SCHEDULE 14A
(REGULATION 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)).
TRANSIT GROUP, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate
number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: 5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
TRANSIT GROUP, INC.
2859 PACES FERRY ROAD, SUITE 1740
ATLANTA, GA 30339
(770) 444-0240
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Shareholders of Transit Group, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders, ("Meeting"),
of Transit Group, Inc., ("TGI" or the "Company"), will be held at the Marriott
Hotel, 4670 Salisbury Road, Jacksonville, Florida 32256, on Thursday, June 25,
1998, at 10:30 A.M. Eastern Daylight Time, for the following purposes:
1. To elect five directors of TGI to serve for the ensuing year and until
their successors are duly elected and qualified. (Proposal 1),
2. To approve the 1998 Stock Incentive Plan of Transit Group, Inc.
(Proposal 2),
3. To approve the 1998 Stock Purchase Plan of Transit Group, Inc.
(Proposal 3),
4. To ratify the appointment of Price Waterhouse LLP as independent
accountants of TGI for the fiscal year ending December 31, 1998.
(Proposal 4), and
5. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
Only holders of the Common Stock of record at the close of business on May
14, 1998, ("Record Date"), will be entitled to notice of and to vote at the
Meeting or any adjournment thereof.
By Order of the Board of Directors,
Philip A. Belyew
President and CEO
May 29, 1998
Atlanta, Georgia
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING,
YOU ARE URGED TO COMPLETE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
<PAGE>
TRANSIT GROUP, INC.
2859 PACES FERRY ROAD, SUITE 1740
ATLANTA, GA 30339
(770) 444-0240
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 25, 1998
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Transit Group, Inc. ("TGI" or the "Company") of proxies
for use at its Annual Meeting of Shareholders of TGI. The Meeting will be held
at the Marriott Hotel, 4670 Salisbury Road, Jacksonville, Florida 32256, on
Thursday, June 25, 1998, at 10:30 A.M. Eastern Daylight Time, and any
adjournment or adjournments thereof. The Meeting is convened for the purposes
set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. This Proxy Statement and accompanying form of proxy and TGI's
1997 Annual Report are expected to be distributed to shareholders on or about
May 29, 1998.
Solicitation of Proxies
This proxy solicitation will be conducted principally by mail, but may also
be by telephone or in person, the cost of which will be paid by TGI. Banks,
brokers, nominees and other custodians and fiduciaries will be requested to
forward proxy solicitation material to their principals and customers where
appropriate, and TGI will reimburse such banks, brokers, nominees, custodians
and fiduciaries for their reasonable out-of-pocket expenses in sending the
proxy material to beneficial owners of the shares.
Actions to be Taken Under the Proxy
Unless instructed otherwise in the space provided in the proxy card, all
properly executed proxies received by TGI will be voted as follows:
(Proposal 1)
"FOR" the election of the nominees for director set forth below under the
heading "Election of Directors";
(Proposal 2)
"FOR" the approval of the 1998 Stock Incentive Plan of Transit Group, Inc.;
(Proposal 3)
"FOR" the approval of the 1998 Stock Purchase Plan of Transit Group, Inc.;
(Proposal 4)
"FOR" the ratification of the appointment of Price Waterhouse LLP as
independent accountants for 1998.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by giving written notice of revocation or a duly executed proxy
bearing a later date to TGI's Secretary. In order to be effective, such notice
or later dated proxy must be received by TGI prior to the exercise of the
earlier proxy. A shareholder may also attend the Meeting, revoke his/her proxy,
and vote in person.
The Company's management knows of no matter to be brought before the Meeting
other than those mentioned herein. If, however, any other matters properly come
before the Meeting, it is intended that the proxies will be voted in accordance
with the judgment of the person or persons voting such proxies.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Voting Rights
The only class of securities entitled to vote at the Meeting is TGI's Common
Stock, $.0l par value. The close of business of May 14, 1998, has been fixed as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting or at any adjournment or adjournments thereof. At May
14, 1998, there were ___________ shares of Common Stock outstanding and
entitled to be voted at the Meeting. Each share of Common Stock is entitled to
one vote at the Meeting. A majority of the outstanding shares of Common Stock
represented at the Meeting, in person or by proxy, will constitute a quorum.
Security Ownership of Certain Beneficial Owners
The following table set forth certain information regarding the TGI Common
Stock owned as of April 29, 1998 (i) by each person who beneficially owned more
5% of the shares of TGI Common Stock; (ii) by each TGI director, (iii) by the
Named Executive Officer of TGI (as defined herein); and (iv) by all TGI
directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percentage
Name and Address of Ownership of of Common
Beneficial Owner Common Stock (1) Stock Owned
------------------- ---------------- -----------
<S> <C> <C> <C>
ECD Trust UA 7/3/80 6,978,465 (2) 34.8%
1910 San Marco Blvd.
Jacksonville, FL 32207
T. Wayne Davis 3,541,405 (3) 17.7%
1910 San Marco Blvd.
Jacksonville, FL 32207
Carroll L. Fulmer 1,339,421 (4) 6.7%
8340 American Way
Groveland, FL 34736
Philip A. Belyew 695,238 (5) 3.5%
Suite 1740
2859 Paces Ferry Road
Atlanta, GA 30339
Wayne N. Nellums 233,334 (6) 1.2%
Suite 1740
2859 Paces Ferry Road
Atlanta, GA 30339
Derek E. Dewan 50,000 (7) *
6440 Atlantic Boulevard
Jacksonville, FL 32211
Ford G. Pearson 25,000 (8) *
666 Garland Place
Des Plaines, IL 60016
All executive officers and 4,246,702 (9) 21.2%
directors as a group
(7 persons)
</TABLE>
* Represents less than 1%.
<PAGE>
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934 and includes, in certain instances,
shares held in the name of an individual's spouse or minor children, the
reporting of which is required by applicable rules of the Securities and
Exchange Commission, but as to which shares the executive officer or director
may have disclaimed beneficial ownership. Unless otherwise noted, all shares
are owned of record by the persons named and the beneficial ownership consists
of sole voting power and sole investment power.
(2) Includes 6,008,601 shares of Common Stock owned directly, 876,000 held by
General Parcel Corporation, and 93,864 shares of Common Stock issuable upon the
exercise of certain warrants. Eunice C. Davis, lifetime beneficiary of the ECD
Trust, is the mother of T. Wayne Davis, Chairman of the Board.
(3) Includes 1,577,264 shares of Common Stock owned directly; 1,268,596 shares
owned by the TWD Trust for ECD, of which Mr. Davis is Trustee; 182,102 shares
owned by the TWD Trust for DDL, of which Mr. Davis is Trustee; 166,997 shares
owned by the TWD Trust for TDD, of which Mr. Davis is Trustee; 20,438 shares
owned by the TWD Trust for TWD, Jr., of which Mr. Davis is Trustee; 5,000
shares owned by Redwing Properties, Inc. of which Mr. Davis is President; 3,497
shares owned by Redwing Investments, Inc., of which Mr. Davis is President;
2,012 shares owned by Mr. Davis' wife, Mary O. Davis; an aggregate of 22,388
shares of Common Stock held by W. Davis' children, C. Rebecca Davis, Elizabeth
Davis and Katherine C. Davis; and 293,111 shares of Common Stock issuable upon
the exercise of certain warrants.
(4) Represents 1,339,421 shares of Common Stock owned directly by Mr. Fulmer's
spouse Barbara Fulmer.
(5) Includes 228,571 shares of Common Stock owned directly and the vested
portion of 700,000 shares of Common Stock issuable upon the exercise of stock
options granted to Mr. Belyew.
(6) Represents the vested portion of 300,000 shares of Common Stock issuable
upon the exercise of stock options granted to Mr. Nellums.
(7) Represents the vested portion of 75,000 shares of Common Stock issuable
upon the exercise of stock options granted to Mr. Dewan.
(8) Represents the vested portion of 75,000 shares of Common Stock issuable
upon the exercise of stock options granted to Mr. Pearson.
(9) Includes a total of 1,577,264 shares and 293,111 warrants and options owned
by T. Wayne Davis; 228,571 shares and 466,667 options owned by Philip A.
Belyew, 25,000 options owned by Ford G. Pearson, 1,339,421 shares owned by
Carroll Fulmer, 50,000 options owned by Derek E. Dewan, 233,334 options owned
by Wayne N. Nellums, and 33,334 options owned by N. Mark Diluzio.
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
Nominees
A Board consisting of five directors is to be elected at the Meeting. Each of
the nominees is currently a member of the Board. Unless otherwise instructed,
the proxy holders will vote the proxies received by them for TGI's nominees
named below. In the event that any nominee of TGI is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as
many of the nominees listed below as possible, and in such event the specific
nominees to be voted for will be determined by the proxy holders. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Shareholders or until a successor has been duly elected and
qualified.
The nominees, and certain information about them, are set forth below:
<TABLE>
<CAPTION>
Current Position Year First Elected
Nominee with TGI to TGI Board
<S> <C> <C> <C>
T. Wayne Davis Chairman of the Board 1988
Philip A. Belyew President, 1997
Chief Executive Officer and
Director
Ford G. Pearson Director 1997
Derek E. Dewan Director 1997
Carroll L. Fulmer Director 1997
</TABLE>
T. Wayne Davis, age 50, has been a director of TGI since February 1988 and
Chairman of the Board of Directors of TGI since February 1989. He has served as
a director of Winn-Dixie Stores, Inc., a grocery store operator, since October,
1982 and served that company as a Vice President from December, 1971 to June,
1987. Since July 1987, Mr. Davis has been a self-employed investor. In 1974,
Mr. Davis founded Abacus Services, Inc., a temporary staffing service, and
served as Chairman and Chief Executive Officer. He also has served on the Board
of Directors of Enstar Group, Inc. and Accustaff Incorporated.
Philip A. Belyew, age 50, has been the President, Chief Executive Officer and
Director of TGI since January 6, 1997. Until November, 1996, Mr. Belyew was
Chairman, President and Chief Executive Officer of Atlanta-based United
TransNet Inc., which was formed in December, 1995 with the merger of Courier
Dispatch Group and five other ground and air courier companies, which was
acquired by Corporate Express in November, 1996. From March 1994 to December
1995, Mr. Belyew served as President and Chief Executive Officer of Courier
Dispatch Group and from December 1991 to March 1994, Mr. Belyew served as Chief
Operating Officer of the same company.
Ford G. Pearson, age 55, has been a member of the Board of Directors of TGI
since October 1997. Mr. Pearson, has served since 1986 as Executive Vice
President, Chief Operating Officer and Chief Financial Officer of Wheels, Inc.,
an Illinois-based fleet leasing and management company. Prior to his
involvement with Wheels, Inc., Mr. Pearson held several positions with
Continental Bank in Chicago and was most recently in charge of the Bank's
Commercial Finance Department.
<PAGE>
Derek E. Dewan, age 43, has been a member of the Board of Directors of TGI
since January, 1997. Mr. Dewan is Chairman, President and Chief Executive
Officer of Accustaff Incorporated, a national provider of strategic staffing,
consulting and outsourcing services to businesses, professional and service
organizations, and governmental agencies. Prior to joining Accustaff in
1994, Mr. Dewan was managing partner for the accounting firm of Coopers
& Lybrand LLP in Jacksonville, Florida. Mr. Dewan also serves on the
Boards of the National Association of Temporary Staffing Services (NATSS) and
Payroll Transfers, Inc.
Carroll L. Fulmer, age 64, has been a member of the Board of Directors of TGI
since September 1997. Mr. Fulmer is Chairman of Carroll Fulmer Group, Inc.
(a wholly-owned subsidiary of TGI), a Florida-based trucking company. Mr.
Fulmer founded the Carroll Fulmer Group and affiliates during the early
1960's and has been running Carroll Fulmer since then.
The election of Directors requires an affirmative vote by the holders of a
majority of the votes cast. Any shares not voted (whether by abstention, broker
non-vote or otherwise) have the effect of a negative vote.
The Board of Directors recommends that you vote FOR the election of the
nominees named above.
Board Meetings and Committees
The Board of Directors of TGI held a total of 4 meetings during the fiscal
year ended December 31, 1997. Mr. Davis, Mr. Belyew, and Mr. Pearson
attended all Board meetings for the portion of the year they were Board
members. Mr. Dewan attended three meetings.
The Board has a standing Executive, Audit, and Compensation Committee.
Messrs. Belyew and Davis currently serve on the Executive Committee. The
purpose of the Executive Committee is to exercise certain powers delegated by
the Board of Directors between regular Board Meetings. All actions of the
Committee are subject to review and ratification by the full Board of
Directors.
Messrs. Dewan and Pearson currently serve on the Audit Committee of the Board
of Directors. The purpose of the Audit committee is to review financial
statements and the internal financial reporting system and controls of the
Company with TGI's management and independent accountants, recommend
resolutions for any dispute between TGI's management and its auditors and
review other matters relating to the relationship of TGI with its auditors.
Messrs. Davis and Dewan currently serve on the Compensation Committee.
The purpose of the Compensation Committee is to review and approve the
salaries of TGI's officers and certain highly compensated employees for
each fiscal year. The compensation of the President and Chief Executive
Officer of TGI remains subject to approval by the full Board. Mr. Davis is
an Executive Officer of the Company.
