1998 Stock Option Plan - the Corporate Executive Board Co.
THE CORPORATE EXECUTIVE BOARD COMPANY
1998 STOCK OPTION PLAN
1. PURPOSE
The purpose of The Corporate Executive Board Company 1998 Stock Option Plan
(the "Plan") is to provide Participants with an increased economic and
proprietary interest in the Company in order to encourage those
Participants to contribute to the success and progress of the Company. The
Plan provides solely for the grant of Options which shall not be incentive
stock options, as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. DEFINITIONS
(a) "Administrator" means the Administrator of the Plan in accordance with
Section 11.
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Common Stock" means the Company's common stock, par value $.01,
subject to adjustment as provided in Section 8.
(d) "Company" means The Corporate Executive Board Company, a Delaware
corporation.
(e) "Options" shall mean the stock options granted pursuant to the Plan.
(f) "Participants" shall mean those officers, independent contractors and
employees of the Company and its subsidiaries to whom Options have
been granted from time to time by the Administrator and any authorized
transferee of such officers, independent contractors and employees.
(g) "Plan" means The Corporate Executive Board Company 1998 Stock Option
Plan.
(h) "Retirement" shall have the meaning specified by the Administrator in
the terms of an option grant or, in the absence of any such term,
shall mean retirement from active employment with the Company (i) at
or after age 55 and with the approval of the Administrator or (ii) at
or after age 65. The determination of the Administrator as to an
individual's Retirement shall be conclusive on all parties.
(i) "Total and Permanent Disablement" shall have the meaning specified by
the Administrator in the terms of an option grant or, in the absence
of any such term, shall mean a physical condition arising from an
illness or injury which renders an individual incapable of performing
work. The determination of the Administrator as to an individual's
Disablement shall be conclusive on all of the parties.
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3. PARTICIPANTS
Options may only be granted to officers, independent contractors, employees
and prospective employees of the Company and its subsidiaries as selected
by the Administrator. For purposes of this Plan, the Chairman of the
Board's status as an employee shall be determined by the Board of
Directors. Options may not be granted to directors of the Company unless
such directors otherwise qualify for participation in the Plan.
4. EFFECTIVE DATE AND TERMINATION OF PLAN
This Plan was adopted by the Board of Directors and approved by the sole
stockholder of the Company on ________ and is effective as of ________.
The Plan shall remain available for the grant of Options until May 1, 2009.
Notwithstanding the foregoing, the Plan may be terminated at such earlier
time as the Board of Directors may determine. Termination of the Plan will
not affect the rights and obligations of the Participants and the Company
arising under Options theretofore granted and then in effect.
5. SHARES SUBJECT TO THE PLAN AND TO OPTIONS
The stock subject to Options authorized to be granted under the Plan shall
consist of ________ shares of the Company's Common Stock, or the number and
kind of shares of stock or other securities which shall be substituted or
adjusted for such shares as provided in Section 8. In the event that
shares of Common Stock subject to the Company's Stock-Based Incentive
Compensation Plan, as amended and restated on ______________, 1998 (the
"Incentive Plan"), are canceled, expire or terminate or that otherwise are
available for issuance but for any other reason are not issued under the
Incentive Plan, then the number of shares of Common Stock authorized for
issuance under the Plan shall be increased accordingly. Such shares may be
authorized and unissued shares of the Company's Common Stock. All or any
shares of Common Stock subject to an Option which for any reason are not
issued, do not become vested or are reacquired pursuant to the Plan or the
terms of an Option may again be made subject to an Option under the Plan.
