CHILDTIME LEARNING CENTERS INC
EX-10.1 STOCK OPTION AGREEMENT - WILLIAM D. DAVIS
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<TYPE>EX-10.1
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<FILENAME>k71647exv10w1.txt
<DESCRIPTION>EX-10.1 STOCK OPTION AGREEMENT - WILLIAM D. DAVIS
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                                                                    EXHIBIT 10.1

                             STOCK OPTION AGREEMENT

Childtime Learning Centers, Inc. (the "Corporation"), hereby grants you an
option (the "Option") to purchase 150,000 shares of the Common Stock of the
Corporation (collectively, the "Shares"), upon the terms and conditions
contained in this Agreement. The Option is being granted as an inducement
essential to your entering into an employment arrangement with the Corporation
and is effective as of August 15, 2002, the date of grant (the "Effective
Date").

1.       The Option is not intended to be an incentive stock option within the
         meaning of Section 422 of the Internal Revenue Code of 1986, as
         amended.

2.       The Option may not be transferred by you other than by will or by the
         laws of descent and distribution and, during your lifetime, the Option
         is exercisable only by you.

3.       Subject to the other terms contained in this Agreement, you may
         exercise the Option in accordance with the following schedule:

         a.   Prior to the first anniversary date of the Effective Date, you may
              not purchase any of the Shares.

         b.   Beginning on the first anniversary date of the Effective Date, you
              may purchase 30,000 Shares at an option exercise price equal to
              $3.50 per share.

         c.   On each subsequent anniversary date of the Effective Date through
              August 15, 2007 (the fifth anniversary date), you may purchase an
              additional 30,000 Shares at an option exercise price equal to
              $3.50 per share.

4.       Subject to earlier termination of the Option pursuant to this
         Agreement, the Option will expire (to the extent not previously
         exercised) on the seventh anniversary of the Effective Date.

5.       If your employment with the Corporation terminates for any reason, you
         will have three months following such termination to exercise the
         Option with respect to those Shares which have become fully vested at
         the time of your termination; provided that the Compensation Committee
         of the Corporation's Board of Directors (the "Compensation Committee")
         may, in its sole discretion, extend such post-termination exercise
         period. In no event, however, will any post-termination exercise period
         extend beyond the seventh anniversary of the Effective Date.

6.       Notwithstanding the foregoing, if your employment with the Corporation
         is terminated within six months after the occurrence of a "Change in
         Control" (as defined below), (a) the Option will become immediately
         exercisable with respect to all of the Shares and


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         (b) the exercise period for the Option will be extended for six months
         from the date of termination of your employment, but in no event beyond
         the seventh anniversary of the Effective Date.

         For purposes of this Paragraph 6, a "Change in Control" of the
         Corporation will occur on the date that (i) any "person" (as that term
         is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
         of 1934), other than Childcare Associates or KD Partners II and their
         affiliates (collectively, "KD Partners") and/or Jacobson Partners and
         its affiliates (collectively, "Jacobson Partners"), (A) acquires
         beneficial ownership, directly or indirectly, of securities of the
         Company representing 50% or more of the combined voting power of the
         Company's then outstanding securities and (B) exercises that voting
         power to replace 50% or more of the directors who were serving on the
         Board of Directors of the Company prior to such acquisition or (ii) any
         person other than KD Partners and/or Jacobson Partners acquires all or
         substantially all of the assets of the Company (whether by purchase,
         merger or consolidation).

7.       The Option will be exercised by giving a written notice to the
         Treasurer of the Corporation. Such notice will specify the number of
         Shares to be purchased and will be accompanied by payment in full (by
         the means specified in Paragraph 8 below) of the aggregate option
         exercise price for the number of Shares purchased and, if applicable,
         by an appropriate representation as to your investment purpose and an
         acknowledgment that the Shares to be issued upon exercise of the Option
         have not been registered under the Securities Act of 1933. Such
         exercise will be effective only upon actual receipt of such written
         notice, and no rights or privileges of a shareholder of the Corporation
         in respect of any of the Shares issuable upon exercise of any part of
         the Option will inure to you or any other person who is entitled to
         exercise the Option unless and until certificates representing such
         Shares have been issued.

8.       The aggregate option exercise price for the number of Shares to be
         purchased will be payable in cash or, in the sole discretion of and
         subject to such conditions as may be established by the Compensation
         Committee, (a) by the Corporation retaining from the Shares to be
         delivered upon exercise of the Option that number of Shares having a
         fair market value on the date of exercise equal to the aggregate option
         exercise price of the number of Shares with respect to which you have
         exercised the Option, or (b) in such other manner as the Compensation
         Committee determines is appropriate, in its sole discretion. Fair
         market value of a Share will be determined by the Compensation
         Committee and may be determined by taking the mean between the highest
         and lowest quoted selling prices of the Corporation's Common Stock on
         any exchange or other market on which the shares of Common Stock of the
         Corporation will be traded on such date, or if there are no sales on
         such date, on the next following day on which there are sales.

9.       The number of Shares subject to the Option and the option exercise
         price will be subject to such adjustment as the Compensation Committee,
         in its sole discretion, deems


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         appropriate to reflect such events as stock dividends, stock splits,
         recapitalizations, mergers, consolidations or reorganizations of or by
         the Corporation; provided, however, that no fractional shares will be
         issued pursuant to exercise of the Option, and any fractional shares
         resulting from such adjustments will be eliminated from the Option.

10.      Nothing contained in this Agreement, nor any action taken by the
         Compensation Committee in connection with this Agreement, will confer
         upon you any right with respect to continuation of your employment by
         the Corporation or any subsidiary of the Corporation, nor interfere in
         any way with the right of the Corporation or any subsidiary to
         terminate your employment at any time.

11.      If, upon or as a result of your exercise of the Option, there is
         payable by the Corporation any amount for income tax withholding, you
         will pay such amount to the Corporation to reimburse it for such income
         tax withholding. The Compensation Committee may, in its sole
         discretion, permit you to satisfy any such withholding obligation, in
         whole or in part, by allowing you to elect either (a) to have the
         amount of Common Stock deliverable by the Corporation upon exercise of
         the Option appropriately reduced, or (b) to tender Common Stock back to
         the Corporation subsequent to your exercise of the Option, subject to
         such rules and regulations as the Compensation Committee, in its sole
         discretion, may adopt. The Compensation Committee may make such other
         arrangements with respect to income tax withholding as it, in its sole
         discretion, determines to be appropriate.

                                         Very truly yours,

                                         Childtime Learning Centers, Inc.
                                         a Michigan corporation


                                         By: /s/ James Morgan
                                             --------------------
                                             James Morgan
                                             Its:  Chairman of the Board

The above is agreed to and accepted:


    /s/ William D. Davis
-----------------------------------------
William D. Davis

Dated as of August 15, 2002


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