As filed with the Securities and Exchange Commission on August 3, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAREER EDUCATION CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3932190
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
2800 West Higgins Road, Suite 790, Hoffman Estates, IL 60195
(Address of Principal Executive Offices) (Zip Code)
Career Education Corporation 1998 Employee Incentive Compensation Plan
(Full Title of the Plan)
John M. Larson
President and Chief Executive Officer
Career Education Corporation
2800 West Higgins Road, Suite 790, Hoffman Estates, IL 60195
(Name and Address of agent for service)
(847) 781-3600
(Telephone Number, including area code, of agent for service)
With a copy to:
Lawrence D. Levin, Esq.
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
(312) 902-5200
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed maximum
Title of securities Amount to be offering price Proposed maximum Amount of
to be registered registered(1) per share (2) aggregate offering price (2) registration fee
<S> <C> <C> <C> <C>
Common Stock, par value 750,000 shares $30.09375 $22,570,312.50 $6,274.55
$0.01 per share
<FN>
(1) Includes an indeterminate number of shares of Career
Education Corporation Common Stock ("Common Stock") that may
be issuable by reason of stock splits, stock dividends or
similar transactions in accordance with Rule 416 under the
Securities Act of 1933.
(2) Estimated solely for purposes of calculating the
registration fee pursuant to Rule 457(h) on the basis of the
high and low sales prices of the Common Stock as reported on
the Nasdaq National Market on August 2, 1999.
</FN>
</TABLE>
<PAGE>
This Registration Statement on Form S-8 registers additional
securities of the same class as other securities for which a
registration statement on Form S-8 relating to the Career
Education Corporation Employee Incentive Compensation Plan is
effective. Accordingly, pursuant to General Instruction E to
Form S-8, the Registration Statement on Form S-8 (File No. 333-
60335) filed by the Registrant with the Securities and Exchange
Commission on July 31, 1998 is hereby incorporated by reference.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 8. Exhibits
4.1 Amended and Restated Certificate of Incorporation of
the Company, incorporated by reference to Exhibit 3.1
to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 (the "1997 10-K").
4.2 Amended and Restated By-laws of the Company,
incorporated by reference to Exhibit 3.2 to the 1997 10-
K.
4.3 The Career Education Corporation 1998 Employee
Incentive Compensation Plan, as amended.
4.4 Specimen stock certificate representing Common Stock,
incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (File No.
333-37601).
5 Opinion of Katten Muchin & Zavis as to the legality of
the shares of Common Stock being offered under the
Plan.
23.1 Consent of Arthur Andersen LLP, independent auditors.
23.2 Consent of Katten Muchin & Zavis (contained in their
opinion filed as Exhibit 5).
24 Power of Attorney (included on the signature page of
this Registration Statement).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe it meets all of the requirements for filing on Form S-8
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Hoffman Estates, State of Illinois, on July 28, 1999.
Career Education Corporation
By: /s/ John M. Larson
John M. Larson
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes
and appoints John M. Larson and William A. Klettke and, each of
them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and revocation, to sign on his behalf,
individually and in each capacity stated below, all amendments
and post-effective amendments to this Registration Statement on
Form S-8 and to file the same, with all exhibits thereto and any
other documents in connection therewith, with the Securities and
Exchange Commission under the Securities Act of 1933, granting
unto each such attorney-in-fact and agent full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as such person might or could
do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities indicated on July 28, 1999.
SIGNATURE TITLE
/s/ John M. Larson President, Chief Executive Officer
John M. Larson (Principal Executive Officer) and a
Director
/s/ William A. Klettke Senior Vice President and Chief
William A. Klettke Financial Officer (Principal
Financial and Accounting Officer)
/s/ Robert E. Dowdell Director
Robert E. Dowdell
/s/ Thomas B. Lally Director
Thomas B. Lally
/s/ Wallace O. Laub Director
Wallace O. Laub
/s/ Keith K. Ogata Director
Keith K. Ogata
/s/ Patrick K. Pesch Director
Patrick K. Pesch
<PAGE>
EXHIBIT INDEX
Exhibit Description
Number
4.3 The Career Education Corporation 1998 Employee
Incentive Compensation Plan, as amended.
5 Opinion of Katten Muchin & Zavis as to the
legality of the shares of Common Stock being
offered under the Plan.
23.1 Consent of Arthur Andersen LLP, independent
auditors.
23.2 Consent of Katten Muchin & Zavis (contained in
their opinion filed as Exhibit 5).
24 Power of Attorney (included on the signature
page of this Registration Statement).
EXHIBIT 4.3
CAREER EDUCATION CORPORATION
1998 EMPLOYEE INCENTIVE COMPENSATION PLAN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE IESTABLISHMENT 1
1.1 Purpose 1
ARTICLE IIDEFINITIONS 1
2.1 "Affiliate" 1
2.2 "Agreement" 1
2.3 "Award" 1
2.4 "Beneficiary" 2
2.5 "Board of Directors" or "Board" 2
2.6 "Cash Incentive Award" 2
2.7 "Cause" 2
2.8 "Change in Control" and "Change in Control Price" 2
2.9 "Code" or "Internal Revenue Code" 2
2.10 "Commission" 2
2.11 "Committee" 2
2.12 "Common Stock" 2
2.13 "Company" 3
2.14 "Covered Employee" 3
2.15 "Deferred Stock" 3
2.16 "Disability" 3
2.17 "Dividend Equivalent" 3
2.18 "Effective Date" 3
2.19 "Exchange Act" 3
2.20 "Fair Market Value" 3
2.21 "Grant Date" 4
2.22 "Incentive Stock Option" 4
2.23 "Initial Public Offering" 4
2.24 "Nasdaq" 4
2.25 "Non-Qualified Stock Option" 4
2.26 "Option Period" 4
2.27 "Option Price" 4
2.28 "Other Stock-Based Awards" 4
2.29 "Participant" 4
2.30 "Performance Award" 4
2.31 "Plan" 5
2.32 "Representative" 5
2.33 "Restricted Stock" 5
2.34 "Retirement" 5
2.35 "Rule 16b-3" 5
2.36 "Securities Act" 5
2.37 "Stock Appreciation Right" 5
2.38 "Stock Option" or "Option" 5
2.39 "Termination of Employment" 5
2.40 "Transfer" 6
ARTICLE IIIADMINISTRATION 6
3.1 Committee Structure and Authority 6
ARTICLE IVSTOCK SUBJECT TO PLAN 8
4.1 Number of Shares 8
4.2 Release of Shares 8
4.3 Restrictions on Shares 8
4.4 Stockholder Rights 9
4.5 Reasonable Efforts To Register 9
4.6 Anti-Dilution 9
ARTICLE VELIGIBILITY 10
5.1 Eligibility 10
5.2 Per Person Award Limitations 10
ARTICLE VISTOCK OPTIONS 10
6.1 General 10
6.2 Grant and Exercise 10
6.3 Terms and Conditions 11
6.4 Termination by Reason of Death 12
6.5 Termination by Reason of Disability 13
6.6 Other Termination 13
6.7 Cashing Out of Option 13
ARTICLE VIISTOCK APPRECIATION RIGHTS 13
7.1 General 13
7.2 Grant 14
7.3 Terms and Conditions 14
ARTICLE VIIIRESTRICTED STOCK 15
8.1 General 15
8.2 Awards and Certificates 15
8.3 Terms and Conditions 16
ARTICLE IXDEFERRED STOCK 17
9.1 General 17
9.2 Terms and Conditions 17
ARTICLE XOTHER AWARDS 18
10.1 Bonus Stock and Awards In Lieu of Obligations 18
10.2 Dividend Equivalents 18
10.3 Other Stock-Based Awards 18
10.4 Performance Awards 19
ARTICLE XIPROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN 22
11.1 Limited Transfer During Offering 22
11.2 Committee Discretion 22
11.3 No Company Obligation 22
ARTICLE XIICHANGE IN CONTROL PROVISIONS 22
12.1 Impact of Event 22
12.2 Definition of Change in Control 23
12.3 Change in Control Price 23
ARTICLE XIIIMISCELLANEOUS 24
13.1 Amendments and Termination 24
13.2 Stand-Alone, Additional, Tandem, and Substitute
Awards 24
13.3 Form and Timing of Payment Under Awards; Deferrals 25
13.4 Status of Awards Under Code Section 162(m) 25
13.5 Unfunded Status of Plan; Limits on Transferability 25
13.6 General Provisions 25
13.7 Mitigation of Excise Tax 27
13.8 Rights with Respect to Continuance of Employment 27
13.9 Awards in Substitution for Awards Granted by Other
Corporations 27
13.10 Procedure for Adoption 28
13.11 Procedure for Withdrawal 28
13.12 Delay 28
13.13 Headings 28
13.14 Severability 28
13.15 Successors and Assigns 28
13.16 Entire Agreement 28
<PAGE>
CAREER EDUCATION CORPORATION
1998 EMPLOYEE INCENTIVE COMPENSATION PLAN
ARTICLE I
ESTABLISHMENT
1.1 Purpose.
The Career Education Corporation 1998 Employee Incentive
Compensation Plan is hereby established by Career Education
Corporation. The purpose of the Plan is to promote the overall
financial objectives of the Company and its stockholders by
motivating those persons selected to participate in the Plan to
achieve long-term growth in stockholder equity in the Company and
by retaining the association of those individuals who are
instrumental in achieving this growth. At the time the Company
is a publicly held corporation, if any, it is intended that
compensation awarded under the Plan qualifies for tax
deductibility under Section 162(m) of the Code to the extent
deemed appropriate by the Committee (as defined herein). The
Plan and the grant of awards hereunder are expressly conditioned
upon the Plan's approval by the stockholders of the Company. If
such approval is not obtained, then this Plan and all Awards (as
defined herein) hereunder shall be null and void ab initio. The
Plan is adopted, subject to stockholder approval, effective as of
the date of consummation of the Initial Public Offering (as
defined herein).
