<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Defnitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RAILAMERICA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
RAILAMERICA, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
RAILAMERICA, INC.
301 YAMATO ROAD, SUITE 1190
BOCA RATON, FLORIDA 33431
-------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 26, 1997
-------------------------------------------------
To the Stockholders of RAILAMERICA, INC.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders
(the "Annual Meeting") of RailAmerica, Inc., a Delaware corporation (the
"Company"), will be held at the Boca Raton Marriott at Town Center, 5150 Town
Center Circle, Boca Raton, Florida, on Thursday, June 26, 1997, at 10:00 a.m.,
local time, for the following purposes:
1. To elect two Class II Directors to hold office for terms of three
years or until their successors are duly elected and qualified;
2. To consider and vote upon a proposal to increase by 750,000 shares
the number of shares of Common Stock reserved for issuance pursuant to the
Company's 1995 Stock Incentive Plan; and
3. To transact such other business as may properly come before the
Annual Meeting and any and all postponements or adjournments thereof.
All stockholders are cordially invited to attend; however, only
stockholders of record at the close of business on May 28, 1997, shall be
entitled to notice of and to vote at the Annual Meeting or any postponements or
adjournments thereof.
By order of the Board of Directors
GARY O. MARINO
Chairman of the Board, Chief Executive
Officer and President
Boca Raton, Florida
June 2, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE> 3
1997 ANNUAL MEETING OF STOCKHOLDERS
OF
RAILAMERICA, INC.
----------------------------------
PROXY STATEMENT
----------------------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of RailAmerica, Inc., a Delaware corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$.001 per share (the "Common Stock"), for use at the 1997 Annual Meeting of
Stockholders of the Company to be held at the Boca Raton Marriott at Town
Center, 5150 Town Center Circle, Boca Raton, Florida, on Thursday, June 26,
1997, at 10:00 a.m., local time, or at any and all postponements or adjournments
thereof (the "Annual Meeting"), pursuant to the foregoing Notice of Annual
Meeting of Stockholders.
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to stockholders is June 2, 1997. Stockholders should
review the information provided herein in conjunction with the Company's 1996
Annual Report to Stockholders, which accompanies this Proxy Statement. The
Company's principal executive offices are located at 301 Yamato Road, Suite
1190, Boca Raton, Florida 33431, and its telephone number is (561) 994-6015.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Stockholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed proxy is to be borne
by the Company. In addition to the solicitation of proxies by mail, the Company,
through its directors, officers, employees and agents, may also solicit proxies
personally and by telephone. Only independent third party agents not otherwise
affiliated with the Company will be specifically compensated for such
solicitation activities. The Company will also request persons, firms and
corporations holding shares in their names or in the names of their nominees,
which are beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so. American Stock Transfer & Trust Company acts as
the Company's transfer agent and, as part of its services to the Company, may
solicit the return of voted proxies from banks, brokers, nominees and
intermediaries. American Stock Transfer & Trust Company does not receive any set
compensation for such services, other than compensation it receives for acting
as transfer agent.
<PAGE> 4
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
1. The election of two Class II Directors to hold office for terms of
three years or until their successors are duly elected and qualified;
2. To consider and vote upon a proposal to increase by 750,000 shares
the number of shares of Common Stock reserved for issuance pursuant to the
Company's 1995 Stock Incentive Plan (the "Incentive Plan"); and
3. Such other business as may properly come before the Annual Meeting,
including any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) FOR the election of the two nominees for Class II director
named below and (b) FOR the proposal to increase by 750,000 shares the number of
shares of Common Stock reserved for issuance pursuant to the Company's Incentive
Plan. In the event a stockholder specifies a different choice by means of the
enclosed proxy, his, her or its shares will be voted in accordance with the
specification so made.
The Board of Directors does not know of any other matters that may be
brought before the Annual Meeting nor does it foresee or have reason to believe
that proxy holders will have to vote for substitute or alternate nominees. In
the event that any other matter should come before the Annual Meeting or any
nominee is not available for election, the persons named in the enclosed proxy
will have discretionary authority to vote all proxies not marked to the contrary
with respect to such matters in accordance with their best judgment.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 28, 1997,
as the record date (the "Record Date") for determining stockholders of the
Company entitled to notice of, and to vote at, the Annual Meeting. As of the
Record Date, there were 8,457,623 shares of Common Stock issued and outstanding
(not including treasury shares), all of which are entitled to be voted at the
Annual Meeting. Each share of Common Stock is entitled to one vote on each
matter submitted to stockholders for approval at the Annual Meeting.
Stockholders do not have the right to cumulate their votes for directors.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. The affirmative vote of a majority of the shares of
Common Stock present and voting at the Annual Meeting is required to approve the
proposal to increase by 750,000 shares the number of shares of Common Stock
reserved for issuance pursuant to the Company's Incentive Plan. Any other matter
that may be submitted to a vote of the stockholders will be approved if the
number of shares of Common Stock voted in favor of the matter exceeds the number
of shares voted in opposition to the matter, unless such matter is one for which
a greater vote is required by law or by the Company's Certificate of
Incorporation or Bylaws. If less than a majority of outstanding shares entitled
to vote are represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting to another date, time or place, and
notice need not be given of the new date, time or place if the new date, time or
place is announced at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence
2
<PAGE> 5
of a quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof.
Pursuant to Delaware law, abstentions and broker non-votes are counted
as present for purposes of determining the presence of a quorum. However,
abstentions are treated as present and entitled to vote and thus have the effect
of a vote against a matter. A broker non-vote on a matter is considered not
entitled to vote on that matter and thus is not counted in determining whether a
matter requiring approval of a majority of the shares present and entitled to
vote has been approved or whether a plurality of the shares present and entitled
to vote has been voted.
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Company's offices, 301 Yamato Road, Suite 1190, Boca Raton,
Florida 33431, for a period of ten days prior to the Annual Meeting and at the
Annual Meeting itself for examination by any stockholder.
The Company's Common Stock is quoted on the Nasdaq Stock Market's
National Market ("Nasdaq") under the symbol "RAIL." Set forth below is high ask
and low bid information for the Common Stock as reported on Nasdaq for each of
the calendar quarters of 1995 and 1996 and for the first calendar quarter of
1997. All such quotations reflect inter-dealer prices, without retail markup,
mark-down or commissions and may not reflect actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1995
----
First Quarter....................... $4 3/8 $2 15/16
Second Quarter...................... 5 1/4 3 13/16
Third Quarter....................... 5 1/16 3 1/2
Fourth Quarter...................... 4 5/32 3 3/8
1996
----
First Quarter....................... $4 1/16 $3 1/8
Second Quarter...................... 4 3/16 3 3/16
Third Quarter....................... 4 3/8 3 3/8
Fourth Quarter...................... 5 3/4 4 1/8
1997
----
First Quarter....................... $6 1/8 $4 5/8
</TABLE>
The Company has never declared or paid a dividend on its Common Stock.
The Company is prohibited from paying dividends on the Common Stock pursuant to
certain restrictive covenants contained in its loan agreements.
3
<PAGE> 6
SECURITY OWNERSHIP
The following table sets forth, as of the Record Date, the number of
shares of Common Stock that were owned beneficially by (i) each person who is
known by the Company to beneficially own more than 5% of the Common Stock, (ii)
each director and nominee for director, (iii) the Named Executive Officers (as
defined in "Executive Compensation") and (iv) all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING SHARES(1)
-------------------- ----------------------- ---------------------
<S> <C> <C>
Luther King Capital Management Corporation............... 1,040,000 12.30%
301 Commerce, Suite 1600
Fort Worth, TX 76102
Gary O. Marino........................................... 474,500(2) 5.36%
RailAmerica, Inc.
301 Yamato Road, Suite 1190
Boca Raton, Florida 33431
John H. Marino........................................... 412,500(3) 4.85%
RailAmerica, Inc.
King Street Station
Suite 150, 1800 Diagonal Road
Alexandria, Virginia 22314
Donald D. Redfearn....................................... 122,301(4) 1.43%
RailAmerica, Inc.
301 Yamato Road, Suite 1190
Boca Raton, Florida 33433
John M. Sullivan......................................... 51,100(5) *
10279 SW Stones Throw Terrace
Palm City, Florida 34990
Richard Rampell.......................................... 51,000(6) *
122 North County Road
Palm Beach, Florida 33480
Charles Swinburn......................................... 51,000(7) *
1800 M. Street, NW
Washington, D.C. 20036
Douglas R. Nichols....................................... 326,333(8) 3.72%
260 State Street
Dallas, Texas 75201
All directors and executive officers
as a group (9 persons)................................... 1,617,880(9) 17.30%
</TABLE>
- -----------------------
* Less than 1%
4
<PAGE> 7
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of options or
warrants. Each beneficial owner's percentage ownership is determined by
assuming that options or warrants that are held by such person (but not
those held by any other person) and that are exercisable within 60 days
have been exercised. Unless otherwise noted, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.
(2) Includes (i) 40,000 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $3.50 per share
granted under the Company's 1992 Stock Option Plan and (ii) 10,000 shares
of Common Stock issuable upon the exercise of presently exercisable options
to purchase Common Stock at $3.625 per share granted under the Incentive
Plan. Also includes (i) 87,500 shares of Common Stock issuable upon the
exercise of presently exercisable options to purchase Common Stock at $3.10
per share, (ii) 87,500 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $3.40 per share,
(iii) 87,500 shares of Common Stock issuable upon the exercise of presently
exercisable options to purchase Common Stock at $3.75 per share, and (iv)
87,500 shares of Common Stock issuable upon the exercise of presently
exercisable options to purchase Common Stock at $4.15 per share, all of
which options were granted pursuant to Mr. Marino's employment agreement.
See "Executive Compensation." Mr. Gary O. Marino is the brother of Mr. John
H. Marino.
(3) Includes 50,000 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $3.625 per share
granted under the Incentive Plan. Mr. John H. Marino is the brother of Mr.
Gary O. Marino.
(4) Includes (i) 40,000 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $3.50 per share
granted under the Company's 1992 Stock Option Plan, (ii) 10,000 shares of
Common Stock issuable upon the exercise of presently exercisable options to
purchase Common Stock at $3.50 per share granted under the Company's 1995
Non-Employee Director Stock Option Plan and (iii) 50,000 shares of Common
Stock issuable upon the exercise of presently exercisable options to
purchase Common Stock at $5.00 per share.
(5) Includes 50,000 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $3.50 per share
granted under the Company's 1992 Stock Option Plan.
(6) Includes 50,000 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $4.81 per share
granted under the Company's 1995 Non-Employee Director Stock Option Plan.
(7) Includes 50,000 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $4.19 per share
granted under the Company's 1995 Non-Employee Director Stock Option Plan.
(8) Includes 33,333 shares of Common Stock issuable upon the exercise of
presently exercisable options to purchase Common Stock at $3.50 per share
granted under the Company's 1995 Non-Employee Director Stock Option Plan.
Also includes warrants to purchase 125,000 shares of Common Stock at $4.60
per share and warrants to purchase 167,000 shares of Common Stock at $5.75
per share owned by First London Securities Corporation. Mr. Nichols is
President and principal shareholder of First London Securities Corporation.
See "Certain Transactions." Does not include 16,667 shares of Common Stock
issuable upon the exercise of options to purchase Common Stock at $3.50 per
share granted under the Company's 1995 Non-Employee Director Stock Option
Plan, which options are not presently exercisable
(9) See notes (2) - (8) above. Also includes (i) 10,000 shares of Common Stock
issuable to W. Graham Claytor, III, the Company's Senior Vice
President-Rail Group, upon the exercise of presently exercisable options to
purchase Common Stock at $3.65 per share and (ii) 100,000 shares of Common
Stock issuable to Robert B. Coward, the Company's Senior Vice
President-Manufacturing Group, upon conversion of a presently convertible
$225,000 convertible subordinated debenture.
5
<PAGE> 8
ELECTION OF DIRECTORS; NOMINEES AND CONTINUING DIRECTORS
Pursuant to the Company's Amended and Restated Certificate of
Incorporation, the Company's Board of Directors is divided into three classes,
as nearly equal in number as possible, designated Class I, Class II and Class
III. At each annual meeting of stockholders, successors to the class of
directors whose term expires at that annual meeting are elected for a three-year
term. The current term of the Class II Directors terminates on the date of the
Company's Annual Meeting; the current term of the Class III Directors terminates
on the date of the Company's 1998 annual meeting of stockholders; and the
current term of the Class I Directors terminates on the date of the Company's
1999 annual meeting of stockholders. Messrs. John H. Marino and John M. Sullivan
currently serve as Class II directors and will stand for re-election at the
Annual Meeting. In 1996, in accordance with the Company's Amended and Restated
Certificate of Incorporation, the Company's Board of Directors determined to
expand the Board of Directors by adding two directors, a Class II director and a
Class III director. Robert F. Toia was elected as a new Class II director and
Douglas R. Nichols was elected as a new Class III director. Mr. Toia no longer
serves as a director of the Company. Messrs. Donald D. Redfearn and Charles
Swinburn currently serve as Class I directors and Messrs. Gary O. Marino and
Richard Rampell currently serve as Class III directors. If elected at the Annual
Meeting, Messrs. John H. Marino and John M. Sullivan will serve until the
Company's 2000 annual meeting of stockholders and until their successors are
duly elected and qualified.
