EXHIBIT 4.2
THIRD AMENDED AND RESTATED CO-SALE AND
BOARD REPRESENTATION AGREEMENT
This THIRD AMENDED AND RESTATED CO-SALE AND BOARD REPRESENTATION AGREEMENT
("Agreement") dated as of January 22, 2003, by and among Capella Education
Company (the "Company"), Xxxxxxx Xxxxx ("Xxxxx"), Cherry Tree Ventures IV, a
Minnesota limited partnership ("Cherry Tree"), NCS Xxxxxxx, Inc. as successor to
National Computer Systems, Inc. ("Pearson"), Forstmann Little & Co. Equity
Partnership-VI, L.P. ("Equity-VI"), Forstmann Little & Co. Equity
Partnership-VII, L.P. ("Equity-VII"), Forstmann Little & Co. Subordinated Debt
and Equity Management Buyout Partnership-VIII, L.P. ("MBO-VIII" and, together
with Equity-VI and Equity-VII, the "Forstmann Little Entities"), SmartForce plc
("SmartForce"), Xxxxxx OTC and Emerging Growth Fund ("Xxxxxx OTC"), TH XXX,
Xxxxxx Investment Trust - TH XXX, Xxxxxx Emerging Opportunities Portfolio
("Xxxxxx TH XXX" and, together with Xxxxxx OTC, "Xxxxxx"), DRW Venture Partners
LP ("Dain"), ThinkEquity Investment Partners LLC ("Think Equity"), the
Management Investors (the "Management Investors") listed on Schedule 1 attached
hereto for the benefit of each of them, Maveron Equity Partners 2000, L.P.,
Maveron Equity Partners 2000-B, L.P. and MEP 2000 Associates LLC (collectively
the "Maveron Entities"), Xxxx Xxxxx ("Xxxx"), Xxxxx Xxxxx ("Xxxxx"), Xxxx
Xxxxxxxx ("Xxxxxxxx"), (collectively, the "Shareholders") and Xxxxxx Xxxxxxx
("Xxxxxxx"), a resident of Minnesota, shall supersede and replace that certain
Second Amended and Restated Co-Sale and Board Representation Agreement dated
February 21, 2002 by and among Shank, Cherry Tree, Pearson, the Forstmann Little
Entities, SmartForce, Xxxxxx, Xxxx, Think Equity, the Management Investors,
Xxxxxxx and the Company (the "Prior Agreement") and be effective as of the date
of this Agreement. The Prior Agreement is hereby cancelled and terminated in its
entirety and shall be of no further force and effect.
WHEREAS, the Maveron Entities and Xxxxx Xxxxx ("Xxxxx") (collectively, the
"Purchasers") have executed the Maveron Class G Convertible Preferred Stock
Purchase Agreement dated as of January 15, 2003 with the Company (the "Purchase
Agreement"), pursuant to which the Purchasers will acquire shares of Class G
Convertible Preferred Stock ("Class G Preferred Stock") which will become part
of the outstanding shares of capital stock of the Company ("Capital Stock")
(hereinafter the term "Capital Stock" shall be deemed to include any shares of
Capital Stock subsequently acquired by a Shareholder and any rights by a
Shareholder to acquire any additional shares of Capital Stock and shall exclude
any shares acquired from Xxxxxx Xxxx ("Xxxx") pursuant to Shareholder Agreement
No. 2 (as defined in Section 2));
WHEREAS, Equity-VII, MBO-VIII, Xxxxxx, Think Equity, Xxxx, Xxxxxxx and the
Management Investors (other than Xxxxx) (collectively referred to as the "Class
F Investors") have entered into an exchange agreement (the "Exchange
Agreement"), pursuant to which the Class F Investors agree to exchange (the
"Exchange") each of the outstanding shares of Class F Convertible Preferred
Stock of the Company (the "Class F Preferred Stock") held by such investor for
shares of Class G Preferred Stock;
WHEREAS, certain of the parties hereto own shares of Capital Stock as set
forth in Schedule 2.4 to the Purchase Agreement;
WHEREAS, the execution and delivery of this Agreement by each Shareholder
is a condition to the purchase of the Class G Preferred Stock by the Purchasers
and the exchange of the Class F Preferred Stock for Class G Preferred Stock by
the Class F Investors; and
WHEREAS, the parties hereto desire that the Purchasers consummate the
purchase of Class G Preferred Stock contemplated by the Purchase Agreement and
are willing to enter into this Agreement as an inducement to the Purchasers to
complete the purchase of the Class G Preferred Stock.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. RESTRICTION ON TRANSFER. (a) Each of Xxxxx, Xxxx, Cherry Tree, the
Forstmann Little Entities, Pearson, SmartForce, the Maveron Entities and Xxxxxx
(collectively, the "Co-Sale Shareholders") agrees, on behalf of such Co-Sale
Shareholder and any transferee of any shares of Capital Stock owned by such
Co-Sale Shareholder, not to sell, transfer or otherwise dispose of (or enter
into a binding agreement to sell, transfer or otherwise dispose of) all or any
of such Co-Sale Shareholder's shares of Capital Stock now or hereafter owned by
such Co-Sale Shareholder, unless the right of co-sale set forth in Section 2 of
this Agreement has been fully complied with to the extent applicable.
