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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 5, 2006
THE WASHINGTON POST COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-6714 53-182885
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1150 15th Street, N.W. 20071
Washington, D.C. (Zip Code)
(Address of principal
executive offices)
(202) 334-6000
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last
report.)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing
obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Section 8 - Other Events
Item 8.01 Entry into a Material Definitive Agreement
On June 5, 2006, following approval by the
Compensation Committee of the Board of Directors
(the Committee) of The Washington Post Company (the
Company), the Company entered into a performance-
based retention arrangement with Mr. Jonathan Grayer,
the Chairman and Chief Executive Officer of its
subsidiary, Kaplan, Inc. (Kaplan). The arrangement
is designed to retain and extend Mr. Grayers service
to Kaplan. The arrangement provides, among other
things, that the Company will grant Mr. Grayer shares
of Kaplan common stock and options to purchase shares
of Kaplan common stock. Combined with the options and
shares Mr. Grayer already holds, these new grants will
bring his total holdings of shares and shares under
option to 5.01% of all outstanding Kaplan shares. In
addition, the arrangement provides Mr. Grayer with the
opportunity to be awarded additional shares in the
future, subject to performance standards, and in lieu
of amounts that would otherwise be paid to him as cash
bonuses. The number of shares that may be so issued
will depend not only on the extent to which performance
targets are achieved, but also on the then-current fair
market value of Kaplan common stock. The Compensation
Committee of the Board estimates that if the Executive
were awarded all the common shares for which he might
in the future be eligible under this arrangement, such
additional grants could represent, in the aggregate,
approximately an additional 1% of shares of Kaplan
common stock.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
Item 9.01(c) Exhibits
Exhibit No. Description
99.1 Agreement, dated as of June 5, 2006,
between Mr. Jonathan Grayer and The
Washington Post Company, relating
performance-based retention
arrangements.
99.2 Stockholders Agreement, dated as of
June 5, 2006, among The Washington
Post Company, Kaplan, Inc. and
Mr. Jonathan Grayer.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
hereunto duly authorized.
The Washington Post Company
(Registrant)
Date June 5, 2006 /s/ John B. Morse, Jr.
(Signature)
John B. Morse, Jr.
Vice President, Finance
EXHIBIT INDEX
Exhibit No. Description
Exhibit 99.1 Agreement, dated as of June 5, 2006,
between Mr. Jonathan Grayer and The
Washington Post Company, relating
performance-based retention
arrangements.
Exhibit 99.2 Stockholders Agreement, dated as of
June 5, 2006, among The Washington
Post Company, Kaplan, Inc. and
Mr. Jonathan Grayer.
Exhibit 99.1
AGREEMENT (this Agreement), dated as
of June 5, 2006, between The Washington Post
Company, a Delaware corporation (Parent),
and Jonathan N. Grayer (the Executive).
WITNESSETH:
WHEREAS, the parties hereto wish to
establish the equity compensation arrangements
for the Executive for the years 2006 through
and including 2011 in connection with assuring
the Executives continued employment as Chairman
and Chief Executive Officer of Kaplan, Inc. (the
Company), a Delaware corporation and subsidiary
of Parent.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used
in this Agreement, the following terms shall
have the meanings ascribed to them below:
Chief Executive Officer shall mean the
Chief Executive Officer of Parent.
Common Stock shall mean common stock,
par value $1.00 per share, of the Company.
Compensation Committee shall mean the
Compensation Committee of the Board of Directors
of Parent.
Current Fair Market Value shall mean
$1,833.00 per share of Common Stock, which
the Compensation Committee has determined to
be the Fair Market Value of the Common Stock
as of the date hereof.
Disability shall have the meaning
assigned thereto in the Stock Option Plan.
Fair Market Value shall mean, as of
any date, the value of the Common Stock
determined as follows:
(i) if the Common Stock is listed on
any established stock exchange or a
national market system, including without
limitation The Nasdaq National Market or
The Nasdaq SmallCap Market of The Nasdaq
Stock Market, its Fair Market Value shall
be the mean between the high and low
sale prices for the Common Stock (or the
closing bid, if no sales were reported)
as quoted on such exchange or system for
the last market trading day prior to the
time of determination, as reported in
The Wall Street Journal or such other
source as the Board of Directors of the
Company deems reliable, or if the Common
Stock is regularly quoted by a recognized
securities dealer but selling prices are
not reported, their Fair Market Value
shall be the mean between the high bid
and low asked prices for the Common
Stock on the last market trading day
prior to the day of determination; or
(ii) in the absence of an
established market for the Common
Stock, the aggregate Fair Market Value
thereof shall be determined at least
once a year on or before the first
day of February and at such other times
as may be deemed appropriate by the
Compensation Committee in its sole
discretion. As part of its
determination, the Compensation Committee
shall (1) obtain and consider a
professional appraisal of the value
of the Company from an investment
bank or from another entity capable of
preparing such valuation; and (2) use
or cause to be used methodologies
such as those used by Goldman Sachs
in each of its 1997-2005 valuations
of the Company, including a multiple
of earnings, present value of future
cash flows or such other established
methodologies that value comparable
enterprises as going concerns.
However, both the recommendation of the
professional appraisal and the result
of the application of such
methodologies shall only be advisory
to the Compensation Committee and
not determinative of the value of the
Company. The Compensation
Committee shall have the right, in
its sole discretion, to retain and make
use of any advisory assistance it deems
necessary or desirable in preparing
the valuations of the Company, including,
but not limited to, the right to
appoint a new appraiser. The Fair Market
Value of each share of Common Stock shall
be determined by dividing the aggregate
Fair Market Value by the number of
then-outstanding shares of Common Stock
plus the number of shares of Common
Stock reserved for issuance under and
pursuant to the terms of the Companys
stock option plans.
Options shall mean options granted
under the Stock Option Plan to purchase
shares of Common Stock.
