Document:

Exhibit 10.33

 

 

LAUREATE  EDUCATION,  INC.

2013  LONG- TERM  INCENTIVE  PLAN

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
History; Effective Date
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Purposes of the Plan
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
Terminology
    	
1
    
	
 
    	
 
    	
 
    
	
4.
    	
Administration
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Administration of the   Plan
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Powers of the   Administrator
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Delegation of   Administrative Authority
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Non-Uniform   Determinations
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Limited Liability;   Advisors
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Indemnification
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Effect of   Administrator’s Decision
    	
3
    
	
 
    	
 
    	
 
    
	
5.
    	
Shares Issuable   Pursuant to Awards
    	
3
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Initial Share Pool
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Adjustments to Share   Pool
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
ISO Limit
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Source of Shares
    	
4
    
	
 
    	
 
    	
 
    
	
6.
    	
Participation
    	
4
    
	
 
    	
 
    	
 
    
	
7.
    	
Awards
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Awards, In General
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Stock Options
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Limitation on Reload   Options
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Stock Appreciation   Rights
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Repricing
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Stock Awards
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Stock Units
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
Performance Shares and   Performance Units
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(i)
    	
Other Stock-Based   Awards
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(j)
    	
Awards to Participants   Outside the United States
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(k)
    	
Limitation on Dividend   Reinvestment and Dividend Equivalents
    	
9
    
	
 
    	
 
    	
 
    
	
8.
    	
Withholding of Taxes
    	
9
    
	
 
    	
 
    	
 
    
	
9.
    	
Transferability of   Awards
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General   Nontransferability Absent Administrator Permission
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Administrator   Discretion to Permit Transfers Other Than For Value
    	
10
    
	
 
    	
 
    	
 
    
	
10.
    	
Adjustments for   Corporate Transactions and Other Events
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Mandatory Adjustments
    	
10
    

 

i

 

TABLE OF CONTENTS

(continued)

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Discretionary   Adjustments
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Adjustments to Performance   Goals
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Statutory Requirements   Affecting Adjustments
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Liquidation
    	
11
    
	
 
    	
 
    	
 
    
	
11.
    	
Change in Control   Provisions
    	
11
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Termination of Awards
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Continuation,   Assumption or Substitution of Awards
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Other Permitted Actions
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Section 409A   Savings Clause
    	
14
    
	
 
    	
 
    	
 
    
	
12.
    	
Substitution of Awards   in Mergers and Acquisitions
    	
14
    
	
 
    	
 
    	
 
    
	
13.
    	
Compliance with   Securities Laws; Listing and Registration
    	
15
    
	
 
    	
 
    	
 
    
	
14.
    	
Section 409A   Compliance
    	
15
    
	
 
    	
 
    	
 
    
	
15.
    	
Plan Duration;   Amendment and Discontinuance
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Plan Duration
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Amendment and   Discontinuance of the Plan
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Amendment of Awards
    	
16
    
	
 
    	
 
    	
 
    
	
16.
    	
General Provisions
    	
17
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Non-Guarantee of   Employment or Service
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
No Trust or Fund   Created
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Status of Awards
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Subsidiary Employees
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Governing Law and   Interpretation
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Use of English Language
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Recovery of Amounts   Paid
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
Repurchase of Shares
    	
18
    
	
 
    	
 
    	
 
    
	
17.
    	
Glossary
    	
18
    
	
 
    	
 
    	
 
    
	
Appendix   A: Provisions for California Residients    
    	
A-1
    

 

ii

 

LAUREATE EDUCATION, INC.

2013 LONG-TERM INCENTIVE PLAN

 

1.                                      History; Effective Date.

 

LAUREATE EDUCATION, INC., a Maryland corporation (“Laureate”), has established the LAUREATE EDUCATION, INC. 2013 LONG-TERM INCENTIVE PLAN, as set forth herein, and as the same may be amended from time to time (the “Plan”). The Plan was adopted by the Board of Directors of Laureate (the “Board”) on June 13, 2013, as a successor plan to Laureate’s 2007 Stock Incentive Plan for Key Employees of Laureate Education, Inc. and its Subsidiaries (the “2007 Plan”). The Plan shall   become effective, subject to approval by the stockholders of Laureate, as of the date (the “Effective   Date”) on which the Plan is approved by the stockholders of Laureate. No awards will be made under Laureate’s 2007 Plan after the Effective Date of this Plan.

 

2.                                      Purposes of the Plan.

 

The Plan is designed:

 

(a)           to promote the long term financial interests and growth of Laureate and its Subsidiaries (collectively, the “Company”) by attracting and retaining management and other personnel and key service providers with the training, experience and ability to enable them to make a substantial contribution to the success of the Company’s business;

 

(b)           to motivate management personnel by means of growth-related incentives to achieve long-range goals; and

 

(c)           to further the alignment of interests of Participants with those of the stockholders of Laureate through opportunities for increased stock or stock-based ownership in Laureate.

 

Toward these objectives, the Administrator may grant stock options, stock appreciation rights, stock awards, stock units, performance shares, performance units, and other stock-based awards to eligible individuals on the terms and subject to the conditions set forth in the Plan.

 

3.                                      Terminology.

 

Except as otherwise specifically provided in an Award Agreement, capitalized words and phrases used in the Plan or an Award Agreement shall have the meaning set forth in the glossary at Section 17 of the Plan or as defined the first place such word or phrase appears in the Plan.

 

4.                                      Administration.

 

(a)           Administration of the Plan. The Plan shall be administered by the Administrator.

 

(b)           Powers of the Administrator. The Administrator shall, except as otherwise provided   under the Plan, have plenary authority, in its sole and absolute discretion, to grant Awards pursuant to the terms of the Plan to Eligible Individuals and to take all other actions necessary or desirable to carry out  the purpose and intent of the Plan. Among other things, the Administrator shall have the authority, in its sole and absolute discretion, subject to the terms and conditions of the Plan to:

 

(i)            determine the Eligible Individuals to whom, and the time or times at which, Awards shall be granted;

 

(ii)                                  determine the types of Awards to be granted any Eligible Individual;

 

(iii)          determine the number of shares of Common Stock to be covered by or used for reference purposes for each Award or the value to be transferred pursuant to any Award;

 

A-1

 

(iv)          determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (A) the purchase price of any shares of Common Stock, (B) the method of payment for shares purchased pursuant to any Award, (C) the method for satisfaction of any tax withholding obligation arising in connection with any Award, including by the withholding or delivery of shares of Common Stock, (D) the timing, terms and conditions of the exercisability, vesting or payout of any Award or any shares acquired pursuant thereto, (E) the Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (F) the time of the expiration of any Award, (G) the effect of the Participant’s Termination of Service on any of the foregoing, and (H) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto as the Administrator shall consider to be appropriate and not inconsistent with the terms of the Plan;

 

(v)        subject to Section 15, modify, amend or adjust the terms and conditions of any Award;

 

(vi)          accelerate or otherwise change the time at or during which an Award may be exercised or becomes payable and waive or accelerate the lapse, in whole or in part, of any restriction, condition or risk of forfeiture with respect to such Award; provided, however, that, except in connection  with death, disability or a Change in Control, no such change, waiver or acceleration shall be made to any Award that is considered “deferred compensation” within the meaning of Section 409A of the Code if the effect of such action is inconsistent with Section 409A of the Code;

 

(vii)         determine whether an Award will be paid or settled in cash, shares of Common Stock, or in any combination thereof and whether, to what extent and under what circumstances cash or shares of Common Stock payable with respect to an Award shall be deferred either automatically or at the election of the Participant;

 

(viii)        for any purpose, including but not limited to, qualifying for preferred or beneficial tax treatment, accommodating the customs or administrative challenges or otherwise complying with the tax, accounting or regulatory requirements of local or foreign (non-United States) jurisdictions, adopt, amend, modify, administer or terminate sub-plans and special provisions or supplements applicable to Awards regulated by the laws of a jurisdiction outside of the United States, which sub-plans, supplements and special provisions may take precedence over other provisions of the Plan, and prescribe, amend and rescind rules and regulations relating to such sub-plans, supplements and special provisions;

 

(ix)          establish any “blackout” period, during which transactions affecting Awards may not be effectuated, that the Administrator in its sole discretion deems necessary or advisable;

 

(x)           determine the Fair Market Value of shares of Common Stock or other property for any purpose under the Plan or any Award;

 

(xi)          administer, construe and interpret the Plan, Award Agreements and all other documents relevant to the Plan and Awards issued thereunder, and decide all other matters to be determined in connection with an Award;

 

(xii)         establish, amend, rescind and interpret such administrative rules, regulations, agreements, guidelines, instruments and practices for the administration of the Plan and for the conduct of its business as the Administrator deems necessary or advisable;

 

(xiii)        correct any defect, supply any omission or reconcile any inconsistency in the  Plan or in any Award or Award Agreement in the manner and to the extent the Administrator shall deem it desirable to carry it into effect; and

 

(xiv)                       otherwise administer the Plan and all Awards granted under the Plan.

 

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(c)           Delegation of Administrative Authority. To the extent permitted by applicable law and stock exchange rules, the Administrator may delegate to officers or other employees of Laureate or any Subsidiary the Administrator’s duties and powers under the Plan, subject to such conditions and limitations as the Administrator shall prescribe, including without limitation the authority to execute agreements or other documents on behalf of the Administrator; provided, however, that such delegation of authority shall not extend to the granting or exercise of discretion with respect to Awards to Eligible Individuals who are “covered employees” within the meaning of Section 162(m) of the Code or officers under Section 16 of the Exchange Act.

 

(d)           Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Award Agreements evidencing such Awards, and the ramifications of a Change in Control upon outstanding Awards) need not be  uniform and may be made by the Administrator selectively among Awards or persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.

 

(e)           Limited Liability; Advisors. To the maximum extent permitted by law, no member of the Administrator shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder. The Administrator may employ counsel, consultants, accountants, appraisers, brokers or other persons. The Administrator, Laureate, and the officers and directors of Laureate shall be entitled to rely upon the advice, opinions or valuations of any such persons.

 

(f)            Indemnification. To the maximum extent permitted by law, by Laureate’s charter and by-laws, and by any directors’ and officers’ liability insurance coverage which may be in effect from time to time, the members of the Administrator and any agent or delegate of the Administrator who is a director, officer or employee of Laureate or a Subsidiary shall be indemnified by Laureate against any and all liabilities and expenses, including the advance of expenses under the procedures and to the full extent permitted by law, to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan.

 

(g)           Effect of Administrator’s Decision. All actions taken and determinations made by the Administrator on all matters relating to the Plan or any Award pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion, unless in contravention of any express term of the Plan, including, without limitation, any determination involving the appropriateness or equitableness of any action. All determinations made by the Administrator shall be conclusive, final and binding on all parties concerned, including Laureate, its stockholders, any Participants and any other employee, consultant, or director of Laureate and its Subsidiaries, and their respective successors in interest. No member of the Administrator, nor any director, officer, employee or representative of Laureate shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or Awards.

 

5.                                      Shares Issuable Pursuant to Awards.

 

(a)           Initial Share Pool. As of the Effective Date, the number of shares of Common Stock issuable pursuant to Awards that may be granted under the Plan (the “Share Pool”) shall be equal to the sum of (i) 28,295,550 shares plus (ii) the number of unallocated shares of Common Stock available for issuance as of the Effective Date under Laureate’s 2007 Plan that are not then subject to outstanding Awards.

 

(b)           Adjustments to Share Pool. On and after the Effective Date, the Share Pool shall be adjusted, in addition to any adjustments to be made pursuant to Section 10 of the Plan, as follows:

 

(i)            The Share Pool shall be reduced, on the date of grant, by one share for each share of Common Stock made subject to an Award granted under the Plan;

 

3

 

(ii)           The Share Pool shall be increased, on the relevant date, by a number of shares of Common Stock equal to the number of unissued shares of Common Stock underlying or used as a reference measure for any Award or portion of an Award granted under this Plan or the 2007 Plan that is cancelled, forfeited, expired, terminated unearned or settled in cash, in any such case without the issuance of shares, and by the number of shares of Common Stock used as a reference measure for any Award granted under this Plan or the 2007 Plan that are not issued upon settlement of such Award either due to a net settlement or otherwise;

 

(iii)          The Share Pool shall be increased, on the forfeiture date, by a number of shares of Common Stock equal to the number of shares of Common Stock that are forfeited back to Laureate after issuance due to a failure to meet an Award contingency or condition with respect to any Award or portion of an Award granted under this Plan or the 2007 Plan;

 

(iv)          The Share Pool shall be increased, on the exercise date, by a number of shares of Common Stock equal to the number of shares of Common Stock withheld by or surrendered (either actually or through attestation) to Laureate in payment of the exercise price of any Award granted under this Plan or the 2007 Plan; and

 

(v)           The Share Pool shall be increased, on the relevant date, by a number of shares of Common Stock equal to the number of shares of Common Stock withheld by or surrendered (either actually or through attestation) to Laureate in payment of the statutory minimum Tax Withholding Obligation that arises in connection with any Award granted under this Plan or the 2007 Plan.

 

(c)           ISO Limit. Subject to adjustment pursuant to Section 10 of the Plan, the maximum number of shares of Common Stock that may be issued pursuant to stock options granted under the Plan that are intended to qualify as Incentive Stock Options within the meaning of Section 422 of the Code shall be equal to the number of shares in the Share Pool as of the Effective Date of the Plan.

 

(d)           Source of Shares. The shares of Common Stock with respect to which Awards may be made under the Plan shall be shares authorized for issuance under Laureate’s charter but unissued, or issued and reacquired, including without limitation shares purchased in the open market or in private transactions.

 

6.                                      Participation.

 

Participation in the Plan shall be open to all Eligible Individuals, as may be selected by the Administrator from time to time. The Administrator may also grant Awards to Eligible Individuals in connection with hiring, recruiting or otherwise, prior to the date the individual first performs services for Laureate or a Subsidiary; provided, however, that such Awards shall not become vested or exercisable, and no shares shall be issued to such individual, prior to the date the individual first commences performance of such services.

