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EXHIBIT 10.4
CAPELLA EDUCATION COMPANY
1999 STOCK OPTION PLAN
NON-STATUTORY STOCK OPTION AGREEMENT
(DIRECTOR)
Name of Optionee:__________________
No. of Shares Covered:_____________ Date of
Grant:______________________
Exercise Price Per Share:__________ Expiration
Date:____________________
Exercise Schedule (Cumulative):
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Date(s) of No. of Shares as to Which
Exercisability Option Becomes Exercisable
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This is a Non-Statutory Stock Option Agreement ("Agreement")
between Capella
Education Company, a Minnesota corporation (the "Company"), and
the optionee
identified above (the "Optionee") effective as of the date of
grant specified
above.
RECITALS
WHEREAS, the Company maintains the Capella Education Company
1999 Stock
Option Plan (the "Plan"); and
WHEREAS, pursuant to the Plan, the Board of Directors of the
Company (the
"Board") or a committee of two or more directors of the Company
(the
"Committee") appointed by the Board administers the Plan and has
the authority
to determine the awards to be granted under the Plan (if the
Board has not
appointed a committee to administer the Plan, then the Board
shall constitute
the Committee); and
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WHEREAS, the Committee has determined that the Optionee is
eligible to
receive an award under the Plan in the form of a non-statutory
stock option (the
"Option");
NOW, THEREFORE, the Company hereby grants this Option to the
Optionee
under the terms and conditions as follows.
TERMS AND CONDITIONS*
1. GRANT. The Optionee is granted this Option to purchase the
number of
Shares specified at the beginning of this Agreement.
2. EXERCISE PRICE. The price to the Optionee of each Share
subject to this
Option shall be the exercise price specified at the beginning of
this
Agreement.
3. NON-STATUTORY STOCK OPTION. This Option is not intended to be
an
"incentive stock option" within the meaning of Section 422 of
the Internal
Revenue Code of 1986, as amended (the "Code").
4. EXERCISE SCHEDULE. This Option shall vest and become
exercisable as to the
number of Shares and on the dates specified in the exercise
schedule at
the beginning of this Agreement. The exercise schedule shall
be
cumulative; thus, to the extent this Option has not already been
exercised
and has not expired, terminated or been cancelled, the Optionee
or the
person otherwise entitled to exercise this Option as provided
herein may
at any time, and from time to time, purchase all or any portion
of the
Shares then purchasable under the exercise schedule.
This Option may also be exercised in full (notwithstanding the
exercise
schedule) under the circumstances described in Section 8 of this
Agreement
if it has not expired prior thereto.
5. EXPIRATION. This Option shall expire at 5:00 p.m. Central
Time on the
earliest of:
(a) The expiration date specified at the beginning of this
Agreement
(which date shall not be later than ten years after the date
of
grant);
(b) The last day of the period following the Optionee's
termination of
service as a director of the Company during which this Option
can be
exercised (as specified in Section 7(a) or 7(b) of this
Agreement,
whichever is applicable); or
(c) The date (if any) fixed for cancellation pursuant to Section
8 of
this Agreement.
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* Unless the context indicates otherwise, terms that are not
defined in
this Agreement shall have the meaning set forth in the Plan as
it currently
exists or as it is amended in the future.
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If termination of the Optionee's status as a director of the
Company shall
have been for Cause, this Option shall expire immediately upon
such
termination. In no event may anyone exercise this Option, in
whole or in
part, after it has expired, notwithstanding any other provision
of this
Agreement.
6. PROCEDURE TO EXERCISE OPTION.
Notice of Exercise. This Option may be exercised by delivering
written
notice of exercise to the Company at the principal executive
office of the
Company, to the attention of the Company's Secretary, in the
form attached
to this Agreement. The notice shall state the number of Shares
to be
purchased, and shall be signed by the person exercising this
Option. If
the person exercising this Option is not the Optionee, he/she
also must
submit appropriate proof of his/her right to exercise this
Option.
