EXHIBIT 10.4
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
THIS STOCK OPTION AGREEMENT (the "Agreement") dated as of ______________
("Grant Date"), is between Career Education Corporation, a Delaware corporation
(the "Company"), and _______________, a _______________ of the Company (the
"Participant").
WHEREAS, the Company desires, by affording the Participant an opportunity
to purchase shares of the Company's Common Stock as hereinafter provided, to
carry out the purposes of the Career Education Corporation 1998 Employee
Incentive Compensation Plan (the "Plan"); and
WHEREAS, the Committee has duly made all determinations necessary or
appropriate to the grants hereunder; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto have agreed, and do hereby
agree, as follows:
1. Definitions.
-----------
For purposes of this Agreement, the definitions of terms contained in the
Plan hereby are incorporated by reference, except to the extent that any term is
specifically defined in this Agreement.
2. Grant of Option, Option Price and Term.
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(a) The Company hereby grants to the Participant, as a matter of
separate agreement and not in lieu of salary or any other compensation for
services, the right and option (the "Option") to purchase ________ shares
of the Common Stock of the Company ("Option Shares") on the terms and
conditions herein set forth. Participant shall have all the rights and
obligations as provided for in this Agreement.
(b) For each of the Option Shares purchased, the Participant shall pay
to the Company $________ per share (the "Option Price"). Accordingly, the
aggregate Option Price to exercise all of the Option is $________
("Aggregate Option Price").
(c) The term of this Option shall be a period of ten (10) years from
the Grant Date (the "Option Period"). The termination of the Option Period
shall result in the termination and cancellation of the Option. In no event
shall the Option be exercisable for any period greater than the Option
Period. During the Option Period, the Option shall be exercisable in
accordance with the determination of the Committee, but in no event later
than the earlier of (i) the date the Option is vested or (ii) immediately
prior to a Change in Control.
(d) Subject to Sections 2(e) and 2(f) below, unvested options shall be
forfeited at termination of employment for any reason. The percentage of
Options which are vested and which will not be forfeited at termination of
employment (unless such termination is for Cause) shall be determined in
accordance with the following schedule:
Cumulative Percentage of
Date Option Shares Vested
---------------------------------------------------------------------------
_____ Anniversary _____%
_____ Anniversary _____%
_____ Anniversary _____%
_____ Anniversary _____%
(e) Notwithstanding the foregoing Section 2(d), all Options shall be
100% vested if any of the following events occur:
(i) a Change in Control, or
(ii) a Participant's Termination of Employment for any reason
other than a voluntary resignation or quit by the
Participant or Termination for Cause.
(f) Any portion of the Option which is not vested, pursuant to
Section 2(d) or 2(e), as of a Participant's Termination of Employment is
cancelled simultaneously with the date of such Termination of Employment.
(g) The Option granted hereunder is, to the extent permitted by law,
designated as an Incentive Stock Option, as such term is defined in Section
422 of the Internal Revenue Code.
(h) The Company shall not be required to issue any fractional Option
Shares.
3. Termination of Option. With respect to vested Option Shares:
(a) If a Participant incurs a Termination of Employment due to any
reason other than Cause, the vested Option shall continue in effect for the
remainder of the term.
(b) If the Participant incurs a Termination of Employment which is
for Cause, the Option shall terminate immediately.
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The death or Disability of a Participant after a Termination of Employment
otherwise provided herein shall not extend the time permitted to exercise an
Option.
4. Exercise. The Option shall be exercisable during the Participant's
lifetime only by the Participant (or his or her guardian or legal
representative), and after the Participant's death only by the Representative.
The Option may only be exercised by the delivery to the Company of a properly
completed written notice, in form satisfactory to the Committee, which notice
shall specify the number of Option Shares to be purchased and the aggregate
Option Price for such shares, together with payment in full of such aggregate
Option Price. Payment shall only be made:
(a) in cash or by check;
(b) with the prior written approval of the Committee, by the delivery
to the Company of a valid and enforceable stock certificate (or
certificates) representing shares of Common Stock held by the Participant,
which is endorsed in blank or accompanied by an executed stock power (or
powers) and guaranteed in a manner acceptable to the Committee;
(c) by a loan extended by the Company;
(d) in cash by a broker-dealer to whom the Participant has submitted a
notice of exercise; or
(e) in any combination of (a), (b), (c) or (d).