 

7.                                      Awards.

 

(a)           Awards, In General. The Administrator, in its sole discretion, shall establish the terms of all Awards granted under the Plan consistent with the terms of the Plan. Awards may be granted individually or in tandem with other types of Awards, concurrently with or with respect to outstanding Awards. All Awards are subject to the terms and conditions provided in the Award Agreement, which   shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following, the grant of such Award. Unless otherwise specified by the Administrator, in its sole discretion, or otherwise provided in the Award Agreement, an Award shall not be effective unless the Award Agreement is signed or otherwise accepted by Laureate and the Participant receiving the Award (including by electronic delivery and/or electronic signature).

 

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(b)                                 Stock Options.

 

(i)            Grants. A stock option means a right to purchase a specified number of shares  of Common Stock from Laureate at a specified price during a specified period of time. The Administrator may from time to time grant to Eligible Individuals Awards of Incentive Stock Options or Nonqualified Options; provided, however, that Awards of Incentive Stock Options shall be limited to employees of Laureate or of any current or hereafter existing “parent corporation” or “subsidiary corporation,” as defined in Sections 424(e) and 424(f) of the Code, respectively, of Laureate, and any other Eligible Individuals  who are eligible to receive Incentive Stock Options under the provisions of Section 422 of the Code. No stock option shall be an Incentive Stock Option unless so designated by the Administrator at the time of grant or in the applicable Award Agreement.

 

(ii)           Exercise. Stock options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator; provided, however, that Awards of stock options may not have a term in excess of ten years’ duration unless required otherwise by applicable law. The exercise price per share subject to a stock option granted under the Plan shall not be less than the Fair Market Value of one share of Common Stock on the date of grant of the stock option, except as provided under applicable law or with respect to stock options that are granted in substitution of similar types of awards of a company acquired by Laureate or a Subsidiary or with which Laureate or a Subsidiary combines (whether in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, or otherwise) to preserve the intrinsic value of such awards.

 

(iii)          Termination of Service. Except as provided in the applicable Award Agreement or otherwise determined by the Administrator, to the extent stock options are not vested and exercisable, a Participant’s stock options shall be forfeited upon his or her Termination of Service.

 

(iv)          Additional Terms and Conditions. The Administrator may, by way of the Award Agreement or otherwise, determine such other terms, conditions, restrictions, and/or limitations, if any, of any Award of stock options, provided they are not inconsistent with the Plan.

 

(c)           Limitation on Reload Options. The Administrator shall not grant stock options under this Plan that contain a reload or replenishment feature pursuant to which a new stock option would be granted automatically upon receipt of delivery of Common Stock to Laureate in payment of the exercise price or any tax withholding obligation under any other stock option.

 

(d)                                 Stock Appreciation Rights.

 

(i)            Grants. The Administrator may from time to time grant to Eligible Individuals Awards of stock appreciation rights. A stock appreciation right entitles the Participant to receive, subject to the provisions of the Plan and the Award Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Award Agreement, times (ii) the number of shares specified by the stock appreciation right, or portion thereof, which is exercised. The base price per share specified in the Award Agreement shall not be less than the lower of the Fair Market Value on the date of grant or the exercise price of any tandem stock option to which the stock appreciation right is related, or with respect to stock appreciation rights that are granted in substitution of similar types of awards of a company acquired by Laureate or a Subsidiary or with which Laureate or a Subsidiary combines (whether in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, or otherwise) such base price as is necessary to preserve the intrinsic value of such awards.

 

(ii)           Exercise. Stock appreciation rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator; provided, however, that stock appreciation rights granted under the Plan may not have a term in excess of ten years’ duration

 

5

 

unless required otherwise by applicable law. The applicable Award Agreement shall specify whether payment by Laureate of the amount receivable upon any exercise of a stock appreciation right is to be made in cash or shares of Common Stock or a combination of both, or shall reserve to the Administrator or the Participant the right to make that determination prior to or upon the exercise of the stock appreciation right. If upon the exercise of a stock appreciation right a Participant is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Administrator shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated.

 

(iii)          Termination of Service. Except as provided in the applicable Award Agreement or otherwise determined by the Administrator, to the extent stock appreciation rights are not vested and exercisable, a Participant’s stock appreciation rights shall be forfeited upon his or her Termination of Service.

 

(iv)          Additional Terms and Conditions. The Administrator may, by way of the Award Agreement or otherwise, determine such other terms, conditions, restrictions, and/or limitations, if any, of any Award of stock appreciation rights, provided they are not inconsistent with the Plan.

 

(e)           Repricing. Notwithstanding anything herein to the contrary, the Administrator may reprice any stock options or stock appreciation rights without the approval of the stockholders of Laureate; provided however, that the Administrator’s authority to reprice any stock options or stock appreciation rights without the approval of the stockholders of Laureate shall be revoked immediately following Laureate’s consummation of an initial public offering of its equity securities. For this purpose, “reprice” means (i) any of the following or any other action that has the same effect: (A) lowering the exercise price or base price of a stock option or stock appreciation right after it is granted other than an adjustment made pursuant to the provisions of Section 10, (B) any other action that is treated as a repricing under U.S. generally accepted accounting principles (“GAAP”), or (C) cancelling a stock option or stock appreciation right at a time when its exercise price or base price exceeds the Fair Market Value of the underlying Common Stock, in exchange for another stock option, stock appreciation right, restricted stock or other equity, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction; and (ii) any other action that is considered to be a repricing under formal or informal guidance issued by the primary securities market or exchange on which the Common Stock is listed or admitted for trading.

 

(f)                                   Stock Awards.

 

(i)            Grants. The Administrator may from time to time grant to Eligible Individuals Awards of unrestricted Common Stock or Restricted Stock (collectively, “Stock Awards”) on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as the Administrator shall determine. Stock Awards shall be evidenced in such manner as the Administrator may deem appropriate, including via book-entry registration.

 

(ii)           Vesting. Restricted Stock shall be subject to such vesting, restrictions on transferability and other restrictions, if any, and/or risk of forfeiture as the Administrator may impose at the date of grant or thereafter. The Restriction Period to which such vesting, restrictions and/or risk of forfeiture apply may lapse under such circumstances, including without limitation upon the attainment of Performance Goals, in such installments, or otherwise, as the Administrator may determine. Subject to the provisions of the Plan and the applicable Award Agreement, during the Restriction Period, the     Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of Restricted Stock.

 

(iii)          Rights of a Stockholder; Dividends. Except to the extent restricted under the Award Agreement relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder of Common Stock including, without limitation, the right to vote Restricted

 

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Stock. Regular cash dividends declared payable on Common Stock shall be paid, with respect to outstanding Restricted Stock, either as soon as practicable following the dividend payment date or deferred for payment to such later date as determined by the Administrator, and shall either be paid in cash or as unrestricted shares of Common Stock having a Fair Market Value equal to the amount of such dividends or reinvested in additional shares of Restricted Stock as determined by the Administrator; provided, however, that dividends declared payable on Restricted Stock that was granted as a Performance Award shall be held by Laureate and made subject to forfeiture at least until achievement of the applicable Performance Goal related to such shares of Restricted Stock. Stock distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Common Stock or other property has been distributed. As soon as is practicable following the date on which restrictions on any shares of Restricted Stock lapse, Laureate shall deliver to the  Participant the certificates for such shares or shall cause the shares to be registered in the Participant’s name in book-entry form, in either case with the restrictions removed, provided that the Participant shall have complied with all conditions for delivery of such shares contained in the Award Agreement or otherwise reasonably required by Laureate.

 

(iv)          Termination of Service. Except as provided otherwise in the applicable Award Agreement, upon Termination of Service during the applicable Restriction Period, Restricted Stock and any accrued but unpaid dividends that are at that time subject to restrictions shall be forfeited; provided that the Administrator may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Administrator may in other cases waive in whole or in part the forfeiture of Restricted Stock.

 

(v)           Additional Terms and Conditions. The Administrator may, by way of the Award Agreement or otherwise, determine such other terms, conditions, restrictions, and/or limitations, if any, of any Award of Restricted Stock, provided they are not inconsistent with the Plan.

 

(g)                                  Stock Units.

 

(i)            Grants. The Administrator may from time to time grant to Eligible Individuals Awards of unrestricted stock Units or Restricted Stock Units on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as the Administrator shall determine. Restricted Stock Units represent a contractual obligation by Laureate to deliver a number of shares of Common Stock, an amount in cash equal to the Fair Market Value of the specified number of shares subject to the Award, or a combination of shares of Common Stock and cash, in accordance with the terms and conditions set forth in the Plan and any applicable Award Agreement.

 

(ii)           Vesting and Payment. Restricted Stock Units shall be subject to such vesting, risk of forfeiture and/or payment provisions as the Administrator may impose at the date of grant. The Restriction Period to which such vesting and/or risk of forfeiture apply may lapse under such circumstances, including without limitation upon the attainment of Performance Goals, in such installments, or otherwise, as the Administrator may determine. Shares of Common Stock, cash or a combination of shares of Common Stock and cash, as applicable, payable in settlement of Restricted Stock Units shall be delivered to the Participant as soon as administratively practicable, but no later than 30 days, after the date on which payment is due under the terms of the Award Agreement provided that the Participant shall have complied with all conditions for delivery of such shares or payment contained in the Award Agreement or otherwise reasonably required by Laureate, or in accordance with an election of the Participant, if the Administrator so permits, that meets the requirements of Section 409A of the Code.

 

(iii)          No Rights of a Stockholder; Dividend Equivalents. Until shares of Common  Stock are issued to the Participant in settlement of stock Units, the Participant shall not have any rights of a stockholder of Laureate with respect to the stock Units or the shares issuable thereunder. The Administrator may grant to the Participant the right to receive Dividend Equivalents on stock Units, on a

 

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current, reinvested and/or restricted basis, subject to such terms as the Administrator may determine provided, however, that Dividend Equivalents payable on stock Units that are granted as a Performance Award shall, rather than be paid on a current basis, be accrued and made subject to forfeiture at least until achievement of the applicable Performance Goal related to such stock Units.

 

(iv)          Termination of Service. Upon Termination of Service during the applicable deferral period or portion thereof to which forfeiture conditions apply, or upon failure to satisfy any other conditions precedent to the delivery of shares of Common Stock or cash to which such Restricted Stock Units relate, all Restricted Stock Units and any accrued but unpaid Dividend Equivalents with respect to such Restricted Stock Units that are then subject to deferral or restriction shall be forfeited; provided that the Administrator may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock Units will be waived in whole or in part in the event of termination resulting from specified causes, and the Administrator may in other cases waive in whole or in part the forfeiture of Restricted Stock Units.

 

(v)           Additional Terms and Conditions. The Administrator may, by way of the Award Agreement or otherwise, determine such other terms, conditions, restrictions, and/or limitations, if any, of any Award of stock Units, provided they are not inconsistent with the Plan.

 

(h)                                 Performance Shares and Performance Units.

 

(i)            Grants. The Administrator may from time to time grant to Eligible Individuals Awards in the form of Performance Shares and Performance Units. Performance Shares, as that term is used in this Plan, shall refer to shares of Common Stock or Units that are expressed in terms of Common Stock, the issuance, vesting, lapse of restrictions on or payment of which is contingent on performance as measured against predetermined objectives over a specified Performance Period. Performance Units, as that term is used in this Plan, shall refer to dollar-denominated Units valued by reference to designated criteria established by the Administrator, other than Common Stock, the issuance, vesting, lapse of restrictions on or payment of which is contingent on performance as measured against predetermined objectives over a specified Performance Period. The applicable Award Agreement shall specify whether Performance Shares and Performance Units will be settled or paid in cash or shares of Common Stock or a combination of both, or shall reserve to the Administrator or the Participant the right to make that determination prior to or at the payment or settlement date.

 

(ii)           Performance Criteria. The Administrator shall, prior to or at the time of grant, condition the grant, vesting or payment of, or lapse of restrictions on, an Award of Performance Shares or Performance Units upon (A) the attainment of Performance Goals during a Performance Period or (B) the attainment of Performance Goals and the continued service of the Participant. The length of the Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained shall be  conclusively determined by the Administrator in the exercise of its absolute discretion. Performance  Goals may include minimum, maximum and target levels of performance, with the size of the Award or payout of Performance Shares or Performance Units or the vesting or lapse of restrictions with respect thereto based on the level attained. An Award of Performance Shares or Performance Units shall be settled as and when the Award vests or at a later time specified in the Award Agreement or in accordance with an election of the Participant, if the Administrator so permits, that meets the requirements of Section 409A of the Code.

 

(iii)          Additional Terms and Conditions. The Administrator may, by way of the Award Agreement or otherwise, determine such other terms, conditions, restrictions, and/or limitations, if any, of any Award of Performance Shares or Performance Units, provided they are not inconsistent with the Plan.

 

(i)            Other Stock-Based Awards. The Administrator may from time to time grant to Eligible Individuals Awards in the form of Other Stock-Based Awards. Other Stock-Based Awards in the form of

 

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Dividend Equivalents may be (A) awarded on a free-standing basis or in connection with another Award other than a stock option or stock appreciation right, (B) paid currently or credited to an account for the Participant, including the reinvestment of such credited amounts in Common Stock equivalents, to be  paid on a deferred basis, and (C) settled in cash or Common Stock as determined by the Administrator; provided, however, that Dividend Equivalents payable on Other Stock-Based Awards that are granted as a Performance Award shall, rather than be paid on a current basis, be accrued and made subject to forfeiture at least until achievement of the applicable Performance Goal related to such Other Stock- Based Awards. Any such settlements, and any such crediting of Dividend Equivalents, may be subject to such conditions, restrictions and contingencies as the Administrator shall establish.

 

(j)            Awards to Participants Outside the United States. The Administrator may grant Awards to Eligible Individuals who are foreign nationals, who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who otherwise are subject to (or could cause Laureate or a Subsidiary to be subject to) tax, legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Administrator, be necessary or desirable in order that any such  Award shall conform to laws, regulations, and customs of the country or jurisdiction in which the Participant is then resident or primarily employed or to foster and promote achievement of the purposes   of the Plan.

 

(k)           Limitation on Dividend Reinvestment and Dividend Equivalents. Reinvestment of dividends in additional Restricted Stock at the time of any dividend payment, and the payment of shares of Common Stock with respect to dividends to Participants holding Awards of stock Units, shall only be permissible if sufficient shares are available under the Share Pool for such reinvestment or payment (taking into account then outstanding Awards). In the event that sufficient shares are not available under the Share Pool for such reinvestment or payment, such reinvestment or payment shall be made in the form of a grant of stock Units equal in number to the shares of Common Stock that would have been obtained by such payment or reinvestment, the terms of which stock Units shall provide for settlement in cash and for Dividend Equivalent reinvestment in further stock Units on the terms contemplated by this Section 7(k).

 

8.                                      Withholding of Taxes.

 

Participants and holders of Awards shall pay to Laureate or its Subsidiary, or make arrangements satisfactory to the Administrator for payment of, any Tax Withholding Obligation in respect of Awards granted under the Plan no later than the date of the event creating the tax or social insurance contribution liability. The obligations of Laureate under the Plan shall be conditional on such payment or arrangements. Unless otherwise determined by the Administrator, Tax Withholding Obligations may be settled in whole or in part with shares of Common Stock, including unrestricted outstanding shares surrendered to Laureate and unrestricted shares that are part of the Award that gives rise to the Tax Withholding Obligation, having a Fair Market Value on the date of surrender or withholding equal to the statutory minimum amount (and not any greater amount) required to be withheld for tax or social insurance contribution purposes, all in accordance with such procedures as the Administrator establishes.  Laureate or its Subsidiary may deduct, to the extent permitted by law, any such Tax Withholding Obligations from any payment of any kind otherwise due to the Participant or holder of an Award.

 

9.                                      Transferability of Awards.

 

(a)           General Nontransferability Absent Administrator Permission. Except as otherwise determined by the Administrator, and in any event in the case of an Incentive Stock Option or a tandem stock appreciation right granted with respect to an Incentive Stock Option, no Award granted under the Plan shall be transferable by a Participant otherwise than by will or the laws of descent and distribution. Except as otherwise determined by the Administrator, an Award may be exercised during the lifetime of the Participant, only by the Participant or, during the period the Participant is under a legal disability, by the Participant’s guardian or legal representative. Awards granted under the Plan shall not be subject in

 

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any manner to alienation, anticipation, sale, transfer, assignment, pledge, or encumbrance, except as otherwise determined by the Administrator; provided, however, that the restrictions in this sentence shall not apply to the shares of Common Stock received in connection with an Award after the date that the restrictions on transferability of such shares set forth in the applicable Award Agreement have lapsed. Nothing in this paragraph shall be interpreted or construed as overriding the terms of any Laureate stock ownership or retention policy, now or hereafter existing, that may apply to the Participant or shares of Common Stock received under an Award.

 

(b)           Administrator Discretion to Permit Transfers Other Than For Value. Except as otherwise restricted by applicable law, the Administrator may, but need not, permit an Award, other than an  Incentive Stock Option or a tandem stock appreciation right granted with respect to an Incentive Stock Option, to be transferred to a Participant’s Family Member (as defined below) as a gift or pursuant to a domestic relations order in settlement of marital property rights. The Administrator shall not permit any transfer of an Award for value. For purposes of this Section 9, “Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests. The following transactions are not prohibited transfers for value: (i) a transfer under a domestic relations order in settlement of marital property rights; and (ii) a transfer to an entity in which more than fifty percent of the voting interests are owned by Family Members (or the Participant) in exchange for an interest in that entity.

 

10.                               Adjustments for Corporate Transactions and Other Events.

 

(a)           Mandatory Adjustments. In the event of a merger, consolidation, stock rights offering, statutory share exchange or similar event affecting Laureate (each, a “Corporate Event”) or a stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of cash or other property, share combination or subdivision, or recapitalization or similar event affecting the capital structure of Laureate (each, a “Share Change”) that occurs at any time after adoption of this Plan by the Board (including any such Corporate Event or Share Change that occurs after such adoption and coincident with or prior to the Effective Date), the Administrator shall make equitable and appropriate substitutions or proportionate adjustments to (i) the aggregate number and kind of shares of Common Stock or other securities on which Awards under the Plan may be granted to Eligible Individuals, (ii) the maximum number of shares of Common Stock or other securities that may be issued with respect to Incentive Stock Options granted under the Plan, (iii) the number of shares of Common Stock or other securities covered by each outstanding Award and the exercise price, base price or other price per share, if any, and other relevant terms of each outstanding Award, and (iv) all other numerical limitations relating to Awards, whether contained in this Plan or in Award Agreements; provided, however, that any fractional shares resulting from any such adjustment shall be eliminated.

 

(b)           Discretionary Adjustments. In the case of Corporate Events, the Administrator may make such other adjustments to outstanding Awards as it determines to be appropriate and desirable, which adjustments may include, without limitation, (i) the cancellation of outstanding Awards in exchange for payments of cash, securities or other property or a combination thereof having an aggregate value equal  to the value of such Awards, as determined by the Administrator in its sole discretion (it being understood that in the case of a Corporate Event with respect to which stockholders of Laureate receive   consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Administrator that the value of a stock option or stock appreciation right shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each  share of Common Stock pursuant to such Corporate Event over the exercise price or base price of such stock option or stock appreciation right shall conclusively be deemed valid and that any stock option or stock appreciation right may be cancelled for no consideration upon a Corporate Event if its exercise   price or base price does not exceed the value of the consideration being paid for each share of Common

 

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Stock pursuant to such Corporate Event), (ii) the substitution of securities or other property (including, without limitation, cash or other securities of Laureate and securities of entities other than Laureate) for the shares of Common Stock subject to outstanding Awards, and (iii) the substitution of equivalent awards, as determined in the sole discretion of the Administrator, of the surviving or successor entity or a parent thereof (“Substitute Awards”).

 

(c)           Adjustments to Performance Goals. The Administrator may, in its discretion, adjust the Performance Goals applicable to any Awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in Laureate’s consolidated financial statements, notes to the consolidated financial statements, management’s discussion and analysis or other Laureate filings with the Securities and Exchange Commission. If the Administrator determines that a change in the business, operations, corporate structure or capital structure of Laureate or the applicable subsidiary, business segment or other operational unit of Laureate or any such entity or segment, or the manner in which any of the foregoing conducts its business, or other events or circumstances, render the Performance Goals to be unsuitable, the Administrator may modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, as the Administrator deems appropriate and equitable.

 

(d)           Statutory Requirements Affecting Adjustments. Notwithstanding the foregoing: (A) any adjustments made pursuant to Section 10 to Awards that are considered “deferred compensation” within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code; (B) any adjustments made pursuant to Section 10 to Awards that are not considered “deferred compensation” subject to Section 409A of the Code shall be made in such a manner as to ensure that after such adjustment, the Awards either (1) continue not to be subject to Section 409A of the Code or (2) comply with the requirements of Section 409A of the Code; (C) in any event, the Administrator shall not have the authority to make any adjustments pursuant to Section 10 to the extent  the existence of such authority would cause an Award that is not intended to be subject to Section 409A of the Code at the date of grant to be subject thereto; and (D) any adjustments made pursuant to Section 10 to Awards that are Incentive Stock Options shall be made in compliance with the requirements of Section 424(a) of the Code.

 

(e)           Liquidation. Unless the Administrator determines otherwise, all Awards outstanding under the Plan shall terminate upon the liquidation, dissolution or winding up of Laureate.

 

11.                               Change in Control Provisions.

 

(a)           Termination of Awards. Notwithstanding the provisions of Section 11(b), in the event that any transaction resulting in a Change in Control occurs, outstanding Awards will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Awards by, or for the issuance therefor of Substitute Awards of, the surviving or successor entity or a parent thereof. Solely with respect to Awards that will terminate as a result of the immediately preceding sentence and except as otherwise provided in the applicable Award Agreement:

 

(i)            the outstanding Awards of stock options and stock appreciation rights the vesting or exercisability conditions on which are then solely time-based and not subject to achievement of Performance Goals shall, to the extent such Awards would have vested and become exercisable on or prior to the third anniversary of the effective time of such Change in Control had these Awards not  been terminated pursuant to this Section 11(a) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the effective time of the Change in Control, become exercisable and the holders of such Awards will be permitted, immediately before the Change in Control, to exercise the Awards;

 

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(ii)           the outstanding Awards of stock options and stock appreciation rights the vesting or exercisability conditions on which are then subject to achievement of Performance Goals shall, to the extent such Awards would have otherwise vested and become exercisable had the Company   achieved the target Performance Goals in the three fiscal years ending coincident with or immediately subsequent to the effective time of such Change in Control (other than any portion of those Awards which would have vested during said time period only pursuant to any catch-up provisions in the  Award Agreements) had these Awards not been terminated pursuant to this Section 11(a) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the effective time of the Change in Control, become exercisable and the holders of such Awards will be permitted, immediately before the Change in Control, to exercise the Awards;

 

(iii)          the outstanding shares of Restricted Stock with respect to which the vesting, forfeiture risk or lapse restrictions thereon is then solely time-based and not subject to achievement of Performance Goals shall, to the extent such shares would have become vested and free of forfeiture risk and lapse restrictions on or prior to the third anniversary of the effective time of such Change in Control had these Awards not been terminated pursuant to this Section 11(a) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the effective time of the Change in Control, become vested, free of forfeiture risk and lapse restrictions and the shares of Restricted Stock that remain unvested after giving effect to the foregoing shall be forfeited for no consideration;

 

(iv)          the outstanding shares of Restricted Stock with respect to which the vesting, forfeiture risk or lapse restrictions thereon is then subject to achievement of Performance Goals shall, to the extent such shares would have become vested and free of forfeiture risk and lapse restrictions had  the Company achieved the target Performance Goals in the three fiscal years ending coincident with or immediately subsequent to the effective time of such Change in Control (other than any portion of those Awards which would have vested during said time period only pursuant to any catch-up provisions in the Award Agreements) had these Awards not been terminated pursuant to this Section 11(a) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the effective time of the Change in Control, become vested, free of forfeiture risk and lapse restrictions and the shares of Restricted Stock that remain unvested, if any, after giving effect to the foregoing shall be forfeited for no consideration;

 

(v)           the outstanding Restricted Stock Units, Performance Shares and Performance Units with respect to which the vesting or earning thereof is then solely time-based and not subject to achievement of Performance Goals shall, to the extent such Awards would have become vested or earned on or prior to the third anniversary of the effective time of such Change in Control had these Awards not been terminated pursuant to this Section 11(a) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the effective time of the Change in Control, become vested and earned and shall be settled in cash or shares of Common Stock (consistent with the terms of the Award Agreement after taking into account the effect of the Change in Control transaction on the shares) as promptly as is practicable, subject to any applicable limitations imposed thereon by  Section 409A of the Code and the unearned balance, if any, of such Awards after giving effect to the foregoing shall be forfeited for no consideration; and

 

(vi)          the outstanding Restricted Stock Units, Performance Shares and Performance Units with respect to which the vesting or earning thereof is then subject to achievement of Performance Goals shall, to the extent such Awards would have become vested or earned had the Company achieved the target Performance Goals in the three fiscal years ending coincident with or immediately subsequent to the effective time of such Change in Control (other than any portion of those Awards which would have vested during said time period only pursuant to any catch-up provisions in the Award Agreements) had these Awards not been terminated pursuant to this Section 11(a) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the effective time of the Change in Control, become vested and earned and shall be settled in cash or shares of Common Stock (consistent with the terms of the Award Agreement after taking into account the effect of the Change in Control transaction on the shares) as promptly as is practicable, subject to any applicable limitations imposed

 

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thereon by Section 409A of the Code and the unearned balance, if any, of such Awards after giving effect to the foregoing shall be forfeited for no consideration.

 

Implementation of the provisions of this Section 11(a) shall be conditioned upon consummation of the Change in Control.

 

(b)           Continuation, Assumption or Substitution of Awards. Unless otherwise provided in the applicable Award Agreement, if a Change in Control occurs under which provision is made in connection with the transaction for the continuation or assumption of outstanding Awards by, or for the issuance of Substitute Awards of, the surviving or successor entity or a parent thereof, then upon the Termination of Service of a Participant by Laureate, an Affiliate, or a successor to Laureate or an Affiliate, coincident with or during the 18-month period following a Change in Control other than for Cause, total and permanent disability or death:

 

(i)            any outstanding Awards of stock options and stock appreciation rights granted under the Plan to the Participant, and any such Substitute Awards, the vesting or exercisability conditions on which are then solely time-based and not subject to achievement of Performance Goals shall, to the extent such Awards would have vested and become exercisable on or prior to the third anniversary of the Participant’s Termination of Service assuming the Participant remained an Eligible Individual throughout such time period, immediately before the Participant’s Termination of Service, become exercisable and the holders of such Awards will be permitted to exercise the Awards within ninety (90) days thereafter or during such longer period of time specified in the Award Agreement with respect to the circumstances  that gave rise to the Participant’s Termination of Service;

 

(ii)           any outstanding Awards of stock options and stock appreciation rights granted under the Plan to the Participant, and any such Substitute Awards, the vesting or exercisability conditions on which are then subject to achievement of Performance Goals shall, to the extent such Awards would have vested and become exercisable had the Company achieved the target Performance Goals in the three fiscal years ending coincident with or immediately subsequent to the Participant’s Termination of Service (other than any portion of those Awards which would have vested during said time period only pursuant to any catch-up provisions in the Award Agreements) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the Participant’s Termination of Service, become exercisable and the holders of such Awards will be permitted to exercise the Awards within ninety (90) days thereafter or during such longer period of time specified in the Award Agreement with respect to the circumstances that gave rise to the Participant’s Termination of Service;

 

(iii)          the outstanding shares of Restricted Stock granted under the Plan to the Participant, and any such Substitute Awards, with respect to which the vesting, forfeiture risk or lapse restrictions thereon is then solely time-based and not subject to achievement of Performance Goals shall, to the extent such shares would have become vested and free of forfeiture risk and lapse restrictions on or prior to the third anniversary of the Participant’s Termination of Service assuming the Participant remained an Eligible Individual throughout such time period, immediately before the Participant’s Termination of Service, become vested, free of forfeiture risk and lapse restrictions and the shares of Restricted Stock that remain unvested after giving effect to the foregoing shall be forfeited for no consideration;

 

(iv)          the outstanding shares of Restricted Stock granted under the Plan to the Participant, and any such Substitute Awards, with respect to which the vesting, forfeiture risk or lapse restrictions thereon is then subject to achievement of Performance Goals shall, to the extent such shares would have become vested and free of forfeiture risk and lapse restrictions had the Company achieved the target Performance Goals in the three fiscal years ending coincident with or immediately subsequent to the Participant’s Termination of Service (other than any portion of those Awards which would have vested during said time period only pursuant to any catch-up provisions in the Award Agreements) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the Participant’s Termination of Service, become vested, free of forfeiture risk and lapse restrictions and

 

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the shares of Restricted Stock that remain unvested, if any, after giving effect to the foregoing shall be forfeited for no consideration;

 

(v)           the outstanding Restricted Stock Units, Performance Shares and Performance Units granted under the Plan to the Participant, and any such Substitute Awards, with respect to which the vesting or earning thereof is then solely time-based and not subject to achievement of Performance Goals shall, to the extent such Awards would have become vested or earned on or prior to the third anniversary of the Participant’s Termination of Service assuming the Participant remained an Eligible Individual throughout such time period, immediately before the Participant’s Termination of Service, become vested and earned and shall be settled in cash or shares of Common Stock (consistent with the terms of the Award Agreement) as promptly as is practicable, subject to any applicable limitations imposed thereon by Section 409A of the Code and the unearned balance, if any, of such Awards after giving effect to the foregoing shall be forfeited for no consideration;

 

(vi)          the outstanding Restricted Stock Units, Performance Shares and Performance Units granted under the Plan to the Participant, and any such Substitute Awards, with respect to which the vesting or earning thereof is then subject to achievement of Performance Goals shall, to the extent such Awards would have become vested or earned had the Company achieved the target Performance Goals in the three fiscal years ending coincident with or immediately subsequent to the Participant’s Termination of Service (other than any portion of those Awards which would have vested during said time period only pursuant to any catch-up provisions in the Award Agreements) assuming the Participant remained an Eligible Individual throughout such time period, immediately before the Participant’s Termination of Service, become vested and earned and shall be settled in cash or shares of Common Stock (consistent with the terms of the Award Agreement) as promptly as is practicable, subject to any applicable limitations imposed thereon by Section 409A of the Code and the unearned balance, if any, of such Awards after giving effect to the foregoing shall be forfeited for no consideration; and

 

(vii)         subject to Section 15, the Administrator may also make additional adjustments and/or settlements of outstanding Awards granted to the Participant or any Substitute Awards as it deems appropriate and consistent with the Plan’s purposes.

 

(c)           Other Permitted Actions. In the event that any transaction resulting in a Change in  Control occurs, the Administrator may take any of the actions set forth in Section 10 with respect to any or all Awards granted under the Plan.

 

(d)           Section 409A Savings Clause. Notwithstanding the foregoing, if any Award is considered to be a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, this Section 11 shall apply to such Award only to the extent that its application would not result in the imposition of any tax or interest or the inclusion of any amount in income under Section 409A of the   Code.

 

12.                               Substitution of Awards in Mergers and Acquisitions.

 

Awards may be granted under the Plan from time to time in substitution for assumed awards held by employees, officers, consultants or directors of entities who become employees, officers, consultants  or directors of Laureate or a Subsidiary as the result of a merger or consolidation of the entity for which they perform services with Laureate or a Subsidiary, or the acquisition by Laureate or a Subsidiary of the assets or stock of the such entity. The terms and conditions of any Awards so granted may vary from the terms and conditions set forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the Awards to the provisions of the assumed awards for which they are substituted and to preserve their intrinsic value as of the date of the merger, consolidation or acquisition transaction. To the extent permitted by applicable law and marketplace or listing rules of the primary securities market or exchange on which the Common Stock is listed or admitted for trading, any available shares under a stockholder-approved plan of an acquired company (as appropriately adjusted to reflect the transaction)

 

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may be used for Awards granted pursuant to this Section 12 and, upon such grant, shall not reduce the Share Pool.

 

13.                               Compliance with Securities Laws; Listing and Registration.

 

(a)           The obligation of Laureate to sell or deliver Common Stock with respect to any Award granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal, state and foreign (non-United States) securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Administrator. If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign (non-United States) securities laws, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery is lawful. If at any time the Administrator determines that the delivery of Common Stock under the Plan would or may violate the rules of any exchange on which Laureate’s securities are then listed for trade, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery would not violate such rules. If the Administrator determines that the exercise or nonforfeitability of, or delivery of benefits pursuant to, any Award would violate any applicable provision of securities laws or the listing requirements of any stock exchange upon which any of Laureate’s equity securities are listed, then the Administrator may postpone any such exercise, nonforfeitability or delivery, as applicable, but Laureate shall use all reasonable efforts to cause such exercise, nonforfeitability or delivery to comply with all such provisions at the earliest practicable date.

 

(b)           Each Award is subject to the requirement that, if at any time the Administrator  determines, in its absolute discretion, that the listing, registration or qualification of Common Stock issuable pursuant to the Plan is required by any securities exchange or under any state, federal or foreign (non-United States) law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Common  Stock, no such Award shall be granted or payment made or Common Stock issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Administrator.

 

(c)           In the event that the disposition of Common Stock acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and is not otherwise exempt from such registration, such Common Stock shall be restricted against transfer to the extent required by the Securities Act or regulations thereunder, and the Administrator may require a person receiving Common Stock pursuant to the Plan, as a condition precedent to receipt of such Common Stock, to represent to Laureate in writing that the Common Stock acquired by such person is acquired for investment only and not with a view to distribution and that such person will not dispose of the Common Stock so acquired in violation of Federal, state or foreign securities laws and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Common Stock in compliance with applicable Federal, state or foreign securities laws.

 

14.                               Section 409A Compliance.

 

It is the intention of Laureate that any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code shall comply in all respects with the requirements of Section 409A of the Code to avoid the imposition of any tax or interest or the inclusion of any amount in income pursuant to Section 409A of the Code, and the terms of each such Award shall be construed, administered and deemed amended, if applicable, in a manner consistent with this intention. Notwithstanding the foregoing, neither Laureate nor any of its Subsidiaries nor any of its or their directors, officers, employees, agents or other service providers will be liable for any taxes, penalties or interest imposed on any Participant or other person with respect to any amounts paid or payable (whether in  cash, shares of Common Stock or other property) under any Award, including any taxes, penalties or

 

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interest imposed under or as a result of Section 409A of the Code. Any payments described in an Award that are due within the “short term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise. For purposes of any Award, each amount to be paid or benefit to be provided to a Participant that constitutes deferred compensation subject to Section 409A of the Code shall be construed as a separate identified payment for purposes of Section 409A of the Code. For purposes of Section 409A of the Code, the payment of Dividend Equivalents under any Award shall be construed as earnings and the time and form of payment of such Dividend Equivalents shall be treated separately from the time and form of payment of the underlying Award. Notwithstanding any other provision of the Plan to the contrary, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, any payments (whether in cash, shares of Common Stock or other property) to be made with respect to the Award that become payable on account of the Participant’s separation from service, within the meaning of Section 409A of the Code, while the Participant is a “specified employee” (as determined in accordance with the uniform policy adopted by the Administrator with respect to all of the arrangements subject to Section 409A of the Code maintained by Laureate and its Subsidiaries) and which would otherwise be paid within six months after the Participant’s separation from service shall be accumulated (without interest) and paid on the first day of the seventh month following the Participant’s separation from service or, if earlier, within 15 days after the appointment of the personal representative or executor of the Participant’s estate following the Participant’s death. Notwithstanding anything in the Plan or an Award Agreement to the contrary, in no event shall the Administrator exercise its discretion to accelerate the payment or settlement of an Award where such payment or settlement constitutes deferred compensation within the meaning of Code section 409A unless, and solely to the extent that, such accelerated payment or settlement is permissible under Treasury Regulation section 1.409A-3(j)(4).

 

15.                               Plan Duration; Amendment and Discontinuance.

 

(a)           Plan Duration. The Plan shall remain in effect, subject to the right of the Board or the Compensation Committee to amend or terminate the Plan at any time, until the earlier of (a) the earliest date as of which all Awards granted under the Plan have been satisfied in full or terminated and no shares of Common Stock approved for issuance under the Plan remain available to be granted under  new Awards or (b) June 12, 2023. No Awards shall be granted under the Plan after such termination date. Subject to other applicable provisions of the Plan, all Awards made under the Plan on or before June 12, 2023, or such earlier termination of the Plan, shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards.

 

(b)           Amendment and Discontinuance of the Plan. The Board or the Compensation  Committee may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would materially impair the rights of a Participant with respect to a previously  granted Award without such Participant’s consent, except such an amendment made to comply with applicable law or rule of any securities exchange or market on which the Common Stock is listed or admitted for trading or to prevent adverse tax or accounting consequences to Laureate or the Participant. Except as otherwise determined by the Board or Compensation Committee, termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

(c)           Amendment of Awards. The Administrator may unilaterally amend the terms of any Award granted under the Plan, but no such amendment shall materially impair the rights of any Participant with respect to an Award without the Participant’s consent, except such an amendment made to cause the Plan or Award to comply with applicable law, applicable rule of any securities exchange on which the Common Stock is listed or admitted for trading, or to prevent adverse tax or accounting consequences for the Participant or the Company or any of its Subsidiaries. For purposes of the foregoing sentence, an amendment to an Award that results in a change in the tax consequences of the Award to the Participant shall not be considered to be a material impairment of the rights of the Participant and shall not require the Participant’s consent.

 

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16.                               General Provisions.

 

(a)           Non-Guarantee of Employment or Service. Nothing in the Plan or in any Award Agreement thereunder shall confer any right on an individual to continue in the service of Laureate or any Subsidiary or shall interfere in any way with the right of Laureate or any Subsidiary to terminate such service at any time with or without cause or notice, subject to applicable law, and whether or not such termination results in (i) the failure of any Award to vest or become payable; (ii) the forfeiture of any unvested or vested portion of any Award; and/or (iii) any other adverse effect on the individual’s interests under any Award or the Plan. No person, even though deemed an Eligible Individual, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. To the extent that an Eligible Individual who is an employee of a Subsidiary receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean that Laureate is the Participant’s employer or that the Participant has an employment relationship with Laureate.

 

(b)           No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between Laureate and a Participant or any other person. To the extent that any Participant or other person acquires a right to receive payments from Laureate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of Laureate.

 

(c)           Status of Awards. Awards shall be special incentive payments to the Participant and shall not be taken into account in computing the amount of salary or compensation of the Participant for purposes of determining any pension, retirement, death, severance, end-of-service or other benefit under  (a) any pension, retirement, profit-sharing, bonus, insurance, severance or other employee benefit plan of Laureate or any Subsidiary now or hereafter in effect under which the availability or amount of benefits is related to the level of compensation or (b) any agreement between (i) Laureate or any Subsidiary and (ii) the Participant, except as such plan or agreement shall otherwise expressly provide.

 

(d)           Subsidiary Employees. In the case of a grant of an Award to an Eligible Individual who provides services to any Subsidiary, Laureate may, if the Administrator so directs, issue or transfer the shares of Common Stock, if any, covered by the Award to the Subsidiary, for such lawful consideration as the Administrator may specify, upon the condition or understanding that the Subsidiary will transfer the shares of Common Stock to the Eligible Individual in accordance with the terms of the Award specified by the Administrator pursuant to the provisions of the Plan. All shares of Common Stock underlying Awards that are forfeited or canceled after such issue or transfer of shares to the Subsidiary shall revert to Laureate.

 

(e)           Governing Law and Interpretation. The validity, construction and effect of the Plan, of Award Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Award Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable United States federal laws and the laws of the State of  Maryland, without regard to its conflict of laws principles. The captions of the Plan are not part of the provisions hereof and shall have no force or effect.

 

(f)            Use of English Language. The Plan, each Award Agreement, and all other documents, notices and legal proceedings entered into, given or instituted pursuant to an Award shall be written in English, unless otherwise determined by the Administrator. If a Participant receives an Award Agreement, a copy of the Plan or any other documents related to an Award translated into a language other than English, and if the meaning of the translated version is different from the English version, the English version shall control.

 

(g)           Recovery of Amounts Paid. Except as otherwise provided by the Administrator, Awards granted under the Plan shall be subject to any and all policies, guidelines, codes of conduct, or other agreement or arrangement adopted by the Board or Compensation Committee with respect to the

 

17

 

recoupment, recovery or clawback of compensation (collectively, the “Recoupment Policy”) and/or to any provisions set forth in the applicable Award Agreement under which Laureate may recover from current and former Participants any amounts paid or shares of Common Stock issued under an Award and any proceeds therefrom under such circumstances as the Administrator determines appropriate. The Administrator may apply the Recoupment Policy to Awards granted before the policy is adopted to the extent required by applicable law or rule of any securities exchange or market on which shares of Common Stock are listed or admitted for trading, as determined by the Administrator in its sole discretion.

 

(h)           Repurchase of Shares. The Administrator in its sole discretion may, but need not, from time to time extend an offer (each, a “Repurchase Offer”) on behalf of the Company to holders of shares  of Common Stock that were or will be acquired or received under an Award (“Award Shares”)(which holders may include Family Members who received their Award Shares pursuant to a transfer effectuated in compliance with Section 9 of the Plan) to purchase some or all of their Award Shares under such terms and conditions as the Administrator shall determine, including without limitation the purchase date, purchase price, timing, medium and method of payment, holders to whom the offer is to be made, and allocation of shares to be purchased in the event of an oversubscription of the offer; provided, however, that no such Repurchase Offer shall apply to any Award Share that on the designated purchase date is unearned, unvested, or subject to a risk of forfeiture or other lapse restriction unless the Administrator accelerates the vesting and/or waives the earning conditions, risks of forfeiture and other restrictions on such Award Share; and provided, further, that no such Repurchase Offer shall extend to an Award Share if the purchase thereof would result in the imposition under Section 409A of the Code of any additional tax or underpayment interest liability. Shares of Common Stock that are acquired by the Company under a Repurchase Option shall not restore to the Share Pool except as otherwise provided under Section   5(b)(v) and/or Section 5(b)(vi).

 

17.                               Glossary.

 

Under this Plan, except where the context otherwise indicates, the following definitions apply:

 

(a)           “Administrator” means the Compensation Committee, or such other committee(s) or officer(s) duly appointed by the Board or the Compensation Committee to administer the Plan or delegated limited authority to perform administrative actions under the Plan, and having such powers as shall be specified by the Board or the Compensation Committee; provided, however, that at any time the Board may serve as the Administrator in lieu of or in addition to the Compensation Committee or such other committee(s) or officer(s) to whom administrative authority has been delegated. With respect to any Award to which Section 16 of the Exchange Act applies, the Administrator shall consist of either the Board or a committee of the Board, which committee shall consist of two or more directors, each of whom is intended to be, to the extent required by Rule 16b-3 of the Exchange Act, a “non-employee director” as defined in Rule 16b-3 of the Exchange Act and an “independent director” to the extent required by the rules of the national securities exchange that is the principal trading market for the Common Stock. Any member of the Administrator who does not meet the foregoing requirements shall abstain from any decision regarding an Award and shall not be considered a member of the Administrator to the extent required to comply with Rule 16b-3 of the Exchange Act.

 

(b)           “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, Laureate or any successor to Laureate. For this purpose, “control” shall mean ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity, or the power to direct the management and policies of the entity, by contract or otherwise.

 

(c)           “Award” means any stock option, stock appreciation right, stock award, stock unit, Performance Share, Performance Unit, and/or Other Stock-Based Award, whether granted under this Plan or the 2007 Plan.

 

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(d)           “Award Agreement” means the written document(s), including an electronic writing acceptable to the Administrator, and any notice, addendum or supplement thereto, memorializing the terms and conditions of an Award granted pursuant to the Plan and which shall incorporate the terms of the Plan.

 

(e)                                  “Board” means the Board of Directors of Laureate.

 

(f)            “Cause” shall mean “Cause” as such term may be defined in any employment agreement in effect at the time of termination of employment between the Participant and Laureate, any of its Affiliates or a successor to Laureate or an Affiliate, or, if there is no such employment agreement or such term is not defined therein, “Cause” shall mean (i) gross negligence or willful malfeasance by the Participant in connection with the performance of his duties with respect to Laureate, any of its Affiliates  or a successor to Laureate or an Affiliate, (ii) conviction of, or pleading guilty or nolo contendere to any felony, (iii) theft, embezzlement, fraud or other similar conduct by the Participant in connection with the performance of his or her duties with Laureate, any of its Affiliates or a successor to Laureate or an Affiliate, or (iv) a willful and material breach of any other applicable agreements with Laureate, any of its Affiliates or a successor to Laureate or an Affiliate including, without limitation, engaging in any action in breach of any applicable restrictive covenants.

 

(g)           “Change in Control” means the first of the following to occur: (i) a Change in Ownership  of Laureate or Wengen, or (ii) a Change in the Ownership of Assets of Laureate, as described herein and construed in accordance with Code section 409A.

 

(i)            A “Change in Ownership of Laureate or Wengen” shall occur on the date that any one Person acquires, or Persons Acting as a Group acquire, in a single transaction or a series of related transactions, ownership of:

 

(A)           the capital stock of Laureate that, together with the stock held by such Person or Group, constitutes more than 50% of the total voting power of the capital stock of Laureate. However, if any one Person is, or Persons Acting as a Group are, considered to own more than 50% of the total voting power of the capital stock of Laureate, the acquisition of additional stock by the same Person or Persons Acting as a Group is not considered to cause a Change in Ownership of Laureate or to cause a Change in Effective Control of Laureate (as described below). An increase in the percentage of capital stock owned by any one Person, or Persons Acting as a Group, as a result of a transaction in which Laureate acquires its stock in exchange for property will be treated as an acquisition of stock; or

 

(B)          partnership interests of Wengen that, together with the partnership interests held by such Person or Group, constitutes more than 50% of the partnership interests of Wengen. However, if any one Person is, or Persons Acting as a Group are, considered under the Wengen Limited Partnership Agreement, as the same is in effect from time to time, to own two percent (2%) or more of the partnership interests of Wengen on the effective date of this Plan, the acquisition of additional partnership interests by the same Person or Persons Acting as a Group is not considered to cause a Change in Ownership of Laureate or Wengen.

 

(ii)           A “Change in the Ownership of Assets of Laureate” shall occur on the date that any one Person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12- month period ending on the date of the most recent acquisition by such Person or Persons), assets from Laureate that have a total gross fair market value equal to or more than 80% of the total gross fair market value of all of the assets of Laureate immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of Laureate, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

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The following rules of construction apply in interpreting the definition of Change in Control:

 

(A)          A Person means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than (1) employee benefit plans sponsored or maintained by Laureate and by entities controlled by Laureate, (2) Wengen or entities controlled by Wengen, or (3) an underwriter of the capital stock of Laureate in a registered public offering.

 

(B)          Persons will be considered to be Persons Acting as a Group (or Group) if they are  owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a Person owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a Group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Persons will not be considered to be acting as a Group solely because they purchase assets of the same corporation at the same time or purchase or own stock of the same corporation at the same time, or as a result of the same public offering.

 

(C)          A Change in Control shall not include a transfer of assets to a related person as described in Code section 409A or a public offering of capital stock of Laureate.

 

(D)          For purposes of the definition of Change in Control, Section 318(a) of the Code applies to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation §1.83- 3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option.

 

(h)           “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, the Treasury Regulations thereunder and other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code shall be deemed to include such regulations and guidance, as well as any successor section, regulations and guidance.

 

(i)            “Common Stock” means shares of common stock of Laureate, par value $0.001 per share, and any capital securities into which they are converted.

 

(j)            “Company” means Laureate and its Subsidiaries, except where the context otherwise requires.

 

(k)                                 “Compensation Committee” means the Compensation Committee of the Board.

 

(l)            “Dividend Equivalent” means a right, granted to a Participant, to receive cash, Common Stock, stock Units or other property equal in value to dividends paid with respect to a specified number of shares of Common Stock.

 

(m)          “Effective Date” means the date on which adoption of the Plan is approved by the stockholders of Laureate.

 

(n)           “Eligible Individuals” means (i) officers and employees of, and other individuals, including non-employee directors, who are natural persons providing bona fide services to or for, Laureate or any of its Subsidiaries, provided that such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for Laureate’s

 

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securities, and (ii) prospective officers, employees and service providers who have accepted offers of employment or other service relationship from Laureate or a Subsidiary.

 

(o)           “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto. Reference to any specific section of the Exchange Act shall be deemed to include such regulations and guidance issued thereunder, as well as any successor section,  regulations and guidance.

 

(p)           “Fair Market Value” means, on a per Share basis as of any date, unless otherwise determined by the Administrator:

 

(i)            if the principal market for the Common Stock (as determined by the Administrator if the Common Stock is listed or admitted to trading on more than one exchange or market) is a national securities exchange or an established securities market, the official closing price per share of Common Stock for the regular market session on that date on the principal exchange or market on which the Common Stock is then listed or admitted to trading or, if no sale is reported for that date, on the last preceding day on which a sale was reported, all as reported by such source as the Administrator may select;

 

(ii)           if the principal market for the Common Stock is not a national securities exchange or an established securities market, but the Common Stock is quoted by a national quotation system, the average of the highest bid and lowest asked prices for the Common Stock on that date as reported on a national quotation system or, if no prices are reported for that date, on the last preceding day on which prices were reported, all as reported by such source as the Administrator may select; or

 

(iii)          if the Common Stock is neither listed or admitted to trading on a national securities exchange or an established securities market, nor quoted by a national quotation system, the value determined by the Administrator in good faith by the reasonable application of a reasonable valuation method, which method may, but need not, include taking into account an appraisal of the fair market value of the Common Stock conducted by a nationally recognized appraisal firm selected by the Administrator.

 

Notwithstanding the preceding, for foreign, federal, state and local income tax reporting purposes and for such other purposes as the Administrator deems appropriate, the Fair Market Value shall be determined by the Administrator in accordance with uniform and nondiscriminatory standards adopted by it from time to time.

 

(q)           “Full Value Award” means an Award that results in Laureate transferring the full value of  a share of Common Stock under the Award, whether or not an actual share of stock is issued. Full Value Awards shall include, but are not limited to, stock awards, stock units, Performance Shares, Performance Units that are payable in Common Stock, and Other Stock-Based Awards for which Laureate transfers the full value of a share of Common Stock under the Award, but shall not include Dividend Equivalents.

 

(r)            “Incentive Stock Option” means any stock option that is designated, in the applicable Award Agreement or the resolutions of the Administrator under which the stock option is granted, as an “incentive stock option” within the meaning of Section 422 of the Code and otherwise meets the requirements to be an “incentive stock option” set forth in Section 422 of the Code.

 

(s)                                   “Nonqualified Option” means any stock option that is not an Incentive Stock Option.

 

(t)            “Other Stock-Based Award” means an Award of Common Stock or any other Award that is valued in whole or in part by reference to, or is otherwise based upon, shares of Common Stock, including without limitation Dividend Equivalents and convertible debentures.

 

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(u)           “Participant” means an Eligible Individual to whom one or more Awards are or have been granted pursuant to the Plan and have not been fully settled or cancelled and, following the death of any such person, his successors, heirs, executors and administrators, as the case may be.

 

(v)           “Performance Award” means a Full Value Award, the grant, vesting, lapse of restrictions or settlement of which is conditioned upon the achievement of performance objectives over a specified Performance Period and includes, without limitation, Performance Shares and Performance Units.

 

(w)          “Performance Goals” means the performance goals established by the Administrator in connection with the grant of Awards based on performance criteria selected by the Administrator.

 

(x)           “Performance Period” means that period established by the Administrator during which any Performance Goals specified by the Administrator with respect to such Award are to be measured.

 

(y)           “Performance Shares” means a grant of stock or stock Units the issuance, vesting or payment of which is contingent on performance as measured against predetermined objectives over a specified Performance Period.

 

(z)           “Performance Units” means a grant of dollar-denominated Units the value, vesting or payment of which is contingent on performance against predetermined objectives over a specified Performance Period.

 

(aa)         “Plan” means this Laureate Education, Inc. 2013 Long-Term Incentive Plan, as set forth herein and as it may be amended from time to time.

 

(bb)         “Laureate” means Laureate Education, Inc., a Maryland corporation.

 

(cc)         “Restricted Stock” means an Award of shares of Common Stock to a Participant that may be subject to certain transferability and other restrictions and to a risk of forfeiture (including by reason of not satisfying certain Performance Goals).

 

(dd)         “Restricted Stock Unit” means a right granted to a Participant to receive shares of Common Stock or cash at the end of a specified period, which right may be conditioned on the satisfaction of certain requirements (including the satisfaction of certain Performance Goals).

 

(ee)         “Restriction Period” means, with respect to Full Value Awards, the period commencing on the date of grant of such Award to which vesting or transferability and other restrictions and a risk of forfeiture apply and ending upon the expiration of the applicable vesting conditions, transferability and other restrictions and lapse of risk of forfeiture and/or the achievement of the applicable Performance Goals (it being understood that the Administrator may provide that vesting shall occur and/or restrictions shall lapse with respect to portions of the applicable Award during the Restriction Period).

 

(ff)          “Subsidiary” means any corporation or other entity in an unbroken chain of corporations  or other entities beginning with Laureate if each of the corporations or other entities, or group of commonly controlled corporations or other entities, other than the last corporation or other entity in the unbroken chain then owns stock or other equity interests possessing 50% or more of the total combined voting power of all classes of stock or other equity interests in one of the other corporations or other entities in such chain or otherwise has the power to direct the management and policies of the entity by contract or by means of appointing a majority of the members of the board or other body that controls the affairs of the entity; provided, however, that solely for purposes of determining whether a Participant has a Termination of Service that is a “separation from service” within the meaning of Section 409A of the   Code or whether an Eligible Individual is eligible to be granted an Award that in the hands of such Eligible Individual would constitute a “nonqualified deferred compensation plan” within the meaning of

 

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Section 409A of the Code , a “Subsidiary” of a corporation or other entity means all other entities with which such corporation or other entity would be considered a single employer under Sections 414(b) or 414(c) of the Code.

 

(gg)         “2007 Plan” means Laureate’s 2007 Stock Incentive Plan for Key Employees of Laureate Education, Inc. and its Subsidiaries.

 

(hhi)        “Tax Withholding Obligation” means any federal, state, local or foreign (non-United States) income, employment or other tax or social insurance contribution required by applicable law to be withheld in respect of Awards.

 

(ii)           “Termination of Service” means the termination of the Participant’s employment or consultancy with, or performance of services for, Laureate and its Subsidiaries. Temporary absences from employment because of illness, vacation or leave of absence and transfers among Laureate and its Subsidiaries shall not be considered Terminations of Service. With respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, “Termination of Service” shall mean a “separation from service” as defined under Section 409A of the Code to the extent required by Section 409A of the Code to avoid the imposition of any tax or interest or the inclusion of any amount in income pursuant to Section 409A of the Code. A Participant has a separation from service within the meaning of Section 409A of the Code if the Participant terminates employment with Laureate and all Subsidiaries for any reason. A Participant will generally be treated as having terminated employment with Laureate and all Subsidiaries as of a certain date if the Participant  and the entity that employs the Participant reasonably anticipate that the Participant will perform no  further services for Laureate or any Subsidiary after such date or that the level of bona fide services that the Participant will perform after such date (whether as an employee or an independent contractor) will permanently decrease to no more than 20 percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36- month period (or the full period of services if the Participant has been providing services for fewer than 36 months); provided, however, that the employment relationship is treated as continuing while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six months or, if longer, so long as the Participant retains the right to reemployment with Laureate or any Subsidiary.

 

(jj)           “Unit” means a bookkeeping entry used by Laureate to record and account for the grant of the following Awards until such time as the Award is paid, cancelled, forfeited or terminated, as the case may be: stock units, Restricted Stock Units, Performance Units, and Performance Shares that are expressed in terms of units of Common Stock.

 

(kk)         “Wengen” means Wengen Alberta, Limited Partnership, a limited partnership formed under the laws of the province of Alberta, Canada.

 

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LAUREATE EDUCATION, INC.

2013 LONG-TERM INCENTIVE PLAN

 

APPENDIX A

PROVISIONS FOR CALIFORNIA RESIDENTS

 

With respect to Awards granted to California residents prior to Laureate’s consummation of an initial public offering of its equity securities that is effected pursuant to a registration statement filed with, and declared effective by, the Securities and Exchange Commission under the Securities Act, and only to the extent required by applicable law, the following provisions shall apply notwithstanding anything in the Plan or an Award Agreement to the contrary:

 

1.             With respect to any Award granted in the form of a stock option pursuant to Section 7(b) of the Plan:

 

(a)           The exercise period shall be no more than 120 months from the date the option is granted.

 

(b)           The options shall be non-transferable other than by last will and testament, by the laws of descent and distribution, or, if and to the extent permitted under the Award Agreement, to a revocable trust or as permitted by Rule 701 of the Securities Act (17 C.F.R. §230.701).

 

(c)           Unless employment is terminated for “cause” as defined by applicable law, the terms of the Plan or Award Agreement, or a contract of employment, the right to exercise the option in the event of termination of employment, to the extent that the Award recipient is entitled to exercise on the date employment terminates, will continue until the earlier of the option expiration date, or:

 

(1)  At least 6 months from the date of termination if termination was caused by death or disability.

 

(2)  At least 30 days from the date of termination if termination was caused by other than death or disability.

 

2.             With respect to an Award, granted pursuant to Section 7(f) of the Plan, that provides the Award recipient the right to purchase stock, the Award shall be non-transferable other than by last will and testament, by the laws of descent and distribution, or, if and to the extent permitted under the Award Agreement, to a revocable trust or as permitted by Rule 701 of the Securities Act (17 C.F.R. §230.701).

 

3.             Security holders representing a majority of Laureate’s outstanding securities entitled to vote must approve the Plan by the later of (a) 12 months after the date the Plan is initially adopted by the Board or (b) 12 months after the first granting of an Award to a resident of California. Any option exercised or any securities purchased pursuant to an Award granted under the Plan before such security holder approval is obtained shall be rescinded if such security holder approval is not obtained within the period described in the preceding sentence. Securities that become outstanding through exercise of an option granted under the Plan to a resident of California or purchased pursuant to an Award granted under the Plan to a resident of California shall not be counted in determining whether such approval is obtained.

 

4.             Laureate will provide financial statements to each Award recipient resident in California annually during the period such individual has Awards outstanding, but only to the extent such disclosure is required under Section 260.140.46 of Title 10 of the California Code of Regulations. Notwithstanding the foregoing, Laureate will not be required to provide such financial statements to Award recipients when the Plan complies with all conditions of Rule 701 of the Securities Act (17 C.F.R. 230.701); provided that for purposes of determining such compliance, any registered domestic partner shall be considered a “family member” as that term is defined in Rule 701.

 

A-1

 

5.             The Plan is intended to comply with Section 25102(o) of the California Corporations Code. Any provision of this Plan which is inconsistent with Section 25102(o), including without limitation any   provision of this Plan that is more restrictive than would be permitted by Section 25102(o) as amended from time to time, shall, without further act or amendment by the Board, be reformed to comply with the provisions of Section 25102(o) without being more restrictive thereof. If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or federal or state securities laws, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery is lawful. Laureate shall have no obligation to effect any registration or qualification of the Common Stock under federal or state laws.

 

{end of document}

 

2

 

FIRST AMENDMENT TO THE

LAUREATE EDUCATION, INC. 2013 LONG-TERM INCENTIVE PLAN

 

This First Amendment to the Laureate Education, Inc. 2013 Long-Term Incentive Plan (this “First Amendment”), effective as of September 17, 2015, is made and entered into by Laureate Education, Inc., a Maryland corporation (the “Company”). Terms used in this Amendment with initial capital letters that are not otherwise defined herein shall have the meanings ascribed to such terms in the Laureate Education, Inc. 2013 Long-Term Incentive Plan (the “Plan”).

 

RECITALS

 

WHEREAS, Article  15 of the Plan provides that the Board of Directors of the Company (the “Board”) may amend the Plan at any time; and

 

WHEREAS, the Board desires to amend the Plan, to increase the aggregate number of shares of Common Stock issuable pursuant to Awards that may be granted under the Plan as set forth in Article 5 of the Plan; and

 

WHEREAS, the Board intends to submit this Amendment to the Company’s shareholders for approval.

 

NOW, THEREFORE, in accordance with Article 15 of the Plan, the Company hereby amends the Plan as follows:

 

1.     Section 5(a) of the Plan is hereby amended by deleting said section in its entirety and substituting in lieu thereof the following new Section 5(a):

 

5(a)           Initial Share Pool.  As of the effective date of the First Amendment, the number of shares of Common Stock issuable pursuant to Awards that may be granted under the Plan (the “Share Pool”) shall be equal to the sum of (i) 33,174,120 shares plus (ii) the number of unallocated shares of Common Stock available for issuance as of the Effective Date under Laureate’ s 2007 Plan that are not then subject to outstanding Awards.

 

2.     This Amendment shall be effective on the date first set forth above. In the event shareholder approval of this Amendment is not obtained within twelve (12) months of the date the Board approved this Amendment, the additional shares added to the Plan pursuant to this Amendment shall not be available for grant as incentive stock options within the meaning of Section 422 of the Code.

 

3.     Except as expressly amended by this Amendment, the Plan shall continue in full force and effect in accordance with the provisions thereof.

 

[Remainder of Page Intentionally Left Blank Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed as of the date first written above.

 

	
 
    	
LAUREATE   EDUCATION, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert W. Zentz
    
	
 
    	
Name:   
    	
Robert   W. Zentz
    
	
 
    	
Title:   
    	
Senior   Vice-President, General Counsel and SecretaryExhibit 10.34

 

STOCK OPTION AGREEMENT

 

THIS AGREEMENT, dated as of             (the “Grant Date”) is made by and between Laureate Education, Inc., a Maryland corporation (hereinafter referred to as “Laureate”), and the individual whose name is set forth on the signature page hereof, who is an Eligible Individual, hereinafter referred to as the “Optionee”.  Any capitalized terms herein not otherwise defined in Article I shall have the meaning set forth in the Laureate Education, Inc. 2013 Long-Term Incentive Plan (the “Plan”).  You must return an executed copy of this Stock Option Agreement and the Management Stockholder’s Agreement and Sale Participation Agreement delivered to you with this Stock Option Agreement to the Company within 30 days of the date hereof.  If you fail to do so, the Options may be forfeited, at the sole election of the Administrator.

 

WHEREAS, Laureate wishes to carry out the Plan, the terms of which are hereby incorporated by reference and made a part of this Agreement; and

 

WHEREAS, the Administrator has determined that it would be to the advantage and best interest of Laureate and its shareholders to grant the Option provided for herein to the Optionee as an incentive for increased efforts during the Optionee’s service relationship with the Company, and has advised Laureate thereof and instructed the undersigned officers to issue said Option.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary.

 

Section 1.1.   Annual Equity Value Target

 

“Annual Equity Value Target” shall have the meaning set forth in Section 3.1(a)(ii)(A).

 

Section 1.2.   Cause

 

“Cause” shall mean “Cause” as such term may be defined in any employment or service agreement in effect at the time of termination of employment or service between the Optionee and the Company, or, if there is no such employment or service agreement or such term is not defined therein, “Cause” shall mean (i) gross negligence or willful malfeasance by the Optionee in connection with the performance of his duties with respect to the Company, (ii) conviction of, or pleading guilty or nolo contendere to any felony, (iii) theft, embezzlement, fraud or other similar conduct by the Optionee in connection with the performance of his or her duties with the Company, or (iv) a willful and material breach of any other applicable agreements

 

 

with the Company including, without limitation, engaging in any action in breach of any applicable restrictive covenants.

 

Section 1.3.   Company

 

“Company” shall mean Laureate and its Subsidiaries.

 

Section 1.4.   Eligible Individual

 

“Eligible Individual” shall mean (i) an officer or employee of, and other individual, including a non-employee director, who is a natural person providing bona fide services to or for, Laureate or any of its Subsidiaries, provided that such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for Laureate’s securities.

 

Section 1.5.   Equity Value

 

“Equity Value” shall have the meaning set forth on Schedule A attached hereto.

 

Section 1.6.   Fiscal Year

 

“Fiscal Year” shall mean the twelve month period ending December 31 of any given calendar year.

 

Section 1.7.   Good Leaving

 

“Good Leaving” shall mean the voluntary termination of employment with the Company by the Optionee after the Company has consummated an initial public offering of its common stock but only if (a) the Optionee has been in the continuous employment of the Company for a period of five years on the date the Optionee’s voluntary termination becomes effective; and (b) the Optionee has provided the Company with no less than six months’ written notice of the Optionee’s intention to voluntarily terminate employment.  For the avoidance of doubt, service with the Company in any capacity other than as an employee of the Company will not be counted toward the requisite five year period of continuous employment nor will employment with any entity prior to the Company’s acquisition of such entity be counted toward the requisite five year period of continuous employment.

 

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Section 1.8.   Good Reason  [ONLY APPLICABLE TO CERTAIN OPTIONEES]

 

“Good Reason” shall mean “Good Reason” as such term may be defined in any employment agreement in effect at the time of termination of employment between the Optionee and Laureate or any of its Subsidiaries, or, if there is no such employment agreement or such term is not defined therein, “Good Reason” shall mean, without the consent of the Optionee, (i) a reduction in base salary (other than a general reduction in base salary that affects all similarly situated employees), (ii) a substantial diminution in the Optionee’s title, duties and responsibilities, other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith, or (iii) a transfer of the Optionee’s primary workplace by more than fifty (50) miles from his or her current workplace; provided, however, that in any event, such conduct is not cured within ten (10) business days after the Optionee gives the Company notice of such event.

 

Section 1.9.   Option

 

“Option” shall mean the aggregate of the Time Option and the Performance Option granted under Section 2.1 of this Agreement.

 

Section 1.10.   Permanent Disability

 

“Permanent Disability” shall mean “Disability” as such term is defined in any employment agreement between the Optionee and the Company, or, if there is no such employment agreement or such term is not defined therein, “Permanent Disability” shall mean a total and permanent disability as defined in the long-term disability plan of Laureate or the Subsidiary, as applicable, with which the Optionee is employed on the date as of which the existence of a Permanent Disability is to be determined.

 

Section 1.11.   Performance Option

 

“Performance Option” shall mean the right and option to purchase, on the terms and conditions set forth herein, all or any part of an aggregate of the number of shares of Common Stock set forth on the signature page hereof opposite the term Performance Option.

 

Section 1.12.   Retirement

 

“Retirement” shall mean the voluntary termination of the Optionee’s employment with the Company if (a) the Optionee has provided the Company with no less than twelve months’ written notice of the Optionee’s intention to terminate employment; and (b) on the effective date of Optionee’s termination of employment, the sum of (1) the length of time the Optionee has been in the continuous employment of Company (which must be no fewer than five (5) years) and (2) the age of the Optionee equals seventy (70).  For the avoidance of doubt, service with the Company in any capacity other than as an employee of the Company will not be counted toward the determination of the Optionee’s length of continuous employment nor will employment with any entity prior to the Company’s acquisition of such entity be counted toward the requisite five year period of continuous employment.

 

Section 1.13.   Secretary

 

“Secretary” shall mean the Secretary of Laureate.

 

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Section 1.14.   Share

 

“Share” shall mean a share of Common Stock.

 

Section 1.15.   Subsidiary

 

“Subsidiary” shall mean any corporation or other entity in an unbroken chain of corporations or other entities beginning with Laureate if each of the corporations or other entities, or group of commonly controlled corporations or other entities, other than the last corporation or  other entity in the unbroken chain then owns stock or other equity interests possessing 50% or more of the total combined voting power of all classes of stock or other equity interests in one of the other corporations or other entities in such chain or otherwise has the power to direct the management and policies of the entity by contract or by means of appointing a majority of the members of the board or other body that controls the affairs of the entity.

 

Section 1.16.   Time Option

 

“Time Option” shall mean the right and option to purchase, on the terms and conditions set forth herein, all or any part of an aggregate of the number of shares of Common Stock set forth on the signature page hereof opposite the term Time Option.

 

ARTICLE II

GRANT OF OPTIONS

 

Section 2.1.   Grant of Options

 

For good and valuable consideration, on and as of the Grant Date, Laureate grants to the Optionee the following stock options (which in the aggregate are referred to herein as the “Option”): (a) the Time Option and (b) the Performance Option, in each case, on the terms and conditions set forth in this Agreement.

 

Section 2.2.   Exercise Price

 

Subject to Section 2.4, the exercise price per share of the shares of Common Stock covered by the Option (the “Exercise Price”) shall be as set forth on the signature page hereof.

 

Section 2.3.   No Guarantee of Employment or Service Relationship

 

Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue in the employ or service of the Company or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to terminate the employment or service of the Optionee at any time for any reason whatsoever, with or without cause or notice, subject to the applicable provisions of, if any, the Optionee’s employment or service agreement with or offer letter provided by the Company to the Optionee and subject to applicable law.  Nothing in this Agreement or in the Plan shall serve as a limitation of the right of the Company to discharge the Optionee at any time with or without cause or notice, subject to applicable law, and

 

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whether or not such discharge results in the failure of any portion of the Option to become exercisable or any other adverse effect on the Optionee’s interests under the Plan.

 

Section 2.4.   Nonqualified Nature of the Options

 

The Option is not intended to qualify as an incentive stock option within the meaning of Code section 422, and this Agreement shall be so construed.

 

Section 2.5.   Adjustments to Option

 

The Option shall be subject to the adjustment provisions of Sections 10, 11 and 12 of the Plan.

 

ARTICLE III

PERIOD OF EXERCISABILITY

 

Section 3.1.   Commencement of Exercisability

 

(a)           So long as the Optionee continues to be an Eligible Individual performing bona fide services to or for the Company through the applicable vesting date(s), the Option shall become vested and exercisable pursuant to the following schedules:

 

(i)            Time Option.  The Time Option shall become vested and exercisable with respect to the following percentage of Shares subject to the Time Option pursuant to the following schedule:

 

	
Vesting Date
    	
 
    	
Percentage of Shares subject to
   the Time Option that will become vested:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

(ii)           Performance Option.

 

(A)          The Performance Option shall be eligible to become vested and exercisable with respect to the following percentage of Shares subject to the Performance Option (each such percentage of Shares identified below, an “Option Tranche”) upon the Administrator’s determination that the Company has attained the applicable Equity Value Target in the applicable Fiscal Year (each, an “Annual Equity Value Target”), as follows:

 

	
If, in this
   Fiscal Year:
    	
 
    	
The Company achieves this Equity
   Value Target:
    	
 
    	
Then this Percentage of Shares subject to the
   Performance Option will vest:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

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(B)(1)     Notwithstanding anything set forth in Section 3.1(a)(ii)(A) above, in the event that the Annual Equity Value Target is not achieved in a Fiscal Year listed in the table set forth in Section 3.1(a)(ii)(A) above (any such Fiscal Year, a “Missed Year” and the five Fiscal Years so listed, collectively, the “Initial Target Years”), then, during the Initial Target Years and through the end of the third Fiscal Year thereafter (each, an “Additional Year” and, the three year period, the “Catch Up Term”), the Option Tranche(s) that was eligible to vest but failed to vest due to the Company’s failure to achieve the Annual Equity Value Target in such Missed Year shall nevertheless vest and become exercisable if the Annual Equity Value Target for any completed Fiscal Year that is subsequent to any Missed Year (a “Subsequent Year Target”), but within the Catch Up Term, is achieved.

 

(2)   The three Additional Year Annual Equity Value Targets are:

 

	
Fiscal Year:
    	
 
    	
Annual Equity Value Target:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

(b)           Notwithstanding any of the foregoing set forth in Section 3.1(a) above, if the Optionee ceases, without Cause, to be an Eligible Individual coincident with or within eighteen (18) months after a Change in Control, the Option shall become exercisable as to 100% of the shares of Common Stock subject to such Option immediately prior to the effective date of Optionee’s cessation of service as an Eligible Individual without Cause (but only to the extent such Option has not otherwise terminated or become exercisable).

 

(c)           Notwithstanding the foregoing, and except as set forth below in clause 3.1(d), no portion of the Option shall become exercisable as to any additional shares of Common Stock following the time the Optionee ceases to be an Eligible Individual, and any portion of the Option which is unexercisable as of the Optionee’s cessation of service as an Eligible Individual shall immediately expire without payment therefor.

 

(d)           In the event that the Optionee ceases to be an Eligible Individual performing bona fide services to or for the Company by reason of death or Permanent Disability, (i) any portion of the Time Option which would, but for the termination of eligibility, have vested during the calendar year during which the termination of eligibility occurred will vest on the date on

 

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 which termination of eligibility occurs and the balance of the unvested portion of the Time Option shall terminate on the Optionee’s service termination date, (ii) any portion of the Performance Option which would, but for the termination of eligibility, have vested if the Annual Equity Value Target for the calendar year during which the termination of eligibility occurred is achieved will remain  outstanding until the Administrator determines whether the applicable Annual Equity Value Target has been achieved and will become vested if and when the Administrator determines that the applicable Annual Equity Value Target has been achieved and will terminate on the date the Administrator determines that the applicable Annual Equity Value Target has not been achieved, and the balance of the unvested portion of the Performance Option shall terminate on the Optionee’s service termination date, and (iii) such portions of the Option which become vested pursuant to this Section 3.1(d) will thereafter be exercisable by the Optionee (or the Optionee’s estate, as applicable) during the time period prescribed in Section 3.2(d).  For the avoidance of doubt, the provisions of this Section 3.1(d) apply solely with respect to termination of the Optionee’s employment with the Company by reason of death or Permanent Disability and do not apply to termination of service with the Company in any other capacity.

 

Section 3.2.   Expiration of Option

 

The Optionee may not exercise any vested portion of the Option to any extent after the first to occur of the following events:

 

(a)           The tenth anniversary of the Grant Date so long as the Optionee remains an Eligible Individual through such date;

 

(b)           The fifth anniversary of the date of the Optionee’s termination of employment with the Company, if the Optionee’s employment is terminated by reason of Retirement;

 

(c)           The second anniversary of the date of the Optionee’s termination of employment with the Company, if the Optionee’s employment is terminated by reason of Good Leaving;

 

(d)           The second anniversary of the date of the Optionee’s termination of employment with the Company, if the Optionee’s employment is terminated by reason of death or Permanent Disability;

 

(e)           Except as otherwise provided in this Section 3, ninety (90) days after the date the Optionee ceases to be an Eligible Individual by reason of the Optionee’s voluntary resignation or the Company’s termination of the employment or service relationship without Cause (for any reason other than as set forth in clause (b) above), or by reason of the entity for which services are performed by the Optionee ceasing to be Laureate or a Subsidiary;

 

(f)            Immediately upon the date the Optionee ceases to be an Eligible Individual for Cause; or

 

(g)           At the discretion of the Company, if the Administrator so determines pursuant to Section 11 of the Plan.

 

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ARTICLE IV

EXERCISE OF OPTION

 

Section 4.1.   Person Eligible to Exercise

 

During the lifetime of the Optionee, only the Optionee (or his or her duly authorized legal representative) may exercise the Option or any portion thereof.  After the death of the Optionee, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.2, be exercised by his personal representative or by any person empowered to do so under the Optionee’s last will and testament or under the then applicable laws of descent and distribution.

 

Section 4.2.   Partial Exercise

 

Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.2; provided, however, that any partial exercise shall be for whole shares of Common Stock only.

 

Section 4.3.   Manner of Exercise

 

The Option, or any exercisable portion thereof, may be exercised solely by delivering to the Secretary or his office all of the following prior to the time when the Option or such portion becomes unexercisable under Section 3.2:

 

(a)           Notice in writing signed by the Optionee or the other person then entitled to exercise the Option or portion thereof, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Administrator;

 

(b)           (i) Full payment (in cash, by check or by a combination thereof) for the Shares with respect to which such Option or portion thereof is exercised or (ii) to the extent permitted by the Administrator in a manner that is compliant with the terms of the Plan, indication that the Optionee elects to have the number of Shares that would otherwise be issued to the Optionee reduced by a number of Shares having an equivalent Fair Market Value to the payment that would otherwise be made by the Optionee to the Company pursuant to clause (i) of this subsection (b);

 

(c)           (i) Full payment (in cash, by check or by a combination thereof) to satisfy the withholding tax obligation with respect to which such Option or portion thereof is exercised or (ii) to the extent permitted by the Administrator in a manner that is compliant with the terms of the Plan, indication that the Optionee elects to have the number of Shares that would otherwise be issued to the Optionee upon exercise of such Option (or portion thereof) reduced by a number of Shares having an aggregate Fair Market Value, on the date of such exercise, equal to the payment to satisfy the minimum withholding tax obligation that would otherwise be required to be made by the Optionee to the Company pursuant to clause (i) of this subsection (c);

 

(d)           A bona fide written representation and agreement, in a form satisfactory to the Administrator, signed by the Optionee or other person then entitled to exercise such Option or

 

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portion thereof, stating that the shares of Common Stock are being acquired for his or her own  account, for investment and without any present intention of distributing or reselling said shares or any of them except as may be permitted under the Securities Act of 1933, as amended (the “Act”), and then applicable rules and regulations thereunder, and that the Optionee or other person then entitled to exercise such Option or portion thereof will indemnify the Company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the Shares by such person is contrary to the representation and agreement referred to above; provided, however, that the Administrator may, in its reasonable discretion, take whatever additional actions it deems reasonably necessary to ensure the observance and performance of such representation and agreement and to effect compliance with the Act and any other federal or state securities laws or regulations; and

 

(e)           In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option.

 

Without limiting the generality of the foregoing, the Administrator may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of Shares acquired on exercise of the Option does not violate the Act, and may issue stop-transfer orders covering such Shares.  Share certificates evidencing stock issued on exercise of this Option shall bear an appropriate legend referring to the provisions of subsection (d) above and the agreements herein.  The written representation and agreement referred to in subsection (d) above shall, however, not be required if the Shares to be issued pursuant to such exercise have been registered under the Act, and such registration is then effective in respect of such Shares.

 

(f)            At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll or any other payment of any kind due to the Optionee and otherwise agrees to make adequate provision for foreign (non-US), federal, state and local taxes required by law to be withheld, if any, which arise in connection with the Option.  The Company may require the Optionee to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Option or issuance of Share upon exercise.

 

Section 4.4.   Conditions to Issuance of Stock Certificates

 

The Shares deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued Shares or issued Shares, which have then been reacquired by Laureate.  Such Shares shall be fully paid and nonassessable.  In its discretion, Laureate may deliver share certificates or may retain such Shares in uncertificated book-entry form.  Laureate shall not be required to issue Shares or deliver any certificate or certificates for shares of stock purchased upon the exercise of an Option or portion thereof prior to fulfillment of all of the following conditions:

 

(a)           The obtaining of approval or other clearance from any state or federal governmental agency which the Administrator shall, in its reasonable and good faith discretion, determine to be necessary or advisable;

 

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(b)           The execution by the Optionee (and the personal representative of the Optionee’s estate or the person to whom the Option or Shares are transferred pursuant to the  Optionee’s last will and testament or the laws of descent and distribution, if applicable) of the Management Stockholder’s Agreement and a Sale Participation Agreement; and

 

(c)           The lapse of such reasonable period of time following the exercise of the Option as the Administrator may from time to time establish for reasons of administrative convenience or as may otherwise be required by applicable law.

 

Section 4.5.   Rights as Stockholder

 

The holder of an Option shall not be, nor have any of the rights or privileges of, a stockholder of Laureate in respect of any Shares purchasable upon the exercise of the Option or any portion thereof unless and until certificates representing such Shares shall have been issued by the Company to such holder upon satisfaction of the conditions set forth in Section 4.4 or unless book entry representing such Shares has been made and such Shares have been deposited with the appropriate registered book-entry custodian.  Upon fulfillment of such conditions, Laureate shall be required to issue and deliver such certificate or certificates, unless book entry representing such Shares has been made and such Shares have been deposited with the appropriate registered book-entry custodian.

 

ARTICLE V

MISCELLANEOUS

 

Section 5.1.   Administration

 

The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations made by the Administrator shall be final and binding upon the Optionee, the Company and all other interested persons.  No member of the Administrator shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Option.  In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan and this Agreement.

 

Section 5.2.   Option Not Transferable

 

Neither the Option nor any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Optionee or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5.2 shall not prevent transfers by will or by the applicable laws of descent and distribution.

 

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Section 5.3.   Notices

 

Any notice to be given under the terms of this Agreement to the Company shall be addressed to Laureate in care of its Secretary, and any notice to be given to the Optionee shall be addressed to him at the physical or electronic address given beneath his signature hereto.  By a notice given pursuant to this Section 5.3, either party may hereafter designate a different address for notices to be given to him or it.  Any notice, which is required to be given to the Optionee, shall, if the Optionee is then deceased, be given to the Optionee’s personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 5.3.  Any notice shall have been deemed duly given when (i) delivered in person, (ii) enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service, (iii) enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with fees prepaid) in an office regularly maintained by FedEx, UPS, or comparable non-public mail carrier, or (iv) delivered by email to an electronic mail address provided by the Optionee.

 

Section 5.4.   Titles; Pronouns

 

Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.  The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates.

 

Section 5.5.   Applicability of Plan, Management Stockholder’s Agreement and Sale Participation Agreement

 

The Option and the Shares issued to the Optionee (or other proper holder of the Option) upon exercise of the Option shall be subject to all of the terms and provisions of the Plan, the Management Stockholder’s Agreement and a Sale Participation Agreement, to the extent applicable to the Option and such Shares.  In the event of any conflict between this Agreement and the Plan, the terms of the Plan shall control.  In the event of any conflict between this Agreement or the Plan and the Management Stockholder’s Agreement or the Sale Participation Agreement, the terms of the Management Stockholder’s Agreement or Sale Participation Agreement, as applicable, shall control.

 

Section 5.6.   Service and Employment Acknowledgments.

 

By accepting the Option and signing this Agreement, the Optionee acknowledges and agrees that:  (i) the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan or this Agreement; (ii) the Optionee is voluntarily participating in the Plan; (iii) the award of Options is a one-time benefit which does not create any contractual or other right to receive future awards of Options, or compensation or benefits in lieu of Options, even if Options have been awarded repeatedly in the past; (iv) all determinations with respect to any such future awards, including, but not limited to, the times when Options shall be awarded or shall become vested or exercisable and the number of Options subject to each award, will be at the sole discretion of the Administrator; (v) the value of the Option is an extraordinary item of compensation which is outside the scope of the Optionee’s employment or service contract, if any;

 

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(vi) the value of the Option is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments or similar payments, or bonuses, long-service awards, pension, welfare or retirement benefits; (vii) the vesting of the Option ceases upon termination of service with the Company or transfer of employment from the Company, or other cessation of eligibility for any reason, except as may otherwise be explicitly provided in this Agreement; (viii) the value of the Options and the underlying shares cannot be predicted with certainty and will change over time and the Company does not guarantee any future value; (ix) if the Optionee is not an employee of the Company, the Option grant will not be interpreted to form an employment contract or relationship with the Company; nothing in this Agreement shall confer upon the Optioneee any right to continue in the service of the Company or interfere in any way with any right of the Company to terminate the Optionee’s service as a director, an employee or consultant, as the case may be, at any time, subject to applicable law; the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan or the Optionee’s acquisition or sale of the shares underlying the Option; and (x) no claim or entitlement to compensation or damages arises if the value of the Option or the underlying Shares decreases and in consideration for the grant of the Option the Optionee irrevocably releases the Company from any claim or entitlement to compensation or damages that does arise in connection with the Option.

