EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT by and between CSX CORPORATION, a Virginia
corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive"), dated as of
the 15th day of March, 2004.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
a. The "EFFECTIVE DATE" shall mean the first date during the
Term (as defined in Section l(b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs, and the
Executive's employment with the Company is terminated by the Company
without Cause prior to the date on which the Change of Control occurs
or the Executive ceases to be an officer of the Company, and if it is
reasonably demonstrated by the Executive that such termination of
employment or cessation of status as an officer (i) was at the request
of a third party who has taken steps reasonably calculated to effect
such Change of Control or (ii) otherwise arose in connection with or
anticipation of such Change of Control, then, in each such case, for
all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment or
cessation of status as an officer.
b. The "TERM" shall mean the period commencing on the date
hereof and ending on the earlier to occur of (i) the third anniversary
of such date or (ii) the first day of the month next following the
Employee's normal retirement date ("Normal Retirement Date") under the
principal pension plan in which the Executive participates (the
"Retirement Plan"); PROVIDED, HOWEVER, that commencing on the date one
year after the date hereof, and on each annual anniversary of such date
(such date and each annual anniversary thereof shall be hereinafter
referred to as the "Renewal Date"), unless previously terminated, the
Term shall be automatically extended so as to terminate three
years from such Renewal Date, unless at least 60 days prior to the
Renewal Date the Company shall give notice to the Executive that the
Term shall not be so extended; and PROVIDED, FURTHER, that the Term
shall end on an earlier date if the Company gives the Executive at
least one year's advance written notice thereof.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
a. STOCK ACQUISITION. The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); PROVIDED, HOWEVER, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this Section 2; or
b. BOARD COMPOSITION. Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; PROVIDED, HOWEVER, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
c. BUSINESS COMBINATION. Approval by the shareholders of the
Company of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or
its principal subsidiary (a "Business Combination") that is not
subject, as a matter of law or contract, to approval by the Surface
Transportation Board or any successor agency or regulatory body having
jurisdiction over such transactions (the "Agency"), in each case,
UNLESS, following such Business Combination:
(i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 50% of,
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respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation,
a corporation which as a result of such transaction owns the
Company or its principal subsidiary or all or substantially
all of the assets of the Company or its principal subsidiary
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be;
(ii) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan
(or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed
prior to the Business Combination; and
(iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
d. REGULATED BUSINESS COMBINATION. Consummation of a Business
Combination that is subject, as a matter of law or contract, to
approval by the Agency (a "Regulated Business Combination") UNLESS such
Business Combination complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 2; or
e. LIQUIDATION OR DISSOLUTION. Approval by the shareholders of
the Company of a complete liquidation or dissolution of the Company or
its principal subsidiary.
If any Change of Control is a Regulated Business Combination, but its
implementation involves another "Change of Control" that is not a Regulated
Business Combination within the meaning of this Section 2, then for all purposes
of this Agreement, such Change of Control shall not be deemed to be a Regulated
Business Combination, the provisions governing a Regulated Business Combination
shall not apply, and the provisions governing such other Change in Control shall
apply.
3. EMPLOYMENT PERIOD.
a. GENERALLY. Subject to Section 3(b), the Company hereby
agrees to continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company subject to the
terms and conditions of this Agreement, for the
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period commencing on the Effective Date and ending on the third
anniversary of such date (the "Employment Period").
b. REGULATED BUSINESS COMBINATION. Notwithstanding the
foregoing, in the case of a Change of Control that is a Regulated
Business Combination, then for all purposes of this Agreement, the
"Employment Period" shall mean the longer of (i) the period commencing
on the Effective Date and ending on the third anniversary of such date
or (ii) the period commencing on the Effective Date and ending thirteen
months from the effective date of a final decision by the Agency on the
proposed Regulated Business Combination ("Final Regulatory Action"),
PROVIDED, HOWEVER, that (x) if the Final Regulatory Action is a denial
of the Regulated Business Combination then for all purposes of this
Agreement the "Employment Period" shall end upon the sixtieth (60th)
day following such Final Regulatory Action and (y) if the Final
Regulatory Action is an approval of the Regulated Business Combination,
but the Regulated Business Combination is not consummated by the first
anniversary of the Final Regulatory Action, then for all purposes of
this Agreement the "Employment Period" shall end upon such first
anniversary, of the Final Regulatory Action.
