SYLVAN LEARNING SYSTEMS, INC.
1996 SENIOR MANAGEMENT STOCK OPTION PLAN
1. PURPOSE
This 1996 Senior Management Stock Option Plan (the "Plan") is intended as
an employment incentive and to encourage capital accumulation and stock
ownership in Sylvan Learning Systems, Inc. (the Corporation ) by certain key
executive officers (including executive officers who are also directors) of the
Corporation and of its Subsidiaries (as defined below) in order to increase
their proprietary interest in the Corporation's success.
2. ADMINISTRATION:
The Plan shall be administered by a committee appointed by the Board of
Directors of the Corporation (the "Committee"). The Committee shall consist of
not less than two members of the Board of Directors who are disinterested
administrators as described in Rule 16b-3 under the Securities Exchange Act of
1934. The Committee shall determine the persons who shall participate in the
Plan and the extent of their participation.
The interpretation and construction by the Committee of any provisions of
the Plan or any stock option agreements entered into under the Plan and any
determination by the Committee pursuant to any provision of the Plan or any such
agreement shall be final and conclusive. No member of the Committee shall be
liable for any action or determination made in good faith, and the members shall
be entitled to indemnification and reimbursement in the manner provided in the
Corporation's charter or by-laws, and under any directors and officers liability
insurance coverage of the Corporation which may be in effect from time to time.
3. ELIGIBILITY:
The individuals who shall be eligible to participate in the Plan shall be
the senior executive officers (including the Chief Financial Officer, the Chief
Executive Officer(s) and the Chairman of the Board, of the Corporation)
(including those senior executive officers who are also directors of the
Corporation), or of any corporation in which the Corporation has a proprietary
interest by reason of stock ownership or otherwise, including any corporation in
which the Corporation acquires a proprietary interest after the adoption of this
Plan (but only if the Corporation owns or controls, directly or indirectly,
stock possessing not less than 50% of the total combined voting power of all
classes of stock in such corporation) (a "subsidiary"), as the Committee shall
determine from time to time.
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4. AWARD OF OPTIONS:
The Committee, at any time and from time to time, may authorize the
granting of options under this Plan to any eligible individual under the Plan.
Subject to the terms of the Plan, the Committee shall determine the timing, size
and all other terms applicable to options granted under this Plan. Options
granted under the Plan may be incentive stock options under section 422 of the
Internal Revenue Code or nonqualified stock options
5. AWARD OF STOCK APPRECIATION RIGHTS:
The Committee, at any time and from time to time, may authorize the
granting of stock appreciation rights to optionees who have been granted options
under this Plan. Each stock appreciation right shall relate to a specific option
granted under this Plan and may be granted concurrently with the option to which
it relates or at any time prior to the exercise, termination or expiration of
such option.
The term "stock appreciation right" shall mean the right to receive from
the Corporation, upon surrender of the option or a portion thereof without
payment to the Corporation, an amount equal to the fair market value on the
exercise date of the total number of Shares of common stock of the Corporation
for which the stock appreciation right is exercised, less the exercise price
which the optionee would have otherwise been required to pay upon purchase of
the Shares. The amount payable by the Corporation upon the exercise of a stock
appreciation right may be paid in cash or in shares of common stock of the
Corporation, or in any combination thereof, as the Committee in its sole
discretion shall determine; provided, however, that in no event shall the total
number of shares which may be paid to the optionee pursuant to the exercise of a
stock appreciation right exceed the total number of Shares subject to the
related option. No fractional shares shall be issued under this section and the
optionee shall instead be entitled to receive a cash adjustment equal to the
same fraction of the fair market value per share.
The Committee may fix, with respect to rights granted under this Plan such
waiting periods, exercise dates or other limitations as it shall deem
appropriate, provided that no right shall be exercisable after the expiration of
the option to which it relates. In addition, the Committee may impose a total
prohibition on the exercise of such rights for such period or periods as it, in
its sole discretion, deems to be appropriate. The shares involved in an option
as to which a stock appreciation right is related shall be used not more than
once to calculate the amounts to be received pursuant to an exercise of such
right. The right of an optionee to exercise an option shall be cancelled if and
to the extent that shares covered by such option are used to calculate amounts
received upon exercise of a related stock appreciation right.
