EMPLOYMENT AGREEMENT
AGREEMENT by and between CSX Corporation, a Virginia corporation
(the "Company") and Xxxxx X. Xxxxxxxxx (the "Executive") dated as of the 15th
day of June, 1999.
WHEREAS, Section 11 of the CSX Corporation 1987 Long-Term
Performance Stock Plan ("1987 Plan") provides that the Compensation Committee of
the Board of Directors of CSX Corporation ("Committee") may, in its discretion,
set forth in a written agreement with Executive conditions, restrictions or
limitations upon the grant of a Restricted Stock Award ("RSA") which differ from
the terms set forth in the 1987 Plan;
WHEREAS, the RSA grant hereunder is made pursuant to the 1987
Plan and this Agreement;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean June 30, 1999.
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2. Employment Period. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to enter into the employ of the Company subject to the
terms and conditions of this Agreement, for up to 3 years, as determined by the
Board of Directors, commencing on the Effective Date and ending not later than
the third anniversary thereof ("Employment Period").
3. Terms of Employment. (a) Position and Duties. (i) During the
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Employment Period, the Executive shall serve as a senior executive officer of
the Company with such authority, duties and responsibilities as are
commensurate with such position and as may be consistent with such position,
including the smooth transition of leadership at CSX Transportation, Inc.
(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
substantially all of his attention and time during normal business hours to the
business and affairs of the Company and CSXT 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.
(b) Compensation. (i) Base Salary. During the Employment Period, the Executive
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shall receive an annual base salary ("Annual Base Salary") of no less than the
base salary paid to the Executive immediately prior to the Effective Date.
During the Employment Period, the Annual Base Salary shall be reviewed in
accordance with the Company's current practice. 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. During the Employment Period, the Executive shall be
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eligible to receive an annual cash bonus ("Annual Bonus") on the same basis as
immediately prior to the Effective Date.
(iii) Incentive Awards. In addition to the Executive's participation in stock
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and other long-term incentive programs of the Company, the Executive shall
receive a grant of 150,000 shares of restricted Company common stock subject to
the conditions described below (the "Restricted Shares"). The Restricted Shares
shall be granted to the Executive upon his certification that he has acquired
since April 27, 1999, 150,000 shares of the Company's common stock. Except as
otherwise provided herein, the Restricted Shares shall vest at the end of the
Employment Period, or at such earlier time as provided by the Committee,
provided that the Company's average free cash-flow per share on an annualized
basis, as adjusted for any extraordinary events, during such period is higher
than its free cash-flow per share, as adjusted for any extraordinary events, for
the four consecutive quarters ending March 26, 1999. Notwithstanding the
foregoing, the Restricted Shares shall vest upon a Change of Control of the
Company, as defined in the Company's 1987 Plan.
(iv) Retirement. The Executive shall be provided with pension benefits as in
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effect immediately prior to the Effective Date, but in addition he shall receive
for pension purposes only, credit for 1/36th of the value of the Restricted
Shares as of the date of grant for each month actually worked pursuant to this
Agreement after the Effective Date. Such amount shall be treated as if being
paid as a cash bonus, for the purpose of pension computation only, ratably over
a period equal to the period actually worked pursuant to this Agreement.
(v) Other Employee Benefit Plans. During the Employment Period, except as
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otherwise expressly provided herein, the Executive shall be entitled to
participate in all employee benefit, welfare, vacation, fringe benefit and other
plans, practices, policies and programs as provided to him immediately prior to
the Effective Date.
4. Termination of Employment. (a) Death or Disability. The Executive's
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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 in the 1987 Plan), it may give to the
Executive written notice in accordance with Section 10(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.
(b) Cause. The Company may terminate the Executive's employment during the
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Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the 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 which specifically identifies the manner in which the Board 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, or
(iii) conviction of a felony or guilty or nolo contendere plea by the Executive
with respect thereto.
