PAGE 33
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 1 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
AGREEMENT
This agreement, dated as of June 1,1996 (Agreement), between Norfolk
Southern Corporation (Corporation) and _____________ (1) memorializes
your entitlement to certain rights and benefits hereinafter detailed that
mature upon, and only upon, your Termination (this and other terms not
defined in the text are defined in Attachment A hereto) following a
Change in Control and your commitment not to engage in Competing
Employment for certain periods; (2) absent such Termination, is not
intended to affect, and shall not be construed as affecting, the
compensation and benefits you are entitled to receive; and (3) is not
under any circumstances a contract or guarantee of employment with the
Corporation. Moreover, upon the happening of such conditions, your
rights under any and all employee retirement income or welfare benefit
policies, plans, programs or arrangements of the Corporation in which you
participate shall be governed by the terms thereof and, except as herein
expressly provided, shall not be enlarged hereunder or otherwise affected
hereby.
The Agreement's terms and protections reflect the Corporation's beliefs
that, in the event of a potential Change in Control, (1) the best
interests of its stockholders require management focus and continuity;
and (2) such focus and continuity will be enhanced by providing economic
protection to officers and other key employees whose employment is most
likely to be affected adversely by such a change. At the recommendation
of its Compensation and Nominating Committee (Committee), which is
composed entirely of non-employee directors, the Board of Directors of
the Corporation (Board) has directed the Corporation to offer this
Agreement to you.
As consideration for the Corporation's offer of this Agreement, and by
your acceptance of it, you hereby covenant and agree as follows:
(i) for the three-year period that begins on the date of this
Agreement, you will engage in no Competing Employment
(provided, however, that if (a) prior to a Change in Control
your employment with the Corporation is terminated for Cause or
because of your inadequate performance of assigned duties or
for other similar reasons - each as determined by the
Corporation's chief legal officer serving at the time - or (b)
your Termination Date is within such three-year period, the
restriction imposed by this subparagraph (i) shall cease to
apply as of your Termination Date), and your undertaking in
this respect may be enforced by appropriate court orders and
decrees, including without limitation those calling for
injunctions and specific performance;
PAGE 34
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 2 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(ii) in the event you (a) are Terminated following a Change in
Control and (b) accept any benefits provided for in Article III
or Article IV of this Agreement, you will engage in no
Competing Employment for the one-year period that begins on
your Termination Date;
(iii) you waive, forego and otherwise renounce, on your behalf
and that of any individual or organization that does or may
claim through you, any and all benefits (including without
limitation any prior notice of agreement termination therein
provided) to which you may or would be entitled under and by
virtue of any other agreement, including amendments and
supplements thereto, as in effect on the date hereof between
you and the Corporation affording you benefits in the event of
your Termination, with the result that all and any such
agreements, from and after the date hereof, shall have no force
and effect; and
(iv) if, prior to a Change in Control, a modification in the nature
of your responsibilities with the Corporation (Reassignment)
results in a change in the maximum percentage of your salary
that may be earned as incentive compensation (Participation
Level), upon the effective date of your Reassignment
(Reassignment Date), you will become and be eligible to receive
only those benefits following a Change in Control as are other
individuals at the Participation Level applicable to your new
position, provided, however, that the three-year period
provided for in subparagraph (i) above shall not be extended
because of your Reassignment; the Corporation hereby undertakes
to furnish you a new agreement or to furnish an amendment or
supplement to this Agreement, to reflect your changed benefits,
but its failure or omission to do so shall not affect the
benefits to which, under this subparagraph (iv), you are
entitled upon and after such Reassignment Date.
I. Effective Date and Term
The Agreement is effective and its term (Term) begins on the date hereof;
its Term ends (provided, however, that the three-year prohibition on
engaging in Competing Employment that begins on the date of this
Agreement, including the exceptions, set out in subparagraph (i) of the
third paragraph of the preamble shall continue to apply) on the earliest
of:
(i) the date, prior to a Change in Control, you cease to be an
employee of the Corporation;
PAGE 35
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 3 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(ii) the date, prior to a Change in Control, you cease to be
eligible to participate in the Corporation's Executive
Management Incentive Plan or Management Incentive Plan, or
any successor plan[s] or program[s]; and
(iii) the date, prior to a Change in Control, that is twenty-
four (24) months after you or the Corporation gives notice to
the other of the termination of this Agreement, provided,
however, that if a Change in Control occurs during the Term
hereof, this Agreement shall terminate after a period of twenty-
four (24) months, beginning on the first day of the month next
following the month in which the Change in Control occurs (such
period - plus the portion of the month, following the Change in
Control, in which the Change in Control occurs - the Change in
Control Period).
II. Binding on Successors
The Corporation shall require any successor (whether direct or indirect,
by purchase, merger, consolidation, reorganization, share exchange or
otherwise) to all or substantially all of the business and/or assets of
the Corporation (Successor; and such result, Succession) by agreement, in
form and substance satisfactory to the Corporation's chief legal officer
or his designee(s), serving immediately prior to the Change in Control,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Corporation would have been required to
perform it had no such Succession occurred. This Agreement shall be
binding upon and inure to the benefit of the Corporation and any
Successor (and, from and after any such Succession, that Successor shall
be deemed the "Corporation" for purposes of this Agreement), but
otherwise the Corporation shall not assign or transfer any of its rights,
or delegate any of its duties or obligations, hereunder.
PAGE 36
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 4 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
III. Protection Afforded by the Agreement During the Change in Con-
trol Period
Except as limited by subparagraph (ix) concerning retirement, in the
event of your Termination during the Change in Control Period, the
Corporation shall (1) pay you within ten (10) business days after your
Termination Date the amounts indicated in subparagraphs (i), (ii), (iii),
(iv) and (vii); (2) continue to provide the Additional Benefits detailed
in subparagraph (v); (3) timely pay, afford or deliver the other amounts,
credits or instruments called for in subparagraphs (vi) and (viii); and
(4) pay and provide the Tax Assistance Payments and other benefits
defined and called for herein:
(i) Severance Pay. In lieu of, and in full satisfaction of any and
all claims you have or may have thereafter to receive cash
compensation or awards under or otherwise to participate in or
under any feature of any compensation policy, plan, program or
arrangement of the Corporation, you shall receive a lump-sum
payment (Severance Pay) equal to three (3) times the sum of:
(a) an amount equal to your Base Pay (determined in accordance
with Item (D)(ii) in Attachment A); and
(b) an amount equal to your Incentive Pay (determined in
accordance with Item (L) in Attachment A).
(ii) Long-Term Compensation
(a) Performance Share Unit Equivalent. In lieu of your
having any entitlement (which entitlement, upon your
receipt of the benefit herein provided, hereby is waived
in full) to receive unearned Performance Share Units (as
that term is defined in the Norfolk Southern Corporation
Long-Term Incentive Plan, or successor plan[s] or
program[s]) that you have been awarded and as to which a
performance cycle has not been completed on your
Termination Date, you shall receive for each incomplete
cycle a cash payment equal to the Performance Share Unit
Equivalent (determined in accordance with Item N in
Attachment A).
