Directors' Stock Plan - The Corporate Executive Board Co.
THE CORPORATE EXECUTIVE BOARD COMPANY
DIRECTORS' STOCK PLAN
1. PURPOSE
-------
The purpose of The Corporate Executive Board Company Directors' Stock Plan
(the "Plan") is to advance the interests of The Corporate Executive Board
Company, a Delaware corporation (hereinafter the "Company"), by enabling the
Company to attract, retain and motivate qualified individuals to serve on
the Company's Board of Directors and to align the financial interests of
such individuals with those of the Company's stockholders by providing for
or increasing their proprietary interest in the Company. Any stock options
granted pursuant to this Plan shall not qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as incentive stock
options. The plan is intended to operate in a manner that exempts grants of
Common Stock under the Plan from Section 16(b) of the Securities Exchange
Act of 1934, as amended.
2. DEFINITIONS
-----------
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the Board and/or the Compensation Committee of the Board
acting pursuant to its authorization to administer this Plan under
Section 7.
(c) "Common Stock" means the Company's Class B Non-Voting Common Stock, par
value $.01 per share, subject to adjustment as provided in Section 9.
(d) "Market Value" means, as of any date, and unless the Committee shall
specify otherwise, the closing sale price of the Common Stock as reported
for such date pursuant to the consolidated quotation system or any other
transaction reporting plan under Section 11A of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or, if there have been no sales
so reported for such date, the average of the best bid and best offer
prices quoted under the consolidated quotation system or any other such
transaction reporting plan as of 4:00 p.m., New York time, on such date, or
if on any date the Common Stock is not so quoted, the average of the best
bid and best offered prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor or comparable organization. If at any time the Common
Stock is not listed on any domestic securities exchange or quoted under a
transaction reporting plan or in the domestic over-the-counter market, the
"Market Value" shall be the fair value thereof determined by the Committee.
(e) "Options" shall mean the stock options granted to a Participant with
respect to shares of Common Stock pursuant to the terms of this Plan.
(f) "Stock Grant" shall mean the award of shares of Common Stock to a
Participant pursuant to the terms of this Plan.
<PAGE>
3. SHARES SUBJECT TO THE PLAN
--------------------------
Subject to adjustment as provided in Section 9, the maximum number of shares
of Common Stock which may be issued pursuant to this Plan shall not exceed
25,000. Shares issued under this Plan may be authorized and unissued shares
of Common Stock or shares of Common Stock reacquired by the Company. All or
any shares of Common Stock subject to an Option or a Stock Grant which for
any reason are not issued, do not become vested or are reacquired pursuant
to the Plan or the terms of an Option or Stock Grant may again be made
subject to an Option or Stock Grant under the Plan.
4. PARTICIPANTS
------------
Any person who is, or is elected to be, a director of the Company or any of
its subsidiaries shall be eligible for the award of Options and/or Stock
Grants hereunder. The Committee shall determine to which directors any such
Options and/or Stock Grants shall be awarded hereunder (any such director
and his or her authorized transferees hereinafter referred to as a
"Participant").
5. DIRECTOR AWARDS
---------------
The Committee may provide for Options and/or Stock Grants to be awarded to
Directors in consideration for their service to the Company. The Committee
shall specify the number of shares subject to each Option or Stock Grant
provided for under this Section 5, or the formula pursuant to which such
number shall be determined, the Participants to receive any such award, the
date of award and the vesting and expiration terms applicable to such Option
or Stock Grant. The award of Options or Stock Grants hereunder may, but need
not, be conditioned on the Director electing to forego his or her right to
all or any part of his or her cash retainer or other fees. Subject to
adjustment pursuant to Section 9, the maximum number of shares of Common
Stock subject to Options and Stock Grants awarded under this Plan during any
calendar year to any person on account of his or her service as a director
shall not exceed 5,000 shares.
