SPECIAL RETIREMENT PLAN
FOR
CSX DIRECTORS
As Amended and Restated January 1, 1995
(As Amended through December 31, 1997)
1. Purpose. In order to attract and retain the services of Directors
of the highest caliber, to reward them for their services to the Company when
they cease to be active Directors, and to retain for the Company the value of
their advice and consultation, the Board of Directors adopted a special
retirement plan for Directors on April 21, 1981. The Plan, as amended November
14, 1984, is further amended and restated to provide as follows:
2. Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below unless the context clearly requires a
different meaning:
(a) Actuary. An actuary or actuaries engaged by the Corporation in
conjunction with the Plan; provided that following a Change of Control, the
selection or retention of the actuary shall be subject to the approval of the
Benefits Trust Committee.
(b) Benefits Trust Committee. The committee established pursuant to
the CSX Corporation and Affiliated Companies Benefits Assurance Trust Agreement.
(c) Board. The Company's Board of Directors.
(d) Change of Control. A 'Change of Control' means any of the
following:
(i) Stock Acquisition. The acquisition by any individual,
entity or group [within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act')] (A 'Person')
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding shares of common
stock of the Company (the 'Outstanding Company Common Stock'), or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the 'Outstanding
Company Voting Securities'); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company; (B) any acquisition by
the Company; (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company; or (D) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (iii) of this Section
2(d); or
(ii) Board Composition. Individuals who, as of the date
hereof, constitute the Board of Directors (the 'Incumbent Board') cease for any
reason to constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the date hereof
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 Board shall be considered as though such individual were a member of
the Incumbent 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 Board of Directors; or
(iii) Business Combination. Approval by the shareholders of
the Company of a reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company or its
principal subsidiary that is not subject, as a matter of law or contract, to
approval by the Interstate Commerce Commission or any successor agency or
regulatory body having jurisdiction over such transactions (the 'Agency') (a
'Business Combination'), in each case, unless, following such Business
Combination:
(A) all or 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 (including, without limitation,
a corporation which as a result of such transaction
owns the Company or its principal subsidiary or all
or substantially all of the assets of the Company or
its principal subsidiary either directly or through
one or more subsidiaries) 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
such corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% 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 resulting from such Business Combination
were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the
action of the Board of Directors, providing for such
Business Combination; or
(iv) Regulated Business Combination. Approval by the
shareholders of the Company of a Business Combination that is subject, as a
matter of law or contract, to approval by the Agency (a 'Regulated Business
Combination') unless such Business Combination complies with clauses (A), (B)
and (C) of subsection (iii) of this Section 2(d); or
(v) Liquidation or Dissolution. Approval by the shareholders
of the Company of a complete liquidation or dissolution of the Company or its
principal subsidiary.
(e) Committee. The Executive Committee of the Board.
(f) Company. CSX Corporation.
(g) Director. A person duly elected or appointed to, and serving
as an active member of, the Board.
(h) Director's Fees. The basic annual retainer fee paid to an
active Outside Director for his services, plus meeting fees, special fees for
serving as Chairman of a committee, but excluding travel expenses or any other
extraordinary form of compensation.
(i) Effective Date. April 21, 1981. The effective date of the
amendment and restatement is January 1, 1995. A Participant receiving Retirement
Payments on the date of the restatement will continue to receive payments in
accordance with the terms of the Plan as restated to the extent not inconsistent
with the terms of the Plan prior to the date of the restatement.
(j) Eligible Service. The period of service with the Company or
any of its predecessor companies as an active Outside Director, measured in
years and months beginning with the day of the month in which the person first
becomes or performs services as an Outside Director and ending with the month in
which he ceases to be, or no longer performs services as, an Outside Director.
Service need not be continuous.
(k) Employee Director. A person who serves or has served as an
active Director during a period when he or she is a salaried employee of the
Company or a subsidiary company.
(l) Outside Director. A Director who, with respect to any period
of service as an active Director taken into account under the Plan, is not an
Employee Director.
(m) Participant. An Outside Director or former Outside Director
who has met or can be expected to meet the requirements for and become eligible
for Retirement Payments under the Plan as determined under Section 3. The term
includes Outside Directors who on the Effective Date of the amendment and
restatement are receiving Retirement Payments under the Plan. An Employee
Director shall not be entitled to become a Participant in the Plan with respect
to any period of service as a Director while an employee of the Company or a
predecessor company.
