Stock Purchase and Loan Plan – CSX Corp.
CSX CORPORATION
Stock Purchase and Loan Plan
As Amended and Restated February 14, 1996,
as Amended through December 10, 1997
1. Purpose
The CSX Corporation 1991 Stock Purchase and Loan Plan (the '1991 Plan')
was established to encourage and increase the ownership of the common stock of
CSX Corporation (the 'Company') by those employees of the Company or a
Subsidiary who, by virtue of their responsibilities or positions, were most
likely to have the opportunity to enhance long-term performance of the Company
and shareholder value. The Company continues to believe that ownership of the
Company's common stock stimulates the efforts of those employees upon whose
judgment and interest the Company is and will be largely dependent for the
successful conduct of its business and will further the identification of those
employees' interests with those of the Company's shareholders.
Unless the 1991 Plan is extended or replaced, these benefits will
generally end July 31, 1996. Management believes it is in the best interests of
the Company's shareholders to extend the 1991 Plan in order to continue the
original objective of assuring that significant amounts of the Company's common
stock are held by employees whose interests are identified with those of the
Company's non-employee shareholders. Accordingly, the 1991 Plan is amended and
restated as of February 14, 1996 (the 'Plan'), to maintain and expand this
objective.
Notwithstanding anything contained in this amended and restated Plan,
the provisions of the 1991 Plan in effect prior to the amendment and restatement
reflected herein shall continue to apply with respect to Company Stock acquired
pursuant to a Purchase Award under the 1991 Plan as to which a Participant is
not granted or does not exercise an Exchange Award.
2. Definitions and Construction
Unless the content clearly indicates to the contrary, in reading this
Plan, the singular shall include plural and the masculine shall include the
feminine.
As used in the Plan, the following terms have the indicated meanings:
(a) 'Applied Dividends' means, as provided in Section 6(e),
dividends paid on pledged Company Stock used to reduce
Interest.
(b) 'Board' means the Company's Board of Directors.
(c) 'Business Day' means, if relevant to a determination of
the value of Company Stock, a day on which shares of
Company Stock are or could be traded on the New York Stock
Exchange.
(d) 'Cause' means a Participant's: (i) act or acts of personal
dishonesty intended to result in substantial personal
enrichment at the expense of the Company or a Subsidiary;
(ii) repeated violations of the Participant's
responsibilities which are demonstrably willful and
deliberate and which are not remedied in a reasonable
period of time after receipt of written notice from the
Company or a Subsidiary; or (iii) conviction of a felony
involving moral turpitude.
(e) 'Change of Control' means any of the following:
(i) Stock Acquisition. The acquisition, by any
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individual, entity or group [within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the 'Exchange
Act')] (a 'Person')of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the
then outstanding shares of common stock of the
Company (the 'Outstanding Company Common Stock'),
or (B) the combined voting power of the then
outstanding voting securities of the Company
entitled to vote generally in the election of
directors (the 'Outstanding Company Voting
Securities'); provided, however, that for purposes
of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (A) any
acquisition directly from the Company; (B) any
acquisition by the Company; (C) any acquisition by
any employee benefit plan (or related trust)
sponsored or maintained by the Company or any
corporation controlled by the Company; or (D) any
acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B)
and (C) of subsection (iii) of this Section 2(e);
or
(ii) Board Composition. Individuals who, as of the date
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hereof, constitute the Board of Directors (the
'Incumbent Board') cease for any reason to
constitute at least a majority of the Board of
Directors; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election or nomination for election by the
Company's shareholders, was approved by a vote of
at least a majority of the directors then
comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of
office occurs as a result of an actual or
threatened election contest with respect to the
election or removal of directors or other actual
or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board
of Directors; or
(iii) Business Combination. Approval by the
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shareholders of the Company of a reorganization,
merger, consolidation or sale or other
disposition of all or substantially all of the
assets of the Company or its principal Subsidiary
that is not subject, as a matter of law or
contract, to approval by the Surface
Transportation Board or any successor agency or
regulatory body having jurisdiction over such
transactions (the 'Agency') (a 'Business
Combination'), in each case, unless, following
such Business Combination:
(A) all or substantially all of the individuals
and entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such
Business Combination beneficially own,
directly or indirectly, more than 50% of,
respectively, the then outstanding shares
of common stock and the combined voting
power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be,
of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a result
of such transaction owns the Company or its
principal Subsidiary or all or substantially
all of the assets of the Company or its
principal Subsidiary either directly or
through one or more subsidiaries) in
substantially the same proportions as their
ownership, immediately prior to such
Business Combination of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be;
(B) no Person (excluding any corporation
resulting from such Business Combination or
any employee benefit plan (or related trust)
of the Company or such corporation resulting
from such Business Combination) beneficially
owns, directly or indirectly, 20% or more
of, respectively, the then outstanding
shares of common stock of the corporation
resulting from such Business Combination
or the combined voting power of the then
outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business
Combination; and
(C) at least a majority of the members of the
Board of Directors resulting from such
Business Combination were members of the
Incumbent Board at the time of the execution
of the initial agreement, or of the action
of the Board of Directors, providing for
such Business Combination; or
(iv) Regulated Business Combination. Approval by the
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shareholders of the Company of a Business
Combination that is subject, as a matter of law or
contract, to approval by the Agency (a 'Regulated
Business Combination') unless such Business
Combination complies with clauses (A), (B) and (C)
of subsection (iii) of this Section 2(e); or
(v) Liquidation or Dissolution. Approval by the
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shareholders of the Company of a complete
liquidation or dissolution of the Company or its
principal Subsidiary.
