EXHIBIT 10.7
TRANSCORE 1999 EMPLOYEE RETENTION PLAN B
This TransCore 1999 Employee Retention Plan B (the "PLAN") is adopted as
of the Effective Date, as defined below, with reference to the following facts:
RECITALS
A. Science Applications International Corporation, a Delaware corporation
("SAIC"), has agreed to sell Syntonic Technology, Inc., a Delaware corporation
doing business as "TransCore" ("SYNTONIC"), JHK & Associates, Inc. and certain
other assets and operations currently owned by SAIC (collectively, "TRANSCORE"),
to TransCore Holdings, Inc., a Delaware corporation ("BUYER"), pursuant to a
Stock Purchase Agreement dated September 2, 1999, among SAIC, Syntonic and Buyer
("STOCK PURCHASE AGREEMENT").
B. Prior to the sale of TransCore, certain employees and consultants of
TransCore (collectively, the "EMPLOYEES") were granted awards of vesting shares
of SAIC's class A common stock ("SAIC STOCK"), vesting options to purchase SAIC
Stock, "Share Unit" interests in SAIC Stock, or some combination of the
foregoing, among other things, under certain benefit plans established and
maintained by SAIC.
C. As a result of the sale of TransCore to Buyer and TransCore's
termination of affiliation with SAIC, Employees with unvested benefits under the
benefit plans adopted by SAIC will not vest in such unvested benefits under such
benefit plans after the closing date of the sale.
D. To motivate and reward future efforts of TransCore Employees, TransCore
desires to provide for the payment of certain benefits to Employees who will not
acquire vested rights in certain benefit plans established and maintained by
SAIC, all on the terms and conditions set forth in this Plan.
PLAN
1. Definitions.
(a) Covered SAIC Plans. "COVERED SAIC PLANS" shall mean:
(i) SAIC 1984 Bonus Compensation Plan, as amended and restated
on April 2, 1991 and July 9, 1999;
(ii) SAIC Stock Compensation Plans, consisting of the Stock
Compensation Plan and the Management Stock Compensation Plan;
(iii) SAIC 1992 Stock Option Plan;
(iv) SAIC 1995 Stock Option Plan; and
(v) SAIC 1998 Stock Option Plan.
(b) Effective Date. The "EFFECTIVE DATE" of this Plan shall mean the
date immediately following the date SAIC transfers legal and beneficial title to
the stock of TransCore to Buyer in accordance with the Stock Purchase Agreement.
(c) Eligible Participants. The "ELIGIBLE PARTICIPANTS" shall mean
those Employees of TransCore or its affiliates or subsidiaries as of the
Effective Date who have been granted, but not yet vested in, benefits under any
of the Covered SAIC Plans. Notwithstanding the foregoing, Eligible Participants
shall exclude any individual participating in the TransCore 1999 Employee
Retention Plan A.
(d) Fixed Benefit. The "FIXED BENEFIT" shall mean the cash benefit
described in Section 2(a).
(e) Payment Date. The "PAYMENT DATE" shall mean the date which is
five years after the Effective Date.
(f) Phantom Share Value. The "PHANTOM SHARE VALUE" shall mean the
fair market value of a share of common stock of TransCore, determined by the
Board of Directors of TransCore in its discretion.
(g) Phantom Stock Option. A "PHANTOM STOCK OPTION" shall mean a
right to receive from TransCore, in exchange for a designated exercise price, a
cash payment based on the Phantom Share Value.
(h) Plan Benefits. "PLAN BENEFITS" shall mean the benefits payable
to Eligible Participants arising under Section 2 hereof, which shall consist of
Fixed Benefits and Phantom Stock Options.
(i) Fundamental Change in Ownership. A "FUNDAMENTAL CHANGE IN
OWNERSHIP" shall mean (A) any sale or transfer of more than 50% of the assets of
Buyer and its subsidiaries on a consolidated basis (measured either by book
value in accordance with generally accepted accounting principles consistently
applied or by fair market value determined in the reasonable good faith judgment
of the Board of Directors of Buyer) in any transaction or series of transactions
(other than sales in the ordinary course of business), and (B) any merger or
consolidation to which Buyer is a party, except for a merger in which
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Buyer is the surviving corporation, the terms of the Preferred Stock are not
changed and the Preferred Stock are not exchanged for cash, securities or other
property, and after giving effect to such merger, the holders of Buyer's
outstanding capital stock possessing a majority of the voting power (under
ordinary circumstances) to elect a majority of Buyer's Board of Directors
immediately prior to the merger shall continue to own Buyer's outstanding
capital stock possessing the voting power (under ordinary circumstances) to
elect a majority of Buyer's Board of Directors.
(j) Public Offering. A "PUBLIC OFFERING" shall mean any bona fide,
firm commitment underwritten offering by Buyer of its capital stock or equity
securities to the public pursuant to an effective registration statement under
the Securities Act of 1933, as then in effect, or any comparable statement under
any similar federal statute then in force which results in net proceeds in
excess of $20,000,000 and results in a market capitalization of Buyer of not
less than $50,000,000.
(k) Organic Change. An "ORGANIC CHANGE" shall mean any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of Buyer's assets to another Person or other
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock.
(l) Liquidation Event. A "LIQUIDATION EVENT" shall mean any
liquidation, dissolution or winding up of Buyer (whether voluntary or
involuntary).
(m) Person. A "PERSON" shall mean an individual, a partnership, a
corporation, a limited liability company, a limited liability partnership, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
(n) Common Stock and Preferred Stock. "COMMON STOCK" shall mean the
Class A Common Stock, par value of $0.001 per share and the Class B Common
Stock, par value of $0.001 per share of Buyer and "PREFERRED STOCK" shall mean
the Class A Redeemable Preferred Stock, having a par value of as set forth in
the certificate of designation filed to establish such series of Buyer the Class
B-1 Convertible Preferred Stock, having a par value of as set forth in the
certificate of designation filed to establish such series.
2. Calculation of Plan Benefits. The Plan Administrator (which shall be
TransCore or a committee, individual or corporate designee appointed by
TransCore) shall determine the Plan Benefits payable to each Eligible
Participant. Except as provided in Section 13, the Plan Administrator's
determination of such Plan Benefits shall be final and conclusive.
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(a) Fixed Benefits. The amount of Fixed Benefits payable to an
Eligible Participants shall be calculated as the sum of the assumed values
determined under Sections 2(a)(i), (ii) and (iii) below ("ASSUMED VALUE"), plus
eight percent (8%) interest compounded annually on the unpaid balance until the
Payment Date:
(i) Stock Options. The value of each unvested option to
purchase SAIC Stock granted to such Eligible Participant under any Covered SAIC
Plan, calculated as the sum of: (1) the excess of (i) the formula price per
share of SAIC Stock in effect on the Effective Date over (ii) the exercise price
with respect to such unvested option and (2) the present value, as of the
Effective Date, of the potential future appreciation of such unvested option
determined by assuming that, from the Effective Date until the expiration date
of such option, the price per share of SAIC Stock will appreciate six percent
(6%) per annum and, for purposes of such present value calculation, utilizing a
discount rate of six percent (6%).
(ii) Bonus Compensation Plan Stock. The value of all unvested
shares of SAIC Stock granted to such Eligible Participant under the SAIC 1984
Bonus Compensation Plan (as amended), calculated as (i) the number of unvested
shares held by such Eligible Participant multiplied by (ii) the formula price
per share of SAIC Stock in effect on the Effective Date.
(iii) Stock Compensation Plans. The value of such Eligible
Participant's unvested balances in the SAIC Management Stock Compensation Plan
or the SAIC Stock Compensation Plan (as applicable), calculated as (i) the
number of Share Units (as that term is defined in such SAIC Stock Compensation
Plan) attributable to such Eligible Participant multiplied by (ii) the formula
price per share of SAIC Stock in effect on the Effective Date.
(b) Phantom Stock Options.
(i) Phantom Stock Options shall permit an Eligible Participant
to receive, on or after the Payment Date, in exchange for payment of the
Exercise Price, a payment in cash equal to the Phantom Share Value for each
Phantom Stock Option granted hereunder.
(ii) The number of Phantom Stock Options granted to an
Eligible Participant shall be equal to 1 for each $100 of Assumed Value as
determined in 2(a) above. The exercise price of each Phantom Stock Option shall
be $0.10 ("EXERCISE PRICE"). Both the Exercise Price and number of Phantom Stock
Options awarded to an Eligible Participant shall be appropriately adjusted in
the discretion of the Board of Directors of TransCore, in the event of certain
changes in capitalization of TransCore including a change in the number of
shares of common stock resulting from a stock split, stock dividend, combination
of shares or other change, or any exchange for other
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securities or any reclassification, reorganization, redesignation or otherwise.
Any such adjustment made by the Board of Directors shall be final and
conclusive.
(iii) All Phantom Stock Options shall fully vest and may be
exercised in connection with a Fundamental Change in Ownership, Public Offering,
Organic Change or Liquidation Event.
(iv) Effective upon the closing of a Public Offering of
TransCore shares, TransCore shall substitute options to purchase actual
TransCore shares for all outstanding but unexercised Phantom Stock Options. Such
substitution shall not impair an Eligible Participant's right to exercise any or
all of the outstanding but unexercised Phantom Stock Options granted to the
Eligible Participant hereunder, which shall be 100% vested pursuant to Section
2(b)(iii) above, prior to the closing of the Public Offering.
3. Vesting of Plan Benefits. Vesting in Plan Benefits shall be as follows:
(a) Fixed Benefits. Fixed Benefits shall become 100% vested on the
first anniversary of the Effective Date or, if earlier, upon the death or
permanent disability of the Eligible Participant or as may be set forth in an
Eligible Participant's written employment agreement.
(b) Phantom Stock Options. Phantom Stock Options shall vest 20% on
each of the first, second and third anniversaries of the Effective Date, and
forty percent (40%) on the fourth anniversary of the Effective Date.
Notwithstanding the foregoing to the contrary, Phantom Stock Options shall
become 100% vested upon the death or permanent disability of the Eligible
Participant or vest in such other manner as may be set forth in an Eligible
Participant's written employment agreement (which agreement shall control to the
extent inconsistent with the vesting provisions herein).
(c) Continuous Employment. Plan Benefits (whether Fixed Benefits or
Phantom Stock Options) shall be paid only to Eligible Participants who are
continuously employed by TransCore or its affiliates or subsidiaries at all
times after the Effective Date through and including the relevant anniversary as
specified in Sections 3(a) and (b) above. Any Plan Benefits which have not
vested shall be forfeited if an Eligible Participant's continuous employment
terminates. For purposes of determining whether Plan Benefits are vested, death,
permanent disability, or approved military, family or medical leave by an
Eligible Participant shall be deemed part of continuous employment solely for
purposes of the immediately preceding sentence. Except as may be set forth in an
Eligible Participant's written employment agreement, any other termination of
employment, whether voluntary or otherwise, shall result in forfeiture of any
unvested Plan Benefits.
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4. Time of Payment of Plan Benefits. Fixed Benefits payable hereunder
shall be paid within 45 days after the fifth anniversary of the Effective Date.
Phantom Stock Options shall be payable in accordance with their terms.
5. Form of Payment. All payments of Plan Benefits shall be made in cash,
subject to applicable deductions, tax and other withholdings and other
adjustments.
6. Payment to Guardian. If at any time an Eligible Participant is the
subject of a conservatorship or other fiduciary responsible for the management
and control of such person's financial affairs, amounts payable to such person
shall be paid to such conservator or fiduciary until such person is no longer
the subject of such conservatorship or fiduciary.