If any part of the payment of the Option Price is made in shares of Common
Stock, such shares shall be valued by using their Fair Market Value as of their
date of delivery.
The Option shall not be exercised unless there has been compliance with all
the preceding provisions of this Paragraph 4, and, for all purposes of this
Agreement, the date of the exercise of the Option shall be the date upon which
there is compliance with all such requirements.
5. Payment of Withholding Taxes. If the Company is obligated to withhold an
amount on account of any tax imposed as a result of the exercise of the Option,
the Participant shall be required to pay such amount to the Company, as provided
in the Plan.
6. Requirements of Law; Registration and Transfer Requirements. The Company
shall not be required to sell or issue any shares under the Option if the
issuance of such shares shall constitute a violation of any provision of any law
or regulation of any governmental authority applicable to the Company. This
Option and each and every obligation of the Company hereunder are subject to the
requirement that the Option may not be exercised or performed, in whole or in
part, unless and until the Option Shares are listed, registered or qualified,
properly marked with a legend or other notation, or otherwise restricted, as is
provided for in the Plan.
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7. Adjustments/Change in Control. In the event of a Change in Control or
other corporate restructuring provided for in the Plan, the Participant shall
have such rights, and the Committee shall take such actions, as provided in the
Plan.
8. Nontransferability. A Participant may at any time make a transfer of
shares of Common Stock received pursuant to the exercise of an Option to his
parents, spouse or descendants, to any trust for the benefit of the foregoing or
to a partnership the interest of which are principally for the foregoing or to a
custodian under a uniform gifts to minors act or similar statute for the benefit
of any of the Participant's descendants. An Option and any interest in the
Option may not otherwise be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner without the prior written
consent of the Company, and any such attempted sale, assignment, conveyance,
gift, pledge, hypothecation or transfer other than as permitted herein shall be
null and void.
9. Plan. Notwithstanding any other provision of this Agreement, the Option is
granted pursuant to the Plan, as shall be adopted by the Company, and is subject
to all the terms and conditions of the Plan, as the same may be amended from
time to time; provided, however, that no provision of the Plan shall deprive the
Participant, without the Participant's consent, of the Option or of any of
Participant's rights under this Agreement. The reasonable interpretation and
construction by the Committee of the Plan, this Agreement and the Option, and
such rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan, shall be final and binding upon the Participant.
10. Stockholder Rights. Until the Option shall have been duly exercised to
purchase such Option Shares and such shares have been officially recorded as
issued on the Company's official stockholder records, no person or entity shall
be entitled to vote, receive distributions or dividends or be deemed for any
purpose the holder of any Option Shares, and adjustments for dividends or
otherwise shall be made only if the record date therefor is subsequent to the
date such shares are recorded and after the date of exercise and without
duplication of any adjustment.
11. Employment Rights. No provision of this Agreement or of the Option granted
hereunder shall give the Participant any right to continue in the employ of the
Company or any of its Affiliates, create any inference as to the length of
employment of the Participant, affect the right of the Company or its Affiliates
to Terminate the Employment of the Participant, with or without cause, or give
the Participant any right to participate in any employee welfare or benefit plan
or other program (other than the Plan) of the Company or any of its Affiliates.
12. Disclosure Rights. The Company shall have no duty or obligation to
affirmatively disclose to the Participant or a Representative, and the
Participant or Representative shall have no right to be advised of, any material
information regarding the Company or an Affiliate at any time prior to, upon or
in connection with the exercise of an Option.
