Exhibit 10.15
PRIVILEGED AND CONFIDENTIAL MATERIAL
PREPARED IN CONNECTION WITH SETTLEMENT DISCUSSIONS
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June 21, 2000
Xx. Xxxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxx Xxxxx Xxxxx, XX 00000
Employment Separation and Consulting Agreement
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Dear Xxx:
As used in this Agreement, the "Companies" will mean CSX Corporation
("CSX") and CSX Transportation, Inc. ("CSXT"), and each reference to "the
Companies" will include CSX, CSXT and their respective affiliates. This
Agreement sets forth the agreement between you and the Companies with respect to
your separation from employment with the Companies.
1. Resignation. Effective April 10, 2000, you voluntarily resigned from
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your position as President of CSXT. Effective April 10, 2000, you ceased to have
any executive, operational or managerial duties with the Companies, and through
December 30, 2000, CSX will employ you as a consultant of the Companies upon the
terms and conditions set forth herein (the "Consultancy"). As of December 30,
2000 or the date you accept other full-time employment, whichever is earlier
(the "Separation Date") you will voluntarily resign or retire from your
employment with the Companies.
2. Consulting Duties. During the Consultancy, you will be available to the
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Companies' executive officers and their designees upon reasonable notice and
subject to your agreement to specific assignments. During any such assignments,
you will be reimbursed for reasonable and customary expenses in accordance with
the Companies' Travel and Expense Reimbursement policies and procedures.
3. Compensation. For your commitments and undertakings in this Agreement,
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the Companies will pay you the amounts set forth in this Section 3.
a. Monthly Payments. For approximately eight and one-half months of
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the Consultancy, the Companies will pay you at an annualized rate of Five
Hundred Fifty Thousand Dollars ($550,000), payable in monthly installments
of approximately Forty Five Thousand Eight Hundred Eighty Three Dollars
($45,883) per month (the "Consulting Pay") for the periods ending May 1,
2000
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June 21, 2000
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and June 1, 2000, with the balance, approximately Three Hundred Twenty
Thousand Eight Hundred Thirty Three Dollars ($320,833), being paid in a
lump sum as soon as practicable. The Companies will attempt to make such
payment on or before June 30, 2000 and will make such payment before July
15, 2000. The amounts described in this Section 3(a) are referred to herein
as the "Monthly Pay."
b. General Ineligibility for Stock Options, Performance Shares,
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Bonuses, Etc. Except as specifically set forth below, you will not be
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eligible for any award or new grant of stock options or other stock
compensation under the CSX Corporation 1987 Long Term Performance Stock
Plan (the "1987 Plan"), the CSX Corporation Stock Purchase and Loan Plan
(the "SPLP") or any other stock compensation, bonus or similar or
substitute program of the Companies (a "Stock Plan").
c. Performance Shares. You will receive approximately 9,490
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performance shares for the 1998 through 2000 performance share cycle as
soon as practicable. The Companies will attempt to make such payment on or
before June 30, 2000 and will make such payment before July 15, 2000. The
value of such shares on the date awarded will be included in your year 2000
compensation for purposes of calculating the bonus described in Section
3(d).
You will receive approximately 9,490 performance shares for the 1999
through 2001 performance share cycle. The Companies will attempt to make
such payment on or before June 15, 2000 and will make such payment before
July 15, 2000. The value of such shares on the date awarded will not be
included in your year 2000 compensation for purposes of calculating the
bonus described in Section 3(d).
d. One-Time Bonus. You will receive a one-time bonus equal to the
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difference between $1 million and the total of $550,000 and the value paid
to you of 9,490 CSX shares representing performance share buyout for the
1998 through 2000 cycle as soon as practicable. The Companies will attempt
to make such payment on or before June 30, 2000 and will make such payment
before July 15, 2000.
