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8-K - FORM 8-K - CORVEL CORP | a56999e8vk.htm |
Exhibit 10.1
CORVEL CORPORATION
1991 EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED AND RESTATED ON AUGUST 5, 2010
AS AMENDED AND RESTATED ON AUGUST 5, 2010
I. PURPOSE
The CorVel Corporation 1991 Employee Stock Purchase Plan, as amended and restated on August 5,
2010 (the Plan), is intended to provide eligible employees of the Company and one or more of its
Corporate Affiliates with the opportunity to acquire a proprietary interest in the Company through
participation in a plan designed to qualify as an employee stock purchase plan under Section 423 of
the Internal Revenue Code (the Code).
II. DEFINITIONS
For purposes of administration of the Plan, the following terms shall have the meanings
indicated:
BASE SALARY means the regular base earnings paid to a Participant by one or more
Participating Companies during such individuals period of participation in the Plan, plus (i) one
hundred percent (100%) of the commissions paid to such individual during each purchase period in
which he or she participates in the Plan and (iii) any salary deferral contributions made by such
Participant to any Code Section 401(k) Plan of the Company or any Company Affiliate during such
period. There shall be excluded from the calculation of Base Salary (i) all overtime payments,
bonuses, profit-sharing distributions and other incentive-type payments and (ii) all contributions
(other than Code Section 401(k) contributions) made by the Company or its Corporate Affiliates for
such individuals benefit under any employee benefit or welfare plan now or hereafter established.
BOARD means the Board of Directors of the Company.
COMPANY means CorVel Corporation, a Delaware corporation1, and any corporate
successor to all or substantially all of the assets or voting stock of the Company that shall by
appropriate action adopt the Plan.
CORPORATE AFFILIATE means any company that is either the parent corporation or a subsidiary
corporation of the Company (as determined in accordance with Section 424 of the Code), including
any parent or subsidiary corporation that becomes such after the Effective Date.
1 | The Company was previously known as FORTIS Corporation and assumed all of the rights and responsibilities of FORTIS Corporation, a Minnesota corporation (FORTIS Minnesota), with respect to the Plan pursuant to the Agreement and Plan of Merger by and between the Company and FORTIS Minnesota, effective May 16, 1991, under which FORTIS Minnesota changed its state of incorporation from Minnesota to Delaware by merging with and into the Company, which was a wholly owned subsidiary of FORTIS Minnesota. |
EFFECTIVE DATE means October 1, 1991; provided, however, that any Corporate Affiliate that
becomes a Participating Company in the Plan after October 1, 1991, shall designate a subsequent
Effective Date with respect to its employee-Participants.
ELIGIBLE EMPLOYEE means any person who is regularly engaged, for a period 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. However, employees of the Company who, at the start of any
purchase period under the Plan, (i) are deemed to be Highly Compensated Employees within the
meaning of Section 414(q) of the Code and (ii) hold unvested options to purchase more than 30,000
shares of Stock under the Companys Restated 1988 Executive Stock Option Plan shall not be treated
as Eligible Employees for that purchase period and shall accordingly be ineligible to participate
in the Plan for such period. A person shall not continue to be an Eligible Employee because of the
payment of compensation following termination of employment whether as part of a severance
agreement with the Company or otherwise.
FAIR MARKET VALUE per share of Stock on any relevant date shall be determined in accordance
with the following provisions:
(a) If the Stock is at the time listed on the Nasdaq National Market or the Nasdaq SmallCap
Market, then the Fair Market Value shall be the closing selling price per share of Stock on the
date in question, as such price is reported by the National Association of Securities Dealers on
the Nasdaq National Market or the Nasdaq SmallCap Market and published in The Wall Street Journal.
(b) If the Stock is at the time listed on any stock exchange, then the Fair Market Value shall
be the closing selling price per share of Stock on the date in question on the stock exchange
determined by the Plan Administrator to be the primary market for the Stock, as such price is
officially quoted in the composite tape of transactions on such exchange and published in The Wall
Street Journal.