Pre-Compensation Operating Income
shall mean the annual operating income
of the Company, after deductions for
annual cash bonuses, but not including
any deductions for long-term compensation
plans or the Stock Option Plan.
Stockholders Agreement shall mean
the Stockholders Agreement, dated as of
June 5, 2006, among Parent, the Company and the
Executive.
Stock Option Plan shall mean the
Fifth Amended and Restated Stock Option
Plan of the Company, as amended from time to
time.
ARTICLE II
EQUITY ARRANGEMENTS
SECTION 2.01. Initial Grant.
(a) Promptly after execution by the
Executive of the Stockholders Agreement,
Parent will cause the Company to issue
to the Executive 2,619 shares of Common
Stock (the Initial Grant), representing
approximately $4,800,000 of Common
Stock based on the Current Fair Market
Value thereof. Parent and the
Executive agree that the Initial
Grant shall be made in lieu of the
Executives 2005 bonus.
(b) In connection with the Initial
Grant, the Executive shall be
entitled to exercise a number of
Options (the Exercised Options)
currently held by the Executive that
will, after the repurchase by Parent
of the shares of Common Stock
underlying such Options as set forth
below, generate net proceeds to the
Executive in an amount approximately equal
to the Executives tax liability arising
from the Initial Grant. Parent and the
Executive agree that the Exercised
Options relate to 3,364 shares of
Common Stock of the Company. Upon
exercise of the Exercised Options,
(i) Parent will repurchase the shares
of Common Stock received by the
Executive in connection therewith at
the Current Fair Market Value and
(ii) Parent will cause the Company
to grant the Executive a number of
additional Options (the Reload Options)
equal to the number of Exercised
Options. The exercise price of the
Reload Options will be the Current Fair
Market Value. The Reload Options
will vest over a period of four years,
with 25% of the Reload Options vesting
on each of January 1, 2007, January 1,
2008, January 1, 2009 and January 1, 2010.
SECTION 2.02. Additional Options.
(a) Promptly after execution by the
Executive of the Stockholders Agreement,
Parent will cause the Company to grant
the Executive 14,182 additional Options
(the Additional Options). The exercise
price of the Additional Options will be
the Current Fair Market Value. Subject
to Section 2.02(b), the Additional
Options will vest over a period of four
years, with 25% of the Additional
Options vesting on each of December 31,
2007, December 31, 2008, December 31,
2009 and December 31, 2010; provided,
however, that such Additional Options
shall not be exercisable unless and
until the Companys Pre-Compensation
Operating Income for any of the fiscal
years ending December 31, 2009,
December 31, 2010 or December 31, 2011
shall have been equal to or greater
than a minimum performance standard, as
established by the Chief Executive
Officer and the Compensation Committee.
(b) Notwithstanding Section 2.02(a), in
the event of the Executives (i)
termination (other than termination
for cause, which shall be defined as
willful misconduct that remains uncured
for more than sixty (60) days following
written notice and results in material
reputational or economic injury to the
Company) or (ii) death or Disability,
all of the Additional Options held by
the Executive shall immediately vest and
become exercisable by the Executive (or
his estate).
SECTION 2.03. Future Grants.
(a) For each of 2006 through 2011, if
Kaplan delivers Pre-Compensation Operating
Income equal to or greater than special
target amounts determined by the Chief
Executive Officer and the Compensation
Committee, Parent will cause the
Company to issue to the Executive a
number of shares of Common Stock
valued at the dollar amount that
would otherwise have been paid to him as
a cash bonus for Kaplans meeting the
applicable special target level, based
on the Fair Market Value thereof as of
the date of issuance.
(b) The Executive shall be eligible
for additional grants of Common Stock
for each of 2006 through 2011, at the
discretion of the Chief Executive
Officer and the Compensation Committee,
based upon truly exceptional performance
by the Company in the preceding year, and
in lieu of amounts that would otherwise
have been paid to him as a cash bonus
for such exceptional performance.
SECTION 2.04. Put Right;
Stockholders Agreement. Executive shall
have the right to put to the Company all
shares of Common Stock held by the
Executive, whether pursuant to the Initial
Grant, any Future Grant, upon exercise
of Options or otherwise, utilizing the
procedures set forth in Section 6(k)(1)
of the Stock Option Plan (Put Right),
and as a result thereof the Executive
shall have the right to sell any or
all of such shares of Common Stock to
the Company pursuant to, and in accordance
with, such Section 6(k)(1). All such
shares of Common Stock shall be subject
to the terms and conditions of the
Stockholders Agreement.
ARTICLE III
OTHER AGREEMENTS
SECTION 3.01. Non-Competition.
For a period of three years from the
date the Executives employment with
the Company terminates, the Executive
will not compete directly against any
non-trivial business in which Parent
and its subsidiaries are then engaged,
which shall mean not participating
actively in the management or
supervision of a directly competing
enterprise. The foregoing is not
intended to prevent the Executive
from working in the same lines of
business as those in which Parent
and its subsidiaries are also engaged
(e.g., education, media) unless the
competitive overlap with Parent and
its subsidiaries is direct and
substantial.
SECTION 3.02. No Solicitation.
For a period of two years from the
date the Executives employment by
the Company terminates, the Executive
will not solicit any then-current
employees of the Company to join the
Executive in another enterprise or activity.
SECTION 3.03. Interpretation. It
is intended by the parties hereto that,
in the event of the need for interpretation
of Section 3.01 or 3.02, Parents appointed
representative to discuss with Executive
the interpretation of Section 3.01 or 3.02
shall be Mr. Donald E. Graham, for so
long as Mr. Graham is a director of Parent
and, thereafter, by a director of Parent
chosen by the Executive. Such interpretation
shall be made taking into account the
purpose of Sections 3.01 and 3.02, which
is not to penalize Executive, or
needlessly circumscribe Executives future,
but to protect Parent and its subsidiaries
from direct and material harm; Sections 3.01
and 3.02 shall not prevent the Executive
from pursuing a normal business career
because of de minimis conflicts.