(b) Each Shareholder agrees, on behalf of such Shareholder and any
transferee of any shares of Capital Stock owned by such Shareholder, not to
sell, transfer or otherwise dispose of (or enter into a binding agreement to
sell, transfer or otherwise dispose of) all or any of such Shareholder's shares
of Capital Stock now or hereafter owned by such Shareholder, unless such
transferee shall become a signatory to this Agreement, and upon execution and
delivery of this Agreement, such transferee shall be deemed a Shareholder for
purposes of this Agreement. The obligations of this Section 1(b) shall terminate
upon an IPO (as defined in Section 2).
2. RIGHT OF CO-SALE. Except as hereinafter provided, each Co-Sale
Shareholder agrees that such Co-Sale Shareholder will not sell, transfer or
otherwise dispose of any shares of Capital Stock (or any rights to acquire
shares of Capital Stock) without permitting each of the other Co-Sale
Shareholders (the "Benefiting Shareholders") to participate as a seller in such
transaction on a pro rata basis according to common share holdings (with
preferred shares of the Company being counted on an as-if-converted basis) as of
the date of receipt of the notice described below in this Section 2.
The following sale, transfer or other disposal of shares of Capital Stock
shall not be covered by this right of co-sale:
(a) sale of shares of Capital Stock by any of the Co-Sale
Shareholders in a bona fide underwritten public offering pursuant to a
registration statement filed by the Company pursuant to the Securities Act
of 1933, as now or hereafter amended (the "1933 Act");
(b) sale of shares of Capital Stock in a market transaction in a
bona fide public market, either pursuant to such a registration statement
or Rule 144 (or any successor rule) promulgated under the 1933 Act;
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(c) transfer of shares of Capital Stock (i) during the lifetime of a
Co-Sale Shareholder to the spouse of such Co-Sale Shareholder or to the
children, spouses of children or grandchildren of such Co-Sale Shareholder
or to a trust or trusts for benefit of any of the foregoing, or (ii) by
gift or testamentary disposition to any person, so long as the transferee,
donee or distributee assumes in writing the obligations of such Co-Sale
Shareholder under this Agreement and agrees to be treated as a
"Shareholder" and a "Co-Sale Shareholder" for all purposes of this
Agreement; or
(d) transfers by Cherry Tree, Xxxxxx, any Maveron Entity or any
Forstmann Little Entity to any of their respective partners, members,
investors, or other affiliates (including without limitation affiliated
investment funds), so long as the transferee assumes in writing the
obligations of such Shareholder under this Agreement and agrees to be
treated as a "Shareholder" and a "Co-Sale Shareholder" for all purposes of
this Agreement.