Tender of Payment. Upon giving notice of any exercise hereunder,
the
Optionee shall provide for payment of the purchase price of the
Shares
being purchased through one or a combination of the following
methods:
(a) Cash;
(b) Cancellation of indebtedness;
(c) By delivery to the Company of unencumbered Shares having
an
aggregate Fair Market Value (as defined in paragraph 7 of the
Plan)
on the date of exercise equal to the purchase price of such
Shares;
(d) By a reduction in the number of Shares delivered to the
Optionee
upon exercise, such number of Shares having an aggregate Fair
Market
Value on the date of exercise equal to the purchase price of
such
Shares; or
(e) To the extent permitted by law, a broker-assisted cashless
exercise
in which the Optionee irrevocably instructs a broker to
deliver
proceeds of a sale of all or a portion of the Shares to be
issued
pursuant to the exercise (or a loan secured by such Shares) to
the
Company in payment of the purchase price of such Shares.
Notwithstanding the foregoing, the Optionee shall not be
permitted to pay
any portion of the purchase price with Shares if the Committee,
in its
sole discretion, determines that payment in such manner is
undesirable.
Delivery of Certificates. As soon as practicable after the
Company
receives the notice and purchase price provided for above, it
shall
deliver to the person exercising this Option, in the name of
such person,
a certificate or certificates representing the Shares being
purchased. The
Company shall pay any original issue or transfer taxes with
respect to the
issue or transfer of the Shares and all fees and expenses
incurred by it
in
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connection therewith. All Shares so issued shall be fully paid
and
nonassessable. Notwithstanding anything to the contrary in this
Agreement,
the Company shall not be required to issue or deliver any Shares
prior to
the completion of such registration or other qualification of
such Shares
under any state or federal law, rule or regulation as the
Company shall
determine to be necessary or desirable.
7. STATUS AS DIRECTOR REQUIREMENT. This Option may be exercised
only while
the Optionee remains a director of the Company or a parent or
subsidiary
thereof, and only if the Optionee has been a director
continuously since
the date of this Agreement; provided that:
(a) This Option may be exercised for one year following the day
the
Optionee ceases to be a director of the Company if such
cessation of
status as a director is for a reason other than death or
disability,
but only to the extent that it was exercisable immediately
prior
such cessation; provided, however, that if termination of
the
Optionee's status as a director shall have been for Cause,
this
Option shall expire, and all rights to purchase Shares
hereunder
shall terminate, immediately upon such termination.
(b) This Option may be exercised within one year after the
Optionee
ceases to be a director of the Company if such cessation is
because
of death or disability.
Notwithstanding the above, this Option may not be exercised
after it has
expired.
8. ACCELERATION OF OPTION.
Death or Disability. This Option may be exercised in full,
regardless of
whether such exercise occurs prior to a date on which this
Option would
otherwise vest, upon the death or disability of the Optionee;
provided
that the Optionee shall have continuously been a director of the
Company
or a parent or subsidiary thereof between the date of this
Agreement and
the date of such death or disability.
Change of Control. If a Change of Control (as defined in Section
10 of
this Agreement) of the Company shall occur and within three
years of such
Change in Control, Optionee's status as a director of the
Company shall be
terminated other than for Cause (as defined below), the options
subject to
this Agreement, if not already exercised in full or otherwise
terminated,
expired or cancelled, shall become immediately exercisable in
full and may
be exercised within 30 days after such termination (subject to
any
applicable shorter time period for exercise set forth in this
Section 8).
For purposes of this Agreement, the term "Cause" shall be
limited to the
following grounds for termination:
(1) Optionee's failure or refusal substantially to perform
his/her
duties to the full extent of his/her abilities for reasons other
than
death or disability, after
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written notice to Optionee of such failure or refusal providing
Optionee
30 days to take corrective action;
(2) Conviction of a felony crime, or commission of any act,
the
conviction for which would be a gross misdemeanor or felony
conviction;
and
(3) Theft or misappropriation of the Company's property.
Merger or Sale. In the event of a merger of the Company with or
into
another corporation or limited liability company or the sale
of
substantially all of the assets of the Company, and the
successor entity,
or a parent or subsidiary of the successor entity, refuses to
assume this
Option or to substitute an equivalent option, then this Option
shall
become exercisable in full immediately. The Committee shall
notify
Optionee in writing or electronically that the Option shall be
fully
vested and exercisable for a period of 15 days from the date of
such
notice and that the Option shall terminate upon the expiration
of such
period.
Dissolution or Liquidation. In the event of the proposed
dissolution or
liquidation of the Company, the Committee shall notify Optionee
as soon as
practicable prior to the effective date of such proposed
transaction. The
Committee in its discretion may provide for Optionee to have the
right to
exercise his or her Option until ten (10) days prior to such
transaction
as to all of the Shares covered thereby, including Shares as to
which the
Option would not othe
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