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CANNONDALE CORPORATION
1994 EMPLOYEE STOCK PURCHASE PLAN
1. Purposes.
The 1994 Employee Stock Purchase Plan (the "Plan") of Cannondale
Corporation (hereinafter referred to as the "Company," unless the context
otherwise requires) is intended to provide a method whereby employees of the
Company and its subsidiary corporations will have an opportunity to acquire a
proprietary interest in the Company through the purchase of shares of the
Company's common stock, $.01 par value ("Common Stock"). It is the intention of
the Company to have the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of Section 423
of the Code.
2. Definitions.
(a) "base pay" means regular straight-time earnings, excluding payments
for overtime, shift premium, incentive compensation, bonuses, and other special
payments, but including, in the case of employees who are salespersons, sales
commissions to the extent determined by the Committee.
(b) "Committee" means the Committee referenced in Paragraph 13 or, if
no such Committee has been designated, "Committee" means the Board of Directors
of the Company.
(c) "employee" means any person who is customarily employed on a full
time or part time basis and regularly scheduled for more than 20 hours per week
and more than five months in a calendar year by the Company or any subsidiary.
(d) "Offering Commencement Date" means the applicable date on which an
Offering under the Plan commences pursuant to Paragraph 4.
(e) "Offering Termination Date" means the applicable date on which an
Offering under the Plan terminates pursuant to Paragraph 4.
(f) "Offering Period" means the applicable period during which an
Offering shall take place pursuant to Paragraph 4.
(g) "subsidiary" means any present or future corporation which (i)
would be a "subsidiary corporation" as that term is defined in Section 424(f) of
the Code and (ii) is designated as a participant in the Plan by the Committee.
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3. Eligibility and Participation.
(a) Any employee who shall have completed not less than one year's
continuous employment and shall be employed by the Company or any subsidiary on
the date his or her participation in the Plan is to become effective shall be
eligible to participate in offerings under the Plan which commence on or after
such one year period has concluded.
(b) For purposes of participation in the Plan, a person on leave of
absence shall be deemed to be an employee for the first 90 days of such leave of
absence and such employee's employment shall be deemed to have terminated at the
close of business on the 90th day of such leave of absence unless such employee
shall have returned to regular full-time or part-time employment (as the case
may be) prior to the close of business on such 90th day.
Termination by the Company of any employee's leave of absence, other than
termination of such leave of absence on return to full-time or part-time
employment, shall terminate an employee's employment for all purposes of the
Plan and shall terminate such employee's participation in the Plan and right to
exercise any option.
(c) Any provision of the Plan to the contrary notwithstanding, no
employee shall be granted an option under the Plan:
(i) if, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock,
possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company or of any
subsidiary (applying the rules of Section 424(d) of the Code
in determining stock ownership for any employee); or
(ii) which permits his or her rights to purchase stock under
all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds $25,000 of fair
market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is
outstanding at any time.
(d) An eligible employee may become a participant in an Offering by
completing an authorization for a payroll deduction ("Authorization") on the
form provided by the Company and filing it with the office of the Treasurer of
the Company at least seven days and no more than 30 days prior to the Offering
Commencement Date. Payroll deductions for a participant shall commence on the
applicable Offering Commencement Date when such participant's Authorization
becomes effective and shall end on the Offering Termination Date, unless sooner
terminated pursuant to Paragraph 9.
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4. Offering Periods.
(a) The Plan will be implemented by ten semi-annual offerings (referred
to herein collectively as "Semi-Annual Offerings," individually as a
"Semi-Annual Offering" and chronologically as "Offering 1" through "Offering
10") of Common Stock. The Offering Periods shall be January 1 to the next
succeeding June 30 and July 1 to the next succeeding December 31; provided,
however, that the first Offering Commencement Date shall be January 1, 1995 and
the first Offering Termination Date shall be June 30, 1995. If any Offering
Commencement Date or Offering Termination Date shall be a Saturday, Sunday or
holiday, such Date shall be deemed to be the next regular business day.
(b) Notwithstanding the foregoing, the Committee may, at its
discretion, authorize in lieu of any two consecutive SemiAnnual Offerings a
single annual offering (referred to herein collectively as "Annual Offerings"
and individually as an "Annual Offering"), any such Annual Offering to commence
on an Offering Commencement Date specified above and to terminate 12 months
thereafter. (Annual Offerings and Semi-Annual Offerings may hereinafter be
referred to collectively as "Offerings" and individually as an "Offering".)
(c) Participation in any one or more of the Offerings under the Plan
shall neither limit, nor require, participation in any other Offering.
5. Payroll Deductions.
(a) At the time a participant files his or her Authorization for a
payroll deduction, the participant shall elect to have deductions made from his
or her pay on each payday during the time he or she is a participant in an
Offering at the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his or her base pay
in effect at the applicable Offering Commencement Date.
(b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan. A participant may not make any separate cash
payment into such account.
(c) Except as provided in Paragraph 9, a participant may only make
changes to the rate of deductions from his or her annualized base pay during an
Offering by completing a new Authorization on the form provided by the Company
and filing it with the office of the Treasurer as provided herein. Such new
Authorization shall be effective upon the commencement of the first pay period
subsequent to its filing. A participant may change his or her Authorization at
any time (subject to limitations on the frequency of such changes as may be
imposed by rules adopted by the Committee).
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(d) If a participant goes on a leave of absence, such participant shall
have the right to elect (i) to withdraw the balance in his or her account
pursuant to Section 9(a), (ii) to discontinue contributions to the Plan but
remain a participant in the Plan, or (iii) remain a participant in the Plan
during such leave of absence, authorizing deductions to be made from payments by
the Company to the participant during such leave of absence and undertaking to
make cash payments to the Plan at the end of each payroll period to the extent
that amounts payable by the Company to such participant are insufficient to meet
such participant's authorized Plan deductions.
6. Granting of Option.
(a) For each of the Offerings, a participating employee shall be deemed
to have been granted an option (the "Option") to purchase, on the applicable
Offering Commencement Date, a maximum number of shares of Common Stock equal to
an amount determined as follows:
(i) In the case of any Semi-Annual Offering, 85% of the market
value of a share of Common Stock on the applicable Offering Commencement Date
shall be divided into an amount equal to (x) one-half of that percentage of the
employee's annualized base pay which he or she has elected to have withheld (but
in no case greater than 5%) multiplied by (y) such employee's annualized base
pay in effect on such Offering Commencement Date.
(ii) In the case of any Annual Offering, 85% of the market
value of a share of Common Stock on the applicable Offering Commencement Date
shall be divided into an amount equal to (x) that percentage of the employee's
annualized base pay which he or she has elected to have withheld (but in no case
greater than 10%) multiplied by (y) such employee's annualized base pay in
effect on such Offering Commencement Date.
The market value of the Common Stock shall be determined as provided in
subparagraph (b) below. An employee's annualized base pay shall be determined as
follows: (i) in the case of a full-time employee normally paid on an hourly
rate, by multiplying his or her normal hourly rate by 2080; (ii) in the case of
a part-time employee normally paid on an hourly rate, by multiplying his or her
normal hourly rate by the product of 52 times the number of hours in his or her
normal work week; (iii) in the case of an employee normally paid at a weekly
rate, by multiplying his or her normal weekly rate by 52; (iv) in the case of an
employee normally paid at a bi-weekly rate, by multiplying his or her normal
bi-weekly rate by 26; and (v) in the case of an employee normally paid at a
monthly rate, by multiplying his or her normal monthly rate by 12.
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(b) The purchase price per share of Common Stock purchased with payroll
deductions made during each Offering (the "Exercise Price") shall be determined
as the lesser of 85% of the average of the closing bid and asked prices for the
Common Stock in the over-the-counter market as reported by NASDAQ, or, if the
Common Stock is then listed on the National Market System or a national
securities exchange, 85% of the composite closing price of the Common Stock on
such system or exchange, as published in The Wall Street Journal, on the (i)
Offering Commencement Date or (ii) the Offering Termination Date applicable to
such Offering (or on the next regular business date on which shares of Common
Stock shall be traded in the event that no shares of Common Stock shall have
been traded on such date). If the Common Stock of the Company is not admitted to
trading on any of the aforesaid dates for which closing prices of the Common
Stock are to be determined then reference shall be made to the fair market value
of the Common Stock on that date, as determined on such basis as shall be
established or specified for the purpose by the Committee.
7. Exercise of Option.
With respect to each Offering during the term of the Plan:
(a) Unless a participant gives written notice of withdrawal to the
Company as provided in Paragraph 9, his or her Option will be deemed to have
been exercised automatically at 11:59 p.m. on the applicable Offering
Termination Date, for the purchase of the number of full shares of Common Stock
which the accumulated payroll deductions in his or her account at that time
shall purchase at the applicable Exercise Price (but not in excess of the number
of shares for which options have been granted the employee pursuant to Paragraph
6(a)), and any excess in his or her account at that time will (i) in the event
the employee has elected to participate in the subsequent Offering, be credited
to his or her account for such subsequent Offering, or (ii) in the event the
employee has not elected to participate in the subsequent Offering, be returned
to the employee promptly following the termination of the Offering.
(b) Fractional shares will not be issued under the Plan and any
accumulated payroll deductions for an employee under an Offering which would
have been used to purchase fractional shares shall (i) in the event the employee
has elected to participate in the subsequent Offering, be credited to his
account for such subsequent Offering, or (ii) in the event the employee has not
elected to participate in the subsequent Offering, be returned to the employee
promptly following the termination of the Offering.
