Exhibit 10.25
CSX CORPORATION
1987 Long-Term Performance Stock Plan as Amended
and Restated Effective April 25, 1996
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
20.
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.
g. "Company": The term Company means CSX Corporation.
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. "Functional Group": The term Functional Group means a group of
employees, identified by the Compensation Committee, in its sole
discretion, to be subject to a common set of Performance Objectives.
o. "Incentive": The term Incentive means any incentive under the Plan
described in Section 6.
p. "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.
q. "Participant": The term Participant means an individual designated by
the Committee as a Participant pursuant to Section 5.
r. "Performance Objective": The term Performance Objective shall mean a
performance objective established in writing by the Committee within
ninety (90) days of the commencement of the Performance Period to
which the Performance Objective relates and at a time when the outcome
2
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 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 for any Performance
Period shall be based on one or more of the following measures, as
determined by the Committee in writing within ninety (90) days of the
commencement 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.
4. The creation by the Company of specific levels of Total
Shareholder Return ("TSR"). TSR for the Company means total
return to shareholders as measured by stock price appreciation
plus dividends.
s. "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.
t. "Plan": The term Plan means this CSX Corporation 1987 Long-Term
Performance Stock Plan as amended or restated from time to time.
u. "Retirement": The term Retirement means termination of employment with
immediate commencement of retirement benefits under the Company's
defined benefit pension plan.
v. "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.
w. "Trust": The term Trust means the CSX Corporation Executive Stock
Trust or such other trust
3
which will substantially conform to the terms of the Internal Revenue
Service model trust as described in Revenue Procedure 92-64, 1992-2
C.B. 422.
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 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
4
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; (f) Restricted Stock; and (g)
Incentive Compensation Program Shares, all as described below and pursuant to
the terms set forth in Sections 7-12 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.
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.
5
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.
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.
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 earlier than one year nor later
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
6
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. For purposes of this Section 9, written notice
must be received by the Corporate Secretary of the Company not earlier than one
year nor later than 10 years 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. PUAs and PSAs may be awarded
7
to individual Participants or to a Functional Group. Awards to a Functional
Group shall be subject to distribution by the Chief Executive Officer of the
Company, or by his designees, to individuals within such group. At the time of
the grant, the Committee shall establish in writing and communicate to
Participants, and to members of a Functional Group who can be identified,
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 Company, and (b) payments to be made in
Company common stock may be deferred pursuant to an election filed on forms
prescribed and provided by and filed with the Company. 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 Company, the Participant shall also specify whether, when the deferral
period expires or when the restrictions below lapse, payment will be in a lump
sum or installments over a period not exceeding twenty (20) years. The Committee
shall prescribe the time periods during which the election must be filed in
order to be effective. Elections to defer, once effective, are irrevocable.
Changes regarding the date of payment, the period over which payments are to be
made and the method of payment are subject to substantial penalties. However, a
One-Time Change of Distribution Election may be made to change the timing or the
form of payment without penalty. Any such election which changes a distribution
election specified "termination of employment" or "the earlier of termination or
a specified age" shall be void in the event the Participant's employment
terminates within twelve (12) months following the date of the election.
If a Participant has made an effective election to defer the payment of
shares of common stock, the Company shall, within a reasonable period of time
after the deferral election is made, transfer shares of common stock or other
assets equal in value to the number of shares as to which payment is deferred to
the Trust to secure the Company's obligation to pay shares of common stock to
the Participant in the future. However, in any event, the Company shall make any
previously deferred payment of shares to the Participant 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.
8
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 therefore.
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.
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.
9
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. Incentive Compensation Program Shares
A Participant who receives base compensation in excess of a dollar level to
be determined by the Committee and who is eligible to receive an award under the
Company's Incentive Compensation Program ("ICP") may elect, by filing the
prescribed election form with the Company in accordance with rules established
by the Committee, to receive all or part of his annual ICP award in shares of
the Company's common stock, rather than cash; provided, however, the Participant
must agree that his receipt of the stock will be deferred until his retirement
or termination of employment, with a minimum deferral period of three (3) years.
