Document:

Exhibit 10.9

 

NON-QUALIFIED STOCK OPTION AGREEMENT

2TOR, INC.

 

Granted to:

 

Social Security number:

 

Option number:

 

Date of Grant:

 

Total Shares:

 

Option price per share:  The option price shall be the fair market value per share (“FMV”) on the date of the grant as determined by the Company in accordance with Section 14 below.

 

Vesting Period:  See below for vesting schedule.

 

Your Option

 

The definition of any terms used herein may be found in 2tor Glossary.

 

Your option is a Non-Qualified Stock Option.  It is not intended to qualify as an Incentive Stock Option under Section 422 of the Code.

 

Vesting

 

shares of your option shall be vested on                         , 200   , the first anniversary of the date you first provided services to the Company.  The remaining              shares shall vest in 36 equal installments of        shares at the end of each calendar month subsequent to the month of the first vesting date.

 

Payment Methods

 

Payment of the option price shall be made in U.S. dollars or, in the discretion of the Committee, in the Common Stock of the Company valued at its Fair Market Value, a combination of such Common Stock and cash, or any other method as may be approved by the Committee. However, payment may not be made with Common Stock unless stock has been held for at least six months. Payment shall be made to the Company at its corporate office, 30 East 23rd Street, 12th Floor, New York, New York 10010.

 

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Conditions of Exercisability

 

The exercise of your option is subject to the following terms and conditions:

 

(1)                                 As a prerequisite to delivery of any stock certificates upon your exercise of an option granted hereunder, you shall give an undertaking and agree (a) to the placing of such legends on your certificates as may be required by the Committee to assure compliance with any federal or state securities laws, and (b) to executing and agreeing to be bound by the terms of the Stockholders Agreement that may be adopted by the Company from time to time. The Common Stock purchased pursuant to the exercise of an option granted hereunder cannot be sold unless it has been registered under the Securities Act of 1933, as amended, or is subject to an exemption from registration under such Act.

 

(2)                                 Except as provided below, you must be an employee, officer, or director of, or consultant to, the Company or one of its subsidiaries at the date of exercise, and that employment, directorship, or consultancy must have been continuous from the date hereof.  For the purposes of this Plan, persons on company-authorized leaves of absence are considered employees, but persons absent due to long-term disability are not considered employees.

 

(3)                                 In the event of your death while an active employee, officer, director, or consultant, your rights to exercise this option which have vested to and including the date of death may be exercised within one year after death by your estate or by any person who acquires such option by inheritance or devise. Thereafter, such rights shall lapse.

 

(4)                                 In the event of the termination of your status as an employee, officer, director or consultant due to long-term disability, your rights to exercise this option which have vested to and including the date of long-term disability may be exercised within one year after the start of long-term disability by you or, should you die within said one year period, by your estate or any person who acquires this option by inheritance or devise. Thereafter, such rights shall lapse.

 

(5)                                 If you are an employee and in the event of your Retirement from the Company, your rights to exercise this option which have vested to and including the date of your Retirement may be exercised within three years after Retirement by you or, should you die within said three year period, by your estate or any person who acquires this option by inheritance or devise. Thereafter, such rights shall lapse. For purposes of this Grant, the term “Retirement” shall mean the termination of employment after having reached age sixty-five (65).

 

(6)                                 In the event of the termination of your status as an employee, officer, director, or consultant other than for Cause, death, disability, or Retirement, or if you are an Executive Officer and terminate your employment with Adequate Notice, your rights to exercise this option which have vested on or before your date of termination may be exercised within three months after such termination or, should you die within said three month period, by your estate or any person who acquires this option by inheritance or devise. Thereafter, such rights shall lapse.

 

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(7)                                 Omitted.

 

(8)                                 If your status as an employee, officer, director, of consultant is terminated for Cause, or if you are an Executive Officer and you terminate your employment without Adequate Notice, the option granted hereunder shall immediately terminate upon the giving of notice of your termination. The Committee shall determine in its sole discretion when notice of termination was given and whether termination was for Cause.