Any Co-Sale Shareholder that intends to sell, transfer or otherwise
dispose of shares of Capital Stock in a transaction subject to these rights of
co-sale (the "Selling Shareholder") shall give prompt written notice of such
intent to each Benefiting Shareholders, and each Benefiting Shareholder shall
notify the Selling Shareholder within 20 days of receipt of such notice whether
such Benefiting Shareholder wishes to participate in such transaction and bear a
pro rata portion of the expenses incident thereto. Failure of a Benefiting
Shareholder to respond within such 20-day period shall be deemed a declination
of any right to participate in such transaction provided that: (i) such
transaction is fully closed and consummated within 90 days of the expiration of
such 20-day period; (ii) the terms of the actual transaction include no fewer or
greater number of shares of Capital Stock than those set forth in the notice
hereunder; and (iii) no purchasers or ultimate legal or beneficial holders of
such shares of Capital Stock are involved in the transaction in addition to
those disclosed in any such notice. Failure to meet any of the foregoing
conditions shall require a new notification and right of co-sale with regard to
such transaction under this Section 2. Each Co-Sale Shareholder acknowledges the
obligations of Shank and Cherry Tree under that certain Shareholder Agreement
dated May 24, 1993 by and between Abel, Shank, and Cherry Tree ("Shareholder
Agreement No. 2") and agrees that any exercise of rights by a Benefiting
Shareholder hereunder shall be conducted in a manner which facilitates
compliance by the Selling Shareholder of such obligations.
The provisions of Section 1(a) and this Section 2 shall terminate at such
time as the Company consummates a sale of shares of Capital Stock pursuant to an
effective registration statement under the 1933 Act in which the aggregate gross
proceeds to the Company and/or selling shareholders, if any, equal or exceed
$20,000,000 at an average price per share of at least $5.40 (an "IPO") (subject
to adjustment for stock splits, stock dividends, combinations, recapitalizations
and the like) or, if earlier, as to any Co-Sale Shareholder at such time as such
Co-Sale Shareholder is the beneficial owner of fewer than 140,000 shares of
Capital Stock (subject to adjustment for stock splits, stock dividends,
combinations, recapitalizations and the like).
3. REPRESENTATION ON BOARD OF DIRECTORS.
(a) From and after the Closing, the Company shall take all necessary
or desirable action within its control to, and the Shareholders shall take
all necessary or
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desirable action within its control (including, without limitation, voting
its shares) to, cause the following persons to be elected as directors in
connection with each annual or special meeting held for the election of
directors of the Company following the date hereof:
(i) Pearson shall have the right to designate one person for
appointment as a director (the "Pearson Director"), who shall
initially be Xxxx Xxxxxx;
(ii) Cherry Tree shall have the right to designate one person for
appointment as a director (the "Cherry Tree Director"), who
shall initially be Xxxx Xxxxxxxxxxxx;
(iii) Equity-VI shall have the right to designate one person for
appointment as a director (the "Equity-VI Director"), who
shall initially be Xxxxxx Xxxxxx;
(iv) So long as Shank (i) is chief executive officer of the
Company or (ii) owns not less than the Minimum Equity Amount
(as defined below), Shank shall have the right to designate
one person (which may be Shank) for appointment as a director
(the "Shank Director"), who shall initially be Xxxxxxx Xxxxx;
(v) The holders of 66 2/3% of the then outstanding shares of
Class G Preferred Stock shall have the right to designate one
person for appointment as a director, who shall initially be
Xxxxxxx Xxxxxxxx (the "Class G Director");
(vi) The Forstmann Little Entities holding shares of Capital Stock
of the Company and Shank (or if Shank is not the chief
executive officer of the Company, the chief executive officer
of the Company) shall have the right to jointly designate one
person for appointment as a director (the "Xxxxxxxxx-Xxxxx
Director"), provided however, that Shank hereby agrees that
he shall approve the appointment of Xxxxxx X. Xxxxxx or T.
Xxxxxxxx XxXxx if the Forstmann Little Entities desire to
appoint either Xx. Xxxxxx or Xx. XxXxx to such directorship;
(vii) The directors designated pursuant to (i) - (v) above (by
majority vote) shall have the right to jointly designate one
person for appointment as a director (the "Preferred
Director"; together with the Pearson Director, the Cherry
Tree Director, the Equity-VI Director, the Shank Director,
the Xxxxxxxxx-Xxxxx Director and the Class G Director, the
"Designated Directors"), who shall initially by Xxxxxx Xxxxx;
and
(viii) The Board of Directors shall include two independent
directors, who shall initially be Xxxxx Xxxxxxxx and Xxxxx
Xxxxx;
"Independent" director shall mean a person who is not an affiliate (as
defined in the 0000 Xxx) of the Company or any Shareholder.