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 based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
(c) Good Reason. The Executive's employment may be terminated by the Executive
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for Good Reason. For purposes of this Agreement, "Good Reason" shall mean in the
absence of a written consent of the Executive, a material breach by the Company
of a material term of this Agreement, after the Executive has given the Company
notice thereof and a reasonable opportunity to cure.
(d) Notice of Termination. Any termination by the Company for Cause, or by the
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Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 10(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 or Cause 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.
(e) Date of Termination. "Date of Termination" means (i) if the Executive's
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employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein within 30 days of such notice, 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.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
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Than for Cause, Death or Disability. If, during the Employment Period, the
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Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive's employment is terminated by reason of his death,
or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, and (2) the
product of (x) the highest annual bonus paid to the Executive for any of the
three years prior to the Effective Date (the "Recent Annual Bonus") and (y) a
fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination, and the
denominator of which is 365, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1) and (2), shall be hereinafter
referred to as the "Accrued Obligations"); and
(ii) until June 30, 2002, the Company shall continue to provide medical and
dental benefits to the Executive, his spouse and dependents on a basis as such
benefits are provided to the Executive's successor (collectively "Medical
Benefits");
(iii)the Restricted Shares shall vest immediately; and
(iv) to the extent not theretofore paid or provided by the Company or deferred
by Executive, the Company shall pay on a timely basis 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 through the
Date of Termination (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
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Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. In addition, the Restricted Shares shall vest
immediately. Accrued Obligations, Other Benefits and the Restricted Shares shall
be paid or distributed to the Executive's estate or beneficiary, as applicable,
within 30 days of the Date of Termination. The Accrued Obligations shall be paid
in a lump sum. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(b) shall include death benefits as in
effect on the date of the Executive's death and the continued provision of
Medical Benefits to the Executive's current spouse and dependents (as defined in
the CSX Medical Plan).
(c) Disability. If the Executive's employment is terminated by reason of the
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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. In
addition, the Restricted Shares shall vest immediately. Accrued Obligations,
Other Benefits and the Restricted Shares shall be paid or distributed to the
Executive within 30 days of the Date of Termination. The Accrued Obligations
shall be paid in a lump sum. With respect to the provision of Other Benefits,
the term Other Benefits as utilized in this Section 5(c) shall include, and the
Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits as in effect at any time thereafter and the
continued provision of Medical Benefits to the Executive and his current spouse
and dependents (as defined in the CSX Medical Plan).
(d) Cause; Other than for Good Reason. If the Executive's employment shall be
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terminated for Cause or the Executive terminates his employment without Good
Reason 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, and (y)
Other Benefits, in each case to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided, nothing in this
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Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 10(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. 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.
7. Full Settlement. The Company's obligation to make the payments provided for
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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").
8. Confidential Information. (a) The Executive shall hold in a fiduciary
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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 8 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
(b) In the event of a breach or threatened breach of this Section
8, the Executive agrees that the Company shall be entitled to injunctive relief
in a court of appropriate jurisdiction to remedy any such breach or threatened
breach, the Executive acknowledges that damages would be inadequate and
insufficient.
(c) Any termination of the Executive's employment or of this Agreement shall
have no effect on the continuing operation of this Section 8.
9. Successors. (a) This Agreement is personal to the Executive and without
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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.
(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.
10. Miscellaneous. (a) This Agreement shall be governed by and construed
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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.
(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:
Xxxxx X. Xxxxxxxxx
home address
If to the Company:
CSX Corporation
000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
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.
(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 shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(f) This Agreement does not supersede the Employment Agreement between the
parties dated February 1, 1995 (the "Existing Agreement"), except to the extent
that this Agreement and the Existing Agreement would provide duplicative
benefits.
(g) The provisions of the 1987 Plan shall apply to the extent they are not
inconsistent with the terms of this Agreement, in which case the terms of this
Agreement shall be controlling.
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/XXXXX X. XXXXXXXXX
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XXXXX X. XXXXXXXXX
CSX CORPORATION
By:/s/XXXX X. XXXX
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