SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Celadon Group, Inc
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a6(i)(1) and 0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
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CELADON GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
CELADON GROUP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Celadon
Group, Inc. (the "Company") will be held at the Company's corporate headquarters
located at One Celadon Drive, Indianapolis, Indiana 46235-4207 on Friday,
December 6, 2002 at 10:00 a.m. (local time) for the following purposes:
1. Election of directors for the ensuing year;
2. To approve an amendment to the Celadon Group, Inc. Non-Employee
Director Stock Option Plan;
3. To approve an amendment to the Celadon Group, Inc. 1994 Stock Option
Plan; and
4. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on October 31, 2002
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting. Any action may be taken on the foregoing matters at
the meeting on the date specified above, or on any date or dates to which the
meeting may be adjourned or postponed. A list of stockholders entitled to vote
at the meeting will be available for examination by any stockholder for any
purpose germane to the meeting at our main office during the ten days prior to
the meeting, as well as at the meeting.
By order of the Board of Directors
Paul A. Will
Secretary
October 31, 2002
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ENSURE THAT YOUR SHARES ARE VOTED.
CELADON GROUP, INC.
One Celadon Drive
Indianapolis, Indiana 46235
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Celadon Group, Inc. (the "Company") to be
voted at the Annual Meeting of Stockholders of the Company (the "Meeting") to be
held on Friday, December 6, 2002, beginning at 10:00 a.m., local time, at the
Company's corporate headquarters and principal executive offices located at One
Celadon Drive, Indianapolis, Indiana 46235-4207. If not otherwise specified, all
properly executed proxies received pursuant to this solicitation, and not
revoked, will be voted in the election of directors FOR the persons named below,
FOR the amendment to the Celadon Group, Inc. Non-Employee Director Stock Option
Plan, as amended (the "Director Option Plan"), and FOR the amendment to the
Celadon Group, Inc. 1994 Stock Option Plan, as amended (the "Stock Option
Plan").
Stockholders who execute proxies may revoke them at any time before they
are exercised by giving written notice of revocation to the Secretary of the
Company at the address of the Company, by executing a subsequent proxy relating
to the same shares and presenting it to the Secretary of the Company, or by
attending the meeting and voting in person (attendance at the meeting, will not,
in and of itself, constitute revocation of a proxy).
Directors will be elected by a plurality of the votes present in person or
represented by proxy at the Meeting and entitled to vote on election of
directors. Approval of the proposed amendments to the Director Option Plan and
the Stock Option Plan, and approval of any other matters that come before the
Meeting for action will require the affirmative vote of the holders of a
majority of the stock duly voted on the matter. Each share is entitled to one
vote on each matter that comes before the Meeting. In the election of directors,
stockholders may either vote "FOR" all nominees for election or withhold their
votes from one or more nominees for election. Votes that are withheld and shares
held by a broker, as nominee, that are not voted (so-called "broker non-voters")
in the election of directors will not be included in determining the number of
votes cast. With respect to a vote for any other matter that comes before the
Meeting for action, stockholders may vote "FOR," "AGAINST" or "ABSTAIN" with
respect to such matters. Proxies marked to abstain will have the same effect as
votes against such matters, and broker non-votes will have no effect on such
matters. Unless a proxy is properly revoked pursuant to the procedures described
above, the Board of Directors, as proxy for the stockholder, will have the
discretion to vote on any other matters that properly come before the Meeting on
behalf of the stockholder as directed by a majority of the Board of Directors in
their best judgment.
A majority of the shares of the Company's common stock, present in person
or represented by proxy, shall constitute a quorum for purposes of the Meeting.
Proxies marked to abstain are counted for purposes of determining a quorum.
Dissenters' rights of appraisal will not be available with respect to the
matters to be acted on at the Meeting.
This proxy statement and the accompanying form of proxy are first being
mailed to stockholders on or about November 6, 2002.
Proxies are being solicited hereunder by the Company. The entire cost of
soliciting proxies hereunder will be borne by the Company. Proxies will be
solicited by mail, and may be solicited personally by directors, officers or
regular employees of the Company who will not be compensated for their services.
The Company will reimburse brokers and banks for their reasonable expenses for
forwarding material to beneficial owners for whom they hold stock.
As of October 17, 2002, the Company had outstanding 7,682,879 shares of
common stock, par value $.033 per share (the "Common Stock"), entitled to vote
at the meeting, each share being entitled to one vote. Only stockholders of
record at the close of business on October 31, 2002, will be entitled to vote at
the Meeting. This Proxy Statement and the accompanying proxy are being sent to
such stockholders on or about November 6, 2002.
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, five directors are to be elected to hold office until the
Annual Meeting of Stockholders in 2003 and until their respective successors
have been elected and qualified. It is the intention of the persons named in the
enclosed form of proxy to vote for the election as directors of the Company of
Stephen Russell, Paul A. Biddelman, Anthony Heyworth, Michael Miller and John
Kines. All of the individuals are currently directors of the Company, and all of
the named individuals are nominees of the Board of Directors. All directors of
the Company hold office until the next annual meeting of stockholders of the
Company or until their successors are elected and qualified or they resign.
The table in the section below entitled "Directors and Executive Officers"
sets forth certain information about each nominee for election to the Board of
Directors, as well as each of the Company's executive officers.
It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to one or more
nominees) will be voted at the Meeting for the election of the nominees
identified below. If any nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why any of the nominees might be unable to serve, if elected.
Executive officers hold office until their successors are chosen and
qualified, subject to their removal by the Board of Directors, the terms of any
applicable employment-related agreements or their resignation. See "Compensation
Committee Report on Executive Compensation--Chief Executive Officer's
Compensation."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
ALL FIVE NOMINEES.
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DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company as of October 17, 2002 are
as follows:
Name Age Position
---- --- --------
Stephen Russell 62 Chief Executive Officer and Chairman
Thomas Glaser 52 Executive Vice President - Operations
Jerry Closser 45 Executive Vice President - Fleet Services
David Shatto 44 Executive Vice President - Sales
Paul A. Will 36 Chief Financial Officer, Secretary and
Assistant Treasurer
Michael Dunlap 40 Treasurer and Assistant Secretary
Sergio Hernandez 44 Vice President - Mexico
Paul A. Biddelman(1) 56 Director of the Company
Michael Miller(2) 57 Director of the Company
Anthony Heyworth(1) 58 Director of the Company
John Kines(1)(2) 59 Director of the Company
(1) Members of the Audit Committee
(2) Members of the Compensation Committee
Mr. Russell has been Chairman of the Board and Chief Executive Officer of
the Company since its inception in July 1986. He is also a director of the
Truckload Carriers Association ("TCA") and chairman of the International
Committee of the TCA from 1997-1999. Mr. Russell is a member of the North
American Transportation Alliance advisory board and is a director of Star Gas
Corporation (the General Partner of Star Gas L.P.), a home heating and LPG
company. Mr. Russell has been a member of the Board of Advisors of the Cornell
University Johnson Graduate School of Management since 1983.
Mr. Glaser has been Executive Vice President - Operations since September
2001. He was Vice President - Transportation Services from May 2001 to September
2001. He served in various management capacities at Contract Freighters, Inc.
for over thirteen years, most recently as Vice President - Operations prior to
joining the Company.
Mr. Closser has been Executive Vice President - Fleet Services since
December 2000. Mr. Closser joined the Company in July 1999 when the Company
purchased Zipp Express, Inc. He was President of Zipp Express, Inc. since its
inception in 1977.
Mr. Shatto has been Executive Vice President - Sales and Marketing of the
Company since September 2001. He was Executive Vice President - Operations from
December 2000 to September 2001. He was Executive Vice President - Operations of
Celadon Trucking Services, Inc. from February 1999 to December 2000. He served
in various management capacities in the truckload market segment for over
nineteen years, most recently as Vice President and General Manager of Shaffer
Trucking, Inc. before joining the Company.
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Mr. Will has been Chief Financial Officer, Secretary and Assistant
Treasurer of the Company since April 2000. He was Vice President - Chief
Financial Officer and Secretary of the Company from December 1998 to March 2000.
He was Vice President-Secretary and Controller of the Company from September
1996 to December 1998. He was Vice President-Controller for Celadon Trucking
Services, Inc. from January 1996 to September 1996 and Controller from September
1993 to January 1996. Mr. Will is a certified public accountant.
Mr. Dunlap has been Treasurer and Assistant Secretary of the Company since
May 2002. He was the Chief Operating Officer of TruckersB2B, Inc., a subsidiary
of the Company, from April 2001 to May 2002. He was Vice President of Strategic
Development of TruckersB2B from April 2000 to April 2001. He was the Vice
President Treasurer of the Company from July 1996 to April 2001. He served as
Vice President of Finance for National Freight, Inc., a regional truckload
transportation company from October 1993 to July 1996.
Mr. Hernandez has been Vice President - Mexico since December 2001. He was
Director of Mexico Sales from to December 2001. He has over 20 years of
responsibilities in marketing and transportation throughout Mexico.
Mr. Biddelman has been a director of the Company since October 1992. Mr.
Biddelman has been President of Hanseatic Corporation, a private investment
company which indirectly manages an entity owning shares of the Company's Common
Stock, since December 1997, and served as Treasurer of that company from April
1992 to December 1997. He is also a director of Insituform Technologies, Inc.,
Six Flags, Inc., SystemOne Technologies, Inc., and Star Gas Corporation (the
General Partner of Star Gas Partners L.P.).
Mr. Miller has been a director of the Company since February 1992. Mr.
Miller has been Chairman of the Board and Chief Executive Officer of Aarnel
Funding Corporation, a venture capital/real estate company since 1974, a partner
of Independence Realty, an owner and manager of real estate properties, since
1989, and President and Chief Executive Officer of Miller Investment Company,
Inc., a private investment company, since 1990.
Mr. Heyworth has been a director of the Company since 1999. He retired
from KeyCorp in February 2000 as Vice Chairman, commercial banking, KeyBank N.A.
after a 35-year career with this $85 billion financial services company. He
continues as Chairman of KeyBank Central Indiana, having served as President and
Chief Executive since 1991. He joined the former Central National Bank in 1965
and was Executive Vice President when the bank merged with Society National Bank
of Cleveland in 1986 and Key Bank in 1994.
Mr. Kines was appointed as a director of the Company on June 9, 2000. He
retired from Associates First Capital Corp. ("Associates") in May 2000 as
President of the Diversified Service Group after a 22-year career with
Associates.
Pursuant to Section 145 of the Delaware General Corporation Law, the
Company's Certificate of Incorporation provides that the Company shall, to the
full extent permitted by law, indemnify all directors, officers, incorporators,
employees, or agents of the Company against liability for certain of their acts.
The Company's Certificate of Incorporation provides that, with a
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number of exceptions, no director of the Company shall be liable to the Company
for damages for breach of fiduciary duty as a director.
COMMITTEES OF THE BOARD
The Audit Committee consists of Paul A. Biddelman, Anthony Heyworth and
John Kines. The Audit Committee meets with management and the Company's
independent auditors to determine the adequacy of internal controls and other
financial reporting matters. The Board of Directors has determined that all
members of the Audit Committee are "independent" as defined in the applicable
listing standards of the NASDAQ National Market System. The Board of Directors
has adopted a written charter for the Audit Committee, and the Audit Committee
has requested management and Ernst & Young LLP to recommend no later than
January 30, 2003 any appropriate modifications to the charter in light of the
Sarbanes-Oxley Act of 2002 and related rulemaking.
The Compensation Committee consists of Michael Miller and John Kines. The
Compensation Committee reviews general policy matters relating to compensation
and benefits of employees and officers of the Company, and administers the
Company's Stock Option Plan.
The Company does not have a nominating committee. The functions normally
performed by a nominating committee are performed by the Company's Board of
Directors as a whole.
MEETINGS OF THE BOARD
The Board of Directors of the Company met five times during the fiscal
year ended June 30, 2002. No current director, while he was an elected director,
failed to attend at least 75% of those meetings plus any committee meetings of
the board of which he was a member. The Company's Audit Committee met six times
during the year ended June 30, 2002. The Compensation Committee met three times
during the year ended June 30, 2002.
REPORT OF THE AUDIT COMMITTEE
The following report does not constitute solicitation material and is not
considered filed or incorporated by reference into any other Company filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, unless
otherwise stated.
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management is responsible for the financial
controls. The independent auditors are responsible for expressing an opinion on
the conformity of the audited financial statements with accounting principles
generally accepted in the United States.
In fulfilling its responsibilities:
- The Audit Committee reviewed and discussed the audited financial
statements contained in the 2002 Annual Report on Form 10-K with the
Company's management and the independent auditors.
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- The Audit Committee discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
- The Audit Committee received from the independent auditors written
disclosures and the letter regarding the auditors' independence, as
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and discussed with
the auditors their independence from the Company and its management.
In reliance on the reviews and discussions noted above, the Audit
Committee recommended to the Board of Directors (and the Board approved) that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the year ended June 30, 2002, for filing with the Securities and
Exchange Commission.
Respectfully submitted by the members of the Audit Committee of the Board
of Directors:
Paul A. Biddelman (Chairman)
Anthony Heyworth
John Kines
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 2000, Truckers B2B sold 107,500 shares of its Class A common
stock for $1.00 per share to Michael Miller, a member of the Company's Board of
Directors, and 350,000 shares of its Class A common stock for $1.00 per share to
Hanseatic Corporation, which company was then a stockholder of the Company. Paul
Biddelman, a member of the Company's Board of Directors, is an officer of
Hanseatic Corporation which is no longer a stockholder of the Company.
On May 4, 2002, the Company loaned $150,000 for a term of four years to
Sergio Hernandez before Mr. Hernandez became an officer of the Company. As of
October 1, 2002, the outstanding amount of the loan was approximately $135,000
and the interest rate was 6.5%. On October 1, 2001, the Company also sold 6,000
shares of its Common Stock to Mr. Hernandez at a price of $4.00 per share. The
Company will not in the future make or extend any loans or extensions of credit
to any executive officer or director.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons owning more than 10 percent of the Common
Stock are required to report their ownership of Common Stock and any changes in
that ownership, on a timely basis, to the Securities and Exchange Commission
(the "SEC"). To the Company's knowledge, based solely on a review of materials
provided to the Company, all such required reports were filed on a timely basis
in fiscal 2002.
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EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid or accrued
by the Company for services rendered during fiscal 2002, 2001 and 2000 to the
Chief Executive Officer of the Company, and each of the four next most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers") during fiscal 2002.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
NAME AND PRINCIPAL SHARES
POSITION YEAR SALARY BONUS OPTIONS ALL OTHER COMPENSATION
Stephen Russell 2002 $544,781 --- 70,000 $96,413 (1)(2)(3)(4)(5)
Chairman & Chief 2001 509,813 --- 75,000 103,772 (1)(2)(4)(5)
Executive Officer 2000 514,347 $200,000 (6) 20,000 92,290 (1)(2)(4)(5)
Jerry Closser 2002 $233,654 --- (8) 42,500 $8,032 (2)(3)(5)
Executive Vice President 2001 233,654 --- 20,000 8,601 (2)(5)
Fleet Services 2000 220,673 --- 5,000 7,441 (2)(5)
David Shatto 2002 $187,829 --- (8) 32,500 $16,464 (2)(3)(4)(5)
Executive Vice President 2001 163,923 10,000 30,000 14,930 (2)(4)(5)
Sales 2000 145,757 22,500 (7) 10,000 6,735 (2)(4)(5)
Paul Will 2002 $173,364 --- (8) 31,250 $13,284 (2)(3)(4)(5)
Chief Financial Officer, 2001 148,077 $25,000 50,000 10,675 (2)(4)(5)
Secretary and 2000 131,923 60,000 (7) 30,000 10,674 (2)(4)(5)
Assistant Treasurer
Thomas Glaser 2002 $160,307 --- 47,200 $48,363 (2)(3)(5)(9)
Executive Vice President 2001 21,538 --- 10,000 --- ---
Operations
Michael Dunlap 2002 $142,903 $51,499 --- $12,004 (2)(3)(4)(5)
Treasurer and 2001 120,577 14,160 15,000 8,891 (2)(4)(5)
Assistant Secretary 2000 115,000 25,000 2,500 8,655 (2)(4)(5)
(1) Includes the premiums paid by the Company for term insurance and
split-dollar insurance for which the Company has an assignment against the
cash value for premiums paid, as follows: $89,145 in fiscal 2002, $81,081
in fiscal 2001, and $78,121in fiscal 2000.
(2) Includes the Company's contribution under the Company's 401(k) Profit
Sharing Plan, as follows: Stephen Russell - $1,117 in fiscal 2002, $4,971
in fiscal 2001, and $1,946 in fiscal 2000; Jerry Closser - $627 in fiscal
2002, $2,080 in fiscal 2001 and $919 in fiscal 2000; David Shatto - $564
in fiscal 2002, $2,602 in fiscal 2001 and $316 in fiscal 2000; Paul Will -
$487 in fiscal 2002, $1,933 in fiscal 2001, and $1,612 in fiscal 2000;
Thomas Glaser - $401 in fiscal 2002; and Michael Dunlap - $484 in fiscal
2002, $1,334 in fiscal 2001, and $1,377 in fiscal 2000.
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(3) Includes the Company's contribution under the Company's Excess Benefit
Plan as follows: Stephen Russell - $773 in fiscal 2002; Jerry Closser -
$1,168 in fiscal 2002; David Shatto - $1,092 in fiscal 2002; Paul Will -
$2,163 in fiscal 2002; Thomas Glaser - $602 in fiscal 2002; and Michael
Dunlap - $2,398 in fiscal 2002.
(4) Includes premiums and reimbursement under an executive health and
disability benefit program includes split dollar life insurance premiums,
as follows: Stephen Russell - $250 in fiscal 2002, $4,705 in fiscal 2001,
and $250 in fiscal 2000; David Shatto - $6,602 in fiscal 2002, $7,770 in
fiscal 2001 and $1,019 in fiscal 2000; Paul Will - $2,083 in fiscal 2002,
$3,342 in fiscal 2001, and $3,662 in fiscal 2000; and Michael Dunlap -
$4,137 in 2002, $2,157 in fiscal 2001, and $1,878 in fiscal 2000.
(5) Includes the Company's car allowance as follows: Stephen Russell - $5,128
in fiscal 2002, $13,015 in fiscal 2001 and $11,973 in fiscal 2000; Jerry
Closser - $6,237 in fiscal 2002, $6,521 in fiscal 2001 and $6,522 in
fiscal 2000; David Shatto - $8,204 in fiscal 2002, $4,558 in fiscal 2001,
and $5,400 in fiscal 2000; Paul Will - $8,551 in fiscal 2002, $5,400 in
fiscal 2001, and $5,400 in fiscal 2000; Thomas Glaser - $6,949 in fiscal
2002; and Michael Dunlap - $4,985 in fiscal 2002, $5,400 in fiscal 2001,
and $5,400 in fiscal 2000.
(6) The Compensation Committee determined to pay a special award to Mr.
Russell in March 2000 for the initiation of TruckersB2B.
(7) David Shatto received 1,875 shares of the Company's common stock and Paul
Will received 5,000 shares of the Company's common stock at fair market
value of $8.00 per share. In addition, the officers received an amount in
excess of the fair market values to cover all applicable taxes.
(8) In fiscal 2002, Jerry Closser, David Shatto and Paul Will received
advances on bonuses in the amounts of $39,650, $35,570 and $16,500,
respectively, each of which was repaid prior to the end of the fiscal year
or the record date for the Meeting.
(9) Thomas Glaser received reimbursement for relocation of $40,411 in fiscal
2002.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to the Named Executive Officers in fiscal 2002. No stock appreciation
rights were granted in fiscal 2002.
Number of
Securities % of total Potential Realizable
Underlying Options Value at Assumed Rates of
Options Granted to Exercise or Stock Price Appreciation For
Granted Employees Base Price Expiration Option Term (2)
Name (Shares)(1) In Fiscal Year Per Share Date 5% 10%
---- ----------- -------------- --------- ---- -- ---
Stephen Russell 70,000 25% $6.41 4/4/12 $282,185 $715,112
Jerry Closser 10,000 15% 3.85 9/7/11 24,212 61,359
2,500 3.84 10/1/11 6,037 15,300
30,000 6.41 4/4/12 120,936 306,477
David Shatto 2,500 11% 3.84 10/1/11 6,037 15,300
30,000 6.41 4/4/12 120,936 306,477
Paul Will 1,250 11% 3.84 10/1/11 3,019 $7,650
30,000 6.41 4/4/12 120,196 306,477
Thomas Glaser 15,000 17% 3.85 9/7/11 36,319 92,039
2,200 3.84 10/1/11 5,313 13,464
30,000 6.41 4/4/12 120,936 306,477
(1) Options become exercisable in installments of 34%, 33% and 33%, after the
expiration of 12, 24 and 36 months, respectively, from the date of the
grant.
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(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the Company's Common Stock over the term of the options. These numbers
are calculated based on rules promulgated by the SEC and do not reflect the
Company's estimate of future stock price growth. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the
timing of such exercise and the future performance of the Company's Common
Stock. There can be no assurance that the rates of appreciation assumed in
this table can be achieved or that the amounts reflected will be received
by the option holder.
REPORT ON OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning the exercise of
options during the last fiscal year and unexercised options held at June 30,
2002 with respect to the Named Executive Officers. There were no options
exercised during fiscal 2002.
OPTION VALUES AT JUNE 30, 2002
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at June 30, 2002 at June 30, 2002 (1)
------------------------ --------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Steve Russell 158,335 76,665 $864,803 $488,722
Jerry Closser 10,001 57,499 67,606 413,294
David Shatto 33,334 49,166 215,071 338,379
Paul Will 68,336 57,914 481,702 411,898
Thomas Glaser 3,334 53,866 29,206 402,168
Michael Dunlap 31,667 833 195,336 5,527
-------------
(1) Fair market value of underlying securities was $12.76 per share based on
the closing price of the Company's Common Stock on June 28, 2002.
DIRECTORS' COMPENSATION
Non-employee directors of the Company receive an annual fee of $15,000,
payable quarterly, for serving as a director of the Company. Such directors
receive $1,250 per quarter for serving on committees. Board members are
reimbursed for their reasonable, documented expenses for each meeting attended.
The Director Option Plan provides for the granting to non-employee
directors of non-qualified stock options to purchase an aggregate of not more
than 160,000 shares of Common Stock (subject to adjustment in certain
circumstances), subject to stockholder approval of the proposed amendment to the
Director Option Plan. Once each calendar year, the compensation committee may
authorize the grant of non-employee director stock options for members of the
Board of Directors.
Stock options granted to non-employee directors vest on the six-month
anniversary of the date of grant, assuming that the non-employee director is a
director on that date. All stock
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options granted to non-employee directors and not previously exercisable become
vested and fully exercisable immediately upon the occurrence of a change in
control of the Company.
All stock options granted pursuant to the Director Option Plan will expire
on the tenth anniversary of the date of grant. Stock options that are
exercisable upon a non-employee director's termination of directorship for any
reason other than death, disability or cause, prior to the complete exercise of
the stock option (or deemed exercise thereof), will remain exercisable following
such termination until the earlier of (i) the expiration of the 90 day period
following the non-employee director's termination of directorship or (ii) the
remaining term of the stock option. Stock options that are exercisable upon a
non-employee director's termination of directorship for disability or death will
remain exercisable by the non-employee director or, in the event of his or her
death, by the non-employee director's estate or by the person given authority to
exercise such stock options by his or her will or by operation of law, until the
earlier of (i) the first anniversary of the non-employee director's termination
of directorship or (ii) the remaining term of the stock option. Upon a
non-employee director's removal from the Board of Directors for cause, all
outstanding stock options of such director will immediately terminate and will
be null and void.
On April 16, 2002, Paul Biddelman, Michael Miller, Anthony Heyworth and
John Kines were each granted options to purchase 6,000 shares, which options
were effective immediately, and 5,000 shares, which options were subject to
stockholder approval of the proposed amendment of the Director Option Plan to
increase the number of shares subject to options thereunder. All of the options
have an exercise price of $6.75 per share. See Proposal 2: Approval of Amendment
to Non-Employee Director Stock Option Plan.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes options outstanding under the Company's
equity compensation plans:
NUMBER OF SECURITIES
NUMBER OF SECURITIES TO REMAINING AVAILABLE FOR
OF OUTSTANDING OPTIONS, WEIGHTED AVERAGE EXERCISE FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE OPTIONS, WARRANTS AND RIGHTS EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, PRICE OF OUTSTANDING (EXCLUDING SECURITIES
WARRANTS AND RIGHTS OPTIONS, WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))
PLAN CATEGORY (a) (b) (c)
------------- ------------------- ---------------------------- ------------------------
EQUITY COMPENSATION PLANS 950,351 $6.45 437
APPROVED BY SECURITY HOLDERS
------------- ------------------- ---------------------------- ------------------------
EQUITY COMPENSATION PLANS Not applicable Not applicable Not applicable
NOT APPROVED BY SECURITY
HOLDERS
------------- ------------------- ---------------------------- ------------------------
TOTAL 950,351 $6.45 437
------------- ------------------- ---------------------------- ------------------------
10
NEW PLAN BENEFITS
CELADON GROUP, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
Non-Executive Director Group $135,000 20,000
The allocation of any other new options authorized under either the
Director Option Plan or the Stock Option Plan as a result of the proposed
amendments is not determinable as of the date of this Proxy Statement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") was formed in September 1993 and is currently
comprised of two non-employee directors of the Company. The Compensation
Committee is responsible for determining the Company's compensation program for
its executive officers, including the Named Executive Officers. The Compensation
Committee also administers the Stock Option Plan and the Incentive Plan and,
subject to the provisions of such plans, determines grants under the plans for
all employees, including the Named Executive Officers.
The Compensation Committee has furnished this report on the Company's
executive compensation policies. This report describes the Compensation
Committee's compensation policies applicable to the Company's executive officers
and provides specific information regarding the compensation of the Company's
Chief Executive Officer
PRINCIPLES OF EXECUTIVE COMPENSATION AND PROGRAM COMPONENTS
The Company's executive compensation philosophy is designed to attract and
retain outstanding executives and to foster employee commitment and align
employee and stockholder interests. To this end, the Company has sought to
provide competitive levels of compensation that integrate pay with the Company's
annual and long-term performance goals and reward above-average corporate
performance.
STOCK OPTION PLANS
The Stock Option Plan and the Director Option Plan are intended to enhance
the profitability and value of the Company for the benefit of its stockholders
by enabling the Company (i) to offer stock-based incentives to employees,
thereby creating a means to raise the level of stock ownership by such
individuals in order to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and stockholders,
and (ii) to grant non-discretionary, nonqualified stock options to non-employee
directors, thereby creating a means to attract, retain and reward such
non-employee directors and strengthen the
11
mutuality of interests between non-employee directors and stockholders. The
Stock Option Plan and the Director Option Plan permit the grant of incentive
stock options (in the case of employees) and nonqualified stock options on a
discretionary, case-by-case basis, after consideration of an individual's
position, contribution to the Company, length of service with the Company,
number of options held, if any, and other compensation.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Russell is employed pursuant to an employment agreement dated January
21, 1994, as amended thereafter, providing for his continued employment until
January 21, 2004. The employment period is automatically renewed for successive
two-year terms unless the Company or Mr. Russell gives written notice to the
other at least 90 days prior to the expiration of the then current employment
period of their intention to terminate Mr. Russell's employment. The employment
agreement provides Mr. Russell with a base salary equal to $521,000 (as adjusted
annually for increases in the Consumer Price Index). In addition, Mr. Russell is
eligible to participate in an incentive bonus program designed for all members
of the Company's senior management pursuant to which he may receive a bonus in
an amount equal to between 0% and 105% of his base salary in the discretion of
the Compensation Committee. The employment agreement also provides that Mr.
Russell is entitled to participate in all employee benefit plans of the Company
and all other fringe benefit plans generally available to employees of the
Company.
The agreement provides that in the event of termination: (i) by the
Company without cause (including the non-renewal of the employment period by the
Company) or by Mr. Russell for cause, Mr. Russell will be entitled to receive
his salary for the remainder of the then current employment period or one year,
whichever is greater; (ii) by reason of his disability, Mr. Russell will be
entitled to receive 50% of his salary during the two-year period commencing on
the date of his termination; and (iii) by reason of his death, Mr. Russell's
estate will be entitled to receive a pro-rata portion of the bonus for the
fiscal year in which his death occurs and to receive 50% of his salary until the
earlier of the end of the then current employment period or one year after the
date of death. The employment agreement includes a two-year non-compete covenant
commencing on termination of employment.
Upon the occurrence of a change in control (as defined in the employment
agreement), the amended agreement provides that if (i) at any time within two
years of a change in control or within 180 days prior to a change in control,
Mr. Russell's employment is terminated by the Company without cause or by Mr.
Russell for cause or (ii) at any time during the 90-day period immediately
following the date which is six months after the change in control Mr. Russell
terminates his employment for any reason, Mr. Russell shall be entitled to
receive (1) a lump sum payment in an amount equal to three times his base salary
and three times the highest annual bonus paid to him within three years prior to
the change in control; (2) any accrued benefits; (3) a pro-rata portion of the
bonus for the fiscal year in which the change in control occurs; (4) continued
medical and dental benefits for Mr. Russell (and eligible dependents) for 36
months; (5) outplacement services for one year; and (6) upon the occurrence of
the change in control, full and immediate vesting of all stock options and
equity awards. The agreement also provides that Mr. Russell is entitled to
receive a gross-up payment on any payments made to Mr. Russell that are subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"); provided, however, that if the total payments made to
Mr.
12
Russell do not exceed 110% of the greatest amount that could be paid to Mr.
Russell such that the receipt of payments would not give rise to any excise tax,
then no gross-up payment will be made and the payments made to Mr. Russell, in
the aggregate, will be reduced to an amount that would result in no excise tax
being triggered.
SEPARATION AGREEMENTS
Mr. Will and Mr. Shatto are parties to separation agreements with the
Company whereby the Company has the right at any time with or without prior
written notice to terminate each of their employment or obtain each of their
resignations. The agreements provide that in the event of termination of
employment, the employee will be entitled to receive: (i) one year's salary less
normal withholding; (ii) a pro-rata bonus payment equal to the then current
bonus formula for the time employed in the then current fiscal year up to the
date of termination in that fiscal year less normal withholdings; (iii) a lump
sum payment equal to twelve months of COBRA premiums for the group medical and
dental plans; and (iv) a lump sum payment equal to twelve months car allowance.
In addition, in such event, the employee will be entitled to exercise any vested
or unvested stock options he then has in accordance with the terms of the Stock
Option Plan for a period of one year from the termination of his employment.
EMPLOYMENT AGREEMENT
Mr. Hernandez has a four-year contract ending on June 25, 2004. The
agreement provides that Mr. Hernandez is entitled to receive (i) $120,000 annual
base salary; (ii) 5% annual increases; (iii) eligible for an annual bonus; (iv)
use of a company automobile; (v) health and life insurance to be provided by the
Company; and (vi) various provisions for voluntary and/or involuntary
termination.
COMPENSATION COMMITTEE
Michael Miller (Chairman)
John Kines
13
STOCK PRICE PERFORMANCE
The following graph compares the cumulative total return to stockholders
of the Company's Common Stock to the cumulative total returns of the Nasdaq
Stock Market - U.S. and the Nasdaq Truck and Transportation Index for the period
June 1997 through June 2002. The graph assumes that $100 was invested on June
30, 1997.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
CELADON GROUP, INC.
THE NASDAQ, AND THE TRUCK AND TRANSPORTATION INDEX
COMPANY/INDEX/PEER GROUP 6/30/97 6/30/98 6/30/99 6/30/00 6/30/01 6/30/02
------------------------ ------- ------- ------- ------- ------- -------
Celadon $ 100.00 $ 165.22 $ 73.91 $ 97.83 $ 37.39 $ 110.96
Nasdaq Index $ 100.00 $ 131.62 $ 189.31 $ 279.93 $ 151.75 $ 103.40
Truck & Transportation Index $ 100.00 $ 121.31 $ 123.93 $ 94.48 $ 106.01 $ 117.70
14
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth as of October 17, 2002, certain information
furnished to the Company regarding the beneficial ownership of Common Stock (i)
by each person who, to the knowledge of the Company, based upon filings with the
SEC, beneficially owns more than five percent of the outstanding shares of the
Common Stock, (ii) by each director of the Company, (iii) by each of the Named
Executive Officers, and (iv) by all directors and executive officers of the
Company as a group.
BENEFICIAL OWNERSHIP OF COMMON
STOCK AS OF
OCTOBER 17, 2002 (1)
--------------------
NAME AND
POSITION SHARES %
-------- ------ -
Stephen Russell........................................... 913,804 (2) 11.9%
Chairman of the Board and
Chief Executive Officer of the Company
Jerry Closser............................................. 53,717 (2) *
Executive Vice President - Fleet Services
David Shatto.............................................. 54,465 (2) *
Executive Vice President - Sales
Paul A. Will.............................................. 97,343 (2) 1.3%
Chief Financial Officer, Secretary and Assistant
Treasurer
Thomas Glaser............................................. 17,684 (2) *
Executive Vice President - Operations
Michael Dunlap............................................ 36,992 (2) *
Treasurer and Assistant Secretary
Paul A. Biddelman......................................... 48,500 (2)(3) *
Director of the Company
Michael Miller............................................ 68,500 (2) *
Director of the Company
Anthony Heyworth.......................................... 27,000 (2) *
Director of the Company
John Kines................................................ 22,000 (2) *
Director of the Company
Trafelet & Company, LLC................................... 384,800 (4) 5.0%
Dimensional Fund Advisors, Inc............................ 601,400 (5) 7.8%
All executive officers and directors as a group
(ten persons)......................................... 1,357,022 17.7%
-------------
* Represents beneficial ownership of not more than one percent of the
outstanding Common Stock.
(1) Based upon 7,682,879 shares of Common Stock outstanding at October 17,
2002.
(2) Includes shares of Common Stock which certain directors and executive
officers of the Company had the right to acquire through the exercise of
options within 60 days of October 17, 2002, as follows: Stephen Russell -
165,000 shares; Jerry Closser - 15,834 shares; David Shatto - 34,167
shares; Paul Will - 77,085 shares; Thomas Glaser - 8,884 shares; Michael
Dunlap - 31,667 shares; Paul A. Biddelman - 48,500 shares; Michael Miller
- 48,500 shares; Anthony Heyworth - 25,000 shares and John Kines - 17,000
shares.
15
(3) Does not include shares, if any, beneficially owned by Hanseatic
Corporation, in which Mr. Biddelman is an officer. Mr. Biddelman does not
hold voting or investment power with respect to such shares.
(4) Trafelet & Company, LLC and Remy W. Trafelet share voting and dispositive
power with respect to 384,800 shares of the Company's Common Stock. The
address of Trafelet & Company, LLC and Remy W. Trafelet is c/o 153 E. 53rd
Street, 51st Floor, New York, NY 10022. The foregoing information is based
upon a Schedule 13G filed by Trafelet & Company, LLC with the SEC on July
30, 2002.
(5) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to beneficially own 601,400 shares of Common Stock, all
of which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional Fund Advisors, Inc.
serves as investment manager. The address of Dimensional Fund Advisors,
Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401. The
foregoing information is based upon a Schedule 13G filed by Dimensional
with the SEC on January 30, 2002.
16
Except as otherwise indicated, the Company has been advised that the
beneficial holders listed in the table above have sole voting and investment
power regarding the shares shown as being beneficially owned by them. Except as
noted in the footnotes, none of such shares is known by the Company to be shares
with respect to which the beneficial owner has the right to acquire beneficial
ownership.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the fiscal year ended
June 30, 2002 were Ernst & Young LLP ("E&Y"). A representative of E&Y is
expected to attend the Meeting to respond to appropriate questions and make a
statement if they so desire.
Audit Fees. The aggregate fees billed by Ernst & Young LLP for
professional services rendered for the audit of the Company's annual financial
statements for the year ended June 30, 2002 and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for that
year were $144,500.
Financial Information Systems Design and Implementation Fees. There were
no fees billed for professional services rendered for information technology
services design and implementation by Ernst and Young LLP for the year ended
June 30, 2002.
All Other Fees. The aggregate fees billed by Ernst & Young LLP for
services rendered to the Company, other than services described above, for the
year ended June 30, 2002 were $178,867. Other services include fees for
accounting consulting and tax consulting.
The Audit Committee has considered whether the provision of the services
described above is compatible with maintaining the independence of Ernst & Young
LLP.
Although the Company has not yet engaged Ernst & Young LLP as its
independent auditors for the fiscal year ended June 30, 2003, the Audit
Committee will approve in advance any audit services or non-audit services to be
performed by Ernst & Young LLP or other independent auditors.
17
PROPOSAL 2: APPROVAL OF AMENDMENT TO
CELADON GROUP, INC. NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
The affirmative vote of at least a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote on this matter at
the Meeting is required to approve the amendment of the Director Option Plan.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS
VOTE THEIR SHARES FOR THE PROPOSAL TO AMEND THE CELADON GROUP, INC. NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN.
BACKGROUND
On March 31, 1997, the Board of Directors adopted the Director Option
Plan, effective as of April 1, 1997, which was thereafter approved by the
stockholders. The Director Option Plan was subsequently amended and restated
effective as of April 1, 1997, by action of the Board of Directors of the
Company on August 19, 1997, which was also approved by the stockholders.
The following description of the Director Option Plan is a summary of the
material provisions of the Director Option Plan and is qualified in its entirety
by reference to the Director Option Plan, as amended subject to stockholder
approval, a copy of which has been filed as Annex A to this Proxy Statement.
The Board of Directors has approved an amendment to the Director Option
Plan to increase the number of shares available for issuance upon exercise of
options granted pursuant to the Director Option Plan from 100,000 shares to
160,000 shares, subject to stockholder approval.
PURPOSE OF THE PLAN
The purposes of the Director Option Plan are to enable the Company to
attract, retain, and motivate the non-employee directors of the Company and to
create a long-term mutuality of interest between the non-employee directors and
the Company's stockholders by granting options to purchase the Company's Common
Stock ("Director Options").
ADMINISTRATION
The Director Option Plan is administered by a committee (the "Committee")
of the Board of Directors of the Company, appointed from time to time by the
Board of Directors. The Committee consists of two or more directors, each of
whom are non-employee directors as defined in Rule 16b-3 under Section 16(b) of
the Exchange Act. If no committee exists which has the authority to administer
the Director Option Plan, the functions of the Committee will be exercised by
the Board of Directors. Currently, no committee exists, and the Board of
Directors is performing the functions of the Committee. The Committee has full
authority to interpret the Director Option Plan and decide any questions under
the Director Option Plan and to make such rules and regulations and establish
such processes for administration of the Director Option Plan as it deems
appropriate subject to the provisions of the Director Option Plan.
18
AVAILABLE SHARES
After giving effect to the proposed amendment, the Director Option Plan
authorizes the issuance of up to 160,000 shares of Common Stock upon the
exercise of non-qualified stock options granted to non-employee directors of the
Company. In general, if Director Options are for any reason canceled, or expire
or terminate unexercised, the shares covered by such Director Options will again
be available for the grant of Director Options.
The Director Option Plan provides that appropriate adjustments will be
made in the number and kind of securities receivable upon the exercise of
Director Options in the event of a stock split, stock dividend, merger,
consolidation or reorganization.
ELIGIBILITY
All non-employee directors of the Company are eligible to be granted
Director Options under the Director Option Plan. A non-employee director is a
director serving on the Company's Board of Directors who is not an active
employee of the Company and/or a subsidiary or parent company of the Company, as
defined in Sections 424(e) and 424(f) of the Code.
GRANT OF DIRECTOR OPTIONS
On April 1, 1997, each of the four non-employee directors of the Company
on April 1, 1997 (the "Initial Grant Date") was granted a Director Option to
purchase 4,000 shares of Common Stock, subject to the terms of the Director
Option Plan. Each non-employee director who is first elected to the Board of
Directors after April 1, 1997 will be granted, as of the first day of the month
coincident with or next following the date of his or her election, a Director
Option to purchase 8,000 shares of Common Stock, subject to the terms of the
Director Option Plan (such grant or any grant on the Initial Grant Date is
referred to as the "First Grant"). In addition, on April 1, 1997, each
non-employee director who was elected to the Board of Directors within one (1)
year period ending March 31, 1997 was granted an additional Director Option to
purchase 8,000 shares of Common Stock, subject to the terms of the Director
Option Plan. As of the Initial Grant Date, only one non-employee director
qualified for this additional grant. Shares of Common Stock underlying Director
Options granted on the Initial Grant Date totaled 24,000 shares. Shares of
Common Stock underlying Director Options granted as of October 17, 2002 totaled
100,000 shares.
Each non-employee director is automatically granted a Director Option to
purchase 11,000 shares of Common Stock for each calendar year in which such
non-employee director remains a non-employee director. The timing of such grants
in each year is within the discretion of the Committee. For the calendar year
2002, each of the non-employee directors was granted Director Options to
purchase a total of 11,000 shares, 6,000 of which were effective immediately and
5,000 of which are subject to stockholder approval of the proposed amendment of
the Director Option Plan. The exercise price for the Director Options is 100
percent of the fair market value (as defined in the Director Option Plan) of the
Common Stock at the time of the grant of the Director Options. Grants on the
Initial Grant Date had an exercise price of $10.50 per share. Grants as of April
16, 2002 had an exercise price of $6.75 per share.
19
EXERCISE OF OPTIONS
Subject to acceleration of the exercisability of the Director Options (as
described below), each Director Option granted under the Director Option Plan
will be exercisable on or after the later of (a) 6 months after the date of
grant or (b) approval of the Director Option Plan by stockholders. Shares
purchased pursuant to the exercise of Director Options will be paid for at the
time of exercise as follows: (i) in cash; (ii) subject to applicable law, by
delivery of unencumbered shares of Common Stock held for at least 6 months; or
(iii) a combination thereof.
Except where a Director Option expires earlier (as described below), if
not previously exercised, each Director Option will expire upon the tenth
anniversary of the date of the grant thereof.
Director Options that are exercisable upon a non-employee director's
termination of directorship for any reason except death, disability or cause (as
defined in the Director Option Plan), prior to the complete exercise of a
Director Option (or deemed exercise thereof), will remain exercisable following
such termination until the earlier of (i) the expiration of the ninety (90) day
period following the non-employee director's termination of directorship or (ii)
the remaining term of the Director Option.
Director Options that are exercisable upon a non-employee director's
termination of directorship for disability or death, will remain exercisable by
the non-employee director or, in the case of death, by the non-employee
director's estate or by the person given authority to exercise such Director
Options by his or her will or by operation of law, until the earlier of (i) the
first anniversary of the non-employee director's termination of directorship or
(ii) the remaining term of the Director Option.
Upon a non-employee director's removal from the Board of Directors,
failure to stand for reelection or failure to be renominated for cause, or if
the Company obtains or discovers information after termination of directorship
that such non-employee director had engaged in conduct during such directorship
that would have justified a removal for cause during such directorship, all
outstanding Director Options held by such non-employee director will immediately
terminate and will be null and void.
The Director Option Plan also provides that all outstanding Director
Options will terminate effective upon the consummation of a merger,
consolidation, liquidation or dissolution in which the Company is not the
surviving entity, subject to the right of non-employee director to exercise all
outstanding Director Options until the effective date of the merger,
consolidation, liquidation or dissolution.
AMENDMENTS
The Director Option Plan provides that it may be amended by the Committee
or the Board of Directors at any time, and from time to time, to effect (i)
amendments necessary or desirable in order that the Director Option Plan and the
Director Options granted thereunder conform to all applicable laws, and (ii) any
other amendments deemed appropriate. Notwithstanding the foregoing, to the
extent required by law, no amendment may be made that would require the approval
of the stockholders of the Company under applicable law or under
20
any regulation of a principal national securities exchange or automated
quotation system sponsored by the National Association of Securities Dealers
unless such approval is obtained. The Director Option Plan may be amended or
terminated at any time by stockholders of the Company.
MISCELLANEOUS
Non-employee directors may be limited under Section 16(b) of the Exchange
Act to certain specific exercise, election or holding periods with respect to
the Director Options granted to them under the Director Option Plan. Director
Options granted under the Director Option Plan are subject to restrictions on
transfer and exercise. No Director Option granted under the Director Option Plan
may be exercised prior to the time period for exercisability, subject to
acceleration in the event of a change in control of the Company (as defined in
the Director Option Plan). Although Director Options will generally be
nontransferable (except by will or the laws of descent and distribution), the
Committee may determine at the time of grant or thereafter that a Director
Option that is otherwise nontransferable is transferable in whole or in part and
in such circumstances, and under such conditions, as specified by the Committee.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of the principal U.S. federal income tax
consequences with respect to Director Options under the Director Option Plan is
based on statutory authority and judicial and administrative interpretations as
of the date of this Proxy Statement, which are subject to change at any time
(possibly with retroactive effect) and may vary in individual circumstances.
Therefore, the following is designed to provide only a general understanding of
the federal income tax consequences (state and local income tax and estate tax
consequences are not addressed below). This discussion is limited to the U.S.
federal income tax consequences to individuals who are citizens or residents of
the U.S., other than those individuals who are taxed on a residence basis in a
foreign country. Readers are advised to obtain the opinions of their own tax and
legal advisers regarding tax consequences of the Director Options.
In general, an optionee will realize no taxable income upon the grant of
non-qualified stock options, and the Company will not receive a deduction at the
time of such grant, unless the option has a readily ascertainable fair market
value (as determined under applicable tax law) at the time of grant. Upon
exercise of a non-qualified stock option, an optionee generally will recognize
ordinary income in an amount equal to the excess of the fair market value of the
stock on the date of exercise over the exercise price, but such amount will not
be subject to federal wage withholding or employment taxes. Upon a subsequent
sale of the stock by the optionee, the optionee will recognize short-term or
long-term capital gain or loss, depending upon his holding period for the stock.
The Company will generally be allowed a deduction equal to the amount recognized
by the optionee as ordinary income.
An optionee should consult with his or her tax advisor as to whether, as a
result of Section 16(b) of the Exchange Act and the rules and regulations
thereunder, the timing of income recognition is deferred for any period
following the exercise of a Director Option (the "Deferral Period"). If there is
a Deferral Period, absent a written election (pursuant to Section 83(b) of the
Code) filed with the Internal Revenue Service within 30 days after the date of
transfer of the
21
shares of Common Stock pursuant to the exercise of the non-qualified stock
option to include in income, as of the transfer date, the excess (on such date)
of the fair market value of such shares over their exercise price, recognition
of income by the recipient could, in certain instances, be deferred until the
expiration of the Deferral Period.
In addition, any entitlement to a tax deduction on the part of the Company
is subject to the applicable federal tax rules, and in the event that the
exercisability of a Director Option is accelerated because of a change in
control, payments relating to the Director Options, either alone or together
with certain other payments may constitute parachute payments under Section 280G
of the Code, which amounts may be subject to excise taxes and be nondeductible
by the Company.
The Director Option Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Director Option
Plan is not, nor is it intended to be, qualified under Section 401(a) or 421 of
the Code.
22
PROPOSAL 3: APPROVAL OF AMENDMENT TO
THE CELADON GROUP, INC. 1994 STOCK OPTION PLAN
The affirmative vote of at least a majority of the shares of Common
Stock present in person or represented by proxy and entitled to vote on this
matter at the meeting is required to approve the amendment to the Stock Option
Plan.
The following description of the Stock Option Plan is a summary of the
material provisions of the Stock Option Plan and is qualified in its entirety by
reference to the Stock Option Plan, as amended subject to stockholder approval,
a copy of which has been filed as Annex B to this Proxy Statement.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS
VOTE THEIR SHARES FOR THE AMENDMENT TO THE STOCK OPTION PLAN.
AMENDMENT TO STOCK OPTION PLAN
The Board of Directors has approved the amendment to the Stock Option
Plan, subject to stockholder approval, to provide that the aggregate number of
shares of Common Stock subject to awards under the Stock Option Plan be
increased from 1,050,000 to 1,200,000, of which an aggregate of 1,200,000 may be
treated as incentive stock options under the Code. The new shares that will be
subject to awards under the Stock Option Plan following stockholder approval of
the proposed amendment have not yet been allocated among the officers and
employees.
The following description of the Stock Option Plan is a summary of the
principal provisions of the Stock Option Plan and is qualified in its entirety
by reference to the Stock Option Plan, a copy of which may be obtained upon
written request to the Company's Investor Relations Department at the Company's
principal business address and which is filed with the SEC as Annex B to this
Proxy Statement.
PURPOSE OF THE PLAN
The purposes of the Stock Option Plan are to enable the Company to
attract, retain, and motivate selected management and other key employees who
are important to the Company and to create a long-term mutuality of interest
between such persons and the Company's stockholders by granting stock options to
purchase shares of the Company's Common Stock ("Options"), stock appreciation
rights ("SARs") and restricted stock awards (collectively, Options, SARs and
restricted stock awards are referred to herein as "Awards").
ADMINISTRATION
The Stock Option Plan is administered by the Compensation Committee. If
no committee exists which has the authority to administer the Stock Option Plan,
the functions of the Compensation Committee will be exercised by the Board of
Directors. The Compensation Committee has full authority to interpret the Stock
Option Plan and decide any questions under the Stock Option Plan and to make
such rules and regulations and establish such processes for administration of
the Stock Option Plan as it deems appropriate subject to the provisions of the
23
Stock Option Plan. Any interpretation and decision made by the Compensation
Committee is final and conclusive.
AVAILABLE SHARES
The Stock Option Plan, as amended, authorizes the issuance of up to
1,200,000 shares of Common Stock upon the exercise of Options, SARs and
restricted stock awards. As of June 30, 2002, there were outstanding Options to
acquire 850,351 shares of Common Stock and 825 shares of restricted stock under
the Stock Option Plan. No SARs have been issued under the Stock Option Plan. In
general, if Awards are for any reason canceled, or expire or terminate
unexercised, the shares covered by such Awards will again be available for the
grant of Awards, except that shares subject to a restricted stock award that are
forfeited after the optionee has received dividends or other benefits of
ownership (excluding voting rights) will not be available for the grant of
Awards. In the event that an optionee delivers shares of Common Stock as payment
of withholding or other taxes or the purchase price of shares of Common Stock
acquired upon the exercise of an Option, such shares will not count against the
maximum aggregate limit on shares of Common Stock that are available under the
Stock Option Plan, except with respect to incentive stock options. The maximum
number of shares of Common Stock with respect to which Awards could be granted
to any individual under the Stock Option Plan during any fiscal year of the
Company may not exceed 75,000.
The Stock Option Plan provides that appropriate adjustments will be
made in the number and kind of securities subject to outstanding Awards and the
purchase price to prevent dilution of or enlargement of an optionee's rights in
the event of a stock split, stock dividend, merger, consolidation or
reorganization that satisfies the requirements set forth in the Stock Option
Plan.
ELIGIBILITY
Selected management and other key employees who are employed by the
Company or a parent or subsidiary corporation of the Company, as defined in
Sections 424(e) and 424(f) of the Code, are eligible to receive Awards under the
Stock Option Plan.
GRANT OF AWARDS
The Compensation Committee determines, subject to the provisions of the
Stock Option Plan, the persons to whom and the time or times at which grants
shall be made, the number of shares of Common Stock subject to an Option or
restricted stock award, the number of Options which will be treated as incentive
stock options ("ISOs") or nonqualified stock options, the duration of each
Option, the specific restrictions applicable to restricted stock awards, and
other terms and provisions of the Awards. In determining persons who are to
receive Awards and the number of shares of Common Stock to be covered by each
Award, the Committee will consider the person's position, responsibilities,
service, accomplishments, present and future value to the Company, the
anticipated length of his future service, and other relevant factors.
The purchase price for the Options will be at least 100 percent of the
fair market value (as defined in the Stock Option Plan) of the Common Stock at
the time of the grant of the Options. In the case of an ISO granted to an
optionee owning more than 10 percent of the combined voting power of all classes
of stock of the Company or any parent or subsidiary corporation of
24
the Company (as defined in Sections 424(e) and 424(f) of the Code) at the time
the ISO is granted, the purchase price for the ISO will be at least 110 percent
of the fair market value of the Common Stock at the time the ISO is granted.
Shares purchased pursuant to the exercise of Options will be paid for
at the time of exercise as follows: (i) cash, (ii) to the extent permitted by
applicable law, by delivery of unencumbered shares of Common Stock held for at
least 6 months, or (iii) a combination thereof. If the Common Stock is traded on
a national securities exchange or system sponsored by the National Association
of Securities Dealers, payment in full or in part may also be made through a
"cashless exercise" procedure whereby the optionee delivers irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the purchase price.
The Stock Option Plan also permits the Compensation Committee in its
discretion, to provide for further nonqualified stock options for a number of
shares equal to the number of shares surrendered ("Reload Options"), if an
optionee exercises an Option by surrendering other shares of Common Stock held
by the optionee for at least six months prior to such date of surrender. The
purchase price of a Reload Option shall be equal to the fair market value of the
Common Stock on the date of exercise of the original Option and may be exercised
in accordance with the terms and conditions as the Compensation Committee may
determine.
Except where an Option expires earlier (as described below), if not
previously exercised, each Option will expire upon the tenth anniversary of the
grant hereof (five years in the case of a 10 percent stockholder). No Options
may be granted after January 4, 2004.
The aggregate fair market value (determined at the time of grant) of
the Common Stock with respect to which ISOs are exercisable for the first time
by an optionee during any calendar year may not exceed $100,000.
The Stock Option Plan permits the Compensation Committee to grant to
all eligible persons shares of Common Stock, subject to such restrictions as the
Board of Directors may determine (a restricted stock award). The Compensation
Committee may grant SARs under the Plan. SARs may be granted either alone or in
addition to other Awards, and may, but need not, relate to a specific Option. A
SAR may be exercised only at a time when the fair market value of a share of the
Common Stock exceeds the fair market value on the date of grant of the SAR and
the SAR is otherwise exercisable. If a SAR relates to a specific Option, at the
time of its exercise, the employee must surrender the privilege of exercising
the related Option to the extent that the employee exercises the SAR. If a SAR
is exercised, the holder is entitled to receive, in cash or in shares of Common
Stock, or a combination thereof, at the discretion of the Compensation
Committee, the excess of the fair market value of shares for which the right is
exercised over the fair market value on the date of grant of the SAR. The
exercise of SARs is subject to certain restrictions set forth in the Stock
Option Plan.
The Compensation Committee may at any time accelerate the vesting of
Options and SARs and the removal of restrictions from restricted stock awards.
In the event of a merger or other type of corporate transaction which results in
a change of control of the Company (as defined in the Stock Option Plan),
Options granted pursuant to the Stock Option Plan
25
automatically vest and become immediately exercisable in full, and any
forfeiture restrictions contained in any restricted stock award automatically
terminate, under certain circumstances.
If the employment of any optionee terminates for cause (as defined in
the Stock Option Plan), any Options or SARs held by the optionee terminate. If
the employment of an optionee otherwise terminates, any Options or SARs held by
the optionee may be exercised during a period of 30 days after such termination,
unless such termination of employment occurs by reasons of retirement with the
consent of the Compensation Committee, disability or death. If the employment of
any optionee terminates by reason of retirement with the consent of the
Compensation Committee or disability, nonqualified stock options or SARs
exercisable at the time of such termination may be exercised for a period of up
to three years after such termination; ISOs exercisable at the time of such
termination may be exercised for a period of up to three months after retirement
with the consent of the Compensation Committee and up to twelve months after
disability. If the employment of any optionee terminates by reason of death or
if an optionee dies during the period which Options or SARs are otherwise
exercisable after retirement or disability, Options or SARs exercisable at the
time of termination of employment or such later date, may be exercised by the
executor or administrator of such optionee's estate within one year of death.
AMENDMENT AND TERMINATION OF PLAN
The Stock Option Plan provides that it may be amended or terminated by
the Board of Directors or the Compensation Committee at any time; provided,
however, that (i) no such action may affect or in any way impair an optionee's
rights under any Award previously granted under the Stock Option Plan and (ii)
no amendment or change may, without stockholder approval, increase the maximum
number of shares of Common Stock which may be issued or transferred under the
Stock Option Plan, change the provisions of the Stock Option Plan regarding the
purchase price of Options, extend the period during which Awards may be granted
or exercised, or change the eligible class of employees under the Stock Option
Plan.
MISCELLANEOUS
Optionees may be limited under Section 16(b) of the Exchange Act to
certain specific exercise, election or holding periods with respect to the
Awards granted to them under the Stock Option Plan. Options granted under the
Stock Option Plan are subject to restrictions on transfer and exercise. No
Option granted under the Stock Option Plan may be exercised prior to the time
period for exercisability, subject to acceleration in the event of a change in
control of the Company (as defined in the Stock Option Plan). Although Options
will generally be nontransferable (except by will or the laws of descent and
distribution), the Compensation Committee may determine at the time of grant or
thereafter that a nonqualified stock option that is otherwise nontransferable is
transferable in whole or in part and in such circumstances, and under such
conditions, as specified by the Compensation Committee.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of the principal U.S. federal income tax
consequences with respect to Options under the Stock Option Plan is based on
statutory authority and judicial and
26
administrative interpretations as of the date of this Proxy Statement, which are
subject to change at any time (possibly with retroactive effect) and may vary in
individual circumstances. Therefore, the following is designed to provide only a
general understanding of the federal income tax consequences (state and local
income tax and estate tax consequences are not addressed below). This discussion
is limited to the U.S. federal income tax consequences to individuals who are
citizens or residents of the U.S., other than those individuals who are taxed on
a residence basis in a foreign country. Readers are advised to obtain the
opinions of their own tax and legal advisers regarding tax consequences of the
Options.
NONQUALIFIED STOCK OPTIONS. In general, an optionee will realize no
taxable income upon the grant of nonqualified stock options, and the Company
will not receive a deduction at the time of such grant, unless the nonqualified
stock option has a readily ascertainable fair market value (as determined under
applicable tax law) at the time of grant. Upon exercise of a nonqualified stock
option, an optionee generally will recognize ordinary income in an amount equal
to the excess of the fair market value of the stock on the date of exercise over
the purchase price. Upon a subsequent sale of the stock by the optionee, the
optionee will recognize short-term or long-term capital gain or loss, depending
upon his or her holding period for the stock. Subject to the limitation under
Section 162(m) of the Code (as described below), the Company will generally be
allowed a deduction equal to the amount recognized by the optionee as ordinary
income in connection with the exercise of the nonqualified stock option.
INCENTIVE STOCK OPTIONS. Options granted under the Stock Option Plan
may be ISOs, provided that such Options satisfy the requirements of the Code
therefor. In general, neither the grant nor the exercise of an ISO will result
in taxable income to the optionee or a deduction to the Company. The sale of
Common Stock received pursuant to the exercise of an ISO which satisfied the
requirement of an ISO, as well as the holding period requirement described
below, will result in long-term capital gain or loss to the optionee equal to
the difference between the amount realized on the sale and the purchase price
and will not result in a tax deduction to the Company. To receive ISO treatment,
the optionee must not dispose of the Common Stock purchased pursuant to the
exercise of an ISO either (i) within two years after the ISO is granted or (ii)
within one year after the date of exercise and must exercise the ISO within
certain time periods (generally, no later than 3 months after the optionee's
termination of employment).
If all requirements for ISO treatment other than the holding period
requirement are satisfied, the recognition of income by the optionee is deferred
until disposition of the Common Stock, but, in general, any gain in an amount
equal to the lesser of (i) the fair market value of the Common Stock on the date
of exercise or, with respect to officers and directors, the date that sale of
such stock would not create liability under Section 16(b) of the Exchange Act
minus the purchase price or (ii) the amount realized on the disposition minus
the purchase price, is treated as ordinary income. Any remaining gain is treated
as long-term or short-term capital gain depending on the optionee's holding
period for the stock disposed of. Subject to the limitation under Section 162(m)
of the Code (as described below), the Company will be entitled to a deduction at
that time equal to the amount of ordinary income realized by the optionee.
CERTAIN OTHER TAX ISSUES. In general, Section 162(m) of the Code denies
a publicly held corporation a deduction for federal income tax purposes for
compensation in excess of $1,000,000 per year per person to its chief executive
officer and the other officers whose
27
compensation is disclosed in its proxy statement, subject to certain exceptions.
Options will generally qualify under one of these exceptions if they are granted
under a plan that states the maximum number of shares with respect to which
Options may be granted to any employee during a specified period and the plan
under which Options are granted is approved by stockholders and is administered
by a compensation committee comprised of outside directors. The Stock Option
Plan is intended to satisfy these requirements with respect to Options. Awards
of restricted stock that are granted or vest upon the attainment of
pre-established performance goals generally satisfy the exception for
performance based compensation under Section 162(m) of the Code; awards of
restricted stock (not subject to the attainment of performance goals) generally
do not satisfy the exception for performance based compensation under Section
162(m) of the Code.
In addition, any entitlement to a tax deduction on the part of the
Company is subject to the applicable federal tax rules, and in the event that
the exercisability of an Option is accelerated because of a change in control,
payments relating to the Options, either alone or together with certain other
payments may constitute parachute payments under Section 280G of the Code, which
excess amounts may be subject to excise taxes and be nondeductible by the
Company.
The Company has the right under the Stock Option Plan to deduct from
any payment to be made to an optionee, or to otherwise require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
pursuant to the Stock Option Plan, payment by the optionee of any federal, state
or local taxes required by law to be withheld. An optionee may generally satisfy
such withholding obligation by reducing the number of shares of Common Stock
otherwise deliverable or by delivering shares of Common Stock already owned.
The Stock Option Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Stock Option
Plan is not, nor is it intended to be, qualified under Section 401(a) of the
Code.
The Board of Directors believes that the Company's ability to grant
additional stock options, SARs, and restricted stock awards is important to the
Company's ability to recruit and retain qualified personnel.
28
STOCKHOLDERS' PROPOSALS
In accordance with the proxy rules adopted under the Exchange Act in
the event the Company receives notice of a stockholder proposal to take action
at the Meeting that is not submitted for inclusion in the Company's proxy
materials, the persons named on the proxy sent by the Company to its
stockholders intend to exercise their discretion to vote on such proposal in
accordance with their best judgment, if notice of the proposal is not received
at the Company's administrative office by September 4, 2002. The Company has not
received notice of any such proposals as of the date of this proxy statement,
and, accordingly, the persons named on the proxy will exercise their discretion
with respect to any such proposals.
STOCKHOLDER PROPOSALS FOR THE 2003 ANNUAL MEETING. Stockholders
interested in submitting a proposal for inclusion in the proxy materials for the
Company's annual meeting of stockholders in 2003 may do so by following the
procedures prescribed in SEC Rule 14a-8. To be eligible for inclusion,
stockholder proposals must be received by the Company's Corporate Secretary no
later than June 30, 2003
GENERAL
The Board of Directors does not know of any matters other than those
specified in the Notice of Annual Meeting of Stockholders that will be presented
for consideration at the meeting. However, if other matters properly come before
the meeting, it is the intention of the persons named in the enclosed proxy to
vote thereon in accordance with their judgement. In the event that any nominee
is unable to serve as a director at the date of the meeting, the enclosed form
of proxy will be voted for any nominee who shall be designated by the Board of
Directors to fill such vacancy.
The Company intends to furnish to its stockholders a copy of the
Company's 2002 Annual Report on Form 10-K filed with the SEC.
Indianapolis, Indiana
29
CELADON GROUP, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
As Amended and Restated Effective as of April 1, 1997
TABLE OF CONTENTS
PAGE
I. PURPOSES OF THE PLAN..................................... 1
II. DEFINITIONS.............................................. 1
III. EFFECTIVE DATE........................................... 3
IV. ADMINISTRATION........................................... 3
A. Duties of the Committee............................. 3
B. Advisors............................................ 3
C. Indemnification..................................... 3
D. Meetings of the Committee........................... 3
E. Determinations...................................... 4
V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS................... 4
A. Shares to be Delivered; Fractional Shares........... 4
B. Number of Shares.................................... 4
C. Adjustments; Recapitalization, etc.................. 4
VI. AWARDS AND TERMS OF OPTIONS.............................. 5
A. Grant............................................... 5
B. Date of Grant....................................... 5
C. Option Agreement.................................... 5
D. OptionTerms......................................... 6
E. Expiration.......................................... 6
F. Acceleration of Exercisability...................... 6
VII. EFFECT OF TERMINATION OF DIRECTORSHIP.................... 6
A. General............................................. 6
B. Death of Disability................................. 6
C. Termination by Company for Cause.................... 6
D. Cancellation of Options............................. 6
VIII. NONTRANSFERABILITY OF OPTIONS............................ 7
IX. RIGHTS AS A STOCKHOLDER.................................. 7
X. TERMINATION, AMENDMENT AND MODIFICATION.................. 7
XI. USE OF PROCEEDS.......................................... 7
XII. GENERAL PROVISIONS....................................... 7
A. Right to Terminate Directorship..................... 7
B. Trusts, etc......................................... 7
C. Notices............................................. 8
D. Severability of Provision........................... 8
E. Payment to Minors, Etc.............................. 8
F. Headings and Captions............................... 8
G. Costs............................................... 8
H. Controlling Law..................................... 8
I. Section 16(b) of the Act............................ 8
PAGE
XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS: PAYMENT OF EXPENSE 8
A. Stock Certificates.................................... 8
B. Legends............................................... 9
C. Payment of Expenses................................... 9
XIV. LISTING OF SHARES AND RELATED MATTERS...................... 9
XV. WITHHOLDING TAXES.......................................... 9
CELADON GROUP, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
As Amended and Restated Effective as of April 1, 1997
I. PURPOSES OF THE PLAN
The purposes of this Non-Employee Director Stock Option Plan, as amended
and restated (the "Plan") are to enable the Celadon Group, Inc. (the "Company")
to attract, retain and motivate the directors who are important to the success
and growth of the business of the Company and to create a long-term mutuality of
interest between the directors and the stockholders of the Company by granting
the directors options to purchase Common Stock (as defined herein). The Plan is
an amendment and restatement of the Non-Employee Director Stock Option Plan,
initially effective April 1, 1997 and adopted on March 31, 1997.
II. DEFINITIONS
In addition to the terms defined elsewhere herein, for purposes of this
Plan, the following terms will have the following meanings when used herein with
initial capital letters:
A. "Act" means the Securities Exchange Act of 1934, as amended.
B. "Board" means the Board of Directors of the Company.
C. "Cause" means an act or failure to act that constitutes "cause" for
removal of a director under applicable Delaware law.
D. "Change in Control" means any of the following:
1. the consummation of any consolidation or merger of the Company in
which the persons who are stockholders of the Company immediately
prior to such consolidation or merger do not own at least a majority
of the Common Stock and of the combined voting power of the then
outstanding capital stock of the continuing or surviving corporation
in such merger, provided that no Change in Control shall be deemed
to have occurred if persons having effective control over the
affairs of the Company immediately prior to such consolidation or
merger have effective control over such continuing or surviving
corporation;
2. the consummation of any sale, lease, exchange, or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company;
3. the approval by the stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company.
4. any "person," including a "group" as determined in accordance with
Sections 13(d) and 14(d) of the Act and the rules and regulations
thereunder, becoming the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the Act), directly or indirectly, of
thirty percent (30%) or more of the combined voting power of the
Company's then outstanding capital stock, whether by means of
open-market purchases, tender offer, or otherwise, provided that no
Change in Control shall be deemed to have occurred as a result of
the ownership of any capital stock by the Company, any subsidiary of
the Company, any employee benefit plan of the Company, or any member
of the Russell Family; or
5. the individuals who constitute the Incumbent Board cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to April 1, 1997, whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors
comprising the Incumbent Board (either by a specific vote or by an
approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such
nomination) shall be considered as though such person were a member
of the Incumbent Board.
1
E. "Code" means the Internal Revenue Code of 1986, as amended (or any
successor statute).
F. "Committee" means a committee of the Board, appointed from time to time
by the Board, which Committee shall be intended to consist of two or more
directors who are non-employee directors as defined in Rule 16b-3 or such other
committee of the Board to which the board has delegated its power and functions
hereunder. If for any reason the appointed Committee does not meet the
requirements of Rule 16b-3, such noncompliance with the requirements of Rule
16b-3 shall not affect the validity of the interpretations or other actions of
the Committee. If and to the extent that no Committee exists which has the
authority to administer the Plan, the functions of the Committee shall be
exercised by the Board.
G. "Common Stock" means the common stock of the company, par value $.033
per share, any common stock into which the common stock may be converted and any
common stock resulting from any reclassification of the common stock.
H "Company" means the Celadon Group, Inc., a Delaware corporation, and any
successor thereto.
I. "Disability" mans a total and permanent disability, as defined in
Section 22(e)(3) of the Code.
J. "Eligible Director" means a director of the Company who is not an
active employee of the Company or any Related person.
K. "Fair Market Value" means, for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, as of any date, the last sales prices reported for the Common Stock
on the applicable date, (i) as reported by the principal national securities
exchange in the United States on which it is then traded, or (ii) if not traded
on any such national securities exchange, as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers, or if the
sale of the Common Stock shall not have been reported or quoted on such date, on
the first day prior thereto on which the Common Stock was reported or quoted.
L. "Incumbent Board" means the composition of the Board on April 1, 1997.
M. "Option" means the right to purchase the number of Shares granted in
the Option agreement at a prescribed purchase price according to the terms
specified in the Plan.
N. "Participant" means an Eligible Director who is granted an Option under
the Plan, which Option has not expired.
O. "Related Person" means, other than the Company (a) any corporation that
is defined as a subsidiary corporation in Section 424(f) of the Code; or (b) any
corporation that is defined as a parent corporation in Section 424(e) of the
Code. An entity shall be deemed a Related Person only for such periods as the
requisite ownership relationship is maintained.
P. "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Act as then in
effect or any successor provisions.
Q. "Russell Family" means Stephen Russell; any lineal descendants of
Stephen Russell (including by adoption); any trust all of the beneficiaries
(other than contingent beneficiaries) of which are members of the Russell Family
(or their estates); any charitable trust, charitable foundation or other
charitable entity if and so long as a majority of the trustees, directors, or
members of a similar managing body of such trust, foundation, or entity are
members of the Russell Family; and any corporation, limited partnership, general
partnership, limited liability company, or other entity if and so long as
members of the
2
Russell Family beneficially own equity interests in such entity enabling them to
effectively control the voting and disposition of Common Stock owned by such
entity.
R. "Securities Act" means the Securities Act of 1933, as amended.
S. "Share" means a share of Common Stock.
T. "Termination of Directorship" with respect to an individual means that
individual is no longer acting as a director (whether a non-employee director or
employee director) of the Company.
III. EFFECTIVE DATE
The Plan shall become effective as of April 1, 1997, (the "Effective
Date"), subject to its approval by the majority of the votes of the shares of
Common Stock present in person or represented by proxy and entitled to vote on
the Plan at a meeting of stockholders within one (1) year after the Plan is
adopted by the Board, provided that the total vote cast on the Plan represents
the majority in interest of all securities entitled to vote on the Plan. Grants
of Options under the Plan will be made on or after the Effective Date of the
Plan, provided that, if the Plan is not approved by the requisite vote of
stockholders, all Options which have been granted pursuant to the terms of the
Plan shall be null and void. No Options may be exercised prior to the approval
of the Plan by the majority of the Common Stock (at the time of approval).
IV. ADMINISTRATION
A. Duties of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full authority to interpret the Plan and to
decide any questions and settle all controversies and disputes that may arise in
connection with the Plan; to establish, amend and rescind rules for carrying out
the Plan; to administer the Plan, subject to its provisions; to prescribe the
form or forms of instruments evidencing Options and any other instruments
required under the Plan and to change such forms from time to time; and to make
all other determinations and to take all such steps in connection with the Plan
and the Options as the Committee, in its sole discretion, deems necessary or
desirable. Any determination, action or conclusion of the Committee shall be
final, conclusive and binding on all parties.
B. Advisors. The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan, and may rely
upon any advice or opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company.
C. Indemnification. To the maximum extent permitted by applicable law, no
officer or former officer of the Company or member or former member of the
Committee or of the Board shall be liable for any action or determination made
in good faith with respect to the Plan or any Option granted under it. To the
maximum extent permitted by applicable law and the Certificate of Incorporation
and By-Laws of the Company and to the extent not covered by insurance, each
officer or former officer and member or former member of the Committee or of the
Board shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to the
Company) or liability (including any sum paid in settlement of a claim with the
approval of the Company), and advanced amounts necessary to pay the foregoing at
the earliest time and to the fullest extent permitted, arising out of any act or
omission to act in connection with the Plan, except to the extent arising out of
such officer's or former officer's, member's or former member's own fraud or bad
faith. Such indemnification shall be in addition to any rights of
indemnification the officers, directors or members or former officers, directors
or members may have under applicable law or under the Certificate of
Incorporation or By-Laws of the Company.
D. Meetings of the Committee. The Committee shall adopt such rules and
regulations as it shall deem appropriate concerning the holding of its meetings
and the transaction of its business. All
3
determinations by the Committee shall be made by the affirmative vote of a
majority of its members. Any such determination may be made at a meeting duly
called and held at which a majority of the members of the Committee are in
attendance in person or through telephonic communications. Any determination set
forth in writing and signed by all the members of the Committee shall be as
fully effective as if it had been made by a majority vote of the members at a
meeting duly called and held.
E. Determinations. Each determination, interpretation or other action made
or taken pursuant to the provisions of this Plan by the Committee shall be
final, conclusive and binding for all purposes and upon all persons, including,
without limitation, the Participants, the Company, directors, officers and other
employees of the Company, and the respective heirs, executors, administrators,
personal representatives and other successors in interest of each of the
foregoing.
V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS
A. Shares to be delivered; Fractional Shares. Shares to be issued under
the Plan shall be made available, at the sole discretion of the Board, either
from authorized but unissued Shares or from issued Shares reacquired by Company
and held in treasury. No fractional Shares will be issued or transferred upon
the exercise of any Option nor will any compensation be paid with regard to
fractional shares.
B. Number of Shares. Subject to adjustment as provided in this Article V,
the maximum aggregate number of Shares authorized for issuance under the Plan
shall be 100,000. Where an Option is for any reason canceled, or expires or
terminates unexercised, the Shares covered by such Option shall again be
available for the grant of Options, within the limits provided by the preceding
sentence.
C. Adjustments; Recapitalization, etc. The existence of this Plan and the
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
Common Stock, the dissolution or liquidation of the Company or any sale or
transfer of all or part of its assets or business, or any other corporate act or
proceeding, in which case the provisions of this Article V(C) shall govern
outstanding Options:
1. The Shares with respect to which Options may be granted are
Shares of Common Stock as presently constituted, but, if and whenever the
Company shall effect a subdivision, recapitalization or consolidation of Shares
or the payment of a stock dividend on Shares without receipt of consideration,
the aggregate number and kind of shares of capital stock issuable under this
Plan shall be proportionately adjusted, and each holder of a then outstanding
Option shall have the right to purchase under such Option, in lieu of the number
of Shares as to which the Option was then exercisable but on the same terms and
conditions of exercise set forth in such Option, the number and kind of shares
of capital stock which he or she would have owned after such sub-division,
recapitalization, consolidation or dividend if immediately prior thereto he had
been the holder of record of the number of Shares as to which such Option was
then exercisable.
2. If the Company merges or consolidates with one or more
corporations and the Company shall be the surviving corporation, thereafter upon
exercise of an Option theretofore granted, the Participant shall be entitled to
purchase under such Option in lieu of the number of Shares as to which such
Option shall then be exercisable, but on the same terms and conditions of
exercise set forth in such Option, the number and kind of shares of capital
stock or other property to which the Participant would have been entitled
pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, the Participant had been the
holder of record of the number of Shares as to which Option was then
exercisable.
3. If the Company shall not be the surviving corporation in any merger or
consolidation, or if the Company is to be dissolved or liquidated, then, unless
the surviving corporation assumes the Options
4
or substitutes new Options which are determined by the Board in its sole
discretion to be substantially similar in nature and equivalent in terms and
value or dissolution, any unexercised Options shall expire without additional
compensation to the holder thereof; provided, that, the Committee shall deliver
notice to each Participant at least twenty (20) days prior to the date of
consummation of such merger, consolidation, dissolution or liquidation which
would result in the expiration of the Options and during the period from the
date on which such notice of termination is delivered to the consummation of the
merger, consolidation, dissolution or liquidation, each Participant shall have
the right to exercise in full effective as of such consummation all the Options
that are then outstanding (without regard to limitations on exercise otherwise
contained in the Options) but contingent on occurrence of the merger,
consolidation, dissolution or liquidation, and, provided that, if the
contemplated transaction does not take place within a ninety (90) day period
after giving such notice for any reason whatsoever, the notice, accelerated
vesting and exercise shall be null and void and if and when appropriate new
notice shall be given as aforesaid.
4. If as a result of any adjustment made pursuant to the preceding
paragraphs of this Article V(C) any Participant shall become entitled upon
exercise of an Option to receive any shares of capital stock other than Common
Stock, then the number and kind of shares of capital stock so receivable
thereafter shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock set forth in this Article V(C).
5. Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or other securities, and in any case whether or not for
fair value, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of Shares subject to Options theretofore granted or
the purchase price per Share.
VI. AWARDS AND TERMS OF OPTIONS
A. Grant. Upon the later of (i) the Effective Date of the Plan and (ii)
the date of the approval of the Plan by the Board (the "Initial Grant Date"),
each Eligible Director shall be automatically granted an Option to purchase
4,000 Shares, subject to the terms of the Plan. Any Eligible Director who is
first elected to the Board after the Initial Grant Date shall automatically be
granted, as of the first day of the month coincident with or next following the
date of such election, an Option to purchase 8,000 Shares, subject to the terms
of the Plan (such grant or any grant on the Initial Grant Date is referred to as
the "First Grant"). Notwithstanding the foregoing, on the Initial Grant Date,
each Eligible Director who was elected to the Board within the one (1) year
period prior to the Initial Grant Date shall also automatically be granted an
Option to purchase 8,000 Shares, subject to the terms of the Plan. Without
further action by the Board or the stockholders (except as provided in Article
X) of the Company, each year, other than the year in which an Eligible Director
receives the First Grant, as of the April 1 of each year following the Initial
Grant Date, each Eligible Director shall be automatically granted an Option to
purchase 4,000 Shares, subject to the terms of the Plan, provided that no such
Option shall be granted if on the date of grant the Company has liquidated,
dissolved or merged or consolidated with another entity in such a manner that it
is not the surviving entity (unless the Plan has been assumed by such surviving
entity with regard to future grants).
B. Date of Grant. If a grant of Options is to be made on a day on which
the principal national exchange or automated quotation system sponsored by the
National Association of Securities Dealers with respect to which Shares are
traded is not open for trading, the grant shall be made on he first day
thereafter on which such exchange or system is open for trading.
C. Option Agreement. Options shall be evidenced by Option agreements in
such form as the Committee shall approve from time to time.
5
D. Option Terms:
1. Exercise Price. The purchase price per share ("Purchase Price")
deliverable upon the exercise of an Option shall be 100% of the Fair Market
Value of such Share at the time of the grant of the Option, or the par value of
the Share, whichever is the greater.
2. Period of Exercisability for Options to Purchase Shares. Except as
otherwise provided herein, Options granted to Eligible Directors shall vest and
become exercisable on the later of (i) six (6) months after the date of grant or
(ii) the approval of the Plan by stockholders in accordance with Article III
thereof.
3. Procedure for Exercise. A Participant electing to exercise one or more
Options shall give written notice to the Secretary of the Company of such
election and of the number of Options he or she has elected to exercise. Shares
purchased pursuant to the exercise of Options shall be paid for at the time of
exercise in cash or by delivery of unencumbered Shares owned by the Participant
for at least six months (or such longer period as required by applicable
accounting standards to avoid a charge to earnings) or a combination thereof.
E. Expiration. Except as otherwise provided herein, if not previously
exercised each Option shall expire upon the tenth anniversary of the date of the
grant thereof.
F. Acceleration of Exercisability. All Options granted to a Participant
and not previously exercisable shall become vested and fully exercisable
immediately upon the occurrence of a Change in Control.
VII. EFFECT OF TERMINATION OF DIRECTORSHIP
A. General. Upon a Participant's Termination of Directorship for any
reason except death, Disability or Cause, prior to the complete exercise of an
Option (or deemed exercise thereof), then such Option shall thereafter be
exercisable to the extent such Option is vested and shall remain exercisable
until the earlier of (i) the expiration of the ninety (90) day period following
the Participant's Termination of Directorship or (ii) the remaining term of the
Option. Any termination of employment by the Company for Cause will be treated
in accordance with the provisions of paragraph (C) below.
B. Death or Disability. Upon Termination of Directorship on account of
Disability or death, all outstanding Options then exercisable and not exercised
by the Participant prior to such Termination of Directorship shall remain
exercisable by the Participant or, in the case of death, by the Participant's
estate or by the person given authority to exercise such Options by his or her
will or by operation of law, until the earlier of (i) first anniversary of the
Participant's Termination of Directorship or (ii) the remaining term of the
Option.
C. Termination by Company for Cause. Upon removal, failure to stand for
reelection or failure to be renominated for Cause, or if the Company obtains or
discovers information after Termination of Directorship that such Participant
had engaged in conduct during such directorship that would have justified a
removal for Cause during such directorship, all outstanding Options of such
Participant shall immediately terminate and shall be null and void.
D. Cancellation of Options. Except as provided in Article VI(F), Options
that were not exercisable during the period such person serves as a director
shall not become exercisable upon a Termination of Directorship for any reason
whatsoever, and such Options shall terminate and become null and void upon a
Termination of Directorship.
6
VIII. NONTRANSFERABILITY OF OPTIONS
No Option shall be transferable by the Participant otherwise than by will
or under applicable laws of descent and distribution and during the lifetime of
the Participant may be exercised only by the Participant or his or her guardian
or legal representative. In addition, except as provided above, no Option shall
be assigned, negotiated, pledged or hypothecated in any way (whether by
operation of law or otherwise), and no Option shall be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, negotiate,
pledge or hypothecate any Option, or in the event of any levy upon any Option by
reason of any execution, attachment or similar process contrary to the
provisions hereof, such Option shall immediately terminate and become null and
void. Notwithstanding the foregoing, the Committee may determine at the time of
grant or thereafter that an Option that is otherwise not transferable pursuant
to this Article VIII is transferable in whole or in part and in such
circumstances, and under such conditions, as specified by the Committee.
IX. RIGHTS AS A STOCKHOLDER
A participant (or a permitted transferee of an Option) shall have no
rights as a stockholder with respect to any Shares covered by such Participant's
Option until such Participant (or permitted transferee) shall have become the
holder of record of such Shares, and no adjustments shall be made for dividends
in cash or other property or distributions or other rights in respect to any
such Shares, except as otherwise specifically provided in this Plan.
X. TERMINATION, AMENDMENT AND MODIFICATION
Subject to the number of Shares authorized for issuance under the Plan as
provided in Article V(B), the Plan shall continue in effect without limit unless
and until the Board otherwise determines. The termination of the plan shall not
terminate any outstanding Options that by their terms continue beyond such
termination date. The Committee or the Board at any time or from time to time
may amend this Plan to effect (i) amendments necessary or desirable in order
that this plan and the Options shall conform to all applicable laws and
regulations, and (ii) any other amendments deemed appropriate. Notwithstanding
the foregoing, solely to the extent required by law, the Committee or the Board
may not effect any amendment that would require the approval of the stockholders
of the Company under applicable law or under any regulation of a principal
national securities exchange or automated quotation system sponsored by the
National Association of Securities Dealers unless such approval is obtained.
This Plan may be amended or terminated at any time by the stockholders of the
Company.
Except as otherwise required by Law, no termination, amendment or
modification of this Plan may, without the consent of the Participant or the
permitted transferee of his Option, alter or impair the rights and obligations
arising under any then outstanding Option.
XI. USE OF PROCEEDS
The proceeds of the sale of Shares subject to Options under the Plan are
to be added to the general funds of the Company and used for its general
corporate purposes as the Board shall determine.
XII. GENERAL PROVISIONS
A. Right to Terminate Directorship. This Plan shall not impose any
obligations on the Company to retain any Participant as a director nor shall it
impose any obligation on the part of any Participant to remain as a director of
the Company.
B. Trust, etc. Nothing contained in the Plan and no action taken pursuant
to the Plan (including, without limitation, the grant of any Option thereunder)
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. If and to the extent that any Participant or
such Participant's executor, administrator or other
7
personal representative, as the case may be, acquires a right to receive any
payment from the Company pursuant to the Plan, such right shall be no greater
than the right of an unsecured general creditor of the Company.
C. Notices. Any notice to the Company required by or in respect of this
plan will be addressed to the Company at One Celadon Drive, 9503 East 33rd
Street, Indianapolis, Indiana 46236, Attention: Chief Financial Officer, or such
other place of business as shall become the Company's principal executive
offices from time to time. Each Participant shall be reasonable for furnishing
the committee with the current and proper address for the mailing to such
Participant of notices and the delivery to such Participant of agreements,
shares and payments. Any such notice to the Participant will, if the Company has
received notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has previously
informed the Company of his or her status and address (and has provided such
reasonable substantiating information as the Company may request) by written
notice under this Section. Any notice required by or in respect of this Plan
will be deemed to have been duly given when delivered in person or when
dispatched by telecopy or, in the case of notice to the Company, by facsimile as
described above, or one business day after having been dispatched by a
nationally recognized overnight courier service or three business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid. The Company assumes no responsibility or obligation
to deliver any item mailed to such address that is returned as undeliverable to
the addressee and any further mailings will be suspended until the Participant
furnishes the proper address.
D. Severability of Provisions. If any provisions of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions of the Plan, and the Plan shall be construed and enforced
as if such provisions had not been included.
E. Payment to Minors, Etc. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Company and their employees, agents and
representatives with respect thereto.
F. Headings and Captions. The Headings and captions herein are provided
for reference and convenience only. They shall not be considered part of the
Plan and shall not be employed in the construction of the Plan.
G. Costs. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Options
hereunder.
H. Controlling Law. The Plan shall be construed and enforced according to
the laws of the State of Delaware, without giving effect to rules governing the
conflict of laws.
I. Section 16(b) of the Act. All elections and transactions under the Plan
by persons subject to Section 16 of the Act involving shares of Common Stock are
intended to comply with any applicable condition under Rule 16b-3. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void. The Committee may establish and adopt written
administrative guidelines, designed to facilitate compliance with Section 16(b)
of the Act, as it may deem necessary or proper for the administration and
operation of the Plan and the transaction of business thereunder.
XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
A. Stock Certificates. Upon any exercise of an Option and payment of the
exercise prices provided in such Option, a certificate of certificates for the
Shares as to which such Option has been exercised shall be issued by the Company
in the name of the person or persons exercising such Option and shall be
delivered to or upon the order of such person or persons, however, in the case
of Options
8
exercised pursuant to Section V(C) 3 hereof, subject to the merger,
consolidation, dissolution or liquidation triggering the rights under that
section.
B. Legends. Certificates for Shares issued upon exercise of an Option
shall bear such legend or legends as the Committee, in its sole discretion,
determines to be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act
or to implement the provisions of any agreements between the Company and the
Participant with respect to such Shares.
C. Payment of Expenses. The Company shall pay all issue or transfer taxes
with respect to the issuance or transfer of Shares, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer and with the administration of the Plan.
XIV. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board or the Committee shall determine in its sole
discretion that the listing, registration or qualification of the Shares covered
by the Plan upon any national securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the grant of
Options of the award or sale of Shares under the Plan, no Option grant shall be
effective and no Shares will be delivered, as the case may be, unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board.
XV. WITHHOLDING TAXES
The Company shall have the right to require, prior to the issuance or
delivery of any shares of Common Stock, payment by the Participant of any
federal, state or local taxes required by law to be withheld.
9
AMENDMENT NUMBER ONE
TO THE
CELADON GROUP, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF APRIL 1, 1997)
WHEREAS, Celadon Group, Inc. (the "Corporation") maintains the Celadon
Group, Inc. Non-Employee Director Stock Option Plan, amended and restated
effective as of April 1, 1997 (the "Plan");
WHEREAS, pursuant to Article X of the Plan, the Corporation, by action of
its Board of Directors or a duly authorized committee thereof, may amend the
Plan, subject to approval by the stockholders of the Corporation in certain
instances; and
WHEREAS, the Corporation desires to amend the Plan.
NOW, THEREFORE, pursuant to Article X of the Plan, the Plan is hereby
amended, effective as of April 1, 2001, as follows:
1. The fourth sentence of Article VI(A) is amended in its entirety to
read as follows:
"At the time determined by the Committee in its sole discretion
following the Initial Grant Date and without further action by the
Board or the stockholders (except as provided in Article X) of the
Company, each calendar year other than the calendar year in which an
Eligible Director receives the First Grant, each Eligible Director
shall be granted, an Option to purchase 4,000 Shares, subject to the
terms of the Plan (the "Annual Grant"), provided that no such Option
shall be granted if on the date of grant the Company has liquidated,
dissolved or merged or consolidated with another entity in such a
manner that it is not the surviving entity (unless the Plan has been
assumed by such surviving entity with regard to future grants). The
Annual Grant for the 2001 calendar year shall be an Option to
Purchase 12,000 Shares granted as of April 13, 2001."
2. The following sentence is added at the end of Article VI(D)(2):
"Notwithstanding the foregoing, the Annual Grant for the 2001
calendar year shall vest and become exercisable on the earlier of
(x) the date that the Fair Market Value of a Share on any day equals
or exceeds 200% of the Fair Market Value of a Share on the date of
grant or (y) the third anniversary of the date of grant."
IN WITNESS WHEREOF, this amendment has been executed this 13th day of
April 2001.
CELADON GROUP, INC.
By: /s/ Michael Miller
------------------
CELADON GROUP, INC.
1994 STOCK OPTION PLAN,
As Amended Effective August 19, 1997
TABLE OF CONTENTS
PAGE
1. PURPOSE OF THE PLAN................................................................. 1
2. ADMINISTRATION OF THE PLAN.......................................................... 1
3. SHARES OF STOCK SUBJECT TO THE PLAN................................................. 2
4. ELIGIBILITY......................................................................... 2
5. GRANTING PLAN AWARDS................................................................ 3
6. OPTIONS............................................................................. 3
a. Option Price................................................................. 3
b. Medium and Time of Payment................................................... 3
c. Waiting and Exercise Period.................................................. 3
d. Reload Options............................................................... 3
e. Fair Market Value............................................................ 4
f. Incentive Stock Options...................................................... 4
7. RESTRICTED STOCK AWARDS............................................................. 5
a. Forfeiture Period............................................................ 5
b. Restrictive Legend and Stock Power........................................... 5
8. STOCK APPRECIATION RIGHTS........................................................... 5
a. Definition................................................................... 5
b. Grant and Termination........................................................ 5
c. Number of Rights............................................................. 5
d. Exercise by Insiders......................................................... 5
9. NON-EMPLOYEE DIRECTORS.............................................................. 5
a. Current Directors............................................................ 5
b. Options...................................................................... 5
c. Non-Committee Members........................................................ 6
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.......................................... 6
11. EFFECTIVENESS, TERMINATION AND AMENDMENT OF THE PLAN................................ 7
12. DEATH, RETIREMENT AND TERMINATION OF EMPLOYMENT..................................... 7
a. General...................................................................... 7
b. Retirement and Nonqualified Options.......................................... 7
c. Retirement and Incentive Options............................................. 8
d. Death........................................................................ 8
e. Leave of Absence............................................................. 8
13. ACCELERATION OF VESTING
a. Acceleration.................................................................
b. Settlement................................................................... 8
c. Change in Control............................................................ 9
d. Change in Control Date....................................................... 10
e. Change in Control Price...................................................... 10
f. Russell Family............................................................... 10
14. MISCELLANEOUS PROVISIONS............................................................ 10
a. Rights as an Employee or Director............................................ 10
b. Rights as a Stockholder...................................................... 10
c. Non-Assignability of Plan Awards............................................. 10
d. Leaves of Absence............................................................ 11
e. Withholding of Taxes......................................................... 11
f. Other Restrictions........................................................... 11
CELADON GROUP, INC.
1994 STOCK OPTION PLAN,
As Amended Effective August 19, 1997
1. PURPOSE OF THE PLAN
The purpose of this 1994 Stock Option Plan, as amended (the "Plan") is to
encourage and enable selected management (including directors) and other key
employees of Celadon Group, Inc. (the "Company") or a parent or subsidiary of
the Company to acquire a proprietary interest in the Company through the
ownership of common stock, par value $.033 per share (the "Common Stock"), of
the Company. Such ownership will provide such persons with a more direct stake
in the future welfare of the Company and encourage them to remain with the
Company or a parent or subsidiary of the Company. It is also expected that the
Plan will encourage qualified persons to seek and accept employment or other
association with the Company or a parent or subsidiary of the Company. Pursuant
to the Plan, such persons may be granted stock options, restricted stock awards,
and stock appreciation rights (collectively, "Plan Awards").
As used herein, the term "parent" or "subsidiary" shall mean any present
or future corporation which is or would be a "parent corporation" or "subsidiary
corporation" of the Company as such terms are defined in Section 424 of the
Internal Revenue Code of 1986, as amended (the "Code") determined as if the
Company were the employer corporation.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Compensation Committee (the
"Committee") as appointed from time to time by the Board of Directors of the
Company (the "Board), which committee shall consist of two or more members of
the Board, each of whom shall be a non-employee director as defined in Rule
16(b)-3 promulgated under Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "1934 Act") and an outside director as defined under Section
162(m) of the Code. To the extent that no Committee exists which has the
authority to administer the Plan, the functions of the Committee shall be
exercised by the Board. If for any reason the appointed Committee does not meet
the requirements of Rule 16b-3 promulgated under Section 16(b) of the 1934 Act
or Section 162(m) of the Code, such noncompliance shall not affect the validity
of the Plan Awards, grants, interpretations or other actions of the Committee.
No person while a member of the Committee or any other committee of the Board
administering the Plan shall be eligible to receive a Plan Award except as
provided in Section 9.
In administering the Plan, the Committee shall follow any general
guidelines not inconsistent with the Plan established by the Board and may adopt
rules and regulations for carrying out the Plan. The Committee may consult with
counsel, who may be counsel to the Company, and shall not incur any liability
for any action taken in good faith in reliance upon the advice of counsel. The
interpretation and decision made by the Committee with regard to any question
arising under the Plan shall be final and conclusive on all persons
participating or eligible to participate in the Plan. Subject to the provisions
of the Plan and any guidelines established by the Board, the Committee from time
to time shall determine the terms and conditions of all Plan Awards, including,
but not limited to, the persons (the "Participants") to whom, and the time or
times at which, Plan Awards shall be granted, the number of shares subject to
each Plan Award, the number of options which shall be treated as incentive stock
options (as described in Section 422 of the Code), the duration of each option,
the specific restrictions applicable to restricted stock awards and other terms
and provisions of each Plan Award.
1
It is the intent of the Company that this Plan and all Plan Awards
satisfy, and be interpreted in a manner that will satisfy, the applicable
requirements of Rule 16b-3 promulgated under the 1934 Act, so that Participants
who are or may be, with respect to their ownership of Common Stock, directly or
indirectly (including by virtue of any other person being required to report
ownership of securities owned by a Participant) subject to Section 16 of the
1934 Act ("Insiders") will be entitled to the benefits of such Rule 16b-3, or
other exemptive rules under such Section 16, and will not be subjected to
avoidable liability thereunder. If any provision of this Plan or of any Plan
Award would otherwise frustrate or conflict with the intent expressed in this
Section 2, that provision, to the extent possible, shall be interpreted and
deemed amended so as to avoid such conflict. To the extent of any remaining
irreconcilable conflict with such intent, such provision shall be deemed void as
applicable to Insiders.
3. SHARES OF STOCK SUBJECT TO THE PLAN
Expect as provided in Section 10, the aggregate number of shares that may
be issued or transferred pursuant to Plan Awards shall not exceed 650,000 shares
of Common Stock. Such shares of Common Stock available under the Plan may be
authorized and unissued shares or previously issued shares acquired or to be
acquired by the Company and held in treasury. Any shares subject to a Plan Award
which for any reason terminates, expires, or is forfeited without the delivery
to the holder of the Plan Award of shares of Common Stock or other consideration
may again be subject to a new Plan Award, except that shares subject to a
restricted stock award that are forfeited after the holder thereof has received
dividends or other benefits of ownership (excluding voting rights) shall not
thereafter be available for grant pursuant to the Plan. If an option or related
stock appreciation right is exercised for shares of Common Stock, the shares
covered by such option shall not thereafter be available for grant pursuant to
the Plan. Any shares of Common Stock that are used by a Participant as full or
partial payment of withholding or other taxes or of the purchase price of shares
of Common Stock acquired on the exercise of an option shall be counted against
the limit set forth in the first sentence of this Section 3 and shall not
thereafter be available for Plan Awards, except that such shares shall be
available for Plan Awards to persons who are not Insiders. The maximum number of
shares of Common Stock subject to any stock option and/or stock appreciation
right which may be granted under the plan to each participant shall not exceed
75,000 shares of Common Stock (subject to any adjustment as provided in Section
10 hereof) in each calendar year during the entire term of the Plan. In the case
of a stock appreciation right related to a stock option, it shall apply against
the Participant's individual share limitations for both stock appreciation
rights and stock options. Notwithstanding the foregoing, in order to comply with
Section 162(m) of the Code, the Committee shall take into account that (i) if a
Plan Award is canceled, the canceled Plan Award continues to be counted against
the maximum number of shares of Common Stock for which Plan Awards may be
granted to a Participant under this Section 3 of the Plan, and (ii) if after the
grant of a Plan Award, the Committee or the Board reduced the exercise price or
purchase price, the transaction is treated as a cancellation of the Plan Award
and a grant of a new Plan Award, and in such case, both the Plan Award that is
deemed to be canceled and the Plan Award that is deemed to be granted, reduce
the maximum number of shares of Common Stock for which Plan Awards may be
granted to a participant under the Plan. To the extent that shares of Common
Stock for which stock options and/or stock appreciation rights are permitted to
be granted to a participant during a calendar year are not covered by a grant of
stock option and/or a stock appreciation right in the calendar year, such shares
of Common Stock shall be available for grant or issuance to the Participant in
any subsequent taxable year during the term of the Plan.
4. ELIGIBILITY
Plan Awards may be granted to management (including directors) and other
key employees who are employed by the Company or a parent or subsidiary of the
Company.
2
5. GRANTING OF PLAN AWARDS
All Plan Awards shall b granted within 10 years from January 5, 1994.
Except for automatic grants provided in Section 9, the date of the grant of any
Plan Award shall be the date on which the Committee authorizes the grant of such
Plan Award.
6. OPTIONS
Options shall be evidenced by stock option agreements in such form, not
inconsistent with the Plan, as the Committee shall approve from time to time,
which agreements need not be identical, and shall be subject to the following
terms and conditions and such other terms and conditions as the Committee may
prescribe:
(a) OPTION PRICE. The exercise price of each stock option shall be not
less than 100% of the Fair Market Value (as defined below) of the
Common Stock at the date the option is granted and not less than the
par value of the Common Stock. In the case of an incentive stock
option granted to a Participant owning more than 10% of the total
combined voting power of all classes of stock of the Company or of
any parent or subsidiary of the Company (a "10% Stockholder"),
actually or constructively under Section 424(d) of the Code, the
exercise price shall not be less than 110% of the Fair Market Value
of the Common Stock subject to the option at the date of its grant.
(b) MEDIUM AND TIME OF PAYMENT. Shares of Common Stock purchased
pursuant to the exercise of an option shall at the time of purchase
be paid for in full in cash, or with shares of Common Stock, or a
combination of cash and Common Stock to be valued at the Fair Market
Value thereof on the date of such exercise; provided, however, that
any shares of Common Stock so delivered shall have been beneficially
owned by the optionee for a period of not less than six months prior
to the date of exercise. If the Common Stock is traded on a national
securities exchange or system sponsored by the National Association
of Securities Dealers, payment in full or in part may also be made
through a "cashless exercise" procedure whereby the optionee
delivers irrevocable instructions to a broker to deliver promptly to
the Company an amount equal to the purchase price. Upon receipt of
payment and such documentation as the Company may deem necessary to
establish compliance with the Securities Act of 1993, as amended
(the "1933 Act"), the Company shall, without stock transfer tax to
the optionee or other person entitled to exercise the option,
deliver to the person exercising the option a certificate or
certificates for such shares.
(c) WAITING AND EXERCISE PERIOD. The waiting period and time for
exercising an option shall be prescribed by the Committee in each
particular case; provided, however, that (i) no option may be
exercised after 10 years from the date it is granted and (ii) in the
case of an incentive stock option granted to a 10% Stockholder, such
option, by its terms, shall be exercisable only within five years
from the date of grant.
(d) RELOAD OPTIONS. The Committee shall have the authority (but not any
obligation) to include within any option agreement a provision
entitling the optionee to a further option (a "Reload Option") if
the optionee exercises the option evidenced by the option agreement,
in whole or in part, by surrendering other shares of Common Stock of
the Company held by the optionee for at least six months prior to
such date of surrender in accordance with the Plan and the terms and
conditions of the option agreement. Any such Reload Option shall not
be a incentive stock option, shall be for a number of shares of
Common Stock equal to the number of surrendered shares, shall be
exercisable at a price equal to the Fair Market Value of the Common
Stock on the date of exercise of such original option, shall become
exercisable if the shares purchased by the optionee pursuant to the
option agreement are held for a minimum period of time established
by the Committee, and shall be subject to such other terms and
conditions as the Committee may determine.
3
(e) FAIR MARKET VALUE. The "Fair market Value" per share of the Common
Stock on any date shall be the "closing price" on the trading day
immediately preceding the date in question, where the "closing
price" on any day is (i) the last reported sales price regular way
or, in case no such reported sale takes place on such day, the
closing bid price regular way, in either case on the principal
national securities exchange (including, for purposes hereof, the
NASDQ National Market System) on which the Common Stock is listed or
admitted to trading, (ii) if on such date the Common Stock is not
listed or admitted to trading on any national securities exchange,
the highest reported bid price for the Common Stock as furnished by
the National Association of Securities Dealers, Inc. Through NASDAQ
or similar organization if NASDAQ is no longer reporting such
information, or (iii) if on such date the Common Stock is not listed
or admitted to trading on any national securities exchange and is
not quoted by NASDAQ or any similar organization, the Fair Market
Value of a share of Common Stock on such date, as determined in good
faith by the Committee in a manner consistent with the requirements
of the Code, whose determination shall be conclusive absent manifest
error, shall be used.
(f) INCENTIVE STOCK OPTIONS. No incentive stock options shall be granted
to any person, if, giving effect to such grant, the Fair Market
Value at the date of such grant of the Common Stock (or other
capital stock of the Company) which first becomes purchasable in any
calendar year under all incentive stock options held by such person
under the Plan and any other plans of the Company any parent or
subsidiary shall exceed $100,000. Incentive stock options shall not
be issued to directors who are not also employees of the Company or
a parent or subsidiary.
7. RESTRICTED STOCK AWARDS
Restricted stock awards shall be evidenced by agreements in such form, not
inconsistent with the Plan, as the Committee shall approve from time to time,
which agreements need not be identical, and shall be subject to the following
terms and conditions and such other terms and conditions as the Committee may
prescribe:
(a) FORFEITURE PERIOD. The period and time during, and the conditions
and restrictions under, which a restricted stock award is subject to
forfeiture (the "Restriction Period") shall be prescribed by the
Committee in each particular case, subject to the provisions of
Section 13.
(b) RESTRICTIVE LEGEND AND STOCK POWER. Each certificate evidencing
shares of Common Stock subject to a restricted stock award shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such restricted stock award. The
Committee may prescribe that the certificates evidencing such shares
be held in escrow by a bank or other institution, or that the
Company may itself hold such shares in escrow, until the
restrictions thereon shall have lapsed and may require, as a
condition of any restricted stock award, that the recipient shall
have delivered a stock power endorsed in blank relating to the
shares of Common Stock subject to the restricted stock award. Upon
the termination of the Restriction Period with respect to any shares
of Common Stock subject to a restricted stock award, the certificate
evidencing such shares will be delivered out of escrow subject to
the satisfaction by the recipient of applicable Federal and state
securities laws and withholding tax requirements, including any
Federal, state, or local withholding taxes. At the discretion of the
Committee, or as may be provided in the agreement evidencing any
option, such taxes may be paid, or may be required to be paid, in
cash or by tender of the holder of restricted stock or withholding
by the Company of the number of shares of Common Stock whose Fair
Market Value equals the amount required to be withheld. At the
discretion of the Committee, such taxes may be paid by the Company.
4
8. STOCK APPRECIATION RIGHTS
Stock appreciation rights shall be evidenced by agreements (which, in the
case of stock appreciation rights related to a stock option, may be included as
part of the agreement evidencing such option) in such form, not inconsistent
with the Plan, as the Committee shall approve from time to time which agreements
need not be identical, and shall be subject to the following terms and
conditions and such other terms and conditions as the Committee may prescribe:
(a) DEFINITION. A stock appreciation right means a right granted
pursuant to the Plan to receive, upon the exercise of such right, up
to the excess of (i) the Fair Market Value of one share of common
Stock on the date of exercise or at any time during a specified
period before the date of exercise over (ii) the Fair Market Value
of one share of Common Stock on the date of grant. Any payment by
the Company in respect of such right may be made in cash, shares of
Common Stock, other property, or any combination thereof as the
Committee, in its sole discretion, shall determine or as shall be
provided in the agreement evidencing such stock appreciation right.
(b) GRANT AND TERMINATION. Stock appreciation rights may be granted
either alone or in addition to other Plan Awards granted under the
Plan and may, but need not relate to a specific stock option granted
under the Plan. The provisions of stock appreciation rights need not
be the same with respect to each Participant. Any stock appreciation
right related to a stock option may be granted at the same time such
stock option is granted or at any time thereafter before exercise or
expiration of such stock option. In the case of any stock
appreciation right related to any stock option, the stock
appreciation right or applicable portion thereof shall terminate and
no longer be exercisable upon the termination or exercise of the
related stock option or portion thereof, except that a stock
appreciation right granted with respect to less than the full number
of shares of Common Stock covered by a related stock option shall
only be reduced when the exercise or termination of the related
stock option exceeds the number of shares not covered by the stock
appreciation right. Any stock option related to any stock
appreciation right shall no longer be exercisable to the extent the
related stock appreciation right has been exercised.
(c) NUMBER OF RIGHTS. If any agreement evidencing a stock appreciation
right which does not elate to any option shall provide that such
stock appreciation right may be settled only in cash (a "cash-only
right"), the number of shares of Common Stock to which such
cash-only right relates shall not be deducted from the limit set
forth in Section 3; provided that the number of cash-only rights
which may be issued in any fiscal year of the Company shall not
exceed 22,500. Except with respect to cash-only rights, the
Committee, for purposes of determining compliance with the limit set
forth in Section 3, shall estimate the number of shares of Common
Stock expected to be issued on settlement of any stock appreciation
right, taking into account any intention of the Committee to require
settlement in cash.
(d) EXERCISE BY INSIDERS. No stock appreciation right may be exercised
by an Insider unless such exercise is exempt from Section 16(b) of
the 1934 Act pursuant to Rule 16b-3 promulgated thereunder or
otherwise.
9. NON-EMPLOYEE DIRECTORS
Each director of the Company who is not an employee of the Company or any
parent or subsidiary (a "Non-Employee Director") shall receive Plan Awards as
follows:
(a) CURRENT DIRECTORS. On the date of approval of this Plan by the
Board, each Non-Employee Director shall receive an option to
purchase 8,000 shares of Common Stock, subject, in each case, to
adjustment as provided in Section 10.
(b) OPTIONS. The exercise price per share of any option granted pursuant
to this Section 9 shall be 100% of the Fair Market Value of a share
of Common Stock on the date of
5
grant (except for grants pursuant to Section 9(a), which shall be
exercisable at a price per share equal to the initial public
offering price in the Company's initial public offering), subject to
adjustment as provided in Section 10. Each option granted pursuant
to this Section 9 shall be exercisable six months after the date of
grant and shall terminate 10 years from the date of grant (unless
earlier exercised or terminated in accordance with the Plan). No
option granted pursuant to this Section 9 shall provide for Reload
Options or be accompanied by stock appreciation rights.
(c) NON-COMMITTEE MEMBERS. Nothing in this Section 9 shall limit the
authority of the Committee to grant Plan Awards to Non-Employee
Directors who are not members of the Committee.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) If dividends payable in Common Stock during any fiscal year of the
Company exceed in the aggregate 5% of the shares of Common Stock
issued and outstanding at the beginning of such fiscal year, or if
there is during any fiscal year of the Company one or more splits,
subdivisions, or combinations of shares of Common Stock resulting in
an increase or decrease by more than 5% of the shares of Common
Stock outstanding at the beginning of the year, the number of shares
of Common Stock available under the Plan shall be increased or
decreased proportionately, as the case may be, the number of shares
of Common Stock subject to stock appreciation rights and the related
Fair Market Value thereof as of the date of grant shall be increased
or decreased proportionately, as the case may be, and the exercise
price and number of shares of Common Stock deliverable upon the
exercise thereafter of any options theretofore granted shall be
increased or decreased proportionately, as the case may be, without
change in the aggregate purchase price. Common Stock dividends,
splits, subdivisions, or combinations during any fiscal year which
do not exceed in the aggregate 5% of the shares of Common Stock
issued and outstanding at the beginning of such year shall be
ignored for purposes of the Plan. All adjustments shall be made as
of the day such action necessitating such adjustment becomes
effective.
(b) In the case of any change or reclassification of the Common Stock,
including by reason of any merger, consolidation, or sale of all or
substantially all of the assets of the Company, and including a
change into a right to receive cash or other property, but excluding
a change or reclassification provided for in Section 10(a), (i) the
holder of each option shall thereafter be entitled, upon exercise of
such option, to receive the kind and amount of securities, property,
or cash, or any combination thereof, receivable upon such change o
reclassification by a holder of the number of shares of Common Stock
for which such option might have been exercised (without regard to
any waiting or vesting period) immediately prior to such change or
reclassification and (ii) the holder of each stock appreciation
right shall be entitled to receive, upon exercise thereof, the
excess, if any, of the Fair Market Value (determinate in a manner
consistent with the definition of Fair Market Value in Section 6(e))
of the securities, property or cash, or combination thereof,
receivable upon such change or reclassification by a holder of one
share of Common Stock over the grant price of such stock
appreciation right.
(c) In the event that the Committee shall determine that any event not
specifically provided for in Sections 10(a) and (b) affects the
shares of Common Stock such that an adjustment is determined by the
Committee to be appropriate to prevent dilution or enlargement of
participants' rights under the Plan, then the Committee shall, in
such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares which may thereafter be issued in
connection with Plan Awards; (ii) the number and kind of shares
issued or issuable in respect of outstanding Plan Awards; and (iii)
the exercise price, grant price, or purchase price relating to any
Plan Award or, if deemed appropriate, make provision of cash payment
with respect to any outstanding Plan Award; provided, however, in
each case, that, with respect to
6
incentive stock options, no such adjustment shall be authorized to
the extent that such adjustment would cause the Plan to violate
Section 422(b)(2) of the Code or any successor provision thereto.
11. EFFECTIVENESS, TERMINATION AND AMENDMENT OF THE PLAN
(a) The Plan shall become effective January 5, 1994, the date of its
adoption by the favorable vote of a majority of the Board, subject,
however, to approval by the stockholders of the Company within 12
months next following such adoption by the Board. If such approval
is not obtained, the Plan and any and all Plan Awards granted during
such interim period shall terminate and be of no further force or
effect. The Plan shall, in all events, terminate on January 5, 2004,
or on such earlier date as the Board may determine, except that the
Plan will remain in effect with respect to Plan Awards outstanding
as of such termination date. Any option or stock appreciation right
outstanding at the termination date shall remain outstanding until
it has either expired or has been exercised. Any restricted stock
award outstanding at the termination date shall remain subject to
the terms of the plan until the restrictions thereon shall have
lapsed.
(b) The Board or Committee shall have the right to amend, suspend, or
terminate the Plan at any time; provided, however, that (i) no such
action shall affect or in any way impair the rights of a Participant
under any Plan Award theretofore granted or (ii) unless first duly
approved by the stockholders of the Company entitled to vote thereon
at a meting (which may be the annual meting) duly called and held
for such purpose, except as provided in Section 10, or by a consent
of stockholders, no amendment or change shall b e made in the Plan;
(A) increasing the total number of shares of Common Stock which may
be issued or transferred under the Plan; (B) increasing the maximum
individual Participant limitations for a calendar year under Section
3; (C) changing the provisions of Section 6(a); (D) extending the
period during which Plan Awards may be granted or exercised; (E)
changing the designations of persons eligible to receive Plan
Awards; or (F) effecting any change that would require stockholder
approval in order for the plan to comply with the applicable
provisions, if any, of Section 16(b) of the 1934 Act, Section 162(m)
of the Code, or, with regard to incentive stock options, Section 422
of the Code.