6. GRANT, TERMS AND CONDITIONS OF OPTIONS
Options may be granted at any time and from time to time prior to the
termination of the Plan, to certain officers, independent contractors and
employees of the Company selected by the Administrator. No Participant
shall have any rights as a stockholder with respect to any shares of stock
subject to Option hereunder until said shares have been issued. Each
Option shall be evidenced by a written stock option agreement and/or such
other written arrangements as may be approved from time to time by the
Administrator. Options granted pursuant to the Plan need not be identical
but each Option much contain and be subject to the following terms and
conditions:
(a) Price: The purchase price under each Option shall be established by
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the Administrator. In no event will the option price be less than the
fair market value
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of the stock on the date of grant unless such Options are granted in
substitution of options granted by a new employee's previous employer
or the optionee pays or foregoes compensation in the amount of any
discount. The price may be paid in cash or any alternative means
acceptable to the Administrator, including an irrevocable commitment
by a broker to pay over such amount from a sale of the shares issuable
under an Option and the acceptance of a promissory note secured by the
number of shares of Common Stock then issuable upon exercise of the
Options.
(b) Duration and Exercise or Termination of Option: Unless the
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Administrator provides otherwise, Options shall become exercisable 25
percent per year beginning one year after the date of the grant.
Unless the Administrator provides otherwise, each Option granted must
expire within a period of not more than ten (10) years from the date
of grant.
(c) Suspension or Termination of Option: Except as otherwise provided by
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the Administrator, if at any time (including after a notice of
exercise has been delivered) the Chief Executive Officer or any other
person designated by the Administrator (each such person, an
"Authorized Officer") reasonably believes that a Participant has
committed an act of misconduct as described in this Section, the
Authorized Officer may suspend the Participant's rights to exercise
any Option pending a determination of whether an act of misconduct has
been committed.
Except as otherwise provided by the Administrator, if the
Administrator or an Authorized Officer determines a Participant has
committed an act of embezzlement, fraud, dishonesty, nonpayment of any
obligation owed to the Company, breach of fiduciary duty or deliberate
disregard of the Company rules resulting in loss, damage or injury to
the Company, or if a Participant makes an unauthorized disclosure of
any Company trade secret or confidential information, engages in any
conduct constituting unfair competition, induces any Company customer
to breach a contract with the Company or induces any principal for
whom the Company acts as agent to terminate such agency relationship,
neither the Participant nor his or her estate nor transferee shall be
entitled to exercise any Option whatsoever. In making such
determination, the Administrator or an Authorized Officer shall act
fairly and shall give the Participant an opportunity to appear and
present evidence on his or her behalf at a hearing before the
Administrator or the Board of Directors. For any Participant who is an
"executive officer" for purposes of Section 16 of the Securities
Exchange Act of 1934, the determination of the Authorized Officer
shall be subject to the approval of the Administrator.
(d) Termination of Employment: Subject to Section 6(b), unless the
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Administrator specifies otherwise, upon the termination of the
Participant's employment, his or her rights to exercise an Option then
held shall be only as follows:
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(1) Death. Upon the death of a Participant while in the employ of the
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Company, all of the Participant's Options then held shall be
exercisable by his or her estate, heir or beneficiary at any time
during the twelve (12) months next succeeding the date of death.
Any and all Options that are unexercised during the twelve (12)
months next succeeding the date of death shall terminate as of
the end of such twelve (12) month period.
If a Participant should die within thirty (30) days of his or her
termination of employment with the Company, an Option shall be
exercisable by his or her estate, heir or beneficiary at any time
during the twelve (12) months succeeding the date of termination,
but only to the extent of the number of shares as to which such
Option was exercisable as of the date of such termination. Any
and all Options that are unexercised during the twelve (12)
months succeeding the date of termination shall terminate as of
the end of such twelve (12) month period. A Participant's estate
shall mean his or her legal representative or other person who so
acquires the right to exercise the Option.
(2) Total and Permanent Disablement. Upon termination as a result of
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the Total and Permanent Disablement of any Participant, all of
the Participant's Options then held shall be exercisable for a
period of twelve (12) months after termination. Any and all
Options that are unexercised during the twelve (12) months
succeeding the date of termination shall terminate as of the end
of such twelve (12) month period.