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as
set forth below:
2.1 "Affiliate" means any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated association or other entity (other than the
Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, the Company including, without limitation, any
member of an affiliated group of which the Company is a common
parent corporation as provided in Section 1504 of the Code.
2.2 "Agreement" or "Award Agreement" means, individually or
collectively, any agreement entered into pursuant to the Plan
pursuant to which an Award is granted to a Participant.
2.3 "Award" means any Option, Stock Appreciation Right,
Restricted Stock, Deferred Stock, Stock, Dividend Equivalent,
Other Stock-Based Award, Performance Award or Cash Incentive
Award, together with any other right or interest granted to a
Participant under the Plan.
2.4 "Beneficiary" means the person, persons, trust or
trusts which have been designated by a Participant in such
Participant's most recent written beneficiary designation filed
with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other
rights are transferred if and to the extent permitted hereunder.
If, upon a Participant's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the person, persons, trust or trusts entitled
by will or the laws of descent and distribution to receive such
benefits.
2.5 "Board of Directors" or "Board" means the Board of
Directors of the Company.
2.6 "Cash Incentive Award" means a conditional right
granted to a Participant under Section 10.4(c) hereof to receive
a cash payment, unless otherwise determined by the Committee,
after the end of a specified period.
2.7 "Cause" shall mean, for purposes of whether and when a
Participant has incurred a Termination of Employment for Cause,
any act or omission which permits the Company to terminate the
written agreement or arrangement between the Participant and the
Company or an Affiliate for "cause" as defined in such agreement
or arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the
term "cause" or a substantially equivalent term, then Cause shall
mean (a) any act or omission which the Company believes is of a
criminal nature and the result of which the Company believes is
detrimental to the interests of the Company or an Affiliate, (b)
the material breach of a fiduciary duty owing to the Company,
including, without limitation, fraud or embezzlement or (c)
conduct, or the omission of conduct, on the part of the
Participant which constitutes a material breach of any statutory
or common-law duty of loyalty to the Company or an Affiliate.
2.8 "Change in Control" and "Change in Control Price" have
the meanings set forth in Sections 12.2 and 12.3, respectively.
2.9 "Code" or "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended, Treasury Regulations (including
proposed regulations) thereunder and any subsequent Internal
Revenue Code.
2.10 "Commission" means the Securities and Exchange
Commission or any successor agency.
2.11 "Committee" means the Compensation Committee of the
Board and/or such other individuals designated by the Board to
administer the Plan.
2.12 "Common Stock" means the shares of the Company's Common
Stock, $.01 par value, whether presently or hereafter issued, and
any other stock or security resulting from adjustment thereof as
described hereinafter or the common stock of any successor to the
Company which is designated for the purpose of the Plan.
2.13 "Company" means Career Education Corporation, a
Delaware corporation, and includes any successor or assignee
corporation or corporations into which the Company may be merged,
changed or consolidated; any corporation for whose securities the
securities of the Company shall be exchanged; and any assignee of
or successor to substantially all of the assets of the Company.
2.14 "Covered Employee" means a Participant who is a
"covered employee" within the meaning of Section 162(m) of the
Code.
2.15 "Deferred Stock" means a right, granted to a
Participant under Section 9.1 hereof, to receive Common Stock,
cash or a combination thereof at the end of a specified deferral
period.
2.16 "Disability" means a mental or physical illness that
entitles the Participant to receive benefits under the long-term
disability plan of the Company or an Affiliate, or if the
Participant is not covered by such a plan or the Participant is
not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and
permanently incapable of performing the Participant's duties for
the Company or an Affiliate. Notwithstanding the foregoing, a
Disability shall not qualify under this Plan if it is the result
of (i) a willfully self-inflicted injury or willfully self-
induced sickness; or (ii) an injury or disease contracted,
suffered, or incurred while participating in a felony criminal
offense. Determination of Disability shall be made by the
Committee. Determination of Disability for purposes of this Plan
shall not be construed to be an admission of disability for any
other purpose.
2.17 "Dividend Equivalent" means a right, granted to a
Participant under Section 10.2, to receive cash, Common Stock,
other Awards or other property equal in value to dividends paid
with respect to a specified number of shares of Common Stock.
2.18 "Effective Date" means the date of consummation of the
Initial Public Offering.
2.19 "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
2.20 "Fair Market Value" means the value determined on the
basis of the good faith determination of the Committee, without
regard to whether the Common Stock is restricted or represents a
minority interest, pursuant to the applicable method described
below:
(a) if the Common Stock is listed on a national
securities exchange or quoted on Nasdaq, the closing price
of the Common Stock on the relevant date (or, if such date
is not a business day or a day on which quotations are
reported, then on the immediately preceding date on which
quotations were reported), as reported by the principal
national exchange on which such shares are traded (in the
case of an exchange) or by Nasdaq, as the case may be;
(b) if the Common Stock is not listed on a national
securities exchange or quoted on Nasdaq, but is actively
traded in the over-the-counter market, the average of the
closing bid and asked prices for the Common Stock on the
relevant date (or, if such date is not a business day or a
day on which quotations are reported, then on the
immediately preceding date on which quotations were
reported), or the most recent preceding date for which such
quotations are reported; and
(c) if, on the relevant date, the Common Stock is not
publicly traded or reported as described in (a) or (b), the
fair market value determined in good faith by the Committee.
2.21 "Grant Date" means the date as of which an Agreement is
entered into pursuant to the Plan.
2.22 "Incentive Stock Option" means any Stock Option
intended to be and designated as an "incentive stock option"
which satisfies the requirements of Section 422 of the Code.
2.23 "Initial Public Offering" means the Company's initial
public offering of Common Stock under the Securities Act.
2.24 "Nasdaq" means The Nasdaq Stock Market, including the
Nasdaq National Market.
2.25 "Non-Qualified Stock Option" means an Option which is
not an Incentive Stock Option.
2.26 "Option Period" means the period during which an Option
shall be exercisable in accordance with the related Agreement and
Article VI.
2.27 "Option Price" means the price at which the Common
Stock may be purchased under an Option as provided in
Section 6.3(b).
2.28 "Other Stock-Based Awards" means Awards granted to a
Participant under Section 10.3 hereof.
2.29 "Participant" means a person who satisfies the
eligibility conditions of Article V and with whom an Agreement
has been entered into under the Plan, and in the event a
Representative is appointed for a Participant or another person
becomes a Representative, then the term "Participant" shall mean
such Representative. The term shall also include a trust for
the benefit of the Participant, the Participant's parents, spouse
or descendants, or a custodian under a uniform gifts to minors
act or similar statute for the benefit of the Participant's
descendants, to the extent permitted by the Committee.
Notwithstanding the foregoing, the term "Termination of
Employment" shall mean the Termination of Employment of the
person to whom the Award was originally granted.
2.30 "Performance Award" means a right, granted to a
Participant under Section 10.4 hereof, to receive Awards based
upon performance criteria specified by the Committee.
2.31 "Plan" means the Career Education Corporation 1998
Stock Incentive Compensation Plan, as herein set forth and as may
be amended from time to time.
2.32 "Representative" means (a) the person or entity acting
as the executor or administrator of a Participant's estate
pursuant to the last will and testament of a Participant or
pursuant to the laws of the jurisdiction in which the Participant
had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the
guardian or temporary guardian of a Participant; (c) the person
or entity which is the Beneficiary of the Participant upon or
following the Participant's death; or (d) any person to whom an
Option has been permissibly transferred; provided that only one
of the foregoing shall be the Representative at any point in time
as determined under applicable law and recognized by the
Committee.
2.33 "Restricted Stock" means Common Stock granted to a
Participant under Section 8.1 hereof, that is subject to certain
restrictions and to a risk of forfeiture.
2.34 "Retirement" means the Participant's Termination of
Employment after attaining either the normal retirement age or
the early retirement age as defined in the principal (as
determined by the Committee) tax-qualified plan of the Company or
an Affiliate, if the Participant is covered by such a plan, or if
the Participant is not covered by such a plan, then age 65.
2.35 "Rule 16b-3" means Rule 16b-3, as from time to time in
effect and applicable to the Plan and Participants, promulgated
by the Commission under Section 16 of the Exchange Act.
2.36 "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
2.37 "Stock Appreciation Right" means a right granted under
Article VII.
2.38 "Stock Option" or "Option" means a right, granted to a
Participant under Section 6.1 hereof, to purchase Common Stock at
a specified price during specified time periods.
2.39 "Termination of Employment" means the occurrence of any
act or event that actually or effectively causes or results in
the person's ceasing, for whatever reason, to be an officer,
director or employee of, or consultant to, the Company or of any
subsidiary of the Company, or to be an officer, director or
employee of, or consultant to, any entity that provides services
to the Company or a subsidiary of the Company, including, without
limitation, death, Disability, dismissal, severance at the
election of the Participant, Retirement, or severance as a result
of the discontinuance, liquidation, sale or transfer by the
Company or its subsidiaries of all businesses owned or operated
by the Company or its subsidiaries. With respect to any person
who is not an employee with respect to the Company, an Agreement
shall establish what act or event shall constitute a Termination
of Employment for purposes of the Plan. A transfer of employment
from the Company to a subsidiary, or from a subsidiary to the
Company, will not be a Termination of Employment, unless
expressly determined by the Committee. A Termination of
Employment shall occur for an employee who is employed by a
subsidiary of the company if the subsidiary shall cease to be a
subsidiary and the Participant shall not immediately thereafter
become an employee of the Company or a subsidiary of the Company.
