Exhibit 10.2

 

OWENS & MINOR, INC.

MANAGEMENT EQUITY OWNERSHIP PROGRAM

 

SECTION I. DEFINITIONS

 

1.1 Annual Bonus means the cash portion of any Incentive Award.

 

1.2 Annual Incentive Plan means the Company’s Annual Incentive Plan approved by
the shareholders of the Company on April 30, 1991 or any successor plan.

 

1.3 Base Salary means the annual salary paid by the Company to a Participant for
performance of his job excluding any benefits, Incentive Awards, bonuses or any
component of pay other than the base amount.

 

1.4 Board means the Board of Directors of the Company.

 

1.5 Business Day means any day on which the New York Stock Exchange is open and
the Common Stock is traded.

 

1.6 Cause means conduct of the Participant amounting to (i) fraud or dishonesty
against the Company, (ii) willful misconduct, repeated refusal to follow the
reasonable directions of the Company’s management or knowing violation of law in
the performance of the duties of Participant’s employment with the Company,
(iii) violation of the Company’s standards of conduct or other Company policies,
(iv) a conviction or plea of guilty or nolo contendere to a felony or a crime
involving dishonesty or (v) a breach or violation of the terms of any
employment, confidentiality, non-compete or other agreement to which the
Participant and the Company are party. The determination of whether the Company
has or had Cause to terminate a Participant’s employment shall be made by the
Committee in its sole and absolute discretion.

 

1.7 Change in Control means that situation when (i) any “person,” as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any Company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company’s then outstanding
securities; (ii) during any period of two consecutive years (not including any
period prior to the effective date of this Program), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (ii) or (iv) of this
Section) whose election by the Board or nomination for election by the Company’s

 

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stockholders was approved by a vote of a majority of the directors then still in
office who either (x) were directors at the beginning of such period or (y) were
so elected or nominated with such approval, cease for any reason to constitute
at least a majority of the Board; (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other Company, other than (x)
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (y) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
“person” (as hereinabove defined) acquires more than 20% of the combined voting
power of the Company’s then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company’s assets; provided, however, that Company securities acquired
directly from the Company shall be disregarded for this purpose.

 

1.8 Committee means the Compensation & Benefits Committee of the Board or any
successor committee.

 

1.9 Common Stock means the Common Stock, $2.00 par value, of Owens & Minor, Inc.

 

1.10 Company means Owens & Minor, Inc., including its Subsidiaries.

 

1.11 Disability means any physical or mental injury or disease of a permanent
nature which renders a Participant incapable of meeting the requirements of the
employment performed by such Participant immediately prior to the commencement
of such disability. The determination of whether a Participant is disabled shall
be made by the Committee in its sole and absolute discretion.

 

1.12 Effective Date shall have the meaning set forth in subsection 2.3 hereof.

 

1.13 Equity Ownership Dividend means the Tier One Equity Ownership Dividend
and/or the Tier Two Equity Ownership Dividend, as applicable.

 

1.14 Fair Market Value means, as of any given date, the closing price of a share
of Common Stock as reported on the New York Stock Exchange composite tape as of
such date, or if the Common Stock was not traded on the New York Stock Exchange
on such day, then on the next preceding day that the Common Stock was traded on
such exchange, all as reported by such source as the Administrator may select.

 

1.15 Fourth Quarter Fair Market Value means the greater of (i) the average Fair
Market Value of a share of Common Stock for all trading days during the fourth
quarter of the calendar year for which the value is calculated or (ii) the Fair
Market Value on the last day in such fourth quarter that a Participant is able
to purchase shares of Common Stock under the “Section 16 window period” policy
set forth in the Company’s Section 16 Compliance Program.

 

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1.16 Incentive Award means an award under the Annual Incentive Plan (or any
successor plan) approved by the Committee which entitles the recipient to shares
of Common Stock, cash or a combination of Common Stock and cash.

 

1.17 Interim Stock Ownership Requirement shall have the meaning specified in
subsection 3.2 hereof.

 

1.18 Own or Owns means, with respect to shares of Common Stock, shares of which
the Participant is the beneficial owner within the meaning of Rule 16a-1(2)
under the Securities Exchange Act of 1934, as amended, but excluding any options
to purchase shares of Common Stock. Shares of Common Stock of which a
Participant is the beneficial owner will include, by way of example, (i) shares,
whether registered in the owner’s name or in nominee name, which are owned by
the Participant, his spouse or any member of his immediate family living in his
household, (ii) shares held by the Participant in or through any benefit plan of
the Company, (iii) shares of restricted stock (including Restricted Stock
awarded under this Program) and (iv) in certain cases, shares owned by a trust
of which the Participant, his spouse or an immediate family member living in his
household is a trustee or beneficiary.

