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Exhibit 10.11
Appendix A
CSX CORPORATION
1987 Long-Term Performance Stock Plan as Amended
and Restated December 14, 1994
1. Purpose
The purpose of the CSX Corporation Long-Term Performance Stock Plan
is to attract and retain outstanding individuals as officers and key employees
of CSX Corporation and its subsidiaries, to furnish motivation for the
achievement of long-term performance objectives by providing such persons
opportunities to acquire ownership of common shares of the Company, monetary
payments based on the value of such shares or the financial performance of the
Company, or both, on terms as herein provided. It is intended that the
Incentives provided under this Plan will be treated as qualified performance-
based compensation within the meaning of section 162(m) of the Code.
2. Definitions
Whenever the following words are capitalized and used in the Plan,
they shall have the respective meanings set forth below, unless a different
meaning is expressly provided. Unless the context clearly indicates to the
contrary, in reading this document the singular shall include the plural and
the masculine shall include the feminine.
a. Beneficiary: The term Beneficiary shall mean the person designated
by the Participant, on a form provided by the Company, to exercise the
Participant's rights in accordance with section 14 of the Plan in the event of
his death.
b. Board of Directors: The term Board of Directors or Board means the
Board of Directors of CSX Corporation.
c. Cause: The term 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 or any of its
subsidiaries, (ii) violation of the management responsibilities by the
Participant which is demonstrably willful and deliberate on the Participant's
part and which is not remedied in a reasonable period of time after receipt of
written notice from the Company or a subsidiary, or (iii) the conviction of
the Participant of a felony involving moral turpitude.
d. Change in Control: The term Change in Control is defined in
section 19.
e. Code: The term Code means the Internal Revenue Code of 1986, as
amended.
f. Committee: The term Committee means a committee appointed from
time to time by the Board of Directors to administer the Plan.
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g. Company: The term Company means CSX Corporation and/or its
subsidiary companies.
h. Completed Month: The term Completed Month shall mean a period
beginning on the monthly anniversary date of a grant of an Incentive and
ending on the day before the next monthly anniversary.
i. Covered Employee: The term Covered Employee shall mean the chief
executive officer of the Company or any other individual who is among the four
(4) highest compensated officers or who is otherwise a covered employee within
the meaning of section 162(m) of the Code, as determined by the Committee.
j. Disability: The term Disability means long-term disability as
determined under the Company's Salary Continuance and Long-Term Disability
Plan.
k. Exchange Act: The term Exchange Act means the Securities Exchange
Act of 1934, as amended.
l. Exercisability Requirements: The term Exercisability Requirements
used with respect to any grant of options means such restrictions or
conditions on the exercise of such options that the Committee may, in its
discretion, add to the one-year holding requirement contained in Sections 7
and 8.
m. Fair Market Value: The term Fair Market Value shall be deemed to
be the mean between the highest and lowest quoted selling prices of the stock
per share as reported under New York Stock Exchange-Composite Transactions on
the day of reference to any event to which the term is pertinent, or, if there
is no sale that day, on the last previous day on which any such sale occurred.
n. Incentive: The term Incentive means any incentive under the Plan
described in section 6.
o. Objective Standard: The term Objective Standard means a formula or
standard by which a third party, having knowledge of the relevant performance
results, could calculate the amount to be paid to a Participant. Such formula
or standard shall specify the individual employees or class of employees to
which it applies, and shall preclude discretion to increase the amount payable
that would otherwise be due upon attainment of the objective.
p. Participant: The term Participant means an individual designated
by the Committee as a Participant pursuant to section 5.