ARTICLE IV
REPRESENTATIONS
Parent represents and warrants
to the Executive, and the Executive represents
and warrants to Parent, as follows:
SECTION 4.01. Authority; Execution
and Delivery; Enforceability. Such party
has full power and authority to execute this
Agreement and to perform its obligations
hereunder. In the case of Parent, the
execution and delivery by Parent of this
Agreement and the performance of its
obligations hereunder have been duly
authorized by all necessary corporate or
similar action. Parent has duly executed
and delivered this Agreement, and this
Agreement constitutes its legal, valid
and binding obligation, enforceable
against it in accordance with its terms.
SECTION 4.02. No Conflicts; Consents.
The execution and delivery by such party
of this Agreement do not, and the performance
of its obligations hereunder will not,
conflict with, or result in any violation
of or default (with or without notice or
lapse of time, or both) under, or give
rise to a right of termination, cancellation
or acceleration of any obligation or to
loss of a material benefit under, or to
increased, additional, accelerated or
guaranteed rights or entitlements of any
person under, or result in the creation
of any mortgage, lien, security interest,
charge, restrictions or encumbrances of
any kind upon any of the
properties or assets of such party under,
any provision of (i) in the case of
Parent, the certificate of incorporation
or by-laws of Parent, (ii) any
material contract, lease, license,
indenture, agreement, commitment or
other legally binding arrangement to
which such party is a party or by
which any of its properties or assets is
bound or (iii) any material judgment, order
or decree or material statute, law
(including common law), ordinance, rule
or regulation applicable to such party or
its properties or assets. No consent,
approval, license, permit, order or
authorization of, or registration,
declaration or filing with, any Federal,
state, local or foreign government or
any court of competent jurisdiction,
administrative agency or commission or
other governmental authority or
instrumentality, domestic or foreign, is
required to be obtained or made by or with
respect to such party in connection with
the execution, delivery and performance
of this Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Notices. All
notices and other communications pursuant
to this Agreement shall be dated and in writing
and shall be given:
If to Parent, to it at the following
address:
The Washington Post Company
1150 15th St., N.W.
Washington, D.C. 20071
Attention: Ann McDaniel
Facsimile: 202-334-1031
If to the Executive, to him at the
following address:
Jonathan N. Grayer
160 West 86th Street, #3
New York, NY 10024
Facsimile: 212-492-5860
or to such other address as the party to
whom notice is to be given may provide
in a written notice to the Company, a copy
of which written notice shall be on
file with the Companys Secretary. Notice
shall be effective when received.
SECTION 5.02. Applicable Law.
The laws of the State of New York shall
govern the interpretation, validity and
performance of the terms of this
Agreement, regardless of the law that
might be applied under principles of
conflicts of laws.
SECTION 5.03. Integration. This
Agreement and the documents referred to
herein or delivered pursuant hereto which
form a part hereof contain the entire
understanding of the parties with respect
to the subject matter hereof. This
Agreement supersedes all prior agreements
and understandings between the parties
with respect to the subject matter
hereof, including the agreement
between the Executive and Alan Spoon
dated October 16, 1997 (except for
paragraph (ii) thereof, which provides
for eighteen months of salary and
medical benefit continuation if the
Executive is terminated prior to 2011,
which shall survive).
SECTION 5.04. Descriptive Headings.
The headings in this Agreement are for
convenience of reference only and shall
not limit or otherwise affect the meaning
of terms contained herein.
SECTION 5.05. Severability.
The invalidity or unenforceability of any
provisions of this Agreement in any
jurisdiction shall not affect the
validity, legality or enforceability of
the remainder of this Agreement in such
jurisdiction or the validity, legality or
enforceability of this Agreement, or any
provision hereof, in any other
jurisdiction, it being intended that all
rights and obligations of the parties
hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 5.06. Other Agreements.
Nothing contained in this Agreement
shall be deemed to be a waiver of, or
release from, any obligations any party
hereto may have under, or any restrictions
on the transfer of shares of Common Stock
or other securities of the Company
imposed by, any other agreement, if any.
SECTION 5.07. Successors, Assigns,
Transferees. The provisions of this
Agreement shall be binding upon and inure
to the benefit of the parties hereto and
their respective heirs, successors and
permitted assigns. Neither this Agreement
nor any right, remedy, obligation or
liability arising hereunder or by reason
hereof may be transferred by the Executive
without the prior written consent of Parent.
Any purported transfer of rights under this
Agreement in violation of this
Section 5.07 shall be void and of no effect.
SECTION 5.08. Defaults. A default
by any party to this Agreement in such
partys compliance with any of the conditions
or covenants hereof or performance of any
of the obligations of such party hereunder
shall not constitute a default by any other
party.
SECTION 5.09. Amendments; Waivers.
This Agreement may not be amended, modified
or supplemented and no waivers of or
consents to departures from the provisions
hereof may be given unless consented to in
writing by Parent and the Executive.
SECTION 5.10. Counterparts. This
Agreement may be executed in two or more
counterparts, each of which shall be deemed
an original but all of which, when taken
together, shall constitute one and the
same Agreement.
SECTION 5.11. Exclusive Jurisdiction;
Waiver of Jury Trial.
(a) Each party agrees to commence
any action, suit or proceeding arising
out of this Agreement in any Federal
court sitting in the City of New York,
New York or, if such suit, action or
other proceeding may not be brought
in such court for jurisdictional
reasons, in any New York State court
situated within the City of New York.
