EXHIBIT 10.10
CHESAPEAKE CORPORATION
DIRECTORS' STOCK OPTION AND
DEFERRED COMPENSATION PLAN
Effective June 1, 1996
TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS
1.01. Administrator. . . . . . . . . . . . . . . . . . . . 1
1.02. Agreement. . . . . . . . . . . . . . . . . . . . . . 1
1.03. Beneficiary or Beneficiaries . . . . . . . . . . . . 1
1.04. Beneficiary Designation Form . . . . . . . . . . . . 1
1.05. Board. . . . . . . . . . . . . . . . . . . . . . . . 1
1.06. Change in Control. . . . . . . . . . . . . . . . . . 1
1.07. Code . . . . . . . . . . . . . . . . . . . . . . . . 1
1.08. Common Stock . . . . . . . . . . . . . . . . . . . . 1
1.09. Company. . . . . . . . . . . . . . . . . . . . . . . 2
1.10. Compensation . . . . . . . . . . . . . . . . . . . . 2
1.11. Control Change Date. . . . . . . . . . . . . . . . . 2
1.12. Date of Grant. . . . . . . . . . . . . . . . . . . . 2
1.13. Deferral Election Form . . . . . . . . . . . . . . . 2
1.14. Deferral Year. . . . . . . . . . . . . . . . . . . . 2
1.15. Deferred Benefit . . . . . . . . . . . . . . . . . . 2
1.16. Deferred Cash Account. . . . . . . . . . . . . . . . 2
1.17. Deferred Cash Benefit. . . . . . . . . . . . . . . . 3
1.18. Deferred Stock Account . . . . . . . . . . . . . . . 3
1.19. Deferred Stock Benefit . . . . . . . . . . . . . . . 3
1.20. Distribution Election Form . . . . . . . . . . . . . 3
1.21. Election Date. . . . . . . . . . . . . . . . . . . . 3
1.22. Fair Market Value. . . . . . . . . . . . . . . . . . 4
1.23. Meeting Fees . . . . . . . . . . . . . . . . . . . . 4
1.24. Option . . . . . . . . . . . . . . . . . . . . . . . 4
1.25. Participant. . . . . . . . . . . . . . . . . . . . . 4
1.26. Plan . . . . . . . . . . . . . . . . . . . . . . . . 4
1.27. Retainer Fee . . . . . . . . . . . . . . . . . . . . 4
1.28. Terminate, Terminating, or Termination . . . . . . . 4
ARTICLE II PURPOSES . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV GRANT OF OPTIONS
4.01. Option Grants. . . . . . . . . . . . . . . . . . . . 5
4.02. Option Price . . . . . . . . . . . . . . . . . . . . 6
4.03. Exercisability . . . . . . . . . . . . . . . . . . . 6
4.04. Maximum Option Period. . . . . . . . . . . . . . . . 7
4.05. Nontransferability . . . . . . . . . . . . . . . . . 7
4.06. Stock Subject to Options . . . . . . . . . . . . . . 7
4.07. Shareholder Rights . . . . . . . . . . . . . . . . . 7
ARTICLE V DEFERRED BENEFITS
5.01. Deferral Election. . . . . . . . . . . . . . . . . . 7
5.02. Deferred Cash Benefits . . . . . . . . . . . . . . . 9
5.03. Deferred Stock Benefits. . . . . . . . . . . . . . . 10
5.04. Distribution of Deferred Benefits. . . . . . . . . . 10
5.05. Hardship Distributions . . . . . . . . . . . . . . . 13
ARTICLE VI ADJUSTMENT UPON CHANGE IN COMMON STOCK. . . . . . . . . . 13
ARTICLE VII COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII GENERAL PROVISIONS
8.01. Effect on Service. . . . . . . . . . . . . . . . . . 15
8.02. Unfunded Plan. . . . . . . . . . . . . . . . . . . . 15
8.03. Notices. . . . . . . . . . . . . . . . . . . . . . . 15
8.04. Rules of Construction. . . . . . . . . . . . . . . . 15
ARTICLE IX AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE X TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XI DURATION OF OPTION GRANTS . . . . . . . . . . . . . . . . 16
ARTICLE XII EFFECTIVE DATE OF PLAN. . . . . . . . . . . . . . . . . . 16
ARTICLE I
DEFINITIONS
1.011. Administrator means the Company's Corporate Secretary.
1.012. Agreement means a written Agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the
terms and conditions of an Option granted to such Participant.