q. Performance Objective: The term Performance Objective shall mean a
performance objective established in writing by the Committee prior to the
commencement of the Performance Period to which the performance objective
relates and at a time when the outcome of such objective is substantially
uncertain. Each Performance Objective shall be established in such a way that
a third party having knowledge of the relevant facts could determine whether
the objective is met. A Performance Objective may be based on one or more
business criteria that apply to the individual Participant, a business unit or
the Company as a whole, and shall state, in terms of an Objective Standard,
the method of computing the amount payable to the Participant if the
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Performance Objective is attained. With respect to Incentives granted to
Covered Employees, the material terms of the Performance Objective shall be
disclosed to, and must be subsequently approved by, a vote of the shareholders
of the Company, consistent with the requirements of section 162(m) of the Code
and the regulations thereunder. The Performance Objectives are disclosed in
Addendum I.
r. Performance Period: The term Performance Period means a fixed
period of time, established by the Committee, during which a Participant
performs service for the Company and during which Performance Objectives may
be achieved.
s. Plan: The term Plan means this CSX Corporation 1987 Long-Term
Performance Stock Plan as amended or restated from time to time.
t. Retirement: The term Retirement means termination of employment
with immediate commencement of retirement benefits under the Company's defined
benefit pension plan.
u. Separation From Employment: The term Separation From Employment
means an employee's separation from employment with the Company as a result of
Retirement, death, Disability, or termination of employment (voluntarily or
involuntarily). A Participant in receipt of periodic severance payments shall
be considered separated from employment on the day preceding the day such
severance payments commenced.
3. Number of Shares
Subject to the provisions of section 16 of this Plan, the maximum
number of shares which may be issued pursuant to the Incentives shall be
16,000,000 shares of the Company's common stock, par value $1.00 per share.
Such shares shall be authorized and unissued shares of the Company's common
stock. Subject to the provisions of section 16, if any Incentive granted under
the Plan shall terminate or expire for any reason without having been
exercised in full, the unissued shares subject thereto shall again be
available for the purposes of the Plan. Similarly, shares which have been
issued, but which the Company retains or which the Participant tenders to the
Company in satisfaction of income and payroll tax withholding obligations or
in satisfaction of the exercise price of any option shall remain authorized
and shall again be available for the purposes of the Plan, provided, however,
that any such previously issued shares shall not be the subject of any grant
under the Plan to any officer of the Company who, at the time of such grant,
is subject to the short-swing trading provisions of section 16 of the Exchange
Act.
4. Administration
The Plan shall be administered by the Committee. The Committee shall
consist of three or more members of the Board of Directors. No member of the
Committee shall be eligible to receive any Incentives under the Plan while a
member of the Committee. A majority of the Committee shall constitute a
quorum. The Committee shall recommend to the Board individuals to receive
Incentives, including the type and amount thereof, unless the Board shall have
delegated to the Committee the authority and power to select persons to whom
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Incentives may be granted, to establish the type and amount thereof, and to
make such grants.
Subject to the express provisions of the Plan, the Committee shall
have authority to construe any agreements entered into with any person in
respect of any Incentive or Incentives, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the terms and provisions of
any such agreements and to make all other determinations necessary or
advisable for administering the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
agreement under the Plan in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge of
such expedience. Any determination of the Committee under the Plan may be made
without notice of meeting of the Committee by a writing signed by a majority
of the Committee members. The determinations of the Committee on the matters
referred to in this section 4 shall be conclusive.
5. Eligibility and Participation
Incentives may be granted only to officers and key employees of the
Company and of its subsidiaries at the time of such grant as the Committee in
its sole discretion may designate from time to time to receive an Incentive or
Incentives. An officer or key employee who is so designated shall become a
Participant. A director of the Company or of a subsidiary who is not also an
officer or employee of the Company or of such subsidiary will not be eligible
to receive an Incentive.
The Committee's designation of an individual to receive an Incentive
at any time shall not require the Committee to designate such person to
receive an Incentive at any other time. The Committee shall consider such
factors as it deems pertinent in selecting Participants and in determining the
type and amount of their respective Incentives, including without limitation
(a) the financial condition of the Company, (b) anticipated financial results
for the current or future years, including return on invested capital, (c) the
contribution by the Participant to the profitability and development of the
Company through achievement of established strategic objectives, and (d) other
compensation provided to Participants.