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13. Changes in Company's Capital Structure. The existence of the Option shall
not affect in any way the right or authority of the Company or its stockholders
to make or authorize any or all adjustments, recapitalizations, reorganizations
or other changes in the Company's capital structure or its business, or any
merger or consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
14. Investment Representation and Agreement. If, in the opinion of counsel for
the Company, a particular representation is required under the Securities Act of
1933 or any other applicable federal or state law, or any regulation or rule of
any governmental agency, the Company may require such representations as the
Company reasonably may determine to be necessary.
15. Governing Law. This Agreement and the Option granted hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Illinois (other than its laws respecting choice of law).
16. Entire Agreement. This Agreement, together with the Plan, constitute the
entire obligation of the parties hereto with respect to the subject matter
hereof and shall supersede any prior expressions of intent or understanding with
respect to this transaction.
17. Amendment. Any amendment to this Agreement shall be in writing and signed
by the Company and the Participant.
18. Waiver; Cumulative Rights. The failure or delay of either party to require
performance by the other party of any provision hereof shall not affect its
right to require performance of such provision unless and until such performance
has been waived in writing. Each and every right hereunder is cumulative and
may be exercised in part or in whole from time to time.
19. Counterparts. This Agreement may be signed in two counterparts, each of
which shall be an original, but both of which shall constitute but one and the
same instrument.
20. Notices. Any notice which either party hereto may be required or permitted
to give the other shall be in writing and may be delivered personally or by
mail, postage prepaid, addressed to the Secretary of the Company, at its then
corporate headquarters, and to the Participant at his address as shown on the
Company's records, or to such other address as the Participant, by notice to the
Company, may designate in writing from time to time.
21. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
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22. Severability. If any provision of this Agreement shall for any reason by
held to be invalid or unenforceable, such invalidity or unenforceability shall
not effect any other provision hereof, and this Agreement shall be construed as
if such invalid or unenforceable provision were omitted.
23. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon each successor and assign of the Company. All obligations
imposed on the Participant or a Representative, and all rights granted to the
Company hereunder, shall be binding upon the Participant's or the
Representative's heirs, legal representatives and successors.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by an officer thereunto duly authorized, and the Participant has
hereunto set his hand, all as of the day and year first above written.
CAREER EDUCATION CORPORATION
By:
----------------------------
-------------------------------
Title
PARTICIPANT:
-------------------------------
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NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
THIS STOCK OPTION AGREEMENT (the "Agreement") dated as of ______________
("Grant Date"), is between Career Education Corporation, a Delaware corporation
(the "Company"), and _______________, a _______________ of the Company (the
"Participant").
WHEREAS, the Company desires, by affording the Participant an opportunity
to purchase shares of the Company's Common Stock as hereinafter provided, to
carry out the purposes of the Career Education Corporation 1998 Employee
Incentive Compensation Plan (the "Plan"); and
WHEREAS, the Committee has duly made all determinations necessary or
appropriate to the grants hereunder; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto have agreed, and do hereby
agree, as follows:
1. Definitions.
For purposes of this Agreement, the definitions of terms contained in the
Plan hereby are incorporated by reference, except to the extent that any term is
specifically defined in this Agreement.
2. Grant of Option, Option Price and Term.
(a) The Company hereby grants to the Participant, as a matter of
separate agreement and not in lieu of salary or any other compensation for
services, the right and option (the "Option") to purchase ________ shares
of the Common Stock of the Company ("Option Shares") on the terms and
conditions herein set forth. Participant shall have all the rights and
obligations as provided for in this Agreement.
(b) For each of the Option Shares purchased, the Participant shall
pay to the Company $________ per share (the "Option Price"). Accordingly,
the aggregate Option Price to exercise all of the Option is $________
("Aggregate Option Price").
(c) The term of this Option shall be a period of ten (10) years from
the Grant Date (the "Option Period"). The termination of the Option Period
shall result in the termination and cancellation of the Option. In no event
shall the Option be exercisable for any period greater than the Option
Period. During the Option Period, the Option shall be exercisable in
accordance with the determination of the Committee, but in no event later
than the earlier of (i) the date the Option is vested or (ii) immediately
prior to a Change in Control.
