Exhibit 10.5

 

RUSH ENTERPRISES INC.
2004 EMPLOYEE STOCK PURCHASE PLAN
(As Amended and Restated Effective February 23, 2016)

 

1.             Purpose of Plan.

 

The purpose of the Plan is to advance the interests of Rush Enterprises Inc., a
Texas corporation (the “Company”), and its shareholders by providing employees
of the Company and its subsidiaries with an opportunity to acquire an ownership
interest in the Company through the purchase of common stock of the Company on
favorable terms through payroll deductions. It is the intention of the Company
that the Plan qualify as an “employee stock purchase plan” under Section 423 of
the Internal Revenue Code of 1986, as amended (the “Code”), and provisions of
the Plan shall be construed consistent with such intention.

 

2.             Definitions.

 

The following terms will have the meanings set forth below, unless the context
clearly otherwise requires:

 

2.1     “Agent” means the party or parties designated by the Company to provide
Share Accounts and certain administrative services in connection with the Plan.

 

2.2     “Board” means the Board of Directors of the Company or any committee
thereof to which the Board of Directors has delegated authority with respect to
the Plan.

 

2.3     “Common Stock” means the Class A common stock, par value $.01 per share,
of the Company, or the number and kind of shares of stock or other securities
into which such common stock may be changed in accordance with Section 11 of the
Plan.

 

2.4      “Committee” means the Compensation Committee of the Board, or such
successor committee that meets the criteria specified in Section 3.

 

2.5    “Contribution Account” means an account established for each Participant
to which payroll deductions under the Plan are credited in accordance with
Section 7.

 

2.6    “Employee” means any person, including an officer, who is employed on a
full-time or part-time basis by the Company or any of its Subsidiaries.

 

2.7      “Ending Date” means the last day of each Offering Period.

 

2.8      “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

2.9      “Fair Market Value” means, with respect to the Common Stock, as of any
date:

 

 

(a)

if the Common Stock is listed on any established stock exchange or a national
market system, including without limitation, the NASDAQ Global Select Market,
the NASDAQ Global Market, the NASDAQ Capital Market of The NASDAQ Stock Market,
or the New York Stock Exchange, the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Committee deems reliable; or

  

 
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(b)

if the Common Stock is not so listed, such price as is determined in the manner
specified by the Committee in its sole discretion, such manner to be acceptable
under Section 423 of the Code.

 

2.10     “Grant Date” means the first day of each Offering Period.

 

2.11     “Insider” means any Employee who is subject to Section 16 of the
Exchange Act.

 

2.12    “Offering Period” means each six-month period beginning on January 1 and
ending on June 30, or beginning on July 1 and ending on December 31.

 

2.13     “Participant” means an eligible Employee who elects to participate in
the Plan in accordance with Section 6.

 

2.14     “Plan” means the Rush Enterprises Inc. 2004 Employee Stock Purchase
Plan, as amended from time to time.

 

2.15     “Share Account” means the brokerage account established by the Agent
for each Participant to which shares of Common Stock purchased under the Plan
are credited in accordance with Section 9. The Share Account will be established
pursuant to a separate agreement between each Participant and the Agent.

 

2.16     “Subsidiary” means any subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.

 

3.             Administration.

 

The Plan shall be administered by the Committee (or any successor thereto
appointed by the Board consisting of not less than three members, all of whom
must be members of the Board who are “Non-Employee Directors” as defined in Rule
16b-3 under the Exchange Act). Members of the Committee shall be appointed from
time to time by the Board, shall serve at the pleasure of the Board, and may
resign at any time upon written notice to the Board. A majority of the members
of the Committee shall constitute a quorum. The Committee shall act by majority
approval of the members, but action may be taken by the Committee without a
meeting if unanimous written consent is given. In accordance with and subject to
the provisions of the Plan, the Committee shall have authority to interpret the
Plan, to make, amend and rescind rules and regulations regarding the Plan
(including rules and regulations intended to insure that operation of the Plan
complies with Section 16 of the Exchange Act), and to make all other
determinations necessary or advisable in administering the Plan, all of which
determinations shall be final and binding upon all persons. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it. To the extent
consistent with corporate law, the Committee may delegate to any directors or
officers of the Company the duties, power and authority of the Committee under
the Plan pursuant to such conditions or limitations as the Committee may
establish; provided, however, that only the Committee may exercise such duties,
power and authority with respect to Insiders. The Committee may request advice
or assistance or retain the services of such other persons as are necessary for
the proper administration of the Plan.