Messrs. Pearson and Dewan currently serve on the Nominating Committee. The
purpose of the Nominating Committee is to review suggestions made by other
Directors for new Board members and propose to nominate two additional
individuals to serve on the Board.
The Compensation Committee held one meeting and the Audit Committee,
Executive Committee, and Nominating Committee did not meet during the fiscal
year ended December 31, 1997.
Director Compensation
All members of the Board of Directors of TGI who are employees of TGI receive
no additional compensation for serving on the Board or any committees thereof
in excess of their regular salaries. In 1997, the two members of the Board of
Directors of TGI who are not employees of TGI received $1,000 for each Board
meeting attended.
<PAGE>
PROPOSAL TO ADOPT 1998 STOCK INCENTIVE PLAN
(Proposal 2)
Background
The Company seeks shareholder approval of the 1998 Stock Incentive Plan of
Transit Group, Inc. (the "Stock Incentive Plan"). The Stock Incentive Plan,
which was approved by the Board of Directors on February 10, 1998, will be
effective as of March 1, 1998 if it is approved by the shareholders. The
discussion which follows is qualified in its entirety by reference to the form
of the Stock Incentive Plan, a copy of which is attached to the proxy statement
as Exhibit A. Shareholders should refer to the Stock Incentive Plan for more
complete information.
The maximum number of shares of common stock (the "Common Stock") which may
be issued pursuant to awards granted under the Stock Incentive Plan will be
equal to the sum of (i) 2,000,000 plus (ii) one percent (1%) of the total
issued and outstanding shares of Common Stock determined as of December 31 for
each year that the Stock Incentive Plan is in effect. The Board of Directors
has reserved shares for this purpose. The maximum number of shares of Common
Stock that may be issued pursuant to Incentive Options is 2,000,000 shares. The
number of shares reserved for issuance under the Stock Incentive Plan may be
adjusted in the event of certain events affecting TGI's capitalization.
Outstanding options previously granted under the Company's other stock option
plans and arrangements will continue in effect until they are exercised,
canceled or terminated. As of May 14, 1998, the market value per share of the
Common Stock as quoted on the NASDAQ Small Cap Market was $___.
Purpose and Eligibility
The purpose of the Stock Incentive Plan is to encourage and enable selected
employees, directors and independent contractors of TGI and its related
corporations to acquire or increase their holdings of Common Stock and other
proprietary interests in TGI in order to promote a closer identification of
their interests with those of TGI and its shareholders, thereby further
stimulating their efforts to enhance the efficiency, soundness, profitability,
growth and shareholder value of TGI. Approximately 750 persons are eligible to
participate at this time, although that number is subject to change in the
future.
This purpose will be carried out by the granting of incentive stock options
and nonqualified stock options ("options"), stock appreciation rights, and
restricted awards (collectively, "awards"). The material terms of each type of
award are discussed below. See "Awards," below.
Administration; Amendment and Termination
The Stock Incentive Plan is administered by the Board of Directors, or, upon
its delegation, by the Compensation Committee of the Board (the "Committee").
(References to the term "Administrator" include the Board or the Committee, or
both, if acting in an administrative capacity.) Under the terms of the Stock
Incentive Plan, the Administrator has authority to take any action with respect
to the Stock Incentive Plan, including, without limitation, the authority to
(i) determine all matters relating to awards, including selection of
individuals to be granted awards, the types of awards, the number of shares of
Common Stock, if any, subject to an award, and the terms, conditions,
restrictions and limitations of an award; (ii) prescribe the form(s) of
agreements related to awards; (iii) establish, amend and rescind rules and
regulations for the administration of the Stock Incentive Plan; and (iv)
construe and interpret the Stock Incentive Plan and agreements related to
awards, establish and interpret rules and regulations for administering the
Stock Incentive Plan and make all other determinations deemed necessary or
advisable for administering the Stock Incentive Plan.
The Stock Incentive Plan may be amended or terminated at any time by the
Board of Directors, provided that (i) no amendment or termination may adversely
affect the rights of an award recipient with respect to an outstanding award
without the recipient's consent; and (ii) shareholder approval is required of
any amendment to the extent that such shareholder approval is required by
applicable law, rule or regulation. Unless earlier terminated by the Board, the
Stock Incentive Plan will have a 10-year term.
<PAGE>
Awards
As noted above, the Stock Incentive Plan authorizes the Administrator to
grant incentive stock options and nonqualified stock options. Both types of
options represent a right to purchase shares of Common Stock at a fixed price.
The option price at which an option may be exercised will be determined by the
Administrator. With respect to incentive options, the option price may not be
less than the fair market value (as defined in the plan) per share of the
Common Stock on the date of the option grant, and, with respect to all options,
the option price may not be less than the par value per share. The period
during which an option may be exercised is determined by the Administrator at
the time of stock option grant, and, with respect to incentive options, may not
extend more then 10 years from the date of grant. Upon exercise, the option
price may be paid in cash, with shares of common stock, by "cashless exercise,"
or by a combination of these methods.
Under the terms of the Stock Incentive Plan, stock appreciation rights
("SARs") may be granted to an optionee of an option with respect to all or a
portion of the shares of Common Stock subject to the related option or may be
granted separately. Upon exercise, a participant is entitled to receive
consideration equal in value to the excess of the fair market value of a share
of Common Stock on the date of exercise over the SAR price (subject to certain
plan limitations). The consideration may be paid in cash, shares of Common
Stock (valued at fair market value on the date of the SAR exercise), or a
combination of cash and shares of Common Stock. SARs are exercisable according
to the terms stated in the related agreement. No SAR may be exercised more than
10 years after it was granted, or such shorter period as may apply to related
options.
The Stock Incentive Plan also authorizes the grant of restricted awards to
such participants in such numbers, upon such terms and at such times as the
Administrator may determine. A restricted award may consist of a restricted
stock award or a restricted unit, or both. Restricted awards are payable in
cash or shares of Common Stock (including restricted stock), or partly in cash
and partly in shares of Common Stock, in accordance with the terms of the Stock
Incentive Plan and in the discretion of the Administrator. The Administrator
may condition the grant or vesting, or both, of a restricted award upon the
continued service of the recipient for a certain period of time, attainment of
such performance objectives as the Administrator may determine, or upon a
combination of continued service and performance objectives. The Administrator
has sole authority to determine the extent, if any, to which restricted awards
are earned.
Participants granted awards will be subject to certain restrictions on
exercise or vesting (such as restrictions imposed in the event of termination
of employment), as provided in the Stock Incentive Plan and related agreement.
In addition, awards are not transferable other than by will or the laws of
intestate succession (except for nonqualified options, which are
nontransferable other than by will or the laws of intestate succession except
as may be permitted by the Administrator in a manner consistent with the
registration provisions of the Securities Act of 1933, as amended).
Change of Control
The Stock Incentive Plan provides that, upon a change of control (as defined
in the Stock Incentive Plan), (i) all options and SARs outstanding as of the
date of the change of control will become fully exercisable, whether or not
then otherwise exercisable; and (ii) any restrictions applicable to any
restricted awards will be deemed to have expired, and such restricted awards
will become fully vested and payable to the fullest extent of the original
award. However, the Stock Incentive Plan authorizes the Administrator, in the
event of a merger, share exchange, reorganization or other business combination
affecting TGI or a related corporation, to determine that any or all awards
shall not vest or become exercisable on an accelerated basis, if the Board of
Directors or the surviving or acquiring corporation takes such action
(including but not limited to the assumption of plan awards or the grant of
substitute awards) which, in the opinion of the Administrator is equitable or
appropriate to protect the rights and interest of participants under the Stock
Incentive Plan.
New Plan Benefits
The amount of compensation that will be paid in 1998 pursuant to the grant of
awards under the Stock Incentive Plan to the Company's Named Executive Officers
,as defined below, (and certain others) is not yet determinable due to vesting,
performance and other criteria and arrangements. However, the following table
sets forth the number of options granted in 1997 under other stock incentive
plans of the Company to each of the following:
<PAGE>
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
Dollar Value Number of
($) (1) Option Grants
------- -------------
<S> <C> <C>
Philip A. Belyew.............................. _____ 700,000
Wayne N. Nellums.............................. _____ 200,000
Executive Group............................... _____ 100,000
Non-Executive Director Group.................. _____ 150,000
Non-Executive Officer Employee................ _____ 359,600
Group
</TABLE>
(1) The dolalr value reflects the difference between the exercixe price of
$___ and the value of the TGI Common Stock on May 14, 1998.
Certain Federal Income Tax Consequences
The following summary generally describes the principal federal (and not
state and local) income tax consequences of awards granted under the Stock
Incentive Plan. The summary is general in nature and is not intended to cover
all tax consequences that may apply to a particular employee or to the Company.
The provisions of the Internal Revenue Code of 1986, as amended (the "Code")
and regulations thereunder relating to these matters are complicated and their
impact in any one case may depend upon the particular circumstances.
Incentive stock options granted under the Stock Incentive Plan are intended
to qualify as incentive stock options under Section 422 of the Code. Pursuant
to Section 422, the grant and exercise of an incentive stock option generally
will not result in taxable income to the participant (with the possible
exception of alternative minimum tax liability) if the participant does not
dispose of shares received upon exercise of such option less than one year
after the date of exercise and two years after the date of grant, and if the
participant has continuously been an employee of the Company from the date of
grant to three months before the date of exercise (or twelve months in the
event of death or disability). The Company will not be entitled to a deduction
for income tax purposes in connection with the exercise of an incentive stock
option. Upon the disposition of shares acquired upon exercise of an incentive
stock option, the participant will be taxed on the amount by which the amount
realized upon such disposition exceeds the option price, and such amount will
be treated as capital gain or loss. If the holding period requirements for
incentive stock option treatment described above are not met, the option will
be treated as a nonqualified stock option.
For federal income tax purposes, the grant of a nonqualified stock option,
SAR or restricted stock award does not result in taxable income to the holder
or a tax deduction to the Company. At the time of exercise of a nonqualified
stock option, the difference between the market value of the stock on the date
of exercise and the option price constitutes taxable ordinary income to the
optionee. The Company is generally entitled to a deduction in the same year in
an amount equal to the income taxable to the participant. Similarly, at the
time of exercise of an SAR, the amount of cash and fair market value of shares
received by the SAR holder, less cash or other consideration paid (if any), is
taxed to the SAR holder as ordinary income and the Company receives a
corresponding income tax deduction.
Upon expiration of the restricted period applicable to a restricted stock
award, the fair market value of such shares at such date and any cash amount
awarded, less cash or other consideration paid (if any), is included in the
participant's ordinary income as compensation, except that, in the case of
restricted stock issued at the beginning of the restriction period, the
participant may elect to include in his ordinary income as compensation at the
time the restricted stock is awarded, an amount equal to the fair market value
of such shares at such time, less any amount paid therefor. TGI is entitled to
a corresponding income tax deduction to the extent that the amount represents
reasonable compensation and an ordinary and necessary business expense, subject
to any required income tax withholding.
<PAGE>
The federal income tax consequences of the award of restricted units and
other restricted awards other than restricted stock will depend on the
conditions of the award. Generally, the transfer of cash or property results in
ordinary income to the participant and a tax deduction to the TGI. If there is
a substantial risk that the property transferred will be forfeited (for
example, because receipt of the property is conditioned upon the performance of
substantial future services), the taxable event is deferred until the risk of
forfeiture lapses unless the participant elects to accelerate the taxable event
to the date of transfer. Generally, any deduction by the TGI occurs only when
ordinary income in respect of an award is recognized by the participant (and
then the deduction is subject to reasonable compensation and withholding
requirements).
The adoption of this proposal requires an affirmative vote by the holders of
a majority of the votes cast. Any shares not voted (whether by abstention,
broker non-vote or otherwise) have the effect of a negative vote.
The Board of Directors recommends that stockholders vote FOR the approval of
the 1998 Stock Incentive Plan of Transit Group, Inc.
PROPOSAL TO ADOPT 1998 EMPLOYEE STOCK PURCHASE PLAN
(Proposal 3)
On February 10, 1998, the Board of Directors of the Company adopted the
Transit Group, Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan"),
subject to shareholder approval at the 1998 Annual Meeting. If approved by
shareholders, the Stock Purchase Plan will enable eligible employees to be
granted options to purchase common stock of the Company (the "Common Stock") at
a discount through payroll deductions or other means established under the
Stock Purchase Plan.
The Stock Purchase Plan is intended to permit eligible employees to provide
for their future security and to encourage them to remain employees of the
Company (or its subsidiaries), and to promote the best interests of the Company
and its shareholders and enhance the long-term performance of the Company. The
Stock Purchase Plan is intended to qualify as an "employee stock purchase plan"
under Section 423 of the Code, and thus to permit participants to receive
favorable tax treatment, as described below.
The following summary describes the material terms of the Stock Purchase Plan
and is qualified in all respects by reference to the terms of the Stock
Purchase Plan, which is attached as Exhibit B to this proxy statement.
Shareholders should refer to the Stock Purchase Plan for more complete and
detailed information.
