<PAGE>
------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
TRANSIT GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
FLORIDA 2859 PACES FERRY ROAD 59-2576629
- ------------------------------- SUITE 1740 ----------------------
(State or other jurisdiction of ATLANTA, GEORGIA 30339 (I.R.S. Employer
incorporation or organization) ------------------------------------------ Identification Number)
(Address of principal executive offices)
</TABLE>
1998 STOCK INCENTIVE PLAN
OF
TRANSIT GROUP, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
TRANSIT GROUP, INC.
(Full title of the plans)
-----------------------------------
PHILIP A. BELYEW
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TRANSIT GROUP, INC.
2859 PACES FERRY ROAD, SUITE 1740
ATLANTA, GEORGIA 30339
(770) 444-0240
(Name, address and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
-------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE(1)
- ----------------------- ---------- -------------- ---------- ------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 3,500,000 $5.00 $17,500,000 $4,865
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) and 457(c), the last sale price of $5.00
reported on December 10, 1998.
------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
- ------ ---------------------------------------
The following documents filed by Transit Group, Inc. (the "Company") with
the Securities and Exchange Commission (the "Commission") are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997, filed with the Commission on March 31, 1998.
(b) The Company's Current Reports on Form 8-K and Form 8-K/A dated
January 13, 1998, February 10, 1998, March 16, 1998, May 18, 1998, June 26,
1998, July 20, 1998, July 31, 1998 and August 31, 1998;
(c) The Company's Form 10-QSB for the quarter ended March 31, 1998,
filed with the Commission on May 14, 1998;
(d) The Company's Form 10-QSB for the quarter ended June 30, 1998,
filed with the Commission on August 13, 1998;
(e) The Company's Form 10-QSB for the quarter ended September 30,
1998, filed with the Commission on November 13, 1998;
(f) The Company's Form 10-QSB/A, filed with the Commission on
February 10, 1998, amending the Company's Form 10-QSB for the quarter ended
September 30, 1997; and
(g) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since the
end of the period referred to in (a), above.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
- ------ -------------------------
The authorized capital stock of the Company consists of 30,000,000 shares
of common stock, par value $.01 per share (the "Common Stock"), and 5,000,000
shares of preferred stock, no par value per share (the "Preferred Stock"). The
holders of Common Stock are entitled to one vote for each share held of record
on all matters submitted to the vote of shareholders. In general, the
affirmative vote of the majority of shares present in person or represented by
proxy at a shareholders' meeting entitled to vote on the subject matter is
required for approval of corporate actions. However, the affirmative vote of
the holders of 51% of the outstanding shares of all classes of stock entitled to
vote is required for (a) amendment, alteration, change or repeal of any
provision of the Articles of Incorporation of the Company; (b) reorganization,
merger or consolidation of the Company; (c) sale, lease or exchange of a major
portion of the property or assets of the Company; or (d) dissolution of the
Company. The holders of Common Stock do not have cumulative voting rights.
Subject to any preferential rights held by holders of the Preferred Stock, the
holders of Common Stock are entitled to receive ratably such dividends as may be
declared from time to time by the Company Board of Directors out of funds
legally available therefor. In the event of the liquidation, dissolution or
winding up of the Company, holders of Common Stock will be entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preference of outstanding Preferred Stock, if any. Holders of Common Stock do
not have preemptive, conversion or redemption rights.
II-1
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
- ------ --------------------------------------
The legality of the securities offered hereby has been passed upon by the
firm of Womble Carlyle Sandridge & Rice, PLLC, counsel to the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ------ -----------------------------------------
Section 607.0850 of the Florida Business Corporation Act (the "Act")
permits, and in some cases requires, the Company as a Florida corporation to
indemnify a director, officer, employee, or agent of the Company, or any person
serving at the request of the Company in any such capacity with respect to
another entity, against certain expenses and liabilities incurred as a party to
any proceeding, including, among others, a proceeding under the Securities Act
of 1933, as amended (the "Securities Act"), brought against such person by
reason of the fact that such person is or was a director, officer, employee, or
agent of the Company or is or was serving in such capacity with respect to
another entity at the request of the Company. With respect to actions, other
than in the right of the Company, such indemnification is permitted if such
person acted in good faith and in a manner such person reasonably believed to be
in, or not opposed to, the best interests of the Company, and with respect to
any criminal action or proceeding, if such person had no reasonable cause to
believe his or her conduct was unlawful. Termination of any such action by
judgment, order, settlement or conviction or a plea of nolo contendere, or its
equivalent shall not, of itself, create a presumption that such person did not
act in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the Company, or with respect to any criminal
action or proceeding, had reasonable cause to believe that his or her conduct
was unlawful.