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(b) In connection with any annual or special meeting of shareholders
at which the term of any Designated Director is to expire, the Company
shall (to the extent within its control), and the Shareholders shall, take
all necessary action to cause a Designated Director to be nominated. At
any time at which the Shareholders have the right to, or will vote for, or
consent to, electing the members of the Board of Directors, the
Shareholders shall vote all shares of Capital Stock then owned by them
(including shares of Capital Stock hereafter acquired by them) in favor of
the election of the Designated Directors to the Board of Directors.
(c) As soon as practicable following Closing, the Company shall (to
the extent within its control), and the Shareholders shall (to the extent
within their control), cause the appointment of (i) a person designated by
the Forstmann Little Entities holding shares of Capital Stock of the
Company to serve on the Audit Committee of the Board of Directors (which
shall consist of no more than five persons or such greater number as the
Board of Directors shall unanimously approve) and (ii) a person designated
by the Forstmann Little Entities holding shares of Capital Stock of the
Company to serve on the Compensation Committee of the Board of Directors
(which shall consist of no more than six persons or such greater number as
the Board of Directors shall unanimously approve).
(d) If at any time a Shareholder (or Shareholders, in the case of a
director designated by more than one Shareholder) desires to remove, with
or without cause, a designee which such Shareholder (or Shareholders) has
the right to designate (whether directly or through their Designated
Director), upon notice of such determination, each Shareholder shall vote
all of its shares of Capital Stock to remove such designee or designees.
In the event of any vacancy arising by reason of the resignation, death,
removal or inability to serve of any Designated Director, each Shareholder
shall vote all of its shares of Capital Stock for the election of the
successor selected by the Shareholder (or Shareholders, in the case of a
director designated by more than one Shareholder) who have the right to
designate (whether directly or through their Designated Director) such
Designated Director. For purposes of this paragraph (d), the chief
executive officer of the Company shall be deemed to be a Shareholder
having the right to co-designate the Xxxxxxxxx-Xxxxx director.
(e) The provisions of this Section 3 shall terminate upon the
consummation of an IPO, or, if earlier, as to the rights with respect to
naming a Designated Director, such rights shall terminate for any
Shareholder at such time as such Shareholder is the beneficial owner of
less than 5% of the outstanding Capital Stock of the Company on a fully
diluted basis (the "Minimum Equity Amount"); provided, however, that the
provisions of this Section 3 with respect to the Equity-VI Director shall
not terminate until such time as the Forstmann Little Entities are the
beneficial owners, collectively, of less than the Minimum Equity Amount;
and provided, further that the provisions of this Section 3 with respect
to the Xxxxxxxxx-Xxxxx Director shall not terminate until such time as the
Forstmann Little Entities are the beneficial owners, collectively, of less
than 10% of the outstanding Capital Stock of the Company on a fully
diluted basis.
(f) The right to designate a director under this Section 3 may be
transferred and assigned by a Shareholder only to a transferee of not less
than 50% of the Capital Stock held (or which such Shareholder has the
right to acquire) at the date hereof by such
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Shareholder, so long as the transferee assumes in writing the obligations
of such Shareholder under this Agreement and agrees to be treated as a
"Shareholder" for all purposes of this Agreement.
(g) Notwithstanding anything else herein, the Board of Directors may
increase the size of the Board of Directors up to ten (10) total directors
to add additional independent directors with a unanimous vote of the then
existing members of the Board of Directors. "Independent" director shall
mean a person who is not an affiliate (as defined in the 0000 Xxx) of the
Company or any Shareholder.
4. AGREEMENT TO VOTE CLASS G PREFERRED STOCK BY MANAGEMENT INVESTORS.
(a) With respect to all matters on which the holders of Class G
Preferred Stock are entitled to vote such shares, each Management Investor
agrees, on behalf of such Management Investor and any transferee of any
shares of Class G Preferred Stock owned by such Management Investor, to
vote, at any meeting of the stockholders of the Company, however called,
including any adjourned or postponed meeting, and in any action by written
consent of the stockholders of the Company or in any other circumstances
upon which a vote, consent or other approval is sought, all shares of
Class G Preferred Stock owned by such Management Investor in the manner
directed by Shank.