1.013. Beneficiary or Beneficiaries means a person or persons or other
entity designated on a Beneficiary Designation Form by a Participant as
allowed in subsection 5.04(c) to receive Deferred Benefits. If there is no
valid designation by the Participant, or if the designated Beneficiary or
Beneficiaries fail to survive the Participant or otherwise fail to take the
benefit, the Participant's Beneficiary is the first of the following who
survives the Participant: a Participant's spouse (the person legally
married to the Participant when the Participant dies); the Participant's
surviving children and the issue of Participant's deceased children, per
stirpes; the Participant's parents; and the Participant's estate.
1.014. Beneficiary Designation Form means a form acceptable to the
Administrator or his designee used by a Participant according to this Plan
to name the Participant's Beneficiary or Beneficiaries who will receive
Deferred Benefits under this Plan on account of the Participant's death.
1.015. Board means the board of directors of the Company.
1.016. Change in Control means a "Change in Control" as defined in the
Chesapeake Corporation Benefits Plan Trust.
1.017. Code means the Internal Revenue Code of 1986, as amended.
1.018. Common Stock means the common stock of the Company.
1.09. Company means Chesapeake Corporation and any successor business by
merger, purchase, or otherwise that maintains the Plan.
1.10. Compensation means a Participant's Meeting Fees and Retainer Fees
for the Deferral Year.
1.11. Control Change Date means a "Control Change Date" as defined in the
Chesapeake Corporation Benefits Plan Trust.
1.12. Date of Grant means each May 1 beginning May 1, 1997, and ending
May 1, 2007.
1.13. Deferral Election Form means a document governed by the provisions
of Article V of this Plan, including the portion that is the Distribution
Election Form and the related Beneficiary Designation Form that applies to
all of that Participant's Deferred Benefits under the Plan.
1.14. Deferral Year means a calendar year for which a Participant has an
operative Deferral Election Form.
1.15. Deferred Benefit means either a Deferred Cash Benefit or a Deferred
Stock Benefit under the Plan for a Participant who has submitted an
operative Deferral Election Form pursuant to section 5.01 of this Plan.
1.16. Deferred Cash Account means that bookkeeping record established for
each Participant who elects a Deferred Cash Benefit under this Plan. A
Deferred Cash Account is established only for purposes of measuring a
Deferred Cash Benefit and not to segregate assets or to identify assets
that may or must be used to satisfy a Deferred Cash Benefit. A Deferred
Cash Account will be credited with the Participant's Compensation deferred
as a Deferred Cash Benefit according to a Deferral Election Form and
according to section 5.02 of this Plan. A Deferred Cash Account will be
credited periodically with amounts based upon interest rates in accordance
with subsection 5.02(b) of this Plan.
1.17. Deferred Cash Benefit means the Deferred Benefit elected by a
Participant under section 5.01 that results in payments governed by
sections 5.02 and 5.04 of this Plan.
1.18. Deferred Stock Account means that bookkeeping record established
for each Participant who elects a Deferred Stock Benefit under this Plan.
A Deferred Stock Account is established only for purposes of measuring a
Deferred Stock Benefit and not to segregate assets or to identify assets
that may or must be used to satisfy a Deferred Stock Benefit. A Deferred
Stock Account will be credited with the Participant's Compensation deferred
as a Deferred Stock Benefit according to a Deferral Election Form and
according to section 5.03 of this Plan. A Deferred Stock Account will be
credited periodically with amounts in accordance with subsection 5.03(b) of
this Plan.
1.19. Deferred Stock Benefit means the Deferred Benefit elected by a
Participant under section 5.01 that results in payments governed by
sections 5.03 and 5.04 of this Plan.
