EXHIBIT 10.2
CAREER EDUCATION CORPORATION
1995 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Career Education Corporation (the "Company"), desiring to afford an
opportunity to the Grantee named below to purchase certain shares of the
Company's common stock in order to give the Grantee an added incentive as an
employee of the Company, hereby grants to Grantee, pursuant to the terms of the
Career Education Corporation 1995 Stock Option Plan (the "Plan"), an option
("Option") to purchase a number of shares specified below, during the term
ending at 5 o'clock p.m. (prevailing local time at the Company's principal
offices) on the expiration date of this Option specified below, at the Option
exercise price specified below, subject to and upon the following terms and
conditions:
1. Identifying Provisions. As used in this Option, the following terms
----------------------
shall have the following respective meanings:
(a) Grantee: ______________
(b) Date of grant: _______________
(c) Number of shares optioned: ________________
(d) Option exercise price per share: __________________
(e) Expiration date: _______________
2. Timing of Purchases. Subject to the other terms of this Agreement
-------------------
regarding the exercisability of this Option, this Option may be exercised in
accordance with the following schedule:
This Option shall be
Exercisable
With Respect to the
Following
On or After This Date Cumulative Number of Shares
--------------------- ---------------------------
___________ _______
___________ _______
___________ _______
___________ _______
___________ _______
3. Exercise: Payment for and Delivery of Stock. Grantee shall acquire
--------------------------------------------
shares pursuant to this Option by delivering to the Company a written notice of
exercise, specifying the number of shares as to which Grantee desires to
exercise this Option and the date on which Grantee desires to complete the
transaction. Unless the Committee determines otherwise, Grantee shall pay to
the Company the full purchase price of the shares to be acquired hereunder, in
cash, on or before the date specified for completion of the purchase. No shares
shall be issued hereunder until full payment has been made to the Company. If
the Company is required to withhold federal income taxes on account of any
present or future tax imposed in connection with Xxxxxxx's exercise of the
Option, Grantee shall be required to pay all such withholding in cash as a
condition to the receipt of shares.
4. Restrictions on Exercise. The following additional provisions shall
------------------------
apply to the exercise of this Option:
a. If the employment by the Company of the Grantee who is not
disabled within the meaning of Section 422(c)(6) of the Internal Revenue Code (a
"Disabled Grantee") is terminated, the unexercised, vested portion of this
Option shall be exercisable (to the extent then exercisable), by the Grantee at
any time prior to the expiration date or within three months after the date of
termination of employment, whichever is the shorter period;
b. If a Disabled Grantee terminates employment, any unexercised
portion of this Option held by the Grantee shall be exercisable in full
(including the portion that, but for this provision, would not be exercisable)
by the Grantee at any time prior to the expiration date or within one year after
the date of termination of employment, whichever is the shorter period; and
c. Following the death of the Grantee during employment, the
unexercised portion of this Option at the time of death shall be exercisable in
full (including the portion that, but for this provision, would not be
exercisable) by the person or persons entitled to do so under the will of the
Grantee, or, if the Grantee shall fail to make testamentary disposition of the
Option or shall die intestate, by the legal representative of the Grantee at any
time prior to the expiration date of such Option or within one year after the
date of death, whichever is the shorter period.
Whether the Grantee is Disabled within the meaning of Section
422(c)(6) of the Internal Revenue Code (the "Code") shall be determined in each
case by the Committee, whose determination shall be final and binding.
Notwithstanding the above, as a condition of exercise the Grantee must
execute and deliver to the Company a restricted stock agreement in the form
attached hereto evidencing Grantee's agreement to be bound by the Career
Education Corporation Amended and Restated Stockholders Agreement dated July 31,
1995, and also providing for certain repurchase rights on behalf of the Company
upon the termination of Xxxxxxx's employment with the Company under the
circumstances specified therein.
5. Nontransferability. The Grantee may not transfer this Option except
------------------
by will or the
-2-
laws of descent and distribution. This Option shall not be otherwise
transferred, assigned, pledged, hypothecated or disposed of in any way, whether
by operation of law or otherwise, and shall be exercisable during the Grantee's
lifetime only by the Grantee or his guardian or legal representative. The
designation of a beneficiary shall not constitute a transfer.