2.40 "Transfer" means any sale, gift, assignment,
distribution, conveyance, pledge, hypothecation, encumbrance or
other transfer of title, whether by operation of law or
otherwise.
In addition, certain other terms used herein have
definitions given to them in the first place in which they are
used.
ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. The Plan shall be
administered by a committee (the "Committee") of the Board of
Directors composed of no fewer than two directors designated by
the Board of Directors. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts
approved in writing by all of the members, shall be the acts of
the Committee. A member of the Committee shall not exercise any
discretion respecting himself or herself under the Plan. The
Board shall have the authority to remove, replace or fill any
vacancy of any member of the Committee upon notice to the
Committee and the affected member. Any member of the Committee
may resign upon notice to the Board. The Board may select
different Committees to administer Awards for different classes
of Participants. The Committee may allocate among one or more of
its members, or may delegate to one or more of its agents, such
duties and responsibilities as it determines.
Among other things, the Committee shall have the authority,
subject to the terms of the Plan:
(a) to select those persons to whom Awards may be
granted from time to time;
(b) to determine whether and to what extent Awards are
to be granted hereunder;
(c) to determine the number of shares of Common Stock
to be covered by each Award granted hereunder;
(d) to determine the terms and conditions of any Award
granted hereunder (including, but not limited to, any Option
Price or Option Period, any exercise restriction or
limitation or exercise acceleration, forfeiture or waiver,
and any performance criteria);
(e) to adjust the terms and conditions, at any time or
from time to time, of any Award, subject to the limitations
of Section 13.1;
(f) to determine to what extent and under what
circumstances Common Stock and other amounts payable with
respect to an Award shall be deferred;
(g) to determine under what circumstances an Award may
be settled in cash or Common Stock;
(h) to provide for the forms of Agreements to be
utilized in connection with the Plan;
(i) to determine whether a Participant has a
Disability or a Retirement;
(j) to determine what securities law requirements are
applicable to the Plan, Awards and the issuance of shares of
Common Stock under the Plan and to require of a Participant
that appropriate action be taken with respect to such
requirements;
(k) to cancel, with the consent of Participants or as
otherwise provided in the Plan or an Agreement, outstanding
Awards;
(l) to interpret and make final determinations with
respect to the remaining number of shares of Common Stock
available under this Plan;
(m) to require, as a condition of the exercise of an
Award or the issuance or transfer of a certificate of Common
Stock, the withholding from a Participant of such amount of
any Federal, state or local taxes as may be necessary in
order for the Company or any other employer to obtain a
deduction or as may be otherwise required by law;
(n) to determine whether and under what circumstances
a Participant has incurred a Termination of Employment;
(o) to determine whether the Company or any other
person has a right or obligation to purchase Common Stock
from a Participant and, if so, the terms and conditions on
which such Common Stock is to be purchased;
(p) to determine the restrictions or limitations on
the transfer of Common Stock;
(q) to determine whether an Award is to be adjusted,
modified or purchased, or is to become fully exercisable,
under the Plan or the terms of an Agreement;
(r) to determine the permissible methods of Award
exercise and payment, including cashless exercise
arrangements;
(s) to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the
administration of the Plan; and
(t) to appoint and compensate agents, counsel,
auditors or other specialists to aid it in the discharge of
its duties.
The Committee shall have the authority to adopt, alter and
repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem
advisable, to interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any Agreement) and to
otherwise supervise the administration of the Plan. The
Committee's policies and procedures may differ with respect to
Awards granted at different times or to different Participants.
Any determination made by the Committee pursuant to the
provisions of the Plan shall be made in its sole discretion and,
in the case of any determination relating to an Award, may be
made at the time of the grant of the Award or, unless in
contravention of any express term of the Plan or an Agreement, at
any time thereafter. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company and Participants. No
determination shall be subject to de novo review if challenged in
court.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Number of Shares. Subject to the adjustment under
Section 4.6, the total number of shares of Common Stock reserved
and available for distribution pursuant to Awards under the Plan
shall be 600,000 shares of Common Stock authorized for issuance
on the Effective Date. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
4.2 Release of Shares. Subject to Section 6.3(f), if any
shares of Common Stock that are subject to any Award cease to be
subject to an Award or are forfeited, if any Award otherwise
terminates without issuance of shares of Common Stock being made
to the Participant, or if any shares (whether or not restricted)
of Common Stock are received by the Company in connection with
the exercise of an Award, including the satisfaction of tax
withholding, such shares, in the discretion of the Committee, may
again be available for distribution in connection with Awards
under the Plan.
4.3 Restrictions on Shares. Shares of Common Stock issued
as or in conjunction with an Award shall be subject to the terms
and conditions specified herein and to such other terms,
conditions and restrictions as the Committee in its discretion
may determine or provide in an Agreement. The Company shall not
be required to issue or deliver any certificates for shares of
Common Stock, cash or other property prior to (i) the listing of
such shares on any stock exchange or Nasdaq (or other public
market) on which the Common Stock may then be listed (or
regularly traded), (ii) the completion of any registration or
qualification of such shares under Federal or state law, or any
ruling or regulation of any government body which the Committee
determines to be necessary or advisable, and (iii) the
satisfaction of any applicable withholding obligation in order
for the Company or an Affiliate to obtain a deduction with
respect to the exercise of an Award. The Company may cause any
certificate for any share of Common Stock to be delivered to be
properly marked with a legend or other notation reflecting the
limitations on transfer of such Common Stock as provided in this
Plan or as the Committee may otherwise require. The Committee
may require any person exercising an Award to make such
representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the
shares of Common Stock in compliance with applicable law or
otherwise. Fractional shares shall not be delivered, but shall
be rounded to the next lower whole number of shares.
4.4 Stockholder Rights. No person shall have any rights of
a stockholder as to shares of Common Stock subject to an Award
until, after proper exercise of the Award or other action
required, such shares shall have been recorded on the Company's
official stockholder records as having been issued or
transferred. Upon exercise of an Award or any portion thereof,
the Company will have thirty (30) days in which to issue the
shares, and the Participant will not be treated as a stockholder
for any purpose whatsoever prior to such issuance. No adjustment
shall be made for cash dividends or other rights for which the
record date is prior to the date such shares are recorded as
issued or transferred in the Company's official stockholder
records, except as provided herein or in an Agreement.
4.5 Reasonable Efforts To Register. The Company will use
its reasonable efforts to register under the Securities Act the
Common Stock delivered or deliverable pursuant to Awards on
Commission Form S-8 if available to the Company for this purpose
(or any successor or alternate form that is substantially similar
to that form to the extent available to effect such
registration), in accordance with the rules and regulations
governing such forms, when the Committee, in its sole discretion,
shall deem such registration appropriate. The Company will use
its reasonable efforts to cause the registration statement to
become effective and to file such supplements and amendments to
the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one
year following the expiration of the Award Period of the last
Award outstanding, (b) the date the Company is no longer a
reporting company under the Exchange Act and (c) the date all
Participants have disposed of all shares delivered pursuant to
any Award.
4.6 Anti-Dilution. In the event, after the Effective Date,
of any Company stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the
capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-
up, spin-off, split-off or distribution to Company stockholders
other than a normal cash dividend), sale by the Company of all or
a substantial portion of its assets (measured on either a stand-
alone or consolidated basis), reorganization, rights offering,
partial or complete liquidation, or any other corporate
transaction, Company stock offering or event involving the
Company and having an effect similar to any of the foregoing,
then the Committee shall adjust or substitute, as the case may
be, the number of shares of Common Stock available for Awards
under the Plan, the number of shares of Common Stock covered by
outstanding Awards, the exercise price per share of outstanding
Awards, and performance conditions and any other characteristics
or terms of the Awards as the Committee shall deem necessary or
appropriate to reflect equitably the effects of such changes to
the Participants; provided, however, that the Committee may limit
any such adjustment so as to maintain the deductibility of the
Awards under Section 162(m) and that any fractional shares
resulting from such adjustment shall be eliminated by rounding to
the next lower whole number of shares with appropriate payment
for such fractional shares as shall reasonably be determined by
the Committee.
ARTICLE V
ELIGIBILITY
5.1 Eligibility. Except as herein provided, the persons
who shall be eligible to participate in the Plan and be granted
Awards shall be those persons who are directors, officers, and
employees of, and consultants to, the Company or any subsidiary
of the Company, who shall be in a position, in the opinion of the
Committee, to make contributions to the growth, management,
protection and success of the Company and its subsidiaries. Of
those persons described in the preceding sentence, the Committee
may, from time to time, select persons to be granted Awards and
shall determine the terms and conditions with respect thereto.
In making any such selection and in determining the form of the
Award, the Committee may give consideration to the person's
functions and responsibilities, the person's contributions to the
Company and its subsidiaries, the value of the individual's
service to the Company and its subsidiaries and such other
factors deemed relevant by the Committee.
5.2 Per Person Award Limitations. In each fiscal year
during any part of which this Plan is in effect, a Participant
may not be granted Awards relating to more than 100,000 shares of
Common Stock, subject to adjustment as provided in Section 4.6,
under each of Articles VI, VII, VIII and IX and Sections 10.1,
10.2, 10.3 and 10.4(b). In addition, the maximum aggregate
amount that may be paid out as final Cash Incentive Awards or
other cash Awards in any fiscal year to any Participant shall be
$1,000,000.
ARTICLE VI
STOCK OPTIONS
6.1 General. The Committee shall have authority to grant
Stock Options under the Plan at any time or from time to time.
