EXHIBIT 10.8
CAPELLA EDUCATION COMPANY
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into as
of, _______________ by and between Capella Education Company, a Minnesota
corporation (the "Company") and ________________________, an individual resident
of the State of _________________ ("Employee").
WHEREAS, the Company has adopted the Learning Ventures
International, Inc. 1993 Stock Option Plan (the "Plan") which permits issuance
of stock options for the purchase of shares of common stock of the Company, and
the Company has taken all necessary actions to grant the Option (as defined in
Section 1 below), pursuant and subject to the terms of the Plan.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Employee hereby agree
as follows:
1. Grant of Option. The Company hereby grants to Employee the right and
option (the "Option) to purchase all or any part of an aggregate of ____________
(______) shares of the Company's common stock at the option price of
________________ Dollars and ______ Cents ($_________) per share on the terms
and conditions set forth in this Agreement and in the Plan. The Company intends
that the Option shall be an Incentive Stock Option governed by the provisions of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The
terms of the Plan and the Option shall be interpreted and administered so as to
satisfy the requirements of the Code. A copy of the Plan will be furnished upon
request of Employee.
2. Vesting of Option Rights. The Option shall not be exercisable the
first time by Employee except in accordance with subsection 422(d) of the Code.
Except as provided in the preceding sentence and except as otherwise provided in
Sections 3 and 4 of this Agreement, the Option may be exercised by Employee in
accordance with the following schedule:
On or after Shares with respect to
the following date which Option becomes exercisable
------------------ --------------------------------
__/__/01 ___________________
__/__/02 ___________________
__/__/03 ___________________
__/__/04 ___________________
Provided, however, that (i) if, prior to __________________________,
Employee dies or becomes "disabled" (as defined below), then the foregoing
vesting schedule shall not apply, and this Option shall be exercisable
with respect to all ________________ shares (except as otherwise provided
in clause (ii) immediately following), and (ii) if
Employee's employment terminates prior to ___________________, for any
reason other than death or disability, then this Option shall be
exercisable only with respect to those shares which Employee has earned
the right to purchase, in accordance with the foregoing vesting schedule,
as of the date on which Employee's employment terminates.
In all cases, the Option shall terminate at the close of business
on, _______________________, or such shorter period as is prescribed herein.
Employee shall not have any of the rights of a shareholder with respect to the
shares subject to the Option until such shares shall be issued to Employee upon
the proper exercise of the Option.
For purposes of this Agreement, Employee shall be considered
"disabled" if Employee shall fail or be unable to render and perform the
services required of Employee for a continuous period of 90 successive days, or
for shorter periods aggregating 120 days or more during any 180 consecutive day
period, by reason of physical or mental incapacity or disability stemming from
any cause.
For purposes of this Agreement, the term "Cause" shall be limited to
the following grounds for termination:
(a) Employee's failure or refusal substantially to perform
Employee's duties to the full extent of Employee's abilities for reasons
other than death or disability;
(b) Conviction of a felony crime, or commission of any act, the
conviction for which would be a felony conviction;
(c) Theft or misappropriation of the Company's property;
(d) Knowingly making a material false written statement to the
Company's Board of Directors or an officer of the Company regarding the
affairs of the Company; and
(e) Termination upon the discontinuance of the Company's business.
For purposes of this Agreement, "Good Reason" shall be defined as
the demotion or reduction of the job responsibilities of Employee or the
reassignment, without Employee's consent, of Employee's place of work to a
location more than 50 miles from the Employee's place of work immediately prior
to the Change in Control.
For purposes of this Agreement, a "Change in Control" of the Company
shall be deemed to occur if any of the following occur:
(a) Definition.