(b) To secure the obligations of the Management Investors to vote
their shares of Class G Preferred Stock in accordance with Section 4(a) of
this Agreement, each Management Investor hereby appoints Shank as such
Management Investor's true and lawful proxy and attorney, with full power
of substitution, to vote (or act by execution of written consents) all of
such Management Investors' shares of Class G Preferred Stock in accordance
with Section 4(a) hereof. The proxy and powers granted by the Management
Investors pursuant to this Section are coupled with an interest and are
given to secure the performance of the Management Investors' duties under
this Section 4. Each Management Investor acknowledges and agrees that the
proxy and powers granted pursuant to this Section 4 are a material
inducement to the Company's and the Maveron Entities' entering into this
Agreement and the Purchase Agreement and Equity-VII's, MBO-VIII's and
Xxxxxx'x entering into this Agreement and the Exchange Agreement. Such
proxy shall be irrevocable for the term of this Agreement will be binding
on any successor in interest of the Management Investor and shall survive
the death, incompetency and disability of any Management Investor or any
other individual holder of a Management Investor's shares of Class G
Preferred Stock. This proxy shall operate to revoke any prior proxy as to
the Class G Preferred Stock heretofore granted by each such Management
Investor. Upon the death, incompetency, disability or the termination
(whether voluntary or involuntary) of employment, of Shank (a "Termination
Event"), all shares of Class G Preferred Stock owned by Management
Investors and Shank shall be voted pro rata in the same manner and
proportion as the votes cast collectively by the Forstmann Little
Entities, the Maveron Entities and Xxxxxx. Upon a Termination Event, the
Management Investors and Shank (or his legal representative) shall appoint
a person or persons, mutually acceptable to the Forstmann Little Entities,
the Maveron Entities and Xxxxxx, as the true and lawful proxy and attorney
of the Management Investors and Shank, with full power of substitution, to
vote the Management Investors' and Shank's shares as provided in the prior
sentence.
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(c) The rights granted to Shank pursuant to this Section 4 shall not
be transferable, in whole or in part, to any other person or entity.
(d) The provisions of this Section 4 shall terminate upon the
consummation of an IPO.
5. LEGENDS AND STOP TRANSFER ORDERS.
(a) LEGEND. The following legend shall be affixed to each of the
certificates representing shares of Capital Stock standing in the name of
a Shareholder on the books of the Company and, so long as this Agreement
shall remain in effect, such legend shall be affixed to certificates
representing shares of Capital Stock acquired by any Shareholder (whether
beneficially or legally) or issued or reissued to such Shareholder, such
legend to be and remain upon such certificates and any reissuance or
transfer thereof unless and until removed pursuant to the provisions of
Section 5(c):
The securities represented by this certificate are subject to
certain transfer restrictions, co-sale and voting rights set forth
in a Third Amended and Restated Co-Sale and Board Representation
Agreement, dated as of January 22, 2003, and may not be sold,
transferred or otherwise disposed of except in compliance with the
terms of such agreement, a copy of which is available for inspection
in the principal office of Company.
(b) STOP TRANSFER ORDER. A stop transfer order shall be placed with
the Company, as well as any transfer agent appointed by the Company,
preventing transfer of any of the securities referred to in Section 5(a)
pending compliance with the conditions set forth in any such legend.
(c) REMOVAL OF LEGENDS. Any legend endorsed on a certificate or
instrument evidencing a security subject to this Agreement shall be
removed, and the Company shall be authorized to issue a certificate or
instrument without such legend to the holder of such security, if this
Agreement has expired by its terms or such security is being disposed of
pursuant to the terms of this Agreement in a transaction which upon
completion will leave the shares of Capital Stock free and clear of this
Agreement.
6. COVENANTS.
(a) REIMBURSEMENT OF DIRECTORS. The Company shall reimburse the
director designated by the holders of the shares of Class G Preferred
Stock for all reasonable costs and expenses associated with attending
meetings of the Board or any committee thereof.
(b) INDEMNIFICATION OF DIRECTORS. (i) The Company shall indemnify,
defend and hold harmless each person who serves as a member of the Board
or committee thereof from and against all losses, claims, damages and
expenses (including reasonable attorneys' fees and expenses) to the
fullest extent permitted from time to time under applicable Law (as
defined in the Purchase Agreement).