(d) Subject to Sections 2(e) and 2(f) below, unvested options shall
be forfeited at termination of employment for any reason. The percentage of
Options which are vested and which will not be forfeited at termination of
employment (unless such termination is for Cause) shall be determined in
accordance with the following schedule:
Cumulative Percentage of
Date Option Shares Vested
--------------------------------------------------------------------
_____ Anniversary _____%
_____ Anniversary _____%
_____ Anniversary _____%
_____ Anniversary _____%
(e) Notwithstanding the foregoing Section 2(d), all Options shall be
100% vested if any of the following events occur:
(i) a Change in Control, or
(ii) a Participant's Termination of Employment for any reason
other than a voluntary resignation or quit by the
Participant or a Termination for Cause.
(f) Any portion of the Option which is not vested, pursuant to
Section 2(d) or or 2(e), as of a Participant's Termination of Employment is
cancelled simultaneously with the date of such Termination of Employment.
(g) The Option granted hereunder is designated as a Non-Qualified
Stock Option.
(h) The Company shall not be required to issue any fractional Option
Shares.
3. Termination of Option. With respect to vested Option Shares:
(a) If a Participant incurs a Termination of Employment due to any
reason other than Cause, the vested Option shall continue in effect for the
remainder of the term.
(b) If the Participant incurs a Termination of Employment which is
for Cause, the Option shall terminate immediately.
The death or Disability of a Participant after a Termination of Employment
otherwise provided herein shall not extend the time permitted to exercise an
Option.
-2-
4. Exercise. The Option shall be exercisable during the Participant's lifetime
only by the Participant (or his or her guardian or legal representative), and
after the Participant's death only by the Representative. The Option may only be
exercised by the delivery to the Company of a properly completed written notice,
in form satisfactory to the Committee, which notice shall specify the number of
Option Shares to be purchased and the aggregate Option Price for such shares,
together with payment in full of such aggregate Option Price. Payment shall only
be made:
(a) in cash or by check;
(b) with the prior written approval of the Committee, by the delivery
to the Company of a valid and enforceable stock certificate (or
certificates) representing shares of Common Stock held by the Participant,
which is endorsed in blank or accompanied by an executed stock power (or
powers) and guaranteed in a manner acceptable to the Committee;
(c) by a loan extended by the Company;
(d) in cash by a broker-dealer to whom the Participant has submitted
a notice of exercise; or
(e) in any combination of (a), (b), (c) or (d).
If any part of the payment of the Option Price is made in shares of Common
Stock, such shares shall be valued by using their Fair Market Value as of their
date of delivery.
The Option shall not be exercised unless there has been compliance with all
the preceding provisions of this Paragraph 4, and, for all purposes of this
Agreement, the date of the exercise of the Option shall be the date upon which
there is compliance with all such requirements.
5. Payment of Withholding Taxes. If the Company is obligated to withhold an
amount on account of any tax imposed as a result of the exercise of the Option,
the Participant shall be required to pay such amount to the Company, as provided
in the Plan.
6. Requirements of Law; Registration and Transfer Requirements. The Company
shall not be required to sell or issue any shares under the Option if the
issuance of such shares shall constitute a violation of any provision of any law
or regulation of any governmental authority applicable to the Company. This
Option and each and every obligation of the Company hereunder are subject to the
requirement that the Option may not be exercised or performed, in whole or in
part, unless and until the Option Shares are listed, registered or qualified,
properly marked with a legend or other notation, or otherwise restricted, as is
provided for in the Plan.
-3-
7. Adjustments / Change in Control. In the event of a Change in Control or
other corporate restructuring provided for in the Plan, the Participant shall
have such rights, and the Committee shall take such actions, as provided in the
Plan.
8. Nontransferability. A Participant may at any time make a transfer of shares
of Common Stock received pursuant to the exercise of an Option to his parents,
spouse or descendants, to any trust for the benefit of the foregoing or to a
partnership the interest of which are principally for the foregoing or to a
custodian under a uniform gifts to minors act or similar statute for the benefit
of any of the Participant's descendants. An Option and any interest in the
Option may not otherwise be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner without the prior written
consent of the Company, and any such attempted sale, assignment, conveyance,
gift, pledge, hypothecation or transfer other than as permitted herein shall be
null and void.