6. Incentives
Incentives may be granted in any one or a combination of (a)
Incentive Stock Options; (b) Non-Qualified Stock Options; (c) Stock
Appreciation Rights; (d) Performance Shares; (e) Performance Units; and (f)
Restricted Stock, all as described below and pursuant to the terms set forth
in sections 7-11 hereof. With respect to Items (a)-(c), the maximum number of
shares of common stock of the Company with respect to which these Incentives
may be granted any Plan Year to any Participant will be 750,000. With respect
to Items (d)-(f), the maximum number of shares of common stock of the Company
with respect to which these Incentives may be granted during any Plan Year to
any Participant will be 150,000.
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7. Incentive Stock Options
Incentive Stock Options (ISOs) will consist of options to purchase
shares of the Company's common stock at purchase prices not less than 100
percent of the Fair Market Value of such common stock on the date of grant.
ISOs will be exercisable upon the date or dates specified in an option
agreement entered into with a Participant but not earlier than one year after
the date of grant of the options and not later than 10 years after the date of
grant of the options; provided, however, that whether or not the one-year
holding requirement is satisfied, any Exercisability Requirements must be
satisfied. For options granted after December 31, 1986, the aggregate Fair
Market Value, determined at the date of grant, of shares for which ISOs are
exercisable for the first time by a Participant during any calendar year shall
not exceed $100,000.
Notwithstanding the provisions of section 5 of this Plan, no
individual will be eligible for or granted an ISO if that individual owns
stock of the Company possessing more than 10 percent of the total combined
voting power of all classes of the stock of the Company or its subsidiaries.
Any Participant who is an option holder may exercise his option to
purchase stock in whole or in part upon the date or dates specified in the
option agreement offered to him. In no case may an option be exercised for a
fraction of a share. Except as set forth in this section 7 and in sections 12
through 15, no option holder may exercise an option unless at the time of
exercise he has been in the continuous employ of the Company or one of its
subsidiaries since the grant of such option. An option holder under this Plan
shall have no rights as a shareholder with respect to any shares subject to
such option until such shares have been issued.
For purposes of this section 7, written notice of exercise must be
received by the Corporate Secretary of the Company not less than one year nor
more than 10 years after the option is granted. Such notice must state the
number of shares being exercised and must be accompanied by payment of the
full purchase price of such shares. Payment for the shares for which an option
is exercised may be made by (1) a personal check or money order payable to CSX
Corporation; (2) a tender by the employee (in accordance with procedures
established by the Company) of shares of the Company's common stock having a
Fair Market Value on the date of tender equaling the purchase price of the
shares for which the option is being exercised; or (3) any combination of (1)
and (2).
8. Non-Qualified Stock Options
Non-Qualified Stock Options (NQSOs) will consist of options to
purchase shares of the Company's common stock at purchase prices not less than
100 percent of the Fair Market Value of such common stock on the date of
grant. NQSOs will be exercisable upon the date or dates specified in an
option agreement entered into with a Participant but not earlier than one year
after the date of grant of the options and not later than 10 years after the
date of grant of the options; provided, however, that whether or not the one-
year holding requirement is satisfied, any Exercisability Requirements must be
satisfied.
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Any Participant may exercise an option to purchase stock upon the
date or dates specified in the option agreement offered to him. In no case may
an option be exercised for a fraction of a share. Except as set forth in this
section 8 and in sections 12 through 15, no option holder may exercise an
option unless at the time of exercise he has been in the continuous employ of
the Company or one of its subsidiaries since the grant of his option. An
option holder under this Plan shall have no rights as a shareholder with
respect to any shares subject to such option until such shares have been
issued.
