<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CORINTHIAN COLLEGES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF CORINTHIAN COLLEGES, INC.]
October 16, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors, you are cordially invited to attend the
2000 Annual Meeting of Stockholders of Corinthian Colleges, Inc. to be held at
6 Hutton Centre Drive, Suite 100, Santa Ana, California 92707, on November 16,
2000 at 10:00 a.m., local time. The formal notice of the Annual Meeting
appears on the following page. The attached Notice of Annual Meeting and Proxy
Statement describe the matters that we expect to be acted upon at the Annual
Meeting.
During the Annual Meeting, stockholders will view a presentation by
Corinthian and have the opportunity to ask questions. Whether or not you plan
to attend the Annual Meeting, it is important that your shares be represented.
Regardless of the number of shares you own, please sign and date the enclosed
proxy card and promptly return it to us in the enclosed postage paid envelope.
If you sign and return your proxy card without specifying your choices, your
shares will be voted in accordance with the recommendations of the Board of
Directors contained in the Proxy Statement.
We look forward to seeing you on November 16, 2000 and urge you to return
your proxy card as soon as possible.
Sincerely,
/s/ DAVID G. MOORE
David G. Moore
President and Chief Executive Officer
<PAGE>
CORINTHIAN COLLEGES, INC.
6 Hutton Centre Drive, Suite 400
Santa Ana, CA 92707-5765
(714) 427-3000
Notice of Annual Meeting of Stockholders
to be held on November 16, 2000
TO THE STOCKHOLDERS OF CORINTHIAN COLLEGES, INC.:
The Annual Meeting of Stockholders of Corinthian Colleges, Inc. (the
"Company") will be held at 10:00 a.m., California time, on November 16, 2000,
at 6 Hutton Centre Drive, Suite 100, Santa Ana, California 92707, for the
following purposes:
1. To vote for the election of Paul R. St. Pierre and Linda Arey Skladany
to the Company's Board of Directors for a three-year term expiring at the
Annual Meeting of Stockholders in 2003;
2. To approve an amendment to the Corinthian Colleges, Inc. 1998
Performance Award Plan which (i) authorizes the addition of 1,100,000
shares of Common Stock authorized for issuance under such plan and increase
the maximum number of shares of Common Stock under such plan to 1,629,134
shares, (ii) increases the annual individual grant limit under such plan,
and (iii) confirms the Company's ability to grant certain performance based
awards under such plan;
3. To approve the Company's Employee Stock Purchase Plan, which
authorizes the issuance by the Company of up to 250,000 shares of the
Company's Common Stock pursuant to such plan;
4. To ratify the appointment by the Board of Directors of Arthur Andersen
LLP as the Company's independent auditors for its fiscal year ending June
30, 2001; and
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October 2, 2000 as
the record date for determining stockholders entitled to notice of, and to
vote at, the meeting.
By order of the Board of Directors,
/s/ DAVID G. MOORE
David G. Moore
Santa Ana, California
October 16, 2000
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ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY. WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID
ENVELOPE FURNISHED FOR THAT PURPOSE.
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<PAGE>
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Corinthian
Colleges, Inc, a Delaware corporation (the "Company" or "Corinthian"), for use
at the Annual Meeting of Stockholders to be held at 10:00 a.m., California
time, on November 16, 2000, at 6 Hutton Centre Drive, Suite 100, Santa Ana,
California 92707, and any adjournments thereof. This Proxy Statement and
accompanying form of proxy were first sent to stockholders on or about October
16, 2000.
Record Date and Outstanding Shares
The Board of Directors has fixed the close of business on October 2, 2000,
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. As of the Record Date, Corinthian had outstanding 10,350,235 shares
of common stock, consisting of 9,173,675 shares of voting common stock, par
value $0.0001 per share (the "Common Stock"), and 1,176,560 shares of
nonvoting common stock, par value $0.0001 per share (the "Nonvoting Common
Stock"). Each of the outstanding shares of Common Stock is entitled to one
vote on all matters to come before the Annual Meeting.
Voting of Proxies
Dennis N. Beal and Dennis L. Devereux, the persons named as proxies on the
proxy card accompanying this Proxy Statement, were selected by the Board of
Directors to serve in such capacity. Messrs. Beal and Devereux are both
executive officers of Corinthian. Each executed and returned proxy will be
voted in accordance with the directions indicated thereon, or if no direction
is indicated, such proxy will be voted in accordance with the recommendations
of the Board of Directors contained in this Proxy Statement. Each stockholder
giving a proxy has the power to revoke it at any time before the shares it
represents are voted. Revocation of a proxy is effective upon receipt by the
Secretary of Corinthian of either (i) an instrument revoking the proxy or (ii)
a duly executed proxy bearing a later date. Additionally, a stockholder may
change or revoke a previously executed proxy by voting in person at the Annual
Meeting.
Required Vote
A plurality of the shares of Common Stock voted in person or by proxy is
required to elect the nominees for directors. A plurality means that the two
nominees receiving the largest number of votes cast will be elected. The
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy is required to (i) approve the proposed amendment to the
Company's 1998 Performance Award Plan, (ii) adopt the Company's Employee Stock
Purchase Plan, and (iii) ratify the appointment by the Board of Directors of
Arthur Andersen LLP as Corinthian's independent auditors. Each stockholder
will be entitled to vote the number of shares of Common Stock held as of the
Record Date by such stockholder for each director position to be filled.
Stockholders will not be allowed to cumulate their votes in the election of
directors.
Voting by Street Name Holders
If you are the beneficial owner of shares held in "street name" by a broker,
the broker, as the record holder of the shares, is required to vote those
shares in accordance with your instructions. If you do not give instructions
to the broker, the broker will nevertheless be entitled to vote the shares
with respect to "discretionary" items but will not be permitted to vote the
shares with respect to "non-discretionary" items (in which case, the shares
will be treated as "broker non-votes").
Quorum; Abstentions and Broker Non-Votes
The required quorum for transaction of business at the Annual Meeting will
be a majority of the shares entitled to vote that are issued and outstanding
as of the Record Date. Votes cast by proxy or in person at the Annual Meeting
will be tabulated by the election inspectors appointed for the meeting and
will determine
<PAGE>
whether or not a quorum is present. The election inspectors will treat
abstentions and broker non-votes as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as "unvoted" for
purposes of determining the approval of any matter submitted to the
stockholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote
with respect to that matter.
Summary Annual Report to Stockholders
Corinthian's Form 10-K, which is incorporated into Corinthian's Annual
Report to Stockholders for the fiscal year ended June 30, 2000 and contains
financial and other information pertaining to Corinthian, is being furnished
to stockholders simultaneously with this Proxy Statement.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Corinthian's Board of Directors currently consists of six directors. Article
V of Corinthian's Certificate of Incorporation provides that the Board of
Directors shall be classified with respect to the terms for which its members
shall hold office by dividing the members into three classes. At the Annual
Meeting, two Class II directors will be elected, each for a term of three
years expiring at Corinthian's Annual Meeting of Stockholders in 2003. Both of
the nominees are presently serving as directors of Corinthian. The Board of
Directors recommends that the stockholders vote in favor of the election of
the nominees named in this Proxy Statement to serve as directors of
Corinthian. See "Nominees" below. The four directors whose terms of office do
not expire in 2000 will continue to serve after the Annual Meeting until such
time as their respective terms of office expire or their successors are duly
elected and qualified. See "Other Directors" below. If at the time of the
Annual Meeting any of the nominees should be unable or decline to serve, the
persons named as proxies on the proxy card will vote for such substitute
nominee or nominees as the Board of Directors recommends, or vote to allow the
vacancy created thereby to remain open until filled by the Board of Directors,
as the Board of Directors recommends. The Board of Directors has no reason to
believe that any nominee will be unable or decline to serve as a director if
elected.
Nominees
The names of the nominees for the office of director and certain information
concerning such nominees are set forth below:
Paul R. St. Pierre, age 55, has served as Corinthian's Vice President,
Marketing & Admissions, as well as a member of the Board of Directors, since
the Company's inception in July 1995. He was promoted to Executive Vice
President in April 1998. He was employed by a subsidiary of National Education
Corporation ("NEC") from 1991 to 1995. His first assignment at NEC was as
School President for its San Bernardino, California campus. Subsequently, he
held corporate assignments as Director of Special Projects, Vice President of
Operations for the Learning Institutes Group (the largest colleges owned by
NEC) and as Vice President, Marketing & Admissions for NEC. From 1986 to 1991,
Mr. St. Pierre was employed by Allied Education Corporation, initially as
School Director, but the majority of the period as Regional Operations
Manager. He was employed as School Director at Watterson College in 1985. From
1982 to 1985, Mr. St. Pierre was Executive Vice President and Partner for
University Consulting Associates, principally responsible for the marketing
and sales of education services, on a contract basis, to institutions of
higher education. He was previously employed, from 1980 to 1982, as Division
Manager for the Institute for Professional Development, a division of Apollo
Group. Mr. St. Pierre received a Bachelor of Arts in Philosophy from Stonehill
College, a Master of Arts in Philosophy from Villanova University and is a
Ph.D. candidate in Philosophy at Marquette University.
Linda Arey Skladany, Esq., age 55, became a member of the Board of Directors
effective upon the completion of Corinthian's initial public offering in
February 1999. She is a member of the Compensation Committee of the Board. Ms.
Skladany has been Vice President for Congressional Relations at Parry,
Romani & DeConcini, a Washington D.C. lobbying firm, since 1995. Ms. Skladany
joined the Reagan administration in 1981 as Special Assistant, first to the
Secretary of Education and then later to the United States Attorney General,
before joining the United States Department of Transportation as Director of
the Executive Secretariat under Secretary Elizabeth Dole. In 1985, Ms.
Skladany joined President Reagan's White House staff as Special Assistant to
the President and Deputy Director of the White House Office of Public Liaison.
In 1988, President Reagan appointed Ms. Skladany to the Advisory Committee for
Trade Negotiation. She was later appointed by Presidents Reagan and Bush,
respectively, to the positions of Commissioner and Acting Chair of the
Occupational Safety and Health Review Commission. From 1990 to 1995, Ms.
Skladany was a legislative attorney and of counsel with the law firm of
Holland and Hart. From 1993 to 1995, she also served as Executive Director of
the Foundation for Environmental and Economic Progress. In 1994, Governor
George Allen of Virginia appointed her to a four-year term on the Board of
Visitors of the College of William and Mary. Ms. Skladany earned a Bachelor of
Arts in Education from the College of William and Mary, a
3
<PAGE>
Master of Arts in Education from Wake Forest University and a Juris Doctorate
from the University of Richmond Law School. She has been admitted to the bar
in Virginia and the District of Columbia.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL OF THE
NOMINEES FOR ELECTION AS CLASS II DIRECTORS.
Other Directors
The following persons will continue to serve as directors of Corinthian
after the Annual Meeting until their terms of office expire (as indicated
below) or until their successors are elected and qualified.
David G. Moore, age 62, is one of the founders of Corinthian and has served
as President and Chief Executive Officer, as well as a member of the Board of
Directors, since the Company's inception in July 1995. Mr. Moore is a Class
III director and his term of office will expire at the annual meeting of the
Company's stockholders in November 2001. Immediately prior to forming the
Company, he was President of a subsidiary of NEC. From 1992 to 1994, Mr. Moore
served as President of DeVry Institute of Technology in Los Angeles, where he
developed DeVry's West Coast growth strategy. From 1980 to 1992 he was
employed by Mott Community College in Flint, Michigan, where he was President
from 1984 to 1992. From 1960 to 1980 Mr. Moore served a distinguished career
in the U. S. Army, retiring at the rank of Colonel. Mr. Moore received a
Bachelor of Arts in Political Science from Seattle University and Master of
Business Administration from the University of Puget Sound. He has also
completed the Management of Higher Education Program at Harvard University,
post graduate studies in Higher Education Management at the University of
Michigan and graduate study and research in Computer Science at Kansas State
University.
Dr. Carol D'Amico, age 48, became a member of the Board of Directors
effective upon the completion of Corinthian's initial public offering in
February 1999. Dr. D'Amico is a Class I director and her term of office will
expire at the annual meeting of the Company's stockholders in November 2002.
Since January 1999, Dr. D'Amico has served as Executive Director for
Workforce, Economic and Community Development for Ivy Tech State College in
Indianapolis, Indiana. From July 1995 to January 1999, she was employed by the
Hudson Institute, located in Indianapolis, Indiana as Senior Fellow and Co-
Director of the Workforce Development Center, established to conduct research
on the future of the American workforce and American economic competitiveness.
She is also co-author of Workforce 2020: Work and Workers in the 21st Century,
published by the Hudson Institute in 1997. Prior to that, Dr. D'Amico served
as Director, Educational Excellence Network and as Research Fellow at the
Hudson Institute. From 1986 to 1990, she was a Policy and Planning Specialist
with the Indiana Department of Education. She also served as Senior Program
Analyst for the Indiana General Assembly from 1982 to 1986. Dr. D'Amico
received a Bachelor of Science in Biology from Ball State University, and a
Master of Science in Adult Education and an ED.D in Educational Leadership and
Policy Studies from Indiana University.
Jack D. Massimino, age 51, became a member of the Board of Directors
effective upon the completion of Corinthian's initial public offering in
February 1999. Mr. Massimino is a Class III director and his term of office
will expire at the annual meeting of the Company's stockholders in November
2001. Mr. Massimino is retired and manages his personal investment portfolio.
He was President and Chief Executive Officer of Talbert Medical Management
Corporation, a publicly traded physician practice management company from 1995
through late 1997. Prior to his association with Talbert, Mr. Massimino was
Executive Vice President and Chief Operations Officer of FHP International
Corporation, a multi-state, publicly traded HMO, with revenues in excess of
$4 billion. He also served in other executive positions since joining FHP in
1988, including Senior Vice President and Vice President, Corporate
Development. Mr. Massimino has held other executive positions in the
healthcare field since the mid 1970's. He received a Bachelor of Arts in
Psychology from California Western University and earned a Master's Degree in
Management from the American Graduate School for International Management. Mr.
Massimino has served on several boards, including Talbert Medical Management
Corporation, FHP, Inc., Texas Health Plans, Great States Insurance Company,
Art Institute of Southern California, Thunderbird World Business Advisory
Council and the Orange County Business Committee for the Arts.
4
<PAGE>
Loyal Wilson, age 52, has served as a member of the Board of Directors since
Corinthian's inception in July 1995. Mr. Wilson is a Class I director and his
term of office will expire at the annual meeting of the Company's stockholders
in November 2002. He has been a Managing General Partner of Primus Venture
Partners since 1983 and a Managing Director of Primus Venture Partners, Inc.
since 1993. In those capacities, Mr. Wilson has overseen investments by
various venture funds controlled by those entities in numerous private
companies. From 1975 to 1983, Mr. Wilson was employed by First Chicago
Corporation. He is also a Director of STERIS Corporation and was formerly a
Director of DeVry, Inc. He received a Bachelor of Arts in Economics from the
University of North Carolina and a Masters in Business Administration from
Indiana University.
Director Compensation
During fiscal 2000, each director of Corinthian who was not an employee of
Corinthian was paid a fee of $10,000 for his or her services as a director and
was paid $1,000 for each Board of Directors meeting attended and $500 for each
Board Committee meeting attended. Immediately following the date of the Annual
Meeting in November 1999, each non-employee director was granted an option to
purchase 3,000 shares of Common Stock at the then-current market price. In
addition, immediately following the 2000 Annual Meeting, each non-employee
director will be granted an option to purchase 3,000 shares of Common Stock at
the then-current market price. The options granted to non-employee directors
vest at the rate of 50% on each of the first and second anniversaries of the
grant date. All non-employee directors are also reimbursed for their
reasonable out-of-pocket expenses incurred in attending Board of Directors
meetings and Committee meetings.
Attendance At Meetings
The Board of Directors met in person or conducted telephonic meetings a
total of eight times during fiscal year 2000. During that same period, the
Board acted two times by unanimous written consent. Each incumbent director
has attended at least 75% of all Board meetings and applicable committee
meetings.
Committees of the Board Of Directors
The Board of Directors has established an Audit Committee and a Compensation
Committee, each comprised entirely of directors who are not officers of
Corinthian. The Board of Directors has no nominating committee; selection of
nominees for the Board is made by the entire Board of Directors.
The Audit Committee is composed of Mr. Wilson, Mr. Massimino and Dr.
D'Amico. The Audit Committee is responsible for reviewing the internal
accounting procedures of the Company and the results and scope of the audit
and other services provided by the Company's independent auditors, consulting
with the Company's independent auditors and recommending the appointment of
independent auditors to the Board of Directors. The Audit Committee met once
during the fiscal year ended June 30, 2000. Each member of the Audit Committee
attended this meeting.
The Compensation Committee is composed of Mr. Wilson, Mr. Massimino and Ms.
Skladany. The Compensation Committee has the authority to supervise all of the
matters related to the compensation of management of the Company, including
determining policies and practices, changes in compensation and benefits for
management, determination of employee benefits and all other matters relating
to employee compensation, including matters relating to the administration of
the Company's 1998 Performance Award Plan. If approved by the Company's
stockholders, the Compensation Committee will also have authority to
administer the Company's Employee Stock Purchase Plan. The Compensation
Committee met three times during the fiscal year ended June 30, 2000. Each
member of the Compensation Committee attended these meetings.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires
Corinthian's officers (as defined under Section 16), directors and persons who
beneficially own greater than 10% of a registered class of Corinthian's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely on a review of the forms it
has received, Corinthian believes that during fiscal 2000 all Section 16
filing requirements applicable to its officers, directors and 10% beneficial
owners were complied with by such persons except for the following: each of
the directors and Named Executive Officers (as defined below) filed their
Forms 5 for fiscal year 2000 after the date prescribed under Section 16(a) and
one new officer, Dennis N. Beal, filed his initial Form 3 after the prescribed
time.
6
<PAGE>
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
The following table provides information concerning the annual and long-term
compensation for services in all capacities to Corinthian for the fiscal years
ended June 30, 2000, June 30, 1999 and June 30, 1998 for our chief executive
officer and our next four most highly compensated executive officers
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------
Other Annual All Other
Name and Principal Fiscal Salary Bonus Compensation Compensation
Position Year ($) ($) ($)(3) ($)(4)
------------------ ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David G. Moore ......... 2000 $285,894 $300,000 $16,893 $6,965
President and Chief 1999 236,250 105,000(2) 15,240 3,249
Executive Officer 1998 232,356 0 14,256 3,189
Paul R. St. Pierre...... 2000 220,256 240,000 23,193 6,085
Executive Vice 1999 194,250 105,000(2) 19,457 3,885
President, Marketing 1998 191,048 0 20,142 3,748
Frank J. McCord(1)...... 2000 209,144 230,000 19,221 0
Executive Vice 1999 183,750 105,000(2) 22,304 0
President and Chief 1998 180,721 0 21,158 0
Financial Officer
Dennis L. Devereux...... 2000 198,033 220,000 21,362 5,832
Executive Vice 1999 173,250 105,000(2) 23,085 3,281
President, Human 1998 170,394 0 21,995 3,169
Resources
Beth A. Wilson ......... 2000 153,462 175,000 103,870(5) 4,631
Vice President, 1999 125,193 37,685 0 2,720
Operations
</TABLE>
--------
(1) Mr. McCord retired from the Company effective June 30, 2000.
(2) Consists of a $50,000 bonus earned and paid during fiscal 1999 and a
$55,000 bonus earned during fiscal 1999 but paid subsequent to the end of
the fiscal year.
(3) Includes $12,220 per year for auto allowance for each of the Named
Executive Officers except Ms. Wilson.
(4) Represents the Company's matching contribution to the employees' 401(k)
Plan. This benefit is provided to all eligible Company employees on a 100%
matching basis up to 2% of each employee's annual salary and on a 50%
matching basis up to the next 4% of each employee's annual salary.
(5) Consists of $103,870 paid to offset taxes associated with relocation
reimbursement.
7
<PAGE>
OPTION GRANTS DURING FISCAL YEAR 2000
The following table sets forth information regarding options to purchase
Common Stock granted during the year ended June 30, 2000 to each of the Named
Executive Officers. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Securities Granted to Appreciation for
Underlying Employees in Exercise or Option Term(1)
Options Fiscal Base Price per Expiration -----------------
Name Granted(#) Year(%) Share($/SH) Date 5% 10%
---- ---------- ------------ -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
David G. Moore.......... 20,000 8.35% $16.00 8/26/09 $201,246 $509,998
Paul R. St. Pierre...... 20,000 8.35 16.00 8/26/09 201,246 509,998
Frank J. McCord......... 20,000 8.35 16.00 8/26/09 201,246 509,998
5,000 2.09 17.00 4/14/00 53,456 135,468
Dennis L. Devereux...... 20,000 8.35 16.00 8/26/09 201,246 509,998
Beth Wilson............. 4,000 1.69 16.00 8/26/09 40,249 102,000
11,238 4.69 17.00 4/14/00 120,148 304,478
</TABLE>
--------
(1) The potential realizable values are based on an assumption that the stock
price of the Common Stock will appreciate at the annual rate shown
(compounded annually) from the date of grant until the end of the option
term. These values do not take into account amounts required to be paid as
income taxes under the Internal Revenue Code and any applicable state laws
or option provisions providing for termination of an option following
termination of employment, non-transferability or vesting. These amounts
are calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect an estimate of future stock price
growth of the shares of the Common Stock.
OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR END OPTION VALUES
The following table contains information regarding the Named Executive
Officers' unexercised options as of June 30, 2000. None of the Named Executive
Officers exercised any options during fiscal 2000.
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised in-the-Money
Options as of Options as of
June 30, 2000(#) June 30, 2000($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C>
David G. Moore............. 5,534/25,534 $60,708/$209,508
Paul St. Pierre............ 5,534/25,534 60,708/209,508
Frank J. McCord............ 5,534/30,534 60,708/241,708
Dennis L. Devereux......... 5,534/25,534 60,708/209,508
Beth Wilson................ 2,382/17,618 26,130/128,263
</TABLE>
--------
(1) Based on the closing sale price of the Common Stock on June 30, 2000
($23.44), as reported by the Nasdaq National Market, less the option
exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Loyal Wilson, Jack D. Massimino and
Linda Arey Skladany.
Loyal Wilson has served as a Director of the Company since its inception in
1995. Mr. Wilson is also a Managing Director of Primus Venture Partners, Inc.,
the sole general partner of Primus Venture Partners III Limited Partnership,
the sole general partner of Primus Capital Fund III Limited Partnership
("Primus"), which holds more than 5% of the Company's common stock, including
shares of the Company's Nonvoting Common Stock.
8
<PAGE>
BOCPII, Limited Liability Company and Banc One Capital Partners II, LLC
(collectively "Banc One") together hold more than 5% of the Company's common
stock, including shares of Nonvoting Common Stock.
David Moore, Frank McCord, Paul St. Pierre and Dennis Devereux, who are each
founders of the Company (collectively the "Founders") and are also Named
Executive Officers, and the Company, Primus and Banc One are parties to a
Registration Rights Agreement. Pursuant to the Registration Rights Agreement,
the parties thereto have certain rights with respect to the registration under
the Securities Act of 1933 of shares of Common Stock owned by them (including
Common Stock receivable upon the conversion of Nonvoting Common Stock) (the
"Registrable Securities").
Primus and Banc One (the "Investors") are entitled to the following "demand"
registration rights. At any time, the holders of a majority of the Investors'
Registrable Securities (the "Investor Registrable Securities") may demand
registration on Form S-1 of all or any portion of their Registrable
Securities, and the holders of at least 10% of the Investor Registrable
Securities may demand registration on Form S-2, Form S-3 or any similar short-
form registration ("Short-Form Registration"), if available, of all or any
portion of their Registrable Securities. For the first two such registrations
on Form S-1, the holders of the Investor Registrable Securities are entitled
to have the Company pay all registration expenses, except underwriting
discounts and commissions ("Company-Paid Long-Form Registrations"); such
holders may also demand an unlimited number of registrations on Form S-1 in
which the holders pay their pro rata share of the registration expenses
("Holder-Paid Long-Form Registrations"), provided that the aggregate offering
value of the Registrable Securities in each case must be at least $1,000,000.
The holders of the Investor Registrable Securities are entitled to request an
unlimited number of Short-Form Registrations in which the Company pays all
registration expenses, except underwriting discounts and commissions, provided
that the aggregate offering value of the Registrable Securities requested to
be registered must be at least $500,000. Demand registrations will be Short-
Form Registrations whenever the Company is permitted to use any applicable
short-form.
The Investors and the Founders are entitled to the following "piggyback"
registration rights. Whenever the Company proposes to register any of its
securities under the Securities Act (other than pursuant to a demand
registration), the Company must notify all holders of Registrable Securities
of the registration and must include in the registration all Registrable
Securities whose holders so request. If a "piggyback" registration is
underwritten, and the managing underwriters advise the Company that the number
of securities requested to be included exceeds the number which can be sold at
an acceptable price, priority in the registration is as follows: (i) the
securities the Company proposes to sell, (ii) the Investor Registrable
Securities, and (iii) the Registrable Securities held by the Founders. The
Company will pay all registration expenses, except underwriting discounts and
commissions, in connection with any "piggyback" registration. Subsequent to
the end of the Company's fiscal year 2000, the Company filed a registration
statement on Form S-3 with respect to 3,000,000 shares of the Company's Common
Stock, 200,000 of which were offered for sale by the Company and 2,800,000 of
which were offered for sale by the Founders, Banc One and Primus
(collectively, the "Selling Stockholders"). Pursuant to the Registration
Rights Agreement, the Company will pay the registration expenses of the
Selling Stockholders in connection with such offering, except for the
underwriting discounts and commissions.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors is composed entirely of
non-employee directors and establishes Corinthian's compensation strategy and
policies and determines the nature and amount of all compensation for
Corinthian's Named Executive Officers. The objectives of the Board of
Directors in determining the levels and components of executive and key
employee compensation are to (i) attract, motivate and retain talented and
dedicated executive officers and other key employees, (ii) provide executive
officers and other key employees with both cash and equity incentives to
further the interests of Corinthian and its stockholders, and (iii) compensate
executive officers and other key employees at levels comparable to those of
executive officers and key employees at other comparable companies.
Generally, the compensation of all executive officers and other key
employees is composed of:
. a base salary,
. perquisites,
. bonuses, and
. periodic stock options.
The Compensation Committee believes that these components offer the
executive officers and other key employees competitive compensation while
aligning their interests with those of the Company's stockholders. Through the
use of stock options and annual bonuses, the executive officers and key
employees are individually rewarded for their improvement of the Company's
performance.
Base Salaries. In determining the base salaries of the Named Executive
Officers in fiscal 2000, the Board of Directors considered the performance of
each executive in past years, the nature of the executive's responsibilities,
the salary levels of executives at comparable publicly held companies and
Corinthian's general compensation practices. Based on such criteria, each of
the Named Executive Officers were given raises of their base salaries during
the latter part of fiscal 2000. The base salaries of the Named Executive
Officers are effective until changed at the discretion of the Compensation
Committee.
Bonuses. Discretionary bonuses for each Named Executive Officer are directly
tied to achievement of specified goals by the Company and such executive and
are a function of criteria which the Compensation Committee believes
appropriately takes into account the specific areas of responsibility of the
particular officer. Discretionary bonuses are paid as a percentage of the
officer's base salary. The performance objectives in fiscal 2000 were based
primarily on net income and other individual criteria established by the
Compensation Committee at a time when the Company's actual performance in
relation to the target remained uncertain (as defined in Section 162(m) of the
Internal Revenue Code). The Compensation Committee may in the future impose,
in its discretion, additional conditions or terms for the payment of bonuses,
including the creation of other financial, strategic or individual goals.
During fiscal 2000, the Compensation Committee awarded each Named Executive
Officer 100% of such executive's targeted bonus. This determination was based
on the achievement of significant net income growth for the Company during the
year, the opening or acquisition of seven new schools, and the accomplishment
of other individual objectives by the Named Executive Officers.
Stock Options. Periodically, the Compensation Committee has, and expects in
the future to, grant stock options to the Named Executive Officers and other
key employees in order to provide a long-term incentive. The value of such
stock options is directly tied to the performance of the Company's Common
Stock. These options provide an incentive to maximize stockholder value
because they reward option holders only if stockholders also benefit. The
exercise price of these stock options is the fair market value of the Common
Stock on the date of grant. In general, the options vest in equal annual
installments over a four-year period beginning one year after the date of
grant. Vesting periods are used to retain key employees and to emphasize the
long-term aspect of
10
<PAGE>
contribution and performance. In making stock option grants to executives and
other key employees, the Compensation Committee considers a number of factors,
including the performance of such persons, achievement of specific delineated
goals, the responsibilities and the relative position of such persons within
Corinthian, review of compensation of executives and key employees in
comparable companies and review of the number of stock options each such
person currently possesses.
Compensation of the Chief Executive Officer. Towards the end of fiscal year
2000, Mr. Moore's annual base salary was increased to $300,000 per year. Mr.
Moore was also granted 20,000 stock options during the fiscal year.
Mr. Moore's salary increase and option grant were based on an evaluation which
considered, in part, the Company's financial performance for fiscal 1999 and
2000, competitive levels of compensation for chief executive officers managing
operations of similar size, complexity and performance level, and Mr. Moore's
contribution to the Company's past business success. Mr. Moore's bonus was
determined in the same manner as that of the other Named Executive Officers.
The Compensation Committee believes this compensation package is generally
competitive with the salaries of chief executive officers of companies of our
size and structure.
Compliance with Section 162(m). The Compensation Committee currently intends
for all base salary and bonus compensation paid to the Named Executive
Officers to be tax deductible to Corinthian pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended. Section 162(m) provides that
compensation paid to the Named Executive Officers in excess of $1,000,000
cannot be deducted by Corinthian for federal income tax purposes unless, in
general, such compensation is performance based, is established by a committee
of independent directors, is objective and the plan or agreement providing for
such performance based compensation has been approved in advance by
stockholders.
The Compensation Committee believes that the executive compensation policies
described in this report are in the best interests of the Company and its
stockholders. The various compensation mechanisms maintain an appropriate
balance between motivating the achievement of short-term goals and
strategically incentivizing long-term success. The Compensation Committee will
continue to monitor the overall effectiveness of the compensation program to
ensure that it will continue to successfully meet our needs.
THE COMPENSATION COMMITTEE
Loyal Wilson
Jack D. Massimino
Linda Arey Skladany
11
<PAGE>
TRANSACTIONS BETWEEN THE COMPANY AND CERTAIN EXECUTIVE OFFICERS
Executives Agreements
On November 24, 1997, the Company entered into a separate Amended and
Restated Executive Stock Agreement with each of the Founders (the "Executive
Agreements"). Each of the Executive Agreements provides for a severance
benefit for each of the Founders in the event he is terminated by the Company,
other than for Cause (as defined below), in an amount equal to the Founder's
base salary (excluding bonuses) during the preceding 12 months, payable on a
monthly basis in equal installments for each of the twelve succeeding months
following the Founder's termination. "Cause" is defined as (i) the commission
of a felony or a crime of moral turpitude or any act involving dishonesty,
disloyalty or fraud, (ii) conduct that brings the Company into public disgrace
or disrepute, (iii) substantial or repeated failure to perform duties directed
by the Board of Directors, (iv) gross negligence or willful misconduct
relating to the Company, or (v) any material breach of the Executive
Agreement.
Loan to David G. Moore
On August 31, 1999, the Company agreed to loan to David G. Moore, President
and a Director of the Company, an amount of up to $350,000 under the terms of
a Promissory Note and Pledge Agreement between the Company and Mr. Moore. The
terms of the Promissory Note provide for interest at a rate of 7% per annum,
payable on an annual basis and when the principal becomes due and payable in
2002. As security for this loan, Mr. Moore pledged to the Company 34,043
shares of his Common Stock in the Company. The pledged shares had a market
value of approximately $700,000 as of the date of the Promissory Note and
Pledge Agreement (based on the closing price of the Company's Common Stock on
the day prior to the execution of the Pledge Agreement).
12
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
Corinthian, the Russell 2000 Index and an index of peer companies selected by
Corinthian during the period commencing on February 5, 1999, the first trading
date after Corinthian's initial public offering, and ending on June 30, 2000.
The comparison assumes $100 was invested on February 5, 1999 in the Common
Stock, the Russell 2000 Index and the peer companies selected by Corinthian
and assumes the reinvestment of all dividends, if any. The companies in the
peer group, all of which are education companies, are weighted according to
their market capitalization. Included in the peer group are: Apollo Group
Inc., Career Education Corporation, Computer Learning Centers, Inc., DeVry,
Inc., Education Management Corporation, EduTrek International, Inc., ITT
Educational Services, Inc., Quest Education Corporation, Strayer Education,
Inc. and Whitman Education Group, Inc. The performance graph begins with
Corinthian's initial public offering price of $18.00 per share.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Customer
Corinthian Selected Russell 2000
Measurement Period Colleges Inc. Stock List Index
------------------- ------------- ---------- ------------
<S> <C> <C> <C>
FYE 2/05/1999 $100.00 $100.00 $100.00
FYE 2/26/1999 $124.33 $104.04 $ 91.79
FYE 3/31/1999 $122.22 $111.81 $ 93.07
FYE 4/30/1999 $ 91.00 $ 91.74 $101.32
FYE 5/28/1999 $ 96.56 $ 88.98 $102.69
FYE 6/30/1999 $104.89 $ 90.08 $107.19
FYE 7/30/1999 $108.67 $80.98 $104.16
FYE 8/31/1999 $114.22 $71.55 $100.19
FYE 9/30/1999 $104.89 $70.02 $100.07
FYE 10/29/1999 $108.33 $74.96 $100.38
FYE 11/30/1999 $111.11 $75.01 $106.25
FYE 12/31/1999 $132.67 $67.39 $118.10
FYE 1/31/2000 $125.00 $66.53 $116.13
FYE 2/28/2000 $ 99.33 $69.29 $135.18
FYE 3/31/2000 $ 88.89 $91.11 $126.13
FYE 4/28/2000 $119.44 $85.20 $118.45
FYE 5/31/2000 $120.83 $90.60 $111.43
FYE 6/30/2000 $130.22 $89.43 $120.96
</TABLE>
13
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of September 15, 2000, certain
information with respect to the beneficial ownership of the Common Stock by
(i) each person known by Corinthian to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each Company director, (iii) each of
the Named Executive Officers and (iv) all of the Company's directors and Named
Executive Officers as a group.
Unless otherwise indicated below, the persons in the table have sole voting
and investment power with respect to all shares shown as beneficially owned by
them.
<TABLE>
<CAPTION>
Shares of Common Percentage of
Stock Beneficially Outstanding
Name Owned (1) Shares Owned
---- ------------------ -------------
<S> <C> <C>
Primus Capital Fund III Limited Partnership.. 2,918,652 28.2%
5900 Landerbrook Drive
Suite 200
Cleveland, Ohio 44124
Banc One entities (2)........................ 1,415,112 13.7
c/o Stonehenge Holdings, Inc.
150 East Gay Street, 24th Floor
Columbus, OH 43215
David G. Moore (3)(12)....................... 626,808 6.1
Paul R. St. Pierre (4)(12)................... 622,025 6.0
Frank J. McCord (5)(12)...................... 411,788 4.0
Dennis Devereux (6)(12)...................... 511,787 4.9
Beth Wilson (7)(12).......................... 3,382 *
Loyal Wilson (8)(12)......................... 2,931,652 28.3
Jack D. Massimino (9)(12).................... 13,000 *
Linda Arey Skladany (10)(12)................. 3,200 *
Carol D'Amico (11)(12)....................... 3,000 *
All directors and executive officers as a
group (9 persons) (3)(4)(5)(6)(7)(8)(9)(10)
(11)........................................ 5,126,642 49.3
</TABLE>
--------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. The number of shares beneficially owned by a person and the
percentage ownership of that person includes shares of common stock
subject to options or warrants held by that person that are currently
exercisable or exercisable within 60 days of September 15, 2000. As of
September 15, 2000, there were 10,350,235 outstanding shares of common
stock, including 1,176,560 shares of Nonvoting Common Stock which are
convertible into Common Stock upon a sale of such nonvoting common stock.
(2) Consists of shares held by BOCPII, Limited Liability Company ("BOCPII"),
and Banc One Capital Partners II, LLC ("Banc One"). BOCPII holds an
aggregate of 861,585 shares, including 623,033 shares of Nonvoting
Common Stock that are convertible into Common Stock on a share for share
basis upon the sale of such stock. Banc One holds 553,527 shares of
Nonvoting Common Stock that are convertible into Common Stock on a share
for share basis upon the sale of such stock.
(3) Includes 10,534 shares of Common Stock which may be acquired by Mr.
Moore upon the exercise of stock options which are currently exercisable
or exercisable within 60 days of September 15, 2000.
(4) All such shares are held in a family trust of which Mr. St. Pierre is a
grantor and a trustee and include 10,534 shares of Common Stock which
may be acquired by Mr. St. Pierre upon exercise of stock options which
are currently exercisable or exercisable within 60 days of September 15,
2000.
(5) All of these shares are held in a family trust of which Mr. McCord is a
grantor and a trustee and include 10,534 shares of Common Stock which
may be acquired by Mr. McCord upon the exercise of stock options which
are currently exercisable or exercisable within 60 days of September 15,
2000.
14
<PAGE>
(6) All of these shares are held in a family trust of which Mr. Devereux is
a grantor and a trustee and include 10,534 shares of Common Stock which
may be acquired by Mr. Devereux upon the exercise of stock options which
are currently exercisable or exercisable within 60 days of September 15,
2000. Does not include shares owned by Mr. Devereux's children who do
not reside with him.
(7) Consists of 3,328 shares of Common Stock which may be acquired by Ms.
Wilson upon exercise of stock options which are currently exercisable or
exercisable within 60 days of September 15, 2000.
(8) Such shares include 2,918,652 shares owned by Primus Capital Fund III
Limited Partnership, 4,000 shares owned by Sage Investments Limited
Partnership and include 3,000 shares of Common Stock which may be
acquired by Mr. Wilson upon exercise of stock options which are currently
exercisable or exercisable within 60 days of September 15, 2000. Mr.
Wilson also holds 6,000 shares in his individual capacity. Mr. Wilson, a
director of the Company, is a managing director of Primus Venture
Partners, Inc., the sole general partner of Primus Venture Partners III
Limited Partnership, the sole general partner of Primus Capital Fund III
Limited Partnership. Mr. Wilson shares voting and investment power with
respect to such shares with four other directors of Primus Venture
Partners, Inc. Mr. Wilson disclaims beneficial ownership of the shares
held by Primus Capital Fund III Limited Partnership, except to the extent
of his pecuniary interest therein. Mr. Wilson is the general partner of
Sage Investments Limited Partnership.
(9) All such shares are held in a family trust of which Mr. Massimino is a
grantor and a trustee and include 3,000 shares of Common Stock which may
be acquired by Mr. Massimino upon exercise of stock options which are
currently exercisable or exercisable within 60 days of September 15,
2000.
(10) Includes 3,000 shares of Common Stock which may be acquired by Ms.
Skladany upon exercise of stock options which are currently exercisable
or exercisable within 60 days of September 15, 2000.
(11) Includes 3,000 shares of Common Stock which may be acquired by Dr.
D'Amico upon exercise of stock options which are currently exercisable
or exercisable within 60 days of September 15, 2000.
(12) The address of each such person is c/o Corinthian Colleges, Inc., 6
Hutton Centre Drive, Suite 400, Santa Ana, California 92707.
PROPOSAL 2
PROPOSED ACTION REGARDING THE
1998 PERFORMANCE AWARD PLAN
At the Annual Meeting, stockholders will be asked to approve an amendment
(the "Amendment") to the Corinthian Colleges, Inc. 1998 Performance Award Plan
(the "1998 Plan"). The Amendment consists of three parts: (1) an increase of
the number of shares available under the 1998 Plan, (2) an increase in the
number of shares that can be granted to any individual in any fiscal year from
22,047 to 50,000, and (3) confirmation and approval of the performance-based
award feature of the 1998 Plan. Following is a more detailed summary of the
two parts of the Amendment:
. Share Increase. The 1998 Plan provides for a limit on the aggregate
number of shares of Common Stock that may be issued or delivered
pursuant to awards thereunder (the "Aggregate Share Limit"). The
Aggregate Share Limit is currently 529,134 shares. As of June 30, 2000,
of those shares, approximately 371,929 shares were subject to awards
then outstanding under the 1998 Plan, and approximately 153,593 shares
were then available for additional 1998 Plan awards. On August 30, 2000
the Board of Directors approved a grant (to be carried out within 30
days of such date) of stock options covering an aggregate of 153,500
shares.
On September 6, 2000, the Board of Directors approved, subject to
stockholder approval, an amendment to the Aggregate Share Limit. The
Amendment, if approved by stockholders, will increase the Aggregate
Share Limit from 529,134 shares to 1,629,134 shares (an increase of
1,100,000 shares), subject to certain adjustments as provided in the
1998 Plan (see "Summary Description of the 1998 Plan--Limits on Awards;
Authorized Shares" below). The Board of Directors approved the share
increase based, in part, on a belief that the number of shares that
remained available for additional awards under the 1998 Plan was
insufficient to adequately provide for future incentives.
15
<PAGE>
. Increase in Maximum Annual Individual Awards. The 1998 Plan limits the
number of shares which may be subject to awards granted to any
individual during a calendar year to 22,047 shares. If stockholders
approve the Amendment, this limit will increase to 50,000 shares per
individual per fiscal year.
. Performance Share Awards. One element of the 1998 Plan is the Company's
flexibility to grant certain performance-based awards designed to
satisfy the requirements for deductibility of compensation under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") (in
addition to other awards such as stock options and stock appreciation
rights which are expressly authorized under the 1998 Plan and may also
qualify as performance-based awards for Section 162(m) purposes)
("Performance-Based Awards"). (See "Summary Description of the 1998
Plan--Performance-Based Awards Under Section 162(m); Business Criteria"
below.) Section 162(m) requires that the Company obtain periodic
stockholder approval of this element of the Plan and the related
"business criteria" (described below) that may be referenced in granting
Performance-Based Awards. Therefore, in addition to the share increase
described above, stockholders are being asked to approve the
Performance-Based Award element of the Plan, including the related
business criteria that may be referenced in granting Performance-Based
Awards.
If the Amendment is not approved by stockholders, the current Aggregate
Share Limit of 529,134 shares will remain in effect and the Company will not
have the flexibility to grant Performance-Based Awards under the 1998 Plan
(other than the stock options and stock appreciation rights which are
otherwise expressly authorized under the 1998 Plan).
The principal terms of the 1998 Plan are summarized below. The following
summary is qualified in its entirety by the full text of the 1998 Plan, which
can be reviewed on the Securities and Exchange Commission's Web site at
http://www.sec.gov. Capitalized terms used in the summary which are not
otherwise defined are used as defined in the 1998 Plan.
Summary Description of the 1998 Plan
Purpose. The purpose of the 1998 Plan is to promote the success of the
Company and the interests of its stockholders by providing an additional means
to attract, motivate, retain and reward selected eligible persons through the
grant of awards and incentives for high levels of individual performance and
improved financial performance of the Company.
Awards. The 1998 Plan authorizes stock options, stock appreciation rights
("SARs"), restricted stock, stock bonuses, Performance-Based Awards, as well
as certain other stock-based and cash awards described in the 1998 Plan. The
various forms of awards that may be granted under the 1998 Plan give the
Company the flexibility to offer competitive incentives and to tailor benefits
to specific needs and circumstances. Generally, an option or stock
appreciation right will expire, or other award will vest, not more than 10
years after the date of grant.
Administration. The 1998 Plan will be administered by the Board of Directors
or by one or more committees appointed by the Board of Directors (the
appropriate acting body is referred to as the "Administrator"). The
Administrator is currently the Compensation Committee of the Board of
Directors.
The Administrator determines the number of shares that are to be subject to
awards and the terms and conditions of such awards, including the price (if
any) to be paid for the shares or the award. Subject to the other provisions
of the 1998 Plan, the Administrator has the authority (a) to permit the
recipient of any award to pay the purchase price of shares of Common Stock or
the award in cash or by check, the delivery of previously owned shares of
Common Stock, or a cashless exercise; (b) to accelerate the receipt or vesting
of benefits pursuant to an award; and (c) to make certain adjustments to an
outstanding award and authorize the conversion, succession or substitution of
an award.
16
<PAGE>
Eligibility. Persons eligible to receive awards under the 1998 Plan include
officers or employees of the Company or any of its subsidiaries, directors of
the Company, and certain consultants and advisors to the Company or any of its
subsidiaries.
Currently, approximately 2,900 officers and employees of the Company and its
subsidiaries (including all of the Company's named executive officers) and
each of the four non-employee directors of the Company are considered eligible
under the 1998 Plan, subject to the power of the Administrator to determine
eligible persons to whom awards will be granted. Members of the Board of
Directors who are not officers or employees of the Company ("Non-Employee
Directors") are also eligible for certain automatic stock option grants
described below under "Automatic Award Grants to Non-Employee Directors."
Limits on Awards; Authorized Shares. As described above, the current
Aggregate Share Limit under the 1998 Plan is 529,134 shares. If stockholders
approve the Amendment, the Aggregate Share Limit will become 1,629,134 shares.
The 1998 Plan provides that the maximum number of shares subject to Awards
which may be granted to any individual during any calendar year is 22,047. If
stockholders approve the Amendment, this limit will increase to 50,000 shares
per individual per fiscal year.
As is customary in incentive plans of this nature, the number and kind of
shares available under the 1998 Plan and the then outstanding stock-based
awards, as well as exercise or purchase prices, performance targets under
certain performance-based awards, and share limits, are subject to adjustment
in the event of certain reorganizations, mergers, combinations,
consolidations, recapitalizations, reclassifications, stock splits, stock
dividends, asset sales or other similar events, or extraordinary dividends or
distributions of property to stockholders.
The 1998 Plan will not limit the authority of the Board of Directors or the
Administrator to grant awards or authorize any other compensation, with or
without reference to the Common Stock, under any other plan or authority.
Stock Options. An option is the right to purchase shares of Common Stock at
a future date at a specified price (the "Option Price"). The Option Price per
share will be determined by the Administrator at the time of grant, but in the
case of Incentive Stock Options may not be less than the fair market value of
a share on the date of grant.
An option may either be an Incentive Stock Option or a Nonqualified Stock
Option. Incentive Stock Option benefits are taxed differently from
Nonqualified Stock Options, as described under "Federal Income Tax Treatment
of Awards Under the 1998 Plan" below. Incentive Stock Options are also subject
to more restrictive terms and are limited in amount by the Code and the 1998
Plan. Full payment for shares purchased on the exercise of an option must be
made at the time of such exercise in a manner approved by the Administrator.
Stock Appreciation Rights. An SAR is the right to receive payment of an
amount equal to the excess of the fair market value of a share of Common Stock
on the date of exercise of the SAR over the base price of the SAR. The base
price will be established by the Administrator at the time of grant of the
SAR. SARs may be granted in connection with other awards or independently.
Restricted Stock Awards, Stock Bonuses. A restricted stock award is an award
typically for a fixed number of shares of Common Stock subject to
restrictions. The Administrator specifies the price, if any, the Participant
must pay for such shares and the restrictions (which may include, for example,
continued service only and/or performance standards) imposed on such shares.
Stock Bonuses. The Administrator may grant a stock bonus to any eligible
person to reward exceptional or special services, contributions or
achievements in the manner and on such terms and conditions (including any
restrictions on the shares) as determined from time to time by the
Administrator. The number of shares so awarded will be determined by the
Administrator and may be granted independently or in lieu of a cash bonus.
17
<PAGE>
Performance-Based Awards Under Section 162(m); Business Criteria. If
stockholders approve the Amendment, the Administrator may grant to executive
officers Performance-Based Awards designed to satisfy the requirements for
deducibility under Section 162(m). (As noted above, these Performance-Based
Awards are in addition to options or SARs which may also qualify as
performance-based awards for Section 162(m) purposes.) These awards will be
based on the performance of the Company and/or one or more of its
subsidiaries, divisions, segments, or units.
The Administrator will establish the business criteria on which performance
goals will be awarded. The business criteria on which performance goals will
be established include revenue growth, net earnings (before or after taxes,
interest, depreciation, and/or amortization), cash flow, return on equity or
on assets or on net investment, stock appreciation, total stockholder return,
or cost containment or reduction, or any combination thereof.
Performance-Based Awards are earned and payable only if performance reaches
specific, preestablished performance goals related to one or more of the
business criteria approved by the Administrator in advance of applicable
deadlines under the Code and while the performance relating to the goals
remains substantially uncertain. Performance goals may be adjusted to reflect
certain changes, including reorganizations, liquidations and capitalization
and accounting changes, to the extent permitted by Section 162(m).
Performance-Based Awards may be stock-based (payable in stock only or in
cash or stock) or may be cash-only awards. Before any Performance-Based Award
is paid, the Administrator must certify that the performance goals have been
satisfied. The Administrator will have discretion to determine the performance
goals and restrictions or other limitations of the individual awards and may
reserve "negative" discretion to reduce payments below maximum Award limits.
Grants of Performance-Based Awards in any calendar year to any participant may
not be made with reference to more than 22,047 shares (50,000 shares per
fiscal year if the Amendment is approved by stockholders) or, if the award is
payable solely in cash, may not provide for payment of more than $200,000.
Deferrals. The 1998 Plan authorizes the Administrator to permit deferred
payment of awards. The Administrator may determine the form and timing of
payment, vesting, and other terms applicable to deferrals.
Automatic Award Grants to Non-Employee Directors. In each year during the
term of the 1998 Plan commencing in 2000, there will be granted automatically
as of the date of the annual meeting of stockholders in each such year, a
Nonqualified Stock Option to purchase 3,000 shares of Common Stock to each
Non-Employee Director then continuing in office (the "Non-Employee Director
Program"). The purchase price per share of Common Stock covered by each Option
granted under the Non-Employee Director Program will be the fair market value
of the Common Stock on the date the option is granted. The 1998 Plan provides
that Non-Employee Director Program Options vest on the first anniversary of
the date of grant and generally expire on the tenth anniversary of the date of
grant. Immediately prior to the occurrence of a Change in Control, each option
granted under the Non-Employee Director Program will become exercisable in
full.
Acceleration of Awards; Possible Early Termination of Awards. Unless prior
to a Change in Control Event the Administrator determines that, upon its
occurrence, benefits will not be accelerated, then generally upon a Change in
Control Event each Option and Stock Appreciation Right will become immediately
exercisable, restricted stock will vest, and cash and performance-based awards
will become payable. A Change in Control Event under the 1998 Plan generally
includes (subject to certain exceptions) a 50% or more change in ownership of
the Company, certain changes in a majority of the Board of Directors, certain
mergers or consolidations, or a liquidation of the Company or sale of
substantially all of the Company's assets.
Termination of or Changes to the 1998 Plan. The Board of Directors may amend
or terminate the 1998 Plan at any time and in any manner. Stockholder approval
for an amendment will generally not be obtained unless required by applicable
law or deemed necessary or advisable by the Board of Directors. Unless
previously terminated by the Board of Directors, the 1998 Plan will terminate
on June 30, 2008. Outstanding Awards may be amended, subject, however, to the
consent of the holder if the amendment materially and adversely affects the
holder.
18
<PAGE>
Securities Underlying Awards. The market value of a share of Common Stock as
of June 30, 2000 was $23.44 per share. Upon receipt of stockholder approval of
the Amendment, the Company plans to register under the Securities Act of 1933,
the additional shares of Common Stock available under the 1998 Plan.
Federal Income Tax Consequences of Awards under the 1998 Plan
The federal income tax consequences of the 1998 Plan under current federal
law, which is subject to change, are summarized in the following discussion
which deals with general tax principles applicable to the 1998 Plan. This
summary is not intended to be exhaustive and, among other considerations, does
not describe state, local, or international tax consequences.
With respect to Nonqualified Stock Options, the Company is generally
entitled to deduct and the optionee recognizes taxable income in an amount
equal to the difference between the option exercise price and the fair market
value of the shares at the time of exercise. With respect to Incentive Stock
Options, the Company is generally not entitled to a deduction nor does the
participant recognize income at the time of exercise. The current federal
income tax consequences of other awards authorized under the 1998 Plan
generally follow certain basic patterns: SARs are taxed and deductible in
substantially the same manner as Nonqualified Stock Options; nontransferable
restricted stock subject to a substantial risk of forfeiture results in income
recognition equal to the excess of the fair market value over the price paid
(if any) only at the time the restrictions lapse (unless the recipient elects
to accelerate recognition as of the date of grant); bonuses, and performance
share awards are generally subject to tax at the time of payment; cash-based
awards are generally subject to tax at the time of payment; and compensation
otherwise effectively deferred is taxed when paid. In each of the foregoing
cases, the Company will generally have a corresponding deduction at the time
the participant recognizes income.
If an award is accelerated under the 1998 Plan in connection with a change
in control (as this term is used under the Code), the Company may not be
permitted to deduct the portion of the compensation attributable to the
acceleration ("parachute payments") if it exceeds certain threshold limits
under the Code (and certain related excise taxes may be triggered).
Furthermore, if the compensation attributable to awards is not "performance-
based" within the meaning of Section 162(m) of the Code, the Company may not
be permitted to deduct the aggregate non performance-based compensation in
excess of $1,000,000 in certain circumstances.
Specific Benefits
For information regarding stock options granted to the Named Executive
Officers of the Company during fiscal 2000, see the material under the heading
"Executive Compensation and Certain Transactions" above.
The Board of Directors has approved, subject to stockholder approval of the
Amendment, the following stock option grants under the 1998 Plan. Except as
described in the preceding sentence and reflected in the following table, the
number, the amount and type of awards to be received by or allocated to
eligible persons in the future under the 1998 Plan cannot be determined at
this time.
19
<PAGE>
CONTEMPLATED STOCK OPTION GRANTS
<TABLE>
<CAPTION>
Name and Position Number of Shares
----------------- ----------------
<S> <C>
David G. Moore.......................................... 50,000
President and Chief Executive Officer
Paul R. St. Pierre...................................... 50,000
Executive Vice President, Marketing
Dennis L. Devereux...................................... 50,000
Executive Vice President, Human Resources
Beth A. Wilson.......................................... 15,000
Vice President, Operations
Other Officers Who Are Not Named Executive Officers..... 80,000
________________________________________________________
Named Executive Officers................................ 165,000
Other Officers Who Are Not Named Executive Officers..... 80,000
-------
245,000
</TABLE>
The stock options reflected in the foregoing table will be granted only if
stockholders approve the Amendment. Such grants (if the Amendment is approved)
will have a term of 10-years and will be subject to vesting of 25% per year
over the next four years after the grant. Each such option will be granted
with a per share exercise price equal to the fair market value of a share of
Common Stock on the date the option is granted and the options will otherwise
be on terms similar to the Company's prior stock option grants under the 1998
Plan.
Vote Required; Recommendation of the Board of Directors "FOR" this Proposal
The Board of Directors believes that the approval of the 1998 Plan Amendment
will promote the interests of the Company and its stockholders and continue to
enable the Company to attract, retain and reward persons important to the
Company's success and to provide incentives based upon the attainment of
corporate objectives and increases in stockholder value.
Approval of the Amendment requires the affirmative vote of a majority of the
Common Stock present, or represented, and entitled to vote at the Annual
Meeting.
THE BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE AMENDMENT TO THE 1998 STOCK AWARD PLAN.
Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise in their proxies. Broker non-votes and
abstentions on this proposal have the effect described on page 1. All members
of the Board of Directors are eligible for awards under the 1998 Plan.
PROPOSAL 3
PROPOSED ACTION REGARDING THE EMPLOYEE
STOCK PURCHASE PLAN
On August 30, 2000, the Board of Directors adopted, subject to stockholder
approval, the Corinthian Colleges, Inc. Employee Stock Purchase Plan (the
"ESPP").
The principal terms of the ESPP are summarized below. The following summary
is qualified in its entirety by the full text of the ESPP, a copy of which is
included as Appendix A to this Proxy Statement. Capitalized terms used in the
summary which are not otherwise defined are used as defined in the ESPP.
20
<PAGE>
Summary Description of the ESPP
Purpose. The purpose of the ESPP is to provide certain employees of the
Company (and its participating Subsidiaries) with an incentive to advance the
best interests of the Company by providing a method whereby they may
voluntarily purchase Common Stock at a favorable price and upon favorable
terms.
Operation. The ESPP generally operates in successive six-month periods
("Offering Periods"), commencing on each January 1 and July 1. If stockholders
approve the ESPP, the first Offering Period will commence on or about January
1, 2001 and will end on or about June 30, 2001. On the first day of each
Offering Period (the "Grant Date"), each Eligible Employee who has timely
filed a valid election to participate in the ESPP for that Offering Period (a
"Participant") will be granted an option (an "Option") to purchase shares of
the Company's Common Stock. A Participant must designate in his or her
election the percentage (which must be at least 1% and not more than 15%) of
his or her Compensation to be withheld from his or her pay during that
Offering Period and credited to a bookkeeping account (an "Account")
maintained under the ESPP in his or her name on the Company's books.
Each Option will be for a six-month term and will automatically be exercised
on the last day of the Offering Period with respect to which it was granted
(the "Exercise Date"). The number of shares of Common Stock acquired by a
Participant upon exercise of his or her Option will be determined by dividing
the Participant's Account balance as of the Exercise Date by the Option Price.
The "Option Price" for each Option will equal the lesser of: (1) 90% of the
Fair Market Value of a share of Common Stock on the Grant Date of the Option;
or (2) 90% of the Fair Market Value of a share of Common Stock on the Exercise
Date of the Option. A Participant's Account will be reduced upon exercise of
his or her Option by the amount used to pay the Option Price.
A Participant's election to participate in the ESPP will continue in effect
for all Offering Periods until: (1) he or she timely files a new valid
election to change the level of his or her contributions or terminate his or
her participation, effective with the following Offering Period; or (2) the
ESPP or his or her participation in an Offering Period is terminated, each as
described below. No interest will be paid to any Participant or credited to
any Account under the ESPP.
Eligibility. Only Eligible Employees may participate in the ESPP. An
"Eligible Employee" is any employee of the Company (or any of its
participating Subsidiaries) who has completed at least twelve months of
continuous employment with the Company (or a participating Subsidiary) as of
the applicable Grant Date. Notwithstanding the foregoing, any employee of the
Company who owns 5% or more of the Common Stock is excluded from ESPP
participation. As of June 30, 2000, there were a total of approximately 1,660
employees of the Company and its participating Subsidiaries (including three
of the Company's Named Executive Officers) who were Eligible Employees and
would have been entitled to participate in the ESPP had it been in effect.
Termination of Participation. A Participant may elect to terminate his or
her contributions to the ESPP during an Offering Period at any time prior to
the Exercise Date by completing and filing a withdrawal form in a manner
prescribed by the Committee. A Participant's participation in the ESPP will
also terminate (prior to the applicable Exercise Date) if his or her
employment by the Company (or a participating Subsidiary) terminates for any
reason.
If a Participant's ESPP participation terminates during an Offering Period
for any of the reasons discussed in the preceding paragraph, he or she will no
longer be permitted to make contributions to the ESPP for that Offering
Period, his or her Option for that Offering Period will automatically
terminate, and his or her Account balance will be paid to him or her in cash
without interest. However, a Participant's termination from participation will
not have any effect upon his or her ability to participate in any succeeding
Offering Period, provided that the applicable eligibility and participation
requirements are again then met.
21
<PAGE>
Authorized Shares; Limits on Contributions. The maximum aggregate number of
shares of Common Stock available under the ESPP is 250,000 shares. As required
by the Code, a Participant cannot purchase more than $25,000 of stock (valued
at the start of the applicable Offering Period) under the ESPP in any one
calendar year. In the event of a merger, consolidation, recapitalization,
stock split, stock dividend, combination of shares, or other change affecting
the Common Stock, a proportionate and equitable adjustment will be made to the
number of shares subject to the ESPP and outstanding Options.
Administration. The ESPP will be administered by the Board of Directors or a
committee appointed by the Board of Directors. The ESPP administrator is
currently the Compensation Committee of the Board of Directors. The ESPP will
not limit the authority of the Board of Directors or the Compensation
Committee to grant awards or authorize any other compensation, with or without
reference to the Common Stock, under any other plan or authority.
Amendment or Termination of the ESPP. The Board of Directors may amend,
modify or terminate the ESPP at any time and in any manner, provided that the
existing rights of Participants are not materially adversely affected thereby.
Stockholder approval for any amendment will only be required to the extent
necessary to meet the requirements of Section 423 of the Code or to the extent
otherwise required by law.
Unless previously terminated by the Board of Directors, no new Offering
Periods will commence on or after, and the ESPP will terminate on, August 30,
2010 or, if earlier, when no shares remain available for Options under the
ESPP.
Securities Underlying Awards. The market value of a share of Common Stock as
of June 30, 2000 was $23.44 per share. Upon receipt of stockholder approval of
the ESPP, the Company plans to register under the Securities Act of 1933, the
shares of Common Stock available under the ESPP.
Federal Income Tax Consequences of the ESPP
The federal income tax consequences of the ESPP under current federal law,
which is subject to change, are summarized in the following discussion which
deals with general tax principles applicable to the ESPP. This summary is not
intended to be exhaustive and, among other considerations, does not describe
state, local, or international tax consequences.
The ESPP is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Code. Participant contributions to the ESPP are made on an
after-tax basis (that is, the contributions are deducted from compensation
that is taxable to the Participant and for which the Company or a Subsidiary
is generally entitled to a tax deduction). Generally, no taxable income will
be recognized by a Participant as of either the Grant Date or the Exercise
Date of an Option. A Participant will generally recognize income (or loss)
upon a sale or disposition of the shares acquired under the ESPP. If such
shares are held by the Participant for a period of at least two years after
the Grant Date of the related Option and for a period of at least one year
after the Exercise Date of the related Option (the "Required Holding Period"),
and the shares are sold at a price in excess of the Option Price of the
related Option, the gain on the sale of the shares will be taxed as ordinary
income to the extent of the lesser of: (1) the amount by which the fair market
value of the shares on the Grant Date exceeded the Option Price, or (2) the
amount by which the fair market value of the shares at the time of their sale
exceeded the Option Price. Any portion of the gain not taxed as ordinary
income will be taxed at capital gain tax rates. The Company will not be
entitled to a federal income tax deduction with respect to any shares that are
held for the Required Holding Period.
Specific Benefits
The benefits that will be received by or allocated to Eligible Employees
under the ESPP cannot be determined at this time because the amount of
contributions set aside to purchase shares of Common Stock under the ESPP
(subject to the limitations discussed above) are entirely within the
discretion of each Participant.
22
<PAGE>
Vote Required; Recommendation of the Board of Directors "FOR" this Proposal
The Board of Directors believes that the ESPP will help promote the
interests of the Company by (1) linking the interests of the Company's
stockholders and Participants, and (2) providing an additional means through
which the Company can attract, motivate, and retain employees.
Approval of the Amendment requires the affirmative vote of a majority of the
Common Stock present, or represented, and entitled to vote at the Annual
Meeting.
THE BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE ESPP.
Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise in their proxies. Broker non-votes and
abstentions on this proposal have the effect described on page 1. Members of
the Board of Directors who are also employees of the Company are eligible for
awards under the ESPP.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Arthur Andersen LLP, independent certified public accountants, as
auditors of Corinthian's financial statements for the fiscal year ended June
30, 2001. Arthur Andersen LLP has acted as auditors for Corinthian since its
inception in 1995. The Board of Directors has determined to afford
stockholders the opportunity to express their opinions on the matter of
auditors, and, accordingly, is submitting to the stockholders at the Annual
Meeting a proposal to ratify the Board of Directors' appointment of Arthur
Andersen LLP. If a majority of the shares voted at the Annual Meeting, in
person or by proxy, are not voted in favor of the ratification of the
appointment of Arthur Andersen LLP, the Board of Directors will interpret this
as an instruction to seek other auditors. It is expected that representatives
of Arthur Andersen LLP will be present at the meeting and will be available to
respond to questions. They will be given an opportunity to make a statement if
they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT
AUDITORS OF CORINTHIAN'S FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE
30, 2001.