6. Changes in Capital Structure. If the outstanding shares of Common
----------------------------
Stock of the Company are increased or decreased or changed into or exchanged for
a different number of kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, consolidation, plan of
exchange, recapitalization, reclassification, stock split, combination of
shares, or dividend payable in shares, appropriate adjustment shall be made by
the Committee to the end that the Grantee's proportionate interest derived under
this Option is maintained as before the occurrence of such event. The Committee
may also require that any securities issued in respect of or exchange for shares
issued hereunder that are subject to restrictions be subject to similar
restrictions. Notwithstanding the foregoing, the Committee shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Committee.
Any such adjustments made by the Committee shall be conclusive.
If any such adjustment provided for in this Paragraph 6 requires the
approval of shareholders of the Company in order to enable the Company to adjust
the Option, then no such adjustment shall be made without the required
shareholder approval. Notwithstanding the foregoing, if the effect of any such
adjustment would be to cause this Option to fail to qualify as an Incentive
Stock Option or to cause a modification, extension or renewal of this Option
within the meaning of Section 424(h) of the Code, the Company may elect that
such adjustment not be made but rather shall use reasonable efforts to effect
such other adjustment of this Option as the Company in its sole discretion shall
deem equitable and which will not result in any disqualification, modification,
extension or renewal (within the meaning of Section 424(h) of the Code) of this
Option.
7. Special Acceleration of Vesting Upon Change of Control.
------------------------------------------------------
a. Notwithstanding any other provisions of this Option and subject
to the limitations described below, this Option shall become fully exercisable
with respect to all shares issuable hereunder as of the date when the
shareholders of the Company approve one of the following ("Approved
------------
Transactions"):
(i) Any consolidation, merger, plan of exchange, or transaction
involving the Company ("Merger") in which the Company is not the
continuing or surviving corporation or pursuant to which the majority
of the Common Stock of the Company would be converted into cash,
securities or other property, other than (A) a Merger involving the
Company in which the holders of the Common Stock of the Company
immediately prior to the Merger have the same proportionate ownership
of common stock of the surviving corporation after the Merger; (B) any
transaction in connection with an initial public offering: (C) any
-----------------------
private placement where a substantial block of stock is sold to one or
more new
-3-
investors; or (D) the conversion of shares from one class of stock to
another or the exercise of any warrant; or
(ii) Any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company or the adoption of any
plan or proposal for the liquidation or dissolution of the Company.
In addition, a Change of Control shall occur in the event a "person"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended) after the Effective Date first becomes the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, in one or more
transactions, of shares of common stock of the Company representing 50% or more
of the total number of votes that may be cast by all stockholders of the Company
voting as a single class, without the approval or consent of the Board of
Directors, other than (A) any transaction in connection with an initial public
offering; (B) any private placement where a substantial block of stock is sold
to one or more new investors; or (C) the conversion of shares from one class of
stock to another or the exercise of any warrant.
Accelerated vesting under this paragraph shall be limited to the maximum
number of additional shares such that the acquisition or disposition of such
shares that vest in connection with an Approved Transaction shall not result in
an excess parachute payment to Grantee (as defined in Section 280G of the Code),
unless the Company authorizes accelerated vesting in excess of such maximum
amount. The Company is authorized by Grantee to collect from Grantee any
additional income or excise taxes which the Company may incur due to a violation
of this provision.
All shares with respect to which this Option would not be exercisable
except for this paragraph shall be deemed to be nonstatutory option shares
pursuant to Section 422(d) of the Code. In such event, Grantee shall recognize
taxable income equal to the difference between the fair market value of the
nonstatutory shares and the exercise price paid for such shares.
b. The Committee may, in its sole discretion, designate a 30-day
period prior to an Approved Transaction during which Grantee shall be the right
to exercise this Option, in whole or in part, and upon the expiration of such
30-day period all rights hereunder with respect to unexercised shares shall
immediately terminate.
8. Rights in Shares Before Issuance and Delivery. Grantee, or his
---------------------------------------------
executor, administrator or legatee if he is deceased, shall have no rights as a
shareholder with respect to any stock covered by this Option until the date of
issuance of the stock certificate to him for such stock after receipt of the
consideration in full set forth herein, or as may be approved by the Company.