Elections to defer are irrevocable. A Participant who makes such election shall,
at the time that the stock is deferred, receive an additional award of stock
equal to a percentage, established by the Committee from time to time, of the
amount that he elected to have deferred, but not to exceed 25% (the "Stock
Premium"). The Participant's election to defer shall also apply to the Stock
Premium.
If a Participant made an effective election to defer the payment of shares
of common stock and receive the Stock Premium, the Company shall, within a
reasonable period of time after the deferral election is made, transfer shares
of common stock or other assets equal in value to the number of shares as to
which payment is deferred to the Trust to secure the Company's obligation to pay
shares of common stock to the Participant in the future. However, in any event,
the Company shall make any previously deferred payment of shares to the
Participant 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 and the three (3) year deferral requirement; or
d. a Change in Control."
13. Separation From Employment
10
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 eligible to retire with
the ability to begin immediately 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 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 prior to the end of the Performance Period 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 canceled.
Notwithstanding anything to the contrary in this Plan, if a Participant or
former Participant (a) becomes the owner, director or employee of a competitor
of the Company or its subsidiaries, (b) has his employment terminated by the
Company or one of its subsidiaries on account of actions by the Participant
which are detrimental to the interests of the Company or its subsidiaries, or
(c) engages in conduct subsequent to the termination of his employment with the
Company or its subsidiaries which the Committee determines to be detrimental to
the interests of the Company or its subsidiaries then the Committee may, in
11
its sole discretion, pay the Participant or former Participant a single sum
payment equal to the amount of his unpaid benefits which were awarded and
deferred under Sections 10 or 12 of the Plan; provided, however, if the deferral
has been for less than three (3) years under Section 12, the Participant shall
not be eligible to receive the Stock Premium. The single sum payment shall be
made as soon as practicable following the date the Participant or former
Participant becomes an owner, director or employee of a competitor, his
termination of employment or the Committee's determination of detrimental
conduct, as the case may be, and shall be in lieu of all other benefits which
may be payable to the Participant or former Participant under this Plan.
14. 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 15 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 by his guardian or legal representative.
15. 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.
16. 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.
17. 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
12
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 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.
18. 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.
19. 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 CompanyOs 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 17) 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.
20. Change in Control
13
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; (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; and (v) the
three (3) year holding requirement of the Stock Premium for deferred ICP shall
be deemed satisfied.
b. A "Change in 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 20(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:
14
(A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company or its principal subsidiary
or all or substantially all of the assets of the Company or its
principal subsidiary either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be;
(B) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination; and
(C) at least a majority of the members of the board of directors
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing
for such Business Combination; or
(iv) Regulated Business Combination. Approval by the 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 20(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.
c. Each Participant who has elected to defer the payment of PSAs
pursuant to Section 10 or an ICP award pursuant to Section 12, may elect in a
time and manner determined by the Committee, but in no event later than December
31, 1996 or the occurrence of a Change in Control, if earlier, to have amounts
and benefits currently deferred, and to be deferred, under the Plan determined
and payable under the terms of the Plan as if a Change in Control had not
occurred. New Participants in the Plan may elect in a time and manner determined
by the Committee, but in no event later than ninety (90) days after becoming a
Participant, to have amounts and benefits currently deferred, and to be
deferred, under the Plan determined and payable under the terms of the Plan as
if a Change in Control had not occurred. A Participant who has
15
made an election, as set forth in the two preceding sentences, may at any time
and from time to time, change that election; provided, however, a change of
election that is made within one year of a Change in Control shall be invalid.
d. If a Change in Control has occurred, the Committee shall cause the
Company to contribute to the Trust, within seven (7) days of such Change in
Control, a lump sum payment equal to the aggregate value of the amount each
Participant deferred pursuant to Sections 10 and 12 (including the Stock Premium
under Section 12) to the extent such amounts are not already in the Trust.
21. 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.
22. 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.
23. 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
16
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.
17