(c) If the Stock is not listed on the Nasdaq National Market, Nasdaq SmallCap Market or a
national securities exchange, the Fair Market Value shall be the average of the closing bid and ask
prices of the Stock on that day as reported by the Nasdaq bulletin board or any comparable system
on that day.
(d) If the Stock is not traded included in the Nasdaq bulletin board or any comparable system,
the Fair Market Value shall be the of the closing bid and ask prices on that day as furnished by
any member of the National Association of Securities Dealers, Inc. selected from time to time by
the Company for that purpose.
(e) If the date in question is not a trading day, then the Fair Market Value shall be
determined based on prices for the trading day prior to the date in question.
PARTICIPANT means any Eligible Employee of a Participating Company who is actively
participating in the Plan.
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PARTICIPATING COMPANY means the Company and such Corporate Affiliate or Affiliates as may be
authorized from time to time by the Board to extend the benefits of the Plan to their Eligible
Employees. The Participating Companies in the Plan are listed in attached Schedule A.
PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability of the Participant to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of twelve months or
more.
STOCK means shares of the common stock of the Company, par value $.0001 per share.
III. ADMINISTRATION
(a) The Plan shall be administered by a committee (the Committee) consisting of one or more
Board members appointed by the Board. Members of the Committee shall serve for such period of time
as the Board may determine and shall be subject to removal by the Board at any time.
(b) The Committee is hereby designated as the Plan Administrator and shall have full authority
to administer the Plan, including authority to interpret and construe any provision of the Plan and
to adopt such rules and procedures for administering the Plan as it may deem necessary in order to
comply with the requirements of Section 423 of the Code. Decisions of the Plan Administrator shall
be final and binding on all parties who have an interest in the Plan.
(c) To the maximum extent permitted by law, the Company shall indemnify each member of the
Committee and every other member of the Board, as well as any other employee with duties under the
Plan, against all liabilities and expenses (including any amount paid in settlement or in
satisfaction of a judgment) reasonably incurred by the individual in connection with any claims
against the individual by reason of the performance of the individuals duties under the Plan. This
indemnity shall not apply, however, if (i) it is in the action, lawsuit, or proceeding that the
individual is guilty of gross negligence or intentional misconduct in the performance of those
duties; or (ii) the individual fails to assist the Company in defending against any such claim.
The Company shall have the right to select counsel and to control the prosecution or defense of the
suit. The Company shall not be obligated to indemnify any individual for any amount incurred
through any settlement or compromise of any action unless the Company consents in writing to the
settlement or compromise.
IV. PURCHASE PERIODS
(a) Stock shall be offered for purchase under the Plan through a series of successive purchase
periods until such time as (i) the maximum number of shares of Stock available for issuance under
the Plan shall have been issued pursuant to purchase rights granted under the Plan or (ii) the Plan
shall have been sooner terminated in accordance with Article IX.
(b) Each purchase period shall have a duration of six (6) months. Purchase periods shall
commence on the first day of April and October.
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(c) The Participant shall be granted a separate purchase right for each purchase period in
which he or she participates. The purchase right shall be granted on the first business day of the
purchase period and shall be automatically exercised on the last business day of the purchase
period.
(d) Under no circumstances shall any shares of Stock be issued hereunder, until such time as
the Company shall have complied with all applicable requirements of the Securities Act of 1933, as
amended, all applicable listing requirements of any securities exchange on which the Stock is
listed and all other applicable requirements established by law or regulation.
(e) The acquisition of Stock through participation in the Plan for any purchase period shall
neither limit nor require the acquisition of Stock by the Participant in any subsequent purchase
period.
V. ELIGIBILITY AND PARTICIPATION
(a) Each individual who is an Eligible Employee of a Participating Company on the first day of
any purchase period may begin participation in the Plan on the first day of any purchase period
following the commencement of his or her employment with the Company or any other Participating
Company.