Pursuant to the terms of the Underwriting Agreement relating to the
Company's initial public offering of Common Stock, consummated in November 1992,
the representatives of the several underwriters (the "Representatives") of such
offering have the right, until September 1997, to have a designee attend all
meetings of the Board of Directors of the Company and to cause the Company to
nominate and use its best efforts to obtain election to the Board of Directors
of a person designated by the Representatives. Mr. Sullivan was elected to the
Company's Board of Directors upon, and has been nominated for re-election as, a
Class II director by designation of the Representatives.
Messrs. John H. Marino and John M. Sullivan have consented to serve on
the Company's Board of Directors and the Board of Directors has no reason to
believe that the nominees will not serve if elected. However, if either or both
of them should become unavailable to serve as a director, and if the Board shall
have designated a substitute nominee or nominees, the persons named as proxies
will vote for such substitute nominee or nominees.
NOMINEES FOR CLASS II DIRECTORS
JOHN H. MARINO - Mr. Marino has served as Vice Chairman of the
Company's Board of Directors since July 1996 and as a director of the Company
since its formation in April 1992. From April 1992 until July 1996, Mr. Marino
served as the Company's President and Chief Operating Officer. Mr. Marino
founded, and from 1986 until April 1996, served as the President and a director
of, Huron & Eastern Railway Company, Inc. ("HESR"), a subsidiary of the Company.
Mr. Marino also served as the President of Huron Transportation Group, Inc.
("HTG"), from its formation in January 1987 until HTG merged with RailAmerica
Services Corporation, a wholly owned subsidiary of the Company, in December 1993
(the "HTG Merger"). Prior to founding HESR in 1985, Mr. Marino served as
President and Chief Executive Officer of several shortline railroads, as an
officer of the Reading Railroad and with the United States Railway Association,
Washington, D.C. Mr. Marino received his B.S. degree in civil engineering from
Princeton University in 1961 and his M.S. degree in transportation engineering
from Purdue University in 1963. From 1963 to 1965, Mr. Marino served as an
officer of the United States Army Corps of Engineers.
JOHN M. SULLIVAN - Mr. Sullivan has served as a director of the Company
since January 1993. From 1977 until 1981, Mr. Sullivan served, upon appointment
by President Carter, as head of the United States Federal Railroad
Administration. From 1982 until 1990, Mr. Sullivan was President and Chief
Executive Officer of Haug Die Casting, Inc., where he remains a director. Mr.
Sullivan received his B.S. degree in engineering from the United States Naval
Academy and served with the United States Navy as an officer, and ultimately as
a carrier aviator from 1946 to 1954.
6
<PAGE> 9
CONTINUING CLASS I DIRECTORS
DONALD D. REDFEARN - Mr. Redfearn has served as the Company's Executive
Vice President - Administration and Secretary since December 1994 and has served
as an officer and director of the Company since its formation in April 1992, and
of HESR since 1986. Mr. Redfearn joined the Company on a full-time basis in
January 1996. From September 1993 until September 1995, Mr. Redfearn served as
President of Jenex Financial Services, Inc., a financial consulting firm. From
1984 until September 1993, Mr. Redfearn served in various capacities at Boca
Raton Capital Corporation ("BRCC"), a publicly-traded venture capital firm and
former stockholder of the Company, including Senior Vice President, Assistant
Secretary and Treasurer. Mr. Redfearn also served as a Vice President of HTG
until the HTG Merger. Mr. Redfearn received his B.A. degree in Business
Administration from the University of Miami and graduated from the School of
Banking of the South at Louisiana State University.
CHARLES SWINBURN - Mr. Swinburn has served as a director of the Company
since February 1995. Mr. Swinburn is currently a practicing attorney in the
Washington, D.C. office of Morgan, Lewis & Bockius, where he specializes in
environmental law. From April 1990 through August 1993, Mr. Swinburn served as a
consultant to private industry and the government. Prior to that time, Mr.
Swinburn served as Vice President of Rollins Environmental Services, Inc. Mr.
Swinburn has served in various capacities at the U.S. Department of
Transportation, most recently as Deputy Assistant Secretary for Policy and
International Affairs. Mr. Swinburn received his B.A. degree from Princeton
University in 1969, his M.B.A. from Harvard Business School in 1971 and his J.D.
from the University of Pennsylvania in 1993.
CONTINUING CLASS III DIRECTORS
GARY O. MARINO - Mr. Marino has served as Chairman of the Company's
Board of Directors and Treasurer since the Company's formation in April 1992, as
Chief Executive Officer of the Company since March 1, 1994 and as President
since July 1996. Mr. Marino has also served as the Chairman of the Board and
Treasurer of HESR since 1986 and as Chairman of the Board, President and Chief
Executive Officer of Kalyn/Siebert, Inc., a wholly owned subsidiary of the
Company ("Kalyn/Siebert"), since its acquisition in 1994. Mr. Marino joined the
Company on a full-time basis in March 1994. Mr. Marino also served as Chairman
of HTG from its formation in 1987 until the HTG Merger. From 1984 until October
1993, Mr. Marino served as Chairman, President and Chief Executive Officer of
BRCC. Mr. Marino received his B.A. degree from Colgate University in 1966 and an
M.B.A. from Fordham University in 1973. From 1966 to 1969, Mr. Marino served as
an officer of the United States Army Ordnance Corps.
RICHARD RAMPELL - Mr. Rampell has served as a director of the Company
since July 1995. Mr. Rampell, a certified public accountant, is currently the
Chief Executive of Rampell & Rampell, P.A., Certified Public Accountants, of
Palm Beach, Florida. Mr. Rampell is a past President of the Palm Beach Tax
Institute and a past President of the Florida Institute of CPA's, East Coast
Chapter. Mr. Rampell graduated with honors from Princeton University with an
A.B. degree and received an M.B.A. from the Wharton School at the University of
Pennsylvania.
DOUGLAS R. NICHOLS - Mr. Nichols has served as a director of the
Company since July 1996. Mr. Nichols is a certified public accountant and the
founder, President and principal stockholder of First London Securities
Corporation, a securities broker-dealer specializing in equity trading and
investment banking. From 1989 to 1991, Mr. Nichols was a Vice President with the
Dallas, Texas office of Smith Barney and from 1986 to 1989 was a broker with the
Dallas branch of Shearson Lehman Brothers. Mr. Nichols is currently a member of
the National Railway Historical Society.
7
<PAGE> 10
INFORMATION REGARDING THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1996, the Board of Directors of the
Company held a total of five (5) meetings and took a number of actions by
unanimous written consent. During 1996, no director attended fewer than 75% of
the aggregate of (i) the number of meetings of the Board of Directors held
during the period he served on the Board, and (ii) the number of meetings of
committees of the Board of Directors held during the period he served on such
committees.
Messrs. Swinburn, Sullivan and Rampell are the current members of the
Company's Audit Committee, which committee held one (1) meeting during the year
ended December 31, 1996. The duties and responsibilities of the Audit Committee
include (i) recommending to the Board of Directors the appointment of the
Company's auditors and any termination of engagement, (ii) reviewing the plan
and scope of audits, (iii) reviewing the Company's significant accounting
policies and internal controls and (iv) having general responsibility for all
audit related matters.
Messrs. Swinburn, Sullivan and Rampell are also the current members of
the Company's Compensation Committee, which committee held four (4) meetings
during the year ended December 31, 1996. The Compensation Committee reviews and
approves the compensation of the Company's executive officers and administers
each of the Company's compensation and benefit plans.
In addition to the foregoing committees, the Board has established an
Executive Committee consisting of Messrs. Gary O. Marino, Donald D. Redfearn and
Richard Rampell, and a Government Affairs Committee consisting of Messrs. John
H. Marino, John Sullivan and Charles Swinburn.
The Board does not have a standing nominating committee.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
Prior to March 1996, each non-employee director of the Company received
a directors fee of $1,000 per month, as well as $500 per Board meeting and $400
for each additional day spent on Company business. Effective March 1, 1996, fees
paid to non-employee directors were increased to $2,000 per month. Non-employee
directors continue to receive $500 per Board meeting and $400 for each
additional day spent on Company business. All directors are reimbursed for
reasonable out-of-pocket expenses associated with travel to meetings of the
Company's Board of Directors or committees thereof. Directors who are also
employees of the Company do not receive additional compensation for their
services as directors.
As more fully described herein, non-employee directors are eligible to
receive options under the Company's 1995 Non-Employee Director Stock Option Plan
(the "Directors Plan"). The Directors Plan provides for an automatic grant of an
option to purchase 50,000 shares of Common Stock upon a person's election as a
non-employee director of the Company. As of the Record Date, options to purchase
210,000 shares of Common Stock have been granted under the Directors Plan at
exercise prices ranging from $3.50 - $4.81 per share.
8
<PAGE> 11
MANAGEMENT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Gary O. Marino.................... 52 Chairman of the Board, Chief Executive
Officer, President and Treasurer
Donald D. Redfearn................ 44 Executive Vice President-Administration and
Secretary
W. Graham Claytor, III............ 46 Senior Vice President-Rail Group
Robert B. Coward.................. 51 Senior Vice President-Manufacturing Group
</TABLE>
The business experience of each of Messrs. Gary O. Marino and Donald D.
Redfearn appears under the caption "Election of Directors; Nominees and
Continuing Directors" above.
W. GRAHAM CLAYTOR, III - Mr. Claytor has served as the Company's Senior
Vice President-Rail Group since joining the Company in March 1996. Prior to
joining the Company, Mr. Claytor served as Managing Director of Southern
Pacific's Plant Rationalization function, charged with selling, leasing and
abandoning surplus branch and mainline trackage. Prior to joining Southern
Pacific, Mr. Claytor served as Superintendent of the Buffalo & Pittsburgh
Railroad and as Trainmaster for Norfolk Southern Corporation, and supervised
marine terminal operations of the Virginia Maryland Railroad. Mr. Claytor
received his B.S. degree from Boston University.
ROBERT B. COWARD - Mr. Coward has served as the Company's Senior Vice
President-Manufacturing Group since the Company's acquisition of Kalyn/Siebert
in 1994. Mr. Coward is responsible for performing all functions related to
Kalyn/Siebert's government contracting business. From 1981 until 1994, Mr.
Coward served as the President and Chief Executive Officer of Kalyn/Siebert and
as General Manager from 1969 until 1981. Mr. Coward received his B.S. in
Industrial Arts from North Texas University.
ELECTION OF EXECUTIVE OFFICERS
The Company's officers are elected annually by the Board of Directors
and serve at the discretion of the Board of Directors.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of the Company's outstanding Common Stock, to file with the
Securities and Exchange Commission (the "SEC"), initial reports of ownership and
reports of changes in ownership of Common Stock. Such persons are required by
SEC regulation to furnish the Company with copies of all such reports.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written or oral representations that
no other reports are required, during the year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent (10%) beneficial owners were complied with, except for
the late filing by (i) Douglas Nichols of a Form 3 reporting his beneficial
ownership of Common Stock and (ii) W. Graham Claytor, III of a Form 4 reporting
a change in his beneficial ownership of Common Stock.
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 1996,
1995 and 1994, the aggregate compensation awarded to, earned by or paid to Gary
O. Marino, the Company's Chairman of the Board, Chief Executive Officer,
President and Treasurer, (ii) John H. Marino, the Company's Vice Chairman of the
Board, and (iii) Donald D. Redfearn, the Company's Executive Vice
President-Administration and Secretary (collectively, the "Named Executive
Officers") during each of such years. Mr. John H. Marino served as the Company's
President and Chief Operating Officer until July 1996. No other executive
officer of the Company received compensation in excess of $100,000 in 1996, 1995
or 1994. The Company did not grant any restricted stock awards or stock
appreciation rights or make any long term incentive plan payouts during such
years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------------------- ----------------------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION(1) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- ---------- --------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary O. Marino.............. 1996 $231,000(2) -- -- 10,000(3) --
Chairman of the Board, 1995 $220,000(4) $124,034(5) -- 350,000(6) --
Chief Executive Officer, 1994 $169,379 $140,000 -- -- --
President and Treasurer
John H. Marino.............. 1996 $169,620(7) -- -- 50,000(3) --
Vice Chairman of the Board 1995 $165,000(8) $ 37,650(9) -- -- --
1994 $137,584 $ 30,000 -- -- --
Donald D. Redfearn ......... 1996 $113,750 -- -- -- --
Executive Vice President 1995 -- -- -- -- $ 72,000(10)
and Secretary 1994 -- -- -- -- $164,986(11)
</TABLE>
- ----------------------
(1) The aggregate amount of perquisites and other personal benefits provided to
each Named Executive Officer is less than 10% of the total amount of salary
and bonus of such officer.