Shares Reserved for the Plan
The aggregate number of shares of Common Stock which may be purchased under
the Stock Purchase Plan may not exceed 1,000,000, subject to adjustment in the
event of mergers, consolidations, stock dividends, stock splits or other
changes in the outstanding Common Stock in accordance with Stock Purchase Plan
terms. Shares issued under the Stock Purchase Plan may be authorized and
unissued shares, treasury shares or shares purchased on the open market. As of
May 14, 1998, the market value per share of the Common Stock as quoted on the
NASDAQ Small Cap Market was $___.
Administration; Amendment and Termination
The Stock Purchase Plan will be administered by the Board, or, upon its
delegation, by the Compensation Committee (the "Committee") of the Board.
(References to the Committee include the Board if it elects to administer the
Stock Purchase Plan.) The Committee may adopt rules and procedures consistent
with the Stock Purchase Plan for its administration and may delegate certain
administrative functions as it considers appropriate. The Committee's
interpretation and construction of the Plan is final and conclusive.
<PAGE>
The Board may at any time, and from time to time, modify, amend, suspend or
terminate the Stock Purchase Plan or any option, except that, (i) shareholder
approval is required of any amendment to the extent required under Section 423
of the Code or other applicable law or rule; and (ii) no amendment may
materially and adversely affect any outstanding option without the
participant's consent. If approved by the shareholders, the effective date of
the Stock Purchase Plan will be June 26, 1998, and the Stock Purchase Plan will
have a 10-year term (unless terminated earlier by the Board).
Eligible Participants
Generally, employees of TGI (or a subsidiary designated by the TGI) are
eligible to participate in the Stock Purchase Plan once they have been employed
90 days or more if they customarily work more than 20 hours per week and for
more than five months per year. Approximately 750 employees would be eligible
to participate in the Stock Purchase Plan at this time.
Material Features of the Plan
If the Stock Purchase Plan is approved by the shareholders, beginning July 1,
1998, TGI will grant options on January 1 and July 1 of each year that the
Stock Purchase Plan is in effect (or on such other date as TGI may designate).
Each option period will last for six months ending on the June 30 or December
31 immediately following the grant of options (or on such date(s) as TGI may
designate).
Each eligible employee who has elected to participate in the Stock Purchase
Plan will be entitled on the purchase date (the last day of the purchase
period) to purchase shares of Common Stock at an option price equal to the
lesser of 85% of the fair market value (as defined in the Stock Purchase Plan)
on the offer date (the first day of the purchase period) or on the purchase
date.
Payment for shares of Common Stock purchased under the Stock Purchase Plan
will be made by authorized payroll deductions from a participant's compensation
or by other methods authorized by the Committee. Compensation generally means a
participant's base salary or regular rate of compensation (excluding
commissions, bonuses, incentive compensation, overtime, employee benefits and
other similar compensation elements), as determined at the beginning of each
purchase period.
An eligible employee who elects to participate in the Stock Purchase Plan
will designate a stated whole percentage between 1% and 15% of compensation to
be credited to the participant's account under the Stock Purchase Plan. On the
offer date for each purchase period, a participant will be granted an option to
purchase such number of Common Stock as is determined by dividing the amount of
the participant's payroll deductions which had accumulated prior to on the
purchase date by the applicable option price. A participant may withdraw from
the Stock Purchase Plan before the applicable purchase date in accordance with
Stock Purchase Plan terms but he may not change the amount of his payroll
deductions once a purchase period has started (although he may change payroll
deductions for successive purchase periods). Unless a participant withdraws or
terminates employment before the purchase date in accordance with Stock
Purchase Plan terms, the option will be exercised automatically for the
purchase of the full number of shares subject to the option.
TGI will maintain an account for each participant to reflect payroll
deductions and the number of shares of Common Stock purchased under the Stock
Purchase Plan by each participant. No participant in the Stock Purchase Plan is
permitted to purchase Common Stock under the Stock Purchase Plan at a rate that
exceeds $25,000 in fair market value of Common Stock, determined at the time
options are granted, for each calendar year, and additional restrictions may
apply to the purchase of shares based on the terms of the Stock Purchase Plan
and Section 423 of the Code.
<PAGE>
Funds received by TGI from the sale of Common Stock under the Stock Purchase
Plan may be used for any corporate purpose.
New Plan Benefits
It is not possible to determine how many eligible employees will participate
in the Stock Purchase Plan in the future. Therefore, it is not possible to
determine the dollar value or number of shares of Common Stock that will be
distributed under the Stock Purchase Plan. TGI anticipates, however, that on
the average approximately 100,000 shares of Common Stock will be distributed
annually during the 10-year term of the Stock Purchase Plan. Based on a per
share price of $_____ (the closing sales price of the Common Stock on the
Nasdaq SmallCap Market on May 14, 1998), the benefits of the Stock Purchase
Plan during 1997 would have been as follows, assuming the maximum payroll
deductions taken:
<TABLE>
<CAPTION>
TRANSIT GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN
Name Dollar Value ($) Number of Shares
---- ---------------- ----------------
<S> <C> <C>
Philip A. Belyew...................... 22,500 _____
Wayne N. Nellums.................... 15,000 _____
Executive Group..................... 100,000 _____
Non-Executive Officer
Employee Group................... 300,000 _____
</TABLE>
Federal Tax Consequences
As noted above, the Stock Purchase Plan is intended to qualify as an employee
stock purchase plan within the meaning of Section 423 of the Code. Under the
Code, an employee who elects to participate in the Stock Purchase Plan will not
realize income (and TGI will not receive a deduction) at the time an option is
granted or when the shares purchased under the Stock Purchase Plan are
transferred to him, although participants will receive the benefit of the
discounted price at the time of purchase.
Participants will, however, recognize income when they sell or dispose of the
shares. If an employee disposes of such shares after two years from the date of
grant of the option and after one year from the date of the purchase of such
shares, the employee will recognize ordinary income for the year in which such
disposition occurs in an amount equal to the lesser of (i) the excess of the
fair market value of such shares at the time of disposition over the purchase
price, or (ii) the excess of the fair market value of the stock at the time of
the grant of the option over the option price (that is, the option price
discount). The employee's basis in the shares disposed of will be increased by
an amount equal to the amount so includable in his income as compensation. Any
additional gain or loss will be a capital gain or loss, either short-term or
long-term, depending on the holding period for such shares.
If any employee disposes of the shares purchased under the Stock Purchase
Plan within such two-year or one-year period, the employee will recognize
ordinary income for the year in which such disposition occurs in an amount
equal to the excess of the fair market value of such shares on the date of
purchase over the purchase price. The employee's basis in such shares disposed
of will be increased by an amount equal to the amount includable in his income
as compensation, and any gain or loss computed with reference to such adjusted
basis which is recognized at the time of disposition will be a capital gain or
loss, either short-term or long-term, depending on the holding period for such
shares. In the event of a disposition within such two-year or one-year period,
the participant's employer will be entitled to a tax deduction equal to the
amount the employee is required to include in income as a result of such
disposition.
<PAGE>
The discussion above is only a summary of federal income consequences to TGI
and participating employees, and does not cover the tax consequences that might
arise in every individual circumstance.
Adoption of this proposal requires an affirmative vote by the holders of a
majority of the votes cast. Any shares not voted (whether by abstention, broker
non-vote or otherwise) has the effect of a negative vote.
The Board recommends that shareholders vote FOR the approval of the Transit
Group, Inc. Employee Stock Purchase Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Proposal 4)
The Board of Directors, upon recommendation of the Audit Committee, has
selected Price Waterhouse LLP as independent accountants for TGI for the fiscal
year ending December 31, 1998. Price Waterhouse LLP has been the independent
public accountants for TGI since February 1997.
Representatives of Price Waterhouse LLP are expected to be present at the
Meeting and will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions. If the
appointment of Price Waterhouse LLP is not ratified, the Board of Directors
will reconsider its selection of auditors.
On February 17, 1997, Transit Group, Inc. engaged Price Waterhouse LLP to
succeed Grenadier, Collins, Mencke & Howard, LLP as its Independent
Accountants. The change in Independent Accountants resulted from TGI's
announced plans to form an Atlanta based holding company and seek to acquire
other trucking companies. The auditor's reports for the last two fiscal years
did not contain adverse opinions or disclaimers of opinion, nor were they
modified as to uncertainty, audit scope, or accounting principles. The decision
to change accountants has been approved by the Board of Directors. There were
no disagreements with Grenadier, Collins, Mencke & Howard, LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
Adoption of this Proposal requires an affirmative vote of a majority of the
votes cast. Any shares not voted (whether by abstention, broker non-vote or
otherwise) has the effect of a negative vote.
The Board of Directors recommends a vote FOR the approval of the appointment
of Price Waterhouse LLP as independent accountants for 1998.
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions with TGI of each
of the present executive officers of TGI:
NAME AGE, POSITION WITH TGI
---- ---- -----------------
Philip A. Belyew 50 President, Chief Executive
Officer
Wayne N. Nellums 49 Vice President, Chief
Financial Officer,
Secretary, and Treasurer
N. Mark DiLuzio 40 Vice President of Finance,
Mergers, and Acquisitions
Scott J. Tsanos 47 Vice President and Chief
Accounting Officer
<PAGE>
TGI's executive officers serve at the pleasure of TGI's Board of Directors.
Wayne N. Nellums, 49, has been Vice President, Chief Financial Officer,
Secretary and Treasurer of TGI since May, 1997. He was Vice President, Chief
Financial Officer and Secretary since October 1995 and was Vice President and
Chief Financial Officer from May 1995 to October 1995. Prior to joining TGI,
Mr. Nellums was a Partner with KPMG Peat Marwick from July, 1979 through
February, 1987. He was with The Enstar Group, Inc. and affiliated companies
from February, 1987 through December, 1992 where he held several positions
including Executive Vice President, Chief Financial Officer from June, 1989
through April, 1991 and Executive Vice President, Chief Financial Officer of
Enstar Specialty Retail, Inc. from April, 1991 through December, 1992. From
January, 1993 through July, 1994 he practiced Public Accounting in Montgomery,
Alabama, and from July, 1994 through April, 1995, Mr. Nellums was Chief
Financial Officer of Affinity Corporation.
N. Mark DiLuzio, 40, has been Vice President of Acquisitions of TGI since
October 1997. Prior to his involvement with TGI, Mr. DiLuzio was Senior Vice
President and Corporate Development Director for First Union Bank in Atlanta
from June 1988 to October 1997. He was employed by Texas Commerce Bancshares in
Houston from June 1981 to June 1988 before joining First Union Bank in Atlanta.
Mr. Scott J. Tsanos, 47, has served as Vice President, Chief Accounting
Officer since February 1998. From ovember 1996 to December 1997, Mr.
Tsanos served as Senior Vice President of Finance for the Camberley Hotel
Company. From January 1983 through November 1996 Mr. Tsanos was employed
by Sybra, Inc. as Vice President of Finance.
Executive Compensation
The following table shows the summary compensation paid by TGI to the Chief
Executive Officer and other executive officer whose salary exceeded $100,000 in
1997 (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1995-1997)
Long-term Compensation
Payouts Awards
Other Securities
Principal Annual Annual Underlying
Name Position Year Salary Bonus Compensation Options
---- --------- ---- ------ ----- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Philip A. Belyew President and 1997 $ 150,000 $ -- $ -- 700,000
Chief Executive 1996 -- -- -- --
Officer 1995 -- -- -- --
Wayne N. Nellums Vice President, 1997 $ 104,384 $ -- $ 63,026 (1) 200,000
CFO, Secretary 1996 $ 85,000 $ -- $ -- --
and Treasurer 1995 $ 55,577 $ -- $ -- 100,000
</TABLE>
(1)In accordance with the Securities and Exchange Commission rules, reporting
is not required unless the aggregate of such compensation exceeds $50,000
or 10% of the total annual salary and bonuses. The amounts reported for
Mr. Nellums represent an auto allowance of $10,450, club dues of $195,
reimbursement of relocation expenses of $39,873, and reimbursement of
income taxes on the moving expense reimbursement in the amount of
$12,508.
STOCK OPTIONS GRANTED IN FISCAL 1997
The following table provides information with respect to the option granted
in 1997 for the Named Executive Officers:
<PAGE>
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options Exercise
Underlying Granted to Price
Options Employees in Per Expiration
Name Granted (#) 1997 Share ($) Date
----- ----------- ---- --------- ----
<S> <C> <C> <C> <C>
Philip A. Belyew 700,000 49% $2.00 01/09/07
Wayne N. Nellums 200,000 14% $2.00 01/09/07
</TABLE>
FISCAL YEAR END OPTION VALUES
The following table provides information with respect to year-end option
values for the Named Executive Officers. There were no options exercised in
fiscal 1997 by the Named Executive Officers:
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities in the Money Options
Underlying Unexercised --------------------
Name Options at Fiscal Year End (#) Exercisable Unexercisable
---- ----------------------------- ----------- -------------
<S> <C> <C> <C>
Philip A. Belyew 700,000 $ 2,041,667 $ 1,020,833
Wayne N. Nellums 300,000 960,833 291,667
</TABLE>
Certain Transactions
During TGI's fiscal year ending December 31, 1993, the ECD Trust purchased
73,684 shares of restricted TGI Common Stock for $350,000. The proceeds of
these sales were utilized by TGI for general working capital purposes.