For purposes of this section 8, written notice of exercise must be
received by the Corporate Secretary of the Company, not less than one year nor
more than 10 years after the option is granted. Such notice must state the
number of shares being exercised and must be accompanied by payment of the
full purchase price of such shares. Payment for the shares for which an option
is exercised may be made by (1) a personal check or money order payable to CSX
Corporation; (2) a tender by the employee (in accordance with procedures
established by the Company) of shares of the Company's common stock having a
Fair Market Value on the date of tender equaling the purchase price of the
shares for which the option is being exercised; (3) the delivery of a properly
executed exercise notice, together with irrevocable instructions to a broker
to promptly deliver to the Company either sale proceeds of shares sold to pay
the purchase price or the amount loaned by the broker to pay the purchase
price; or (4) any combination of (1), (2) and (3).
9. Stock Appreciation Rights
Any option granted under the Plan may include a stock appreciation
right (SAR) by which the participant may surrender to the Company all or a
portion of the option to the extent exercisable at the time of surrender and
receive in exchange a payment equal to the excess of the Fair Market Value of
the shares covered by the option portion surrendered over the aggregate option
price of such shares. Such payment shall be made in shares of Company common
stock, in cash, or partly in shares and partly in cash, as the Committee in
its sole discretion shall determine, but in no event shall the number of
shares of common stock delivered upon a surrender exceed the number the option
holder could then purchase upon exercise of the option. Such rights may be
granted by the Committee concurrently with the option or thereafter by
amendment upon such terms and conditions as the Committee may determine.
The Committee may also grant, in addition to, or in lieu of options
to purchase stock, SARs which will entitle the Participant to receive a
payment upon surrender of that right, or portion of that right in accordance
with the provisions of the Plan equaling the difference between the Fair
Market Value of a stated number of shares of Company common stock on the date
of the grant and the Fair Market Value of a comparable number of shares of
Company common stock on the day of surrender, adjusted for stock dividends
declared between the time of the grant of the SAR and its surrender. The
Committee shall have the right to limit the amount of appreciation with
respect to any or all of the SARs granted. Payment made upon the exercise of
the SARs may be in cash or shares of Company common stock, or partly in shares
and partly in cash, as the Committee in its sole discretion shall determine.
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For purposes of this section 9, written notice must be received by
the Corporate Secretary of the Company between the beginning of the second
year and the end of the tenth year after the SAR is granted. Such notice must
state the number of SARs being surrendered and the method of settlement
desired within the guidelines established from time to time by the Committee.
The SAR holder will receive settlement based on the Fair Market Value on the
day the written request is received by the Corporate Secretary of the Company.
In certain situations as determined by the Committee, for purposes of
this section 9, written notice must be received by the Corporate Secretary of
the Company between the third and twelfth business days after the public
release of the Company's Quarterly Earnings Report, or between such other,
different period as may hereinafter be established by the Securities and
Exchange Commission. For such settlements, a Participant subject to a
restricted exercise period shall receive settlement based on the highest Fair
Market Value during the period described in the foregoing sentence.
The Committee may not grant an SAR or other rights under this section
9 in connection with an incentive stock option if such grant would cause the
option or the Plan not to qualify under section 422A of the Code or if it is
prohibited by such section or Treasury regulations issued thereunder. Any
grant of an SAR or other rights which would disqualify either the option as an
ISO or the Plan, or which is prohibited by section 422A of the Code or
Treasury regulations issued thereunder, is and will be considered as void and
vesting no rights in the grantee. It is a condition for eligibility for the
benefits of the option and of the Plan that the Participant agree that in the
event an SAR or other right granted should be determined to be void as
provided by the foregoing, the Participant has no right or cause of action
against the Company.
10. Performance Unit Awards and Performance Share Awards.
The Committee may grant Performance Unit Awards (PUAs) and
Performance Share Awards (PSAs) under which payment shall be made in shares of
the Company's common stock, in cash, or partly in shares and partly in cash,
as the Committee in its sole discretion shall determine. The Committee shall
establish in writing and communicate to Participants at the time of grant of
each PUA or PSA, Performance Objectives to be achieved during the Performance
Period. Awards of PUAs and PSAs may be determined by the average level of
attainment of Performance Objectives over multiple Performance periods.
