EXHIBIT 10.21
STOCK OPTION AGREEMENT
The Participant has been granted an Option by TAL International Group,
Inc. (the "Company") under the terms of the TAL International Group, Inc. 2004
Management Stock Plan (the "Plan"). The Option shall be subject to the following
Incentive Stock Option Terms (sometimes referred to as the "Option Terms"):
1. Terms of Award. The following words and phrases used in the Option
Terms shall have the meanings set forth in this paragraph 1:
(a) The "Participant" is XXXXXX XXXXXX.
(b) The "Grant Date" is November 3, 2004.
(c) The number of "Covered Shares" is 400 shares of Stock.
(d) The "Exercise Price" is $ 1.00 per share.
Other words and phrases used in the Option Terms are defined in the Plan or
elsewhere in the Option Terms. Except where the context clearly implies or
indicates the contrary, a word, term, or phrase used in the Plan is similarly
used in the Option Terms.
2. Incentive Stock Option. The Option is intended to constitute an
"incentive stock option" as that term is used in Code section 422. To the extent
that the aggregate fair market value (determined at the time of grant) of
Covered Shares with respect to which incentive stock options are exercisable for
the first time by the Participant during any calendar year under all plans of
the Company and its Subsidiaries exceeds $100,000, the options or portions
thereof which exceed such limit (according to the order in which they were
granted) shall be treated as nonstatutory stock options. It should be understood
that there is no assurance that the Option will, in fact, be treated as an
incentive stock option.
3. Date of Exercise.
(a) Subject to the limitations of the Option Terms, the Option shall become
exercisable with respect to one-fourth (1/4) of the Covered Shares on
the one-year anniversary of the Grant Date (the "Initial Vesting Date")
(but only if the Date of Termination has not occurred prior to the
Initial Vesting Date). After the Initial Vesting Date, the Option shall
become exercisable with respect to an additional one forth (1/4) of the
Covered Shares at the anniversary of the Initial Vesting Date (but only
if the Date of Termination has not occurred prior to such anniversary),
until such time as this Option is fully exercisable.
(b) The Option may be exercised on or after the Date of Termination only as
to that portion of the Covered Shares for which it was exercisable (or
became exercisable) immediately prior to such date.
4. Expiration. The Option shall not be exercisable after the
Company's close of business on the last business day that occurs prior to the
Expiration Date. The "Expiration Date" shall be the earliest to occur of:
(a) the ten-year anniversary of the Grant Date;
(b) if the Date of Termination occurs by reason of the Participant's death
or Disability, the one-year anniversary of such Date of Termination;
(c) if the Date of Termination occurs by reason of termination of the
Participant by the employer for Cause, or by the Participant other than
for Good Reason, such Date of Termination; or
(d) if the Date of Termination occurs for reasons other than (i) the
Participant's death, (ii) the Participant's Disability, (iii)
termination of the Participant by the employer for Cause, or (iv)
termination by the Participant other than for Good Reason, the 90-day
anniversary of such Date of Termination.
5. Method of Option Exercise. Subject to the Option Terms and the
Plan, the Option may be exercised in whole or in part by filing an option
exercise notice in the form attached as Exhibit A (the "Exercise Notice") with
the Secretary of the Company at its corporate headquarters prior to the
Company's close of business on the last business day that occurs prior to the
Expiration Date. Such notice shall specify the number of shares of Stock which
the Participant elects to purchase and such other representations and agreements
as may be required by the Company, and shall be accompanied by payment of the
Exercise Price. This Option may not be exercised until such time as the Plan has
been approved by the shareholders of the Company. The Option shall not be
exercisable if and to the extent the Company determines that such exercise would
violate applicable state or Federal securities laws or the rules and regulations
of any securities exchange on which the Stock is traded. If the Company makes
such a determination, it shall use all reasonable efforts to obtain compliance
with such laws, rules and regulations. In making any determination hereunder,
the Company may rely on the opinion of counsel for the Company.