(b) In order to participate in the Plan for a particular purchase period, an Eligible Employee
must complete the enrollment forms prescribed by the Plan Administrator (including a stock purchase
agreement and a payroll deduction authorization) and file such forms with the Plan Administrator
(or its designee) during the specified enrollment period for that purchase period.
(c) The payroll deduction authorized by a Participant for purposes of acquiring Stock under
the Plan may be any multiple of $10.00, up to a dollar maximum not in excess of 20% of the Base
Salary paid to the Participant during the purchase period. The deduction rate so authorized shall
continue in effect for the entire purchase period, unless the Participant shall, prior to the end
of the purchase period for which the purchase right is in effect, change the rate by filing the
appropriate form with the Plan Administrator (or its designee). The changed rate shall become
effective as soon as practicable following the filing of such form. Payroll deductions, however,
will automatically cease upon the termination of the Participants purchase right in accordance
with Section VII(d) or (e) below.
VI. STOCK SUBJECT TO PLAN
(a) The Stock purchasable by Participants under the Plan shall, solely in the Boards
discretion, be made available from either authorized but unissued Stock or from reacquired Stock,
including shares of Stock purchased on the open market. The total number of shares that may be
issued under the Plan shall not exceed 950,000 shares (subject to adjustment under subparagraph (b)
below). If any outstanding purchase right is terminated for any reason prior to its exercise, the
shares allocable to the purchase right may again become subject to purchase under the Plan.
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(b) In the event any change is made to the Stock purchasable under the Plan by reason of any
stock dividend, recapitalization, stock split, reverse stock split, combination of shares,
recapitalization or other change affecting the outstanding Stock as a class without the Companys
receipt of consideration, appropriate adjustments shall be made by the Plan Administrator to (i)
the class and maximum number of shares issuable over the term of the Plan, (ii) the class and
maximum number of shares purchasable per Participant under any one purchase right, and (iii) the
class and number of shares and the price per share in effect under each purchase right at the time
outstanding under the Plan.
VII. PURCHASE RIGHTS
Each Eligible Employee who participates in the Plan for a particular purchase period shall
have the right to purchase Stock 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.
(a) Purchase Price. The purchase price per share of Stock shall be 95% of the Fair
Market Value of a share of Stock on the date the purchase right is exercised.
(b) Number of Purchasable Shares.
(i) The number of shares of Stock purchasable by a Participant upon the exercise of an
outstanding purchase right shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the purchase period for which such
purchase right is outstanding, by the purchase price per share in effect for that purchase period.
However, the maximum number of shares purchasable by any Participant during any one purchase period
shall not exceed 1,000 shares (subject to adjustment under Section VI(b)). However, the Plan
Administrator shall have the discretionary authority, exercisable prior to the start of any
purchase period under the Plan, to increase or decrease the limitations to be in for the number of
shares of Stock purchasable per Participant during that purchase period.
(ii) Under no circumstances shall purchase rights be granted the Plan to any Eligible Employee
if such individual would, after the grant, own (within the meaning of Code Section 424(d)), or hold
outstanding options or other rights to purchase, stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or any Corporate Affiliate. For this
purpose an Eligible Employees ownership interest shall be determined in accordance with Code
Section 424(d), which rules are as follows:
i. The Eligible Employee is treated as owning any stock owned, directly or indirectly,
by:
(1) | Brothers and sisters (whether by whole or half-blood); | ||
(2) | Spouse; and | ||
(3) | Lineal descendants and/or ancestors. |
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ii. Stock owned, directly or indirectly, by a corporation, partnership, estate, or
trust is treated as owned proportionately by or for its stockholders, partners, or
beneficiaries.
iii. Stock that can be acquired by the exercise of an option is treated as being owned
by the Eligible Employee for purposes of determining the number of shares owned by the
Eligible Employee, but not for purposes of determining the total number of shares of Stock
outstanding. Options are taken into account for this purpose whether or not they are
currently exercisable.
