Document:

exv10w15

 

Exhibit 10.15

WGL HOLDINGS, INC.

1999 INCENTIVE COMPENSATION PLAN,

As Amended and Restated

March 5, 2003

SECTION 1

PURPOSE

Purpose. The purpose of this 1999 Incentive Compensation Plan, as Amended and
Restated (the “Plan”) of WGL Holdings, Inc., a Virginia corporation (the
“Company”), is to advance the interests of the Company and its shareholders by
providing for incentive compensation triggered by factors related to
operational excellence, customer service, utility reliability and others as a
means to attract, retain and reward officers and other key employees of, and
consultants and other service providers to, the Company and Subsidiaries and to
enable such persons to acquire or increase their interests in the Company and
its success, thereby promoting a closer identity of interests between such
persons and the Company’s shareholders. The Plan is intended to qualify certain
compensation awarded under the Plan as “performance-based compensation” under
Code section 162(m) to the extent deemed appropriate by the Committee.

SECTION 2

GENERAL DEFINITIONS

Definitions. The definitions of awards under the Plan, including Options,
SARs, Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of
other awards, Dividend Equivalents, Other Stock-Based Awards and Cash Awards,
are set forth in Section 6 of the Plan. Such awards, together with any other
right or interest granted to a Participant under the Plan, are termed “Awards.”
For purposes of the Plan, the following additional terms shall be defined as
set forth below:

     (a) “Award Agreement” means any written agreement, contract, notice or
other instrument or document evidencing or relating to an Award.

     (b) “Beneficiary” means the person, persons, trust or trusts which have
been designated by a Participant in his most recent written beneficiary
designation filed with the Committee to exercise the rights and receive the
benefits specified under an Award upon such Participant’s death or, if there
is no designated Beneficiary or surviving designated Beneficiary, then the
person, persons, trust or trusts entitled by will or the laws of descent and
distribution to exercise such rights and receive such benefits.

     (c) “Board” means the Board of Directors of the Company.

 

 

(d) “Change of Control” means:

     (i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of either (A) the then-outstanding shares of
common stock of the Company or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally
in the election of directors; provided, however, that for purposes of this
paragraph (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company, (B) any acquisition
by the Company, or any corporation controlled by or otherwise affiliated with
the Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled
by or otherwise affiliated with the Company; or (D) any transaction described
in clauses (A), (B), and (C) of paragraph (iv) of this definition; or

     (ii) Individuals who, as of the close of business on November 1, 2000,
constituted the Board of Directors of the Company (the “Incumbent Company
Board”) cease for any reason to constitute at least a majority of the Board
of Directors of the Company; provided, however, that any individual becoming
a director subsequent to November 1, 2000 whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Company Board shall
be considered as though such individual were a member of the Incumbent
Company Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Company Board; or

     (iii) The acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (A) the then-outstanding shares of common stock of Washington Gas
Light Company (the “Utility”) or (B) the combined voting power of the
then-outstanding voting securities of the Utility entitled to vote generally
in the election of directors; provided, however, that for purposes of this
paragraph (iii), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Utility, (B) any acquisition
by the Utility or any corporation controlled by or otherwise affiliated with
the Utility, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Utility or any corporation controlled
by or otherwise affiliated with the Utility; or (C) any transaction described
in clauses (A) and (B) of paragraph (v) of this definition; or

     (iv) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company
(a “Business Combination”), in each case unless, following such Business
Combination, (A) all or

- 2 -

 

substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Company common stock and
outstanding Company voting securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination in substantially the
same proportions as their ownership, immediately prior to such Business
Combination, of the outstanding Company common stock and outstanding Company
voting securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or of such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 30% or
more of, respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination, or the combined voting
power of the then-outstanding voting securities of such corporation, except
to the extent that such ownership existed prior to the Business Combination
and (C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Company Board at the time of the execution of the initial
agreement, or of such Incumbent Company Board, providing for such Business
Combination; or

     (v) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Utility (a
“Utility Business Combination”), in each case unless, following such Utility
Business Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, directly or indirectly,
respectively, of the outstanding Utility common stock and the outstanding
Utility voting securities immediately prior to such Utility Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Utility Business Combination in substantially
the same proportions as their ownership, immediately prior to such Utility
Business Combination, of the outstanding Utility common stock and outstanding
Utility voting securities, as the case may be, and (B) no Person (excluding
any corporation resulting from such Utility Business Combination or any
employee benefit plan (or related trust) of the Utility or such corporation
resulting from such Utility Business Combination) beneficially owns, directly
or indirectly, 30% or more of, respectively, the then-outstanding shares of
common stock of the corporation resulting from such Utility Business
Combination, or the combined voting power of the then-outstanding voting
securities of such corporation, except to the extent that such ownership
existed prior to the Utility Business Combination; or

     (vi) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

- 3 -

 

For purposes of this definition, the term “affiliated” includes any entity
controlled by, controlling or under common control with the entity referred
to.

     (e) “Code” means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
the regulations thereunder and successor provisions and regulations thereto.

     (f) “Committee” means the committee appointed by the Board to administer
the Plan or, if no committee is appointed, the Board.

     (g) “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include the rules thereunder and successor provisions and rules
thereto.

     (h) “Fair Market Value” means, on any given day, the closing price of
one share of Stock as reported on the New York Stock Exchange composite tape
on such day or, if the Stock was not traded on such day, then on the next
preceding day that the Stock was traded, all as reported by such source as
the Committee may select.

     (i) “ISO” means any Option intended to be and designated as an incentive
stock option within the meaning of Code section 422.

     (j) “Participant” means a person who, at a time when eligible under
Section 5, has been granted an Award.

     (k) “Plan Year” means the Company’s fiscal year.

     (l) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.

     (m) “Stock” means the common stock, no par value, of the Company and
such other securities as may be substituted for Stock or for such other
securities pursuant to Section 4(c).

     (n) “Subsidiary” or “Subsidiaries” means any corporation or corporations
which, together with the Company, would form a group of corporations
described in Code section 424(f). The term shall include the Utility. The
term shall also refer to any entity designated as such by the Board for
purposes of the Plan.

     (o) “Utility” means Washington Gas Light Company.