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(ii) To the fullest extent permitted from time to time under
applicable Law, the Company shall pay, on an as-incurred basis, the
reasonable fees and expenses of the directors (including reasonable
attorneys' fees and expenses) in advance of the final disposition of
any Litigation (as defined in the Purchase Agreement) that is the
subject of the right to indemnification.
(iii) In the event of any Litigation, subject to the
provisions of any insurance policy the director shall be entitled to
control the defense thereof with counsel of the director's own
choosing reasonably acceptable to the Company and the Company shall
cooperate in the defense thereof; provided, that, such director
shall have no power to settle or compromise any Litigation for which
indemnification is being sought without the prior written consent of
the Company which shall not be unreasonably withheld.
(iv) The Articles of Incorporation and By-Laws of the Company
shall contain provisions for the indemnification and exculpation of
directors to the maximum extent permitted under applicable Law, and
shall be amended as and when necessary to effectuate the foregoing.
(v) The Company shall cause to be maintained in effect, with
financially sound insurers, a policy of directors' and officers'
liability insurance on terms and amounts substantially similar to
the directors' and officers' liability insurance maintained as of
the date hereof. Upon the Company's initial public offering, the
Company shall expand such directors' and officers' liability
insurance so that it shall be on such terms and in such amounts as
are customary for similarly situated public companies.
(c) BOARD MEETINGS. The Company agrees, as a general practice, to
hold meetings of its Board of Directors periodically, and in any case not
less than once every calendar quarter, and to hold meetings of the
committees of its Board of Directors as frequently as is necessary or
appropriate.
(d) INSURANCE. The Company will procure and maintain insurance with
respect to its properties and business against such casualties and
contingencies, of such types (including, without limitation, errors and
omissions coverage), on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as the Company believes is customary in
the case of similarly situated entities engaged in the same or similar
business and all such insurance shall be effected and maintained in force
under a policy or policies issued by insurers of recognized
responsibility, except that the Company may effect worker's compensation
or similar insurance in respect of operations in any state or other
jurisdiction either through an insurance fund operated by such state or
other jurisdiction or by causing to be maintained a system or systems of
self-insurance which is in accord with applicable laws.
(e) NON-DISCLOSURE AND INVENTION AGREEMENTS. The Company shall cause
all Key Employees currently employed or hereafter hired by the Company to
execute the Company's Statement of Policy and Employee Responsibilities
(which includes non-
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disclosure and invention assignment provisions) in a form that is
determined by the executive officers of the Company to reasonably protect
the proprietary information of the Company. "Key Employee" shall mean any
executive officer and any officer having policy-making functions,
including, without limitation, the persons set forth on Schedule 6(e).
7. TERMINATION OF PRIOR AGREEMENT. As of the date of this Agreement, the
Prior Agreement is hereby cancelled and terminated in its entirety and is
of no further force and effect.
8. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersedes any prior understandings, agreements or
representations, written or oral, relating to the subject matter hereof.
(b) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken
together shall constitute one and the same agreement, and any party hereto
may execute this Agreement by signing any such counterpart.
(c) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law but if any provision of this Agreement is held
to be invalid, illegal or unenforceable under any applicable law or rule,
the validity, legality and enforceability of the other provision of this
Agreement will not be affected or impaired thereby.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
personal representatives and successors and assigns. Subject to compliance
with the terms of this Agreement and the limitations herein expressed,
including, without limitation, the limitations set forth in Section 4(c),
all or any of the rights granted to any of the Shareholders under this
Agreement may be assigned in whole or in part to a transferee of Capital
Stock of any such Shareholder (a "Transferee"). As a condition precedent
to such assignment being effective, the Company and each other Shareholder
shall be given written notice prior to the transfer, stating the name and
address of the Transferee and identifying the securities with respect to
which such rights are being transferred, and each Transferee shall become
a signatory to this Agreement, and upon execution and delivery of this
Agreement, such Transferee shall be deemed a Shareholder for purposes of
this Agreement.
