SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934
and
Schedule 13D
(Amendment No. 1)
_______________
Conrail Inc.
(Name of Subject Company)
CSX Corporation
Green Acquisition Corp.
(Bidders)
Common Stock, Par Value $1.00 Per Share
(Title of Class of Securities)
208368 10 0
(CUSIP Number of Class of Securities)
Series A ESOP Convertible Junior
Preferred Stock, Without Par Value
(Title of Class of Securities)
Not Available
(CUSIP Number of Class of Securities)
Mark G. Aron
CSX Corporation
One James Center
901 East Cary Street
Richmond, Virginia 23219-4031
Telephone: (804) 782-1400
(Names, Addresses and Telephone Numbers of Persons Authorized
to Receive Notices and Communications on Behalf of Bidder)
With a copy to:
Pamela S. Seymon
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telephone: (212) 403-1000
<PAGE>
This Statement amends and supplements the Tender Of-
fer Statement on Schedule 14D-1 filed with the Securities and
Exchange Commission on October 16, 1996 (the "Schedule 14D-1")
by Green Acquisition Corp. ("Purchaser"), a Pennsylvania corpo-
ration and a wholly owned subsidiary of CSX Corporation, a Vir-
ginia corporation ("Parent"), to purchase an aggregate of
17,860,124 shares of (i) Common Stock, par value $1.00 per
share (the "Common Shares"), and (ii) Series A ESOP Convertible
Junior Preferred Stock, without par value (together with the
Common Shares, the "Shares"), of Conrail Inc., a Pennsylvania
corporation (the "Company"), including, in each case, the as-
sociated Common Stock Purchase Rights, upon the terms and sub-
ject to the conditions set forth in the Offer to Purchase,
dated October 16, 1996 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, together with any amend-
ments or supplements thereto, constitute the "Offer") at a pur-
chase price of $92.50 per Share, net to the tendering share-
holder in cash. Capitalized terms used and not defined herein
shall have the meanings assigned such terms in the Offer to
Purchase and the Schedule 14D-1.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(b) (i) The words "a credit facility that Par-
ent will seek to obtain from one or more commercial banks" in
the second sentence of the second paragraph under Section 10 of
the Offer to Purchase are hereby deleted and replaced with the
words "the credit facility (the "Facility") contemplated by the
Commitment Letter, as described below".
(ii) Section 10 is hereby further amended and
supplemented by adding the following text after the second
paragraph:
The Commitment Letter. In connection with the
Offer and the Merger, Parent has entered into a com-
mitment letter, dated October 21, 1996 (the "Commit-
ment Letter"), with Bank of America National Trust
and Savings Association, BA Securities, Inc., The
Bank of Nova Scotia, The Chase Manhattan Bank, Chase
Securities Inc., NationsBank, N.A. and NationsBanc
Capital Markets, Inc., pursuant to which, upon the
terms and subject to the conditions set forth therein
and in the Term Sheet (as defined below), Bank of
America National Trust and Savings Association, The
Bank of Nova Scotia, The Chase Manhattan Bank and
NationsBank, N.A. (collectively, "Principal Agents")
have agreed to provide a competitive advance and re-
volving credit facility in an aggregate principal
amount of $4,800,000,000 (the "Facility"), and each
Principal Agent has committed to provide
$1,200,000,000 of this amount. Proceeds of the Fa-
cility will be used to finance purchase of Shares
pursuant to one or more all cash tender offers, exer-
cise of the Company Stock Option or otherwise and the<PAGE>
Merger, to replace existing credit facilities used
for commercial paper backup and, following the
Merger, to provide working capital and for other gen-
eral corporate purposes. The Commitment Letter in-
cludes an attachment (the "Term Sheet") which sets
forth the terms contemplated to be included in the
definitive documentation with respect to the Facility
(the "Credit Agreement"). Under the Commitment Let-
ter, each Principal Agent has reserved the right to
syndicate a portion of its commitment to one or more
financial institutions acceptable to Parent, and, in
connection therewith, Chase Securities Inc., BA Secu-
rities, Inc., NationsBanc Capital Markets, Inc. and
The Bank of Nova Scotia (collectively, the "Arrang-
ers" and, together with the Principal Agents, the
"Agents") have agreed to act as co-arrangers for the
Facility and intend to commence syndication efforts
immediately.
Under the Facility, two borrowing options will
be available: (i) a competitive advance option (the
"CAF"), which will be provided on an uncommitted com-
petitive advance basis through a competitive bid auc-
tion mechanism, and (ii) a revolving credit option
(the "Revolving Credit"), which will be provided on a
committed basis. Under each option, amounts borrowed
and repaid may be reborrowed subject to availability
under the Facility. Up to the full amount of the re-
maining commitments may be borrowed under either of
the two borrowing options, so long as the total bor-
rowed amount outstanding under the Facility does not
exceed the amount of the Facility at any time. Each
borrowing will be conditioned upon the delivery of a
borrowing notice, the accuracy of representations and
warranties and the absence of defaults. Events of
default will include a material breach of representa-
tions or warranties, failure to pay principal or in-
terest, breach of covenants, cross acceleration, ma-
terial judgments and bankruptcy, subject to customary
notice and cure periods.
