrees that the Company, its subsidiaries, the Investors and any of their respective affiliates shall be entitled to injunctive or other relief in order to enforce the covenant not to compete, covenant not to solicit and/or confidentiality covenants as set forth in Section 22 of this Agreement.

 

(d)         In the event of any arbitration or other disputes with regard to this Agreement or any other document or agreement referred to herein, each Party shall pay its own legal fees and expenses, unless otherwise determined by the arbitrator.

 

18.       Assignability of Certain Rights by the Company.  The Company shall have the right to assign any or all of its rights to purchase shares of Stock pursuant to Sections 4 and 5 hereof.

 

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19.       Miscellaneous.

 

(a)         In this Agreement all references to “dollars” or “$” are to United States dollars and the masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates.

 

(b)         If any provision of this Agreement shall be declared illegal, void or unenforceable by any court of competent jurisdiction, the other provisions shall not be affected, but shall remain in full force and effect.

 

20.       Withholding.  The Company or its subsidiaries shall have the right to deduct from any cash payment made under this Agreement to the applicable Management Stockholder Entities any federal, state or local income or other taxes required by law to be withheld with respect to such payment, if applicable.

 

21.       Notices.  All notices, consents, payments, demands and other communications required or permitted for herein shall be in writing and sent by electronic mail (if an address is provided for notice pursuant to this provision) and shall be (a) delivered personally to the Person or to an officer of the Person to whom the same is directed, or (b) sent by electronic mail, facsimile, overnight courier or registered or certified mail, return receipt requested, postage prepaid.  Any notice or other communication hereunder shall be deemed duly delivered, given and received for all purposes as of:  (i) the date so delivered, if delivered personally; (ii) upon receipt, if sent by electronic mail, facsimile or overnight courier; or (iii) on the date of receipt or refusal indicated on the return receipt, if sent by registered or certified mail, return receipt requested, postage and charges prepaid and properly addressed. All communications shall be sent to such party’s address as set forth below or at such other address or to such other person as the party shall have furnished to each other party in writing in accordance with this provision:

 

(a)         If to the Company, to it at the following address:

 

Laureate Education, Inc.
 650 South Exeter Street
 Baltimore, MD  21202-4382
 Attention:  General Counsel
 Telecopy:  (410) 843-8544

 

with copies to:

 

Wengen Alberta, Limited Partnership

9 West 57th Street, Suite 4200

New York, NY 10019

Attention:  Brian Carroll

Telecopy:  (212) 750-0003

 

and

 

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Simpson Thacher & Bartlett LLP
 425 Lexington Avenue
 New York, New York 10017
 Attention: Gary Horowitz, Esq.

Telecopy:  (212) 455-2502

 

(b)         If to the Management Stockholder, to the Management Stockholder at the address set forth below under the Management Stockholder’s signature; or at such other address as either party shall have specified by notice in writing to the other.

 

22.       Confidential Information; Covenant Not to Compete; Covenant Not to Solicit.

 

(a)         In consideration of the Company entering into this Agreement with the Management Stockholder, unless otherwise provided in any employment or severance agreement entered into by and between the Management Stockholder and the Company or any of its subsidiaries (in which case the corresponding provisions therein shall control), the Management Stockholder hereby agrees effective as of the date of the Management Stockholder’s commencement of employment with the Company or its subsidiaries, without the Company’s prior written consent, the Management Stockholder shall not, directly or indirectly:

 

(i)                                      at any time during or after the Management Stockholder’s employment with the Company or its subsidiaries, disclose or use any Confidential Information pertaining to the business of the Company or any of its subsidiaries or the Investors or any of their respective Affiliates, except when required to perform his or her duties to the Company or one of its subsidiaries, by law or judicial process;

 

(ii)                                at any time during the Management Stockholder’s employment with the Company or its subsidiaries and for a period of two years thereafter, directly or indirectly, act as a proprietor, investor, director, officer, employee, substantial stockholder, consultant, or partner in any business that directly competes, at the relevant determination date, with the post-secondary business of the Company or any of their respective Affiliates in any geographic area where the Company or its Affiliates manufactures, produces, sells, leases, rents, licenses or otherwise provides products or services,

 

(iii)                                at any time during the Management Stockholder’s employment with the Company or its subsidiaries and for a period of two years thereafter, directly or indirectly (A) solicit customers or clients of the Company, any of its subsidiaries, the Investors or any of their respective Affiliates to terminate their relationship with the Company, any of its subsidiaries, the Investors or any of their respective Affiliates or otherwise solicit such customers or clients to compete with any business of the Company, any of its subsidiaries, the Investors or any of their respective Affiliates or (B) solicit or offer employment to any person who is, or has been at any time during the twelve (12) months immediately preceding the termination of the Management Stockholder’s employment employed by the Company or any of its Affiliates;

 

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provided that in each of (ii) and (iii) above, such restrictions shall not apply with respect to any Investor or any of their Affiliates that is not engaged in any business that competes, directly or indirectly, with the Company or any of its subsidiaries.  If the Management Stockholder is bound by any other agreement with the Company regarding the use or disclosure of Confidential Information, the provisions of this Agreement shall be read in such a way as to further restrict and not to permit any more extensive use or disclosure of Confidential Information.  Notwithstanding the foregoing, for the purposes of Section 22(a)(ii), the Management Stockholder may, directly or indirectly own, solely as an investment, securities of any Person engaged in the business of the Company or its affiliates which are publicly traded on a national or regional stock exchange or quotation system or on the over-the-counter market if the Management Stockholder (I) is not a controlling person of, or a member of a group which controls, such person and (II) does not, directly or indirectly, own 5% or more of any class of securities of such Person.

 

(b)         Notwithstanding clause (a) above, if at any time a court holds that the restrictions stated in such clause (a) are unreasonable or otherwise unenforceable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographic area determined to be reasonable under such circumstances by such court will be substituted for the stated period, scope or area.  Because the Management Stockholder’s services are unique and because the Management Stockholder has had access to Confidential Information, the parties hereto agree that money damages will be an inadequate remedy for any breach of this Agreement.  In the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any violations of, the provisions hereof (without the posting of a bond or other security).

 

(c)                                  In the event that the Management Stockholder breaches any of the provisions of Section 22(a), in addition to all other remedies that may be available to the Company, the Management Stockholder shall be required to pay to the Company any amounts actually paid to him or her by the Company in respect of any repurchase by the Company of any Options or Stock held by such Management Stockholder; provided that with respect to Option Stock, the Management Stockholder shall be required to pay to the Company only such amounts, if any, that the Management Stockholder received in excess of the exercise price paid by the Management Stockholder in acquiring such Option Stock, on a net after-tax basis.

 

23.       Irrevocable Proxy.  In accordance with Section 2-507(d) of the MGCL, each Management Stockholder hereby irrevocably appoints Parent and any authorized representatives and designees thereof as its lawful proxy and attorney-in-fact to exercise with full power in such Management Stockholder’s name and on its behalf such Management Stockholder’s right to vote (or execute a written consent) all of the shares of outstanding Common Stock owned by the Management Stockholder at any regular or special meeting of the stockholders of the Company or in connection with a written consent in lieu of a regular or special meeting of the stockholders of the Company.  Parent and any authorized representatives and designees thereof shall vote (or execute a consent) under this proxy on behalf of each such Management Stockholder in the same manner as Parent votes (or executes a consent) any outstanding shares of Common Stock owned by it at any such regular or special meeting of the stockholders of the Company or in connection with a written consent in lieu of a regular or special meeting of the stockholders of the Company.   This

 

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proxy is irrevocable and is coupled with an interest and shall not be terminable as long as this Agreement remains effective among the parties hereto, their successors, transferees and assigns and, if such Management Stockholder is a natural person, shall not terminate on the disability or incompetence of such Management Stockholder.  The Company is hereby requested and directed to honor this proxy upon its presentation by Parent and any authorized representatives and designees thereof, without any duty of investigation whatsoever on the part of the Company. Each such Management Stockholder agrees that the Company, and the Company’s secretary shall not be liable to such Management Stockholder for so honoring this proxy.

 

[Signatures on next page.]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

 

	
 
    	
LAUREATE   EDUCATION, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Robert   W. Zentz
    
	
 
    	
Title:
    	
Senior   Vice President, Secretary and General Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WENGEN   ALBERTA, LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
By:   Wengen Investments Limited, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[Signature Page for Management Stockholder’s Agreement]

 

 

	
 
    	
MANAGEMENT   STOCKHOLDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
«FirstName»   «LastName»
    
	
 
    	
 
    
	
 
    	
ADDRESS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
o  The   above-signed represents that he/she is an “accredited investor” as defined in   Rule 501(a) of Regulation D, as amended, under the Act.
    

 

[signature page for Management Stockholder’s Agreement]

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