 

1.19 Participant means a Teammate designated in subsection 2.5 hereof or
selected to participate in the Program by the Committee pursuant to subsection
2.5 hereof.

 

1.20 Program means the Owens & Minor, Inc. Management Equity Ownership Program,
as it may be amended from time to time.

 

1.21 Restricted Period shall mean the period of time specified in this Program
with respect to particular grants of Restricted Stock during which the
restrictions imposed by Section VI hereof shall apply.

 

1.22 Restricted Stock means shares of Common Stock which are awarded by the
Company under this Program subject to forfeiture, restrictions on transfer and
such other restrictions as are set forth in Section VI hereof or as the
Committee may determine in accordance with the provisions of Section VI of this
Program.

 

1.23 Retirement means retirement from the Company within the meaning of the
Company’s Supplemental Executive Retirement Plan or any successor thereto.

 

1.24 Stock Purchase Period means (i) with respect to any Participant whose
participation in the Program begins on the Effective Date and who has completed
at least one year of service with the Company as of the Effective Date, the
period of time beginning on the Effective Date and ending on December 31 of the
fifth full calendar year thereafter or (ii) with respect to any Participant
whose participation in the Program begins after the Effective Date (in the
first, second or third quarter of a calendar year) or who has completed less
than one year of service with the Company as of the Effective Date, the period
of time beginning on the date the Participant first becomes a Participant under
the Program and ending on December 31 of the sixth full calendar

 

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year thereafter or (iii) with respect to any Participant whose participation in
the Program begins after the Effective Date (in the fourth quarter of a calendar
year), the period of time beginning on the date the Participant first becomes a
Participant under the Program and ending on December 31st of the seventh full
calendar year thereafter.

 

1.25 Subsidiary means a corporation of which more than 50% of the total combined
voting power of all classes of stock entitled to vote is owned, directly or
indirectly, by Owens & Minor, Inc.

 

1.26 Teammate means any person employed by the Company.

 

1.27 Tier One Equity Ownership Dividend shall have the meaning specified in
Section IV(a) hereof.

 

1.28 Tier One Participant shall have the meaning specified in Section 3.1
hereof.

 

1.29 Tier Two Equity Ownership Dividend shall have the meaning specified in
Section IV(b) hereof.

 

1.30 Tier Two Participant shall have the meaning specified in Section 3.1.
hereof.

 

1.31 Total Stock Ownership Requirement shall have the meaning specified in
subsection 3.1 hereof.

 

Unless the context clearly requires otherwise, the masculine pronoun whenever
used shall include the feminine and neuter pronouns, the singular shall include
the plural and the plural shall include the singular.

 

SECTION II. GENERAL TERMS

 

2.1 Purpose of the Program. The purpose of the Program is to promote the
interests of the Company and its shareholders by increasing the ownership of
Common Stock by certain key management level Teammates to more closely align
their financial rewards with the performance of the Company and to motivate
these Teammates to manage the Company for long-term growth and profitability.

 

2.2 Administration of the Program. The Program shall be administered by the
Committee which shall have exclusive and absolute authority and discretion to
interpret the Program, to establish and modify rules for the administration of
the Program, to impose such conditions and restrictions as it determines
appropriate with respect to the Program and to take such other actions and make
such other determinations as it may deem necessary or advisable for the
implementation and administration of the Program. Notwithstanding any provision
in the Program to the contrary, the Committee shall have the authority to waive
or modify any stock ownership requirement set forth in Section 3 of the Program;
provided that any such modification or waiver is applied uniformly to all
Participants. All actions taken and all interpretations and

 

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determinations made by the Committee in good faith shall be final and binding
upon the Participants, the Company and all other interested persons. No member
of the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Program or any award of
Restricted Stock hereunder.

 

2.3 Effective Date of the Program. The Program is effective on July 1, 1997 (the
“Effective Date”) and will continue in effect for a period of ten years or until
sooner terminated by the Board.