During TGI's fiscal year ending December 31, 1993, T. Wayne Davis, Chairman
of the Board, and affiliates purchased 44,210 shares of restricted TGI Common
Stock for $210,000. Mr. Davis also purchased 100,000 shares of convertible
preferred stock for $2,500,000. The proceeds of these sales were utilized by
TGI for general working capital purposes.
During TGI's fiscal year ending December 31, 1996, the ECD Trust, an affiliate
of the T. Wayne Davis, purchased 320,000 shares of convertible preferred stock
for $8,000,000. The proceeds were used to retire long term debt and for general
working capital purposes.
On May 2, 1997, the Company's Chairman, the Company's President and Chief
Executive Officer, certain affiliates of the Company's Chairman and another
individual subscribed to purchase 3,272,902 shares of restricted common stock
for cash, cancellation of debt and assumption of debt in the amount of
appproximately $5.7 million.
In June of 1997, the ECD Trust and T. Wayne Davis elected to convert their
preferred stock and accrued dividends of $385,000 to common stock. The
Company issued 4,323,922 shares of common stock upon the conversiion.
In July 1997, an affiliate of the TGI's Chairman loaned TGI $4,000,000.
The note bears interest at 9% and is payable in four equal annual
installments commencing April 1999.
In December 1997, the Company sold the parcel delivery business to the ECD
Trust, an affiliate of the Company's Chairman. The buyer assumed liabilities of
approximately $4.0 million in excess of assets. To compensate for the excess
liabilities assumed by the buyer, the Company issued 877,000 shares of Common
Stock to the buyer.
<PAGE>
SHAREHOLDER PROPOSALS
A shareholder who wishes to submit a proposal for action at the 1999 Annual
Meeting must send his proposal sufficiently in advance so that it is received
at TGI's principal executive office by January 19, 1999. The shareholder should
also notify TGI in writing regarding his intention to appear personally at the
Meeting to present his proposal at the time he submits his proposal.
OTHER MATTERS
Management of TGI is not aware of any other matter to be presented for action
at the Annual Meeting other that those mentioned in the Notice of Annual
Meeting of Shareholders and referred to in this Proxy Statement. If any other
matter comes before the Meeting, it is the intention of the persons named in
the enclosed proxy to vote on such matters in accordance with their judgment.
ANNUAL REPORT
A copy of the Company's 1997 Annual Report is being mailed with this Proxy
Statement to each shareholder of record. Shareholders not receiving a copy of
such Annual Report may obtain one by writing or calling Vanessa Plumecocq,
Financial Analyst of the Company.
By Order of the Board of Directors,
Philip A. Belyew
President and CEO
May 29, 1998
Atlanta, Georgia
<PAGE>
EXHIBIT A
1998 STOCK INCENTIVE PLAN
OF
TRANSIT GROUP, INC.
1. Purpose
The purpose of the 1998 Stock Incentive Plan of Transit Group, Inc. (the
"Plan") is to encourage and enable selected employees, directors and
independent contractors of Transit Group, Inc. (the "Corporation") and its
related corporations to acquire or to increase their holdings of common stock
of the Corporation (the "Common Stock") and other proprietary interests in the
Corporation in order to promote a closer identification of their interests with
those of the Corporation and its shareholders, thereby further stimulating
their efforts to enhance the efficiency, soundness, profitability, growth and
shareholder value of the Corporation. This purpose will be carried out through
the granting of benefits (collectively referred to herein as "Awards") to
selected employees, independent contractors and directors, including the
granting of incentive stock options ("Incentive Options"), nonqualified stock
options ("Nonqualified Options"), stock appreciation rights ("SARs"),
restricted stock awards ("Restricted Stock Awards"), and restricted units
("Restricted Units") to such participants. Incentive Options and Nonqualified
Options shall be referred to herein collectively as "Options." Restricted Stock
Awards and Restricted Units shall be referred to herein collectively as
"Restricted Awards."
<PAGE>
2. Administration of the Plan
(a) The Plan shall be administered by the Board of Directors of the
Corporation (the "Board" or the "Board of Directors") or, upon its delegation,
by the Compensation Committee of the Board of Directors (the "Committee"). For
the purposes herein, the term "Administrator" shall refer to the Board and,
upon its delegation of all or part of its authority to administer the Plan, the
Committee.
(b) Any action of the Administrator with respect to the Plan may be taken by
a written instrument signed by all of the members of the Board or Committee, as
appropriate, and any such action so taken by written consent shall be as fully
effective as if it had been taken by a majority of the members at a meeting
duly held and called. Subject to the provisions of the Plan, and unless
authority is granted to the chief executive officer as provided in Section
2(c), the Administrator shall have full and final authority in its discretion
to take any action with respect to the Plan including, without limitation, the
authority (i) to determine all matters relating to Awards, including selection
of individuals to be granted Awards, the types of Awards, the number of shares
of the Common Stock, if any, subject to an Award, and all terms, conditions,
restrictions and limitations of an Award; (ii) to prescribe the form or forms
of the agreements evidencing any Awards granted under the Plan; (iii) to
establish, amend and rescind rules and regulations for the administration of
the Plan; and (iv) to construe and interpret the Plan and agreements evidencing
Awards granted under the Plan, to establish and interpret rules and regulations
for administering the Plan and to make all other determinations deemed
necessary or advisable for administering the Plan. The Administrator shall also
have authority, in its sole discretion, to accelerate the date that any Award
which was not otherwise exercisable or vested shall become exercisable or
vested in whole or in part without any obligation to accelerate such date with
respect to any other Award granted to any recipient. In addition, the
Administrator shall have the authority and discretion to establish terms and
conditions of Awards as the Administrator determines to be necessary or
appropriate to conform to the applicable requirements or practices of
jurisdictions outside of the United States.
(c) Notwithstanding Section 2(b), the Administrator may delegate to the chief
executive officer of the Corporation the authority to grant Awards, and to make
any or all of the determinations reserved for the Administrator in the Plan and
summarized in Section 2(b) herein with respect to such Awards, to any
individual who, at the time of said grant or other determination, (i) is not
deemed to be an officer or director of the Corporation within the meaning of
Section 16 of the Exchange Act, and (ii) is otherwise eligible under Section 5.
To the extent that the Administrator has delegated authority to grant Awards
pursuant to this Section 2(c) to the chief executive officer, references to the
Administrator shall include references to such person, subject, however, to the
requirements of the Plan, Rule 16b-3 and other applicable law.
3. Effective Date
The effective date of the Plan shall be March 1, 1998 (the "Effective Date").
Awards may be granted under the Plan on and after the effective date, but no
Awards will be granted after February 29, 2008.
4. Shares of Stock Subject to the Plan; Award Limitations
(a) Subject to adjustments as provided in this Section 4, the number of
shares of Common Stock that may be issued pursuant to Awards shall be the
sum of (i)2,000,000 plus (ii) one percent (1%) of the total issued and
outstanding shares of Common Stock determined as of December 31 for each year
that the Plan is in effect. Such shares shall be authorized but unissued
shares or treasury shares of the Corporation or shares purchased on the open
market. Notwithstanding the foregoing, the maximum number of shares of
Common Stock that may be issued pursuant to Incentive Options shall be
2,000,000 shares.
(b) The Corporation hereby reserves sufficient authorized shares of Common
Stock to meet the grant of Awards hereunder. Any shares subject to an Award
which is subsequently forfeited, expires or is terminated may again be the
subject of an Award granted under the Plan. To the extent that any shares of
Common Stock subject to an Award are not delivered to a Participant (or his
beneficiary) because the Award is forfeited or canceled or because the Award is
settled in cash, such shares shall not be deemed to have been issued for
purposes of determining the maximum number of shares of Common Stock available
for issuance under the Plan. If the option price of an Option granted under the
Plan is satisfied by tendering shares of Common Stock, only the number of
shares issued net of the shares of Common Stock tendered shall be deemed issued
for purposes of determining the maximum number of shares of Common Stock
available for issuance under the Plan.
<PAGE>
(c) If there is any change in the shares of Common Stock because of a merger,
consolidation or reorganization involving the Corporation or a related
corporation, or if the Board of Directors of the Corporation declares a stock
dividend or stock split distributable in shares of Common Stock, or if there is
a change in the capital stock structure of the Corporation or a related
corporation affecting the Common Stock, the number of shares of Common Stock
reserved for issuance under the Plan shall be correspondingly adjusted, and the
Administrator shall make such adjustments to Awards or to any provisions of
this Plan as the Administrator deems equitable to prevent dilution or
enlargement of Awards or otherwise advisable.
5. Eligibility
An Award may be granted only to an individual who satisfies the following
eligibility requirements on the date the Award is granted:
(a) The individual is either (i) an employee of the Corporation or a related
corporation, (ii) a director of the Corporation or a related corporation, or
(iii) an independent contractor, consultant or advisor (collectively,
"independent contractors") providing services to the Corporation or a related
corporation. For this purpose, an individual shall be considered to be an
"employee" only if there exists between the individual and the Corporation or a
related corporation the legal and bona fide relationship of employer and
employee.
(b) With respect to the grant of Incentive Options, the individual does not
own, immediately before the time that the Incentive Option is granted, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Corporation. Notwithstanding the foregoing, an
individual who owns more than ten percent of the total combined voting power of
the Corporation may be granted an Incentive Option if the option price (as
determined pursuant to Section 6(b) herein), is at least 110% of the Fair
Market Value of the Common Stock (as defined in Section 6(b) herein (the "Fair
Market Value")), and the option period (as defined in Section 6(c) herein) does
not exceed five years. For this purpose, an individual will be deemed to own
stock which is attributable to him under Section 424(d) of the Internal Revenue
Code of 1986, as amended ("the Code").
(c) The individual, being otherwise eligible under this Section 5, is
selected by the Administrator as an individual to whom an Award shall be
granted (a "Participant").
6. Options
(a) Grant of Options: Subject to the limitations of the Plan, the
Administrator may in its sole and absolute discretion grant Options to such
eligible individuals in such numbers, upon such terms and at such times as the
Administrator shall determine. Both Incentive Options and Nonqualified Options
may be granted under the Plan. To the extent necessary to comply with Section
422 of the Code and related regulations, (i) if an Option is designated as an
Incentive Option but does not qualify as such under Section 422 of the Code,
the Option (or portion thereof) shall be treated as a Nonqualified Option; and
(ii) the provisions relating to the grant and terms of Incentive Options
(including but not limited to the provisions in Section 4(a) herein regarding
the maximum number of shares available for issuance pursuant to such Incentive
Options) shall be deemed to be a separate plan.
(b) Option Price: The price per share at which an Option may be exercised
(the "option price") shall be established by the Administrator at the time the
Option is granted and shall be set forth in the terms of the agreement
evidencing the grant of the Option; provided, that (i) in the case of an
Incentive Option, the option price shall be no less than the Fair Market Value
per share of the Common Stock on the date the Option is granted and (ii) in no
event shall the option price per share of any Option be less than the par value
per share of the Common Stock. In addition, the following rules shall apply:
<PAGE>
(i) An Incentive Option shall be considered to be granted on
the date that the Administrator acts to grant the Option, or on any
later date specified by the Administrator as the effective date of the
Option. A Nonqualified Option shall be considered to be granted on the
date the Administrator acts to grant the Option or any other date
specified by the Administrator as the date of grant of the Option.
(ii) For the purposes of the Plan, the Fair Market Value of
the shares shall be determined in good faith by the Administrator in
accordance with the following provisions: (A) if the shares of Common
Stock are listed for trading on the New York Stock Exchange or the
American Stock Exchange, the Fair Market Value shall be the closing
sales price per share of the shares on the New York Stock Exchange or
the American Stock Exchange (as applicable) on the date immediately
preceding the date the Option is granted, or, if there is no
transaction on such date, then on the trading date nearest preceding
the date the Option is granted for which closing price information is
available, and, provided further, if the shares are quoted on the
Nasdaq National Market or the Nasdaq SmallCap Market of the Nasdaq
Stock Market but are not listed for trading on the New York Stock
Exchange or the American Stock Exchange, the Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such system on the date immediately
preceding the date the Option is granted for which such information is
available; or (B) if the shares of Common Stock are not listed or
reported in any of the foregoing, then the Fair Market Value shall be
determined by the Administrator in accordance with the applicable
provisions of Section 20.2031-2 of the Federal Estate Tax Regulations,
or in any other manner consistent with the Code and accompanying
regulations.
(iii) In no event shall there first become exercisable by an
employee in any one calendar year Incentive Options granted by the
Corporation or any related corporation with respect to shares having
an aggregate Fair Market Value (determined at the time an Incentive
Option is granted) greater than $100,000.
(c) Option Period and Limitations on the Right to Exercise Options
(i) The term of an Option (the "Option Period") shall be
determined by the Administrator at the time the Option is granted.
With respect to Incentive Options, such period shall not extend more
than ten years from the date on which the Option is granted. Any
Option or portion thereof not exercised before expiration of the
option period shall terminate. The period during which an Option may
be exercised shall be determined by the Administrator at the time the
Option is granted.