(c) Payment. Payment for the Stock purchased under the Plan shall be effected through
the Participants authorized payroll deductions. Such deductions shall begin on the first pay day
coincident with or immediately following the commencement date of the purchase period and shall
terminate with the pay day ending with or immediately prior to the last business day of such
purchase period. The amounts so collected shall be credited to the Participants individual
account under the Plan, but no interest shall be paid on the balance from time to time outstanding
in the account. The collected amounts shall not be required to be held in any segregated account
or trust fund and may be commingled with the Companys general assets and used for any corporate
purpose.
(d) Termination of Purchase Rights.
(i) A Participant may terminate his or her outstanding purchase right under the Plan by filing
the prescribed notification form with the Plan Administrator (or its designee) at least two
business days before the last business day of any purchase period. No further payroll deductions
shall be collected from the Participant with respect to such purchase right, and the Participant
shall have the following election with respect to any payroll deductions made by such individual
with respect to such purchase right: (A) have the Company refund those payroll deductions or (B)
have such payroll deductions held for the purchase of shares at the end of the purchase period. If
no such election is made, then such payroll deductions shall automatically be refunded at the end
of such purchase period. Immediately following the refund or purchase of shares, the purchase
right shall terminate.
(ii) The request for termination shall be irrevocable with respect to the particular purchase
right to which it pertains, and the Participant may not subsequently rejoin the purchase period
covered by such right.
(e) Termination of Service.
(i) Except as set forth in Paragraph VII(e)(ii) below, if a Participant ceases to be an
Eligible Employee while his or her purchase right remains outstanding, then such purchase right
shall immediately terminate, and all sums previously collected from the Participant during the
purchase period in which such termination occurs shall be refunded (without interest) to the
Participant.
(ii) Should the Participant die or become Permanently Disabled or should the Participant cease
active employment by reason of a leave of absence taken in accordance with
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the Companys leave of absence policy, then the Participant (or the person or persons to whom
the rights of the deceased Participant under the Plan are transferred by will or by the laws of
descent and distribution) shall have the election, exercisable up until the end of the purchase
period in which the Participant dies or becomes Permanently Disabled or in which the leave of
absence commences, to (i) withdraw all the funds credited to the Participants account at the time
of his or her cessation of employment or at the commencement of such leave or (ii) have such funds
held for the purchase of shares at the end of such purchase period. If no such election is made,
then such funds shall automatically be held for the purchase of shares at the end of such purchase
period. In no event, however, shall any further payroll deductions added to the Participants
account following his or her cessation of employment or the commencement of such leave. Upon the
Participants return to active employment of twenty (20) hours a week (x) within ninety (90) days
following the commencement of such leave or (y) prior to the expiration of any longer period for
which such Participants right to reemployment with the Company is guaranteed by statute or
contract, his or her payroll deductions under the Plan shall automatically resume at the rate in
effect at the time the leave began, unless the Participant withdraws from the Plan prior to his or
her return. An individual who returns to active employment following a leave of absence that
exceeds in duration the applicable (x) or (y) time period will no longer be an Eligible Employee
for purposes of subsequent participation in the Plan, will receive a refund (without interest) of
the payroll deductions that the Participant made during that purchase period with respect to such
purchase right not previously exercised, and must accordingly re-enroll in the Plan (by making a
timely filing of the prescribed enrollment forms) on or before the first day of the new purchase
period once he or she qualifies as an Eligible Employee.
(f) Stock Purchase. The Stock subject to the purchase right of each Participant
(other than Participants whose payroll deductions have been refunded in accordance with Section
VII(d) or (e) above) shall be automatically purchased on the Participants behalf on the last
business day of the purchase period. The purchase shall be effected by applying the amount credited
to each Participants account on the last business day of the purchase period to the purchase of
whole shares of Stock (subject to the limitations on the maximum number of purchasable shares set
forth in Section VII(b)) at the purchase price in effect for such purchase period. Any amount
remaining in the Participants account after such application shall be refunded.