6. Payment of Exercise Price. Payment of the Exercise Price may be
made by any of the following methods or any combination thereof:
(a) By cash or by check payable to the Company.
(b) Except as otherwise provided by the Committee before the Option is
exercised and provided that the Company's common stock is publicly
traded and quoted regularly in the Wall Street Journal, by delivery of
shares of Stock owned by the Participant having an aggregate Fair
Market Value (valued as of the date of exercise) that is equal to the
amount of cash that would otherwise be required. Except as otherwise
provided by the Committee, payments made with shares of Stock shall be
limited to shares held by the Participant for not less than six months
prior to the payment date.
(c) Except as otherwise provided by the Committee before the Option is
exercised and provided that the Company's common stock is publicly
traded and quoted regularly in the Wall Street Journal, by authorizing
a third party to sell shares of Stock (or a sufficient portion of the
shares) acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise.
7. Change in Control. Subject to the provisions of paragraph 4.2(f)
of the Plan (relating to the adjustment of shares), and except as otherwise
provided in the Plan, upon the occurrence of a Change in Control, all of the
options shall vest in full.
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8. Withholding. All deliveries and distributions under the Option
Terms are subject to withholding of all applicable taxes. At the election of the
Participant, and subject to such rules and limitations as may be established by
the Committee from time to time, such withholding obligations may be satisfied
through the surrender of shares of Stock which the Participant already owns, or
to which the Participant is otherwise entitled under the Plan; provided,
however, that such shares may be used to satisfy not more than the Company's
minimum statutory withholding obligation (based on minimum statutory withholding
rates for Federal and state tax purposes, including payroll taxes, that are
applicable to such supplemental taxable income).
9. Participant's Representations and Shareholders Agreement. At the
time this Option is exercised, the Participant shall, if required by the
Company, concurrently with the exercise of all or any portion of this Option (i)
deliver to the Company his or her Investment Representation Statement in the
form attached hereto as Exhibit B; and (ii) agree to execute and become a party
to the Shareholders Agreement, as may be in effect on such date.
10. Lock-Up Period. The Participant hereby agrees that, if so
requested by the Company or any representative of the underwriters (the
"Managing Underwriter") in connection with any registration of the offering of
any securities of the Company under the Securities Act, the Participant shall
not sell or otherwise transfer any Shares or other securities of the Company
during the 180-day period, or such other period as may be requested in writing
by the Managing Underwriter and agreed to in writing by the Company (the "Market
Standoff Period") following the effective date of a registration statement of
the Company filed under the Securities Act. Such restriction shall apply only to
the first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.
11. Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of the Participant only by the
Participant. The terms of the Plan and the Option Terms shall be binding upon
the executors, administrators, heirs, successors and assigns of the Participant.
12. All Terms. The Plan is incorporated herein by reference. The Plan
and the Option Terms, including all Exhibits hereto, as applicable, constitute
all of the terms with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and the
Participant with respect to the subject matter hereof. The Option Terms may be
amended by written agreement of the Company and the Participant without the
consent of any other person.
13. Definitions. For purposes of the Option Terms, words and phrases
used in this Agreement shall be defined as follows:
(a) Cause. If the Participant is subject to an employment agreement (or
other similar agreement) with the Company or a Subsidiary that
provides a definition of termination for "cause," then, for purposes
of this Award, the term "Cause" shall have meaning set forth in such
agreement. In the absence of such a definition, the term "Cause" shall
mean any of the following: (1) the willful and continued failure by
the Participant to substantially perform his duties, other than by
reason of his being Disabled (as defined below), (2) the willful
engaging by the Participant in conduct which is demonstrably and
materially injurious to the Company or its Affiliates,
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(3) conduct by the Participant that involves theft or fraud or,
dishonesty in connection with his duties, (4) the Participant's
violation of a non-compete or confidentiality agreement with the
Company or an Affiliate, or (5) conviction of felony involving moral
turpitude.
