Exhibit 4.1
VSE CORPORATION 2004 STOCK OPTION PLAN
Section 1 Purpose. The purpose of the VSE Corporation 2004 Stock Option
Plan (the "Plan") is to promote the interests of VSE Corporation, a
Delaware corporation ("VSE"), its Subsidiaries (VSE and its Subsidiaries,
collectively, the "Company"), and its stockholders by (a) providing
incentives for executives and other key employees of the Company, and
non-employee Directors of VSE, (b) encouraging stock ownership by such
individuals by providing them with a means to acquire a proprietary
interest in the Company, and (c) aiding in attracting and retaining
individuals of the caliber necessary for the Company's continued growth
and profitability.
Section 2 Definitions. For purposes of the Plan, the following terms
shall have the meanings set forth below:
(a) "Award" or "Awards" means an award or grant of Nonqualified Stock
Options made to a Participant under Section 4 of the Plan.
(b) "Board" means VSE's Board of Directors.
(c) A "Change-of-Control" shall be deemed to have occurred if (i) VSE
shall be merged or consolidated with another corporation and, as
a result of such merger or consolidation, less than 75% of the
outstanding voting securities of the surviving or resulting
corporation shall be owned directly or indirectly in the aggregate
by the former VSE stockholders as the same shall have existed
immediately prior to such merger or consolidation, (ii) VSE shall
sell all or substantially all of its assets to another corporation
or other entity which is not a wholly owned Subsidiary or an
affiliate of VSE, or (iii) a person, within the meaning in Section
3(a)(9) or of Section 13(d)(3) of the Exchange Act (as in effect
on the date hereof), shall acquire 50% or more of VSE's outstanding
voting securities (whether directly, indirectly, beneficially or
on record). For purposes hereof, ownership of voting securities
shall take into account and shall include ownership as determined
by applying the provision of Exchange Act Rule 13d-3(d)(1)(i) (as
in effect on the date hereof).
(d) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time or any successor thereto, together with rules,
regulations and interpretations promulgated thereunder.
(e) "Committee" means the compensation committee of the Board.
(f) "Common Stock" means the common stock of VSE, par value $.05 per
share, or any equity security of VSE issued in substitution,
exchange, or in lieu thereof.
(g) "Disability" means disability as determined by the Board in
accordance with standards and procedures similar to those under the
Company's long-term disability plan.
(h) "Discretionary Option" means a Nonqualified Stock Option to
purchase Common Stock that is granted hereunder to a Participant
who is not an Outside Director.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.
(j) "Fair Market Value" means on any given date, the closing price of
the Common Stock as reported on the Nasdaq National Market System
("Nasdaq") for the date in question. If no sales of Common Stock
were made on Nasdaq on that date, the closing price of a share of
Common Stock as reported on Nasdaq for the preceding day on which
sales of Common Stock were made on Nasdaq shall be substituted.
(k) "Insider" means a Participant who is subject to the reporting
requirements of Exchange Section 16 with respect to VSE.
(l) "Nondiscretionary Option" means a Nonqualified Stock Option to
purchase Common Stock that is granted to Outside Directors pursuant
to Section 7 hereof.
(m) "Nonqualified Stock Option" means an option to purchase Common
Stock during such specified time as the Committee may determine,
not to exceed five years, that is granted pursuant to Section 4
hereof, that does not meet the requirements of Code Section 422,
or if meeting those requirements, is not intended to be an
incentive stock option under Code Section 422.
(n) "Outside Directors" means any Board member who, on the date of the
granting of an option to such member hereunder, is not an officer
or employee of the Company. Outside Directors shall not be
eligible to receive Discretionary Options.
(o) "Participant" means any person who is employed by the Company or
is an Outside Director and who is granted an Award under the Plan.
(p) "Retirement" means retirement from active employment with the
Company or as a Board member on or after the normal retirement date
specified in the Company's retirement plan or such earlier
retirement date as approved by the Committee for purposes of this
Plan.
(q) "Subsidiary" shall mean a subsidiary of VSE, whether now or
hereafter existing, and whether direct or indirect, as defined in
Code Section 424(f).
(r) "Termination-for-Cause" means termination of the Participant's
employment by the Company by written notice to the Participant,
specifying the event relied upon for such termination, due to
(i) the Participant's willful misconduct in respect of his or her
duties for the Company, (ii) conviction for a felony or
perpetration of a common law fraud, (iii) failure to comply with
applicable laws or corporate policies with respect to the execution
of the Company's business operations, (iv) theft, fraud,
embezzlement, dishonesty or other conduct which has resulted or is
likely to result in economic damage to the Company, or (v) the
failure by the Participant to substantially perform the
Participant's duties and obligations as determined by his or her
supervisor, other than any such failure resulting from the
Participant's incapacity due to physical or mental illness.
(s) "Vesting" or "vest" means the ability to exercise the stock option
at one time or in such installments over the balance of the vesting
period as may be provided in the stock option agreement.
(t) "Voluntary Termination" means the voluntary termination of a
Participant who chooses to cease employment with the Company.
Section 3 Administration. The portion of the Plan which relates to the
grant of Discretionary Options shall be administered by the Board,
provided that a majority of the Board members and a majority of the Board
members acting on the matter are Outside Directors. Alternatively, if the
Board shall not satisfy the foregoing provisions or if the Board shall
otherwise so specify, the portion of the Plan which relates to the grant
of Discretionary Options shall be administered by a committee of at least
three directors, all of whom must be Outside Directors. In any event, the
portion of the Plan which relates to the grant of Nondiscretionary Options
shall be administered by the Board. To administer the Plan, the Board may
consider, but is not required to consider, the recommendations of the
Committee.
(a) The Board is authorized, subject to the provisions of the Plan, to
construe and interpret the Plan, to promulgate, amend and rescind
rules and regulations relating to the implementation of the Plan,
and to make all other determinations necessary or advisable for all
the administration of the Plan. The Board may designate persons
other than Board members to carry out its responsibilities under
such conditions and limitations as it may prescribe, except that
the Board may not delegate its authority with regard to selection
for participation of and the granting of Discretionary Options to
persons subject to Exchange Act Section 16(a) and 16(b), except as
specified herein. Any determination, decision or action of the
Board in connection with the construction, interpretation,
administration, or application of the Plan shall be final,
conclusive and binding upon all Participants. The Company shall
effect the granting of Awards under the Plan in accordance with the
determinations made by the Board, by execution of instruments in
writing in such form as approved by the Board ("stock option
agreement").
(b) The granting of Nondiscretionary Options under the Plan and the
amount, price, vesting and timing of Nondiscretionary Options shall
be automatic, as described in Section 7 hereof. All questions of
interpretation of the Plan with respect to Nondiscretionary Options
will be determined by the Board.
Section 4 Grants. Grants under the Plan are in the form of Nonqualified
Stock Options to purchase Common Stock. Nonqualified Stock Options are
herein called "stock options."
(a) Stock options may be granted from time to time under the Plan for
up to 350,000 shares in the aggregate of Common Stock. Shares
which are forfeited back to the Company under the Plan may be
reissued under the Plan. Of these aggregate shares, 30,000 shares
are reserved for Nondiscretionary Options and 320,000 shares are
reserved for Discretionary Options. Either authorized but unissued
shares or reacquired shares may be used for grants. The Company
may purchase shares required for this purpose. In no event will
the determination of the number of shares available be calculated
in a manner inconsistent with applicable laws and regulations as
in effect from time to time.
(b) In no event shall a Discretionary Grant be made under the Plan if
the total number of shares of Common Stock underlying unexercised
outstanding options granted under the Plan and under the Company's
1998 Stock Option Plan (the "Prior Plan") exceeds fifteen percent
(15%) of the total outstanding Common Stock or would exceed fifteen
percent (15%) of the total outstanding Common Stock if such grant
was made.
Section 5 Participation. Employees eligible for Discretionary Options
shall be selected by the Board from time to time from among those
executives and other key employees of the Company who, in the Board's
judgment, are in a position to contribute materially to the Company's
success. Participants who are Outside Directors shall only be eligible to
receive Nondiscretionary Options under the Plan.
(a) No Participant shall have any rights as a stockholder with respect
to any Common Stock subject to his or her stock options prior to
the date as of which he or she is actually recorded as the holder
of the Common Stock covered by such stock options upon VSE's stock
records.
(b) Nothing in the Plan or any stock option granted hereunder shall
confer upon any employee any right to continue in the employ of the
Company or interfere in any way with the right of the Company to
terminate his or her employment at any time.
Section 6 Conditions of Discretionary Options.
(a) Discretionary Options shall be evidenced by stock option
agreements, which shall be subject to the applicable provisions of
the Plan and contain such other provisions as the Board shall
determine from time to time, such as a defined vesting period with
respect to the initial exercisability of the Discretionary Option.
A Discretionary Option may be exercised at one time or in
installments over the balance of the vesting period as may be
provided in the stock option agreement.
(b) The Discretionary Option price per share shall be not less than the
Fair Market Value of the Common Stock as of the date each
Discretionary Option is granted.
(c) The Board may permit the voluntary surrender of all or a portion
of any Discretionary Option to be conditioned upon the granting of
a new stock option.
(d) In the event of a Change-of-Control, then notwithstanding any
provision of this section or of any provisions of any option
agreements to the contrary, all Awards which have not terminated
and which are then held by any Participant shall, as of such
Change-of-Control, become immediately vested and exercisable
without regard to the exercise period specified in any relevant
stock option agreement.
(e) VSE's obligation to issue, transfer or deliver Common Stock under
the Plan shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as
amended, with respect to such issue, transfer or delivery, if
deemed necessary or appropriate, (ii) the condition that the Common
Stock reserved for issuance, if any, shall have been listed (or
authorized for listing upon official notice of issuance) upon each
stock exchange on which outstanding shares of the same class may
then be listed, and (iii) all other applicable laws, regulations,
rules and orders which shall then be in effect.
(f) If the Board determines that a Participant is incapacitated and
unable to exercise the Discretionary Options granted under the Plan
and has not designated a legal representative, the Board, in its
discretion, may authorize the assignment of the power to exercise
such stock options to a fiduciary, legal guardian or other
individual whom the Board deems appropriate based on the applicable
facts and circumstances. Due consideration shall be given to any
such assignment provided by the Participant prior to the
incapacity.
(g) The Company will withhold applicable taxes related to the exercise
of Options hereunder. A Participant may satisfy the withholding
obligation by (i) paying the amount of any taxes in cash, (ii) with
the approval of the Board at the time applicable taxes are due or
as provided in the stock option agreement, shares of Common Stock
may be deducted from the payment to satisfy the obligation in full
or in part, or (iii) with the Board's approval at the time
applicable withholding taxes are due, deliver already owned Common
Stock to satisfy the obligation in full or in part. The amount of
the withholding and the number of shares to be deducted shall be
determined by the with reference to the Fair Market Value of the
Common Stock as of the date when the withholding is required to be
made. Any use of Common Stock by an Insider for payment of
applicable withholding taxes shall be subject to the provisions of
Exchange Act Rule 16b-3 as to the manner and timing of the
election.
(h) Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or
intent of any provisions hereof.
Section 7 Conditions of Nondiscretionary Options.
(a) Grant of Options. Each then serving Outside Director shall receive
a Nondiscretionary Option on January 1 of each year to purchase up
to 1,000 shares of Common Stock, which total shall include the
options granted pursuant to Section 7(a) of this Plan and the Prior
Plan, and each newly appointed or elected director shall receive
on the first calendar day of the month next following his or her
appointment or election as a director a Nondiscretionary Option to
purchase up to 1,000 shares of Common Stock. Notwithstanding the
foregoing, if a sufficient number of shares is unavailable in any
year to provide for the total Nondiscretionary Option awards, the
number of shares in such year shall be prorated accordingly. The
foregoing number of shares shall be adjusted in accordance with the
principles of Section 10 hereof in the event of the occurrence of
an event described therein.
(b) Nondiscretionary Options shall be evidenced by stock option
agreements, which shall be subject to the applicable provisions of
the Plan. Each Nondiscretionary Option shall be vested as follows:
25% immediately upon date of grant, and 25% on each of the first
three successive anniversary dates after the date of grant (100%
vested after three years). The Nondiscretionary Option shall be
exercised only to purchase whole shares, and in no case may a
fraction of a share be purchased. The right of the Participant to
purchase shares with respect to which this option has become
exercisable as herein provided may be exercised in whole or in part
at any time, prior to the fifth anniversary of the date of grant.
(c) The Nondiscretionary Option price per share shall be not less than
the Fair Market Value of the Common Stock as of the date each
Nondiscretionary Option is granted.
(d) The Board may permit the voluntary surrender of all or a portion
of any Nondiscretionary Option to be conditioned upon the granting
of a new stock option.
(e) In the event of a Change-of-Control, then notwithstanding any
provision of this section or of any provisions of any stock option
agreements to the contrary, all Awards which have not terminated
and which are then held by any Participant shall, as of such
Change-of-Control, become immediately vested and exercisable
without regard to the exercise period specified in any relevant
stock option agreement.
(f) VSE's obligation to issue, transfer or deliver Common Stock under
the Plan shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as
amended, with respect to such issue, transfer or delivery, if
deemed necessary or appropriate, (ii) the condition that the Common
Stock reserved for issuance, if any, shall have been listed (or
authorized for listing upon official notice of issuance) upon each
stock exchange on which outstanding shares of the same class may
then be listed, and (iii) all other applicable laws, regulations,
rules and orders which shall then be in effect.
(g) If the Board determines that a Participant is incapacitated and
unable to exercise the Nondiscretionary Options granted under the
Plan and has not designated a legal representative, the Board, in
its discretion, may authorize the assignment of the power to
exercise such stock options to a fiduciary, legal guardian or other
individual whom the Board deems appropriate based on the applicable
facts and circumstances. Due consideration shall be given to any
such assignment provided by the Participant prior to the
incapacity.
(h) The Company will withhold applicable taxes related to the exercise
of Options hereunder. A Participant may satisfy the withholding
obligation by (i) paying the amount of any taxes in cash, (ii) with
the approval of the Board at the time applicable taxes are due or
as provided in the stock option agreement, shares of Common Stock
may be deducted from the payment to satisfy the obligation in full
or in part, or (iii) with the approval of the Board at the time
applicable withholding taxes are due, deliver already owned Common
Stock to satisfy the obligation in full or in part. The amount of
the withholding and the number of shares to be deducted shall be
determined by the Board with reference to the Fair Market Value of
the Common Stock on that date when the withholding is required to
be made. Any use of Common Stock by an Insider for payment of
applicable withholding taxes shall be subject to the provisions of
Exchange Act Rule 16b-3 as to the manner and timing of the
election.
(i) Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or
intent of any provisions hereof.
Section 8 Exercise of Awards.