SECTION 3

ADMINISTRATION

- 4 -

 

     (a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions
of the Plan:

     (i) to select persons to whom Awards may be granted;

     (ii) to determine the type or types of Awards to be granted to each such
person;

     (iii) to determine the number of Awards to be granted, the number of
 shares of Stock to which an Award will relate, the terms and conditions of
any Award (including, without limitation, any exercise price, any grant price
or purchase price, any restriction or condition, any schedule for lapse of
restrictions or conditions relating to transferability, forfeiture,
exercisability or settlement and any waivers or accelerations thereof and any
performance conditions (including, without limitation, any performance
conditions relating to Awards not intended to be governed by Section 7(e) and
any waivers and modifications thereof), based in each case on such
considerations as the Committee shall determine) and all other matters to be
determined in connection with an Award;

     (iv) to determine whether, to what extent and under what circumstances
an Award may be settled, or the exercise price of an Award may be paid, in
cash, Stock, other Awards or other property, or an Award may be canceled,
forfeited or surrendered;

     (v) to determine whether, to what extent and under what circumstances
cash, Stock, other Awards or other property payable with respect to an Award
will be deferred either automatically, or at the election of the Committee or
of the Participant;

     (vi) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;

     (vii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;

     (viii) to correct any defect or omission or reconcile any inconsistency
in the Plan and to construe and interpret the Plan and any Award, rules and
regulations or Award Agreement; and

     (ix) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the proper administration of the Plan.

     Other provisions of the Plan notwithstanding, the Board may perform any
function of the Committee under the Plan, including, without limitation, for
the purpose of ensuring that transactions under the Plan by Participants who
are then subject to Section 16 of the Exchange Act in respect of the Company
are exempt under Rule 16b-3. In any case

- 5 -

 

in which the Board is performing a function of the Committee under the
Plan, each reference to the Committee herein shall be deemed to refer to the
Board.

     (b) Manner of Exercise of Committee Authority. Any determination or
action of the Committee with respect to the Plan or any Award shall be taken in
the sole and absolute discretion of the Committee and shall be final,
conclusive and binding on all persons, including, without limitation, the
Company, any Subsidiary, any Participant, any person claiming any rights or
interests under the Plan or any Award from or through any Participant and the
Company’s shareholders, except to the extent that the Committee may
subsequently modify, or make a further determination or take further action not
consistent with its prior determination or action. If not specified in the
Plan, the time at which the Committee must or may make any determination or
take any action shall be determined by the Committee, and any such
determination or action may thereafter be modified by the Committee (subject to
Sections 8(e) and 8(f)). The express grant of any specific power to the
Committee, the making of any determination or the taking of any action by the
Committee or the failure to make any determination or take any action shall not
be construed as limiting any power or authority of the Committee. Except as
provided in Section 7(e), the Committee may delegate to officers or managers of
the Company or any Subsidiary authority, subject to such terms and conditions
as the Committee shall determine, to perform such functions as the Committee
may determine, to the extent permitted under applicable law.

     (c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
Subsidiary, the Company’s independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any determination, action or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such determination, action or
interpretation.

SECTION 4

STOCK SUBJECT TO THE PLAN AND MAXIMUM AWARDS

     (a) Shares of Stock Reserved. Subject to adjustment as provided in
Section 4(c), the total number of shares of Stock reserved and available for
delivery pursuant to Awards shall not exceed 2,000,000. Shares subject to any
Award which is canceled, expired, forfeited, settled in cash or otherwise
terminated without delivery of fully tradeable shares of Stock to the
Participant (or Beneficiary), including, without limitation, shares of
Restricted Stock that are forfeited and shares of Stock withheld or surrendered
in payment of any exercise price of an Award or taxes related to an Award,

- 6 -

 

shall again be available for delivery pursuant to Awards. Notwithstanding
the foregoing, the number of shares that may be delivered upon the exercise of
ISOs shall not exceed 2,000,000, and the number of shares that may be delivered
in the form of Restricted Stock shall not exceed 300,000, in each case subject
to adjustment as provided in Section 4(c). Any shares of Stock delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued shares, treasury shares or shares acquired by the Company.

     (b) Annual Per-Participant Limitations. During any Plan Year, no
Participant may be granted Awards relating to more than 400,000 shares of
Stock, subject to adjustment as provided in Section 4(c). In addition, with
respect to Cash Awards, no Participant may be paid during any Plan Year cash or
other property relating to such Awards that exceeds the Fair Market Value of
the number of shares of Stock set forth in the preceding sentence, determined
either at the date of grant or the date of settlement, whichever is greater.
This provision sets forth two separate limitations, so that Awards that may be
settled solely by delivery of Stock will not operate to reduce the amount of
Cash Awards, and vice versa. Awards that may be settled either in Stock or in
cash must not exceed either limitation during the applicable Plan Year.

     (c) Adjustments. In the event that the Committee shall determine that any
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and nonrecurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution or other similar corporate transaction or event
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares of Stock reserved and available for delivery pursuant
to Awards under Section 4(a), including, without limitation, the share
limitations for Restricted Stock and ISOs, (ii) the number and kind of shares
of Stock specified in the annual per-Participant limitations under Section
4(b), (iii) the number and kind of shares of Stock relating to outstanding
Restricted Stock or other Awards in connection with which shares have been
issued, (iv) the number and kind of shares of Stock that may be issued in
respect of any other outstanding Awards and (v) the exercise price, grant price
or purchase price relating to any Awards (or, if deemed appropriate, the
Committee may make provision for a cash payment with respect to any outstanding
Awards). In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards (including,
without limitation, cancellation of unexercised or outstanding Awards, or
substitution of Awards using stock of a successor or other entity) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence and events constituting a Change of
Control) affecting the Company or any Subsidiary or the financial statements of
the Company or any Subsidiary, or in response to changes in applicable laws,
regulations or accounting principles. Notwithstanding anything herein to the
contrary, without the prior approval of the shareholders of the Company,
neither the Board nor the Committee may take any action that would constitute a
repricing of an outstanding

- 7 -

 

Option.

SECTION 5

ELIGIBILITY

     Executive officers and other key employees of the Company or of any
Subsidiary, including any member of the Board who is also such an employee, and
persons who provide consulting or other services to the Company or any
Subsidiary deemed by the Committee to be of substantial value, are eligible to
be granted Awards. In addition, persons who have been offered employment by the
Company or any Subsidiary, and persons employed by an entity that the Committee
reasonably expects to become a Subsidiary, are eligible to be granted Awards.

SECTION 6

SPECIFIC TERMS OF AWARDS

     (a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose, in connection with
any Award, such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including, without
limitation, terms requiring forfeiture of Awards in the event of termination of
employment or service of the Participant. Except as provided in Section 6(f),
6(h) or 7(a), or to the extent required to comply with requirements of
applicable law, only services may be required as consideration for the grant
(but not the exercise) of any Award.

     (b) Options. The Committee is authorized to grant options to purchase
Stock on the following terms and conditions (“Options”):

     (i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee; provided, however, that
except as provided in Section 7(a), the exercise price shall be not less than
the Fair Market Value on the date of grant.