(3) Retirement. Upon Retirement of a Participant, the Participant's
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Options then held shall be exercisable for a period of twelve
(12) months after Retirement. The number of shares with respect
to which the Options shall be exercisable shall equal the total
number of shares which were exercisable under the Participant's
Option on the date of his or her Retirement. Any and all Options
that are unexercised during the twelve (12) months succeeding the
date of termination shall terminate as of the end of such twelve
(12) month period.
(4) Other Reasons. Upon the date of a termination of a Participant's
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employment for any reason other than those stated above in
Sections 6(d)(1), (d)(2) and (d)(3) or as described in
Section 6(c) above, (A) any Option that is unexercisable as of
such termination date shall remain unexercisable and shall
terminate as of such date, and (B) any Option that is exercisable
as of such termination date shall expire the earlier of
(i) thirty (30) days following such date or (ii) the expiration
date of such Option.
(e) Transferability of Option: Unless the Administrator specifies
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otherwise, each Option shall be nontransferable by the Participant
other than by will or the laws of
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descent and distribution and shall only be exercisable by the
Participant during his or her lifetime.
(f) Cancellation: The Administrator may, at any time prior to exercise and
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subject to consent of the Participant, cancel any Options previously
granted and may or may not substitute in their place Options at a
different price and different type under different terms or in
different amounts.
(g) Conditions and Restrictions Upon Securities Subject to Options: The
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Administrator may provide that the shares of Common Stock issued upon
exercise of an Option shall be subject to such further conditions or
agreements as the Administrator in its discretion may specify prior to
the exercise of such Option, including without limitation, conditions
on vesting or transferability, forfeiture or repurchase provisions and
method of payment for the shares issued upon exercise (including the
actual or constructive surrender of Common Stock already owned by the
Participant). The Administrator may establish rules for the deferred
delivery of Common Stock upon exercise of an Option 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 fair
market value of one share of Common Stock. Unless the Administrator
specifies otherwise, Stock Units represent an unfunded and unsecured
obligation of the Company. Settlement of Stock Units upon expiration of
the deferral period shall be made in Common Stock or otherwise as
determined by the Administrator. 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 so settled,
the number of shares of Common Stock represented by a Stock Unit shall
be subject to adjustment pursuant to Section 8. Any Stock Units that
are settled after the holder's death shall be distributed to the
holder's designated beneficiary(ies) or, if none was designated, the
holder's estate.
(h) Other Terms and Conditions: Options may also contain such other
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provisions, which shall not be inconsistent with any of the foregoing
terms, as the Administrator shall deem appropriate. No Option, however,
nor anything contained in the Plan shall confer upon any Participant
any right to continue in the Company's employ or service nor limit in
any way the Company's right to terminate his or her employment at any
time.
7. LOANS
The Company may make loans, at the request of the Participant and in the
sole discretion of the Administrator, for the purpose of enabling the
Participant to exercise Options granted under the Plan and to pay the tax
liability resulting from an Option exercised under the Plan. The
Administrator shall have full authority to determine the terms and
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conditions of such loans. Such loans may be secured by the shares received
upon exercise of such Option.
8. ADJUSTMENT OF AND CHANGES IN THE STOCK
In the event that the number of shares of Common Stock of the Company shall
be increased or decreased through reorganization, reclassification,
combination of shares, stock splits, reverse stock splits, spin-offs, or
the payment of a stock dividend, (other than regular, quarterly cash
dividends) or otherwise, then each share of Common Stock of the Company
which has been authorized for issuance under the Plan, whether such share
is then currently subject to or may become subject to an Option under the
Plan, may be proportionately adjusted to reflect such increase or decrease,
unless the terms of the transaction provide otherwise. Outstanding Options
may also be amended as to price and other terms if necessary to reflect the
foregoing events.
In the event there shall be any other change in the number or kind of the
outstanding shares of Common Stock of the Company, or any stock or other
securities into which such Common Stock shall have been changed, or for
which it shall have been exchanged, whether by reason of merger,
consolidation or otherwise, then the Administrator shall, in its sole
discretion, determine the appropriate adjustment, if any, to be effected.