 

4.             Eligibility.

 

Any person who is (a) an Employee on the last day of the calendar month
immediately preceding a Grant Date, (b) is not on long-term disability or unpaid
leave status at that time, and (c) has reached the age of majority in the state
or province in which he or she resides shall be eligible to participate in the
Plan for the Offering Period beginning on such Grant Date, subject to the
limitations imposed by Section 423(b) of the Code.

 

 
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5.              Offering Periods.

 

Options to purchase shares of Common Stock shall be granted to Participants
under the Plan through a series of consecutive Offering Periods. The first
Offering Period under the Plan shall have a Grant Date of July 1, 2004 and an
Ending Date of December 31, 2004. Offering Periods under the Plan shall continue
until either (a) the Committee decides, in its sole discretion, to cancel future
Offering Periods because the Common Stock remaining available under the Plan is
insufficient to grant options to all eligible Employees, or (b) the Plan is
terminated in accordance with Section 17 below. Notwithstanding the foregoing,
and without limiting the authority of the Committee under Section 3, 11.2 and 17
of the Plan, the Committee, in its sole discretion, may (a) accelerate the
Ending Date of the then current Offering Period and provide for the exercise of
Options thereunder by Participants in accordance with Section 9 of the Plan, or
(b) accelerate the Ending Date of the then current Offering Period and provide
that all payroll deductions credited to the accounts of Participants will be
paid to Participants as soon as practicable after such Ending Date and that all
Options for such Offering Period will automatically be canceled and will no
longer be exercisable.

 

6.             Participation.

 

Participation in the Plan is voluntary. An eligible Employee may become a
Participant in the Plan by completing an enrollment form provided by the Company
authorizing payroll deductions and the establishment of a Share Account, and
filing the enrollment form with the Company’s Human Resources Department not
later than the last business day of the month immediately preceding the Grant
Date of the first Offering Period in which the Participant wishes to
participate.

 

7.             Payroll Deductions.

 

7.1     Each Employee electing to participate in the Plan shall designate on the
enrollment form the amount of money which he or she wishes to have deducted from
his or her paycheck each pay day to purchase Common Stock pursuant to the Plan.
The aggregate amount of such payroll deductions shall not be less than $25.00
per month, and shall not be more than $10,625.00 (85% of $12,500.00) per
Offering Period, pro-rated equally over the number of pay days applicable to a
Participant during each such Offering Period. Deductions for Plan purposes will
not be withheld from compensation amounts, such as annual bonus or gain sharing
payments, that are not part of a Participant’s normal and recurring compensation
each payday.

 

7.2     Payroll deductions for a Participant shall commence on the first pay day
on or after the Grant Date of the applicable Offering Period and shall continue
until the termination date of the Plan, unless participation in the Plan is
sooner terminated as provided in Section 10, the deduction amount is increased
or decreased by the Participant as provided in Section 7.4, deductions are
suspended as provided in Section 7.4 or the Offering Period is adjusted by the
Committee as provided in Section 5. Except for a Participant’s rights to change
the amount of, suspend or discontinue deductions pursuant to Sections 7.4 and
10, the same deduction amount shall be utilized for each pay day during
subsequent Offering Periods, whether or not the Participant’s compensation level
increases or decreases. If the pay period of any Participant changes, such as
from weekly to semi-monthly, an appropriate adjustment shall be made to the
deduction amount for each pay day corresponding to the new pay period, if
necessary, so as to ensure the deduction of the proper amount as specified by
the Participant in his or her enrollment form for that Offering Period.