(2) Includes (i) a payment of $20,000 in lieu of Mr. Gary Marino's
participation in a retirement benefits plan and (ii) deferred compensation
of $1,000 which was contributed to a nonqualified deferred compensation
plan in January 1997.
(3) Represents options granted under the Company's Incentive Plan which have an
exercise price of $3.625 per share.
(4) Includes deferred compensation of $20,000 which was contributed to a
nonqualified deferred compensation plan in January 1997.
(5) Includes a bonus of 50,000 shares of Common Stock granted pursuant to Mr.
Gary Marino's employment agreement, which bonus was valued at $93,750 as of
the date of execution of the agreement in July 1995. Also includes a bonus
of $30,284 which was paid to Mr. Gary Marino in 1996 based upon the
performance of the Company for the year ended December 31, 1995.
(6) Granted pursuant to the terms of Mr. Gary Marino's employment agreement.
Such options have exercise prices ranging from $3.10 to $4.15 per share.
(7) Includes deferred compensation of $15,420 which was contributed to a
nonqualified deferred compensation plan in January 1997.
10
<PAGE> 13
(8) Includes deferred compensation of $15,000 which was contributed to a
nonqualified deferred compensation plan in January 1997.
(9) Represents a bonus paid to Mr. John Marino in 1996 based upon the
performance of the Company and its transportation subsidiaries for the year
ended December 31, 1995.
(10) Represents fees paid during 1995 for consulting services provided by Mr.
Redfearn and Jenex Financial Corporation ("Jenex"), a Company in which Mr.
Redfearn was an executive officer and a principal shareholder, for the
benefit of the Company and its subsidiaries. See "Certain Transactions."
Mr. Redfearn received no compensation as an officer of the Company in 1995.
(11) Includes $15,036 paid to Mr. Redfearn for directors and consulting fees and
$70,479 and 40,274 shares of Common Stock (valued at $1.75 per share)
received by Jenex in connection with assisting the Company in obtaining
financing for the Company's acquisition of Kalyn/Siebert in 1994. Mr.
Redfearn received no compensation as an officer of the Company in 1994. See
"Certain Transactions."
EMPLOYMENT AGREEMENTS
Prior to July 1995, Gary Marino had an employment arrangement with the
Company which provided that he serve as Chief Executive Officer of the Company
and its subsidiaries. Under this arrangement, Mr. Marino received a base salary
of $150,000 from March 1, 1994 through August 31, 1994, $175,000 from September
1, 1994 through December 31, 1994 and $200,000 per year as of January 1, 1995.
Mr. Marino's base salary is subject to increase in accordance with the Consumer
Price Index, as well as any additional increases in the discretion of the Board
of Directors. Commencing January 1, 1996, Mr. Marino's base salary was increased
to $210,000. Mr. Marino was also entitled to a $642 monthly car allowance,
subject to annual increase in accordance with the Consumer Price Index. Under
his employment arrangement Mr. Marino was entitled to such benefits (including
medical, dental, disability and life insurance) as the Company and its
subsidiaries typically provided to its executive officers. The arrangement also
provided that Mr. Marino receive annual cash payments in lieu of his
participation in a retirement benefits plan.
In addition, Mr. Marino's employment arrangement provided that he be
issued an aggregate of 50,000 shares of Common Stock upon the execution of a
formal employment agreement. All of these shares were issued to Mr. Marino in
July 1995 upon has execution of a written employment agreement. Pursuant to Mr.
Marino's employment agreement, Mr. Marino was also granted non-qualified options
to purchase an aggregate of 350,000 shares of Common Stock at varying exercise
prices and exercise dates. All of such options are currently exercisable, have a
term of ten (10) years from the date they became exercisable and have exercise
prices ranging from $3.10 to $4.15 per share. The agreement also provides that
Mr. Marino receive annual cash payments in lieu of his participating in a
retirement benefits plan. The agreement has an initial term expiring on March 1,
1998, and is subject to automatic one year renewal terms, unless either party
notifies the other of non-renewal 180 days prior to the expiration of the then
current term. In the event Mr. Marino's employment is terminated without cause
pursuant to a change in control of the Company, Mr. Marino is entitled to
receive as of the date of termination a lump sum equal to 150% of his total
compensation for the 12 month period prior to the date of termination. The
agreement also contains certain non-competition provisions applicable to Mr.
Marino should he resign from the Company or be terminated with cause.
STOCK OPTION AND BONUS PLANS
1992 STOCK OPTION PLAN
The Company's 1992 Stock Option Plan provides officers, employees and
consultants of the Company and its subsidiaries who are not directors of the
Company or 5% stockholders (directly or indirectly) with the ability to receive
grants of options to purchase shares of Common Stock. The 1992 Stock Option Plan
was approved by the Company's stockholders as of July 1, 1992, and became
effective as of such date. The Company has reserved 250,000 shares of Common
Stock for the grant of options under the 1992 Stock Option Plan, all of which
have been granted and are currently outstanding at an exercise price of $3.50
per share.
11
<PAGE> 14
BONUS PLAN
In May 1995, the Board of Directors adopted its Corporate Senior
Executive Bonus Plan (the "Bonus Plan") pursuant to which participants receive
cash bonuses based upon the annual performance of the Company and its
subsidiaries, commencing with the 1995 fiscal year. Pursuant to the Bonus Plan,
bonuses are to be paid to certain designated individuals based on Company
performance on a consolidated basis, subsidiary performance or a combination of
both.
Participants in the Bonus Plan which are subsidiary-specific receive
cash bonuses based upon objective, auditable and performance-related criteria
relating to the Company's subsidiaries. No subsidiary-specific participant will
be paid a bonus greater than 50% of the salary earned by that participant for
the full year. Subsidiary-specific participants will be designated by the Chief
Executive Officer subject to ratification by the Compensation Committee. Bonuses
paid to participants for consolidated Company performance will be paid from a
bonus pool equal to 12% of any pre-tax consolidated income in excess of that
amount required to achieve a 12% return on average stockholders' equity. The
Compensation Committee determines the appropriate treatment of year end results
in the calculation, based on the recommendation of the Chief Executive Officer,
if appropriate. No participant will be paid a bonus based on consolidated
Company performance greater than the salary earned by that participant for the
full year.
1995 STOCK INCENTIVE PLAN. As more fully described herein, effective
January 1, 1995, the Company adopted the Incentive Plan pursuant to which key
personnel of the Company selected as participants are eligible to receive awards
of various forms of equity-based incentive compensation, including stock
options, stock appreciation rights, stock bonuses, restricted stock awards,
performance units and phantom stock units, and awards consisting of combinations
of such incentives.
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. Effective January 1,
1995, the Board of Directors adopted the Directors Plan, under which 250,000
shares of Common Stock have been reserved for issuance. Pursuant to the
Directors Plan, directors of the Company who are not also employees of the
Company ("Non-Employee Directors") are granted options to purchase Common Stock
upon election to the Company's Board of Directors. The Directors Plan is
administered by the Compensation Committee, the members of which are also
participants therein. Subject to the provisions of the Directors Plan, the
Compensation Committee has sole discretionary authority to construe, interpret
and apply the terms of the Directors Plan, to determine all questions
thereunder, and to adopt and amend such rules and regulations for the
administration thereof as it may deem desirable.
Under the terms of the Directors Plan, each Non-Employee Director shall
be granted an option to purchase 50,000 shares of Common Stock on the date such
person is first elected to become a director of the Company. The term of the
Directors Plan is ten years from the effective date, after which no further
options will be granted thereunder. Options granted under the Directors Plan
expire ten years from the date of grant. The exercise price per share of each
option granted under the Directors Plan will be the fair market value of the
Common Stock on the date prior to the date the option is granted. Options
granted under the Directors Plan vest over a period of three years at the rate
of one-third annually on each anniversary date of the date of grant, provided
the Non-Employee Director to whom the options are granted continues to serve as
a director on each such vesting date.
As of the date hereof, options under the Directors Plan to purchase (i)
10,000 shares of Common Stock have been granted to Donald D. Redfearn at an
exercise price of $3.50 per share, (ii) 50,000 shares of Common Stock have been
granted to Charles Swinburn at an exercise price of $4.19 per share, (iii)
50,000 shares of Common Stock have been granted to Richard Rampell at an
exercise price of $4.81 per share and (iv) 50,000 shares of Common Stock have
been granted to Douglas Nichols at an exercise price of $3.50 per share.
1995 EMPLOYEE STOCK PURCHASE PLAN. The Board of Directors of the
Company has adopted, effective January 1, 1995, the 1995 Employee Stock Purchase
Plan (the "Stock Purchase Plan"), under which 250,000 shares
12
<PAGE> 15
of Common Stock are reserved for issuance. During the first quarter of 1996, the
Company implemented the Stock Purchase Plan. The Stock Purchase Plan, which is
designed to qualify under Section 423 of the Internal Revenue Code, is designed
to encourage stock ownership by employees of the Company. Employees of the
Company other than members of the Board of Directors and owners of 5% or more of
the Company's Common Stock are eligible to participate in the Stock Purchase
Plan, with certain exceptions, if they are employed by the Company for at least
20 hours per week and more than five months per year. No employee is eligible to
participate who, after the grant of options under the Stock Purchase Plan, owns
(including all shares which may be purchased under any outstanding option) 5% or
more of the Company's Common Stock.
On January 1 of each year (the "Enrollment Date"), the Company will
grant to each participant an option to purchase on December 31 of such year (the
"Exercise Date"), at a price determined in the manner described below (the
"Purchase Price"), the number of full shares of Common Stock which his or her
accumulated payroll deductions on the Exercise Date will purchase at the
Purchase Price. The Purchase Price will be the lesser of (i) a percentage (not
less than 85%) of the fair market value of the Common Stock on the Enrollment
Date, or (ii) a percentage (not less than 85%) of the fair market value of the
Common Stock on the Exercise Date. As soon as practicable after any Exercise
Date on which a purchase of shares of Common Stock occurs, the Company will
deliver to each participant a certificate representing the shares purchased upon
exercise of his or her option; however, the Compensation Committee may determine
to hold a participant's certificates until the participant ceases participation
in the Stock Purchase Plan or requests delivery of the certificates.
OPTION/SAR GRANT TABLE
The following table sets forth information concerning grants of stock
options made during the year ended December 31, 1996 to the Named Executive
Officers. No stock appreciation rights were granted in 1996.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/SARS OPTIONS/SARS GRANTED EXERCISE PRICE
NAME GRANTED(#) FISCAL YEAR ($/SH) EXPIRATION DATE
---- ---------- -------------------- --------------- ---------------
<S> <C> <C> <C> <C>
Gary O. Marino 10,000 3% $3.625 1/1/06
John H. Marino 50,000 17% $3.625 1/1/06
Donald D. Redfearn 50,000 17% $5.00 11/01/06
</TABLE>
13
<PAGE> 16
AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers at December 31,
1996. No stock options were exercised by the Named Executive Officers during the
year ended December 31, 1996. No stock appreciation rights were granted or are
outstanding.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME EXERCISE(#) REALIZED($) DECEMBER 31, 1996(#) DECEMBER 31, 1996($)(1)
---- ----------- ----------- ---------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary O. Marino......... 0 0 400,000(2) -- $513,750 --
John H. Marino......... 0 0 50,000 -- $62,500 --
Donald D. Redfearn..... 0 0 100,000(3) -- $62,500 --
</TABLE>
- -----------------------
(1) The closing sale price of the Common Stock on December 31, 1996 as reported
by Nasdaq was $4.875 per share. Value is calculated by multiplying (a) the
difference between $4.875 and each option exercise price by (b) the number
of shares of Common Stock underlying the option.
