EXHIBIT 10.10
AMENDED AND RESTATED OPTION AGREEMENT
THIS AMENDED AND RESTATED OPTION AGREEMENT (this "AGREEMENT"), dated
as of July 31, 1995, is between Career Education Corporation, a Delaware
corporation ("CEC"), and Xxxxxx X. Xxxxxxx ("XXXXXXX").
RECITALS
X. Xxxxxxx and CEC are parties to that certain Xxxxxxx Option
Agreement, dated as of January 31, 1994 (the "ORIGINAL AGREEMENT") pursuant to
which Xxxxxxx was granted options to purchase certain shares of CEC's common
stock, $.01 par value based upon the returns achieved by Xxxxxx Equity Capital
Corporation ("HECC"), on its behalf and as successor to Xxxxxx Financial, Inc.
X. Xxxxxxx and CEC have decided to amend and restate certain
provisions relating to the Agreement as set forth below.
AGREEMENTS
In consideration of the recitals and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 In addition to the terms defined elsewhere in this Agreement, as
used in this Agreement:
(a) "Adjusted Shares" means the number of shares of CEC Common
(assuming full exercise of all Option Shares) at the time of the
exercise of the Option, exclusive of (i) any shares of CEC Common
issued or issuable pursuant to the Supplemental Option or the Xxxxxx
Option; (ii) any shares of CEC Common issued to the management of CEC
pursuant to any stock option plans duly adopted by the Board of
Directors from time to time; and (iii) any shares of CEC Common sold
at a price equal to the market value of such shares (as reasonably
determined by the Board of Directors of CEC) to any Person who is not
affiliated with any of the Existing Stockholders. For purposes hereof,
if CEC issues any Option Securities or CEC Common in connection with
the issuance of any shares of preferred
stock of CEC (or any other capital stock with a preference as to
dividends or liquidation), such Option Securities and any CEC Common
issuable upon the exercise, exchange or conversion thereof shall be
deemed to have been issued at market value (regardless of the stated
exercise, exchange or purchase price of such CEC Common) if the Board
of Directors reasonably determines that the total price paid for all
such equity securities (including the Option Securities, preferred
stock and CEC Common) equals the market value of the portion of total
capitalization represented by all such equity securities. It is hereby
acknowledged that all CEC Common issuable in connection with the
Warrant (along with any Penalty Warrants issued from time to time)
issued to Electra Investment Trust PLC and Electra Associates, Inc.
(collectively, "ELECTRA") or their respective successors or assigns
pursuant to the Securities Purchase Agreement of even date herewith
among CEC and Electra constitute shares of CEC Common issued at market
value for purposes of this Agreement.
(b) "Cash Equivalent" means (a) marketable direct obligations
issued or unconditionally guarantied by the United States Government
or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within ninety (90)
days from the date of acquisition thereof; (b) commercial paper
maturing no more than ninety (90) days from the date issued and, at
the time of acquisition, having a rating of at least A-1 from Standard
& Poor's Corporation or at least P-1 from Xxxxx'x Investors Service,
Inc.; and (c) certificates of deposit or bankers' acceptances maturing
within ninety (90) days from the date of issuance thereof issued by,
or overnight reverse repurchase agreements from, any commercial bank
organized under the laws of the United States or any state thereof or
the District of Columbia having combined capital and surplus of not
less than $500,000,000 and not subject to setoff rights in favor of
such bank.
(c) "Cause" has the meaning set forth in the Xxxxxxx Option
Agreement.
(d) "CEC Common" means the common stock of CEC, $.01 par value,
regardless of class, and any securities (including, without
limitation, options and warrants) which are exercisable or
exchangeable for or convertible into CEC Common (an "OPTION
SECURITY"); provided, that for purposes of calculating the Option
Amount hereunder, the CEC Common issuable upon exercise, exchange or
conversion of any Option Security
shall, upon its issuance, be deemed to have been sold to the holder of
the Option Security as of the date of the issuance of the Option
Security for an amount equal to the exercise, exchange or conversion
price provided in such Option Security plus the consideration received
by CEC upon the issuance of the Option Security (as reasonably
determined by the Board of Directors of CEC in connection with the
issuance of such Option Securities).
