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EXHIBIT 4.12
WARRANT NO. _____
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT
OF 1933 0R ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED
FOR VALUE UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR
LAWS COVERING SUCH SECURITY OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THIS SECURITY
(SATISFACTORY TO THE COMPANY AND ITS LEGAL
COUNSEL) STATING THAT SUCH SALE.
TRANSFER. ASSIGNMENT, PLEDGE OR
DISTRIBUTION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE
SECURITIES ACT OF 1933 AND ALL
APPLICABLE STATE SECURITIES LAWS.
WARRANT
TO PURCHASE
COMMON SHARES
OF
CAPELLA EDUCATION COMPANY
FOR VALUE
RECEIVED, Legg Mason Wood Walker, Incorporated, a Maryland
corporation, is entitled to subscribe for
and purchase from Capella Education
Company, a Minnesota corporation (the
"Company"), up to One Hundred Thirty Five
Thousand Eighty Eight (135,088) duly
authorized, fully paid and nonassessable
Common Shares of the Company, $.10 par
value per share, or such greater or
lesser number of such shares as may be
determined by application of the
anti-dilution provisions of this warrant,
at the price of Seventeen and 10/100
Dollars ($17.10) per share, subject to
adjustments as noted below (the "Warrant
Exercise Price").
This
warrant is subject to the following provisions, terms and
conditions:
1.
Expiration. This warrant shall expire on the earlier of (i) May
11,
2005, or (ii) the second anniversary of the
Company's initial public offering of
its Common Shares which is registered with
the Securities and Exchange
Commission under the provisions of the
Securities Act of 1933 (the "Act").
Subject to the foregoing, this warrant may
be exercised, in whole or in part, by
the holder hereof at any time or from time
to time prior to the expiration
hereof.
2.
Exercise. The rights represented by this warrant may be exercised
by
the holder hereof, in whole or in part, by
written notice of exercise delivered
to the Company and by the surrender of this
warrant (properly endorsed if
required) at the principal office of the
Company and upon payment to it by
either (i) cash, certified check or bank
draft of the purchase price for the
shares to be purchased, or (ii) delivery of
certificates for the Company's
Common Shares already owned by the holder
having a fair market value equal to
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the purchase price for the shares to be
purchased. "Fair market value" per
Common Share on any date shall be (A) the
average of the daily closing prices of
the Common Shares for the thirty (30)
consecutive trading days preceding such
date on the principal national securities
exchange or national securities market
on which the Common Shares are listed or
admitted to trading or, (B) if not so
listed or admitted, the average of the
medians of the highest reported bid and
lowest reported asked quotations for the
Common Shares for each trading day
during such period as furnished by the
National Association of Securities
Dealers, Inc. or its successor, or, (C) if
not so listed, admitted or quoted, as
determined in good faith by the Company's
Board of Directors using customary
valuation methods, provided that no
representative, delegate or agent of the
holder on the Company's Board of Directors
shall be entitled to vote on the
determination of such fair market value,
and provided further that the Board of
Directors shall not be required to retain
outside advisors in making its
determination. The shares to be purchased
shall be deemed to be issued as of the
close of business on the date on which this
warrant has been exercised by
payment to the Company of the Warrant
Exercise Price. Certificates for the
shares so purchased, bearing the
restrictive legend set forth at the beginning
of this warrant, shall be delivered to the
holder within ten (10) days after the
rights represented by this warrant shall
have been so exercised, and, unless
this warrant has expired, a new warrant
representing the number of shares, if
any, with respect to which this warrant has
not been exercised shall also be
delivered to the holder hereof within such
time. No fractional shares shall be
issued upon the exercise of this warrant,
but in lieu of any such fractional
share the Company shall make a cash payment
therefor equal in amount to the
product of the applicable fraction
multiplied by the current fair market value
per Common Share.
3. Right
to Convert Warrant. The holder of this warrant shall have the
right to require the Company to convert
this warrant (the "Conversion Right"),
in whole or in part, at any time prior to
its expiration, into the Company's
Common Shares as provided for in this
Section 3. Upon exercise of the Conversion
Right, the Company shall deliver to the
holder (without payment by the holder of
any Warrant Exercise Price) that number of
the Company's Common Shares equal to
the quotient obtained by dividing (i) the
value of the warrant at the time the
Conversion Right is exercised (determined
by subtracting the aggregate Warrant
Exercise Price for the shares subject to
the warrant in effect immediately prior
to the exercise of the Conversion Right
from the aggregate fair market value of
the shares subject to the warrant
immediately prior to the exercise of the
Conversion Right) by (ii) the fair market
value of one Common Share of the
Company immediately prior to the exercise
of the Conversion Right and
multiplying the quotient so obtained by a
fraction equal to the portion of this
Warrant which the holder desires to
convert. For purposes hereof, "fair market
value" per Common Share shall be determined
as provided in Section 2. The
Conversion Right may be exercised by the
holder hereof, in whole or in part, by
written notice of exercise delivered to the
Company and by the surrender of this
warrant (properly endorsed if required) at
the principal office of the Company.
The shares to be issued upon exercise of
the Conversion Right shall be deemed to
be issued as of the close of business on
the date on which the Conversion Right
has been exercised by written notice and
surrender of this warrant to the
Company. Certificates for the shares so
issued, bearing the restrictive legend
set forth at the beginning of this warrant,
together with cash in lieu of any
fractional
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share shall be delivered to the holder
within ten (10) days after the Conversion
Right shall have been so exercised, and,
unless this warrant has expired, a new
warrant representing the number of shares,
if any, with respect to which the
Conversion Right has not been exercised
shall also be delivered to the holder
hereof within such time. No fractional
shares shall be issued upon the exercise
of the Conversion Right, but in lieu of any
such fractional share the Company
shall make a cash payment therefor equal in
amount to the product of the
applicable fraction multiplied by the
current fair market value per Common
Share.
4.
Covenants of the Company. The Company covenants and agrees that
all
shares that may be issued upon the exercise
of the rights represented by this
warrant shall, upon issuance, be duly
authorized and issued, fully paid and
nonassessable shares. The Company further
covenants and agrees that during the
period within which the rights represented
by this warrant may be exercised, the
Company will at all times have authorized,
and reserved for the purpose of issue
or transfer upon exercise of the
subscription rights evidenced by this warrant,
a sufficient number of its Common Shares to
provide for the exercise of the
rights represented by this warrant, and
will not permit the par value, if any of
its Common Shares to exceed the Warrant
Exercise Price. If the Company shall
list its Common Shares on any securities
exchange it will, at its expense, list,
or obtain approval for listing upon
issuance of, the Common Shares issuable
under this warrant. The Company shall
similarly list, or obtain approval for
listing upon issuance of, any other
security issuable under this warrant if such
other security has been listed on any
securities exchange.
5.
Adjustments to Warrant Exercise Price. The Warrant Exercise Price
shall
be subject to adjustment from time to time
as hereinafter provided in this
Section 5:
(a) If the
Company at any time divides its outstanding Common Shares into
a greater number of shares (whether
pursuant to a stock split, stock dividend or
otherwise), and conversely, if its
outstanding Common Shares are combined into a
smaller number of shares, the Warrant
Exercise Price in effect immediately prior
to such division or combination shall be
proportionately adjusted to reflect the
reduction or increase in the value of each
such Common Share.
(b) If any
capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger
of the Company with another
corporation, or the sale of all or
substantially all of its assets to another
corporation shall be effected in such a way
that holders of the Company's Common
Shares shall be entitled to receive stock,
securities or assets with respect to
or in exchange for such Common Shares,
then, as a condition of such
reorganization, reclassification,
consolidation, merger or sale, the holder of
this warrant shall have the right to
purchase and receive upon the basis and
upon the terms and conditions specified in
this warrant and in lieu of the
Common Shares of the Company immediately
theretofore purchasable and receivable
upon the exercise of the rights represented
hereby, such shares of stock other
securities or assets as would have been
issued or delivered to the holder of
this warrant if it had exercised this
warrant and had received such Common
Shares prior to such reorganization,
reclassification, consolidation, merger or
sale. The Company shall not effect any such
consolidation, merger or sale,
unless prior to the consummation
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thereof the successor corporation (if other
than the Company) resulting from
such consolidation or merger or the
corporation purchasing such assets shall
assume by written instrument executed and
mailed to the registered holder of
this warrant at the last address of such
holder appearing on the books of the
Company, the obligation to deliver to such
holder such shares of stock,
securities or assets as, in accordance with
the foregoing provisions, such
holder may be entitled to purchase.
(c) Upon
each adjustment of the Warrant Exercise Price, the holder of
this
warrant shall thereafter be entitled to
purchase, at the Warrant Exercise Price
resulting from such adjustment, the number
of shares obtained by multiplying the
Warrant Exercise Price in effect
immediately prior to such adjustment by the
number of shares purchasable pursuant
hereto immediately prior to such
adjustment and dividing the product thereof
by the Warrant Exercise Price
resulting from such adjustment.
(d) Upon
any adjustment of the Warrant Exercise Price, the Company shall
give written notice thereof, by first class
mail, postage prepaid, addressed to
the registered holder of this warrant at
the address of such holder as shown on
the books of the Company, which notice
shall state the Warrant Exercise Price
resulting from such adjustment and the
increase or decrease, if any, in the
number of shares purchasable at such price
upon the exercise of this warrant,
setting forth in reasonable detail the
method of calculation and the facts upon
which such calculation is based.
6. No
Voting_Rights. This warrant shall not entitle the holder hereof
to
any voting rights or other rights as a
shareholder of the Company.
7.
Registration Rights. If, at any time commencing after the date
hereof,
the Company proposes to register any of its
securities for money under the Act,
other than pursuant to Form S-4, Form S-8
or a comparable registration statement
and other than in connection with demand
registrations initiated by other
security holders of the Company whose
rights exclude or restrict (to the extent
of such restriction) participation by other
holders of registration rights, it
will give written notice by registered
mail, at least thirty (30) days prior to
the filing of each such registration
statement to the holder of this warrant
and/or the Common Shares and any other
securities issuable upon exercise of this
warrant (collectively, the "warrant
securities") of its intention to do so. If
the holder of this warrant and/or warrant
securities notifies the Company within
twenty (20) business days after receipt of
any such notice of its desire to
include any such securities in such
proposed registration statement, the Com