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8. Delivery.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant a certificate or
certificates representing the shares of Common Stock purchased upon the exercise
of such participant's Option.
9. Withdrawal.
(a) A participant may elect to withdraw payroll deductions credited to
his or her account under any Offering at any time prior to the applicable
Offering Termination Date by giving written notice of withdrawal to the
Treasurer of the Company. All of the participant's payroll deductions credited
to his or her account (without interest thereon) will be paid to the participant
promptly after receipt of such notice of withdrawal and no further payroll
deductions will be made from his or her pay during such Offering. The Company
may, at its option, treat any attempt by an employee to borrow on the security
of accumulated payroll deductions as an election, under this Paragraph, to
withdraw such deductions.
(b) A participant's withdrawal from any Offering will not have any
effect upon his or her eligibility to participate in any succeeding Offering or
in any similar plan which may hereafter be adopted by the Company, except that
employees who are also officers within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall be
subject to the provisions of Rule 16b-3(d)(2) promulgated under the Exchange Act
and any successor provisions therefor.
(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death while in the employ of the Company or a
subsidiary, the payroll deductions credited to his or her account will be
returned to the participant or, in the case of the participant's death
subsequent to the termination of employment, to the person or persons entitled
thereto under Paragraph 13.
(d) Upon termination of the participant's employment because of death,
his or her beneficiary (as defined in Paragraph 13) shall have the right to
elect, by written notice given to the Treasurer of the Company prior to the
first to occur of (A) the expiration of the period of 60 days commencing with
the date of the death of the participant, or (B) the Offering Termination Date
next following the date of the participant's death, either
(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan or
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(ii) to exercise the participant's Option on the Offering
Termination Date next following the date of the participant's
death for the purchase of the number of full shares of Common
Stock which the accumulated payroll deductions in the
participant's account at the date of the participant's death
will purchase at the applicable Exercise Price, and any excess
in such account will be returned to said beneficiary without
interest.
In the event that no such written notice of election shall be duly received by
the office of the Treasurer of the Company, the beneficiary shall automatically
be deemed to have elected to withdraw the payroll deductions credited to the
participant's account at the date of the participant's death and the same will
be paid promptly to the said beneficiary without interest.
(e) A participant on leave of absence shall, subject to the election
made by such participant pursuant to Section 5(d), continue to be a participant
in the Plan so long as such participant is on continuous leave of absence. A
participant who has been on leave of absence for more than 90 days and who
therefore is not an employee for the purpose of the Plan shall not be entitled
to participate in any Offering commencing after the 90th day of such leave of
absence. Notwithstanding any other provisions of the Plan, unless a participant
on leave of absence returns to regular full-time or part-time employment with
the Company at the earlier of (i) the termination of such leave of absence or
(ii) three months from the 90th day of such leave of absence, such participant's
participation in the Plan shall terminate on whichever of such dates first
occurs.
10. Interest.
No interest will be paid or allowed on any money paid into the Plan
during any Offering Period or credited to the account of any participant during
such Offering Period except as otherwise specified by the Committee prior to the
Offering Commencement Date of such Offering Period.
11. Common Stock.
(a) Subject to adjustment for changes in the capitalization of the
Company as provided in Paragraph 16, the maximum number of shares of Common
Stock which shall be made available for sale under the Plan is 348,750 shares.
On or before each Offering Commencement Date the Committee shall determine the
maximum number of shares available during such Offering; provided that the
maximum number shall not exceed 34,875 shares in the case of any Semi-Annual
Offering, or 69,750 shares in the case of any Annual Offering, in each case
together with any shares remaining unsold from the prior Offering(s) (such
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amounts being subject to adjustment as provided in Paragraph 16). If the total
number of shares for which options are exercised on any Offering Termination
Date in accordance with Paragraph 7 exceeds the maximum number available under
such Offering, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in as nearly uniform a manner as shall
be practicable and as it shall determine to be equitable, and any excess in the
account of each participant will be returned to the employee promptly following
the termination of the Offering.
(b) The participant will have no interest in Common Stock covered by
his or her Option until such Option has been exercised.
(c) Certificates for Common Stock to be delivered to a participant
under the Plan will be registered in the name of the participant, or, if the
participant so directs by written notice to the Company prior to the applicable
Offering Termination Date, in the names of the participant and one such other
person as may be designated by the participant, as joint tenants with rights of
survivorship or as tenants by the entireties, to the extent permitted by
applicable law.
(d) The Committee may, in its discretion, require as conditions to the
exercise of any Option that the shares of Common Stock reserved for issuance
upon the exercise of the Option shall have been duly authorized for trading in
the over-the-counter market or the National Market System on the NASDAQ system
or on a national securities exchange and that a Registration Statement under the
Securities Act of 1933, as amended, with respect to said shares shall be
effective.