6. TERMS AND CONDITIONS OF OPTIONS AND STOCK GRANTS
------------------------------------------------
(a) General Terms and Conditions: Options and Stock Grants awarded pursuant
----------------------------
to the Plan need not be identical but each Option and Stock Grant shall be
subject to the following general terms and conditions:
(1) Terms and Restrictions Upon Shares: The Committee may provide
----------------------------------
that the shares of Common Stock issued upon exercise of an Option or
receipt of a Stock Grant shall be subject to such further conditions,
restrictions or agreements as the Committee in its discretion may
specify prior to the exercise of such Option or receipt of such Stock
Grant, including without limitation, deferrals on issuance, conditions
on vesting or transferability, and forfeiture or repurchase provisions.
The Committee may establish rules for the deferred delivery of Common
Stock upon exercise of an Option or receipt of a Stock Grant with the
deferral evidenced by use of "Stock Units" equal in number to the
number of shares of Common Stock whose delivery is so deferred. A
"Stock Unit" is a bookkeeping entry representing an amount equivalent
to the Market Value of one share of Common
2
<PAGE>
Stock. Stock Units represent an unfunded and unsecured obligation of
the Company except as otherwise provided by the Board. Settlement of
Stock Units upon expiration of the deferral period shall be made in
Common Stock or otherwise as determined by the Committee. The amount of
Common Stock, or other settlement medium, to be so distributed may be
increased by an interest factor or by dividend equivalents. Until a
Stock Unit is settled, the number of shares of Common Stock represented
by a Stock Unit shall be subject to adjustment pursuant to Section 9.
(2) Transferability: Unless otherwise provided by the Committee,
---------------
awards of Options or Stock Grants under the Plan shall be
nontransferable by the Participant other than by will or the laws of
descent and distribution and Options shall be exercisable only by the
Participant during his or her lifetime.
(3) Other Terms and Conditions: No holder of an Option or Stock
--------------------------
Grant shall have any rights as a stockholder with respect to any shares
of Common Stock subject to an Option or Stock Grant hereunder until
said shares have been issued. Options and Stock Grants may also contain
such other provisions, which shall not be inconsistent with any of the
foregoing terms, as the Committee shall deem appropriate. The Committee
may waive conditions to and/or accelerate exercisability of an Option
or Stock Grant, either automatically upon the occurrence of specified
events (including in connection with a change of control of the
Company) or otherwise in its discretion. No Option or Stock Grant,
however, nor anything contained in the Plan, shall confer upon any
Participant any right to serve as a director of the Company or any of
its subsidiaries.
(b) Option Terms: The Committee may establish the terms, provisions and
------------
conditions applicable to awards of Options (including, but not limited to,
exercise price, exercisability and vesting) to the extent such terms,
provisions and conditions are consistent with the express provisions of the
Plan. The exercise price for each Option shall be established by the
Committee or under a formula established by the Committee. Notwithstanding
the forgoing, the exercise price shall not be less than the Market Value of
the Common Stock on the date of grant of the Option, unless the Participant
pays or foregoes compensation in the amount of any discount. The exercise
price of an Option shall be payable (i) in cash, (ii) by payment under an
arrangement with a broker where payment is made pursuant to an irrevocable
direction to the broker to deliver all or part of the proceeds from the
sale of the Option shares to the Company, (iii) by tendering (either
physically or by attestation) shares of Common Stock owned by the
Participant exercising the Option and having a Market Value on the date of
exercise equal to the exercise price but only if such will not result in an
accounting charge to the Company, or (iv) by any combination of the
foregoing. In addition, the exercise price may be payable in such other
form(s) of consideration as the Committee in its discretion shall specify,
including without limitation by loan (as described in Section 8) or by
techniques that may result in an accounting charge to the Company.
(c) Stock Grant Terms: Stock Grants under the Plan may, in the sole
-----------------
discretion of the Committee, but need not, be conditioned upon the
Participant paying cash or cash-equivalent consideration or agreeing to
forego other compensation for the shares of Common Stock covered by the
Stock Grant. Stock Grants under the Plan may be subject to terms, provisions
3
<PAGE>
and conditions (including, but not limited to, vesting) as are established
in the sole discretion of the Committee, provided such terms, provisions and
conditions are consistent with the express provisions of the Plan. The
terms, provisions and conditions may be contingent upon the passage of time,
continued service or achievement of Company or individual performance goals,
as specified by the Committee.
7. ADMINISTRATION OF THE PLAN
--------------------------
The Plan shall be administered by the Board, except to the extent the Board
designates that the Plan shall be administered by the Compensation Committee
of the Board (the Board or any such designated committee, the "Committee").
The Committee shall act pursuant to a majority vote or unanimous written
consent.
Subject to the express provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in
connection with the administration of this Plan, including, without
limitation: (a) to prescribe, amend and rescind rules relating to this Plan
and to define terms not otherwise defined herein; (b) to prescribe the form
of documentation used to evidence any Option or Stock Grant awarded
hereunder, including provision for such terms as it considers necessary or
desirable, not inconsistent with the terms established by the Committee; (c)
to establish and verify the extent of satisfaction of any conditions to
exercisability applicable to Options or to receipt or vesting of Stock
Grants; (d) to determine whether, and the extent to which, adjustments are
required pursuant to Section 9 hereof; and (e) to interpret and construe
this Plan, any rules and regulations under the Plan and the terms and
conditions of any Option or Stock Grant awarded hereunder, and to make
exceptions to any procedural provisions in good faith and for the benefit of
the Company.
All decisions, determinations and interpretations by the Committee regarding
the Plan, any rules and regulations under the Plan and the terms and
conditions of any Option or Stock Grant awarded hereunder, shall be final
and binding on all Participants and holders of Options and Stock Grants.
The Committee may consider such factors as it deems relevant, in its sole
and absolute discretion, in making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice
of any officer or other employee of the Company and such attorneys,
consultants and accountants as it may select.
8. LOANS
-----
The Company may, if authorized by the Committee, make loans for the purpose
of enabling a Participant to exercise Options and, if applicable, receive
Common Stock awarded under the Plan and to pay the tax liability resulting
from an Option exercise or Stock Grant under the Plan. The Committee shall
have full authority to determine the terms and conditions of such loans.
Such loans may be secured by the shares of Common Stock received upon
exercise of such Option or receipt of such Stock Grant.
9. ADJUSTMENT OF AND CHANGES IN THE STOCK
--------------------------------------
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or
4
<PAGE>
securities, or if cash, property or shares or securities are distributed in
respect of such outstanding securities, in either case as a result of a
reorganization, reclassification, dividend (other than a regular, quarterly
cash dividend or an issuance of the class of securities then subject to this
Plan as part of a public or private offering thereof) or other distribution,
stock split, reverse stock split, spin-off or the like, or if substantially
all of the property and assets of the Company are sold, then, unless the
terms of such transaction shall provide otherwise, the maximum number and
type of shares or other securities that may be issued under this Plan shall
be appropriately adjusted. The Committee shall determine in its sole
discretion the appropriate adjustment, if any, to be effected pursuant to
the immediately preceding sentence. In addition, in connection with any such
change in the class of securities then subject to this Plan, the Committee
may make appropriate and proportionate adjustments in the number and type of
shares or other securities or cash or other property that may be acquired
pursuant to Options and Stock Grants theretofore awarded under this Plan and
the exercise price of such Options or price, if any, of such Stock Grants.
No right to purchase or receive fractional shares shall result from any
adjustment in Options or Stock Grants pursuant to this Section 9. In case
of any such adjustment, the shares subject to the Option or Stock Grant
shall be rounded up to the nearest whole share of Common Stock.
10. REGISTRATION, LISTING OR QUALIFICATION OF STOCK
-----------------------------------------------
In the event that the Committee determines in its discretion that the
registration, listing or qualification of the shares of Common Stock
issuable under the Plan on any securities exchange or under any applicable
law or governmental regulation is necessary as a condition to the issuance
of such shares under the Option or Stock Grant, the Option or Stock Grant
shall not be exercisable or exercised in whole or in part unless such
registration, listing, qualification, consent or approval has been
unconditionally obtained.
11. TAXES
-----
The Committee may make such provisions or impose such conditions as it may
deem appropriate for the withholding or payment by a Participant of any
taxes which it determines are necessary or appropriate in connection with
any issuance, exercise or vesting of any Options, Stock Grants or shares
under this Plan, and the rights of a holder of an Option or Stock Grant or
shares are subject to satisfaction of such conditions. The Company shall not
be required to issue shares of Common Stock or to recognize the disposition
of such shares until such obligations are satisfied. At the Participant's
election, any such obligations may be satisfied by having the Company
withhold a portion of the shares of Common Stock that otherwise would be
issued to the holder of the Option or Stock Grant upon exercise of the
Option or vesting or receipt of the Stock Grant or by surrendering to the
Company shares of Common Stock previously acquired, provided that such will
not result in an accounting charge to the Company. The Company and any
affiliate of the Company shall not be liable to a Participant or any other
persons as to any tax consequence expected, but not realized, by any
Participant or other person due to the receipt of any Options or shares
awarded hereunder.
5
<PAGE>
12. ARBITRATION AND APPLICABLE LAW
------------------------------
Any claim, dispute or other matter in question of any kind relating to this
Plan shall be settled by arbitration before a single arbitrator (who is
mutually agreeable to the parties) and otherwise conducted in accordance
with the Rules of the American Arbitration Association (the "AAA Rules"),
which proceedings shall be held in the city in which the Company's executive
offices are located. If the parties are unable to agree upon an arbitrator,
the arbitrator shall be selected in accordance with the AAA Rules. Notice
of demand for arbitration shall be made in writing to the opposing party and
to the American Arbitration Association within a reasonable time after the
claim, dispute or other matter in question has arisen. In no event shall a
demand for arbitration be made after the date when the applicable statute of
limitations would bar the institution of a legal or equitable proceeding
based on such claim, dispute or other matter in question. The decision of
the arbitrator shall be final and may be enforced in any court of competent
jurisdiction. This Plan and any rights hereunder shall be interpreted and
construed in accordance with the laws of the State of Delaware and
applicable federal law.
13. EFFECTIVE DATE, AMENDMENT AND TERMINATION OF PLAN
-------------------------------------------------
This Plan shall become effective upon its adoption by the Board and approval
by the Company's stockholders. Any Options and Stock Grants awarded prior
to the such date shall be contingent on such approval and, if such approval
is not obtained, shall be null and of no effect.
Unless earlier suspended or terminated by the Board, no Options or Stock
Grants may be awarded after May 1, 2009. The Board may periodically amend
the Plan as it determines appropriate, without further action by the
Company's stockholders except to the extent required by applicable law. Any
amendment to the Plan will not affect the rights and obligations arising
under Options or Stock Grants theretofore awarded and then in effect.
Notwithstanding the foregoing, and subject to adjustment pursuant to Section
9, the Plan may not be amended to increase the number of shares of Common
Stock authorized for issuance under the Plan, unless any such amendment is
approved by the Company's stockholders. The Plan may be earlier terminated
at such earlier time as the Board may determine. Termination and expiration
of the Plan will not affect the rights and obligations arising under Options
or Stock Grants theretofore awarded and then in effect.
6
<PAGE>
THE CORPORATE EXECUTIVE BOARD COMPANY
STANDARD TERMS AND CONDITIONS FOR
DIRECTOR NON-QUALIFIED STOCK OPTIONS
1. TERMS OF OPTION
THE CORPORATE EXECUTIVE BOARD COMPANY, a Delaware corporation (the
"Company"), has granted to the Optionee named in the Term Sheet provided to
said Optionee herewith (the "Term Sheet") a non-qualified stock Option (the
"Option") to purchase any part or all of the number of shares of the
Company's Class B Common Stock, $0.01 par value per share (the "Common
Stock"), set forth in Term Sheet, at the purchase price per share and upon
the other terms and subject to the conditions set forth in the Term Sheet,
these Standard Terms and Conditions (as amended from time to time), and the
Plan specified in the Term Sheet (the "Plan"). The Option is granted in
consideration for Optionee's service as a director of the Company.
2. NON-QUALIFIED STOCK OPTION
The Option is not intended to be an incentive stock Option under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") and will
be interpreted accordingly.
3. CONTINUED SERVICE
Except as otherwise provided in these Standard Terms and Conditions and the
Plan, the Option shall be exercisable only if Optionee serves as a director
of the Company on the date that the Option becomes vested, as set forth in
the Term Sheet.
4. OPTION EXERCISE PRICE
The exercise price (the "Exercise Price") of the Option is set forth in the
Term Sheet.
5. TERM OF OPTION AND EXERCISE OF OPTION
To the extent not previously exercised, and subject to termination or
acceleration as provided in these Standard Terms and Conditions, the Option
shall be fully exercisable on and after it becomes vested, as described in
the Term Sheet, to purchase up to that number of shares of Common Stock as
set forth in the Term Sheet. Notwithstanding anything to the contrary in
Sections 6 through 9 hereof, no part of the Option may be exercised after
ten (10) years from the grant date set forth in the Term Sheet.
To exercise the Option (or any part thereof), Optionee shall deliver a
"Notice of Exercise" to the Company specifying the number of whole shares
of Common Stock Optionee wishes to purchase and how Optionee's shares of
Common Stock should be registered (in Optionee's name only or in Optionee's
and Optionee's spouse's names as community property or as joint tenants
with right of survivorship). The Company shall not be obligated to issue
any shares of Common Stock until Optionee shall have paid the total
Exercise Price for that number of shares of Common Stock. The Exercise
Price may be paid (a) in cash, (b) by payment under an arrangement with a
broker where payment is made pursuant to an irrevocable direction to the
broker to deliver all or part of the proceeds from the sale of the Option
shares to the Company, (c) by tendering (either physically or by
attestation) shares of Common Stock owned by Optionee and having a Market
Value (defined in the Plan) on the date of exercise equal to the Exercise
Price but only if such will
7
<PAGE>
not result in an accounting charge to the Company, or (d) by any
combination of the foregoing. In addition, the Exercise Price may be
payable in such other form(s) of consideration as the Committee (defined in
the Plan) in its discretion shall specify, including without limitation by
loan or by techniques that may result in an accounting charge to the
Company. Fractional shares may not be exercised. Shares of Common Stock
will be issued as soon as practical after exercise. Optionee will have the
rights of a stockholder only after the shares of Common Stock have been
issued.
Notwithstanding the above, the Company shall not be obligated to deliver
any shares of Common Stock during any period when the Company determines
that the exercisability of the Option or the delivery of shares hereunder
would violate any federal, state or other applicable laws.
6. TERMINATION OF RELATIONSHIP
After the effective date of his or her election as a director, if Optionee
ceases to be a director of the Company for any reason other than death,
Disablement (defined below) or Retirement (defined below), Optionee may at
any time within ninety (90) days from the date of such termination exercise
the Option to the extent it was exercisable on the date of termination.
After such ninetieth (90th) day, the Option shall terminate to the extent
that it is unexercised.
7. DEATH
If Optionee ceases to be a director of the Company on account of Optionee's
death while in the service of the Company as a director, the executor of
Optionee's will, administrator of Optionee's estate or any successor
trustee of a grantor trust may exercise Optionee's rights during the twelve
(12) months next succeeding the date of death. The number of shares
exercisable by Optionee's estate or beneficiary will be the total number of
unexercised shares under the Option were exercisable on the date of
Optionee's death. If Optionee dies within thirty (30) days of ceasing
service with the Company as a director, the executor of Optionee's will,
administrator of Optionee's estate or any successor trustee of a grantor
trust may exercise within twelve (12) months from the date of Optionee's
termination those outstanding options which were exercisable on the date of
Optionee's termination.
After either twelve (12) month period described in this Section 7, the
Option shall terminate to the extent that it is unexercised.
8. DISABILITY
If Optionee ceases to be a director of the Company on account of Optionee's
Disablement, Optionee may within twelve (12) months from the date of
Optionee's Disablement exercise the Option to the extent it was exercisable
on the date of Optionee's Disablement. After such twelve (12) month
period, the Option shall terminate to the extent that it is unexercised.
For purposes of these Standard Terms and Conditions, "Disablement" means a
physical condition arising from an illness or injury which renders an
individual incapable of performing work. The determination of the
Committee as to an individual's Disablement shall be conclusive on all of
the parties.
