EXHIBIT 10.1
STOCK OPTION AGREEMENT
Childtime Learning Centers, Inc. (the "Corporation"), hereby grants you an
option (the "Option") to purchase 150,000 shares of the Common Stock of the
Corporation (collectively, the "Shares"), upon the terms and conditions
contained in this Agreement. The Option is being granted as an inducement
essential to your entering into an employment arrangement with the Corporation
and is effective as of August 15, 2002, the date of grant (the "Effective
Date").
1. The Option is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
2. The Option may not be transferred by you other than by will or by the
laws of descent and distribution and, during your lifetime, the Option
is exercisable only by you.
3. Subject to the other terms contained in this Agreement, you may
exercise the Option in accordance with the following schedule:
a. Prior to the first anniversary date of the Effective Date, you may
not purchase any of the Shares.
b. Beginning on the first anniversary date of the Effective Date, you
may purchase 30,000 Shares at an option exercise price equal to
$3.50 per share.
c. On each subsequent anniversary date of the Effective Date through
August 15, 2007 (the fifth anniversary date), you may purchase an
additional 30,000 Shares at an option exercise price equal to
$3.50 per share.
4. Subject to earlier termination of the Option pursuant to this
Agreement, the Option will expire (to the extent not previously
exercised) on the seventh anniversary of the Effective Date.
5. If your employment with the Corporation terminates for any reason, you
will have three months following such termination to exercise the
Option with respect to those Shares which have become fully vested at
the time of your termination; provided that the Compensation Committee
of the Corporation's Board of Directors (the "Compensation Committee")
may, in its sole discretion, extend such post-termination exercise
period. In no event, however, will any post-termination exercise period
extend beyond the seventh anniversary of the Effective Date.
6. Notwithstanding the foregoing, if your employment with the Corporation
is terminated within six months after the occurrence of a "Change in
Control" (as defined below), (a) the Option will become immediately
exercisable with respect to all of the Shares and
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(b) the exercise period for the Option will be extended for six months
from the date of termination of your employment, but in no event beyond
the seventh anniversary of the Effective Date.
For purposes of this Paragraph 6, a "Change in Control" of the
Corporation will occur on the date that (i) any "person" (as that term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934), other than Childcare Associates or KD Partners II and their
affiliates (collectively, "KD Partners") and/or Xxxxxxxx Partners and
its affiliates (collectively, "Xxxxxxxx Partners"), (A) acquires
beneficial ownership, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the
Company's then outstanding securities and (B) exercises that voting
power to replace 50% or more of the directors who were serving on the
Board of Directors of the Company prior to such acquisition or (ii) any
person other than KD Partners and/or Xxxxxxxx Partners acquires all or
substantially all of the assets of the Company (whether by purchase,
merger or consolidation).
7. The Option will be exercised by giving a written notice to the
Treasurer of the Corporation. Such notice will specify the number of
Shares to be purchased and will be accompanied by payment in full (by
the means specified in Paragraph 8 below) of the aggregate option
exercise price for the number of Shares purchased and, if applicable,
by an appropriate representation as to your investment purpose and an
acknowledgment that the Shares to be issued upon exercise of the Option
have not been registered under the Securities Act of 1933. Such
exercise will be effective only upon actual receipt of such written
notice, and no rights or privileges of a shareholder of the Corporation
in respect of any of the Shares issuable upon exercise of any part of
the Option will inure to you or any other person who is entitled to
exercise the Option unless and until certificates representing such
Shares have been issued.
8. The aggregate option exercise price for the number of Shares to be
purchased will be payable in cash or, in the sole discretion of and
subject to such conditions as may be established by the Compensation
Committee, (a) by the Corporation retaining from the Shares to be
delivered upon exercise of the Option that number of Shares having a
fair market value on the date of exercise equal to the aggregate option
exercise price of the number of Shares with respect to which you have
exercised the Option, or (b) in such other manner as the Compensation
Committee determines is appropriate, in its sole discretion. Fair
market value of a Share will be determined by the Compensation
Committee and may be determined by taking the mean between the highest
and lowest quoted selling prices of the Corporation's Common Stock on
any exchange or other market on which the shares of Common Stock of the
Corporation will be traded on such date, or if there are no sales on
such date, on the next following day on which there are sales.
9. The number of Shares subject to the Option and the option exercise
price will be subject to such adjustment as the Compensation Committee,
in its sole discretion, deems
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appropriate to reflect such events as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of or by
the Corporation; provided, however, that no fractional shares will be
issued pursuant to exercise of the Option, and any fractional shares
resulting from such adjustments will be eliminated from the Option.
10. Nothing contained in this Agreement, nor any action taken by the
Compensation Committee in connection with this Agreement, will confer
upon you any right with respect to continuation of your employment by
the Corporation or any subsidiary of the Corporation, nor interfere in
any way with the right of the Corporation or any subsidiary to
terminate your employment at any time.
11. If, upon or as a result of your exercise of the Option, there is
payable by the Corporation any amount for income tax withholding, you
will pay such amount to the Corporation to reimburse it for such income
tax withholding. The Compensation Committee may, in its sole
discretion, permit you to satisfy any such withholding obligation, in
whole or in part, by allowing you to elect either (a) to have the
amount of Common Stock deliverable by the Corporation upon exercise of
the Option appropriately reduced, or (b) to tender Common Stock back to
the Corporation subsequent to your exercise of the Option, subject to
such rules and regulations as the Compensation Committee, in its sole
discretion, may adopt. The Compensation Committee may make such other
arrangements with respect to income tax withholding as it, in its sole
discretion, determines to be appropriate.
Very truly yours,
Childtime Learning Centers, Inc.
a Michigan corporation
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Its: Chairman of the Board
The above is agreed to and accepted:
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Dated as of August 15, 2002
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