THE COBALT GROUP, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSES.
The Cobalt Group, Inc. 1999 Employee Stock Purchase Plan (the "Plan")
is intended to provide additional incentives to employees and a convenient means
by which eligible employees of the Company and its Corporate Affiliates may
purchase the Company's shares of Common Stock and a method by which the Company
may assist and encourage such employees to become shareholders of the Company.
2. DEFINITIONS.
As used herein, the following definitions apply:
a. "BASE SALARY" means the regular cash compensation paid to a
Participant by one or more Participating Companies, including incentive bonuses,
overtime, commissions and any pre-tax contributions made by the Participant to
any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria
benefit program, but excluding any severance pay, hiring or relocation bonuses
and pay in lieu of vacations and sick leave.
b. "BOARD" means the Company's Board of Directors.
c. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
d. "COMPANY" means The Cobalt Group, Inc., a Washington corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of The Cobalt Group, Inc. which shall by appropriate action adopt the
Plan.
e. "COMMON STOCK" means the Company's common stock.
f. "CORPORATE AFFILIATE" means any company which is a parent or
subsidiary corporation of the Company (as determined in accordance with Code
Section 424), including any parent or subsidiary corporation which becomes such
after the Effective Date.
g. "EFFECTIVE DATE" means the first day of the first month of each
offering period which shall commence as determined by the Plan Administrator.
For any Corporate Affiliate which becomes a Participating Company in the Plan
after the first day of an offering period has commenced, a subsequent Effective
Date shall be designated with respect to participation by its Eligible
Employees.
h. "ELIGIBLE EMPLOYEE" means any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week and more than
five (5) months per
calendar year, in the rendition of personal services to the Company or any
other Participating Company for earnings considered wages under Section
3121(a) of the Code.
i. "ENTRY DATE" means the date an Eligible Employee first joins the
offering period in effect under the Plan. The earliest Entry Date under the
Plan shall be the Effective Date.
j. "PARTICIPANT" means any Eligible Employee of a Participating
Company who is actively participating in the Plan.
k. "PARTICIPATING COMPANY" means the Company and such Corporate
Affiliate or Affiliates as may be designated from time to time by the Board.
l. "PERIOD OF PARTICIPATION" means each six-month period for which
the Participant actually participates in an offering period in effect under the
Plan.
m. "PLAN ADMINISTRATOR" means the plan administrator appointed
by the Board pursuant to Section 3.a.
n. "PURCHASE DATE" means the last business day of each Period
of Participation on which day shares of Common Stock are automatically purchased
for Participants under the Plan.
3. ADMINISTRATION.
(a) POWERS. The Plan shall be administered by the Compensation
Committee ("Plan Administrator") appointed from time to time by the Board.
The Plan Administrator shall have full authority to administer the Plan,
including, without limitation, authority to interpret and construe any
provision of the Plan; to determine the offering periods and the maximum
number of shares of Common Stock which may be purchased in any one offering
period; to determine, in accordance with Section 7(c), the fair market value
of the Common Stock on any date; to prescribe, amend and rescind rules and
regulations relating to this Plan; within law, to waive or modify any term or
provision contained in this Plan or in any right to purchase shares of Common
Stock under this Plan; to authorize any person to execute on behalf of the
Company any instrument required to effectuate this Plan; and to make all
other determinations deemed necessary or advisable for the administration for
this Plan. The interpretation and construction by the Plan Administrator of
any terms or provisions of this Plan, any right issued hereunder or of any
rule or regulation promulgated in connection herewith and all actions taken
by the Plan Administrator shall be conclusive and binding on all interested
parties. The Plan Administrator may delegate administrative functions to
individuals who are officers or employees of the Company or a Corporate
Affiliate.
(b) LIMITED LIABILITY. No member of the Board of Directors or
the Plan Administrator or officer of the Company or any Corporate Affiliate
shall be liable for any action or inaction of the entity or body, or another
person or, except in circumstances involving bad faith, of himself or herself.
Subject only to compliance with explicit provisions hereof, the
Board of Directors and Plan Administrator may act in their absolute
discretion in all matters related to this Plan.
4. OFFERING PERIODS.
a. DETERMINATION. Shares of Common Stock shall be offered for
purchase under the Plan through a series of offering periods, each to be of a
duration of six (6) months, all as selected by the Plan Administrator, until
such time as the maximum number of shares of Common Stock available for
issuance under the Plan shall have been purchased or the Plan shall have been
sooner terminated in accordance with Section 10.
b. SEPARATE PURCHASE RIGHTS. The Participant shall be granted a
separate purchase right for each offering period in which he/she
participates. The purchase right shall be granted on the Entry Date on which
such individual first joins the offering period in effect under the Plan and
shall be automatically exercised on the Purchase Date.
c. INDEPENDENT. The acquisition of Common Stock through
participation in the Plan for any offering period shall neither limit nor
require the acquisition of Common Stock by the Participant in any subsequent
offering period.
5. ELIGIBILITY AND PARTICIPATION.
a. ENTRY DATES. Each Eligible Employee of a Participating
Company shall be eligible to participate in the Plan in accordance with the
provisions of this paragraph 5.2. An individual who is an Eligible Employee
on the start date of the offering period may enter that offering period on
such start date, provided he/she enrolls in the offering period before such
date in accordance with Section 5(b) below. That start date shall then
become such individual's Entry Date for the offering period, and on that date
such individual shall be granted his/her purchase right for the offering
period. Should such Eligible Employee not enter the offering period on the
start date, then he/she may not subsequently join that particular offering
period on any later date.
b. ENROLLMENT FORMS. To participate for a particular offering
period, the Eligible Employee must complete the enrollment forms prescribed in
the Plan Administrator (including the payroll deduction authorization) and file
such forms with the Plan Administrator at least ten (10) business days before
his/her scheduled Entry Date.
c. PAYROLL DEDUCTIONS. The payroll deduction authorized by the
Participant for purposes of acquiring shares of Common Stock under the Plan
shall be at a rate of not less than two percent (2%) nor more than fifteen
percent (15%) of the Base Salary paid to the Participant during the Period of
Participation, unless the Plan Administrator consents to a lower or higher
rate. The deduction rate so authorized shall continue in effect for the
remainder of the offering period, except to the extent such rate is changed
in accordance with the following guidelines:
(1) The Participant may, at any time during the Semi-Annual
Period of Participation, reduce his/her rate of payroll deduction but not less
than, without the consent of the Plan Administrator, two percent (2%) of Base
Salary. Such reduction shall become effective as soon as possible after filing
of the requisite reduction form with the Plan Administrator (or its designate),
but the Participant may not effect more than one such reduction during the same
Semi-Annual Period of Participation.
(2) The Participant may, prior to the commencement of any
new offering period, increase or decrease the rate of his/her payroll deduction
by filing the appropriate form with the Plan Administrator (or its designate).
The new rate (which may not be less than, without the consent of the Plan
Administrator, the two (2%) minimum and not exceed the 15 percent (15%) maximum)
shall become effective as of the first date of the Period of Participation
following the filing of such form.
(3) For purposes of this Section 5(3), an amended payroll
deduction authorization form shall be effective for a specific pay period when
filed ten (10) business days prior to the last day of such period.
Payroll deductions will automatically cease upon the termination of
the Participant's purchase right in accordance with the applicable provisions of
Section 7 below.
d. RULE 16b-3. Employees who are also directors or officers of
the Company may participate only in accordance with Rule 16b-3 under the
Securities Exchange Act of 1934, as in effect from time to time.
e. PARTICIPATION VOLUNTARY. Participation in the Plan shall be
voluntary.
6. STOCK SUBJECT TO PLAN
a. TOTAL NUMBER. The total number of shares of Common Stock
which may be issued under the Plan shall not exceed 300,000 shares (subject to
adjustment under Section 6(b) below).
b. CHANGES TO CAPITALIZATION. In the event any change is made
to the Company's outstanding Common Stock by reason of any stock dividend, stock
split, combination of shares or other change affecting such outstanding Common
Stock as a class without receipt of consideration, then appropriate adjustments
shall be made by the Plan Administrator to (1) the class and maximum number of
shares issuable over the term of the Plan, (2) the class and maximum number of
shares purchasable per Participant during each Semi-Annual Period of
Participation, (3) the class and maximum number of shares purchasable in the
aggregate by all Participants on any one purchase date under the Plan, and (4)
the class and number of shares and the price per share of the Common Stock
subject to each purchase right at the time outstanding under the Plan. Such
adjustments shall be designed to preclude the dilution or enlargement of rights
and benefits under the Plan.
7. PURCHASE RIGHTS.
a. TERMS AND CONDITIONS. An Employee who participates in the
Plan for a particular offering period shall have the right to purchase shares of
Common Stock, at the end of the Participation Period, upon the terms and
conditions set forth below and shall execute a purchase agreement embodying such
terms and conditions and such other provisions (not inconsistent with the Plan)
as the Plan Administrator may deem advisable.
b. PURCHASE PRICE. Common Stock shall be issuable at the end of
the Period of Participation at a purchase price equal to the lower of
eighty-five percent (85%) of (1) the fair market value per share on the
Participant's Entry Date into the offering period, or (2) the fair market
value per share on the Purchase Date on which the Period of Participation
ends.
c. VALUATION. For purposes of determining the fair market
value per share of Common Stock on any relevant date, the following procedures
shall be in effect:
(i) The fair market value on any date shall be equal to
the closing price of the Common Stock on such date, as reported on the NASDAQ
National Market System or such other quotation system that supersedes it. If
there is no quoted price for such date, then the closing price on the next
preceding day for which there does exist such a quotation shall be determinative
of fair market value.
(ii) If Section 7(c)(1) is not applicable, the fair market
value shall be determined by the Plan Administrator in good faith. Such
determination shall be conclusive and binding on all persons.
d. NUMBER OF PURCHASABLE SHARES. The number of shares
purchasable per Participant for each Period of Participation shall be the
number of whole shares obtained by dividing the amount collected from the
Participant through payroll deductions during such Period of Participation by
the purchase price in effect for the Purchase Date on which such Semi-Annual
Period of Participation ends. No Participant, however, may purchase during
any one Purchase Period more than 1,000 shares of Common Stock (subject to
periodic adjustment under Section 6(b)).
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
any of its Corporate Affiliates.
e. PAYMENT. Payment for the Common Stock purchased under the
Plan shall be effected by means of the Participant's authorized payroll
deductions. Such deductions shall begin on the first day coincident with or
immediately following the Participant's Entry Date into the offering period and
shall (unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of
the offering period. The amounts so collected shall be credited to the
Participant's book account under the Plan, but no interest shall be paid on
the balance from time to time outstanding in such account. The amounts
collected from a Participant may be commingled with the general assets of the
Company and may be used for general corporate purposes.
f. TERMINATION OF PURCHASE RIGHT. The following provisions
shall govern the termination of outstanding purchase rights:
(1) A Participant may, at any time prior to the last
thirty (30) business days of the Semi-Annual Period of Participation, terminate
his/her outstanding purchase right under the Plan by filing the prescribed
notification form with the Plan Administrator (or its designate), unless the
Participant has delivered to the Plan Administrator a written waiver of his or
her rights to terminate such purchase rights. No further payroll deductions
shall be collected from the Participant with respect to the terminated purchase
right, and any payroll deductions collected for the Period of Participation in
which such termination occurs shall be refunded to the Participant.
(2) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the offering period
for which such terminated purchase right was granted. In order to resume
participation in any subsequent offering period, such individual must re-enroll
in the Plan (by making a timely filing of a new payroll deduction authorization)
on or before the date he/she is first eligible to join any new offering period.
(3) If the Participant ceases to remain an Eligible
Employee while his/her purchase right remains outstanding, then such individual
(or the personal representative of the estate of a deceased Participant) shall
have the following election, exercisable up until the end of the Semi-Annual
Period of Participation in which the Participant ceases Eligible Employee
status:
i) to withdraw all of the Participant's payroll
deductions for such Period of Participation,
or
ii) to have such funds held for the purchase of
shares on the Purchase Date immediately
following such cessation of Eligible Employee
status.
If no such election is made, then such funds shall be refunded as soon
as possible after the close of such Period of Participation. In no event,
however, may any payroll deductions be made on the Participant's behalf
following his/her cessation of Eligible Employee status.
g. STOCK PURCHASE. Shares of Common Stock shall automatically
be purchased on behalf of each Participant (other than Participants whose
payroll deductions have previously been refunded in accordance with the
Termination of Purchase Right provisions above) on the Purchase Date. The
purchase shall be effected by applying such Participant's payroll deductions for
the Period of Participation ending on such Purchase Date to the purchase
of shares of Common Stock (subject to the limitation on the maximum number of
purchasable shares set forth above) at the purchase price in effect for such
Period of Participation. Any payroll deductions not applied to the purchase
of Common Stock at the end of an offering period or by reason of the
limitation on the maximum number of shares purchasable by the Participant for
that Period of Participation shall be refunded to the Participant.
h. PRORATION OF PURCHASE RIGHTS. Subject to the limitations
set forth in Section 6(a), the Plan Administrator shall determine the number of
shares of Common Stock, subject to periodic adjustment under Section 6(b), which
may be purchased in the aggregate by all Participants in any one offering period
under the Plan. Should the total number of shares of Common Stock which are to
be purchased pursuant to outstanding purchase rights on any particular date
exceed either (1) the maximum limitation on the number of shares purchasable in
the aggregate on such date or (2) the number of shares then available for
issuance under the Plan, the Plan Administrator shall make a pro rata allocation
of the available shares on a uniform and nondiscriminatory basis, and the
payroll deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro rated to such individual, shall
be refunded to such Participant.
i. RIGHTS AS SHAREHOLDER. A Participant shall have no rights
as a shareholder with respect to the shares subject to his/her outstanding
purchase right until the shares are actually purchased on the Participant's
behalf in accordance with the applicable provisions of the Plan. No adjustments
shall be made for dividends, distributions or other rights for which the record
date is prior to the date of such purchase.
A Participant shall be entitled to receive, as soon as practicable
after each Purchase Date, a stock certificate for the number of shares
purchased on the Participant's behalf. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
j. ASSIGNABILITY. Purchase rights granted under the Plan shall
not be assignable or transferable by the Participant other than by will or by
the laws of descent and distribution following the Participant's death, shall
not be subject to execution, attachment or similar process, and shall be
exercised during the Participant's lifetime only by the Participant.
k. CHANGE IN OWNERSHIP. Should the Company or its shareholders
enter into an agreement to dispose of all or substantially all of the assets or
outstanding capital stock of the Company by means of:
(1) a sale, merger or other reorganization in which the
Company will not be the surviving corporation (other than a reorganization
effected primarily to change the state in which the Company is incorporated), or
(2) a reverse merger in which the Company is the
surviving corporation but in which more than 50% of the Company's outstanding
voting stock is
transferred to holders different from those who held the stock immediately
prior to the reverse merger, then, unless the successor shall continue this
Plan and assume all the obligations evidenced by the outstanding rights to
purchase shares of Common Stock or shall provide equivalent rights with
respect to the successor's securities, all to the reasonable satisfaction of
the Board, all outstanding purchase rights under the Plan shall automatically
be exercised immediately prior to the consummation of such sale, merger,
reorganization or reverse merger by applying the payroll deductions of each
Participant for the Period of participation in which such transaction occurs
to the purchase of whole shares of Common Stock at the lower of eighty-five
percent (85%) of (i) the fair market value of the Common Stock on the
Participant's Entry Date into the offering period in which such transaction
occurs, or (ii) the fair market value of the Common Stock immediately prior
to the consummation of such transaction. However, the applicable share
limitations of Sections 7 and 8 shall continue to apply to any such purchase.
The Company shall use its best efforts to provide at least ten (10)
days' advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall, following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Sections 7.
8. ACCRUAL LIMITATIONS.
a. DOLLAR LIMIT. No Participant shall be entitled to accrue
rights to acquire Common Stock pursuant to any purchase right outstanding under
this Plan if and to the extent such accrual, when aggregated with rights to
purchase Common Stock accrued under any other purchase right outstanding under
this Plan and similar rights accrued under other employee stock purchase plans
(within the meaning of Section 423 of the Code) of the Company or its Corporate
Affiliates, would otherwise permit such Participant to purchase more than
$25,000 worth of stock of the Company or any Corporate Affiliate (determined on
the basis of the fair market value of such stock on the date or dates such
rights are granted to the Participant) for each calendar year such rights are at
any time outstanding.
b. APPLICATION. For purposes of applying such accrual
limitations, the right to acquire Common Stock pursuant to each purchase right
outstanding under the Plan shall accrue as follows:
(1) the right to acquire Common Stock under each such
purchase right shall accrue as and when the purchase right first becomes
exercisable for each the last business day of each Period of Participation.
(2) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already accrued
in the same calendar year the right to acquire $25,000 worth of Common Stock
(determined on the basis of the fair market value on the date or dates of
grant) pursuant to one or more purchase rights held by the Participant during
such calendar year.
(3) If by reason of such accrual limitations, any
purchase right of a Participant does not accrue for a particular Period of
Participation, then the payroll deductions which the Participant made during
that Period of Participation with respect to such purchase right shall be
refunded.
c. CONTROLLING PROVISION. In the event there is any conflict
between the provisions of this Section 8 and one or more provisions of the Plan
or any instrument issued thereunder, the provisions of this Section 8 shall be
controlling.
9. STATUS OF PLAN UNDER FEDERAL TAX LAWS.
The Plan is designed to qualify as an employee stock purchase plan
under Code Section 423, and shall be governed and construed accordingly.
10. AMENDMENT AND TERMINATION.
a. AMENDMENTS, SUSPENSION, DISCONTINUATION. The Board may
alter, amend, suspend or discontinue the Plan immediately following the close of
any Period of Participation. However, the Board may not, without the approval
of the Company's shareholders:
(1) materially increase the number of shares issuable
under the Plan or the maximum number of shares which may be purchased per
Participant or in the aggregate during any one Period of Participation under the
Plan, except that the Plan Administrator shall have the authority, exercisable
without such shareholder approval, to effect adjustments to the extent necessary
to effect changes in the Company's capital structure pursuant to Section 6(b);
(2) alter the purchase price formula so as to reduce the
purchase price payable for the shares of Common Stock issuable under the Plan;
(3) materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility to participate in the Plan; or
(4) adopt amendments which require shareholder approval
under applicable law, including Section 16(b) of the Securities Exchange Act of
1934.
b. TERMINATION OF PURCHASE RIGHTS. The Company shall have the
right, exercisable in the sole discretion of the Plan Administrator, to
terminate all outstanding purchase rights under the Plan immediately following
the close of any Period of Participation. Should the Company elect to exercise
such right, then the Plan shall terminate in its entirety. No further purchase
rights shall thereafter be granted or exercised, and no further payroll
deductions shall thereafter be collected, under the Plan.
11. GENERAL PROVISIONS.
a. REQUIREMENTS. No offering period shall commence, and no
shares of Common Stock shall be issued hereunder, until (1) the Plan shall have
been approved by the Company's shareholders and (2) the Company shall have
complied with all relevant provisions of law, including, without limitation, any
applicable state securities laws, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, applicable laws of foreign countries and other
jurisdictions, the requirements of any quotation service or stock exchange upon
which the shares may then be listed, and all other applicable requirements
established by law or regulation. In the event such shareholder approval is not
obtained, or such Company compliance is not effected, within twelve (12) months
after the date on which the Plan is adopted by the Board, the Plan shall
terminate and have no further force or effect.
b. PLAN TERMINATION. The Plan shall terminate upon the earlier
of (1) June 30, 2004, or (2) the date on which all shares available for issuance
under the Plan shall have been sold pursuant to purchase rights exercised under
the Plan.
c. COSTS. All costs and expenses incurred in the administration
of the Plan shall be paid by the Company.
d. NO STATUS AS EMPLOYEE. Neither the action of the Company in
establishing the Plan, or any action taken under the Plan by the Board or the
Plan Administrator, nor any provision of the Plan itself shall be construed so
as to grant any person the right to remain in the employ of the Company or any
of its Corporate Affiliates for any period of specific duration, and such
person's employment may be terminated at any time, with or without cause.
e. NO SEGREGATION OF FUNDS. All payroll deductions received or
held by the Company under the Plan may be used by the Company for any corporate
purposes and the Company shall not be obligated to segregate the payroll
deductions.
f. NO INTEREST. No Participant shall be entitled, at any time,
to any payment or credit for interest with respect to or on the payroll
deductions contemplated herein, or on any other assets held hereunder for the
Participant's account.
g. GOVERNING LAW. The provisions of the Plan shall be governed
by the laws of the State of Washington.