With respect to any action threatened, pending or completed in the right of
the Company to procure a judgment in its favor against any such person, the
Company may indemnify any such person against expenses actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit, including the appeal thereof, if he or she acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which any such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duties to the Company unless the court in which the action was
brought determines that despite the adjudication of liability, but in view of
all the circumstances in the case, such person is fairly and reasonably entitled
to indemnity for such expenses.
Section 607.0850 of the Act also provides that if any such person has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, whether brought in the right of the Company or otherwise, such
person shall be indemnified against expenses actually and reasonably incurred by
him or her in connection therewith.
If any director or officer does not succeed upon the merits or otherwise in
defense of an action, suit or proceeding, then unless pursuant to a
determination made by a court, indemnification by the Company shall be made only
as authorized in the specific case upon a determination that indemnification of
the director or officer is proper because he or she has met the applicable
standard of conduct. Any such determination may be made:
(a) By the Board of Directors by a majority vote of a quorum
consisting of Directors who are not parties to such action, suit, or
proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, by a
majority vote of a committee duly designated by the Board of Directors (in
which Directors who are parties may participate) consisting solely of two
or more Directors not at the time parties to the proceeding;
(c) By independent legal counsel selected by the Board of Directors
prescribed in paragraph (a) or the committee prescribed in paragraph (b);
or if a quorum of the Directors cannot be obtained for paragraph (a) or the
committee cannot be designated under paragraph (b) selected by a majority
vote of the full Board of Directors (in which Directors who are parties may
participate); or
II-2
<PAGE>
(d) By the shareholders by a majority vote of a quorum consisting of
shareholders who were not parties to the proceeding or, if no such quorum
is obtainable, by a majority vote of shareholders who were not parties to
such proceedings.
The indemnification provisions of the Company's Articles of Incorporation
and Bylaws are essentially identical to those set forth above, except that the
Company's Articles of Incorporation and Bylaws require, rather than permit, the
Company to advance expenses under the circumstances for such payments described
above. In addition, the Company's Bylaws provide that if any expenses or other
amounts are paid by way of indemnification other than by court order or action
by the shareholders or by an insurance carrier pursuant to insurance maintained
by the Company, then the Company shall, not later than the time of delivery to
shareholders of a written notice of the next annual meeting of shareholders
(unless such meeting is held within three months from the date of such payment)
and, in any event, within fifteen (15) months from the date of such payment,
deliver either personally or by United States mail to each shareholder of record
entitled to vote for the election of Directors a statement specifying the
persons paid, the amounts paid, and the nature and status (at the time of such
payment) of the litigation or threatened litigation.
Section 607.0850 of the Act also contains a provision authorizing
corporations to purchase and maintain liability insurance on behalf of its
Directors and officers. For some years the Company has maintained an insurance
policy which insures directors and officers of the Company against amounts the
director or officer is obligated to pay in respect of his legal liability,
whether actual or asserted, for any negligent act, any error, any omission or
any breach of duty which, subject to the applicable limits and terms of the
policy, include damages, judgments, settlements, costs of investigation, and
costs, charges and expenses incurred in the defense of actions, suits, or
proceedings or appeals thereto, subject to the exceptions, limitations and
conditions set forth in the policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
- ------ -----------------------------------
Not applicable.
ITEM 8. EXHIBITS.
- ------ --------
The following exhibits are filed as a part of this Registration
Statement:
NUMBER DESCRIPTION
------ -----------
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC, as to the
legality of the Common Stock being registered.
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC, which is
contained in its opinion filed as Exhibit 5.