1.20. Distribution Election Form means that part of a Deferral Election
Form used by a Participant according to this Plan to establish the duration
of deferral and the frequency of payments of a Deferred Benefit. If a
Deferred Benefit has no Distribution Election Form that is operative
according to section 5.01 of this Plan, distribution of that Deferred
Benefit is governed by section 5.04(b) of this Plan.
1.21. Election Date means the date established by this Plan as the date
before which a Participant must submit a valid Deferral Election Form to
the Administrator. For each Deferral Year, the Election Date is December
31 of the preceding calendar year. However, for an individual who becomes
a Participant during a Deferral Year, the Election Date is the thirtieth
day following the date that he becomes a member of the Board. Despite the
two preceding sentences, the Administrator may set an earlier date as the
Election Date for any Deferral Year. The Election Date for the 1996
Deferral Year is the thirtieth day following the date that the Plan is
approved by the Company's shareholders in accordance with Article XII.
1.22. Fair Market Value means the average closing sales price of the
Common Stock on the New York Stock Exchange, composite tape, for the twenty
trading days before the Option's Date of Grant.
1.23. Meeting Fees means the amount paid to a member of the Board for
attendance at Board meetings and meetings of the Board's committees,
according to the Company's established rules and procedures for
compensating members of the Board.
1.24. Option means a stock option that entitles the holder to purchase
from the Company a stated number of shares of Common Stock at the shares'
Fair Market Value.
1.25. Participant means a member of the Board who is not an employee of
the Company on the applicable Date of Grant. For purposes of Article V of
this Plan, a Participant, with respect to any Deferral Year, means a member
of the Board who is not an employee of the Company and whose Deferral
Election Form is operative for that Deferral Year.
1.26. Plan means the Chesapeake Corporation Directors' Stock Option and
Deferred Compensation Plan.
1.27. Retainer Fee means that portion of the cash compensation payable to
a member of the Board that is fixed and paid without regard to the member's
attendance at meetings, including any payment that is made on account of
the individual's service as chairman of a committee of the Board.
1.28. Terminate, Terminating, or Termination, with respect to a
Participant, mean cessation of the Participant's relationship with the
Company as a member of the Board whether by death, disability or severance
for any other reason.
ARTICLE II
PURPOSES
The Plan is intended to promote a greater identity of interest
between Participants and the Company's shareholders. The Plan is also
intended to provide an attractive investment opportunity for Participants
by allowing Participants to receive a Deferred Benefit in lieu of all or
part of the Compensation otherwise payable to the Participant.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The
Administrator shall have complete authority to interpret all provisions of
this Plan; to prescribe the form of Agreements; to adopt, amend, and
rescind rules and regulations pertaining to the administration of this
Plan; and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific
power to the Administrator shall not be construed as limiting any power or
authority of the Administrator. Any decision made, or action taken, by the
Administrator or in connection with the administration of this Plan shall
be final and conclusive. The Administrator shall not be liable for any act
done in good faith with respect to this Plan or any Agreement or Option or
Deferred Benefit. All expenses of administering this Plan shall be borne
by the Company.
ARTICLE IV
GRANT OF OPTIONS
4.001. Option Grants. On each Date of Grant during the term of this
Plan, each Participant will be granted an Option for the number of shares
of Common Stock determined in accordance with the following schedule:
Date of Grant Number of Shares
May 1, 1997 1500
May 1, 1998 1700
May 1, 1999 1900
May 1, 2000 2100
May 1, 2001 2300
May 1, 2002 2500
May 1, 2003 2700
May 1, 2004 2900
May 1, 2005 3100 May 1, 2006 3300 May 1, 2007 3500
All Options shall be evidenced by Agreements which shall be subject to
applicable provisions of the Plan and to such other provisions as the
Administrator may adopt.