 

(9)                                 This option shall be transferable by you to your spouse, children, brother, sister, parents or a trust in which these persons have more than fifty percent of the beneficial interest, or by will or by the laws of descent and distribution. During your lifetime, this option shall be exercisable only by you or any transferee described in the previous sentence.

 

(10)                          This option is not, in any event, exercisable after the expiration of ten years from the date of grant.

 

(11)                          The exercise of this option is subject to all the terms and conditions relating to incentive stock options contained in the 2tor, Inc. Amended and Restated 2008 Stock Incentive Plan (the “Plan”), a copy of which has been provided to you, and which is also available upon request from the corporate secretary of the Company.  In accordance with the plan, you agree that in connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing such offering of the Company’s securities, you will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days (or such other period, not to exceed 30 days after the expiration of the market stand-off time period, as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto)) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering.  In the event of a Change in Control (as defined in the Plan) in which the Surviving Corporation (as defined in the Plan) does not assume this option or substitute an equivalent award therefor, the number of shares of this option which may vest under Section 11.1 of the Plan shall be no greater than the number of shares that would have vested as of the date one year after the date of such Change in Control.  If, in connection with or within one year following a Change in Control, either (a) your employment is terminated by the successor corporation without Cause or (b) you terminate employment after being Reassigned (as defined in the Plan), the number of shares of this option which may vest under Section 11.2 of the Plan shall be no greater than the number of shares that would have vested as of the date one year after the date of such termination.

 

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(12)                          In connection with the exercise of this option, the Company shall have the right to withhold from your salary or other amounts payable to you, or to require you to make arrangements to pay in a manner satisfactory to the Company, the appropriate amount of applicable withholding taxes, if any. Without limiting the scope of the preceding sentence, you shall have the right to elect to pay your withholding taxes to the Company in cash or in such form and manner as the Committee shall prescribe, to have such number of shares of Common Stock otherwise issuable with respect to the exercise of this option reduced by the amount necessary to satisfy all or part, as you may so elect, of your withholding obligation, and to transfer to the Company unrestricted shares of Common Stock already held by you to satisfy all or any part, as you may so elect, of your withholding obligation, provided that no more than the statutory withholding rate shall be withheld. The obligations of the Company under this Agreement shall be conditional on such payment or arrangements.

 

(13)                          Notwithstanding anything in this option grant agreement to the contrary, the Committee reserves the right at any time to substitute for any unvested portion of this option an alternative equity instrument the fair market value of which is no less than the fair market value of the unvested portion of this option being replaced.  To the extent that a portion of this option is replaced with an alternative equity instrument, such replaced option shall be cancelled immediately.  Any such substitution for the unvested portion of this option shall not affect the vested portion of this option, which shall remain exercisable subject to the terms and conditions contained herein.

 

(14)                          The Company shall undertake a valuation of the Company’s shares of common stock to determine the FMV for each share of common stock as of the date of grant.  Such valuation will be completed by the Company as soon as commercially practicable and the Company will notify you of such FMV which shall also be the per share exercise price of this Option.

 

Please retain this copy for your files.

 

	
2TOR,   INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
Title:
    
	
 
    	
 
    	
Social   Security No.:
    	
 
    

 

4Exhibit 10.10

 

 

2013 2U, Inc. Bonus Plan

 

We know that changing the world, pursuing excellence and working with a great community are what drive you, but a bonus can still be sweet! We tried to keep our methodology for this bonus plan as simple and transparent as possible, but with so many different programs and functions in the company, that wasn’t easy. So bear with us as we walk you through it.

 

First, we think you’re eligible to participate in the bonus plan.

 

We believe your current position and job duties make you eligible for our bonus plan. However, you will become ineligible if your work changes in a way that subjects it to Title IV regulation 34 CFR § 668.14(b)(22) (a/k/a the “Incentive Compensation Rule”).