 

2.4 Scope of the Program. The Program is adopted under and is part of the Annual
Incentive Plan and is subject in all respects to the provisions of the Annual
Incentive Plan. Upon expiration of the Annual Incentive Plan, unless determined
otherwise by the Board, the Program will continue under any plan that succeeds
or replaces the Annual Incentive Plan and will be subject to all provisions of
such successor or replacement plan. All shares of Restricted Stock issued under
the Program shall be provided from shares of Common Stock authorized under the
Annual Incentive Plan or such other plan as succeeds or replaces the Annual
Incentive Plan. In the event there are insufficient shares of Common Stock
authorized under the Annual Incentive Plan or any successor or replacement plan
to make the grants of Restricted Stock contemplated by this Program, then no
such grants of Restricted Stock shall be made under this Program.

 

2.5 Eligibility. Participants in the Program shall be selected by the Committee
from among those management level Teammates who, in the opinion of the
Committee, are in a position to contribute materially to the Company’s growth
and development and to its long-term financial success. The Chief Executive
Officer, the President and any Executive Vice President, Senior Vice President,
[Group Vice President], Vice President and Regional Vice President of Owens &
Minor, Inc. (or, in each case, the same positions bearing different titles)
shall automatically be Participants in the Program effective on the later of the
Effective Date or the date on which he is appointed to or employed in such
position.

 

SECTION III. COMMON STOCK OWNERSHIP REQUIREMENTS

 

3.1 Five-Year Ownership Requirement. Each Participant will be required to own
shares of Common Stock the Fourth Quarter Fair Market Value of which as of the
last day of the Participant’s Stock Purchase Period and each December 31
thereafter during the term of this Program is not less than the applicable
ownership multiple designated in the table below (as such ownership multiple may
be changed by the Committee) multiplied by the Participant’s then-current Base
Salary (the “Total Stock Ownership Requirement”).

 

    

Position

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Ownership Multiple of Base Salary

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I.

  

Tier One Participants (each, a “Tier One Participant”)

         

Chief Executive Officer

  

4.0X

    

President

  

3.0X

 

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Executive Vice President

 

2.0X

   

Senior Vice President

 

1.5X

   

Vice President, Group Vice President, Regional Vice President

 

1.0X

   

Other Management Level Teammates who are Participants

 

As designated by the Committee

II.

 

Tier Two Participants (each, a “Tier Two Participant”)

       

Management Level Teammates designated by the Committee

 

0.5X

 

In the event a Participant is promoted to a higher position with a higher
ownership multiple during the Participant’s Stock Purchase Period a new Stock
Purchase Period shall commence for such Participant effective January 1
following the date of promotion with an initial Interim Ownership Requirement of
10% and increasing ownership requirements thereafter in accordance with Section
3.2A; provided however that, with respect to the calendar year in which the
promotion is made, the Participant shall continue to be required to meet the
otherwise applicable Interim Stock Ownership Requirement or Total Stock
Ownership Requirement based on the Participant’s relevant ownership multiple and
Base Salary immediately prior to the date of promotion.

 

3.2 Interim Ownership Requirement. As of each December 31 during a Participant’s
Stock Purchase Period, such Participant will be required to own shares of Common
Stock the Fourth Quarter Fair Market Value of which as of each such date is not
less than the respective percentages designated in the table below of the
Participant’s Total Stock Ownership Requirement (the “Interim Stock Ownership
Requirement”).

 

  A.   Participants with at Least 12 Months of Service with the Company as of
the Effective Date and Whose Participation Begins on the Effective Date

 

December 31

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Percentage of Total Stock

Ownership Requirement

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1st

  

  10%

2nd

  

  25%

3rd

  

  45%

4th

  

  65%

5th

  

  85%

6th

  

100%

 

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  B.   Participants with Less Than 12 Months of Service with the Company as of
the Effective Date or Whose Participation Begins after the Effective Date (in
the 1st, 2nd or 3rd Quarter of a Calendar Year)

 

December 31

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Percentage of Total Stock Ownership Requirement

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1st

  

No Requirement

2nd

  

  10%

3rd

  

  25%

4th

  

  45%

5th

  

  65%

6th

  

  85%

7th

  

100%

 

  C.   Participants Whose Participation Begins after the Effective Date (in the
4th Quarter of a Calendar Year)

 

December 31

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Percentage of Total Stock Ownership Requirement

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1st

  

No Requirement

2nd

  

    5%

3rd

  

  10%

4th

  

  25%

5th

  

  45%

6th

  

  65%

7th

  

  85%

8th

  

100%

 

3.3 Annual Incentive Deferrals. Not later than 30 days after a Participant first
becomes a Participant in the Program and not later than January 1 of each full
calendar year thereafter during a Participant’s Stock Purchase Period, the
Participant may make an irrevocable election on a form provided by the Company
to receive 25% or 50% of his Annual Bonus for performance during that calendar
year, if any, in shares of Restricted Stock based upon the Fair Market Value of
the Common Stock on the date the Annual Bonus is awarded. The Restricted Period
for any shares of Restricted Stock granted pursuant to this subsection 3.3 shall
commence on the date the Annual Bonus is awarded and expire on the third January
2nd (or next succeeding Business Day) thereafter.

 

SECTION IV. RESTRICTED STOCK AWARDS

 

Equity Ownership Dividends.

 

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  (a)   Tier One Participants. Each Tier One Participant who, as of December 31
of any year during the term of this Program, achieves the applicable Interim
Stock Ownership Requirement or Total Stock Ownership Requirement as specified in
subsections 3.1 and 3.2 hereof will receive an award of Restricted Stock equal
to 10% of the Fourth Quarter Fair Market Value of all Common Stock owned by the
Tier One Participant up to the Total Stock Ownership Requirement (the “ Tier One
Equity Ownership Dividend”), subject to such terms and conditions as may be
prescribed by the Committee and the full and complete authority of the Committee
to modify the amount or eliminate the payment of Tier One Equity Ownership
Dividends with respect to any calendar year and any Tier One Participant.
Notwithstanding the foregoing, with respect to any Tier One Participant who has
achieved his or her Total Stock Ownership Requirement, effective January 1,
2001, the Tier One Equity Ownership Dividend shall be reduced to 5% of the
Fourth Quarter Fair Market Value of all Common Stock owned by the Tier One
Participant up to the Total Stock Ownership Requirement for each year subsequent
to the year in which such Total Stock Ownership Requirement was initially
achieved.

 

  (b)   Tier Two Participants. Each Tier Two Participant who, as of December 31
of any year during the term of this Program, achieves the applicable Interim
Stock Ownership Requirement or Total Stock Ownership Requirement as specified in
subsections 3.1 and 3.2 hereof will receive an award of either 100, 150 or 200
shares of Restricted Stock (the “ Tier Two Equity Ownership Dividend”), as
determined and designated by the Committee for each Tier Two Participant and
subject to such terms and conditions as may be prescribed by the Committee and
the full and complete authority of the Committee to modify the amount or
eliminate the payment of the Tier Two Equity Ownership Dividend with respect to
any calendar year and any Tier Two Participant.

 

  (c)   Each award of an Equity Ownership Dividend hereunder will be determined
based on the Fourth Quarter Fair Market Value of the Common Stock on December 31
of the year in which the Interim Stock Ownership Requirement or the Total Stock
Ownership Requirement, as the case may be, is achieved. Equity Ownership
Dividends will be granted upon approval by the Committee not later than March 1
of the year following achievement of the applicable stock ownership requirement.
The Restricted Period for any shares of Restricted Stock awarded pursuant to
this Section IV shall commence on the date of grant and expire on the fifth
January 2nd (or next succeeding Business Day) thereafter.

 

SECTION V. FAILURE TO ACHIEVE STOCK OWNERSHIP REQUIREMENTS

 

Each Tier One Participant who, as of the second December 31 during the Tier One
Participant’s Stock Purchase Period and each December 31 thereafter during the
term of this Program, fails to achieve the applicable Interim Stock Ownership
Requirement or Total Stock Ownership Requirement, will incur the following
consequences:

 

Consequences of Failure to Achieve

 

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December 31

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Stock Ownership Requirement

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2nd

  

25% of Annual Bonus*, if any, will be paid in Restricted Stock

3rd

  

50% of Annual Bonus*, if any, will be paid in Restricted Stock

4th

  

75% of Annual Bonus*, if any, will be paid in Restricted Stock

5th

  

100% of Annual Bonus*, if any, will be paid in Restricted Stock

6th

  

100% of Annual Bonus*, if any, will be paid in Restricted Stock and 50% of the
following year’s Base Salary increase, if any, will be paid in Restricted Stock

