EXHIBIT 10.4
SPARTAN MOTORS,
INC.
STOCK OPTION AND
RESTRICTED STOCK PLAN OF 1998
SECTION 1
Establishment
of Plan ; Purpose of Plan
1.1
Establishment of Plan . The
Company hereby establishes the Stock Option and Restricted Stock
Plan of 1998 (the " Plan ") for its directors, corporate and
Subsidiary officers and other key employees. The Plan permits the
grant or award of Options, Restricted Stock and Tax Benefit
Rights.
1.2
Purpose of Plan . The purpose of
the Plan is to provide directors, officers and key employees of the
Company and its Subsidiaries with an increased incentive to make
significant contributions to the long-term performance and growth
of the Company and its Subsidiaries, to join the interests of
directors, officers and key employees with the interests of the
Company's shareholders through the opportunity for increased stock
ownership and to attract and retain directors, officers and key
employees. The Plan is further intended to provide flexibility to
the Company in structuring long-term incentive compensation to best
promote the foregoing objectives. Within that context, the Plan is
intended to provide performance-based compensation under Section
162(m) of the Code and shall be interpreted, administered and
amended if necessary to achieve that purpose.
SECTION 2
Definitions
The following words have the
following meanings unless a different meaning is plainly required
by the context:
2.1
"Act" means the Securities Exchange Act of 1934, as
amended.
2.2
"Board" means the Board of Directors of the
Company.
2.3
Unless otherwise defined in the grant or agreement
applicable to an Incentive Award, "Change in Control" means (a) the
failure of the Continuing Directors at any time to constitute at
least a majority of the members of the Board; (b) the acquisition
by any Person other than an Excluded Holder of beneficial ownership
(within the meaning of Rule 13d-3 issued under the Act) of 20% or
more of the outstanding Common Stock or the combined voting power
of the Company's outstanding securities entitled to vote generally
in the election of directors; (c) the approval by the shareholders
of the Company of a reorganization, merger or consolidation, unless
with or into a Permitted Successor; or (d) the approval by the
shareholders of the Company of a complete liquidation or
dissolution of the Company or the sale or disposition of all or
substantially all of the assets of the Company other than to a
Permitted Successor.
2.4
"Code" means the Internal Revenue Code of 1986, as
amended.
2.5
"Committee" means the Compensation Committee of the
Board or such other committee as the Board shall designate to
administer the Plan. The Committee shall consist of at least two
members of the Board who shall be "Non-Employee Directors" as
defined below and "outside directors" as defined in the regulations
issued under Section 162(m) of the Code.
2.6
"Common Stock" means the Common Stock of the Company,
$.01 par value.
2.7
"Company" means Spartan Motors, Inc., a Michigan
corporation, and its successors and assigns.
2.8
"Competition" means participation, directly or
indirectly, in the ownership, management, financing or control of
any business that is the same as or similar to the present or
future businesses of the Company or any Subsidiary. Such
participation may be by way of employment, consulting services,
directorship or officership. Ownership of less than 3% of the
shares of any corporation whose shares are traded publicly on any
national or regional stock exchange or over the counter shall not
be deemed Competition.
2.9
"Consensual Severance" means the voluntary
termination of all employment by the Participant with the Company
or any of its Subsidiaries that the Committee determines to be in
the best interests of the Company.
2.10
"Continuing Directors" mean the individuals
constituting the Board as of the date this Plan was adopted and any
subsequent directors whose election or nomination for election by
the Company's shareholders was approved by a vote of 3/4 of the
individuals who are then Continuing Directors, but specifically
excluding any individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as
the term is used in Rule 14a-11 of Regulation 14A issued under the
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
2.11
"Early Retirement" means the voluntary termination of
all employment by a Participant with the written consent of the
Committee after the Participant has attained 55 years of age and
completed 10 years of service with the Company or any of its
Subsidiaries.
2.12
"Employee Benefit Plan" means any plan or program
established by the Company or a Subsidiary for the compensation or
benefit of employees of the Company or any of its Subsidiaries.
2.13
"Excluded Holder" means (a) any Person who at the
time this Plan was adopted was the beneficial owner of 10% or more
of the outstanding Common Stock; or (b) the Company, a Subsidiary
or any Employee Benefit Plan of the Company or a Subsidiary or any
trust holding Common Stock or other securities pursuant to the
terms of an Employee Benefit Plan.