 

Also, to receive your bonus (except as otherwise required by law), you must be actively employed on a continuous basis through the date on which the bonus is paid. Thus, if you are not employed with 2U, Inc. on the date the 2013 bonus is payable (prior to June 30, 2014), you will not be entitled to any 2013 bonus payment, even if the performance targets that would have applied to you are met for that year.

 

Note that this is a discretionary plan and all payouts are subject to approval by the Board of Directors. We reserve the right to modify or terminate this bonus plan at any time for any reason, with or without prior notice.

 

Here’s what your bonus will be based on.

 

All bonus calculations will be based on performance against three things:

 

·                       Bookings — which determines 25% of your bonus potential,

·                       Revenue — which determines 25% of your bonus potential, and

·                       EBITDA — which determines 50% of your bonus potential.

 

Here’s what we’re measuring:

 

·                       2U Targets are the 2013 budgeted Bookings, Revenue and EBITDA numbers for the whole company as approved by the Board of Directors (which may be changed if they think necessary).

·                       Program Targets are the 2013 budgeted Bookings, Revenue and EBITDA numbers for each Program as approved by the Board of Directors (which may be changed if they think necessary).

·                  There is one exception — because the Simmons Nursing Program is going to have only one cohort this year rather than the two cohorts we budgeted, the Simmons Nursing Program targets will be based on the 1+11 forecast.

·                  And, while we will measure performance for GU Nursing and Simmons Nursing separately against their respective Program targets, bonus-eligible employees in our Nursing vertical will be paid75% on GU results and 25% on Simmons results.

 

The specific targets for Bookings, Revenue and EBITDA will depend on your bonus track.

 

·                       If you are in the Matrix, 75% of your bonus will be based on 2U targets and 25% will be based on Program targets. Programs with targets will be all Programs budgeted to be launched — so with students in classes and generating revenue - before or during 2013. The performance of each of these programs will be weighted equally in the calculation of your bonus.

·                       If you are in a Program or mix of Programs, 75% of your bonus will be based on your Program’s targets and 25% will be based on 2U targets.

 

Here’s how much you could earn.

 

You have a personal bonus target that is stated as a percent of your salary. That percentage multiplied by the base pay you actually earn during 2013 will determine your base bonus potential.

 

 

And here’s how your bonus is calculated.

 

Hitting all financial targets earns you 80% of your bonus. If those financial targets are not hit, or your personal performance is below standard, your bonus could be paid out at a lesser amount or not paid out at all. If those financial targets are exceeded, you could be paid out up to 120% of your base bonus potential.

 

Your bonus moves up or down at various levels of financial performance based on a sliding scale. In prior years, we used the same scale for each program, meaning that larger programs had wide bands for each 5% change in earned bonus while smaller programs had narrow bands. Now that we have programs at such different stages of development, “one size fits all” really doesn’t work anymore. So to create fair and reasonable scales for everyone, we’ve established a scale for the Matrix and grouped Programs together by level of maturity (for revenue and bookings) and level of profitability (for EBITDA).

 

Here are the scales:

 

	
2U
    
	
Bonus decreases 5% for every:
    
	
- 1.25% change in revenue
    
	
- .94% change in bookings
    
	
- .62% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+1.25% change in revenue
    
	
+ .94% change in bookings
    
	
+ 1.24% change in EBITDA
    
	
 
    
	
MAT
    
	
Bonus decreases 5% for every:
    
	
- 1.25% change in revenue
    
	
- .94% change in Bookings
    
	
- 1.25% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+ 1.25% change in revenue
    
	
+.94% change in Bookings
    
	
+ 2.5% change in EBITDA
    
	
 
    
	
MSW & MBA
    
	
Bonus decreases 5% for every:
    
	
- 1.25% change in revenue
    
	
- .94% change in Bookings
    
	
- .62% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+ 1.25% change in revenue
    
	
+.94% change in Bookings
    
	
+ 1.24% change in EBITDA
    
	
 
    
	
MSN
    
	
Bonus decreases 5% for every:
    
	
- 1.25% change in revenue
    
	
- .94% change in Bookings
    

 