(e) "Commission" means the Securities and Exchange Commission.
(f) "Dilution Factor" means a fraction, the numerator of which
is the number of shares of CEC Common outstanding at the time of such
determination plus the then exercisable portion of the Option Amount
----
pursuant to the Option and the Xxxxxx Option, and the denominator of
which is the number of shares of CEC Common outstanding at the time of
such determination.
(g) "Xxxxxxx Consulting Agreement" means the Consulting and Non-
Competition Agreement, dated as of January 31, 1994, between Xxxxxxx
and CEC, as amended as of July 31, 1994.
(h) "Earn-Up Target" means, at the time of determination, an
amount of cash or cash equivalents that HECC and its affiliates would
have to receive in connection with the sale, transfer, redemption,
repayment, or other disposition of all or part of the Xxxxxx
Investment (net of related transaction expenses including fees and
expenses of counsel) or any cash dividend or interest declared and
paid thereon in order for HECC and their respective affiliates
(including, without limitation, all consulting, non-competition,
advisory or similar fees received by HECC and its affiliates) to (i)
earn, in the aggregate with respect to the Xxxxxx Investment, an IRR
of at least the amount specified with respect to such Earn-Up Target
and (ii) receive aggregate cash or cash equivalent consideration of at
least twice the total amount of Xxxxxx Investment. All Earn-Up Targets
shall be calculated on a pro forma basis assuming that all shares of
CEC Common subject to the Supplemental Option and all shares of CEC
Common subject to the Option and the Xxxxxx Option that would become
exercisable upon achievement of such Earn-Up Target have been
exercised and such shares were issued and outstanding prior to the
transaction or payment with respect to which achievement of the Earn-Up
Target is being calculated. The Earn-Up Targets shall be based on the
achievement
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of the IRR identified below:
Earn-Up Target IRR
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Initial Earn-Up Target 25%
Second Earn-Up Target 30%
Third Earn-Up Target 35%
Fourth Earn-Up Target 40%
Final Earn-Up Target 45%
(i) "EXERCISE PERCENTAGE" means the percentage of the Option
Amount with respect to which the Option is exercisable based upon the
achievement of the Earn-Up Targets as determined in accordance with
the following:
Earn-Up Target Percentage
of Option Amount
then Exercisable
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Initial Earn-Up Target 44.4%
Second Earn-Up Target 55.5%
Third Earn-Up Target 66.7%
Fourth Earn-Up Target 83.3%
Final Earn-Up Target 100%
(j) "Exercise Price" means $.10 per share (adjusted
proportionately in the event the CEC Common is combined into a lesser
number or divided into a greater number but in no event less than the
par value of such CEC Common).
(k) "Existing Stockholders" means Xxxxxx, Xxxxxxx and HECC and
each of their respective successors and permitted assigns.
(l) "Xxxxxx Investment" means any and all equity and debt
investments in CEC or its subsidiaries made by HECC or any of its
affiliates on or prior the exercise of an Option.
(m) "IRR" means the annual rate of interest that causes (i) the
net present value as of January 31, 1994 of all cash or cash
equivalent payments received by HECC and its affiliates on or prior to
the date of any calculation hereof with respect to the Xxxxxx
Investment (whether such payments are received from CEC or any third
party, and whether such payments are received as principal, interest,
dividends, sale proceeds, upon redemption of any portion of the Xxxxxx
Investment, upon liquidation of CEC or otherwise including, without
limitation, all consulting, non-competition, advisory or similar fees
received by HECC and its affiliates), to equal (ii) the sum of (A)
$3,000,000 plus (B) the net present value (calculated
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using an interest rate equal to the IRR) as of January 31, 1994 of
each additional cash payment made, directly or indirectly, subsequent
to January 31, 1994 by HECC or its affiliates to CEC or to others to
acquire additional debt or equity securities of CEC as part of the
Xxxxxx Investment. The IRR shall be calculated on a pre-tax basis.