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e. Options. All CSX options previously granted to you will expire,
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vest or be exercisable in accordance with their terms.
f. Employment Agreement. With respect to the Employment Agreement
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between you and CSX dated June 15, 1999 (the "Employment Agreement"), will
be treated as described on Exhibit A hereto, and the Employment Agreement
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will hereby be rendered null and void in all respects.
g. Health Care Coverage. You and your wife will continue coverage
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under the CSX Corporation Medical, Dental and Vision Plan, including
related prescription drug benefits, through December, 2004, as if you were
an active employee. After that date, as a retiree of CSX, you and you wife
will continue coverage under the CSX Corporation Medical, Dental and Vision
Plan, including related prescription drug benefits, to the same extent as
other retirees of CSX. The Companies will pay for you to have an annual
physical at the Mayo Clinic, Jacksonville, Florida, during the year 2000.
h. Lump Sum Option for Certain Benefits. The Companies will make
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available to you the lump sum option for the Supplemental and Special
Retirement Plans when, and to the extent, that option becomes available to
executives of the Companies; provided, however, that if the Companies
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approve a policy before December 31, 2000 that provides for a lump sum
option for the Supplemental and Special Retirement Plans, you will receive
your lump sum payment no later than December 31, 2000, and the Companies
will use its best efforts to deliver such payment to you on or about
December 1, 2000.
i. Tax. The Companies will withhold applicable taxes, including
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F.I.C.A., railroad retirement, federal, state and local with respect to the
payments arrangements described in this outline. The Companies will work
with your tax advisor to assist him in you financial planning work.
j. Pension Enhancement. Your benefits under the Companies' pension
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and similar plans will be calculated substantially as described in Exhibit
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B, which includes an additional five years of credited service that will
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provide you a pension benefit that is approximately 15 percent over that
you otherwise would have received. Such Exhibit B does not reflect
reduction in monthly payments that would result from your electing to take
the lump sum option described in Section 3(h).
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June 21, 2000
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k. Other Benefits and Perquisites through the Separation Date.
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During the Consultancy, you will continue to participate in (i) the CSX
Corporation Medical, Dental and Vision Plan; (ii) the CSX Corporation
Supplementary Savings and Incentive Deferral Plan and (iii) any other
benefits or perquisites that you participated in as of April 10, 2000.
l. Other Benefits and Perquisites after Separation Date. From and
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after the Separation Date, except for the rights you then may have under
Section 3(g) of this Agreement providing for extended health care coverage
and as a former employee or retiree under (i) the Tax Savings Thrift Plan
for Employees of CSX Corporation and Affiliated Companies, (ii) the CSX
Corporation Supplementary Savings and Incentive Award Deferral Plan; (iii)
the CSX life insurance programs; (iv) the CSX Market Value Cash Plan; (v)
the 1987 Plan; or (vi) COBRA or any similar or successor law, you will not
be entitled to receive or accrue any benefits or perquisites. You will be
entitled to the benefits of other plans to the same extent as are other
retirees of the Companies.
m. Club Membership.
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(i) Pablo Creek. You will resign your membership in the Pablo
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Creek Club (the "Club") on or before September 1, 2000. Within twenty
(20) days of receipt of the payment from the Club evidencing your
equity membership in the Club, you will pay to the Companies a sum
equal to the amount of the equity investment returned to you by the
Club minus a sum calculated by Ernst & Young equal to 20% of the
Gross-Up for the taxes incurred by you on the equity investment in the
Club.
(ii) TPC. You will transfer the TPC membership either to the
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Companies or to an individual designated by the Companies on or before
September 1, 2000.
n. Transition Payment. You will receive a one time cash payment to
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cover transition expenses of you choosing in an amount up to $10,000.
o. Plan Amendments. YOU ACKNOWLEDGE AND AGREE THAT IF ANY BENEFIT OR
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PERQUISITE PLANS OR POLICIES ARE AMENDED OR TERMINATED, YOU WILL BE SUBJECT
TO SUCH AMENDED OR TERMINATED PLANS OR POLICIES.
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June 21, 2000
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p. Death. If you were to die prior to the Separation Date, your
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designated beneficiary would be entitled to the payments contemplated by
Section 3 of this Agreement when, and to the extent, such payment would
otherwise have been payable hereunder.
4. Waiver and Release. In exchange for the compensation and benefits
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promised herein, you hereby waive and release the Companies from any and all
claims you may have against them, except for claims relating solely to the
performance of their obligations under this Agreement, and further agree to
execute the Waiver and Release attached hereto as Exhibit C at the time of
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execution of this Agreement to more completely set forth the parties'
understanding, and to execute an additional Waiver and Release in the same form
upon the Separation Date. Notwithstanding any failure by you to deliver such
additional Waiver and Release, your obligations under this Agreement, including
those under this Section 4, will remain in full force and effect.