(1) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) acquires or becomes a "beneficial owner" (as defined
in Rule 13d-3 or any successor rule under the Exchange Act), directly or
indirectly, of
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securities of the Company representing the following: (i) 40% or more of
the combined voting power of the Company's then outstanding securities
entitled to vote generally in the election of directors ("Voting
Securities") at any time prior to the Company selling any of its shares in
a public offering pursuant to a registration statement filed under the
Securities Act of 1933, as amended (the "Securities Act"), or (ii) 35% or
more of the combined voting power of the Company's then outstanding Voting
Securities at any time after the Company sells any of its shares in a
public offering pursuant to a registration statement filed under the
Securities Act. Provided, however, that the following shall not constitute
a Change in Control pursuant to this paragraph (a)(1):
(A) any acquisition or beneficial ownership by the Company or a
subsidiary;
(B) any acquisition or beneficial ownership by any employee benefit plan
(or related trust) sponsored or maintained by the Company or one or
more of its subsidiaries;
(C) any acquisition or beneficial ownership by any corporation with
respect to which, immediately following such acquisition, more than
60% of both the combined voting power of the Company's then
outstanding Voting Securities and the shares of common stock of the
Company is then beneficially owned, directly or indirectly, by all
or substantially all of the persons who beneficially owned Voting
Securities and shares of common stock of the Company immediately
prior to such acquisition in substantially the same proportions as
their ownership of such Voting Securities and shares of common
stock, as the case may be, immediately prior to such acquisition;
(2) A majority of the members of the Board of Directors of the
Company shall not be Continuing Directors. "Continuing Directors" shall
mean: (A) individuals who, on the date hereof, are directors of the
Company, (B) individuals elected as directors of the Company subsequent to
the date hereof for whose election proxies shall have been solicited by
the Board of Directors of the Company or (C) any individual elected or
appointed by the Board of Directors of the Company to fill vacancies on
the Board of Directors of the Company caused by death or resignation (but
not by removal) or to fill newly-created directorships;
(3) Approval by the stockholders of the Company of a reorganization,
merger or consolidation of the Company or a statutory exchange of
outstanding Voting Securities of the Company, unless, immediately
following such reorganization, merger, consolidation or exchange, all or
substantially all of the persons who were the beneficial owners,
respectively, of Voting Securities and shares of common stock of the
Company immediately prior to such reorganization, merger, consolidation or
exchange beneficially own, directly or indirectly, more than 60% (subject
to the modification in subparagraph (b) below) of, respectively, the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors and the then
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outstanding shares of common stock, as the case may be, of the corporation
resulting from such reorganization, merger, consolidation or exchange in
substantially the same proportions as their ownership, immediately prior
to such reorganization, merger, consolidation or exchange, of the Voting
Securities and shares of common stock of the Company, as the case may be;
or
(4) Approval by the stockholders of the Company of (x) a complete
liquidation or dissolution of the Company or (y) the sale or other
disposition of all or substantially all of the assets of the Company (in
one or a series of transactions), other than to a corporation with respect
to which, immediately following such sale or other disposition, more than
60% (subject to the modification in subparagraph (b) below) of,
respectively, the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors and the then outstanding shares of common stock of such
corporation is then beneficially owned, directly or indirectly, by all or
substantially all of the persons who were the beneficial owners,
respectively, of the Voting Securities and shares of common stock of the
Company immediately prior to such sale or other disposition in
substantially the same proportions as their ownership, immediately prior
to such sale or other disposition, of the Voting Securities and shares of
common stock of the Company, as the case may be.
(b) After a Public Offering. At all times after the Company sells
any of its shares in a public offering pursuant to a registration statement
filed under the Securities Act, the references to 60% in subparagraphs
(a)(1)(C), (a)(3) and (a)(4) above shall be changed to 65%.
3. Acceleration of Vesting. If a Change of Control of the Company
shall occur and within three years of such Change in Control, (i) Employee's
employment shall be terminated other than for Cause as defined in Section 2
above, or (ii) Employee shall voluntarily leave employment with the Company for
"Good Reason" (defined in Section 2 above), then, upon the date of such
termination or voluntary leaving of employment for Good Reason, the options
subject to this Agreement, if not already exercised in full or otherwise
terminated, expired or cancelled, shall become immediately exercisable in full.