No adjustments shall be made for dividends, whether ordinary or extraordinary,
whether in cash, securities or other property, for distributions in which the
record date is prior to the date for which the stock certificate is issued.
9. Requirements of Law. The certificate or certificates representing the
-------------------
shares of the common stock to be issued or delivered upon exercise of this
Option may bear a legend
-4-
evidencing the foregoing and other legends required by any applicable securities
laws. Furthermore, nothing herein shall require the Company to issue any stock
upon exercise of this Option if the issuance would, in the opinion of counsel
for the Company, constitute a violation of the Securities Act of 1933, as
amended, the Illinois or Delaware securities laws, or any other applicable rule
or regulation then in effect.
10. Disposition of Shares--Restrictions. Except in connection with
-----------------------------------
reorganizations or other transactions described in Paragraph 6 hereof, no stock
acquired by the exercise of this Option shall be transferable, otherwise than by
will or the laws of descent and distribution, within two (2) years after the
date the Option is granted or within one (1) year after the transfer of such
share of stock to the Grantee pursuant to the exercise of the Option. Any
disposition during such periods shall disqualify this Option as an Incentive
Stock Option, and the tax rules applicable to nonstatutory stock options shall
apply.
11. No Right to Continued Service. This Option shall not confer upon the
-----------------------------
Grantee any right with respect to continued service with the Company, nor shall
it alter, modify, limit or interfere with any right or privilege of the Company
under any employment or consulting contract, heretofore or hereinafter executed,
with the Grantee, including the right to terminate the Grantee's service at any
time for or without cause.
12. Career Education, Corporation 1995 Stock Option Plan. Grantee hereby
----------------------------------------------------
acknowledges receipt of a copy of the Plan and agrees to be bound by all terms
and provisions thereof and as the same shall have been amended from time to time
in accordance with the terms thereof, provided that no such amendment shall
deprive the Grantee, without his consent, of this Option or any of his rights
hereunder. Xxxxxxx acknowledges and agrees that such provisions are acceptable
to him for all purposes. Grantee further acknowledges and agrees that in the
event of any conflict herewith, the provisions of the Plan shall govern and
control, and this Agreement or the applicable provision hereof shall
automatically be deemed modified to conform ab initio.
13. Notices. Any notice to be given to the Committee shall be addressed
-------
to the Committee in care of the Company at its principal office, and any notice
to be given to the Grantee shall be addressed to him at the address given
beneath his signature hereto or at such other address as the Grantee may
hereafter designate in writing to the Company. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified, and deposited, postage and registry or
certification fee prepaid, in a post office or branch post office regularly
maintained by the United States Postal Service.
14. Miscellaneous. This Agreement and the Plan constitute the entire
-------------
agreement and understanding between the Company and the Grantee and may not be
changed, modified or amended by oral statements to the contrary, but only by
written document signed by both parties hereto. The titles to each paragraph
herein are for convenience only and are not to be used in the construction or
interpretation of this document. This Agreement shall be binding on and inure
to the benefit of the parties hereto, and their respective heirs, legatees,
successors and assigns. This Agreement shall be construed in accordance with
the laws of the State of Illinois.
-5-
This document constitutes an offer by the Company to enter into an
Agreement under the terms and conditions herein set forth. Said offer will
expire and terminate without further notice at 5 o'clock p.m. (prevailing local
time at the Company's principal office) on May 31, 1996 unless sooner accepted
by the Grantee by delivering a copy of this Agreement, executed by the Grantee,
to the Company on or before said time and date.
IN WITNESS THEREOF, the Company has granted this Option on the date of
grant specified above.
ACCEPTED: CAREER EDUCATION CORPORATION,
a Delaware corporation,
Grantee: ____________________ By:_______________________
Address: ____________________ Title:____________________
_____________________________ Date:_____________________
_____________________________
-6-
NOTATIONS AS TO PARTIAL EXERCISE
Date of Exercise Number of Balance of Authorized Notation Date
-------- -------------
Purchased Shares on Signature
---------
Shares Option
------ ------
-7-