(f) 'Commitment Date' means a date fixed by the Committee
which shall be the first day of the Commitment Period.
(g) 'Commitment Period' means a period of twenty (20) Business
Days beginning with the Commitment Date during which a
Participant who has been granted a Purchase Award must
purchase all or part of the underlying Company Stock.
(h) 'Committee' means the Committee of the Board appointed to
administer the Plan as provided in Section 10.
(i) 'Company' means CSX Corporation.
(j) 'Company Stock' means the common stock of the Company and
rights, options or warrants for the purchase of securities
of the Company which may be issued with shares of common
stock pursuant, and subject to, plans or agreements
adopted or entered into from time to time by the Company.
(k) 'Disability' means the inability to perform the services
for which a Participant was employed as a result of a
physical or mental impediment entitling the Participant to
begin receiving benefits under the CSX Salary Continuation
and Long-Term Disability Plan.
(l) 'Equity' means, as of any date, the Exchange Award
Purchase Price of a share of Company Stock less the
applicable portion of the unpaid balance and accrued
interest of a Purchase Loan to which such share of Company
Stock is subject.
(m) 'Exchange Act' means the Securities Exchange Act of 1934,
as amended.
(n) 'Exchange Award' means a Purchase Award granted pursuant
to Section 4 to a Participant who received a Purchase
Award under the 1991 Plan.
(o) 'Exchange Award Down Payment' means a dollar amount
computed by taking a percentage, to be determined by the
Committee, of the Exchange Award Purchase Price of the
Company's common stock on the Commitment Date multiplied
by the number of shares in the Exchange Award; provided,
however, such percentage shall not be less than 10% nor
more than 25%.
(p) 'Insider' means any person subject to Section 16(b) of the
Exchange Act.
(q) 'Interest' means an amount calculated using the Applicable
Federal Rate, as determined for purposes of Section
1274(d) of the IRC.
(r) 'Interest Spread' means, at the time of determination,
Interest accrued on a Purchase Loan reduced by Applied
Dividends.
(s) 'IRC' means the Internal Revenue Code of 1986, as amended.
(t) 'Market Price' means the average of the high and the low
price of a share of Company Stock on the New York Stock
Exchange (or the average of the bid and asked prices if
there were no sales), on any Business Day as reported in
The Wall Street Journal.
(u) 'Participant' means an employee of the Company or a
Subsidiary who is designated by the Committee, in its sole
discretion, as eligible for and who receives a Purchase
Award.
(v) 'Purchase Award' means a right to purchase a specified
number of shares of Company Stock with Purchase Loan
rights.
(w) 'Purchase Loan' means an extension of credit to a
Participant by the Company evidenced by a non-recourse
promissory note for (i) in the case of a new Purchase
Loan, 90% or 95% of the Purchase Price of the Company
Stock awarded to the Participant under the Plan, or (ii)
in the case of a Purchase Loan made pursuant to an
exchange of Company Stock pursuant to Section 4, the
Purchase Price of the Company Stock awarded to the
Participant under an Exchange Award, less his Exchange
Award Down Payment, and in either case, bearing Interest,
and secured by a pledge of all of the shares of Company
Stock purchased by the Participant.