(b) Option Equivalent. Except in the case of persons at
the time subject to Section 16 of the Securities Exchange
Act of 1934 (Officers), for each option granted to you by
the Corporation which on your Termination Date is
exercisable but remains unexercised (and by its terms, no
longer can be exercised), you shall receive a cash payment
equal to the Option Equivalent (determined in accordance
PAGE 37
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 5 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
with Item M in Attachment A). To protect and assure to
the full extent practicable the intended value of options
exercisable at the time by Officers, effective on the
date Notice of Termination (for reasons other than Cause)
is given, any requirement contained in any agreement(s)
between such Officer and the Corporation that such
Officer exercise an option only during a specified
period (other than any provision concerning the date
on which the option first is or becomes exercisable)
hereby is waived.
(c) Accelerated Dividend Equivalent. As to each option,
performance share unit or other instrument you hold on the
date Notice of Termination (for reasons other than Cause)
is given as to which the right to receive dividend
equivalents then exists, you shall receive an amount equal
to the Accelerated Dividend Equivalent (determined in
accordance with Item A in Attachment A), provided,
however, that the Corporation's obligation to make the
payment herein provided for shall mature on your
Termination Date.
(iii) Deferred Compensation Equivalent. In lieu of your having any
entitlement to receive payments under the terms of the
Officers' Deferred Compensation Plan (or any successor plan[s]
or program[s]), which entitlement, upon your receipt of the
benefit herein provided, hereby is waived in full, you shall
receive an amount equal to the Deferred Compensation Equivalent
(determined in accordance with Item J in Attachment A).
(iv) Vacation Equivalent. In lieu of your having any entitlement to
receive payments or other compensation for vacation to which
you would have been or might have become entitled in and
following the year that includes your Termination Date, which
entitlement, upon your receipt of the benefit herein provided,
hereby is waived in full, you shall receive an amount equal to
the Vacation Equivalent (determined in accordance with Item T
in Attachment A).
PAGE 38
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 6 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(v) Additional Benefits. For the thirty-six (36) months next
following your Termination Date, the Corporation shall arrange
to provide you with Additional Benefits substantially similar
to those you were entitled to receive immediately prior to your
Termination Date (and if and to the extent that such benefits
shall not or cannot be paid or provided under any policy, plan,
program or arrangements of the Corporation for whatever reason,
the Corporation shall itself pay or provide for the payment of
such Additional Benefits to you, your dependents and your
beneficiaries). Without otherwise limiting the purposes or
effects of the provisions under the caption "No Mitigation
Obligation," infra, Additional Benefits to which you are
entitled pursuant to the first sentence of this subparagraph
(v) shall be reduced to the extent you actually receive
comparable Additional Benefits from another employer during
such period following your Termination Date, and you shall
report to the Corporation any such benefits actually received.
(vi) Post-Retirement Life Insurance Benefit. If on your Termination
Date you are not eligible - or, if eligible, you have elected
not to - retire pursuant to subparagraph (ix) of this Article
III, in lieu of your entitlement at retirement to receive
benefits of any kind under the Corporation's Executive Life
Insurance Plan, which entitlement, upon your receipt of the
benefit herein provided, hereby is waived in full, you shall
receive, as soon as practicable after your Termination Date, a
fully paid policy in the face amount and determined in
accordance with Item P in Attachment A, and the Corporation
shall pay to or on your behalf the cash benefit, also
determined in accordance with Item P in Attachment A.
If on your Termination Date you are eligible, and elect, to
retire pursuant to subparagraph (ix) of this Article III, you
shall receive the policy and cash benefit determined in
accordance with Item P of Attachment A, provided, however, that
such policy and the related cash payment shall not be
distributed or made until such policy would have been
distributed under the terms of the Executive Life Insurance
Plan or its successor(s), as in effect on the day immediately
preceding the date of the Change in Control.
PAGE 39
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 7 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(vii) Prorata Incentive Pay. In lieu of your having any entitlement
(which entitlement, upon your receipt of the benefit herein
provided, hereby is waived in full) to receive payments or
other compensation under the terms of the Executive Management
Incentive Plan or the Management Incentive Plan (or successor
plan[s] or program[s]) in respect of your employment during the
year that includes your Termination Date, you shall receive an
amount equal to Prorata Incentive Pay (determined in accordance
with Item Q in Attachment A).
(viii) (a) Creditable Service for Retirement. For purposes of
determining your creditable service under the Corporation's
various retirement plans, including without limitation any
agreement(s) with you providing retirement income, you shall
receive additional creditable service, based on your age on
your Termination Date, as follows:
(1) Age 50 - 54: as if you had been employed until you
were 60;
(2) Age 55 - 59: as if you had been employed until you
were 62; and
(3) All others: three (3) additional years,
provided, however, that such creditable service shall not be
greater than the number that is equal to the number of months
(calculated in accordance with the terms of the applicable
plan) between (i) your Termination Date and (ii) the date on
which you would attain the mandatory retirement age in effect
at the time of the Change in Control. Your rights under such
programs and plans shall be governed by the terms thereof and,
except as herein expressly provided, shall not be enlarged
hereunder or otherwise affected hereby.
(b) Final Average Compensation for Retirement. For
purposes of determining your final average compensation under
the Corporation's various plans (including without limitation
any agreement(s) with you) providing retirement income, the
amount of Severance Pay provided for in subparagraph (i) of
this Article III shall be included, and the payments made
pursuant to subparagraph (i) shall be deemed to have been made
over the number of annual periods equal to the multiple used to
determine the gross amount of your Severance Pay, provided,
however, that your final average compensation shall not include
amounts paid or payable pursuant to subparagraph (iv) (to the
extent they are an Additional Vacation Equivalent) and
subparagraph (vii) of this Article III.
PAGE 40
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 8 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(ix) Special Proviso for Those Eligible to Retire. If on your
Termination Date you are eligible to retire under the
provisions of any of the Corporation's retirement plans
(excluding any special, temporary early retirement
amendment[s]), as in effect either on the day immediately
preceding the Change in Control or on your Termination Date,
you may elect to retire on your Termination Date by giving the
Corporation written notice as provided in this subparagraph
(ix). Not later than two (2) business days following, but not
including, the date on which Notice of Termination is given
(whether by you or by the Corporation), the Corporation shall
advise you in writing of your right herein provided to elect to
retire. If you wish to exercise that right, you must so advise
the Corporation prior to your Termination Date on an election
form it provides and in the manner prescribed under Article X.
