PAGE 1
Exhibit 10.10
CSX CORPORATION
1991 Stock Purchase and Loan Plan
1. Purpose
The purpose of this 1991 Stock Purchase and Loan Plan (the "Plan") is
to further the long-term stability and financial success of CSX Corporation
(the "Company") by providing a method for employees to significantly increase
their ownership of Company Stock (as hereinafter defined). The Company
believes that ownership of Company Stock will stimulate the efforts of those
employees upon whose judgement 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.
2. Definitions
As used in the Plan, the following terms have the meanings indicated:
(a) "Applied Dividends" means dividends paid on pledged Company
Stock applied to reduce Interest as provided in Section
6(e).
(b) "Board" means the Board of Directors of the Company.
(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
(or other national stock exchange, or if not so listed,
could be traded over-the-counter). In all other cases, the
term means a day on which the offices of the Company are
open for the conduct of business in the normal course.
(d) "Cause" means (i) an act or acts of personal dishonesty of a
Participant intended to result in substantial personal
enrichment of the Participant at the expense of the Company
and any of its Subsidiaries, (ii) repeated violations by the
Participant of the Participant's executive responsibilities
which are demonstrably willful and deliberate on the
Participant's part and which are not remedied in a
reasonable period of time after receipt of written notice
from the Company or the Subsidiary or (iii) the conviction
of the Participant of a felony involving moral turpitude.
"Change of Control" shall mean any of the following:
(i) Stock Acquisition. The acquisition, by any 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
- 1 -
PAGE 2
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 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 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 Interstate Commerce Commission 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
- 2 -
PAGE 3
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
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 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 the 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, a Virginia corporation.
- 3 -
PAGE 4
(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. If the
par value of the Company Stock is changed, or in the event
of a change in the capital structure of the Company (as
provided in Section 9), the shares resulting from such a
change shall be deemed to be the Company Stock within the
meaning of the Plan.
(k) "Disability" means the inability to perform the services for
which the Participant was employed as determined by the
Committee, and such determination shall be conclusive.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Insider" means (a) any person subject to Section 16(b) of
the Exchange Act, and (b) any person deemed to be an insider
by the Company.
(n) "Interest" means the Applicable Federal Rate, as determined
for purposes of IRC 1274(d).
(o) "Interest Spread" means, at the time of determination,
Interest accrued on the Purchase Loan reduced by Applied
Dividends.
(p) "IRC" means the Internal Revenue Code of 1986, as amended.
(q) "Market Price" means the fair market value of a share of
Company Stock based upon the closing price of the Company
Stock on the New York Stock Exchange (or other national
stock exchange, or if not so listed, the average of the
highest and lowest reported sales prices [or bid and asked
prices if there have been no sales] on the NASDAQ National
Issues Transactions Tape), as reported in the Wall Street
Journal.
(r) "Participant" means an employee of the Company who is
designated by the Committee as eligible to be a Participant
who receives a Purchase Award under the Plan.
(s) "Purchase Award" means an award to an employee to purchase a
specified number of shares of Company Stock with Purchase
Loan rights.
(t) "Purchase Loan" means an extension of credit to the
Participant by the Company evidenced by a non-recourse
promissory note for 95% of the Purchase Price of Company
Stock awarded to the Participant under the Plan, bearing
Interest, and secured by a pledge of the shares of Company
Stock purchased by the Participant.
- 4 -
PAGE 5
(u) "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 consistent with the Plan.
(v) "Purchase Price" means the average of the Market Price for
the five (5) consecutive Business Days immediately preceding
the day which the Committee fixes as the Commitment Date.
(w) "Retirement" means termination of employment (for reasons
other than Cause) on or after a Participant's 65th birthday.
(x) "Subsidiary" means, with respect to any corporation, a
corporation more than 50% of whose voting shares are owned
directly or indirectly by the Company.
3. Company Stock
Subject to Section 9 of the Plan (concerning changes in the capital
structure of the Company), there shall be reserved for issuance under the Plan
an aggregate of 2,200,000 shares of Company Stock, which shall be authorized
but unissued shares. Shares that have been awarded under the Plan but not
issued, or shares that have been issued but for whatever reason are returned
to the Company, may again be awarded under the Plan.
4. Eligible Employees
All present and future employees who hold positions Grade 22 (or
equivalent) or higher with the Company (or any Subsidiary of the Company,
whether now existing or hereafter created or acquired) shall be eligible to
receive a Purchase Award with Purchase Loan rights under the Plan. The
Committee shall have the power and complete discretion, as provided in
Sections 5 and 10, to select among eligible employees to receive a Purchase
Award and to authorize a Purchase Loan to such Participant for the purchase of
Company Stock. The grant of a Purchase Award and Purchase Loan shall not
obligate the Company or any Subsidiary of the Company to pay the Participant
any particular amount of remuneration, to continue the employment of the
Participant after the grant or to make further grants to the Participant at
any time thereafter.