 

 
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7.3     All payroll deductions authorized by a Participant shall be credited to
the Participant’s Contribution Account. A Participant may not make any separate
cash payment or contribution to such Contribution Account. Contribution Accounts
shall be solely for bookkeeping purposes, and no separate fund or trust shall be
established for payroll deductions. Until utilized to purchase shares of Common
Stock, funds from payroll deductions shall be held as part of the Employers’
general assets, and the Employers shall not be obligated to segregate such
funds. No interest shall accrue on a Participant’s payroll deductions under the
Plan.

 

7.4     No increases or decreases in the amount of payroll deductions for a
Participant may be made during an Offering Period. A Participant may increase or
decrease the amount of his or her payroll deductions under the Plan, or may
suspend such payroll deductions, for subsequent Offering Periods by completing a
change form and filing it with the Company’s Human Resources Department not
later than the last business day of the month immediately preceding the Grant
Date for the Offering Period as of which such increase, decrease or suspension
is to be effective.

 

7.5     Payroll deductions which are authorized by Participants who are paid
other than in U.S. currency shall be withheld in Contribution Accounts in the
country in which such Participant is employed until exercise of an option
granted hereunder. Upon exercise of the option granted to such Participant, the
amount so withheld shall be converted into U.S. dollars on the basis of the rate
of exchange published in The Wall Street Journal for such currency into U.S.
dollars as of the business day immediately preceding the Ending Date for such
Offering Period. The purchase price shall thereupon be paid to the Company in
U.S. dollars following such conversion, the extent to which the Participant may
exercise an option therefore being dependent, in part, upon the applicable rate
of currency exchange. If, as a result of fluctuations in the exchange rate
between the U.S. dollar and a foreign currency during an Offering Period, a
Participant who is paid in such foreign currency has less than the minimum
permitted amount deducted during an Offering Period, the amount deducted will,
nevertheless, be used to purchase Common Stock in accordance with the Plan.

 

8.             Grant of Option.

 

8.1     Subject to Section 8.2, on each Grant Date, each eligible Employee who
is then a Participant shall be granted (by operation of the Plan) an option to
purchase the number of whole and fractional shares (computed to the fourth
decimal place) of Common Stock equal to the lesser of (a) the amount determined
by dividing the amount of payroll deductions credited to his or her Contribution
Account during the Offering Period beginning on such Grant Date by the Purchase
Price specified in the following sentence, or (b) the amount determined by
dividing $12,500.00 by the Fair Market Value of one share of Common Stock on the
applicable Grant Date. The purchase price per share of such shares (the
“Purchase Price”) shall be the lesser of (i) 85% of the Fair Market Value of one
share of Common Stock on the applicable Grant Date, or (ii) 85% of the Fair
Market Value of one share of Common Stock on the applicable Ending Date.

 

 
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8.2     Despite any provisions of the Plan that may provide or suggest
otherwise:

 

 

(a)

no Employee shall be granted an option under the Plan to the extent that
immediately after the grant, such Employee (or any other person whose stock
ownership would be attributed to such Employee pursuant to Section 424(d) of the
Code) would own shares of Common Stock and/or hold outstanding options to
purchase shares of Common Stock that would in the aggregate represent 5% or more
of the total combined voting power or value of all classes of shares of the
Company or of any Subsidiary;

 

 

(b)

no Employee shall be granted an option under the Plan to the extent that the
Employee’s rights to purchase shares of Common Stock under all “employee stock
purchase plans” (within the meaning of Section 423 of the Code) of the Company
and its Subsidiaries would accrue (i.e., become exercisable) at a rate that
exceeds $25,000 of Fair Market Value of such shares of Common Stock (determined
at the time such option is granted, which is the Grant Date) for each calendar
year in which such option is outstanding at any time; or

 

 

(c)

no Participant may purchase more than 10,000 shares of Common Stock under the
Plan in any given Offering Period.