Stock Options may be either Incentive Stock Options or Non-
Qualified Stock Options. An Option shall entitle the Participant
to receive shares of Common Stock upon exercise of such Option,
subject to the Participant's satisfaction in full of any
conditions, restrictions or limitations imposed in accordance
with the Plan or an Option Agreement (the terms and provisions of
which may differ from other Agreements), including, without
limitation, payment of the Option Price.
6.2 Grant and Exercise. The grant of a Stock Option shall
occur as of the date the Committee determines. Each Option
granted under this Plan shall be evidenced by an Agreement, in a
form approved by the Committee, which shall embody the terms and
conditions of such Option and which shall be subject to the
express terms and conditions set forth in the Plan. Such
Agreement shall become effective upon execution by the
Participant. To the extent that any Stock Option is not
designated as an Incentive Stock Option or, even if so
designated, does not qualify as an Incentive Stock Option, it
shall constitute a Non-Qualified Stock Option. Anything in the
Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended
or altered, nor shall any discretion or authority granted under
the Plan be exercised, so as to disqualify the Plan under
Section 422 of the Code or, without the consent of the
Participant affected, to disqualify any Incentive Stock Option
under such Section 422.
6.3 Terms and Conditions. Stock Options shall be subject
to such terms and conditions as shall be determined by the
Committee, including the following:
(a) Option Period. The Option Period of each Stock
Option shall be fixed by the Committee; provided that no
Stock Option shall be exercisable more than ten (10) years
after the date the Stock Option is granted. In the case of
an Incentive Stock Option granted to an individual who owns
more than ten percent (10%) of the combined voting power of
all classes of stock of the Company, a corporation which is
a parent corporation of the Company or any subsidiary of the
Company (each as defined in Section 424 of the Code), the
Option Period shall not exceed five (5) years from the date
of grant. No Option which is intended to be an Incentive
Stock Option shall be granted more than ten (10) years from
the date the Plan is adopted by the Company or the date the
Plan is approved by the stockholders of the Company,
whichever is earlier.
(b) Option Price. The Option Price per share of the
Common Stock purchasable under an Option shall be determined
by the Committee in its sole and absolute discretion;
provided, however, that in the case of an Incentive Stock
Option granted to an individual who owns more than ten
percent (10%) of the combined voting power of all classes of
stock of the Company, a corporation which is a parent
corporation of the Company or any subsidiary of the Company
(each as defined in Section 424 of the Code), the Option
Price per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value per share on the
date the Option is granted.
(c) Exercisability. Subject to Section 12.1, Stock
Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined
by the Committee. If the Committee provides that any Stock
Option is exercisable only in installments, the Committee
may at any time waive such installment exercise provisions,
in whole or in part, and, subject to the foregoing, may at
any time accelerate the exercisability of any Stock Option.
If the Committee intends that an Option be an Incentive
Stock Option, the Committee may, in its discretion, provide
that the aggregate Fair Market Value (determined at the date
the Option is granted) of the Common Stock as to which such
Incentive Stock Option which is exercisable for the first
time during any calendar year shall not exceed $100,000.
(d) Method of Exercise. Subject to the provisions of
this Article VI, a Participant may exercise Stock Options,
in whole or in part, at any time during the Option Period by
the Participant's giving to the Company written notice of
exercise on a form provided by the Committee (if available)
specifying the number of shares of Common Stock subject to
the Stock Option to be purchased. Such notice shall be
accompanied by payment in full of the purchase price by cash
or check or such other form of payment as the Company may
accept. If set forth in an Agreement or otherwise approved
by the Committee, payment in full or in part may also be
made (i) by delivering Common Stock already owned by the
Participant having a total Fair Market Value on the date of
such delivery equal to the Option Price; (ii) by the
execution and delivery of a note or other evidence of
indebtedness (and any security agreement thereunder)
satisfactory to the Committee and permitted in accordance
with Section 6.3(e); (iii) by the delivery of cash or the
extension of credit by a broker-dealer to whom the
Participant has submitted a notice of exercise or otherwise
indicated an intent to exercise the Option (in accordance
with Part 220, Chapter II, Title 12 of the Code of Federal
Regulations, so-called "cashless" exercise); or (iv) by any
combination of the foregoing. In the case of an Incentive
Stock Option, the right to make a payment in the form of
already owned shares of Common Stock of the same class as
the Common Stock subject to the Stock Option may be
authorized only at the time the Stock Option is granted. No
shares of Common Stock shall be issued until full payment
therefor, as determined by the Committee, has been made.
(e) Company Loan or Guarantee. Upon the exercise of
any Option and subject to the pertinent Agreement and the
discretion of the Committee, the Company may at the request
of the Participant:
(i) lend to the Participant an amount equal to
such portion of the Option Price as the Committee may
determine; or
(ii) guarantee a loan obtained by the Participant
from a third-party for the purpose of tendering the
Option Price.
The terms and conditions of any loan or guarantee,
including the term, interest rate and any security interest
thereunder and whether the loan shall be with recourse,
shall be determined by the Committee, except that no
extension of credit or guarantee shall obligate the Company
for an amount to exceed the lesser of the aggregate Fair
Market Value per share of the Common Stock on the date of
exercise, less the par value of the shares of Common Stock
to be purchased upon the exercise of the Award, or the
amount permitted under applicable laws or the regulations
and rules of the Federal Reserve Board and any other
governmental agency having jurisdiction.
(f) Non-transferability of Options. Except as provided
herein or in an Agreement, no Stock Option or interest
therein shall be transferable by the Participant other than
by will or by the laws of descent and distribution, and all
Stock Options shall be exercisable during the Participant's
lifetime only by the Participant.
6.4 Termination by Reason of Death. Unless otherwise
provided in an Agreement or determined by the Committee, if a
Participant incurs a Termination of Employment due to death, any
unexpired and unexercised Stock Option held by such Participant
shall thereafter be fully exercisable for a period of ninety (90)
days following the date of the appointment of a Representative
(or such other period or no period as the Committee may specify)
or until the expiration of the Option Period, whichever period is
the shorter.
6.5 Termination by Reason of Disability. Unless otherwise
provided in an Agreement or determined by the Committee, if a
Participant incurs a Termination of Employment due to a
Disability, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable by the
Participant for the period of ninety (90) days (or such other
period or no period as the Committee may specify) immediately
following the date of such Termination of Employment or until the
expiration of the Option Period, whichever period is shorter, and
the Participant's death at any time following such Termination of
Employment due to Disability shall not affect the foregoing. In
the event of the Participant's Termination of Employment by
reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
6.6 Other Termination. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs
a Termination of Employment due to Retirement or if the
Termination of Employment is involuntary on the part of the
Participant (but is not due to death or Disability or with
Cause), any Stock Option held by such Participant shall
immediately terminate, except that such Stock Option, to the
extent then exercisable, may be exercised for the a period of the
ninety (90) days immediately following the date of such
Termination of Employment or until the expiration of the Option
Period, whichever is shorter. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs
a Termination of Employment which is voluntary on the part of the
Participant (and is not due to Retirement) or if the
Participant's Termination of Employment is for Cause, any Stock
Option held by such Participant shall terminate immediately,
without any exercise thereof. 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.
6.7 Cashing Out of Option. On receipt of written notice of
exercise, the Committee may elect to cash out all or part of the
portion of any Stock Option to be exercised by paying the
Participant an amount, in cash or Common Stock, equal to the
excess of the Fair Market Value of the Common Stock that is
subject to the Option over the Option Price times the number of
shares of Common Stock subject to the Option on the effective
date of such cash-out.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 General. The Committee shall have authority to grant
Stock Appreciation Rights under the Plan at any time or from time
to time. Subject to the Participant's satisfaction in full of
any conditions, restrictions or limitations imposed in accordance
with the Plan or an Agreement, a Stock Appreciation Right shall
entitle the Participant to surrender to the Company the Stock
Appreciation Right and to be paid therefor in shares of the
Common Stock, cash or a combination thereof as herein provided,
the amount described in Section 7.3(b).
7.2 Grant. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under
the Plan, in which case the exercise of the Stock Appreciation
Right shall require the cancellation of a corresponding portion
of the Stock Option, and the exercise of a Stock Option shall
result in the cancellation of a corresponding portion of the
Stock Appreciation Right. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of
grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of
such Stock Option. A Stock Appreciation Right may also be
granted on a stand-alone basis. Each Stock Appreciation Right
granted under this Plan shall be evidenced by an Agreement, which
shall embody the terms and conditions of such Stock Appreciation
Right and which shall be subject to the terms and conditions set
forth in this Plan.
7.3 Terms and Conditions. Stock Appreciation Rights shall
be subject to such terms and conditions as shall be determined by
the Committee, including the following:
(a) Period and Exercise. The term of a Stock
Appreciation Right shall be established by the Committee.
If granted in conjunction with a Stock Option, the Stock
Appreciation Right shall have a term which is the same as
the Option Period and shall be exercisable only at such
time or times and to the extent the related Stock Options
would be exercisable in accordance with the provisions of
Article VI. A Stock Appreciation Right which is granted on
a stand-alone basis shall be for such period and shall be
exercisable at such times and to the extent provided in an
Agreement. Stock Appreciation Rights shall be exercised by
the Participant's giving written notice of exercise on a
form provided by the Committee (if available) to the
Company specifying the portion of the Stock Appreciation
Right to be exercised.
