EXHIBIT 4.3
1999 OUTSIDE DIRECTORS STOCK OPTION PLAN
1. PURPOSE. The purpose of the Plan is to advance the interests of
the Company and its stockholders by encouraging increased Common Stock
ownership by members of the Board who are not employees of the Company or
any of its Subsidiaries, in order to promote long-term stockholder value
through directors' continuing ownership of the Common Stock.
2. DEFINITIONS. Unless the context clearly indicates otherwise, the
following terms, when used in the Plan, shall have the meanings set forth
below.
"Annual Meeting" shall mean the annual meeting of the
shareholders of the Company (as defined herein).
"Board" shall mean the Board of Directors of the Company, as it
may from time to time be constituted.
"Common Stock" shall mean the Common Stock, $0.01 par value, of
the Company, and shall include the Common Stock as it may be
changed from time to time as described in Paragraph 8 of the
Plan.
"Company" shall mean ITT Educational Services, Inc., and any
successor by merger or consolidation.
"Eligible Director" shall mean a member of the Board who is not
at the time of receipt of an Option an employee of the Company or
any of its Subsidiaries.
"Fair Market Value" of the Common Stock of the Company means the
last sale price on the applicable date (or if there is no
reported sale on such date, on the last preceding date on which
any reported sale occurred) of one share of Common Stock on the
principal exchange on which such shares are listed, or if not
listed on any exchange, on the Nasdaq National Market System or
any similar system then in use, or if the shares of Common Stock
are not listed on the Nasdaq National Market System, the mean
between the closing high bid and low asked quotations of one such
share on the date in question as reported by Nasdaq or any
similar system then in use, or, if no such quotations are
available, the Fair Market Value on such date of one share of
Common Stock as the Board shall determine.
"Grantee" shall mean an Eligible Director who has been granted an
Option.
"Option" shall mean a non-qualified option to purchase Common
Stock held in the treasury granted by the Company pursuant to the
terms of the Plan.
"Plan" shall mean the 1999 Outside Directors Stock Option Plan,
as set forth herein and as amended from time to time.
"Subsidiary" shall mean any corporation at least 50% of whose
outstanding voting stock is owned, directly or indirectly, by the
Company.
3. ADMINISTRATION. The Plan shall be administered by the Board.
The Board shall have all the powers vested in it by the terms of the Plan,
such powers to include authority (within the limitations described herein)
to prescribe the form of the agreements embodying Options. The Board shall
have the power to construe the Plan, to determine all questions arising
thereunder, and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. Any decision of the
Board in the administration of the Plan, as described herein, shall be
final and conclusive. The Board may act only by a majority of its members
in office, except that the members thereof may authorize any one or more of
their members or the Secretary or any other officer of the Company to
execute and deliver documents on behalf of the Board. No member of the
Board shall be liable for anything done or omitted to be done by him or by
any other member of the Board in connection with the Plan, except for his
own willful misconduct or as expressly provided by statute.
4. PARTICIPATION. Each Eligible Director shall be eligible to
receive Option grants in accordance with Paragraphs 5, 6, 7 and 8 below.
5. GRANTS UNDER THE PLAN.
(a) Options may be granted under the Plan, subject to the terms,
conditions and restrictions specified in Paragraphs 6, 7 and 8 below.
There may be issued under the Plan pursuant to the exercise of Options an
aggregate of not more than 250,000 shares of Common Stock, subject to
adjustment as provided in Paragraph 8 below. Shares of Common Stock that
are the subject of an Option but not purchased prior the expiration of the
Option, shall thereafter be considered unissued for purposes of the maximum
number of shares that may be issued under the Plan, and may again be the
subject of Option grants under the Plan. If at any time, the shares
remaining available for Option grants are not sufficient to make all Option
grants then required to be made under the Plan, no Option grants shall be
made.
(b) An Eligible Director to whom an Option is provided to be
granted or is granted under the Plan (and any person succeeding to such an
Eligible Director's right pursuant to the Plan), shall have no rights as a
stockholder with respect to any shares of Common Stock issuable pursuant to
any such Option until such Option is exercised. Except as provided in
Paragraph 8 below, no adjustment shall be made for dividends,
distributions, or other rights (whether ordinary or extraordinary, and
whether in cash, securities, or other property) for which the record date
is prior to the date an Option is exercised. Except as expressly provided
for in the Plan, no Eligible Director or other person shall have any claim
or right to be granted an Option. Neither the Plan nor any action taken
hereunder shall be construed as giving any Eligible Director any right to
be retained in the service of the Company.
6. AUTOMATIC OPTION GRANTS. On the tenth business day following the
date of the Annual Meeting each year, commencing in 2000, each Eligible
Director who was an Eligible Director immediately prior to the Annual
Meeting in that year and who remains an Eligible Director on the tenth
business day following the date of the Annual Meeting, shall be
automatically granted an Option to purchase 2,000 shares of Common Stock
(subject to adjustment as provided in Paragraph 8). Each Option shall be
evidenced by an agreement in such form as the Board shall prescribe from
time to time in accordance with the Plan and shall comply with the
following terms and conditions and such additional terms and conditions not
inconsistent with the Plan as may from time to time be prescribed by the
Board.
(a) The Option exercise price per share shall be one hundred
percent (100%) of the Fair Market Value of a share of Common
Stock on the date the Option is granted.
(b) The Option shall not be transferable by the Grantee
otherwise than by will or the laws of descent and distribution,
and shall be exercisable during his lifetime only by him.