7th and thereafter

  

100% of Annual Bonus*, if any, will be paid in Restricted Stock and 100% of the
following year’s Base Salary increase, if any, will be paid in Restricted Stock

 

  *   In each instance, the percentage of Annual Bonus payable in Restricted
Stock will be the greater of the applicable amount set forth above or the
percentage elected by the Tier One Participant pursuant to subsection 3.3 hereof

 

The number of shares of Restricted Stock granted in lieu of cash payment of
Annual Bonus or Base Salary increase will be determined based on the Fair Market
Value of the Common Stock on the date the Annual Bonus or Base Salary increase
is awarded. The Restricted Period for any shares of Restricted Stock granted
pursuant to this Section V in respect of Annual Bonus shall commence on the date
the Annual Bonus is awarded and expire on the third January 2nd (or next
succeeding Business Day) thereafter. The Restricted Period for any shares of
Restricted Stock granted pursuant to this Section V in respect of Base Salary
increase shall be two years from the date of grant.

 

This Section V shall not apply to Tier Two Participants who fail to achieve
their applicable ownership requirements hereunder.

 

SECTION VI. RESTRICTED STOCK

 

6.1 Terms of Restricted Stock. Until the expiration of the Restricted Period or
the lapse of restrictions as provided in subsection 6.4 or 6.5 hereof, shares of
Restricted Stock issued to Participants under the Program shall be subject to
the following restrictions and any additional restrictions that the Committee in
its sole discretion, may determine; provided, however, the Participant shall
have beneficial ownership of shares of Restricted Stock, including the right to
receive cash dividends on and the right to vote shares of Restricted Stock:

 

(i) Participants shall not be entitled to receive the certificate or
certificates representing shares of Restricted Stock;

 

(ii) Shares of Restricted Stock may not be sold, transferred, assigned, pledged,
conveyed, hypothecated or otherwise disposed of; and

 

(iii) Shares of Restricted Stock may be forfeited immediately as provided in
subsection 6.4.

 

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Any stock dividends or other shares of Company stock or other property issued in
respect of Restricted Stock, including without limitation, shares issued in
connection with stock splits and recapitalizations, will be subject to the same
restrictions applicable to the Restricted Stock.

 

6.2 Custody of Shares of Restricted Stock. Any certificates representing shares
of Restricted Stock issued under the Program shall be issued in the
Participant’s name but shall be held by the Company (or its transfer agent)
during the Restricted Period. The Company shall serve as attorney-in-fact for
the Participant during the Restricted Period with full power and authority in
the Participant’s name to assign and convey to the Company any shares of
Restricted Stock held by the Company for such Participant if the Participant
forfeits the shares under the terms of the Restricted Stock. Each certificate
representing shares of Restricted Stock may bear a legend referring to the
Program and the risk of forfeiture of the shares and stating that such shares
are nontransferable until all restrictions have been satisfied and the legend
has been removed.

 

6.3 Distribution of Restricted Stock. If a Participant who receives shares of
Restricted Stock under the Program remains in the continuous employment of the
Company during the entire Restricted Period and otherwise does not forfeit such
shares pursuant to subsection 6.4 hereof, all restrictions applicable to the
shares of Restricted Stock shall lapse upon expiration of the Restricted Period
and a certificate or certificates representing the shares of Common Stock that
were granted to the Participant in the form of shares of Restricted Stock shall
be delivered to the Participant.

 

6.4 Forfeiture.

 

(a) If a Participant’s employment is terminated before the expiration of the
Restricted Period by reason of Retirement, Disability or death of the
Participant, subject to the authority of the Committee in its sole discretion to
determine otherwise, all restrictions applicable to the shares of Restricted
Stock held by the Company for the Participant shall immediately lapse on the
date the Participant’s employment is terminated and the certificate or
certificates representing the shares of Common Stock upon which the restrictions
have lapsed shall be delivered to the Participant (or in the event of the
Participant’s death, to his estate). If a Participant’s employment is terminated
under this subsection (i) on or after December 31st but prior to the issuance of
any Equity Ownership Dividend awarded for such year, subject to the authority of
the Committee in its sole discretion to determine otherwise, the Participant
shall be entitled to receive the shares issuable in respect of any such Equity
Ownership Dividend free of all applicable restrictions.