(g) Proration of Purchase Rights. Should the total number of shares of Stock that are
to be purchased pursuant to outstanding purchase rights on any particular date exceed 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 any amounts
credited to the accounts of Participants shall, to the extent not applied to the purchase of Stock,
be refunded to the Participants.
(h) Rights as Stockholder. A Participant shall have no rights as a stockholder of the
Company with respect to shares covered by his or her outstanding purchase right under the Plan
until the shares are actually purchased on the Participants behalf in accordance with Section
VII(f). No adjustments shall be made for dividends, distributions or other rights for which the
record date is prior to the date of such purchase.
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(i) Assignability. No purchase right granted under the Plan shall be assignable or
transferable by the Participant other than by will or by the laws of descent and distribution
following the Participants death, and during the Participants lifetime the purchase right shall
be exercisable only by the Participant.
(j) Notice of Disqualifying Disposition. A Participant must notify the Company if the
Participant disposes of stock acquired pursuant to the Plan prior to the expiration of the holding
periods required to qualify for long-term capital gains treatment on the sale proceeds.
(k) Merger or Liquidation of Company. In the event the Company or its stockholders
enter into an agreement to dispose of all or substantially all of the assets or outstanding capital
stock of the Company by means of a sale, merger, reorganization or similar transaction (other than
a reorganization effected primarily to change the State in which the Company is incorporated) or in
the event the Company is liquidated (a Change in Control), each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any Change in Control, by
applying the payroll deductions of each Participant for the purchase period in which such Change in
Control occurs to the purchase of whole shares of Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Stock on the first
day of the purchase period in which such Change in Control occurs or (ii) the Fair Market Value per
share of Stock immediately prior to the effective date of such Change in Control. However, the
applicable limitation on the number of shares of Stock purchasable per Participant shall continue
to apply to any such purchase. Any amount not applied to the purchase of Stock by reason of the
Section VII(b) limitation on the maximum number of purchasable shares shall be refunded. The
Company shall use its best efforts to provide at least ten (10) days prior written notice of the
occurrence of any Change in Control, and Participants shall, following the receipt of such notice,
have the right to terminate their outstanding purchase rights prior to the effective date of the
Change in Control.
VIII. ACCRUAL LIMITATIONS
(a) No Participant shall be entitled to accrue rights to acquire Stock pursuant to any
purchase right outstanding under the Plan if and to the extent such accrual, when aggregated with
(i) rights to acquire Stock accrued under other purchase rights granted to the Participant under
this Plan and (ii) similar rights accrued by the Participant under other employee stock purchase
plans (within the meaning of Code Section 423) 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) For purposes of applying the accrual limitations of Section VIII(a), the right to acquire
Stock pursuant to each purchase right granted under the Plan shall accrue as follows:
(i) The right to acquire Stock under each such purchase right shall accrue when the purchase
right first becomes exercisable on the last business day of the purchase period for which such
right is granted.
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(ii) To the extent the Participants purchase right does not, by reason of the Section VIII(a)
limitations, accrue on the last business day of the particular purchase period for which such right
is granted, then the payroll deductions that the Participant made during that purchase period with
respect to such purchase right shall be refunded.
(c) In the event there is any conflict between the provisions of this Article VIII and one or
more provisions of the Plan or any instrument issued thereunder, the provisions of this Article
VIII shall be controlling.
IX. AMENDMENT AND TERMINATION
The Board may from time to time alter, amend, suspend or discontinue the Plan to become
effective immediately following the close of a purchase period; provided, however, the Plan may be
amended or terminated immediately upon Board action, if and to the extent necessary to assure that
the Company will not recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Stock offered for purchase under the Plan, should the financial
accounting rules applicable to the Plan at the Effective Date be subsequently revised so as to
require the Company to recognize compensation expense in the absence of such amendment or
termination. The Board may not, without the approval of the Companys stockholders, increase the
number of shares issuable under the Plan (provided, however, the Plan Administrator shall have the
authority to effect adjustments pursuant to Section VI(b) without stockholder approval).
