Exhibit 10.12
EMPLOYMENT AGREEMENT
AGREEMENT by and between CSX Corporation, a Virginia corporation
(the "Company") and John W. Snow (the "Executive"), dated as of the 14th day of
October, 1996.
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
pending the merger of the Company and Conrail Inc., a Pennsylvania corporation
(the "Merger") pursuant to the Agreement and Plan of Merger dated as of October
14, 1996 and to provide the surviving corporation after the Merger with
continuity of management. 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. Effective Date. The "Effective Date" shall mean the date on
which the Effective Time of the Merger (as defined in the Merger Agreement)
occurs.
2. Employment Period. 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
period commencing on the Effective Date and ending on the fifth anniversary of
the Effective Date (the "Employment Period"). The Employment Period shall, for
the purposes of this agreement, be divided into a period beginning on the
Effective Date and ending on the second anniversary thereof (the "First
Employment Segment"), a period beginning on the second anniversary of the
Effective Date and ending on the fourth anniversary thereof (the "Second
Employment Segment") and a period beginning on the fourth anniversary of the
Effective Date and ending on the fifth anniversary thereof (the "Third
Employment Segment").
3. Terms of Employment. (a) Position and Duties. (i) (A) During
the First Employment Segment, the Executive shall serve as Chairman of the
Board, and Chief 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 as may be assigned to him by the Board; (B) during
the second Employment Segment, the Executive shall serve as Chairman of the
Board, with such authority, duties and responsibilities as are commensurate with
such position; (C) during the Third Employment Segment, the Executive shall
serve as Chairman Emeritus; and (D) the Executive's services shall be performed
at the Company's headquarters during the Employment Period.
(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, 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 deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. (A) During the First
Employment Segment, 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 in respect
of the twelve-month period immediately preceding the month in which the
Effective Date occurs; (B) during the Second Employment Segment and Third
Employment Segment, the Executive shall receive an Annual Base Salary in an
amount no less than the base salary paid or payable, including any base salary
which has been earned but deferred, by the Company to the Chief Executive
Officer of the Company during the Second Employment Segment in respect of such
period. 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
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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) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in all
bonus, 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 during the Second Employment Segment and the Third
Employment Segment shall the Executive receive an amount in connection with any
such plan, practice, policy or program less than the amount received in
connection with such plan, practice, policy or program by the Company's Chief
Executive Officer.
(iii) 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 to other senior
executives of the Company and its affiliated companies, but in no event during
the Second Employment Segment and the Third Employment Segment to a lesser
extent than the Company's Chief Executive Officer and/or such executive's
family, as the case may be.
(iv) 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 Company's policies.
(v) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
payment of club dues, and, if applicable, use of an automobile and payment of
related expenses, to the extent applicable to other senior executives of the
Company and its affiliated companies, but in no event to a lesser extent than,
during the Second Employment Segment and the Third Employment Segment than the
Company's Chief Executive Officer.
(vi) 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 as provided generally at any time
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thereafter with respect to other senior executives of the Company and its
affiliated companies.
(vii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the plans,
policies, programs and practices of the Company and its affiliated companies as
in effect generally at any time with respect to other senior executives of the
Company and its affiliated companies but in any event not less than four weeks
per annum during the Employment Period.
(viii) Post-Employment Benefits. Following the
termination of the Employment Period, the Executive shall be provided for life
with an office and administrative assistance and other benefits and perquisites
as is the practice of the Company to provide to its ex-Chairman as of the date
hereof.
4. 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 11(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 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
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(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 (which through lapse of
time or otherwise is not subject to appeal) or guilty or nolo contendere plea by
the Executive with respect thereto, or
(iv) a material willful breach of the covenants
contained in Section 9.
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. 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) through (iv) above, and specifying the particulars
thereof in detail and that in the case of the conduct described in subparagraphs
(i) and (iv) above, Executive failed to cure such conduct within 30 days of his
receipt of written notice from the Company detailing such conduct.