(b) Amount. Upon the exercise of a Stock Appreciation
Right granted in conjunction with a Stock Option, a
Participant shall be entitled to receive an amount in cash,
shares of Common Stock or both as determined by the
Committee or as otherwise permitted in an Agreement equal
in value to the excess of the Fair Market Value per share
of Common Stock over the Option Price per share of Common
Stock specified in the related Agreement multiplied by the
number of shares in respect of which the Stock Appreciation
Right is exercised. In the case of a Stock Appreciation
Right granted on a stand-alone basis, the Agreement shall
specify the value to be used in lieu of the Option Price
per share of Common Stock. The aggregate Fair Market Value
per share of the Common Stock shall be determined as of the
date of exercise of such Stock Appreciation Right.
(c) Non-transferability of Stock Appreciation Rights.
Stock Appreciation Rights shall be transferable only when
and to the extent that a Stock Option would be transferable
under the Plan, unless otherwise provided in an Agreement.
(d) Termination. A Stock Appreciation Right shall
terminate at such time as a Stock Option would terminate
under the Plan, unless otherwise provided in an Agreement.
(e) Effect on Shares Under the Plan. Upon the exercise
of a Stock Appreciation Right, the Stock Option or part
thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of
the limitation set forth in Section 4.1 on the number of
shares of Common Stock to be issued under the Plan, but
only to the extent of the number of shares of Common Stock
covered by the Stock Appreciation Right at the time of
exercise based on the value of the Stock Appreciation Right
at such time.
(f) Incentive Stock Option. A Stock Appreciation Right
granted in tandem with an Incentive Stock Option shall not
be exercisable unless the Fair Market Value of the Common
Stock on the date of exercise exceeds the Option Price. In
no event shall any amount paid pursuant to the Stock
Appreciation Right exceed the difference between the Fair
Market Value on the date of exercise and the Option Price.
ARTICLE VIII
RESTRICTED STOCK
8.1 General. The Committee shall have authority to grant
Restricted Stock under the Plan at any time or from time to time,
either alone or in addition to other Awards granted under the
Plan. The Committee shall determine the persons to whom and the
time or times at which grants of Restricted Stock will be
awarded, the number of shares of Restricted Stock to be awarded
to any Participant, the time or times within which such Awards
may be subject to forfeiture and any other terms and conditions
of the Awards. Each Award shall be confirmed by, and be subject
to the terms of, an Agreement. The Committee may condition the
grant of Restricted Stock upon the attainment of specified
performance goals by the Participant or by the Company or an
Affiliate (including a division or department of the Company or
an Affiliate) for or within which the Participant is primarily
employed or upon such other factors or criteria as the Committee
shall determine. The provisions of Restricted Stock Awards need
not be the same with respect to any Participant.
8.2 Awards and Certificates. Notwithstanding the
limitations on issuance of shares of Common Stock otherwise
provided in the Plan, each Participant receiving an Award of
Restricted Stock shall be issued a certificate in respect of such
shares of Restricted Stock. Such certificate shall be registered
in the name of such Participant and shall bear an appropriate
legend referring to the terms, conditions, and restrictions
applicable to such Award as determined by the Committee. The
Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award
of Restricted Stock, the Participant shall have delivered a stock
power, endorsed in blank, relating to the Common Stock covered by
such Award.
8.3 Terms and Conditions. Shares of Restricted Stock shall
be subject to the following terms and conditions:
(a) Limitations on Transferability. Subject to the
provisions of the Plan and the Agreement, during a period
set by the Committee commencing with the date of such Award
(the "Restriction Period"), the Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise
encumber any interest in shares of Restricted Stock.
(b) Rights. Except as provided in Section 8.3(a), the
Participant shall have, with respect to shares of
Restricted Stock, all of the rights of a stockholder of the
Company holding the class of Common Stock that is the
subject of the Restricted Stock, including, if applicable,
the right to vote the shares and the right to receive any
cash dividends. Unless otherwise determined by the
Committee and subject to the Plan, cash dividends on the
class of Common Stock that is the subject of the Restricted
Stock shall be automatically deferred and reinvested in
additional Restricted Stock, and dividends on the class of
Common Stock that is the subject of the Restricted Stock
payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock on
which such dividends were paid.
(c) Acceleration. Based on service, performance by the
Participant or by the Company or an Affiliate, including
any division or department for which the Participant is
employed, or such other factors or criteria as the
Committee may determine, the Committee may provide for the
lapse of restrictions in installments and may accelerate
the vesting of all or any part of any Award and waive the
restrictions for all or any part of such Award.
(d) Forfeiture. Unless otherwise provided in an
Agreement or determined by the Committee, if the
Participant incurs a Termination of Employment during the
Restriction Period due to death or Disability, the
restrictions shall lapse and the Participant shall be fully
vested in the Restricted Stock. Unless otherwise provided
in an Agreement or determined by the Committee, upon a
Participant's Termination of Employment for any reason
during the Restriction Period other than death or
Disability, all shares of Restricted Stock still subject to
restriction shall be forfeited by the Participant, except
the Committee shall have the discretion to waive in whole
or in part any or all remaining restrictions with respect
to any or all of such Participant's Restricted Stock.
(e) Delivery. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock
subject to such Restriction Period, certificates for such
shares shall be delivered to the Participant.
(f) Election. A Participant may elect to further defer
receipt of the Restricted Stock for a specified period or
until a specified event, subject in each case to the
Committee's approval and to such terms as are determined by
the Committee. Subject to any exceptions adopted by the
Committee, such election must be made one (1) year prior to
completion of the Restriction Period.
ARTICLE IX
DEFERRED STOCK
9.1 General. The Committee shall have authority to grant
Deferred Stock under the Plan at any time or from time to time,
either alone or in addition to other Awards granted under the
Plan. The Committee shall determine the persons to whom and the
time or times at which Deferred Stock will be awarded, the number
of shares of Deferred Stock to be awarded to any Participant, the
duration of the period (the "Deferral Period") prior to which the
Common Stock will be delivered, and the conditions under which
receipt of the Common Stock will be deferred and any other terms
and conditions of the Awards. Each Award shall be confirmed by,
and be subject to the terms of, an Agreement. The Committee may
condition the grant of Deferred Stock upon the attainment of
specified performance goals by the Participant or by the Company
or an Affiliate, including a division or department of the
Company or an Affiliate for or within which the Participant is
primarily employed, or upon such other factors or criteria as the
Committee shall determine. The provisions of Deferred Stock
Awards need not be the same with respect to any Participant.
9.2 Terms and Conditions. Deferred Stock Awards shall be
subject to the following terms and conditions:
(a) Limitations on Transferability. Subject to the
provisions of the Plan and the Agreement, Deferred Stock
Awards, or any interest therein, may not be sold, assigned,
transferred, pledged or otherwise encumbered during the
Deferral Period. At the expiration of the Deferral Period
(or Elective Deferral Period as defined in Section 9.2(e),
where applicable), the Committee may elect to deliver
Common Stock, cash equal to the Fair Market Value of such
Common Stock or a combination of cash and Common Stock to
the Participant for the shares covered by the Deferred
Stock Award.
(b) Rights. Unless otherwise determined by the
Committee and subject to the Plan, cash dividends on the
Common Stock that is the subject of the Deferred Stock
Award shall be automatically deferred and reinvested in
additional Deferred Stock, and dividends on the Common
Stock that is the subject of the Deferred Stock Award
payable in Common Stock shall be paid in the form of
Deferred Stock of the same class as the Common Stock on
which such dividends were paid.
(c) Acceleration. Based on service, performance by the
Participant or by the Company or the Affiliate, including
any division or department for which the Participant is
employed, or such other factors or criteria as the
Committee may determine, the Committee may provide for the
lapse of deferral limitations in installments and may
accelerate the vesting of all or any part of any Award and
waive the deferral limitations for all or any part of such
Award.
(d) Forfeiture. Unless otherwise provided in an
Agreement or determined by the Committee, if the
Participant incurs a Termination of Employment during the
Deferral Period due to death or Disability, the
restrictions shall lapse and the Participant shall be fully
vested in the Deferred Stock. Unless otherwise provided in
an Agreement or determined by the Committee, upon a
Participant's Termination of Employment for any reason
during the Deferral Period other than death or Disability,
the rights to the shares still covered by the Award shall
be forfeited by the Participant, except the Committee shall
have the discretion to waive in whole or in part any or all
remaining deferral limitations with respect to any or all
of such Participant's Deferred Stock.
(e) Election. A Participant may elect further to defer
receipt of the Deferred Stock payable under an Award (or an
installment of an Award) for a specified period or until a
specified event (an "Elective Deferral Period"), subject in
each case to the Committee's approval and to such terms as
are determined by the Committee. Subject to any exceptions
adopted by the Committee, such election must be made at
least one (1) year prior to completion of the Deferral
Period for the Award (or of the applicable installment
thereof).
ARTICLE X
OTHER AWARDS
10.1 Bonus Stock and Awards In Lieu of Obligations. The
Committee is authorized to grant Common Stock as a bonus, or to
grant Common Stock or other Awards in lieu of Company obligations
to pay cash or deliver other property under other plans or
compensatory arrangements. Common Stock or Awards granted
hereunder shall be subject to such other terms as shall be
determined by the Committee.
10.2 Dividend Equivalents. The Committee is authorized to
grant Dividend Equivalents to a Participant, entitling the
Participant to receive cash, Common Stock, other Awards, or other
property equal in value to dividends paid with respect to a
specified number of shares of Common Stock. Dividend Equivalents
may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend
Equivalents will be paid or distributed when accrued or will be
deemed to have been reinvested in additional Common Stock, Awards
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may
specify.
