Employee Stock Purchase Plan - Capella Education Co.
CAPELLA EDUCATION COMPANY
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose and Scope of Plan. The purpose of this employee stock
purchase plan (the "Plan") is to provide the employees of Capella Education
Company (the "Company") and its subsidiaries with an opportunity to acquire a
proprietary interest in the Company through the purchase of its common stock
and, thus, to develop a stronger incentive to work for the continued success of
the Company. The Plan is intended to be an "employee stock purchase plan" within
the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended,
and shall be interpreted and administered in a manner consistent with such
intent.
2. Definitions.
2.1. The terms defined in this section are used (and
capitalized) elsewhere in this Plan:
(a) "Affiliate" means any corporation that is a "parent
corporation" or "subsidiary corporation" of the Company, as
defined in Sections 424(e) and 424(f) of the Code or any
successor provision, and whose participation in the Plan has
been approved by the Board of Directors.
(b) "Board of Directors" means the Board of Directors of
the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(d) "Committee" means two or more Non-Employee Directors
designated by the Board of Directors to administer the Plan
under Section 13.
(e) "Common Stock" means the common stock, par value $.10 per
share (as such par value may be adjusted from time to time),
of the Company.
(f) "Company" means Capella Education Company, a Minnesota
corporation.
(g) "Compensation" means the gross cash compensation
(including wage, overtime, salary, commission, but excluding
bonus earnings) paid by the Company or any Affiliate to a
Participant in accordance with the terms of employment.
(h) "Eligible Employee" means any employee of the Company or
an Affiliate who has been employed for at least 90 days
prior to the start of a Purchase Period and whose customary
employment is at least 20 hours per week; provided, however,
that "Eligible Employee" shall not include any person who
would be
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deemed, for purposes of Section 423(b)(3) of the Code, to
own stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company.
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
(j) "Fair Market Value" of a share of Common Stock as of any
date means, if the Company's Common Stock is listed on a
national securities exchange or traded in the national
market system, the closing price for such Common Stock on
such exchange or market on said date, or, if no sale has
been made on such exchange or market on said date, on the
last preceding day on which any sale shall have been made.
If such determination of Fair Market Value is not consistent
with the then current regulations of the Secretary of the
Treasury applicable to plans intended to qualify as an
"employee stock purchase plan" within the meaning of Section
423(b) of the Code, however, Fair Market Value shall be
determined in accordance with such regulations. The
determination of Fair Market Value shall be subject to
adjustment as provided in Section 14.
(k) "Non-Employee Director" means a member of the Board of
Directors who is considered a non-employee director within
the meaning of Exchange Act Rule 16b-3 or any successor
definition.
(l) "Participant" means an Eligible Employee who has elected
to participate in the Plan in the manner set forth in
Section 4.
(m) "Plan" means this Capella Education Company Employee
Stock Purchase Plan, as amended from time to time.
(n) "Purchase Period" means, except as otherwise determined
by the Committee, a semi-annual period commencing January 1
and ending June 30, or commencing July 1 and ending December
31.
(o) "Recordkeeping Account" means the account maintained in
the books and records of the Company recording the amount
withheld from each Participant through payroll deductions
made under the Plan.
3. Scope of the Plan. Shares of Common Stock may be sold to
Eligible Employees pursuant to this Plan as hereinafter provided, but not more
than 450,000 shares of Common Stock (subject to adjustment as provided in
Section 14) shall be sold to Eligible Employees pursuant to this Plan. All sales
of Common Stock pursuant to this Plan shall be subject to the same terms,
conditions, rights and privileges. The shares of Common Stock sold to Eligible
Employees pursuant to this Plan may be shares acquired by purchase on the open
market or in privately negotiated transactions, by direct issuance from the
Company (whether newly issued or treasury shares) or by any combination thereof.