Under the Facility, interest rates per annum for
the outstanding loans will be determined as follows:
(i) interest rates for the CAF will be obtained from
bids selected by Parent and (ii) interest rates for
the Revolving Credit will be based upon either LIBOR
or an alternate base rate ("ABR") that will be the
higher of The Chase Manhattan Bank's prime rate and
the federal funds effective rate plus 1/2 of 1%, as
selected by Parent. No spread will be charged on ABR
-2-<PAGE>
loans. The interest rate applicable to each LIBOR
loan will be equal to LIBOR for the interest period
applicable to such loan plus a margin, ranging from
14.0 to 35.0 basis points per annum, determined based
upon Parent's credit ratings.
Under the Facility, interest periods for out-
standing loans will be determined as follows:
(i) interest periods for the CAF will be determined
per market availability, with fixed-rate auction ad-
vances being for periods ranging from seven to 360
days; and (ii) under the Revolving Credit, the in-
terest period on ABR loans will be three months, and
the interest period on LIBOR loans will be either
one, two, three or six months, at Parent's option.
Interest will be payable at the end of the relevant
interest period, but not less often than quarterly.
Interest will be calculated on the basis of the ac-
tual number of days elapsed over a 365/366-day year
for ABR loans based on The Chase Manhattan Bank's
prime rate, and over a 360-day year for all other
loans.
Under the Facility, prepayments of ABR loans
will be permitted at any time without penalty. LIBOR
Revolving Credit loans may be prepaid in whole or in
part at any time, subject to compensation in respect
of any redeployment costs if prepayment occurs other
than at the end of an interest period. CAF loans
will not be subject to prepayment.
Under the Facility, mandatory commitment reduc-
tion will occur in the event that any required gov-
ernmental approval is denied or in the event that
Parent elects to abandon the Offer and the Merger.
Upon the occurrence of such event, the commitments
would be reduced to the amount of loans outstanding
at such time reduced by the amount of net proceeds
from sales of the Shares, if any. Parent may opt to
reduce the commitments under the Facility by giving
notice thereof, provided that the aggregate Facility
commitments at any time may in no event be less than
the aggregate amount of the CAF advances and loans
outstanding at such time.
In the Commitment Letter, Parent has made cer-
tain representations and warranties regarding infor-
mation made available to the Agents. In addition,
the Credit Agreement will include certain representa-
tions and warranties regarding, among other things,
-3-<PAGE>
organization and powers, authority and enforceabil-
ity, no conflicts, financial information, absence of
material adverse change, absence of material liti-
gation, compliance with laws and regulations and
agreements, inapplicability of certain laws, taxes,
ERISA and absence of material misstatements. In ad-
dition, the Credit Agreement will include certain
covenants regarding, among other things, maintenance
of corporate existence, maintenance of ownership of
railroad subsidiaries, maintenance of insurance, pay-
ment of taxes, delivery of financial statements and
reports, compliance with laws, use of proceeds, and
certain limitations on debt, including limitations on
indebtedness in excess of $4,000,000,000 for the pur-
chase of Shares, limitations on additional unsecured
indebtedness at subsidiaries (subject to appropriate
thresholds and other customary terms) and a limita-
tion on total debt (other than indebtedness incurred
to finance the exercise of the Company Stock Option)
as a percentage of total capitalization to a maximum
of 65% prior to the Merger and 55% at or after the
Merger. The Credit Agreement will also include cer-
tain covenants regarding limitations on mergers or
sales of all or substantially all assets and limita-
tions on liens and sale/leaseback transactions.
The Agents' commitments and agreements in the
Commitment Letter are subject to (i) the reasonable
satisfaction of the Agents with any material changes
in the structure or terms of the Offer and the Merger
prior to the execution of the Credit Agreement and
all legal, tax and accounting matters relating
thereto, (ii) the absence of any material adverse
change since December 31, 1995, in or affecting the
business, assets or condition (financial or other-
wise) of Parent and its subsidiaries and the Company
and its subsidiaries, taken as a whole, (iii) the
absence of a material disruption of or material ad-
verse change in financial, banking or capital market
conditions that, in the Arrangers' reasonable judg-
ment, would be likely to materially impair the syndi-
cation of the Facility, (iv) the negotiation, execu-
tion and delivery on or before November 30, 1996 of
the definitive Credit Agreement in form satisfactory
to the Agents and their counsel, (v) the Agents' sat-
isfaction that, prior to and during the syndication
of the Facility, there shall be no competing issues
of debt securities or commercial bank facilities of
Parent or the Company or any of their respective sub-
sidiaries being offered, placed or arranged and (vi)
-4-<PAGE>
certain other conditions set forth in the Term Sheet.
In addition, the Credit Agreement will include usual
and customary cost and yield provisions.
The Credit Agreement also include conditions to
effectiveness including, but not limited to, the ab-
sence of pending litigation or administrative pro-
ceedings or other legal or regulatory developments
that, in the reasonable judgment of at least three
Agents, would be reasonably likely to prohibit the
transactions contemplated by the Offer and the Merger
or to result in a material adverse change in the
business, assets or condition of Parent, the termina-
tion of existing credit facilities of Parent used for
the purpose of commercial paper backup, the consumma-
tion of the Offer and other customary conditions to
effectiveness for facilities and transactions of such
type.