Each party irrevocably submits to the
jurisdiction of such court for the purposes
of any such suit, action or other
proceeding. Each party further agrees
that service of any process, summons,
notice or document by U.S. registered
mail to such partys respective address
set forth above shall be effective service
of process for any action, suit or
proceeding in New York with respect to any
matters to which it has submitted to
jurisdiction in this Section 5.11. Each
party irrevocably and unconditionally
waives any objection to the laying
of venue of any action, suit or
proceeding arising out of this Agreement
or the transactions contemplated hereby
in any Federal court in the City of
New York, New York, or any New York
State court situated within the City of
New York, and hereby further irrevocably
and unconditionally waives and agrees not
to plead or claim in any such court that
any such action, suit or proceeding
brought in any such court has been brought
in an inconvenient forum.
(b) Each party waives, to the fullest
extent permitted by applicable law, any
right it may have to a trial by jury in
respect of any litigation arising out
of or relating to this Agreement. Each
party (i) certifies that no representative,
agent or attorney of another party has
represented, expressly or otherwise,
that such other party would not, in the
event of litigation, seek to enforce the
foregoing waiver and (ii) acknowledges
that it has been induced to enter into
this Agreement by, among other things,
the mutual waivers and certifications
set forth above in this Section 5.11(b).
IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as
of the date first above written.
THE WASHINGTON POST COMPANY,
By
Name: Donald E. Graham
Title: Chief Executive
Officer and Chairman
Jonathan N. Grayer
Exhibit 99.2
STOCKHOLDERS AGREEMENT (this
Agreement), dated as of June 5, 2006,
among The Washington Post Company, a
Delaware Corporation (Parent),
Kaplan, Inc., a Delaware corporation
(the Company), and Jonathan N.
Grayer (the Stockholder).
WITNESSETH:
WHEREAS, the Stockholder has been
awarded Shares (as defined below), and may
in the future be awarded, or acquire through
the exercise of options or otherwise,
additional Shares;
WHEREAS, as of the date hereof,
Parent owns all of the outstanding Shares
that are not owned by the Stockholder; and
WHEREAS, the parties hereto wish to
make provision relating to the ownership,
voting and disposition by the Stockholder
of the Shares owned by the Stockholder
on the date hereof and from time to
time hereafter.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used
in this Agreement, the following terms shall
have the meanings ascribed to them below:
Affiliate of any Person shall mean any
Person that, directly or indirectly through one
or more intermediaries, controls, is controlled
by or is under common control with such Person.
Code shall mean the Internal Revenue Code
of 1986, as amended.
Company Board shall mean the Board of
Directors of the Company.
Compensation Committee shall mean the
Compensation Committee of the Board of Directors
of Parent.
Fair Market Value shall mean, as of any
date, the value of the Shares determined as
follows:
(i) if the Shares are listed on any
established stock exchange or a national market
system, including without limitation The Nasdaq
National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, their Fair Market
Value shall be the mean between the high and
low sale prices for the Shares (or the closing
bid, if no sales were reported) as quoted on
such exchange or system for the last market
trading day prior to the time of determination,
as reported in The Wall Street Journal or
such other source as the Company Board deems
reliable, or if the Shares are regularly quoted
by a recognized securities dealer but selling
prices are not reported, their Fair Market
Value shall be the mean between the high bid
and low asked prices for the Shares on the last
market trading day prior to the day of
determination; or
(ii) in the absence of an established
market for the Shares, the aggregate Fair Market
Value thereof shall be determined at least once
a year on or before the first day of February
and at such other times as may be deemed
appropriate by the Compensation Committee in
its sole discretion. As part of its determination,
the Compensation Committee shall (1) obtain and
consider a professional appraisal of the value
of the Company from an investment bank or from
another entity capable of preparing such
valuation; and (2) use or cause to be used
methodologies such as those used by Goldman Sachs
in its 1997 valuation of the Company, including a
multiple of earnings, present value of future
cash flows or such other established methodologies
that value comparable enterprises as going
concerns. However, both the recommendation of
the professional appraisal and the result
of the application of such methodologies
shall only be advisory to the Compensation
Committee and not determinative of the value
of the Company. The Compensation Committee
shall have the right, in its sole discretion,
to retain and make use of any advisory
assistance it deems necessary or desirable in
preparing the valuations of the Company,
including, but not limited to, the right to
appoint a new appraiser. The Fair Market
Value of each Share shall be determined
by dividing the aggregate Fair Market Value
by the number of then-outstanding Shares plus
the number of Shares reserved for issuance
under and pursuant to the terms of the
Companys stock option plans.
Initial Public Offering shall mean a
bona fide underwritten public offering of
Shares as a direct result of which at least
35 of the aggregate voting common equity
securities of the Company (calculated on a
fully diluted basis taking into account the
number of Shares reserved for issuance under
and pursuant to the terms of the Companys
stock option plans) will be beneficially
owned by Persons other than Parent and its
Affiliates (including all directors,
officers and employees of Parent and its
Affiliates).
Minority-Held Subsidiary shall mean a
corporation, that is not a Subsidiary of the
Company, whether now or hereafter existing,
in an unbroken chain of corporations beginning
with the Company, in which each of the
corporations in the chain other than the last
corporation in the chain owns stock possessing
20% or more of the issued and outstanding stock
in one of the other corporations in such chain.
Minority-Held Subsidiary Employer shall
mean the Minority-Held Subsidiary with respect to
which the Stockholder becomes an employee,
director, or both, immediately following the
Stockholders termination of employment without
cause from the Company, from a Subsidiary
Employer, or from a Minority-Held Subsidiary
other than the Minority-Held Subsidiary
Employer, as the case may be.
Person shall mean any individual,
corporation (including any non-profit
corporation), general or limited partnership,
cooperative, limited liability company,
joint venture, estate, trust, association,
organization, labor union or other entity.
Securities Act shall mean the
Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder.
Shares shall, as the case may be, mean (i)
shares of common stock, par value $1.00 per
share, of the Company, (ii) any other shares of
capital stock of the Company and (iii) shares of
any other capital stock or securities into which
such shares of common stock or other shares of
capital stock are reclassified or changed,
including by reason of a merger, consolidation,
share exchange, reorganization, recapitalization
or similar transaction.