(b) Change in Control. The term "Change in Control" means any of the
following: (i) the closing of any merger, combination, consolidation
or similar business transaction involving the Company in which the
holders of Stock immediately prior to such closing are not the
holders, directly or indirectly, of a majority of the ordinary voting
securities of the surviving person in such transaction immediately
after such closing, (ii) the closing of any sale or transfer by the
Company of all or substantially all of its assets to an acquiring
person in which the holders of Stock immediately prior to such closing
are not the holders of a majority of the ordinary voting securities of
the acquiring person immediately after such closings, (iii) the
closing of any sale by the holders of Stock of an amount of Stock that
equals or exceeds a majority of the shares of Stock immediately prior
to such closing to a person in which the holders of the Stock
immediately prior to such closing are not the holders of a majority of
the ordinary voting securities of such person immediately after such
closing or (iv) the consummation of a registered public offering of
Stock by the Company pursuant to the Securities Act of 1933, as
amended, for gross proceeds of at least $50 million.
(c) Date of Termination. The "Date of Termination" shall be the first day
occurring on or after the Grant Date on which the Participant ceases to
be an Employee of, or Service Provider to, the Company or any
Subsidiary, regardless of the reason for such cessation, subject to the
following:
(i) The Participant's cessation as an Employee and Service Provider
shall not be deemed to occur by reason of the transfer of the
Participant between the Company and a Subsidiary or between two
Subsidiaries.
(ii) The Participant's cessation as an Employee and Service Provider
shall not be deemed to occur by reason of the Participant's being on a
leave of absence from the Company or a Subsidiary approved by the
Company or Subsidiary otherwise receiving the Participant's services.
(iii) If, as a result of a sale or other transaction, the Subsidiary
for whom Participant is employed (or to whom the Participant is
providing services as a Service Provider) ceases to be a Subsidiary
(and the entity for whom the Participant is employed or to whom the
Participant is providing services is or becomes an entity that is
separate from the Company), and the Participant is not, at the end of
the 30-day period following the transaction, an Employee of or Service
Provider to the Company or an entity that is then a Subsidiary, then
the occurrence of such transaction shall be treated as the
Participant's Date of Termination caused by the Participant being
discharged by the entity for whom the Participant is employed or to
whom the Participant is providing services.
(iv) A Service Provider whose services to the Company or a
Subsidiary are governed by a written agreement with the Service
Provider will cease to be a Service Provider at the time the term of
such written agreement ends (without renewal); and a Service Provider
whose services to the Company or a Subsidiary are not governed by a
written agreement with the Service Provider will cease to be a Service
Provider on the date that is 90 days after the date
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the Service Provider last provides services requested by Company or
Subsidiary (as determined by the Committee).
(d) Disability. If the Participant is subject to an employment agreement
(or other similar agreement) with the Company or a Subsidiary that
provides a definition of termination for "disability," then, for
purposes of this Award, the term "Disability" shall have meaning set
forth in such agreement. In the absence of such a definition, the
Participant shall be considered to have a "Disability" during the
period in which the Participant is unable, by reason of a medically
determinable physical or mental impairment, to engage in any
substantial gainful activity, which condition, in the opinion of a
physician selected by the Committee, is expected to have a duration of
not less than 120 days.
(e) Employee. The term "Employee" means any person, including Officers and
Directors, employed by the Company or any Subsidiary.
(f) Good Reason. If the Participant is subject to an employment agreement
(or other similar agreement) with the Company or a Subsidiary that
provides a definition of termination for "good reason," then, for
purposes of this Award, the term "Good Reason" shall have meaning set
forth in such agreement. In the absence of such a definition, the term
"Good Reason" shall mean either of (1) a reduction in the
Participant's salary rate; or (2) a reduction in the Participant's
rank which occur without the Participant's consent and which are not
corrected by the Company within 10 days of delivery of a written
notice to the Company by the Participant which identifies the
circumstances which the Participant believes constitute a reduction in
salary rate or rank.
