EXHIBIT 1.1
4,000,000 SHARES
CAPELLA EDUCATION COMPANY
COMMON STOCK
UNDERWRITING AGREEMENT
November ___, 2006
CREDIT SUISSE SECURITIES (USA) LLC,
As Representative of the Several Underwriters,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Capella Education Company, a Minnesota corporation
(the "COMPANY"), proposes to issue and sell 3,632,140 shares of its Common
Stock, $0.10 par value per share ("SECURITIES"), and the stockholders listed in
Schedule A hereto ("SELLING STOCKHOLDERS") propose severally to sell an
aggregate of 367,860 outstanding shares of the Securities (such 4,000,000 shares
of Securities being hereinafter referred to as the "FIRM SECURITIES"), with each
Selling Stockholder selling the number of Firm Securities set forth opposite its
name on Schedule A. The Company also proposes to sell to the Underwriters, at
the option of the Underwriters, an aggregate of not more than 600,000 additional
shares of its Securities (such 600,000 additional shares being hereinafter
referred to as the "OPTIONAL SECURITIES"). The Firm Securities and the Optional
Securities are herein collectively called the "OFFERED SECURITIES". As part of
the offering contemplated by this Agreement, Xxxxx Xxxxxxx & Co. (the
"Designated Underwriter") has agreed to reserve out of the Firm Securities
purchased by it under this Agreement, up to 200,000 shares, for sale to the
Company's directors, employees and other parties associated with the Company
(collectively, the "PARTICIPANTS"), as set forth in the Prospectus (as defined
herein) under the heading "Underwriting" (the "DIRECTED SHARE PROGRAM"). The
Firm Securities to be sold by the Designated Underwriter pursuant to the
Directed Share Program (the "DIRECTED SHARES") will be sold by the Designated
Underwriter pursuant to this Agreement at the public offering price. Any
Directed Shares not subscribed for by the end of the business day on which this
Agreement is executed will be offered to the public by the Underwriters as set
forth in the Prospectus. The Company and each Selling Stockholder hereby agree,
severally and not jointly, with the several Underwriters named in Schedule B
hereto (the "UNDERWRITERS") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to, and agrees with,
the several Underwriters and the Selling Stockholders that:
(i) A registration statement (No. 333-124119) (the
"INITIAL REGISTRATION STATEMENT") relating to the Offered
Securities, including a form of prospectus, has been filed
with the Securities and Exchange Commission (the "COMMISSION")
and an additional registration statement (the "ADDITIONAL
REGISTRATION STATEMENT") relating to the Offered Securities
may have been or may be filed with the Commission pursuant to
Rule 462(b) ("RULE 462(b)") under the Securities Act of 1933
(the "ACT"). "INITIAL REGISTRATION STATEMENT" as of any time
means the initial registration statement, in the form then
filed with the Commission, including all information contained
in the additional registration statement (if any) and then
deemed to be a part of the initial
registration statement pursuant to the General Instructions of
the Form on which it is filed and all information (if any)
included in a prospectus then deemed to be a part of the
initial registration statement pursuant to Rule 430C ("RULE
430C") under the Act or retroactively deemed to be a part of
the initial registration statement pursuant to Rule 430A(b)
("Rule 430A(b)") under the Act and that in any case has not
then been superseded or modified. "ADDITIONAL REGISTRATION
STATEMENT" as of any time means the additional registration
statement in the form then filed with the Commission,
including the contents of the Initial Registration Statement
incorporated by reference therein and including all
information (if any) included in a prospectus then deemed to
be a part of the additional registration statement pursuant to
Rule 430C or retroactively deemed to be a part of the
additional registration statement pursuant to Rule 430A(b) and
that in any case has not then been superseded or modified. The
Initial Registration Statement and the Additional Registration
Statement are herein referred to collectively as the
"REGISTRATION STATEMENTS" and individually as a "REGISTRATION
STATEMENT". "REGISTRATION STATEMENT" as of any time means the
Initial Registration Statement and any Additional Registration
Statement as of such time. For purposes of the foregoing
definitions, information contained in a form of prospectus
that is deemed retroactively to be a part of a Registration
Statement pursuant to Rule 430A shall be considered to be
included in such Registration Statement as of the time
specified in Rule 430A. As of the time of execution and
delivery of this Agreement, the Initial Registration Statement
has been declared effective under the Act and is not proposed
to be amended. Any Additional Registration Statement has or
will become effective upon filing with the Commission pursuant
to Rule 462(b) and is not proposed to be amended. The Offered
Securities all have been or will be duly registered under the
Act pursuant to the Initial Registration Statement and, if
applicable, the Additional Registration Statement. For
purposes of this Agreement, "EFFECTIVE TIME" with respect to
the Initial Registration Statement or, if filed prior to the
execution and delivery of this Agreement, the Additional
Registration Statement means the date and time as of which
such Registration Statement was declared effective by the
Commission or has become effective upon filing pursuant to
Rule 462(c) ("RULE 462(C)") under the Act. If an Additional
Registration Statement has not been filed prior to the
execution and delivery of this Agreement but the Company has
advised the Representative that it proposes to file one,
"EFFECTIVE TIME" with respect to such Additional Registration
Statement means the date and time as of which such
Registration Statement is filed and becomes effective pursuant
to Rule 462(b). "EFFECTIVE DATE" with respect to the Initial
Registration Statement or the Additional Registration
Statement (if any) means the date of the Effective Time
thereof. A "REGISTRATION STATEMENT" without reference to a
time means such Registration Statement as of its Effective
Time. "STATUTORY PROSPECTUS" as of any time means the
prospectus included in a Registration Statement immediately
prior to that time, including any information in a prospectus
deemed to be a part thereof pursuant to Rule 430A or 430C that
has not been superseded or modified. For purposes of the
preceding sentence, information contained in a form of
prospectus that is deemed retroactively to be a part of a
Registration Statement pursuant to Rule 430A shall be
considered to be included in the Statutory Prospectus as of
the actual time that form of prospectus is filed with the
Commission pursuant to Rule 424(b) ("RULE 424(B)") under the
Act. "PROSPECTUS" means the Statutory Prospectus that
discloses the public offering price and other final terms of
the Offered Securities and otherwise satisfies Section 10(a)
of the Act. "ISSUER FREE WRITING PROSPECTUS" means any "issuer
free writing prospectus", as defined in Rule 433, relating to
the Offered Securities in the form filed or required to be
filed with the Commission or, if not required to be filed, in
the form retained in the Company's records pursuant to Rule
433(g). "GENERAL USE ISSUER FREE WRITING PROSPECTUS" means any
Issuer Free Writing Prospectus that is intended for general
distribution to prospective investors, as evidenced by its
being specified in Schedule C to this Agreement. "LIMITED USE
ISSUER FREE WRITING PROSPECTUS" means any Issuer Free Writing
Prospectus that is not a General Use Issuer Free Writing
Prospectus. "APPLICABLE TIME" means ___:00 _m (Eastern time)
on the date of this Agreement.
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(ii) (A) On the Effective Date of the Initial
Registration Statement, the Initial Registration Statement
conformed in all material respects to the requirements of the
Act and the rules and regulations of the Commission ("RULES
AND REGULATIONS") and did not include any untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement
conformed, or will conform, in all material respects to the
requirements of the Act and the Rules and Regulations and did
not include, or will not include, any untrue statement of a
material fact and did not omit, or will not omit, to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading and (C) on the date
of this Agreement, the Initial Registration Statement and, if
the Effective Time of the Additional Registration Statement is
prior to the execution and delivery of this Agreement, the
Additional Registration Statement each conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b) or
(if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will
conform in all material respects to the requirements of the
Act and the Rules and Regulations, and none of such documents
includes, or will include, any untrue statement of a material
fact or omits, or will omit, to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading. The preceding sentence does
not apply to statements in or omissions from a Registration
Statement or the Prospectus based upon written information
furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being
understood and agreed that the only such information is that
described as such in Section 8(c) hereof.