MISCELLANEOUS AND OTHER MATTERS SOLICITATION
The cost of this proxy solicitation will be borne by Corinthian. Corinthian
may request banks, brokers, fiduciaries, custodians, nominees and certain
other record holders to send proxies, proxy statements and other materials to
their principals at Corinthian's expense. Such banks, brokers, fiduciaries,
custodians, nominees and other record holders will be reimbursed by Corinthian
for their reasonable out-of-pocket expenses of solicitation. Corinthian does
not anticipate that costs and expenses incurred in connection with this proxy
solicitation will exceed an amount normally expended for a proxy solicitation
for an election of directors in the absence of a contest.
23
<PAGE>
PROPOSALS OF STOCKHOLDERS
Stockholder proposals intended to be considered at Corinthian's 2001 Annual
Meeting of Stockholders must be received by the Secretary of Corinthian at its
principal executive offices no later than June 18, 2001 in order to be
considered for inclusion in Corinthian's Proxy Statement and form of proxy
relating to that meeting. If a stockholder notifies Corinthian of such
stockholder's intent to present a proposal for consideration at Corinthian's
2001 Annual Meeting of Stockholders after September 1, 2001, Corinthian,
acting through the persons named as proxies in the proxy materials for such
meeting, may exercise discretionary voting authority with respect to such
proposal without including information regarding such proposal in its proxy
materials.
OTHER BUSINESS
The Board of Directors is not aware of any other matters to be presented at
the Annual Meeting other than those mentioned in Corinthian's Notice of Annual
Meeting of Stockholders enclosed herewith. If any other matters are properly
brought before the Annual Meeting, however, it is intended that the persons
named in the proxy will vote as the Board of Directors directs.
ADDITIONAL INFORMATION
Included herewith is a copy of Corinthian's Annual Report on Form 10-K for
its fiscal year ended June 30, 2000, as filed with the Commission. Corinthian
files annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any reports, statements
or other information we file at the Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our Commission filings are also available to the public from commercial
document retrieval services and at the web site maintained by the Commission
at http://www.sec.gov.
By order of the Board of Directors
/s/ DAVID G. MOORE
David G. Moore
President and Chief Executive Officer
Santa Ana, California,
October 16, 2000
ALL STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY PROMPTLY.
24
<PAGE>
APPENDIX A
CORINTHIAN COLLEGES, INC.
EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. PURPOSE.............................................................. 1
2. DEFINITIONS.......................................................... 1
3. ELIGIBILITY.......................................................... 4
4. STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS........................ 4
5. OFFERING PERIODS..................................................... 4
6. PARTICIPATION........................................................ 4
7. METHOD OF PAYMENT OF CONTRIBUTIONS................................... 5
8. GRANT OF OPTION...................................................... 6
9. EXERCISE OF OPTION................................................... 7
10. DELIVERY............................................................. 8
11. TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS................. 8
12. ADMINISTRATION....................................................... 9
13. DESIGNATION OF BENEFICIARY........................................... 10
14. TRANSFERABILITY...................................................... 11
15. USE OF FUNDS; INTEREST............................................... 11
16. REPORTS.............................................................. 11
17. ADJUSTMENTS OF AND CHANGES IN THE STOCK.............................. 11
18. POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS....................... 12
19. TERM OF PLAN; AMENDMENT OR TERMINATION............................... 12
20. NOTICES.............................................................. 13
21. CONDITIONS UPON ISSUANCE OF SHARES................................... 13
22. PLAN CONSTRUCTION.................................................... 13
23. EMPLOYEES' RIGHTS.................................................... 14
24. MISCELLANEOUS........................................................ 14
25. EFFECTIVE DATE....................................................... 15
26. TAX WITHHOLDING...................................................... 15
27. NOTICE OF SALE....................................................... 15
</TABLE>
-i-
<PAGE>
CORINTHIAN COLLEGES, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Corinthian Colleges, Inc.
Employee Stock Purchase Plan (this "Plan").
1. PURPOSE
The purpose of this Plan is to provide Eligible Employees with an incentive
to advance the best interests of the Corporation (and those Subsidiaries
which may be designated by the Committee as "Participating Corporations")
by providing a method whereby they may voluntarily purchase Common Stock at
a favorable price and upon favorable terms.
2. DEFINITIONS
Capitalized terms used herein which are not otherwise defined shall
have the following meanings.
"Account" means the bookkeeping account maintained by the Corporation,
or by a recordkeeper on behalf of the Corporation, for a Participant
pursuant to Section 7(a).
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee appointed by the Board to administer
this Plan pursuant to Section 12.
"Common Stock" means the Common Stock, par value $0.0001 per share, of
the Corporation and such other securities or property as may become the
subject of Options pursuant to an adjustment made under Section 17.
"Company" means, collectively, the Corporation, its Parent and its
Subsidiaries (if any).
"Compensation" means an Eligible Employee's regular earnings, overtime
pay, sick pay, vacation pay, cash incentive compensation, commissions
and bonuses. Compensation also includes any amounts contributed as
salary reduction contributions to a plan qualifying under Section
401(k), 125 or 129 of the Code. Any other form of remuneration is
excluded from Compensation, including (but not limited to) the
following: prizes, awards, relocation or housing allowances, stock
option exercises, stock appreciation rights, restricted stock
exercises, performance awards, auto allowances, tuition reimbursement
and other forms of imputed income. Notwithstanding the foregoing,
Compensation shall not include any amounts deferred under or paid from
any nonqualified deferred compensation plan maintained by the Company.
"Contributions" means all bookkeeping amounts credited to the Account
of a Participant pursuant to Section 7(a).
"Corporation" means Corinthian Colleges, Inc., a Delaware corporation,
and its successors.
"Effective Date" means the date this Plan was adopted by the Board.
"Eligible Employee" means any employee of the Corporation, or of any
Subsidiary which has been designated in writing by the Committee as a
"Participating Corporation" (including any Subsidiaries which have
become such after the date that this Plan is approved by the
stockholders of the Corporation). Notwithstanding the foregoing,
"Eligible Employee" shall not include any employee who has not as of
the Grant Date completed at least twelve months of continuous
employment with the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
A-1
<PAGE>
"Exercise Date" means, with respect to an Offering Period, the last day
of that Offering Period.
"Fair Market Value" on any date means: (i) if the Common Stock is
listed or admitted to trade on a national securities exchange, the
closing price of a share of Common Stock on the Composite Tape, as
published in the Western Edition of The Wall Street Journal, of the
principal national securities exchange on which such stock is so listed
or admitted to trade, on such date, or, if there is no trading of the
Common Stock on such date, then the closing price of a share of Common
Stock as quoted on such Composite Tape on the next preceding date on
which there was trading in such shares; (ii) if the Common Stock is not
listed or admitted to trade on a national securities exchange, the
last/closing price for a share of Common Stock on such date, as
furnished by the National Association of Securities Dealers, Inc.
("NASD") through the NASDAQ National Market Reporting System or a
similar organization if the NASD is no longer reporting such
information; (iii) if the Common Stock is not listed or admitted to
trade on a national securities exchange and is not reported on the
National Market Reporting System, the mean between the bid and asked
price for a share of Common Stock on such date, as furnished by the
NASD or a similar organization; or (iv) if the Common Stock is not
listed or admitted to trade on a national securities exchange, is not
reported on the National Market Reporting System and if bid and asked
prices for the Common Stock are not furnished by the NASD or a similar
organization, the value as established by the Committee at such time
for purposes of this Plan.
"Grant Date" means the first day of each Offering Period, as determined
by the Committee and announced to potential Eligible Employees.
"Offering Period" means the six-consecutive month period commencing on
each Grant Date; provided, however, that the Committee may declare, as
it deems appropriate and in advance of the applicable Offering Period,
a shorter (not to be less than three months) Offering Period or a
longer (not to exceed 27 months) Offering Period; provided further that
the Grant Date for an Offering Period may not occur on or before the
Exercise Date for the immediately preceding Offering Period.
"Option" means the stock option to acquire Shares granted to a
Participant pursuant to Section 8.
"Option Price" means the per share exercise price of an Option as
determined in accordance with Section 8(b).
"Parent" means any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation in which
each corporation (other than the Corporation) owns stock possessing 50%
or more of the total combined voting power of all classes of stock in
one or more of the other corporations in the chain.
"Participant" means an Eligible Employee who has elected to participate
in this Plan and who has filed a valid and effective Subscription
Agreement to make Contributions pursuant to Section 6.
"Plan" means this Corinthian Colleges, Inc. Employee Stock Purchase
Plan, as it may hereafter be amended from time to time.
"Rule 16b-3" means Rule 16b-3 as promulgated by the Commission under
Section 16, as amended from time to time.
"Section 16" means Section 16 of the Exchange Act.
"Share" means a share of Common Stock.
"Subscription Agreement" means the written agreement filed by an
Eligible Employee with the Corporation pursuant to Section 6 to
participate in this Plan.
"Subsidiary" means any corporation (other than the Corporation) in an
unbroken chain of corporations (beginning with the Corporation) in
which each corporation (other than the last corporation) owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one or more of the other corporations in the chain.
A-2
<PAGE>
3. ELIGIBILITY
Any person employed as an Eligible Employee as of a Grant Date shall be
eligible to participate in this Plan during the Offering Period in which
such Grant Date occurs, subject to the Eligible Employee satisfying the
requirements of Section 6.
4. STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS
(a) Subject to the provisions of Section 17, the capital stock that may be
delivered under this Plan will be shares of the Corporation's
authorized but unissued Common Stock and any of its shares of Common
Stock held as treasury shares. The maximum number of Shares that may be
delivered pursuant to Options granted under this Plan is 250,000
Shares, subject to adjustments pursuant to Section 17. In the event
that all of the Shares made available under this Plan are subscribed
prior to the expiration of this Plan, this Plan shall terminate at the
end of that Offering Period and the shares available shall be allocated
for purchase by Participants in that Offering Period on a pro-rata
basis determined with respect to Participants' Account balances.
(b) The maximum number of Shares that any one individual may acquire upon
exercise of his or her Option with respect to any one Offering Period
is 3,000, subject to adjustments pursuant to Section 17 (the
"Individual Limit"); provided, however, that the Committee may amend
such Individual Limit, effective no earlier than the first Offering
Period commencing after the adoption of such amendment, without
stockholder approval. The Individual Limit shall be proportionately
adjusted for any Offering Period of less than six months, and may, at
the discretion of the Committee, be proportionately increased for any
Offering Period of greater than six months.
5. OFFERING PERIODS
During the term of this Plan, the Corporation will offer Options to
purchase Shares in each Offering Period to all Participants in that
Offering Period. Each Option shall become effective on the Grant Date.
Unless otherwise specified by the Committee in advance of the Offering
Period, an Offering Period that commences on or about July 1 will end the
following December 31 and an Offering Period that commences on or about
January 1 will end the following June 30. The term of each Option shall be
the duration of the related Offering Period and shall end on the Exercise
Date. The first Offering Period shall commence no earlier than the
Effective Date. Offering Periods shall continue until this Plan is
terminated in accordance with Section 18 or 19, or, if earlier, until no
Shares remain available for Options pursuant to Section 4.
6. PARTICIPATION
(a) An Eligible Employee may become a participant in this Plan by
completing a Subscription Agreement on a form approved by and in a
manner prescribed by the Committee (or its delegate). To become
effective, a Subscription Agreement must be signed by the Eligible
Person and filed with the Corporation at the time specified by the
Committee, but in all cases prior to the start of the Offering Period
with respect to which it is to become effective, and must set forth a
whole percentage (or, if the Committee so provides, a stated amount) of
the Eligible Employee's Compensation to be credited to the
Participant's Account as Contributions each pay period.
(b) Notwithstanding the foregoing, a Participant's Contribution election
shall be subject to the following limitations:
(i) the 5% ownership and the $25,000 annual purchase limitations set
forth in Section 8(c);
(ii) unless the Committee otherwise provides, an election of a stated
amount of Compensation must result in a Plan Contribution of at least
$10.00 each pay period;
(iii) a Participant may not elect to contribute more than fifteen
percent (15%) of his or her Compensation as Plan Contributions; and
(iv) such other limits, rules, or procedures as the Committee may
prescribe.
A-3
<PAGE>
(c) Subscription Agreements shall contain the Eligible Employee's
authorization and consent to the Corporation's withholding from his or
her Compensation the amount of his or her Contributions. An Eligible
Employee's Subscription Agreement, and his or her participation
election and withholding consent thereon, shall remain valid for all
Offering Periods until (i) the Eligible Employee's participation
terminates pursuant to the terms hereof, (ii) the Eligible Employee
files a new Subscription Agreement that becomes effective, or (iii) the
Committee requires that a new Subscription Agreement be executed and
filed with the Corporation.
7. METHOD OF PAYMENT OF CONTRIBUTIONS
(a) The Corporation shall maintain on its books, or cause to be maintained
by a recordkeeper, an Account in the name of each Participant. The
percentage of Compensation elected to be applied as Contributions by a
Participant shall be deducted from such Participant's Compensation on
each payday during the period for payroll deductions set forth below
and such payroll deductions shall be credited to that Participant's
Account as soon as administratively practicable after such date. A
Participant may not make any additional payments to his or her Account.
A Participant's Account shall be reduced by any amounts used to pay the
Option Price of Shares acquired, or by any other amounts distributed
pursuant to the terms hereof.
(b) Payroll deductions with respect to an Offering Period shall commence as
of the first day of the payroll period which coincides with or
immediately follows the applicable Grant Date and shall end on the last
day of the payroll period which coincides with or immediately precedes
the applicable Exercise Date, unless sooner terminated by the
Participant as provided in this Section 7 or until his or her
participation terminates pursuant to Section 11.
(c) A Participant may terminate his or her Contributions during an Offering
Period (and receive a distribution of the balance of his or her Account
in accordance with Section 11) by completing and filing with the
Corporation, in such form and on such terms as the Committee (or its
delegate) may prescribe, a written withdrawal form which shall be
signed by the Participant. Such termination shall be effective as soon
as administratively practicable after its receipt by the Corporation. A
withdrawal election pursuant to this Section 7(c) with respect to an
Offering Period shall only be effective, however, if it is received by
the Corporation prior to the Exercise Date of that Offering Period.
Partial withdrawals of Accounts, and other modifications or suspensions
of Subscription Agreements, except as provided in Section 7(e) or 7(f),
are not permitted.
(d) During leaves of absence approved by the Corporation and meeting the
requirements of Regulation Section 1.421-7(h)(2) under the Code, a
Participant may continue participation in this Plan by cash payments to
the Corporation on his normal paydays equal to the reduction in his
Plan Contributions caused by his leave.
(e) A Participant may discontinue, increase, or decrease the level of his
or her Contributions (within Plan limits) by completing and filing with
the Corporation, on such terms as the Committee (or its delegate) may
prescribe, a new Subscription Agreement which indicates such election.
An election pursuant to this Section 7(e) shall be effective no earlier
than the first Offering Period that commences after the Corporation's
receipt of such election.
(f) A Participant may discontinue (but not increase or otherwise decrease)
the level of his or her Contributions, by filing with the Corporation,
on such terms as the Committee (or its delegate) may prescribe, a new
Subscription Agreement which indicates such election. A Participant may
make only one election under this Section 7(f) each Offering Period. An
election pursuant to this Section 7(f) shall be effective no earlier
than the first payroll period that starts after the Corporation's
receipt of such election.
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8. GRANT OF OPTION
(a) On each Grant Date, each Eligible Employee who is a participant during
that Offering Period shall be granted an Option to purchase a number of
Shares. The Option shall be exercised on the Exercise Date. The number
of Shares subject to the Option shall be determined by dividing the
Participant's Account balance as of the applicable Exercise Date by the
Option Price.
(b) The Option Price per Share of the Shares subject to an Option for an
Offering Period shall be the lesser of: (i) 90% of the Fair Market
Value of a Share on the applicable Grant Date; or (ii) 90% of the Fair
Market Value of a Share on the applicable Exercise Date.
(c) Notwithstanding anything else contained herein, a person who is
otherwise an Eligible Employee shall not be granted any Option (or any
Option granted shall be subject to compliance with the following
limitations) or other right to purchase Shares under this Plan to the
extent:
(i) it would, if exercised, cause the person to own "stock" (as such
term is defined for purposes of Section 423(b)(3) of the Code)
possessing 5% or more of the total combined voting power or value of
all classes of stock of the Corporation, or of any Parent, or of any
Subsidiary; or
(ii) such Option causes such individual to have rights to purchase
stock under this Plan and any other plan of the Corporation, any
Parent, or any Subsidiary which is qualified under Section 423 of the
Code which accrue at a rate which exceeds $25,000 of the fair market
value of the stock of the Corporation, of any Parent, or of any
Subsidiary (determined at the time the right to purchase such Stock is
granted, before giving effect to any discounted purchase price under
any such plan) for each calendar year in which such right is
outstanding at any time.
For purposes of the foregoing, a right to purchase stock accrues when it
first become exercisable during the calendar year. In determining whether
the stock ownership of an Eligible Employee equals or exceeds the 5% limit
set forth above, the rules of Section 424(d) of the Code (relating to
attribution of stock ownership) shall apply, and stock which the Eligible
Employee may purchase under outstanding options shall be treated as stock
owned by the Eligible Employee.
9. EXERCISE OF OPTION
Unless a Participant's Plan participation is terminated as provided in
Section 11, his or her Option for the purchase of Shares shall be exercised
automatically on the Exercise Date for that Offering Period, without any
further action on the Participant's part, and the maximum number of whole
Shares subject to such Option (subject to the Individual Limit set forth in
Section 4(b) and the limitations contained in Section 8(c)) shall be
purchased at the Option Price with the balance of such Participant's
Account.
If any amount which is not sufficient to purchase a whole Share remains in
a Participant's Account after the exercise of his or her Option on the
Exercise Date: (i) such amount shall be credited to such Participant's
Account for the next Offering Period, if he or she is then a Participant;
or (ii) if such Participant is not a Participant in the next Offering
Period, or if the Committee so elects, such amount shall be refunded to
such Participant as soon as administratively practicable after such date.
If the Share limit of Section 4(a) is reached, any amount that remains in a
Participant's Account after the exercise of his or her Option on the
Exercise Date to purchase the number of Shares that he or she is allocated
shall be refunded to the Participant as soon as administratively
practicable after such date.
If any amount which exceeds the Individual Limit set forth in Section 4(b)
or one of the limitations set forth in Section 8(c) remains in a
Participant's Account after the exercise of his or her Option on the
Exercise Date, such amount shall be refunded to the Participant as soon as
administratively practicable after such date.
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10. DELIVERY
As soon as administratively practicable after the Exercise Date, the
Corporation shall deliver to each Participant a certificate representing
the Shares purchased upon exercise of his or her Option. The Corporation
may make available an alternative arrangement for delivery of Shares to a
recordkeeping service. The Committee (or its delegate), in its discretion,
may either require or permit the Participant to elect that such
certificates be delivered to such recordkeeping service. In the event the
Corporation is required to obtain from any commission or agency authority
to issue any such certificate, the Corporation will seek to obtain such
authority. If the Corporation is unable to obtain from any such commission
or agency authority which counsel for the Corporation deems necessary for
the lawful issuance of any such certificate, or if for any other reason the
Corporation cannot issue or deliver shares of Common Stock and satisfy
Section 21, the Corporation shall be relieved from liability to any
Participant except that the Corporation shall return to each Participant
the amount of the balance in his or her Account.
11. TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS
(a) Except as provided in the next paragraph, if a Participant ceases to be
an Eligible Employee for any reason, or if the Participant elects to
terminate Contributions pursuant to Section 7(c), at any time prior to
the last day of an Offering Period in which he or she participates,
such Participant's Account shall be paid to him or her or in cash (or,
in the event of the Participant's death, to the person or persons
entitled thereto under Section 13 in cash), and such Participant's
Option and participation in the Plan shall be automatically terminated.
If a Participant (i) ceases to be an Eligible Employee during an
Offering Period but remains an employee of the Company through the
Exercise Date, or (ii) during an Offering Period commences a sick
leave, military leave, or other leave of absence approved by the
Company, and the leave meets the requirements of Treasury Regulation
Section 1.421-7(h)(2) and the Participant is an employee of the Company
or on such leave as of the applicable Exercise Date, such Participant's
Contributions shall cease (subject to Section 7(d)), and the
Contributions previously credited to the Participant's Account for that
Offering Period shall be used to exercise the Participant's Option as
of the applicable Exercise Date in accordance with Section 9 (unless
the Participant makes an election to terminate Contributions in
accordance with Section 7(c) at any time prior to the last day of the
applicable Offering Period, in which case such Participant's Account
shall be paid to him or her in cash in accordance with the foregoing
paragraph).
(b) A Participant's termination from Plan participation precludes the
Participant from again participating in this Plan during that Offering
Period. However, such termination shall not have any effect upon his or
her ability to participate in any succeeding Offering Period, provided
that the applicable eligibility and participation requirements are
again then met. A Participant's termination from Plan participation
shall be deemed to be a revocation of that Participant's Subscription
Agreement and such Participant must file a new Subscription Agreement
to resume Plan participation in any succeeding Offering Period.
(c) For purposes of this Plan, if a Participating Corporation ceases to be
a Subsidiary, each person employed by that Subsidiary will be deemed to
have terminated employment for purposes of this Plan and will no longer
be an Eligible Employee, unless the person continues as an Eligible
Employee in respect of another Company entity.
12. ADMINISTRATION
(a) The Board shall appoint the Committee, which shall be composed of not
less than two members of the Board. Each member of the Committee, in
respect of any transaction at a time when an affected Participant may
be subject to Section 16 of the Exchange Act, shall be a "non-employee
director" within the meaning of Rule 16b-3. The Board may, at any time,
increase or decrease the number of members of the Committee, may remove
from membership on the Committee all or any portion of its
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members, and may appoint such person or persons as it desires to fill
any vacancy existing on the Committee, whether caused by removal,
resignation, or otherwise. The Board may also, at any time, assume or
change the administration of this Plan.
(b) The Committee shall supervise and administer this Plan and shall have
full power and discretion to adopt, amend and rescind any rules deemed
desirable and appropriate for the administration of this Plan and not
inconsistent with the terms of this Plan, and to make all other
determinations necessary or advisable for the administration of this
Plan. The Committee shall act by majority vote or by unanimous written
consent. No member of the Committee shall be entitled to act on or
decide any matter relating solely to himself or herself or solely to
any of his or her rights or benefits under this Plan. The Committee
shall have full power and discretionary authority to construe and
interpret the terms and conditions of this Plan, which construction or
interpretation shall be final and binding on all parties including the
Corporation, Participants and beneficiaries. The Committee may delegate
ministerial non-discretionary functions to third parties, including
officers or employees of the Corporation.
(c) Subject only to compliance with the express provisions hereof, the
Board and Committee may act in their absolute discretion in matters
within their authority related to this Plan. Any action taken by, or
inaction of, the Corporation, any Participating Corporation, the Board
or the Committee relating or pursuant to this Plan shall be within the
absolute discretion of that entity or body and will be conclusive and
binding upon all persons. In making any determination or in taking or
not taking any action under this Plan, the Board or Committee, as the
case may be, may obtain and may rely on the advice of experts,
including professional advisors to the Corporation. No member of the
Board or Committee, or officer or agent of the Company, will be liable
for any action, omission or decision under the Plan taken, made or
omitted in good faith.
13. DESIGNATION OF BENEFICIARY
(a) A Participant may file, in a manner prescribed by the Committee (or its
delegate), a written designation of a beneficiary who is to receive any
Shares or cash from such Participant's Account under this Plan in the
event of such Participant's death. If a Participant's death occurs
subsequent to the end of an Offering Period but prior to the delivery
to him or her of any Shares deliverable under the terms of this Plan,
such Shares and any remaining balance of such Participant's Account
shall be paid to such beneficiary (or such other person as set forth in
Section 13(b)) as soon as administratively practicable after the
Corporation receives notice of such Participant's death and any
outstanding unexercised Option shall terminate. If a Participant's
death occurs at any other time, the balance of such Participant's
Account shall be paid to such beneficiary (or such other person as set
forth in Section 13(b)) in cash as soon as administratively practicable
after the Corporation receives notice of such Participant's death and
such Participant's Option shall terminate. If a Participant is married
and the designated beneficiary is not his or her spouse, spousal
consent shall be required for such designation to be effective unless
it is established (to the satisfaction of the Committee or its
delegate) that there is no spouse or that the spouse cannot be located.
The Committee may rely on the last designation of a beneficiary filed
by a Participant in accordance with this Plan.
(b) Beneficiary designations may be changed by the Participant (and his or
her spouse, if required) at any time on forms provided and in the
manner prescribed by the Committee (or its delegate). If a Participant
dies with no validly designated beneficiary under this Plan who is
living at the time of such Participant's death, the Corporation shall
deliver all Shares and/or cash payable pursuant to the terms hereof to
the executor or administrator of the estate of the Participant, or if
no such executor or administrator has been appointed, the Corporation,
in its discretion, may deliver such Shares and/or cash to the spouse or
to any one or more dependents or relatives of the Participant, or if no
spouse, dependent or relative is known to the Corporation, then to such
other person as the Corporation may designate.
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14. TRANSFERABILITY
Neither Contributions credited to a Participant's Account nor any Options
or rights with respect to the exercise of Options or right to receive
Shares under this Plan may be anticipated, alienated, encumbered, assigned,
transferred, pledged or otherwise disposed of in any way (other than by
will, the laws of descent and distribution, or as provided in Section 13)
by the Participant. Any such attempt at anticipation, alienation,
encumbrance, assignment, transfer, pledge or other disposition shall be
without effect and all amounts shall be paid and all shares shall be
delivered in accordance with the provisions of this Plan. Amounts payable
or Shares deliverable pursuant to this Plan shall be paid or delivered only
to the Participant or, in the event of the Participant's death, to the
Participant's beneficiary pursuant to Section 13.
15. USE OF FUNDS; INTEREST
All Contributions received or held by the Corporation under this Plan will
be included in the general assets of the Corporation and may be used for
any corporate purpose. Notwithstanding anything else contained herein to
the contrary, no interest will be paid to any Participant or credited to
his or her Account under this Plan (in respect of Account balances, refunds
of Account balances, or otherwise).