     (ii) Time and Method of Exercise. Each Option shall be exercisable
during and over such period ending not later than ten years from the date it
was granted, as may be determined by the Committee and stated in the Award
Agreement. The Committee shall determine the time or times at which an Option
may be exercised in whole or in part, the methods by which the exercise price
may be paid or deemed to be paid, the form of such payment, including,
without limitation, cash, Stock, other Awards or other property (including,
without limitation, awards granted under other Company plans and through
“cashless exercise” arrangements, to the extent permitted by applicable law)
and the methods by which Stock will be delivered or deemed to be delivered to
Participants.

- 8 -

 

     (iii) ISOs. The terms and conditions of any ISOs shall comply in all
respects with the requirements of Code section 422. Notwithstanding anything
to the contrary herein, no term of the Plan or of any Award Agreement
relating to ISOs shall be interpreted, amended or altered, nor shall any
discretion or authority granted hereunder be exercised, so as to cause the
ISOs to fail to qualify as such under Code section 422, unless such result is
mutually agreed to by the Company and the Participant.

     (iv) Termination of Employment or Service. Unless otherwise determined
by the Committee, upon termination of a Participant’s employment or service,
as applicable, with the Company and all Subsidiaries, such Participant may
exercise any Options during the three-month period following such termination
of employment or service, but only to the extent that such Option was
exercisable as of such termination of employment or service. Notwithstanding
the foregoing, if the Committee determines that such termination is for
cause, all Options held by the Participant shall terminate as of the
termination of employment or service.

     (c) Stock Appreciation Rights. The Committee is authorized to grant
Stock appreciation rights on the following terms and conditions (“SARs”):

     (i) Right to Payment. An SAR shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the
Fair Market Value on the date of exercise (or, if the Committee shall so
determine in the case of any such right other than one related to an ISO, the
Fair Market Value at any time during a specified period before or after the
date of exercise), over (B) the grant price of the SAR as determined by the
Committee as of the date of grant of the SAR, which, except as provided in
Section 7(a), shall be not less than the Fair Market Value on the date of
grant.

     (ii) Other Terms. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of exercise,
method of settlement, form of consideration payable in settlement, method by
which Stock will be delivered or deemed to be delivered to Participants,
whether or not an SAR shall be in tandem with any other Award, and any other
terms and conditions of any SAR.

     (d) Restricted Stock. The Committee is authorized to grant restricted
shares of Stock on the following terms and conditions (“Restricted Stock”):

     (i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such installments or
otherwise, as the Committee may determine. Except to the extent restricted
under the terms of the Plan and any Award Agreement relating to the
Restricted Stock, a Participant granted Restricted Stock shall have all of
the rights of a shareholder, including, without limitation, the right to vote
the Restricted Stock and the right to receive dividends thereon.

- 9 -

 

     (ii) Forfeiture. Except as otherwise determined by the Committee, upon
a Participant’s termination of employment or service (as determined under
criteria established by the Committee) during the applicable restriction
period, Restricted Stock that is at that time subject to restrictions shall
be forfeited and reacquired by the Company; provided, however, that the
Committee may provide, by rule or regulation or in any Award Agreement, or
may determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock shall be waived in whole or in part
in the event of termination resulting from specified causes.

     (iii) Certificates for Stock. Restricted Stock may be evidenced in such
manner as the Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant, such
certificates may bear an appropriate legend referring to the terms,
conditions and restrictions applicable to the Restricted Stock, the Company
may retain physical possession of the certificates and the Participant may be
required to deliver a stock power to the Company, endorsed in blank, relating
to the Restricted Stock.

     (iv) Dividends. Dividends paid on Restricted Stock shall be either paid
at the dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the aggregate amount of such dividends,
or the payment of such dividends shall be deferred and/or the amount or value
thereof automatically reinvested in additional shares of Restricted Stock,
other Awards or other property, as the Committee shall determine or permit
the Participant to elect. Stock distributed in connection with a Stock split
or Stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has been
distributed, unless otherwise determined by the Committee.

     (e) Deferred Stock. The Committee is authorized to grant deferred
shares of Stock subject to the following terms and conditions (“Deferred
Stock”):

     (i) Award and Restrictions. Delivery of Deferred Stock shall occur upon
expiration of the deferral period specified in the Award by the Committee or,
if permitted by the Committee, as elected by the Participant. In addition,
Deferred Stock shall be subject to such restrictions as the Committee may
impose, if any, which restrictions may lapse at the expiration of the
deferral period or at other specified times, separately or in combination at
such times, under such circumstances, in installments or otherwise, as the
Committee may determine.

     (ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment or service (as determined under criteria
established by the Committee) during the applicable deferral period or
portion thereof to which restrictions or forfeiture conditions apply, all
Deferred Stock that is at that time subject to such restrictions or
forfeiture conditions shall be forfeited; provided, however, that the
Committee may provide, by rule or regulation or in any Award Agreement, or
may

- 10 -

 

determine in any individual case, that restrictions or forfeiture
conditions relating to Deferred Stock shall be waived in whole or in part in
the event of termination resulting from specified causes.

     (f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee
is authorized to grant Stock as a bonus, or to grant Stock or other Awards in
lieu of Company obligations to pay cash or other property, under other plans
or compensatory arrangements.

     (g) Dividend Equivalents. The Committee is authorized to grant dividend
equivalents entitling the Participant to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock (“Dividend Equivalents”). Dividend Equivalents may
be awarded on a free-standing basis or in connection with another Award. The
Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock,
Awards or other property, and shall be subject to such restrictions on
transferability and risks of forfeiture, as the Committee may determine.

     (h) Other Stock-Based or Cash Awards. The Committee is authorized,
subject to limitations under applicable law, to grant such other Awards that
may be denominated or payable in, valued in whole or in part by reference to
or otherwise based on or related to Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes
of the Plan, including, without limitation, performance shares, convertible
or exchangeable debt securities, other rights convertible or exchangeable
into Stock, purchase rights for Stock, Awards with a value or payment
contingent upon performance of Stock (or any other factors designated by the
Committee) and Awards valued by reference to the book value of Stock or the
value of securities of or the performance of specified Subsidiaries (“Other
Stock-Based Awards”). The Committee shall determine the terms and conditions
of such Awards. Stock issued pursuant to an Other Stock-Based Award in the
nature of a purchase right granted under this Section 6(h) shall be purchased
for such consideration, paid for at such times, by such methods and in such
forms, including, without limitation, cash, Stock, other Awards or other
property, as the Committee shall determine. Awards that may be settled in
whole or in part in cash or other property (not including Stock) may also be
granted pursuant to this Section 6(h) (“Cash Awards”). The Committee shall
determine the terms and conditions of such Cash Awards.