(iii) (A) At the time of initial filing of the
Initial Registration Statement and (B) at the date of this
Agreement, the Company was not and is not an "ineligible
issuer", as defined in Rule 405, including (x) the Company or
any other subsidiary in the preceding three years not having
been convicted of a felony or misdemeanor or having been made
the subject of a judicial or administrative decree or order as
described in Rule 405 and (y) the Company in the preceding
three years not having been the subject of a bankruptcy
petition or insolvency or similar proceeding, not having had a
registration statement be the subject of a proceeding under
Section 8 of the Act and not being the subject of a proceeding
under Section 8A of the Act in connection with the offering of
the Offered Securities, all as described in Rule 405.
(iv) As of the Applicable Time, neither (A) the
General Use Issuer Free Writing Prospectus(es) issued at or
prior to the Applicable Time, the preliminary prospectus,
dated ____________, 2006 (which is the most recent Statutory
Prospectus distributed to investors generally) and the other
information, if any, stated in Schedule D to this Agreement,
all considered together (collectively, the "GENERAL DISCLOSURE
PACKAGE"), nor (ii) any individual Limited Use Issuer Free
Writing Prospectus, when considered together with the General
Disclosure Package, included any untrue statement of a
material fact or omitted to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or
omissions from any prospectus included in the Registration
Statement or any Issuer Free Writing Prospectus in reliance
upon and in conformity with written information furnished to
the Company by any Underwriter through the Representative
specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter
consists of the information described as such in Section 8(c)
hereof.
(v) Each Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion
of the public offer and sale of the Offered Securities or
until any earlier date that the Company notified or notifies
Credit Suisse Securities (USA) LLC ("CREDIT SUISSE") as
described in the next sentence, did not, does
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not and will not include any information that conflicted,
conflicts or will conflict with the information then contained
in the Registration Statement. If at any time following
issuance of an Issuer Free Writing Prospectus there occurred
or occurs an event or development as a result of which such
Issuer Free Writing Prospectus conflicted or would conflict
with the information then contained in the Registration
Statement or included or would include an untrue statement of
a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances prevailing at that subsequent time,
not misleading, (i) the Company has promptly notified or will
promptly notify Credit Suisse and (ii) the Company has
promptly amended or will promptly amend or supplement such
Issuer Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission. The foregoing two
sentences do not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon and in
conformity with written information furnished to the Company
by any Underwriter through the Representative specifically for
use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the
information described as such in Section 8(c) hereof.
(vi) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Minnesota, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the General Disclosure Package; and the Company
is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified or in good standing would not, individually or in
the aggregate, have a material adverse effect on the condition
(financial or other), business, properties or results of
operations of the Company and Capella University, a Minnesota
corporation ("CAPELLA UNIVERSITY"), taken as a whole
("MATERIAL ADVERSE EFFECT"). The State of Minnesota and the
State of Arizona are the only jurisdictions in which the
Company or any of its subsidiaries maintains an office or
leases property.
(vii) Capella University and Aprisa, Inc., a
__________ corporation ("APRISA"), are the only subsidiaries
of the Company; Capella University has been duly incorporated
and is an existing corporation in good standing under the laws
of the State of Minnesota, with power and authority (corporate
and other) to own its properties and conduct its business as
described in the General Disclosure Package; Capella
University is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure
to be so qualified or in good standing would not, individually
or in the aggregate, have a Material Adverse Effect; all of
the issued and outstanding capital stock of Capella University
has been duly authorized and validly issued and is fully paid
and nonassessable; and the capital stock of Capella University
is owned free from liens, encumbrances and defects.
(viii) Capella University and Aprisa are the only
entities in which the Company, directly or indirectly, owns an
equity interest. Capella University is the only entity in
which the Company, directly or indirectly, owns an equity
interest that (A) engages in any business, activity or
operation or (B) owns or holds any assets or has any
liabilities, contingent or otherwise.
(ix) The Offered Securities and all other outstanding
shares of capital stock of the Company have been duly
authorized; all outstanding shares of capital stock of the
Company are, and, when the Offered Securities have been
delivered and paid for in accordance with this Agreement on
such Closing Date (as defined below), such Offered Securities
will have been, validly issued, fully paid and nonassessable,
will be consistent with the information in the General
Disclosure Package and will conform to the
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description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with
respect to the Securities.
(x) Except as disclosed in the General Disclosure
Package, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a
valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in
connection with this offering.
(xi) Except as disclosed in the General Disclosure
Package, there are no contracts, agreements or understandings
between the Company and any person granting such person the
right to require the Company to file a registration statement
under the Act with respect to any securities of the Company
owned or to be owned by such person, or to require the Company
to include such securities in the securities registered
pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Act.
(xii) The Offered Securities have been approved for
listing subject to notice of issuance on The Nasdaq Stock
Market.
(xiii) No consent, approval, authorization, or order
of, or filing with, any governmental agency or body, any
accrediting agency or any court is required to be obtained or
made by the Company for the consummation of the transactions
contemplated by this Agreement in connection with the issuance
or sale of the Offered Securities, except such as have been
obtained and made under the Act and such as may be required
under foreign or state securities laws or under the rules of
the National Association of Securities Dealers, Inc. ("NASD").
(xiv) The execution, delivery and performance by the
Company of this Agreement and the consummation of the
transactions herein contemplated by the Company will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default or change of control
under, (A) any statute, any rule, regulation, standard or
order of any governmental agency or body applicable to the
Company, any accrediting agency or any court, domestic or
foreign, having jurisdiction over the Company, Capella
University or any of their properties, including, without
limitation, the Higher Education Act of 1965, as amended (the
"HEA"), (B) any agreement or instrument to which the Company
or Capella University is a party or by which the Company or
Capella University is bound or to which any of the properties
of the Company or Capella University is subject, except such
breaches, violations or defaults that would not, individually
or in the aggregate, have a Material Adverse Effect, or (C)
the charter or by-laws of the Company or Capella University,
and the Company has full power and authority to authorize,
issue and sell the Offered Securities as contemplated by this
Agreement.
(xv) This Agreement has been duly authorized,
executed and delivered by the Company.
(xvi) The Company and Capella University have good
and marketable title to all real properties and all other
properties and assets owned by them, in each case free from
liens, encumbrances and defects that would materially affect
the value thereof or materially interfere with the use made or
to be made thereof by them; and except as disclosed in the
General Disclosure Package, the Company and Capella University
hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially
interfere with the use made or to be made thereof by them.
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(xvii) The Company and Capella University possess
certificates, authorizations, accreditations or permits issued
by appropriate governmental agencies or bodies or accrediting
agencies necessary to conduct the business now operated by
them, including, without limitation, all authorizations
required to participate in federal financial aid programs
under Title IV of the HEA, and have not received any notice of
proceedings relating to the revocation or modification of any
such certificate, authorization, accreditation or permit that,
if determined adversely to the Company or Capella University,
would, individually or in the aggregate, have a Material
Adverse Effect.
(xviii) No labor dispute with the employees of the
Company or Capella University exists or, to the knowledge of
the Company, is imminent that could reasonably be expected to
have a Material Adverse Effect.
(xix) The Company and Capella University own, possess
or can acquire on reasonable terms, adequate trademarks, trade
names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual
property (collectively, "INTELLECTUAL PROPERTY RIGHTS")
necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice
of infringement of, or conflict with, asserted rights of
others with respect to any intellectual property rights that,
if determined adversely to the Company or Capella University,
would, individually or in the aggregate, have a Material
Adverse Effect.
(xx) Except as disclosed in the General Disclosure
Package, neither the Company nor Capella University is in
violation of any statute, any rule, regulation, decision or
order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "ENVIRONMENTAL
LAWS"), owns or operates any real property contaminated with
any substance that is subject to any environmental laws, is
liable for any off-site disposal or contamination pursuant to
any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination,
liability or claim would, individually or in the aggregate,
have a Material Adverse Effect; and the Company is not aware
of any pending investigation which might lead to such a claim.