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4. Eligibility and Participation. To be eligible to participate
in the Plan for a given Purchase Period, an employee must be an Eligible
Employee on the first day of such Purchase Period. An Eligible Employee may
elect to participate in the Plan by filing an enrollment form with the Company
before the first day of such Purchase Period that authorizes regular payroll
deductions from Compensation beginning with the first payday in such Purchase
Period and continuing until the Eligible Employee withdraws from the Plan,
modifies his or her authorization, or ceases to be an Eligible Employee, as
hereinafter provided.
5. Amount of Common Stock Each Eligible Employee May Purchase.
5.1. Subject to the provisions of this Plan, each Eligible
Employee shall be offered the right to purchase on the last day of the
Purchase Period the number of shares of Common Stock (including
fractional shares) that can be purchased at the price specified in
Section 5.2 with the entire credit balance in the Participant's
Recordkeeping Account; provided, however, that the Fair Market Value
(determined on the first day of any Purchase Period) of shares of
Common Stock that may be purchased by a Participant during such
Purchase Period shall not exceed the excess, if any, of (i) $25,000 (or
such lesser amount designated by the Committee) over (ii) the Fair
Market Value (determined on the first day of the relevant Purchase
Period) of shares of Common Stock previously acquired by the
Participant in any prior Purchase Period during such calendar year.
Notwithstanding the foregoing, no Eligible Employee shall be granted an
option to acquire shares of Common Stock under this Plan which permits
the Eligible Employee's rights to purchase shares of Common Stock under
this Plan and all other "employee stock purchase plans" within the
meaning of Section 423(b) of the Code maintained by the Company and the
Affiliates to accrue at a rate which exceeds $25,000 of Fair Market
Value (determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time. If the purchases
by all Participants would otherwise cause the aggregate number of
shares of Common Stock to be sold under the Plan to exceed the number
specified in Section 3, however, each Participant shall be allocated a
ratable portion of the maximum number of shares of Common Stock which
may be sold.
5.2. The purchase price of each share of Common Stock sold
pursuant to this Plan shall be established from time to time by the
Committee, but shall be no less than the lesser of (a) or (b) below:
(a) 85% of the Fair Market Value of such share on the first
day of the Purchase Period; or
(b) 85% of the Fair Market Value of such share on the last
day of the Purchase Period.
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6. Method of Participation.
6.1. The Company shall give notice to each Eligible Employee
of the opportunity to purchase shares of Common Stock pursuant to this
Plan and the terms and conditions for such offering. Such notice is
subject to revision by the Company at any time prior to the date of
purchase of such shares. The Company contemplates that for tax purposes
the first day of a Purchase Period will be the date of the offering of
such shares.
6.2. Each Eligible Employee who desires to participate in the
Plan for a Purchase Period shall signify his or her election to do so
by delivering an executed election on a form developed by the
Committee. An Eligible Employee may elect to have any whole percent of
Compensation withheld, but not exceeding 10% per pay period. An
election to participate in the Plan and to authorize payroll deductions
as described herein must be made before the first day of the Purchase
Period to which it relates and shall remain in effect unless and until
such Participant withdraws from the Plan, modifies his or her
authorization, or ceases to be an Eligible Employee, as hereinafter
provided.
6.3. Any Eligible Employee who does not make a timely election
as provided in Section 6.2, shall be deemed to have elected not to
participate in the Plan. Such election shall be irrevocable for such
Purchase Period.
7. Recordkeeping Account.
7.1. The Company shall maintain a Recordkeeping Account for
each Participant. Payroll deductions pursuant to Section 6 shall be
credited to such Recordkeeping Accounts on each payday.
7.2. No interest shall be credited to a Participant's
Recordkeeping Account.
7.3. The Recordkeeping Account is established solely for
accounting purposes, and all amounts credited to the Recordkeeping
Account shall remain part of the general assets of the Company.
7.4. A Participant may not make any separate cash payment into
the Recordkeeping Account.
8. Right to Adjust Participation or to Withdraw.
8.1. A Participant may, at any time during a Purchase Period,
direct the Company to adjust the amount withheld from his or her future
Compensation, subject to the limitation in Section 6.2. Upon any such
action, future payroll deductions with respect to such Participant
shall be adjusted in accordance with the Participant's direction.