In addition, in the event of such change described in this paragraph, the
Administrator may accelerate the time or times at which any Option may be
exercised and may provide for cancellation of such accelerated Options
which are not exercised within a time prescribed by the Administrator in
its sole discretion.
No right to purchase fractional shares shall result from any adjustment in
Options pursuant to this Section 8. In case of any such adjustment, the
shares subject to the Option shall be rounded down to the nearest whole
share. Notice of any adjustment shall be given by the Company to each
Participant which shall have been so adjusted and such adjustment (whether
or not notice is given) shall be effective and binding for all purposes of
the Plan.
9. LISTING OR QUALIFICATION OF STOCK
In the event that the Board of Directors or the Administrator determines in
its discretion that the listing or qualification of the Plan shares on any
securities exchange or quotation or trading system or under any applicable
law or governmental regulation is necessary as a condition to the issuance
of such shares under the Option, the Option may not be exercised in whole
or in part unless such listing, qualification, consent or approval has been
unconditionally obtained.
10. WITHHOLDING
To the extent required by applicable federal, state, local or foreign law,
a Participant shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise by reason of an
Option exercise. The Company shall not be
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required to issue shares or to recognize the disposition of such shares
until such obligations are satisfied. The Administrator may permit these
obligations to be satisfied by having the Company withhold a portion of the
shares of stock that otherwise would be issued to him or her upon exercise
of the Option, or to the extent permitted, by tendering shares previously
acquired, provided that such will not result in an accounting charge to the
Company.
11. ADMINISTRATION AND AMENDMENT OF THE PLAN
The Plan shall be administered by the Administrator who shall be the
Compensation Committee of the Board of Directors or, in the absence of a
Compensation Committee, the Board of Directors itself. Subject to the
express provisions of this Plan, the Administrator 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 and regulations relating to this Plan
and to define terms not otherwise defined herein; (b) to determine which
persons are Participants (as defined in Section 3 hereof) and to which of
such Participants, if any, an Option shall be granted hereunder and the
timing of any such Option grants; (c) to determine the number of shares of
Common Stock subject to an Option and the exercise or purchase price of
such shares; (d) to establish and verify the extent of satisfaction of any
conditions to exercisability applicable to an Option; (e) to waive
conditions to and/or accelerate exercisability of an Option, either
automatically upon the occurrence of specified events (including in
connection with a change of control of the Company) or otherwise in its
discretion; (f) to prescribe and amend the terms of Option grants made
under this Plan (which need not be identical); (g) to determine whether,
and the extent to which, adjustments are required pursuant to Section 8
hereof; and (h) to interpret and construe this Plan, any rules and
regulations under the Plan and the terms and conditions of any Option
granted hereunder, and to make exceptions to any such provisions in good
faith and for the benefit of the Company.
All decisions, determinations and interpretations by the Administrator
regarding the Plan, any rules and regulations under the Plan and the terms
and conditions of any Option granted hereunder, shall be final and binding
on all Participants and optionholders. The Administrator shall consider
such factors as it deems relevant, in its sole and absolute discretion, to
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.
The Administrator may, from time to time, delegate some of its
responsibilities with respect to the administration of the Plan to such
persons as it may designate in its sole discretion but may not delegate
authority to grant options to a person who is not a member of the Board of
Directors.
The interpretation and construction of any provision of the Plan by the
Board of Directors shall be final and conclusive. The Board of Directors
may periodically adopt rules and
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regulations for carrying out the Plan, and amend the Plan as desired,
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 of the Participants and the Company arising under
Options theretofore granted and then in effect. Notwithstanding the
foregoing, and subject to adjustment pursuant to Section 8, the Plan may
not be amended to increase the number of shares of Common Stock authorized
for issuance, unless approved by the Company's stockholders.
12. TIME OF GRANTING OPTIONS
The effective date of such Option shall be the date on which the grant was
made. Within a reasonable time thereafter, the Company will deliver the
Option to the Participant.
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