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2.14
"Incentive Award" means the award or grant of a
Option, Restricted Stock or Tax Benefit Right to a Participant
pursuant to the Plan.
2.15
"Market Value" shall equal the last reported sales
price of shares of Common Stock on The Nasdaq Stock Market (or any
successor exchange that is the primary stock exchange for trading
of Common Stock) on the date of grant, or if The Nasdaq Stock
Market (or any such successor) is closed on that date, the last
preceding date on which The Nasdaq Stock Market (or any such
successor) was open for trading and on which shares of Common Stock
were traded.
2.16
"Non-Employee Director" shall have the meaning set
forth in Rule 16b-3 under the Act as in effect from time to
time.
2.17
"Normal Retirement" means the voluntary termination
of all employment by a Participant after the Participant has
attained 62 years of age, or such other age as shall be determined
by the Committee in its sole discretion or as otherwise may be set
forth in the Incentive Award agreement or other grant document with
respect to a Participant and a particular Incentive Award.
2.18
"Option" means the right to purchase Common Stock at
a stated price for a specified period of time. For purposes of the
Plan, an Option may be either an incentive stock option within the
meaning of Section 422(b) of the Code or a nonqualified stock
option.
2.19
"Participant" means a director, corporate officer or
any key employee of the Company or its Subsidiaries who is granted
an Incentive Award under the Plan.
2.20
"Permitted Successor" means a company which,
immediately following the consummation of a transaction specified
in clauses (c) and (d) of the definition of "Change in Control"
above, satisfies each of the following criteria: (a) 50% or more of
the outstanding common stock of the company and the combined voting
power of the outstanding securities of the company entitled to vote
generally in the election of directors (in each case determined
immediately following the consummation of the applicable
transaction) is beneficially owned, directly or indirectly, by all
or substantially all of the Persons who were the beneficial owners
of the Company's outstanding Common Stock and outstanding
securities entitled to vote generally in the election of directors
(respectively) immediately before the applicable transaction; (b)
no Person other than an Excluded Holder beneficially owns, directly
or indirectly, 20% or more of the outstanding common stock of the
company or the combined voting power of the outstanding securities
of the company entitled to vote generally in the election of
directors (for these purposes the term Excluded Holder shall
include the company, any subsidiary of the company and any employee
benefit plan of the company or any such subsidiary or any trust
holding common stock or other securities of the company pursuant to
the terms of any such employee benefit plan); and (c) at least a
majority of the board of directors is comprised of Continuing
Directors.
2.21
"Person" has the same meaning as set forth in
Sections 13(d) and 14(d)(2) of the Act.
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2.22
"Restricted Period" means the period of time during
which Restricted Stock awarded under the Plan is subject to
restrictions. The Restricted Period may differ among Participants
and may have different expiration dates with respect to shares of
Common Stock covered by the same Incentive Award.
2.23
"Restricted Stock" means Common Stock awarded to a
Participant pursuant to Section 6 of the Plan.
2.24
"Subsidiary" means any company or other entity of
which 50% or more of the outstanding voting stock or voting
ownership interest is directly or indirectly owned or controlled by
the Company or by one or more Subsidiaries of the Company.
2.25
"Tax Benefit Right" means any right granted to a
Participant pursuant to Section 7 of the Plan.
2.26
"Total Disability" means that the Participant, for
physical or mental reasons, is unable to perform the essential
functions of his or her duties for the Company for 120 consecutive
days, or 180 days during any 12-month period.
SECTION 3
Administration
3.1
Power and Authority . The
Committee shall administer the Plan. Except as limited in this
Plan, the Committee shall have full power and authority to
interpret the provisions of the Plan and Incentive Awards granted
under the Plan, to supervise the administration of the Plan and the
Incentive Awards granted under the Plan and to make all other
determinations considered necessary or advisable under the Plan.
All determinations, interpretations and selections made by the
Committee regarding the Plan shall be final and conclusive. The
Committee shall hold its meetings at such times and places as it
deems advisable. Action may be taken by a written instrument signed
by all of the members of the Committee, and any action so taken
shall be fully as effective as if it had been taken at a meeting
duly called and held. The Committee may delegate recordkeeping,
calculation, payment and other ministerial administrative functions
to individuals designated by the Committee, who may be employees of
the Company or its Subsidiaries.