(x) 'Purchase Note' means a promissory note evidencing the
Purchase Loan for the balance of the Purchase Price
without recourse rights against the maker and with other
terms and conditions established by the Committee
consistent with the Plan.
(y) 'Purchase Note Repayment Amount' means the then unpaid
balance of the Purchase Note, accrued and unpaid interest,
applicable federal and state payroll and withholding taxes
on income recognized on the transaction, and any brokerage
fees, collection fees and costs associated with the
Purchase Loan.
(z) 'Purchase Price' or 'Exchange Award Purchase Price' means,
with respect to a share of Company Stock, the average of
the Market Price for the five (5) consecutive Business
Days immediately preceding the Commitment Date.
(aa) 'Retirement' means the termination of employment (for
reasons other than Cause) (i) at or after age 65, or (ii)
after age 55 with at least 10 years of service with the
Company and/or a Subsidiary.
(ab) 'Subsidiary' means a corporation more than 50% of the
voting shares of which are owned directly or indirectly by
the Company.
3. Company Stock
There shall be an aggregate of 9,000,000 shares of Company Stock
reserved for issuance under the Plan, subject to Section 9 of the Plan
(concerning changes in the capital structure of the Company). Shares that have
been awarded under the Plan but not issued, or shares that have been issued but
are returned to the Company in conformity with the Plan (including shares of
Company Stock retained, canceled or repurchased by the Company in conjunction
with the payment of a Purchase Loan or withholding taxes), may again be awarded
under the Plan.
4. Exchange of Shares
To encourage, extend and expand the continued ownership of Company
Stock, Participants in the 1991 Plan whose Purchase Loans mature July 31, 1996,
without regard to the one-year extension provided for under Section 6(b), may be
given a one-time irrevocable election to exchange all, or a portion to be
determined by the Committee, of any shares purchased under the 1991 Plan for an
enhanced Purchase Award under the Plan (an 'Exchange Award'). To the extent such
shares are exchanged they shall constitute the 'Exchanged Shares.' Exchange
Awards shall be issued for not more than the number of shares of common stock
determined by dividing the excess of the Exchange Award Purchase Price, as of
the Commitment Date of the Exchange Award, of the number of shares relating to a
Purchase Loan issued pursuant to the 1991 Plan over the outstanding amount due
on the Purchase Loan on such date by 25% of the Exchange Award Purchase Price of
the Company's common stock on such date. In the case of a Participant who
exercises an Exchange Award, his 1991 Purchase Notes shall be canceled.
5. Stock Purchase Awards
On or as soon as practicable after a Commitment Date, the Committee
shall give notice to each Participant (or to the class of Participants) eligible
for an award stating (i) the number of shares of Company Stock covered by each
such Purchase Award or a formula for determining the number of shares of Company
Stock covered by each such Purchase Award, and (ii) the price, other terms and
conditions, if any, pertaining to each such Purchase Award and Purchase Loan
that must be satisfied by a Participant in order to exercise the Purchase Award.
A Participant shall exercise a Purchase Award and Purchase Loan rights
by delivering to the Company during the Commitment Period (i) a notice stating
the amount of his down payment (which shall be 5% or 10% of the Purchase Price
or his Exchange Award Down Payment in the case of an Exchange Award) and his
intention to deliver a Purchase Note for the balance of the Purchase Price, and
(ii) where applicable, the down payment (which shall be deemed paid in the case
of an Exchange Award) and a Purchase Note.
The grant of a Purchase Award and Purchase Loan to a Participant shall
not obligate the Company or a Subsidiary of the Company to pay the Participant
any particular amount of remuneration, to continue the employment of a
Participant after the grant or to make further grants to a Participant at any
time thereafter.
6. Purchase Loans
The Company shall, subject to paragraph (a) below, upon the Committee's
recommendation, extend a Purchase Loan to a Participant upon exercise of a
Purchase Award subject to the following terms and conditions:
(a) The original principal amount of a new Purchase Loan shall
be the difference between the Participant's down payment
(which shall be 5% or 10% of the Purchase Price) and the
Purchase Price. In the case of an Exchange Award, the
Purchase Loan shall be the difference between the
Participant's Exchange Award Down Payment and the Exchange
Award Purchase Price. The down payment for a new Purchase
Loan shall be in cash, or, if authorized by the Committee
(i) by delivery of shares of Company Stock having a Market
Price equal to the required down payment on date of transfer
to the Company, or (ii) by delivery to the Company of a
promissory note with terms and conditions fixed by the
Committee and with full recourse rights against the maker.