4.002. Option Price. The price per share for Common Stock purchased on
the exercise of an Option shall be the share's Fair Market Value. Payment
of the Option price shall be made in cash or a cash equivalent acceptable
to the Administrator. In addition, all or part of the Option price may be
paid by surrendering shares of Common Stock to the Company. If Common
Stock is used to pay all or part of the Option price, the fair market value
of the shares surrendered (determined as of the day before the date of
exercise and based on the closing sales price on the New York Stock
Exchange composite tape on such date), together with any cash and cash
equivalents paid, must not be less than the Option price for the number of
shares for which the Option is being exercised.
4.003. Exercisability. Subject to the provisions of this Plan, an Option
may be exercised on or after the day before the Annual Meeting of the
Company's shareholders next following its Date of Grant. The preceding
sentence to the contrary notwithstanding, an Option shall be exercisable in
whole or in part as of a Control Change Date or the date that the
Participant's membership on the Board terminates as a result of the
Participant's death or permanent and total disability (as such term is
defined in Section 22(e)(3) of the Code). An Option shall be forfeited if,
as of the termination of the Participant's membership on the Board, the
Option is not then exercisable and such termination occurs for any reason
other than the Participant's death or permanent and total disability (as
defined above). Options that are exercisable or that become exercisable
upon the Participant's termination of membership on the Board will remain
exercisable until the tenth anniversary of the Option's Date of Grant. An
Option may be exercised with respect to any number of whole shares less
than the full number for which the Option could be exercised. A partial
exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan and the applicable Agreement
with respect to the shares remaining subject to the Option.
4.004. Maximum Option Period. No Option shall be exercisable after the
expiration of ten years from its Date of Grant.
4.005. Nontransferability. Options granted under this Plan shall be
nontransferable except by will or the laws of descent and distribution.
During the lifetime of the Participant to whom the Option is granted, the
Option may be exercised only by the Participant. No right or interest of a
Participant in any Option shall be subject to, any lien, obligation, or
liability of such Participant.
4.006. Stock Subject to Options. Upon the exercise of any Option, the
Company shall deliver to the Participant (or the Participant's broker if
the Participant so directs) shares of its previously authorized but
unissued Common Stock.
4.007. Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date of
the exercise of such Option.
ARTICLE V
DEFERRED BENEFITS
5.051. Deferral Election. A deferral election is valid when a Deferral
Election Form is completed, signed by the electing Participant, and
received by the Administrator or the Administrator's delegate. Deferral
elections are governed by the provisions of this section.
(a)Before each Deferral Year's Election Date, each Participant will be
provided with a Deferral Election Form and a Beneficiary Designation Form.
Under the Deferral Election Form for a single Deferral Year, a Participant
may elect on or before the Election Date to defer the receipt of all or
part of the Participant's Retainer Fee (in 10% increments) or the
Participant's Meeting Fees (in 10% increments) or both for the Deferral
Year.
(b) A Participant's Deferral Election Form may specify either a Deferred
Cash Benefit, a Deferred Stock Benefit or a combination thereof (in
10% increments of the deferred amount).
(c) Except as permitted by Rule 16b-3 of the Securities Exchange
Commission, as in effect from time to time or any successor rule or
regulation, a Participant may not elect to convert a Deferred Cash
Benefit to a Deferred Stock Benefit or to convert a Deferred Stock
Benefit to a Deferred Cash Benefit.
(d) Each Distribution Election Form is part of the Deferral Election Form
on which it appears or to which it states that it is related. The
Administrator may allow a Participant to file one Distribution
Election Form for all of the Participant's Deferred Cash Benefits, all
of the Participant's Deferred Stock Benefits, or all of the
Participant's Deferred Benefits. The provisions of section 5.04(b) of
this Plan apply to any Deferred Benefit under this Plan if there is no
operative Distribution Election Form for that Deferred Benefit.
(e) On or before the Election Date of a Deferral Year, the Administrator
may reject any Deferral Election Form or any Distribution Election
Form or both, and the Administrator is not required to state a reason
for any rejection. The Administrator may modify any Distribution
Election Form at any time to the extent necessary to comply with any
federal securities laws or regulations. However, the Administrator's
rejection of any Deferral Election Form or any Distribution Election
Form or the Administrator's modification of any Distribution Election
Form must be based upon action taken without regard to any vote of the
Participant whose Deferral Election Form or Distribution Election Form
is under consideration, and the Administrator's rejections must be
made on a uniform basis with respect to similarly situated
Participants. If the Administrator rejects a Deferral Election Form,
the Participant must be paid the amounts that the Participant would
then have been entitled to receive if the Participant had not
submitted the rejected Deferral Election Form.