9. Plan. Notwithstanding any other provision of this Agreement, the Option is
granted pursuant to the Plan, as shall be adopted by the Company, and is subject
to all the terms and conditions of the Plan, as the same may be amended from
time to time; provided, however, that no provision of the Plan shall deprive the
Participant, without the Participant's consent, of the Option or of any of
Participant's rights under this Agreement. The reasonable interpretation and
construction by the Committee of the Plan, this Agreement and the Option, and
such rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan, shall be final and binding upon the Participant.
10. Stockholder Rights. Until the Option shall have been duly exercised to
purchase such Option Shares and such shares have been officially recorded as
issued on the Company's official stockholder records, no person or entity shall
be entitled to vote, receive distributions or dividends or be deemed for any
purpose the holder of any Option Shares, and adjustments for dividends or
otherwise shall be made only if the record date therefor is subsequent to the
date such shares are recorded and after the date of exercise and without
duplication of any adjustment.
11. Employment Rights. No provision of this Agreement or of the Option granted
hereunder shall give the Participant any right to continue in the employ of the
Company or any of its Affiliates, create any inference as to the length of
employment of the Participant, affect the right of the Company or its Affiliates
to Terminate the Employment of the Participant, with or without cause, or give
the Participant any right to participate in any employee welfare or benefit plan
or other program (other than the Plan) of the Company or any of its Affiliates.
12. Disclosure Rights. The Company shall have no duty or obligation to
affirmatively disclose to the Participant or a Representative, and the
Participant or Representative shall have no right to be advised of, any material
information regarding the Company or an Affiliate at any time prior to, upon or
in connection with the exercise of an Option.
13. Changes in Company's Capital Structure. The existence of the Option shall
not affect in any way the right or authority of the Company or its stockholders
to make or authorize any or
-4-
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
14. Investment Representation and Agreement. If, in the opinion of counsel for
the Company, a particular representation is required under the Securities Act of
1933 or any other applicable federal or state law, or any regulation or rule of
any governmental agency, the Company may require such representations as the
Company reasonably may determine to be necessary.
15. Governing Law. This Agreement and the Option granted hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Illinois (other than its laws respecting choice of law).
16. Entire Agreement. This Agreement, together with the Plan, constitute the
entire obligation of the parties hereto with respect to the subject matter
hereof and shall supersede any prior expressions of intent or understanding with
respect to this transaction.
17. Amendment. Any amendment to this Agreement shall be in writing and signed
by the Company and the Participant.
18. Waiver; Cumulative Rights. The failure or delay of either party to require
performance by the other party of any provision hereof shall not affect its
right to require performance of such provision unless and until such performance
has been waived in writing. Each and every right hereunder is cumulative and may
be exercised in part or in whole from time to time.
19. Counterparts. This Agreement may be signed in two counterparts, each of
which shall be an original, but both of which shall constitute but one and the
same instrument.
20. Notices. Any notice which either party hereto may be required or permitted
to give the other shall be in writing and may be delivered personally or by
mail, postage prepaid, addressed to the Secretary of the Company, at its then
corporate headquarters, and to the Participant at his address as shown on the
Company's records, or to such other address as the Participant, by notice to the
Company, may designate in writing from time to time.
21. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
22. Severability. If any provision of this Agreement shall for any reason by
held to be invalid or unenforceable, such invalidity or unenforceability shall
not effect any other provision hereof, and this Agreement shall be construed as
if such invalid or unenforceable provision were omitted.
-5-
23. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
on the Participant or a Representative, and all rights granted to the Company
hereunder, shall be binding upon the Participant's or the Representative's
heirs, legal representatives and successors.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by an officer thereunto duly authorized, and the Participant has
hereunto set his hand, all as of the day and year first above written.
CAREER EDUCATION CORPORATION
By: ________________________________________
_____________________________________________
Title
PARTICIPANT:
_____________________________________________
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