(xxi) Except as disclosed in the General Disclosure
Package, there are no pending actions, suits or proceedings
against or affecting the Company, Capella University or any of
their respective properties that, if determined adversely to
the Company or Capella University, would, individually or in
the aggregate, have a Material Adverse Effect, or would
materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, or which are
otherwise material in the context of the sale of the Offered
Securities; and no such actions, suits or proceedings are, to
the Company's knowledge, threatened.
(xxii) The financial statements included in the
Registration Statement and the General Disclosure Package
present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity
with the generally accepted accounting principles in the
United States ("GAAP") applied on a consistent basis; all
non-GAAP financial information included in the Registration
Statement and the General Disclosure Package complies with the
requirements of Regulation G and Item 10 of Regulation S-K
under the Act; the schedules included in the Registration
Statement present fairly the information required to be stated
therein; there are no pro forma or as adjusted financial
statements which are required to be included in the
Registration Statement and General Disclosure Package in
accordance with Regulation S-X under the Act; and, except as
disclosed in the General Disclosure Package, there are no
material off-balance sheet arrangements (as defined in
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Regulation S-K under the Act, Item 303(a)(4)(ii)) that may
have a material current or future effect on the Company's
financial condition, results of operations, liquidity, capital
expenditures or capital resources of the Company and Capella
University taken as a whole.
(xxiii) Each of the Company and Capella University
maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific
authorizations, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability, (C) access to assets is permitted only in
accordance with management's general or specific
authorization, and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences. To the extent required by the Rules and
Regulations, the Company will maintain disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the
Securities Exchange Act of 1934 (the "EXCHANGE ACT")) that are
effective in ensuring that information required to be
disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in
the rules and forms of the Commission, including, without
limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company's management,
including its principal executive officer or officers and its
principal financial officer or officers, as appropriate to
allow timely decisions regarding required disclosure.
(xxiv) The Company will be in compliance with all
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and
the applicable rules and regulations thereunder upon the
applicability of such provisions, rules or regulations, as the
case may be, to the Company.
(xxv) The section entitled "Management's Discussion
and Analysis of Financial Condition and Results of
Operation--Critical Accounting Policies and Use of Estimates"
in the Registration Statement and the General Disclosure
Package accurately and fully describes (A) accounting policies
which the Company believes are the most important in the
portrayal of the financial condition and results of operations
of the Company and its consolidated subsidiaries and which
require management's most difficult, subjective or complex
judgments ("CRITICAL ACCOUNTING POLICIES"), (B) judgments and
uncertainties affecting the application of critical accounting
policies, and (C) to the extent required by the Rules and
Regulations, explanations of the likelihood that materially
different amounts would be reported under different conditions
or using different assumptions.
(xxvi) To the extent required by the Rules and
Regulations, the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" in the
Registration Statement and the General Disclosure Package
accurately and fully describes all material trends, demands,
commitments, events, uncertainties and risks, and the
potential effects thereof, that the Company believes would
materially affect liquidity and are reasonably likely to
occur.
(xxvii) Except as disclosed in the General Disclosure
Package, there are no outstanding guarantees or other
contingent obligations of the Company or Capella University
that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
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(xxviii) Except as disclosed in the General
Disclosure Package, since the date of the latest audited
financial statements included in the General Disclosure
Package, there has been no material adverse change nor any
development or event involving a prospective material adverse
change, in the condition (financial or other), business,
properties or results of operations of the Company and Capella
University taken as a whole, and, except as disclosed in or
contemplated by the General Disclosure Package, there has been
no dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock.
(xxix) The Company is not and, after giving effect to
the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
General Disclosure Package, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(xxx) Furthermore, the Company represents and
warrants to the Underwriters that (A) the Registration
Statement, the Prospectus, any Statutory Prospectus and any
Issuer Free Writing Prospectus comply, and any further
amendments or supplements thereto will comply, with any laws
or regulations applicable to the Company of foreign
jurisdictions in which the Prospectus, any Statutory
Prospectus or any Issuer Free Writing Prospectus, as amended
or supplemented, if applicable, are distributed in connection
with the Directed Share Program, and that (B) no
authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental
instrumentality or court, other than such as have been
obtained, is necessary for the Company under the securities
law and regulations of foreign jurisdictions in which the
Directed Shares are offered outside the United States. The
foregoing sentence shall apply only to those foreign
jurisdictions designated by Credit Suisse in accordance with
Section 5(f) hereof.
(xxxi) The Company has not offered, or caused the
Underwriters to offer, any Offered Securities to any person
pursuant to the Directed Share Program with the specific
intent to unlawfully influence (A) a customer or supplier of
the Company to alter the customer's or supplier's level or
type of business with the Company or (B) a trade journalist or
publication to write or publish favorable information about
the Company or its products.
(b) Each Selling Stockholder severally, and not jointly,
represents and warrants to, and agrees with, the several Underwriters
that:
(i) Upon the consummation of the transactions
contemplated herein and the conversion of all of the shares of
the Company's preferred stock into Securities, such Selling
Stockholder will have valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder
on such Closing Date and full right, power and authority to
enter into this Agreement and to sell, assign, transfer and
deliver the Offered Securities to be delivered by such Selling
Stockholder on such Closing Date hereunder; and, upon the
delivery of and payment for the Offered Securities on each
Closing Date hereunder, the several Underwriters will acquire
valid and unencumbered title to the Offered Securities to be
delivered by such Selling Stockholder on such Closing Date,
subject to any interests created by the several Underwriters.
(ii) Except with respect to Xxxxxx OTC & Emerging
Growth Fund (the "XXXXXX SELLING STOCKHOLDER"), such Selling
Stockholder has, and on each Closing Date will have, full
legal right, power and authority, and all authorization and
approval required by law, to enter into the Custody Agreement
(the "CUSTODY AGREEMENT") signed by such Selling Stockholder
and the Custodian (as defined below) relating to the deposit
of the Offered Securities to be sold by such Selling
Stockholder, and the Power of Attorney (the "POWER OF
ATTORNEY") appointing Xxxxxxx X. Xxxxx and Xxxxxxx X.
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Thom as such Selling Stockholder's attorneys-in-fact to the
extent set forth therein and relating to the transactions
contemplated hereby, and to sell, assign, transfer and deliver
the Offered Securities to be sold by such Selling Stockholder
in the manner provided herein and therein.
(iii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required to be obtained or made by such Selling
Stockholder for the consummation of the transactions
contemplated by the Power of Attorney and related Custody
Agreement, except, in each case, with respect to the Xxxxxx
Selling Stockholder, or this Agreement in connection with the
sale of the Offered Securities sold by such Selling
Stockholder, except such as may be required under the Act and
under state and foreign securities laws.
(iv) This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling
Stockholder.
(v) Except with respect to the Xxxxxx Selling
Stockholder, the Power of Attorney and related Custody
Agreement with respect to such Selling Stockholder have been
duly authorized, executed and delivered by such Selling
Stockholder and constitute valid and legally binding
obligations of such Selling Stockholder enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(vi) Except with respect to the Xxxxxx Selling
Stockholder, the execution, delivery and performance of the
Power of Attorney and related Custody Agreement and the
consummation of the transactions therein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (A) any statute,
any rule or regulation governing transactions of this type or
any order applicable to such Selling Stockholder of any
governmental agency or body or any court, domestic or foreign,
having jurisdiction over such Selling Stockholder or any of
its properties, (B) any material agreement or material
instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder is bound or to which any of the
properties of such Selling Stockholder is subject or (C) the
charter or by-laws of such Selling Stockholder if such Selling
Stockholder is a corporation, the partnership agreement of
such Selling Stockholder if such Selling Stockholder is a
partnership, the trust agreement of such Selling Stockholder
if such Selling Stockholder is a trust or any other
constituent documents of such Selling Stockholder.
(vii) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
(A) any statute, any rule or regulation governing transactions
of this type or any order applicable to such Selling
Stockholder of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over such Selling
Stockholder or any of its properties, (B) any material
agreement or material instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the properties of such Selling
Stockholder is subject or (C) the charter or by-laws of such
Selling Stockholder if such Selling Stockholder is a
corporation, the partnership agreement of such Selling
Stockholder if such Selling Stockholder is a partnership, the
trust agreement of such Selling Stockholder if such Selling
Stockholder is a trust or any other constituent documents of
such Selling Stockholder.