(e) MODIFICATION, AMENDMENT, WAIVER OR TERMINATION. With the written
consent of the Company and the holders of a majority of the shares of
capital stock of the Company (assuming full conversion of all shares of
preferred stock of the Company) held by the Shareholders at such time (the
"Agreement Shares"), (i) the obligations of the Company and the
Shareholders under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely) and (ii) this Agreement may be
amended, changed,
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discharged or terminated. Notwithstanding the foregoing, this Agreement
may not be amended (i) in a manner adverse to any Shareholder without the
consent of such Shareholder unless such amendment affects all Shareholders
in the same fashion or (ii) in a manner which disproportionately benefits
any Shareholder unless each other Shareholder not sharing ratably in such
benefit has consented thereto. Neither this Agreement nor any provisions
hereof may be amended, changed, waived, discharged or terminated orally,
but only by a signed statement in writing.
(f) NOTICES. Any notices or other communications required by this
Agreement shall be given by sending such notices or other communications
by registered mail to the appropriate party at its last known address as
shown on the books and records of the Company.
(g) HEADINGS. The headings and any table of contents contained in
this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
(h) GOVERNING LAW. ALL MATTERS RELATING TO THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW PROVISIONS THEREOF.
(i) THIRD-PARTY BENEFIT. Nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights, remedies,
obligations or liabilities of any nature whatsoever.
(j) WAIVER OF JURY TRIAL. EACH PARTY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(k) REMEDIES. The parties agree that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and
that any party may, in its discretion, apply to any court of law or equity
of competent jurisdiction for specific performance and injunctive relief
in order to enforce or prevent any violations this Agreement, and any
party against whom such proceeding is brought hereby waives the claim or
defense that such party has an adequate remedy at law and agrees not to
raise the defense that the other party has an adequate remedy at law.
(l) ADVICE OF COUNSEL. Each party acknowledges that it has been
advised by counsel in the negotiation, execution and delivery of this
agreement.
(m) EFFECTIVE TIME. This Agreement shall become effective at the
time of Closing (as defined in the Purchase Agreement).
(n) MASSACHUSETTS BUSINESS TRUSTS. A copy of the Agreement and
Declaration of Trust of each Xxxxxx fund or series investment company
(each, a "Fund")
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that is a Massachusetts business trust is on file with the Secretary of
State of The Commonwealth of Massachusetts, and notice is hereby given
that this Agreement is executed on behalf of such Fund by the Trustees of
the relevant Fund as Trustees, and not individually, and that the
obligations of this Agreement are not binding upon any of the Trustees,
officers and shareholders of the Fund individually but are binding only
upon the assets and property of such Fund.
(o) INDIVIDUAL RETIREMENT ACCOUNTS. Xxxxxxx agrees, and agrees to
cause USB Xxxxx Xxxxxxx as Custodian FBO Xxxxxx Xxxxxxx XXX Account
#00000000 ("Xxxxxxx XXX") and any other party necessary, to perform all of
the obligations of the Xxxxxxx XXX under this Agreement. Any notice given
to the Xxxxxxx XXX under this Agreement shall also be given to: Xxxxxx
Xxxxxxx, c/o Capella Education Company 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxxx, XX 00000, telecopy: (000) 000-0000.
Xxxxxxx Xxxxx agrees, and agrees to cause USB Xxxxx Xxxxxxx as
Custodian FBO Xxxxxxx X. Xxxxx XXX Account #00000000 ("Xxxxx XXX") and any
other party necessary, to perform all of the obligations of the Xxxxx XXX
under this Agreement. Any notice given to the Xxxxx XXX under this
Agreement shall also be given to: Xxxxxxx Xxxxx, c/o Capella Education
Company 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxx, XX 00000,
telecopy: (000) 000-0000.
(p) CO-SALE SHAREHOLDER WAIVER. The Co-Sale Shareholders (other than
the Maveron Entities) do hereby waive any and all rights under Section
1(a) and 2 of the Prior Agreement to participate as a seller in the
Exchange or to receive any notice of the Exchange.
[The remainder of this page has been left blank intentionally. Signature
page follows.]
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the first paragraph of this Agreement.
CHERRY TREE VENTURES IV, A MINNESOTA
LIMITED PARTNERSHIP
By /s/ Xxxx Xxxxxxxxxxxx
--------------------------
Its ______________________
NCS XXXXXXX, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Its Vice President & Chief Financial
Officer
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-VI, L.P.