10.3 Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise
based on, or related to, Common Stock, as deemed by the Committee
to be consistent with the purposes of the Plan, including,
without limitation, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Common Stock,
purchase rights for Common Stock, Awards with value and payment
contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to
the book value of Common Stock or the value of securities of or
the performance of specified subsidiaries. The Committee shall
determine the terms and conditions of such Awards. Common Stock
delivered pursuant to an Award in the nature of a purchase right
granted under this Section 10.3 shall be purchased for such
consideration and paid for at such times, by such methods, and in
such forms, including, without limitation, cash, Common Stock,
other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any
other Award under the Plan, may also be granted pursuant to this
Section 10.3.
10.4 Performance Awards.
(a) Performance Conditions. The right of a Participant
to exercise or receive a grant or settlement of any Award,
and its timing, may be subject to performance conditions
specified by the Committee. The Committee may use business
criteria and other measures of performance it deems
appropriate in establishing any performance conditions, and
may exercise its discretion to reduce or increase the
amounts payable under any Award subject to performance
conditions, except as limited under Sections 10.4(b) and
10.4(c) hereof in the case of a Performance Award intended
to qualify under Code Section 162(m).
(b) Performance Awards Granted to Designated Covered
Employees. If the Committee determines that a Performance
Award to be granted to a person the Committee regards as
likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code
Section 162(m), the grant and/or settlement of such
Performance Award shall be contingent upon achievement of
preestablished performance goals and other terms set forth
in this Section 10.4(b).
(i) Performance Goals Generally. The performance
goals for any such Performance Awards shall consist of
one or more business criteria and a targeted level or
levels of performance with respect to such criteria, as
specified by the Committee consistent with this
Section 10.4(b). Performance goals shall be objective
and shall otherwise meet the requirements of Code
Section 162(m), including the requirement that the
level or levels of performance targeted by the
Committee result in the performance goals being
"substantially uncertain."
(ii) Business Criteria. One or more of the
following business criteria for the Company, on a
consolidated basis, and/or for specified subsidiaries
or business units of the Company (except with respect
to the total stockholder return and earnings per share
criteria), shall be used exclusively by the Committee
in establishing performance goals for such Performance
Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a
comparable basis) of a publicly available index, such
as, but not limited to, the Standard & Poor's 500 or
the Nasdaq-U.S. Index; (3) net revenue; (4) net income;
(5) pre-tax income; (6) EBITDA (earnings before
interest, taxes, depreciation and amortization); (7)
EBITDA margin (EBITDA as a percentage of net revenue);
(8) operating income; (9) operating margin (operating
income as a percentage of net revenue); (10) earnings
per share; (11) return on equity; (12) return on
capital; and (13) return on investment. The foregoing
business criteria shall also be exclusively used in
establishing performance goals for Cash Incentive
Awards granted under Section 10.4(c) hereof.
(iii)Performance Period: Timing For Establishing
Performance Goals. Achievement of performance goals in
respect of such Performance Awards shall be measured
over such periods as may be specified by the Committee.
Performance goals shall be established on or before the
dates that are required or permitted for "performance-
based compensation" under Code Section 162(m).
(iv) Settlement of Performance Awards; Other
Terms. Settlement of such Performance Awards may be in
cash or Common Stock, or other Awards, or other
property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of
a settlement otherwise to be made in connection with
such Performance Awards, but may not exercise
discretion to increase any such amount payable in
respect of a Performance Award subject to this
Section 10.4(b). The Committee shall specify the
circumstances in which such Performance Awards shall be
forfeited or paid in the event of a Termination of
Employment or a Change in Control prior to the end of a
performance period or settlement of Performance Awards,
and other terms relating to such Performance Awards.
(c) Cash Incentive Awards Granted to Designated Covered
Employees. The Committee may grant Cash Incentive Awards
to Participants including those designated by the Committee
as likely to be Covered Employees, which Awards shall
represent a conditional right to receive a payment in cash,
unless otherwise determined by the Committee, after the end
of a specified fiscal year or fiscal quarter or other
period specified by the Committee, in accordance with this
Section 10.4(c).
(i) Cash Incentive Award. The Cash Incentive
Award for Participants the Committee regards as likely
to be regarded as Covered Employees shall be based on
achievement of a performance goal or goals based on one
or more of the business criteria set forth in Section
10.4(b), and may be based on such criteria for any
other Participant. The Committee may specify the
amount of the individual Cash Incentive Award as a
percentage of any such business criteria, a percentage
thereof in excess of a threshold amount or another
amount which need not bear a strictly mathematical
relationship to such business criteria. The Committee
may establish a Cash Incentive Award pool that includes
Participants the Committee regards likely to be Covered
Employees, which shall be an unfunded pool, for
purposes of measuring Company performance in connection
with Cash Incentive Awards. The amount of the Cash
Incentive Award pool shall be based upon the
achievement of a performance goal or goals based on one
or more of the business criteria set forth in
Section 10.4(b) hereof in the given performance period,
as granted by the Committee. The Committee may specify
the amount of the Cash Incentive Award pool as a
percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount or
another amount which need not bear a strictly
mathematical relationship to such business criteria.
(ii) Potential Cash Incentive Awards. Not later
than the date required or permitted for "qualified
performance-based compensation" under Code
Section 162(m), the Committee shall determine the
Participants who will potentially receive Cash
Incentive Awards for the specified fiscal year, quarter
or other period, either as individual Cash Incentive
Awards or out of an Cash Incentive Award pool
established by such date and the amount or method for
determining the amount of the individual Cash Incentive
Award or the amount of such Participant's portion of
the Cash Incentive Award pool.
(iii)Payout of Cash Incentive Awards. After the
end of the specified fiscal year, quarter or other
period, as the case may be, the Committee shall
determine the amount, if any, of potential individual
Cash Incentive Award payable to a Participant or of any
Cash Incentive Award pool and the maximum amount of
potential Cash Incentive Award payable to each
Participant in any Cash Incentive Award pool. The
Committee may, in its discretion, determine that the
amount payable to any Participant as a final Cash
Incentive Award shall be increased or reduced from the
amount of his or her potential Cash Incentive Award,
including a determination to make no final Award
whatsoever, but may not exercise discretion to increase
any such amount in the case of a Cash Incentive Award
intended to qualify under Code Section 162(m). The
Committee shall specify the circumstances in which a
Cash Incentive Award shall be paid or forfeited in the
event of Termination of Employment by the Participant
or a Change in Control prior to the end of the period
for measuring performance or the payout of such Cash
Incentive Award, and other terms relating to such Cash
Incentive Award in accordance with the Plan. Upon the
completion of the measuring period and the
determination of the right to payment and the amount,
the Committee shall direct the Company to make payment.
(d) Written Determinations. All determinations by the
Committee as to the establishment of performance goals and
the potential Performance Awards or Cash Incentive Awards
related to such performance goals and as to the achievement
of performance goals relating to such Awards, the amount of
any Cash Incentive Award pool and the amount of final Cash
Incentive Awards, shall be made in writing in the case of
any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating
to such Performance Awards or Cash Incentive Awards.
ARTICLE XI
PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
11.1 Limited Transfer During Offering. In the event there
is an effective registration statement under the Securities Act
pursuant to which shares of Common Stock shall be offered for
sale in an underwritten offering, a Participant shall not, during
the period requested by the underwriters managing the registered
public offering, effect any public sale or distribution of shares
received directly or indirectly as, or pursuant to an exercise
of, any Award.
11.2 Committee Discretion. The Committee may in its sole
discretion include in any Agreement an obligation that the
Company purchase a Participant's shares of Common Stock received
upon the exercise of an Award (including the purchase of any
unexercised Awards which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company, upon
such terms and conditions as the Committee may determine and set
forth in an Agreement. The provisions of this Article XI shall
be construed by the Committee in its sole discretion and shall be
subject to such other terms and conditions as the Committee may
from time to time determine. Notwithstanding any provision
herein to the contrary, the Company may upon determination by the
Committee assign its right to purchase shares of Common Stock
under this Article XI, whereupon the assignee of such right shall
have all the rights, duties and obligations of the Company with
respect to purchase of the shares of Common Stock.
11.3 No Company Obligation. None of the Company, an
Affiliate or the Committee shall have any duty or obligation to
disclose affirmatively to a record or beneficial holder of Common
Stock or an Award, and such holder shall have no right to be
advised of, any material information regarding the Company or any
Affiliate at any time prior to, upon or in connection with
receipt or the exercise of an Award or the Company's purchase of
Common Stock or an Award from such holder in accordance with the
terms hereof.
ARTICLE XII
CHANGE IN CONTROL PROVISIONS
12.1 Impact of Event. Notwithstanding any other provision
of the Plan to the contrary, unless otherwise provided in an
Agreement, in the event of a Change in Control (as defined in
Section 12.2):
(a) Any Stock Appreciation Rights and Stock Options
outstanding as of the date such Change in Control and not
then exercisable shall become fully exercisable to the full
extent of the original grant;
(b) The restrictions and deferral limitations
applicable to any Restricted Stock, Deferred Stock or other
Award shall lapse, and such Restricted Stock, Deferred
Stock or other Award shall become free of all restrictions
and become fully vested and transferable to the full extent
of the original grant.
(c) The performance goals and other conditions with
respect to any outstanding Performance Award or Cash
Incentive Award shall be deemed to have been satisfied in
full, and such Award shall be fully distributable, if and
to the extent provided by the Committee in the Agreement
relating to such Award or otherwise, notwithstanding that
the Award may not be fully deductible to the Company under
Section 162(m) of the Code.
(d) Notwithstanding any other provision of the Plan,
unless the Committee shall provide otherwise in an
Agreement, a Participant shall have the right, whether or
not the Award is fully exercisable or may be otherwise
realized by the Participant, by giving notice during the
sixty (60) day period from and after a Change in Control to
the Company, to elect to surrender all or part of a stock-
based Award to the Company and to receive cash, within
thirty (30) days of such notice, in an amount equal to the
amount by which the "Change in Control Price" (as defined
in Section 12.3) per share of Common Stock on the date of
such election shall exceed the amount which the Participant
must pay to exercise the Award per share of Common Stock
under the Award (the "Spread"), multiplied by the number of
shares of Common Stock granted under the Award as to which
the right granted under this Section 12.1 shall have been
exercised.