(viii) (A) On the Effective Date of the Initial
Registration Statement, the Initial Registration Statement
conformed in all material respects to the requirements of the
Act and the Rules and Regulations and did not include any
untrue statement of a
9
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement
conformed, or will conform, in all material respects to the
requirements of the Act and the Rules and Regulations and did
not include, or will not include, any untrue statement of a
material fact and did not omit, or will not omit, to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading and (C) on the date
of this Agreement, the Initial Registration Statement and, if
the Effective Time of the Additional Registration Statement is
prior to the execution and delivery of this Agreement, the
Additional Registration Statement each conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b) or
(if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will
conform in all material respects to the requirements of the
Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading. Notwithstanding any
inference to the contrary, the preceding sentence applies only
to the extent that any statements in or omissions from a
Registration Statement or the Prospectus are based on written
information furnished to the Company by such Selling
Stockholder specifically for use therein, it being understood
and agreed that the only such information furnished by such
Selling Stockholder to the Company (the "SELLING STOCKHOLDER
INFORMATION") consists of the information that appears in the
table (and the corresponding footnotes thereto) under the
caption "Principal and Selling Shareholders" in the
Prospectus.
(ix) As of the Applicable Time, neither (A) the
General Disclosure Package nor (B) any individual Limited Use
Issuer Free Writing Prospectus, when considered together with
the General Disclosure Package, included any untrue statement
of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The preceding sentence applies only to the extent
statements in or omissions from the General Disclosure Package
or any individual Limited Use Issuer Free Writing Prospectus
are based upon Selling Stockholder Information.
(x) All Selling Stockholder Information contained in
any Issuer Free Writing Prospectus, as of its issue date and
at all subsequent times through the completion of the public
offering and sale of the Offered Securities or until any
earlier date that the Selling Stockholders notified or notify
the Company and the Representative as described in the next
sentence, did not, does not and will not include any
information that conflicted, conflicts or will conflict with
the information then contained in the Registration Statement.
If at any time following issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as
a result of which such Selling Stockholder Information
conflicted or would conflict with the information then
contained in the Registration Statement or included or would
include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
prevailing at that subsequent time, not misleading, such
Selling Stockholder has promptly notified or will promptly
notify the Company and the Representative and will provide the
Company with all necessary information so as to correct such
untrue statement or omission.
(xi) Such Selling Stockholder has reviewed and is
familiar with the Registration Statement and the General
Disclosure Package and (A) has no knowledge of any material
adverse information with regard to the Company or its
subsidiaries which is not disclosed in the Registration
Statement and the General Disclosure Package, (B) has no
knowledge of any misstatement of a material fact or failure to
state a material fact necessary to make the statements in the
General Disclosure Package, in light of the
10
circumstances under which they were made, not misleading, (C)
is not prompted to sell the Firm Securities to be sold by the
Selling Stockholder by any information concerning the Company
or any of its subsidiaries which is not set forth in the
Registration Statement and the General Disclosure Package and
(D) has no reason to believe that any representation or
warranty of the Company set forth in Section 2(a) above is
untrue.
(xii) Except as disclosed in the General Disclosure
Package, there are no contracts, agreements or understandings
between such Selling Stockholder and any person that would
give rise to a valid claim against such Selling Stockholder or
any Underwriter for a brokerage commission, finder's fee or
other like payment in connection with this offering.
(xiii) At any time during the period during which a
prospectus relating to the Offered Securities is required to
be delivered under the Act in connection with sales by any
Underwriter or dealer, if there is any change in the Selling
Stockholder Information with respect to a Selling Stockholder,
such Selling Stockholder will immediately notify the
Representative of such change.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements and subject to the terms and
conditions set forth herein, the Company and each Selling Stockholder agree,
severally and not jointly, to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company and each Selling
Stockholder, at a purchase price of $_____ per share, that number of Firm
Securities (rounded up or down, as determined by Credit Suisse in its
discretion, in order to avoid fractions) obtained by multiplying 3,632,140 Firm
Securities in the case of the Company and the number of Firm Securities set
forth opposite the name of such Selling Stockholder in Schedule A hereto, in the
case of a Selling Stockholder, in each case by a fraction the numerator of which
is the number of Firm Securities set forth opposite the name of such Underwriter
in Schedule B hereto and the denominator of which is the total number of Firm
Securities.
Certificates in negotiable form for the Offered Securities to be sold
by Sheng-Xxxx Xxxx, J. Xxxxx Xxxxxxx and Rotherwood Investments, LLC
(collectively, the "CUSTODIAL SELLING STOCKHOLDERS") hereunder have been placed
in custody for delivery under this Agreement under Custody Agreements made with
Xxxxx Fargo Bank, National Association, as custodian (the "CUSTODIAN"). Each
Custodial Selling Stockholder agrees, severally and not jointly, that the shares
represented by the certificates held in custody for such Custodial Selling
Stockholder under such Custody Agreement are subject to the interests of the
Underwriters hereunder, that the arrangements made by such Custodial Selling
Stockholder for such custody are, to that extent, irrevocable and that the
obligations of such Custodial Selling Stockholder hereunder shall not be
terminated by operation of law, whether by the death of any individual Custodial
Selling Stockholder or the occurrence of any other event, or in the case of a
trust, by the death of any trustee or trustees or the termination of such trust.
If any individual Custodial Selling Stockholder or any such trustee or trustees
should die, or if any other such event should occur, or if any of such trusts
should terminate, before the delivery of the Offered Securities hereunder,
certificates for such Offered Securities shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such death or
other event or termination had not occurred, regardless of whether or not the
Custodian shall have received notice of such death or other event or
termination.
The Company, the Xxxxxx Selling Stockholder and the Custodian will
deliver the Firm Securities to or as instructed by the Representative for the
accounts of the several Underwriters, in a form reasonably acceptable to the
Representative, against payment of the purchase price by the Underwriters in
Federal (same-day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to Credit Suisse drawn to the order of the Company
in the case of 3,632,140 shares of Firm Securities, the Xxxxxx Selling
Stockholder in the case of 224,820 shares of Firm Securities and the Custodian,
for the accounts of the Selling Stockholders, in the case of 143,040 shares of
Firm Securities, at the office of Cravath, Swaine & Xxxxx LLP, at 10:00 a.m.,
New York time, on November ____, 2006, or at such other time not later than
seven full business days thereafter as Credit Suisse and the Company determine,
such time being herein referred to as the "FIRST CLOSING DATE". For purposes of
Rule 15c6-1 under the
11
Exchange Act, the First Closing Date (if later than the otherwise applicable
settlement date) shall be the settlement date for payment of funds and delivery
of securities for all the Offered Securities sold pursuant to the offering. The
Firm Securities so to be delivered or evidence of their issuance will be made
available for checking at the above office of Cravath, Swaine & Xxxxx LLP at
least 24 hours prior to the First Closing Date.
In addition, upon written notice from Credit Suisse given to the
Company from time to time, not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per Security to be paid for the Firm
Securities. The Company agrees to sell to the Underwriters the number of
Optional Securities specified in such notice and the Underwriters agree,
severally and jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased from the Company for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by Credit Suisse to eliminate fractions) and may be
purchased by the Underwriters only for the purpose of covering over-allotments
made in connection with the sale of the Firm Securities. No Optional Securities
shall be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by Credit Suisse to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by Credit
Suisse but shall be not later than five full business days after written notice
of election to purchase Optional Securities is given. The Company will deliver
the Optional Securities being purchased on each Optional Closing Date to or as
instructed by the Representative for the accounts of the several Underwriters in
a form reasonably acceptable to the Representative against payment of the
purchase price therefor in Federal (same-day) funds by official bank check or
checks or wire transfer to an account at a bank acceptable to Credit Suisse
drawn to the order of the Company at the above office of Cravath, Swaine & Xxxxx
LLP. The Optional Securities being purchased on each Optional Closing Date or
evidence of their issuance will be made available for checking at the above
office of Cravath, Swaine & Xxxxx LLP at a reasonable time in advance of such
Optional Closing Date.