If and only if you make this election, your retirement will be
deemed to have occurred simultaneously with your Termination
Date (provided, however, that the "effective date" of such
retirement for purposes of such retirement plans shall be as
provided under such plans), and, instead of your having the
rights provided in this Article III, your rights shall be
governed by the retiree (or any specific change in control)
provisions of the respective, applicable plans (as to each, on
the terms most favorable to you under such plan [excluding any
special, temporary early retirement amendment(s)] as in effect
either immediately preceding the Change in Control or on your
Termination Date), provided, however, that if you make the
election herein afforded, you shall still receive the payments
called for in subparagraphs (i) and (ii)(a), (ii)(c) and (iii),
and the benefits described in subparagraph (viii).
There shall be no right of setoff or counterclaim in respect of any
claim, debt or obligation against any payment to, or benefit for, you
provided for in this Agreement, except as expressly provided in
subsection (v).
Without limiting your rights to arbitration, at law or in equity, if the
Corporation fails on a timely basis to make any payment required to be
made pursuant to provisions under this Article III, the Corporation shall
pay interest on the amount thereof at an annualized rate of interest
equal to three percent (3%) above the then-applicable Prime Rate ("Prime
Rate" means the rate of interest publicly announced by Morgan Guaranty
Trust Company of New York in New York City from time to time as its prime
rate).
PAGE 41
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 9 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
IV. Certain Tax Payments by the Corporation
Notwithstanding anything in the Agreement to the contrary, in the event
of (a) your Termination during the Change in Control Period and (b) the
determination (as hereinafter provided) that any required payment by the
Corporation to or for your benefit, whether paid or payable pursuant to
the terms of the Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right, or similar right,
or the lapse or termination of any restriction on the vesting or
exercisability of any of the foregoing including without limitation
acceleration of the termination of Share Retention Agreements under the
Corporation's Long-Term Incentive Plan (individually and collectively,
Payment), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (Code) or any successor
provision thereto by reason of the Payment's being considered "contingent
on a change in ownership or control" of the Corporation within the
meaning of Section 280G of the Code (or any successor provision thereto),
or any interest or penalties with respect to such excise tax
(collectively, Excise Tax), then you shall be entitled to receive an
additional payment or payments (individually or collectively, Tax
Assistance Payment), which shall include an amount such that, after you
pay (1) all taxes (including any interest or penalties imposed with
respect to such taxes) and (2) any Excise Tax imposed upon the Tax
Assistance Payment, you retain so much of the Tax Assistance Payment as
is equal to the Excise Tax imposed on the Payment.
Subject to the provisions hereinafter concerning your providing notice of
a claim by the Internal Revenue Service, all determinations required to
be made under these provisions, including whether an Excise Tax is
payable by you, the amount of such Excise Tax and whether the Corporation
is required to pay you a Tax Assistance Payment and the amount of such
Tax Assistance Payment, if any, shall be made by a nationally recognized
accounting firm you, in your sole discretion, select (Accounting Firm).
You shall direct the Accounting Firm to submit its determination and
detailed supporting calculations to both you and the Corporation within
thirty (30) days after the Termination Date, if applicable, and any such
other time or times as you or the Corporation may request. If the
Accounting Firm determines that any Excise Tax is payable by you, the
Corporation shall pay the required Tax Assistance Payment to you within
ten (10) business days after the Corporation receives such determination
and calculations with respect to any Payment to you.
PAGE 42
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 10 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Any federal tax returns you file shall be prepared and filed on a basis
consistent with the determination of the Accounting Firm with respect to
the Excise Tax payable by you. If the Accounting Firm determines that
you are required to pay no Excise Tax, it shall (at the same time it
makes such determination) furnish you and the Corporation an opinion that
you have substantial authority not to report any Excise Tax on your
federal income tax return. However, in view of uncertainty concerning
application of Section 4999 of the Code (or any successor provision
thereto) at the time of any determination made hereunder by the
Accounting Firm, it is possible that a Tax Assistance Payment that should
have been made by the Corporation will not have been made (Underpayment),
consistent with the calculations required to be made hereunder. In the
event the Corporation exhausts or fails to pursue its remedies pursuant
to the provisions concerning notice of a claim by the Internal Revenue
Service, and you thereafter are required to make a payment of any Excise
Tax, you shall direct the Accounting Firm to determine the amount of the
Underpayment and to submit its determination and detailed supporting
calculations as promptly as possible both to you and to the Corporation,
which shall pay the amount of such Underpayment to you or for your
benefit within ten (10) business days following the Corporation's receipt
of such determination and calculations.
Each of you and the Corporation shall provide the Accounting Firm access
to and copies of any books, records and documents in your or its
possession, as the case may be, reasonably requested by the Accounting
Firm, and shall otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination and
calculations required or contemplated hereunder.
The Corporation shall bear the fees and expenses of the Accounting Firm
for services hereunder. If, for any reason, you initially pay such fees
and expenses, the Corporation shall reimburse you the full amount of the
same within ten (10) business days following receipt from you of a
statement and reasonable evidence of your payment thereof.
PAGE 43
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 11 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
You shall notify the Corporation in writing of any claim by the Internal
Revenue Service that, if successful, would require the Corporation to pay
a Tax Assistance Payment. You shall give such notification as promptly
as practicable, but in no event later than the tenth (10th) business day
next following your receipt of such claim, and you further shall apprise
the Corporation of the nature of such claim and the date on which it is
required to be paid (in each case, to the extent known to you). You
shall not pay or otherwise satisfy such claim prior to the earlier of (a)
the expiration of the thirty (30)-calendar-day period next following the
date on which you give notice to the Corporation or (b) the date any
payment of the amount with respect to such claim is due. If the
Corporation notifies you in writing prior to the expiration of such
period that it desires to contest such claim, you shall:
(1) provide the Corporation any written records or documents in
your possession relating to such claim and reasonably requested by the
Corporation;
(2) take such action in connection with contesting such claim as
the Corporation reasonably shall request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Corporation;
(3) cooperate with the Corporation in good faith in order
effectively to contest such claim; and
(4) permit the Corporation to participate in any proceedings
relating to such claim, provided, however, that the Corporation
directly shall bear and pay all costs and expenses (including without
limitation, interest and penalties) incurred in connection with such
contest and shall indemnify you and hold you harmless, on an after-tax
basis, from and against any and all Excise Tax or income tax
(including without limitation, interest and penalties with respect
thereto), imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing, the Corporation
shall control all proceedings taken in connection with the contest of
any claim contemplated by these provisions and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such
claim (provided, however, that you may participate therein at your own
cost and expense) and may, at its option, either direct you to pay the
tax claimed and sue for a refund or contest the claim in any
permissible manner, and you agree 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
Corporation shall determine; provided, however, that if the
Corporation directs you to pay the tax claimed and to sue for a
refund, the Corporation shall advance the amount of such payment
PAGE 44
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 12 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
to you, and pay on a current basis all costs of litigation, including
without limitation attorneys' fees, on an interest-free basis and
shall agree to and shall indemnify you and hold you harmless, on an
after-tax basis, from any Excise Tax or income tax, including without
limitation, interest and penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes
for your taxable year with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Corporation's control of any such contested claim
shall be limited to issues with respect to which a Tax Assistance
Payment would be payable hereunder, and you shall be entitled to
settle or to contest, as the case may be, any other issue(s)
raised by the Internal Revenue Service or any other taxing
authority.