The Exchange Award Down Payment shall be deemed to have been
paid by the Equity in a Participant's Exchanged Shares
subject to a Purchase Loan under the 1991 Plan.
(b) The Purchase Loan shall be due and payable as provided in
the provisions of the Purchase Note executed by the
Participant. The term of the Purchase Note shall not exceed
a period of five (5) years; provided, however, the
Participant, in his discretion, may extend the Purchase Note
for one (1) year; provided, further, that the Committee,
may, in its discretion, extend a Purchase Note for up to two
(2) years. In no event may the Purchase Note term, including
extensions, exceed seven (7) years.
(c) Purchase Notes shall be in the form approved by the
Committee and shall contain such terms and conditions, not
inconsistent with the Plan, as the Committee shall determine
in its sole discretion; provided, that each Purchase Note
shall be subject to the terms of the Plan.
(d) A Participant shall effect a pledge of all shares of Company
Stock acquired by the Participant upon the exercise of the
Purchase Award by delivering to the Company (i) the
certificate or certificates for the acquired shares of
Company Stock, accompanied by a duly executed stock power in
blank, and (ii) a properly executed stock pledge agreement
in the form approved by the Committee.
(e) Dividends paid on shares of Company Stock pledged as
security for a Purchase Loan shall be first treated as
Applied Dividends and then applied to repay the Purchase
Note. At the discretion of the Committee, the Company shall
also pay (i) dividend equivalents on the number of shares
purchased pursuant to a Purchase Note equal to the number of
shares representing the Participant's Equity in the
Exchanged Shares, and (ii) only after all interest and
Purchase Price reductions are realized under Section 6(g),
dividend equivalents on the number of shares purchased
pursuant to a Purchase Note in excess of the number of
shares in (i), above, if any.
(f) Within ten (10) Business Days after the maturity date of a
Purchase Loan, or on the date or dates, if installments are
elected pursuant to Section 7(c), as of which a Participant
elects to prepay a Purchase Loan and Purchase Note in
accordance with Section 7, the Participant shall repay in
full the Purchase Note Repayment Amount or the portion
related to an installment under Section 7(c). If not fully
paid when due, the Participant agrees to sell his pledged
Company Stock to the Company at the Market Price on the
maturity date if a Business Day (or at the Market Price on
the Business Day immediately preceding the maturity date if
the maturity date is not a Business Day). The Company may
sell on the Participant's behalf on the open market (except
as hereinafter provided) the number of shares of Company
Stock pledged as collateral necessary to repay the Purchase
Note Repayment Amount. If, pursuant to procedures
established by the Company for compliance with applicable
securities laws, the Company believes that the purchase of
pledged shares by the Company in repayment of a Purchase
Note, or the sale by the Company of pledged shares of
Company Stock on the open market to repay a Purchase Note,
would violate any provision of applicable securities laws or
cause a Participant to incur a liability under Section 16(b)
of the Exchange Act, the maturity date may be extended by
the Committee until the first day the purchase by the
Company of the pledged shares or a sale of the pledged
shares on the open market can be made without violating such
securities laws or the Participant incurring liability under
Section 16(b). If, pursuant to procedures established by the
Company for compliance with applicable tax laws, the Company
believes that the repayment of a Purchase Note, the purchase
of the pledged shares in repayment of a Purchase Note, or
the sale by the Company of pledged shares of Company Stock
on the open market to repay a Purchase Note would cause any
portion of a Participant's compensation under the Plan to be
nondeductible under Section 162(m) of the IRC, the maturity
date may be extended by the Committee until the first day
the repayment of a Purchase Note, the purchase of the
pledged shares in repayment of a Purchase Note, or the sale
by the Company of pledged shares of Company Stock on the
open market to repay a Purchase Note can be made without
such compensation being non-deductible under Section 162(m)
of the IRC, but in no event shall such extension of the
maturity date be for a period greater than one (1) year.