On October 3, 2006, the Company declared a special cash distribution
(the "SPECIAL CASH DISTRIBUTION") to its stockholders of record as of October 3,
2006 (the "RECORD DATE"), as described in the General Disclosure Package and the
Registration Statement. It is acknowledged that the special cash distribution to
which holders of record of the Offered Securities are entitled shall be payable
only to the holders of record of the Offered Securities on the Record Date and
that the Underwriters and any subsequent purchasers of the Offered Securities
shall not be entitled to receive any portion of the special cash distribution
payable in respect of the Offered Securities.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) The Company will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable
and if consented to by Credit Suisse, subparagraph (4)) of Rule 424(b)
not later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifteenth business
day after the Effective Date of the Initial Registration Statement.
The Company will advise Credit Suisse promptly of any such
filing pursuant to Rule 424(b). If an additional registration statement
is necessary to register a portion of the Offered Securities under the
Act but the Effective Time thereof has not occurred as of the execution
and
12
delivery of this Agreement, the Company will file the additional
registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance
with Rule 462(b) on or prior to 10:00 p.m., New York time, on the date
of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or will make
such filing at such later date as shall have been consented to by
Credit Suisse.
(b) The Company will advise Credit Suisse and each Selling
Stockholder promptly of any proposal to amend or supplement at any time
the Initial Registration Statement, any Additional Registration
Statement or any Statutory Prospectus and will not effect such
amendment or supplementation without Credit Suisse's consent, which
shall not be unreasonably withheld or delayed; and the Company will
also advise Credit Suisse promptly of the effectiveness of any
Additional Registration Statement (if its Effective Time is subsequent
to the execution and delivery of this Agreement) and of any amendment
or supplementation of a Registration Statement or any Statutory
Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its
reasonable best efforts to prevent the issuance of any such stop order
and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is (or but for the exemption in Rule 172 would be) required
to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company will promptly notify Credit Suisse and each Selling
Stockholder of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect
such compliance. Neither Credit Suisse's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 7.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"AVAILABILITY DATE" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "AVAILABILITY DATE" means the
90th day after the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representative and each
Selling Stockholder copies of each Registration Statement (three of
which will be signed and will include all exhibits), each related
preliminary prospectus, and, so long as a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and
all amendments and supplements to such documents, in each case in such
quantities as Credit Suisse requests. The Prospectus shall be so
furnished on or prior to 3:00 p.m., New York time, on the business day
following the execution and delivery of this Agreement. All other such
documents shall be so furnished as soon as available. The Company will
pay the expenses of printing and distributing to the Underwriters all
such documents.
(f) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
Credit Suisse designates and will continue such qualifications in
effect so long as required for the distribution; provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so
subject.
13
(g) The Company and each Selling Stockholder agree with the
several Underwriters that the Company will pay all expenses incident to
the performance of the obligations of the Company and such Selling
Stockholder, as the case may be, under this Agreement, for any filing
fees and other expenses (including fees and disbursements of counsel)
in connection with qualification of the Offered Securities for sale
under the laws of such jurisdictions as Credit Suisse designates and
the printing of memoranda relating thereto, for the filing fee incident
to the review by the NASD of the Offered Securities, for any travel
expenses of the Company's officers and employees and any other expenses
of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, including the cost of
any aircraft chartered in connection with attending or hosting such
meetings, for any transfer taxes on the sale by the Selling
Stockholders of the Offered Securities to the Underwriters, for
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters and for expenses incurred for preparing, printing and
distributing any Issuer Free Writing Prospectuses to investors or
prospective investors; provided, however, that each Selling Stockholder
will be responsible for (i) any fees and disbursements of any counsel
for such Selling Stockholder and (ii) for any discounts, commissions or
transfer taxes on the sale by such Selling Stockholder of the Offered
Securities to the Underwriters.
(h) For the period specified below (the "LOCK-UP PERIOD"), the
Company will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to, any additional shares
of its Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse; provided that
the Company may (i) issue Securities pursuant to the consummation of
the transactions contemplated herein, (ii) issue Securities pursuant to
the conversion of all of the shares of the preferred stock of the
Company into Securities in connection with the consummation of the
transactions contemplated herein, (iii) issue Securities pursuant to
any stock split recommended by the Pricing Committee of the Board of
Directors of the Company in connection with the consummation of the
transactions contemplated herein, (iv) file with the Commission one or
more registration statements on Form S-8 registering the Securities
issuable under the Company's stock option plans in effect on the date
hereof, (v) grant stock options or restricted stock awards or other
equity awards (and issue Securities upon exercise thereof) pursuant to
the terms of any employee stock option plan or employee stock purchase
plan in effect on the date hereof, (vi) redeem any warrants outstanding
on the date hereof and (vii) make contributions of Securities to the
Capella Education Company Employee Stock Ownership Plan. The initial
Lock-Up Period will commence on the date hereof and will continue and
include the date 180 days after the date hereof or such earlier date
that Credit Suisse consents to in writing; provided, however, that if
(1) during the last 17 days of the initial Lock-Up Period, the Company
releases earnings results or material news or a material event relating
to the Company occurs or (2) prior to the expiration of the initial
Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be
extended until the expiration of the 18-day period beginning on the
date of release of the earnings results or the occurrence of the
material news or material event, as applicable, unless Credit Suisse
waives, in writing, such extension; provided, however, that the Lock-Up
Period will not be extended pursuant to this proviso at any time at
which the Securities are "actively traded securities", as defined in
Regulation M under the Exchange Act and research reports under Rule 139
of the Act, may otherwise be issued with respect to the Company. The
Company will provide Credit Suisse with notice of any announcement
described in clause (2) of the preceding sentence that gives rise to an
extension of the Lock-Up Period.
(i) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the NASD or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date
of the effectiveness of the Registration Statement. The Designated
Underwriter will notify the
14
Company as to which Participants will need to be so restricted. The
Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time.
(j) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share
Program and stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Directed Share
Program.
(k) Furthermore, the Company covenants with the Underwriters
that the Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed
Share Program.
6. Free Writing Prospectuses. The Company represents and agrees that,
unless it obtains the prior consent of Credit Suisse, and each Underwriter
represents and agrees that, unless it obtains the prior consent of the Company
and Credit Suisse, it has not made and will not make any offer relating to the
Offered Securities that would constitute an Issuer Free Writing Prospectus, or
that would otherwise constitute a "free writing prospectus", as defined in Rule
405, required to be filed with the Commission. Any such free writing prospectus
consented to by the Company and Credit Suisse is hereinafter referred to as a
"PERMITTED FREE WRITING PROSPECTUS". The Company represents that it has treated
and agrees that it will treat each Permitted Free Writing Prospectus as an
"issuer free writing prospectus", as defined in Rule 433, and has complied and
will comply with the requirements of Rules 164 and 433 applicable to any
Permitted Free Writing Prospectus, including timely Commission filing where
required, legending and record keeping. The Company represents that is has
satisfied and agrees that it will satisfy the conditions in Rule 433 to avoid a
requirement to file with the Commission any electronic road show.
7. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representative shall have received a letter, in the
form attached as Exhibit A hereto, dated the date of delivery thereof
(which shall be on or prior to the date of this Agreement), of Ernst &
Young LLP. For purposes of this subsection, if the Effective Time of
the Additional Registration Statement is subsequent to the execution
and delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean
the Initial Registration Statement and the Additional Registration
Statement as proposed to be filed shortly prior to its Effective Time,
and "PROSPECTUS" shall mean the prospectus included in the Registration
Statements.