(n) Plan. The Special Retirement Plan for CSX Directors.
(o) Payment Date. The last day of each calendar quarter beginning
with the last day of the calendar quarter in which the Participant becomes
entitled to receive Retirement Payments and ending with the payment for the last
calendar quarter for the calendar year in which the Participant ceases to be
eligible for Retirement Payments under Section 3.
(p) Retirement Payment. An annual amount equal to 50% of the
Director's Fees paid during the Outside Director's final twelve months of
service as a Director with the Company payable in quarterly installments on each
Payment Date.
(q) Rule of 75. Any combination of age and years of Eligible
Service that totals 75 or more.
(r) Trust. The CSX Corporation and Affiliated Companies Benefits
Assurance Trust or a similar grantor trust established by the Company which will
substantially conform to the terms of the Internal Revenue Service model trust
as described in Revenue Procedure 92-64, 1992-2 D.B. 422. Except as provided in
Section 5, the Company is not obligated to make any contribution to the Trust.
(s) Valuation Date. The last day of each calendar year and such
other dates as the Committee deems necessary or appropriate to value the
Participants' benefits under this Plan.
3. Eligibility for Retirement Payments.
(a) An Outside Director who no longer serves as a Director (for
any reason other than death), whose service as a Director ended prior to April
17, 1997, and who has (i) attained the age of 68, or (ii) has met the Rule of
75, shall be deemed a Participant in the Plan and shall be entitled to receive
Retirement Payments. A Participant who ceased to serve as a Director before
attaining the age of 68 will be entitled to receive Retirement Payments when the
Participant attains the age of 68 or meets the Rule of 75, whichever event shall
first occur. In consideration of the receipt of Retirement Payments under the
Plan, a Participant agrees to be available for advice and consultation as
requested by the Board.
(b) A Participant entitled to compensation under (a) shall
receive Retirement Payments on each Payment Date as hereinafter provided. A
Participant who has completed 10 or more years of Eligible Service or has met
the Rule of 75, will be entitled to Retirement Payments for life. A Participant
who has not completed 10 years of Eligible Service and has not met the Rule of
75, will be entitled to receive Retirement Payments for a period equal to the
lesser of (i) the Participant's life and (ii) the Participant's period of
Eligible Service. A Participant's right to compensation shall terminate as of
the last day of the calendar year in which his or her death occurs, or, if the
Participant has less than 10 years of Eligible Service and has not met the Rule
of 75, as of the end of the calendar year in which falls the date that is the
anniversary of the date the Participant's last period of Eligible Service began.
(c) Any retirement payment due after the death of a Participant
shall be paid to the Participant's surviving spouse, or, if no spouse survives,
to the Participant's personal representative.
(d) The obligations of the Company or any of its affiliated
corporations and the benefit due any Participant, surviving spouse or
beneficiary hereunder shall be reduced by any amount received in regard thereto
under the Trust.
4. Funding. To the extent reflected by resolutions of the applicable
boards of directors, obligations for benefits under this Plan shall be joint and
several.
5. Change of Control.
(a) If a Change of Control has occurred, the Committee shall
cause the Company to contribute to the Trust within 7 days of such Change of
Control, a lump sum contribution equal to the greater of:
(i) the aggregate unfunded value of the amount each
Participant would be eligible to receive, under (b), below; or
(ii) the present value of accumulated Plan benefits based on
the assumptions the Company's independent actuary deems reasonable for this
purpose, as of a Valuation Date coinciding with nor next preceding the date of
Change of Control, to the extent such amounts are not already in the Trust. The
aggregate value of the amount of the lump sum to be contributed to the Trust
pursuant to this Section 4 shall be determined by the Company's independent
actuaries. Thereafter, the Company's independent actuaries shall annually
determine as of a Valuation Date for such Participant not receiving a lump sum
payment pursuant to subsection (b), below, the greater of:
(A) the amount such Participant would have received
under subsection (b) had such Participant not made
the election under subsection (c) below, if
applicable; and
(B) the present value of accumulated benefits based
on assumptions the actuary deems reasonable for this
purpose. To the extent that the value of the assets
held in the Trust relating to this Plan does not
equal the amount described in the preceding sentence,
at the time of the valuation, the Company shall make
a lump sum contribution to the Trust equal to the
difference.
In no event, however, shall the Company's contribution to the
Trust be less than the amount that would have been contributed thereto with
respect to liabilities relating to the Plan (including related administrative
and investment expense), pursuant to and at the time and in the manner provided
under Section 1(h) of the Trust.