X. GENERAL PROVISIONS
(a) Effective Date. The Plan became effective on the Effective Date. On June 15,
1992, the Board approved a restatement of the Plan, to be effective as of October 1, 1992. The
restatement was approved by the Companys stockholders at the 1992 Annual Meeting. On May 4, 1994,
the Board approved an amendment to the Plan to increase the aggregate number of shares issuable
over the term thereof from 100,000 to 150,000 shares. The amendment was approved by the Companys
stockholders at the 1994 Annual Meeting. In June 1997, the Board approved another amendment to the
Plan to increase the aggregate number of shares issuable over the term thereof from 150,000 to
250,000 shares. The amendment was approved by the Companys stockholders at the 1997 Annual
Meeting.
On June 14, 1999, the Company effected a 2-for-1 stock split in the form of a 100 percent
stock dividend distributed to stockholders of record as of May 31, 1999. On May 20, 2001, the
Board approved amendments to the Plan to (i) effect certain technical revisions to the provisions
of the Plan in order to facilitate the administration and interpretation of the Plan, (ii) modify
the type of amendments to the Plan which require stockholder approval and (iii) extend the
termination date of the Plan by ten years to September 30, 2011. The amendments were approved by
the Companys stockholders at the 2001 Annual Meeting. On August 31, 2001, the Company effected a
3-for-2 stock split in the form of a 50 percent stock dividend distributed to stockholders of
record as of August 17, 2001.
On August 4, 2005, the Board approved amendments to the Plan to (i) avoid compensation expense
charges under Statement of Financial Accounting Standards No. 123
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(revised 2004), Accounting for Stock-Based Compensation and (ii) increase the aggregate number
of shares issuable over the term of the Plan from 750,000 to 950,000 shares. The amendments were
approved by the Companys stockholders at the 2005 Annual Meeting.
On May 14, 2010, the Board approved amendments to the Plan to (i) remove the requirement for
stockholder approval for modifying eligibility requirements and (ii) extend the termination date of
the Plan by ten years from September 30, 2011 to September 30, 2021, subject to stockholder
approval at the 2010 Annual Meeting.
(b) Termination. The Plan shall terminate upon the EARLIEST of (i) September 30,
2021, (ii) the date on which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan, (iii) the date on which all purchase rights
are exercised in connection with a Change in Control or (iv) termination by the Board. No further
purchase rights shall be granted or exercised, and no further payroll deductions shall be collected
under the Plan following such termination.
(c) Costs. All costs and expenses incurred in the administration of the Plan shall be
paid by the Company; however, each Plan Participant shall bear all costs and expenses incurred by
such individual in the sale or other disposition of any shares purchased under the Plan.
(d) No Employment Rights. Neither the action of the Company in establishing the Plan,
nor 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
persons employment may be terminated at any time, with or without cause.
(e) Governing Law. The provisions of the Plan shall be governed by the laws of the
State of California.
(f) Annual Statements. To the extent required, the Company shall provide a statement
containing the information required by Code Section 6039(a) to Participants no later than January
31st of the calendar year following prior to the calendar year in which they purchase Stock
pursuant to the Plan. This notice shall contain the following items of information:
(i) The name, address, and employer identification number of the corporation transferring the
Stock;
(ii) The name, address, and identifying number of the Participant to whom the share or shares
of Stock were transferred;
(iii) The name and address of the corporation the stock of which is the subject of the option
(if other than the corporation transferring the stock);
(iv) The date the option was granted;
(v) The date the shares were transferred to the person exercising the option;
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(vi) The fair market value of the Stock at the time the option was exercised;
(vii) The number of shares of Stock transferred pursuant to the option;
(viii) The type of option under which the transferred shares were acquired; and
(ix) The total cost of all the shares.
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SCHEDULE A
PARTICIPATING COMPANIES
CorVel Corporation, a Delaware corporation
CorVel Healthcare Corporation, a California corporation
CorVel Enterprise Comp, Inc. a Delaware corporation
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