Prior to the payment of PUAs and PSAs, the Committee shall determine
the extent to which Performance Objectives have been attained during the
Performance Period or Performance Periods in order to determine the level of
payment to be made, if any, and shall record such results in the minutes of
the meeting of the Committee. In no instance will payment be made if the
Performance Objectives are not attained.
Payment, if any, shall be made in a lump sum or in installments, in
cash or shares of Company common stock, as determined by the Committee,
commencing as promptly as feasible following the end of the Performance
Period, except that (a) payments to be made in cash may be deferred subject to
such terms and conditions as may be prescribed by the Committee, and (b)
payments to be made in Company common stock may be deferred pursuant to an
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election filed on forms prescribed and provided by and filed with the
Committee. A Participant may elect annually to defer to a date certain, or the
occurrence of an event, as provided in the form, the receipt of all or any
part of shares of Company common stock he may subsequently become entitled to
receive. On forms provided by and filed with the Committee, the Participant
shall also specify whether, when the deferral period expires or the
restrictions specified below lapse, payment will be in a lump sum or
installments over a period not exceeding twenty years. The Committee shall
prescribe the time periods during which the election must be filed in order to
be effective. Elections to defer are irrevocable. Changes to the date of
payment, the period over which payments are to be made and the method of
payment are subject to substantial penalties. Shares of Company common stock
with respect to which a Participant has made an effective election shall be
transferred to a trust and shall remain subject to the claims of the Company's
creditors and restricted and may not be sold, hypothecated or transferred
(including, without limitation, transfer by gift or donation), except that
such shares shall be distributed to Participants and such restrictions shall
lapse upon:
a. the death of the Participant;
b. the Disability of the Participant
c. the Participant's termination of employment with the Company or a
subsidiary of the Company, subject to the Participant's deferral
election; or
d. a Change in Control.
11. Restricted Stock
A Restricted Stock Award (RSA) shall entitle the Participant,
subject to his continued employment during the restriction period determined
by the Committee and his complete satisfaction of any other conditions,
restrictions and limitations imposed in accordance with the Plan, to the
unconditional ownership of the shares of the Company's common stock covered by
the grant without payment therefor.
The Committee may grant RSAs at any time or from time to time to a
Participant selected by the Committee in its sole discretion. The Committee
shall establish at the time of grant of each RSA a Performance Period and
Performance Objectives to be achieved during the Performance Period.
At the time of grant, the Performance Period and Performance
Objectives shall be set forth either in agreements or in guidelines
communicated to the Participant in such form consistent with this Plan as the
Committee shall approve from time to time.
Following the conclusion of each Performance Period and prior to
payment, the Committee shall determine the extent to which Performance
Objectives have been attained or a degree of achievement between maximum and
minimum Performance Objectives during the Performance Period in order to
determine the level of payment to be made, if any, and shall record such
results in the minutes of the meeting of the Committee. In no instance will
payment be made if the Performance Objectives are not attained.
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At the time that an RSA is granted, the Committee shall establish in
the written agreement a restriction period applicable to all shares covered by
such grant. Subject to the provisions of the next following paragraph, the
Participant shall have all of the rights of a stockholder of record with
respect to the shares covered by the grant to receive dividends or other
distributions in respect of such shares (provided, however, that any shares of
stock of the Company distributed with respect to such shares shall be subject
to all of the restrictions applicable to such shares) and to vote such shares
on all matters submitted to the stockholders of the Company, but such shares
shall not be sold, exchanged, pledged, hypothecated or otherwise disposed of
at any time prior to the expiration of the restriction period, including by
operation of law, and any purported disposition, including by operation of
law, shall result in automatic forfeiture of any such shares.