If, after you receive an amount advanced by the Corporation pursuant to
provisions of the last full paragraph, you receive any refund with
respect to such claim, you shall (subject to the Corporation's complying
with any applicable provisions of the same paragraph) promptly pay to the
Corporation the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after you
receive such an amount advanced by the Corporation, a determination is
made that you shall not be entitled to any refund with respect to such
claim and the Corporation does not notify you in writing of its intent to
contest such denial or refund prior to expiration of thirty (30) calendar
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 the Tax Assistance Payment
the Corporation is required to pay you hereunder.
V. No Mitigation Obligation
You and the Corporation agree that payments made by the Corporation
pursuant to this Agreement will be liquidated damages (and in lieu of any
claim for any breach whatsoever of this Agreement by the Corporation) and
that you will not be required to mitigate the amount of any such payment
by seeking other employment or otherwise, nor shall any profits, income,
earnings or other benefits from any source whatsoever, other than from
Competing Employment, create any mitigation, offset reduction or other
obligation on your part hereunder or otherwise, except as expressly
provided in the materials, supra, concerning Additional Benefits.
PAGE 45
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 13 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
VI. Arbitration
Except as otherwise expressly provided under the caption "Certain Tax
Payments by the Corporation," any controversy or claim between you and
the Corporation arising out of or relating to the existence,
enforceability, terms or application of this Agreement or any breach or
alleged breach thereof, shall be settled by three (3) arbitrators, one of
whom shall be appointed by the Corporation, one by you and the third of
whom shall be appointed by the first two arbitrators. If the first two
arbitrators cannot agree on the third arbitrator required to be appointed
hereunder, then such arbitrator shall be appointed by the Chief Judge of
the United States District Court for the district having jurisdiction of
the city or other municipality in which the arbitration is to be held.
The arbitration shall be conducted in accordance with the rules of the
American Arbitration Association, except with respect to the selection of
arbitrators, which shall be as hereinbefore provided. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The arbitrators shall have no authority to award
punitive, incidental or consequential damages, and they shall apply the
substantive law of the Commonwealth of Virginia in reaching a decision.
If you determine in good faith to retain legal counsel and/or to incur
other reasonable costs or expenses in connection with any such
arbitration or to enforce any or all of your rights under this Agreement
or under any arbitration award, the Corporation shall pay all such
attorneys' fees, costs and expenses you incur in connection with non-
frivolous applications to interpret or enforce your rights, including
enforcement of any arbitration award in court, regardless of the final
outcome. In addition, during the pendency of such arbitration, the
Corporation will continue to pay you, with the customary frequency, the
greater of your Base Pay as in effect immediately prior to the Change in
Control or immediately prior to your Termination and to provide Benefits
until the controversy or claim finally is resolved in accordance
herewith. These payments and the provision of Benefits hereunder shall
be in addition to, and not in derogation or mitigation of any other
payment or benefit due you under this Agreement.
Notwithstanding any other provision hereof, the parties' respective
rights and obligations under this Caption will survive a termination or
expiration of this Agreement or the Termination of your employment for
any reason whatsoever.
VII. Employment Rights
Nothing expressed or implied in this Agreement shall create any right or
duty on your part or that of the Corporation to have you remain in the
employment of the Corporation prior to or following any Change in
Control.
PAGE 46
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 14 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
VIII. Withholding of Taxes
The Corporation may withhold from any amounts payable under this
Agreement all federal, state, city, local or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
IX. Personal Nature of Agreement
This Agreement is personal in nature, and neither you nor the Corporation
(except as provided under the caption "Binding on Successors"), without
the prior written consent of the other, shall assign or transfer any of
its rights, or delegate any of its duties or obligations, except as
expressly provided under this caption. Without limiting the generality
and effect of the foregoing, your right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than by a transfer by will or by
the laws of descent and distribution; in no event shall the Corporation
have any obligation or liability to recognize or honor any attempted
assignment or transfer that is contrary hereto.
X. Notice
For all purposes of this Agreement, except as otherwise expressly
provided in subparagraph (ix) of Article III, all communications,
including without limitation, notices, consents, requests and approvals,
provided for herein shall be in writing and shall be deemed to have been
duly given when (1) actually delivered or (2) if mailed, five (5)
business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid,
(i) if to the Corporation, to the attention of its Corporate
Secretary at its principal executive office at the time, and
(ii) if to you, at the address at the time on file with the
Corporation as your principal residence address, or
(iii) in either case, to such other address as either the Corporation
or you shall have furnished the other in writing and in accordance
herewith, provided, however, that notices of change of address
hereunder shall be effective only upon actual receipt.
PAGE 47
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 15 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
XI. Governing Law
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia,
without giving effect to the Commonwealth's principles of conflicts of
law, save those permitting the parties to an agreement to stipulate the
substantive law applicable to the agreement and the procedural law
applicable to suits, actions or proceedings relating to it.
XII. Validity/Severability
If any provision of this Agreement or the application of any provision
hereof to any person (including a Person) or circumstance is held
invalid, illegal or unenforceable, the remainder of this Agreement and
the application of such provision to any other person (including a
Person) shall not be affected, and the provision(s) so held to be
invalid, illegal or unenforceable shall be reformed or excised in good
faith by the Corporation, without the necessity of your agreeing thereto,
to the extent (and only to the extent) necessary to make it or them
valid, legal or enforceable.
XIII. Miscellaneous
No provision of this Agreement may be amended, modified, waived or
discharged unless such amendment, modification, waiver or discharge is
agreed to in a writing signed by you and the Corporation. No waiver by
either party hereto at any time of any breach or of compliance with any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
set forth expressly in this Agreement.
PAGE 48
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 16 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
XIV. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Board of Directors of the Corporation has
directed that this Agreement be executed and delivered on its behalf by
one or more officers of the Corporation thereunto duly authorized, as of
the day and year first above written, and you have indicated your
acceptance of and intent to be bound by this Agreement in the space
provided below.
NORFOLK SOUTHERN CORPORATION
By
----------------------------------
Name:
--------------------------
Title:
--------------------------
ATTEST
{SEAL}
- ----------------------------------------
Corporate Secretary
Accepted:
By
------------------------------------
Name:
----------------------------------
(Please print full name)
Being the same individual named
in the preamble hereto and re-
ferred to as "You" in the text.