23.2 Consent of Price Waterhouse, LLP.
23.3 Consent of Katz, Sapper & Miller, LLP.
23.4 Consent of Davie, Kaplan, Chapman & Braverman, P.C.
24 Power of Attorney. (See signature page to the Registration
Statement.)
99.1 1998 Incentive Stock Option Plan of Transit Group, Inc.
99.2 1998 Employee Stock Purchase Plan of Transit Group, Inc.
II-3
<PAGE>
ITEM 9. UNDERTAKINGS.
- ------ ------------
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
-------- -------
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Company pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that
is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Transit
Group, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in unincorporated Cobb County, State of Georgia, this 11th day
of December, 1998.
TRANSIT GROUP, INC.
By: /s/ Philip A. Belyew
-------------------------------------
Philip A. Belyew
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears on
the signature pages to this Registration Statement constitutes and appoints
Philip A. Belyew and Wayne N. Nellums and each of them, his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned, and in his or her name, place and stead, in
any and all capacities to sign any and all amendments, including post-effective
amendments, to this Registration Statement, to make such changes in the
Registration Statement as such attorneys-in-fact deems appropriate to file the
same, with all exhibits thereto and other documents in connection therewith with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do so and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on December 11, 1998.
/s/ Philip A. Belyew /s/ Wayne N. Nellums
- ----------------------------------- -----------------------------------
Name: Philip A. Belyew Name: Wayne N. Nellums
Title: President, Chief Executive Title: Executive Vice President and
Officer (principal executive Chief Financial Officer
officer) and Director
/s/ T. Wayne Davis /s/ Derek E. Dewan
- ----------------------------------- -----------------------------------
Name: T. Wayne Davis Name: Derek E. Dewan
Title: Chairman Title: Director
/s/ Carroll L. Fulmer /s/ Robert R. Hermann, Jr.
- ----------------------------------- -----------------------------------
Name: Carroll L. Fulmer Name: Robert R. Hermann, Jr.
Title: Director Title: Director
/s/ Ford G. Pearson
- -----------------------------------
Name: Ford G. Pearson
Title: Director
II-5
<PAGE>
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM S-8 OF
TRANSIT GROUP, INC.
NUMBER DESCRIPTION
- ------ -----------
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC, as to the legality
of the Common Stock being registered.
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC, which is
contained in its opinion filed as Exhibit 5.
23.2 Consent of Price Waterhouse, LLP.
23.3 Consent of Katz, Sapper & Miller, LLP
23.4 Consent of Davie, Kaplan, Chapman & Braverman, P.C.
24 Power of Attorney. (See signature page to the Registration
Statement.)
99.1 1998 Incentive Stock Option Plan of Transit Group, Inc.
99.2 1998 Employee Stock Option Plan of Transit Group, Inc.
II-6
<PAGE>
EXHIBIT 5
December 8, 1998
Transit Group, Inc.
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
Re: Registration Statement on Form S-8 with respect to the Issuance
of Shares Pursuant to the 1998 Incentive Stock Option Plan of
Transit Group, Inc. and the 1998 Employee Stock Purchase Plan of
Transit Group, Inc.
Ladies and Gentlemen:
We have served as counsel for Transit Group, Inc., a Florida
corporation (the "Company"), in connection with its registration under the
Securities Act of 1933, as amended, of 3,500,000 shares of its common stock,
$.01 par value (the "Shares"), which are proposed to be offered and sold
pursuant to the 1998 Incentive Stock Option Plan of Transit Group, Inc. and the
1998 Employee Stock Purchase Plan of Transit Group, Inc. (individually, a
"Plan," and collectively, the "Plans"), and pursuant to the Company's
Registration Statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission (the "Commission") with respect to
the Shares.
As to various questions of fact material to our opinion, we have
relied solely upon (i) an Officer's Certificate delivered to us by a Company
officer, and (ii) the representations of the directors, officers and managers of
the Company and of public officials. We have made no other inquiries.