Except as hereinafter provided, if, during the restriction period
applicable to such grant, a Separation From Employment of a Participant occurs
for any reason other than death, Disability or Retirement, all shares covered
by such grant shall be forfeited to the Company automatically. If the
Participant's Separation From Employment is because of Retirement or death, or
in the event of Disability, the Participant or his successor in interest shall
be entitled to unconditional ownership of a fraction of the total number of
shares covered by such grant of which the numerator is the number of whole
calendar months in the period commencing with the first whole calendar month
following the date of grant and ending with the whole calendar month including
the date of death, Disability or Retirement, and of which the denominator is
the number of whole calendar months in the applicable restriction period. Any
fractional shares shall be disregarded.
The Committee may, at the time of granting any RSA, impose such other
conditions, restrictions or limitations upon the rights of the Participants
during the restriction period or upon the Participant's right to acquire
unconditional ownership of shares as the Committee may, in its discretion,
determine and set forth in the written agreement.
At the time of grant of an RSA, the Company shall cause to be issued
and registered in the name of the Participant a stock certificate representing
the full number of shares covered thereby, which certificate shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such grant, and the grantee shall execute and deliver to the
Company a stock power endorsed in blank covering such shares. Such stock
certificate and stock power shall be held by the Company or its designee until
the expiration of the restriction period, at which time the same shall be
delivered to the Participant or his designee if all of the conditions and
restrictions of the grant have been satisfied, or until the forfeiture of such
shares, at which time the same shall be cancelled and the shares shall be
returned to the status of unissued shares.
12. Separation From Employment
If the Participant's Separation From Employment is because of
Disability or death, the right of the Participant or his successor in interest
to exercise an ISO, NQSO or SAR shall terminate not later than five years
after the date of such Disability or death, but in no event later than 10
years from the date of grant; provided, however, that if such Participant is
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eligible to retire with the ability to immediately begin receiving retirement
benefits under the Company's pension plan, his or his successor in interest's
right to exercise any ISOs, NQSOs or SARs shall be determined as if his
Separation From Employment was because of Retirement.
If the Participant's Separation From Employment is because of his
Retirement, the right of the Participant or his successor in interest to
exercise an ISO, NQSO or SAR shall terminate not later than 10 years from the
date of grant.
Unless the Committee deems it necessary in individual cases (except
with respect to Covered Employees) to extend a Participant's exercise period,
if a Participant's Separation From Employment is for any reason other than
Retirement, Disability or death, the right of the Participant to exercise an
ISO, NQSO or SAR shall terminate not later than one year from the date of
Separation From Employment, but in no event later than 10 years after the date
of grant.
At the time of his Separation From Employment for any reason other
than Cause, a Participant shall vest in a portion of any Incentives granted
under sections 7 (ISOs), 8 (NQSOs) or 9 (SARs) that he has held for less than
one year from the date of the grant. The portion of such Incentives in which
the Participants shall vest shall be determined by multiplying all shares
subject to such incentives by a fraction, the numerator of which shall be the
number of Completed Months of employment following the date of grant and the
denominator of which shall be twelve.
A Participant who vests in any Incentives under the preceding
paragraph may not exercise such Incentives prior to the satisfaction of the
one-year holding requirement and the Exercisability Requirements pertaining to
such Incentives. Any Incentives vested under the preceding paragraph must be
exercised within one year from the date of the Participant's Separation From
Employment.
As to PUAs or PSAs, in the event of a Participant's Separation From
Employment by Retirement, Disability or death prior to the end of the
applicable Performance Period, payment, if any, to the extent earned under the
applicable Performance Objectives and awarded by the Committee, shall be
payable at the end of the Performance Period in proportion to the active
service of the Participant during the Performance Period, as determined by the
Committee. If the Separation From Employment is for any other reason, the
Participant's participation in Section 10 of the Plan shall immediately
terminate, his agreement shall become void and the PUA or PSA shall be
cancelled.
13. Incentives Non-assignable and Non-transferable
Any Incentive granted under this Plan shall be non-assignable and
non-transferable other than as provided in section 14 and shall be exercisable
(including any action of surrender and exercise of rights under section 9)
during the Participant's lifetime only by the Participant who is the holder of
the Incentive or his guardian or legal representative.