16. REPORTS
Statements shall be provided to Participants as soon as administratively
practicable following each Exercise Date. Each Participant's statement
shall set forth, as of such Exercise Date, that Participant's Account
balance immediately prior to the exercise of his or her Option, the Fair
Market Value of a Share, the Option Price, the number of whole Shares
purchased and his or her remaining Account balance, if any.
17. ADJUSTMENTS OF AND CHANGES IN THE STOCK
Upon or in contemplation of any reclassification, recapitalization, stock
split (including a stock split in the form of a stock dividend), or reverse
stock split; any merger, combination, consolidation, or other
reorganization; split-up, spin-off, or any similar extraordinary dividend
distribution in respect of the Common Stock (whether in the form of
securities or property); any exchange of Common Stock or other securities
of the Corporation, or any similar, unusual or extraordinary corporate
transaction in respect of the Common Stock; or a sale of substantially all
the assets of the Corporation as an entirety occurs; then the Committee
shall, in such manner, to such extent (if any) and at such time as it deems
appropriate and equitable in the circumstances:
(a) proportionately adjust any or all of (i) the number and type of shares
of Common Stock or the number and type of other securities that
thereafter may be made the subject of Options (including the specific
maxima and numbers of shares set forth elsewhere in this Plan), (ii)
the number, amount and type of shares of Common Stock (or other
securities or property) subject to any or all outstanding Options,
(iii) the Option Price of any or all outstanding Options, or (iv) the
securities, cash or other property deliverable upon exercise of any
outstanding Options; or
(b) make provision for a cash payment or for the substitution or exchange
of any or all outstanding Options for cash, securities or property to
be delivered to the holders of any or all outstanding Options based
upon the distribution or consideration payable to holders of the Common
Stock upon or in respect of such event.
The Committee may adopt such valuation methodologies for outstanding
Options as it deems reasonable in the event of a cash or property
settlement and, without limitation on other methodologies, may base such
settlement solely upon the excess (if any) of the amount payable upon or in
respect of such event over the exercise or strike price of the Option.
In each case, no adjustment, substitution, exchange or settlement will be
made (without reasonable compensation therefor) that would cause this Plan
to violate Section 423 of the Code or any successor provisions without the
written consent of the holders materially adversely affected thereby.
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In any of such events, the Committee may take such action sufficiently
prior to such event to the extent that the Committee deems the action
necessary to permit the Participant to realize the benefits intended to be
conveyed with respect to the underlying shares in the same manner as is or
will be available to stockholders generally.
18. POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS
Upon a dissolution of the Corporation, or any other event described in
Section 17 that the Corporation does not survive, the Plan and, if prior to
the last day of an Offering Period, any outstanding Option granted with
respect to that Offering Period shall terminate, subject to any provision
that has been expressly made by the Board for the survival, substitution,
assumption, exchange or other settlement of the Plan and Options. In the
event a Participant's Option is terminated pursuant to this Section 18
without a provision having been made by the Board for a substitution,
exchange or other settlement of the Option, such Participant's Account
shall be paid to him or her in cash without interest.
19. TERM OF PLAN; AMENDMENT OR TERMINATION
(a) This Plan shall become effective as of the Effective Date. No new
Offering Periods shall commence on or after the tenth anniversary of
the Effective Date and this Plan shall terminate as of the Exercise
Date on or immediately following such tenth anniversary unless sooner
terminated pursuant to Section 4, Section 18, or this Section 19.
(b) The Board may, at any time, terminate or, from time to time amend,
modify or suspend this Plan, in whole or in part, without notice.
Stockholder approval for any amendment or modification shall not be
required, except to the extent required by Section 423 of the Code or
other applicable law, or deemed necessary or advisable by the Board. No
Options may be granted during any suspension of this Plan or after the
termination of this Plan, but the Committee will retain jurisdiction as
to Options then outstanding in accordance with the terms of this Plan.
No amendment, modification, or termination pursuant to this Section
19(b) shall, without written consent of the Participant, affect in any
manner materially adverse to the Participant any rights or benefits of
such Participant or obligations of the Corporation under any Option
granted under this Plan prior to the effective date of such change.
Changes contemplated by Section 17 or Section 18 shall not be deemed to
constitute changes or amendments requiring Participant consent.
Notwithstanding the foregoing, the Committee shall have the right to
designate from time to time the Subsidiaries whose employees may be
eligible to participate in this Plan and such designation shall not
constitute any amendment to this Plan requiring stockholder approval.
20. NOTICES
All notices or other communications by a Participant to the Corporation
contemplated by this Plan shall be deemed to have been duly given when
received in the form and manner specified by the Committee (or its
delegate) at the location, or by the person, designated by the Committee
(or its delegate) for that purpose.
21. CONDITIONS UPON ISSUANCE OF SHARES
This Plan, the granting of Options under this Plan and the offer, issuance
and delivery of shares of Common Stock are subject to compliance with all
applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities laws) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of
counsel for the Corporation, be necessary or advisable in connection
therewith. The person acquiring any securities under this Plan will, if
requested by the Corporation and as a condition precedent to the exercise
of his or her Option, provide such assurances and representations to the
Corporation as the Committee may deem necessary or desirable to assure
compliance with all applicable legal and accounting requirements.
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22. PLAN CONSTRUCTION
(a) It is the intent of the Corporation that transactions involving Options
under this Plan in the case of Participants who are or may be subject
to the prohibitions of Section 16 satisfy the requirements for
applicable exemptions under Rule 16 promulgated by the Commission under
Section 16 so that such persons (unless they otherwise agree) will be
entitled to the exemptive relief of Rule 16b-3 or other exemptive rules
under Section 16 in respect of those transactions and will not be
subject to avoidable liability thereunder.
(b) This Plan and Options are intended to qualify under Section 423 of the
Code.
(c) If any provision of this Plan or of any Option would otherwise
frustrate or conflict with the intents expressed above, that provision
to the extent possible shall be interpreted so as to avoid such
conflict. If the conflict remains irreconcilable, the Committee may
disregard the provision if it concludes that to do so furthers the
interest of the Corporation and is consistent with the purposes of this
Plan as to such persons in the circumstances.
23. EMPLOYEES' RIGHTS
(a) Nothing in this Plan (or in any other documents related to this Plan)
will confer upon any Eligible Employee or Participant any right to
continue in the employ or other service of the Company, constitute any
contract or agreement of employment or other service or effect an
employee's status as an employee at will, nor shall interfere in any
way with the right of the Company to change such person's compensation
or other benefits or to terminate his or her employment or other
service with or without cause. Nothing contained in this Section 23(a),
however, is intended to adversely affect any express independent right
of any such person under a separate employment or service contract
other than a Subscription Agreement.
(b) No Participant or other person will have any right, title or interest
in any fund or in any specific asset (including shares of Common Stock)
of the Company by reason of any Option hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation
or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan will create, or be construed to create, a trust
of any kind or a fiduciary relationship between the Company and any
Participant or other person. To the extent that a Participant or other
person acquires a right to receive payment pursuant to this Plan, such
right will be no greater than the right of any unsecured general
creditor of the Corporation. No special or separate reserve, fund or
deposit will be made to assure any such payment.
(c) A Participant will not be entitled to any privilege of stock ownership
as to any shares of Common Stock not actually delivered to and held of
record by the Participant. No adjustment will be made for dividends or
other rights as a stockholder for which a record date is prior to such
date of delivery.
24. MISCELLANEOUS
(a) This Plan, the Options, and related documents shall be governed by, and
construed in accordance with, the laws of the State of Delaware. If any
provision shall be held by a court of competent jurisdiction to be
invalid and unenforceable, the remaining provisions of this Plan shall
continue in effect.
(b) Captions and headings are given to the sections of this Plan solely as
a convenience to facilitate reference. Such captions and headings shall
not be deemed in any way material or relevant to the construction of
interpretation of this Plan or any provision hereof.
(c) The adoption of this Plan shall not affect any other Company
compensation or incentive plans in effect. Nothing in this Plan will
limit or be deemed to limit the authority of the Board or Committee (i)
to establish any other forms of incentives or compensation for
employees of the Company (with or without reference to the Common
Stock), or (ii) to grant or assume options (outside the scope of and in
addition to those contemplated by this Plan) in connection with any
proper corporate purpose; to the extent consistent with any other plan
or authority.
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(d) Benefits received by a Participant under an Option granted pursuant to
this Plan shall not be deemed a part of the Participant's compensation
for purposes of the determination of benefits under any other employee
welfare or benefit plans or arrangements, if any, provided by the
Company, except where the Committee or the Board expressly otherwise
provides or authorizes in writing.
25. EFFECTIVE DATE
This Plan shall be effective on the Effective Date, subject, however, to
the approval of this Plan by the stockholders of the Corporation within
twelve months after the date on which the Board approved this Plan.
Notwithstanding anything else contained herein to the contrary, no Shares
shall be issued or delivered under this Plan until such stockholder
approval is obtained and, if such stockholder approval is not obtained
within such 12-month period of time, all Contributions credited to a
Participant's Account hereunder shall be refunded to such Participant as
soon as practicable after the end of such 12-month period.
26. TAX WITHHOLDING
Notwithstanding anything else contained in this Plan herein to the
contrary, the Company may deduct from a Participant's Account balance as of
an Exercise Date, before the exercise of the Participant's Option is given
effect on such date, the amount of any taxes which the Company reasonably
determines it may be required to withhold with respect to such exercise. In
such event, the maximum number of whole shares of Common Stock subject to
such Option (subject to the other limits set forth in this Plan) shall be
purchased at the Option Price with the balance of the Participant's Account
(after reduction for the tax withholding amount).
Should the Company for any reason be unable, or elect not to, satisfy its
tax withholding obligations in the manner described in the preceding
paragraph with respect to a Participant's exercise of an Option, or should
the Company reasonably determine that it has a tax withholding obligation
with respect to a disposition of shares acquired pursuant to the exercise
of an Option prior to satisfaction of the holding period requirements of
Section 423 of the Code, the Company shall have the right at its option to
(i) require the Participant to pay or provide for payment of the amount of
any taxes which the Company reasonably determines that it is required to
withhold with respect to such event or (ii) deduct from any amount
otherwise payable to or for the account of the Participant the amount of
any taxes which the Company reasonably determines that it is required to
withhold with respect to such event.
27. NOTICE OF SALE
Any person who has acquired shares of Common Stock under this Plan shall
give prompt written notice to the Corporation of any sale or other transfer
of the shares of Common Stock if such sale or transfer occurs (i) within
the two-year period after the Grant Date of the Offering Period with
respect to which such Shares were acquired, or (ii) within the twelve-month
period after the Exercise Date of the Offering Period with respect to which
such shares of Common Stock were acquired.
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CORINTHIAN COLLEGES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING, NOVEMBER 16, 2000
The undersigned, a stockholder of CORINTHIAN COLLEGES, INC., a Delaware
corporation (the "Company"), acknowledges receipt of a copy of the Notice of
Annual Meeting of Stockholders, the accompanying Proxy Statement and a copy of
the Company's Annual Report on Form 10-K for its fiscal year ended June 30,
2000; and, revoking any proxy previously given, hereby constitutes and appoints
Dennis N. Beal and Dennis L. Devereux and each of them, his or her true and
lawful agents and proxies with full power of substitution in each, to vote the
shares of Common Stock of the Company standing in the name of the undersigned
at the Annual Meeting of Stockholders of the Company to be held at 6 Hutton
Centre Drive, Suite 100, Santa Ana, California 92707 on November 16, 2000 at
10:00 a.m. California time, and at any adjournment thereof, on all matters
coming before said meeting.
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4.
1. Nominees for a three-year term as a Class II member of the Company's Board
of Directors:
Paul R. St. Pierre Linda Arey Skladany
[_] FOR this nominee [_] FOR this nominee
[_] WITHHOLD AUTHORITY to vote [_] WITHHOLD AUTHORITY to vote
for this nominee for this nominee
2. To approve the amendments to the Company's 1998 Performance Award Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve the Company's Employee Stock Purchase Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for its fiscal year ending June 30, 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
5. In their discretion, upon any other matters as may properly come before the
meeting or at any adjournment thereof.
(continued and to be signed on other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREBY
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4. IF ANY NOMINEE BECOMES UNAVAILABLE FOR ANY
REASON, THE PERSONS NAMED AS PROXIES SHALL VOTE FOR THE ELECTION OF SUCH OTHER
PERSON AS THE BOARD OF DIRECTORS MAY PROPOSE TO REPLACE SUCH NOMINEE.
(This Proxy must be signed exactly as
your name appears hereon. Executors,
administrators, trustees, etc.,
should give full title as such. If
the shares are held in joint name,
either person may sign this Proxy. If
the stockholder is a corporation, a
duly authorized officer should sign
on behalf of the corporation and
should indicate his or her title.)
Dated: ________________________, 2000
_____________________________________
Signature of Stockholder
Dated: ________________________, 2000
_____________________________________
Signature of Stockholder
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