In connection with the preparation of this opinion, we have only
reviewed, and this opinion is limited to, those laws of the State of Georgia,
excluding local laws of the State of Georgia (i.e., the statutes and ordinances,
the administrative decisions and the rules and regulations of counties, towns,
municipalities and special political subdivisions of, or authorities or quasi-
governmental bodies constituted under the laws of the State of Georgia and
judicial decisions to the extent they deal with any of the foregoing), and the
laws of the United States of America that are, in our experience, normally
applicable to the transactions referenced herein. We are licensed to practice
law in the State of Georgia and, accordingly, this opinion is based solely upon
such laws and we do not render any opinion as to the effect of the laws of any
other jurisdiction. Further, we have assumed for purposes of this opinion (1)
that the laws of the State of Florida are identical in substance and effect to
the laws of the State of Georgia; (2) the genuineness of all signatures; (3) the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as certified or photostatic
copies; and (4) the proper issuance and accuracy of certificates of public
officials and officers and agents of the Company. In rendering opinions as to
future events, we have assumed the facts and law existing on the date hereof.
Based upon and subject to the foregoing, and having regard for such
legal considerations as we have deemed relevant, we are of the opinion that the
Shares have been duly authorized by all necessary corporate action on the part
of the Company and, upon issuance pursuant to the terms of the respective Plan,
will be validly issued, fully paid and nonassessable.
This opinion is delivered solely for your benefit in connection with
the Plans and may not be quoted in whole or in part, referred to, filed with any
governmental agency or otherwise used or relied upon by any other person or for
any other purpose without our prior written consent except as provided herein.
<PAGE>
This opinion is rendered as of the date hereof, and we undertake no
obligation to advise you of any changes in applicable law or any other matters
that may come to our attention after the date hereof.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement.
WOMBLE CARLYLE SANDRIDGE & RICE
A Professional Limited Liability Company
Elizabeth O. Derrick
EOD
SLM
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 24, 1998, appearing on page 17
of Transit Group, Inc.'s Annual Report on Form 10-KSB for the year ended
December 31, 1997.
/s/ PricewaterhouseCoopers, LLP
- -------------------------------
PricewaterhouseCoopers LLP
Atlanta, Georgia
December 8, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Transit Group, Inc. of our report dated March 5, 1998,
except for Note 9, as to which the date is March 24, 1998, relating to the
combined financial statements of Certified Transport, Inc. and Venture
Logistics, inc. and subsidiaries, which appears in the Current Report on Form 8-
K/A of Transit Group, Inc. dated July 20, 1998.
/s/ Katz, Sapper & Miller, LLP
- ------------------------------
Katz, Sapper & Miller, LLP
Indianapolis, Indiana
December 9, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 18, 1998, relating to the
combined financial statements of K.J. Transportation, Inc. and Affiliates, which
appears in the Current Report on Form 8-K/A of Transit Group, Inc. dated August
31, 1998.
/s/ Davie Kaplan Chapman & Braverman, P.C.
- ------------------------------------------
Davie Kaplan Chapman & Braverman, P.C.
Rochester, New York
December 9, 1998
<PAGE>
EXHIBIT 99.1
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."
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
<PAGE>
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.
(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
-2-
<PAGE>
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 or a related corporation. Notwithstanding
the foregoing, an individual who owns more than ten percent of the total
combined voting power of the Corporation or a related corporation may be granted
an Incentive Option if the option price (as determined pursuant to Section 6(b)
herein) (the "Fair Market Value"), is at least 110% of the Fair Market Value of
the Common Stock (as defined in Section 6(b) herein), 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
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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:
(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
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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.
(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.
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(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.
(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
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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.
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(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.
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.
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(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.
(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
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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:
(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.
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(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
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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.
(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.
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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.
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.
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<PAGE>
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.
(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
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<PAGE>
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.
-15-
<PAGE>
(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.
(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]
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<PAGE>
EXHIBIT 99.2
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:
(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.
<PAGE>
(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.
(l) "Plan" means the Transit Group, Inc. 1998 Employee Stock Purchase
Plan, as it may be hereafter amended.
2
<PAGE>
(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
3
<PAGE>
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.
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
4
<PAGE>
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.
(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.
5
<PAGE>
(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 and 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:
6
<PAGE>
(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)).
(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)
7
<PAGE>
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.
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
8
<PAGE>
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
9
<PAGE>
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.
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.
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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.
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.
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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]
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