(b) If the Effective Time of the Additional Registration
Statement (if any) is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than 10:00
p.m., New York time, on the date of this Agreement or, if earlier, the
time the Prospectus is printed and distributed to any Underwriter, or
shall have occurred at such later date as shall have been consented to
by Credit Suisse. Prior to such Closing Date, the Prospectus shall have
been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or, to the knowledge of any Selling
Stockholder, the Company or the Representative, shall be contemplated
by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company and
15
Capella University taken as one enterprise which, in the judgment of a
majority in interest of the Underwriters including the Representative,
is material and adverse and makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and
payment for the Offered Securities; (ii) any downgrading in the rating
of any debt securities or preferred stock of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that
any such organization has under surveillance or review its rating of
any debt securities or preferred stock of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any
change in U.S. or international financial, political or economic
conditions or currency exchange rates or exchange controls as would, in
the judgment of a majority in interest of the Underwriters including
the Representative, be likely to prejudice materially the success of
the proposed issue, sale or distribution of the Offered Securities,
whether in the primary market or in respect of dealings in the
secondary market; (iv) any material suspension or material limitation
of trading in securities generally on The Nasdaq Stock Market or any
setting of minimum prices for trading on such exchange; (v) any
suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market; (vi) any banking moratorium declared
by U.S. Federal or New York authorities; (vii) any major disruption of
settlements of securities or clearance services in the United States;
or (viii) any attack on, outbreak or escalation of hostilities or act
of terrorism involving the United States, any declaration of war by
Congress or any other national or international calamity or emergency
if, in the judgment of a majority in interest of the Underwriters
including the Representative, the effect of any such attack, outbreak,
escalation, act, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Representative shall have received an opinion, dated
such Closing Date, of Faegre & Xxxxxx LLP, counsel for the Company, to
the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Minnesota, with corporate power and authority to own
its properties and conduct its business as described in the
General Disclosure Package;
(ii) Capella University has been duly incorporated
and is an existing corporation in good standing under the laws
of the State of Minnesota, with power and authority (corporate
and other) to own its properties and conduct its business as
described in the General Disclosure Package; all of the issued
and outstanding capital stock of Capella University has been
duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock of Capella University is
owned of record by the Company, and, to the knowledge of such
counsel, free from liens and encumbrances;
(iii) The Offered Securities delivered on such
Closing Date and all other outstanding shares of capital stock
of the Company have been duly authorized; all outstanding
Securities are, and when the Offered Securities have been
delivered and paid for in accordance with this Agreement on
such Closing Date, will be, validly issued, fully paid and
nonassessable, are consistent with the information in the
General Disclosure Package and conform in all material
respects to the description thereof contained in the
Prospectus; and the stockholders of the Company have no
preemptive rights with respect to the Securities;
(iv) Except as described in the Registration
Statement, there are no contracts, agreements or
understandings known to such counsel between the Company and
any person granting such person the right to require the
Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned
by such person or to require the Company to include such
securities in the securities registered pursuant to the
Registration Statement or in any securities being
16
registered pursuant to any other registration statement filed
by the Company under the Act;
(v) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court
is required to be obtained or made by the Company for the
consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the
Offered Securities, except such as have been obtained and made
under the Act and such as may be required under state or
foreign securities laws or pursuant to the rules of the NASD;
(vi) The execution, delivery and performance by the
Company of this Agreement and the consummation of the
transactions herein contemplated by the Company will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation applicable to the Company or order of any
governmental agency or body or any court having jurisdiction
over the Company or Capella University or any of their
properties, or any agreement or instrument known to such
counsel to which the Company or Capella University is a party
or by which the Company or Capella University is bound or to
which any of the properties of the Company or Capella
University is subject, or the charter or by-laws of the
Company or Capella University;
(vii) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in
such opinion, the Additional Registration Statement (if any)
was filed and became effective under the Act as of the date
and time (if determinable) specified in such opinion, the
Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the
date specified therein, and, to the knowledge of such counsel,
no stop order suspending the effectiveness of a Registration
Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and each Registration
Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations; the
descriptions in the Registration Statements and Prospectus set
forth under the headings "Description of Capital Stock" and
"U.S. Federal Tax Consequences to Non-U.S. Holders of Common
Stock" of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present
in all material respects the information required to be shown;
and such counsel do not know of any legal or governmental
proceedings required to be described in a Registration
Statement or the Prospectus which are not described as
required or of any contracts or documents of a character
required to be described in a Registration Statement or the
Prospectus or to be filed as exhibits to a Registration
Statement which are not described and filed as required; it
being understood that such counsel need express no opinion as
to the financial statements or other financial data contained
in the Registration Statements or the Prospectus; and
(viii) This Agreement has been duly authorized,
executed and delivered by the Company.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that, during the preparation of the
Registration Statement and the General Disclosure Package, such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent accountants for the Company and
representatives of the Underwriters, at which conferences the contents of the
General Disclosure Package, the Registration Statement and related matters were
discussed, reviewed and revised. Based upon such participation but without
independent review or verification, and without assuming responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and General Disclosure Package, nothing has come to such
counsel's attention which causes it to believe that, at the time the
Registration Statement became
17
effective and as of the Closing Date, the Registration Statement (including any
amendments or supplements thereto) (except as to financial statements and
related notes, financial and accounting data and supporting schedules included
therein or omitted therefrom, as to which such counsel need express no opinion)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
not misleading, or the Prospectus (including any amendments or supplements
thereto) as of its issue date and as of the Closing Date (except as to financial
statements and related notes, financial and accounting data and supporting
schedules included therein or omitted therefrom, as to which such counsel need
express no opinion) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and such counsel have no reason to believe that, as of the
Applicable Time, the documents specified in a schedule to such counsel's letter,
consisting of those included in the General Disclosure Package, when considered
together with the price to the public on the cover page of the Prospectus,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(e) The Representative shall have received an opinion, dated
such Closing Date, of Xxxxxxx X. Xxxx, Vice President and General
Counsel for the Company, to the effect that:
(i) The Company is duly qualified to do business as a
foreign corporation in good standing in all jurisdictions
other than its jurisdiction of incorporation in which its
ownership or lease of property or the conduct of its business
requires such qualification, which jurisdictions shall be set
forth in a schedule to such counsel's opinion;
(ii) Capella University is duly qualified to do
business as a foreign corporation in good standing in all
jurisdictions other than its jurisdiction of incorporation in
which its ownership or lease of property or the conduct of its
business requires such qualification, which jurisdictions
shall be set forth in a schedule to such counsel's opinion;
(iii) Except as disclosed in the General Disclosure
Package, to the knowledge of such counsel, there are no
pending actions, suits or proceedings against or affecting the
Company, Capella University or any of their respective
properties that, if determined adversely to the Company or
Capella University, would, individually or in the aggregate,
have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities;
and, to the knowledge of such counsel, no such actions, suits
or proceedings are threatened in writing; and
(iv) To the knowledge of such counsel, the Company
and Capella University have not received any notice of
infringement of or conflict with asserted rights of others
with respect to any intellectual property rights that, if
determined adversely to the Company or Capella University,
would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(f) The Representative shall have received an opinion, dated
such Closing Date, of Drinker, Xxxxxx and Xxxxx LLP, special regulatory
counsel for the Company, to the effect that:
(i) The statements contained in the General
Disclosure Package under the headings "Risk Factors--Risks
Related to the Extensive Regulation of Our Business" and
"Regulatory Environment," insofar as they constitute a summary
of legal matters, documents or proceedings with respect to the
operation of postsecondary educational institutions and the
offering of programs of postsecondary education under Title IV
of the HEA, the statutes of the states in which Capella
University is presently licensed or
18
authorized to operate or offer degrees, as applicable, or the
standards of accreditation of the Higher Learning Commission
of the North Central Association of Colleges and Schools (the
"HIGHER LEARNING COMMISSION"), are accurate in all material
respects;
(ii) The execution, delivery and performance of this
Agreement by the Company and the issuance and sale by the
Company of the Securities will not result in a breach or
violation of (A) Title IV of the HEA, (B) any regulation of
the U.S. Department of Education promulgated under Title IV of
the HEA, (C) the statutes of the states in which Capella
University is presently licensed or authorized to operate or
offer degree programs, as applicable, or (D) the standards of
accreditation of the Higher Learning Commission;
(iii) Except as disclosed in the General Disclosure
Package, the Company and Capella University have all necessary
authorizations, approvals, accreditations and certifications
(collectively, "LICENSES") required for the Company and
Capella University to participate in the federal aid programs
under Title IV of the HEA, as described in the Registration
Statement and the General Disclosure Package; and
(iv) Except as disclosed in the General Disclosure
Package, no consent, approval, authorization, order,
registration or qualification of, or filing with, the U.S.