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14. Death of Option Holder
In the event of the death of a Participant who is an Incentive holder
under the Plan while employed by the Company or one of its subsidiaries or
prior to exercise of all rights under an Incentive, the Incentive theretofore
granted may be exercised (including any action of surrender and exercise of
rights under section 9) by the Participant's Beneficiary or, if no Beneficiary
is designated, by the executor or executrix of the Participant's estate or by
the person or persons to whom rights under the Incentive shall pass by will or
the laws of descent and distribution in accordance with the provisions of the
Plan and of the option and to the same extent as though the Participant were
then living.
15. No Right to Continued Employment
Notwithstanding any other provisions of this Plan to the contrary, it
is a condition for eligibility for any benefit or right under this Plan that
each individual agrees that his or her designation as a Participant and any
grant made under the Plan may be rescinded and determined to be void and
forfeited entirely in the absolute and sole discretion of the Committee in the
event that such individual is discharged for Cause.
Incentives granted under the Plan shall not be affected by any change
of employment so long as the Incentive holder has not suffered a Separation
From Employment. A leave of absence granted by the Company or one of its
subsidiaries shall not constitute Separation From Employment unless so
determined by the Committee. Nothing in the Plan or in any Incentive granted
pursuant to the Plan shall confer on any individual any right to continue in
the employ of the Company or one of its subsidiaries or interfere in any way
with the right of the Company or such subsidiary to terminate employment at
any time.
16. Adjustment of Shares
In the event of any change (through recapitalization, merger,
consolidation, stock dividend, split-up, combination or exchanges of shares or
otherwise) in the character or amount of the Company's common stock prior to
exercise of any Incentive granted under this Plan, the Incentives, to the
extent not exercised, shall entitle the Participant who is the holder to such
number and kind of securities as he would have been entitled to had he
actually owned the stock subject to the Incentives at the time of the
occurrence of such change. If any such event should occur, prior to exercise
of an Incentive granted hereunder, which shall increase or decrease the amount
of common stock outstanding and which the Committee, in its sole discretion,
shall determine equitably requires an adjustment in the number of shares which
the Incentive holder should be permitted to acquire, such adjustment as the
Committee shall determine may be made, and when so made shall be effective and
binding for all purposes of the Plan.
Incentives may also be granted having terms and provisions which vary
from those specified in the Plan provided that any Incentives granted pursuant
to this paragraph are granted in substitution for, or in connection with the
assumption of, then existing Incentives granted by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or
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by reason of a transaction involving a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
which the Company or a subsidiary corporation is a party.
17. Loans to Option Holders
The Committee may adopt programs and procedures pursuant to which the
Company may lend money to any Participant who is an Incentive holder for the
purpose of assisting the Participant to acquire or carry shares of common
stock issued upon the exercise of Incentives granted under the Plan.
18. Termination and Amendment of Plan
Unless the Plan shall have been previously terminated as hereinafter
provided, the Plan shall terminate on May 2, 1999, and no Incentives under it
shall be granted thereafter. The Board of Directors, without further approval
of the Company's shareholders, may at any time prior to that date terminate
the Plan, and thereafter no further Incentives may be granted under the Plan.
However, Incentives previously granted thereunder may continue to be exercised
in accordance with the terms thereof.
The Board of Directors, without further approval of the shareholders,
may amend the Plan from time to time in such respects as the Board may deem
advisable; provided, however, that no amendment shall become effective without
prior approval of the shareholders which would: (i) increase (except in
accordance with section 16) the maximum number of shares for which Incentives
may be granted under the Plan; (ii) reduce (except in accordance with section
16) the Incentive price below the Fair Market Value of the Company's common
stock on the date of grant of the Incentive; (iii) extend the term of the Plan
beyond May 2, 1999; (iv) change the standards of eligibility prescribed by
section 5; or (v) increase the maximum awards identified in Sections 7, 8, 9,
10 and 11.