4. TERMS OF EMPLOYMENT.
a. POSITION AND DUTIES. (i) During the Employment Period: (A)
the Executive's position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date, and (B)
the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any
office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention
and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as
such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee
of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities
(or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter
be
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deemed to interfere with the performance of the Executive's
responsibilities to the Company.
b. COMPENSATION. (i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal to
twelve times the highest monthly base salary paid or payable, including
any base salary which has been earned but deferred, to the Executive by
the Company and its affiliated companies in respect of the twelve-month
period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase awarded
to the Executive prior to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase, and
the term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement, the
term "affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be eligible to earn, for each fiscal year
ending during the Employment Period, an annual bonus (the
"Annual Bonus") in cash, at a minimum, target and maximum
level not less favorable (in terms both of dollar amounts and
difficulty of achievement) to the Executive than the
Executive's opportunity to earn such annual cash bonuses under
the Company's annual incentive plans, or any comparable bonus
under any predecessor or successor plan, for each of the last
three full fiscal years prior to the Effective Date
(annualized in the event that the Executive was not employed
by the Company for the whole of such fiscal year). (The
highest of the actual amounts of such bonuses, as so
annualized, for each of such three full fiscal years is
hereafter referred to as the "Recent Annual Bonus".) Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective
Date or if
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more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
(iv) WELFARE BENEFIT PLANS. During the Employment
Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in
no event shall such plans practices, policies and programs
provide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans,
practices, policies and programs its effect for the Executive
at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date
to other peer executives of the Company and its affiliated
companies.
(v) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period,
the Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile
and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments,
and to exclusive personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable
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to the Executive, as provided generally at any time thereafter
with respect to other peer executives of the Company and its
affiliated companies.
(viii) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in
effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, it more favorable
to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
a. DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give
to the Executive written notice in accordance with Section 13(b) of
this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity due
to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
b. CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with
the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies
the manner in which the Board or Chief Executive officer
believes that the Executive has not substantially performed
the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
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For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chief Executive Officer or a senior
officer of the Company or based upon the advice of counsel for the
Company shall he conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.
c. GOOD REASON. The Executive's employment may be terminated
by the Executive during the Employment Period for Good Reason. For
purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any other
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than
an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than as provided in
Section 4(a)(i)(B) hereof or the Company's requiring the
Executive to travel on Company business to a substantially
greater extent than required immediately prior to the
Effective Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted
by this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 12(c) of this Agreement.
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Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason shall be deemed to be a
termination for Good Reason for all purposes of this Agreement if such
termination occurs (i) in the case of a Change of Control that is a
Business Combination but not a Regulated Business Combination, during
the 30-day period beginning on the 180th day following the day on which
the Business Combination is consummated, (ii) in the case of any other
Change of Control that is not a Regulated Business Combination, during
the 30-day period beginning on the 180th day following the Effective
Date, and (iii) in the case of a Change of Control that is a Regulated
Business Combination consummated pursuant to Final Regulatory Action,
during the 30-day period immediately following the first anniversary of
the Final Regulatory Action (it being understood that the Executive
will have no rights under this paragraph in the case of a Change of
Control that is a Regulated Business Combination denied by the Agency).
d. REGULATED BUSINESS COMBINATION. Notwithstanding the
foregoing, in the case of a Change of Control that is a Regulated
Business Combination, then for all purposes of this Agreement, during
that portion of the Employment Period prior to Final Regulatory Action,
the Executive may not exercise his rights to terminate his employment
under this Agreement for "Good Reason." The Executive may only
terminate his employment under this Agreement if he is "Constructively
Terminated" by the Company. Moreover, except to the extent expressly
set forth in the definition of "Constructive Termination," the
Executive shall have no remedy for any breach by the Company of the
provisions of Section 4; PROVIDED, HOWEVER, that any failure of the
Company to comply in any material respect with the provisions of
Section 4 shall create a rebuttable presumption that a Constructive
Termination has occurred.
For purposes of this Agreement, a "Constructive Termination" shall
mean:
(i) substantial diminution of the Executive's duties
or responsibilities as contemplated by Section 4(a) of this
Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(ii) a reduction in the Executive's Annual Base
Salary;
(iii) a failure by the Company to comply with Section
4(b)(ii) regarding the Annual Bonus;
(iv) a reduction in the Executive's other incentive
opportunities, benefits or perquisites described in Section
4(b) unless the Executive's peer executives suffer a
comparable reduction;
(v) the Company's requiring the Executive to be based
at any office or location other than as provided in Section
4(a)(i)(B) hereof; or
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(vi) any purported termination by the Company of the
Executive's employment otherwise than for Cause.