Department of Education under Title IV of the HEA, any state
agency in any state in which Capella University is presently
licensed or authorized to offer degrees, as applicable, or the
Higher Learning Commission is required for the consummation by
the Company of the transactions contemplated by this Agreement
in connection with the issuance and sale of the Securities.
(g) The Representative shall have received an opinion, dated
such Closing Date, of ____________, counsel for Selling Stockholder
Rotherwood Investments, LLC, to the effect that:
(i) Such Selling Stockholder had valid and
unencumbered title to the Offered Securities delivered by such
Selling Stockholder on such Closing Date and had full right,
power and authority to sell, assign, transfer and deliver the
Offered Securities delivered by such Selling Stockholder on
such Closing Date hereunder; and the several Underwriters have
acquired valid and unencumbered title to the Offered
Securities purchased by them from such Selling Stockholder on
such Closing Date hereunder;
(ii) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court
is required to be obtained or made by such Selling Stockholder
for the consummation of the transactions contemplated by the
Power of Attorney, the Custody Agreement or this Agreement in
connection with the sale of the Offered Securities sold by
such Selling Stockholder, except such as have been obtained
and made under the Act and such as may be required under state
securities laws or pursuant to the rules of the NASD;
(iii) The execution, delivery and performance of the
Power of Attorney, the Custody Agreement and this Agreement
and the consummation of the transactions therein and herein
contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
(A) any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction
over such Selling Stockholder or any of its properties, (B)
any agreement or instrument to which such Selling Stockholder
is a party or by which such Selling Stockholder is bound or to
which any of the properties of such Selling Stockholder is
subject or (C) the charter and by-laws of such Selling
Stockholder; and
(iv) Each of this Agreement and the Power of Attorney
and related Custody Agreement with respect to such Selling
Stockholder have been duly authorized, executed
19
and delivered by such Selling Stockholder and constitute valid
and legally binding obligations of such Selling Stockholder
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity
principles.
(h) The Representative shall have received an opinion, dated
such Closing Date, of _____________________, counsel for Selling
Stockholder J. Xxxxx Xxxxxxx, to the effect that:
(i) Such Selling Stockholder had valid and
unencumbered title to the Offered Securities delivered by such
Selling Stockholder on such Closing Date and had full right,
power and authority to sell, assign, transfer and deliver the
Offered Securities delivered by such Selling Stockholder on
such Closing Date hereunder; and the several Underwriters have
acquired valid and unencumbered title to the Offered
Securities purchased by them from such Selling Stockholder on
such Closing Date hereunder;
(ii) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court
is required to be obtained or made by such Selling Stockholder
for the consummation of the transactions contemplated by the
Power of Attorney, the Custody Agreement or this Agreement in
connection with the sale of the Offered Securities sold by
such Selling Stockholder, except such as have been obtained
and made under the Act and such as may be required under state
securities laws or pursuant to the rules of the NASD;
(iii) The execution, delivery and performance of the
Power of Attorney, the Custody Agreement and this Agreement
and the consummation of the transactions therein and herein
contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over such
Selling Stockholder or any of his properties or any agreement
or instrument to which such Selling Stockholder is a party or
by which such Selling Stockholder is bound or to which any of
the properties of such Selling Stockholder is subject; and
(iv) Each of this Agreement and the Power of Attorney
and related Custody Agreement with respect to such Selling
Stockholder have been duly authorized, executed and delivered
by such Selling Stockholder and constitute valid and legally
binding obligations of such Selling Stockholder enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(i) The Representative shall have received an opinion, dated
such Closing Date, of DLA Piper, counsel for Selling Stockholder
Sheng-Xxxx Xxxx, to the effect that:
(i) Upon payment by the Underwriters of the purchase
price for the Firm Securities to be sold by Sheng-Xxxx Xxxx in
accordance with this Agreement, delivery in the State of New
York of security certificates for the Firm Securities, as
directed by the Underwriters, endorsed to Cede & Co. or such
other nominee as may be designated by DTC, or in blank, by an
effective endorsement, registration of transfer of the Firm
Securities in the stock registry of the Company in the name of
Cede & Co. or such other nominee and the crediting of the Firm
Securities on the books of DTC to securities accounts of the
Underwriters, and assuming that neither DTC nor any such
Underwriter has notice of any adverse claim to the Firm
Securities within the meaning of Section 8-105 of the Uniform
Commercial Code (the "UCC"), (a) DTC will be a "protected
purchaser" of the Securities within the meaning of Section
8-303 of the UCC, (b) under Section 8-501 of the UCC, the
Underwriters will acquire a security entitlement in respect
20
of the Firm Securities and (c) no action based on an "adverse
claim" (as defined in Section 8-102 of the UCC) to the Firm
Securities, whether framed in conversion, replevin,
constructive trust, equitable lien or other theory, may be
successfully asserted against the Underwriters with respect to
the Firm Securities. With respect to the opinion of such
counsel set forth in the preceding sentence, such counsel may
assume that DTC is a "clearing corporation" within the meaning
of Section 8-102 of the UCC and that DTC's jurisdiction for
purposes of Section 8-110 of the UCC is the State of New York;
(ii) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court
is required to be obtained or made by such Selling Stockholder
for the consummation of the transactions contemplated by the
Power of Attorney, the Custody Agreement or this Agreement in
connection with the sale of the Offered Securities sold by
such Selling Stockholder, except such as have been obtained
and made under the Act and such as may be required under state
securities laws or pursuant to the rules of the NASD;
(iii) The execution, delivery and performance of the
Power of Attorney, the Custody Agreement and this Agreement
and the consummation of the transactions therein and herein
contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over such
Selling Stockholder or any of his properties or any agreement
or instrument to which such Selling Stockholder is a party or
by which such Selling Stockholder is bound or to which any of
the properties of such Selling Stockholder is subject; and
(iv) Each of this Agreement and the Power of Attorney
and related Custody Agreement with respect to such Selling
Stockholder have been duly authorized, executed and delivered
by such Selling Stockholder and constitute valid and legally
binding obligations of such Selling Stockholder enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(j) The Representative shall have received an opinion, dated
such Closing Date, of Ropes & Xxxx LLP, counsel for the Xxxxxx Selling
Stockholder, substantially in the form of Exhibit B attached hereto.
(k) The Representative shall have received from Cravath,
Swaine & Xxxxx LLP, counsel for the Underwriters, such opinion or
opinions, dated such Closing Date, with respect to the incorporation of
the Company, the validity of the Offered Securities delivered on such
Closing Date, the Registration Statements, the Prospectus and other
related matters as the Representative may require, and the Selling
Stockholders and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(l) The Representative shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties of
the Company in this Agreement are true and correct; the Company has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to such Closing
Date; no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule
462(b), including payment of the applicable filing fee in accordance
with Rule 111(a) or (b) under the Act, prior to the Applicable Time;
and, subsequent to the respective dates of the most recent financial
statements in the General Disclosure Package, there has been no
material adverse
21
change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in the General Disclosure Package
or as described in such certificate.
(m) The Representative shall have received a letter, dated
such Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
such Closing Date for the purposes of this subsection.
(n) On or prior to the date of this Agreement, the
Representative shall have received lockup letters from each of the
executive officers and directors of the Company and each equityholder
and optionholder of the Company listed in Schedule E hereto.
(o) The Custodian will deliver to Credit Suisse a letter
stating that it will deliver to each Custodial Selling Stockholder a
United States Treasury Department Form 1099 (or other applicable form
or statement specified by the United States Treasury Department
regulations in lieu thereof) on or before January 31 of the year
following the date of this Agreement.