(n) "Xxxxxx Option" means the option granted to Xxxxxx pursuant
to the Amended and Restated Option Agreement, of even date herewith,
between CEC and Xxxxxx.
(o) "Non-Earn-Up Sale" means the consummation of the sale,
transfer or other disposition by HECC and its affiliates of all or the
last portion of the Xxxxxx Investment in one or more arm's-length
transactions to independent third parties resulting in the receipt by
HECC and its affiliates of cash in an amount which when aggregated
with all prior cash dispositions by HECC or its affiliates of the
Xxxxxx Investment, all cash dividends and interest declared and paid
in respect thereof and all consulting, non-competition, advisory or
similar fees received by HECC and its affiliates is less than the
Initial Earn-Up Target.
(p) "Option" has the meaning set forth in Section 2.1 hereof.
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(q) "Option Amount" means the number of shares of CEC Common
equal to 4.5% of the Adjusted Shares as reduced by the number of
shares of CEC Common previously issued pursuant to the Option.
(r) "Option Termination Date" means the earliest of (i) January
31, 2004, (ii) the date of the closing of a Non-Earn-Up Sale, (iii) a
termination of Xxxxxxx'x engagement as a consultant with CEC for
Cause, (iv) the date of any material violation by Xxxxxxx of any
provision of Section 5 of the Xxxxxxx Consulting Agreement following
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the termination of his employment with CEC and (v) twenty-four (24)
months after the date Xxxxxxx and his Permitted Transferees cease to
be stock holders of CEC.
(s) "Permitted Transferee" has the meaning set forth in Section 2.6
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of the Stockholders' Agreement.
(t) "Person" means a natural person, a partnership, a
corporation, an association, a joint stock company, a trust, an
estate, a joint venture, an unincorporated organization or other
entity or a
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governmental entity or any department, agency or political subdivision
thereof.
(u) "Securities Act" means the Securities Act of 1933, as
amended.
(v) "Supplemental Option" means the option granted to Xxxxxx
pursuant to the Supplemental Option Agreement of even date herewith
between CEC and Xxxxxx.
(w) "Vested Percentage" means the percentage identified below as
determined by the number of years from January 31, 1994 Xxxxxxx is a
director of CEC or is engaged as a consultant of CEC (pursuant to the
Xxxxxxx Consulting Agreement or otherwise), plus any additional period
during which Xxxxxxx continues to receive his Consultant Fee pursuant
to Section 5.1 of the Xxxxxxx Consulting Agreement, as determined
below:
Years of Employment Vested Percentage
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After January 31, 1995 25%
After January 31, 1996 50%
After January 31, 1997 75%
After January 31, 1998 100%
Notwithstanding the foregoing, if Xxxxxxx ceases to be a director of
or a consultant to CEC as the direct result of (i) the consummation of
a transaction described in Section 2.4(c) of the Stockholders'
--------------
Agreement prior to the fourth anniversary hereof or (ii) any person
other than Xxxxxxx, Xxxxxx or Xxxxxx acquiring a majority of the CEC
Common and exercising the power to elect a majority of CEC's Board of
Directors, the Vested Percentage shall be 100%.
ARTICLE II
THE OPTION PROVISIONS
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2.1 Grant of the Option. Subject to the terms and conditions set
-------------------
forth herein, CEC hereby grants to Xxxxxxx an option (the "OPTION") to purchase
CEC Common from CEC at a price, per share, equal to the Exercise Price. The
Option shall be exercisable with respect to the Option Amount applicable to the
achievement of the corresponding Earn-Up Target.