No termination or amendment of the Plan may, without the consent of a
Participant who is a holder of an Incentive then existing, terminate his or
her Incentive or materially and adversely affect his or her rights under the
Incentive.
19. Change in Control
a. Notwithstanding any provision of this Plan to the contrary, upon
the occurrence of a Change in Control as set forth in subsection b., below:
(i) all stock options then outstanding under this Plan shall become fully
exercisable as of the date of the Change in Control, whether or not then
otherwise exercisable; (ii) all SARs which have been outstanding for at least
six months shall become fully exercisable as of the date of the Change in
Control, whether or not then otherwise exercisable: (iii) all terms and
conditions of RSAs then outstanding shall be deemed satisfied as of the date
of the Change in Control; and (iv) all PUAs and PSAs then outstanding shall
be deemed to have been fully earned and to be immediately payable in cash as
of the date of the Change in Control.
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PAGE 13
b. "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 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 19(b); 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
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;
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PAGE 14
(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 19(b); 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.
20. Compliance with Regulatory Authorities
Any shares purchased or distributed pursuant to any Incentives
granted under this Plan must be held for investment and not with a view to the
distribution or resale thereof. Each person who shall exercise an Incentive
granted under this Plan may be required to give satisfactory assurances to
such effect to the Company as a condition to the issuance to him or to her of
shares pursuant to such exercise; provided, however, that the Company may
waive such condition if it shall determine that such resale or distribution
may be otherwise lawfully made without registration under the Securities Act
of 1933, or if satisfactory arrangements for such registration are made. Each
Incentive granted under this Plan is further subject to the condition that if
at any time the Board shall in its sole discretion determine that the listing,
registration or qualification of the shares covered by such Incentive upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of or in connection with the granting of such Incentives or the
purchase or transfer of shares thereunder, the delivery of any or all shares
of stock pursuant to exercise of the Incentive may be withheld unless and
until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board.
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PAGE 15
21. Withholding Tax
Whenever the Company proposes or is required to issue or transfer
shares of common stock under the Plan, a Participant shall remit to the
Company an amount sufficient to satisfy any federal, state or local income and
payroll tax withholding liability prior to the delivery of any certificate or
certificates for such shares. Alternatively, in the sole discretion of the
Company, to the extent permitted by applicable laws including regulations
promulgated under the Exchange Act, such federal, state or local income and
payroll tax withholding liability may be satisfied prior to the delivery of
any certificate or certificates for the shares by an adjustment, equal in
value to such liability, in the number of shares to be transferred to the
Participant. Whenever under the Plan payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any federal, state or
local income and payroll tax withholding liability.
22. Non-Uniform Determinations
Determinations by the Committee under the Plan, including, without
limitation, determinations of the persons to receive Incentives and the form,
amount and timing of such Incentives, and the terms and provisions of such
Incentives and the agreements evidencing the same need not be uniform, and may
be made by the Committee selectively among persons who receive, or are
eligible to receive, Incentives under the Plan, whether or not such persons
are similarly situated.
Without amending the Plan, Incentives may be granted to eligible
employees who are foreign nationals or who are employed outside the United
States or both, on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary or desirable
to further the purposes of the Plan. Such different terms and conditions may
be reflected in Addenda to the Plan.
Addendum I
The Performance Objectives for any Performance Period shall be based
on one or more of the following measures, as determined by the Committee in
writing prior to the beginning of the Performance Period:
1. The achievement by the Company or business unit of specific levels of
Return on Invested Capital ("ROIC"). ROIC for the Company or business unit
means its results of operations divided by its capital.
2. The generation by the Company or business unit of free cash flow.
3. The creation by the Company or business unit of specific levels of
Economic Value Added ("EVA"). EVA for the Company or business unit means its
ROIC less its cost of capital multiplied by its capital.
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