PAGE 49
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 17 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 1 of 18
CERTAIN DEFINITIONS
For purposes of this Agreement:
(A) Accelerated Dividend Equivalent means the lump-sum cash payment
equal to the sum of
(i) the total of all dividend equivalents that, but for your
Termination, you would have received (whether in cash or
on a deferred basis) after your Termination Date on grants
outstanding on your Termination Date; and
(ii) the fair market value of all units, including fractions
thereof, credited or creditable on your Termination Date
to your memorandum account in respect of dividend
equivalents you were not entitled to receive in cash. For
this purpose, "fair market value" shall be determined in
accordance with the methodology identified in Item (N)(i)
of this Attachment A, so that you will receive in exchange
for such units a cash amount calculated with respect to
the mean of the high and low trading prices of the
security from which the unit (on any date required to be
used under Item (N)(i)) derives its value.
In return for this payment, you will be deemed to have waived any
and all rights you otherwise might have to receive payments, in any
form (post-Termination dividend equivalents that would have been
converted to units, will be paid in cash instead) in respect of such
dividend equivalents or such units.
For purposes of (A)(i), the dividend rate per share shall be the
greater of the rate established pursuant to the authority of the
Board of Directors:
(a) on the most recent dividend declaration date
preceding your Termination Date; or
(b) on the dividend declaration date that immediately
precedes the date of the Change in Control.
PAGE 50
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 18 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 2 of 18
Example: On your Termination Date, you hold options to acquire
a total of 6,000 shares of the Corporation's common stock.
Dividend equivalents were awarded with each option grant,
payable (whether in cash or on a deferred basis) during the
first five (5) years next following the date of grant, on
options unexercised on the dividend record date. The dividend
declared immediately prior to the Change in Control was $0.56
per share; the most recent dividend declared is $0.60 per share.
Also, on your Termination Date, 116.916 units have been credited
to your memorandum account, and the Fair Market Value of the
Corporation's common stock is determined to be $85.00.
Accordingly, you will receive a lump-sum cash payment on all
outstanding options - as to each such option, for the entire
remaining period during which you would have been entitled to
receive dividend equivalents on that option - at the rate per
share (option) of $0.60, plus the fair market value of your
units.
For instance, if 4,000 of your options called for payment of
dividend equivalents (whether in cash or to be converted into
units) for the six (6) quarters next following your Termination
Date, and the other 2,000 called for such payments (whether in
cash or to be converted into units) over the next ten (10)
quarters, you would receive in a lump sum:
4,000, times $0.60, times 6 dividend dates = $ 14,400.00
2,000, times $0.60, times 10 dividend dates = 12,000.00
-----------
$ 26,400.00
AND
116.916 units @ $85.00 per share (unit) = 9,937.86
-----------
TOTAL $ 36,337.86
PAGE 51
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 19 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 3 of 18
(B) Actual Incentive Pay Percentage means, in any given year, the
percentage actually earned, as determined pursuant to the authority
of the Board of Directors, of the maximum potential bonus amount
potentially payable to participants in the Corporation's Executive
Management Incentive Plan and its Management Incentive Plan, or any
successor plan[s] or program[s] to either or both (respectively,
EMIP and MIP).
(C) Additional Benefits refers to, as to each plan listed herein, the
greater of all those benefits associated with or accruing as a
result of your continued participation in the following plans, or
portions of plans, of the Corporation in which you are participating
or are eligible to participate (whether funded by actual insurance
or self-insured by the Corporation) immediately prior to (a) the
Change in Control or (b) your Termination:
1. Norfolk Southern Corporation Comprehensive Benefits
Plan
[Only Paragraphs E, F and H of Article III, "ChoicePlus,"
providing medical, dental and life insurance benefits],
2. Norfolk Southern Corporation Executive Accident Plan,
The term "Additional Benefits" shall not include benefits of any
type under any other plans, policies or programs.
(D) Base Pay means
(i) in determining whether a Termination has occurred, the gross
amount of your annual salary in effect on the date of a Change
in Control (the gross amount you actually were paid in the pay
period coinciding with or immediately preceding the date of the
Change in Control, multiplied by the number of pay periods in
the year or otherwise determined and expressed as an annual
amount).
(ii) in calculating the amount of Severance Pay, the larger of
(a) the amount calculated under Item (D)(i); or
(b) the amount calculated as provided in Item (D)(i), but
substituting "Termination Date" for "date of a Change in
Control" wherever the latter term appears.
PAGE 52
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 20 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 4 of 18
(E) Beneficial Owner means any Person who, under Rule 13d-3 (or
successor rules or regulations thereto) promulgated under the
Securities Exchange Act of 1934, would be deemed beneficially to own
Voting Stock.
(F) Benefits means any of the perquisites, benefits and service credit
for benefits provided under any and all employee retirement income
or welfare benefit policies, plans, programs or arrangements in
which you participate immediately prior to the Change in Control,
including without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement or
other retirement income or welfare benefit, deferred compensation,
incentive compensation, group and/or executive life, health,
medical/hospital or other insurance (whether funded by actual
insurance or self-insured by the Corporation), disability, salary
continuance, severance pay plan, expense or tuition reimbursement or
other employee benefit policies, plans, programs or arrangements
that now exist, or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the
Corporation providing perquisites, benefits and service credit for
benefits at least as great as are payable thereunder prior to a
Change in Control, provided, however, that your rights under such
policies, plans, programs or arrangements shall be governed by the
terms thereof and shall not be enlarged hereunder or otherwise
affected hereby.
(G) Cause refers to your having engaged in any of the following if the
result of the same is materially harmful to the Corporation:
(i) an intentional act of fraud, embezzlement or theft in
connection with your duties or in the course of your employment
with the Corporation;
(ii) intentional wrongful damage to property of the Corporation;
(iii) intentional wrongful disclosure of secret processes or of
confidential information of the Corporation; or
(iv) intentional violation of the Corporation's Code of
Conduct/Ethics (or any successor[s]) as in effect immediately
prior to a Change in Control.
PAGE 53
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 21 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 5 of 18
For these purposes, an act or failure to act on your part shall be
deemed "intentional" only if you acted or omitted to act otherwise
than in accordance with your good faith business judgment of the
best interests of the Corporation; in determining whether this
standard has been satisfied, you shall be afforded all the
presumptions and be entitled to all the protections available to
directors under Section 13.1-690 of the Virginia Stock Corporation
Act.