(ii) An Option may be exercised by giving written notice to
the Corporation at such place as the Corporation shall direct. Such
notice shall specify the number of shares to be purchased pursuant to
an Option and the aggregate purchase price to be paid therefor, and
shall be accompanied by the payment of such purchase price. Such
payment shall be in the form of (A) cash; (B) shares of Common Stock
owned by the Participant at the time of exercise; (C) shares of Common
Stock withheld upon exercise; (D) delivery of written notice of
exercise to the Corporation and delivery to a broker of written notice
of exercise and irrevocable instructions to promptly deliver to the
Corporation the amount of sale or loan proceeds to pay the option
price; or (E) a combination of the foregoing methods, as elected by
the Participant. Shares tendered or withheld in payment on the
exercise of an Option shall be valued at their Fair Market Value on
the date of exercise, as determined by the Administrator by applying
the provisions of Section 6(b)(ii).
(iii) Notwithstanding Section 6(c)(i) herein, no Option
granted to a Participant who was an employee at the time of grant
shall be exercised unless the Participant is, at the time of exercise,
an employee as described in Section 5(a), and has been an employee
continuously since the date the Option was granted, subject to the
following:
(A) An Option shall not be affected by any change in
the terms, conditions or status of the Participant's
employment, provided that the Participant continues to be an
employee of the Corporation or a related corporation.
<PAGE>
(B) The employment relationship of a Participant
shall be treated as continuing intact for any period that the
Participant is on military or sick leave or other bona fide
leave of absence, provided that the period of such leave does
not exceed ninety days, or, if longer, as long as the
Participant's right to reemployment is guaranteed either by
statute or by contract. The employment relationship of a
Participant shall also be treated as continuing intact while
the Participant is not in active service because of
disability. The Administrator shall determine whether a
Participant is disabled within the meaning of this paragraph.
(C) Unless an individual option agreement provides
otherwise, if the employment of a Participant is terminated
because of disability, or if the Participant dies while he is
an employee, the Option may be exercised only to the extent
exercisable on the date of the Participant's termination of
employment or death while employed (the "termination date"),
except that the Administrator may in its discretion
accelerate the date for exercising all or any part of the
Option which was not otherwise exercisable on the termination
date. The Option must be exercised, if at all, prior to the
first to occur of the following, whichever shall be
applicable: (X) the close of the period of twelve months next
succeeding the termination date; or (Y) the close of the
option period. In the event of the Participant's death, such
Option shall be exercisable by such person or persons as
shall have acquired the right to exercise the Option by will
or by the laws of intestate succession.
(D) Unless an individual option agreement provides
otherwise, if the employment of the Participant is terminated
for any reason other than disability or death or for "cause,"
his Option may be exercised to the extent exercisable on the
date of such termination of employment, except that the
Administrator may in its discretion accelerate the date for
exercising all or any part of the Option which was not
otherwise exercisable on the date of such termination of
employment. The Option must be exercised, if at all, prior to
the first to occur of the following, whichever shall be
applicable: (X) the close of the period of 90 days next
succeeding the termination date; or (Y) the close of the
option period. If the Participant dies following such
termination of employment and prior to the earlier of the
dates specified in (X) or (Y) of this subparagraph (D), the
Participant shall be treated as having died while employed
under subparagraph (C) immediately preceding (treating for
this purpose the Participant's date of termination of
employment as the termination date). In the event of the
Participant's death, such Option shall be exercisable by such
person or persons as shall have acquired the right to
exercise the Option by will or by the laws of intestate
succession.
(E) Unless an individual option agreement provides
otherwise, if the employment of the Participant is terminated
for "cause," his Option shall lapse and no longer be
exercisable as of the effective time of his termination of
employment, as determined by the Administrator. For purposes
of this subparagraph (E) and subparagraph (D), the
Participant's termination shall be for "cause" if such
termination results from the Participant's (X) dishonesty;
(Y) refusal to perform his duties for the Corporation; or (Z)
engaging in conduct that could be materially damaging to the
Corporation without a reasonable good faith belief that such
conduct was in the best interest of the Corporation. The
determination of "cause" shall be made by the Administrator
and its determination shall be final and conclusive.
(F) Notwithstanding the foregoing, the Administrator
shall have authority, in its discretion, to extend the period
during which an Option may be exercised; provided that, in
the event that any such extension shall cause an Incentive
Option to be designated as a Nonqualified Option, no such
extension shall be made without the prior written request and
consent of the Participant.
<PAGE>
(iv) Notwithstanding Section 6(c)(i), herein, unless an
individual option agreement provides otherwise, an Option granted to a
Participant who was a director of the Corporation or a related
corporation at the time of grant may be exercised only to the extent
exercisable on the date of the Participant's termination of service to
the Corporation or a related corporation (unless the termination was
for cause), and must be exercised, if at all, prior to the first to
occur of the following, as applicable: (X) the close of the period of
one year next succeeding the termination date; or (Y) the close of the
option period. If the services of such a Participant are terminated
for cause (as defined in Section 6(c)(iii)(E) herein), his Option
shall lapse and no longer be exercisable as of the effective time of
his termination of services, as determined by the Administrator.
Notwithstanding the foregoing, the Administrator may in its discretion
accelerate the date for exercising all or any part of an Option which
was not otherwise exercisable on the termination date or extend the
period during which an Option may be exercised, or both.
(v) Notwithstanding Section 6(c)(i), herein, unless an
individual option agreement provides otherwise, an Option granted to a
Participant who was an independent contractor of the Corporation or a
related corporation at the time of grant (and who does not thereafter
become an employee, in which case he shall be subject to the
provisions of Section 6(c)(iii) herein) may be exercised only to the
extent exercisable on the date of the Participant's termination of
service to the Corporation or a related corporation (unless the
termination was for cause), and must be exercised, if at all, prior to
the first to occur of the following, as applicable: (X) the close of
the period of 90 days next succeeding the termination date; or (Y) the
close of the option period. If the services of such a Participant are
terminated for cause (as defined in Section 6(c)(iii)(E) herein), his
Option shall lapse and no longer be exercisable as of the effective
time of his termination of services, as determined by the
Administrator. Notwithstanding the foregoing, the Administrator may in
its discretion accelerate the date for exercising all or any part of
an Option which was not otherwise exercisable on the termination date
or extend the period during which an Option may be exercised, or both.
(vi) A Participant or his legal representative, legatees or
distributees shall not be deemed to be the holder of any shares
subject to an Option unless and until certificates for such shares are
delivered to him or them under the Plan.
(vii) Nothing in the Plan shall confer upon the Participant
any right to continue in the service of the Corporation or a related
corporation as an employee, director, or independent contractor or to
interfere in any way with the right of the Corporation or a related
corporation to terminate the Participant's employment or service at
any time.
(viii) A certificate or certificates for shares of Common
Stock acquired upon exercise of an Option shall be issued in the name
of the Participant (or his beneficiary) and distributed to the
Participant (or his beneficiary) as soon as practicable following
receipt of notice of exercise and payment of the purchase price.
(d) Nontransferability of Options
(i) Incentive Options shall not be transferable other than by
will or the laws of intestate succession. Nonqualified Options shall
not be transferable other than by will or the laws of intestate
succession except as may be permitted by the Administrator in a manner
consistent with the registration provisions of the Securities Act of
1933, as amended (the "Securities Act"). The designation of a
beneficiary does not constitute a transfer. An Option shall be
exercisable during the Participant's lifetime only by him or by his
guardian or legal representative.
(ii) If a Participant is subject to Section 16 of the
Exchange Act, shares of Common Stock acquired upon exercise of an
Option may not, without the consent of the Administrator, be disposed
of by the Participant until the expiration of six months after the
date the Option was granted.
<PAGE>
7. Stock Appreciation Rights
(a) Grant of SARs: Subject to the limitations of the Plan, the
Administrator may in its sole and absolute discretion grant SARs to such
eligible individuals, in such numbers, upon such terms and at such times as the
Administrator shall determine. SARs may be granted to an optionee of an Option
(hereinafter called a "Related Option") with respect to all or a portion of the
shares of Common Stock subject to the Related Option (a "Tandem SAR") or may be
granted separately to an eligible key employee (a "Freestanding SAR"). Subject
to the limitations of the Plan, SARs shall be exercisable in whole or in part
upon notice to the Corporation upon such terms and conditions as are provided
in the agreement relating to the grant of the SAR.
(b) Tandem SARs: A Tandem SAR may be granted either concurrently with
the grant of the Related Option or (if the Related Option is a Nonqualified
Option) at any time thereafter prior to the complete exercise, termination,
expiration or cancellation of such Related Option. Tandem SARs shall be
exercisable only at the time and to the extent that the Related Option is
exercisable (and may be subject to such additional limitations on
exercisability as the Administrator may provide in the agreement), and in no
event after the complete termination or full exercise of the Related Option.
For purposes of determining the number of shares of Common Stock that remain
subject to such Related Option and for purposes of determining the number of
shares of Common Stock in respect of which other Awards may be granted, a
Related Option shall be considered to have been surrendered upon the exercise
of a Tandem SAR to the extent of the number of shares of Common Stock with
respect to which such Tandem SAR is exercised. Upon the exercise or termination
of a Related Option, the Tandem SARs with respect thereto shall be canceled
automatically to the extent of the number of shares of Common Stock with
respect to which the Related Option was so exercised or terminated. Subject to
the limitations of the Plan, upon the exercise of a Tandem SAR, the Participant
shall be entitled to receive from the Corporation, for each share of Common
Stock with respect to which the Tandem SAR is being exercised, consideration
equal in value to the excess of the Fair Market Value of a share of Common
Stock on the date of exercise over the Related Option price per share;
provided, that the Administrator may, in any agreement granting Tandem SARs,
establish a maximum value payable for such SARs.
(c) Freestanding SARs: Unless an individual agreement provides
otherwise, the base price of a Freestanding SAR shall be not less than 100% of
the Fair Market Value of the Common Stock (as determined in accordance with
Section 6(b)(ii) herein) on the date of grant of the Freestanding SAR. Subject
to the limitations of the Plan, upon the exercise of a Freestanding SAR, the
Participant shall be entitled to receive from the Corporation, for each share
of Common Stock with respect to which the Freestanding SAR is being exercised,
consideration equal in value to the excess of the Fair Market Value of a share
of Common Stock on the date of exercise over the base price per share of such
Freestanding SAR; provided, that the Administrator may, in any agreement
granting Freestanding SARs, establish a maximum value payable for such SARs.
(d) Exercise of SARs:
(i) Subject to the terms of the Plan, SARs shall be
exercisable in whole or in part upon such terms and conditions as are
provided in the agreement relating to the grant of the SAR. The period
during which an SAR may be exercisable shall not exceed ten years from
the date of grant or, in the case of Tandem SARs, such shorter option
period as may apply to the Related Option. Any SAR or portion thereof
not exercised before expiration of the period stated in the agreement
relating to the grant of the SAR shall terminate.
(ii) SARs may be exercised by giving written notice to
the Corporation at such place as the Administrator
shall direct. The date of exercise of the SAR shall
mean the date on which the Corporation shall have
received proper notice from the Participant of the
exercise of such SAR.
(iii) No SAR may be exercised unless the Participant is,
at the time of exercise, an eligible Participant, as
described in Section 5, and has been a Participant
continuously since the date the SAR was granted,
subject to the provisions of Sections 6(c)(iii),
(iv) and (v) herein.
<PAGE>
(e) Consideration; Election: The consideration to be received upon the
exercise of the SAR by the Participant shall be paid in cash, shares of Common
Stock (valued at Fair Market Value on the date of exercise of such SAR in
accordance with Section 6(b)(ii) herein) or a combination of cash and shares of
Common Stock, as elected by the Administrator, subject to the terms of the
Plan, the applicable agreement and applicable laws or rules. The Corporation's
obligation arising upon the exercise of the SAR may be paid currently or on a
deferred basis with such interest or earnings equivalent as the Administrator
may determine. A certificate or certificates for shares of Common Stock
acquired upon exercise of an SAR for shares shall be issued in the name of the
Participant (or his beneficiary) and distributed to the Participant (or his
beneficiary) as soon as practicable following receipt of notice of exercise. No
fractional shares of Common Stock will be issuable upon exercise of the SAR
and, unless otherwise provided in the applicable agreement, the Participant
will receive cash in lieu of fractional shares.
(f) Limitations: The applicable SAR agreement shall contain such
terms, conditions and limitations consistent with the Plan as may be specified
by the Administrator. Unless otherwise so provided in the applicable agreement
or the Plan, any such terms, conditions or limitations relating to a Tandem SAR
shall not restrict the exercisability of the Related Option.
(g) Nontransferability:
(i) SARs shall not be transferable other than by will or the
laws of intestate succession. The designation of a beneficiary does
not constitute a transfer. SARs may be exercised during the
Participant's lifetime only by him or by his guardian or legal
representative.
(ii) If the Participant is subject to Section 16 of the
Exchange Act, shares of Common Stock acquired upon exercise of an SAR
may not, without the consent of the Administrator, be disposed of by
the Participant until the expiration of six months after the date the
SAR was granted.
