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EXHIBIT 10.10
LANDSTAR SYSTEM, INC.
1993 STOCK OPTION PLAN
AS AMENDED, EFFECTIVE August 7, 1997
SECTION 1.
PURPOSE
The purpose of the Plan is to foster and promote the long-term financial
success of the Company and materially increase shareholder value by (a)
motivating superior performance by means of performance-related incentives,
(b) encouraging and providing for the acquisition of an ownership interest
in the Company by Employees, and (c) enabling the Company to attract and retain
the services of an outstanding management team upon whose judgment, interest,
and special effort the successful conduct of its operations is largely
dependent.
SECTION 2.
DEFINITIONS
2.1. Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means (i) the willful failure by the Participant to perform
substantially his duties as an Employee of the Company (other than due to
physical or mental illness) after reasonable notice to the Participant of such
failure, (ii) the Participant's engaging in serious misconduct that is
injurious to the Company or any Subsidiary, (iii) the Participant's having been
convicted of, or entered a plea of nolo contendere to, a crime that constitutes
a felony or (iv) the breach by the Participant of any written covenant or
agreement with the Company or any Subsidiary not to disclose any information
pertaining to the Company or any Subsidiary or not to compete or interfere with
the Company or any Subsidiary.
(d) "Change in Control" means the occurrence, of any of the following
events:
(i) any "person," including a "group" (as such terms are used in Sections
13(d) and 14(d)(2) of the Act, but excluding the Company, any of its
Subsidiaries, any employee benefit plan of the Company or any of its
Subsidiaries, Kelso Investment Associates IV, L.P., and its affiliates and
Alex. Brown & Sons Incorporated, and its affiliates) is or becomes the
"beneficial owner" (as defined in Rule 13(d)(3) under the Act), directly or
indirectly, of securities of the Company representing the greater of 35% or
more of the combined voting power of the Company's then outstanding
securities; or
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(ii) the stockholders of the Company shall approve a definitive agreement
(a) for the merger or other business combination of the Company with or into
another corporation, a majority of the directors of which were not directors
of the Company immediately prior to the merger and in which the stockholders of
the Company immediately prior to the effective date of such merger directly or
indirectly own less than 50% of the voting power in such corporation or (b) for
the sale or other disposition of all or substantially all of the assets of the
Company; or
(iii) the purchase of Stock pursuant to any tender or exchange offer made
by any "person," including a "group" (as such terms are used in Sections 13(d)
and 14(d)(2) of the Act), other than the Company, any of its Subsidiaries, an
employee benefit plan of the Company or any of its Subsidiaries, Kelso
Investment Associates IV, L.P., and its affiliates, or Alex. Brown & Sons
Incorporated, and its affiliates, for 35% or more of the Stock of the Company.
(e) "Change in Control Price" means the highest price per share of Stock
offered in conjunction with any transaction resulting in a Change in Control
(as determined in good faith by the Committee if any part of the offered price
is payable other than in cash).
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the Board, which shall
consist of two or more "outside directors" within the meaning of Section
1-162-27(e) of the Treasury Regulations issued pursuant to Section 162(m) of
the Code.
(h) "Company" means Landstar System, Inc., a Delaware corporation, and any
successor thereto.
(i) "Disability" means total disability as determined in accordance with
the terms of the long-term disability plan of the Company or any of its
Subsidiaries in which the Participant is eligible to participate.
(j) "Employee" means any officer or other key executive and management
employee of the Company or any of its Subsidiaries.
(k) "Fair Market Value" means, on any date, the average of the bid and asked
for price of a share of Stock as reported on the National Association of
Securities Dealers Automated Quotation/National Market System (or on such other
recognized market or quotation system on which the trading prices of the Stock
are traded or quoted at the relevant time) on such date. In the event that
there are no Stock transactions reported on NASDAQ/NMS(or such other system)
on such date, Fair Market Value shall mean the closing price on the immediately
preceding date on which Stock transactions were so reported.
(l) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be either
(i)an "Incentive Stock Option" within the meaning of Section 422 of the Code
or (ii)a "Nonstatutory Stock Option."
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(m) "Participant" means any Employee designated by the Committee to
participate in the Plan.
(n) "Plan" means the Landstar System, Inc. 1993 Stock Option Plan, as in
effect from time to time.
(o) "Retirement" means termination of a Participant's employment on or after
the date the participant attains age 62.
(p) "Stock" means the common stock of the Company, par value $0.01 per share.
(q) "Subsidiary" means any corporation or partnership in which the Company
owns, directly or indirectly, 50% or more of the total combined voting power of
all classes of stock of such corporation or of the capital interest or profits
interest of such partnership.
2.2. Gender and Number. Except when otherwise indicated by the context, words
in the masculine gender used in the Plan shall include the feminine gender,
the singular shall include the plural, and the plural shall include the
singular.
SECTION 3.
ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those Employees selected by the Committee
to participate in the Plan.
SECTION 4.
POWERS OF THE COMMITTEE
4.1. Power to Grant. The Committee shall determine the Participants to whom
Options shall be granted and the terms and conditions of any and all such
Options. The Chairman of the Board may suggest to the Committee the
Participants who should receive Options under the Plan. The terms and
conditions of each Option shall be determined by the Committee at the time of
grant, and such terms and conditions shall not be subsequently changed in a
manner which would be adverse to participants without the consent of the
Participant to whom such Option has been granted. The Committee may establish
different terms and conditions for different Participants receiving Options
and for the same Participant for each Option such Participant may receive,
whether or not granted at different times.
4.2. Substitute Options. The Committee shall have the right to grant Options
in substitution for or upon the cancellation of Options previously granted and
such new Options may contain terms more favorable to the recipient than the
Options they replace, including, without limitation, a lower exercise price
(subject to Section 6.2).
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4.3. Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to prescribe, amend, and rescind rules and regulations relating to
the Plan, to provide for conditions deemed necessary or advisable to protect
the interests of the Company, and to make all other determinations necessary
or advisable for the administration and interpretation of the Plan in order
to carry out its provisions and purposes. Determinations, interpretations,
or other actions made or taken by the Committee pursuant to the provisions of
the Plan shall be final, binding, and conclusive for all purposes and upon
all persons.
SECTION 5.
STOCK SUBJECT TO PLAN
5.1. Number. Subject to the provisions of Section 5.3, the number of shares
of Stock subject to Options under the Plan may not exceed 1,115,000 shares of
Stock. The shares to be delivered under the Plan may consist, in whole or in
part, of treasury Stock or authorized but unissued Stock, not reserved for any
other purpose.
5.2. Cancelled, Terminated, or Forfeited Options. Any shares of Stock subject
to an Option which for any reason is cancelled, terminated or otherwise
settled without the issuance of any Stock shall again be available under the
Plan.
5.3. Adjustment in Capitalization. In the event of any Stock dividend or
Stock split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock available for
Options under Section 5.1 or subject to outstanding Options and the respective
prices and/or performance criteria applicable to outstanding Options may be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
SECTION 6.
STOCK OPTIONS
6.1. Grant of Options. Options may be granted to Participants at such time or
times as shall be determined by the Committee. Options granted under the Plan
may be of two types: (i) Incentive Stock Options and (ii) Nonstatutory Stock
Options. The Committee shall have complete discretion in determining the number
of Options, if any, to be granted to a Participant. Each Option shall be
evidenced by an Option agreement that shall specify the type of Option granted,
the exercise price, the duration of the Option, the number of shares of Stock
to which the Option pertains, and such other terms and conditions not
inconsistent with the Plan as the Committee shall determine.
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6.2. Option Price. Nonstatutory Stock Options and Incentive Stock Options
granted pursuant to the Plan shall have an exercise price which is not less
than the Fair Market Value on the date the Option is granted.
6.3. Exercise of Options. Options awarded to a Participant under the Plan
shall be exercisable at such times and shall be subject to such restrictions
and conditions including the performance of a minimum period of service or the
satisfaction of performance goals, as the Committee may impose either at or
after the time of grant of such Options, subject to the Committee's right to
accelerate the exercisability of such Option in its discretion. Notwithstanding
the foregoing, no Option shall be exercisable for more than 10 years after the
date on which it is granted.
6.4. Payment. The Committee shall establish procedures governing the exercise
of Options, which shall require that written notice of exercise be given and
that the Option price be paid in full in cash or cash equivalents, including
by personal check, at the time of exercise. The Committee may, in its
discretion, permit a Participant to make payment in Stock already owned by him
or her, valued at its Fair Market Value on the date of exercise, as partial
or full payment of the exercise price. As soon as practicable after receipt
of a written exercise notice and full payment of the exercise price, the
Company shall deliver to the Participant a certificate or certificates
representing the acquired shares of Stock.
6.5. Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of any Participant affected thereby, to
cause any Incentive Stock Option previously granted to fail to qualify for
the Federal income tax treatment afforded under Section 421 of the Code.
6.6. Buyout. The Committee may at any time offer to buy out for a payment
in cash any Option previously granted, based on such terms and conditions as
the Committee shall establish and communicate to the optionee at the time
such offer is made.
SECTION 7.
TERMINATION OF EMPLOYMENT
7.1. Termination of Employment Due to Retirement. Unless otherwise
determined by the Committee at the time of grant, in the event a Participant's
employment terminates by reason of Retirement, any Options granted to such
Participant which are then outstanding (whether or not exercisable prior to the
date of such termination) may be exercised at any time prior to the expiration
of the term of the Options or within one (1) year (or such other period as the
Committee shall determine at the time of grant) following the Participant's
termination of employment, whichever period is shorter.