(g) The Purchase Price of one half of the pledged shares of
Company Stock shall be adjusted as follows if at any time
after the first anniversary date of a Purchase Note the
Market Price of Company Stock equals or exceeds the Purchase
Price of the Participant's Company Stock by the amount
specified below for a period of ten (10) consecutive
Business Days:
Stock Price Purchase Price Reductions
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Purchase Price + 20% 10%
Purchase Price + 30% 20%
Purchase Price + 40% 30%
Purchase Price + 50% 40%
Purchase Price + 60% 50%
Purchase Price + 70% 60%
Purchase Price + 80% 70%
Purchase Price + 90% 80%
Purchase Price + 100% 100%
The principal amount of a Participant's Purchase Loan and
Purchase Note, plus accrued and unpaid Interest, as
well as any accrued and unpaid Interest on a down
payment loan referenced in Section 6(a) shall be
adjusted pursuant to Section 2.5 of the Stock Purchase
Pledge and Loan Agreement. The amount of such
adjustment to the principal amount of a Participant's
Purchase Loan and Purchase Note shall equal the amount
of the Purchase Price adjustment provided above. The
provisions of this Section and any applicable
adjustments to Interest and a Purchase Note shall be
applied at the time of repayment of a Purchase Note.
Decreases in the Market Price of Company Stock
subsequent to the completion of a measuring period
shall be disregarded for purposes of the adjustments
authorized by this Section.
(h) In the event of a change in capital structure involving any
of the pledged shares of Company Stock, as provided in
Section 9, such newly acquired shares shall be pledged to
the Company as substitute or additional security.
(i) Notwithstanding anything in this Section 6 to the contrary,
the Company shall not be required to make a Purchase Loan to
a Participant if making such Purchase Loan will (i) cause
the Company to violate any covenant or other similar
provision in any indenture, loan agreement, or other
agreement, or (ii) violate any applicable federal, state or
local law.
(j) Upon issuance by the Company of Company Stock purchased
pursuant to a Purchase Award, the affected Participant shall
be deemed a shareholder of the Company and (subject to the
terms of the Plan, the Purchase Loan, the Purchase Note and
related documents) shall be entitled to dividend and voting
rights with respect to the Company Stock purchased.
7. Termination of Employment; Change of Control; Prepayment of Purchase
Loan
If before a Purchase Note is repaid a Participant's employment
terminates for any reason, or he is no longer employed by a continuing
Subsidiary, or a Change of Control occurs, the following provisions shall apply
notwithstanding any terms in the Purchase Note to the contrary:
(a) Death or Disability. If a Participant's termination of employment
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results from death or Disability, the affected Participant (or
the Participant's estate or personal representative) may either
(i) continue to hold the Purchase Note and participate in the
Plan for three years (or, if earlier, until the maturity date of
the Purchase Loan, as extended by either the Participant or the
Committee, pursuant to Section 6(b)), or (ii) within ninety (90)
days of said termination of employment (A) elect to prepay the
Purchase Note, or (B) elect to rescind the Exchange Award or the
Purchase Award, as the case may be. If the Participant elects to
prepay the Purchase Note under (ii)(A), the Purchase Note shall
become due and payable on the prepayment date elected by the
Participant. If an election to prepay the Purchase Note is
effective prior to the first anniversary of the execution of the
Purchase Note, Section 6(g) shall not apply; if it is effective
on or after the first anniversary of its execution, Section 6(g)
shall apply. If the Participant elects to rescind the Exchange
Award or the Purchase Award under (ii)(B), the shares of Company
Stock acquired by the Participant upon the exercise of the
Exchange Award or Purchase Award shall be transferred to the
Company, the Purchase Note shall be canceled, the Participant
shall have no further rights under the Plan, and the Company
shall have no further obligations to the Participant, except that
the Company shall pay to or with respect to the Participant, in
consideration for the cancellation of the Participant's rights
under the Exchange Award or Purchase Award, an amount equal to
his Exchange Award Down Payment, as adjusted under Section 7(h),
or, if applicable, the Purchase Award down payment paid to the
Company pursuant to Section 6(a).