8. Restricted Awards
(a) Grant of Restricted Awards: Subject to the limitations of the
Plan, the Administrator may in its sole and absolute discretion grant
Restricted Awards to such individuals in such numbers, upon such terms and at
such times as the Administrator shall determine. A Restricted Award may consist
of a Restricted Stock Award or a Restricted Unit, or both. Restricted Awards
shall be payable in cash or whole shares of Common Stock (including Restricted
Stock), or partly in cash and partly in whole shares of Common Stock, in
accordance with the terms of the Plan and the sole and absolute discretion of
the Administrator. The Administrator may condition the grant or vesting, or
both, of a Restricted Award upon the continued service of the Participant for a
certain period of time, attainment of such performance objectives as the
Administrator may determine, or upon a combination of continued service and
performance objectives. The Administrator shall determine the nature, length
and starting date of the period during which the Restricted Award may be earned
(the "Restriction Period") for each Restricted Award. In the case of Restricted
Awards based upon performance criteria, or a combination of performance
criteria and continued service, the Administrator shall determine the
performance objectives to be used in valuing Restricted Awards and determine
the extent to which such Awards have been earned. Performance objectives may
vary from participant to participant and between groups of participants and
shall be based upon such Corporation, business unit and/or individual
performance factors and criteria as the Administrator in its sole discretion
may deem appropriate, including, but not limited to, earnings per share, return
on equity, return on assets or total return to shareholders. The Administrator
shall determine the terms and conditions of each Restricted Award, including
the form and terms of payment of Awards. The Administrator shall have sole
authority to determine whether and to what degree Restricted Awards have been
earned and are payable and to interpret the terms and conditions of Restricted
Awards and the provisions herein.
(b) Earning of Restricted Awards: Unless the applicable agreement
provides otherwise, a Restricted Award granted to a Participant shall be deemed
to be earned as of the first to occur of the completion of the Restriction
Period, retirement, displacement, death or disability of the Participant, or
acceleration of the Restricted Award, provided that, in the case of Restricted
Awards based upon performance criteria or a combination of performance criteria
and continued service, the Administrator shall have sole discretion to
determine if, and to what degree, the Restricted Awards shall be deemed earned
at the end of the Restriction Period or upon the retirement, displacement,
death or disability of the Participant. In addition, the following rules shall
also apply to the earning of Restricted Awards:
<PAGE>
(i) Completion of Restriction Period: For this purpose, a
Restricted Award shall be deemed to be earned upon completion of the
Restriction Period (except as otherwise provided herein for
performance-based Restricted Awards). In order for a Restricted Award
to be deemed earned, the Participant must have been continuously
employed or in service during the Restriction Period. Continuous
employment or service shall mean employment with or service to any
combination of the Corporation and one or more related corporations,
and a temporary leave of absence with consent of the Corporation shall
not be deemed to be a break in continuous employment or service.
(ii) Retirement of the Participant: For this purpose, the
Participant shall be deemed to have retired as of the earlier of (A)
his normal retirement date under the retirement plan established by
the Corporation for its employees which is applicable to the
Participant, or (B) his retirement date under a contract, if any,
between the Participant and the Corporation providing for his
retirement from the employment of the Corporation or a related
corporation prior to such normal retirement date, or (C) a mutually
agreed upon early retirement date under such retirement plan of the
Corporation between the Participant and the Corporation.
(iii) Displacement of the Participant: For this purpose, the
Participant shall be deemed to have been displaced in the event of the
termination of the Participant's employment or service due to the
elimination of the Participant's job or position without fault on the
part of the Participant.
(iv) Death or Disability of the Participant: Except as
otherwise provided herein for performance-based Restricted Awards, if
the Participant shall terminate continuous employment or service
because of death or disability before a Restricted Award is otherwise
deemed to be earned pursuant to this Section 8(b), the Participant
shall be deemed to have earned a percentage of the Award (rounded to
the nearest whole share in the case of Restricted Awards payable in
shares) determined by dividing the number of his full years of
continuous employment or service then completed during the Restriction
Period with respect to the Award by the number of years of such
Restriction Period.
(v) Acceleration of Restricted Awards by the Administrator:
Notwithstanding the provisions of this Section 8(b), the
Administrator, in its sole and absolute discretion, may accelerate the
date that any Restricted Award granted to the Participant shall be
deemed to be earned in whole or in part, without any obligation to
accelerate such date with respect to other Restricted Awards granted
to the Participant or to accelerate such date with respect to
Restricted Awards granted to any other Participant, or to treat all
Participants similarly situated in the same manner.
(c) Forfeiture of Restricted Awards: If the employment or service of a
Participant shall be terminated for any reason, and the Participant has not
earned all or part of a Restricted Award pursuant to the terms herein, such
Award to the extent not then earned shall be forfeited immediately upon such
termination and the Participant shall have no further rights with respect
thereto.
(d) Share Certificates; Dividend and Voting Rights:
(i) Unless an individual agreement provides otherwise,
certificates representing Restricted Stock shall be issued in the name
of the Participant as soon as practicable following determination of
the Restricted Awards payable in Restricted Stock by the
Administrator, and shares represented by such certificates shall be
deemed to be issued and outstanding for all purposes. Each such
certificate shall have attached thereto a stock power which shall be
executed in blank by the Participant entitled to such certificate, and
such certificate with the executed stock power attached shall be
immediately delivered to the Administrator (or its designee) to be
held for the Participant until such shares have been earned (in which
event the certificate representing the shares shall be transferred to
the Participant or his beneficiary or personal representative) or
forfeited (in which event the shares shall become available for other
Awards), as provided in this Section 8.
<PAGE>
(ii) Unless the applicable agreement provides otherwise, a
Participant shall have all rights and incidents of ownership with
respect to Restricted Stock subject to a Restricted Award and held for
his account, including the right to receive dividends when paid by the
Corporation and to have full voting rights with respect to such
Restricted Stock held for his account by the Corporation on the record
date, even though the Restricted Stock with respect to which such
dividends are paid or vote exercised shall not have been earned and
shall be subject to forfeiture. Any securities of the Corporation
distributed in a transaction described in Section 4(c), or otherwise,
with respect to Restricted Stock held for a participant by the
Corporation shall be delivered to the Corporation to be held with and
as a part of such Award, subject to being earned or forfeited as
provided in Section 8, as if such distributed securities were a part
of the original Award.
(e) Nontransferability:
(i) The recipient of a Restricted Award shall not sell,
transfer, assign, pledge or otherwise encumber shares subject to the
Award until the Restriction Period has expired or until all conditions
to vesting have been met.
(ii) Restricted Awards shall not be transferable other than
by will or the laws of intestate succession. The designation of a
beneficiary does not constitute a transfer.
(iii) If a Participant of a Restricted Award is subject to
Section 16 of the Exchange Act, shares of Common Stock subject to such
Award may not, without the consent of the Administrator, be sold or
otherwise disposed of within six months following the date of grant of
such Award.
9. Withholding
The Corporation shall withhold all required local, state and federal
taxes from any amount payable in cash with respect to an Award. The Corporation
shall require any recipient of an Award payable in shares of the Common Stock
to pay to the Corporation in cash the amount of any tax or other amount
required by any governmental authority to be withheld and paid over by the
Corporation to such authority for the account of such recipient.
Notwithstanding the foregoing, the recipient may satisfy such obligation in
whole or in part, and any other local, state or federal income tax obligations
relating to such an Award, by electing (the "Election") to have the Corporation
withhold shares of Common Stock from the shares to which the recipient is
entitled. The number of shares to be withheld shall have a Fair Market Value as
of the date that the amount of tax to be withheld is determined (the "Tax
Date") as nearly equal as possible to (but not exceeding) the amount of such
obligations being satisfied. Each Election must be made in writing to the
Administrator in accordance with election procedures established by the
Administrator.
10. Section 16(b) Compliance
It is the general intent of the Corporation that transactions under
the Plan which are subject to Section 16 of the Exchange Act shall comply with
Rule 16b-3 under the Exchange Act. Notwithstanding anything in the Plan to the
contrary, the Administrator, in its sole and absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers or directors subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other participants.
11. No Right or Obligation of Continued Employment
Nothing contained in the Plan shall require the Corporation or a
related corporation to continue the employment or service of a Participant, nor
shall any such individual be required to remain in the employment or service of
the Corporation or a related corporation. Except as otherwise provided in the
Plan, Awards granted under the Plan to employees of the Corporation or a
related corporation shall not be affected by any change in the duties or
position of the participant, as long as such individual remains an employee of,
or in service to, the Corporation or a related corporation
<PAGE>
12. Unfunded Plan; Retirement Plans
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Corporation or any related corporation, including, without limitation, any
specific funds, assets or other property which the Corporation or any related
corporation, in their discretion, may set aside in anticipation of a liability
under the Plan. A participant shall have only a contractual right to the Common
Stock or amounts, if any, payable under the Plan, unsecured by any assets of
the Corporation or any related corporation. Nothing contained in the Plan shall
constitute a guarantee that the assets of such corporations shall be sufficient
to pay any benefits to any person.
(b) In no event shall any amounts accrued, distributable or payable
under the Plan be treated as compensation for the purpose of determining the
amount of contributions or benefits to which any person shall be entitled under
any retirement plan sponsored by the Corporation or a related corporation that
is intended to be a qualified plan within the meaning of Section 401(a) of the
Code.
13. Amendment and Termination of the Plan
The Plan may be amended or terminated at any time by the Board of
Directors of the Corporation; provided, that (i) such amendment or termination
shall not, without the consent of the recipient of an Award, adversely affect
the rights of the recipient with respect to an outstanding Award; and (ii)
approval of an amendment by the shareholders of the Corporation shall be
required to the extent, if any, that shareholder approval of such amendment is
required by applicable law, rule or regulation.
14. Restrictions on Shares
The Corporation may impose such restrictions on any shares
representing Awards hereunder as it may deem advisable, including without
limitation restrictions under the Securities Act, under the requirements of any
stock exchange or similar organization and under any blue sky or state
securities laws applicable to such shares. Notwithstanding any other Plan
provision to the contrary, the Corporation shall not be obligated to issue,
deliver or transfer shares of Common Stock under the Plan or make any other
distribution of benefits under the Plan, or take any other action, unless such
delivery, distribution or action is in compliance with all applicable laws,
rules and regulations (including but not limited to the requirements of the
Securities Act). The Corporation may cause a restrictive legend to be placed on
any certificate issued pursuant to an Award hereunder in such form as may be
prescribed from time to time by applicable laws and regulations or as may be
advised by legal counsel.
15. Applicable Law
The Plan shall be governed by and construed in accordance with the
laws of the State of Georgia.
16. Shareholder Approval
The Plan is subject to approval by the shareholders of the
Corporation, which approval must occur, if at all, within 12 months of the
effective date of the Plan. Awards granted prior to such shareholder approval
shall be conditioned upon and shall be effective only upon approval of the Plan
by such shareholders on or before such date.
17. Change of Control
(a) Notwithstanding any other provision of the Plan to the contrary,
in the event of a Change of Control (as defined in Section 17(b) herein):
(i) All Options and SARs outstanding as of the date of such
Change of Control shall become fully exercisable, whether or not then
otherwise exercisable.
(ii) Any restrictions including but not limited to the
Restriction Period applicable to any Restricted Award shall be deemed
to have expired, and such Restricted Awards shall become fully vested
and payable to the fullest extent of the original grant of the
applicable Award.
<PAGE>
(iii) Notwithstanding the foregoing, in the event of a
merger, share exchange, reorganization or other business combination
affecting the Corporation or a related corporation, the Administrator
may, in its sole and absolute discretion, determine that any or all
Awards granted pursuant to the Plan shall not vest or become
exercisable on an accelerated basis, if the Board of Directors of the
surviving or acquiring corporation, as the case may be, shall have
taken such action, including but not limited to the assumption of
Awards granted under the Plan or the grant of substitute awards (in
either case, with substantially similar terms as Awards granted under
the Plan), as in the opinion of the Administrator is equitable or
appropriate to protect the rights and interests of participants under
the Plan. For the purposes herein, if the Committee is acting as the
Administrator authorized to make the determinations provided for in
this Section 17(a)(iii), the Committee shall be appointed by the Board
of Directors, two-thirds of the members of which shall have been
directors of the Corporation prior to the merger, share exchange,
reorganization or other business combinations affecting the
Corporation or a related corporation.
(b) For the purposes herein, a "Change of Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) The date any entity or person that is not a shareholder
on the effective date of the Plan shall have become the beneficial
owner of, or shall have obtained voting control over, thirty percent
(30%) or more of the outstanding Common Stock of the Corporation;
(ii) The date the shareholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation with
or into another corporation, in which the Corporation is not the
continuing or surviving corporation or pursuant to which any shares of
Common Stock of the Corporation would be converted into cash,
securities or other property of another corporation, other than a
merger or consolidation of the Corporation in which holders of Common
Stock immediately prior to the merger or consolidation have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of all or substantially all the assets of the
Corporation; or
(iv) The date there shall have been a change in a majority of
the Board of Directors of the Corporation within a 12-month period
unless the nomination for election by the Corporation's shareholders
of each new director was approved by the vote of two-thirds of the
directors then still in office who were in office at the beginning of
the 12-month period.