12.2 Definition of Change in Control. For purposes of this
Plan, a "Change in Control" shall be deemed to have occurred if
(a) any corporation, person or other entity (other than the
Company, a majority-owned subsidiary of the Company or any of its
subsidiaries, or an employee benefit plan (or related trust)
sponsored or maintained by the Company), including a "group" as
defined in Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner of stock representing more than twenty percent
(20%) of the combined voting power of the Company's then
outstanding securities; (b)(i) the stockholders of the Company
approve a definitive agreement to merge or consolidate the
Company with or into another corporation other than a majority-
owned subsidiary of the Company, or to sell or otherwise dispose
of all or substantially all of the Company's assets, and (ii) the
persons who were the members of the Board of Directors of the
Company prior to such approval do not represent a majority of the
directors of the surviving, resulting or acquiring entity or the
parent thereof; (c) the stockholders of the Company approve a
plan of liquidation of the Company; or (d) within any period of
24 consecutive months, persons who were members of the Board of
Directors of the Company immediately prior to such 24-month
period, together with any persons who were first elected as
directors (other than as a result of any settlement of a proxy or
consent solicitation contest or any action taken to avoid such a
contest) during such 24-month period by or upon the
recommendation of persons who were members of the Board of
Directors of the Company immediately prior to such 24-month
period and who constituted a majority of the Board of Directors
of the Company at the time of such election, cease to constitute
a majority of the Board.
12.3 Change in Control Price. For purposes of the Plan,
"Change in Control Price" means the higher of (a) the highest
reported sales price of a share of Common Stock in any
transaction reported on the principal exchange on which such
shares are listed or on Nasdaq during the sixty (60) day period
prior to and including the date of a Change in Control or (b) if
the Change in Control is the result of a tender or exchange
offer, merger, consolidation, liquidation or sale of all or
substantially all of the assets of the Company (in each case a
"Corporate Transaction"), the highest price per share of Common
Stock paid in such Corporate Transaction, except that, in the
case of Incentive Stock Options and Stock Appreciation Rights
relating to Incentive Stock Options, such price shall be based
only on the Fair Market Value of the Common Stock on the date any
such Incentive Stock Option or Stock Appreciation Right is
exercised. To the extent that the consideration paid in any such
Corporate Transaction consists all or in part of securities or
other non-cash consideration, the value of such securities or
other non-cash consideration shall be determined in the sole
discretion of the Committee.
ARTICLE XIII
MISCELLANEOUS
13.1 Amendments and Termination. The Board may amend, alter
or discontinue the Plan at any time, but no amendment, alteration
or discontinuation shall be made which would impair the rights of
a Participant under a Stock Option, Stock Appreciation Right,
Restricted Stock Award or Deferred Stock Award theretofore
granted without the Participant's consent. In addition, no such
amendment shall be made without the approval of the Company's
stockholders to the extent such approval is required by law or
agreement.
The Committee may amend the Plan at any time provided that
(a) no amendment shall impair the rights of any Participant under
any Award theretofore granted without the Participant's consent,
and (b) any amendment shall be subject to the approval or
rejection of the Board.
The Committee may amend the terms of any Award or other
Award theretofore granted, prospectively or retroactively, but no
such amendment shall impair the rights of any Participant without
the Participant's consent or reduce an Option Price.
Subject to the above provisions, the Board shall have
authority to amend the Plan to take into account changes in law
and tax and accounting rules, as well as other developments, and
to grant Awards which qualify for beneficial treatment under such
rules without stockholder approval. Notwithstanding anything in
the Plan to the contrary, if any right under this Plan would
cause a transaction to be ineligible for pooling of interests
accounting that would, but for the right hereunder, be eligible
for such accounting treatment, the Committee may modify or adjust
the right so that pooling of interests accounting shall be
available, including the substitution of Common Stock having a
Fair Market Value equal to the cash otherwise payable hereunder
for the right which caused the transaction to be ineligible for
pooling of interests accounting.
13.2 Stand-Alone, Additional, Tandem, and Substitute
Awards. Awards granted under the Plan may, in the discretion of
the Committee, be granted either alone or in addition to, in
tandem with, or in substitution or exchange for, any other Award
or any award granted under another plan of the Company, any
subsidiary, or any business entity to be acquired by the Company
or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. Such additional,
tandem, and substitute or exchange Awards may be granted at any
time. If an Award is granted in substitution or exchange for
another Award or award, the Committee shall require the surrender
of such other Award or award in consideration for the grant of
the new Award. In addition, Awards may be granted in lieu of
cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any subsidiary.
13.3 Form and Timing of Payment Under Awards; Deferrals.
Subject to the terms of the Plan and any applicable Agreement,
payments to be made by the Company or an Affiliate upon the
exercise of an Award or settlement of an Award may be made in
such forms as the Committee shall determine, including, without
limitation, cash, Common Stock, other Awards or other property,
and may be made in a single payment or transfer, in installments,
or on a deferred basis. The settlement of any Award may be
accelerated, and cash may be paid in lieu of Common Stock in
connection with such settlement, in the discretion of the
Committee or upon occurrence of one or more specified events (in
addition to a Change in Control). Installment or deferred
payments may be required by the Committee (subject to
Section 13.1 of the Plan) or permitted at the election of the
Participant. Payments may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the granting or crediting of
Dividend Equivalents in respect of installment or deferred
payments denominated in Common Stock.
13.4 Status of Awards Under Code Section 162(m). It is the
intent of the Company that Awards granted to persons who are
Covered Employees within the meaning of Code Section 162(m) shall
constitute "qualified performance-based compensation" satisfying
the requirements of Code Section 162(m). Accordingly, the
provisions of the Plan shall be interpreted in a manner
consistent with Code Section 162(m). If any provision of the
Plan or any agreement relating to such an Award does not comply
or is inconsistent with the requirements of Code Section 162(m),
such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.
13.5 Unfunded Status of Plan; Limits on Transferability. It
is intended that the Plan be an "unfunded" plan for incentive and
deferred compensation. The Committee may authorize the creation
of trusts or other arrangements to meet the obligations created
under the Plan to deliver Common Stock or make payments;
provided, however, that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan. Unless
otherwise provided in this Plan or in an Agreement, no Award
shall be subject to the claims of Participant's creditors, and no
Award may be transferred, assigned, alienated or encumbered in
any way other than by will or the laws of descent and
distribution or to a Representative upon the death of the
Participant.
13.6 General Provisions.
(a) Representation. The Committee may require each
person purchasing or receiving shares pursuant to an Award
to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.
(b) No Additional Obligation. Nothing contained in the
Plan shall prevent the Company or an Affiliate from
adopting other or additional compensation arrangements for
its employees.
(c) Withholding. No later than the date as of which an
amount first becomes includible in the gross income of the
Participant for Federal income tax purposes with respect to
any Award, the Participant shall pay to the Company (or
other entity identified by the Committee), or make
arrangements satisfactory to the Company or other entity
identified by the Committee regarding the payment of, any
Federal, state, local or foreign taxes of any kind required
by law to be withheld with respect to such amount required
in order for the Company or an Affiliate to obtain a
current deduction. If the Participant disposes of shares
of Common Stock acquired pursuant to an Incentive Stock
Option in any transaction considered to be a disqualifying
transaction under the Code, the Participant must give
written notice of such transfer and the Company shall have
the right to deduct any taxes required by law to be
withheld from any amounts otherwise payable to the
Participant. Unless otherwise determined by the Committee,
withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Award that gives
rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditional on such
payment or arrangements, and the Company and its Affiliates
shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment otherwise due to the
Participant.
(d) Reinvestment. The reinvestment of dividends in
additional Deferred or Restricted Stock at the time of any
dividend payment shall be permissible only if sufficient
shares of Common Stock are available under the Plan for
such reinvestment (taking into account then outstanding
Options and other Awards).
(e) Representation. The Committee shall establish such
procedures as it deems appropriate for a Participant to
designate a Representative to whom any amounts payable in
the event of the Participant's death are to be paid.
(f) Controlling Law. The Plan and all Awards made and
actions taken thereunder shall be governed by and construed
in accordance with the laws of the State of Illinois (other
than its law respecting choice of law). The Plan shall be
construed to comply with all applicable law and to avoid
liability to the Company, an Affiliate or a Participant,
including, without limitation, liability under
Section 16(b) of the Exchange Act.
(g) Offset. Any amounts owed to the Company or an
Affiliate by the Participant of whatever nature may be
offset by the Company from the value of any shares of
Common Stock, cash or other thing of value under this Plan
or an Agreement to be transferred to the Participant, and
no shares of Common Stock, cash or other thing of value
under this Plan or an Agreement shall be transferred unless
and until all disputes between the Company and the
Participant have been fully and finally resolved and the
Participant has waived all claims to such against the
Company or an Affiliate.
(h) Fail Safe. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this
Plan are intended to comply with all applicable conditions
of Rule 16b-3, as applicable. To the extent any action by
the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed
advisable by the Committee.