Subsidiary shall mean any subsidiary
corporation, whether now or hereafter existing,
as defined in Section 424(f) of the Code;
provided, however, that 80% shall be substituted
for 50% whereever 50% appears in such definition.
Subsidiary Employer shall mean the
Subsidiary of the Company with respect to
which the Stockholder becomes an employee,
director, or both, immediately following the
Stockholders termination of employment
without cause from the Company, from a
Subsidiary of the Company other than the
Subsidiary Employer, or from a Minority-Held
Subsidiary Employer, as the case may be.
ARTICLE II
TRANSFERS
SECTION 2.01. Restrictions on Transfers.
The Stockholder shall not, directly or
indirectly, offer, transfer, sell, assign,
pledge, hypothecate or otherwise dispose of
(collectively, Transfer) any Shares, or solicit
any offers to purchase or otherwise acquire or
take a pledge of any Shares, other than by
will or by the laws of descent and distribution.
The provisions of this Section 2.01 shall not
apply to any transaction contemplated by
Section 2.05 or Article III hereof.
SECTION 2.02. Legend. Each certificate
representing Shares held by the Stockholder
shall bear substantially the following legend:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS
OF, AND IN PARTICULAR MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION IS EXPRESSLY
PERMITTED BY, AND COMPLIES WITH THE
PROVISIONS OF, A STOCKHOLDERS
AGREEMENT (THE AGREEMENT) (A COPY
OF WHICH IS ON FILE WITH, AND MAY BE
OBTAINED FROM, THE SECRETARY OF
KAPLAN, INC. (TOGETHER WITH ITS
SUCCESSORS, THE COMPANY)). THE
HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE,
AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF THE AGREEMENT.
IN ADDITION TO THE FOREGOING, THE
SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (A) SUCH DISPOSITION IS
PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (B) THE HOLDER
HEREOF SHALL HAVE DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL,
WHICH OPINION OF COUNSEL SHALL BE
REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT SUCH
DISPOSITION IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS.
SECTION 2.03. Stop Transfers. The
Stockholder agrees that, in order to
ensure compliance with the restrictions
referred to herein, the Company may issue
appropriate stop transfer instructions to
its transfer agent, if any, and that, if
the Company transfers its own securities, it
may make appropriate notations to the same
effect in its own records. No Transfer of
Shares in violation of this Agreement shall
be made or recorded on the books of the
Company and any such Transfer shall be void
and of no effect.
SECTION 2.04. Transfers to the
Company. Notwithstanding anything in this
Agreement to the contrary, the Stockholder
may at any time transfer all or a portion
of his Shares to the Company (on the terms
and conditions as may be agreed upon by the
Stockholder and the Company) without
complying with the provisions of this Article II.
SECTION 2.05. Repurchase Right Upon
Termination of Employment. In the event that
the Stockholder ceases to be employed by the
Company, a Subsidiary Employer or a Minority-Held
Subsidiary Employer (including by reason of death
or disability), and at such time, the Stockholder
(or his estate) holds Shares, the Company shall
have the right for a period of 90 days
following the effective date of any such
termination of employment to repurchase all
outstanding Shares held by the Stockholder
(or his estate) for an amount equal to the
then Fair Market Value of such Shares.
The Company, in exercising its repurchase
right, shall give the Stockholder
(or his estate) written notice specifying
(i) the number of Shares the Company is
repurchasing and (ii) the Fair Market
Value of such Shares (the Repurchase Notice).
The Fair Market Value for purposes of the
Companys exercise of its repurchase right
hereunder shall be the Fair Market Value
of the Shares as of the date of the
Repurchase Notice as determined in good
faith by the Compensation Committee.
The purchase price for Shares repurchased by
the Company shall be paid in cash.
ARTICLE III
DRAG-ALONG RIGHTS; BRING-ALONG RIGHTS,
REGISTRATION RIGHTS
SECTION 3.01. Drag-Along Right.
(a) If Parent at any time proposes to
sell or dispose of Shares representing
more than 50% of the Shares then outstanding
to any Person or Persons other than an
Affiliate of Parent (such transferee Person
or Persons are hereinafter referred to
collectively as the Drag-Along Purchasers),
Parent shall have the right (the Drag-Along
Right) to require the Stockholder to sell
or dispose to the Drag-Along Purchasers
such number of outstanding Shares owned
by the Stockholder determined in accordance
with this Section 3.01 (a Drag-Along
Disposition Transaction). Parent shall
send a written notice (a Drag-Along Notice)
to the Stockholder not less than 30 days
prior to the date upon which such sale or
disposition is scheduled to close. Each
Drag-Along Notice shall (i) specify in
reasonable detail all the terms and
conditions upon which such sale or disposition
is to occur and (ii) make reference to this
Section 3.01 and state that the Stockholder
is obligated to sell or dispose of its
Drag-Along Shares (as defined below)
pursuant to such sale.
(b) In connection with any Drag-
Along Disposition Transaction, (i the
Stockholder shall be required to sell or
dispose of the number of remaining Shares
(the Drag-Along Shares), requested
by Parent; provided, however, that the
percentage of the total number of
remaining Shares then owned by the
Stockholder represented by such Drag-Along
Shares shall be equal to the percentage of
the total number of outstanding Shares then
owned by Parent to be sold by Parent.
Unless the Stockholder agrees otherwise,
the Stockholder shall receive as
consideration upon such sale or disposition
for his Shares the same type of
consideration and the same amount of
consideration per share and on the same
terms and conditions as are applicable to
the Shares to be sold by Parent. The
Stockholder shall agree to the same
covenants, representations and warranties
as Parent agrees to in connection with the
proposed sale. To the extent the Stockholder
is required to provide indemnification in
connection with the Drag-Along Disposition
Transaction, the monetary indemnification
obligations of the Stockholder shall
be limited to the fair market value of
the cash, property and other assets
received by the Stockholder in such
Drag-Along Disposition Transaction;
provided, however, that this limitation
shall not apply in respect of any
representations, warranties or covenants
that are personal in nature to the
Stockholder (e.g., title to Shares being
transferred).