(c) Good Reason. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean in the absence of a written consent of the Executive:
(i) the removal of the Executive during the Employment
Period from any of the positions described in Section 3(a) except as
specifically contemplated by Section 3(a) or the assignment to the Executive of
any duties inconsistent in any material respect with the Executive's position
(including status, offices, titles and reporting requirements), authority,
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duties or responsibilities as contemplated by Section 3(a) of this Agreement, or
any other action by the Company which results in a material 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 material failure by the Company to comply with
any of the provisions of Section 3(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 more than 35 miles from that provided in Section
3(a)(i)(C) 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 10(c) of this Agreement.
For purposes of this Section 3(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(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
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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 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 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:
(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) the product of (x) the highest annual bonus paid to
the Executive for any of the three years prior to the Date of
Termination (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 and (3) any
compensation previously deferred (other than pursuant to a
qualified plan) 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 greater of (1) the amount equal to the product
of (i) the number of months remaining in the Employment Period
on the Date of Termination (the "Continuation Period"), divided
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by twelve and (ii) the sum of (x) the Executive's Annual Base
Salary and (y) the Recent Annual Bonus, and (2) the amount equal
to the product of (i) three and (ii) the sum of (x) the
Executive's Annual Base Salary and (y) the Recent 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 or, if longer, for the Continuation Period, assuming
for this purpose that all accrued benefits are fully vested,
and, assuming that the Executive's compensation in each such
year is that required by Section 3(b)(i) and assuming an annual
bonus equal to the Recent Annual Bonus, 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;
(ii) for three years after the Executive's Date of
Termination or, if longer, if the Continuation Period, 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 3(b)(iii) 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 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. 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 or, if longer,
for the Continuation Period, and to have retired on the last day of such period;
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(iii) 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 any amount which (i) is
earned by, but has not been paid to, the Executive and (ii) would have been paid
or vested in the calendar year in which the Executive's termination of
employment occurs (such other amounts and benefits shall be hereinafter referred
to as the "Other Benefits").
(iv) all stock-based awards shall become immediately
vested and in the case of stock options, or other exercisable awards, shall
remain exercisable for at least 90 days following the Date of Termination or
such longer period as may be provided in any applicable plan or award agreement.
(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 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 5(b) shall
include death benefits 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. In addition, all stock based awards that would have vested
by the end of the fiscal year in which such termination occurs shall become
immediately vested and, in the case of stock options and other exercisable
awards, shall remain exercisable for at least 90 days following the date of such
termination or such longer period as may be provided in any applicable plan or
award agreement.
(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 5(c)
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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 generally with respect to other peer executives of the Company
and its affiliated companies and their families. In addition, all stock based
awards that would have vested by the end of the fiscal year in which such
termination occurs shall become immediately vested and, in the case of stock
options and other exercisable awards, shall remain exercisable for at least 90
days following the date of such termination or such longer period as may be
provided in any applicable plan or award agreement.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be 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, (y) the amount of any compensation previously deferred by the
Executive (other than pursuant to a qualified plan), and (z) Other Benefits, in
each case to the extent theretofore unpaid, except in the event that the
Executive gives notice of termination without good reason within thirty (30)
days of the fourth anniversary of the Effective Date.
6. 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 provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
11(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 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, except as
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provided in Section 5(a)(ii), 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. 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 8) (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
and employment 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 Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, 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 and Young LLP or such other certified public accounting firm reasonably
acceptable to the Company 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. All fees and expenses of the Accounting Firm shall be borne solely
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by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive within five days of (i) the later
of the due date for the payment of any Excise Tax, and (ii) 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 8(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 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;
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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 8(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 sue 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 sue 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 8(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 8(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 8(c), a
determination is made that the Executive shall not be entitled to any refund
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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.
9. Confidential Information. (a) 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 or in order to
enforce his rights under this Agreement or as necessary to defend himself
against a claim asserted directly or indirectly by the Company or its
affiliates, 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 9 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 9, 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 9.