SECTION 7

CERTAIN PROVISIONS APPLICABLE TO AWARDS

     (a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards may be
granted either alone or in addition to, in tandem with or in substitution for
any other Award or any award granted under any other plan of the Company, any
business entity

- 11 -

 

to be acquired by the Company or any Subsidiary, or any other right of a
Participant to receive payment from the Company or any Subsidiary. Awards
granted in addition to or in tandem with other Awards or awards may be granted
either as of the same time or as of a different time from the grant of such
other Awards or awards.

     (b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall
the term of any ISO or any SAR granted in tandem therewith exceed the period
permitted under Code section 422.

     (c) Form of Payment Under Awards. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or any
Subsidiary upon the grant, exercise or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single
payment or transfer, in installments or on a deferred basis. Such payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents in respect of installment or deferred
payments denominated in Stock.

     (d) Legal Compliance.

     (i) Compliance with Code Section 162(m). It is the intent of the
Company that Options, SARs and other Awards designated as such constitute
“performance-based compensation” within the meaning of Code section 162(m).
Subject to automatic acceleration and payout resulting from a Change of
Control under Section 7(f), if any provision of the Plan or of any Award
Agreement relating to such an Award does not comply or is inconsistent with
the requirements of Code section 162(m), such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements, and
no provision shall be deemed to confer upon the Committee or any other person
discretion to increase the amount of compensation otherwise payable in
connection with any such Award upon attainment of the performance goals.

     (ii) Section 16 Compliance. With respect to a Participant who is then
subject to Section 16 of the Exchange Act in respect of the Company, the
Committee shall implement transactions under the Plan and administer the Plan
in a manner that will ensure that each transaction by such a Participant is
exempt from liability under Rule 16b-3, except that such a Participant may be
permitted to engage in a nonexempt transaction under the Plan if written
notice has been given to the Participant regarding the nonexempt nature of
such transaction. The Committee may authorize the Company to repurchase any
Award or shares of Stock resulting from any Award in order to prevent a
Participant who is subject to Section 16 of the Exchange Act from incurring
liability under Section 16(b). Unless otherwise specified by the Participant,
equity securities, including, without limitation, derivative securities,
acquired under the Plan which are disposed of by a Participant shall be
deemed to

- 12 -

 

     be disposed of in the order acquired by the Participant.

     (e) Performance-Based Awards. The Committee may designate any Award, the
exercisability, vesting, payment or settlement of which is subject to the
attainment of one or more preestablished performance goals, as a
performance-based Award intended to qualify as “performance-based compensation”
within the meaning of Code section 162(m). The performance goals for an Award
subject to this Section 7(e) shall consist of one or more business criteria,
identified below, and a targeted level or levels of performance with respect to
such criteria, as specified by the Committee. Performance goals shall be
objective and shall otherwise meet the requirements of Code section
162(m)(4)(C). The following business criteria for the Company, on a
consolidated basis, and/or for specified Subsidiaries or business units of the
Company, shall be used by the Committee in establishing performance goals for
such Awards: (i) earnings; (ii) net income; (iii) net income applicable to
Stock; (iv) revenue (v) cash flow; (vi) return on assets; (vii) return on net
assets; (viii) return on invested capital; (ix) return on equity; (x)
profitability; (xi) economic value added; (xii) operating margins or profit
margins; (xiii) income before income taxes; (xiv) income before interest and
income taxes; (xv) income before interest, income taxes, depreciation and
amortization; (xvi) total return on Common Stock; (xvii) book value; (xviii)
expense management; (xix) capital structure and working capital; (xx) strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue, gross profit, market penetration, geographic business
expansion, cost targets or goals relating to acquisitions or divestitures;
(xxi) costs; (xxii) employee morale or productivity; (xxiii) customer
satisfaction or loyalty; (xxiv) customer service; (xxv) compliance programs;
(xxvi) gas delivered; (xxvii) system reliability; (xxviii) adequacy and
security of gas supply; and (xxix) safety. The levels of performance required
with respect to such business criteria may be expressed in absolute or relative
terms, including, without limitation, per share amounts and comparisons to the
performance of a published or special index deemed applicable by the Committee,
such as the Standard & Poor’s 500 Stock Index or the performance of one or more
comparator companies. In establishing the levels of performance to be attained,
the Committee may disregard or offset the effect of such factors as
extraordinary and/or nonrecurring events as determined by the Company’s
independent certified public accountants in accordance with generally accepted
accounting principles and changes in or modifications to accounting standards
as may be required by the Financial Accounting Standards Board. Achievement of
performance goals with respect to such Awards shall be measured over a period
of not less than one year nor more than five years, as the Committee may
specify. Performance goals may differ for Awards to different Participants. The
Committee shall specify the weighting to be given to each business criterion
for purposes of determining the final amount payable with respect to any such
Award. The Committee may reduce the amount of a payout otherwise to be made in
connection with an Award subject to this Section 7(e), but may not exercise its
discretion to increase such amount, and the Committee may consider other
performance criteria in exercising such negative discretion. All determinations
by the Committee as to the attainment of performance goals shall be in writing.
The Committee may not delegate any responsibility with respect to an Award that
is intended to qualify as “performance-based compensation” within the meaning
of

 - 13 -

 

Code section 162(m).

     (f) Acceleration and Payout upon a Change of Control. Notwithstanding
anything contained herein to the contrary, all conditions and/or restrictions
relating to the continued performance of services and/or the achievement of
performance goals with respect to the exercisability, vesting, payment or
settlement of an Award shall immediately lapse upon a Change of Control, and
all Awards shall be immediately paid or settled; provided, however, that such
lapse shall not occur if the Committee determines that such lapse shall not
occur.

- 14 -

 

SECTION 8

GENERAL PROVISIONS

     (a) Compliance with Laws and Obligations. The Company shall not be
obligated to issue or deliver Stock in connection with any Award or to take any
other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated quotation system
or any other law, regulation or contractual obligation until the Company is
satisfied that such laws, regulations and other obligations have been complied
with in full. Certificates representing shares of Stock issued under the Plan
may be subject to such stop-transfer orders and other restrictions as may be
applicable under such laws, regulations and other obligations, including,
without limitation, any requirement that a legend or legends be placed thereon.

     (b) Limitations on Transferability. Awards and other rights or benefits
under the Plan shall not be transferable by a Participant except by will or the
laws of descent and distribution or to a Beneficiary in the event of the
Participant’s death, shall not be pledged, mortgaged, hypothecated or otherwise
encumbered, or otherwise be subject to the claims of creditors and, in the case
of ISOs and SARs in tandem therewith, shall be exercisable during the lifetime
of a Participant only by such Participant or his guardian or legal
representative; provided, however, that Awards and other rights (other than
ISOs and SARs in tandem therewith) may be transferred to one or more
transferees during the lifetime of the Participant to the extent and on such
terms and conditions as may then be permitted by the Committee.