(f) A Participant may not revoke a Deferral Election Form or a
Distribution Election Form after the Deferral Year begins. Any
revocation before the beginning of the Deferral Year is the same as a
failure to submit a Deferral Election Form or a Distribution Election
Form. Any writing signed by a Participant expressing an intention to
revoke a Deferral Election Form or a related Distribution Election
Form and delivered to the Administrator before the close of business
on the relevant Election Date is a revocation.
(g) A Participant who has not submitted a valid Deferral Election Form to
the Administrator on or before the relevant Election Date may not
defer any part of the Participant's Compensation for the Deferral
Year. The Deferred Benefit of a Participant who submits a valid
Deferral Election Form but fails to submit a valid Distribution
Election Form for that Deferred Benefit before the relevant Election
Date or who otherwise has no valid Distribution Election Form for that
Deferred Benefit is governed by section 5.04(b).
5.052. Deferred Cash Benefits.
(a) Deferred Cash Benefits will be set up in a Deferred Cash Account for
each Participant and credited with interest in accordance with
subsection 5.02(b). A Deferred Cash Benefit attributable to a
deferred Retainer Fee is credited to the Participant's Deferred Cash
Account as of the day that the deferred Retainer Fee would have been
paid but for the Participant's Deferral Election. A Deferred Cash
Benefit attributable to a deferred Meeting Fee is credited to the
Participant's Deferred Cash Account as of the first day of the month
following the month in which the deferred Meeting Fee would have been
paid but for the Participant's Deferral Election.
(b) Interest will be credited to Deferred Cash Accounts on the first day
of each month based on the Deferred Cash Account balance at the end of
the preceding day. The applicable rate for each month will be the
prime rate established by the Company's principal lender, as of the
last business day of each calendar quarter preceding the date on which
interest is credited to Deferred Cash Accounts. Interest is accrued
through the end of the month preceding the month of distribution of a
Deferred Cash Benefit.
5.053. Deferred Stock Benefits.
(a) Deferred Stock Benefits will be set up in a Deferred Stock Account for
each electing Participant and credited with earnings in accordance
with subsection 5.02(b). A Deferred Stock Benefit attributable to a
deferred Retainer Fee is credited to the Participant's Deferred Stock
Account as of the day that the deferred Retainer Fee would have been
paid but for the Participant's Deferral Election. A Deferred Stock
Benefit attributable to a deferred Meeting Fee is credited to the
Participant's Deferred Stock Account as of the first day of the month
following the month in which the deferred Meeting Fee would have been
paid but for the Participant's Deferral Election.
(b) Credits will be added to Deferred Stock Accounts at variable rates
equal to the value of dividends paid on Common Stock when the
additional credit is made. The value of a Deferred Stock Account at
any relevant time equals the value of the shares of Common Stock
(based on the average closing price of the Common Stock on the New
York Stock Exchange, composite type), as if the Compensation deferred
by the Participant under the Plan and any additional credits under
this subsection had been used to purchase Common Stock on the date
those amounts were credited to the Deferred Stock Account. Additional
credits are credited on the last day of each calendar quarter on
accumulated Deferred Stock Accounts. Additional credits are accrued
through the end of the month preceding the month of distribution of a
Deferred Stock Benefit.
5.054. Distribution of Deferred Benefits.
(a) A Deferred Cash Benefit must be distributed in cash. Except as
provided in Plan subsection 5.04(e) and section 5.05, a Deferred Stock
Benefit must be distributed in shares of Common Stock. However, cash
must be paid in lieu of fractional shares of Common Stock otherwise
distributable.
(b) Deferred Benefits will be paid in a single sum unless the
Participant's Distribution Election Form specifies annual installment
payments over a period which shall not be more than ten years. For a
Deferred Cash Benefit, interest credits under Plan subsection 5.02(b)
continue to accrue on the unpaid balance of a Deferred Cash Account.