The Selling Stockholders and the Company will furnish the Representative with
such conformed copies of such opinions, certificates, letters and documents as
the Representative reasonably requests. Credit Suisse may in its sole discretion
waive on behalf of the Underwriters compliance with any conditions to the
obligations of the Underwriters hereunder, whether in respect of an Optional
Closing Date or otherwise.
8. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, members, directors and officers
and each person, if any, who controls such Underwriter within the meaning of
Section 15 of the Act, against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any part of any Registration
Statement at any time, any Statutory Prospectus as of any time, the Prospectus
or any Issuer Free Writing Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; provided, further, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
the Selling Stockholder Information.
The Company agrees to indemnify and hold harmless the Designated
Underwriter and each person, if any, who controls the Designated Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (the "DESIGNATED ENTITIES"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company for distribution to Participants in
connection with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the Participant agreed to purchase; or (iii) related to, arising out of, or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities
22
(or expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of the Designated Entities.
(b) The Selling Stockholders severally, and not jointly, will
indemnify and hold harmless each Underwriter, its partners, directors
and officers and each person who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in any part of any Registration Statement at
any time, any Statutory Prospectus as of any time, the Prospectus or
any Issuer Free Writing Prospectus, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with the Selling Stockholder
Information relating to such Selling Stockholder.
(c) Each Underwriter will severally, and not jointly,
indemnify and hold harmless the Company, the directors and officers of
the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Act, each Selling Stockholder, the
directors and officers of each Selling Stockholder, if any, and each
person, if any, who controls such Selling Stockholder within the
meaning of Section 15 of the Act against any losses, claims, damages or
liabilities to which such persons may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any part of any Registration Statement at any time, any Statutory
Prospectus as of any time, the Prospectus or any Issuer Free Writing
Prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative
specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company and each Selling
Stockholder in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred,
it being understood and agreed that the only such information furnished
by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the concession
figure appearing in the fourth paragraph under the caption
"Underwriting" and the information contained in the sixth paragraph
under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under subsection (a), (b) or (c) above, notify the
indemnifying party of the commencement thereof; but the failure to
notify the indemnifying party shall not relieve it from any liability
that it may have under subsection (a), (b) or (c) above except to the
extent that it has been materially prejudiced (through the forfeiture
of substantive rights or defenses) by such failure; and provided
further that the failure to notify the indemnifying party shall not
relieve it from any liability that it may have to an indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such
action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such
23
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. Notwithstanding anything
contained herein to the contrary, if indemnity may be sought pursuant
to the last paragraph in Section 8(a) hereof in respect of such action
or proceeding, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in
addition to any local counsel) for the Designated Underwriter for the
defense of any losses, claims, damages and liabilities arising out of
the Directed Share Program, and all persons, if any, who control the
Designated Underwriter within the meaning of either Section 15 of the
Act of Section 20 of the Exchange Act. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified
party from all liability on any claims that are the subject matter of
such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of
an indemnified party.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a), (b) or (c) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company
and the Selling Stockholders, on the one hand, and the Underwriters, on
the other hand, from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Selling Stockholders, on the one hand, and
the Underwriters, on the other hand, in connection with the statements
or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders,
on the one hand, and the Underwriters, on the other hand, shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company, the Selling Stockholders or the Underwriters and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the
subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), (i) no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission and (ii)
the liability under this subsection of each Selling Stockholder shall
be limited to an amount equal to the aggregate gross proceeds after
underwriting commissions and discounts, but before expenses, to such
Selling Stockholder from the sale of the Firm Securities sold by such
Selling Stockholder hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (e) to contribute are several in proportion to their
respective underwriting obligations and not joint. The Selling
Stockholders' obligations in this subsection (e) to contribute are
several in proportion to their respective aggregate gross proceeds
24
received after underwriting commissions and discounts, but before
expenses, from the sale of the Firm Securities sold by the Selling
Stockholders hereunder and not joint.
(f) The obligations of the Company and the Selling
Stockholders under this Section shall be in addition to any liability
which the Company and the Selling Stockholders may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section shall be in
addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each director of the Company, to each officer of the Company who has
signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
9. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, Credit
Suisse may make arrangements satisfactory to the Company and the Selling
Stockholders for the purchase of such Offered Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of shares of Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to Credit Suisse, the Company and the Selling
Stockholders for the purchase of such Offered Securities by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Stockholders, except as provided in Section 10 (provided that if
such default occurs with respect to Optional Securities after the First Closing
Date, this Agreement will not terminate as to the Firm Securities or any
Optional Securities purchased prior to such termination). As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
10. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
9 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and each Selling Stockholder shall
remain responsible for the expenses to be paid or reimbursed by such party
pursuant to Section 5 and the respective obligations of the Company, the Selling
Stockholders and the Underwriters pursuant to Section 8 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 9 or the occurrence of any event specified
in clause (iii), (iv), (vi), (vii) or (viii) of Section 7(c), the Company will
reimburse the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
11. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or faxed and confirmed to
the Representative at Eleven Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention:
LCD-IBD (fax: 000-000-0000), or, if sent to the Company [or any of the Selling
Stockholders], will be mailed, delivered or faxed and confirmed to it at Capella
Education Company, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxxx, XX
00000-0000, Attention: General Counsel
25
(fax: 000-000-0000); provided, however, that any notice to an Underwriter or
Selling Stockholder pursuant to Section 8 will be mailed, delivered or faxed and
confirmed to such Underwriter or Selling Stockholder.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 8, and no other person will have any right or obligation
hereunder.
13. Representation. The Representative will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representative will be binding
upon all the Underwriters. Pursuant to the Power of Attorney executed by each
Custodial Selling Stockholder, Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxx will act for
the Custodial Selling Stockholders in connection with such transactions, and any
action under or in respect of this Agreement taken by Xxxxxxx X. Xxxxx and
Xxxxxxx X. Xxxx will be binding upon all the Custodial Selling Stockholders.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
16. Absence of Fiduciary Relationship. The Company and each Selling
Stockholder acknowledges and agrees that:
(a) the Representative has been retained solely to act as an
underwriter in connection with the sale of the Company's Offered Securities and
that no fiduciary, advisory or agency relationship between the Company, any
Selling Stockholder and the Representative has been created in respect of any of
the transactions contemplated by this Agreement or the Prospectus, irrespective
of whether the Representative has advised or is advising the Company or any
Selling Stockholder on other matters;
(b) the price of the Offered Securities set forth in this Agreement was
established by the Company and the attorneys-in-fact for the Custodial Selling
Stockholders following discussions and arms-length negotiations with the
Representative, and each of the Company and the attorneys-in-fact for the
Custodial Selling Stockholders is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement;
(c) it has been advised that the Representative and its affiliates are
engaged in a broad range of transactions which may involve interests that differ
from those of the Company or the Selling Stockholders and that the
Representative has no obligation to disclose such interests and transactions to
the Company or any of the Selling Stockholders by virtue of any fiduciary,
advisory or agency relationship; and
(d) it waives, to the fullest extent permitted by law and to the extent
arising out of this Agreement and the purchase and sale of the Offered
Securities, any claims it may have against the Representative for breach of
fiduciary duty or alleged breach of fiduciary duty and agrees that the
Representative shall have no liability (whether direct or indirect) to the
Company or any of the Selling Stockholders in respect of such a fiduciary duty
claim or to any person asserting a fiduciary duty claim on behalf of or in right
of the Company, any of the Selling Stockholders or any of their respective
stockholders, employees or creditors.
[Remainder of this page intentionally left blank]
26
If the foregoing is in accordance with the Representative's
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
CAPELLA EDUCATION COMPANY
By
-----------------------------------
Name:
Title:
XXXXXX OTC & EMERGING
GROWTH FUND
By Xxxxxx Investment Management, LLC
By
-----------------------------------
Name:
Title:
SHENG-XXXX XXXX
J. XXXXX XXXXXXX
ROTHERWOOD INVESTMENTS, LLC
By
-----------------------------------
Name:
Title: Attorney-in-Fact
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above written.
CREDIT SUISSE SECURITIES (USA) LLC
By
---------------------------------
Name:
Title:
Acting on behalf of itself and as the
Representative of the several
Underwriters.