10. 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.
(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
14
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.
11. 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.
(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:
John W. Snow
122 Tempsford Lane
Richmond, VA 23226
If to the Company:
One James Center
901 East Cary Street
Richmond, VA 23219
Attention: Executive Vice President -
Law & Public Affairs
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.
15
(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, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) 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,
notwithstanding the terms and conditions of the agreement between the Executive
and the Company dated as of February 1, 1995 (the "Severance Agreement") the
terms and conditions of this Agreement shall be controlling during the
Employment Period and the Merger shall not constitute a Change of Control for
purposes of the Severance Agreement; provided, however, that the Severance
Agreement shall become effective in the event of any Change of Control (as
defined in the Severance Agreement) subsequent to the consummation of the
Merger.
(g) The Company shall indemnify and hold the Executive and his
legal representatives harmless to the fullest extent permitted by applicable
law, from and against all judgements, fines, penalties, excise taxes, amounts
paid in settlement, losses, expenses, costs, liabilities and legal fees if the
Executive is made, or threatened to be made a party to any threatened or pending
or completed action, suit, proceeding, whether civil, criminal, administrative
or investigative, including an action by or in the right of the Company or its
affiliates to procure a judgement in its favor, by reason of the fact that the
Executive is or was serving as a director or officer of the Company or its
affiliates or in any capacity at the request of the Company or its affiliates
for any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise. The right to indemnification provide in this paragraph
(g) shall not be deemed exclusive of any other rights to which Executive may
16
have or hereafter be entitled under any law or the charter or by-laws of the
Company or its affiliates or otherwise, both as to action in Executive's
official capacity and as to action in another capacity while holding such
office, and shall continue after Executive has ceased to be a director or
officer and shall inure to the benefit of Executive's heirs, executors and
administrators. Any reimbursement obligation arising hereunder shall be
satisfied on an as incurred basis. In addition, the Company agrees to continue
to maintain customary and appropriate directors and liability insurance during
the Employment Period and the Executive shall be entitled to the protection of
any such insurance policies on no less favorable a basis than is provided to any
other officer or director of the Company or its affiliates.
(h) To the extent the provisions of this Agreement operate to
amend the terms of or awards outstanding under certain benefit or incentive
award plans, and the terms of such plans or awards require approval of such
amendment by the Company or its affiliated companies, or an authorized
representative thereof, and/or the Executives consent thereto (including the
Executive's consent to amend the terms of outstanding awards, if any), (i) the
offering of this Agreement pursuant to the direction of the Board shall
constitute the express authorization of the Company and its affiliated companies
and their approval of the amendment of such plan or award in the manner set
forth herein, and (ii) the Executive's consent to the terms hereof shall signify
his consent to the amendment of such plan or award, as required, as of the date
hereof.
17
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.
---------------------------------
JOHN W. SNOW
CSX CORPORATION
By______________________________
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
WHEREAS, John W. Snow (the "Executive") entered into an
employment agreement with CSX Corporation, a Virginia corporation ("CSX"), dated
as of October 14, 1996 which is effective as of the effective date of the merger
of Conrail Inc., a Pennsylvania corporation ("Conrail"), and CSX pursuant to an
Agreement and Plan of Merger dated as of October 14, 1996 (the "Employment
Agreement") between Conrail, Green Acquisition Corp., a Pennsylvania
corporation, and CSX (the "Merger Agreement"); and
WHEREAS, the parties to the Employment Agreement wish to
modify the Employment Agreement in certain respects;
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. Section 1 of the Employment Agreement shall be amended to
provide that the "Effective Date" shall mean the "Control Date" (as such term is
defined in the Second Amendment to the Merger Agreement).
2. Except as hereinabove provided, the Employment Agreement
shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First
Amendment to the Employment Agreement as of the 18th day of December, 1996.
------------------------------
John W. Snow
CSX Corporation
By____________________________
Name:
Title: