Document:

Warrant to Purchase 105,555 Shares of the Common Stock of Motive Inc

 Exhibit 10.1 
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 
 WARRANT TO PURCHASE 105,555 SHARES 
 OF THE COMMON STOCK OF 
 MOTIVE, INC. 
 EFFECTIVE DATE:
February 20, 2006 
 EXPIRATION DATE: February 20, 2009 
 This certifies that HEIDRICK & STRUGGLES, INC. or its transferees or assigns (each individually, the “Holder”) for the agreed upon
value of $1.00 and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, shall be entitled to purchase from MOTIVE, INC., a Delaware corporation (the “Company”),
having its principal place of business at 12515 Research Boulevard, Bldg. 5, Austin, TX 78759, a maximum of 105,555 fully paid and nonassessable shares of the Company’s Common Stock (“Common Stock”) for
cash at prices equal to the following: $3.40 per share for 83,333 shares and $0.01 per share for 22,222 shares (the “Exercise Price”) at any time, or from time to time, up to and including 5:00 p.m. Pacific time
on the Expiration Date, upon the surrender to the Company at its principal place of business (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed, a Form of Subscription in substantially the
form attached hereto duly filled in and signed and, as applicable, upon payment in cash or by check of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions
hereof, or the surrender of the right to acquire the number of shares of Common Stock determined in accordance with Section 1.2. The Exercise Prices and the number of shares of Common Stock purchasable hereunder are subject to adjustment as
provided in Section 3 of this Warrant. 
 The Warrant is being issued pursuant to the letter agreement between the Company and the
Holder dated as of November 8, 2005 (the “Letter Agreement”). The Holder of this Warrant is subject to certain restrictions, and entitled to certain rights as set forth in the Letter Agreement. This Warrant is referred to as the
“Warrant” in the Letter Agreement. 
 This Warrant is subject to the following terms and conditions: 
 1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR
SHARES. 
 1.1. General. This Warrant is exercisable at the option of the holder of record hereof at any
time or from time, to time, up to the Expiration Date for all or any part of the shares of Common Stock (but not for a fraction of a share), which may be purchased hereunder. The Company agrees that the shares of Common Stock purchased under this
Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant, properly endorsed, the completed and executed Form of Subscription and appropriate
payment for such shares shall have each been delivered to the 

 Company at its principal place of business. Certificates for the shares of Common Stock so purchased, together with any
other securities or property to which the Holder is entitled upon such exercise, shall be delivered to the Holder by the Company at the Company’s expense within a reasonable time after the rights represented by this Warrant have been so
exercised, and in any event, within five (5) business days of such exercise. In case of a purchase of less than all the shares which may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase to the Holder hereof within a reasonable time. Each stock certificate so delivered shall be in such denominations of Common
Stock as may be requested by the Holder hereof and shall be registered in the name designated by such Holder. 
 1.2 Net Issue
Exercise. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Company’s Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising
this Warrant for cash, the Holder may elect a “Net Issue Exercise” pursuant to which it will receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at
the principal office of the Company together with the properly endorsed Form of Subscription and notice of such election in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

 X = Y (A-B) 
   A 
 Where X = the number of shares of Common Stock to be issued to the Holder 
 Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such exercise) 
 A = the fair market value of one share of the Company’s Common Stock (at
the date of such exercise) 
 B = Exercise Price (as adjusted to the date of such exercise). 
 For purposes of the above calculation, the fair market value of one share of Common Stock shall be determined by the Company’s Board of Directors in good faith;
provided, however, that where there is a public market for the Company’s Common Stock, the fair market value per share shall be the average of the closing prices of the Company’s Common Stock quoted on the Nasdaq National Market (or
similar system) or on any exchange on which the Common Stock is listed, whichever is applicable, over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised. 
 2. SHARES TO BE FULLY PAID; RESERVATION OF
SHARES. The Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, 

  

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fully paid and nonassessable and free from all preemptive rights of any shareholder and free of all taxes, liens and charges with respect to the issue
thereof. The Company further covenants and agrees that, during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Common Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by
this Warrant. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic
securities exchange upon which the Common Stock may be listed; provided, however, that the Company shall not be required to effect a registration under Federal or State securities laws with respect to such exercise. The Company will not take any
action which would result in any adjustment of the Exercise Price (as set forth in Section 3 hereof) if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of
Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities and other equity purchase rights then outstanding, would exceed the total number of shares
of Common Stock then authorized by the Company’s Certificate of Incorporation (the “Company Charter”). 
 3.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price and the number of shares purchasable upon the exercise
of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3. Upon each adjustment of the Exercise Price, the Holder of this Warrant shall thereafter be entitled to purchase,
at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment. 
 3.1 Subdivision or
Combination of Stock. In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced,
and conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of shares (by reverse stock split or otherwise), the Exercise Price in effect immediately prior to such combination shall be
proportionately increased. 
 3.2 Dividends in Common Stock, Other Stock, Property, Reclassification. If at any time or from time to
time the Holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor, 
 (a) Common Stock or any shares of stock or other securities which are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, 
 (b) any cash paid or payable otherwise than as a cash dividend, or 
  

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 (c) Common Stock or additional stock or other securities or property (including cash) by way of
spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 3.1 above),

 then, and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of
Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clause (b) above and this clause (c)) which such
Holder would hold on the date of such exercise had he been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other
securities and property. 
 3.3 Reorganization, Consolidation, Merger or Sale. If any recapitalization or reorganization of the
capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities, or other assets or property (an “Organic Change”), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof
shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant) such shares of
stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof. Prior to the consummation of any such consolidation, merger or sale, the successor entity (if other than the Company) resulting from such consolidation or the corporation
purchasing such assets shall assume by written instrument reasonably satisfactory in form and substance to the Holders executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of
the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. 
 3.4 Certain Events. If any change in the outstanding Common Stock of the Company or any other event occurs as to which the other provisions of
this Section 3 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with such provisions, then the Board of Directors of the Company shall make an
adjustment in the number and class of shares available under the Warrant, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the
Warrant upon exercise for the same aggregate Exercise Price the total number, class and kind of shares as the 

  

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Holder would have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring
adjustment. 
 3.5 Notices of Change. 
 (a) Immediately upon any adjustment in the number or class of shares subject to this Warrant and/or of the Exercise Price, the Company shall give written notice thereof to the Holder, setting forth in
reasonable detail and certifying the calculation of such adjustment. 
 (b) The Company shall give written notice to the Holder at
least 10 business days prior to the date on which the Company closes its books or takes a record for determining rights to receive any dividends or distributions. 
 (c) The Company shall also give written notice to the Holder at least 30 business days prior to the date on which an Organic Change shall take place. 
 4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon the exercise of the Warrant shall be made
without charge to the Holder of the Warrant for any issue tax (other than any applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised. 
 5. CLOSING OF BOOKS. The Company will at no time close its transfer books against the transfer of any warrant or of any shares of Common Stock issued or issuable upon the
exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 
 6. NO
VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in this Warrant shall be construed as conferring upon
the Holder hereof the right to vote or to consent or to receive notice as a shareholder of the Company or any other matters or any rights whatsoever as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the holder to purchase
shares of Common Stock, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such Holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by
the Company or by its creditors. 
 7. WARRANTS TRANSFERABLE. Subject to compliance with applicable
federal and state securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes), upon surrender of this Warrant properly endorsed. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Warrant shall have been so endorsed, may be treated by the Company,
at the Company’s option, and all other persons dealing with this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant, or to the transfer hereof on the books of the
Company any notice to 

  

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the contrary notwithstanding; but until such transfer on such books, the Company may treat the registered owner hereof as the owner for all purposes.

 8. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF
WARRANT. The rights and obligations of the Company, of the holder of this Warrant and of the holder of shares of Common Stock issued upon exercise of this Warrant, shall survive the exercise of this Warrant. 
 9. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE COMPANY. 
 (a) Articles and Bylaws. The Company has made available to Holder
true, complete and correct copies of the Company Charter and Bylaws, as amended, through the date hereof. 
 (b) Due Authority. The
execution and delivery by the Company of this Warrant and the performance of all obligations of the Company hereunder, including the issuance to Holder of the right to acquire the shares of Common Stock, have been duly authorized by all necessary
corporate action on the part of the Company, and the Warrant is not inconsistent with the Company Charter or Bylaws and constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms. 
 (c) Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant, except for any filing required by applicable federal and state
securities laws, which filing will be effective by the time required thereby. 
 (d) Issued Securities. All issued and outstanding
shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of capital stock were issued in full compliance with all federal and state securities laws. 

(e) Exempt Transaction. Subject to the accuracy of the Holders representations in Section 10 hereof, the issuance of the Common Stock
upon exercise of this Warrant will constitute a transaction exempt from (i) the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “1933 Act”), in reliance upon Section 4(2)
thereof, and (ii) the qualification requirements of the applicable state securities laws. 
 (f) Compliance with Rule 144. At
the written request of the Holder, who proposes to sell Common Stock issuable upon the exercise of the Warrant in compliance with Rule 144 promulgated by the Securities and Exchange Commission, the Company shall furnish to the Holder, within thirty
(30) days after receipt of such request, a written statement confirming the Company’s compliance with the filing requirements of the Securities and Exchange Commission as set forth in such Rule, as such Rule may be amended from time to
time. 
  

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 10. REPRESENTATIONS AND COVENANTS OF
THE HOLDER. 
 This Warrant has been entered into by the Company in reliance upon the following
representations and covenants of the Holder: 
 (a) Investment Purpose. The Warrant and the Common Stock issuable upon exercise of
the Warrant will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration
or exemption pursuant to the 1933 Act. 
 (b) Private Issue. The Holder understands (i) that the Warrant and the Common Stock
issuable upon exercise of this Warrant is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications
requirements thereof pursuant to Section 4(2) of the 1933 Act and any applicable state securities laws, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 10.

 (c) Disposition of Holders Rights. In no event will the Holder make a disposition of the Warrant or the Common Stock issuable upon
exercise of the Warrant unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel (which counsel may either be
inside or outside counsel to the Holder) satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration
requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Common Stock or Common Stock issuable on the exercise of such rights do not apply to
transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of Common Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a letter
shall have been issued to the Holder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Holder at its request by such Commission stating that no action shall be recommended by such staff
or taken by such Commission, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent
restrictions on transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Holder or holder of a share of Common Stock then outstanding as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense to such holder, one or more new certificates for the Warrant or for such shares of Common Stock not bearing any restrictive legend. 
  

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 (d) Financial Risk. The Holder has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment. 
 (e) Risk of No Registration. The Holder understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the “1934 Act”), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the Warrant, or (ii) the Common Stock issuable
upon exercise of the Warrant, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale of the Warrant or the Common Stock issuable upon exercise of the Warrant which might be made by it in
reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule. 
 (f) Accredited
Investor. Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D under the 1933 Act, as presently in effect. 
 11. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought. 
 12. NOTICES. Any notice, request
or other document required or permitted to be given or delivered to the holder hereof or the Company shall be delivered or shall be sent by an established overnight service provider (e.g., Federal Express), or registered or certified mail, postage
prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Warrant or such other address as either may from time to time provide to the other in
accordance with this Section. 
 13. BINDING EFFECT ON
SUCCESSORS. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns
of the holder hereof. 
 14. DESCRIPTIVE HEADINGS AND GOVERNING
LAW. The description headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of the State of Texas, without giving effect to principles of conflicts of laws. 
 15. LOST WARRANTS. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will 

  

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make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant. 
 16. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in
lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Exercise Price. 
  

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 IN WITNESS WHEREOF, the Company has caused this
Warrant to be duly executed by its officers, thereunto duly authorized. 
  
  

			
	 MOTIVE, INC.

	 a Delaware corporation

		
	By:	 	/s/ April Downing
		
	Name:	 	April Downing
		
	Title:	 	Acting Chief Financial Officer and Vice President of Finance and Investor Relations

 EXHIBIT A 
 SUBSCRIPTION FORM 
 Date:
                    , 200         
 Motive, Inc. 
 12515 Research Boulevard 
 Building 5 
 Austin, TX 78759 
 Attn: President 
 Ladies and Gentlemen: 
  

	 ̈	The undersigned hereby elects to exercise the warrant issued to it by Motive, Inc. (the “Company”) and dated February 20, 2006, (the
“Warrant”) and to purchase thereunder
                                        
         shares of the Common Stock of the Company (the “Shares”) at a purchase price of
                                     Dollars
($                ) per Share or an aggregate purchase price of
                                 Dollars
($                ) (the “Exercise Price”). Pursuant to the terms of the Warrant the undersigned has delivered the Exercise Price
herewith in full in cash or by certified check or wire transfer. 

  

	 ̈	The undersigned hereby elects to convert
                             percent
(            %) of the value of the Warrant pursuant to the provisions of Section 1.2 of the Warrant. 

 Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

  

	
	 Name:____________________________

	
	 Address:__________________________

	
	 _________________________________

	

  

	
	 Very truly yours,

	
	 ___________________________________

	
	 By: ________________________________

	
	
	 Title: _______________________________Form of Nonqualified Stock Option Award Agreement

 Exhibit 10.53 
 2006 ITT EDUCATIONAL SERVICES, INC. 
 EQUITY COMPENSATION PLAN 
 NONQUALIFIED STOCK OPTION AGREEMENT 
 This Agreement (“Agreement”), effective as of the      day of                     ,
2         (“Grant Date”), is by and between ITT Educational Services, Inc. (“Company”) and
                     (“Grantee”). 
 The Grantee now serves the Company or a Subsidiary as either an Employee or a Non-Employee Director, and in recognition of the Grantee’s valued services, the Company, through the Committee, desires to provide an
opportunity for the Grantee to increase his or her stock ownership in the Company pursuant to the provisions of the 2006 ITT Educational Services, Inc. Equity Compensation Plan (“Plan”). 
 In consideration of the terms and conditions of this Agreement and the Plan, the terms of which are incorporated as a part of this Agreement, the parties
agree as follows: 
 1. Grant of Option. As of the date indicated above, the Company hereby grants to the Grantee the right and option
(“Option”) to purchase all or any part of an aggregate of                      Shares. 
 2. Nonqualified Status. This Option is a nonqualified stock option and is not intended to qualify as an incentive stock option under Code
Section 422. 
 3. Exercise Price. The Exercise Price of each Share covered by this Option is
$                     per Share. 
 4. Vesting of Option. Subject to the terms of the Plan and this Agreement, including paragraphs 5 and 6 below, the Grantee will vest in and be entitled to exercise this Option at the time the Committee selects below: 
                      (a) this Option shall
become exercisable as to                      [insert fraction, such as 1/3] of the Shares on a cumulative basis, on each of the
                     [insert anniversary dates, such as first, second, and third] anniversaries of the Grant Date (time-based vesting
(graded) –at least one year from the Grant Date); 
                      (b) on
                         , 2         (time-based vesting (cliff)
– at least one year from the Grant Date); 
                      (c) on the date or dates the Grantee achieves the Performance Measures, as specified in Attachment A to this
Agreement (performance-based vesting – at least one year from the Grant Date). 
 5. Term of Option. This Option expires at the
close of business on                          , 2         (not to
exceed seven years from the Grant Date), unless it expires earlier pursuant to the following rules: 
 (a) Upon termination by
the Company of the Grantee’s employment or service without Cause, or upon termination of employment or service by the Grantee for a reason other than death, Disability, or Retirement (i) the Grantee will forfeit all of the Shares subject
to this Option that had not yet become exercisable as of the date of his or her termination, and (ii) Shares subject to this Option that were exercisable as of the date of the Grantee’s termination will remain exercisable until the earlier
of (A) the date 90 days after the date of termination, or (B) the date this Option otherwise expires in accordance with the terms of the Plan and this Agreement; and 
  

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 (b) Upon termination of the Grantee’s employment or service for Cause, the Grantee
will immediately forfeit this Option entirely, to the extent it remains unexercised (including as to those Shares subject to this Option that are otherwise exercisable as of the date of his or her termination). 
 6. Termination for Death, Disability, or Retirement. The effect of the Grantee’s termination of employment or service for death, Disability,
or Retirement depends on whether this Option is subject to a time-based or performance-based vesting schedule (as specified in paragraph 4 of this Agreement): 
 (a) Time-Based Vesting Schedule. Upon the Grantee’s death, Disability, or Retirement, all of the Grantee’s Options with
time-based vesting provisions will become immediately exercisable and will remain exercisable until the earlier of (i) the date three years after the date of the Grantee’s death, Disability, or Retirement; or (ii) the date the Options
expire in accordance with their terms. 
 (b) Performance-Based Vesting Schedule. Upon the Grantee’s death,
Disability, or Retirement, all of the Grantee’s Options with performance-based vesting provisions are subject to the following two rules: (i) the Grantee will forfeit all such Options that are not exercisable as of the date of the
Grantee’s death, Disability or Retirement; and (ii) Options that were exercisable as of the date of the Grantee’s death, Disability or Retirement will remain exercisable until the earlier of (A) the date three years after the
date of the Grantee’s death, Disability or Retirement, or (B) the date the Options expire in accordance with their terms. 
 7.
Exercise. The Grantee may exercise this Option, to the extent vested, by delivering a written notice to the Company, or the Company’s designee, as the Company specifies in writing to the Grantee. The Grantee’s written notice must:
(i) set forth the number of Shares for which he or she is exercising the Option, and (ii) specify the method of payment for the Exercise Price. The Grantee may pay the Exercise Price by any of the following means: 
 (a) in cash or its equivalent; 
 (b) by tendering (either actually or constructively by attestation) Shares having an aggregate Fair Market Value at the time of exercise equal to the Exercise Price that the Grantee has held for at least
                     (    ) months; 
 (c) Cashless Exercise; or 
 (d) by a combination of any of the permitted methods of payment in subparagraphs (a), (b), and (c) above. 
 8. Non-Assignability. Except as provided in the Plan or this Agreement, the Option is not assignable or transferable by the Grantee otherwise than by will or by the laws of descent and distribution and is exercisable, during the
Grantee’s lifetime, only by the Grantee. 
 9. Change in Control. As provided in Section 19 of the Plan, upon the occurrence
of a Change in Control, this Option may become exercisable prior to time provided for under the vesting schedule in paragraph 4. 
 10.
Withholding. Prior to the delivery of any Shares pursuant to this Option, the Company has the right and power to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy all applicable tax
withholding requirements. The Company may permit or require the Grantee to satisfy all or part of the tax withholding obligations in connection with this Option by (a) having the Company withhold otherwise deliverable Shares, or
(b) delivering to the Company Shares already owned for a period of at least six (6) months (or such longer or shorter period as may be required to avoid a charge to earnings for financial accounting purposes), in each case having a value
equal to the amount to be withheld, which shall not exceed the 
  

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 amount determined by the applicable minimum statutory tax withholding rate (or such other rate as will not result in a
negative accounting impact). For these purposes, the value of the Shares to be withheld or delivered will be equal to the Fair Market Value as of the date that the taxes are required to be withheld. 
 11. Notices. All notices and other communications required or permitted under this Agreement shall be written and delivered personally or sent by
registered or certified first-class mail, postage prepaid and return receipt required, addressed as follows: if to the Company, to the Company’s executive offices in Carmel, Indiana, and if to the Grantee or his or her successor, to the address
last furnished by the Grantee to the Company. Notwithstanding the foregoing, though, the Company may authorize notice by any other means it deems desirable or efficient at a given time, such as notice by facsimile or electronic mail (e-mail).

 12. No Employment Rights. Neither the Plan nor this Agreement confers upon the Grantee any right to continue in the employ or
service of the Company or a Subsidiary or interferes in any way with the right of the Company or a Subsidiary to terminate the Grantee’s employment or service at any time. 
 13. Defined Terms. All of the defined terms, or terms that begin with capital letters and have a special meaning for purposes of this Agreement,
have the meaning ascribed to them in this Agreement. All defined terms to which this Agreement does not ascribe a meaning have the meaning ascribed to them in the Plan. 
 14. Plan Controlling. The terms and conditions set forth in this Agreement are subject in all respects to the terms and conditions of the Plan, which are controlling. All determinations and interpretations of
the Committee are binding and conclusive upon the Grantee and his or her legal representatives. The Grantee agrees to be bound by the terms and provisions of the Plan. 
 The Company and the Grantee have executed this Agreement as of the date first above written. 
  

					
	  

	[GRANTEE SIGNATURE]
		
	Print Name:	 	  

	
	ITT EDUCATIONAL SERVICES, INC.
		
	By:	 	  

		
	Print Name:	 	  

		
	Title:	 	  

  

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 ATTACHMENT A 
 TO 
 NONQUALIFIED STOCK OPTION AGREEMENT 
 PERFORMANCE-BASED VESTING 
  

	I.	Performance Measures and Beginning of Performance Period 

 Pursuant to the terms of the Plan and paragraph 4 of this Agreement, the Grantee will vest in this Option only upon the achievement, under the terms applicable in part II below and within the Performance Period that begins on the date
specified in this part I, of the following Performance Measures: [specify the applicable Performance Measures and the first day of the Performance Period]: 
                                       
                                        
                                        
                                        
                                        
                                        
                    
  
                                       
                                        
                                        
                                        
                                        
                                        
                    
  
                                       
                                        
                                        
                                        
                                        
                                        
                    
  
                                       
                                        
                                        
                                        
                                        
                                        
                    
  
                                       
                                        
                                        
                                        
                                        
                                        
                    
  
                                       
                                        
                                        
                                        
                                        
                                        
                    
  
  

	II.	Performance Period (Vesting Schedule) 

 The
Performance Period, or vesting schedule, that the Committee selects below applies to the Grantee’s Option: 
  

	         1.	Prorated Vesting. The Performance Period for this Option is
                     years (at least one), beginning on the date specified in part I above. After the Performance Period expires, the
Committee will determine the percentage of achievement for the Performance Measures in part I above. Based upon that determination, the Grantee will vest in a percentage of Shares subject to this Option in accordance with the following schedule
[below is an example]: 

  

			
	 PERCENTAGE ACHIEVEMENT OF
 PERFORMANCE MEASURES
	 	 PERCENTAGE OF SHARES
 THAT VEST

	 Below 85%
	 	0%
	 At least 85% but less than 90%
	 	25%
	 At least 90% but less than 95%
	 	50%
	 At least 95% but less than 100%
	 	75%
	 At least 100%
	 	100%

  

	         2.	Graded Vesting. The Performance Period for this Option is
                     years (more than one), with the first year beginning on the date specified in part I above and each subsequent year
beginning on its anniversary. After each year of the Performance Period, as specified below, the Committee will determine whether the Performance Measures applicable to the period were achieved, as specified in part I above. Based upon that
determination, the Committee will determine whether the Grantee vested in the correlating fraction of this Option for that period, all in accordance with the following schedule [below is an example]: 

  

			
	 YEAR OF THE PERFORMANCE
 PERIOD
	 	 FRACTION OF SHARES
 THAT VEST

	 The first year
	 	1/3
	 The second year
	 	1/3
	 The third year
	 	1/3

  

 - 4 - 

	         3.	Cliff Vesting. The Performance Period for this Option is
                     years (at least one), beginning on the date specified in part I above. After the Performance Period expires, the
Committee will determine whether the Performance Measures specified in part I above were achieved. If the Performance Measures were achieved in full, the Grantee will vest in this entire Option. If the Performance Measures were not achieved in full,
the Grantee will forfeit this entire Option. 

  

 - 5 -

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