(a) Subject to Sections 6 and 7, each stock option will be exercisable
in whole or in part from time to time, prior to its cancellation
or termination, by written notice to VSE specifying the number of
shares, with respect to which it is being exercised. If any stock
option is being exercised, such notice shall be accompanied by
payment in full of the purchase price by cash or check or in other
form acceptable to the Board, including shares of Common Stock or
partly in cash or check and partly in such shares, except that the
Board may, from time to time, impose limits and conditions on the
use of such shares for payment. The Board may alternatively
permit, under such terms and conditions as it may establish from
time to time, payment methods for option exercises which will
enable a Participant (other than a Participant who, at the time of
exercise, is subject to Exchange Act Section 16(b)) to pay the
exercise price of a stock option, and any applicable withholding
taxes, from the proceeds of the sale of shares received as a result
of the exercise of such stock option, through the delivery of a
properly executed exercise notice together with such other
documentation as the Board and the broker, if applicable, shall
require to effect an exercise of the stock option and delivery to
the Company of the amount of sale or loan proceeds required to pay
the exercise price. Certificates for shares to be received upon
the exercise of stock options will be delivered in regular course.
All fractional shares are payable in cash.
(b) Except as provided in Section 9, a stock option may be exercised
during the lifetime of the Participant only by the Participant, and
after his or her death by the persons to whom the stock option has
been transferred by will or by laws of descent and distribution.
Stock options are not otherwise transferable.
Section 9 Termination of Stock Options. Each stock option will terminate
upon the earliest of the following:
(a) The date fixed by the Board when the stock option is granted as set
forth in the relevant stock option agreement, not to exceed five
years from date of grant.
(b) Three months after voluntary termination of employment (not to
exceed the stock option termination date), after which the
Participant shall forfeit all rights and Awards for unexercised and
nonvested shares under the Plan, except as follows:
(i) If the Participant dies while an employee, vested shares may
be exercised by Participant's legal representative within one
year from death of Participant, not to exceed the stock option
termination date.
(ii) Upon the Participant's Retirement vested shares may be
exercised within three years after the date of such
Retirement, not to exceed the stock option termination date.
(iii) If the Participant's employment is terminated for
Disability or due to a lay-off by the Company, vested shares
may be exercised within one year after termination of
employment not to exceed the stock option termination date.
(iv) If the Board determines that the stock option may be
exercised (whether or not it was fully exercisable) for a
longer period of time.
(v) If a Change-of-Control occurs, all stock option shares shall
vest immediately, and may be exercised within one year after
termination of employment, not to exceed the stock option
termination date.
(c) Notwithstanding anything hereinabove to the contrary, if a
Participant's employment is terminated by reason of Termination-for-
Cause, his or her ability to exercise any stock option shall
terminate on the date of such termination of employment. For this
purpose, the determination of the Board as to whether a
Participant's employment was terminated for reason of Termination-for-
Cause is final, conclusive and binding on the Participant and
all other respective parties.
Section 10 Adjustments. In the event of any change in the Common Stock,
through the declaration of stock dividends, through recapitalization
resulting in stock split-ups or combinations of shares, or as the result
of similar events, pro rata adjustment shall be automatically made in the
number of shares available for issuance pursuant to the exercise of
Options under the Plan, in the number of shares and price per share of
all shares subject to outstanding stock options.
Section 11 Amendment and Termination. The Board may alter, suspend or
terminate the Plan. Except as provided in Sections 6, 7, and 10, the
Board may not, however, increase the maximum number of shares which may be
issued under the Plan in the aggregate, materially increase or decrease
the benefits accruing to Participants under the Plan or materially modify
the requirements regarding eligibility for participation in the Plan or,
without the written consent of the holder thereof, alter or impair any
stock option previously granted under the Plan. No stock option may be
granted after the termination of the Plan, but stock options previously
granted may vest and be exercised in accordance with their terms.
Section 12 Term. The Plan shall be adopted by the Board effective as of
May 3. 2004, subject to approval by the Company's stockholders. The Plan
shall remain in effect until all Awards under the Plan have been exercised
or terminated under the Plan or May 3, 2014, whichever occurs first.
Section 13 Governing Law. The Plan and all determinations made and
actions taken pursuant thereto shall be governed by the laws of the State
of Delaware and construed in accordance therewith.
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