(H) A Change in Control occurs upon any of the following circumstances
or events:
(i) The Corporation consummates a merger or other similar control-
type transaction or transactions (however denominated or
effectuated) with another corporation or other Person
(Combination), and immediately thereafter less than eighty
percent (80%) of the combined voting power of the then-
outstanding securities of such corporation or Person is held in
the aggregate by the holders of securities entitled,
immediately prior to such Combination, to vote generally in the
election of directors of the Corporation (Voting Stock);
(ii) The Corporation consummates any stockholder-approved
consolidation or dissolution (however denominated or
effectuated) pursuant to a recommendation of the Board;
(iii) At any time, Continuing Directors (as herein defined)
shall not constitute a majority of the members of the Board
("Continuing Director" means (i) each individual who has been a
director of the Corporation for at least twenty-four (24)
consecutive months before such time and (ii) each individual
who was nominated or elected to be a director of the
Corporation by at least two thirds of the Continuing Directors
at the time of such nomination or election);
(iv) The Corporation sells all or substantially all of its assets to
any other corporation or other Person, and less than eighty
percent (80%) of the combined voting power of the then-
outstanding securities of such corporation or Person
immediately after such transaction is held in the aggregate by
the holders of Voting Stock immediately prior to such sale;
(v) A report is filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), pursuant to the Securities
Exchange Act of 1934, as amended (Exchange Act), disclosing
that any Person has become the Beneficial Owner of twenty (20)
or more percent of the voting power of Voting Stock; or
PAGE 54
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 22 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 6 of 18
(vi) The Board determines by a majority vote that, because of the
occurrence, or the threat or imminence of the occurrence, of
another event or situation with import or effects similar to
the foregoing, those who have accepted an agreement of this
type are entitled to its protections.
Notwithstanding the provisions of the foregoing subparagraph (v),
unless otherwise determined in a specific case by majority vote of
the Board, a Change in Control for purposes of this Agreement shall
not be deemed to have occurred solely because (a) the Corporation,
(b) an entity of which the Corporation is the direct or indirect
Beneficial Owner of 50 or more percent of the voting securities or
(c) any Corporation-sponsored employee stock ownership plan or any
other employee benefit plan of the Corporation either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K, or Schedule 14A
(or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 20 percent or otherwise, or
because the Corporation reports that a change in control of the
Corporation has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
(I) Competing Employment means the provision of services of any type,
kind or nature and in any capacity (whether as a director, partner,
officer, employee, independent contractor, consultant or otherwise),
whether or not for compensation or other remuneration of any type,
kind or nature (current or deferred and whether or not paid or
payable to you, or at your direction), to any organization or person
(i) that is, or
(ii) that controls, or
(iii) that is controlled by, or
(iv) one of whose customers or clients which accounted for 5%
or more of the organization's or person's gross revenues
in the immediately preceding fiscal year or is likely to
account for 5% or more of such gross revenues in the
current or next succeeding fiscal year is:
(a) a Class I railroad operating in the United States,
Canada or Mexico; or
PAGE 55
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 23 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 7 of 18
(b) an interstate trucking company operating in the United
States, Canada or Mexico; or
(c) a provider or arranger (as to either - one incorporated
under the laws of the United States or of any state or
political subdivision of either or both) of intermodal
services of any kind or nature, any portion of which
services is provided or arranged in the United States,
provided however, that the provision of services otherwise
prohibited by the foregoing may be permitted if, in the sole
judgment of the Corporation's chief legal officer at the time, in
providing such services, you do not draw or rely extensively on, or
use for a purpose contrary to the Corporation's business interests,
the experience and expertise you acquired during and as a result of
your employment with, or that you used or employed for the benefit
of, the Corporation.
(J) Deferred Compensation Equivalent means, in respect of all amounts
you have deferred or elected to defer as of your Termination Date
under the terms of the Officers' Deferred Compensation Plan or
successor plan(s) or program(s) (ODCP), as in effect on the day
immediately preceding the Change in Control, a lump-sum cash payment
equal to the present value on your Termination Date, using a
discount rate of 4.5%, of the stream of annual installment payments
that you would have received (a) had you worked until normal
retirement at age 65, or (b) if greater, had you retired on your
Termination Date. In return for this payment, you will have, and
will be deemed to have, waived any and all rights you otherwise
might have to receive payments in respect of such deferrals under
the terms of the ODCP.
Example: You have deferred $70,000 - portions of several
bonuses. It is determined, on the actuarial basis noted above,
that the present value of the stream of annual installment
payments you would have received on $70,000 of deferrals (at
the interest rate in effect for each such deferral immediately
preceding the date of the Change in Control), had you worked to
normal retirement at age 65, is $175,000.
Accordingly, you would receive immediately and in cash a
Deferred Compensation Equivalent of $175,000.
PAGE 56
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 24 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 8 of 18
The actual amount any ODCP participant receives under this
provision will depend on that participant's age on the
Termination Date and the interest rate applicable to each pre-
Termination deferral the participant has made.
In all cases, however, that amount will exceed your account
balance (the sum of all your deferrals, plus interest credited
to the Termination Date).
(K) Incentive Opportunity means the percentage of your salary or other
fixed compensation that, in accordance with all applicable
provisions of the EMIP and MIP - including without limitation
earnings and return targets - in effect immediately prior to the
Change in Control, could be earned as incentive pay.
(L) Incentive Pay means the product of (i) and (ii), where:
(i) is 100% of the larger of your Incentive Opportunity
(a) on your Termination Date; or
(b) immediately preceding the date of the Change in Control;
and
(ii) is your Base Pay.
Example: On your Termination Date, your Incentive Opportunity
is 30% of your base salary; immediately prior to the date of
the Change in Control, your Incentive Opportunity was 45% of
your base salary.
Accordingly, your Incentive Pay will be calculated on the basis
of a 45% Incentive Opportunity - and that percentage will be
applied to your Base Pay. The resulting dollar amount is the
Incentive Pay that will be used in the calculation of your
Severance Pay.
For instance, if your Base Pay is $100,000 and your Incentive
Opportunity is 45%, your Incentive Pay is $45,000. The sum
($145,000) of your Base Pay and Incentive Pay will be
multiplied by the factor indicated in the Severance Pay section
of your Agreement to determine the amount of your Severance
Pay.
PAGE 57
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 25 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 9 of 18
(M) Option Equivalent means that positive number that is the product of
(i) and (ii) where
(i) is the total number of shares of the type of Norfolk Southern
or successor security (Security) that the option entitles you
to acquire; and
(ii) is the number that is equal to the difference between
(a) the Fair Market Value of the type of Security (the mean of
the high and low prices at which shares of that Security
trade on the Applicable Date (as hereinafter defined) as
reported in the Composite Transactions for such date by
The Wall Street Journal) for which the option is
exercisable on your Termination Date, less
(b) the option exercise or strike price on your Termination
Date.
"Applicable Date" means the later of (i) your Termination Date, if
at least 100,000 shares of the Security trade on that date on the
New York Stock Exchange (Exchange) or (ii) the immediately preceding
day on which at least 100,000 shares trade on the Exchange,
provided, however, that if, at the time of the Change in Control or
during the Change in Control Period, the Norfolk Southern security
for which the option could be exercised ceases to be listed on the
Exchange (Cessation Date) and the option is not exercisable for the
number of shares of a successor security into which the Norfolk
Southern security could have been converted, for which it could have
been exchanged or to which it otherwise is equal, then "Applicable
Date" shall be defined (and Fair Market Value determined) with
reference to the Cessation Date rather than "your Termination Date."
