LINCOLN EDUCATIONAL SERVICES CORPORATION STOCK OPTION AGREEMENT
Exhibit
10.12
[Standard Form of Stock Option Agreement]
2005
LONG-TERM INCENTIVE PLAN
Lincoln
Educational Services Corporation (the “Company”) hereby
grants you, _______________________ (the “Optionee”), an option
(the “Option”)
under the Company’s 2005 Long-Term Incentive Plan (the “Plan”) to purchase
Ordinary Shares (“Shares”) of the
Company. Subject to the provisions of the Plan and the Option Rules
attached hereto as Exhibit A, the principal features of the Option are as
follows:
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Date
of Grant
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Exercise
Price per Share
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$______________ |
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Number
of Optioned Shares
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_______________ |
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Type
of Option:
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___Incentive
Stock Option (ISO) (to the extent permitted by applicable
laws)
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___Nonstatutory
Stock Option (NSO)
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Expiration
Date:
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10
years from the Date of
Grant
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Vesting
Schedule
The
Option shall become exercisable, in whole or in part, in accordance with the
terms of the Plan, the Option Rules (attached hereto as Exhibit A) and the
following vesting schedule:
The
Option shares shall vest on [ ____ ], subject to your continuing to be an
employee or consultant (a “Service Provider”)
through these dates.
Option
Termination:
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Event Triggering
Option Termination
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Maximum Time to
Exercise After Triggering Event*
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Termination
of Service, other than for Cause (except as provided
below)
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30
days
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Termination
of Service for Cause
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Immediately
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Termination
of Service due to Disability
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6
months
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Termination
of Service due to death
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6
months
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Resignation
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Immediately
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*However,
in no event may the Option be exercised after the Expiration
Date. It is your
responsibility to exercise the Option, if you so desire, before it expires or
terminates.
Your
signature below indicates your agreement, understanding, and acceptance that the
Option is subject to all of the terms and conditions contained in Exhibit A and
the Plan. Please be
sure to read all of Exhibit A, which contains the specific terms and conditions
of the Option.
This
Option Agreement does not represent a securities interest in the Company, which
interest may accrue only upon the exercise of the Option in accordance with its
terms.
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OPTIONEE
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[Title]
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Signed
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Date
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Date
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EXHIBIT
A
OPTION
RULES
1.
Grant of
Option. The Committee hereby grants to the Optionee under the
Plan the right to purchase the number of Shares set forth on the first page of
this Option Agreement (the “Grant Notice”), at the Exercise Price per Share set
forth in the Grant Notice, and subject to all of the terms and conditions in
this Option Agreement and the Plan, a copy of which the Optionee acknowledges
having received.
The
aggregate Fair Market Value (determined with respect to each Incentive Stock
Option at the time the Incentive Stock Option is granted) of Shares with respect
to which Incentive Stock Options are exercisable for the first time by the
Optionee during any calendar year (under the Plan or any other plan of the
Company) shall not exceed US$100,000. If the Option is designated in
the Grant Notice as an Incentive Stock Option, all or a portion of the Option
may nonetheless be treated as a Nonstatutory Stock Option.
2.
Definitions.
Unless otherwise defined herein, the capitalized terms in this Option Agreement
shall have the meanings ascribed to those terms in the Plan. In the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail unless otherwise
indicated.
“Cause” shall mean (unless otherwise
defined in an agreement between the Service Provider and the Company or any of
its subsidiaries, in which case the term “Cause” as used herein with
respect to such Service Provider shall have the meaning ascribed to it therein),
(i) the Service Provider’s willful failure to perform the duties of his or her
employment or consultancy in any material respect, (ii) malfeasance or gross
negligence in the performance of a Service Provider’s duties of employment or
consultancy, (iii) the Service Provider’s conviction of a felony under the laws
of the United States or any state thereof (whether or not in connection with his
or her employment or consultancy), (iv) the Service Provider’s intentional or
reckless disclosure of trade secrets or confidential or proprietary information
respecting the Company’s or any of its subsidiaries’ business to any individual
or entity which is not in the performance of the duties of his or her employment
or consultancy, (v) the Service Provider’s commission of an act or acts of
sexual harassment that would normally constitute grounds for termination, or
(vi) any other act or omission by the Service Provider (other than an act or
omission resulting from the exercise by the Service Provider of good faith
business judgment), which is materially injurious to the financial condition or
business reputation of the Company or any of its affiliates; provided, however, that in the
case of (i) and (ii) above, a Service Provider shall not be deemed to have been
terminated for cause unless he has received written notice of the alleged basis
therefor from the Company, and fails to remedy the matter within thirty (30)
days after he has received such notice, except that no such “cure opportunity”
shall be required in the case of two separate episodes giving the Company, the
right to terminate for cause for such reason occurring within any 12-month
period.
