GRADALL INDUSTRIES, INC.
1998 STOCK OPTION PLAN
1. General. This Stock Option Plan (the "Plan") provides eligible
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employees of Gradall Industries, Inc., a Delaware corporation (the "Company"),
and its subsidiaries with the opportunity to acquire or expand their equity
interest in the Company by making available for purchase shares of Common Stock,
par value $.001 per share, of the Company ("Common Stock"), through the granting
of nontransferable options to purchase shares of Common Stock ("Stock Options").
Stock Options shall be referred to herein as "Grants", and an individual grant
of Stock Options shall be referred to herein as a "Grant".
It is intended that key employees may be granted, simultaneously or from
time to time, Stock Options that qualify as incentive stock options ("Incentive
Stock Options") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or Stock Options which do not qualify as Incentive Stock
Options ("Non-Qualified Stock Options"). With respect to Incentive Stock
Options granted under this Plan, the Plan and Option Agreements entered into
pursuant to this Plan shall be administered and construed in a manner consistent
with the requirements of Section 422 of the Code.
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including, without limitation, Rule 16b-3. The Plan shall be
administered, and Stock Options shall be granted and may be exercised, only in
such a manner as to conform to such laws, rules and regulations, if applicable.
2. Purpose of the Plan. The purpose of the Plan is to provide
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continuing incentives to key employees of the Company and its subsidiaries, by
encouraging such key employees to acquire new or additional share ownership in
the Company, thereby increasing their proprietary interest in the Company's
business and enhancing their personal interest in the Company's success. For
purposes of the Plan, a "subsidiary" consists of any corporation fifty percent
(50%) of the stock of which is directly or indirectly owned or controlled by the
Company.
3. Effective Date of the Plan. The Plan shall become effective upon
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its adoption by the Board of Directors of the Company (the "Board"), subject to
approval by holders of a majority of the outstanding shares of voting capital
stock of the Company. If the Plan is not so approved within twelve (12) months
after the date the Plan is adopted by the Board, the Plan and any Grants made
hereunder shall be null and void. However, if the Plan is so approved, no
further shareholder approval shall be required with respect to the making of
Grants pursuant to the Plan.
4. Administration of the Plan. The Plan shall be administered by the
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Board. Subject to the terms and conditions of the Plan, the Board, shall be
authorized and empowered:
a. To select the key employees to whom Grants may be made;
b. To determine the number of shares of Common Stock to be covered
by any Grant;
c. To prescribe the terms and conditions of any Grants made under
the Plan, and the form(s) and agreement(s) used in connection with such Grants,
which shall include agreements governing the granting of Stock Options which may
provide that the stock which is the subject of any such Grant shall be subject
to the restrictions on transfer contained in any agreement in effect among the
Company and one or more of its stockholders;
d. To determine the time or times when Stock Options will be
granted and when they will terminate in whole or in part;
e. To determine the time or times when Stock Options that are
granted may be exercised; provided, however, that unless the Board specifically
determines otherwise in any individual instance, the standard vesting schedule
for Stock Options granted hereunder shall be three equal yearly installments;
f. To determine, at the time a Stock Option is granted under the
Plan, whether such Stock Option is an Incentive Stock Option entitled to the
benefits of Section 422 of the Code; and
g. To establish any other Stock Option agreement provisions not
inconsistent with the terms and conditions of the Plan or, where the Stock
Option is an Incentive Stock Option, with the terms and conditions of Section
422 of the Code; and
h. Make any other determination and take any other action that the
Board deems necessary or desirable for the administration of the Plan.
5. Employees Eligible for Grants. Grants may be made from time to time
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to those key employees of the Company or its subsidiaries who are designated by
the Board in its sole and exclusive discretion. Key employees may include, but
shall not necessarily be limited to, members of the Board of Directors
(excluding members of the Committee) and officers of the Company and any
subsidiary; however, Stock Options shall be granted to key employees only while
actually employed by the Company or a subsidiary. No Stock Option shall be
granted to any key employee during any period of time when such key employee is
on a leave of absence.
6. Stock Subject to the Plan. The shares to be issued pursuant to any
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Grant made under the Plan shall be shares of Common Stock. Either shares of
Common Stock held as treasury stock or authorized and unissued shares of Common
Stock, or both, may be so issued, in such amount or amounts within the maximum
limits of the Plan as the Board shall from time to time determine.
Subject to the provisions of the next succeeding paragraph of this Section
6, the aggregate number of shares of Common Stock that can be actually issued
under the Plan shall be 300,000 shares.
If, at any time subsequent to the adoption of this Plan by the Board the
number of issued and outstanding shares of Common Stock increases or decreases,
or the Common Stock is changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company as a result of a stock
split, stock dividend, combination of shares, reclassification, redesignation,
recapitalization or other similar capital change): (i) there shall automatically
be substituted for each share of Common Stock subject to the Plan and to an
unexercised Stock Option (in whole or in part) granted under the Plan, the
number and kind of shares of stock or other securities into which each share of
outstanding Common Stock shall be changed or for which each such share of Common
Stock shall be exchanged; and (ii) the option price per share of Common Stock or
unit of securities shall be increased or decreased proportionately so that the
aggregate purchase price for the securities subject to a Stock Option shall
remain the same as immediately prior to such event. In addition to the
foregoing, the Board shall be entitled in the event of any such increase,
decrease or exchange of shares of Common Stock to make other adjustments to the
securities subject to a Stock Option, the provisions of the Plan, and to any
related Stock Option agreements (including adjustments which may provide for the
elimination of fractional shares) where necessary (under Section 422(a)(2) of
the Code or otherwise) to preserve the terms and conditions of any Grants
hereunder.
7. Stock Option Provisions.
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a. General. The Board may grant to key employees (also referred
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to as "optionees") nontransferable Stock Options that qualify as Incentive Stock
Options under Section 422 of the Code or Non-Qualified Stock Options . Stock
Options shall only be granted under this Plan within ten (10) years from the
earlier of (i) the date this Plan is adopted by the Board and (ii) the date this
Plan is approved by the stockholders of the Company.
b. Stock Option Price. The option price per share of Common Stock
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which may be purchased under an Incentive Stock Option under the Plan shall be
determined by the Board at the time of Grant, but shall not be less than one
hundred percent (100%) of the fair market value of a share of Common Stock,
determined as of the date such Option is granted; however, if a key employee to
whom an Incentive Stock Option is granted is, at the time of the grant of such
Option, an "owner" as defined in Section 422(b)(6) of the Code (modified as
provided in Section 424(d) of the Code) of more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
subsidiary (a "Substantial Shareholder"), the price per share of Common Stock of
such Incentive Stock Option, as determined by the Board, shall not be less than
one hundred ten percent (110%) of the fair market value of a share of Common
Stock on the date such Incentive Stock Option is granted. The option price per
share of Common Stock under each Non-Qualified Stock Option granted pursuant to
the Plan shall be determined by the Board at the time of Grant. Except as
specifically provided above, the fair market value of a share of Common Stock
shall be the last reported sales price of the Common Stock as reported by The
Nasdaq National Market on the last business day prior to the date of the Grant.
If the Common Stock is not included in The Nasdaq National Market, the fair
market value of the Common Stock shall be determined in accordance with
procedures to be established by the Board. The day on which the Board approves
the granting of a Stock Option shall be considered the date on which such Option
is granted.
c. Period of Stock Option. The Board shall determine when each
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Stock Option is to expire. However, no Incentive Stock Option shall be
exercisable after the expiration of ten (10) years from the date upon which such
Option is granted, or five (5) years from the date upon which such Option is
granted, with respect to Incentive Stock Options granted to a Substantial
Shareholder.
d. Limitation on Exercise and Transfer of Stock Options. Only the
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key employee to whom a Stock Option is granted may exercise such Option, except
where a guardian or other legal representative has been duly appointed for such
employee, and except as otherwise provided in the case of such employee's death.
No Stock Option granted hereunder shall be transferable by an optionee other
than by will or the laws of descent and distribution. No Stock Option granted
hereunder may be pledged or hypothecated, nor shall any such Option be subject
to execution, attachment or similar process.
e. Payment for Stock Option Price. A Stock Option shall be
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exercised by an optionee giving written notice to the Company of his intention
to exercise the same, accompanied by full payment of the purchase price in cash
or by check. The Board may, in its sole discretion, approve other methods of
exercise for a Stock Option or payment of the option price, provided that no
such method shall cause any Incentive Stock Option granted under the Plan to not
qualify under Section 422 of the Code, or cause any share of Common Stock issued
in connection with the exercise of an option not to be a fully paid and
non-assessable share of Common Stock.
f. Limitation on Exercisable Stock Option. No Incentive Stock
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Option shall be granted to any optionee, to the extent that the aggregate fair
market value of the shares of Common Stock subject to such Option and all other
Incentive Stock Options granted to such optionee, which are first eligible for
exercise in any given calendar year, exceeds the sum of One Hundred Thousand
Dollars ($100,000.00). Such aggregate fair market value shall be determined as
of the date such Option is granted, taking into account, in the order in which
granted, any other Incentive Stock Options granted by the Company, or by a
parent or subsidiary thereof.
g. Withholding of Taxes. The Board may, in its sole discretion,
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require, as a condition to any Grant or to the delivery of certificates for
shares issued thereunder, that the optionee pay to the Company, in cash, any
federal, state or local taxes of any kind required by law to be withheld with
respect to any Grant or any delivery of shares of Common Stock upon exercise
thereof. The Company, to the extent permitted or required by law, shall have
the right to deduct from any payment of any kind (including salary, bonus,
severance of insurance proceeds) otherwise due to an optionee any federal, state
or local taxes of any kind required by law to be withheld with respect to any
Grant or to the delivery of shares of Common Stock under the Plan.
8. Termination of Employment. A Stock Option may be exercised only
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while the optionee is an employee of the Company or a subsidiary or within three
(3) months after the termination of employment for any reason other than death,
retirement, "permanent and total disability" (as defined below) or termination
for "cause" (as defined below). Neither the optionee nor any other person shall
have any right after such date to exercise all or any part of his Stock Options
and they shall thereupon be forfeited, declared void and without value, or both.
If termination of employment is due to death or permanent and total
disability, then outstanding Stock Options may be exercised, to the extent they
were exercisable on the date of such termination of employment, within the one
(1) year period ending on the anniversary of such death or permanent and total
disability. If termination of employment is without cause or as a result of
retirement, such Stock Options may be exercised, to the extent they were
exercisable on the date of such termination of employment, within three (3)
months of the date of such termination. In the case of death, such outstanding
Stock Options may be exercised by such optionee's estate, or the person
designated by such optionee by Will, or as otherwise designated by the laws of
descent and distribution. Notwithstanding the foregoing, in no event shall any
Stock Option be exercisable after the expiration of the option period.
For purposes hereof, "permanent and total disability" means a permanent and
total disability as defined in Section 22(e)(3) of the Code. For purposes
hereof, termination for "cause" means termination of the employee's employment
by the Company as a result of (i) conviction of the employee for a felony or for
any crime or offense lesser than a felony involving the property of the Company
or a subsidiary; (ii) conduct by the employee that has caused demonstrable and
serious injury to the Company or a subsidiary, monetary or otherwise; or (iii)
substandard performance, or material misconduct or negligence in the
performance, of the employee's duties in the reasonable judgment of the Board.
9. Merger, Sale, etc. In the event of a merger, consolidation or other
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corporate reorganization of the Company with respect to which the outstanding
shares of Common Stock of the Company are to be converted into or exchanged for
cash, debt or equity securities or other property, the Company shall pay to each
holder of an outstanding Stock Option on or before the consummation thereof in
cash the amount by which the aggregate value of the consideration receivable in
the transaction by the holder of the number of shares of Common Stock equal to
the number of shares remaining subject to such Stock Option (whether or not then
exercisable) exceeds the aggregate option price of such Stock Option unless (i)
the surviving or acquiring corporation in such merger, consolidation or other
corporate reorganization has agreed to assume such Stock Option or to substitute
a new option therefor in conformity with the requirements of Section 422 and 424
of the Internal Revenue Code and (ii) such holder agrees to such assumption or
substitution.
In the event that (a) the Company sells or otherwise transfers all or
substantially all its assets or (b) all or substantially all the assets of The
Gradall Company are acquired by another corporation or entity (whether by
purchase, merger or otherwise) then, in either of such events, the Company shall
pay to each holder of an outstanding Stock Option on or before the consummation
thereof an amount in cash equal to the product obtained by multiplying (I) the
number of shares remaining subject to such Stock Option (whether or not then
exercisable) by (II) the quotient obtained by dividing (A) the value of the
consideration paid to the Company or The Gradall Company for such assets
(excluding the amount of debt assumed by the acquirer) by (B) the number of
shares of Common Stock of the Company which would then be outstanding (assuming
the exercise of all options, warrants and convertible securities) and
subtracting from the product so obtained the aggregate option price of such
Stock Option, unless (i) the acquiring corporation or entity has agreed to
assume such Stock Option or to substitute a new option therefor in conformity
with the requirements of Section 422 and 424 of the Internal Revenue Code and
(ii) such holder agrees to such assumption or substitution.
10. Change of Control. In the event that (i) the Company is the
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surviving corporation in a merger, combination or other corporate reorganization
as a result of which less than a majority of the outstanding voting securities
are owned by the persons who were shareholders of the Company immediately prior
to such merger or corporate reorganization, (ii) 25% or more of the outstanding
voting securities of the Company become owned (whether directly, indirectly,
beneficially or of record) by any person or group (within the meaning of Section
13(d) or Section 14(d) of the Securities Exchange Act of 1934), other than MLGA
Fund II, L.P. or a pension, retirement, profit sharing, employee stock ownership
or other employee benefit plan of the Company or an affiliate thereof, and the
percentage of voting securities so owned by such person or group exceeds the
percentage of the Company's outstanding voting securities owned by MLGA Fund II,
L. P. or (iii) during any period of two consecutive years, individuals who at
the beginning of any such period constituted the directors of Company cease for
any reason to constitute a majority thereof (provided, however, that for
purposes of this clause (iii) each new director whose nomination for election
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of any such period will be deemed to
have been a director of the Company at the beginning of such period), then in
any of such events each Stock Option which is then outstanding shall immediately
become and be exercisable in full for the remainder of its term, notwithstanding
the subsequent termination by the Company of the optionee's employment with the
Company.
11. Employment by Subsidiary. For purposes of this Plan, employment by
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a subsidiary of the Company shall be considered employment by the Company. The
term "subsidiary" as used herein shall have the meaning set forth in Section 424
of the Internal Revenue Code or subsequent comparable statute. All references
herein to the provisions of the Internal Revenue Code are references to the
Internal Revenue Code of 1986, as amended, as in effect from time to time.
12. Amendments to Plan. The Board is authorized to interpret this Plan
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and from time to time adopt any rules and regulations for carrying out this Plan
that it may deem advisable. Subject to the approval of the Board, the Board may
at any time amend, modify, suspend or terminate this Plan. In no event,
however, without the approval of the stockholders, shall any action of the Board
or the Board result in:
a. Materially amending, modifying or altering the eligibility
requirements provided in Section 5 hereof;
b. Materially increasing, except as provided in Section 6 hereof,
the maximum number of shares of Common Stock that may be made subject to Grants;
or
c. Materially increasing the benefits accruing to participants
under this Plan;
except to conform this Plan and any agreements made hereunder to changes in the
Code or required by governing law.