(N) Performance Share Unit Equivalent means the number that is equal to
the product of (i) and (ii) where:
(i) is Fair Market Value which means,
(a) if on your Termination Date the security that could be
earned out as Performance Shares (Performance Security) is
listed on the Exchange, the Fair Market Value of each such
unearned Performance Share Unit shall be the larger of the
value of a share of such Performance Security (x) on the
date of the Change in Control or (y) your Termination
PAGE 58
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 26 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 10 of 18
Date; if fewer than 100,000 shares of such Performance
Security were traded on the Exchange on your Termination
Date, then on the next succeeding day on which at least
100,000 shares trade on the Exchange. On any date,
"Value" is the mean of the high and low prices at
which shares of the Performance Security trade on such
date as reported in the Composite Transactions for such
date by The Wall Street Journal; or
(b) if at the time of the Change in Control or during the
Change in Control Period, the Performance Security ceases
to be listed on the Exchange (Cessation Date), Fair Market
Value shall be computed as provided under (i)(a) hereof,
but substituting Cessation Date for Termination Date; and
(ii) is the number of your Equivalent Shares which means the total
number of Performance Share Units granted to you for which the
full performance cycle has not been completed (In-Cycle Units),
multiplied by the mean of the overall earnout percentages for
the two most recently completed performance cycles.
In return for this payment, you will have, and will be deemed to
have, waived any and all rights you otherwise might have to receive
payments, in any form, in respect of such Performance Share Units.
Example: On your Termination Date, you have 7,500 In-
Cycle Units (2,500 granted in each of the prior three
years); in the two most recently completed cycles
preceding your Termination Date, the overall earnout
percentages were 88.30% and 75.80%, respectively - equal
to a mean overall earnout of 82.05%.
To determine the number of Equivalent Shares used to
compute your Performance Share Equivalent, 7,500 In-Cycle
Units are multiplied by 82.05%, giving a deemed earnout of
6,153.75 (Equivalent Shares).
The 6,153.75 Equivalent Shares are multiplied by the Fair
Market Value of the common stock to determine the amount
of your lump-sum cash payment.
PAGE 59
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 27 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 11 of 18
Accordingly, if the Fair Market Value of the common stock
is $85 per share, your Performance Share Equivalent would
be $523,068.75 (6,153.75 shares, multiplied by $85).
(O) Person means any
(i) "person" as that term is used and defined in the attached copy
of Section 14(d)(2) of the Exchange Act as in effect on the
effective date of this Agreement, and
(ii) "affiliate" or "associate" of any person (as defined in Item
(O)(i)) as those terms are used and defined in the attached
copy of Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the effective date of this
Agreement.
(P) Post-Retirement Life Insurance Benefit means a fully paid life
insurance policy (Policy), of which you are the sole owner and in
which the Corporation shall have no interest. The Policy shall be
in a face amount equal to the greater of the amount of the post-
retirement life insurance benefit to which you would have been
entitled on your retirement under the Corporation's retirement
policy as in effect for you (a) on your Termination Date or (b)
immediately preceding the date of the Change in Control, provided,
however, that the face amount of such Policy shall be reduced as and
to the extent required under the terms of (i) Appendix L (relating
to Retiree Group Life Insurance) of the Corporation's Comprehensive
Benefits Plan or (ii) the Death Benefit Plan of Norfolk Southern
Corporation and Participating Subsidiary Companies, each as in
effect on May 9, 1996. The Corporation also shall make a cash
payment, either directly to you or on your behalf, in an amount
estimated to be equal (after taking into account any Federal and
states taxes estimated to be applicable to such cash payment) to any
additional Federal and state income taxes that are imposed upon you
as a result of the issuance to you and your receipt of the Policy.
In determining the amount to be paid pursuant to the foregoing
sentence, the Corporation shall not be required to examine the
individual tax liability of any person entitled to receive such
cash payment or on whose behalf it is required to be made.
PAGE 60
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 28 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 12 of 18
(Q) Prorata Incentive Pay means the amount of pay to which, had you been
employed on December 31 of the year that includes your Termination
Date, you would have been entitled to receive under the terms of the
EMIP or the MIP, or the successor plan(s) or program(s) as in effect
for that year, calculated as the product of (i) and (ii), where
(i) is the maximum amount of bonus or incentive pay you
would have been entitled to receive for the full year,
using the larger of (a) your Incentive Opportunity or
(b) the percentage of your base salary that could be
earned as bonus or incentive pay during the year that
includes your Termination Date, and
(ii) is the percentage (carried to three decimal places) that
results from multiplying (a) and (b), where
(a) is the number of calendar days in that year which
immediately precedes, but includes, your Termination
Date, divided by 365; and
(b) is the mean of the last two Actual Incentive Pay
Percentages.
Example: A Change in Control occurs in 1997, and you are
Terminated effective the 183rd day of 1998. Your base salary
for 1998 is $100,000, and the percentage of your base salary
that could be earned as 1998 bonus or incentive pay is 30%; the
percentage of your base salary that could have been earned as
bonus or incentive pay in 1997 was 45%. Consequently, for
purposes of this calculation, the 45% opportunity is used.
PAGE 61
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 29 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 13 of 18
In January 1997, the Actual Incentive Pay Percentage
(attributable to 1996 performance) was determined to be 100%;
in January 1998, that percentage (attributable to 1997
performance) was determined to be 90%. Thus, the mean of the
last two Actual Incentive Pay Percentages is 95%.
the amount calculated under (i) is $45,000 (45% of
$100,000).
the percentage calculated under (ii) is 47.630% (183/365,
multiplied by 95% - the portion of the full year for which
you worked, times the mean of the last two Actual
Incentive Pay Percentages).
Accordingly, your Prorata Incentive Pay would be $21,433.50
($45,000, times 47.630%)
Under the terms of the Agreement, this amount will not be used
to calculate your final average compensation for pension
benefit purposes.