12. DEATH, RETIREMENT, AND TERMINATION OF EMPLOYMENT
(a) GENERAL. An option or stock appreciation right which has not
theretofore expired shall terminate on the date of the termination
for Cause (as hereinafter defined) or 30 days after the date of the
termination for any reason, other than for cause, death, or
Retirement (as defined in Section 12 (b)), of the holder's
employment or association with the Company or a parent or subsidiary
of the Company (including by reason of any event as a result of
which a parent or subsidiary ceases to be such), subject to the
condition that no option or stock appreciation right granted in
connection with an option may b exercised in whole or in part after
the expiration date of the option or more than 10 years after the
date of grant of such option or stock appreciation right. "Cause"
shall mean (i) the conviction by a Participant of a felony or a
crime involving moral turpitude or (ii) the commission by a
Participant of a public or notorious act which subjects the Company
to public disrespect, scandal, or ridicule and which adversely
affects the value of the services to the Company of such
Participant.
(b) RETIREMENT AND NONQUALIFIED OPTIONS. With respect to nonqualified
options and stock appreciation rights, upon the termination of
employment or association due to retirement with the consent of the
Committee or Disability (as hereinafter defined,) (collectively,
"Retirement"), the holder of such option or stock appreciation right
may, during a period (the "Retirement period") which is the longer
of (i) up to 10 years after the date of grant of such option or
stock appreciation right, such period to be set on a case by case
basis by the Committee, and (ii) three years from the date of such
7
termination, exercise such stock appreciation right or purchase some
or all of the shares covered by such non-qualified stock option
which was exercisable under the Plan immediately prior to such
termination. "Disability" shall have the meaning provided in Section
22(e) (3) of the Code.
(c) RETIREMENT AND INCENTIVE OPTIONS. With respect to incentive stock
options, upon the termination of the employment of any such employee
due to Retirement, the employee may, within three months after the
date of such termination (12 months in the case of Disability),
purchase some or all of the shares covered by an incentive stock
option which was exercisable under the Plan immediately prior to
such termination and shares not purchased within three months (12
months in the case of Disability) after the date of termination due
to Retirement under such incentive stock option may be purchased
during the Retirement Period but will be non-qualified stock option
stock and not incentive stock option stock; provided, however, that,
prior to such purchase, the option will remain subject to the
provisions of the Plan governing incentive stock options.
(d) DEATH. Upon the death of any holder of any option or stock
appreciation right while in active service or of the death of any
disabled or retired person within the periods referenced in Sections
12(b) and (c), the person or persons to whom such holder's rights
under an option or stock appreciation right are transferred by will
or the laws of descent and distribution may, within 12 months after
the date of such person's death, exercise such stock appreciation
right or purchase some or all of the shares to which such person was
entitled pursuant to the exercise of an option under the Plan on the
date of his death.
(e) LEAVES OF ABSENCE. Leaves of absence pursuant to Section 14(d) shall
not be deemed terminations or interruptions of employment or other
association.
13. ACCELERATION OF VESTING
(a) ACCELERATION. Immediately upon the occurrence of a Change in Control
of the Company (as hereinafter defined), except as specifically
otherwise provided by the terms of an agreement relating to a
particular Plan Award,
(i) All options and stock appreciation rights shall immediately
become exercisable in full, including that portion of any
option or sock appreciation right that had not become
exercisable, and the Company shall afford each holder of an
option the opportunity to exercise such right prior to its
settlement pursuant to Section 13(b), and
(ii) All restricted stock awards shall immediately vest and no
longer be subject to forfeiture.
(b) SETTLEMENT. Immediately following the occurrence of any Change in
Control,
(i) each stock appreciation right not theretofore exercised shall
be settled by a payment to the holder thereof by the Company
in cash of the amount to which the holder thereof would have
been entitled (on a basis as if the Fair Market Value was
determined as provided in Section 13(b) (iii)) had he
exercised such right on the Change in Control Date (as
hereinafter defined) (immediately prior to the occurrence of
such Change in Control, if it occurred on the Change in
Control Date), and thereafter shall be deemed terminated, and
(ii) each stock option not theretofore exercised shall be settled
by a payment to the holder thereof by the Company in cash of
an amount equal to the excess of the Fair Market Value on the
Change in Control Date over the exercise price of such option,
multiplied by the number of shares of Common Stock for
8
which each option is exercisable immediately prior to the
Change in Control, and thereafter shall be deemed terminated,
provided, that,
(iii) in each case, for purposes of the foregoing, the Fair Market
Value on the Change in Control Date shall be the higher of the
Fair Market Value, as defined, on such date and the Change in
Control Price (as hereinafter defined),
(iv) in the case of an option with a related stock appreciation
right, whichever of such option or such stock appreciation
right entitles the holder to the greatest payment shall be
settled pursuant to Section 13(b) (i) or (ii), and the other
shall be terminated without any further payment,
(v) in the case of any option or sock appreciation right which had
been granted to a Insider within the six-month period
preceding the Change in Control Date, such settlement shall be
delayed until such time as such settlement would not cause
such Insider to realize liability under Section 16(b) of the
1934 Act, and
(vi) no settlement shall be made pursuant to this Section 13(b) of
any option or stock appreciation right held by an Insider who
has control over the timing or occurrence of the Change in
Control.
(c) CHANGE IN CONTROL. A "Change in Control" shall mean:
(i) consummation of
(A) any consolidation or merger of the Company in which the
persons who are the stockholders of the Company
immediately prior to such consolidation or merger do not
own a least a majority of each of the common stock and
of the combined voting power of the then outstanding
capital sock of the continuing or surviving corporation
in such merger, provided that no Change in Control shall
be deemed to have occurred if persons having effective
control over the affairs of the Company immediately
prior to such consolidation or merger have effective
control over such continuing or surviving corporation;
or
(B) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company; or
(ii) approval by the stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company; or
(iii) any "person," including a "group" as determined in accordance
with Sections 13(d) and 14(d) of the 1934 Act and the rules
and regulations thereunder, becoming the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the 1934
Act), directly or indirectly, of 30% or more of the combine
voting power of the Company's then outstanding capital stock,
whether by means of open-market purchases, ender offer, or
otherwise, provided that no Change in Control shall be deemed
to have occurred as a result of the ownership of any capital
stock by the Company, any subsidiary of the Company, any
employee benefit plan of the Company, or any member of the
Russell Family (as hereinafter defined); or
(iv) individuals who constitute the Board on December 1, 1993 (the
"Incumbent Board") cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a
director subsequent to December 1, 1993, whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors
comprising the Incumbent Board (either by a specific vote or
by approval of the proxy statement of the Company in which
such person is named as a
9
nominee for director, without objection to such nomination)
shall be considered though such person were a member of the
Incumbent Board.
(d) CHANGE IN CONTROL DATE. "Change in Control Date" shall mean (i) in
the case of a Change in Control described in Section 13(c) (i),
(ii), or (iv), the date of occurrence thereof, and (ii) in the case
of a Change in Control described in Section 13 (c) (iii), the date
on which the Company first obtains knowledge of the occurrence
thereof.
(e) CHANGE IN CONTROL PRICE. "Change in Control Price" shall mean (i) in
the case of a Change in Control described in Section 13(c)(i), the
amount paid or to be paid in or as a result of such merger,
consolidation, or other transaction per share of Common Stock, (ii)
in the case of a Change in Control described in Section 13(c)(iii),
the highest price per share of common Stock paid to acquire Common
Stock by the person described therein in the one-year preceding the
Change of Control Date or in the transaction which results in the
Change of ontrol, and (iii) in the case of a Change in Control
described in Section 13(c) (ii) or (iv), the highest price per share
of Common Stock paid to acquire Common Stock by any person (other
than a member of the Russell or Bennett Family), proposing such
liquidation or distribution, or becoming or nominating a person for
election as a director without the approval of the Incumbent Board.
(f) RUSSELL FAMILY. "Russell Family" shall mean (i) Stephen Russell;
(ii) any lineal descendants of Stephen Russell (including by
adoption); (iii) any trust all of the beneficiaries (other than
contingent beneficiaries) of which are members of the Russell Family
(or their estates); (iv) any charitable trust, charitable
foundation, or other charitable entity if and so long as a majority
of the trustees, directors, or members of a similar managing body of
such trust, foundation, or entity are members of the Russell Family;
and (v) any corporation, limited partnership, general partnership,
limited liability company, or other entity if and so long as members
of the Russell Family beneficially own equity interests in such
entity enabling them to effectively control the voting and
disposition of Common Stock owned by such entity.
14. MISCELLANEOUS PROVISIONS
(a) RIGHTS AS AN EMPLOYEE OR DIRECTOR. Nothing in the Plan, the grant or
holding of a Plan Award, or in any agreement entered into pursuant
to the Plan shall confer to any Participant any right to continue in
the employ of or other association with the Company or any parent or
subsidiary of the Company or interfere in any way with the right of
the Company or any parent or subsidiary of the Company to terminate
such employment or other association of a Participant at any time.
(b) RIGHTS AS A STOCKHOLDER. Except as provided in Section (14(c), a
holder of a restricted stock award shall have all of the rights of a
stockholder with respect to all of the shares of Common Stock
subject to the restricted stock award, including, without
limitation, the right to vote such shares and to receive dividends
in cash or other property or other distributions or rights in
respect of such shares. A holder of a Plan Award (other than a
restricted stock award) shall have no rights as a stockholder with
respect to any shares of Common Stock issuable or transferable upon
exercise thereof until the date a stock certificate is issued to him
for such shares, and, except as otherwise expressly provided in the
Plan, no adjustment shall be made for dividends or other rights for
which the record date is prior to the date such stock certificate is
issued.
(c) NON-ASSIGNABILITY OF PLAN AWARDS. No Plan Award shall be assignable
or transferable by the recipient, except (i) by will or by the laws
of descent and distribution or (ii) in the case of Plan Awards other
than incentive stock options, pursuant to a qualified domestic
relations order (as defined in the code or the Employee Retirement
Income Security Act or the rules thereunder), provided that such
restriction on the transfer or assignment of a restricted stock
award shall expire upon the date of expiration of the related
Restriction Period. During the lifetime of a
10
recipient (or transferee pursuant to Section 14(c) (ii)), Plan
Awards shall be exercisable only by him or his personal
representative or guardian. No Plan Award or interest therein may be
pledged, attached, or otherwise encumbered other than in favor of
the Company. Notwithstanding the foregoing, the Committee may
determine at the time of grant or hereafter that a stock option
(other than an incentive stock option) that is otherwise not
transferable pursuant to this Section 14(c), is transferable in
whole or in part and in such circumstances and under such
conditions, as specified by the Committee.
(d) LEAVE OF ABSENCE. In the case of a Participant on an approved leave
of absence, the Committee may, if it determines that to do so would
be in the best interests of the Company, provide in a specific case
for continuation of Plan Awards during such leave of absence, such
continuation to be on such terms and conditions as the Committee
determines to be appropriate, except that in no event shall an
option or stock appreciation right be exercisable after 10 years
from the date it is granted.
(e) WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise
require, prior to the issuance or delivery of any shares of Common
Stock or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to
be withheld.
Except as set forth in an option agreement, a Participant may
satisfy any such withholding obligation (without additional approval
by the Committee) by reducing the number of shares of Common Stock
otherwise deliverable or by delivering shares of Common Stock
already owned. Any fraction of a share of common Stock required to
satisfy such tax obligations shall be disregarded and the amount due
shall be paid instead in cash by the Participant.
(f) OTHER RESTRICTIONS. Each Plan Award shall be subject to the
requirement that, if at any time the Board or the Committee shall
determine, in its discretion, that the listing, registration, or
qualification of the shares of Common Stock issuable or transferable
upon exercise thereof upon any securities exchange or under any
state or Federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the granting of such Plan Award or the issue,
transfer, or purchase of shares thereunder, such Plan Award may not
be exercised in whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Board. The
Company shall not be obligated to sell or issue any shares of Common
Stock in any manner in contraention of the 1933 Act or any state
securities law.
11
AMENDMENT NUMBER FOUR
OF THE
CELADON GROUP, INC. 1994 STOCK OPTION PLAN
WHEREAS, Celadon Group, Inc. (the "Corporation") maintains the Celadon
Group, Inc. 1994 Stock Option Plan, effective as of January 5, 1994 and as
amended from time to time (the "Plan");
WHEREAS, pursuant to Section 11(b) of the plan, the Corporation, by action
of its Board of Directors or a duly authorized committee thereof, may amend the
Plan, subject to approval by the stockholders of the Corporation in certain
instances; and
WHEREAS, the Corporation desires to amend the Plan, subject to the
approval of the stockholders of the Corporation.
NOW, THEREFORE, pursuant to Section 11(b) of the plan, the Plan is hereby
amended, effective as of the date this amendment is approved by the
Corporation's Board of Directors, subject to the approval of the stockholders of
the Corporation, as follows:
1. Section 3 of the Plan is further amended by deleting "650,000" and
substituting 800,000 in lieu thereof;
IN WITNESS WHEREOF, this amendment has been executed this 8th day of
October, 1999.
CELADON GROUP, INC.
By: /s/ Paul A. Will
----------------
Secretary
AMENDMENT NUMBER FIVE
OF THE
CELADON GROUP, INC. 1994 STOCK OPTION PLAN
WHEREAS, Celadon Group, Inc. (the "Corporation") maintains the Celadon
Group, Inc. 1994 Stock Option Plan, effective as of January 5, 1994 and as
amended from time to time (the "Plan");
WHEREAS, pursuant to Section 11(b) of the plan, the Corporation, by action
of its Board of Directors or a duly authorized committee thereof, may amend the
Plan, subject to approval by the stockholders of the Corporation in certain
instances; and
WHEREAS, the Corporation desires to amend the Plan, subject to the
approval of the stockholders of the Corporation.
NOW, THEREFORE, pursuant to Section 11(b) of the plan, the Plan is hereby
amended, effective as of the date this amendment is approved by the
Corporation's Board of Directors, subject to the approval of the stockholders of
the Corporation, as follows:
1. Section 3 of the Plan is further amended by deleting "800,000" and
substituting 1,050,000 in lieu thereof;
IN WITNESS WHEREOF, this amendment has been executed this 10th day of
October, 2000.
CELADON GROUP, INC.
By: /s/ Paul A. Will
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Secretary
PROXY
CELADON GROUP, INC.
9503 EAST 33RD STREET
ONE CELADON DRIVE
INDIANAPOLIS, INDIANA 46235-4207
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen Russell, Paul Biddelman and
Paul A. Will and each of them with full power of substitution, proxies of the
undersigned, to vote all shares of Common Stock of Celadon Group, Inc. (the
"Company") that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Stockholders of the Company to be held on Friday,
December 6, 2002 at 10:00 a.m. (local time) at the Company's corporate
headquarters located at One Celadon Drive, Indianapolis, Indiana 46235, and at
any adjournment or postponement thereof. The undersigned hereby revokes any
proxy heretofore given with respect to such shares.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL 1 AND IN
FAVOR OF PROPOSALS 2 AND 3. IF MORE THAN ONE OF SAID PROXIES OR THEIR
SUBSTITUTES SHALL BE PRESENT AND VOTE AT SAID MEETING, OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF, A MAJORITY OF THEM SO PRESENT AND VOTING (OR IF ONLY ONE
TO BE PRESENT AND VOTE, THEN THAT ONE) WILL HAVE AND MAY EXERCISE ALL THE POWERS
HEREBY GRANTED.
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SEE REVERSE SEE REVERSE
SIDE SIDE
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CELADON GROUP, INC. VOTE BY MAIL
9530 EAST 33RD STREET Mark, sign, and date your proxy card and return it in
the postage-paid envelope we have provided or return it
to Celadon Group, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: CD
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
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CELADON GROUP, INC.
This Proxy, when properly executed and returned,
will be voted in the manner directed below. If no
direction is made, this Proxy will be voted FOR all
nominees and FOR Proposals 2 and 3.
FOR WITHHOLD
1. Election of Directors ALL ALL
[ ] [ ]
Nominees: (01) Stephen Russell, (02) Paul A. Biddelman,
(03) Michael Miller, (04) Anthony Heyworth,
(05) John Kines
[ ] For, except vote withheld from the following nominee(s):
------------------
2. Proposal to amend the Celadon Group, Inc. Non-Employee Director Stock
Option Plan.
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to amend the Celadon Group, Inc. 1994 Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
4. In their discretion, the proxies are authorized to vote upon each other
matter that may properly come before the meeting or any adjournments
thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE IN THE USA.
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT RIGHT. [ ]
Please sign below exactly as your name appears. When shares are held by joint
tenants, both shall sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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Signature (PLEASE SIGN WITHIN BOX) Date Signature
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