(2) At December 31, 1996, Mr. Gary Marino had been granted the following
options to purchase Common Stock, which options were exercisable at year
end: (i) options to purchase 40,000 shares of Common Stock at an exercise
price of $3.50 per share, (ii) options to purchase 87,500 shares of Common
Stock at an exercise price of $3.10 per share, (iii) options to purchase
87,500 shares of Common Stock at an exercise price of $3.40 per share, (iv)
options to purchase 87,500 shares of Common Stock at an exercise price of
$3.75 per share, (v) options to purchase 87,500 shares of Common Stock at
an exercise price of $4.15 per share and (vi) options to purchase 10,000
shares of Common Stock at an exercise price of $3.625 per share.
(3) At December 31, 1996, Mr. Redfearn had been granted the following options
to purchase Common Stock, which options were exercisable at year end: (i)
options to purchase 50,000 shares of Common Stock at an exercise price of
$3.50 per share and (ii) options to purchase 50,000 shares of Common Stock
at an exercise price of $5.00 per share. The exercisable options to
purchase 50,000 shares of Common Stock at $5.00 per share were not
in-the-money at December 31, 1996.
CERTAIN TRANSACTIONS
Jenex Financial Corporation, of which Donald D. Redfearn was an
executive officer and principal stockholder, received $70,479 and 40,274 shares
of the Company's Common Stock in 1994, which shares were valued at $1.75 per
share at the time of issuance, for assisting the Company in obtaining financing
for its acquisition of Kalyn/Siebert. Additionally, Mr. Redfearn and companies
in which he was a principal stockholder received $72,000 in fees during 1995 for
consulting services performed for the benefit of the Company and its
subsidiaries.
On June 6, 1995, the Company consummated the settlement of litigation
brought against the Company and certain of its subsidiaries by Eric D. Gerst, a
former employee and director of the Company. Pursuant to a settlement agreement
dated as of March 15, 1995, Mr. Gerst dismissed the lawsuit with prejudice and
provided general releases to the Company and the Company's RailAmerica Services
Corporation and HESR subsidiaries, among others. In addition, the Company
repurchased from Mr. Gerst and certain of his family members 190,000 shares of
Common Stock, constituting all shares of Common Stock owned by them, and certain
locomotives and other rolling stock for an aggregate cash payment of $1 million.
Additionally, the Company issued to Mr. Gerst a warrant to purchase 127,500
shares of Common Stock at an exercise price of $4.25 per share, which warrant
was
14
<PAGE> 17
exercised by Mr. Gerst in November 1996. Upon further consideration and review
by the Company, the suspension of Mr. Gerst from his duties as an officer of the
Company had been rescinded, annulled and retracted retroactively to the
effective date of such suspension, July 15, 1994. Mr. Gerst voluntarily resigned
as an officer and director of the Company on January 17, 1995.
First London Securities Corporation ("First London"), of which Douglas
Nichols is President and principal shareholder, served as the exclusive
placement agent for the Company's private placements transactions consummated in
September 1996 and January 1997. As part of the September 1996 private
placement, First London received a $225,000 placement fee, a $45,000
nonaccountable expense fee and warrants exercisable in one-year to purchase
125,000 shares of Common Stock at an exercise price of $4.60 per share. As part
of the January 1997 private placement, First London received a $375,750
placement fee, a $75,150 nonaccountable expense fee and warrants exercisable in
one-year to purchase 167,000 shares of Common Stock at an exercise price of
$5.75 per share.
The Company believes that all of the transactions described above were
on terms comparable to those that might have been obtained from unaffiliated
parties.
PROPOSAL TO INCREASE BY 750,000 SHARES THE NUMBER
OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE UNDER
THE COMPANY'S 1995 INCENTIVE STOCK OPTION PLAN
BACKGROUND AND PURPOSE. The terms of the Incentive Plan provide for grants of
stock options, stock appreciation rights ("SARs"), restricted stock, performance
shares and/or phantom stock units that may be settled in cash or stock
(collectively, the "Awards"). The purpose of the Incentive Plan is to provide a
means through which the Company and its subsidiaries may attract key personnel
(collectively, the "Participants") to enter into and remain in the employ of the
Company and its subsidiaries, and to provide a means whereby those key persons
upon whom the responsibilities of the successful administration and management
of the Company rest, and whose present and potential contributions to the
welfare of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their commitment to the welfare of the Company
and promoting the mutuality of interests between Participants and the Company's
stockholders. A further purpose of the Incentive Plan is to provide Participants
with additional incentive and reward opportunities designed to enhance the
profitable growth of the Company, and provide Participants with annual and long
term performance incentives to expend their maximum efforts in the creation of
stockholder value.
The following is a summary of certain principal features of the
Incentive Plan. This summary is qualified in its entirety by reference to the
complete text of the Incentive Plan, which is attached to this Proxy Statement
as Appendix A. Stockholders are urged to read the actual text of the Incentive
Plan in its entirety.
ADMINISTRATION. The Incentive Plan is required to administered by the
Compensation Committee of the Board of Directors or such other committee as may
be designated by the Board of Directors consisting of at least two directors
(the "Committee"), each of whom shall be a "disinterested person" as defined
under Rule 16b-3 under the Securities Exchange Act of 1934, as amended. The
Compensation Committee of the Board of Directors has been appointed as the
Committee for the Incentive Plan. Subject to the terms of the Incentive Plan,
the Committee is authorized to select persons eligible to receive Awards, to
determine the type and number of Awards to be granted and the number of shares
of Common Stock to which Awards will relate, to specify times at which Awards
will be exercisable (including performance conditions that may be required as a
condition thereof), to set other terms and conditions of Awards, prescribe forms
of Award agreements, to interpret and specify rules and regulations relating to
the Incentive Plan, and to make all other decisions and determinations as the
Committee may deem necessary or advisable for the administration of the
Incentive Plan.
15
<PAGE> 18
SHARES AVAILABLE FOR AWARDS. Assuming approval of the proposed amendment,
1,000,000 shares of Common Stock will be reserved for the grant of Awards under
the Incentive Plan. As of the Record Date, Awards to purchase 236,500 shares of
Common Stock have been issued and are outstanding under the Incentive Plan.
Shares of Common Stock acquired upon the exercise of Awards granted under the
Incentive Plan will be authorized and unissued shares of Common Stock. The
Company's stockholders do not have any preemptive rights to purchase or
subscribe for the shares reserved for issuance under the Incentive Plan. If any
Award granted under the Incentive Plan should be surrendered, terminate, expire
or be forfeited, the shares of Common Stock subject thereto shall be released
and shall again be available for the grant of new Awards under the Incentive
Plan.
The Committee is authorized to adjust outstanding Awards (including
adjustments to exercise prices of options and other affected terms of Awards) in
the event that a dividend or other distribution (whether in cash, shares of
Common Stock or other property), recapitalization, stock split, reorganization,
merger, consolidation, combination, repurchase, share exchange or other similar
corporate transaction or event affects the Common Stock so that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of
Participants. The Committee is also authorized to adjust performance conditions
and other terms of Awards in response to these kinds of events or in response to
changes in applicable laws, regulations or accounting principles.
ELIGIBILITY. The persons eligible to receive Awards under the Incentive Plan are
the officers, directors and full-time employees of the Company and any
subsidiary. No director of the Company who is not an employee of the Company or
any subsidiary will be eligible to receive any Awards under the Incentive Plan.
As of the Record Date, approximately 50 persons were eligible to participate in
the Incentive Plan.
STOCK OPTIONS AND SARS. The Committee is authorized to grant stock options,
including both incentive stock options ("ISOs"), which can result in potentially
favorable tax treatment to the Participant, and non-qualified stock options, and
SARs entitling the Participant to receive the amount by which the fair market
value of a share of Common Stock on the date of exercise exceeds the grant price
of the SAR. The exercise price per share subject to an option and the grant
price of an SAR are determined by the Committee, but must not be less than the
fair market value of a share of Common Stock on the date of grant in the case of
ISOs and SARs or less than the par value per share of Common Stock in the case
of non-qualified stock options. For purposes of the Incentive Plan, the term
"fair market value" shall mean (i) the average (on the date of grant) of the
high and low price of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if the Common Stock is then traded
on a national securities exchange; (ii) the last reported sale price (on the
date of grant) of the Common Stock on the National Market of The Nasdaq Stock
Market, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on the date of grant) by an established quotation system for over-the-counter
securities, if the Common Stock is not reported on the National Market of The
Nasdaq Stock Market. However, if the Common Stock is not publicly traded at the
time an Award is granted under the Incentive Plan, "fair market value" shall be
deemed to be the fair market value of the Common Stock as determined by the
Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in any private transactions negotiated at arm's length. SARs may be
granted in tandem with or independent of grants of stock options. The maximum
term of each option or SAR, the times at which each option or SAR will be
exercisable, and provisions requiring forfeiture of unexercised options or SARs
at or following termination of employment generally are fixed by the Committee,
except that no option or SAR may have a term exceeding ten years. Options may be
exercised by payment of the exercise price in cash and/or shares of Common
Stock, or, in the discretion of the Committee, either (i) in other property
having a fair market value equal to the exercise price or (ii) by delivering to
the Company a copy of irrevocable instructions to a stockbroker to deliver
promptly to the Company an amount of sale or loan proceeds sufficient to pay the
exercise price.
RESTRICTED STOCK. The Committee is authorized to grant Awards of restricted
stock. Restricted stock is a grant of shares of Common Stock which may not be
sold or disposed of, and which may be forfeited in the event of certain
terminations of employment, prior to the end of a restricted period specified by
the Committee. A Participant granted restricted stock generally has all of the
rights of a stockholder of the Company, unless otherwise determined
16
<PAGE> 19
by the Committee. Participants granted Awards of restricted stock are entitled
to dividends payable on Common Stock, even during the restricted period,
although the Company may withhold payment of the dividends until the expiration
of the restricted period. The purchase price of restricted stock will be an
amount equal to the par value of such shares and will be payable within 60 days
following the making of the Award.
PERFORMANCE SHARES. The Committee is authorized to establish performance share
programs to be effective over designated periods of not less than 3 nor more
than 5 years. Performance shares may be awarded to Participants based upon the
degree to which certain objective performance goals, as may be established by
the Committee, are attained. Performance goals may include absolute or relative
growth in earnings per share or rate of return on stockholders' equity or other
measurement of corporate performance an may be determined on an individual basis
or by categories of Participants. The Committee may adjust performance goals or
performance measurement standards as it deems equitable in recognition of
extraordinary or non-recurring events experienced during an Award period by the
Company or by any other corporation whose performance is relevant to the
determination of whether performance goals have been attained.
PHANTOM STOCK UNITS. The Committee is authorized to issue Participants Awards of
phantom stock units upon terms and conditions established by the Committee from
time to time. A phantom stock unit is a hypothetical investment equivalent to
one share of Common Stock granted in connection with an Award under the
Incentive Plan. Phantom stock units are nontransferable and subject to
forfeiture if a Participant's employment is terminated for any reason before
such Awards become vested in accordance with their terms. Dividends, if any,
payable with respect to phantom stock units during the restricted period shall
be withheld by the Company and subject to forfeiture in accordance with the
vesting schedule generally applicable to phantom stock units. Upon expiration of
the restricted period, the Company shall deliver to the Participant one share of
Common Stock for each phantom stock unit which has not then been forfeited and
cash equal to any dividends, if any, credited with respect to such Award.
EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control (as defined in
the Incentive Plan), notwithstanding any vesting schedule provided for in the
Incentive Plan or by the Committee with respect to an Award of options, SARs,
restricted stock or phantom stock units, such option or SAR shall become
immediately exercisable with respect to 100% of the shares subject to such
option or SAR, and the restricted period shall expire immediately with respect
to 100% of the shares of restricted stock or phantom stock units subject to
restrictions. In addition, upon a Change in Control, all incomplete Award
periods in effect on the date such Change in Control occurs shall end and the
Committee shall (i) determine the extent to which performance goals with respect
to each such Award period have been met based upon such audited or unaudited
financial information then available as it deems relevant, (ii) cause to be paid
to each Participant partial or full Awards with respect to performance goals for
each such Award period based upon the Committee's determination of the degree of
attainment of such performance goals and (iii) cause all previously deferred
Awards to be settled as soon as possible.
AMENDMENT AND TERMINATION. The Board of Directors may amend, alter, suspend,
discontinue or terminate the Incentive Plan or the Committee's authority to
grant Awards without further stockholder approval, except stockholder approval
must be obtained for any amendment (i) increasing the number of shares of Common
Stock which may be issued upon exercise of Awards under the Incentive Plan, (ii)
extending the term of any Awards, (iii) extending the term of the Incentive Plan
and (iv) changing the class of persons eligible to receive Awards under the
Incentive Plan, among others. Unless earlier terminated by the Board, the
Incentive Plan will terminate at such time as no shares of Common Stock remain
available for issuance under the Incentive Plan and the Company has no further
rights or obligations with respect to outstanding Awards under the Incentive
Plan, provided, however, that no grants of Awards shall occur after January 1,
2005.
