As filed with the Securities and Exchange Commission on November 19, 1998
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Covenant Transport, Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0320154
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 Birmingham Highway, Chattanooga, Tennessee 37419
(Address of Principal Executive Offices) (Zip Code)
Covenant Transport, Inc. 1998 Non-Officer Incentive Stock Plan
(Full title of the plan)
David R. Parker
Chairman, President, and Chief Executive Officer
Covenant Transport, Inc.
400 Birmingham Highway
Chattanooga, Tennessee 37419
(423)821-5442
(Name, address, and telephone number of agent for service)
With Copies To:
Mark A. Scudder
Scudder Law Firm, P.C.
411 South 13th Street, Suite 200
Lincoln, Nebraska 68508
(402) 435-3223
Approximate date of proposed commencement date of sales pursuant to the plan: as
soon as practicable after the effective date of this registration statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of securities to be Amount to be offering price aggregate offering Amount of
registered registered share price registration fee
Class A Common Stock 200,000 shares $16.3125 <F1> $3,262,500 <F1> $907
($0.01 par value)
<FN>
<F1> Estimated pursuant to Rule 457(c) of the Securities Act of 1933, as
amended (the "Securities Act") solely for purposes of calculating the
registration fee. The price is based upon the average of high and low
prices of Covenant Transport, Inc. Class A Common Stock on November 18,
1998, as reported on The Nasdaq National Market.
</FN>
</TABLE>
Page 1 of 5 pages
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I, Items 1 and
2, will be delivered to employees in accordance with Form S-8 and Rule 428 under
the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by the Registrant with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are hereby incorporated
by reference in this Registration Statement:
a. The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
b. The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1998, June 30, 1998, and September 30,
1998; and
c. The description of the Registrant's Class A Common Stock contained
under the caption Description of Registrant's Securities to be
Registered in the Registrant's registration statement on Form 8-A
filed September 30, 1994, which incorporates by reference the
information under the heading Description of Capital Stock in the
prospectus dated October 28, 1994, included in the Registrant's
Registration Statement on Form S-1 (No. 33-82978, effective October
28, 1994), including any amendment or report filed for the purpose
of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to this registration statement 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 in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VII of the Registrant's Articles of Incorporation ("Articles") and
Article X of the Registrant's Bylaws provide that the Registrant's directors and
officers shall be indemnified against liabilities they may incur while serving
in such capacities to the fullest extent allowed by the Nevada General
Corporation Law. Under these indemnification provisions, the Registrant is
required to indemnify
Page 2 of 5 pages
<PAGE>
its directors and officers against any reasonable expenses (including attorneys'
fees) incurred by them in the defense of any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, to which they were
made a party, or in defense of any claim, issue, or matter therein, by reason of
the fact that they are or were a director or officer of the Registrant or while
a director or officer of the Registrant are or were serving at the Registrant's
request as a director, officer, partner, trustee, employee, or agent of another
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise unless it is ultimately determined by a court of competent
jurisdiction that they failed to act in a manner they believed in good faith to
be in, or not opposed to, the best interests of the Registrant, and with respect
to any criminal proceeding, had reasonable cause to believe their conduct was
lawful. The Registrant will advance expenses incurred by directors or officers
in defending any such action, suit, or proceeding upon receipt of written
confirmation from such officers or directors that they have met certain
standards of conduct and an undertaking by or on behalf of such officers or
directors to repay such advances if it is ultimately determined that they are
not entitled to indemnification by the Registrant. The Articles provide that the
Registrant may, through indemnification agreements, insurance, or otherwise,
provide additional indemnification. The Registrant has entered into
indemnification agreements with its directors and officers, pursuant to which
the Registrant agrees to indemnify such persons to the maximum extent against
expense or loss arising from any action, suit, or proceeding brought by reason
of the fact that any person is a director or officer of the Registrant.
Article VI of the Registrant's Articles eliminates, to the fullest extent
permitted by law, the liability of directors and officers for monetary or other
damages for breach of fiduciary duties to the Registrant and its stockholders as
a director or officer.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
Exhibit No. Exhibit
4.1 Restated Articles of Incorporation of Covenant Transport, Inc.
(incorporated by reference to Exhibit 3.1 to the Registration
Statement on Form S-1, File No. 33-82978 (the "Form S-1")).
4.2 Amended Bylaws of Covenant Transport, Inc. (incorporated by
reference to Exhibit 3.2 to the Form S-1).
5 Opinion of Scudder Law Firm, P.C. as to the validity of the shares
of Class A Common Stock, par value $0.01 per share.*
23.1 Consent of PricewaterhouseCoopers LLP*
23.2 Consent of Scudder Law Firm, P.C. (contained in Exhibit 5 hereto).
24 Power of Attorney*
99 Covenant Transport, Inc. 1998 Non-Officer Incentive Stock Plan*
* Filed herewith
Page 3 of 5 pages
<PAGE>
ITEM 9. UNDERTAKINGS
a. Rule 415 Offering. The Registrant 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 paragraph (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 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. Filing incorporating subsequent Exchange Act documents by
reference. The Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to 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. Request for acceleration of effective date or filing of
registration statement on Form S-8. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to
directors, officers, and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant 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 Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant 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
Page 4 of 5 pages
<PAGE>
Registrant 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.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act, the
Registrant 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, thereunder duly
authorized, in the City of Chattanooga, State of Tennessee November 19, 1998.