(g) Shareholders Agreement. The term "Shareholders Agreement" means the
agreement governing the rights and obligations with respect to shares
of Stock and to holders of Stock (including, without limitation, voting
and sale rights), which agreement shall be in such form as the Company
determines.
(h) Stock. The term "Stock" means the Common Stock, par value $0.001 per
share of the Company.
14. Designated Event Bonus.
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(a) General. If upon the consummation of a Designated Event, the holders of
all of the outstanding shares of Series A Preferred Stock receive cash
equal to the Liquidation Preference (as defined in the Certificate of
Incorporation) plus accrued but unpaid dividends as of the redemption
date on each outstanding share of Series A Preferred Stock (such
aggregate amount, the "Series A Redemption Amount"), then the Company
shall pay to Participant the Bonus Amount. For the avoidance of doubt,
any payments under this Section 14 shall be subordinate to all rights
of payment of the Series A Preferred Stock.
(b) Payment of the Bonus Amount. The Bonus Amount shall be payable in cash.
Notwithstanding the foregoing, if the Designated Event is a Public
Offering, the Company may, in its sole discretion, issue Stock or other
securities that are exercisable for or convertible into Stock in lieu
of cash payment of the Bonus Amount. The number of securities issued in
payment of the Bonus Amount would be based on the price per share of
the securities sold in the Public Offering.
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(c) Definitions. For purposes of this Section 14, the following terms shall
have the corresponding meanings:
(i) "Bonus Amount" shall mean an amount equal to the difference
between (i) all accrued but unpaid dividends on all of the shares of
Series A Preferred Stock outstanding immediately prior to the
Designated Event divided by the difference between of (A) one minus
(B) the Fully-Diluted Equity Factor and (ii) all accrued but unpaid
dividends on all of the shares of Series A Preferred Stock outstanding
immediately prior to the Designated Event.
(ii) "Certificate of Incorporation" shall mean the Amended and
Restated Certificate of Incorporation of the Company, as filed with
the Secretary of State of Delaware on the date hereof.
(iii) "Designated Event" shall mean a Change of Control (as defined
in the Certificate of Incorporation) or a Public Offering, in each
case in which the entire Series A Redemption Amount is paid in full in
cash.
(iv) "Fully-Diluted Common Stock" shall mean all of the Stock,
assuming conversion, exercise or exchange of all outstanding
convertible, exercisable or exchangeable securities, options, warrants
and similar securities or instruments into or for Stock (regardless of
whether such convertible, exercisable or exchangeable securities,
options, warrants or similar securities or instruments are then
convertible, exercisable or exchangeable).
(v) "Fully-Diluted Equity Factor" shall mean the fraction obtained
by dividing (i) the Participant Shares by (ii) the Fully-Diluted
Common Stock immediately prior to the Designated Event.
(vi) "Participant Shares" shall mean the shares of Stock issuable
upon exercise of this Option, subject to adjustment for stock splits,
combinations, stock dividends, recapitalizations and similar
transactions.
(vii) "Public Offering" shall mean a public offering and sale of
equity securities by the Company pursuant to an effective Registration
Statement under the Securities Act of 1933, as amended (the
"Securities Act") for gross proceeds of at least $50 million.
(viii) "Registration Statement" means any registration statement of
the Company filed with, or to be filed with, the Securities and
Exchange Commission under the rules and regulations promulgated under
the Securities Act, including the related prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, and all exhibits and all material incorporated by
reference in such registration statement other than a registration
statement (and related prospectus) filed on Form S-8 or any successor
form thereto.
(ix) "Series A Preferred Stock" shall mean the Series A Preferred
Stock, par value $0.001 per share, of the Company.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused these presents to be executed in its
name and on its behalf, all as of the Grant Date.
TAL INTERNATIONAL GROUP, INC.
By: /s/ A. Xxxxxxx Xxxxxx, Xx.
-----------------------------
Name: A. Xxxxxxx Xxxxxx, Xx.
Title: Vice President
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