(c) The Option shall not be exercisable before the
expiration of one year from the date it is granted.
(d) The Option shall not be exercisable after the expiration
of ten years from the date it is granted.
(e) To exercise an Option under the Plan, the Grantee must
give written notice to the Company specifying the number of
shares of Common Stock with respect to which the Grantee elects
to exercise the Option together with full payment of the Option
exercise price. The date of exercise shall be the date on which
the notice is received by the Company. Payment may be made
either:
(i) in cash (including check, bank draft or money order);
(ii) by tendering shares of Common Stock already owned by
the Grantee and having a Fair Market Value on the date of
exercise equal to the Option exercise price;
(iii) by the simultaneous "cashless" exercise of the Option
and the sale of the shares of Common Stock issuable upon exercise
of the Option; or
(iv) by a combination of (i), (ii) or (iii).
(f) An Option shall not be exercisable unless the person
exercising the Option has been, at all times during the period
beginning with the date of grant of the Option and ending on the
date of such exercise, in continuous service on the Board, except
that:
(i) if any Grantee of an Option shall die or
become permanently disabled or shall retire with the
consent of the Board, holding an Option that has not
expired and has not been fully exercised, he or his
executor, administrators, heirs, or distributees, as
the case may be, may, at any time within one year after
the date of such event (but in no event after the
Option has expired under the provisions of subparagraph
6(d) above), exercise the Option with respect to any
shares as to which the Grantee could have exercised the
Option at the time of his death, disability, or
retirement; or
(ii) if a Grantee shall cease to serve as a
director of the Company for any reason other than those
set forth in 6(f)(i) above, while holding an Option
that has not expired and has not been fully exercised,
the Grantee, at any time within three months of the
date he ceased to be such an Eligible Director (but in
no event after the Option has expired under the
provisions of subparagraph 6(d) above), may exercise
the Option with respect to any shares of Common Stock
as to which he could have exercised the Option on the
date he ceased to be such an Eligible Director.
(g) Each Grantee of an Option shall pay to the Company, or
make arrangements satisfactory to the Board regarding the payment
of, any federal, state, or local taxes of any kind required by
law to be withheld with respect to the shares of Common Stock as
to which an Option is being exercised.
7. SPECIAL OPTION GRANTS. The Board, in its discretion, may also
make special grants of Options to Eligible Directors. Each such Option
shall be evidenced by an agreement in such form as the Board shall
prescribe from time to time in accordance with the Plan and shall comply
with the terms and conditions set forth in subparagraphs 6(a) and 6(b)
above and subparagraphs 6(d) through 6(g) above and such additional terms
and conditions not inconsistent with the Plan as may from time to time be
prescribed by the Board.
8. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in
the outstanding Common Stock by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares or other similar event, the number or kind of shares
that may be issued under the Plan pursuant to Paragraphs 5, 6 and 7 above,
the number or kind of shares subject to any outstanding Option, and the
Option exercise price per share under any outstanding Option, shall be
automatically adjusted so that the proportionate interest of the Eligible
Directors or of the Grantee shall be maintained as before the occurrence of
such event. Any adjustment in outstanding Options shall be made without
change in the total Option exercise price applicable to the unexercised
portion of such Options and with a corresponding adjustment in the Option
exercise price per share. Any adjustment permitted by this Paragraph shall
be conclusive and binding for all purposes of the Plan.
9. MISCELLANEOUS PROVISIONS.
(a) An Eligible Director's rights and interests under the Plan
may not be assigned or transferred in whole or in part either directly or
by operation of law or otherwise (except in the event of a participant's
death, by will or the laws of descent and distribution), including, but not
by way of limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy, or in any other manner, and no such right or interest of any
Eligible Director in the Plan shall be subject to any obligation or
liability of such Eligible Director.
(b) If the shares of Common Stock that are the subject of an
Option are not registered under the Securities Act of 1933, as amended,
pursuant to an effective registration statement, the Grantee, if the Board
shall deem it advisable, may be required to represent and agree in writing
(i) that any shares of Common Stock acquired by such Grantee pursuant to
the Plan will not be sold except pursuant to an exemption from registration
under said Act and (ii) that such Grantee is acquiring such shares of
Common Stock for his own account and not with a view to the distribution
thereof. No shares of Common Stock shall be issued hereunder unless
counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal, state and other securities laws.
(c) By accepting any Options under the Plan, each Grantee and
each person claiming under or through him shall be conclusively deemed to
have indicated his acceptance and ratification of and consent to, the terms
and conditions of the Plan and any action taken under the Plan by the
Company or the Board.
10. AMENDMENT. The Board may at any time and from time to time and
in any respect amend or modify this Plan; provided, however, that the Board
may not amend this Plan more than once during any six-month period, and
provided further, that any amendments requiring shareholder approval in
order to maintain the exemption of the Plan under Rule 16b-3 (promulgated
pursuant to the Securities Exchange Act of 1934, as amended), as in effect
from time to time, shall be subject to approval by the shareholders of the
Company in the manner required by such Rule.
11. TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) Upon the adoption of a resolution of the Board
terminating the Plan; or
(b) Upon the award or the purchase upon exercise of Options
of all the shares of Common Stock provided to be awarded or the
subject of Options under Paragraph 5, 6 and 7, as adjusted
pursuant to Paragraph 8.
No termination of the Plan shall materially and adversely affect any of the
rights or obligations of any Grantee, without his consent, under any Option
theretofore granted under the Plan.