7. Payment Upon Death.
(a) Beneficiary Designations. Upon forms provided by TransCore, each
Eligible Participant shall designate in writing the beneficiary or beneficiaries
whom such Eligible Participant desires to receive the Plan Benefits payable
under the Plan, if any, in the event of the death of an Eligible Participant. An
Eligible Participant may change his or her designated beneficiary or
beneficiaries from time to time without the consent of such beneficiary or
beneficiaries by filing a new designation in writing with TransCore on forms
prescribed for that purpose, provided, however, that if a married Eligible
Participant desires to designate an individual other than his or her spouse as
beneficiary, such designation shall not be effective unless consented to in
writing by such Eligible Participant's spouse. Notwithstanding the foregoing,
spousal consent shall not be necessary if it is established to the satisfaction
of TransCore that there is no spouse of the Eligible Participant or that the
required consent cannot be obtained because the spouse cannot be located or is
legally incompetent. TransCore may rely upon the designation of beneficiary or
beneficiaries last filed by the Eligible Participant in accordance with this
Plan.
(b) Default Beneficiaries. If the designated beneficiary does not
survive the Eligible Participant, or if there is not valid beneficiary
designation, amounts payable under the Plan shall be paid to the Eligible
Participant's spouse, or if there is not a surviving spouse, then to the duly
appointed and currently acting personal representative of the Eligible
Participant's estate. If there is no personal representative of the
Participant's estate duly appointed, then payments under the Plan shall be made
to the person or persons who can verify by affidavit or court order to the
satisfaction of TransCore that they are legally entitled to receive the benefits
specified hereunder pursuant to the laws of intestate succession or other
statutory provision in effect at the Eligible Participant's death in the state
in which the Eligible Participant resides.
8. No Enlargement of Employment Rights.
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(a) Voluntary Plan. This Plan is a strictly voluntary undertaking on
the part of TransCore and shall not be deemed to be consideration for, or an
inducement to, or a condition of, the employment of any Employee.
(b) No Continued Employment Right. Nothing in this Plan shall confer
upon any Employee any right to continue in the employment or affiliation with
TransCore nor constitute any promise or commitment by TransCore regarding future
positions, work assignments, compensation or any other term or condition of
employment or affiliation.
(c) No Other Rights. No person shall have any rights under this Plan
except as specifically provided herein and, with respect to vesting, as may be
set forth in an employment agreement. No Eligible Participant shall have any
rights under this Plan to receive any benefit or other rights, except a payment
in cash on the terms set forth herein.
9. No Tax Advice. TransCore makes no representation regarding taxation to
any Eligible Participant of any payments provided under this Plan.
10. Delivery of Payments. All payment under this Plan shall be delivered
in person or mailed to the last address of the Eligible Participant (or in the
case of the death or conservatorship of the Eligible Participant, to the address
of the person entitled thereto as shown on the records of TransCore). Each
Eligible Participant shall be responsible for furnishing TransCore with his or
her current address and the correct current name and address of any Beneficiary
or Beneficiaries.
11. Plan Amendments. The Plan Benefits provided hereunder may not be
withdrawn, revoked or modified in any manner which alters the eligibility
provisions hereof in any manner detrimental to a TransCore employee, reduces
Plan Benefits or delays the time for payment of Plan Benefits hereunder without
the affected Eligible Participant's prior written consent.
12. Governing Law. This Plan and all questions arising thereunder shall be
interpreted in accordance with the laws of the State of Delaware, without regard
to the doctrine of conflicts of law.
13. Records. The records of (i) TransCore and SAIC with respect to
eligibility to participate in this Plan and (ii) of SAIC with regard to the
calculation of the Plan Benefits payable hereunder shall be binding and
conclusive on all Eligible Participants, beneficiaries and all other persons
whomsoever.
14. Severability. If any particular provision of this Plan shall be found
to be illegal or unenforceable, such provision shall not affect the other
provisions of the Plan, but the Plan shall be interpreted in all respects as if
such invalid provision were omitted.
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* * *
The Plan was duly adopted and approved by the Board of Directors of the
Company as of the 3rd day of September, 1999, to be effective as of September 4,
1999.
/s/ Claudia F. Wiegand
--------------------------------------------
Secretary
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