By: FLC XXXII Partnership, L.P., its
General Partner
By /s/________________________
A General Partner
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-VII, L.P.
By: FLC XXXII Partnership, L.P., its
General Partner
By /s/__________________________
A General Partner
12
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT
PARTNERSHIP-VIII, L.P.
By: FLC XXXIII Partnership, L.P., its
General Partner
By /s/__________________________
A General Partner
SMARTFORCE PLC
By /s/__________________________
Its CFO
CAPELLA EDUCATION COMPANY
By /s/ Xxxxxxx X. Xxxxx
-----------------------------
Its Chairman and CEO
XXXXXX OTC AND EMERGING
GROWTH FUND
By Xxxxxx Investment Management, LLC
By: /s/_________________________
Name:
Title:
00
XX XXX, XXXXXX XXXXXXXXXX XXXXX -
XX XXX, XXXXXX EMERGING
OPPORTUNITIES PORTFOLIO
By TH Xxx, Xxxxxx Capital Management, LLC
By: /s/_________________________
Name:
Title:
DRW VENTURE PARTNERS LP
By RBC XXXX XXXXXXXX CORP.
Its: General Partner
By: /s/ Xxxx Xxxxxx
----------------------------
Xxxx Xxxxxx
Its: Director of Finance and
Administration,RBC CMS
THINKEQUITY INVESTMENT
PARTNERS LLC
By: ThinkEquity Holdings LLC
Its: Manager
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Its: Representative of the Board
of Managers
/s/ Xxxxxx Xxxxx
--------------------------------
XXXXXX XXXXX
/s/ Xxxxxxx Xxxxxxxx
--------------------------------
XXXXXXX XXXXXXXX
14
/s/ Xxxxxxx X. Xxxxx
-----------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-----------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxxxx Xxxxxx
-----------------------
XXXXXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxxxx
-----------------------
XXXXXXX XXXXXXXX
/s/ Xxxx Xxxxxxxxx
-----------------------
XXXX XXXXXXXXX
/s/ Xxxxxx Xxxxxxx
-----------------------
XXXXXX XXXXXXX
USB XXXXX XXXXXXX AS CUSTODIAN
FBO XXXXXXX X. XXXXX XXX
ACCOUNT #00000000
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
Its: Managing Director
15
USB XXXXX XXXXXXX AS CUSTODIAN
FBO XXXXXX XXXXXXX XXX
ACCOUNT #00000000
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
Its: Managing Director
MAVERON EQUITY PARTNERS 2000, L.P.
By: MAVERON GENERAL PARTNER 2000 LLC
By: /s/ Xxx Xxxxxxx
----------------------------
Xxx Xxxxxxx
Its: Manager
MAVERON EQUITY PARTNERS 2000-B, L.P.
By: MAVERON GENERAL PARTNER 2000 LLC
By: /s/ Xxx Xxxxxxx
----------------------------
Xxx Xxxxxxx
Its: Manager
MEP 2000 ASSOCIATES LLC
By: MAVERON GENERAL PARTNER 2000 LLC
By: /s/ Xxx Xxxxxxx
----------------------------
Xxx Xxxxxxx
Its: Manager
/s/ Xxxxx Xxxxx
--------------------------------
XXXXX XXXXX
16
/s/ Xxxx Xxxxx
--------------------------------
XXXX XXXXX
/s/ Xxxxx Xxxxx
--------------------------------
XXXXX XXXXX
/s/ Xxxx Xxxxxxxx
--------------------------------
XXXX XXXXXXXX
THE S. XXXXXX AND XXXXXX X. XXXXX ISSUE
TRUST
By: /s/_________________________
Its: Trustee
17
SCHEDULE 1
MANAGEMENT INVESTORS
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx
Xxxx Xxxxxxxxx
USB Xxxxx Xxxxxxx as Custodian FBO Xxxxxx Xxxxxxx
XXX Account #00000000
USB Xxxxx Xxxxxxx as Custodian FBO Xxxxxxx X. Xxxxx
XXX Account #00000000
Xxxxx Xxxxx
The S. Xxxxxx and Xxxxxx X. Xxxxx Issue Trust
SCHEDULE 6(e)
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxx Xxxxxxx
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx
Xxxx Xxxxxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxxxxxx
