EXHIBIT 99.1
THE CHALONE WINE GROUP, LTD.
2003 EMPLOYEE STOCK PURCHASE PLAN
This EMPLOYEE STOCK PURCHASE PLAN (the "Plan"), adopted by the Board of
Directors of THE CHALONE WINE GROUP, LTD., a California corporation (the
"Company"), effective January 1, 2003 (the "Effective Date"), and approved by
the Company's shareholders May 29, 2003.
1. PURPOSE. The purpose of the Plan is to enable the Company to
attract, retain, and stimulate employees of the Company, to devote themselves to
the greater success and prosperity by the equity-acquisition incentives provided
herein. The Plan is intended to qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "Administrator" shall mean the Company's Board of Directors, exclusive
of any director who is a participant or is eligible to be a participant
in the Plan.
(b) "Board" shall man the Board of Directors of The Chalone Wine Group,
Ltd., except when referring to the "Administrator," where it shall mean
the diminished board as defined above.
(c) "Code" shall mean the Internal Revenue Code of 1986.
(d) "Compensation" shall mean the annual base rate of pay of a Participant,
determined in accordance with nondiscriminatory rules adopted by the
Board of Directors, including commissions, but excluding bonuses,
income with respect to stock options or other stock purchases, moving
expense reimbursements, shift differentials, or any pay for work
outside the regular work schedule.
(e) "Determination Date" shall mean either (i) the Offering Commencement
Date (or the date of entry as a Participant in the Plan for
later-enrolling or re-enrolling employees), or (ii) the last day of
each Interim Offering Period.
(f) "Eligible Employee" shall mean any regular employee of the Company
whose date of hire was at lest one year prior to the commencement of an
Offering Period or an Interim Offering Period and who is customarily
employed for more than 20 hours per week and five (5) months per year
in any calendar year.
(g) "Fair Market Value" of a share of Stock shall mean the closing price of
the Stock as quoted in the NASDAQ National Marketing System on the
Determination Date. In the event the Stock is not traded on the date as
of which the Fair Market Value is to be determined, Fair Market Value
shall be determined as of the next preceding date on which the Stock is
traded.
(h) "Interim Offering Period" shall, unless the Administrator has otherwise
determined, mean each three-month period during and within an Offering
Period.
(i) "Offering Commencement Date" shall mean the first day of each Offering
Period.
(j) "Offering Period" shall, unless the Administrator has established a
shorter period, mean a 27-month period during which contributions for
the purchase of Stock under the Plan may be made.
(k) "Option" shall mean the right of a Participant to purchase Stock during
the applicable Offering Period.
(l) "Participant" shall mean an Eligible Employee who elects to participate
in the Plan.
(m) "Plan Account" shall mean the account established for each Participant
pursuant to the Plan.
(n) "Purchase Price" shall mean the price at which Participants may
purchase Stock as determined pursuant to the Plan, as set forth in
Section 5(d).
(o) "Stock" shall mean the no par value common stock of the Company.
(p) "Subsidiary" shall mean a corporation, a majority of whose voting
shares are owned by the Company.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board, as heretofore defined. The Board may however delegate essentially
ministerial functions of the administration, and references hereinafter to the
"Administrator" with respect to such functions may refer either to the Board or
to its delegee. The interpretation of or construction of the Administrator shall
be conclusive and binding on all persons.
4. NUMBER OF SHARES TO BE OFFERED. The maximum aggregate number of
shares which shall be offered under the Plan, for the period commencing February
26, 2003 and concluding January 31, 2008, shall be 50,000 shares of Stock,
subject to adjustment as set forth in Section 10. In the event that any Option
granted under the Plan expires or is terminated for any reason, the shares
allocable to the unexercised portion of such Option shall again be subject to an
Option under the Plan.
5. ELIGIBILITY AND PARTICIPATION.
(a) INITIAL PARTICIPATION. An Eligible Employee may become a Participant on
the Offering Commencement Date by delivering to the Company's payroll
office an enrollment form, authorizing payroll deductions as
hereinafter et forth, within such time as the Administrator shall
determine; absent a contrary determination by the Administrator such
forms shall be submitted not less than ten (10) days prior to the
Offering Commencement Date. An Eligible Employee who did not enroll in
the Plan at the Offering Commencement Date, or a person who becomes an
Eligible Employee after an Offering Commencement Date, may enroll in
the Plan for the remainder of the Offering Period as of the beginning
of the next Interim Offering Period, by submitting an enrollment form
prior to the commencement date of such Interim Offering Period.
(b) CONTINUED PARTICIPATION. A Participant shall automatically participate
in each successive Offering Period (including Interim Offering Periods)
until such time as such Participant withdraws from the Plan as set
forth below. A Participant is not required to file any additional
enrollment forms for subsequent Offering Periods in order to continue
participation in the Plan.
(c) PAYROLL DEDUCTION. The Participant shall designate on the enrollment
form the percentage of Compensation which he or she elects to have
withheld for the purchase of Stock pursuant to the Plan, which
percentage may be any percent up to 10% of the Participant's
Compensation. A Participant may reduce (but not increase) the rate of
payroll withholding during an Offering Period by filing an amended
enrollment form with the Administrator at the Company's payroll office
at any time prior to the last day of any Interim Offering Period for
which such change is to be effective; provided, however, that the
Administrator may limit the number of such changes that may be made in
any Offering Period. A Participant may increase or decrease the rate of
payroll deduction for any subsequent Offering Period by filing with the
Company a new authorization for payroll deductions within such time as
the Administrator shall determine; absent a contrary determination by
the Administrator that time shall be at least ten (10) days prior to
the Offering Commencement Date for such subsequent Offering Period.
By enrolling in the Plan, a Participant shall be deemed to have elected
to purchase the maximum number of whole shares of Stock which can be purchased
with the amount of the Participant's Compensation which is withheld during and
at the end of the Offering Period.
(d) PURCHASE PRICE. The Purchase Price for each share of Stock to be
purchased under the Plan shall be eighty-five percent (85%) of the Fair
Market Value of such share on either (i) the Offering Commencement Date
(or the date of entry as a Participant in the Plan for later-enrolling
or re-enrolling employees) or (ii) the last day of each Interim
Offering Period, whichever is less.
(e) CONTRIBUTIONS. The Purchase Price of the Stock shall be accumulated by
payroll deductions throughout the Offering Period, which shall be
applied automatically to purchase Stock at the Purchase Price at the
end of each Interim Offering Period. Payroll deductions shall commence
on the first payday following the Offering Commencement Date (or, in
the case of a later-enrolling or re-enrolling employee, on the first
payday following the commencement of the applicable Interim Offering
Period) and shall continue to the end of the Offering Period unless
sooner altered or terminated as provided in this Plan.
(f) EFFECT OF LEAVE OF ABSENCE. During a Company-approved leave of absence
on diminished (or no) compensation, a Participant may, for such period
as the Board shall deem reasonable (which in no event shall be for a
period longer than ninety (90) days unless the Participant's
reemployment rights after the leave of absence are guaranteed by law),
continue as a Participant in the Plan, at his or her previous level of
participation, by making cash payments to the Company on his or her
normal paydays in an amount equal to the difference between the amount
of his or her regular payroll deductions taken while regularly employed
by the Company and the amount of the payroll deduction taken while on
such leave of absence. Failure to pay any installment within ten (10)
days after the payday on which it is due shall be treated as an
election by the Participant to reduce his or her participation in the
Plan to the reduced level represented by the payroll deductions then in
effect or, if there are none then being taken, as an election to
withdraw from the Plan.
(g) PURCHASE OF STOCK. The Company will maintain a Plan Account on its books
in the name of each Participant. On each payday the amount deducted
from the Participant's Compensation will be credited to the
Participant's Plan Account. No interest shall accrue on any such
payroll deductions. As of the last day of each Interim Offering Period
the amount then in the Participant's Plan Account will be divided by
the Purchase Price and the amounts in the Participant's Plan Account
shall be used to purchase the number of whole shares of Stock which
result. Share certificates representing the number of shares of Stock
so purchased shall be issued and delivered to the Participant as soon
as reasonably practicable after the close of each Interim Offering
Period. Any amount remaining in the Participant's Plan Account at the
end of an Interim Offering Period (other than the final Interim
Offering Period of an Offering Period), after deducting the amount of
the Purchase Price for the number of whole shares issued to the
Participant, shall be retained in the Plan Account for use in the next
Interim Offering Period. Any amount remaining in the Participant's Plan
Account at the end of an Offering Period, after deducting the amount of
the Purchase Price for the number of whole shares to be issued to the
Participant, shall be refunded to the Participant, in cash, without
interest.
(h) WITHDRAWAL; RE-ENTRY. A Participant may elect to withdraw from
participation in the Plan at any time up to the last day of an Interim
Offering Period by filing the prescribed form with the Administrator or
the Company's payroll office. At the time of withdrawal the amount then
credited to the Participant's Plan Account (and not previously applied
to the purchase of Stock) will be refunded to the Participant, in cash,
without interest, and the Participant's participation in the Plan shall
forthwith terminate. A Participant who voluntarily elects to withdraw
from the Plan may not resume participation in the Plan until after the
expiration of one complete Interim Offering Period, or, for
Participants who are persons subject to Section 16 of the Securities
and Exchange Act of 1934, two complete Interim Offering Periods (six
(6) months); re-enrollment shall e made in the same manner as set forth
in subsection (a) of this Section 5 for initial participation in the
Plan.
(i) PRO RATA ALLOCATION. In the event that the aggregate number of shares
of Stock which all Participants elect to purchase during a Interim
Offering Period shall exceed the number of shares remaining available
for issuance under the Plan, the number of shares to which each
Participant shall become entitled shall be determined by multiplying
the number of shares available for issuance by a fraction, the
numerator of which is the sum of the number of shares the Participant
has elected to purchase and the denominator of which is the sum of the
number of shares which all Participants have elected to purchase.
6. EFFECT OF TERMINATION OF EMPLOYMENT: LOSS OF ELIGIBILITY. Termination
of a Participant's employment for any reason, including retirement,
disability, or death, or the failure of a Participant to remain an
Eligible Employee, shall be treated as a withdrawal under the Plan. In
the event of a Participant's death, a refund of sums then remaining in
the Participant's Plan Account shall be paid, in cash, without
interest, to the representative of the Participant's estate. A
Participant deemed to have withdrawn under this Section 6 for a reason
other than death may elect to have the sum then remaining in his or her
Plan Account retained in the Plan until the end of the Interim Offering
Period then in progress (provided that it will occur within three (3)
months of the date of the withdrawing Participant's termination of
employment) for the purchase of Stock at the end of that Interim
Offering Period. After deducting the amount of the Purchase rice for
the number of whole shares to be issued to the Participant, any amount
remaining in the Participant's Plan Account shall be refunded to the
Participant, in cash, without interest, and the withdrawn Participant's
participation in the Plan shall terminate. A transfer by a Participant
from the Company to a Subsidiary, from one Subsidiary to another, or
from a Subsidiary to the Company shall not be treated as a termination
of employment, for purposes of the Plan.
7. LIMITATION ON STOCK OWNERSHIP. Notwithstanding any provision herein to
the contrary, no employee shall be granted an Option to purchase Stock
pursuant to Section 5: (i) if such employee, immediately after electing
to purchase such Stock, would own 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 parent or Subsidiary of the Company, or
(ii) if the rights of the employee to purchase Stock under this and all
other qualified employee stock purchase plans of the Company (or any
Parent or Subsidiary of the Company) would accrue (become exercisable)
at a rate that exceeds $25,000 of fair market value of such Stock,
determined at the time such right is granted, for each calendar year
for which such purchase right is outstanding at any time. For purposes
of the percentage limitation of the first limitation of this Section 7,
ownership of Stock shall be determined by the attribution rules of
Section 425(d) of the Code, and Participants shall be considered to own
any Stock which the Participant may purchase under outstanding Options.
8. OPTIONS NOT TRANSFERABLE. The rights or interests of any Participant in
the Plan, or in any Option granted under the Plan, or in any Stock
purchase to be made pursuant to the Plan, shall not be transferable,
whether voluntarily or involuntarily, and Options may be exercised and
Stock purchased only by the Participant. Notwithstanding the foregoing,
consonant with provisions of Section 425(c) (2) of the code and with
the approval of the Administrator, Stock may be acquired, under the
Plan, by the Participant in joint tenancy with another. If the
Participant shall in any manner attempt to transfer, assign or
otherwise encumber his or her rights or interests under the Plan, other
than as herein permitted, such act shall be treated as a withdrawal
from the Plan.
9. TAX TREATMENT OF PURCHASED SHARES; SHORT-SWING EXPOSURE; HOLDING
PERIODS. Section 423(a) of the Code specifies that stock purchased
under an employee stock purchase plan such as this Plan must be held by
the Participant for: (i) two (2) years after enrollment in the Plan;
and (ii) one (1) year after the actual stock purchase. Any disposition
of Stock acquired under the Plan within the foregoing holding periods
may result in the loss of certain tax advantages to the concerned
Participant. Additionally, any disposition of Stock acquired under the
Plan, by a Participant who is a person subject to Section 16 of the
Securities Exchange Act of 1934, within six (6) months following the
acquisition thereof will presumptively be subject to short-swing
liability pursuant to Section 16(b) of said Act.