COVENANT TRANSPORT, INC.
By: /s/ Heidi Hornung Scherr, attorney-in-fact
David R. Parker, Chairman of the Board,
President, and Chief Executive Officer
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
Chairman of the Board, President, and
/s/ Heidi Hornung Scherr, attorney-in-fact Chief Executive Officer (principal November 19, 1998
David R. Parker executive officer)
/s/ Heidi Hornung Scherr, attorney-in-fact Treasurer and Chief Financial Officer November 19, 1998
Joey B. Hogan (principal financial and accounting officer)
/s/ Heidi Hornung Scherr, attorney-in-fact
R. H. Lovin, Jr. Director November 19, 1998
/s/ Heidi Hornung Scherr, attorney-in-fact
Michael W. Miller Director November 19, 1998
/s/ Heidi Hornung Scherr, attorney-in-fact
William T. Alt Director November 19, 1998
/s/ Heidi Hornung Scherr, attorney-in-fact
Hugh O. Maclellan, Jr. Director November 19, 1998
/s/ Heidi Hornung Scherr, attorney-in-fact
Mark A. Scudder Director November 19, 1998
/s/ Heidi Hornung Scherr, attorney-in-fact
Robert E. Bosworth Director November 19, 1998
</TABLE>
Page 5 of 5 pages
<PAGE>
Exhibit No. Exhibit
4.1 Restated Articles of Incorporation of Covenant Transport, Inc.
(incorporated by reference to Exhibit 3.1 to the Registration
Statement on Form S-1, File No. 33-82978 (the "Form S-1")).
4.2 Amended Bylaws of Covenant Transport, Inc. (incorporated by
reference to Exhibit 3.2 to the Form S-1).
5 Opinion of Scudder Law Firm, P.C. as to the validity of the shares
of Class A Common Stock, par value $0.01 per share.*
23.1 Consent of PricewaterhouseCoopers LLP*
23.2 Consent of Scudder Law Firm, P.C. (contained in Exhibit 5 hereto).
24 Power of Attorney*
99 Covenant Transport, Inc. 1998 Non-Officer Incentive Stock Plan*
* Filed herewith
<PAGE>
Exhibit 5
November 19, 1998
Covenant Transport, Inc.
400 Birmingham Highway
Chattanooga, TN 37419
Ladies and Gentlemen:
Scudder Law Firm, P.C. has served as legal counsel to Covenant Transport,
Inc., a Nevada corporation (the "Company"), in the preparation and filing with
the Securities and Exchange Commission of the Company's Registration Statement
on Form S-8 (the "Registration Statement"). The Registration Statement relates
to the registration of shares of the Company's Class A Common Stock, par value
$.01 per share (the "Shares"), which are to be offered under the Company's 1998
Non-Officer Incentive Stock Plan (the "Plan"). It is our opinion that:
1. The Company is a validly organized and existing corporation under the
laws of the State of Nevada.
2. All necessary corporate action has been duly taken to authorize the
establishment of the Plan, the sale of the Shares under the Plan, and the
registration of the Shares covered by the Registration Statement under the
Securities Act of 1933.
3. Any Shares issued and paid for under the Plan will be legally issued,
fully paid and non-assessable shares of the Class A Common Stock of the Company.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with the filing of the Registration Statement.
Very truly yours,
SCUDDER LAW FIRM, P.C.
By: /s/ Earl H. Scudder
Earl H. Scudder, Principal
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Covenant Transport, Inc. on Form S-8 of our report dated January 31, 1998, on
our audits of the consolidated financial statements of Covenant Transport, Inc.
as of December 31, 1996 and 1997, and for each of the three years in the period
ended December 31, 1997, which report is incorporated by reference in Covenant
Transport, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1997.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Knoxville, Tennessee
November 18, 1998
<PAGE>
Exhibit 24
POWER OF ATTORNEY
By their signatures hereon, the directors constitute and appoint Mark A.
Scudder, Heidi Hornung Scherr, and Joey B. Hogan, and each of them singly, our
true and lawful attorneys and agents, to do any and all things and acts in our
names and to execute any and all instruments for us which said Mark A. Scudder,
Heidi Hornung Scherr, and Joey B. Hogan, or any of them, may deem necessary or
advisable to enable Covenant Transport, Inc. to comply with the Securities Act
of 1933, as amended, and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection with the Registration
Statement on Form S-8, including specifically, but not limited to, power and
authority to sign for us or any of us in our names such registration statement
and any and all amendments (including post-effective amendments) thereto.
/s/ David R. Parker /s/ Michael W. Miller
David R. Parker Michael W. Miller
/s/ R. H. Lovin, Jr. /s/ Hugh O. Maclellan, Jr.
R. H. Lovin, Jr. Hugh O. Maclellan, Jr.
/s/ Mark A. Scudder /s/ William T. Alt
Mark A. Scudder William T. Alt
/s/ Robert E. Bosworth
Robert E. Bosworth
<PAGE>
Exhibit 99
COVENANT TRANSPORT, INC.
1998 NON-OFFICER INCENTIVE STOCK PLAN
1. Purpose and Scope of the Plan. The purpose of this incentive stock plan
is to attract and retain the best available non-officer personnel for positions
of substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company, and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options,
Nonstatutory Stock Options, Restricted Stock Awards, Reload Options, Other Stock
Based Awards, or Other Benefits at the discretion of the Board and, if required
by the Board, as reflected in the terms of written Award agreements. Incentive
Stock Options shall only be granted to Employees. The Plan shall not confer upon
any Participant any right with respect to continuation of an employment or
consulting relationship with the Company, nor shall it interfere in any way with
an employee's right or the Company's right to terminate the employment or
consulting relationship at any time.
2. Definitions. As used in this Plan, the following definitions shall
apply:
(a) "Award" shall mean Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock Awards, Reload Options, Other Stock Based
Awards, or Other Benefits granted pursuant to the Plan.
(b) "Board" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean the Class A Common Stock of the
Company, par value $.01 per share.
(e) "Company" shall mean Covenant Transport, Inc., a Nevada
corporation, or any permitted successor that assumes the obligations under
this Plan by agreement or operation of law.
(f) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan, if one is appointed.
(g) "Consultant" shall mean any person who is engaged by the
Company, Parent, or any Subsidiary to render consulting services and is
compensated for such consulting services or any other person determined by
the Board to have performed services for or on behalf of the Company which
merits the grant of an Award, and any director of the Company whether
compensated for such services or not.
(h) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status
as an Employee
<PAGE>
shall not be considered interrupted in the case of sick leave, military
leave, or any other leave of absence approved by the Board; provided that
such leave is for a period of not more than 90 days or reemployment upon
the expiration of such leave is guaranteed by contract or statute.
(i) "Director" shall mean a member of the Board of Directors of the
Company, Parent, or any Subsidiary.
(j) "Employee" shall mean any person, not to include officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(l) "Fair Market Value" shall mean:
(i) If the Common Stock is not at the time listed or admitted
to trading on a stock exchange, the mean between the lowest reported
bid price and the highest reported asked price of the Common Stock
in the over-the-counter market on the date the Award is granted, as
such prices are reported by The Nasdaq Stock Market or in a
publication of general circulation selected by the Board and
regularly reporting the market price of the Common Stock in such
market; or
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, the mean between the lowest and
highest reported sales price of the Common Stock on the date of the
grant of the Award on the principal exchange on which the Common
Stock is then listed or admitted to trading.
If no reported quotation or sale of Common Stock takes place on the date
in question, the last reported closing sale price of the Common Stock
prior to such date shall be determinative.
(m) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code.
(n) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(o) "Option" shall mean a stock option granted pursuant to the Plan.
(p) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(q) "Other Benefits" shall mean types of Awards granted under this
Plan as determined by the Board in addition to those specifically
provided.
<PAGE>
(r) "Other Stock Based Awards" shall mean awards valued in whole or
in part by reference to, or otherwise based on, the Company's Common
Stock.
(s) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(t) "Participant" shall mean an Employee or Consultant who receives
an Award.
(u) "Plan" shall mean this 1998 Non-Officer Incentive Stock Plan.
(v) "Reload Option" shall mean an Option to purchase for cash or
shares a number of shares of Common Stock up to (i) the number of shares
of Common Stock used to exercise the underlying option, and (ii) the
number of shares of Common Stock used to satisfy any tax withholding
requirement incident to the exercise of the underlying option, in either
case through the use of shares of Common Stock or vested options.
(w) "Restricted Stock" shall mean shares of Common Stock which are
subject to the restrictions described in this Plan and such other terms
and conditions as the Board may prescribe.
(x) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(y) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(z) "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of shares which may be optioned, sold, or
granted through Awards under the Plan is 200,000 shares of Common Stock. The
Shares may be authorized, but unissued, or reacquired Common Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject to the Option shall
become available for future grant under the Plan, unless the Plan shall have
been terminated. Any shares of Restricted Stock which are forfeited shall again
be available for Awards under the Plan. Fractional shares shall not be issued.
The Board will determine the manner in which fractional share values will be
treated. Each Award shall state the total number of shares of Common Stock
subject to such Award. Shares issued under the Plan and later repurchased by the
Company shall become available for future grant or sale under the Plan.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by the Board of
Directors of the Company or a committee appointed by the Board in
accordance with this Section 4. The
<PAGE>
Board of Directors may appoint a committee consisting of not less than two
members of the Board of Directors to administer the Plan on behalf of the
Board of Directors, subject to such terms and conditions as the Board of
Directors may prescribe. Once appointed, the committee shall continue to
serve until otherwise directed by the Board of Directors. From time to
time the Board of Directors may increase the size of the Committee and
appoint additional members of the Board, remove members (with or without
cause), appoint new members, fill vacancies however caused, or remove all
members of the Committee and thereafter directly administer the Plan.