 

(b) If a Participant’s employment is terminated before the expiration of the
Restricted Period by the Company without Cause, subject to the authority of the
Committee in its sole discretion to determine otherwise, the number of shares of
Restricted Stock held by the Company for the Participant shall be reduced by the
proportion of the Restricted Period

 

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remaining after the Participant’s termination of employment, the restrictions on
the balance of such shares of Restricted Stock shall lapse on the date the
Participant’s employment terminated and the certificate or certificates
representing the shares of Common Stock upon which the restrictions have lapsed
shall be delivered to the Participant. If a Participant’s employment is
terminated under this subsection (ii) on or after December 31st but prior to the
issuance of any Equity Ownership Dividend awarded for such year, subject to the
authority of the Committee in its sole discretion to determine otherwise, the
Participant shall not be entitled to receive any portion of the shares issuable
in respect of any such Equity Ownership Dividend.

 

(c) If a Participant’s employment is terminated before the expiration of the
Restricted Period by the Company for Cause or by the Participant at any time,
all shares of Restricted Stock held by the Company for the Participant shall be
forfeited immediately and all rights of the Participant to such shares shall
terminate immediately without further obligation on the part of the Company. If
a Participant’s employment is terminated under this subsection (iii) on or after
December 31st but prior to the issuance of any Equity Ownership Dividend awarded
for such year, the Participant shall not be entitled to receive any of the
shares issuable in respect of any such Equity Ownership Dividend.

 

6.5 Change of Control. Upon any Change of Control, unless the Committee in its
sole discretion determines otherwise prior to the Change of Control, all
restrictions applicable to shares of Restricted Stock shall immediately lapse
and the certificate or certificates representing the shares of Common Stock that
were granted to the Participants in the form of shares of Restricted Stock shall
be delivered to the Participants.

 

6.6 Waiver of Restrictions. The Committee, in its sole discretion, may at any
time waive any or all restrictions with respect to shares of Restricted Stock.

 

SECTION VII. MISCELLANEOUS PROVISIONS

 

7.1 Termination and Amendment. The Board at any time may amend or terminate the
Program. Notwithstanding any expiration or termination of the Program, unless
otherwise determined by the Committee, the provisions relating to Restricted
Stock contained in Section VI hereof shall continue to apply with respect to all
shares of Restricted Stock outstanding as of the date of expiration or
termination.

 

7.2 Withholding. Each Participant shall pay to the Company any amount necessary
to satisfy applicable federal, state or local tax withholding requirements
attributable to an award of Restricted Stock under the Program, or upon the
vesting of such Restricted Stock, promptly upon notification of the amount due.
Such amounts to be paid by the Participant, at the election of the Committee,
may be withheld from the shares of Common Stock that otherwise would be
distributed to such Participant pursuant to the Program.

 

7.3 Legal and Other Requirements. The grant or distribution of shares of
Restricted Stock shall be subject to the condition that if at any time the
Company determines in its discretion that the satisfaction of withholding tax or
other tax liabilities, or the listing, registration or

 

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qualification of any shares of Common Stock upon any securities exchange or
under and federal or state law, or the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with such
grant or distribution, then in any such event, such grant or distribution shall
not be effective unless such liabilities have been satisfied or such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.

 

7.4 Choice of Law. The Program, its validity, interpretation and administration
and the rights and obligations of all persons having an interest therein shall
be governed by and construed in accordance with the laws of the Commonwealth of
Virginia, except to the extent that such laws may be preempted by federal law.

 

7.5 Adjustment Upon Changes in Capitalization. In the event of a
recapitalization, stock split, stock dividend, exchange, combination or
reclassification of shares, merger, consolidation, reorganization or other
change in or affecting the capital structure or capital stock of the Company,
the Board, upon recommendation of the Committee, may make appropriate
adjustments in the number and kind of shares subject to outstanding Restricted
Stock grants as it deems equitable to prevent dilution or enlargement of the
rights of Participants.

 

7.6 Fractional Shares. The Company shall not be required to issue or deliver any
fractional share of Restricted Stock issuable under this Program but shall round
each grant of shares of Restricted Stock hereunder up to the nearest whole
share.

 

7.7 No Employment Contract. The Program shall not confer upon any Participant
any right to continued employment by the Company nor shall the Program in any
way interfere with the right of the Company to terminate the employment of any
Participant at any time.

 

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