For a Deferred Stock Benefit, additional credits under Plan subsection
5.03(b) continue to accrue on the unpaid balance of a Deferred Stock
Account.
Notwithstanding the preceding paragraph, if a Participant Terminates as a
result of permanent and total disability (as defined in Section 22(e)(3)
of the Code), Deferred Benefits will be paid to such Participant in
installment payments over a period of ten years commencing on the date
the Participant's disability is certified by the Administrator unless the
Administrator, in its sole discretion, approves a longer or shorter
payment period. If, after the Participant's Termination as a result of
permanent and total disability (as defined above), such Participant
recovers before the balance of the Participant's Deferred Cash and
Deferred Stock Accounts under the Plan are exhausted, the Participant's
distributions will be discontinued and any remaining Deferred Benefits
under the Plan will be governed by the provisions of this section and the
Participant's Distribution Election Forms.
Unless otherwise specified in a Participant's Distribution Election Form
or if there is no Distribution Election Form that is operative according
to section 5.01 of this Plan, any lump sum payment will be paid or
installment payments will begin to be paid as of February 15 of the year
after the Participant's Termination or as of February 15 of the year
after the Participant's attainment of age sixty-five, if earlier. For
distributions that would automatically be caused under the preceding
sentence by a Participant's Termination (other than by death or
disability) or for distributions that would otherwise automatically begin
because a Participant reaches age sixty-five, the Participant may elect
on his Distribution Election Form that payments are to begin
(i) on the February 15 following the Participant's
Termination, without regard to the Participant's age; or
(ii) on the February 15 following the Participant's
Termination and the Participant's attainment of a specified age; or
(iii) even if the Participant does not Terminate, on the
February 15 following attainment of a specified age.
For purposes of these distribution election alternatives, the specified
age must be not less than the Participant's age two years from the
Election Date pertaining to the applicable Deferral Year and not greater
than the age at which there are no earnings limitations in order to
receive full social security benefits.
(c) Deferred Benefits may not be assigned by a Participant or Beneficiary.
A Participant may use only one Beneficiary Designation Form to
designate one or more Beneficiaries for all of the Participant's
Deferred Benefits under the Plan; such designations are revocable.
Each Beneficiary will receive the Beneficiary's portion of the
Participant's Deferred Cash Account and Deferred Stock Account as of
February 15 of the year following the Participant's death unless the
Beneficiary's request for accelerated payment is approved at the
Administrator's discretion under section 5.05 of this Plan. The
Administrator may require that multiple Beneficiaries agree upon a
single distribution method.
(d) Any Common Stock distributed in settlement of a Deferred Stock Benefit
shall be issued from the Company's previously authorized but unissued
Common Stock.
(e) Notwithstanding any other provision of this Plan or any Distribution
Election Form, in the event of a Change in Control, all Deferred
Benefits credited to Participants and Beneficiaries shall be paid in a
lump sum, in cash, on the Control Change Date.
5.055. Hardship Distributions.
(a) At its sole discretion and at the request of a Participant before or
after the Participant's Termination, or at the request of any of the
Participant's Beneficiaries after the Participant's death, the
Administrator may accelerate and pay all or part of any amount
attributable to a Participant's Deferred Benefits under this Plan.
Accelerated distributions may be allowed only in the event of a
financial emergency beyond the Participant's or Beneficiary's control
and only if disallowance of a distribution would create a severe
hardship for the Participant or Beneficiary. An accelerated
distribution must be limited to the amount determined by the
Administrator to be necessary to satisfy the financial emergency.
(b) For purposes of an accelerated distribution of a Deferred Stock
Benefit under this section, the Deferred Stock Benefit's value is
determined by the value of the Deferred Stock Account at the time of
the distribution.
(c) Only cash distributions are permitted under this section.
Distributions under this section must first be made from the
Participant's Deferred Cash Account before accelerating the
distribution of any amount attributable to a Deferred Stock Benefit.