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8.2. Any Participant who stops payroll deductions may not
thereafter resume payroll deductions during such Purchase Period.
8.3. At any time before the end of a Purchase Period, any
Participant may withdraw from the Plan. In such event, all future
payroll deductions shall cease and the entire credit balance in the
Participant's Recordkeeping Account will be paid to the Participant,
without interest, in cash within 15 days. A Participant who withdraws
from the Plan will not be eligible to reenter the Plan until the next
succeeding Purchase Period.
8.4. Notification of a Participant's election to increase,
decrease, or terminate deductions, or to withdraw from the Plan, shall
be made by filing an appropriate form with the Company. Notification to
increase or decrease deductions will take effect as soon as
administratively feasible following such notification.
9. Termination of Employment. If the employment of a Participant
terminates for any reason, including death, disability, or retirement, the
entire balance in the Participant's Recordkeeping Account shall be refunded
in cash within 15 days.
10. Purchase of Shares.
10.1. As of the last day of each Purchase Period, the entire
credit balance in each Participant's Recordkeeping Account shall be
used to purchase shares (including fractional shares) of Common Stock
(subject to the limitations of Section 5) unless the Participant has
filed an appropriate form with the Company in advance of that date
(which elects to receive the entire credit balance in cash). Any amount
in a Participant's Recordkeeping Account that is not used to purchase
shares pursuant to this Section 10.1 shall be refunded to the
Participant, without interest, in cash within 15 days after the end of
the Purchase Period.
10.2. Shares of Common Stock acquired by each Participant
shall be held in a general securities brokerage account maintained for
the benefit of all Participants with a registered securities
broker/dealer selected by the Company (the "Agent"). The Agent shall
maintain individual subaccounts for each Participant in such general
account to which shall be allocated such Participant's shares of Common
Stock (including fractional shares to four decimal places).
10.3. Prior to the last day of each Purchase Period, the
Company shall determine whether some or all of the shares of Common
Stock to be purchased as of the last day of such Purchase Period will
be purchased by the Agent for the accounts of Participants on the open
market or in privately negotiated transactions. If some or all of such
shares are to be so purchased by the Agent, the Company shall advise
the Agent of the number of shares to be so purchased and shall provide
to the Agent such funds, in addition to the funds available from
Participants' Recordkeeping Accounts, as may be necessary to permit the
Agent to so purchase such number of shares (including all brokerage
fees and expenses).
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10.4. Each Participant shall be entitled to vote all shares
held for the benefit of such Participant in the general securities
brokerage account maintained by the Agent.
10.5. Certificates for the number of whole shares of Common
Stock, determined as aforesaid, purchased by each Participant shall be
issued and delivered to him or her, registered in the form directed by
the Participant, only upon the request of the Participant or his or her
representative. Any such request shall be made by filing an appropriate
form with the Company. No certificates for fractional shares will be
issued. Instead, Participants will receive a cash distribution
representing any fractional shares.
11. Rights as a Stockholder. A Participant shall not be entitled
to any of the rights or privileges of a stockholder of the Company with respect
to shares of Common Stock under the Plan, including the right to receive any
dividends which may be declared by the Company, until (i) he or she actually has
paid the purchase price for such shares and (ii) either the shares have been
credited to the general securities brokerage account maintained by the Agent for
the Participant's benefit or certificates have been issued to the Participant,
both as provided in Section 10.
12. Rights Not Transferable. A Participant's rights under this
Plan are exercisable only by the Participant during his or her lifetime, and may
not be sold, pledged, assigned or transferred in any manner other than by will
or the laws of descent and distribution. Any attempt to sell, pledge, assign or
transfer the same shall be null and void and without effect. The amounts
credited to a Recordkeeping Account may not be assigned, transferred, pledged or
hypothecated in any way, and any attempted assignment, transfer, pledge,
hypothecation or other disposition of such amounts will be null and void and
without effect.
13. Administration of the Plan. This Plan shall be administered
by the Committee, which is authorized to make such uniform rules as may be
necessary to carry out its provisions. Subject to the terms of this Plan, the
Committee shall determine the term of each Purchase Period and the manner of
determining the purchase price of the shares of Common Stock to be sold during
such Purchase Period. The Committee shall also determine any other questions
arising in the administration, interpretation and application of this Plan, and
all such determinations shall be conclusive and binding on all parties.
14. Adjustment upon Changes in Capitalization. In the event of
any change in the Common Stock by reason of stock dividends, split-ups,
corporate separations, recapitalizations, mergers, consolidations, combinations,
exchanges of shares and the like, the aggregate number and class of shares
available under this Plan and the number, class and purchase price of shares
available but not yet purchased under this Plan, shall be adjusted appropriately
by the Committee.
15. Registration of Certificates. Stock certificates to be
issued and delivered upon the request of the Participant or his or her
representative, as provided in Section 10.5, shall be registered in the name of
the Participant, or jointly, as joint tenants with the right of survivorship,
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in the name of the Participant and another person, as the Participant or his or
her representative may direct on an appropriate form filed with the Company.
16. Amendment of Plan. The Board of Directors may at any time
amend this Plan in any respect which shall not adversely affect the rights of
Participants pursuant to shares previously acquired under the Plan, except that,
without stockholder approval on the same basis as required by Section 19.1, no
amendment shall be made (i) to increase the number of shares to be reserved
under this Plan, (ii) to decrease the minimum purchase price, (iii) to withdraw
the administration of this Plan from the Committee, or (iv) to change the
definition of employees eligible to participate in the Plan.
17. Effective Date of Plan. This Plan shall be effective upon
approval by the stockholders of the Company. All rights of Participants in any
offering hereunder shall terminate at the earlier of (i) the day that
Participants become entitled to purchase a number of shares of Common Stock
equal to or greater than the number of shares remaining available for purchase
or (ii) at any time, at the discretion of the Board of Directors, after 30 days'
notice has been given to all Participants. Upon termination or suspension of
this Plan, shares of Common Stock shall be purchased for Participants in
accordance with Section 10.1, and cash, if any, remaining in the Participants'
Recordkeeping Accounts shall be refunded to them, as if the Plan were terminated
at the end of a Purchase Period.
18. Governmental Regulations and Listing. All rights granted or
to be granted to Eligible Employees under this Plan are expressly subject to all
applicable laws and regulations and to the approval of all governmental
authorities required in connection with the authorization, issuance, sale or
transfer of the shares of Common Stock reserved for this Plan, including,
without limitation, there being a current registration statement of the Company
under the Securities Act of 1933, as amended, covering the shares of Common
Stock purchasable on the last day of the Purchase Period applicable to such
shares, and if such a registration statement shall not then be effective, the
term of such Purchase Period shall be extended until the first business day
after the effective date of such a registration statement, or post-effective
amendment thereto. If applicable, all such rights hereunder are also similarly
subject to effectiveness of an appropriate listing application to a national
securities exchange or a national market system, covering the shares of Common
Stock under the Plan upon official notice of issuance.
19. Miscellaneous.
19.1. This Plan shall not be deemed to constitute a contract
of employment between the Company or any Affiliate and any Participant,
nor shall it interfere with the right of the Company or any Affiliate
to terminate any Participant and treat him or her without regard to the
effect which such treatment might have upon him or her under this Plan.
19.2. Wherever appropriate as used herein, the masculine
gender may be read as the feminine gender, the feminine gender may be
read as the masculine gender, the singular may be read as the plural
and the plural may be read as the singular.
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19.3. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of
Minnesota.
19.4. Delivery of shares of Common Stock or of cash
pursuant to the Plan shall be subject to any required withholding
taxes. A person entitled to receive shares of Common Stock may, as a
condition precedent to receiving such shares, be required to pay the
Company a cash amount equal to the amount of any required withholdings.
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