6. STOCK:
The stock subject to the options, stock appreciation rights, and other
provisions of the Plan shall be shares of the Corporation's authorized but
unissued common stock and shares of common stock held as treasury stock in the
Corporation (all such shares of common stock are referred to herein as
"Shares"). Subject to adjustment in accordance with the provisions of Paragraph
7(f) hereof, the total number of Shares which may be issued under the Plan shall
not exceed in the aggregate 1,500,000 Shares. The maximum number of Shares that
may be issued pursuant to options and stock appreciation rights granted under
this Plan to any person is 750,000 Shares.
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In the event that any outstanding option or stock appreciation right under
the Plan for any reason expires or is terminated prior to the end of the period
during which options or stock appreciation rights may be granted, the Shares
allocable to the unexercised portion of such option or stock appreciation right
may again be subjected to options or stock appreciation rights under the Plan.
7. TERMS AND CONDITIONS OF STOCK OPTION AGREEMENTS:
Stock options and stock appreciation rights granted pursuant to the Plan
shall be evidenced by agreements in such form as the Committee shall, from time
to time, approve. Stock appreciation rights shall be evidenced by an agreement
amending the stock option agreement to which such rights relate. Such agreements
shall comply with and be subject to the following terms and conditions:
(a) Medium of Payment:
Upon exercise of the option, the option price shall be payable at the
discretion of the Committee: (i) in United States dollars in cash or by
certified check, bank draft or money order payable to the order of the
Corporation; (ii) through the delivery of shares of common stock of the
Corporation which have been held by the optionee for at least six months at the
time of surrender or acquired under a grant not less than six months prior to
the time of surrender and which shall be valued at their fair market value on
the date of exercise; (iii) by withholding of Shares otherwise issuable pursuant
to an exercise of an option equal in value to the option price or any portion
thereof; or (iv) by any other means that the Committee may approve. At the
discretion of the Committee, payment in full of the option price need not
accompany the written notice of exercise provided that the notice directs that
the stock certificates for the Shares issued upon exercise be delivered to a
licensed broker acceptable to the Corporation as agent for the individual
exercising the option and at the time the stock certificates are delivered to
the broker, the broker will tender to the Corporation cash or cash equivalents
acceptable to the Comoration equal to the exercise price.
(b) Number of Shares:
The agreement shall state the total number of Shares to which it pertains.
(c) Option Price:
Unless the Committee provides otherwise, the option price for Shares
covered by an incentive stock option granted hereunder shall be not less than
100% of the fair market value, as determined by the Committee, of such Shares on
the date of the granting of the incentive stock option and the option price for
Shares covered by a non-qualified stock option granted hereunder shall be not
less than 85% of the fair market value, as determined by the Committee, of such
Shares on the date of the granting of the nonqualified stock option.
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(d) Term of Options and Stock Appreciation Rights:
Unless the Committee provides otherwise, each option and related stock
appreciation right granted under the Plan shall expire not more than 10 years
from the date the option is granted; provided that a stock appreciation right
shall not be exercisable prior to or later than the time the related option
could be exercised.
(e) Date of Exercise:
The Committee may in its discretion provide that an option or stock
appreciation right may not be exercised in whole or in part for any period or
periods of time specified by the Committee. Except as may be so provided, any
option or stock appreciation right may be exercised in whole at any time or in
part from time to time during its term. In the case of an option or stock
appreciation right not immediately exercisable in full, the Committee may in its
discretion accelerate the time at which an option or stock appreciation right
granted hereunder may be exercised.
(f) Recapitalization:
The aggregate number of Shares on which options and stock appreciation
rights may be granted to persons participating under the Plan, the number of
Shares thereof covered by each outstanding option and stock appreciation right,
and the price per Share thereof in each such option and stock appreciation right
shall all be proportionately adjusted for any increase or decrease in the number
of issued Shares, as applicable, resulting from a subdivision or consolidation
of shares or other capital adjustment, or the payment of a stock dividend or
other increase or decrease in such Shares, effected without receipt of
consideration by the Corporation; provided, however, that any fractional Shares
resulting from any such adjustment shall be eliminated.