FEDERAL INCOME TAX CONSEQUENCES OF AWARDS OF OPTIONS. The following is a brief
description of the federal income tax consequences generally arising with
respect to Awards of options under the Incentive Plan.
17
<PAGE> 20
The grant of an option gives rise to no tax consequences for the
Participant or the Company. The exercise of an option has different tax
consequences depending on whether the option is an ISO or a non-qualified
option. On exercising an ISO, the Participant recognizes no income for regular
income tax purposes, but the option spread is taken into account in computing
liability for the alternative minimum tax. On exercising a non-qualified option,
the Participant recognizes ordinary income equal to the excess, on the date of
exercise, of the fair market value of the Common Stock acquired on exercise of
the option and the exercise price. If, however, the Participant is an officer or
director of the Company or any other person to whom the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act applies, the
Participant generally will not recognize ordinary income, and the amount of
ordinary income will not be determined until the earlier of the expiration of
the six month period after exercise of the option and the first day on which a
sale at a profit of the shares of Common Stock acquired on exercise of the
option would not subject the Participant to suit under those provisions. Such a
Participant, however, may elect to recognize ordinary income on the date of
exercise of the option.
The disposition of shares of Common Stock acquired on exercise of an
option may have different tax consequences depending on whether the option is an
ISO or a non-qualified option. On a disposition of shares of Common Stock
acquired on exercise of an ISO before the Participant has held those shares for
at least two years from the date the option was granted and at least one year
from the date the option was exercised (the "ISO holding periods"), the
Participant recognizes ordinary income equal to the lesser of (i) the excess of
the fair market value of the shares on the date of exercise of the ISO over the
exercise price and (ii) the excess of the amount realized on the disposition of
those shares over the exercise price. On a disposition of shares of Common Stock
acquired on the exercise of a non-qualified option or on exercise of an ISO when
the ISO holding periods have been met, the Participant will recognize capital
gain or loss equal to the difference between the sales price and the
Participant's tax basis in the shares of Common Stock. That gain or loss will be
long-term if the shares of Common Stock have been held for more than one year as
of the date of disposition. The Participant's tax basis in the shares of Common
Stock generally will be equal to the exercise price of the option plus the
amount of any ordinary income recognized in connection with the option.
The Company generally will be entitled to a tax deduction equal to the
amount that the Participant recognizes as ordinary income in connection with an
option. The Company is not entitled to a tax deduction relating to any amount
that constitutes a capital gain for a Participant. Accordingly, the Company will
not be entitled to any tax deduction with respect to an ISO if the Participant
holds the shares of Common Stock for the ISO holding periods prior to disposing
of the shares.
Section 162(m) to the Code generally disallows a public company's tax
deduction for compensation in excess of $1 million paid in any taxable year to
the Company's chief executive officer or any of its other four highest
compensated officers (a "covered employee"). Compensation that qualifies as
"performance-based compensation", however, is excluded from the $1.0 million
deductibility cap and therefore remains fully deductible by the Company. The
Company intends that options and certain other Awards granted to employees whom
the Committee expects to be covered employees at the time a deduction arises in
connection with the Awards qualify as "performance-based compensation" so that
deductions with respect to options and such other Awards will not be subject to
the $1.0 million cap under Section 162(m) of the Code. Future changes in Section
162(m) of the Code or the regulations thereunder may adversely affect the
ability of the Company to ensure that options or other Awards under the
Incentive Plan will qualify as "performance based compensation" so that
deductions are not limited by Section 162(m) of the Code.
Section 280G of the Code provides special rules in the case of golden
parachute payments. Those rules could apply if, on a change in control of the
Company, the acceleration of options or other Awards held by a Participant that
is an officer, director or highly-compensated individual with respect to the
Company, and any other compensation paid to the Participant that is contingent
on a change in control of the Company or a substantial portion of the Company's
assets and have a present value of at least three times the Participant's
average annual compensation from the Company over the prior five years (the
"average compensation"). In that event, the contingent compensation that exceeds
the Participant's average compensation, adjusted to take account of any
18
<PAGE> 21
portion thereof shown to be reasonable compensation, is not deductible by the
Company and is subject to a nondeductible 20% excise tax, in addition to regular
income tax, in the hands of the Participant.
The foregoing discussion, which is general in nature and is not
intended to be a complete description of the federal income tax consequences of
the Incentive Plan, is intended for the information of stockholders considering
how to vote at the Annual Meeting and not as tax guidance to Participants in the
Incentive Plan. This discussion does not address the effects of other federal
taxes or taxes imposed under state, local or foreign tax laws. Participants in
the Incentive Plan should consult a tax adviser as to the tax consequences of
participation.
PRIOR GRANTS OF OPTIONS
As of the Record Date, options to purchase an aggregate of 236,500
shares of Common Stock had been granted under the Incentive Plan to 37 employees
of the Company. The options granted under the Incentive Plan have exercise
prices ranging from $3.50 to $3.625 and have terms of 10 years.
The following table indicates, as of the Record Date, certain
information regarding options which have been granted under the Incentive Plan
to the persons and groups indicated:
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE VALUE OF OPTIONS AT
NAME AND POSITION SUBJECT TO OPTIONS PER SHARE MAY 28, 1997(1)
----------------- ------------------ --------- -------------------
<S> <C> <C> <C>
Gary O. Marino 10,000 $3.625 $11,250
Chairman of the Board, Chief
Executive Officer, President and
Treasurer
John H. Marino 50,000 $3.625 $56,250
Vice Chairman of the Board
Donald D. Redfearn -0- N/A N/A
Executive Vice President and
Secretary
All current executive officers as a 10,000 $3.625 $11,250
group (4 persons)
All current directors who are not -0- N/A N/A
executive officers as a group
(5 persons)
All employees as a group, other than 196,500 (2) (2)
executive officers (36 persons)
</TABLE>
- -------------------------
(1) The closing sale price of the Common Stock on May 28, 1997 was $4.75
per share. Value is calculated by multiplying (i) the difference
between $4.75 and the option exercise price by (ii) the number of
shares of Common Stock underlying the option.
(2) The Company has granted options to purchase an aggregate of 176,500
shares of Common Stock to thirty-six (36) employees of the Company,
other than executive officers. Of such options, (i) options to purchase
45,000 shares of Common Stock have an exercise price of $3.625 per
share and an aggregate value of $50,625 as of the Record Date and (ii)
options to purchase 131,500 shares of Common Stock have an exercise
price of $3.50 per share and an aggregate value of $164,375 as of the
Record Date.
The Company believes that Awards granted under the Incentive Plan will be
granted primarily to those persons who possess a capacity to contribute
significantly to the successful performance of the Company. Because persons to
whom Awards may be made are to be determined from time to time by the Committee
in its discretion, it is impossible at this time to indicate the precise number,
names or positions of persons who will hereafter receive Awards or the nature
and terms of such Awards.
19
<PAGE> 22
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSAL TO INCREASE BY 750,000 SHARES THE NUMBER OF SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE UNDER THE COMPANY'S 1995 INCENTIVE STOCK
OPTION PLAN.
OTHER BUSINESS; REPRESENTATIVES OF THE COMPANY'S AUDITORS
The Board of Directors knows of no other business to be brought before
the Annual Meeting. If, however, any other business should properly come before
the Annual Meeting, the persons named in the accompanying proxy will vote
proxies as in their discretion they may deem appropriate, unless they are
directed by a proxy to do otherwise.
Representatives of Coopers & Lybrand LLP, the Company's independent
auditors, are not expected to be present at the Annual Meeting, and,
accordingly, may not be available to respond to stockholder inquiries.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a stockholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 1998 Annual Meeting of Stockholders
must deliver a proposal in writing to the Company's principal executive offices
no later than January 31, 1998.
By Order Of The Board of Directors
GARY O. MARINO
Chairman of the Board, Chief Executive
Officer and President
Boca Raton, Florida
June 2, 1997
20
<PAGE> 23
APPENDIX A
----------
RAILAMERICA, INC.
1995 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the 1995 Stock Incentive Plan ("Plan") of
RailAmerica, Inc. ("Company") is to provide a means through which the Company
and its Subsidiaries may attract able persons to enter and remain in the employ
of the Company and its Subsidiaries, and to provide a means whereby those key
persons upon whom the responsibilities of the successful administration and
management of the Company rest, and whose present and potential contributions to
the welfare of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their commitment to the welfare of the Company
and promoting an identity of interest between stockholders and these key
persons.
A further purpose of the Plan is to provide such key persons with
additional incentive and reward opportunities designed to enhance the profitable
growth of the Company. The Plan provides for granting Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards,
Phantom Stock Unit Awards and Performance Share Units, or any combination of the
foregoing.
2. DEFINITIONS. The following definitions shall be applicable
throughout the Plan.
(a) "Appreciation Date" shall mean the date designated by a
Holder of Stock Appreciation Rights for measurement of the appreciation in the
value of rights awarded to him, which date shall be the date notice of such
designation is received by the Committee, or its designee.
(b) "Award" shall mean, individually or collectively, any
Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right,
Restricted Stock Award, Phantom Stock Unit Award or Performance Share Unit
Award.
(c) "Award Period" shall mean a period of time within which
performance is measured for the purpose of determining whether an award of
Performance Share Units has been earned.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Cause" shall mean the Company or a Subsidiary having cause
to terminate a Participant's employment under any existing employment agreement
between the Participant and the Company or a Subsidiary or, in the absence of
such an employment agreement, upon (i) the determination by the Committee that
the Participant has ceased to perform his duties to the Company or a Subsidiary
(other than as a result of his incapacity due to physical or mental illness or
injury), which failure amounts to an intentional and extended neglect of his
duties to such party, (ii) the Committee's determination that the Participant
has engaged or is about to engage in conduct materially injurious to the Company
or a Subsidiary, or (iii) the Participant having been convicted of a felony.
(f) "Change in Control" shall, unless the Board otherwise
directs by resolution adopted prior thereto, be deemed to occur if (i) any
"person" (as that term is used in Sections 13 and 14(d)(2) of the Securities and
Exchange Act of 1934 ("Exchange Act")) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act), directly or indirectly,
of 25% or more of the voting stock; or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by the Company's shareholders of each
new director was approved by a vote of at least three quarters of the directors
then still in office who were directors at the beginning of the period. Any
merger, consolidation or corporate reorganization in which the owners of the
Company's capital stock entitled to vote in the election of directors ("Voting
Stock") prior
<PAGE> 24
to said combination, own 50% or more of the resulting entity's voting stock
shall not, by itself, be considered a Change in Control.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended. Reference in the Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to such section and any
regulations under such section.
(h) "Committee" shall mean the Compensation Committee of the
Board, or such other committee as may be appointed by the Board, each member of
which shall be a "disinterested person" within the meaning of Rule 16b-3, which
shall be the administrative committee for the Plan.
(i) "Common Stock" shall mean the Common Stock of the Company,
$0.001 par value per share.
(j) "Company" shall mean RailAmerica, Inc., a Delaware
corporation.
(k) "Date of Grant" shall mean the date on which the granting of
an Award is authorized or such other date as may be specified in such
authorization.
(l) "Disability" shall mean the complete and permanent
inability by reason of illness or accident to perform the duties of the
occupation at which a Participant was employed when such disability commenced
or, if the Participant was retired when such disability commenced, the inability
to engage in any substantial gainful activity, as determined by the Committee
based upon medical evidence acceptable to it.
(m) "Disinterested Person" shall mean a person who is a
"disinterested person" within the meaning of Rule 16b-3 of the Exchange Act, or
any successor rule or regulation.
(n) "Eligible Employee" shall mean any person regularly employed
by the Company or a Subsidiary on a full-time salaried basis who satisfies all
of the requirements of Section 6.
(o) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(p) "Fair Market Value" shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the NASDAQ National Market List, if
the Common Stock is not then traded on a national securities exchange; or (iii)
the closing bid price (or average of bid prices) last quoted (on that date) by
an established quotation service for over-the-counter securities, if the Common
Stock is not reported on the NASDAQ National Market List. However, if the Common
Stock is not publicly-traded at the time an option is granted under the Plan,
"Fair Market Value" shall be deemed to be the fair value of the Common Stock as
determined by the Compensation Committee of the Board of the Company (the
"Committee") after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
(q) "Holder" shall mean a Participant who has been granted an
Option, a Stock Appreciation Right, a Restricted Stock Award, Phantom Stock Unit
Award or a Performance Share Unit Award.
(r) "Incentive Stock Option" shall mean an Option granted by the
Committee to a Participant under the Plan which is designated by the Committee
as an Incentive Stock Option pursuant to Section 422 of the Code.