(c) Each of Parent and each Drag-Along
Purchaser shall have the right, in its sole
discretion, at all times prior to
consummation of the proposed Drag-Along
Disposition Transaction, to abandon or
otherwise terminate such transaction, and
neither Parent nor any Drag-Along Purchaser
shall have any liability or obligation to
the Stockholder with respect thereto by
virtue of such abandonment or termination;
provided, however, that the Company
shall promptly pay to the Stockholder his
reasonable out-of-pocket costs and
expenses (if any) incurred in connection
with the transaction through the date of
abandonment or termination thereof.
SECTION 3.02. Bring-Along Rights.
(a) If the Company Board approves the
sale of the Company to another entity
(whether by a merger, consolidation, share
exchange, reorganization, recapitalization
or similar transaction) (an Approved Sale),
then (i) the Stockholder shall not raise
dissenter or appraisal rights with respect
to the Approved Sale, and (ii) if the
Approved Sale is structured as a sale of
capital stock, the Stockholder shall sell
all remaining Shares held by the Stockholder,
on the terms and conditions approved by the
Company Board. The Stockholder shall
promptly take all actions as the Company
Board shall deem necessary and appropriate in
connection with the consummation of the
Approved Sale. In the event of an Approved
Sale, the Stockholder, unless he expressly
(i.e. other than by operation of clause
(i) of this Section 3.02(a)) agrees
otherwise pursuant to the terms of the
Approved Sale, shall receive as consideration
upon such Approved Sale for his Shares
the same type of consideration and the
same amount of consideration per Share as
shall be received by Parent in connection
with such Approved Sale; provided, however,
that in any Approved Sale to a Person who is
not an Affiliate of Parent, Parent may
retain 10% or less of the Shares held by
Parent or receive a different type of
consideration than the Stockholder in
respect of 10% or less of the Shares
held by Parent in circumstances the Company
Board determines necessary for the
Approved Sale to be accounted for in the
manner requested by the purchaser of the
Company in such Approved Sale.
(b) If the Company Board desires to
consummate an ApprovedSale, the Company
Board shall provide a written notice to
the Stockholder, which notice shall
describe the proposed transaction in
summary terms and, if the Approved Sale is
structured as a sale of Shares, contain the
price, terms and conditions of the sale
of Shares by the Stockholder to the
entity to which such Shares are to be sold.
Upon not less than five business days
request, the Stockholder shall enter into
(i) a binding agreement with the entity to
which such Shares are to be sold to sell to
such entity all of his Shares, free
and clear of all liens, charges, pledges,
security interests and encumbrances and
t the price and on the terms contained in
said notice and (ii) any binding
interseller agreement relating to such
Approved Sale that the Company Board may
approve, which agreements may provide for
escrows, holdbacks, expense reimbursement
and other purchase price reductions or
deferrals that apply pro rata to all sellers.
To the extent the Stockholder is
required to provide indemnification in
connection with any Approved Sale, the
monetary indemnification obligations of
the Stockholder shall be limited to the
fair market value of the cash, property
and other assets received by the Stockholder
in the Approved Sale; provided, however, that
this limitation shall not apply in respect
of any representations, warranties or
covenants that are personal in nature to
the Stockholder (e.g., title to
Shares being transferred).
(c) The Stockholder shall bear his pro
rata share of the fees and expenses
incurred by the Company and Parent in
the Approved Sale.
SECTION 3.03. Piggyback Rights
In the event of an Initial Public Offering,
the Stockholder shall have the right to request
registration of the Shares for sale in
connection with an underwritten registered
Initial Public Offering. However, the
Company shall not be obligated to take any
action to effect any registration of
Stockholders Shares if, at the time of the
request, the managing underwriters advise
the Company in good faith and in writing
that such inclusion would adversely affect
the underwriters ability to market the shares
included in the registration statement. If the
Stockholders Shares are not registered in
connection with an Initial Public Offering
due to advice from the managing underwriter
of such shares, until such date as the
Shares are registered, the Stockholder
shall continue to have the right to put the
Shares to the Company at the per share
price of the publicly traded stock.
Stockholder agrees to execute any
customary agreements and certificates
required by the underwriters in connection
with any such underwritten registered
initial public offering.
ARTICLE IV
VOTING; WAIVER OF RIGHTS
SECTION 4.01. Proxy; Voting. The
Stockholder has, simultaneously with the
execution of this Agreement, granted Parent
a proxy to vote and provide consent with
respect to the Stockholders Shares as to all
matters presented to the stockholders of the
Company for voting or consent, including the
election of directors, substantially in the
form of Exhibit A attached hereto. If at
any time such proxy shall not be in full
force and effect for any reason other than
termination of this Agreement pursuant to
Section 6.14, the Stockholder shall vote or
cause to be voted, and provide or cause to
be provided consent with respect to, all
Shares held of record by him or over which
he has voting control, in each case as directed
by Parent with respect to all matters
presented to the stockholders of the Company
for voting or consent.
SECTION 4.02. Management of the
Business of the Company. The Stockholder
(i) acknowledges and agrees that Parent,
by virtue of its majority ownership of the
capital stock of the Company, controls the
management of the business and affairs of the
Company (including with respect to any sale or
initial public offering of the Company),
(ii) acknowledges and agrees that Parent
shall not be liable to the Stockholder for
any action taken in connection with its
management of the business and affairs of
the Company and (iii) hereby irrevocably
waives, to the fullest extent permitted by
law, any and all rights, claims or remedies
against Parent in respect of any duties
(including fiduciary duties), whether in
equity or at law (including any fiduciary
duties that a majority stockholder may have
to a minority stockholder), to the
Stockholder, whether arising from Parents
and the Stockholders ownership of capital
stock of the Company or otherwise. The
Stockholder acknowledges and agrees that
Parents practice has been to borrow money
from the Company on a regular basis on
terms previously disclosed to the
Stockholder. Without limiting the generality
of the foregoing, the Stockholder acknowledges
and agrees that the Stockholder has no
rights, claims, or remedies against Parent
in respect of any duties (including
fiduciary duties), whether in equity or at
law (including any fiduciary duties
that a majority stockholder may have
to a minority stockholder), to the extent
that the Parent continues such practice.