In connection with the Commitment Letter, Parent
has agreed to pay the Agents certain fees, to reim-
burse the Agents for certain expenses and to provide
certain indemnities, as is customary for commitments
of the type described herein. The Credit Agreement
will include an agreement by Parent to pay a facility
fee to each lender under the Facility based on the
aggregate amount of such lender's commitment under
the Facility, whether used or unused, at a rate,
ranging from 6.0 to 15.0 basis points per annum, de-
termined based upon Parent's credit ratings.
Assuming that the funds contemplated by the Com-
mitment Letter and Facility described above are made
available in accordance with the terms thereof, Pur-
chaser expects that the condition set forth in sub-
section (g) of Section 15 of the Offer to Purchase
will be satisfied.
The Commitment Letter is attached hereto as Exhibit
(b)(1), and the foregoing summary description is qualified in
its entirety by reference to such exhibit.
(iii) On October 22, 1996, Parent issued a press
release in which it announced that a group of banks had commit-
ted to lend up to an aggregate of $4.8 billion to Parent to buy
Shares pursuant to the Offer and to consummate the Merger. A
copy of the press release is attached hereto as Exhibit (a)(9),
and the foregoing summary description is qualified in its en-
tirety by reference to such exhibit.
-5-<PAGE>
Item 9. Financial Statements of Certain Bidders.
The words "cash provided by operating activities" in
clause (i) of the first sentence of the second paragraph under
"Certain Projected Financial Information" in Section 8 of the
Offer to Purchase are hereby deleted and replaced with the word
"revenues".
Item 10. Additional Information.
(b)-(c), (e)
(i) Section 16 of the Offer to Purchase is hereby
amended and supplemented by changing the date "January 15,
1997" to "January 18, 1997" in the second sentence of the first
paragraph of the subsection entitled "STB Matters; Acquisition
of Control".
(ii) Section 16 is hereby further amended and
supplemented by adding the following text after the first sen-
tence of the first paragraph of the subsection entitled "STB
Matters; Acquisition of Control":
On October 18, 1996, Parent and the Company filed
with the STB a Notice of Intent to File Railroad Con-
trol Application, a Petition for Protective Order and a
Petition to Establish Procedural Schedule.
(iii) Section 16 is hereby further amended and
supplemented by changing the words "plan to ask" to "have
asked" in the third sentence of the sixth paragraph of the sub-
section entitled "STB Matters; Acquisition of Control".
(iv) Section 16 is hereby further amended and
supplemented by adding the following text to the end of the
third sentence of the sixth paragraph of the subsection en-
titled "STB Matters; Acquisition of Control":
contemplating a final order by the STB within 255
days of the filing of an application with the STB
seeking approval of the Merger.
(v) Section 16 is hereby further amended and supple-
mented by changing the word "such" to "cash" in the forth sen-
tence of the third paragraph of the subsection entitled "STB
Matters; The Voting Trust".
-6-<PAGE>
Item 11. Material to be Filed as Exhibits.
(a)(1) -- Offer to Purchase, dated October 16, 1996.*
(a)(2) -- Letter of Transmittal.*
(a)(3) -- Notice of Guaranteed Delivery.*
(a)(4) -- Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.*
(a)(5) -- Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nom-
inees.*
(a)(6) -- Guidelines for Certification of Taxpayer Identi-
fication Number on Substitute Form W-9.*
(a)(7) -- Text of Press Release issued by Parent on Octo-
ber 15, 1996.*
(a)(8) -- Form of Summary Advertisement dated October 16,
1996.*
(a)(9) -- Text of Press Release issued by Parent on Octo-
ber 22, 1996.
(b)(1) -- Commitment Letter, dated October 21, 1996.
(c)(1) -- Agreement and Plan of Merger, dated as of Octo-
ber 14, 1996, by and among Parent, Purchaser and
the Company.*
(c)(2) -- Company Stock Option Agreement, dated as of Oc-
tober 14, 1996, between Parent and the Company.*
(c)(3) -- Parent Stock Option Agreement, dated as of Octo-
ber 14, 1996, between Parent and the Company.*
(c)(4) -- Form of Voting Trust Agreement.*
_____________________
* Previously filed.
-7-<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
CSX CORPORATION
By:/s/ MARK G. ARON
Name: Mark G. Aron
Title: Senior Vice President
Law and Public Affairs
Dated: October 23, 1996<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
GREEN ACQUISITION CORP.
By:/s/ MARK G. ARON
Name: Mark G. Aron
Title: General Counsel
and Secretary
Dated: October 23, 1996<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
(a)(1) -- Offer to Purchase, dated October 16, 1996.*
(a)(2) -- Letter of Transmittal.*
(a)(3) -- Notice of Guaranteed Delivery.*
(a)(4) -- Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.*
(a)(5) -- Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees.*
(a)(6) -- Guidelines for Certification of Taxpayer Identi-
fication Number on Substitute Form W-9.*
(a)(7) -- Text of Press Release issued by Parent on Octo-
ber 15, 1996.*
(a)(8) -- Form of Summary Advertisement dated October 16,
1996.*
(a)(9) -- Text of Press Release issued by Parent on Octo-
ber 22, 1996.