(For purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such
term is defined in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, other than the Corporation, a subsidiary of the
Corporation or any employee benefit plan(s) sponsored or maintained by
the Corporation or any subsidiary thereof, and the term "beneficial
owner" shall have the meaning given the term in Rule 13d-3 under the
Exchange Act.)
18. Certain Definitions
In addition to other terms defined in the Plan, the following terms
shall have the meaning indicated:
(a) "Agreement" means any written agreement or agreements between the
Corporation and the recipient of an Award pursuant to the Plan relating to the
terms, conditions and restrictions of Options, SARs, Restricted Awards and any
other Awards conferred herein.
(b) "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or which has lasted or can
be expected to last for a continuous period of not less than twelve months.
(c) "Parent" or "Parent Corporation" shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the
Corporation if each corporation other than the Corporation owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in another corporation in the chain.
(d) "Predecessor" or "Predecessor Corporation" means a corporation
which was a party to a transaction described in Section 424(a) of the Code (or
which would be so described if a substitution or assumption under that Section
had occurred) with the Corporation, or a corporation which is a parent or
subsidiary of the Corporation, or a predecessor of any such corporation.
<PAGE>
(e) "Related Corporation" means any parent, subsidiary or predecessor
of the Corporation.
(f) "Restricted Stock" shall mean shares of Common Stock which are
subject to Restricted Awards payable in shares, the vesting of which is subject
to restrictions set forth in the Plan or the agreement relating to such Award.
(g) "Subsidiary" or "Subsidiary Corporation" means any corporation
(other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation if each corporation other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in another corporation in the chain.
IN WITNESS WHEREOF, this 1998 Stock Incentive Plan of Transit Group,
Inc., is, by the authority of the Board of Directors of the Corporation,
executed in behalf of the Corporation, the 10 day of February,
1998.
TRANSIT GROUP, INC.
By: /s/ Philip A. Belyew
--------------------
Name: Philip A. Belyew
--------------------
Title: President and Chief
Executive Officer
--------------------
ATTEST:
/s/ Wayne N. Nellums
Secretary
[Corporate Seal]
<PAGE>
EXHIBIT B
1998 EMPLOYEE STOCK PURCHASE PLAN
OF
TRANSIT GROUP, INC.
1. Purpose
The purpose of the 1998 Employee Stock Purchase Plan of Transit Group, Inc.
(the "Plan") is to give eligible employees of Transit Group, Inc., a Florida
corporation (the "Corporation"), and its Subsidiaries an opportunity to acquire
shares of the common stock of the Corporation (the "Common Stock") and to
continue to promote the Corporation's best interests and enhance its long-term
performance. This purpose will be carried through the granting of options to
purchase shares of the Corporation's Common Stock through payroll deductions or
other means permitted under the Plan. The Plan is intended to comply with the
requirements of Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to employee stock purchase plans. The provisions of
the Plan shall be construed so as to comply with the requirements of Section
423 of the Code.
2. Certain Definitions
In addition to terms defined elsewhere in the Plan, the following words and
phrases shall have the meanings given below unless a different meaning is
required by the context:
<PAGE>
(a) "Board" means the Board of Directors of the Corporation.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Compensation Committee of the
Board.
(d) "Common Stock" means shares of the common stock of the
Corporation.
(e) "Corporation" means Transit Group, Inc., a Florida
corporation.
(f) "Eligible Employee" means any employee of the Corporation
or a Subsidiary except for (i) any employee whose customary employment
is 20 hours or less per week, or (ii) any employee whose customary
employment is for not more than five months in any calendar year. For
purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave
of absence approved by the Corporation; provided that, where the
period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the
employment relationship shall be deemed to have terminated on the 91st
day of such leave.
(g) "Fair Market Value" of the Common Stock as of the
applicable Offer Date shall be determined in good faith by the
Committee in accordance with the following provisions:
(i) if the shares of Common Stock are listed for
trading on the New York Stock Exchange or the American Stock
Exchange, the Fair Market Value shall be the closing sales
price of the shares on the New York Stock Exchange or the
American Stock Exchange (as applicable) on the date
immediately preceding the date the option is granted, or, if
there is no transaction on such date, then on the trading
date nearest preceding the date the option is granted for
which closing price information is available, and, provided
further, if the shares are quoted on the Nasdaq National
Market or the Nasdaq SmallCap Market of the Nasdaq Stock
Market but are not listed for trading on the New York Stock
Exchange or the American Stock Exchange, the Fair Market
Value shall be the closing sales price for such stock (or the
closing bid if no sales were reported) as quoted on such
system on the date immediately preceding the date the option
is granted for which such information is available; or
(ii) if the shares of Common Stock are not listed or
reported in any of the foregoing, then Fair Market Value
shall be determined by the Committee in any other manner
consistent with the Code and accompanying regulations.
Notwithstanding any provision of the Plan to the contrary, no
determination made with respect to the Fair Market Value of Common
Stock subject to an option shall be inconsistent with Section 423 of
the Code or regulations thereunder.
(h) "Offer Date" means the date of grant of an option
pursuant to the Plan. The Offer Date shall be the first date of each
Purchase Period, commencing with the Purchase Period that commences on
July 1, 1998.
(i) "Option" means an option granted hereunder which will
entitle a participant to purchase shares of Common Stock in accordance
with the terms of the Plan.
(j) "Option Price" means the price per share of Common Stock
subject to an option, as determined in accordance with Section 8(b).
(k) "Participant" means an Eligible Employee who is a
participant in the Plan.
<PAGE>
(l) "Plan" means the Transit Group, Inc. 1998 Employee
Stock Purchase Plan, as it may be hereafter amended.
(m) "Purchase Date" means the date of exercise of an option
granted under the Plan. The Purchase Date shall be the last day of
each Purchase Period, commencing with the Purchase Period that
terminates on December 31, 1998.
(n) "Purchase Period" means each six-month period during
which an offering to purchase Common Stock is made to Eligible
Employees pursuant to the Plan. There shall be two Purchase Periods in
each fiscal year of the Corporation, with the first Purchase Period in
a fiscal year commencing on January 1 and ending on June 30, and the
second Purchase Period in a fiscal year commencing on July 1 and
ending on December 31 of that year. Notwithstanding the foregoing, the
first Purchase Period after the effective date of the Plan shall begin
on July 1, 1998 and end on December 31, 1998. The Committee shall have
the power to change the duration of Purchase Periods (including the
commencement date thereof) with respect to future offerings without
shareholder approval if such change is announced at least five (5)
days prior to the scheduled beginning of the first Purchase Period to
be affected thereafter.
(o) "Subsidiary" means any present or future corporation
which (i) would be a "subsidiary corporation" of the Corporation as
that term is defined in Section 424 of the Code and (ii) is at any
time designated as a corporation whose employees may participate in
the Plan.
3. Effective Date
The Effective Date of the Plan shall be June 26, 1998. The first Purchase
Period during which offers to purchase Common Stock will be made shall commence
on July 1, 1998. The Plan shall have a term of 10 years unless sooner
terminated in accordance with Section 16 herein.
4. Administration
(a) The Plan shall be administered by the Board or, upon its
delegation, by the Committee. References to the Committee shall
include the Board if it is acting in its administrative capacity with
respect to the Plan.
(b) Any action of the Committee may be taken by a written
instrument signed by all of the members of the Committee and any
action so taken by written consent shall be as fully effective as if
it had been taken by a majority of the members at a meeting duly held
and called. Subject to the provisions of the Plan, the Committee shall
have full and final authority, in its discretion, to take any action
with respect to the Plan, including, without limitation, the
following: (i) to establish, amend and rescind rules and regulations
for the administration of the Plan; (ii) to prescribe the form(s) of
any agreements or other written instruments used in connection with
the Plan; (iii) to determine the terms and provisions of the options
granted hereunder; and (iv) to construe and interpret the Plan, the
options, the rules and regulations, and the agreements or other
written instruments, and to make all other determinations necessary or
advisable for the administration of the Plan. The determinations of
the Committee on all matters regarding the Plan shall be conclusive.
The Committee may appoint one or more agents to assist in the
administration of the Plan.
5. Shares Subject to Plan
The aggregate number of shares of Common Stock which may be purchased under
the Plan shall not exceed 1,000,000 shares, subject to adjustment pursuant to
Section 13 herein. Shares of Common Stock granted pursuant to the Plan shall be
authorized but unissued shares, treasury shares or shares purchased on the open
market. The Corporation hereby reserves sufficient authorized shares of Common
Stock to provide for the exercise of options granted hereunder. In the event
that any option granted under the Plan expires unexercised or is terminated,
surrendered or canceled without being exercised, in whole or in part, for any
reason, the number of shares of Common Stock subject to such option shall again
be available for grant as an option and shall not reduce the aggregate number
of shares of Common Stock available for the grant of options as set forth
herein. If, on a given Purchase Date, the number of shares with respect to
which options are to be exercised exceeds the number of shares then available
under the Plan, the Corporation shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall be practicable
and as it shall determine to be equitable.
<PAGE>
6. Eligibility
(a) Initial Eligibility. Any Eligible Employee who shall have
completed 90 days' employment and shall be employed by the Corporation
on any given the Offer Date for a Purchase Period shall be eligible to
be a participant during such Purchase Period.
(b) Certain Limitations. Any provisions of the Plan to the
contrary notwithstanding:
(i) No Eligible Employee shall be granted an option
under the Plan to the extent that, immediately after the
option was granted, the individual would own stock or hold
outstanding options to purchase stock (or both) possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Corporation or of any parent or
Subsidiary of the Corporation. For purposes of this Section
6(b)(i), stock ownership of an individual shall be determined
under the rules of Section 424(d) of the Code, and stock
which the employee may purchase under outstanding options
shall be treated as stock owned by the employee.
(ii) No Eligible Employee shall be granted an option
under the Plan to the extent that his rights to purchase
stock under all employee stock purchase plans (as defined in
Section 423 of the Code) of the Corporation and any parent or
Subsidiary of the Corporation would accrue at a rate which
exceeds $25,000 of fair market value of such stock
(determined at the time of the grant of such option) for each
calendar year in which such option is outstanding at any
time. Any option granted under the Plan shall be deemed to be
modified to the extent necessary to satisfy this Section
6(b)(ii).
7. Participation; Payroll Deductions
(a) Commencement of Participation. An Eligible Employee shall
become a participant by completing a subscription agreement
authorizing payroll deductions on the form provided by the Corporation
and filing it with the Corporation prior to the Offer Date for the
applicable Purchase Period. Following the filing of a valid
subscription agreement, payroll deductions for a participant shall
commence on the first payroll period which occurs on or after the
Offer Date for the applicable Purchase Period and shall continue for
successive Purchase Periods during which the participant is eligible
to participate in the Plan, unless modified as provided in Section
7(d), or withdrawn as provided in Section 10 herein.
(b) Amount of Payroll Deduction; Determination of
Compensation. At the time a participant files his subscription
agreement authorizing payroll deductions, he shall elect to have
payroll deductions made on each payday that he is a participant during
a Purchase Period at a rate of not less than 1% nor more than 15% of
his compensation. For the purposes herein, a participant's
"compensation" during any Purchase Period means his base salary or
regular rate of compensation (excluding commissions, bonuses,
incentive compensation, overtime, employee benefits and similar
elements of compensation) determined as of the first day of each
Purchase Period. In the case of an hourly employee, an eligible
employee's compensation during a pay period shall be determined by
multiplying such employee's hourly rate of pay in effect on the first
day of such Purchase Period by the number of hours of work for such
employee during such period. Such compensation rates shall be
determined by the Committee in a nondiscriminatory manner consistent
with the provision of Section 423 of the Code and the regulations
thereunder.
(c) Participant's Account. All payroll deductions made for a
participant shall be credited to his account under the Plan and shall
be withheld in whole percentages only.
<PAGE>
(d) Changes in Payroll Deductions. A participant may
discontinue his participation in the Plan as provided in Section 10,
but no other change may be made during a Purchase Period and,
specifically, a participant may not alter the amount of his payroll
deductions for that Purchase Period. A participant may increase or
decrease the rate of his payroll deductions for subsequent Purchase
Periods by completing and filing with the Corporation a new
subscription agreement authorizing a change in payroll deduction rate.
A participant's subscription agreement shall remain in effect for
successive Purchase Periods unless modified in accordance with Section
7(d) herein or terminated as provided in Section 10 herein.
(e) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 6(b) herein, a
participant's payroll deductions may be decreased to zero percent (0%)
at any time during a Purchase Period. Payroll deductions shall
recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by
the participant pursuant to Section 10 herein.
(f) Participation During Leave of Absence. If a participant
goes on a leave of absence, such participant shall have the right to
elect: (i) to withdraw the balance in his account pursuant to Section
10; (ii) to discontinue contributions to the Plan but remain a
participant in the Plan; or (iii) to remain a participant in the Plan
during such leave of absence, authorizing deductions to be made from
payments by the Corporation to the participant during such leave of
absence and undertaking to make cash payments to the Plan at the end
of each payroll period to the extent that amounts payable by the
Corporation to such participant are insufficient to meet such
participant's authorized payroll deductions.