2
<PAGE> 25
(s) "Nonqualified Stock Option" shall mean an Option granted by
the Committee to a Participant under the Plan which is not designated by the
Committee as an Incentive Stock Option.
(t) "Normal Termination" shall mean termination:
(i) With respect to the Company or a Subsidiary, at
retirement (excluding early retirement) pursuant to
the Company retirement plan then in effect;
(ii) On account of Disability;
(iii) With the written approval of the Committee; or
(iv) By the Company or a Subsidiary without cause.
(u) "Option" shall mean an Award granted under Section 7 of the
Plan.
(v) "Option Period" shall mean the period described in
Section 7(c).
(w) "Participant" shall mean an Eligible Employee who has been
selected to participate in the Plan and to receive an Award pursuant to Section
6.
(x) "Performance Goals" shall mean the performance objectives of
the Company during an Award Period or Restricted Period established for the
purpose of determining whether, and to what extent, Awards will be earned for an
Award Period or Restricted Period.
(y) "Performance Share Unit" shall mean a hypothetical investment
equivalent equal to one share of Stock granted in connection with an Award made
under Section 9 of the Plan.
(z) "Phantom Stock Unit" shall mean a hypothetical investment
equivalent equal to one Share of Stock granted in connection with an Award made
under Section 10 of the Plan, or credited with respect to Awards of Performance
Share Units which have been deferred under Section 9.
(aa) "Plan" shall mean the 1995 Stock Incentive Plan of
RailAmerica, Inc.
(bb) "Restricted Period" shall mean, with respect to any share of
Restricted Stock, the period of time determined by the Committee during which
such share of Restricted Stock is subject to the restrictions set forth in
Section 10.
(cc) "Restricted Stock" shall mean shares of Common Stock issued
or transferred to a Participant subject to the restrictions set forth in Section
10 and any new, additional or different securities a Participant may become
entitled to receive as a result of adjustments made pursuant to Section 12.
(dd) "Restricted Stock Award" shall mean an Award granted under
Section 10 of the Plan.
(ee) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ff) "Stock" shall mean the Common Stock or such other authorized
shares of stock the Company as the Committee may from time to time authorize for
use under the Plan.
(gg) "Stock Appreciation Right" or "SAR" shall mean an Award
granted under Section 8 of the Plan.
3
<PAGE> 26
(hh) "Subsidiary" shall mean any corporation which is a
"subsidiary corporation" of the Company within the meaning of Section 424(f)
of the Code.
(ii) "Valuation Date" shall mean the last day of an Award
Period or the date of death of a Participant, as applicable.
3. EFFECTIVE DATE. DURATION AND SHAREHOLDER APPROVAL. Subject to the
approval of this Plan by the shareholders of the Company at a duly convened
meeting of shareholders, or by a written consent of shareholders effective under
applicable state law, the Plan shall become effective on January 1, 1995, and no
further Awards may be made after the expiration of ten years therefrom.
The Plan shall continue in effect until all matters relating to the
payment of Awards and administration of the Plan have been settled.
4. ADMINISTRATION. The Committee shall administer the Plan. Each member
of the Committee shall, at the time he takes any action with respect to an Award
under the Plan, be a Disinterested Person. Two members of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present or acts approved in writing by a majority
of the Committee shall be deemed the acts of the Committee.
No member of the Committee, while serving as such, shall be eligible to
receive an Award under the Plan. Subject to the provisions of the Plan, the
Committee shall have exclusive power to:
(a) Select the Eligible Employees to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to each
Participant;
(c) Determine the time or times when Awards will be made;
(d) Determine the duration of each Award Period;
(e) Determine the conditions to which the payment of Awards may be
subject;
(f) Establish the Performance Goals for each Award Period;
(g) Prescribe the form or forms evidencing Awards; and
(h) Cause records to be established in which there shall be entered,
from time to time as Awards are made to Participants, the date of each Award,
the number of Incentive Stock Options, Nonqualified Stock Options, SARs, Phantom
Stock Units, Performance Share Units and Shares of Restricted Stock awarded by
the Committee to each Participant, the expiration date, the Award Period and the
duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the provisions of
the Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's interpretation of
the Plan or any Awards granted pursuant thereto and all decisions and
determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.
5. GRANT OF OPTIONS. Stock Appreciation Rights. Restricted Stock
Awards, Phantom Stock Awards and Performance Share Units: Shares Subject to the
Plan. The Committee may, from time to time, grant Awards of
4
<PAGE> 27
Options, Stock Appreciation Rights, Restricted Stock, Phantom Stock Units and/or
Performance Share Units to one or more Participants; provided, however, that:
(a) Subject to Section 12, the aggregate number of shares of Stock
made subject to Awards may not exceed 1,000,000;
(b) Such shares shall be deemed to have been used in payment of
Awards whether they are actually delivered or the Fair Market Value equivalent
of such shares is paid in cash. In the event any Option, SAR not attached to an
Option, Restricted Stock, Phantom Stock Unit or Performance Share Unit shall be
surrendered, terminate, expire, or be forfeited, the number of shares of Stock
no longer subject thereto shall thereupon be released and shall thereafter be
available for new Awards under the Plan to the fullest extent permitted by Rule
16b-3 under the Exchange Act (if applicable at the time); and
(c) Stock delivered by the Company in settlement of Awards under the
Plan may be authorized and unissued Stock or Stock held in the treasury of the
Company or may be purchased on the open market or by private purchase at prices
no higher than the Fair Market Value at the time of purchase.
6. ELIGIBILITY. Participants shall be limited to officers and employees
of the Company and its Subsidiaries who have received written notification from
the Committee or from a person designated by the Committee, that they have been
selected to participate in the Plan.
7. STOCK OPTIONS. One or more Incentive Stock Options or Nonqualified
Stock Options can be granted to any Participant; provided, however, that
Incentive Stock Options may be granted only to employees of the Company or a
Subsidiary. Each Option so granted shall be subject to the following conditions.
(a) OPTION PRICE. The option price ("Option Price") per share of
Stock shall be set by the Committee at the time of grant but shall not be less
than (i) in the case of an Incentive Stock Option, the Fair Market Value of a
share of Stock at the Date of Grant, and (ii) in the case of a Nonqualified
Stock Option, the par value per share of Stock.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options which have
become exercisable may be exercised by delivery of written notice of exercise to
the Committee accompanied by payment of the Option Price. The Option Price shall
be payable in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised, or, in the discretion of the Committee, either (i)
in other property having a Fair Market Value on the date of exercise equal to
the Option Price, or (ii) by delivering to the Company a copy of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay the Option Price.
(c) OTHER TERMS AND CONDITIONS. If the Holder has not died or his
relationship as an officer or employee with the Company or a Subsidiary has not
terminated, the Option shall become exercisable in such manner and within such
period or periods ("Option Period"), not to exceed 10 years from its Date of
Grant, as set forth in the Stock Option Agreement to be entered into in
connection therewith.
(i) Each Option shall lapse in the following situations:
-- Ten years after it is granted;
-- Three months after Normal Termination,
except as otherwise provided by the
Committee, or
-- Any earlier time set forth in the Stock
Option Agreement.
5
<PAGE> 28
(ii) If the Holder terminates his relationship as an
officer or employee with the Company or a Subsidiary
otherwise than by Normal Termination or death, the
Option shall lapse at the time of termination.
(iii) If the Holder dies within the Option Period or within
3 months after Normal Termination (or such other
period as may have been established by the
Committee), the Option shall lapse unless it is
exercised within the Option Period and in no event
later than 12 months after the date of Holder's death
by the Holder's legal representative or
representatives or by the person or persons entitled
to do so under the Holder's last will and testament
or, if the Holder shall fail to make testamentary
disposition of such Option or shall die intestate, by
the person entitled to receive said Option under the
applicable laws of descent and distribution.
(d) STOCK OPTION AGREEMENT. Each Option granted under the Plan shall
be evidenced by a "Stock Option Agreement" between the Company and the Holder of
the Option containing such provisions as may be determined by the Committee, but
shall be subject to the following terms and conditions.
(i) Each Option or portion thereof that is exercisable
shall be exercisable for the full amount or for any
part thereof, except as otherwise determined by the
terms of the Stock Option Agreement.
(ii) Each share of Stock purchased through the exercise of
an Option shall be paid for in full at the time of
the exercise. Each Option shall cease to be
exercisable, as to any share of Stock, when the
Holder purchases the share or exercises a related SAR
or when the Option lapses.
(iii) Options shall not be transferable by the Holder
except by will or the laws of descent and
distribution and shall be exercisable during the
Holder's lifetime only by him or her.
(iv) Each Option shall become exercisable by the Holder in
accordance with the vesting schedule established by
the Committee for the Award.
(v) Each Stock Option Agreement may contain an agreement
that, upon demand by the Committee for such a
representation, the Holder shall deliver to the
Committee at the time of any exercise of an Option a
written representation that the shares to be acquired
upon such exercise are to be acquired for investment
and not for resale or with a view to the distribution
thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares
issued upon exercise of an Option shall be a
condition precedent to the right of the Holder or
such other person to purchase any shares. In the
event certificates for Stock are delivered under the
Plan with respect to which such investment
representation has been obtained, the Committee may
cause a legend or legends to be placed on such
certificates to make appropriate reference to such
representation and to restrict transfer in the
absence of compliance with applicable federal or
state securities laws.
(e) GRANTS TO 10% HOLDERS OF COMPANY VOTING STOCK. Notwithstanding
Section 7(a), if an Incentive Stock Option is granted to a Holder who owns stock
representing more than ten percent of the voting power of all classes of stock
of the Company or of the Company and its Subsidiaries, the period specified in
the Stock Option Agreement for which the Option thereunder is granted and at the
end of which such Option shall
6
<PAGE> 29
expire shall not exceed five years from the Date of Grant of such Option and the
Option Price shall be at least 110 percent of the Fair Market Value (on the Date
of Grant) of the Stock subject to the Option.
(f) LIMITATION. To the extent the aggregate Fair Market Value (as
determined as of the Date of Grant) of Stock for which Incentive Stock Options
are exercisable for the first time by any Participant during any calendar year
(under all plans of the Company and its Subsidiaries) exceeds $100,000, such
excess Incentive Stock Options shall be treated as Nonqualified Stock Options.
(g) VOLUNTARY SURRENDER. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option and its
corresponding SAR, if any, granted under the Plan to be conditioned upon the
granting to the Holder of a new Option for the same or a different number of
shares as the Option surrendered or require such voluntary surrender as a
condition precedent to a grant of a new Option to such Participant. Such new
Option shall be exercisable at the Option Price, during the exercise period, and
in accordance with any other terms or conditions specified by the Committee at
the time the new Option is granted, all determined in accordance with the
provisions of the Plan without regard to the Option Price, exercise period, or
any other terms and conditions of the Nonqualified Stock Option surrendered.
(h) ORDER OF EXERCISE. Options granted under the Plan may be
exercised in any order, regardless of the Date of Grant or the existence of any
other outstanding Option.
(i) NOTICE OF DISPOSITION. Participants shall give prompt notice to
the Company of any disposition of Stock acquired upon exercise of an Incentive
Stock Option if such disposition occurs within either two years after the Date
of Grant of such Option and/or one year after the receipt of such Stock by the
Holder.
8. STOCK APPRECIATION RIGHTS. Any Option granted under the Plan may
include an SAR, either at the time of grant or by amendment except that in the
case of an Incentive Stock Option, such SAR shall be granted only at the time of
grant of the related Option. The Committee may also award to Participants SARs
independent of any Option. An SAR shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose, including, but not
limited to, the following:
(a) VESTING. An SAR granted in connection with an Option shall
become exercisable, be transferable and shall lapse according to the same
vesting schedule, transferability and lapse rules that are established for the
Option. An SAR granted independent of an Option shall become exercisable, be
transferable and shall lapse in accordance with a vesting schedule,
transferability and lapse rules established by the Committee. Notwithstanding
the above, an SAR shall not be exercisable by a person subject to Section 16(b)
of the Exchange Act for at least six months following the Date of Grant.
(b) FAILURE TO EXERCISE. If on the last day of the Option Period (or
in the case of an SAR independent of an Option, the SAR period established by
the Committee), the Fair Market value of the Stock exceeds the Option Price, the
Holder has not exercised the Option or SAR, and neither the Option nor the SAR
has lapsed, such SAR shall be deemed to have been exercised by the Holder on
such last day and the Company shall make the appropriate payment therefor.