(b) Involuntary Termination With Consent of Company. If a
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Participant's employer terminates his employment for reasons
other than Cause, the affected Participant may, within
ninety (90) days of said termination of employment (i)
elect to prepay the Purchase Note, or (ii) elect to rescind
the Exchange Award or the Purchase Award, as the case may be. If
the Participant elects to prepay the Purchase Note under (i), the
Purchase Note shall become due and payable on the prepayment date
elected by the Participant. If the Participant elects to rescind
the Exchange Award or the Purchase Award under (ii), the shares
of Company Stock acquired by the Participant upon the exercise of
the Exchange Award or Purchase Award shall be transferred to the
Company, the Purchase Note shall be canceled, the Participant
shall have no further rights under the Plan, and the Company
shall have no further obligations to the Participant, except that
the Company shall pay to or with respect to the Participant, in
consideration for the cancellation of the Participant's rights
under the Exchange Award or Purchase Award, an amount equal to
his Exchange Award Down Payment, as adjusted under Section 7(h),
or, if applicable, the Purchase Award down payment paid to the
Company pursuant to Section 6(a). If the Participant's
termination of employment is prior to the first anniversary of
the execution of the Purchase Note, Section 6(g) shall not apply;
if it is on or after the first anniversary of the execution of
the Purchase Note, Section 6(g) shall apply.
(c) Retirement. If a Participant's termination of employment
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results from his Retirement, the affected Participant may
either (i) continue to hold the Purchase Note and participate
in the Plan for three (3) years (or, if earlier, until the
maturity date of the Purchase Loan, as extended by either the
Participant, or the Committee, pursuant to Section 6(b)), (ii)
prepay the Purchase Note within ninety (90) days of said
termination of employment, or (iii) repay the Purchase Note in no
more than three (3) installments, due over the remaining term of
the Purchase Note, including extensions. If a Participant elects
to prepay a Purchase Note, the Participant agrees to sell the
pledged Company Stock to the Company for the Market Price on the
date of prepayment. If an election to prepay the Purchase Note
under (ii) or (iii) above is effective prior to the first
anniversary of the execution of the Purchase Note, Section 6(g)
shall not apply; if it is effective on or after the first
anniversary of its execution, Section 6(g) shall apply.
(d) Voluntary Termination with Consent of Company or Involuntary
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Termination. If the Participant's termination of employment is
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voluntary and with the consent of the Company, or, if his
employer terminates his employment for reasons other than
Cause and the Company does not consent to the Participant's
termination being treated under Section 7(b), the maturity
date of the Purchase Note shall be accelerated without further
action of the Committee or the Company and shall be required
to be prepaid within ninety (90) days of said termination of
employment, and the Participant agrees to sell the pledged
Company Stock to the Company for the Market Price on the date
of prepayment. If a Participant's termination of employment is
prior to the first anniversary of the execution of the Purchase
Note, Section 6(g) shall not apply; if it is on or after the
first anniversary of the execution of the Purchase Note,
Section 6(g) shall apply.
(e) Termination for Cause or Voluntary Termination Without Consent
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of Company. If the Participant's termination of employment is
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involuntary for Cause or a voluntary termination without
the consent of the Company, the maturity date of the
Purchase Note shall be accelerated without further action of the
Committee or the Company to the date of his termination of
employment. In such case, Section 6(g) shall not apply and the
Participant agrees to sell the pledged Company Stock to the
Company for the lesser of (i) the Market Price on the date of
termination of employment, or (ii) an amount equal to his
Exchange Award Down Payment, as adjusted by Section 7(h), or, if
applicable, the Purchase Award down payment paid to the Company
pursuant to Section 6(a) (in any event, less all related taxes
and expenses), and the Company shall have the right to retain any
excess over such amount and the shares' Market Price.
(f) Divisive Transaction. If the Participant's employer ceases to be
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a Subsidiary or if there is a sale of substantially all
of the assets of the Subsidiary, the affected Participant
may, within ninety (90) days of the closing of such
divisive transaction (i) elect to prepay the Purchase Note, or
(ii) elect to rescind the Exchange Award or the Purchase Award,
as the case may be. If the Participant elects to prepay the
Purchase Note under (i), the Purchase Note shall become due and
payable on the prepayment date elected by the Participant. If the
Participant elects to rescind the Exchange Award or the Purchase
Award under (ii), the shares of Company Stock acquired by the
Participant upon the exercise of the Exchange Award or Purchase
Award shall be transferred to the Company, the Purchase Note
shall be canceled, the Participant shall have no further rights
under the Plan, and the Company shall have no further obligations
to the Participant, except that the Company shall pay to or with
respect to the Participant, in consideration for the cancellation
of the Participant's rights under the Exchange Award or Purchase
Award, an amount equal to his Exchange Award Down Payment, as
adjusted under Section 7(h), or, if applicable, the Purchase
Award down payment paid to the Company pursuant to Section 6(a).