2.2 Procedures for Exercise. Subject to the Option becoming
-----------------------
exercisable pursuant to Section 2.3 of this Agreement, Xxxxxxx or a Permitted
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Transferee may exercise the Exercise Percentage of the Option Amount (in whole
or in part) at any time thereafter and prior to the Option Termination Date by
delivering
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written notice to CEC setting forth the portion of the Option (not to exceed the
Exercise Percentage of the Option Amount) to be exercised, together with cash
(or a bank check payable to the order of CEC or its designee) in an amount equal
to the aggregate Exercise Price for the shares of CEC Common with respect to
which Xxxxxxx or a Permitted Transferee is exercising such Option. The shares
subject to the Option shall be shares of such class or classes of the CEC Common
as CEC shall determine. As promptly as practicable after receiving such written
notice and payment, CEC shall deliver to Xxxxxxx or a Permitted Transferee, as
the case may be, certificates for the shares of CEC Common with respect to which
Xxxxxxx or a Permitted Transferee has exercised the Option. For all purposes,
Xxxxxxx or a Permitted Transferee, as the case may be, will be deemed to have
exercised the Option and to have purchased and become the holder of the
applicable CEC Common as of the date CEC receives written notice and payment
from Xxxxxxx or a Permitted Transferee, as the case may be, as provided in this
Section 2.2.
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2.3 Conditions to Exercise of the Options. The Option shall only
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become exercisable as follows:
(a) The Option will become exercisable with respect to the
Exercise Percentage of the Option Amount on or after the first date on
which HECC and/or its affiliates receive an amount of cash or cash
equivalents necessary to achieve the Earn-Up Target applicable to such
Exercise Percentage.
(b) At the time of the exercise of the Option, Xxxxxxx shall be
entitled to exercise the Option with respect to a number of shares of
CEC Common equal to the Exercise Percentage of the Option Amount
applicable to the achievement of such Earn-Up Target, less the number
----
of shares of CEC Common previously purchased pursuant to the Option.
(c) If at the time of the exercise of the Option, Xxxxxxx is not
a director of CEC or engaged as a consultant by CEC, Xxxxxxx shall
only be entitled to exercise the Option with respect to the Vested
Percentage of the Exercise Percentage of the CEC Common, determined as
of the date Xxxxxxx ceased to be so engaged, otherwise subject to the
Option in accordance herewith.
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2.4 Payments in Lieu of Exercise of Option. If at the time the
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Option or any portion thereof is exercised neither Xxxxxxx nor his Permitted
Transferees are stockholders of CEC, CEC shall have the right, but not the
obligation, to pay Xxxxxxx or his Permitted Transferees the cash or cash
equivalent consideration attributable to the CEC Common that Xxxxxxx would have
otherwise been entitled to purchase pursuant to Section 2.3 above. To the
-----------
extent that Xxxxxxx or his Permitted Transferees are to receive cash or cash
equivalent consideration pursuant to this Section 2.4 in lieu of the issuance of
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shares of CEC Common, CEC shall transfer to Xxxxxxx an aggregate amount of cash
or cash equivalent consideration equal to the value of the CEC Common that
Xxxxxxx would have been entitled to purchase pursuant to such exercised Options.
The per share value of the CEC Common referred to in the preceding sentence
shall be equal (a) to (i) the sum of the cash or cash equivalent consideration
received by HECC and its affiliates in any transaction or redemption resulting
in the achievement of an Earn-Up Target attributable to the CEC Common sold by
such parties, divided by (ii) the aggregate number of shares of CEC Common to be
sold by such parties or redeemed by CEC in such transaction multiplied by the
Dilution Factor; or (b) if no shares of CEC Common were sold or redeemed in
connection with the achievement of such Earn-Up Target, the Fair Market Value of
such shares, as determined in accordance with the Stockholders' Agreement.
2.5 Notice of Internal Rate of Return. After each shall, transfer,
---------------------------------
redemption or other disposition of any portion of the Xxxxxx Investment, the
receipt of any cash dividend or interest thereon or the payment of any
consulting, non-competition, advisory or similar fees received by HECC and its
affiliates, the Compensation Committee of the Board of Directors of CEC (with
the assistance of HECC) will, if requested by Xxxxxxx in writing, deliver within
seven (7) days of Xxxxxxx'x request written notice to Xxxxxxx of the IRR after
giving effect to such transaction in order to determine whether an Earn-Up
Target has been met. If one or more Earn-Up Targets have been achieved, such
notice shall also contain a calculation of the Exercise Percentage of the Option
Amount and the number of shares of CEC Common which Xxxxxxx is then entitled to
purchase upon exercise of the Option.
2.6 Termination of the Options. Notwithstanding anything else to
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the contrary in this Agreement, the Options will expire and terminate
immediately upon the Option Termination Date and thereafter will be void and of
no force and effect.
2.7 Non-Transferable. Xxxxxxx or any Permitted Transferee will not
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transfer, sell, convey, exchange or otherwise dispose of (herein referred to as
"DISPOSITION" or "TO DISPOSE OF") the Options and the rights and privileges of
Xxxxxxx or such Permitted Transferee under this Agreement, except (i) in the
event
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of Xxxxxxx'x death or incompetency, to a Permitted Transferee who consents in
writing to be bound by the terms of this Agreement to the same extent as Xxxxxxx
or (ii) by exercise pursuant to the terms of this Agreement.
2.8 No Rights as a Stockholder. The Options do not confer upon
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Xxxxxxx or a Permitted Transferee any right to vote or consent or to receive
notice as a stockholder of CEC that do not otherwise exist in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise of the Options as hereinbefore provided.
ARTICLE III
MISCELLANEOUS
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3.1 Notices. All notices, demands or other communications to be
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given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier service
(charges prepaid), sent by facsimile or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Company and to Xxxxxxx at
the addresses indicated below:
If to CEC:
Career Education Corporation
0000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With copies to:
Xxxxxx Equity Capital Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Xxxxxx International Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
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and
Goldberg, Kohn, Bell, Black,
Xxxxxxxxxx & Moritz, Ltd.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Xxxxxxx:
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
With copies to:
Xxxxx, Xxxxx & Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
3.2 Entire Agreement. Except as otherwise expressly set forth
----------------
herein, this Agreement and the other agreements executed in connection here
embody the complete agreement and understanding among the parties and supersede
and preempt any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way, including, without limitation, the Original Agreement.
3.3 Successors and Assigns. All covenants and agreements contained
----------------------
in this Agreement by or on behalf of either party hereto shall bind and inure to
the benefit of the other party hereto and their heirs, legal representatives,
successors and assigns whether so expressed or not.
3.4 Governing Law. This Agreement shall be construed and enforced
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in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by the laws
of the State of Illinois without giving effect to the provisions thereof
regarding conflict of laws.
3.5 Consent to Jurisdiction and Service of Process.
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EACH PARTY HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY
AGREES THAT SUBJECT TO CEC'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS SHALL BE LITIGATED
IN SUCH COURTS. EACH PARTY HERETO ACCEPTS FOR ITSELF AND HIMSELF, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. XXXXXXX
DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND SUCH OTHER PERSONS AS MAY
HEREINAFTER BE SELECTED BY CEC WHO IRREVOCABLY AGREE IN WRITING TO SO SERVE AS
AGENT TO RECEIVE ON SUCH PARTY'S BEHALF SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH
PARTY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH
PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO EACH PARTY AS PROVIDED
HEREIN, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO
MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT
APPOINTED BY A PARTY REFUSES TO ACCEPT SERVICE, SUCH PARTY HEREBY AGREES THAT
SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF CEC TO BRING PROCEEDINGS AGAINST XXXXXXX IN ANY OTHER COURT
HAVING JURISDICTION OVER XXXXXXX.
3.6 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS
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RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED. EACH PARTY HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE OTHER PARTY. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS OR HIS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY.
IN THE EVENT OF LITIGATION,
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THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
3.7 Descriptive Headings; Interpretation. The descriptive
------------------------------------
headings of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
3.8 Counterparts. This Agreement may be executed simultaneously in
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two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
3.9 Amendments and Waivers. No modification, amendment or waiver of
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any provisions of this Agreement shall be effective unless approved in writing
by each of the parties hereto. The failure of any party at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and will not affect the right of such party to enforce each
and every provision hereof in accordance with its terms.
3.10 Severability. Whenever possible, each provision of this
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Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
3.11 Xxxxxxx'x Investment Representations. Xxxxxxx hereby
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represents on the date hereof, and any person that acquires all or any portion
of the Options in accordance with the provisions of this Agreement represents
with respect to such person as of the date of such acquisition, that such person
is acquiring the Options for such person's own account with the present
intention of holding the Options and any shares of common stock of CEC acquired
pursuant to the Options for purposes of investment, and that such person has no
intention of selling either the Options or any shares of common stock of CEC
acquired pursuant to the Options in a public distribution in violation of the
federal securities laws or any applicable state securities laws. Xxxxxxx hereby
represents on the date hereof, and any person that acquires all or any portion
of the Options in accordance with the provisions of this Agreement represents
with respect to such person as of the date of exercise, that such person (a) has
such knowledge and experience in financial and business matters that such person
is capable of evaluating the merits and risks of such person's investment in the
Options and any shares of common stock of CEC acquired
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pursuant to the Options; (b) is able to bear the complete loss of his investment
in the Options and any shares of common stock of CEC acquired pursuant to the
Options; (c) has had the opportunity to ask questions of, and receive answers
from, CEC concerning the terms and conditions of the Options and the common
stock of CEC and to obtain additional information about CEC; (d) is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
by the Commission under the Securities Act; and (e) understands that no
assurances can be given that CEC's business plan, as currently proposed or
subsequently modified, will be effectuated and that none of HECC, HFI or their
respective affiliates has any commitment or obligation to provide additional
equity or debt financing, or other financial accommodations, to CEC or its
subsidiaries to effectuate such business plan or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CAREER EDUCATION CORPORATION
By /s/ Xxxx X. Xxxxxx
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Its President
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XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
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AMENDMENT TO
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AMENDED AND RESTATED OPTION AGREEMENT
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THIS AMENDMENT (the "Amendment"), dated as of October 20, 1997, is made by
and between Career Education Corporation, a Delaware corporation ("CEC"), and
Xxxxxx X. Xxxxxxx ("Xxxxxxx") and amends that certain Amended and Restated
Option Agreement (the "Option Agreement") dated as of July 31, 1995, between CEC
and Xxxxxxx.
WHEREAS, pursuant to the Option Agreement, CEC granted Xxxxxxx an option
(the "Option") to purchase a number of shares of CEC common stock equal to 4.5%
of the CEC common stock, $.01 par value, at the time of the exercise of the
Option (assuming full exercise of all outstanding warrants, options and
convertible securities), adjusted as set forth in the Option Agreement; and
WHEREAS, CEC is pursuing an initial public offering of its common stock
pursuant to a Registration Statement on Form S-1, Registration No. 333-37601
(the "Offering"), and in contemplation of the Offering, Xxxxxxx and CEC have
agreed to amend certain terms and conditions of the Option Agreement.
NOW, THEREFORE, pursuant to Section 3.9 of the Option Agreement, CEC and
Xxxxxxx agree as follows:
1. Paragraph (r) of Section 1.1 of the Option Agreement is hereby amended
by adding the following sentence at the end of such Paragraph:
Notwithstanding the foregoing, after the closing (the "IPO Closing") of the
initial public offering by CEC of the CEC Common (the "Offering"), "Option
Termination Date" shall mean January 31, 2004.