13.7 Mitigation of Excise Tax. If any payment or right
accruing to a Participant under this Plan (without the
application of this Section 13.7), either alone or together with
other payments or rights accruing to the Participant from the
Company or an Affiliate ("Total Payments"), would constitute a
"parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced
to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan
being subject to an excise tax under Section 4999 of the Code or
being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or
payments under this Plan is to apply shall be made by the
Committee in good faith after consultation with the Participant,
and such determination shall be conclusive and binding on the
Participant. The Participant shall cooperate in good faith with
the Committee in making such determination and providing the
necessary information for this purpose. The foregoing provisions
of this Section 13.7 shall apply with respect to any person only
if, after reduction for any applicable Federal excise tax imposed
by Section 4999 of the Code and Federal income tax imposed by the
Code, the Total Payments accruing to such person would be less
than the amount of the Total Payments as reduced, if applicable,
under the foregoing provisions of the Plan and after reduction
for only Federal income taxes. In addition, the foregoing
provisions of this Section 13.7 are not meant to be exclusive
with regard to any Participant, and the Company or an Affiliate
may, pursuant to employment, severance or other agreements,
provide for additional payments to a Participant due to a
Participant's rights under an award constituting a "parachute
payment."
13.8 Rights with Respect to Continuance of Employment.
Nothing contained herein shall be deemed to alter the
relationship between the Company or an Affiliate and a
Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written
contract regarding such relationship. Nothing contained herein
shall be construed to constitute a contract of employment between
the Company or an Affiliate and a Participant. The Company or an
Affiliate and each of the Participants continue to have the right
to terminate the employment or service relationship at any time
for any reason, except as provided in a written contract.
13.9 Awards in Substitution for Awards Granted by Other
Corporations. Awards (including cash in respect of fractional
shares) may be granted under the Plan from time to time in
substitution for awards held by employees, directors or service
providers of other corporations who are about to become officers,
directors or employees of the Company or an Affiliate as the
result of a merger or consolidation of the employing corporation
with the Company or an Affiliate, or the acquisition by the
Company or an Affiliate of the assets of the employing
corporation, or the acquisition by the Company or Affiliate of
the stock of the employing corporation, as the result of which it
becomes a designated employer under the Plan. The terms and
conditions of the Awards so granted may vary from the terms and
conditions set forth in this Plan at the time of such grant as
the Committee may deem appropriate to conform, in whole or in
part, to the provisions of the awards in substitution for which
they are granted.
13.10 Procedure for Adoption. Any Affiliate of the Company
may by resolution of such Affiliate's board of directors, with
the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, adopt the
Plan for the benefit of its employees as of the date specified in
the board resolution.
13.11 Procedure for Withdrawal. Any Affiliate which has
adopted the Plan may, by resolution of the board of directors of
such Affiliate, with the consent of the Board of Directors and
subject to such conditions as may be imposed by the Board of
Directors, terminate its adoption of the Plan.
13.12 Delay. The Company shall have the right to suspend or
delay any time period described in the Plan or an Agreement if
the Committee shall determine that the action may constitute a
violation of any law or result in liability under any law to the
Company, an Affiliate or a stockholder of the Company until such
time as the action required or permitted shall not constitute a
violation of law or result in liability to the Company, an
Affiliate or a stockholder of the Company.
13.13 Headings. The headings contained in this Plan are for
reference purposes only and shall not affect the meaning or
interpretation of this Plan.
13.14 Severability. If any provision of this Plan shall for
any reason be held to be invalid or unenforceable, such
invalidity or unenforceability shall not effect any other
provision hereby, and this Plan shall be construed as if such
invalid or unenforceable provision were omitted.
13.15 Successors and Assigns. This Plan shall inure to the
benefit of and be binding upon each successor and assign of the
Company. All obligations imposed upon a Participant, and all
rights granted to the Company hereunder, shall be binding upon
the Participant's heirs, legal representatives and successors.
13.16 Entire Agreement. This Plan and the Agreements
constitute the entire agreement with respect to the subject
matter hereof and thereof, provided that in the event of any
inconsistency between the Plan and any Agreement, the terms and
conditions of the Plan shall control.
<PAGE>
FIRST AMENDMENT TO THE
CAREER EDUCATION CORPORATION
1998 EMPLOYEE INCENTIVE COMPENSATION PLAN
WHEREAS, Career Education Corporation (the "Corporation") has
established and maintains the Career Education Corporation 1998
Employee Incentive Compensation Plan (the "Plan"), effective as
of April 1, 1998; and
WHEREAS, the Corporation has determined that it desires to
amend the Plan to increase the maximum number of Awards (as
defined in the Plan) which may be granted to a Participant in the
Plan in any fiscal year;
NOW, THEREFORE, BE IT RESOLVED that, pursuant to the power
and authority reserved to the Corporation by Section 13.1 of the
Plan, and pursuant to the authority delegated to the Committee,
as defined in the Plan, the Plan be and is hereby amended
effective July 29, 1998, unless otherwise specified herein, in
the following particulars:
Section 5.2 is amended by deleting its first sentence and
replacing it with the following:
"In each fiscal year during any part of which this
Plan is in effect, a Participant may not be granted Awards
relating to more than 250,000 shares of Common Stock,
subject to adjustment as provided in Section 4.6, under
each of Articles VI, VII, VIII and IX and Sections 10.1,
10.2, 10.3 and 10.4(b)."
Except as provided herein, the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, the Corporation has caused this amendment
to be executed effective as of the 29th day of July, 1998.
CAREER EDUCATION CORPORATION
By: /s/ William A. Klettke
William A. Klettke
Vice President and Chief Financial Officer
<PAGE>
SECOND AMENDMENT TO THE
CAREER EDUCATION CORPORATION
1998 EMPLOYEE INCENTIVE COMPENSATION PLAN
WHEREAS, Career Education Corporation (the "Corporation") has
established and maintains the Career Education Corporation 1998
Employee Incentive Compensation Plan (the "Plan"), effective as
of April 1, 1998, as amended on July 29, 1998; and
WHEREAS, the Corporation desires to further amend the Plan to
increase the total number of shares of Common Stock (unless
otherwise stated in this Amendment, defined terms used herein
shall have the meanings ascribed to them in the Plan) reserved
and available for distribution pursuant to Awards under the Plan;
NOW, THEREFORE, BE IT RESOLVED that, pursuant to the power
and authority reserved to the Corporation by Section 13.1 of the
Plan, and pursuant to the authority delegated to the Committee,
the Plan be and hereby is amended, effective February 17, 1999,
in the following manner:
Section 4.1 is amended by deleting its first sentence and
replacing it with the following:
"4.1Number of Shares. Subject to the adjustment under
Section 4.6, the total number of shares of Common
Stock reserved and available for distribution
pursuant to Awards under the Plan shall be
1,350,000 shares of Common Stock authorized for
issuance as of the Effective Date."
Except as provided herein, the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, the Corporation has caused this amendment
to be executed effective as of the 17th day of February, 1999.
CAREER EDUCATION CORPORATION
By: /s/ William A. Klettke
William A. Klettke
Vice President and Chief Financial Officer
EXHIBIT 5
(312) 902-5200
[KMZ LETTERHEAD]
August 3, 1999
Career Education Corporation
2800 West Higgins Road
Hoffman Estates, IL 60195
Ladies and Gentlemen:
We have acted as counsel for Career Education
Corporation, a Delaware corporation (the "Company"), in
connection with the preparation and filing of a Registration
Statement on Form S-8 (the "Registration Statement") for the
registration for sale under the Securities Act of 1933, as
amended (the "Act"), of 750,000 additional shares of the
Company's common stock, $.01 par value per share (the
"Common Stock"), which may be issued pursuant to the Career
Education Corporation 1998 Employee Incentive Compensation
Plan, as amended (the "Plan"). This opinion is being
furnished in accordance with the requirements of Item
605(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined and
relied upon originals or copies, certified or otherwise
identified to our satisfaction, of the following:
1. The Registration Statement;
2. The Amended and Restated Certificate of
Incorporation of the Company;
3. The Amended and Restated By-Laws of the
Company;
4. Records of proceedings and actions of the
Board of Directors and the Stockholders of
the Company relating to the amendments to the
Plan;
5. The Plan;
6. Certificates of public officials, officers,
representatives and agents of the Company,
and we have assumed that all of the
representations contained therein are
accurate and complete; and
7. Such other instruments, documents, statements
and records of the Company and others as we
have deemed relevant and necessary to examine
and rely upon for the purpose of this
opinion.
In connection with this opinion, we have assumed the legal
capacity of all natural persons, accuracy and completeness of all
documents and records that we have reviewed, the genuineness of
all signatures, the authenticity of the documents submitted to us
as originals and the conformity to authentic original documents
of all documents submitted to us as certified, conformed or
reproduced copies.
Based upon and subject to the foregoing, we are of the
opinion that the additional 750,000 shares of Common Stock
issuable under the Plan, when issued and delivered by the Company
in accordance with the terms of the Plan, will be validly issued,
fully paid and nonassessable securities of the Company.
Our opinion expressed above is limited to the General
Corporation Law of the State of Delaware, and we do not express
any opinion herein concerning any other laws. In addition, we
express no opinion herein concerning any statutes, ordinances,
administrative decisions, rules or regulations of any county,
town, municipality or special political subdivision (whether
created or enabled through legislative action at the federal,
state or regional level). This opinion is given as of the date
hereof and we assume no obligation to advise you of changes that
may hereafter be brought to our attention. In connection
therewith, we hereby consent to the use of this opinion for
filing as Exhibit 5 to the Registration Statement.
Very truly yours,
/S/ KATTEN MUCHIN & ZAVIS
KATTEN MUCHIN & ZAVIS
EXHIBIT 23.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January 29,
1999 included in Career Education Corporation's Form 10-K for the year
ended December 31, 1998 and incorporated by reference to Registration
Statement on Form S-8 (File No. 333-60335) and to all references to our
Firm included in this registration statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
August 2, 1999