Section 6(g) shall apply to all Participants affected by a
divisive transaction. The foregoing shall apply whether or not
the Participant continues in the employ of the Subsidiary but
shall not apply should the Participant continue in the employ of
the Company or another Subsidiary not part of the divisive
transaction.
(g) Change of Control. If a Change of Control occurs, Sections 7(a)
----------------- through (f) shall no longer be applicable, the
Interest and Purchase Price Reductions under Section 6(g) shall
be applied as if the Stock Price had increased by 100% and the
Participant may either (i) continue to hold the Purchase Note and
participate in the Plan until the maturity date of the Purchase
Note, including any extensions, or (ii) within ninety (90) days
of said Change of Control and, if applicable, within ninety (90)
days of a final Agency action in a Regulated Business Combination
under Section 2(e)(iv), (A) elect to prepay the Purchase Note, or
(B) elect to rescind the Exchange Award or the Purchase Award, as
the case may be. If the Participant elects to prepay the Purchase
Note under (ii)(A), the Purchase Note shall become due and
payable on the prepayment date elected by the Participant, and
the provisions of Section 6(g) shall apply. If the Participant
elects to rescind the Exchange Award or the Purchase Award under
(ii)(B), the shares of Company Stock acquired by the Participant
upon the exercise of the Exchange Award or Purchase Award shall
be transferred to the Company, the Purchase Note shall be
canceled, the Participant shall have no further rights under the
Plan, and the Company shall have no further obligations to the
Participant, except that the Company shall pay to or with respect
to the Participant, in consideration for the cancellation of the
Participant's rights under the Exchange Award or Purchase Award,
an amount equal to his Exchange Award Down Payment, as adjusted
under Section 7(h), or, if applicable, the Purchase Award down
payment paid to the Company pursuant to Section 6(a).
(h) Adjustment of Exchange Award Down Payment. Solely for purposes of
------------------------------------------ determining the amount
available to a Participant under this Section 7, a Participant's
Exchange Award Down Payment shall be adjusted as follows: the
dollar amount of the Exchange Award Down Payment computed as of
the date of the Exchange of Shares pursuant to Section 4 shall be
divided by the Market Price on the date of such Exchange of
Shares, to arrive at a number of equivalent shares. On the
Purchase Loan maturity date or prepayment date applicable under
this Section 7, the number of equivalent shares determined in the
preceding sentence will be multiplied by the Market Price on such
date to arrive at the Participant's Exchange Award Down Payment
as adjusted.
(i) Certain Terms of Purchase Awards or Exchange Awards.
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Notwithstanding any provision of this Plan to the contrary,
in the discretion of the Committee, a Purchase Award and/or
Exchange Award may provide, to the extent deemed appropriate
by the Committee to eliminate or reduce the applicability or
impact of Sections 280G and/or 4999 of the IRC, for: (i) the
cancellation of shares and/or a reduction or increase in the
amount of a Purchase Note, (ii) a limitation of the reduction
of the Purchase Price pursuant to Section 7(g) above, (iii) the
elimination of any acceleration of a Purchase Note or right to
prepay such Note, or (iv) a reduction or limitation of any other
benefit under this Plan or otherwise to a Participant.
8. Non-transferability of Purchase Awards
Except as provided in Section 7(a), neither right of Participation nor
Purchase Awards are assignable or transferable.
9. Change in Capital Structure
If the number of outstanding shares of Company Stock is increased or
decreased as a result of a subdivision or consolidation of shares, the payment
of a stock dividend, stock split, or any other change in capitalization effected
without receipt of consideration by the Company (including, but not limited to,
the creation or issuance to the shareholders generally of rights, options or
warrants for the purchase of common or preferred stock of the Company), or if a
spin-off transaction occurs, then the number and kind of shares of stock or
securities of the Company to be subject to the Plan, the maximum number of
shares or securities which may be delivered under the Plan, and other relevant
provisions shall be appropriately adjusted by the Committee, whose determination
shall be binding and conclusive on all persons.
If there is a Change of Control, the Committee may take such actions,
not inconsistent with the Plan, with respect to outstanding unexercised Purchase
Awards as the Committee deems appropriate.
Notwithstanding anything in the Plan to the contrary, the Committee may
take the foregoing actions without the consent of any Participant, and the
Committee's determination shall be conclusive and binding on all persons for all
purposes.