     (c) No Right to Continued Employment or Service. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee or any person
the right to be retained in the employ or service, as applicable, of the
Company or any Subsidiary, nor shall it interfere in any way with the right of
the Company or any Subsidiary to terminate any employee’s employment or any
person’s service at any time.

     (d) Taxes. The Company and any Subsidiary is authorized to withhold from
any Award granted or exercised, vested, paid or settled any delivery of cash,
Stock, other Awards or other property, or from any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take such
other action as the Committee may deem advisable to enable the Company and the
Participant to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include,
without limitation, authority to withhold or receive Stock, other Awards or
other property, and to make cash payments in respect thereof, in satisfaction
of a Participant’s tax obligations.

     (e) Changes to the Plan and Awards. The Board may amend, alter, suspend,

- 15 -

 

discontinue or terminate the Plan or the Committee’s authority to grant
Awards under the Plan without the consent of the Company’s shareholders or
Participants, except that any such Board action shall be subject to the
approval of the Company’s shareholders at or before the next annual meeting of
shareholders for which the record date is after such Board action if such Board
action increases the number of shares of Stock subject to the Plan or if such
shareholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the
Stock may then be listed or quoted, and the Board may otherwise, in its
discretion, determine to submit other such changes to the Plan to shareholders
for approval; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights or benefits of
such Participant under any Award theretofore granted to him (as such rights and
benefits are set forth in the Plan and the Award Agreement). The Committee may
waive any terms or conditions under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award Agreement relating
thereto; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights or benefits of
such Participant under such Award (as such rights or benefits are set forth in
the Plan and the Award Agreement).

     (f) Repricing Restriction. Notwithstanding anything herein to the
contrary, without the prior approval of the shareholders of the Company,
neither the Board nor the Committee may take any action that would constitute a
repricing of an outstanding Option.

     (g) No Rights to Awards; No Shareholder Rights. No Participant, employee
or eligible person shall have any claim to be granted any Award, and there is
no obligation for uniformity of treatment of Participants, employees or
eligible persons. No Award shall confer on any Participant any of the rights or
benefits of a shareholder of the Company unless and until Stock is duly issued
or transferred and delivered to the Participant in accordance with the terms of
the Award or, in the case of an Option, the Option is duly exercised.

     (h) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award Agreement shall give any such
Participant any rights or benefits that are greater than those of a general
creditor of the Company; provided, however, that the Committee may authorize
the creation of trusts or make other arrangements to meet the Company’s
obligations under the Plan to deliver cash, Stock, other Awards or other
property pursuant to any Award, which trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines with the consent of an affected Participant.

     (i) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the Company’s shareholders for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other compensatory

- 16 -

 

arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

     (j) No Fractional Shares. No fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares, or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

     (k) Gender; Singular and Plural. All masculine pronouns shall be deemed
to include their feminine counterparts. As the context may require, the
singular may be read as the plural and vice versa.

     (l) Governing Law. The validity, construction and effect of the Plan or
any Award Agreement and any rules and regulations relating to the Plan or any
Award Agreement shall be determined in accordance with the laws of the
Commonwealth of Virginia, without giving effect to principles of conflicts of
laws, and applicable federal law.

     (m) Effective Date; Plan Termination. The Plan shall become effective as
of the date of its approval by the Company’s shareholders, and shall continue
in effect until terminated by the Board.

- 17 -exv10w1

 

Exhibit 10.1

SPECIAL EMPLOYMENT AGREEMENT

     AGREEMENT by and between CSX Corporation, a Virginia corporation (the
“Company” or “CSX”)), and Andrew B. Fogarty (the “Executive”), dated as of the
13th day of December, 2004.

     WHEREAS, the Company and the Executive wish to set forth the terms and
conditions of the Executive’s continued employment with the Company or its
Affiliated Companies (as hereafter defined) for the term hereof;

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Employment Period. The Company shall employ the Executive, and the
Executive shall serve the Company, on the terms and conditions set forth in
this Agreement, for the Employment Period as defined in this Paragraph 1. The
“Employment Period” shall mean the period from January 1, 2004 until the later
of May 31, 2005 or a reasonable period thereafter as determined by the Chief
Executive Officer of CSX after the Closing of a Transaction (as defined below),
unless this Agreement is terminated earlier pursuant to its terms. The parties
agree further, however, that if the “Effective Date,” as defined in the
Employment Agreement dated November 1, 2000, between the Executive and the
Company (the “Change of Control Agreement”), should occur during the Employment
Period, this Agreement shall immediately terminate and be superseded in its
entirety by the Change of Control Agreement.

     2. Position and Duties.

          (a) During the Employment Period, the Executive shall serve as President
and Chief Executive Officer of CSX World Terminals, LLC (“CSXWT”) or in any

- 1 -

 

other position requested of him by the Chairman, President and Chief
Executive Officer of the Company, with the status, offices, titles, reporting
requirements, authority, duties and responsibilities appropriate to that
position.

          (b) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, Executive agrees during
normal business hours to diligently discharge the business and affairs of CSXWT
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 and CSXWT in accordance with
this Agreement.

     3. Compensation.

          (a) Base Salary. During the Employment Period, the Executive shall
receive a minimum base salary equal to his annual base salary as of the date
hereof (the “Base Salary”), payable in accordance with the Company’s customary
payroll practices. During the Employment Period, the Base Salary may be
reviewed for possible increases. Any increase in the Base Salary shall not
limit or reduce any other obligation of the Company under this Agreement. The
Base Salary shall not be reduced after any such increase, and the term “Base
Salary’ shall thereafter refer to the Base Salary as so increased.
Notwithstanding the preceding,

- 2 -

 

an across-the-board reduction in Base Salary applicable to all similarly
situated peer executives implemented out of extreme business necessity shall
not be a violation of this section.

          (b) Annual Bonus. In addition to the Base Salary, the Executive shall
have the opportunity to earn, for each fiscal year that is included in the
Employment Period, annual bonuses based upon a target incentive equal to 90% of
the Executive’s Base Salary, on the same terms and conditions established
thereunder for the Executive and his peer executives. Any annual bonuses so
earned (each, an “Annual Bonus”) shall be paid to the Executive at the same
time as his peer executives receive their bonuses; provided, that the Annual
Bonus for the fiscal year in which the Employment Period terminates shall equal
the amount that would have been payable to the Executive for the year of
termination multiplied by a fraction. The numerator of the fraction shall be
the number of months before the end of the fiscal year of the Employment Period
and the denominator of the fraction shall be 12.