(c) PAYMENT. The amount of additional compensation which may be
received pursuant to the award of one SAR is the excess, if any, of the Fair
Market Value of one share of Stock on the Appreciation Date over the Option
Price, in the case of an SAR granted in connection with an Option, or the Fair
Market Value of one share of Stock on the Date of Grant, in the case of an SAR
granted independent of an Option. The Company shall pay such excess in cash, in
shares of Stock valued at Fair Market Value, or any combination thereof, as
determined by the Committee. Fractional shares shall be settled in cash.
(d) DESIGNATION OF APPRECIATION DATE. A Participant may designate an
Appreciation Date at such time or times as may be determined by the Committee at
the time of grant by filing an irrevocable written
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notice with the Committee or its designee, specifying the number of SARs to
which the Appreciation Date relates, and the date on which such SARs were
awarded. Such time or times determined by the Committee may take into account
any applicable "window periods" required by Rule 16b-3 under the Exchange Act.
(e) EXPIRATION. Except as otherwise provided in the case of SARs
granted in connection with Options, the SARs shall expire on a date designated
by the Committee which is not later than ten years after the date on which the
SAR was awarded.
9. PERFORMANCE SHARES
(a) AWARD GRANTS. The Committee is authorized to establish
Performance Share programs to be effective over designated Award Periods of not
less than three years nor more than five years. At the beginning of each Award
Period, the Committee will establish in writing Performance Goals based upon
financial objectives for the Company for such Award Period and a schedule
relating the accomplishment of the Performance Goals to the Awards to be earned
by Participants. Performance Goals may include absolute or relative growth in
earnings per share or rate of return on stockholders' equity or other
measurement of corporate performance and may be determined on an individual
basis or by categories of Participants. The Committee may adjust Performance
Goals or performance measurement standards as it deems equitable in recognition
of extraordinary or non-recurring events experienced during an Award Period by
the Company or by any other corporation whose performance is relevant to the
determination of whether Performance Goals have been attained. The Committee
shall determine the number of Performance Share Units to be awarded, if any, to
each Participant who is selected to receive an Award. The Committee may add new
Participants to a Performance Share program after its commencement by making pro
rata grants.
(b) DETERMINATION OF AWARD. At the completion of a Performance Share
program, or at other times as specified by the Committee, the Committee shall
calculate the amount earned with respect to each Participant's award by
multiplying the Fair Market Value on the Valuation Date by the number of
Performance Share Units granted to the Participant and multiplying the amount so
determined by a performance factor representing the degree of attainment of the
Performance Goals.
(c) PARTIAL AWARDS. A Participant for less than a full Award Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.
(d) PAYMENT OF NON-DEFERRED AWARDS. The amount earned with respect
to an Award shall be payable 100% in shares of Stock based on the Fair Market
Value on the Valuation Date; provided, however, that, at its discretion, the
Committee may vary such form of payment as to any Participant upon the specific
request of such Participant. The amount of any payment made in cash shall be
based upon the Fair Market Value on the seventh business day prior to payment.
Except as provided in subparagraph 9(e), payments of Awards shall be made as
soon as practicable after the completion of an Award Period.
(e) DEFERRAL OF PAYMENT. A Participant may file a written election
with the Committee to defer the payment of any amount otherwise payable pursuant
to subparagraph 9(d) on account of an Award to a period commencing at such
future date as specified in the election. Such election must be filed with the
Committee no later than the last day of the month which is two-thirds of the way
through the Award Period during which the Award is earned, unless the Committee
specifies an earlier filing date.
(f) SEPARATE ACCOUNTS. At the conclusion of each Award Period, the
Committee shall cause a separate account to be maintained in the name of each
Participant with respect to whom all or a portion of an Award of Performance
Share Units earned under the Plan has been deferred. All amounts credited to
such account shall be fully vested at all times.
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(g) ELECTION OF FORM OF INVESTMENT. Within 60 days from the end of
each Award Period, and at such time or times, if any, as the Committee may
permit, a Participant may file a written election with the Committee of the
percentage of the deferred portion of any Award of Performance Share Units which
is to be expressed in the form of dollars and credited with interest, the
percentage of such Award which is to be expressed in the form of Phantom Stock
Units and the percentage of such Award which is to be deemed invested in any
other hypothetical investment equivalent from time to time made available under
the Plan by the Committee. In the event a Participant fails to file an election
within the time prescribed, one hundred percent (100%) of the deferred portion
of such Participant's Award shall be expressed in the form of Phantom Stock
Units.
(h) INTEREST PORTION. The amount of interest credited with respect
to the portion of an Award credited to the Participant's account which is
deferred and credited with interest (the "Interest Portion") shall be equal to
the amount such portion would have earned had it been credited with interest
from the last day of the Award Period with respect to which the Award was made
until the seventh business day preceding the date as of which payment is made,
compounded annually, at the Company's rate of return on stockholders' equity for
each fiscal year that payment is deferred, or at such other rate as the
Committee may from time to time determine. The Committee may, in its sole
discretion, credit interest on amounts payable prior to the date on which the
Company's rate of return on stockholders' equity becomes ascertainable at the
rate applicable to deferred amounts during the year immediately preceding the
year of payment.
(i) PHANTOM STOCK UNIT PORTION. With respect to the portion of an
Award credited to the Participant's account which is deferred and expressed in
the form of Phantom Stock Units (the "Phantom Stock Unit Portion"), the number
of Phantom Stock Units so credited shall be equal to the result of dividing (i)
the Phantom Stock Unit Portion by (ii) the Fair Market Value on the date the
Award Period ended.
(j) DIVIDEND EQUIVALENTS. Within thirty (30) days from the payment
of a dividend by the Company on its Stock, the Phantom Stock Unit Portion of
each Participant's account shall be credited with additional Phantom Stock Units
the number of which shall be determined by (i) multiplying the dividend per
share paid on the Company's Stock by the number of Phantom Stock Units credited
to his account at the time such dividend was declared, then (ii) dividing such
amount by the Fair Market Value on the payment date for such dividend.
(k) PAYMENT OF DEFERRED AWARDS. Payment with respect to amounts
credited to the account of a Participant shall be made in a series of annual
installments over a period of ten (10) years, or such other period as the
Committee may direct, or as the Committee may allow the Participant to elect, in
either case at the time of the original deferral election. Except as otherwise
provided by the Committee, each installment shall be withdrawn proportionately
from the Interest Portion and from the Phantom Stock Unit Portion of a
Participant's account based on the percentage of the Participant's account which
he originally elected to be credited with interest and with Phantom Stock Units,
or, if a later election has been permitted by the Committee and is then in
effect, based an the percentage specified in such later election. Payments shall
commence on the date specified by the Participant in his deferral election,
unless the Committee in its sole discretion determines that payment shall be
made over a shorter period or in more frequent installments, or commence on an
earlier date, or any or all of the above. If a Participant dies prior to the
date on which payment with respect to all amounts credited to his account shall
have been completed, payment with respect to such amounts shall be made to the
Participant's beneficiary in a series of annual installments over a period of
five (5) years, unless the Committee in its sole discretion determines that
payment shall be made over a shorter period or in more frequent installments, or
both. To the extent practicable, each installment payable hereunder shall
approximate that part of the amount then credited to the Participant's or
beneficiary's account which, if multiplied by the number of installments
remaining to be paid would be equal to the entire amount then credited to the
Participant's account.
(l) COMPOSITION OF PAYMENT. The Committee shall cause all payments
with respect to deferred Awards to be made in a manner such that not more than
one-half of the value of each installment shall consist of Stock. To that end,
payment with respect to the Interest Portion and the Phantom Stock Unit Portion
of a
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Participant's account shall be paid in cash and Stock as the Committee
shall determine in its sole discretion. The determination of any amount to be
paid in cash for Phantom Stock Units shall be made by multiplying (i) the Fair
Market Value of one share of Stock on the seventh business day prior to the date
as of which payment is made, by (ii) the number of Phantom Stock Units for which
payment is being made. The determination of the number of shares of Stock, if
any, to be distributed with respect to the Interest Portion of a Participant's
account shall be made by dividing (i) one-half of the value of such portion on
the seventh business day prior to the date as of which payment is made, by (ii)
the Fair Market Value of one share of Stock on such date. Fractional shares
shall be paid in cash.
(m) ALTERNATIVE INVESTMENT EQUIVALENTS. If the Committee shall have
permitted Participants to elect to have deferred Awards of Performance Share
Units invested in one or more hypothetical investment equivalents other than
interest or Phantom Stock Units, such deferred Awards shall be credited with
hypothetical investment earnings at such rate, manner and time as the Committee
shall determine. At the end of the deferral period, payment shall be made in
respect of such hypothetical investment equivalents in such manner and at such
time as the Committee shall determine.
(n) ADJUSTMENT OF PERFORMANCE GOALS. The Committee may, during the
Award Period, make such adjustments to Performance Goals as it may deem
appropriate, to compensate for, or reflect, any significant changes that may
have occurred during such Award Period in (i) applicable accounting rules or
principles or changes in the Company's method of accounting or in that of any
other corporation whose performance is relevant to the determination of whether
an Award has been earned or (ii) tax laws or other laws or regulations that
alter or affect the computation of the measures of Performance Goals used for
the calculation of Awards.
10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS.
(a) AWARD OF RESTRICTED STOCK AND PHANTOM STOCK UNITS.
(i) The Committee shall have the authority (1) to grant
Restricted Stock and Phantom Stock Unit Awards, (2)
to issue or transfer Restricted Stock to
Participants, and (3) to establish terms, conditions
and restrictions applicable to such Restricted Stock
and Phantom Stock Units, including the Restricted
Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock
or Phantom Stock Units shall be granted or become
vested and the number of shares or units to be
covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute
and deliver to the Secretary of the Company an
agreement with respect to Restricted Stock and escrow
agreement satisfactory to the Committee and the
appropriate blank stock powers with respect to the
Restricted Stock covered by such agreements and shall
pay to the Company, as the purchase price of the
shares of Stock subject to such Award, the aggregate
par value of such shares of Stock within 60 days
following the making of such Award. If a Participant
shall fail to execute the agreement, escrow agreement
and stock powers or shall fail to pay such purchase
price within such period, the Award shall be null and
void. Subject to the restrictions set forth in
Section l0(b), the Holder shall generally have the
rights and privileges of a stockholder as to such
Restricted Stock, including the right to vote such
Restricted Stock. At the discretion of the Committee,
cash and stock dividends with respect to the
Restricted Stock may be either currently paid or
withheld by the Company for the Holder's account, and
interest may be paid on the amount of cash dividends
withheld at a rate and subject to such terms as
determined by the Committee. Cash or stock dividends
so withheld by the Committee shall not be subject to
forfeiture.
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(iii) In the case of a Restricted Stock Award, the
Committee shall then cause stock certificates
registered in the name of the Holder to be issued and
deposited together with the stock powers with an
escrow agent to be designated by the Committee. The
Committee shall cause the escrow agent to issue to
the Holder a receipt evidencing any stock certificate
held by it registered in the name of the Holder.
(iv) In the case of a Phantom Stock Units Award, no shares
of Common Stock shall be issued at the time the Award
is made, and the Company will not be required to set
aside a fund for the payment of any such Award. The
Committee shall, in its sole discretion, determine
whether to credit to the account of, or to currently
pay to, each Holder of an Award of Phantom Stock
Units an amount equal to the cash dividends paid by
the Company upon one share of Stock for each Phantom
Stock Unit then credited to such Holder's account
("Dividend Equivalents"). Dividend Equivalents
credited to Holder's account shall be subject to
forfeiture and may bear interest at a rate and
subject to such terms as determined by the Committee.
(b) RESTRICTIONS.
(i) Restricted Stock awarded to a Participant shall be
subject to the following restrictions until the
expiration of the Restricted Period: (1) the Holder
shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the
restrictions on transferability set forth in the
grant; (3) the shares shall be subject to forfeiture
to the extent provided in subparagraph (d) and, to
the extent such shares are forfeited, the stock
certificates shall be returned to the Company, and
all rights of the Holder to such shares and as a
shareholder shall terminate without further
obligation on the part of the Company.
(ii) Phantom Stock Units awarded to any Participant shall
be subject to the following restrictions until the
expiration of the Restricted Period: (1) the units
shall be subject to forfeiture to the extent provided
in subparagraph (d), and to the extent such units are
forfeited, all rights of the Holder to such units
shall terminate without further obligation on the
part of the Company and (2) any other restrictions
which the Committee may determine in advance are
necessary or appropriate.
(iii) The Committee shall have the authority to remove any
or all of the restrictions on the Restricted Stock
and Phantom Stock Units whenever it may determine
that, by reason of changes in applicable laws or
other changes in circumstances arising after the date
of the Restricted Stock Award or Phantom Stock Award,
such action is appropriate.
