Competing Employment Following Termination
(This provision only applies to Vice Presidents and above, and certain other employees)
Notwithstanding the foregoing, if the Participant’s employment is terminated by reason of a reduction in force prior to vesting and the Participant “Engages in Competing Employment” (as defined below) prior to vesting, then the unvested Options shall be terminated without further obligation on the part of CSX or any affiliate. A Participant Engages in Competing Employment if the Participant works for or provides services for any “Competitor” (as defined below) on the Participant’s own behalf or on behalf of others, including, but not limited to, as a consultant, independent contractor, owner, officer, partner or employee performing functions similar to those performed or managed by the Participant in the two (2) years preceding the Participant’s termination of employment with CSX. For this purpose, a Competitor is any Class I railroad in the United States or Canada, any parent, subsidiary and affiliate of such Class I railroad, and any shortline railroad that connects to CSX, including Genesee & Wyoming and its subsidiaries.
Termination of Employment Following Vesting
In the event of the Participant’s separation from employment due to Retirement, Disability, or Death, the Participant or designated Beneficiary or estate will have until the Expiration Date (as defined in the Notice) to exercise any vested Options. Except as otherwise provided in the Plan, if the Participant separates from employment from CSX (including management and contract positions) for any reason other than Retirement, Disability, or death after the end of the vesting period, Participant will have60 days after separation from employment to exercise any Options that are vested at separation from employment.
Termination for Cause/Moral Turpitude
If the Participant’s employment is terminated for Cause, as defined in the Plan, all rights under the unvested Options shall lapse and terminate immediately. A Participant who commits an act involving moral turpitude that adversely affects the reputation or business of CSX or its affiliates shall forfeit all unvested Options. Examples of acts of moral turpitude include, but are not limited to, dishonesty or fraud involving CSX or any affiliated company, their employees, vendors, or customers or a violation of the CSX Code of Ethics.
Exercise
Participant may exercise these Options, in whole or in part, to purchase a whole number of vested shares at any time by following the exercise procedures below. All exercises must take place before the Expiration Date, or such earlier dates as established by the Notice, Option Agreement or the Plan, or such Options shall otherwise lapse.
Options may be exercised by: (a) paying cash, (b) executing a “cashless” exercise, or (c) executing a “cashless” exercise and “hold” transaction.
Taxation of Stock Options
An exercise of Options may generate federal and applicable state income and employment tax withholding obligations. The full purchase price of the shares being purchased through exercise of Options and the related withholding taxes for federal, state or local jurisdictions must be paid to CSX at the time of an exercise of Options. The Participant acknowledges that CSX shall have the right to deduct any taxes required to be withheld by law in connection with the exercise of the Option from any amounts payable by it to the Participant (including, without limitation, future cash wages).
Non-Transferability
The Options may not be sold, assigned, pledged, exchanged, or otherwise transferred, encumbered or disposed of by the Participant other than by will or by the laws of descent and distribution, and are exercisable during Participant’s life only by the Participant.
NON-QUALIFIED STOCK OPTION GRANT OPTION AGREEMENT • CSX CORPORATION 3