If the Corporation shall be the surviving or resulting corporation in any
merger or consolidation, any option granted hereunder shall pertain to and apply
to the securities to which a holder of the number of Shares subject to the
option or stock appreciation right would have been entitled; but a dissolution
or liquidation of the Corporation, or a merger or consolidation in which the
Corporation is not the surviving or resulting corporation shall cause every
option and stock appreciation right outstanding hereunder to terminate, except
that the surviving or resting corporation may, in its absolute and uncontrolled
discretion, tender options or stock appreciation rights to purchase its shares
on terms and conditions, both as to the number of shares and otherwise, which
shall substantially preserve the rights and benefits of any option or stock
appreciation right then outstanding hereunder.
In the event of a change in the Corporation's common stock which is limited
to a change in the designation thereof to "capital stock" or other similar
designation, or to a change in the par value thereof, or from par value to no
par value, without increase in the number of issued shares, the shares resulting
from any such change shall be deemed to be Shares of common stock within the
meaning of the Plan.
(g) Transferability:
No option or related stock appreciation right shall be assignable or
transferable except by will or by the laws of descent and distribution. During
the lifetime of an optionee, the option or related stock
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appreciation right shall be exercisable only by such optionee. Notwithstanding
the foregoing, in the discretion of the Committee, transfers of options shall be
permitted to (a) members of the immediate family of the optionee (children,
grandchildren, spouse, parents or siblings of the optionee); (b) trusts for the
benefit of such family members; and (c) partnerships whose only partners are
such family members. No consideration may be paid for the transfer of such
options. The Committee may grant transferable or nontransferable options in its
discretion and the option agreement shall specify whether the option is
transferable or nontransferable.
(h) Rights as a Stockholder:
An optionee shall have no rights as a stockholder with respect to Shares
covered by the optionee's option or stock appreciation right until the date of
the issuance of the Shares to the optionee and only after such Shares are fully
paid. No adjustment will be made for dividends or other rights for which the
record date is prior to the date of such issuance.
(i) Withholding:
The Corporation shall have the right to withhold, or require an individual
exercising an option to remit to the Corporation, an amount sufficient to
satisfy any applicable federal, state or local withholding tax requirements
imposed with respect to the exercise of options. To the extent permissible under
applicable tax, securities and other laws, the option agreement shall permit
satisfaction of a tax withholding requirement by withholding Shares issued as a
result of the exercise of an option.
k) Other Provisions:
The agreements authorized under this Plan may contain Such other provisions
as the Committee shall deem advisable.
8. TERM AND EFFECTIVENESS OF PLAN:
The Plan shall become effective on the date it is approved by the
affirmative vote of a majority of the votes cast in person or by proxy at a
meeting of the stockholders of the Corporation and when so approved shall be
deemed to have been in full force and effect from and after the date on which it
is adopted for the Corporation by action of its Board of Directors. Before
stockholder approval has been obtained, the Committee may grant stock options
and stock appreciation rights under the Plan; however, such stock options and
stock appreciation rights shall be void if the Plan is not thereafter approved
by the stockholders. No stock option or stock appreciation rights shall be
granted pursuant to this Plan after the tenth anniversary of the date on which
the Plan was adopted by the Board of Directors of the Corporation or the date
the Plan is approved by the stockholders of the Corporation whichever is
earlier.
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9. AMENDMENTS:
The Board of Directors may from time to time alter, amend, suspend, or
discontinue this Plan, subject to the terms of the Plan; provided, however, that
to the extent required under Rule 16b-3 with respect to persons who are subject
to Section 16 of the Securities Exchange Act of 1934 and, with respect to
incentive stock options, to the extent required by the Internal Revenue Code, no
action by the Board of Directors which materially modifies the Plan shall become
effective without the approval of the stockholders of the Corporation. The
Committee may alter or amend any and all option and stock appreciation rights
agreements granted hereunder, provided that no such amendment shall become
effective without the consent of the option holder.
10. APPLICATION OF FUNDS:
The proceeds received by the Corporation from the sale of common stock
pursuant to options will be used for general corporate purposes
SYLVAN LEARNING SYSTEMS, INC.
By:
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Douglas L. Becker
President & Co-CEO
By:
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R. Christopher Hoehn-Saric
Co-CEO