(b) In the event a Change of Control has occurred, the trustee of
the Trust shall, within 45 days of such Change of Control, pay to each
Participant not making an election under subsection (c), a lump sum payment
equal to the present value of the Retirement Payments the Participant is
entitled to receive from the Company pursuant to the terms of the Plan assuming
when applicable for each Participant as of the date of Change of Control that
(i) the Participant will complete his current term as Director, (ii) the
Participant will survive during the period of his normal life expectancy, and
(iii) the age requirement for retirement and receipt of Retirement Payments is
the age of the Participant on the Change of Control date. Present value shall be
determined by using a discount rate equal to the applicable Federal rate
provided for in Section 7872(f)(2) of the Internal Revenue Code of 1986, as
amended. The amount of each Participant's lump sum payment shall be determined
by the Actuary.
(c) Each Participant may elect in a time and manner determined by
the Committee, but in no event later than December 31, 1996, or the occurrence
of a Change of Control, if earlier, to have amounts and benefits determined and
payable under the terms of this Plan as if a Change of Control had not occurred.
New Participants in the Plan may elect in a time and manner determined by the
Committee, but in no event later than 90 days after becoming a Participant, to
have amounts and benefits determined and payable under the terms of the Plan as
if a Change of Control had not occurred. A Participant who has made an election,
as set forth in the two preceding sentences, may, at any time and from time to
time, change that election ; provided, however, a change of election that is
made within one year of a Change of Control shall be invalid.
(d) Each Participant who has made an election under (c), above,
may elect within 90 days following a Change of Control, in a time and manner
determined by the Benefits Trust Committee, to receive a lump sum payment
calculated under the provisions of subsection (b), above, determined as of the
Valuation Date next preceding such payment, except that such amount shall be
reduced by 5% and such reduction shall be irrevocably forfeited to the Company
by the Participant. Furthermore, as a result of such election, the Participant
shall no longer be eligible to participate or otherwise benefit under the Plan.
Payments under this subsection (d) shall be made not later than seven (7) days
following receipt by the Company of the Participant's election. The Benefits
Trust Committee shall, no later than seven (7) days after a Change of Control
has occurred, cause written notification to be given to each Participant
eligible to make an election under this subsection (d), that a Change of Control
has occurred and informing such Participant of the availability of the election.
(e)Notwithstanding the preceding, following a Change of Control, any
election by a Participant to receive his or her payment in an alternate form or
to delay his or her payment is subject to the approval of the Benefits Trust
Committee in its sole judgment and discretion.
6. Committee Powers. Prior to a Change of Control, the Committee
shall have full power and authority to interpret, construe and administer this
Plan, and all actions of the Committee under the Plan shall be binding and
conclusive on all persons for all purposes. Following a Change of Control, the
Benefits Trust Committee may remove and/or replace the Committee as the Plan's
administrator. Accordingly, following a Change of Control, any and all final
benefit determinations for Participants, their beneficiaries, heirs and assigns
and decisions regarding benefit claims under this Plan shall rest with the
Benefits Trust Committee or its delegate in its sole judgment and absolute
discretion.
7. Successors. The Plan shall be binding upon and inure to the
benefit of Participants. If the Company becomes a party to any merger,
consolidation, reorganization or in the event of a sale of substantially all the
assets of the Company, the Plan shall remain in full force and effect as an
obligation of the Company or its successor in interest.
8. Amendment and Termination. Prior to a Change of Control and upon
the recommendation of the Committee, the Board reserves the right to amend or
terminate the Plan at any time without the consent of any Participant, but no
amendment or termination shall deprive any Participant of the right to continue
to receive payment under Section 3 once payments have begun. Notwithstanding the
foregoing, if a Change of Control occurs, each Participant, regardless of age or
Eligible Service shall be eligible for benefits under the Plan, and the Plan may
not be terminated and no amendment may be made that would adversely affect the
right of any such Participant to receive Retirement Payments or Accelerated
Retirement Payments under the Plan. Following a Change of Control, this Plan may
not be amended or terminated without the approval of the Benefits Trust
Committee.
9. Construction. The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia. The masculine pronoun
shall mean the feminine wherever appropriate. The captions inserted herein are
inserted as a matter of convenience and shall not affect the construction of the
Plan.
Special Retirement Plan for Directors - CSX Corp.
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