3.
Exercise of
Option.
(a) Right to
Exercise. The
Option shall be exercisable during its term cumulatively according to the
Vesting Schedule set out in the Grant Notice and with the applicable provisions
of the Plan. Notwithstanding the foregoing, the Option shall not be
exercised for a fraction of a Share.
(b) Method of
Exercise. The Option shall be exercisable to the extent then
vested by delivery of a written exercise notice in the form attached hereto as
Exhibit B (the
“Exercise
Notice”), which shall state the election to exercise the Option, the
number of Shares with respect to which the Option is being exercised, and such
other representations and agreements as may be required by the
Company. The Exercise Notice shall be signed by the Optionee (or by
the Optionee’s beneficiary or other person entitled to exercise the Option in
the event of the Optionee’s death under the Plan) and shall be delivered in
person or by certified mail to the Secretary of the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Shares exercised. The Option shall be deemed to be
exercised as of the date (the “Exercise Date”)
(i) the Company receives (as determined by the Committee in its sole, but
reasonable, discretion) the fully executed Exercise Notice accompanied by
payment of the aggregate Exercise Price and (ii) all other applicable terms
and conditions of the Option Agreement are satisfied.
(c) Issuance of
Shares. After receiving the Exercise Notice, the Company shall
cause to be issued a certificate or certificates for the Shares as to which the
Option has been exercised, registered in the name of the person exercising this
Option (or in the names of such person and his or her spouse as community
property or as joint tenants with right of survivorship). The Company
shall cause the certificate or certificates to be deposited with the Company’s
designated stock option provider for the account of the Optionee.
4. Method of
Payment. Payment of the aggregate Exercise Price shall be by
any of the following forms of consideration, or a combination thereof, at the
election of the Optionee:
(a) cash
or check;
(b) at
the discretion of the Committee and if the Shares are publicly traded,
consideration received by the Company under a formal cashless exercise program
adopted by the Company in connection with the Plan; or
(c) at
the discretion of the Committee, surrender of other Shares which, if accepted by
the Company, would not subject the Company to adverse accounting as determined
by the Committee.
5. Non-Transferability of
Option. The Option and the rights and privileges conferred
hereby shall not be sold, pledged or otherwise transferred (whether by operation
of law or otherwise) in any manner otherwise than by will or by the laws of
descent or distribution, shall not be subject to sale under execution,
attachment, levy or similar process and may be exercised during the lifetime of
the Optionee only by the Optionee. The terms of the Plan and the
Option Agreement shall be binding upon the executors, Committees, heirs,
successors and assigns of the Optionee.
6. Term of
Option. The Option shall in any event expire on the expiration
date set forth in the Grant Notice, and may be exercised prior to the expiration
date only in accordance with the Plan and the terms of this Option
Agreement.
7. Tax
Obligations.
(a) Withholding
Taxes. The Optionee shall make appropriate arrangements with
the Company (or Subsidiary employing or retaining the Optionee) for the
satisfaction of all U.S. Federal, state, local and non-U.S. income and
employment tax withholding requirements applicable to the Option
exercise. The Optionee hereby acknowledges, understands and agrees
that the Company may refuse to honor the exercise and refuse to deliver Shares
if the withholding amounts are not delivered at the time of
exercise.
(b) Notice of Disqualifying
Disposition of Shares. If the Option granted to the Optionee
herein is designated as an Incentive Stock Option, and if the Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the Incentive Stock
Option on or before the later of (1) the date two years after the Date of Grant
and (2) the date one year after the date of exercise, the Optionee shall
immediately notify the Company in writing of such disposition. The
Optionee hereby acknowledges and agrees that the Optionee may be subject to
income tax withholding by the Company on the compensation income recognized by
the Optionee in connection with the exercise of the Option.
8.
Adjustment of
Shares. In the event of any transaction described in Section
13(b) of the Plan, the terms of the Option (including, without limitation, the
number and kind of the Optioned Shares and the Exercise Price) may be adjusted
as set forth in Section 13(b) of the Plan. This Option Agreement
shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer any part of its business or
assets.
9.
Legality of Initial
Issuance. No Shares shall be issued upon the exercise of the
Option unless and until the Company has determined that: (i) the Company and the
Optionee have taken all actions required to register the Shares under the
Securities Act of 1933, as amended (the “Securities Act”) or to perfect an
exemption from the registration requirements thereof, if applicable; (ii) all
applicable listing requirements of any stock exchange or other securities market
on which the Shares are listed have been satisfied; and (iii) all other
applicable provisions of state or U.S. federal law or other applicable laws have
been satisfied.
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10. Securities Law
Restrictions. Regardless of whether the offering and sale of
Shares under the Plan have been registered under the Securities Act or have been
registered or qualified under the securities laws of any state, the Company at
its discretion may impose restrictions upon the sale, pledge or other transfer
of the Shares (including the placement of appropriate legends on share
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other applicable laws.
