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Exhibit 10.9
LOAN AGREEMENT FOR TAX WITHHOLDING ON SPECIAL STOCK AWARD
THIS AGREEMENT is made and entered into as of December 4, 1995, by
and between CSX CORPORATION ("CSX"), a Virginia corporation, and ALVIN R.
CARPENTER ("Executive").
FIRST. Pursuant to an agreement dated April 17, 1990 ("1990
Agreement"), between Executive and CSX, Executive was awarded 20,000 shares of
$1 Par Value Common Stock of CSX Corporation ("Stock"), to be issued to
Executive in two Batches, as described in the 1990 Agreement, subject to
certain terms and conditions as to each Batch. On April 17, 1995, all
preconditions to receipt by the Executive of 10,000 shares of Stock
constituting the First Batch were deemed satisfied by CSX. The First Batch
was issued pursuant to a plan that has not been approved by shareholders of
CSX.
SECOND. As a result of certain requirements of Section 16 of the
Securities and Exchange Act of 1934 (" '34 Act") and Section 83(c) of the
Internal Revenue Code ("IRC"), tax valuation and withholding for the First
Batch of the Stock was deferred until October 18, 1995. The issuance of Stock
to Executive is considered compensation pursuant to the IRC and is subject to
withholding taxes.
THIRD. The parties recognized that it is the regular practice of
CSX to permit employees to require CSX to satisfy tax withholding obligations
arising from issuance of stock compensation awards through retention of Stock
equal in value to the amount of taxes to be withheld. The parties understand
CSX can retain Stock for tax withholding purposes only during a period
beginning on the third business day following release to the public by CSX of
quarterly earnings and ending on the twelfth business day following such
release of earnings ("Window Period").
FOURTH. Use of shares of the First Batch for tax withholding may
constitute a sale of Stock by Executive pursuant to Section 16 of the '34 Act,
which sale may be matched against any purchase of Stock, as determined
pursuant to said Section 16, resulting in potential forfeiture of monies by
Executive.
FIFTH. CSX has deemed it in CSX's best interests and in the best
interests of CSX shareholders for executive employees of CSX to increase
levels of personal Stock ownership. In furtherance of this objective, CSX has
offered certain executives the opportunity to receive payments under its
Management Incentive Compensation Plan ("MICP") and Senior Management
Incentive Compensation Plan ("SMICP") in Stock, such payments to be issued
during or about February 1996. Payments in Stock for such purposes will be
pursuant to a plan not approved by shareholders of CSX and may therefore
constitute a purchase of Stock pursuant to Section 16 of the '34 Act.
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ALVIN R. CARPENTER
November 22, 1995
SIXTH. It is the mutual desire of CSX and Executive (a) to
continue to increase Stock owned by Executive, (b) to encourage Executive to
accept compensation, when possible, in Stock, and (c) to avoid any matching of
purchases and sales pursuant to Section 16 of the '34 Act, which matching will
result in forfeiture by Executive of monies or securities.
NOW, THEREFORE, in order for each party to satisfy objectives
recited heretofore in Paragraphs First through Sixth and in consideration of
the parties' undertakings with respect to each other, CSX and Executive do
hereby agree that:
1. As of October 18, 1995, CSX will lend to Executive the sum of
$377,200, to be used to satisfy withholding taxes necessitated by issuance of
the First Batch, such loan to accrue interest at the Applicable Federal Rate
of 5.79% on an annual basis ("Loan").
2. As soon as practicable without forfeiture by Executive of any
Stock, but in no event earlier than six months and one day following
distribution of Stock pursuant to the MICP or SMICP award during or about
February 1996, Executive will (a) sell on the open market such number of
shares from the First Batch as are required to satisfy Executive's obligations
as to principal and interest pursuant to the Loan, or (b) tender to CSX such
shares for satisfaction of obligations pursuant to the Loan. Such sale of
Stock by Executive shall be within a Window Period during which Executive and
CSX agree that sale of Stock is appropriate and in conformity with all federal
securities laws.
3. CSX shall forgive interest on the Loan. Executive understands
that such forgiveness of interest will result in taxable compensation imputed
to Executive. At the end of each affected CSX fiscal year, Executive shall be
compensated for any tax liability incurred as a result of the Loan during such
fiscal year, including payment for taxes resulting from such additional
compensation ("Gross-Up").
4. Executive understands and acknowledges that the pendency and
terms of the Loan must be reported in each CSX Proxy Statement applicable to a
fiscal year or any part of a fiscal year in which the Loan is outstanding,
that income imputed to Executive as a result of the Loan or forgiveness of
interest may be required to be disclosed in each CSX Proxy Statement
applicable to a fiscal year or any part of a fiscal year in which the Loan is
outstanding, and that any sale of Stock to satisfy the Loan must be reported
to the Securities and Exchange Commission.
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ALVIN R. CARPENTER
November 22, 1995
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of December 4, 1995.
RECIPIENT CSX CORPORATION
/s/ A.R. CARPENTER By: /s/ ALAN A. RUDNICK
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Social Security No.______________ Title: VP-General Counsel
and Corporate Secretary
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