8
<PAGE>
9. RETIREMENT
If Optionee ceases to be a director of the Company on account of Optionee's
retirement from the Board of Directors, the Option, to the extent it was
exercisable on the date of Retirement, may be exercised by Optionee for a
period of twelve (12) months following the date of Optionee's Retirement.
After such twelve (12) month period, the Option shall terminate to the
extent that it is unexercised. "Retirement" means ceasing from service as
a director of the Company at or after age 60.
10. INCOME TAXES WITHHOLDING
The Company shall not be obligated to issue any shares of Common Stock
pursuant to the exercise of the Option until the Optionee has satisfied in
full any and all taxes and tax withholding requirements as may be
applicable. Such taxes may be paid in the manner provided for payment of
the Exercise Price of the Option. The Committee may, in its discretion,
make such provisions and take such steps as it may deem necessary or
appropriate for the withholding of all federal, state, local and other
taxes required by law to be withheld with respect to the issuance or
exercise of the Option including, but not limited to, deducting the amount
of any such withholding taxes from any amount then or thereafter payable to
the Optionee.
11. NON-TRANSFERABILITY OF OPTION
Unless otherwise provided by the Committee, Optionee may not assign or
transfer the Option to anyone other than by will or the laws of descent and
distribution and Options shall be exercisable only by Optionee during his
or her lifetime. The Company may cancel Optionee's Option if Optionee
attempts to assign or transfer it in a manner inconsistent with this
Section 11.
12. DISPUTES
Any disagreement concerning Optionee's Option shall be finally and
conclusively determined as provided in the Plan.
13. THE PLAN AND OTHER AGREEMENTS
The provisions of the Plan are incorporated into these Standard Terms and
Conditions by this reference. In the event of a conflict between the terms
and conditions of these Standard Terms and Condition and the Plan, the Plan
controls. Certain capitalized terms not otherwise defined herein are
defined in the Plan.
The Term Sheet, these Standard Terms and Conditions and the Plan constitute
the entire understanding between Optionee and the Company regarding the
Option. Any prior agreements, commitments or negotiations concerning the
Option are superseded.
14. NO INTEREST IN SHARES SUBJECT TO OPTION.
Neither Optionee (individually or as a member of a group) nor any
beneficiary or other person claiming under or through Optionee shall have
any right, title, interest, or privilege in or to any shares of Common
Stock allocated or reserved for the purpose of the Plan or subject to the
Term Sheet or these Standard Terms and Conditions except as to such shares
of Common Stock, if any, as shall have been issued to such person upon
exercise of the Option or any part of it.
9
<PAGE>
15. NOT A CONTRACT FOR SERVICES.
Nothing in the Plan, in the Term Sheet, these Standard Terms and Conditions
or any other instrument executed pursuant the Plan shall confer upon
Optionee any right to continue to serve as a director of the Company or
shall affect the right of the Company to terminate Optionee with or without
cause.
16. NOTICES.
All notices, requests, demands and other communications pursuant to these
Standard Terms and Conditions shall be in writing and shall be deemed to
have been duly given if personally delivered, telexed or telecopied to, or,
if mailed, when received by, the other party at the following addresses (or
at such other address as shall be given in writing by either party to the
other):
If to the Company to:
The Corporate Executive Board Company
The Watergate
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
Attention: Chairman of the Board
If to the Optionee, to the address set forth below the Optionee's signature
on the Term Sheet.
17. SEPARABILITY.
In the event that any provision of these Standard Terms and Conditions is
declared to be illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, such provision shall be reformed, if possible, to
the extent necessary to render it legal, valid and enforceable, or
otherwise deleted, and the remainder of these Standard Terms and Conditions
shall not be affected except to the extent necessary to reform or delete
such illegal, invalid or unenforceable provision.
18. HEADINGS.
The headings preceding the text of the sections hereof are inserted solely
for convenience of reference, and shall not constitute a part of these
Standard Terms and Conditions, nor shall they affect its meaning,
construction or effect.
19. FURTHER ASSURANCES.
Each party shall cooperate and take such action as may be reasonably
requested by another party in order to carry out the provisions and
purposes of these Standard Terms and Conditions.
20. BINDING EFFECT.
These Standard Terms and Conditions shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted heirs,
beneficiaries, successors and assigns.
10