7.2. Termination of Employment Due to Death or Disability. Unless otherwise
determined by the Committee at the time of grant, in the event a Participant's
employment terminates by reason of death or Disability, any Options granted to
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such Participant which are then outstanding (whether or not exercisable prior
to the date of such termination) may be exercised by the Participant or the
Participant's designated beneficiary, and if none is named, in accordance with
Section 10.2, at any time prior to the expiration date of the term of the
Options or within one year (or such other period as the Committee shall
determine at the time of grant) following the Participant's termination of
employment, whichever period is shorter.
7.3. Termination of Employment For Cause. Unless otherwise determined by
the Committee at the time of grant, in the event a Participant's employment
is terminated for Cause, any Options granted to such Participant which are
then outstanding (whether or not exercisable prior to the date of such
termination) shall be forfeited.
7.4. Termination of Employment for Any Other Reason. Unless otherwise
determined by the Committee at or after the time of grant, in the event the
employment of the Participant shall terminate for any reason other than one
described in Section 7.1, 7.2 or 7.3, any Options granted to such Participant
which are exercisable at the date of the Participant's termination of employment
shall be exercisable at any time prior to the expiration of the term of such
Options or the thirtieth day following the Participant's termination of
employment, whichever period is shorter.
SECTION 8.
CHANGE IN CONTROL
8.1. Accelerated Vesting and Payment. Subject to the provisions of Section
8.2 below, in the event of a Change in Control, each Option shall be cancelled
in exchange for a payment in cash of an amount equal to the excess of the
Change in Control Price over the exercise price for such Option.
8.2. Alternative Awards. Notwithstanding Section 8.1, no cancellation,
acceleration of exercisability or vesting or cash settlement or other payment
shall occur with respect to any Option if the Committee reasonably determines
in good faith prior to the occurrence of a Change in Control that such Option
shall be honored or assumed, or new rights substituted therefor (such honored,
assumed or substituted award hereinafter called an "Alternative Award"), by a
Participant's employer (or the parent or a subsidiary of such employer)
immediately following the Change in Control, provided that any such Alternative
Award must:
(i) be based on stock which is traded on an established securities market,
or which will be so traded within 60 days of the Change in Control;
(ii) provide such Participant (or each Participant in a class of
Participants) with rights and entitlements substantially equivalent to or
better than the rights, terms and conditions applicable under such Award,
including, but not limited to, an identical or better exercise or vesting
schedule and identical or better timing and methods of payment;
(iii) have substantially equivalent economic value to such Award
(determined at the time of the Change in Control);
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(iv) have terms and conditions which provide that in the event that the
Participant's employment is involuntarily terminated or constructively
terminated, any conditions on a Participant's rights under, or any restrictions
on transfer or exercisability applicable to, each such Alternative Award shall
be waived or shall lapse, as the case may be.
For this purpose, a constructive termination shall mean a termination by a
Participant following a material reduction in the Participant's compensation or
a material reduction in the Participant's responsibilities, in each case
without the Participant's written consent.
SECTION 9.
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
The Board may at any time terminate or suspend the Plan, and from time to time
may amend or modify the Plan. No amendment, modification, or termination of
the Plan shall in any manner adversely affect any Option theretofore granted
under the Plan, without the consent of the Participant.
SECTION 10.
MISCELLANEOUS PROVISIONS
10.1. Nontransferability of Options. No Options granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
All rights with respect to Options granted to a Participant under the Plan
shall be exercisable during his lifetime only by such Participant.
10.2. Beneficiary Designation. Each Participant under the Plan may from time
to time name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid or by whom any
right under the Plan is to be exercised in case of his death. Each designation
will revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Participant in writing with the Committee during his lifetime. In the absence
of any such designation, benefits remaining unpaid at the Participant's death
shall be paid to or exercised by the Participant's surviving spouse, if any,
or otherwise to or by his estate.
10.3. No Guarantee of Employment or Participation. Nothing in the Plan
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary or affiliate. No Employee shall have a right to be selected as a
Participant, or, having been so selected, to receive any future Options.
10.4. Tax Withholding. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
Federal, state, and local withholding tax requirements on any Option under the
Plan, and the Company may defer payment of cash or issuance of Stock until
such requirements are satisfied.
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10.5. Indemnification. Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be made a party or in which he may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive and shall be independent of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or By-laws, by contract, as a matter of
law, or otherwise.
10.6. No Limitation on Compensation. Nothing in the Plan shall be construed
to limit the right of the Company to establish other plans or to pay
compensation to its employees in cash or property, in a manner which is not
expressly authorized under the Plan.
10.7. Requirements of Law. The granting of Options and the issuance of shares
of Stock shall be subject to all applicable laws, rules, and regulations, and
to such approvals by any governmental agencies or national securities
exchanges as may be required.
10.8. Term of Plan. The Plan shall be effective upon its adoption by the
Board and approval by a majority of the shareholders of the Company. The Plan
shall continue in effect, unless sooner terminated pursuant to Section 9,
until the tenth anniversary of the date on which it is adopted by the Board.
10.9. Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
10.10. No Impact On Benefits. Options granted under the Plan are not
compensation for purposes of calculating an Employee's rights under any
employee benefit plan.