11. General
Provisions.
(a) Notice. Any
notice required by the terms of this Option Agreement shall be given in writing
and shall be deemed effective upon personal delivery or upon deposit with the
United States Postal Service, by registered or certified mail, with postage and
fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Optionee at the address that he or she
most recently provided to the Company.
(b) Successors and
Assigns. Except as provided herein to the contrary, this
Option Agreement shall be binding upon and inure to the benefit of the parties
to this Option Agreement, their respective successors and permitted
assigns.
(c) No
Assignment. Except as otherwise provided in this Option
Agreement, the Optionee shall not assign any of his or her rights under this
Option Agreement without the prior written consent of the Company, which consent
may be withheld in its sole discretion. The Company shall be
permitted to assign its rights or obligations under this Option Agreement, but
no such assignment shall release the Company of any obligations pursuant to this
Option Agreement.
(d) Severability. The
validity, legality or enforceability of the remainder of this Option Agreement
shall not be affected even if one or more of the provisions of this Option
Agreement shall be held to be invalid, illegal or unenforceable in any
respect.
(e) Administration. Any
determination by the Committee in connection with any question or issue arising
under the Plan or this Option Agreement shall be final, conclusive, and binding
on the Optionee, the Company, and all other persons.
(f) Headings. The
section headings in this Option Agreement are inserted only as a matter of
convenience, and in no way define, limit or interpret the scope of this Option
Agreement or of any particular section.
(g) Counterparts. This
Option Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(h) Entire Option Agreement;
Governing Law. The provisions of the Plan are incorporated
herein by reference. The Plan and this Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company and the Optionee with respect to the subject matter hereof, and may not
be modified adversely to the Optionee’s interest except by means of a writing
signed by the Company and the Optionee. This Option Agreement is
governed by the laws of the State of New York applicable to contracts executed
in and to be performed in that State.
12. No Guarantee of Continued
Service. THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING
OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING
AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE OPTION
GRANTED HEREUNDER, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH THE OPTIONEE’S RIGHT
OR THE COMPANY’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
o O
o
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EXHIBIT
B
2005
LONG-TERM INCENTIVE PLAN
EXERCISE
NOTICE
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Attention: Secretary
1. Exercise of
Option. Effective as of today, _____________, _____, the
undersigned (the “Optionee”) hereby
elects to exercise the Optionee’s option to purchase _________ Ordinary Shares
(the “Shares”)
of Lincoln Educational Services Corporation (the “Company”), under and
pursuant to the 2005 Long-Term Incentive Plan (the “Plan”) and the Share
Option Agreement dated ____________, ____ (the “Option
Agreement”). Unless otherwise defined herein, the capitalized
terms in this notice of exercise (the “Exercise Notice”)
shall have the meanings ascribed to those terms in the Plan.
2. Delivery of
Payment. The Optionee herewith delivers to the Company the
full Exercise Price of the Shares with respect to which the Optionee is
exercising the Option, and any and all withholding taxes due in connection with
the exercise of the Option.
3. Representations of the
Optionee. The Optionee hereby acknowledges that the Optionee
has received and read, and understands the Plan and the Option Agreement,
including the Option Rules, and agrees to abide by and be bound by their terms
and conditions.
4. Rights as
Stockholder. Until the issuance of the Shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Shares,
notwithstanding the exercise of the Option. The Shares shall be
issued to the Optionee as soon as practicable after the Option is exercised in
accordance with the Option Agreement. No adjustment shall be made for
a dividend or other right for which the record date is prior to the date of
issuance except as provided in Section 13 of the Plan.
5. Tax
Consultation. The Optionee hereby acknowledges that he or she
understands that the Optionee may suffer adverse tax consequences as a result of
the Optionee’s purchase or disposition of the Shares. The Optionee
hereby represents that the Optionee has consulted with any tax consultants the
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that the Optionee is not relying on the Company for any tax
advice.
6. Interpretation. Any
dispute regarding the interpretation of this Exercise Notice shall be submitted
by the Optionee or by the Company forthwith to the Committee, which shall review
such dispute at its next regular meeting. The resolution of such a
dispute by the Committee shall be final and binding on all parties.
7. Governing Law;
Severability. This Exercise Notice is governed by the laws of
the State of New York applicable to contracts executed in and to be performed in
that State.
8. Entire
Agreement. The Plan and Option Agreement are incorporated
herein by reference. This Exercise Notice, the Plan, and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and the Optionee.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, this Exercise Notice is deemed made as of the date first set
forth above.
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Submitted
by:
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Accepted
by:
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OPTIONEE
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Signature
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By
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Print
Name
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Title
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Address:
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Date
Received
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