13. Investment Representation, Approvals and Listing. The Board may,
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if it deems appropriate, condition its grant of any Stock Option hereunder upon
receipt of the following investment representation from the optionee:
"I agree that any shares of Common Stock of Gradall Industries, Inc. which
I may acquire by virtue of this Stock Option shall be acquired for investment
purposes only and not with a view to distribution or resale, and may not be
transferred, sold, assigned, pledged, hypothecated or otherwise disposed of
unless (i) a registration statement or post-effective amendment to a
registration statement under the Securities Act, with respect to said shares of
Common Stock has become effective so as to permit the sale or other disposition
of said shares by me; or (ii) there is presented to Gradall Industries, Inc. an
opinion of counsel satisfactory to Gradall Industries, Inc. to the effect that
the sale or other proposed disposition of said shares of Common Stock may
lawfully be made otherwise than pursuant to an effective registration statement
or post-effective amendment to a registration statement relating to the said
shares under the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificate for shares of
Common Stock upon the exercise of any Stock Option granted under this Plan prior
to (i) the obtaining of any approval from any governmental agency with the Board
shall, in its sole discretion, determine to be necessary or advisable; (ii) the
admission of such shares to listing on any national securities exchange on which
the shares of Common Stock may be listed; (iii) the completion of any
registration or other qualification of the shares of Common Stock under any
state or federal law or ruling or regulations of any governmental body which the
Board shall, in its sole discretion, determine to be necessary or advisable or
the determination by the Board, in its sole discretion, that any registration or
other qualification of the shares of Common Stock is not necessary or advisable;
or (iv) the obtaining of an investment representation from the optionee in the
form stated above or in such other form as the Board, in its sole discretion,
shall determine to be adequate.
14. General Provisions. The form and substance of Stock Option
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Agreements made hereunder, whether granted at the same or different times, need
not be identical. Nothing in this Plan or in any Stock Option agreement shall
confer upon any employee any right to continue in the employ of the Company or
any of its subsidiaries or to interfere with or limit the right of the Company
or any subsidiary to terminate his employment at any time, with or without
cause. Nothing contained in this Plan or in any Stock Option Agreement shall be
construed as entitling any optionee to any rights of a stockholder as a result
of the grant of Stock Option, until such time as shares of Common Stock are
actually issued to such optionee pursuant to the exercise of such Option. This
Plan may be assumed by the successors and assigns of the Company. The liability
of the Company under this Plan and any sale made hereunder is limited to the
obligations set forth herein with respect to such sale and no term or provision
of this Plan shall be construed to impose any liability on the Company in favor
of any employee (or any other party acting on his behalf or in his stead) with
respect to any loss, cost or expense which such employee or party may incur in
connection with or arising out of any transaction in connection with this Plan.
The cash proceeds received by the Company from the issuance of shares of Common
Stock pursuant to this Plan will be used for general corporate purposes. The
expense of administering this Plan shall be borne by the Company. The captions
and section numbers appearing in this Plan are inserted only as a matter of
convenience. They do not define, limit, construe or describe the scope or
intent of the provisions of this Plan.
15. Provisions Applicable Solely to Insiders. The provisions of this
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Section 15 shall apply only to persons who are subject to Section 16 of the
Exchange Act with respect to securities of the Company ("Insiders"), and shall
apply to Insiders notwithstanding any provision of the Plan to the contrary. No
Insider shall be permitted to transfer any security of the Company acquired by
him, except to the extent permitted by 17 C.F.R. 240.16a-2(d)(1), upon the
exercise of any Stock Option, until at least six (6) months and one (1) day
after the later of (i) the day on which such Stock Option is granted to the
Insider or (ii) the day on which the exercise or conversion price of such Stock
Option is fixed.
16. Termination of This Plan. This Plan shall terminate on March 24,
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2008, and thereafter no Stock Options shall be granted hereunder. All Stock
Options outstanding at the time of termination of this Plan shall continue in
full force and effect according to their terms and the terms and conditions of
this Plan.