          (c) Long Term Incentive Program. The Executive shall be eligible for a
Long Term Incentive Program bonus of 15,000 units for 2004 and 15,000 units for
2005, pursuant to the terms of such program.

          (d) Separation Payment. Upon termination of the Employment Period by the
Company (other than for Cause, as defined below), the Executive will be paid a
separation payment in the amount of one year of the Executive’s Base Salary as
of the date of termination (“Separation Payment”).

          (e) Other Benefits. During the Employment Period: (i) the Executive
shall be entitled to participate in all savings and retirement plans,
practices, policies and programs of the Company to the same extent as his peer
executives; (ii) the Executive and/or the

- 3 -

 

Executive’s family, as applicable, shall be eligible for participation in,
and shall receive all benefits under, all welfare benefit plans, practices,
policies and programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life
insurance, group life insurance, accidental death and travel accident insurance
plans and programs) to the same extent as his peer executives; (iii) the
Executive shall be entitled to perquisites and fringe benefits to the same
extent and on the same basis as his peer executives; and (iv) tax and financial
planning benefits shall also be made available to the Executive to the same
extent and on the same basis as his peer executives for each year of the
Employment Period hereof as well as the year after the year of the Executive’s
retirement.

          (f) Special Transaction Bonus. The Executive has been designated to
participate in a Transaction Bonus Program involving possible strategic
initiatives related to CSXWT being considered by CSX Senior Management. The
amount of the actual Special Transaction Bonus to be paid will be discretionary
and determined solely by the Chief Executive Officer of CSX. In applying this
discretion, the Chief Executive Officer of CSX will consider the value received
by CSX from a third-party buyer (“Buyer”) compared to the estimates provided by
the investment banking firm(s) representing CSX, as a result of a sale of all,
or substantially all, of the assets of CSXWT, including a sale of the stock of
CSXWT’s parent company, SL Service, Inc. (the “Transaction”). This amount is
payable by the Company or an affiliated company, subject to applicable
withholdings, as soon as practicable following the Closing of a Transaction
(the “Special Transaction Bonus”).

          The Special Transaction Bonus will be paid only if there is a Closing of a
Transaction by December 31, 2005. For purposes of this Agreement, a “Closing”
means one or more transactions to sell or dispose of all, or substantially all,
of the assets of CSXWT which

- 4 -

 

must be completed prior to December 31, 2005. For the avoidance of doubt,
if a Closing of one or more transactions to sell or dispose of all or
substantially all of the assets of CSXWT does not occur by December 31, 2005,
the Special Transaction Bonus will expire without payment.

          In order to receive a payment, the Executive must either (i) be employed
by CSXWT, CSX, the Buyer or any affiliate of the Buyer on the Payment Date or
(ii) have a “Qualifying Termination” before the payment date. A Qualifying
Termination means the termination of the Executive’s employment under any of
the following circumstances:

	(i)	 	involuntary termination by the
Company before the Closing on account of the elimination
of the Executive’s job;
	 
	(ii)	 	termination of employment by the
Executive at the time of the Closing because the
post-Closing position offered to the Executive by the
Company requires that he relocate by more than 50 miles
from Jacksonville, Florida or provides the Executive
with a base salary or target incentive opportunity that
is less than the Executive currently receives;
	 
	(iii)	 	the Executive is employed by the
Company immediately after the Closing, but the
Executive’s employment is involuntarily terminated
because his job is eliminated after the Closing;
	 
	(iv)	 	the Executive is employed by the
Company immediately after the Closing, but his employer
subsequently requires that he relocate by more than 50
miles from Jacksonville, Florida immediately after

- 5 -

 

	 	 	the Closing or reduces the Executive’s base salary or
target incentive opportunity below those he received
immediately after the Closing, and as a result the
Executive terminates his employment.

          In the event that the Executive’s employment is involuntarily terminated
(including termination to allow him to accept employment with the Buyer)
because his employment is eliminated by the Company in conjunction with or
subsequent to the closing of a sale or disposition of less than substantially
all of CSXWT, the Executive’s Special Transaction Bonus will be paid as soon
as practicable following the closing of the transaction.

     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 Executive’s becoming disabled within the meaning of
the long-term disability plan of the Company covering the Executive.

- 6 -

 

          (b) By the Company. The Company may terminate the Executive’s employment
during the Employment Period for Cause or without Cause. “Cause” means (i) the
willful and continued failure of the Executive to substantially perform the
Executive’s duties with the Company or one of its affiliates (other than any
such failure resulting from Disability), after the Chief Executive Officer of
CSX delivers to the Executive a written demand for substantial performance that
specifically identifies the manner in which the Chief Executive Officer
believes that the Executive has not substantially performed the Executive’s
duties, or (ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company
or its affiliates by the Executive.

          (c) Good Reason. The Executive may terminate employment during the
Employment Period for Good Reason or without Good Reason. A termination for
“Good Reason” means termination by the Executive within 60 days after, and as a
result of: (i) the assignment to the Executive of any duties materially
inconsistent with Section 2(a) of this Agreement, or any other action by the
Company that results in a material diminution in the Executive’s position,
authority, duties or responsibilities; or (ii) any failure by the Company to
comply with any provision of Section 3 of this Agreement, other than an
isolated, insubstantial and inadvertent failure that is not taken in bad faith
and is remedied by the Company promptly after receipt of notice thereof from
the Executive.

          (d) Notice of Termination. Any termination of the Executive’s employment
by the Company or by the Executive shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b) of
this Agreement. For purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent

- 7 -

 

applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated, and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights hereunder.

          (e) Date of Termination. The “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company other than for Cause or
Disability, or by the Executive for Good Reason, the date on which the Notice
of Termination is given or any date within thirty (30) days after the giving of
such Notice of Termination as is specified therein, as the case may be, (ii) if
the Executive’s employment is terminated by the Company for Cause or by the
Executive without Good Reason, the Date of Termination shall be the date on
which the Notice of Termination is given, and (iii) if the Executive’s
employment is terminated by reason of the Executive’s death or Disability, the
Date of Termination shall be the date of death or the Disability Effective
Date, as the case may be.