10. Administration of the Plan
The Plan shall be administered by the Committee, consisting of not less
than three Directors of the Company appointed by the Board. Subject to paragraph
(d) below, the Committee shall be the Compensation Committee of the Board or
such subcommittee appointed by the Compensation Committee consisting of not
fewer than two non-employee directors. The Committee shall at all times consist
of outside directors within the meaning of Section 162(m) of the IRC. The
Committee shall have general authority to impose any limitation or condition
upon a Purchase Award the Committee deems appropriate to achieve the objectives
of the Purchase Award and the Plan, and in addition, and without limitation and
in addition to powers set forth elsewhere in the Plan, shall have the following
specific authority:
(a) The Committee shall have the power and complete discretion to
determine (i) which employees of the Company or a Subsidiary
shall be Participants, (ii)which Participants shall receive a
Purchase Award with Purchase Loan rights, (iii) the number of
shares of Company Stock to be covered by each Purchase Award,
(iv) the Market Price of Company Stock,(v) the time or times when
a Purchase Award shall be granted, (vi) whether a Disability
exists, (vii) the manner in which payment will be made upon the
exercise of a Purchase Award, (viii) the number of shares of
Company Stock required to be pledged at any given time, and to
make appropriate adjustments and (ix) any additional requirements
relating to Purchase Awards that the Committee deems appropriate.
(b) The Committee may adopt rules and regulations for carrying out
the Plan and for the sale or other disposition of Company Stock
acquired pursuant to the Plan. The interpretation and
construction of any provision of the Plan by the Committee shall
be final and conclusive. The Committee may consult with counsel,
who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the
advice of counsel.
(c) A majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action may be taken by a
written instrument signed by all of the members, and any action
so taken shall be fully effective as if it had been taken at a
meeting.
(d) The Board may from time to time appoint or remove members and
fill vacancies, however caused, in the Committee. Insofar as it
is necessary to satisfy the requirements of Section 16(b) of the
Exchange Act and Rule 16b-3 thereunder, no member of the
Committee shall be eligible to participate in the Plan or in any
other plan of the Company or a Subsidiary that entitles
participants to acquire stock, stock options or stock
appreciation rights of the Company or a Subsidiary, and no person
shall become a member of the Committee if, within the preceding
one-year period, the person shall have been eligible to
participate in such a plan.
(e) Down payment loans under the 1991 Plan shall be extended on a
full recourse basis for up to seven (7) years in the case of any
Participant who receives and exercises an Exchange Award. To the
extent that a Purchase Note is extended, accelerated or prepaid
under the terms of the Plan, said extension, acceleration or
prepayment shall also apply to the down payment loan.
11. Effective Date of the Plan
The 1991 Plan became effective as of December 12, 1990. This amendment
and restatement of the 1991 Plan shall be effective as of February 14, 1996, and
shall be submitted to the shareholders of the Company for approval. Until (i)
the Plan has been approved by the Company's shareholders, (ii) the Company Stock
issuable under the Plan has been registered with the Securities and Exchange
Commission, (iii) the Company Stock is accepted for listing on the New York
Stock Exchange, and (iv) the requirements of any applicable state securities
laws have been met, no Purchase Award shall be granted or Purchase Loan
authorized by the Committee.
12. Termination, Modification
If not sooner amended or terminated by the Board, this Plan shall
terminate at the close of business on February 13, 2006. No Purchase Awards
shall be made under this Plan after termination. The Board may terminate the
Plan or may amend the Plan in such respects as it shall deem advisable;
provided, however, that, if necessary to satisfy the requirements of Section
16(b) of the Exchange Act, the New York Stock Exchange or applicable state law,
the shareholders of the Company must approve any amendment that would (i)
materially increase the benefits accruing to Participants under the Plan, (ii)
materially increase the number of shares of Company Stock that may be issued
under the Plan, or (iii) materially modify the Plan's eligibility requirements.
A termination or amendment of the Plan shall not, without the consent of the
affected Participant, adversely impact a Participant's rights under a Purchase
Award previously granted to him.
13. Notice
All notices and other communications required or permitted to be given
under this Plan shall be in writing and shall be deemed to have been duly given
if delivered personally or mailed first class, postage prepaid, as follows: (i)
if to the Company--at its principal business address to the attention of the
Secretary; (ii) if to any Participant--at the last address of the Participant
known to the sender at the time the notice or other communication is sent.
14. Governing Law
The terms of this Plan shall be governed by the laws of the Commonwealth
of Virginia.
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