10. ADJUSTMENTS ON CHANGES IN CAPITALIZATION, MERGER, LIQUIDATION. In
the event of changes in the Company's Stock by reason of stock dividends, stock
splits, reverse stock splits, combinations, reclassifications, or
recapitalization thereof, or as a result of merger, consolidation,
reorganization, or liquidation of or involving the Company, the Board shall make
appropriate adjustments in the number and class of shares of Stock then subject
to the Plan, the number and class of shares of Stock which a Participant will be
entitled to receive upon exercise of any outstanding Option, and the price which
the Participant shall be required to pay therefor.
In the event of any merger or consolidation of the Company (except with
one or its direct or indirect Subsidiaries) or any acquisition of eighty percent
(80%) or more of the Company's assets or Stock, the Board may provide for the
substitution of new Options for any Options then outstanding under the Plan, or
for the assumption by the Company's successor of any such outstanding Options
(so long as such substitutions or assumptions are in compliance with the rules
regarding substitutions and assumptions of stock options set forth in Section
425(a) of the Code), or for the acceleration of the expiration date of
outstanding Options to a date not sooner than ten (10) days after notice to the
Participant. Such provisions for the substitution of new Options, the assumption
of outstanding Options, or the acceleration o the expiration date shall be
binding on the holders of the Options. The determination of the Board as to what
adjustment shall be made under this Section shall be binding and conclusive.
11. NON-ASSURANCE OF EMPLOYMENT. Nothing in the Plan shall be
construed to confer on any Participant any right to continue in the employ of
the Company, or any Subsidiary, or to limit in any respect the right of the
Company, or Subsidiary, to terminate such employment at any time.
12. RIGHTS AS A SHAREHOLDER. A Participant shall have no rights as a
shareholder with respect to any shares of Stock he or she may have a right to
purchase under the Plan until the date of issuance of a stock certificate to
such Participant for share issued pursuant to the Plan.
13. NON-LIABILITY. Neither the Company nor the Board nor the
Administrator-delegee, nor any member of the Board or the Administrator, shall
be liable for any action or determination made in good faith with respect to the
Plan, any interpretation thereof or amendment thereto, or any Option granted
under it, nor if, notwithstanding the good faith efforts of the foregoing, it is
determined for any reason, by the Internal Revenue Service or a court of
competent jurisdiction, that any Option granted hereunder, intended to qualify
under Section 423 of the code, does not qualify.
14. TAX WITHHOLDING. To the extent required by applicable federal,
state, local or foreign law, a Participant shall make arrangements satisfactory
to the Company for satisfaction of any withholding tax obligations that arise in
connection with the Plan. The Company shall not be required to issue any shares
of Stock under the Plan until such obligations are satisfied.
15. AMENDMENT OR TERMINATION OF THE PLAN. The Board shall have the
right to amend, modify or terminate the Plan at any time without notice,
provided that no Participant's then existing right to purchase Stock, to the
date of such termination, shall be adversely affected thereby; and provided
further that no amendment to the Plan shall be effective unless such amendment
is approved by a vote of the holders of a majority of the outstanding shares of
Common Stock of the Company represented and voting at a duly called meeting of
shareholders held within twelve (12) months before or after the date upon which
such action is taken by the Board, if such amendment would:
(a) Increase the aggregate number of shares of Stock to be issued under the
Plan (except as set forth in Section 10);
(b) Materially modify the requirements for eligibility to participate in the
Plan;
(c) Extend the term of the Plan;
(d) Alter the Purchase Price formula so as to reduce the price for shares of
Stock to be purchased under the Plan;
(e) Otherwise materially increase the benefits accruing to Participants under
the Plan; or
(f) Knowingly cause the Plan to fail to meet the requirements of an "employed
stock purchase plan" under Section 423 of the Code.
The Plan shall terminate on January 31, 2008, if it has not been
earlier terminated (or extended) pursuant to this Section 14.
16. EFFECTIVENESS. The effective date of this Plan was February 26,
2003, which was the date of its adoption by the Company's Board of Directors,
following which shareholder approval was duly obtained.