5. Stock Purchase Awards
(a) On or as soon as practicable after the Commitment Date, the
Committee shall give notice to the 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, if any, conditions
pertaining to each such Purchase Award and Purchase Loan
that must be satisfied by a Participant in order to exercise
the Purchase Award.
- 5 -
PAGE 6
(b) 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 or
percentage of his down payment (which shall be 5% of the
Purchase Price) and his intention to deliver a Purchase Note
for the balance of the Purchase Price, and (ii) the down
payment and the Purchase Note.
6. Purchase Loans
The Company shall, subject to paragraph (i) 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 the Purchase Loan shall be
the difference between the Participant's down payment (which
shall be 5% of the Purchase Price) and the Purchase Price.
The down payment 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.
(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. At the request of a
Participant, the time for repayment of the Purchase Loan and
Purchase Note shall be extended for up to one (1) year. The
Purchase Note may be prepaid without penalty at any time
after the third anniversary date of the Purchase Note (or
second anniversary date of the Purchase Note if the initial
term of the Purchase Note is four (4) years or less).
(c) The Purchase Loan shall be without recourse to the
Participant, shall be evidenced by the Participant's
Purchase Note and shall bear Interest. The Purchase Note
shall be in the form approved by the Committee and shall
contain such terms and conditions, which are not
inconsistent with the Plan, as the Committee shall determine
in its sole and absolute discretion, and the Purchase Note
shall be subject to the terms of the Plan even though not
set forth in the Purchase Note.
(d) Payment of the Purchase Note shall be secured by a pledge of
all the shares of Company Stock acquired by the Participant
upon the exercise of the Purchase Award to which the
Purchase Loan relates. The Participant shall effect such
pledge 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 such form
as approved by the Committee.
- 6 -
PAGE 7
(e) Dividends paid on shares of Company Stock pledged as
security for a Purchase Loan shall be first applied by the
Company to pay Interest accrued and unpaid on the
Participant's Purchase Note and then to repayment of the
Purchase Note.
(f) Within ten (10) Business Days after the maturity date of the
Purchase Loan, or on the date as of which the Participant
elects to prepay the Purchase Loan and Purchase Note as
provided in Section 6(b), the Participant shall repay in
full the then unpaid principal balance of the Purchase Note,
accrued and unpaid Interest, applicable federal and state
withholding taxes, and costs associated with the Purchase
Loan. If not fully paid when due, 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 Participant agrees to sell to the Company, or the
Company may sell on the open market (except as hereinafter
provided), the number of shares of Company Stock pledged as
collateral necessary to repay in full the Purchase Note,
accrued and unpaid Interest, applicable federal and state
withholding taxes, and costs associated with the Purchase
Loan. If the pledged shares are sold on the open market,
the Company shall receive and apply the sale proceeds (net
of brokerage fees, collection fees and federal or state
withholding taxes on income applicable to the transaction)
realized from such sale toward repayment of the Purchase
Note, accrued and unpaid Interest, applicable federal and
state withholding taxes, and costs associated with the
Purchase Loan. If, pursuant to procedures established by
the Company for compliance with securities laws, the Company
believes that the purchase of pledged shares by the Company
in repayment of the Purchase Note, or the sale by the
Company of pledged shares of Company Stock on the open
market to repay the Purchase Note, would violate any
provision of applicable securities laws or cause the
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 incurring such liability under Section 16(b).
Subject to the agreements of participants as provided in
Sections 7(c) and (d) below, any shares of Company Stock
remaining after repayment of the Purchase Note, accrued and
unpaid Interest, applicable federal and state withholding
taxes, and costs associated with the Purchase Loan, shall be
transferred to the Participant.
- 7 -
PAGE 8
(g) The Purchase Price and the principal amount of a
Participant's Purchase Loan and Purchase Note, plus accrued
and unpaid Interest, shall be adjusted as follows if at any
time after the second anniversary date of the Purchase Note
(or first anniversary date if the initial term of the
Purchase Note is four (4) years or less) 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:
Interest Purchase Price/
Reduction Note Reduction
Purchase Price + $5 Interest Spread 0
Purchase Price + $10 Interest Spread 5%
Purchase Price + $15 Interest Spread 15%
Purchase Price + $20 Interest Spread 25%
The provisions of this paragraph and any applicable adjustments to Interest
and the Purchase Note shall be applied at the time of repayment of the
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 paragraph.
(h) In the event of a change in capital structure involving the
transfer of 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 exercise of a Purchase Award, the delivery of the
consideration to the Company for the exercise of the
Purchase Award and issuance by the Company of Company Stock
purchased pursuant to the Purchase Award, the 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 (i) to dividends on
such Company Stock owned or pledged, and (ii) to exercise
all voting rights with respect to the Company Stock
purchased.