     5. Obligations of the Company upon Termination during the Employment
Period. (a) Other Than for Cause, Death or Disability; Good Reason. If,
during the Employment Period, the Company terminates the Executive’s
employment, other than for Cause or for death or Disability, or the Executive
terminates employment for Good Reason, the Company shall pay the amounts
described in this Paragraph 5(a) to the Executive. The payments

- 8 -

 

provided pursuant to this Paragraph 5(a) are intended as liquidated
damages for a termination of the Executive’s employment by the Company other
than for Cause, death or Disability, or for the actions of the Company leading
to a termination of the Executive’s employment by the Executive for Good
Reason, shall be the sole and exclusive remedy therefor, and shall be paid only
upon receipt by the Company from the Executive of an executed release and
waiver, satisfactory in form and in substance to the Company, of all claims
against the Company. The amounts to be paid as described herein are:

	(i)	 	for any termination during the
Employment Period, by the Company other than for Cause,
or by the Executive for Good Reason,

	A.	 	continuation of the
Executive’s base salary, at the rate set pursuant
to Paragraph 3(a), above, and in effect at the
date of Notice of Termination, through May 31,
2005;
	 
	B.	 	continuation of the
Executive’s participation in the annual bonus plan
of the Company, as described in paragraph 3(b),
above, through May 31, 2005, paid on the same
basis as peer executives of the Company (including
any award for 2005 performance, pro rated to
5/12ths of a full year award);
	 
	C.	 	continuation of the
Executive’s participation in the long-term
incentive plan(s) of the Company, including
participation in new grants of performance units
through May 31, 2005, consistent with awards to
peer executives;

- 9 -

 

	D.	 	continuation of the
Executive’s benefits and perquisites as described
in paragraph 3(c) above, through May 31, 2005;
	 
	E.	 	continuation of
Company-paid tax and financial planning services
to the extent provided to the Company’s senior
executives ending the year following the year the
executive begins to receive retirement benefits
from the Company; and
	 
	F.	 	the Separation Payment.

          (b) Death or Disability. If the Executive’s employment is terminated by
reason of the Executive’s death or Disability during the Employment Period, the
Company shall pay to the Executive or the Executive’s estate or legal
representative, as applicable, (i) the Executive’s accrued but unpaid Base
Salary up to the Date of Termination (the “Accrued Obligations”) in a lump sum
in cash within 30 days after the Date of Termination, and (ii) the Annual
Bonus, if any, earned for any fiscal year that begins before and ends on or
after the Date of Termination, at such time as the annual bonuses for the
Executive’s peer executives are paid, and any earned but unpaid Special
Transaction Bonus due Executive under Section 3(f), and the Company shall have
no further obligations under this Agreement.

          (c) Cause; Other than for Good Reason. If the Executive’s employment is
terminated by the Company for Cause during the Employment Period, the Company
shall pay the Executive the Accrued Obligations in a lump sum within 30 days
after the Date of Termination, and the Company shall have no further
obligations under this Agreement. If the Executive voluntarily terminates
employment during the Employment Period, other than for Good Reason, the
Company shall pay to the Executive the Accrued Obligations in

- 10 -

 

a lump sum in cash within 30 days of the Date of Termination, and the
Company shall have no further obligations under this Agreement.

     6. Non-exclusivity of Rights; Confirmation of Retirement Benefits.

          (a) Except as specifically provided in this Agreement, nothing herein
shall prevent or limit the Executive’s continuing or future participation in
any plan, program, policy or practice provided by the Company or any other
company controlled by, controlling, or under common control with, the Company
(collectively, the “Affiliated Companies”) for which the Executive may qualify,
nor, subject to Paragraph 10(f), shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with the Company or any Affiliated Company. 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.
Notwithstanding the foregoing, if the Executive receives payments and benefits
pursuant to Paragraphs 5(a) of this Agreement, the Executive shall not be
entitled to any severance pay or benefits under any severance plan, program or
policy of the Company and the Affiliated Companies.

          (b) Retirement Benefits. It is expressly acknowledged and agreed that
nothing in this Agreement shall affect the Executive’s entitlements to
retirement benefits under the Company’s retirement plans and programs from and
after his retirement from employment with the Company in accordance with their
terms, including without limitation: (i) retiree health

- 11 -

 

care plans; (ii) the Tax Savings Thrift Plan for Employees of CSX
Corporation and Affiliated Companies; (iii) the CSX Corporation Supplementary
Savings and Incentive Award Deferral Plan and the 2002 Deferred Compensation
Plan ; (iv) the CSX life insurance programs; (v) the CSX option plans; and (vi)
the Supplemental Retirement Plan and the Special Retirement Plan (including
without limitation the Executive’s right to receive lump sum benefits
thereunder). Any Special Transaction Bonus paid pursuant to Section 3(f) shall
not be taken into account in calculating any pension or retirement benefit due
Executive. Notwithstanding the preceding, in the event no Annual Bonus is paid
to Executive under Section 3(b) for any fiscal year in the Employment Period,
such calculation shall take into account an amount that would have been paid to
Executive if he had been a corporate employee of the Company during such fiscal
year.

     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 such
amounts shall not be reduced whether or not the Executive obtains other
employment.

     8. Confidential Information; No-Raid; Noncompetition; Inventions.

          (a) The Executive shall hold in a fiduciary capacity, for the benefit of
the Company and the Affiliated Companies, all confidential or proprietary
information, knowledge or data relating to the Company or any Affiliated
Company and their respective businesses (including, without limitation, any
proprietary and not publicly available information

- 12 -

 

concerning any processes, methods, trade secrets, research, secret data,
costs or names of users or purchasers of their respective products or services,
business methods, operating procedures or programs or methods of promotion and
sale), which shall have been obtained by the Executive during the Executive’s
employment by the Company or any Affiliated Company and/or his service as a
consultant hereunder, and that is not public knowledge (other than as a result
of the Executive’s violation of this Section 8(a)) (“Confidential
Information”). For the purposes of this Section 8(a), information shall not be
deemed to be publicly available merely because it is embraced by general
disclosures or because individual features or combinations thereof are publicly
available. The Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after the Executive’s employment
with the Company or any Affiliated Company, except with the prior written
consent of the Company, or such Affiliated Company, as applicable, or as
otherwise required by law or legal process. All records, files, memoranda,
reports, customer lists, drawings, plans, documents and the like that the
Executive uses, prepares or comes into contact with during the course of the
Executive’s employment shall remain the sole property of the Company and/or one
or more Affiliated Company, as applicable, and shall be turned over to the
Company or such Affiliated Company, as applicable, upon termination of the
Executive’s employment. The Executive also agrees that through the end of the
Noncompetition Period (as defined below), he will advise any prospective
employer or client that meets any of the following criteria of the
confidentiality restrictions set forth in this Agreement and state in writing
to such prospective employer or client that his employment or provision of
services will not violate these provisions, and will deliver a copy of such
statement to the Company. Such a statement shall be required for any
prospective employer or client that is (i) engaged in the railroad, ocean
transportation and marine terminal operations or intermodal

- 13 -

 

transportation businesses; (ii) a customer representing more than 1% of
the revenues of either CSX Transportation, Inc., SL Service, Inc. or its
affiliates and business units or CSX Intermodal, Inc.; or (iii) affiliated with
the Norfolk Southern Corporation. In addition, to the extent that the
Executive is a party to any other agreement relating to confidential
information, inventions or similar matters with the Company, the Executive
shall continue to comply with the provisions of such agreements.

          (b) The Executive agrees that he will not, at any time during the
Noncompetition Period (as defined in Section 8(c) below), without the prior
written consent of the Company or the applicable Affiliated Company, as
applicable, directly or indirectly employ, or solicit the employment of
(whether as an employee, officer, director, agent, consultant or independent
contractor), any person who was or is at any time during the previous twelve
(12) months an employee, representative, officer or director of the Company or
any Affiliated Company (except for such employment by the Company or any
Affiliated Company); provided, however, that a public advertisement not
specifically targeted at the employees of the Company shall not be deemed to be
a solicitation for purposes of this provision.

          (c) During the Noncompetition Period (as defined below), the Executive
shall not, without the prior written consent of the Chief Executive Officer of
the Company, engage in or become associated with a Competitive Activity. For
purposes of this Section 9: (i) the “Noncompetition Period” means the period
from the date of this Agreement through two years following the termination of
the Employment Period; (ii) a “Competitive Activity” means any business or
other endeavor, in any county of any state of the United States or a comparable
jurisdiction in Canada or any other country, directly or indirectly for a Class
I railroad operating in North America; and (iii) the Executive shall be
considered to have become

- 14 -

 

“associated with a Competitive Activity” if the Executive becomes directly
or indirectly involved as an owner, principal, employee, officer, director,
independent contractor, representative, stockholder, financial backer, agent,
partner, advisor, lender, or in any other individual or representative capacity
with any individual, partnership, corporation or other organization that is
engaged in a Competitive Activity. Notwithstanding the foregoing, the
Executive may make and retain investments in less than 0.5% of the equity of
any entity engaged in a Competitive Activity, if such equity is listed on a
national securities exchange or regularly traded in an over-the-counter market.
Executive acknowledges that he deems such restrictions to be reasonable and
that such restrictions will not prevent him from providing for his family
during the Noncompetition Period.

          (d) All plans, discoveries and improvements, whether patentable or
unpatentable, made or devised by the Executive, whether alone or jointly with
others, from the date of the Executive’s initial employment by the Company and
continuing until the end of the Consulting Period (or, if there is no
Consulting Period, until the termination of the Executive’s employment with the
Company and the Affiliated Companies), relating or pertaining in any way to the
Executive’s employment with or the business of the Company or any Affiliated
Company, shall be promptly disclosed in writing to the Chief Executive Officer
and are hereby transferred to and shall redound to the benefit of the Company,
and shall become and remain its sole and exclusive property. The Executive
agrees to execute any assignments to the Company or its nominee, of the
Executive’s entire right, title and interest in and to any such discoveries and
improvements and to execute any other instruments and documents requisite or
desirable in applying for and obtaining patents or copyrights, at the expense
of the Company, with respect thereto in the United States and in all foreign
countries, that may be required by the Company.

- 15 -

 

The Executive further agrees, during and after the Employment Period, to
cooperate to the extent and in the manner required by the Company, in the
prosecution or defense of any patent or copyright claims or any litigation, or
other proceeding involving any trade secrets, processes, discoveries or
improvements covered by this Agreement, but all necessary expenses thereof
shall be paid by the Company.

          (e) The Executive acknowledges and agrees that: (i) the purpose of the
foregoing covenants, including without limitation the noncompetition covenant
of Section 8(c), is to protect the goodwill, trade secrets and other
Confidential Information of the Company; (ii) because of the nature of the
business in which the Company and the Affiliated Companies are engaged and
because of the nature of the Confidential Information to which the Executive
has access, it would be impractical and excessively difficult to determine the
actual damages of the Company and any Affiliated Company in the event the
Executive breached any of the covenants of this Section 8; and (iii) remedies
at law (such as monetary damages) for any breach of the Executive’s obligations
under this Section 8 would be inadequate. The Executive therefore agrees and
consents that if he commits any breach of a covenant under this Section 9 or
threatens to commit any such breach, the Company shall have the right (in
addition to, and not in lieu of, any other right or remedy that may be
available to it) to temporary and permanent injunctive relief from a court of
competent jurisdiction, without posting any bond or other security and without
the necessity of proof of actual damage. With respect to any provision of this
Section 9 finally determined by a court of competent jurisdiction to be
unenforceable, the Executive and the Company hereby agree that such court shall
have jurisdiction to reform this Agreement or any provision hereof so that it
is enforceable to the maximum extent permitted by law, and the parties agree to
abide by such court’s determination. If any of the covenants of this Section 9
are

- 16 -

 

determined to be wholly or partially unenforceable in any jurisdiction,
such determination shall not be a bar to or in any way diminish the Company’s
right to enforce any such covenant in any other jurisdiction.

     9. 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 to CSX (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of CSX 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.

     10. Miscellaneous.

          (a) This Agreement shall be governed by and construed in accordance with
the laws of Florida, 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.

- 17 -

 

          (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:
	 
	 	 	Andrew B. Fogarty

13747 Hope Sound Court

Jacksonville, FL 32225

	 
	 	 	If to the Company:
	 
	 	 	CSX Corporation

500 Water Street

Jacksonville, FL 32202

Attention: Senior Vice President, Human Resources and Labor Relations

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 addressees.

          (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. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

          (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.

- 18 -

 

          (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) 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) Except as expressly provided herein, the Executive and the Company
acknowledge that this Agreement supersedes any other agreement between the
Executive and the Company or any Affiliated Company, including the Executive’s
Special Employment Agreement with CSX Corporation dated October 2001 concerning
the subject matter hereof, except as provided for herein. This Agreement shall
have no effect on any agreements between the Executive and the Company or any
of its affiliates not concerning the subject matter hereof.

          (g) This Agreement may be executed in several counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one and
the same instrument.

- 19 -

 

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand
and, pursuant to due authorization, the Company has caused this Agreement to be
executed in its name on its behalf, all as of the day and year first above
written.

	 	 	 	 	 
	 	 	/s/ Andrew B. Fogarty
	 	 	

	 	 	Andrew B. Fogarty
	 
	 	 	 	 
	 	 	CSX CORPORATION
	 
	 	 	 	 
	

	 	By
	 	/s/ Robert J. Haulter
	

	 	 	 	

	 	 	Robert J. Haulter, Senior Vice President,
	 	 	Human Resources and Labor Relations

- 20 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]