(R) Termination means:
(i) Your decision to leave the employ of the Corporation if,
following a Change in Control and during the Change in Control
Period, any of the following occurs, provided, however, that
your continued employment after the occurrence of one or more
of the following shall not constitute consent to, or a waiver
of rights with respect to, circumstances that empower you to
leave the employ of the Corporation:
(a) You are not elected or reelected to the office of the
Corporation you held immediately prior to the Change in
Control, or - if you were serving as a director of the
Corporation immediately prior to the Change in Control -
you are removed as a director;
(b) Your Base Pay is, or when annualized will be, less than
the amount determined in accordance with (D)(i) herein);
(c) Your Incentive Opportunity is less than that provided for
under (K) herein;
PAGE 62
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 30 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 14 of 18
(d) Without your prior written consent, the Corporation,
except to meet the requirements of applicable federal or
state law, (i) terminates, or (ii) reduces the value or
scope of your rights to any Benefits to which you are
entitled, and the Corporation does not remedy any such
termination or reduction, as the case may be, within ten
(10) calendar days after its receipt of written notice
from you;
(e) You determine in good faith that following a Change in
Control, you have been rendered substantially unable to
carry out or have suffered a substantial reduction in any
of the substantial authorities, powers, functions,
responsibilities or duties attached to the position you
held immediately prior to the Change in Control, which
situation is not remedied within ten (10) calendar days
after receipt by the Corporation of written notice from
you that you have made such a determination;
(f) The liquidation, dissolution, merger, consolidation or
reorganization of the Corporation or the transfer of all
or a significant portion of its business and/or assets,
unless the successor or successors (by liquidation,
merger, consolidation, reorganization or otherwise) to
which all or a significant portion of its business and/or
assets have been transferred (directly or by operation of
law) shall have assumed all the duties and obligations of
the Corporation under this Agreement either by operation
of law or pursuant to the provisions under the Agreement
caption "Binding on Successors";
(g) The Corporation requires you to relocate your principal
location of work outside a circle having (i) as its center
your principal location of work immediately prior to the
Change in Control and (ii) a radius of thirty-five (35)
miles, or requires you to travel away from your office in
the course of discharging your responsibilities or duties
hereunder significantly more (in terms either of
consecutive days or of aggregate days in any calendar
year) than was required of you immediately prior to the
Change in Control, without (in either case) your prior
written consent; or
PAGE 63
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 31 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 15 of 18
(h) Without limiting the generality or the effect of the
foregoing, any material breach of this Agreement by the
Corporation or any successor thereto.
OR
(ii) The termination of your employment by the Corporation, during
the twenty-four months next succeeding a Change in Control, for
any reason except:
(a) Your death;
(b) Your Total Disability, as defined in the Long Term
Disability Plan of Norfolk Southern Corporation and
Participating Subsidiary Companies (or any plan that is
successor or in addition thereto), as then in effect, and
you begin to receive disability benefits pursuant to that
plan;
(c) Your retirement pursuant to any Board-approved policy or
plan, on the terms in effect immediately prior to the
Change in Control, providing for mandatory retirement of
certain personnel; or
(d) Cause.
(S) Termination Date means the date specified in the Notice of Termination
(hereinafter defined), provided, however, that if, prior to the
Termination Date, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
Termination, then the Termination Date shall be the date on which the
dispute finally is determined, either by mutual written agreement of
the parties, by a binding arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); and provided, further, that
the Termination Date shall be extended by a notice of dispute only if
such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
PAGE 64
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 32 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 16 of 18
For these purposes, any purported termination of your employment by
the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto, delivered in accordance with
the caption concerning "Notice" in the Agreement. The Notice of
Termination shall
(i) indicate the specific Termination provision relied upon;
(ii) set forth in reasonable detail the facts and circumstances
claimed to provide a basis for Termination under the
provision(s) so indicated; and
(iii) shall specify the Termination Date, which:
(a) if the Termination is for Cause, shall be a date not
less than thirty (30) days from the date the Notice of
Termination is given; and
(b) if the Termination is not for Cause, shall be a date
not less than fifteen (15) nor more than sixty (60)
days after such Notice of Termination is given.
(T) Vacation Equivalent is intended to compensate you for your unused
vacation in the year of Termination and for one year of additional
vacation; for these purposes, the term means the cash value
attributable to the sum of
(i) Your Current Vacation Equivalent - the number of full days of
vacation for which you are eligible in the year that includes
your Termination Date, determined using the more generous of the
vacation policy as in effect (a) on your Termination Date or (b)
on the day immediately preceding the date of the Change in
Control, the number of such full days to be reduced by the number
of full days of vacation you have taken prior to your Termination
Date in the year that includes your Termination Date, multiplied
by your Base Pay expressed as a daily rate on the basis of 261
business days per year; and
(ii) Your Additional Vacation Equivalent - the larger of the
number of weeks, determined as of your Termination Date or as of
January 1 of the year next following the year that includes your
Termination Date (or, if greater, for which you would have been
eligible on either date had the Corporation's vacation policy, as
in effect on the day immediately preceding the date of the Change
in Control, been in effect on either date) multiplied by your
Base Pay expressed as a weekly rate.
PAGE 65
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 33 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 17 of 18
In return for this payment, you will have, and will be deemed to
have, waived any and all rights you otherwise might have to
receive payments in respect of vacation to which you would or may
have been entitled in any years or years including or following
that which includes your Termination Date.
Example:
Current Vacation Equivalent - In the year of your Termination,
you are eligible for three (3) weeks' vacation; had the
Corporation's vacation policy as in effect on the day prior to
the Change in Control been continued, in the year that includes
your Termination Date, you would have been eligible for five (5)
weeks' vacation.
For purposes of determining the Current Vacation Equivalent, you
are deemed to be eligible for five week's (25 business days')
vacation.
If your Base Pay (the amount used to compute your Severance Pay)
is $100,000, it would be equivalent to $383.14 per business day
($100,000, divided by 261 business days).
If you have 17 business days of vacation remaining in the year
that includes your Termination Date, your Current Vacation
Equivalent would be $6,513.38, in return for which you will be
deemed to have waived any and all rights you otherwise might have
to receive payments in respect of unused vacation to which you
were entitled in the year that includes your Termination Date.
Additional Vacation Equivalent - Under the vacation policy in
effect in the year of your Termination, you are eligible for
three (3) weeks' vacation, and you would be eligible for four (4)
weeks' vacation had you been employed on the following January 1;
had the Corporation's vacation policy as in effect on the day
prior to the Change in Control been continued, in the year that
includes your Termination Date, you would have been eligible for
five (5) weeks' vacation, and you would be eligible for five (5)
weeks' vacation had you been employed on the following January 1.
PAGE 66
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 34 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 18 of 18
For purposes of determining the Additional Vacation Equivalent,
you are deemed to be eligible for five weeks' vacation.
If your Base Pay (the amount used to compute your Severance Pay)
is $104,000, it would be equivalent to $2,000.00 per week
($100,000, divided by 52).
Accordingly, your Additional Vacation Equivalent would be
$10,000.00 ($2,000.00, multiplied by five (5) weeks), in return
for which you will be deemed to have waived any and all rights
you otherwise might have to receive payments in respect of
vacation to which you would have been entitled.
In this example, your Vacation Equivalent would be $16,513.38
(the sum of your Current Vacation Equivalent and your Additional
Vacation Equivalent).
Under the terms of the Agreement, only the portion of this
payment that represents the value of your Current Vacation
Equivalent will be used to calculate your final average
compensation for pension benefit purposes.