7. Termination of Employment; Change of Control; Prepayment of Purchase
Loan
If before the Purchase Note is repaid a Participant's employment
terminates, a Change of Control occurs, or the Committee authorizes repayment
of the Purchase Loan, the following provisions shall apply notwithstanding any
terms in the Purchase Note to the contrary:
- 8 -
PAGE 9
(a) If the termination of employment is the result of death,
Disability or Retirement, or if a Change of Control occurs,
or with the consent of the Committee, the Participant (or
the Participant's estate or personal representative in the
event of death or incapacity) may either (i) prepay the
Purchase Note, or (ii) continue to participate in the Plan
until the maturity date of the Purchase Note.
(b) If the termination of employment is the result of a mutual
agreement between the Participant and the Company or is
involuntary for reasons other than Cause, or if the
Participant's employer ceases to be a Subsidiary in a
divisive transaction involving a sale of shares or
substantially all of the assets of the Subsidiary, the
maturity date of the Purchase Note shall be accelerated
without further action of the Committee or the Company to
the date of termination of employment, and (i) Section 6(g)
shall not apply, and (ii) the Participant agrees to sell his
pledged Company Stock to the Company at the greater of (x)
the Market Price on the date of termination of employment,
and (y) an amount equal to his down payment paid to the
Company pursuant to Section 6(a).
(c) If the termination of employment is voluntary by the
Participant or involuntary by the Company for Cause, the
maturity date of the Purchase Note shall accelerate without
further action of the Committee or the Company to the date
of termination of employment, Section 6(g) shall not apply,
and the Participant agrees to sell his pledged Company Stock
to the Company at the lesser of (i) the down payment paid to
the Company pursuant to Section 6(a), and (ii) the Market
Price on the date of termination of employment, and the
Company shall have the right to retain any excess Market
Price.
(d) A Participant may, with the consent of the Committee, prepay
the Purchase Loan before the third anniversary date of the
Purchase Note (or second anniversary date if the initial
term of the Purchase Note is four (4) years or less). 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 down payment paid to the Company
pursuant to Section 6(a), and (ii) the Market Price on the
prepayment date fixed by the Committee, and the Company
shall have the right to retain any excess Market Price.
(e) If a Change of Control occurs, a Participant can elect to
prepay his or her Purchase Note at any time before the
maturity date and paragraph (d) shall not apply, and
paragraphs (b) and (c) shall not apply to a termination of
employment that occurs subsequent to a Change of Control.
8. Nontransferability of Purchase Awards
Purchase Awards shall not be transferable.
- 9 -
PAGE 10
9. Change in Capital Structure
(a) 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 shareholders
generally of rights, options or warrants for the purchase of
common or preferred stock of the Company), 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.
(b) If the Company is a party to a consolidation or a merger in
which the Company is not the surviving corporation, a
transaction that results in the acquisition of substantially
all of the Company's outstanding stock by a single person or
entity, or a sale or transfer of substantially all of the
Company's assets, the Committee may take such actions with
respect to outstanding unexercised Purchase Awards as the
Committee deems appropriate.
(c) 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 and Pension
Committee of the Board unless the Board shall appoint another committee to
administer the Plan. 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 eligible employees shall receive a
Purchase Award with Purchase Loan rights, (ii) the number of
shares of Company Stock to be covered by each Purchase
Award, (iii) the fair market value of Company Stock, (iv)
the time or times when a Purchase Award shall be granted,
(v) whether a Disability exists, (vi) the manner in which
payment will be made upon the exercise of a Purchase Award,
and (vii) any additional requirements relating to Purchase
Awards that the Committee deems appropriate.
- 10 -
PAGE 11
(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 from time to time may appoint members previously
appointed and may 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 any Parent or Subsidiary of the Company that
entitles participants to acquire stock, stock options or
stock appreciation rights of the Company or any Parent or
Subsidiary of the Company, 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.
11. Effective Date of the Plan
This Plan shall be effective as of December 12, 1990 and shall be
submitted to the shareholders of the Company for approval. Until (a) the Plan
has been approved by the Company's shareholders, (b) the shares issuable under
the Plan have been registered with the Securities and Exchange Commission, (c)
if the Company's common stock is otherwise so listed, accepted for listing on
the New York Stock Exchange (or other national stock exchange) upon notice of
issuance, and (d) 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 terminated by the Board, this Plan shall terminate at
the close of business on December 12, 2000. 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 (a)
materially increase the benefits accruing to Participants under the Plan, (b)
materially increase the number of shares of Company Stock that may be issued
- 11 -
PAGE 12
under the Plan, or (c) materially modify the requirements of eligibility for
participation in the Plan. A termination or amendment of the Plan shall not,
without the consent of the Participant, affect 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: (a) if to the Company - at its principal business address to the
attention of the Secretary; (b) 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.
- 12 -