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive
Stock Options, Nonstatutory Stock Options, Restricted Stock Awards, Reload
Options concurrently with the grant of any Award of Incentive Stock
Options or Nonstatutory Stock Options, Other Stock Based Awards, and Other
Benefits; (ii) to determine, upon review of relevant information and in
accordance with Section 2.(1) of the Plan, the Fair Market Value of the
Common Stock; (iii) to determine the exercise price per share of Options
to be granted, which exercise price shall be determined in accordance with
Section 8.(a) of the Plan; (iv) to determine the Employees and Consultants
to whom, and the time or times at which, Awards shall be granted and the
number of shares to be represented by each Award; (v) to interpret the
Plan; (vi) to prescribe, amend, and rescind rules and regulations relating
to the Plan; (vii) to determine the terms and provisions of each Award
granted (which need not be identical) and, with the consent of the holder
of the Award, modify or amend each Award; (viii) to accelerate or defer
(with the consent of the Participant) the exercise or vesting date of any
Award, consistent with the provisions of Section 7 of the Plan; (ix) to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Award previously granted by the
Board; and (x) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) Effect of Board's Decision. All decisions, determinations, and
interpretations of the Board shall be final and binding on all
Participants and any other holders of any Awards granted under the Plan.
5. Eligibility.
(a) Generally. Awards may be granted only to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Award may, if he is
otherwise eligible, be granted an additional Award or Awards.
(b) Limitations on Incentive Stock Options. The aggregate Fair
Market Value (determined as of the date of grant) of Common Stock with
respect to which Incentive Stock Options are exercisable for the first
time by any Participant during any calendar year (under all plans of the
Company, Parent, or any Subsidiary) shall not exceed $100,000. If the Fair
Market Value (determined as of the date of grant) of Common Stock with
respect to which Incentive Stock Options are exercisable for the first
time by any
<PAGE>
Participant during any calendar year exceeds $100,000, then the Options
for the first $100,000 worth of Common Stock to become exercisable in such
calendar year shall be Incentive Stock Options and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year
shall be Nonstatutory Stock Options. In the event that the Code or the
regulations promulgated thereunder are amended after the date of the Plan
to provide for a different limit on the Fair Market Value of Common Stock
permitted to be subject to Incentive Stock Options, such different limit
shall be automatically incorporated in this Section 5.(b) and shall apply
to any Incentive Stock Options granted after the effective date of such
amendment.
(c) Other Stock Based Awards. The Board shall have the right to
grant Other Stock Based Awards which may include, without limitation, the
grant of Common Stock based on certain conditions, including short-term
incentives or the issuance of Common Stock in lieu of cash under other
incentive or deferred compensation programs of the Company.
(d) Other Benefits. The Board shall have the right to provide Other
Benefits, if the Board believes that such Awards would further the
purposes for which this Plan was established.
6. Term of Plan. The Plan shall become effective upon adoption by the
Board of Directors. It shall continue in effect until terminated under Section
14 of the Plan. No Awards of Incentive Stock Options shall be made hereunder
after October 14, 2008.
7. Term of Awards. The term of each Incentive Stock Option shall be ten
(10) years from the date of grant or such shorter term as may be provided in any
notice or agreement evidencing such Award; provided, however, in the case of an
Incentive Stock Option granted to a Participant who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five (5) years from
the date of grant or such shorter time as may be provided in the Incentive Stock
Option agreement. The foregoing notwithstanding, if the Code or regulations
promulgated thereunder are subsequently amended to provide for a different
percentage of voting power or maximum option term for Incentive Stock Options,
such new limits shall be automatically incorporated in this Section 7 and shall
apply to any Incentive Stock Options granted after the effective date of such
amendment. The term of each Reload Option shall be equal to the remaining option
term of the underlying Option. The term of each Award, if applicable, that is
not an Incentive Stock Option or Reload Option shall be determined by the Board
and set forth in the agreement or notification relating to Nonstatutory Stock
Options, Restricted Stock, Other Stock Based Awards, or Other Benefits.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is
determined by the Board, but shall be subject to the following:
<PAGE>
(i) In the case of an Incentive Stock Option, any restrictions
imposed by the Code at the time of grant, which restrictions
currently are as follows:
(A) grants to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, shall have a
per Share exercise price no less than 110% of the Fair Market
Value per Share on the date of grant; or
(B) grants to any other Employee shall have a per Share
exercise price no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of Nonstatutory Stock Options, at any price
per Share determined by the Board.
(iii) In the case of Reload Options, unless otherwise
established by the Board, the exercise price per share of Common
Stock deliverable upon the exercise of a Reload Option shall be the
Fair Market Value of a share of Common Stock on the date the grant
of the Reload Option becomes effective.
(b) Consideration for Restricted Stock, Other Stock Based Awards,
and Other Benefits. In the case of Restricted Stock, an award of
Restricted Stock may provide that the Participant be required to furnish
such consideration for the Award as the Board shall determine, or may be
issued in exchange for past services or other legal consideration. An
Award of Restricted Stock may provide that such Restricted Stock may be
exchanged during the Restricted Period for other Restricted Stock upon
such terms and conditions as the Board may permit or shall require.
Payment under or a settlement of any Other Stock Based Awards and Other
Benefits shall be made in such manner and at such times as the Board may
determine.
(c) Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option or grant of an Award,
including the method of payment, shall be determined by the Board and may
consist entirely of (i) cash, (ii) check, (iii) other Shares of Common
Stock having a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which the Option shall be
exercised, (iv) vested and exercisable (but unexercised) Options valued at
the difference between the exercise price and Fair Market Value of the
Shares, or (v) any combination of such methods of payment, or other
consideration and method of payment for the issuance of Shares to the
extent permitted under the Nevada General Corporation Law. In making its
determination as to the type of consideration to accept, the Board shall
consider whether acceptance of the consideration may be reasonably
expected to benefit the Company.
<PAGE>
9. Exercise of Option.
(a) Generally. Any Option granted under the Plan shall be
exercisable at such times and under such conditions as determined by the
Board, including performance criteria with respect to the Company and/or
the Participant, and as shall be permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a Share. Anything to the
contrary notwithstanding, each Reload Option is fully exercisable two
years from the effective date of grant (or if fewer than two years remain
until the termination of this Plan, then such Reload Option shall be
exercisable within 90 days prior to termination of the Plan).
(b) Procedure. An Option shall be deemed to be exercised when
written notice of exercise in accordance with Section 22.(c) and (d)
hereof (if applicable, in the form required by the Nonstatutory or
Incentive Stock Option agreement or notice) has been given to the Company
in accordance with the terms of the Option by the person entitled to
exercise the Option and full payment for the Shares with respect to which
the Option is exercised has been received by the Company. Full payment
may, as authorized by the Board, consist of any consideration and method
of payment allowable under Section 8 of the Plan. The Company shall issue
(or cause to be issued) the stock certificate promptly upon exercise of
the Option. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is
issued, except as provided in Section 12 of the Plan. Exercise of an
Option in any manner shall result in a decrease in the number of Shares
which may be available, both for purposes of the Plan and for purchase
under the Option, by the number of Shares as to which the Option is
exercised.
10. Conditions and Restrictions Affecting Awards.
(a) Certain Events Affecting Exercisability of Incentive Stock Options.
(i) Termination of Status as an Employee. With respect to
Options that are Incentive Stock Options at the time of grant, in
the event of termination of a Participant's Continuous Status as an
Employee, such Participant may, but only within three (3) months
after such event of termination of a Participant's Continuous Status
as an Employee (but in no event later than the date of expiration of
the term of the Incentive Stock Option as set forth in Section 7
hereof), exercise his Incentive Stock Option to the extent that he
was entitled to exercise it at the date of termination. To the
extent that he was not entitled to exercise the Incentive Stock
Option at the date of such termination, or if he does not exercise
the Incentive Stock Option (which he was entitled to exercise)
within the time specified in this Subsection 10.(a) the Incentive
Stock Option shall terminate.
(ii) Disability of Participant. With respect to Options that
are Incentive Stock Options at the time of grant, notwithstanding
the provision of Section 10.(a)(i) above, in the event of
termination of a Participant's Continuous Status as an Employee as a
result of his total and permanent disability (as defined
<PAGE>
in Section 22(e)(3) of the Code), he may, but only within twelve
(12) months following the date of termination (but in no event later
than the date of expiration of the term of the Incentive Stock
Option as set forth in Section 7 hereof), exercise his Incentive
Stock Option to the extent he was entitled to exercise it at the
date of termination. To the extent that he was not entitled to
exercise the Incentive Stock Option at the date of termination, or
if he does not exercise the Incentive Stock Option (which he was
entitled to exercise) within the time specified herein, the
Incentive Stock Option shall terminate.
(iii) Death of Participant. With respect to Options that are
Incentive Stock Options at the time of grant, in the event of the
death of a Participant:
(A) who is at the time of his death an Employee of the
Company and who shall have been in Continuous Status as an
Employee since the date of grant of the Incentive Stock
Option, the Incentive Stock Option may be exercised, at any
time within twelve (12) months following the date of death
(but in no event later than the date of expiration of the term
of the Incentive Stock Option as set forth in Section 7
hereof), by the Participant's estate or by a person who
acquired the right to exercise the Incentive Stock Option by
bequest or inheritance, but only to the extent that the
Participant had the right to exercise the Incentive Stock
Option at the date of death; or
(B) which occurs within three (3) months after the
termination of Continuous Status as an Employee, the Incentive
Stock Option may be exercised, at any time within twelve (12)
months following the date of death (but in no event later than
the date of expiration of the term of the Incentive Stock
Option as set forth Section 7 hereof), by the Participant's
estate or by a person who or entity which acquired the right
to exercise the Incentive Stock Option by bequest or
inheritance, but only to the extent of the right to exercise
that had accrued at the date of termination.
(iv) Right to Repurchase; Refund of Benefit. Unless approved
in writing by the Board or otherwise provided in the agreement
reflecting the Incentive Stock Option, if
(A) The Participant (1) voluntarily terminates employment
with the Company or the Participant's employment is
involuntarily terminated for nonperformance of duties and (2)
the Participant subsequently becomes, directly or indirectly,
a sole proprietor, partner, stockholder, officer, director,
employee, independent contractor, or consultant of or to any
business which is related to the contract or common carriage
of goods; or
(B) The Participant's employment is involuntarily
terminated for (or voluntarily terminates because of) gross
misconduct, fraud, embezzlement, theft, or breach of any
fiduciary duty to the Company
<PAGE>
(each of (A) and (B) a "Triggering Event"), then the option
(meaning an Option that was an Incentive Stock Option at the
time of grant), to the extent not already exercised, shall
immediately terminate. In addition, the Board, in its
discretion, may repurchase each Share issued in respect of an
exercised Incentive Stock Option for the Fair Market Value on
the date of grant if a Triggering Event occurs any time within
up to three years after the Option for such Optioned Stock was
exercised by the Participant, such period, within the
prescribed three years, being determined by the Board. The
Company shall exercise its rights hereunder by written
notification to the Participant to be given within 180 days
after the Board becomes aware of the Triggering Event. If a
Triggering Event occurs and the Participant has already
disposed of all or some of the Shares, the Board may demand,
and the Participant shall pay to the Company, the difference
between the Fair Market Value on the date of grant and the
Fair Market Value on the date of exercise.
(v) Termination of Option Period. Notwithstanding anything in
the Plan to the contrary, all Incentive Stock Options to the extent
not already exercised shall terminate upon expiration of a term
equal to ten (10) years from the date of grant, subject to
adjustment under Section 7.
(b) Certain Conditions Affecting Restricted Stock Awards.
(i) Restriction. Except as provided in Section 10.(b)(iii), at
the time of an Award of Restricted Stock, the Board may establish in
its discretion, for each Participant a vesting schedule and a period
of time ("Restricted Period") during which Restricted Stock may not
be sold, assigned, transferred, pledged, or otherwise encumbered,
except as hereinafter provided. Except for such restrictions as may
be provided in the Restricted Stock agreement or notice and subject
to this Subsection 10.(b), the Participant shall have all rights of
a stockholder with respect to such Restricted Stock. The Board, in
its discretion, may accelerate the time at which any or all of the
restrictions shall lapse with respect to any shares of Restricted
Stock prior to the expiration of the Restricted Period or remove any
or all of such restrictions, as it deems appropriate.
(ii) Registration and Redelivery of Restricted Stock. Each
certificate of Restricted Stock shall be registered in the name of
the Participant and deposited by the Participant, together with a
stock power endorsed in blank, with the Company. During the
Restricted Period, the Restricted Stock shall remain in the
possession of the Company. At the end of the Restricted Period, the
Company shall redeliver to the Participant (or the Participant's
legal representative or personal representative) the certificates of
Common Stock deposited pursuant to this Subsection 10.(b)(ii). The
Common Stock so delivered to the Participant shall no longer be
subject to the provisions of this Subsection 10.(b).
<PAGE>
(iii) Termination of Employment. Unless the Restricted Stock
agreement or notice otherwise provides, in the event the
Participant's employment with the Company and/or its Subsidiaries or
Parent is terminated for reasons other than death, total and
permanent disability (as defined in Section 22(e)(3) of the Code),
or retirement after the age of 65, all Restricted Stock awarded to
such Participant which is still subject to restriction shall be
forfeited. For the purposes of this Subsection 10.(b)(iii), the
forfeiture period for each Award of Restricted Stock shall be
separately calculated from the date of the Award. Unless the
Restricted Stock agreement or notice otherwise provides, the
restrictions contained in Subsection 10.(b)(i) shall terminate on
the Participant's death, total and permanent disability (as defined
in Section 22(e)(3) of the Code), or attainment of age sixty-five
(65).
(c) Certain Conditions Affecting Reload Options.
(i) Non-Qualification as Incentive Stock Option.
Notwithstanding the fact that the underlying Option may be an
Incentive Stock Option, a Reload Option is not intended to qualify
as an Incentive Stock Option.
(ii) Reload Option Amendment. Each Incentive Stock Option and
Nonstatutory Stock Option agreement or notice shall state whether
the Board has authorized Reload Options with respect to the
underlying options. Upon the exercise of an underlying option, any
additional Reload Option must be evidenced by an amendment to the
underlying agreement or notice or by a new notice from the Board.
(iii) Termination of Employment. No additional Reload Options
shall be granted to Participants when Options are exercised pursuant
to the terms of this Plan following termination of the Participant's
employment.
(iv) Application Sections. Applicable sections of the Plan or
written notice or agreement regarding the manner of payment,
restrictions, death, retirement, total or permanent disability (as
defined in Section 22(e)(3) of the Code) of the Participant, and
similar provisions relating to the underlying Option, are
incorporated by reference in this Subsection 10.(c) as though fully
set forth herein.