During that portion of the Employment Period after Final Regulatory Action,
the Executive may terminate his Employment under this Agreement for "Good
Reason."
e. NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason or Constructive Termination,
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 13(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision
so indicated, and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty days after
the giving of such notice). The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason, Cause or Constructive
Termination shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
f. DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by
the Executive for Good Reason or Constructive Termination, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date
of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment
is terminated by reason of death or Disability, the Date of Termination
shall be the date of death of the Executive or the Disability Effective
Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
a. GOOD REASON OR CONSTRUCTIVE TERMINATION: OTHER THAN FOR
CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause
or Disability or the Executive shall terminate employment for Good
Reason or Constructive Termination, then the Company shall provide the
following payments and benefits:
(i) The Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the
extent not theretofore paid, (2)
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the product of (x) the higher of (I) the Recent
Annual Bonus and (II) the Executive's most recently
established target Annual Bonus (annualized for any
fiscal year consisting of less than twelve full
months or during which the Executive was employed for
less than twelve full months) (such higher amount
being referred to as the "Highest Annual Bonus") and
(y) a fraction, the numerator of which is the number
of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365
and (3) any compensation previously deferred by the
Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in
each case to the extent not theretofore paid (the sum
of the amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount equal to the product of (1)
three and (2) the sum of (x) the Executive's Annual
Base Salary and (y) the Highest Annual Bonus; and
C. an amount equal to the excess of (a)
the actuarial equivalent of the benefit under the
Company's qualified defined benefit retirement plan
(the "Retirement Plan") (utilizing actuarial
assumptions no less favorable to the Executive than
those in effect under the Company's Retirement Plan
immediately prior to the Effective Date), and any
excess or supplemental retirement plan in which the
Executive participates (together, the "SERP") which
the Executive would receive if the Executive's
employment continued for three years after the Date
of Termination assuming for this purpose that all
accrued benefits are fully vested, and, assuming that
the Executive's compensation in each of the three
years is that required by Section 4(b)(i) and Section
4(b)(ii), over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any,
under the Retirement Plan and the SERP as of the Date
of Termination;
PROVIDED, that if the Executive shall have previously so
elected in accordance with any nonqualified deferred
compensation plan of the Company in which the Executive is
eligible to participate, some or all of such cash payments may
be deferred under such plan.
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv)
of this Agreement if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies
and their families; PROVIDED, HOWEVER, that if the Executive
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becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another
employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility;
and PROVIDED, FURTHER, that the period during which the
Executive and his family are eligible for health continuation
coverage under Section 4980B of the Code by reason of the
Executive's termination of employment shall be determined in
accordance with the same principles as are applicable under
the Company's general severance plan or policy. For purposes
of determining eligibility (but not the time of commencement
of benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three
years after the Date of Termination and to have retired on the
last day of such period.
(iii) The Company shall, at its sole expense as
incurred, provide the Executive with outplacement services the
scope and provider of which shall be selected by the Executive
in his sole discretion, but at a cost not in excess of
$20,000.
(iv) The provisions of this Section 6.a.(iv) shall
apply with respect to each option to acquire stock of the
Company and/or its affiliated companies, whether vested or
unvested, that has been granted to the Executive before the
Effective Date, remains outstanding immediately before the
Date of Termination, and terminates, expires, or is forfeited
without having been exercised (an "Unexercised Option");
PROVIDED, that this Section 6.a.(iv) shall not be applicable
if the Change of Control transaction referred to in Section
1.a. hereof is intended to be eligible for
pooling-of-interests accounting under APB No. 16, and would,
but for this Section 6.a.(iv), be eligible for such accounting
treatment. The Company shall pay to the Executive, upon the
termination, expiration or forfeiture of an Unexercised
Option, a cash lump sum equal to the value of such Unexercised
Option, determined as of the day before the Date of
Termination, using the Black-Scholes method of valuation,
determined based upon the terms and conditions that would have
governed such Unexercised Option if the Executive's employment
had not terminated.
(v) To the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any
other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the
Company and its affiliated companies, including earned but
unpaid stock and similar compensation (such other amounts and
benefits shall be hereinafter referred to as the "Other
Benefits").
b. DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this
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Agreement, other than for payment of Accrued Obligations and the timely
payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in
this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the
Company and affiliated companies to the estates and beneficiaries of
peer executives of the Company and such affiliated companies under such
plans, programs, practices and policies relating to death benefits, if
any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive's
estate and/or the Executive's beneficiaries, as in effect on the date
of the Executive's death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.
c. DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term
Other Benefits as utilized in this Section 6(c) shall include, and the
Executive shall be entitled after the Disability Effective Date to
receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time
thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
d. CAUSE; OTHER THAN FOR GOOD REASON OR CONSTRUCTIVE
TERMINATION. If the Executive's employment shall be terminated for
Cause during the Employment Period, this Agreement shall terminate
without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by
the Executive, and (z) Other Benefits, in each case to the extent
theretofore unpaid. If the Executive voluntarily terminates employment
during the Employment Period, excluding a termination for Good Reason
or Constructive Termination, this Agreement shall terminate without
further obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice
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provided by the Company or any of its affiliated companies for which the
Executive may qualify, nor, subject to Section 13(f), shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies;
PROVIDED, that any amounts payable to the Executive pursuant to Section 6(a)
hereof shall not be eligible for deferral by the Executive. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
8. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest regardless of the outcome thereof by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment, at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"); provided, that the Executive shall repay to
the Company all such amounts paid by the Company, and shall not be entitled to
any further payments hereunder, in connection with a contest originated by the
Executive if the trier of fact in such contest determines that the Executive's
claim was not brought in good faith or was frivolous.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
a. Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that
any payment or distribution by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise
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Tax imposed upon the Payments. Notwithstanding the foregoing provisions
of this Section 9(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Executive, after taking
into account the Payments and the Gross-Up Payment, would not receive a
net after-tax benefit of at least $50,000 (taking into account both
income taxes and any Excise Tax) as compared to the net after-tax
proceeds to the Executive resulting from an elimination of the Gross-Up
Payment and a reduction of the Payments, in the aggregate, to an amount
(the "Reduced Amount") such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the
Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount.
b. Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Ernst & Young or such other certified
public accounting firm as may be designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a Payment, or
such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall be paid by the
Company to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting
Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made by
the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
c. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with
respect to such
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claim is due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and ▇▇▇ for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
PROVIDED, HOWEVER, that if the Company directs the Executive to pay
such claim and ▇▇▇ for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
d. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying
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with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section
9(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
11. ARBITRATION. The Company and the Executive agree that all
disputes, controversies and claims arising between them concerning the subject
matter of this Agreement, other than Sections 9 and 10 hereof, shall be settled
by arbitration in accordance with the rules and procedures of the American
Arbitration Association of Virginia in Richmond, Virginia in accordance with the
laws of the Commonwealth of Virginia. If the parties to any such dispute,
controversy or claim are unable to agree upon an arbitrator or arbitrators, then
three arbitrators or two arbitrators and one umpire shall be appointed by the
American Arbitration Association of Virginia, as it may determine, in accordance
with the rules and practices, then obtaining, of such association. If the
parties to any such dispute, controversy or claim shall agree upon two
arbitrators, but such parties or such arbitrators shall be unable to agree upon
a third arbitrator or upon an umpire, then such third arbitrator or umpire shall
be appointed as aforesaid by the said American Arbitration Association. Any
arbitration pursuant to this Section shall be final and binding on the parties,
and judgment upon the award rendered in any such arbitration may be entered in
any court, state or federal, having jurisdiction. The parties expressly
acknowledge that they are waiving their rights to seek remedies in court,
including without limitation the right (if any) to a jury trial.
12. SUCCESSORS.
a. This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
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b. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
c. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
13. MISCELLANEOUS.
a. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force
or effect. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their
respective successors and legal representatives; PROVIDED, that the
Company may unilaterally amend Exhibit A hereto from time to time, but
only to the extent it determines, upon the advice of counsel, to be
necessary to comply with the legal requirements to obtain a valid
release.
b. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
▇▇▇▇ ▇. ▇▇▇▇▇▇
[ADDRESS]
IF TO THE COMPANY:
CSX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Senior Vice President -
Human Resources and Labor Relations
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
c. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
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d. The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
e. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure
to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason or Constructive Termination pursuant to
Section 5 of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
f. The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the
Company is "at will" and, subject to Section 1(a) hereof, prior to the
Effective Date, the Executive's employment may be terminated by either
the Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to the
subject matter hereof.
14. WAIVER AND RELEASE WITH RESPECT TO PRIOR AGREEMENTS. In
exchange for the compensation and benefits promised herein, the Executive hereby
waives and releases the Company and its affiliates from any and all claims he
ever had or may have arising from or in connection with the letter agreement
dated March 15, 2004, as the same may be amended to the date hereof ("Prior
Agreement"), between the Company and the Executive and the Executive
acknowledges that this Agreement supersedes and renders null and void in all
respects any such Prior Agreement.
15. OTHER AGREEMENTS UNAFFECTED. Except for the Prior
Agreement, or as otherwise expressly provided herein, this Agreement shall have
no effect on any other agreement between the Executive and the Company or any of
its affiliates, and any such agreement is ratified and confirmed in all respects
and shall remain in full force and effect in accordance with its terms.
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IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
CSX CORPORATION
By /s/
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