(g) Other Methods of Participation. The Committee may, in its
discretion, establish additional procedures whereby Eligible Employees
may participate in the Plan by means other than payroll deduction,
including, but not limited to, delivery of funds by participants in a
lump sum or automatic charges to participants' bank accounts. Such
other methods of participation shall be subject to such rules and
conditions as the Committee may establish. The Committee may at any
time amend, suspend or terminate any participation procedures
established pursuant to this Section 7(g) without prior notice to any
participant or Eligible Employee.
8. Grant of Options
(a) Number of Option Shares. On the Offer Date of each
Purchase Period, a participant shall be granted an option to purchase
on the Purchase Date of such Purchase Period (at the applicable option
price) such number of shares of Common Stock as is determined by
dividing the amount of the participant's payroll deductions
accumulated on the Purchase Date and retained in the participant's
account as of the Purchase Date by the applicable option price (as
determined in accordance with Section 8(b) herein); (subject to
adjustment pursuant to Section 13), and provided that such purchase
shall be subject to the limitations set forth in Sections 6(b) herein.
Exercise of the option shall occur as provided in Section 9 herein,
unless the participant has withdrawn pursuant to Section 10 herein or
terminated employment pursuant to Section 11 herein.
(b) Option Price. The option price per share of Common Stock
purchased with payroll deductions made during such a Purchase Period
for a participant shall be the lesser of:
(i) 85% of the Fair Market Value of a share of
the Common Stock on the Offer Date for the
Purchase Period; or
(ii) 85% of the Fair Market Value of a share of the
Common Stock on the Purchase Date for the Purchase
Period.
9. Exercise of Options
(a) Automatic Exercise. Unless a participant gives written
notice of withdrawal to the Corporation as provided in Section 10 or
terminates employment as provided in Section 11, his option for the
purchase of Common Stock shall be exercised automatically on the
Purchase Date applicable to such Purchase Period, and the maximum
number of whole shares of Common Stock subject to the option shall be
purchased for the participant at the applicable option price with the
accumulated payroll deductions in his account at that time (but not in
excess of the number of shares for which options have been granted to
the participant pursuant to Section 8(a)).
<PAGE>
(b) Termination of Option. An option granted during any
Purchase Period shall expire on the last day of the Purchase Period,
unless earlier terminated pursuant to withdrawal or termination of
employment as provided in Sections 10 and 11.
(c) Fractional Shares. Fractional shares will not be issued
under the Plan. Any excess payroll deductions in a participant's
account which are not sufficient to purchase a whole share will be
automatically re-invested in a subsequent Purchase Period unless the
participant withdraws his payroll deductions pursuant to Section 10
herein or terminates employment pursuant to Section 11 herein.
(d) Delivery of Stock. The shares of Common Stock purchased
by each participant shall be credited to such participant's account as
of the close of business on the Purchase Date for a Purchase Period. A
participant will be issued a certificate for his shares when his
participation in the Plan is terminated, the Plan is terminated, or
upon request (but in the last case only in denominations of at least
10 shares. After the close of each Purchase Period, a report will be
sent to each participant stating the entries made to such
participant's account, the number of shares of Common Stock purchased
and the applicable option price.
10. Withdrawal
A participant may withdraw all but not less than all payroll deductions and
share certificates credited to his account during a Purchase Period at any time
prior to the applicable Purchase Date by giving written notice to the
Corporation in form acceptable to the Corporation. In the event of such
withdrawal, (i) all of the participant's payroll deductions credited to his
account will be paid to him promptly (without interest) after receipt of his
notice of withdrawal, (ii) certificates for shares held in the participant's
account shall be distributed to him, (iii) such participant's option for the
Purchase Period shall be automatically terminated, and (iv) no further payroll
deductions will be made during such Purchase Period. The Corporation may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election to withdraw. A participant's
withdrawal from any Purchase Period will not have any effect upon his
eligibility to participate in any succeeding Purchase Period or in any similar
plan which may hereafter be adopted by the Corporation. Notwithstanding the
foregoing, however, if a participant withdraws from a Purchase Period, payroll
deductions shall not resume at the beginning of a succeeding Purchase Period
unless the participant delivers to the Corporation a new subscription agreement
and such participation otherwise complies with the terms of the Plan.
11. Termination of Employment
Upon termination of a participant's employment for any reason (including
death), or in the event that a participant ceases to be an Eligible Employee,
he shall be deemed to have withdrawn from the Plan. In such event, all payroll
deductions credited to his account during the Purchase Period (without
interest) but not yet used to exercise an option and a certificate(s) for
shares held in the participant's account shall be delivered to him, or, in the
case of his death, to a beneficiary duly designated on a form acceptable to the
Committee pursuant to Section 17 herein. Any unexercised options granted to a
participant during such Purchase Period shall be deemed to have expired on the
date of the participant's termination of employment (unless terminated earlier
pursuant to Sections 9(b) or 10 herein).
12. Transferability
Neither payroll deductions credited to a participant's account nor any option
(or rights attendant to an option) granted pursuant to the Plan may be
transferred, assigned, pledged, or hypothecated (whether by operation of law or
otherwise), except as provided by will or the applicable laws of descent or
distribution. No option shall be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an option, or levy of attachment or similar process upon the
option not specifically permitted herein, shall be null and void and without
effect, except that the Corporation may treat such act as an election to
withdraw funds during a Purchase Period in accordance with Section 10 hereof.
During a participant's lifetime, his option(s) may be exercised only by him.
<PAGE>
13. Dilution and Other Adjustments
(a) General. If there is any change in the outstanding shares
of Common Stock of the Corporation as a result of a merger, consolidation,
reorganization, stock dividend, stock split distributable in shares, or other
change in the capital stock structure of the Corporation, the Committee shall
make such adjustments to options (including but not limited to the option price
and the number of shares of Common Stock covered by each unexercised option),
to the number of shares reserved for issuance under the Plan, and to any
provisions of this Plan as the Committee deems equitable to prevent dilution or
enlargement of options or otherwise advisable to reflect such change.
(b) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Corporation, or the merger of the
Corporation with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted (in either case under terms
substantially similar to the terms of the Plan) by the successor corporation or
a parent or subsidiary of the successor corporation. In the event that the
successor corporation fails to agree to assume or substitute the option, the
Purchase Period then in progress shall be shortened by setting a new Purchase
Date (the "New Purchase Date") and the Purchase Period then in progress shall
end on the New Purchase Date. The New Purchase Date shall be before the date of
the Corporation's proposed sale or merger. The Corporation shall notify each
participant in writing, at least ten (10) business days prior to the New
Purchase Date, that the Purchase Date for the participant's option has been
changed to the New Purchase Date and that the participant's option shall be
exercised automatically on the New Purchase Date, unless prior to such date the
participant has withdrawn from the Purchase Period as provided in Section 10
hereof.
14. Shareholder Approval of Adoption of Plan
The Plan is subject to the approval of the Plan by the shareholders of the
Corporation within 12 months of the date of adoption of the Plan by the Board.
The Plan shall be null and void and of no effect if the foregoing condition is
not fulfilled.
15. Limitations on Options
Notwithstanding any other provisions of the Plan:
(a) The Corporation intends that options granted and Common
Stock issued under the Plan shall be treated for all purposes as
granted and issued under an employee stock purchase plan within the
meaning of Section 423 of the Code and regulations issued thereunder.
Any provisions required to be included in the Plan under Section 423
and regulations issued thereunder are hereby included as fully as
though set forth in the Plan.
(b) All employees shall have the same rights and privileges
under the Plan, except that the amount of Common Stock which may be
purchased by any employee under options granted pursuant to the Plan
shall bear a uniform relationship to the compensation of employees.
All rules and determinations of the Committee in the administration of
the Plan shall be uniformly and consistently applied to all persons in
similar circumstances.
16. Amendment and Termination of the Plan
The Board may at any time and from time to time modify, amend, suspend or
terminate the Plan or any option granted hereunder, except that (i) shareholder
approval shall be required of any amendment to the extent required under
Section 423 of the Code or other applicable law or rule; and (ii) no amendment
may materially and adversely affect any option outstanding at the time of the
amendment without the consent of the holder thereof. The Plan shall terminate
in any event when the maximum number of shares of Common Stock to be sold under
the Plan (as provided in Section 5) has been purchased. Upon termination of the
Plan, certificate(s) for the full number of whole shares of Common Stock held
for each participant's benefit, the cash equivalent of any fractional shares
held for each participant and the cash, if any, credited to such participant's
account shall be distributed promptly to such participant.
<PAGE>
17. Designation of Beneficiary
The Committee, in its sole discretion, may authorize participants to
designate a person or persons as each such participant's beneficiary, which
beneficiary shall be entitled to the rights of the participant in the event of
the participant's death to which the participant would otherwise be entitled.
The Committee shall have sole discretion to approve the form or forms of such
beneficiary designations, to determine whether such beneficiary designations
will be accepted, and to interpret such beneficiary designations.
18. Legal and Other Requirements
The obligations of the Corporation to issue, deliver and transfer shares of
Common Stock subject to the Plan shall be subject to all applicable laws,
regulations, rules and approvals, including, but not by way of limitation, the
effectiveness of a registration statement under the Securities Act of 1933, as
amended, if deemed necessary or appropriate by the Corporation. Certificates
for shares of Common Stock issued hereunder may be legended as the Corporation
shall deem appropriate.
19. Interest
No interest shall accrue on the payroll deductions of a participant in the
Plan.
20. No Obligation To Exercise Options
The granting of an option shall impose no obligation upon a participant to
exercise such option.
21. Use of Funds
The proceeds received by the Corporation from the sale of Common Stock
pursuant to options will be used for general corporate purposes, and the
Corporation shall not be obligated to segregate such payroll deductions.
22. Withholding Taxes
Upon the exercise of any option under the Plan, in whole or in part, or at
the time some or all of the Common Stock is disposed of, a participant must
make adequate provision for the Corporation's federal, state or other tax
withholding obligations, if any, which arise from the exercise of the option or
the disposition of the Common Stock. The Corporation shall have the right to
require the participant to remit to the Corporation, or to withhold from the
participant (or both) an amount sufficient to satisfy all federal, state and
local withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for shares of Common Stock.
23. Right to Terminate Employment
Nothing in the Plan or any agreement entered into pursuant to the Plan shall
confer upon an employee the right to continue in the employment of the
Corporation or any Subsidiary or affect any right which the Corporation or any
Subsidiary may have to terminate the employment of such employee.
24. Rights as a Shareholder
No participant (or other person) shall have any right as a shareholder unless
and until certificates for shares of Common Stock are issued to him or held for
his account.
25. Notices
All notices or other communications by a participant to the Corporation under
or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Corporation at the location, or by the
person, designated by the Corporation for the receipt thereof.
26. Applicable Law
All questions pertaining to the validity, construction and administration of
the Plan and options granted hereunder shall be determined in conformity with
the laws of Georgia, to the extent not inconsistent with Section 423 of the
Code and regulations thereunder.
<PAGE>
27. Elimination of Fractional Shares
If under any provision of the Plan which requires a computation of the number
of shares of Common Stock subject to an option, the number so computed is not a
whole number of shares of Common Stock, such number of shares of Common Stock
shall be rounded down to the next whole number.
IN WITNESS WHEREOF, this 1998 Employee Stock Purchase Plan of Transit Group,
Inc. has been executed in behalf of the Corporation effective as of the 10th
day of February, 1998.
TRANSIT GROUP, INC.
By: /s/ Philip A. Belyew
--------------------
Name: Philip A. Belyew
--------------------
Title: President and Chief
Executive Officer
--------------------
ATTEST:
/s/ Wayne N. Nellums
Secretary
[Corporate Seal]
<PAGE>
FOLD AND DETACH HERE
- ------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of the
Company. This proxy when properly executed will be voted in accordance with the
specifications made herein by the undersigned shareholder. If no direction is
made, this proxy will be voted FOR the election of the nominees for the
director listed below and all the other Proposals.
1. ELECTION OF DIRECTORS
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name below)
FOR all nominees listed to the right T. Wayne Davis
(except as marked to the contrary) [ ] Philip A. Belyew
Ford G. Pearson
WITHHOLD authority to vote Derek E. Dewan
for all nominees [ ] Carroll L. Fulmer
2. APPROVAL OF THE TRANSIT GROUP, INC. 1998 STOCK OPTION PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. APPROVAL OF THE TRANSIT GROUP, INC. 1998 STOCK PURCHASE PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS OF TGI FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the Proxies are authorized to vote on such other business
as may properly come before the meeting or adjournment(s), including adjourning
the Annual Meeting to permit, if necessary, further solicitation of proxies.
This proxy may be revoked at any time prior to voting hereof.
This proxy, when properly executed, duly returned and not revoked will be
voted. It will be voted in accordance with the directions given by the
undersigned shareholder. If no direction is made, it will be voted in favor of
the election of nominees for director listed above and the other Proposals
listed on this Proxy.
Dated: ______________________________, 1998
- --------------------------------------
Signature(s)
- --------------------------------------
NOTE: Joint Owners should each
Sign. When signing as attorney, executor,
Administrator, trustee or guardian, please
Give full title as such. If the signatory is a
Corporation, sign the full corporate name by
A duly authorized officer.