4. Time Periods for Exercise of Option. The Option shall terminate
and may no longer be exercised if Employee ceases to be employed by the Company,
except that:
(a) If Employee's employment shall be terminated for any reason,
voluntary or involuntary, other than death, disability or as a result of
Employee's gross and willful misconduct. Employee may at any time within a
period of sixty (60) days after such termination exercise the Option to
the extent the Option is exercisable by Employee hereunder on the date of
the termination of Employee's employment; and
(b) If Employee's employment is terminated as a result of Employee's
gross and willful misconduct, including but not limited to wrongful
appropriation of funds or
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the commission of a gross misdemeanor or felony, the Option shall be
terminated as of the date of the misconduct; and
(c) If Employee dies in the employ of the Company or Employee's
employment is terminated because Employee has become disabled while in the
employ of the Company, the Option may, within ninety (90) days after
Employee's death or the date of termination for such disability, be
exercised by Employee or Employee's personal representatives, if
applicable, or by the person or persons to whom Employee's rights under
the Option pass by will or by the applicable laws of descent and
distribution; and
provided, however, that the Option may not be exercised to any extent by anyone
after the termination date of the Option, ____________________.
5 Investment Representation. Employee hereby represents and agrees
that any shares of stock which Employee may acquire pursuant to the exercise of
the Option will be acquired for long-term investment purposes and not with the
view toward the distribution or sale thereof in a public offering within the
meaning of the federal Securities Act of 1933. Employee acknowledges that at the
time of the acquisition such shares will not be registered under either the
federal or applicable state securities laws, and that the Company will be
relying upon the foregoing investment representation in agreeing to issue such
shares to Employee. Employee acknowledges that the transferability of such
shares will be subject to restrictions imposed by all applicable federal and
state securities laws and agrees that the certificates evidencing such shares
may be imprinted with an appropriate legend setting forth these restrictions on
transferability.
6. Method of Exercise of Option. Subject to the foregoing, the
Option may be exercised in whole or in part from time to time by serving written
notice on the Company at its principal office in Minneapolis, Minnesota. The
notice shall set forth the number of shares as to which the Option is being
exercised and shall be accompanied by payment of the purchase price. Payment of
the purchase price shall be made by check payable to the Company; or, at the
discretion of Employee, (i) by delivering to the Company for cancellation shares
of the Company's common stock already owned by Employee having a fair market
value equal to the full purchase price of the shares being acquired, or (ii) a
combination of cash and such shares. The fair market value of such shares shall
be determined as provided in Section 5 of the Plan.
7 Miscellaneous.
(a) This Agreement shall not confer on Employee any right with
respect to continuance of employment with the Company or any subsidiary of the
Company, nor will it interfere in any way with the right of the Company to
terminate such employment at any time. Neither Employee nor Employee's legal
representative, legatees or distributees, as the case may be, will be or will be
deemed to be the holder of any shares subject to the Option unless and until the
Option has been exercised and the purchase price of the shares purchased has
been paid.
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(b) The Option may not be transferred, except by will or the laws of
descent and distribution to the extent provided in Section 4(c) above, and
during Employee's lifetime the Option is exercisable only by Employee.
(c) If there shall be any change in the stock subject to the Option
through merger, consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in the corporate structure of the Company,
appropriate adjustments shall be made by the Company in the number of shares and
the price per share of the shares subject to the Option in order to prevent
dilution or enlargement of the option rights granted hereunder.
(d) The Company shall at all times during the term of the Option
reserve and keep available such number of shares of the Company's common stock
as will be sufficient to satisfy the requirements of this Agreement.
(e) If Employee shall dispose of any of the shares of stock acquired
upon exercise of the Option within two (2) years from the date the Option was
granted or within one (1) year after the date of exercise of the Option, then,
in order to provide the Company with the opportunity to claim the benefit of any
income tax deduction, Employee shall promptly notify the Company of the dates of
acquisition and disposition of such shares, the number of shares so disposed of,
and the consideration, if any, received for such shares.
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IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement as of the date set forth in the first paragraph.
CAPELLA EDUCATION COMPANY
By /s/ Xxxxxxx Xxxxx
-----------------------
Xxxxxxx Xxxxx, Chairman
By _______________________
**[___________________]
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