5. Confidential Information.
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a. Confidential Information Defined. The parties recognize that
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during your employment, you have learned trade secrets and other
information confidential to the Companies and that the Companies would be
substantially injured if the confidentiality of such information were not
maintained. For the purposes of this Section 5, "Confidential Information"
means and includes every item of and all the contents of any discussions,
documents, information, technology, procedures, customer lists, business
plans, employee compensation data, pricing information, strategies,
software, financial data, ideas and assumptions and all other material
relating to or in connection with your prior employment or future
consulting work for the Companies and their property, business methods and
practices, suppliers and customers, other than that which is generally
known to the public. To the extent that the Confidential Information
comprises any written material or other material in a reproducible form by
any means whatsoever, whether manual, mechanical or electronic, you will
not copy, extract or reproduce the same by any means whatsoever, nor
provide nor otherwise make such material available to any third party, nor
use such Confidential Information for your own purposes.
b. Restriction on Use. You agree not to disclose to third persons
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such documents or Confidential Information without the prior consent of the
Companies, whether for compensation or otherwise. You further agree not to
use such documents or Confidential Information for any purpose detrimental
to the Companies. You will at all times use your best possible efforts to
ensure that any person to whom the Confidential Information is disclosed
pursuant to this
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June 21, 2000
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Agreement keeps the same secret and confidential and observes an obligation
of confidentiality in relation thereto.
c. Non-Competition. You specifically agree that you will advise any
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future employer or client of yours that meets any of the following criteria
of these confidentiality restrictions and will secure the written agreement
of such employer or client, and make it available to the Companies upon
request, that your provision of services will not violate these provisions.
Such advice and agreement shall be required for any employer or client that
is (i) engaged in the railroad or intermodal transportation business; (ii)
a customer representing more than 1% of the revenues of either CSXT or CSX
Intermodal, Inc.; or (iii) affiliated with the Norfolk Southern
Corporation. You further agree not to work for, or provide services,
directly or indirectly, to any entity that meets any of these criteria
before January 1, 2001, without the prior written consent of the Companies.
The covenant in this Section 5(c) will expire on January 1, 2001, and after
that date, you are free to work anywhere.
d. Restriction on Trading. You acknowledge that you may be deemed to
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be an "officer" of CSX for purposes of Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder up until October 10, 2000. Accordingly, you agree to
comply with the reporting requirements of the Exchange Act and the
Companies' policies governing trading of such officers for the period after
cessation of your reporting obligations contemplated by Rule 16a-2
promulgated under the Exchange Act. You acknowledge that these reporting
and related short-swing profit liabilities are solely your responsibility.
e. No Waiver of Legal Rights. You hereby acknowledge that none of
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the provisions of this Agreement, including, without limitation, the
provisions of this Section 5 will be deemed or construed to reduce the
protections afforded the Companies by common law, statute or regulation.
f. Perpetual Restriction. You acknowledge that notwithstanding the
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expiration of the provisions of Section 5, including your ability to work
anywhere on or after January 1, 2001, your obligations with respect to
Confidential Information are perpetual.
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June 21, 2000
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6. Private Agreement. It is the desire and in the interest of all parties
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affected by this Agreement that the terms hereof be maintained in strictest
confidence. To that end, you and the Companies covenant and agree to maintain
each and every term of this Agreement in the strictest confidence, and to
neither release nor divulge either orally or in writing any term, covenant or
condition hereof to any person, firm or entity provided, however:
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a. that the Companies or you may disclose as required pursuant to a
lawful subpoena or court order;
b. that the Companies or you may disclose in accordance with a
prepared written statement approved in advance by the Chief Executive
Officer of CSXT; or
c. that the Companies may disclose to employees or advisors,
including counsel, determined to have a need to know;
d. that you may disclose to your spouse, counsel, tax advisor, and
estate planner, whom you will instruct to preserve confidentiality;
e. that you may disclose the existence of the Consultancy and the
confidentiality provisions.
7. Governing Law. This Agreement will be governed, construed and
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interpreted under the laws of the Commonwealth of Virginia.
8. Injunctive Remedy. You acknowledge that any breach or threatened
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breach of the covenants set forth in this Agreement would cause irreparable
injury to the Companies and that money damages alone would not provide an
adequate remedy to the Companies. The parties agree that any reviewing court
will have the authority to reform this provision to conform to applicable law,
provided that it is the intent of the parties that this Section 8 be given full
effect in all respects.
9. Adequate Consideration. You acknowledge and agree that the
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compensation and benefits reflected herein and which you have already received
fully satisfy all obligations of the Companies arising from your employment or
the termination thereof and that the Companies are not required to provide the
special severance and other termination benefits reflected in this Agreement
under the terms of any personnel policy or benefit plan or contract. You further
acknowledge that you have signed this Agreement in exchange for consideration in
excess of any to which you were otherwise
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June 21, 2000
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entitled and that such consideration is satisfactory and adequate for the
covenants made by you herein.
10. Parties' Intent; Mutual Cooperation. The parties mutually agree to
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conduct themselves with a spirit of harmony and mutual cooperation, and to
refrain from and avoid any disparaging or defamatory comments or statements to
any third parties after execution hereof that would reflect negatively on the
business, person or professional reputation of any parties hereto. You
acknowledge and agree that the foregoing applies only to the executive officers
of the Companies and that your remedy with respect to any breach of the
foregoing shall be solely to seek an injunction.
11. Litigation. You agree to cooperate and provide information and
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assistance to the Companies in any dispute, proceeding, arbitration or
litigation involving the Companies of which you have knowledge or involvement as
a result of your employment with the Companies. During any such activity, you
will be reimbursed for reasonable and customary expenses in accordance with the
Companies' Travel and Expense Reimbursement policies and procedures.
The Companies hereby confirm that notwithstanding your status as a
consultant, retiree or former employee, for acts on behalf of the Companies
occurring during your tenure as an officer of the Companies, or one of their
affiliates, you will be entitled to indemnity and advances for expenses afforded
officers under the CSX Articles of Incorporation to the extent permitted by the
Virginia Stock Corporation Act.
12. Dispute Resolution. Any dispute, controversy or claim arising out of
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or relating to this Agreement, or the breach, termination or validity hereof,
except an injunction proceeding under either Section 5 or 8, shall be finally
settled through binding arbitration by a sole, disinterested arbitrator in
accordance with the Rules of the American Arbitration Association. The
arbitrator shall be jointly selected by you and the Companies but, if you and
the Companies do not agree on an arbitrator within thirty days after demand for
arbitration is made by a party, the arbitrator shall be designated by the
American Arbitration Association. The award of the arbitrator shall be final and
conclusive, and the arbitration shall be concluded within six months of its
commencement. Each party to the arbitration shall pay the compensation, costs,
fees and expenses of its own witnesses, experts and counsel, and the
compensation and any costs and expenses of the arbitrator shall be borne equally
by the parties.
13. Other Agreements. In exchange for the compensation and benefits
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promised herein, you hereby waive and release the Companies from any and all
claims you may have with respect to (a) the offer of employment dated June 11,
1998; (b) the acceptance of such offer dated June 19, 1998; and (c) the
Employment Agreement, and
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you acknowledge that this Agreement shall supersede and render null and void in
all respects the foregoing agreements.
14. Entire Agreement. This Agreement, together with the Waiver and Release
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Agreement, reflects the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior discussions or understandings
between the parties. The terms of this Agreement may not be amended, deleted or
modified except by prior written agreement signed by you and the Companies.
15. Successors and Assigns. You and the Companies have read this Agreement
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and understand its contents. You and the Companies further acknowledge
satisfaction with the terms of this Agreement and agree that the Agreement will
be binding upon your and the Companies' respective attorneys, heirs, personal
representatives, successors and assigns.
Very truly yours,
CSX CORPORATION
/s/ Xxxxxx X. Xxxxxxx
By: ____________________________
Xxxxxx X. Xxxxxxx
Senior Vice President-
Corporate Services
CSX TRANSPORTATION, INC.
/s/ Xxxxxxx X. Xxxx
By: __________________________
Xxxxxxx X. Xxxx
Senior Vice President-
Human Resources
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June 21, 2000
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Reviewed, approved and
agreed as of the 26th day of
June, 2000:
/s/ Xxxxxx X. Xxxxxx
______________________________
Xxxxxx X. Xxxxxx
EXHIBIT A
Employment Agreement
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The Employment Agreement will be treated as described below and, as provided in
Section 3(f), will be rendered null and void in all respects.
1. Immediate Vesting. The Companies will pay you 100,000 CSX shares and
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will attempt to make such payment on or before June 30, 2000 and will
make such payment before July 15, 2000.
2. Total Shares. Assuming that 41% of the 100,000 share award were to be
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withheld for tax payments, you would then have 59,000 remaining. Your
total number of shares would be an estimated 159,000 (the "Shares")
from (a) your initial 100,000 purchase and (b) the 100,000 share award,
less shares sold for withholding.
3. Interest Coverage. The Companies will pay or reimburse your Loan
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interest from the inception of the Loan to date and through the period
the Loan is outstanding to the extent your dividend payments on the
Shares (estimated at $1.20 per share) do not equal such interest. A
Gross-Up Payment as defined below will be paid with respect to this
payment (the "Interest Spread Payment").
4. Past Interest. In addition, the Companies will pay you a lump sum
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amount of $304,419 for the Interest Spread and the related Gross-Up
Payments for the four interest payments you made through April 2000.
The Companies will attempt to ensure that such payment is made on or
before June 30, 2000 and will make such payment before July 15, 2000.
1. Principal Coverage. The Companies will hold you harmless from any loss
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on the loan principal in your approximately $4.99 million NationsBank
credit facility dated May 6, 1999 (the "Loan"), after deducting the
amount of your proceeds from the sales of the Shares (the "Principal
Spread Payment"). A Gross Up Payment will be paid with respect to the
Principal Spread Payment. You represent that the principal balance on
the Loan is approximately $4.99 million and agree that you will not
make any further borrowings under the Loan. You acknowledge and agree
that
a. Before June 15, 2001, you will not sell any Shares or repay any Loan
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principal unless:
(i) you have the prior written consent of the Companies; or
(ii) NationsBank has declared the Loan in default for a reason other
than your failure to deliver information or payments when due,
and you have given the Companies notice within five (5)
business days of your receiving notice of such default and at
least five (5) business days before any sale of Shares.
b. After June 15, 2001, you may sell any or all of the Shares if:
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(i) you give the Companies five (5) days prior written notice; and
(ii) you immediately remit proceeds from the sale of such Shares to
NationsBank in satisfaction of your obligations under the Loan.
5. Loan Compliance. You will use your best efforts to avoid any default of
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the Loan, including, without limitation, promptly seeking a waiver of
any default that could arise in connection with your serving as a
Consultant with the Companies or retiring from the Companies. The
Companies will cooperate with you in seeking such a waiver.
6. Direct Payments of Loan. You agree to promptly pay Interest Spread
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Payments to NationsBank. You further agree that the Companies may make
Interest Spread Payments to NationsBank directly, in the Companies'
sole discretion, and that the Company will make Principal Spread
Payments to NationsBank directly.
7. Gross-Up Payments. You will be entitled to receive additional payments
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("Gross-Up Payments") in an amount such that after payment by you of
all taxes, including income taxes, imposed with respect to the Interest
Spread Payments and the Principal Spread Payment, you retain an amount
of the Gross-Up Payment equal to the taxes imposed upon the payments.
8. Payment Mechanics. To receive any Interest Spread, Principal Spread or
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Gross-Up Payment:
a. You will send Ernst & Young or such other certified public accounting
firm as may be agreed upon by you and the Companies (the "Accountant")
timely notice that the interest payment is due to NationsBank,
including your interest invoice, if applicable. You agree to provide
the Companies or the Accountants with any other supporting
documentation reasonably requested by either of them to permit
verification and calculation of the Gross-Up Payments.
b. The Accountant will review and provide detailed supporting
calculations both to the Companies and to you within fifteen (15)
business days of receipt of the materials from you.
c. Within seven (7) business days of receipt of the Accountant's work,
the Company will pay you the Interest Spread, Principal Spread or
Gross-Up Payment, as the case may be, as calculated by the Accountant.
9. Companies' Early Termination Right. Notwithstanding Section 5.a. of this
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Exhibit A, the Companies will have the option to require you to sell the
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Shares and repay the Loan at any time. If the Companies were to exercise
such right, they would make the Principal Spread and Gross-Up Payments
promptly.
10. Securities Requirements. You and the Companies will work together on the
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disposition of the Shares to help ensure that securities law requirements
are satisfied.
11. Housing Assistance. During the period the Loan is outstanding, the
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Companies will assist you with respect to the refinancing of your North
Carolina residence. Specifically, the Companies will either (a) provide
acceptable assurances to your mortgage lender or (b) provide a bridge
loan.