 

9.             Exercise of Option.

 

9.1     Unless a Participant withdraws from the Plan pursuant to Section 10, his
or her option for the purchase of shares of Common Stock granted for an Offering
Period will be exercised automatically and in full at the applicable Purchase
Price as soon as practicable following the Ending Date of such Offering Period.
If the full amount credited to a Participant’s Contribution Account during an
Offering Period is not required to exercise such Participant’s option for that
Offering Period in full (due to the applicability of clause (b) of Section 8.1
and/or fluctuations in the exchange rate between the U.S. dollar and the foreign
currency in which such Participant is paid), the amount not required to exercise
such option shall promptly be refunded to the Participant following the Ending
Date of such Offering Period.

 

9.2     No Participant (or any person claiming through such Participant) shall
have any interest in any Common Stock subject to an option under the Plan until
such option has been exercised and the shares of Common Stock purchased, at
which point such Participant shall have all of the rights and privileges of a
shareholder of the Company with respect to shares purchased under the Plan.
During his or her lifetime, a Participant’s option to purchase shares of Common
Stock under the Plan is exercisable only by the Participant.

 

9.3     Shares of Common Stock purchased pursuant to the exercise of options
hereunder shall be held in Share Accounts maintained for and in the name of each
Participant by the Agent, such Agent or its nominee to be the record holder of
such shares for the benefit of the Participant. The Agent shall provide each
Participant with a quarterly statement of his or her Share Account.

 

9.4     Dividends paid with respect to shares credited to each Share Account
will be themselves credited to such Account and, if paid in cash, will
automatically be reinvested in whole and fractional shares of Common Stock.

 

9.5     A Participant may request that the Agent cause a stock certificate
representing some or all of the number of whole shares of Common Stock credited
to the Participant’s Share Account be issued in the name of the Participant. The
Agent shall cause such certificate to be issued as soon as practicable after its
receipt of such request and the payment by the Participant of any applicable
issuance fees. From and after the date of the issuance of any such certificate,
the number of shares credited to the Participant’s Share Account shall be
reduced by the number of shares represented by such certificate, and the
Participant shall thereafter be the record holder of the shares represented by
such certificate.

 

 
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10.           Withdrawal; Termination of Employment.

 

10.1     A Participant may terminate his or her participation in the Plan and
withdraw all, but not less than all, of the payroll deductions credited to his
or her Contribution Account under the Plan at any time on or before the last
business day of an Offering Period by giving written notice to the Company. Such
notice shall (a) state that the Participant wishes to terminate participation in
the Plan, (b) specify the withdrawal date, and (c) request the withdrawal of all
of the Participant’s payroll deductions held under the Plan. All of the
Participant’s payroll deductions credited to his or her Contribution Account
will be paid to the Participant as soon as practicable after the withdrawal date
specified in the notice of withdrawal (or, if no such date is specified, as soon
as practicable after receipt of the notice of withdrawal), the Participant’s
option for such Offering Period will be automatically canceled, and no further
payroll deductions for the purchase of shares of Common Stock will be made for
such Offering Period or for any subsequent Offering Period, except pursuant to a
re-enrollment in the Plan as provided in Section 10.2.

 

10.2     If a Participant’s suspension of payroll deductions under the Plan
pursuant to Section 7.4 continues for four consecutive Offering Periods, such
suspension shall be deemed an election by the Participant to terminate his or
her participation in the Plan, and such termination shall be effective as of the
Ending Date of the second consecutive Offering Period during which no payroll
deductions occurred. If, for any reason, a Participant’s net pay after
withholding taxes and other applicable deductions not related to the Plan (such
as for health and welfare benefits) each pay day becomes less than the amount
the Participant has designated be deducted each pay day for contribution to the
Plan, such occurrence shall be deemed an election by the Participant to
terminate his or her participation in the Plan, and such termination shall be
effective immediately. Following such termination, all of the Participant’s
payroll deductions credited to his or her Contribution Account will be paid to
the Participant as soon as practicable, the Participant’s option for such
Offering Period will be automatically canceled, and no further payroll
deductions for the purchase of shares of Common Stock will be made for such
Offering Period or for any subsequent Offering Period, except pursuant to a
re-enrollment in the Plan as provided in Section 10.4.