12. Administration.
The Plan shall be administered by a Committee designated by the Board
of Directors, which Committee shall consist of at least two directors who are
"disinterested persons" within the meaning of Rule 16b-3 under the Exchange Act.
No member of the Committee shall be eligible to purchase Common Stock under the
Plan. All powers and rights of the Committee may also and concurrently be
exercised by the Board of Directors in its sole discretion. If the Board of
Directors has not designated any such Committee, all references herein to the
Committee shall be to the Board of Directors. The interpretation and
construction of any provision of the Plan and the adoption of rules and
regulations for administering the Plan shall be made by the Committee.
Determinations made by the Committee with respect to any matter or provision
contained in the Plan shall be final, conclusive and binding upon the Company
and upon all participants, their heir or legal representatives. Any rule or
regulation adopted by the Committee shall remain in full force and effect unless
and until altered, amended, or repealed by the Committee or by the Board of
Directors.
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13. Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to
receive any shares of Common Stock and/or cash in the event of the death of the
participant prior to the delivery of such shares or cash to the participant.
Such designation of beneficiary may be changed by the participant at any time by
written notice to the Treasurer of the Company. The beneficiary may, as and to
the extent provided in Paragraph 9(d), elect to exercise the participant's
Option when it becomes exercisable on the Offering Termination Date of the then
current Offering. Upon the death of a participant and upon receipt by the
Company of proof of the identity and existence by the participant under the
Plan, and notice of election of the beneficiary to exercise the Option, the
Company shall deliver such stock and/or cash at the end of the applicable
Offering Period to such beneficiary. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall deliver such
stock and/or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
stock and/or cash to the spouse or to any one or more dependents of the
participant as the Company may designate. No beneficiary shall, prior to the
death of the participant by whom he has been designated, acquire any interest in
the stock or cash credited to the participant under the Plan.
14. Transferability.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an Option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant otherwise than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 9(a).
15. Use of Funds.
The Company shall not be obligated to segregate any payroll deductions
received or held by the Company.
16. Effect of Changes of Common Stock.
(a) In the event of any changes of outstanding shares of the Common
Stock by reason of stock dividends, subdivisions, combinations and exchanges of
shares, recapitalizations, mergers in which the Company is the surviving
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corporation, consolidations and the like, the aggregate number and class of
shares available under the Plan and the Exercise Price per share shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive. Any such adjustments may provide for the elimination of any
fractional shares which would otherwise become subject to any Option.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each Option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such Option for each share as to which such Option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 16(b) shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities and/or property as to which such holder of such Option
might thereafter be entitled to receive.
17. Amendment or Termination.
The Committee may at any time terminate or amend the Plan. Except as
hereinafter provided, no such termination may affect Options previously granted
which would adversely affect the rights of any participant, nor may an amendment
be made without prior approval of the stockholders of the Company if such
amendment would (i) cause the Plan to no longer comply with Section 423 of the
Code, or any successor rule or regulation thereof, (ii) require stockholder
approval under the rules of NASDAQ or the national securities exchange on which
the Common Stock is then traded, or (iii) permit the members of the Committee to
purchase Common Stock under the Plan.
18. Notices.
All notices or other communications by a participant to the Company
under or in connection with the Plan must be in writing and shall be deemed to
have been duly given when received by the Treasurer of the Company.
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19. Effective Date.
The Plan shall become effective as of January 1, 1995, subject to
approval by the holders of the majority of the Common Stock on or before
December 31, 1995. If the Plan is not so approved, the Plan shall not become
effective.
20. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefit of any employee or class of employees to purchase any shares under the
Plan, or create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an employee's employment at any time.
21. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each employee
participating in the Plan, including, without limitation, such employee's estate
and the executors, administrators or trustees thereof, heirs and legatees, and
any receiver, trustee in bankruptcy or representative of creditors of such
employee.
22. Governing Law.
The laws of the State of Connecticut will govern all matters relating
to this Plan except to the extent it is superseded by the laws of the United
States.
23. Registration and Qualification of the Plan under Applicable
Securities Laws.
No Option shall be granted under the Plan until such time as the
Company has qualified or registered the shares which are subject to the Option
under the applicable state and federal securities laws to the extent required by
such laws.
24. Additional Conditions.
The Committee may establish additional conditions or provisions for the
participation of eligible employees in the Plan in order to comply with the tax,
securities and other laws and regulations of the countries in which such
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employees reside, even if such conditions or provisions increase the benefits
accruing to such employees under the Plan.
Adopted by the Board of Directors
on August 4, 1994.
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Adopted by the Stockholders on
October 7, 1994.
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