(d) A distribution under this section is in lieu of that portion of the
Deferred Benefit that would have been paid otherwise. A Deferred Cash
Benefit is adjusted for a distribution under this section by reducing
the Participant's Deferred Cash Account balance by the amount of the
distribution. A Deferred Stock Benefit is adjusted for a distribution
under this section by reducing the value of the Participant's Deferred
Stock Account by the amount of the distribution.
ARTICLE VI
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The number of shares as to which Options may be granted under this
Plan, the terms of outstanding Options and each Deferred Stock Account
shall be proportionately adjusted as the Administrator determines to be
equitably required in the event that the Company (a) effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of shares
or (b) engages in a transaction described in Section 424 of the Code. Any
determination made under this Article VI by the Administrator shall be
final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, outstanding Options or Deferred Stock Accounts.
ARTICLE VII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable
federal and state laws and regulations, any listing agreement to which the
Company is a party, and the rules of all domestic stock exchanges on which
the Company's shares may be listed. The Company shall have the right to
rely on an opinion of its counsel as to such compliance. Any share
certificate issued to evidence Common Stock for which an Option is
exercised or that is distributed under this Plan may bear such legends and
statements as the Board may deem advisable to assure compliance with
federal and state laws and regulations. No Option shall be exercisable, no
Common Stock shall be issued, no certificate for shares of Common Stock
shall be delivered, and no payment shall be made under this Plan until the
Company has obtained such consent or approval as the Board may deem
advisable from regulatory bodies having jurisdiction over such matters.
ARTICLE VIII
GENERAL PROVISIONS
8.081. Effect on Service. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any Participant any right to continue
service as a member of the Board.
8.082. Unfunded Plan. The Plan, insofar as it provides for grants and
Deferred Benefits, shall be unfunded, and the Company shall not be required
to segregate any assets that may at any time be represented by grants or
Deferred Benefits under this Plan. Any liability of the Company to any
person with respect to any grant under, or Deferred Benefit payable under,
this Plan shall be based solely upon any contractual obligations that may
be created pursuant to this Plan. No such obligation of the Company shall
be deemed to be secured by any pledge of, or other encumbrance on, any
property of the Company.
8.083. Notices. Notices and elections under this Plan must be in
writing. A notice or election is deemed delivered if it is delivered
personally or if it is mailed by registered or certified mail to the person
at such person's last known business address.
8.084. Rules of Construction. Headings are given to the Articles and
Sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of
law. This Plan is created, adopted and maintained according to the laws of
the Commonwealth of Virginia (other than its choice-of-law rules).
ARTICLE IX
AMENDMENT
The Board may amend this Plan from time to time; provided, however,
that no amendment may become effective until shareholder approval is
obtained if the amendment (i) materially increases the aggregate number of
shares of Common Stock that may be issued under the Plan (other than an
adjustment authorized by Article VI), (ii) materially changes the class of
individuals eligible to become Participants or (iii) materially increases
the benefits that may accrue to Participants under the Plan. The preceding
sentence to the contrary notwithstanding, the Plan may not be amended more
than once in any six month period unless such amendment is required to
comply with the Code or the Employee Retirement Income Security Act of
1974. No amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under the Plan or any Option as in
effect at the time such amendment is made.
ARTICLE X
TERMINATION
The Board may terminate the Plan at any time. The termination of this
Plan shall not affect any rights of a Participant under any Option or to
any Deferred Benefit payable under this Plan pursuant to the terms of this
Plan as in effect at the time of such termination.
ARTICLE XI
DURATION OF OPTION GRANTS
No Option may be granted under this Plan after May 1, 2007. Options
granted on or before May 1, 2007 shall remain valid in accordance with
their terms.
ARTICLE XII
EFFECTIVE DATE OF PLAN
No Option will be granted under this Plan and no Deferral Election
shall be effective before this Plan is approved by a majority of the votes
entitled to be cast by the Company's shareholders, voting either in person
or by proxy, at a duly held shareholders' meeting.
RI-EB\t:\Chsapeak\12\96Plan.1
January 18, 1996