(d) Certain Conditions Affecting Other Stock Based Awards and Other
Benefits. Unless the agreement or notice relating to the Other Stock Based
Awards or Other Benefits otherwise provides, except in the event of the
Participant's death, total or permanent disability (as defined in Section
22(e)(3) of the Code), or retirement after attaining age 65, in the event
that the Participant terminates employment with the Company and/or its
Subsidiaries or Parent prior to the time benefits become payable pursuant
to Awards of Other Stock Based Awards or Other Benefits, such Awards shall
be immediately forfeited. Unless the agreement or notice relating to the
Other Stock Based Awards or Other Benefits otherwise provides, in the
event of the Participant's death, total or permanent disability (as
<PAGE>
defined in Section 22(e)(3) of the Code), or retirement after attaining
age 65, the Company shall pay to the Participant (or the Participant's
legal representative or personal representative) the amount that would
have been payable to the Participant had the Participant satisfied all of
the requirements contained in the agreement relating to such Award
calculated as of the date of the occurrence of an event described in this
sentence.
11. Transferability of Options. Except with Board approval and otherwise
in accordance with applicable provisions of the Code and SEC rules and
regulations, all Awards may not be transferred in any manner other than by will
or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant. Following transfer, the
Awards shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that the term "Participant"
shall be deemed to refer to the transferee.
12. Adjustments Upon Certain Changes.
(a) In the event of any change in the outstanding Common Stock by
reason of a stock split, stock dividend, combination, reclassification, or
exchange of Common Stock, recapitalization, merger, consolidation, or
other similar event, the shares of Common Stock authorized hereunder and
outstanding Awards, as applicable, shall be proportionately adjusted by
the Board in its sole discretion and any such judgment shall be binding
and conclusive on all persons. Provided, however, in the case of Incentive
Stock Options, no such adjustment shall be made if the result thereof
would be that the excess of (i) the aggregate Fair Market Value of the new
or substituted shares over (ii) the aggregate exercise price of such
shares is more than (x) the excess of the aggregate Fair Market Value of
all shares subject to the Option immediately before such substitutions or
assumption over (y) the aggregate exercise price of such shares, or that
the new Option or the assumption of the old Option gives the Participant
additional benefits which the Participant did not have under the old
Option.
(b) Notwithstanding anything in the Plan to the contrary, if any
person, corporation, or other entity or group thereof other than David and
Jacquelyn Parker and Clyde and Elizabeth Fuller, and entities controlled
by them (the "Acquiror"), acquires (an "Acquisition"), other than by
merger or consolidation or purchase from the Company, the beneficial
ownership (as that term is used in Section 13(d)(1) of the Exchange Act
and the rules and regulations promulgated thereunder) of Shares which,
when added to any other Shares the beneficial ownership of which is held
by the Acquiror, shall have more than 50% of the votes that are entitled
to be cast at meetings of stockholders, any portion of an Award that was
not currently exercisable or vested prior to the date of the Acquisition
shall become fully exercisable or vested immediately, as appropriate. In
the case of Options, the Participant may elect, during the period
commencing on the date of the Acquisition and ending at the closing of
business on the thirtieth (30th) day following the date of the
Acquisition, to exercise the Option in whole or in part. In the event the
thirtieth (30th) day referred to in this Subsection 12.(b) shall fall on a
day that is not a business day, then the thirtieth (30th) day shall be
deemed to be the next following business day.
<PAGE>
(c) Notwithstanding anything in the Plan to the contrary, in the
event of a proposed dissolution or liquidation of the Company, all Awards
will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. In the event of a proposed
sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, all Awards shall
be assumed or equivalent Awards shall be substituted by such successor
corporation, unless the Board determines that the Participant shall (i)
have the right to exercise the Option as to all the Common Stock subject
to the Option or (ii) receive the fully vested Award. If the Board makes
the Option fully exercisable, the Board shall notify the Participant that
the Option shall be fully exercisable for a period of thirty (30) days
from the date of such notice (but not later than the expiration of the
Option term), and the Option will terminate upon the expiration of such
period. In the event the thirtieth (30th) day referred to in this
Subsection 12.(c) shall fall on a day that is not a business day, then the
thirtieth (30) day shall be the next following business day.
13. Time of Granting Awards. The date of grant of an Award, for all
purposes, shall be the date on which the Board makes the determination granting
that Award or such other effective date as the Board may specify in its grant of
the Award. Notice of the determination shall be given to each Employee or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant and such notice or the Award agreement shall be effective as
of the date of the grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable,
unless otherwise required by any applicable laws.
(b) Effect of Amendment or Termination. Any amendment or termination
of the Plan shall not affect Awards already granted and those Awards shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Participant and
the Board, which agreement must be in writing and signed by the
Participant and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise or grant of an Award unless the exercise or grant of
such Award and the issuance and delivery of Shares shall comply with all
relevant provisions of law, including, without limitation, the Securities Act
and the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or quotation system upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. The Board may require any person
receiving Common Stock hereunder to acknowledge that such Common Stock is being
acquired for investment purposes and not with a view for resale or distribution
and such Common Stock shall not be sold or transferred unless in accordance with
applicable law and regulations. If the Company, as part of an offering of
securities or otherwise, finds it desirable because of legal or regulatory
requirements to reduce the
<PAGE>
period during which Options may be exercised, the Board may, in its discretion
and without the holders' consent, so reduce such period on not less than fifteen
(15) days' written notice to the holders thereof.
16. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance or sale of any Shares under the Plan, shall relieve the Company of any
liability in respect of the failure to issue or sell the Shares as to which the
requisite authority shall not have been obtained.
17. Award Agreement. Awards shall be evidenced by written agreements or
notices in form as the Board shall approve.
18. Tax Withholding.
(a) The Board shall have sole discretion whether to withhold stock
sufficient to satisfy any withholding or other tax due with respect the
exercise of an Option, the vesting of Restricted Stock, or any similar
transaction under the Plan, or to demand such amounts in cash. Any tax
withholding effected in shares of Common Stock must comply with all
applicable laws.
(b) Notwithstanding anything in the Plan to the contrary, the
Participant acknowledges that under certain circumstances, including but
not limited to a "disqualifying disposition" of an Incentive Stock Option
under Section 422(a)(i) of the Code, the Participant may recognize
ordinary income which, for tax purposes, is considered payment of wages
for services. As a result, the Company may have certain tax withholding
and reporting obligations. The Company shall not be obligated to issue any
stock certificate upon the exercise of the right to purchase, or the
transfer of, Shares until the Participant has delivered sufficient funds
to cover all income, FICA, FUTA, and other applicable tax withholding. The
Participant shall notify the Company of any disqualifying disposition of
Shares underlying the Option (currently, any disposition within two years
of the date of grant or one year of the exercise date or cashless exercise
with shares underlying the Option tendered in payment) and take all
actions necessary for the Company to obtain a tax deduction if
compensation income is deemed to result from any exercise or disposition.
The Participant shall indemnify and hold the Company harmless against any
loss it may experience as a result of the Participant's failure to comply
with this subsection. At the Board's sole discretion, to satisfy the
Company's withholding obligations, the Company may retain such number of
shares of Common Stock subject to the exercised Option which have an
aggregate Fair Market Value on the date of exercise equal to the Company's
aggregate federal, state, local, and foreign tax withholding obligations
as a result of the exercise of the Option by the Participant. The Board
may consider the Participant's preference in making such determination,
but the Participant acknowledges
<PAGE>
that the Board is under no obligation to follow or even consider the
Participant's preference.
19. Non-Uniform Determinations. The Board's determinations, including
without limitation, (a) the Participants' right to receive Awards, (b) the form,
amount, and timing of Awards, (c) the terms, conditions, and provisions of
Awards (including vesting and forfeiture provisions), and (d) the agreements or
notices evidencing the same, need not be uniform and may be made by it
selectively among Participants who receive, or who are eligible to receive,
Awards under the Plan, whether or not such Participants are similarly situated.
20. Indemnification. Directors shall be indemnified and held harmless by
the Company from any loss, liability, or expense that may be imposed upon or
incurred by such present or past Director in connection with or resulting from
any claim, action, or proceeding in which the Director is involved by reason of
any action taken or failure to act under the Plan; provided such Director shall
give the Company an opportunity, at its own expense, to defend the same. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, as a matter or law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
21. Requirements of Law. Awards, agreements, notices, and the issuance of
shares of Common Stock shall be subject to applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or securities
exchanges or quotation systems as may be required.
22. Miscellaneous.
(a) Participant Not a Stockholder. The Participant shall not be
deemed for any purposes to be a stockholder of the Company with respect to
an Award except to the extent that a stock certificate has been issued (as
evidenced by the appropriate entry on the books of the Company) or of a
duly authorized transfer agent of the Company and, if applicable, the
Option exercised and payment made.
(b) Disputes or Disagreements. The Participant agrees, for himself
and his personal representatives, that any disputes or disagreements which
arise under or as a result of this Plan or any agreement hereunder shall
be determined by the Board in its sole discretion, and any interpretation
by the Board of the terms of this Plan or any Agreement shall be final,
binding, and conclusive.
(c) Notices. Any notice to be given hereunder ("Notice") shall be
addressed to the Company in care of its Treasurer at 400 Birmingham
Highway, Chattanooga, Tennessee 37419, or at its then current corporate
headquarters. Notice to be given to the Participant shall be addressed to
him or her by hand delivery or at his or her then current residential
address as appearing on the payroll records. Notice shall be deemed duly
given when enclosed in a properly sealed envelope and deposited by
certified mail, return receipt
<PAGE>
requested, in a post office or branch post office regularly maintained by
the United States Government.
(d) Exercise of Incentive Stock Option. Subject to the terms and
conditions of the Plan and any agreement reflecting the grant of Incentive
Stock Option, such Option may be exercised only by completing and signing
a written notice in substantially the following form:
I hereby exercise [all/part of] the Incentive Stock Option granted
to me by Covenant Transport, Inc. on ____________ (date of grant),
and elect to purchase ____________ (______) shares of the Company's
Class A Common Stock for $________ per share, representing the Fair
Market Value on the date of grant.
<PAGE>