 

10.3     Upon termination of a Participant’s employment with the Employer for
any reason, including retirement or death, his or her participation in the Plan
will automatically cease and the payroll deductions accumulated in his or her
Contribution Account will be returned to the Participant as soon as practicable
after such employment termination or, in the case of death, to the person or
persons entitled thereto under Section 12 below, and the Participant’s option
for the current Offering Period will be automatically canceled. For purposes of
the Plan, the termination date of employment shall be the Participant’s last
date of actual employment and shall not include any period during which such
Participant receives any severance payments.

 

10.4     A Participant’s termination of participation in the Plan pursuant to
Section 10.1 or 10.2 will not have any effect upon his or her eligibility to
participate in a subsequent Offering Period by completing and filing a new
enrollment form in accordance with Section 6 or in any similar plan that may
hereafter be adopted by the Company.

 

 
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11.           Stock Subject to the Plan.

 

11.1     The maximum number of shares of Common Stock that shall be reserved for
sale under the Plan shall be 1,400,000 shares, subject to adjustment as provided
in Sections 11.2 and 11.3. The shares to be sold to Participants under the Plan
may be, at the election of the Company, either treasury shares or shares
authorized but unissued. If the total number of shares of Common Stock that
would otherwise be subject to options granted pursuant to Section 8 on any
Ending Date exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are then
outstanding), the Committee shall make a pro rata allocation of the shares of
Common Stock remaining available for issuance in as uniform and equitable a
manner as is practicable, as determined in the Committee’s sole discretion. In
such event, the Company shall give written notice of such reduction of the
number of shares subject to the option to each Participant affected thereby and
shall return any excess funds accumulated in each Participant’s Contribution
Account as soon as practicable after the Ending Date of such Offering Period.

 

11.2     In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off) or any other similar change in the corporate structure or
shares of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) will make appropriate adjustments (which determination will be
conclusive) as to the number and kind of securities or other property (including
cash) available for issuance or payment under the Plan and, in order to prevent
dilution or enlargement of the rights of Participants, (a) the number and kind
of securities or other property (including cash) subject to each outstanding
option, and (b) the Purchase Price of outstanding options.

 

11.3     Subject to the following provisions of this Section 11.3, if the
Company is the surviving corporation in any reorganization, merger or
consolidation with or involving one or more other corporations, each outstanding
option under the Plan shall apply to the amount and kind of securities to which
a holder of the number of shares of Common Stock subject to such option would
have been entitled immediately following such reorganization, merger or
consolidation, with a corresponding proportionate adjustment of the Purchase
Price. If there is a (a) dissolution or liquidation of the Company, (b) merger,
consolidation or reorganization of the Company with one or more other
corporations in which the Company is not the surviving corporation, (c) sale of
all or substantially all of the assets of the Company to another person or
entity, or (d) transaction (including a merger or reorganization in which the
Company is the surviving corporation) approved by the Board that results in any
person or entity owning more than 50% of the combined voting power of all
classes of stock of the Company, then the Plan and all options outstanding
thereunder shall terminate, except as provided in the following sentence. If
provision is made in writing in connection with such transaction for the
continuation of the Plan and either the assumption of the options theretofore
granted or the substitution for such options of new options covering the stock
of a successor corporation (or a parent or subsidiary thereof), in either case
with appropriate adjustments as to the number and kinds of shares and exercise
prices, then the Plan shall continue in the manner and under the terms provided.
If the Plan is terminated as provided in this Section 11.3, the current Offering
Period shall be deemed to have ended on the last trading day prior to such
termination, and the options of each Participant then outstanding shall be
deemed to have been automatically exercised in accordance with Section 9.1 on
such last trading day. The Committee shall cause written notice to be sent of an
event that will result in such a termination to all Participants not later than
the time the Company gives notice thereof to its shareholders. Adjustments under
this Section 11.3 shall be made by the Committee, whose determination in that
respect shall be final, binding and conclusive.