(b)(1) -- Commitment Letter, dated October 21, 1996.
(c)(1) -- Agreement and Plan of Merger, dated as of Octo-
ber 14, 1996, by and among Parent, Purchaser and
the Company.*
(c)(2) -- Company Stock Option Agreement, dated as of Oc-
tober 14, 1996, between Parent and the Company.*
(c)(3) -- Parent Stock Option Agreement, dated as of Octo-
ber 14, 1996, between Parent and the Company.*
(c)(4) -- Form of Voting Trust Agreement.*
_____________________
* Previously filed.
[CSX Corporation Letterhead]
CSX Receives $4.8 Billion Financing Commitment in Connection
With Conrail Merger
RICHMOND, Va., Oct. 22 /PR Newswire/ -- CSX Corpora-
tion (CSX) (NYSE: CSX) today announced it has marked another
important milestone in its proposed merger with Conrail Inc.
(Conrail) (NYSE: CRR), completing arrangements for a 5-year,
$4.8 billion bank facility in connection with the merger.
Underwriters of the financing are NationsBank, BankAmerica, the
Bank of Nova Scotia and Chase Manhattan Bank. Chase Securities
Inc. has been selected as administrative agent.
Each of the banks has agreed to commit $1.2 billion
of the $4.8 billion financing with syndication to a consortia
of leading financial institutions.
John W. Snow, chairman and chief executive officer of
CSX, said, "Completing this arrangement clearly underscores our
commitment to the merger. We remain very excited about the
prospects this combination offers to our customers, our share-
holders and the public.
"We are very encouraged by the early response we are
getting from key constituents, including shippers and public
officials. We are anxious to work with other carriers in the
region, and so far have reached out in that regard to Norfolk
Southern as the other leading carrier in the area. We are in-
tent on reaching agreements with Norfolk Southern and other
carriers and having them completed prior to filing our applica-
tion with the Surface Transportation Board. We firmly believe
this merger will vastly improve rail service east of the
Mississippi," Snow said.
CSX and Conrail last week announced their agreement
to combine in a strategic merger. The merger will create the
leading freight transportation and logistics company in the
world with annual revenues of more than $14 billion, offering
domestic and international customers rail, container-shipping,
barge, intermodal and contract logistics services. The newly
created transportation system will offer much more extensive
single-line rail service opportunities to shippers and
receivers in 22 states and will have a 29,645-mile system,
covering territory from Chicago, Boston and New York to Miami
and New Orleans.
CSX Corporation, headquartered in Richmond, Va., is
an international transportation company offering a variety of<PAGE>
rail, container-shipping, intermodal, trucking, barge and con-
tract logistics services.
CSX's Internet address is http://www.csx.com
CSX press releases available through Company News On-
Call by fax, 800-758-5804, ext. 219563, or at http://
www.prnewswire.com/
-2-
Execution Copy
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
BA SECURITIES, INC.
THE BANK OF NOVA SCOTIA
THE CHASE MANHATTAN BANK
CHASE SECURITIES INC.
NATIONSBANK, N.A.
NATIONSBANC CAPITAL MARKETS, INC.
October 21, 1996
CSX Corporation
Commitment Letter
CSX Corporation
One James Center
901 E. Cary Street
Richmond, VA 23219
Ladies and Gentlemen:
We understand that CSX Corporation ("CSX") proposes
to acquire all the issued and outstanding shares (the "Shares")
of common stock and Series A ESOP Junior Convertible Preferred
Stock of Conrail Inc. ("Conrail") pursuant to a merger agree-
ment (the "Merger Agreement") providing for Shares to be pur-
chased by CSX by means of one or more all cash tender offers
(the "Tender Offers"), exercise of a stock option granted by
Conrail (the "Conrail Stock Option") or otherwise for 40% of
the Shares (on a fully diluted basis (excluding Shares that
would be outstanding or issuable upon the exercise of the Con-
rail Stock Option)) followed by a merger in which all the re-
maining Shares will be converted to the right to receive shares
of common stock of CSX and (to the extent that 40% of the
Shares as calculated above have not theretofore been purchased)
cash (the "Merger"; the Tender Offers, the Merger and any exer-
cise of the Conrail Stock Option being collectively called the
"Acquisition"). You have advised us that CSX will require a
Competitive Advance and Revolving Credit Facility (the "Facil-
ity") in an aggregate principal amount of $4,800,000,000 to
finance the Acquisition and to replace existing credit facili-
ties used for the purpose of commercial paper backup and, fol-
lowing the Merger, for working capital and for other general
corporate purposes of CSX. It is contemplated that the terms
of the Facility will be as set forth in the Summary of Terms<PAGE>
CSX Corporation -2- October 21, 1996
and Conditions attached as Exhibit A hereto and made a part
hereof (the "Term Sheet").