(c) RESTRICTED PERIOD. The Restricted Period of Restricted Stock and
Phantom Stock Units shall commence on the Date of Grant and shall expire from
time to time as to that part of the Restricted Stock and Phantom Stock Units
indicated in a schedule established by the Committee with respect to the Award.
(d) FORFEITURE PROVISIONS. In the event a Holder terminates
employment during a Restricted Period, that portion of the Award with respect to
which restrictions have not expired ("Non-Vested Portion") shall be treated as
follows.
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(i) Resignation or discharge:
-- The Non-Vested Portion of the Award shall be
completely forfeited.
(ii) Normal Termination:
-- The Non-Vested Portion of the Award shall be
prorated for service during the Restricted
Period and shall be received as soon as
practicable following termination.
(iii) Death:
-- The Non-Vested Portion of the Award shall be
prorated for service during the Restricted
Period and paid to the Participant's
beneficiary as soon as practicable following
death.
(e) DELIVERY OF RESTRICTED STOCK AND SETTLEMENT OF PHANTOM STOCK
UNITS. Upon the expiration of the Restricted Period with respect to any shares
of Stock covered by a Restricted Stock Award, a stock certificate evidencing the
shares of Restricted Stock which have not then been forfeited and with respect
to which the Restricted Period has expired (to the nearest full share) shall be
delivered without charge to the Holder, or his beneficiary, free of all
restrictions under the Plan.
Upon the expiration of the Restricted Period with respect to any
Phantom Stock Units covered by a Phantom Stock Unit Award, the Company shall
deliver to the Holder or his beneficiary without any charge one share of Stock
for each Phantom Stock Unit which has not then been forfeited and with respect
to which the Restricted Period has expired ("vested unit") and cash equal to any
Dividend Equivalents credited with respect to each such vested unit and the
interest thereon, if any; provided, however, that the Committee may, in its sole
discretion, elect to pay cash or part cash and part Stock in lieu of delivering
only Stock for vested units. If cash payment is made in lieu of delivering
Stock, the amount of such payment shall be equal to the Fair Market Value for
the date on which the Restricted Period lapsed with respect to such vested unit.
(f) Payment for Restricted Stock. Except as provided in subparagraph
l0(a)(ii), a Holder shall not be required to make any payment for Stock received
pursuant to a Restricted Stock Award.
(g) SEC Restrictions. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend:
"The shares of Stock represented by this certificate were
issued pursuant to the 1995 Stock Incentive Plan of
RailAmerica, Inc. Such shares have not been registered under
the Securities Act of 1933 and may not be sold or transferred
except in compliance therewith."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities except in compliance with
the Securities Act.
11. GENERAL.
(a) ADDITIONAL PROVISIONS OF AN AWARD. The award of any benefit
under the Plan may also be subject to such other provisions (whether or not
applicable to the benefit awarded to any other Participant) as the Committee
determines appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Common Stock through the exercise of
Options, provisions for the forfeiture of or restrictions on resale or other
disposition of shares acquired under any form of benefit, provisions giving the
Company the right to
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<PAGE> 35
repurchase shares acquired under any form of benefit in the event the
Participant elects to dispose of such shares, and provisions to comply with
Federal and state securities laws and Federal and state income tax withholding
requirements.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of stock which are subject to Options or
Restricted Stock Awards, Performance Share Unit Awards or Phantom Stock Unit
Awards hereunder until such shares have been issued to that person upon exercise
of an Option according to its terms or upon sale or grant of those shares in
accordance with a Restricted Stock Award, Performance Share Unit Award or
Phantom Stock Unit Award.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company
to make payment of Awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act any of the shares of Stock issued under the
Plan. If the shares issued under the Plan may in certain circumstances be exempt
from registration under the Securities Act, the Company may restrict the
transfer of such shares in such manner as it deems advisable to ensure the
availability of any such exemption.
(d) TAX WITHHOLDING. Notwithstanding any other provision of the
Plan, the Company or a Subsidiary, as appropriate, shall have the right to
deduct from all Awards, to the extent paid in cash, all federal, state or local
taxes as required by law to be withheld with respect to such Awards and, in the
case of Awards paid in Stock, the Holder or other person receiving such Stock
may be required to pay to the Company or a Subsidiary, as appropriate prior to
delivery of such Stock, the amount of any such taxes which the Company or
Subsidiary is required to withhold, if any, with respect to such Stock. Subject
in particular cases to the disapproval of the Committee, the Company may accept
shares of Stock of equivalent Fair Market Value in payment of such withholding
tax obligations if the Holder of the Award elects to make payment in such manner
at least six months prior to the date such tax obligation is determined.
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No employee or other
person shall have any claim or right to be granted an Award under the Plan nor,
having been selected for the grant of an Award, to be selected for a grant of
any other Award. Neither this Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ of
the Company or a Subsidiary.
(f) CONDITIONS. Each Participant to whom Awards are granted under
the Plan shall be required to enter into an Incentive Plan Agreement in a form
authorized by the Committee, including provisions that the Participant shall not
disclose any trade or secret data or any other confidential information of the
Company or any of its Subsidiaries acquired during the course of such
Participant's employment.
(g) DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant shall
file with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect to
an Award of Performance Share Units, Phantom Share Units or Restricted Stock, if
any, due under the Plan upon his death. A Participant may, from time to time,
revoke or change his beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt.
(h) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee
shall find that any person to whom any amount is payable under the Plan is
unable to care for his affairs because of illness or accident, or is a minor, or
has died, then any payment due to such person or his estate (unless a prior
claim therefor has been made by a duly appointed legal representative), may, if
the Committee so directs the Company, be paid to his spouse, child, relative, an
institution maintaining or having custody of such person, or any other person
deemed by
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<PAGE> 36
the Committee to be a proper recipient on behalf of such person otherwise
entitled to payment. Any such payment shall be a complete discharge of the
liability of the Committee and the Company therefor.
(i) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on his behalf in his capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the Company
shall indemnify and hold harmless each member of the Committee and each other
employee, officer or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any such
person. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
(j) GOVERNING LAW. The Plan will be administered in accordance with
federal laws, or in the absence thereof, the laws of the State of Florida.
(k) FUNDING. Except as provided under Section 10, no provision of
the Plan shall require the Company, for the purpose of satisfying any
obligations under the Plan, to purchase assets or place any assets in a trust or
other entity to which contributions are made or otherwise to segregate any
assets, nor shall the Company maintain separate bank accounts, books, records,
or other evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Holders shall have no rights under the Plan
other than as unsecured general creditors of the Company, except that insofar as
they may have become entitled to payment of additional compensation by
performance of services, they shall have the same rights as other employees
under general law.
(l) NONTRANSFERABILITY. A person's rights and interest under the
Plan, including amounts payable, may not be sold, assigned, donated or
transferred or otherwise disposed of, mortgaged, pledged or encumbered except,
in the event of a Holder's death, to a designated beneficiary to the extent
permitted by the Plan, or in the absence of such designation, by will or the
laws of descent and distribution.
(m) RELIANCE ON REPORTS. Each member of the Committee and each
member of the Board shall be fully justified in relying, acting or failing to
act, and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of the
Company and its Subsidiaries and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
(n) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall
be taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided.
(o) EXPENSES. The expenses of administering the Plan shall be borne
by the Company and its Subsidiaries.
(p) PRONOUNS. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
(q) TITLES AND HEADINGS. The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings shall
control.
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<PAGE> 37
12. CHANGES IN CAPITAL STRUCTURE.
Options, SARs, Restricted Stock Awards, Phantom Stock Unit Awards,
Performance Share Unit Awards, and any agreements evidencing such Awards, and
Performance Goals, shall be subject to adjustment or substitution, as determined
by the Committee in its sole discretion, as to the number, price or kind of a
share of Stock or other consideration subject to such Awards or as otherwise
determined by the Committee to be equitable (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company, or of any other
corporation whose performance is relevant to the attainment of Performance Goals
hereunder, by reason of stock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the Date of Grant of any such
Award or (ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Participants in the
Plan, or which otherwise warrants equitable adjustment because it interferes
with the intended operation of the Plan. In addition, in the event of any such
adjustments or substitution, the aggregate number of shares of Stock available
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any adjustment in Incentive Stock Options
under this Section 12 shall be made only to the extent not constituting a
"modification" within the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 12 shall be made in a manna which does not
adversely affect the exemption provided pursuant to Rule 16b-3 under the
Exchange Act. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for
all purposes.
13. EFFECT OF CHANGE IN CONTROL.
(a) In the event of a Change in Control, notwithstanding any vesting
schedule provided for hereunder or by the Committee with respect to an Award of
Options, SARs, Phantom Stock Units or Restricted Stock, such Option or SAR shall
become immediately exercisable with respect to 100 percent of the shares subject
to such Option or SAR, and the Restricted Period shall expire immediately with
respect to 100 percent of the Phantom Stock Units or shares of Restricted Stock
subject to Restrictions; provided, however, that to the extent that so
accelerating the time an Incentive Stock Option may first be exercised would
cause the limitation provided in Section 7(f) to be exceeded, such Options shall
instead first become exercisable in so many of the next following years as is
necessary to comply with such limitation.
(b) In the event of a Change in Control, all incomplete Award
Periods in effect on the date the Change in Control occurs shall end on the date
of such change, and the Committee shall, (i) determine the extent to which
Performance Goals with respect to each such Award Period have been met based
upon such audited or unaudited financial information then available as it deems
relevant, (ii) cause to be paid to each Participant partial or full Awards with
respect to Performance Goals for each such Award Period based upon the
Committee's determination of the degree of attainment of Performance Goals, and
(iii) cause all previously deferred Awards to be settled in full as soon as
possible.
(c) The obligations of the Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company, the Company agrees that it will make appropriate
provisions for the preservation of Participant's rights under the Plan in any
agreement or plan which it may enter into or adopt to effect any such merger,
consolidation, reorganization or transfer of assets.
15
<PAGE> 38
14. NONEXCLUSIVITY OF THE PLAN.
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
15. AMENDMENTS AND TERMINATION.
The Board may at any time terminate the Plan. With the express written
consent of an individual Participant, the Board may cancel or reduce or
otherwise alter the outstanding Awards thereunder if, in its judgment, the tax,
accounting, or other effects of the Plan or potential payouts thereunder would
not be in the best interest of the Company. The Board may, at any time, or from
time to time, amend or suspend and, if suspended, reinstate, the Plan in whole
or in part, provided, however, that without further stockholder approval the
Board shall not:
(a) Increase the maximum number of shares of Stock which may be
issued on exercise of Options, SARs, or pursuant to Restricted Stock Awards,
Phantom Stock Unit Awards, or Performance Share Unit Awards, except as provided
in Section 12;
(b) Change the maximum Option Price;
(c) Extend the maximum Option Term;
(d) Extend the termination date of the Plan; or
(e) Change the class of persons eligible to receive Awards under the
Plan.
* * *
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<PAGE> 39
Appendix A
RAILAMERICA, INC.
301 YAMATO ROAD, SUITE 1190
BOCA RATON, FLORIDA 33341
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
COMMON STOCK
The undersigned holder of Common Stock of RailAmerica, Inc., a Delaware
corporation (the "Company"), hereby appoints Gary O. Marino and Donald D.
Redfearn, and each of them, as proxies for the undersigned, each with full power
of substitution, for and in the name of the undersigned to act for the
undersigned and to vote, as designated below, all of the shares of Common Stock
of the Company that the undersigned is entitled to vote at the 1997 Annual
Meeting of Stockholders of the Company, to be held at the Boca Raton Marriott at
Town Center, 5150 Town Center Circle, Boca Raton, Florida, on Thursday, June 26,
1997, at 10:00 a.m., local time, or at any adjournments or postponements
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE
DIRECTOR NOMINEES LISTED IN PROPOSAL (1) SET FORTH BELOW AND FOR THE OTHER
PROPOSALS SET FORTH.
PROPOSAL 1. Election of John H. Marino and John M. Sullivan as Class II
directors of the Company.
[ ] VOTE FOR all nominees listed above, except vote
withheld from the following nominee (if any).
-----------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
PROPOSAL 2.
To increase by 750,000 shares the number of shares of Common Stock
reserved for issuance pursuant to the Company's 1995 Stock Incentive
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the 1997 Annual Meeting, or at any
adjournments or postponements thereof.
(SEE REVERSE SIDE)
<PAGE> 40
(CONTINUED FROM OTHER SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" ALL OF THE PROPOSALS.
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement and (iii) the Company's 1996 Annual Report to
Stockholders.
Dated: _______________, 1997
--------------------------------------------
(Signature)
--------------------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name
appears hereon and mail it promptly even
though you may plan to attend the meeting.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD
AND PROMPTLY RETURN IT IN THE ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED IN
THE UNITED STATES.
2