 

Section 5.7.   Personal Data.

 

For purposes of the implementation, administration and management of the Option and the Plan or the effectuation of any acquisition, equity or debt financing, joint venture, merger, reorganization, consolidation, recapitalization, business combination, liquidation, dissolution, share exchange, sale of stock, sale of material assets or other similar corporate transaction involving the Company (a “Corporate Transaction”), the Optionee explicitly and unambiguously consents, by accepting this Agreement, to the collection, receipt, use, retention and transfer, in electronic or other form, of the Optionee’s personal data by and among the Company and its third party vendors or any potential party to a potential Corporate Transaction.  The Optionee understands that personal data (including but not limited to, name, home address, telephone number, employee number, employment status, social insurance number, tax identification number, date of birth, nationality, job title or duties, salary and payroll location, data for tax withholding purposes and Options awarded, cancelled, vested and unvested) is held by the Company and may be transferred to any broker designated by the Administrator or third parties assisting in the implementation, administration and management of the Options or the Plan or the effectuation of a Corporate Transaction and the Optionee expressly authorizes such transfer as well as the retention, use, and the subsequent transfer of the data, in electronic or other form, by the recipient(s) for these purposes.  The Optionee understands that these recipients may be located in the Optionee’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Optionee’s country.  The Optionee understands that personal data will be held only as long as is necessary to implement, administer and manage the Option or Plan or effect a Corporate Transaction.  The Optionee understands that, to the extent required by applicable law, the Optionee may, at any time, request a list with the names and addresses of any potential recipients of the personal data, view data, request additional information about the storage and processing of data, require any necessary amendments to data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company’s Secretary.

 

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The Optionee understands, however, that refusing or withdrawing the Optionee’s consent may affect the Optionee’s ability to accept an award of Options or otherwise participate in the Plan.

 

Section 5.8.   Electronic Delivery of Documents.

 

(a)           Methods of Delivery.  The Company may from time to time electronically deliver, via e-mail or posting on the Company’s website, this Agreement, information with respect to the Plan or the Option, any amendments to the Agreement, and any reports of the Company provided generally to the Company’s stockholders.  The Optionee may receive from the Company, at no cost, a paper copy of any electronically delivered documents by contacting the Secretary.

 

(b)           Consent and Acknowledgment.  By signing this Agreement, the Optionee (i) consents to the electronic delivery of this Agreement, all information with respect to the Plan and the Option and any reports of the Company provided generally to the Company’s stockholders; (ii) acknowledges that the Optionee may receive from the Company a paper copy of any documents delivered electronically at no cost to the Optionee by contacting the Company by telephone or in writing; (iii) further acknowledges that the Optionee may revoke the Optionee’s consent to the electronic delivery of documents at any time by notifying the Company of such revoked consent by telephone, postal service or electronic mail; and (iv) further acknowledges that the Optionee understands that the Optionee is not required to consent to electronic delivery of documents.

 

Section 5.9.   Risk and Financial Information Disclosure.

 

For purposes of claiming an exemption from registration under Rule 12h-1(f)(1) under the Securities Exchange Act of 1934, the Company may decide to provide the Optionee, every six months, with the information described in Rules 701(e)(3), (4), and (5) under the Securities Act of 1933 (risk and financial information relating to the Company), with any such financial statements being not more than 180 days old.  Any such information may be provided either by physical or electronic delivery or by written notice of the availability of the information on an Internet site that may be password-protected and of any password needed to access the information.  The Optionee may be required to execute an agreement to keep the information confidential as a condition precedent to the provision of the information.  Any such agreement shall be executed in such manner and form as the Administrator may require from time to time.  Notwithstanding the foregoing, the Company shall have no initial or continuing obligation to provide the Optionee with the information described in this Section 5.9, except as otherwise required by applicable law.

 

Section 5.10.   Amendment; Entire Agreement

 

This Agreement may be amended from time to time by the Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have a materially adverse effect on the Option or Shares as determined in the discretion of the Administrator, except as provided in the Plan or in a written document signed by the Optionee and the Company.  This Agreement constitutes the entire agreement among the parties with respect to any agreements regarding the equity-based incentive awards referenced on the Optionee’s signature page hereto and supersedes all prior and contemporaneous agreements (including any change in control, executive retention, employment or other agreements regarding the vesting of

 

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the equity-based incentive awards referenced on the Optionee’s signature page hereto, or payment of cash or Shares in respect of these equity-based awards upon a termination of the Optionee’s employment with the Company or other termination of status as an Eligible Individual), discussions, understandings and negotiations, whether written or oral, with respect to any of the foregoing.

 

Section 5.11.   Governing Law

 

The laws of the State of Maryland shall govern the interpretation, validity and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

 

Section 5.12.   Resolution of Disputes

 

Any dispute or disagreement which shall arise under, or as a result of, or pursuant to or relating to, this Agreement shall be determined by the Administrator in good faith in its absolute and uncontrolled discretion, and any such determination or any other determination by the Administrator under or pursuant to this Agreement and any interpretation by the Administrator of the terms of this Agreement, will be final, binding and conclusive on all persons affected thereby.  The Optionee agrees that before the Optionee may bring any legal action arising under, as a result of, pursuant to or relating to, this Agreement the Optionee will first exhaust his or her administrative remedies before the Administrator.  The Optionee further agrees that in the event that the Administrator does not resolve any dispute or disagreement arising under, as a result of, pursuant to or relating to, this Agreement to the Optionee’s satisfaction, no legal action may be commenced or maintained relating to this Agreement more than twenty-four (24) months after the Administrator’s decision.

 

Section 5.13.   Section 409A

 

This Agreement and the Options granted hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Code.  This Agreement and the Options shall be administered, interpreted and construed in a manner consistent with this intent.  Nothing in the Plan or this Agreement shall be construed as including any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the Options.  Should any provision of the Plan or this Agreement be found not to comply with, or otherwise be exempt from, the provisions of Section 409A of the Code, it may be modified and given effect, in the sole discretion of the Administrator and without requiring your consent, in such manner as the Administrator determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A of the Code.  The foregoing, however, shall not be construed as a guarantee or warranty by the Company of any particular tax effect to the Optionee.  Notwithstanding anything herein to the contrary, (i) if, at the time of the Optionee’s termination of employment with the Company, the Optionee is a “specified employee” as defined in Section 409A of the Code, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent the imposition of any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Optionee) until the date that is six months and one day following the Optionee’s termination of

 

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employment with the Company (or the earliest date as is permitted under Section 409A of the Code) and (ii) if any other payments of money or other benefits due to the Optionee hereunder would cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Board, that does not cause such an accelerated or additional tax or result in an additional cost to the Company.  The Company shall consult with its legal counsel and tax accountants in good faith regarding the implementation of the provisions of this Section 5.13, which shall be done only in a manner that is reasonably acceptable to the senior executives of the Company; provided that neither the Company nor any of its employees or representatives shall have any liability to the Optionee with respect thereto.

 

Section 5.14.   Counterparts

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.  Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

Signature Pages to follow.

 

15

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.

 

	
 
    	
LAUREATE   EDUCATION, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Robert   W. Zentz
    
	
 
    	
Title:
    	
Senior   Vice President, Secretary
    
	
 
    	
 
    	
and   General Counsel
    

 

[signature page to the Stock Option Agreement]

 

 

OPTIONEE:                                           

 

Address: (to be completed by Optionee:)

 

 

Options Granted:

 

Terms of OPTIONS:

Grant Date:           

Exercise Price:             per share

Expiration:          10 years

Time Option:

Performance Option:

 

[signature page to the Stock Option Agreement]

 

 

Schedule A

 

“EQUITY VALUE” for any fiscal year means the product of (A) Pro Rata Adjusted EBITDA for that fiscal year multiplied by (B) 10 minus Pro Rata Net Debt for that fiscal year, all calculated on an Fx Neutral basis, all fairly and appropriately adjusted for Additional Adjustments.

 

“Adjusted EBITDA” for any fiscal year will mean the Operating Income, as stated on the audited Consolidated Statement of Income of Laureate Education, Inc. and Subsidiaries (collectively “Laureate” or “the Company” or “LEI”), PLUS/(MINUS) (to the extent included in Operating Income):

 

1.              depreciation and amortization expenses;

2.              share-based compensation expenses, as defined by ASC 718;

3.              impairment costs as recognized on the Company’s financial statements for tangible or intangible assets to the extent described in the financial statements;

4.              transaction expenses in connection with financings, including fees and costs related to the issuance or modification of any indebtedness;

5.              (gains)/charges, net of insurance proceeds, resulting from a Force majeure event in any of the Company’s operating regions;

6.              charges, expenses and VAT  relating to tax efficient repatriation strategies;

7.              (gains)/losses on the disposition of Company’s  assets  (excluding (gains)/losses on dispositions of furniture and equipment in the ordinary course of business), investments, operations that qualify as businesses under ASC 805, and/or entities as defined under ASC 810;

8.              all expenses related to any public or private offering of the Company’s shares that are not netted with the offering proceeds and have not been capitalized;

9.              costs related to the restructuring or reduction in force (as defined in  ASC 420 or ASC 712), to the extent described in the financial statements;

10.       (gains)/expenses related to the establishment or changes in contingent liabilities and indemnification assets or contingent liabilities where there is an unrecorded indemnification asset booked in connection with the acquisition of business but only if  attributable to a period prior to the acquisition of a business; and

11.       (gains)/expenses for a litigation case, net of insurance proceeds or indemnification, if applicable, if the (gains)/expenses are in excess of $5 million.

12.       Adjusted EBITDA (as defined above to the extent such items are disclosed in the financial statements of the affiliate) for any affiliate (including THINK Education Group, LLC and any affiliate acquired after December 31, 2012) accounted for as an equity method investment.

 

“Pro Rata Adjusted EBITDA” shall mean Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests as of the last day of that fiscal year AND THEN fairly and appropriately adjusted for Additional Adjustments.  Any affiliates accounted for as equity method investment shall be pro rata adjusted to capture appropriately the economic share of Laureate’s investment.  This adjustment shall be calculated on an Fx Neutral basis if such information is available from the affiliate’s financial statements or, to the extent unavailable, the adjustment shall be calculated in USD.

 

 

“Pro Rata Debt” for any fiscal year will include only the below list of debt elements, as derived from the audited Balance Sheet for Laureate Education, Inc. and Consolidated Subsidiaries at the last day of such fiscal year.  The Pro Rata Debt balance shall be appropriately adjusted to exclude amounts in each such element attributable to noncontrolling interests.

 

1.              short-term and long-term debt;

2.              due to shareholders of acquired companies (long-term and current portion); and

3.              deferred compensation obligations for the share-based deferred compensation arrangement (for Laureate’s CEO and former Board member) as defined in the Consolidated financial statements.

 

“Pro Rata Net Debt” for any fiscal year will mean Pro Rata Debt (as defined herein):

 

MINUS (except to the extent attributable to noncontrolling interests):

 

1.              Cash and cash equivalent and Restricted cash, all as shown on the audited Balance Sheet for Laureate Education, Inc. and Consolidated Subsidiaries at the last day of the fiscal year;

2.              cumulative dividends or cash distributions on shares paid since December 31, 2012 to any class of shareholders, including minority shareholders; and

3.              cumulative net cash paid since December 31, 2012 for cross currency derivatives entered into by the Company (including carry and final settlement).

 

PLUS (except to the extent attributable to noncontrolling interests):

 

1.              the amount of capital contributions (either cash or in-kind), by any class of shareholders, since December 31, 2012; provided, however, that any in-kind contributions shall be accounted for at fair market value, and any cash proceeds from any Laureate equity offering shall be valued net of fees; and

2.              cumulative net cash received since December 31, 2012 for cross currency derivatives entered into by the Company (including carry and final settlement).

 

Pro Rata Net Debt shall also be adjusted to take into account Laureate’s economic share of the net debt positions of affiliates accounted for as equity method investments (including THINK Education Group, LLC and any affiliate acquired after December 31, 2012), similar to the pro rata net debt definition stated above; provided, however, that “net debt” of such affiliates shall be defined as short-term and long-term debt as reported on their financial statements less Cash and cash equivalents and Restricted Cash only.  This adjustment shall be calculated on an Fx Neutral basis if such information is available from the affiliate’s financial statements or, to the extent unavailable, the adjustment shall be calculated in USD.

 

“Additional Adjustments” shall mean:

 

1.              implications from the expropriation or deconsolidation of Company assets or a Company business required by or resulting from the actions of any government or government agency; with the Pro Rata Adjusted EBITDA from any such business during the LTM prior to expropriation, multiplied by an earnings growth rate of 1.08 compounded annually from the date of expropriation or deconsolidation, added to that fiscal year’s Pro Rata Adjusted EBITDA;

2.              changes in US GAAP, or the application thereof, subsequent to the issuance of the Company’s 2012 audited financial statements, promulgated by accounting standard setters or changes in local laws and regulations; and

 

 

3.              pro-forma adjustments, as disclosed in the presentation pursuant to which any acquired business(s) is approved, to include a full annual period of Pro Rata Adjusted EBITDA of that business(s) during that fiscal year.

 

“Fx Neutral” shall mean the application of the Foreign Exchange Spot Rates, as defined below, to the audited financial statements of Laureate Education, Inc. and Consolidated Subsidiaries for each fiscal year for which an Equity Value is calculated. These rates will be used to adjust both the Balance Sheet and Income Statement items in the Equity Value calculation.

 

“Foreign Exchange Spot Rates” shall equal the foreign exchange spot rates used to translate the audited Balance Sheet of Laureate Education, Inc. and Consolidated Subsidiaries at December 31, 2012.

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