ARTICLE V
REPRESENTATIONS
Each of Parent and the Company
represents and warrants to the Stockholder,
and the Stockholder represents and warrants
to each of Parent and the Company, as
follows:
SECTION 5.01. Authority; Execution
and Delivery; Enforceability. Such party
has full power and authority to execute
this Agreement and to perform its
obligations hereunder. In the case of
any party that is a corporation, the
execution and delivery by such party of
this Agreement and the performance of its
obligations hereunder have been duly
authorized by all necessary corporate or
similar action. Such party has duly executed
and delivered this Agreement, and this
Agreement constitutes its legal, valid
and binding obligation, enforceable against
it in accordance with its terms.
SECTION 5.02. No Conflicts; Consents.
The execution and delivery by such party
of this Agreement do not, and the performance
of its obligations hereunder will not
conflict with, or result in any violation
of or default (with or without notice or
lapse of time, or both) under, or give rise
to a right of termination, cancelation or
acceleration of any obligation or to loss
of a material benefit under, or to increased,
additional, accelerated or guaranteed rights
or entitlements of any person under, or
result in the creation of any mortgage,
lien, security interest, charge, restrictions
or encumbrances of any kind upon any of the
properties or assets of such party under,
any provision of (i) in the case of any party
that is a corporation or other legal entity,
the certificate of incorporation, by-laws
or similar organizational document of such
party, (ii) any material contract, lease,
license, indenture, agreement, commitment
or other legally binding arrangement to
which such party is a party or by which any
of its properties or assets is bound or
(iii) any material judgment, order or
decree or material statute, law (including
common law), ordinance, rule or regulation
applicable to such party or its properties
or assets. No consent, approval, license,
permit, order or authorization of, or
registration, declaration or filing with,
any Federal, state, local or foreign
government or any court of competent
jurisdiction, administrative agency or
commission or other governmental authority
or instrumentality, domestic or foreign,
is required to be obtained or made by or
with respect to such party in connection
with the execution, delivery and
performance of this Agreement.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices. All notices
and other communications provided for herein
shall be dated and in writing and shall
be given:
If to Parent, to it at the following
address:
The Washington Post Company
1150 15th St., N.W.
Washington, D.C. 20071
Attention: Ann McDaniel
Facsimile: 202-334-1031
with a copy to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Ronald Cami
Facsimile: 212-474-3700
If to the Stockholder, to him at
the following address:
Jonathan N. Grayer
160 West 86th Street, #3
New York, NY 10024
Facsimile: 212-492-5860
If to the Company, to it at the
following address:
Kaplan, Inc.
888 Seventh Avenue
New York, NY 10106
Attention: Johan de Muinck Keizer,
General Counsel
Facsimile: 212-489-2301
or to such other address as the party to
whom notice is to be given may provide
in a written notice to the Company, a
copy of which written notice shall be
on file with the Companys Secretary.
Notice shall be effective when received.
SECTION 6.02. Applicable Law. The
laws of the State of New York shall govern the
interpretation, validity and performance of the
terms of this Agreement, regardless of the law
that might be applied under principles of
conflicts of laws.
SECTION 6.03. Integration. This
Agreement and the documents referred to
herein or delivered pursuant hereto which
form a part hereof contain the entire
understanding of the parties with respect
to the subject matter hereof. This
Agreement supersedes all prior agreements
and understandings between the parties with
respect to the subject matter hereof.
SECTION 6.04. Descriptive Headings.
The headings in this Agreement are for
convenience of reference only and shall
not limit or otherwise affect the meaning
of terms contained herein.
SECTION 6.05. Severability. The
invalidity or unenforceability of any
provisions of this Agreement in any
jurisdiction shall not affect the validity,
legality or enforceability of the remainder
of this Agreement in such jurisdiction or
the validity, legality or enforceability
of this Agreement, or any provision hereof,
in any other jurisdiction, it being
intended that all rights and obligations
of the parties hereunder shall be enforceable
to the fullest extent permitted by law.
SECTION 6.06. Other Agreements.
Nothing contained in this Agreement shall
be deemed to be a waiver of, or release
from, any obligations any party hereto
may have under, or any restrictions on
the Transfer of Shares or other securities
of the Company imposed by, any other
agreement, if any.
SECTION 6.07. Successors, Assigns,
Transferees. The provisions of this Agreement
shall be binding upon and inure to the
benefit of the parties hereto and their
respective heirs, successors and permitted
assigns. Neither this Agreement nor any right,
remedy, obligation or liability arising
hereunder or by reason hereof may be
transferred by the Stockholder without
the prior written consent of Parent and
the Company. Any purported transfer of
rights under this Agreement in violation
of this Section 6.07 shall be void and of
no effect.
SECTION 6.08. Defaults. A default
by any party to this Agreement in such
partys compliance with any of the
conditions or covenants hereof or performance
of any of the obligations of such party
hereunder shall not constitute a default
by any other party.
SECTION 6.09. Amendments; Waivers.
This Agreement may not be amended, modified
or supplemented and no waivers of or consents
to departures from the provisions hereof may
be given unless consented to in writing by
Parent, the Company and the Stockholder.
SECTION 6.10. Counterparts. This
Agreement may be executed in two or more
counterparts, each of which shall be deemed
an original but all of which, when taken
together, shall constitute one and the same
Agreement.
SECTION 6.11. Specific Performance.