 

 
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12.           Designation of Beneficiary.

 

12.1     A Participant may file a written designation of a beneficiary who is to
receive a cash refund of the amount, if any, from the Participant’s Contribution
Account under the Plan in the event of such Participant’s death at a time when
cash is held for his or her account. Disposition of shares of Common Stock in a
Participant’s Share Account upon the Participant’s death shall be in accordance
with the agreement governing the Share Account.

 

12.2     A designation of beneficiary pursuant to Section 12.1 may be changed by
the Participant at any time by written notice. In the event of the death of a
Participant in the absence of a valid designation of a beneficiary who is living
at the time of such Participant’s death, the Company shall deliver such cash to
the executor or administrator of the estate of the Participant; or, if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company in its discretion, may deliver such cash to the spouse or to any one
or more dependents or relatives of the Participant; or, if no spouse, dependent
or relative is known to the Company, then to such other person as the Company
may designate.

 

13.           No Right to Employment.

 

Nothing in the Plan will interfere with or limit in any way the right of the
Company or any of its subsidiaries to terminate the employment of any Employee
or Participant at any time, nor confer upon any Employee or Participant any
right to continue in the employ of the Company or any of its subsidiaries.

 

14.           Rights As a Shareholder.

 

As a holder of an Option under the Plan, a Participant will have no rights as a
shareholder unless and until such Option is exercised and the Participant
becomes the holder of record of shares of Common Stock. Except as otherwise
provided in the Plan, no adjustment will be made for dividends or distributions
with respect to Options as to which there is a record date preceding the date
the Participant becomes the holder of record of such shares, except as the
Committee may determine in its sole discretion.

 

15.           Transferability.

 

Neither payroll deductions credited to a Participant’s Contribution Account nor
any rights with regard to the exercise of an option or to receive shares of
Common Stock under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will or the laws of descent and
distribution) by the Participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect.

 

16.           Conditions of Sale.

 

Notwithstanding any other provision of the Plan or any agreements entered into
pursuant to the Plan, the Company will not be required to issue any shares of
Common Stock under the Plan, and a Participant may not sell, assign, transfer or
otherwise dispose of shares of Common Stock issued pursuant to Options granted
under the Plan, unless (a) there is in effect with respect to such shares a
registration statement under the Securities Act and any applicable state or
foreign securities laws or an exemption from such registration under the
Securities Act and applicable state or foreign securities laws, and (b) there
has been obtained any other consent, approval or permit from any other
regulatory body that the Committee, in its sole discretion, deems necessary or
advisable. The Company may condition such issuance, sale or transfer upon the
receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of Common Stock, as
may be deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.

 

 
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17.           Amendment or Termination.

 

The Board may suspend or terminate the Plan or any portion thereof at any time,
and may amend the Plan from time to time in such respects as the Board may deem
advisable in order that Options under the Plan will conform to any change in
applicable laws or regulations or in any other respect the Board may deem to be
in the best interests of the Company; provided, however, that no amendments to
the Plan will be effective without approval of the shareholders of the Company
if shareholder approval of the amendment is then required pursuant to Section
423 of the Code or the rules of any stock exchange or similar regulatory body.
Upon termination of the Plan, the Committee, in its sole discretion, may take
any of the actions described in Section 5 of the Plan.

 

18.           Notices.

 

All notices or other communications by a Participant to the Company in
connection with the Plan shall be deemed to have been duly given when received
by the Senior Vice President & CFO of the Company or by any other person
designated by the Company for the receipt of such notices or other
communications, in the form and at the location specified by the Company.

 

19.           Effective Date.

 

This amendment and restatement of the Plan shall become effective on the date it
is approved by the requisite vote of the Board, subject to approval by the
Company’s shareholders.

 

20.           Miscellaneous.

 

The headings to sections of the Plan have been included for convenience of
reference only. The Plan shall be interpreted and construed in accordance with
the laws of the State of Texas. References in the Plan to “$” or “dollars” shall
be deemed to refer to United States dollars unless the context clearly indicates
otherwise. 

 

 

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