Each of Bank of America National Trust and Savings
Association, The Bank of Nova Scotia, The Chase Manhattan Bank
and NationsBank, N.A. (collectively, the "Principal Agents") is
pleased to advise you of its commitment to provide severally
$1,200,000,000 of the Facility upon the terms and subject to
the conditions set forth or referred to herein and in the Term
Sheet.
You hereby appoint BA Securities, Inc., The Bank of
Nova Scotia, Chase Securities Inc. and NationsBanc Capital Mar-
kets, Inc. (collectively, the "Arrangers", and together with
the Principal Agents, the "Agents"), and the Arrangers hereby
agree to act, as co-arrangers for the Facility. You hereby
appoint the Principal Agents and the Principal Agents hereby
agree to act in the capacities with respect to the Facility
specified for each Principal Agent in the Term Sheet. Each
Principal Agent and Arranger will perform all functions and
exercise all authority customarily performed and exercised by
it in such roles.
Each Principal Agent reserves the right, prior to and
after the execution of definitive credit documentation, to syn-
dicate a portion of its commitment to one or more financial
institutions reasonably acceptable to you which will become
parties to such documentation pursuant to a syndication to be
managed by the Arrangers (the Principal Agents and the finan-
cial institutions becoming parties to such documentation being
called the "Lenders").
The Arrangers intend to commence syndication efforts
immediately, and you agree actively to assist the Arrangers in
completing a syndication satisfactory to them. You represent
that (a) all information made available by you or your autho-
rized representatives is and will be complete and correct in
all material respects and does not and will not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained there-
in not materially misleading in light of the circumstances
under which such statements are made and (b) all financial pro-
jections prepared by you or on your behalf and that have been
or will be made available have been and will be prepared in
good faith based upon assumptions believed by you to be reason-
able. In arranging and syndicating the Facility, we will be
using and relying primarily on such information and projections
without independent verification thereof.<PAGE>
CSX Corporation -3- October 21, 1996
As consideration for the agreements of the Agents
hereunder, you agree to pay the fees provided for in the Term
Sheet and the Fee Letter dated the date hereof and delivered
herewith (the "Fee Letter").
Each Principal Agent's commitment hereunder and the
Arrangers' agreements to perform the services described herein
are subject to (a) the reasonable satisfaction of the Agents
with any material changes in the structure or terms of the Ac-
quisition prior to the execution of definitive documentation
with respect to the Facility, and all legal, tax and accounting
matters relating thereto, (b) the absence of any material ad-
verse change since December 31, 1995, in or affecting the busi-
ness, assets or condition (financial or otherwise) of CSX and
its subsidiaries and Conrail and its subsidiaries, taken as a
whole, (c) the absence of a material disruption of or material
adverse change in financial, banking or capital market condi-
tions that, in the Arrangers' reasonable judgment, would be
likely materially to impair the syndication of the Facility,
(d) the negotiation, execution and delivery on or before Novem-
ber 30, 1996, of definitive documentation with respect to the
Facility satisfactory to the Agents and their counsel, (e) the
Agents' satisfaction that, prior to and during the syndication
of the Facility, there shall be no competing issues of debt
securities or commercial bank facilities of CSX or Conrail or
any of their respective subsidiaries being offered, placed or
arranged and (f) the other conditions set forth or referred to
in the Term Sheet.
CSX agrees (a) to indemnify and hold harmless each
Agent and each of its affiliates and their respective officers,
directors, employees, agent and advisors from and against any
and all losses, claims, damages, liabilities and expenses aris-
ing out of or in connection with this Commitment Letter or the
transactions contemplated hereby; provided, however, that the
foregoing indemnity will not, as to any indemnified party, ap-
ply to losses, claims, damages, liabilities or expenses to the
extent they have resulted from the wilful misconduct or gross
negligence of such indemnified party and (b) to reimburse the
Agents and their affiliates for all reasonable out-of-pocket
expenses (including, without limitations reasonable syndication
expenses and the reasonable fees, disbursements and other
charges of counsel) incurred in connection with the arrangement
of the Facility, the preparation of this Commitment Letter, the
Fee Letter and the definitive documentation for the Facility or
the other transactions contemplated hereby. No indemnified
person shall be liable for any indirect or consequential dam-
ages in connection with its activities related to the Facility.<PAGE>
CSX Corporation -4- October 21, 1996
This Commitment Letter is delivered to you on the
understanding that neither this Commitment Letter, the Term
Sheet nor any of their terms or substance shall be disclosed,
directly or indirectly, to any other person, provided, that the
foregoing restrictions shall cease to apply after this Commit-
ment Letter has been accepted by you in accordance with the
terms hereof.
The reimbursement, indemnification and confidential-
ity provisions contained herein and in the Fee Letter shall
remain in full force and effect regardless of whether defini-
tive financing documentation shall be executed and delivered
and notwithstanding the termination of the Commitment Letter or
the Principal Agents' commitments hereunder. This Commitment
Letter and the Fee Letter are the only agreements that have
been entered into among us with respect to the Facility and set
forth the entire understanding of the parties with respect
thereto. This Commitment Letter agreement may be executed in
any number of counterparts (including by facsimile transmis-
sion), each of which shall be an original, and all of which,
when taken together, shall constitute one agreement. This Com-
mitment Letter shall be governed by, and construed in accor-
dance with, the laws of the State of New York. This Commitment
Letter supersedes in full the Commitment Letter dated October
16, 1996 from The Chase Manhattan Bank and Chase Securities
Inc. to you.<PAGE>
CSX Corporation -5- October 21, 1996
If the foregoing correctly sets forth our agreement,
please indicate your acceptance of the terms hereof and of the
Term Sheet and the Fee Letter by returning to us executed
counterparts hereof and of the Fee Letter not later than 8:00
p.m., New York City time, on October 21, 1996, failing which
the Principal Agents' commitments and the Arrangers' agreements
herein will expire.
Each of the undersigned is extremely pleased to have
the opportunity to assist you in connection with this important
financing.
Very truly yours,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Mark N. Hurley
Title: Managing Director
BA SECURITIES, INC.
By: /s/ Mark S. Lies
Title: Managing Director
THE BANK OF NOVA SCOTIA
By: /s/ James R. Trimble
Title: Senior Relationship
Manager<PAGE>
CSX Corporation -6- October 21, 1996
THE CHASE MANHATTAN BANK
By: /s/ J.M. Long
Title: Vice President
CHASE SECURITIES INC.
By: /s/ Elizabeth B. Hughes
Title: Managing Director
NATIONSBANK, N.A.
By: /s/ E. Turner Coggin
Title: Senior Vice President
NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ John N. Gregg, Jr.
Title: Director
Accepted and agreed to as of
the date first above written:
CSX CORPORATION
By: /s/ G.R. Weber
Title: Vice President and
Treasurer<PAGE>
EXHIBIT A
CSX CORPORATION
Competitive Advance and Revolving Credit Facility
Summary of Terms and Conditions
Borrower: CSX Corporation (the "Borrower")
Acquisition: The Borrower will acquire all the
issued and outstanding shares (the
"Shares") of common stock and Series
A ESOP Convertible Junior Preferred
Stock of Conrail Inc. ("Conrail")
pursuant to a merger agreement (as
amended from time to time, the
"Merger Agreement") providing for
Shares to be purchased by the Bor-
rower by means of one or met all cash
tender offers (the "Tender Offers")
exercise of a stock option granted by
Conrail (the "Conrail Stock Option")
or otherwise for 40% of the Shares
(on a fully diluted basis (excluding
Shares that would be outstanding or
issuable upon the exercise of the
Conrail Stock Option)) followed by a
merger in which all the remaining
Shares will be converted to the right
to receive shares of common stock of
the Borrower and (to the extent that
40% of the Shares as calculated above
have not theretofore been purchased)
cash (the "Merger"; the Tender Of-
fers, the Merger and any exercise of
the Conrail Stock Option being col-
lectively called the "Acquisition").
Arrangers: BA Securities, Inc., The Bank of Nova
Scotia, Chase Securities Inc. and
NationsBanc Capital Markets, Inc.
(collectively, the "Arrangers").
Administrative Agent: The Chase Manhattan Bank ("Chase")
will act as sole administrative agent<PAGE>
(in such capacity, the "Administra-
tive Agent") for a syndicate of lead-
ers arranged by the Arrangers (col-
lectively, the "Lenders").
Documentation Agent: The Bank of Nova Scotia (in such ca-
pacity, the "Documentation Agent").
Co-Syndication Agents: Bank of America National Trust and
Savings Association and NationsBank,
N.A. (in such capacities, the "Co-
Syndication Agents"; and together
with the Arrangers, the Documentation
Agent and the Administrative Agent,
the "Agents").
Facility: Competitive advance and revolving
credit facility in an aggregate prin-
cipal amount of $4,800,000,000 (the
"Facility"). The Borrower will have
the right to request the Arrangers to
arrange an increase in the Facility
for the purposes described below on
terms and conditions to be agreed.
Borrowing Options: Two borrowing options will be avail-
able under the Facility: (i) a com-
petitive advance option (the "CAF")
and (ii) a revolving credit option
(the "Revolving Credit"). The CAF
will be provided on an uncommitted
competitive advance basis through an
auction mechanism. The Revolving
Credit will be provided on it commit-
ted basis. Under each option amounts
borrowed and repaid may be reborrowed
subject to availability under the
Facility.
Purpose: The proceeds of the Facility will be
used to finance the Acquisition and
to replace existing credit facilities
used for the purpose of commercial
paper backup. In addition, following
the Merger the proceeds of the Facil-
ity may be used for working capital
and for other general corporate pur-
poses.
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Commitment Termination Five years from the date of execution
and Final Maturity: of definitive credit documentation
(the "Closing Date").
Availability: Subject to the second succeeding sen-
tence, under the CAF, up to the full
amount of the remaining commitments
(less any amounts outstanding under
the Revolving Credit) may be bor-
rowed, repaid and reborrowed at the
discretion of the Lenders, which may
elect to bid in accordance with the
Administrative Agent's standard pro-
cedures for competitive advance fa-
cilities. Subject to the next suc-
ceeding sentence, under the Revolving
Credit, up to the fall amount of the
remaining commitments (less any
amount outstanding under the CAF) may
be borrowed, repaid and reborrowed
subject only to applicable conditions
to borrowing. Availability under
each option will be reduced by usage
under the other option on a dollar-
for-dollar basis. Total outstandings
under the Facility may not exceed the
amount of the Facility at any time.
Fees and Interest Rates: As per attached Annex I.
Interest Periods: CAF -- per market availability:
Fixed Rate Auction Advances:
7-360 days.
Revolving Credit -- at the Borrower's
option:
LIBOR Loans: 1, 2, 3 or 6 months.
Alternative Base Rate ("ABR") Loans:
3 months.
Interest will be payable at the end
of each interest period, but not less
often than every three months.
Mandatory Commitment In the event that any governmental
Reduction: approval required for the Acquisition
shall be finally denied, or in the
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event the Borrower shall elect to
abandon the Acquisition, the commit-
ments under the Facility shall be
reduced to an amount equal to the sum
at such time of the aggregate princi-
pal amount of loans outstanding under
the Facility and the aggregate face
amount of commercial paper outstand-
ing and supported by commitments un-
der the Facility. In the event that
the Borrower sells any of the Shares,
the Facility shall be reduced by the
amount of the net proceeds of any
such sales.
Optional Commitment Upon at least three business days'
Reductions: prior irrevocable written notice to
the Administrative Agent, the Bor-
rower may at any time in whole perma-
nently terminate or from time to time
in part permanently terminate, the
commitments under the Facility; pro-
vided, that the aggregate commitments
of all Lenders may in no event be
less than the aggregate amount of the
CAF advances and loans outstanding.
Optional Prepayments: LIBOR Revolving Credit Loans may be
prepaid in whole or in part at any
time at the Borrower's option, sub-
ject, if prepayment occurs other than
at the end of an applicable interest
period, to compensation in respect of
any redeployment costs. ABR loans
may be prepaid at any time without
penalty. CAF advances will not be
subject to prepayment.
Documentation: A credit agreement (the "Credit
Agreement") for the Facility incorpo-
rating the terms provided for herein
and other customary non-economic
terms and provisions as the Agents
may reasonably specify in the context
of the transactions contemplated
hereby.
Conditions to Usual for facilities and transactions
Effectiveness: of this type, those specified below
and others to be reasonably specified
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by the Agents, including but not lim-
ited to definitive documentation with
respect to the Facility satisfactory
in all respects to the Lenders, sat-
isfactory legal opinions, delivery of
financial statements and projections,
accuracy of representations and war-
ranties, absence of defaults,
delivery of borrowing certificates,
evidence of authority and compliance
with applicable laws and regulations.
The initial Tender Offer shall have
been or shall simultaneously be con-
summated in accordance with appli-
cable law and the Merger Agreement.
There shall be no pending litigation
or administrative proceedings or
other legal or regulatory develop-
ments that, in the reasonable judg-
ment of at least three of the Agents,
would be reasonably likely to pro-
hibit the Acquisition or to result in
a material adverse change in the
business, assets or condition (finan-
cial or otherwise) of the Borrower,
it being understood that the proposal
for or the pendency of proceedings
for approval of the Acquisition be-
fore the Surface Transportation
Board, or any administrative, judi-
cial or other contest with respect to
such approval process at the Surface
Transportation Board, shall not vio-
late this condition.
The existing credit facilities of the
Borrower used for the purpose of com-
mercial paper backup shall have been
terminated.
Conditions to Each Delivery of borrowing notice,
Borrowing: accuracy of representations and war-
ranties and absence of debuts.
Representations and To include organization and powers,
Warranties: authority and enforceability, no con-
flicts, financial information, ab-
sence of material adverse change,
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absence of material litigation, com-
pliance with laws and regulations
(including Federal Reserve margin
regulations) and agreements, inap-
plicability of Investment Company Act
of 1940 and Public Utility Holding
Company Act of 1931 taxes ERISA and
absence of material misstatements.
Financial Covenant: Total Debt (other than indebtedness
the proceeds of which are used to
purchase Shares pursuant to the Con-
rail Stock Option) shall not exceed
(a) at any time prior to the Merger,
65% of Total Capitalization (to be
defined as Total Debt plus Total
Shareholders' Equity) and (b) at any
time on or after the consummation of
the Merger, 55% of Total Capitaliza-
tion. "Total Debt" will be defined
as all short-term and long-term in-
debtedness reflected on a consoli-
dated balance sheet of the Borrower
in accordance with GAAP. "Total
Shareholders' Equity" will be defined
as the amounts included under share-
holders' equity on a consolidated
balance sheet of the Borrower in ac-
cordance with GAAP.
Affirmative and Negative To include maintenance of corporate
Covenants: existence, maintenance of ownership
of railroad subsidiaries, maintenance
of insurance, payment of taxes, de-
livery of financial statements and
reports, maintenance of records, com-
pliance with laws, use of proceeds,
limitation on indebtedness in excess
of $4,000,000,000 for the purchase of
Shares, limitations on additional
unsecured indebtedness at subsidiar-
ies (subject to appropriate thresh-
olds and other customary terms),
limitations on mergers and sales of
all or substantially all assets, and
limitations on liens and sale-lease-
back transactions (which shall not
apply to margin stock to the extent
it exceeds 25% of the assets subject
to such limitation and which will
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permit the Borrower and its subsid-
iaries to continue to utilize methods
of railroad equipment financing as
and to the extent customarily used by
them.)
Events of Defaults: To include material breach of repre-
sentation or warranty, failure to pay
principal or interest, breach of cov-
enants, cross acceleration, material
judgments and voluntary or involun-
tary bankruptcy, subject to customary
notice and cure periods.
Cost and Yield Usual and customary, including but
Protection: not limited to protection with re-
spect to redeployment costs, changes
in capital requirements or their in-
terpretation, changes in circum-
stances, reserves, illegality and
taxes (including, without limitation,
withholding tax gross-ups).
Assignments and Lenders will be permitted to assign
Participations: loans and commitments with the prior
written consent of the Borrower (not
to be unreasonably withheld), except
that consent will not be required for
assignments to another Lender or an
affiliate of a Lender. Assignments
will be in a minimum amount to be
agreed (or the remaining amount of a
Lender's commitment). Assignments
will be by novation, such that the
assignee will succeed to the rights
and obligations of the assignor
Lender. Assignments to any Federal
Reserve Bank will be permitted with-
out consent. Participations will be
without restriction and participants
will be entitled to yield and in-
creased cost protection to the same
extent as (but not more than) the
participating Lender. Voting rights
of participants will be limited to
changes in amounts, rates, fees and
maturity.
Expenses and All reasonable out-of-pocket expenses
Indemnification: of the Agents associated with (i) the
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syndication of the Facility and (ii)
the preparation, execution and deliv-
ery and amendment, waiver, adminis-
tration and enforcement of the loan
documentation (including reasonable
fees, charges and disbursements of
counsel for the Agents and, in the
case of enforcement, the Lenders) are
to be paid by the Borrower.
The Borrower will indemnify the
Agents and the Lenders against, and
hold them harmless from, all costs,
expenses (including reasonable fees,
charges and disbursements of counsel)
and liabilities including those re-
sulting from any litigation or other
proceedings (regardless of whether
the Agents or any Lender is a party
thereto), related to or arising out
of the Facility, the use of proceeds
thereof or any other transactions
contemplated hereby, except to the
extent such costs, expenses and li-
abilities have resulted from the wil-
ful misconduct or gross negligence of
the party seeking indemnification.
Governing Law: New York.
Counsel for the Agents: Simpson Thacher & Bartlett.
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Annex I
Facility Fee: A Facility Fee will accrue for the
account of each Lender on the ag-
gregate amount of such Lender's com-
mitment under the Facility, whether
used or unused, and will be payable
quarterly in arrears based on the
actual number of days elapsed over a
365/366-day year. The Facility Fee
will commence to accrue on the Clos-
ing Date and will cease to accrue on
the final maturity of the Facility or
any earlier date on which the commit-
ments are terminated.
The Facility Fee will accrue at the
rates set forth in the applicable
table below based upon the Borrower's
senior unsecured non-credit-enhanced
long-term debt ratings ("Ratings") by
Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies
Inc. ("S&P") and Moody's Investor
Services, Inc. ("Moody's").
Interest Rates: Interest will be payable on the out-
standing loans at the following rates
per annum:
(A) CAF: The rates obtained from
bids selected by the Borrower; and
(B) Revolving Credit: Rates based
upon LIBOR or ABR, as selected by the
Borrower.
No spread will be charged on ABR
Loans.
The interest rate applicable to each
LIBOR Loan will be equal to LIBOR for
the interest period applicable to
such Loan plus a Margin determined
based upon the Borrower's Ratings by
S&P and Moody's in effect from time
to time, as set forth in the table
below.
Interest on LIBOR Loans will be pay-
able at the ends of the relevant in-
terest periods (but not less often<PAGE>
than quarterly). Interest shall be
calculated on the basis of the actual
number of days elapsed over a 365/
366-day year for ABR Loans based on
the Administrative Agent's Prime
Rate, and over a 360-day year for all
other Loans.
As used herein, (a) LIBOR means the
London interbank offered rate for
U.S. Dollars, adjusted for statutory
reserves and (b) Alternate Base Rate,
or ABR, means the higher of (i) the
Administrative Agent's Prime Rate and
(ii) the Federal Funds Effective Rate
plus 1/2 of 1%.
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Ratings Facility LIBOR All-in Drawn
(S&P/ Fee (basis Margin (basis Costs (basis
Moody's) points points points per
* per annum) per annum) annum)
Category 1 A/A2 or 6.0 14.0 20.0
Category 2 higher 7.0 13.0 20.0
Category 3 A-/A3 8.5 16.5 25.0
Category 4 BBB+/Baa1 10.0 20.0 30.0
Category 5 BBB/Baa2 12.5 22.5 35.0
Category 6 BBB-/Baa3 15.0 35.0 50.0
* In the event of a split rating, the higher of the two Rat-
ings will apply for purposes of determining the relevant
Category unless the Ratings differ by two or more levels,
in which case a Rating one level below the higher Rating
will apply for purposes of determining the relevant Cat-
egory.
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