2. Section 2.1 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:
Notwithstanding the foregoing, at any time after the IPO Closing, the
Option shall be exercisable with respect to 5117.3 shares of CEC Common,
subject to adjustment from time to time as provided in this Article II.
3. Section 2.3 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:
Notwithstanding the foregoing, the Option will become exercisable in full
(fully vested) upon the IPO Closing, and at the time of any exercise of the
Option, Xxxxxxx shall be entitled to exercise the Option with respect to a
number of shares of CEC Common equal to 5,117.3 (subject to adjustment as
provided in this Article II) less the number of shares previously purchased
pursuant to the
Option, whether or not Xxxxxxx is serving as a director of CEC at such
exercise time.
4. Section 2.4 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:
Notwithstanding the foregoing, at any time after the IPO Closing, the per
share value of CEC Common referred to in this Section 2.4 shall be equal to
the closing (last sale) price per share of CEC Common, as reported on the
Nasdaq National Market (or, if other than the Nasdaq National Market, the
principal market or exchange on which CEC Common is then traded) for the
most recent day on which CEC Common is traded prior to the date on which
CEC receives written notice of, and payment for, exercise of the Option
pursuant to Section 2.2 of this Agreement.
5. The Option Agreement is hereby amended by adding the following Section
2.9:
2.9 Subdivision or Combination of CEC Common. If CEC at any time
(whether prior to or after the IPO Closing) subdivides (by any stock split,
stock dividend, recapitalization or otherwise), the outstanding shares of
CEC Common into a greater number of shares, the number of shares of CEC
Common obtainable upon exercise of the Option will be proportionately
increased. If CEC at any time (whether prior to or after the IPO Closing)
combines (by combination, reverse stock split or otherwise) the outstanding
shares of CEC Common into a smaller number of shares, the number of shares
of CEC Common obtainable upon exercise of the Option will be
proportionately decreased.
6. The Option Agreement is hereby amended by adding the following Section
2.10:
2.10 Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of CEC's assets to another person
or entity, or other transaction which is effected in such a way that
holders of CEC Common are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for CEC Common is referred to herein as "Organic Change." Prior
to the consummation of any Organic Change, CEC will make appropriate
provision (in form and substance reasonably satisfactory to Xxxxxxx) to
insure that Xxxxxxx will thereafter, upon the basis and the terms and in
the manner provided in this Agreement, have the right to acquire and
receive in lieu of or addition to (as the case may be) the shares of CEC
Common immediately theretofore acquirable and receivable upon the exercise
of the Option, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for the number of shares of CEC
Common immediately theretofore acquirable and receivable upon the exercise
of the Option Agreement
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had such Organic Change not taken place. CEC will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof,
the successor entity (if other than CEC) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument
(in form and substance reasonably satisfactory to Xxxxxxx) the obligation
to deliver to Xxxxxxx such shares of stock, securities or assets as, in
accordance with the foregoing provisions, Xxxxxxx may be entitled to
acquire.
7. Section 3.1 of the Option Agreement is hereby amended to read in its
entirety as follows:
Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be
in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier
service (charges prepaid), sent by facsimile or mailed to the recipient by
certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to CEC and to
Xxxxxxx at the addresses indicated below:
If to CEC:
Career Education Corporation
0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With copies to:
Xxxxxx Equity Capital Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Xxxxxx International Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
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Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and
Goldberg, Kohn, Bell, Black, Xxxxxxxxxx & Moritz, Ltd.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Xxxxxxx:
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
With copies to:
Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
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IN WITNESS WHEREOF, CEC and Xxxxxxx have executed this Amendment as of
October 20, 1997.
CAREER EDUCATION CORPORATION
By: /s/ W. A. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
------------------------- -------------------------
Name: Xxxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
-------------------------
Title: Sr. VP & CFO
-------------------------
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