3.2 Grants or
Awards to Participants . In accordance with
and subject to the provisions of the Plan, the Committee shall have
the authority to determine all provisions of Incentive Awards as
the Committee may deem necessary or desirable and as are consistent
with the terms of the Plan, including, without limitation, the
authority to: (a) determine whether and when Incentive Awards will
be granted, the persons to be granted Incentive Awards, the amount
of Incentive Awards to be granted to each person and the terms of
the Incentive Awards to be granted; (b) determine and amend vesting
schedules, if any; (c) permit delivery or withholding of stock in
payment of the exercise price or to satisfy tax withholding
obligations; and (d) waive any restrictions or conditions
applicable to any Incentive Award. Incentive Awards shall
be
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granted or awarded by the
Committee, and Incentive Awards may be amended by the Committee
consistent with the Plan, provided that no such amendment may
become effective without the consent of the Participant, except to
the extent that the amendment operates solely to the benefit of the
Participant.
3.3
Indemnification of Committee
Members . Neither any member or former member of the
Committee nor any individual to whom authority is or has been
delegated shall be personally responsible or liable for any act or
omission in connection with the performance of powers or duties or
the exercise of discretion or judgment in the administration and
implementation of the Plan. Each person who is or shall have been a
member of the Committee shall be indemnified and held harmless by
the Company from and against any cost, liability or expense imposed
or incurred in connection with such person's or the Committee's
taking or failing to take any action under the Plan. Each such
person shall be justified in relying on information furnished in
connection with the Plan's administration by any appropriate person
or persons.
SECTION 4
Shares
Subject to the Plan
4.1
Number of Shares . Subject to
adjustment as provided in Section 4.3 of the Plan, a maximum of
1,000,000 shares of Common Stock shall be available for Incentive
Awards under the Plan. Such shares may be authorized but unissued
shares, shares issued and reacquired by the Company or shares
bought on the market for the purpose of the Plan.
4.2
Limitation Upon Incentive
Awards . No Participant shall be granted, during any
calendar year, Incentive Awards with respect to more than 50% of
the total number of shares of Common Stock available for Incentive
Awards under the Plan set forth in Section 4.1 of the Plan, subject
to adjustment as provided in Section 4.3 of the Plan.
4.3
Adjustments . If the number of shares of
Common Stock outstanding changes by reason of a stock dividend,
stock split, recapitalization, merger, consolidation, combination,
exchange of shares or any other change in the corporate structure
or shares of the Company, the aggregate number and class of shares
available for grants or awards under the Plan, together with Option
prices, award limits and other appropriate terms of this Plan,
shall be appropriately adjusted. No fractional shares shall be
issued pursuant to the Plan, and any fractional shares resulting
from adjustments shall be eliminated from the respective Incentive
Award, with an appropriate cash adjustment for the value of any
Incentive Awards eliminated. If an Incentive Award is canceled,
surrendered, modified, expires or is terminated during the term of
the Plan but before the exercise or vesting of the Incentive Award
in full, the shares subject to but not purchased or retained by the
Participant under such Incentive Award shall be available for other
Incentive Awards. If shares subject to and otherwise deliverable
upon the exercise of an Incentive Award are surrendered to the
Company in connection with the exercise or vesting of an Incentive
Award, the surrendered shares subject to the Incentive Award shall
be available for other Incentive Awards.
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SECTION 5
Options
5.1
Grant .
(a) Officers and
Employees . Except as set forth below for Non-Employee
Directors, a Participant may be granted one or more Options under
the Plan. Options shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be
determined by the Committee in its sole discretion. The Committee
may vary, among Participants and among Options granted to the same
Participant, any and all of the terms and conditions of Options
granted under the Plan. Subject to the limitation imposed by
Section 4.2 of the Plan, the Committee shall have complete
discretion in determining the number of Options granted to each
Participant. The Committee may designate whether or not an Option
is to be considered an incentive stock option as defined in Section
422(b) of the Code.
(b) Non-Employee
Directors . Subject to the limitation imposed by Section 4.2
and the adjustments imposed by Section 4.3, an Option to purchase
3,500 shares of Common Stock shall be granted automatically on June
30 and December 31 of