 

	
- 1.56% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+ 1.25% change in revenue
    
	
+.94% change in Bookings
    
	
+ 3.12% change in EBITDA
    
	
 
    
	
LLM, MPH, IR
    
	
Bonus decreases 5% for every:
    
	
- 1.55% change in revenue
    
	
- 1.25% change in bookings
    
	
- .94% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+1.55% change in revenue
    
	
+1.25% change in bookings
    
	
+ 1.88% change in EBITDA
    
	
 
    
	
MPA
    
	
Bonus decreases 5% for every:
    
	
- 1.55% change in revenue
    
	
- 1.25% change in bookings
    
	
- .62% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+1.55% change in revenue
    
	
+1.25% change in bookings
    
	
+1.24% change in EBITDA
    
	
 
    
	
Simmons
    
	
Bonus decreases 5% for every:
    
	
- 1.55% change in revenue
    
	
- 1.25% change in bookings
    
	
- 1.25% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+1.55% change in revenue
    
	
+1.25% change in bookings
    
	
+2.5% change in EBITDA
    
	
 
    
	
Semester Online
    
	
Bonus decreases 5% for every:
    
	
- 1.55% change in bookings & revenue
    
	
- .62% change in EBITDA
    
	
 
    
	
Bonus increases 5% for every:
    
	
+ 1.55% change in bookings & revenue
    
	
+ 1.24% change in EBITDA
    

 

 

Personal Performance

 

If in your annual review, your performance is rated as below standard, your bonus, as calculated under this plan, may be reduced by up to 50%.

 

Taking Your Bonus

 

Except as otherwise required by law, no bonus is payable unless the employee is actively employed on a continuous basis with 2U, Inc. through the date on which the bonus amount is paid.

 

Small Print

 

Your employment by 2U is at-will and is for no definite duration. Nothing in this bonus plan, or any other 2U policy or practice, in any way creates an express or implied contract of employment. Nothing in this bonus plan, or any other 2U policy or practice, in any way creates a guarantee of any benefit or bonus payments other than as provided by law.

 

It is within our sole discretion to determine eligibility for bonuses and the amount of any bonuses provided under the bonus plan, including but not limited to the calculation of bonuses or amount upon which the bonus plan, or any portion thereof, is or could be based. We may modify the manner, accounting practice and method of calculating these amounts. Further, you may forfeit the entire amount of your bonus should you be found to have violated any federal, state or local statute or accreditation standard in the performance of your duties.

 

2U may review this bonus plan from time to time and may modify it or terminate it within our sole discretion at any time and for any reason. 2U will try to give you reasonable advance notice of any changes, but that may not be possible in all instances, and 2U is not otherwise obligated to do so. Any modifications, changes or enhancements to this or any other bonus plan must be approved in writing and be signed by 2U’s CEO and/or COO/CFO; no oral modifications are authorized or valid.

 

If you have any questions concerning your bonus plan, please contact 2U’s Human Resources.

 

	
Yours,
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Cathy Graham
    	
 
    
	
Cathy Graham
    	
 
    
	
Chief Financial Officer
    	
 
    

 

 

Acknowledgment

 

I,                                                       , have read the 2U 2013 Bonus Plan and fully understand it. I understand that nothing in this bonus plan, or in any other 2U plan, policy or practice, in any way creates an express or implied contract of employment; or creates a guarantee of any benefit or bonus payment except as provided by law. I agree that my employment with 2U is at-will and for no definite duration, and that either I or 2U may terminate my employment at any time, with or without cause.

 

I further acknowledge that 2U may review this bonus plan from time to time and may modify it or terminate it within its sole discretion at any time for any reason, with or without prior notice.

 

I further acknowledge that if my employment with 2U, Inc. terminates for any reason prior to the applicable bonus payment vesting dates, I will not be eligible to receive any 2013 bonus amount otherwise payable on such payment vesting date, unless otherwise required by law.

 

	
 
    	
 
    	
Employee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Sign Name
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Print Name

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