Each of the parties hereto acknowledges and
agrees that in the event of any breach of
this Agreement, the non-breaching parties
would be irreparably harmed and could not
be made whole by monetary damages. It is
accordingly agreed that the parties hereto
will waive the defense in any action for
specific performance that a remedy at law
would be adequate and that the parties
hereto, in addition to any other remedy to
which they may be entitled at law or in
equity, shall be entitled to an injunction
or injunctions to prevent breaches of the
provisions of this Agreement and to enforce
specifically the terms and provisions hereof
without the necessity of proving actual
damages or securing or posting any bond or
providing prior notice.
SECTION 6.12. Exclusive Jurisdiction;
Waiver of Jury Trial. (a) Each party agrees
to commence any action, suit or proceeding
arising out of this Agreement in any Federal
court sitting in the City of New York, New
York or, if such suit, action or other
proceeding may not be brought in such court
for jurisdictional reasons, in any New
York State court situated within the City of
New York. Each party irrevocably submits to
the jurisdiction of such court for the
purposes of any such suit, action or other
proceeding. Each party further agrees that
service of any process, summons, notice or
document by U.S. registered mail to such
partys respective address set forth above
shall be effective service of process for
any action, suit or proceeding in New York
with respect to any matters to which it has
submitted to jurisdiction in this
Section 6.12. Each party irrevocably and
unconditionally waives any objection to the
laying of venue of any action, suit or
proceeding arising out of this Agreement
or the transactions contemplated hereby
in any Federal Court in the City of New York,
New York, or any New York State court situated
in the City of New York, and hereby further
irrevocably and unconditionally waives and
agrees not to plead or claim in any such
court that any such action, suit or
proceeding brought in any such court has
been brought in an inconvenient forum.
(b) Each party waives, to the fullest
extent permitted by applicable law, any
right it may have to a trial by jury in
respect of any litigation arising out of
or relating to this Agreement. Each
party (i) certifies that no representative,
agent or attorney of another party has
represented, expressly or otherwise, that
such other party would not, in the event of
litigation, seek to enforce the foregoing
waiver and (ii) acknowledges that it has
been induced to enter into this Agreement by,
among other things, the mutual waivers and
certifications set forth above in this
Section 6.12(b).
SECTION 6.13. Recapitalization,
Exchanges, etc., Affecting Shares. The
provisions of this Agreement shall apply,
to the full extent set forth herein
with respect to the Shares, to any and
all securities of the Company or any
successor or assign of the Company
(whether by merger, share exchange,
consolidation, sale of assets or otherwise)
which may be issued in respect of, in
exchange for or in substitution of the
Shares, by reason of any stock dividend,
stock split, stock issuance, reverse
stock split, combination, recapitalization,
reclassification, merger, consolidation
or otherwise. Upon the occurrence of any
of such events, amounts hereunder shall be
appropriately adjusted.
SECTION 6.14. Termination. The
rights and obligations of the parties hereto
shall automatically terminate upon the
earlier of (i) the consummation of an
Initial Public Offering and (ii) the
consummation of any merger, consolidation,
share exchange, reorganization,
recapitalization or similar transaction
involving the Company, if Parent does not
own, directly or indirectly, at least a
majority of the voting power of the surviving
entity after giving effect to such transaction;
provided, however, that (A) the provisions of
Section 3.03 and Article VI shall survive any
such termination under clause (i) above until
the occurrence of an event described in clause
(ii) above, (B) in connection with any Transfer
by the Stockholder after such Initial Public
Offering (1) such Transfer shall be pursuant
to an effective registration statement under
the Securities Act and shall be registered
under all applicable state securities or
blue sky laws or (2) such Transfer shall
meet an available exemption from registration
under the Securities Act and all applicable
state securities or blue sky laws, and
(C) an outstanding Repurchase Notice shall
survive any termination under clause (i) above
if received by the Stockholder prior to the
date of such termination.
IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of
the date first above written.
THE WASHINGTON POST COMPANY,
by
Name: Donald E. Graham
Title: Chief Executive Officer and
Chairman
KAPLAN, INC.,
by
Name: Gerald M. Rosberg
Title: Senior Vice President
Jonathan N. Grayer
EXHIBIT A
IRREVOCABLE PROXY
I, the undersigned, pursuant to
Section 212 of the Delaware General Corporation
Law, hereby irrevocably appoint The Washington Post
Company (Parent), a Delaware corporation, as
attorney and proxy for the undersigned, to vote,
and to provide consent, as to any matters presented
to the stockholders of Kaplan, Inc., a Delaware
corporation (the Company), for voting or consent,
including the election of directors, with respect to
the total number of shares of common stock, par value
$1.00 per share, of the Company owned by the
undersigned on the date hereof and any shares of
common stock or any other capital stock of the
Company acquired by the undersigned from time to
time subsequent to the date hereof (collectively,
the Shares); and to attend any and all meetings,
and adjournments thereof, of the stockholders of
the Company called for the purpose of voting or
providing consent as to any such matters; and to
represent and otherwise to act for the undersigned
in the same manner and with the same effect as if
such action were taken by the undersigned.
The undersigned hereby revokes any
previous proxies with respect to the Shares
which are the subject of this irrevocable proxy.
This proxy is irrevocable, coupled with an interest
and has been granted pursuant to the Stockholders
Agreement, dated as of June 5, 2006, among Parent,
the Company and the undersigned (the Stockholders
Agreement). This proxy shall not terminate
until such time as the Stockholders Agreement has
terminated in accordance with the terms thereof.
The undersigned authorizes the attorney
and proxy appointed herein to substitute any other
Person to act hereunder, to revoke any such
substitution and to file this proxy or any
substitution or revocation with the Secretary
of the Company.
IN WITNESS WHEREOF, the undersigned
has executed this proxy this 5th day of June
2006.
Name: Jonathan N. Grayer
Address: 160 West 86th Street, #3
New York, NY 10024